Smith Barney
Investment Funds Inc.
7 World Trade Center
New York, New York  10048
800-451-2010

Statement of Additional Information
August 28, 2001

This Statement of Additional Information expands upon and
supplements the information contained in the current prospectus
dated August 28, 2001, as amended or supplemented from time to
time, of Smith Barney Hansberger Global Value Fund (the "Fund"), a
separate series of Smith Barney Investment Funds Inc. (the
"Company"), and should be read in conjunction with the Fund's
prospectus.  The Fund's prospectus may be obtained from a a
Service Agent (as defined on page 29), or by writing or calling
the Company at the address or telephone number listed above.  This
Statement of Additional Information, although not in itself a
prospectus, is incorporated by reference into the Fund's
prospectus in its entirety.

CONTENTS

	Directors and Executive Officers of the Company	2
	Investment Objectives and Management Policies	5
	Additional Risk Factors	19
	Investment Restrictions	24
	Brokerage and Portfolio Transactions	25
	Purchase of Shares	30
	Redemption of Shares	36
	Exchange Privilege	38
	Distributor	40	Valuation of Shares	41
	Performance Data	42
	Dividends and Distributions	45
	Taxes	45
	Minimum Account Size	48
	Financial Statements	48
	Additional Information	48
	Other Information	48
	Appendix	A-1



DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

 The names of the Directors and executive officers of the Company,
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 Company, as defined
in the Investment Company Act of 1940, as amended (the "1940
Act"), is indicated by an asterisk.

Paul R. Ades, Director (Age 61). Law firm of Paul R. Ades PLLC.
His address is Argyle Square, 181 West Main Street, Suite C, P.O.
Box 790, Babylon, New York 11702.

Herbert Barg, Director (Age 78). Private investor. His address is
273 Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.

Dwight B. Crane, Director (Age 63). Professor, Graduate School of
Business Administration, Harvard University. His address is
Harvard Business School, Soldiers Field, Morgan Hall #375, Boston,
Massachusetts 02163.

Frank G. Hubbard, Director (Age 63).  President, Avatar
International Inc.; formerly Vice President, S&S Industries;
Former Corporate Vice President, Materials Management and
Marketing Services of Huls America, Inc.  His address is Avatar
International, Inc., 87 Whittredge Road, Summit, New Jersey 07901.

*Heath B. McLendon, Chairman of the Board, President and Chief
Executive Officer (Age 68). Managing Director of Salomon Smith
Barney Inc. ("Salomon Smith Barney"); Director and President of
Smith Barney Fund Management LLC ("SBFM") and Travelers Investment
Adviser, Inc. ("TIA"); and formerly Chairman of the Board of Smith
Barney Strategy Advisers Inc. Mr. McLendon is a director of 77
investment companies associated with Citigroup Inc. ("Citigroup").
His address is 7 World Trade Center, 45th Floor, New York, New
York 10048.

Jerome H. Miller, Director (Age 62).  Retired, Former President,
Asset Management Group of Shearson Lehman Brothers.  His address
is 27 Hemlock Road, Manhasset, New York, NY  11030.

Ken Miller, Director (Age 58). President of Young Stuff Apparel
Group, Inc.  His address is 1411 Broadway, 6th Floor, Suite 610,
New York, New York 10018.

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; Senior Vice President and
Treasurer of 83 investment companies associated with Citigroup.
His address is 125 Broad Street, New York, New York 10004.

Paul Brook, Controller (Age 47).  Director of Salomon Smith
Barney; from 1997-1998 Managing Director of AMT Capital Services
Inc.; prior to 1997 Partner with Ernst & Young LLP; 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; Secretary of 60 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 and/or general
partner of certain other mutual funds for which Smith Barney
serves as distributor.  As of August 3, 2001, the Directors and
officers of the Company, as a group, owned less than 1.00% of the
outstanding common stock of the Fund.

As of August 3, 2001 to the best of the knowledge of the Fund and
the Board of Directors, no single shareholder or group (as the
term is used in Section 13(d) of the Securities Exchange Act of
1934) beneficially owned more than 5% of the outstanding shares
with the exception of the following:

Clas
s
Percent
Name
Address
Y
46.7401
Smith Barney Series, Inc.
Concert High Growth
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3rd Floor
Suite 200
Philadelphia, PA 19153-3111
Y
26.5172
Smith Barney Series, Inc.
Concert Growth
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3rd Floor
Suite 200
Philadelphia, PA 19153-3111
Y
9.3512
Smith Barney Series, Inc.
Select High Growth
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3rd Floor
Suite 200
Philadelphia, PA 19153-3111
Y
7.2390
Smith Barney Series, Inc.
Select Growth
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3rd Floor
Suite 200
Philadelphia, PA 19153-3111

Y
6.8788
Smith Barney Series, Inc.
Concert Global
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3rd Floor
Suite 200
Philadelphia, PA 19153-3111

No officer, director or employee of Salomon Smith Barney or any
parent or subsidiary receives any compensation from the Company
for serving as an officer or director of the Company.  The Company
pays each director who is not an officer, director or employee of
Salomon Smith Barney or any of its affiliates a fee of $16,000 per
annum plus $2,500 per meeting attended and reimburses travel and
out-of-pocket expenses which expenses, for the fiscal year ended
April 30, 2001, totaled $15,401.  For the fiscal year ended April
30, 2001, the Directors of the Company were paid the following
compensation:




Name of Person

Aggregate
Compensation
from Fund*
Total Pension
or Retirement
Benefits
Accrued as
part of Fund
Expenses
Compensation
from Fund and
Fund Complex
Paid to
Directors
Number of
Funds for
Which
Director
Serves Within
Fund Complex





Paul R. Ades
$2,526
0
$56,775
5
Herbert Barg
2,526
0
116,075
16
Dwight B. Crane
2,162
0
153,175
23
Frank G. Hubbard
2,524
0
56,675
5
Heath B. McLendon
0
0
0
77
Jerome Miller
2,513
0
56,275
5
Ken Miller
2,526
0
56,475
5

*At the end of the calendar year in which they attain age 80,
Directors are required to change to emeritus status.  Directors
Emeritus are entitled to serve in emeritus status for a maximum of
10 years during which time they are paid 50% of the annual
retainer fee and meeting fees otherwise applicable to the Fund
Directors together with reasonable out-of-pocket expenses for each
meeting attended.

Investment Manager and Sub-Adviser.  SBFM serves as investment
adviser to the Fund pursuant to an investment management agreement
(the "Management Agreement"). SBFM is an affiliate of Salomon
Smith  Barney and an indirect, wholly owned subsidiary of
Citigroup.  Hansberger Global Investors, Inc. ("Hansberger", a
wholly-owned subsidiary of Hansberger Group, Inc.,) serves as sub-
adviser to the Fund pursuant to a sub-advisory agreement (the
"Sub-Advisory Agreement").  The Management Agreement and the Sub-
Advisory Agreement were most recently approved by the Board of
Directors, including a majority of the Directors who are not
"interested persons" of the Company or the investment advisers
(the "Independent Directors"), of the Fund on July 26, 2001.  SBFM
provides investment advisory and management services to investment
companies affiliated with Salomon Smith Barney.

As compensation for investment management services rendered to the
Fund, the Fund pays SBFM a fee computed daily and paid monthly at
the annual rate of 0.95% of the value of its average daily net
assets. As compensation for sub-advisory services rendered to the
Fund, SBFM pays Hansberger a fee, computed daily and paid monthly,
at the annual rate of 0.50% of the value of the Fund's average
daily net assets.  SBFM and Hansberger bear all expenses in
connection with the performance of their services.

Code of Ethics

Pursuant to Rule 17j-1 of the 1940 Act, the Company, the
investment adviser 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 Company's Code of Ethics is on file with the
Securities and Exchange Commission ("SEC").  A copy of the
investment adviser's Code of Ethics is filed herewith.


Counsel and Auditors.  Willkie Farr & Gallagher serves as counsel
to the Company.  The Independent Directors have selected Stroock &
Stroock & Lavan LLP as their legal counsel.  KPMG LLP, 757 Third
Avenue, New York, New York 10017, has been selected as the Fund's
independent auditor to examine and report on the Fund's financial
statements and highlights for the fiscal year ending April 30,
2002.

Custodian  Chase Manhattan Bank, located at Chase Metrotech
Center, Brooklyn NY 11245, serves as the custodian of the Company.
Under its custody agreement with the Company, Chase holds the
Company's portfolio securities and keeps all necessary accounts
and records.  For its services, Chase receives a monthly fee based
upon the month-end market value of securities held in custody and
also receives transaction charges.  Chase bank is authorized to
establish separate accounts for foreign securities owned by the
Company to be held with foreign branches of other domestic banks
as well as with certain foreign banks and securities depositories.
The assets of the Company are held under bank custodianship in
compliance with the 1940 Act.

Transfer Agent  Citi Fiduciary Trust Company (the "Transfer
Agent") located at 125 Broad Street, New York, New York 10004,
serves as the transfer agent and shareholder services agent of the
Fund.

Sub-Transfer Agent  PFPC Global Fund Services (the "Sub-Transfer
Agent"), located at P.O. Box 9699, Providence, Rhode Island 02940-
9699, serves as the Fund's sub-transfer agent to render certain
shareholder record-keeping and accounting service functions.

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

Each of the following investment policies, strategies and
techniques is subject to the limitations set forth under
"Investment Restrictions." Except as described under "Investment
Restrictions," the investment policies described in the prospectus
and in this statement of additional information are not fundamental
and the Board of Directors may change such policies without
shareholder approval.

General.  The Fund's investment objective is long-term capital
growth.  The Fund seeks to achieve this objective by investing
primarily in equity securities of U.S. and foreign issuers,
including those of emerging market issuers,  which, in the opinion
of SBFM and Hansberger, are undervalued.  For the Fund, income
will be an incidental consideration.

In making investment decisions for the Fund, Hansberger relies
heavily on a fundamental analysis of securities with a long-term
investment perspective.  Hansberger's valuation methods focus on a
company's share price in relation to earnings, dividends, assets,
sales and a variety of other criteria.  The Fund seeks to invest
in companies whose securities are trading at an attractive level
taking into account such factors as future earnings, cash flow
and/or net asset value, and Hansberger utilizes proprietary
valuation screens, internal and external research sources and
other fundamental analysis to identify those securities that
appear to be undervalued.  Once undervalued securities are
identified, Hansberger analyzes each security, concentrating on a
variety of fundamental issues, including sales growth, cash flow,
new product development, management structure and other economic
factors.  This fundamental analysis results in a list of
securities meeting a strict value discipline, which are reviewed
by Hansberger for inclusion in the Fund's portfolio.

Hansberger seeks to increase the scope and effectiveness of this
fundamental investment approach by extending the search for value
into many countries around the world.  This global search provides
Hansberger with more diverse opportunities and flexibility to
shift portfolio investments not only from company to company and
industry to industry, but also country to country, in search of
undervalued securities.  Under normal market conditions the Fund
will invest its assets in at least three countries, which may
include the United States.

Although the Fund generally invests in common stocks, it may also
invest in preferred stocks and certain debt securities, rated or
unrated, such as convertible bonds and bonds selling at a
discount, when Hansberger believes the potential for appreciation
will equal or exceed that available from investments in common
stock.  The Fund may also invest in warrants or rights to
subscribe to or purchase such securities, and sponsored or
unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs")
and other depository receipts (collectively, "Depositary
Receipts").  The Fund may also lend its portfolio securities and
borrow money for investment purposes (i.e., "leverage" its
portfolio).  In addition, the Fund may invest in closed-end
investment companies holding foreign securities, and enter into
transactions in options on securities, securities indices and
foreign currencies, forward foreign currency contracts, and
futures contracts and related options.  When deemed appropriate by
SBFM or Hansberger, the Fund may invest cash balances in
repurchase agreements and other money market investments to
maintain liquidity in an amount sufficient to meet expenses or for
day-to day operating purposes.  Whenever, in the judgment of
Hansberger, market or economic conditions warrant, the Fund may
adopt a temporary defensive position and may invest without limit
in money market securities denominated in U.S. dollars or in the
currency of any foreign country, as described below.

See "Additional Risk Factors" below for more information on the
special risks involved with investing in foreign securities.

Repurchase Agreements.  The Fund may enter into repurchase
agreements.  A repurchase agreement is a contract under which the
Fund acquires a security for a relatively short period (usually not
more than one week) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and
price (representing the Fund's cost plus interest).  It is the
Fund's present intention to enter into repurchase agreements only
upon receipt of fully adequate collateral and only with commercial
banks (whether U.S. or foreign) and registered broker-dealers.
Repurchase agreements may also be viewed as loans made by the Fund
which are collateralized primarily by the securities subject to
repurchase.  The Fund bears a risk of loss in the event that the
other party to a repurchase agreement defaults on its obligations
and the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities.  Pursuant to policies
established by the Board of Directors, SBFM and Hansberger monitor
the creditworthiness of all issuers with which the Fund enters into
repurchase agreements.

Reverse Repurchase Agreements.  The Fund currently does not intend
to commit more than 5% of its Fund's net assets to reverse
repurchase agreements.  The Fund may enter into reverse repurchase
agreements with broker/dealers and other financial institutions.
Such agreements involve the sale of Fund securities with an
agreement to repurchase the securities at an agreed-upon price,
date and interest payment and are considered to be borrowings by
the Fund and are subject to the borrowing limitations set forth
under "Investment Restrictions."  Since the proceeds of reverse
repurchase agreements are invested, this would introduce the
speculative factor known as "leverage."  The securities purchased
with the funds obtained from the agreement and securities
collateralizing the agreement will have maturity dates no later
than the repayment date.  Such transactions are only advantageous
if the Fund has an opportunity to earn a greater rate of interest
on the cash derived from the transaction than the interest cost of
obtaining that cash.  Opportunities to realize earnings from the
use of the proceeds equal to or greater than the interest required
to be paid may not always be available, and the Fund intends to use
the reverse repurchase technique only when SBFM and Hansberger
believe it will be advantageous to the Fund.  The use of reverse
repurchase agreements may exaggerate any interim increase or
decrease in the value of the participating Fund's assets.  The
Fund's custodian bank will maintain a separate account for the Fund
with securities having a value equal to or greater than such
commitments.

Securities Lending.  The Fund is authorized to lend up to 33 1/3%
of the total market value of its portfolio securities to brokers,
dealers, domestic and foreign banks or other financial institutions
for the purpose of increasing its net investment income. Any loan
of securities must be callable at any time and are continuously
secured by cash or U.S. Government Obligations equal to no less
than the market value, determined daily, of the securities loaned.
There may, however, be risks of delay in recovery of the securities
or even loss of rights in the collateral should the borrowers of
the securities fail financially.  Apart from lending its securities
and acquiring debt securities of a type customarily purchased by
financial institutions, no Fund will make loans to other persons.

The Fund will receive amounts equal to dividends or interest on the
securities loaned.  It will also earn income for having made the
loan because cash collateral pursuant to these loans will be
invested in short-term money market instruments.  In connection
with lending of securities the Fund may pay reasonable finders,
administrative and custodial fees.  Where voting or consent rights
with respect to loaned securities pass to the borrower, management
will follow the policy of calling the loan, in whole or in part as
may be appropriate, to permit the exercise of such voting or
consent rights if the issues involved have a material effect on the
Fund's investment in the securities loaned.

Commercial Bank Obligations.  For the purposes of the Fund's
investment policies with respect to bank obligations, obligations
of foreign branches of U.S. banks and of foreign banks may be
general obligations of the parent bank in addition to the issuing
bank, or may be limited by the terms of a specific obligation and
by government regulation.  As with investment in non-U.S.
securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject the Fund to
investment risks that are different in some respects from those of
investments in obligations of domestic issuers.  Although the Fund
will typically acquire obligations issued and supported by the
credit of U.S. or foreign banks having total assets at the time of
purchase in excess of U.S. $1 billion (or the equivalent thereof),
this is not a fundamental investment policy or restriction of the
Fund.  For calculation purposes with respect to the U.S. $1 billion
figure, the assets of a bank will be deemed to include the assets
of its U.S. and non-U.S. branches.

When-Issued and Delayed Delivery Securities.  The Fund may purchase
securities on a when-issued or delayed delivery basis.  The price
of debt obligations purchased on a when-issued basis is fixed at
the time the Fund commits to purchase, but delivery and payment for
the securities ("settlement") takes place at a later date.  The
price of these securities may be expressed in yield terms.  The
Fund will enter into these transactions in order to lock in the
yield (price) available at the time of commitment.  Between
purchase and settlement, the Fund assumes the ownership risk of the
when-issued securities, including the risk of fluctuations in the
securities market value due to, among other factors, a change in
the general level of interest rates.  However, no interest accrues
to the Fund during this period.

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 the Fund, 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.  The Fund, therefore, may not invest in a master demand
note, if as a result more than 15% of the value of the Fund's total
assets would be invested in such notes and other illiquid
securities.

Temporary Investments.  The Fund may make money market investments
pending other investments or settlement for liquidity, or in
adverse market conditions.  These money market investments include
obligations of the U.S. Government and its agencies and
instrumentalities, obligations or foreign sovereignties, other
debt securities, commercial paper including bank obligations,
certificates of deposit (including Eurodollar certificates of
deposit) and repurchase agreements.

For temporary defensive purposes, during periods in which SBFM or
Hansberger believes changes in economic, financial or political
conditions make it advisable, the Fund may reduce its holdings in
equity and other securities and may invest up to 100% of its
assets in certain short-term (less than twelve months to maturity)
and medium-term (not greater than five years to maturity) debt
securities and in cash (U.S. dollars, foreign currencies,
multicurrency units).  These short-term and medium-term debt
securities consist of (a) obligations of governments, agencies or
instrumentalities of any member state of the Organization for
Economic Cooperation and Development ("OECD"), (b) bank deposits
and bank obligations (including certificates of deposit, time
deposits and banker's acceptances) of banks organized under the
laws of any member state of the OECD, denominated in any currency:
(c) floating rate securities and other instruments denominated in
any currency issued by international development agencies: (d)
finance company and corporate commercial paper and other short-
term corporate debt obligations of corporations organized under
the laws of any member state of the OECD meeting the Fund's credit
quality standards: and (e) repurchase agreements with banks and
broker-dealers covering any of the foregoing securities.  The
short-term and medium-term debt securities in which the Fund may
invest for temporary defensive purposes will be those that SBFM
and Hansberger believe to be of high quality, i.e., subject to
relatively low risk of loss of interest or principal.  There is
currently no rating system for debt securities in most emerging
countries.  If rated, these securities will be rated in one of the
three highest rating categories by rating services such as Moody's
Investors Services, Inc. or Standard & Poor's Ratings Group (i.e.,
rated at least A).

Non-Publicly Traded Securities.  The Fund may invest in securities
that are neither listed on a stock exchange nor traded over the
counter, including privately placed securities.  These securities
may present a higher degree of business and financial risk, which
can result in substantial losses.  In the absence of a public
trading market for these securities, they may be less liquid than
publicly traded securities.  Although these securities may be
resold in privately negotiated transactions, the prices realized
from these sales could be less than those originally paid by the
Fund or less than what the Fund may consider the fair value of
such securities.  Further, companies whose securities are not
publicly traded may not be subject to disclosure and other
investor protection requirements that might apply if their
securities were publicly traded.  If such securities are required
to be registered under the securities laws of one or more
jurisdictions before being resold, the Fund may be required to
bear the costs of registration.  The Fund may not invest more than
15% of its net assets in illiquid securities, including securities
for which there is no readily available secondary market.  The
Fund may invest in securities that can be offered and sold to
qualified institutional buyers under Rule 144A under the
Securities Act of 1933 Act ("Rule 144A Securities").  The Board of
Directors has delegated to SBFM and Hansberger, subject to the
Board's supervision, the daily function of determining and
monitoring the liquidity of Rule 144A Securities.  Rule 144A
Securities held by the Fund which have been determined to be
liquid will not be subject to the 15% limitation described above.
However, Rule 144A Securities may become illiquid if qualified
institutional buyers are not interested in acquiring them.

Short Sales. The Fund may sell securities short "against the box",
that is, sell a security that the Fund owns or has the right to
acquire, for delivery at a specified date in the future.

Depositary Receipts (including ADRs, EDRs and GDRs). The Fund may
purchase ADRs, EDRs, GDRs and other depositary receipts or other
securities representing underlying shares of foreign companies.
Depositary Receipts are typically issued by a financial
institution ("depository") and evidence ownership interests in a
security or a pool of securities ("underlying securities") that
have been deposited with the depository. ADRs are publicly traded
on exchanges or over-the-counter in the United States and are
issued through "sponsored" or "unsponsored" arrangements.  In a
sponsored ADR arrangement, the foreign issuer assumes the
obligation to pay some or all of the depository's transaction fees,
whereas under an unsponsored arrangement, the foreign issuer
assumes no such obligation and the depository's transaction fees
are paid by the ADR holders.  In addition, less information is
available in the United States about an unsponsored ADR than about
a sponsored ADR, and the financial information about a company may
not be as reliable for an unsponsored ADR as it is for a sponsored
ADR.  The Fund may invest in ADRs through both sponsored and
unsponsored arrangements.

The depository for ADRs is typically a U.S. financial institution
and the underlying securities are issued by a foreign issuer.  For
other Depositary Receipts, the depository may be a foreign or a
U.S. entity, and the underlying securities may have a foreign or a
U.S. issuer.  For purposes of the Fund's investment policies,
investments in Depositary Receipts will be deemed to be
investments in the underlying securities.  Thus, a Depositary
Receipt representing ownership of common stock will be treated as
common stock.

Real Estate Investment Trusts ("REITs").  The Fund may invest up
to 10% of its assets in Real Estate Investment Trusts.  REITs are
pooled investment vehicles that invest primarily in either real
estate or real estate related loans.  The value of a REIT is
affected by changes in the value of the properties owned by the
REIT or securing mortgage loans held by the REIT.  A REIT is
dependent upon cash flow from its investments to repay financing
costs and the ability of the REIT's manager.  REITs are also
subject to risks generally associated with investments in real
estate.

Borrowing.  The Fund may borrow money from U.S.-regulated banks in
an amount not to exceed 33 1/3% of the value of the Fund's total
assets (including the amount borrowed) valued at market less
liabilities other than the borrowing.  If the Fund borrows and
uses the proceeds to make additional investments, income and
appreciation from such investments will improve its performance if
they exceed the associated borrowing costs but impair its
performance if they are less than such borrowing costs.  This
speculative factor is known as "leverage."

Leverage creates an opportunity for increased returns to
shareholders of the Fund but, at the same time, creates special
risk considerations.  For example, leverage may exaggerate changes
in the net asset value of the Fund's shares and in the 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 which 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
from the incremental securities is insufficient to cover the cost
of borrowing, securities might have to be liquidated to obtain
required funds.  Depending on market or other conditions, such
liquidations could be disadvantageous to the Fund.

Other Investment Companies.  Some emerging countries have laws and
regulations that preclude direct foreign investment in the
securities of companies located there.  However, indirect foreign
investment in the securities of companies listed and traded on the
stock exchanges in these countries is permitted by certain
emerging countries through specifically authorized investment
funds.  The Fund may invest in these investment funds, as well as
other closed-end investment companies up to 10% of its assets, as
permitted by the 1940 Act.

Forward Roll Transactions.  In order to enhance current income,
the Fund may enter into forward roll transactions.  In a forward
roll transaction, the Fund sells a security to a financial
institution, such as a bank or broker-dealer, and simultaneously
agrees to repurchase a similar security from the institution at a
later date at an agreed-upon price.  During the period between the
sale and repurchase, the Fund will not be entitled to receive
interest and principal payments on the securities sold.  Proceeds
of the sale will be invested in short-term instruments,
particularly repurchase agreements, and the income from these
investments, together with any additional fee income received on
the sale will generate income for the Fund exceeding the yield on
the securities sold.  Forward roll transactions involve the risk
that the market value of the securities sold by the Fund may
decline below the repurchase price of those securities.  At the
time the Fund enters into forward roll transactions, it will place
in a segregated account on the books of the Fund, or with the
Chase Manhattan Bank ("Chase"), cash or liquid assets having a
value equal to the repurchase price (including accrued interest)
and will subsequently monitor the account to insure that such
equivalent value is maintained.

Forward Foreign Currency Exchange Contracts and Options on Foreign
Currencies.  The Fund may enter into forward foreign currency
exchange contracts ("forward contracts"), providing for the
purchase of or sale of an amount of a specified currency at a
future date.  The Fund may use forward contracts to protect
against a foreign currency's decline against the U.S. dollar
between the trade date and settlement date for a securities
transaction, or to lock in the U.S. dollar value of dividends
declared on securities it holds, or generally to protect the U.S.
dollar value of the securities it holds against exchange rate
fluctuations.  The Fund may also use forward contracts to protect
against fluctuating exchange rates and exchange control
regulations.  Forward contracts may limit the Fund's losses due to
exchange rate fluctuation, but they will also limit any gains that
the Fund might otherwise have realized.  The Fund may also enter
into foreign currency futures contracts ("currency futures").

Except where segregated accounts are not required by the 1940 Act,
when the Fund enters into a forward contract or currency future,
it will place in a segregated account maintained on the books of
the Fund, or with Chase, cash or liquid securities in an amount
equal to the value of the Fund's total assets committed to
consummation of forward contracts and currency futures.  If the
value of these segregated securities declines, additional cash or
securities will be placed in the account on a daily basis so that
the account value is at least equal to the Fund's commitments to
such contracts.

The Fund may purchase put and call options and write covered put
and call options on foreign currencies for the purpose of
protecting against declines in the U.S. dollar value of foreign
currency denominated portfolio securities and against increases in
the U.S. dollar cost of such securities to be acquired.  As in the
case of other kinds of options, however, the writing of an option
on a foreign currency constitutes only a partial hedge, up to the
amount of the premium received, and the Fund could be required to
purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses.  The purchase of an option on a
foreign currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate
movements adverse to the Fund's position, it may lose the entire
amount of the premium plus related transaction costs.  Options on
foreign currencies to be written or purchased by the Fund are
traded on U.S. and foreign exchanges or over-the-counter.

Option Transactions.  In addition to options on currencies
described above, the Fund may seek to hedge all or a portion of
its investments through options on other securities in which it
may invest.  Options which the Fund may purchase or sell will be
traded on a recognized securities or futures exchange or over the
counter ("OTC").  Options markets in emerging countries are
currently limited and the nature of the strategies adopted by
Hansberger and the extent to which those strategies are used will
depend on the development of such markets.

The primary risks associated with the use of options on securities
are (i) imperfect correlation between the change in market value
of the securities the Fund holds and the prices of options
relating to the securities purchased or sold by the Fund; and (ii)
possible lack of a liquid secondary market for an option.  Options
not traded on an exchange (OTC options) are generally considered
illiquid and may be difficult to value.  Hansberger believes that
the Fund will minimize its risk of being unable to close out an
option contract by transacting in options only if there appears to
be a liquid secondary market for those options.

Writing Covered Call Options.  The Fund may write (sell) covered
call options for hedging purposes.  Covered call options will
generally be written on securities and currencies which, in the
opinion of the subadviser, are not expected to make any major price
moves in the near future but which, over the long term, are deemed
to be attractive investments for the Fund.

A call option gives the holder (buyer) the right to purchase a
security or currency at a specified price (the exercise price) at
any time until a certain date (the expiration date).  So long as
the obligation of the writer of a call option continues, he may be
assigned an exercise notice by the broker-dealer through whom such
option was sold, requiring him to deliver the underlying security
or currency against payment of the exercise price.  This obligation
terminates upon the expiration of the call option, or such earlier
time at which the writer effects a closing purchase transaction by
purchasing an option identical to that previously sold. A call is
"covered" if the Fund (i) owns the securities underlying the
option or securities convertible or exchangeable (without the
payment of any consideration) into the securities underlying the
option, (ii) maintains in a segregated account on the Fund's
books, or with Chase, the Fund's custodian, cash, or liquid
securities provided such securities have been determined by SBFM
and Hansberger to be unencumbered pursuant to guidelines
established by the Board of Directors ("eligible segregated
assets") with a value sufficient to meet the Fund's obligations
under the call, or (iii) owns an offsetting call option.

Fund securities or currencies on which call options may be written
will be purchased solely on the basis of investment considerations
consistent with the Fund's investment objective.  When writing a
covered call option, the Fund, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying
security or currency above the exercise price and retains the risk
of loss should the price of the security or currency decline.
Unlike one who owns securities or currencies not subject to an
option, the Fund has no control over when it may be required to
sell the underlying securities or currencies, since the option may
be exercised at any time prior to the option's expiration.  If a
call option which the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may
be offset by a decline in the market value of the underlying
security or currency during the option period.  If the call option
is exercised, the Fund will realize a gain or loss from the sale of
the underlying security or currency.  The security or currency
covering the call option will be maintained in a segregated account
of the Fund's custodian.  The Fund does not consider a security or
currency covered by a call option to be "pledged" as that term is
used in the Fund's policy which limits the pledging or mortgaging
of its assets.

The premium the Fund receives for writing a call option is deemed
to constitute the market value of an option.  The premium the Fund
will receive from writing a call option will reflect, among other
things, the current market price of the underlying security or
currency, the relationship of the exercise price to such market
price, the implied price volatility of the underlying security or
currency, and the length of the option period.  In determining
whether a particular call option should be written on a particular
security or currency, Hansberger will consider the reasonableness
of the anticipated premium and the likelihood that a liquid
secondary market will exist for those options.  The premium
received by the Fund for writing covered call options will be
recorded as a liability in the Fund's statement of assets and
liabilities.  This liability will be adjusted daily to the option's
current market value, which will be calculated as described in
"Determination of Net Asset Value" in the Prospectus.  The
liability will be extinguished upon expiration of the option or
delivery of the underlying security or currency upon the exercise
of the option.  The liability with respect to a listed option will
also be extinguished upon the purchase of an identical option in a
closing transaction.

Closing transactions will be effected in order to realize a profit
or to limit losses on an outstanding call option, to prevent an
underlying security or currency from being called, or to permit the
sale of the underlying security or currency.  Furthermore,
effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with
either a different exercise price, expiration date or both.  If the
Fund desires to sell a particular security or currency from its
Fund on which it has written a call option or purchases a put
option, it will seek to effect a closing transaction prior to, or
concurrently with, the sale of the security or currency.  There is
no assurance that the Fund will be able to effect such closing
transactions at a favorable price.  If the Fund cannot enter into
such a transaction, it may be required to hold a security or
currency that it might otherwise have sold, in which case it would
continue to be at market risk with respect to the security or
currency.

The Fund will pay transaction costs in connection with the writing
of options and in entering into closing purchase contracts.
Transaction costs relating to options activity are normally higher
than those applicable to purchases and sales of Fund securities.

Call options written by the Fund will normally have expiration
dates of less than nine months from the date written.  The exercise
price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the
time the options are written.  From time to time, the Fund may
purchase an underlying security or currency for delivery in
accordance with the exercise of an option, rather than delivering
such security or currency from its portfolio.  In such cases,
additional costs will be incurred.

The Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more,
respectively, than the premium received from the writing of the
option.  Because increases in the market price of a call option
will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in
part by appreciation of the underlying security or currency owned
by the Fund.

Writing Put Options.  The Fund may also write (i.e., sell) covered
put options.  The writer of a put incurs an obligation to buy the
security underlying the option from the put's purchaser at the
exercise price at any time on or before the termination date, at
the purchaser's election (certain options the Fund writes will be
exercisable by the purchaser only on a specific date).  Generally,
a put is "covered" if the Fund maintains eligible segregated
assets equal to the exercise price of the option or if the Fund
holds a put on the same underlying security with a similar or
higher exercise price.

Purchasing Put Options.  The Fund may purchase put options.  As the
holder of a put option, the Fund has the right to sell the
underlying security or currency at the exercise price at any time
during the option period.  The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit
them to expire.

The Fund may purchase a put option on an underlying security or
currency (a "protective put") owned by the Fund as a hedging
technique in order to protect against an anticipated decline in the
value of the security or currency.  Such hedge protection is
provided only during the life of the put option when the Fund, as
the holder of the put option, is able to sell the underlying
security or currency at the put exercise price regardless of any
decline in the underlying security's market price or currency's
exchange value.  The premium paid for the put option and any
transaction costs would reduce any capital gain otherwise available
for distribution when the security or currency is eventually sold.

The Fund may also purchase put options at a time when the Fund does
not own the underlying security or currency.  By purchasing put
options on a security or currency it does not own, the Fund seeks
to benefit from a decline in the market price of the underlying
security or currency.  If the put option is not sold when it has
remaining value, and if the market price of the underlying security
or currency remains equal to or greater than the exercise price
during the life of the put option, the Fund will lose its entire
investment in the put option.  In order for the purchase of a put
option to be profitable, the market price of the underlying
security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put
option is sold in a closing sale transaction.

The premium paid by the Fund when purchasing a put option will be
recorded as an asset in the Fund's statement of assets and
liabilities.  This asset will be adjusted daily to the option's
current market value, which will be calculated as described in
"Determination of Net Asset Value" in the Prospectus.  The asset
will be extinguished upon expiration of the option or the delivery
of the underlying security or currency upon the exercise of the
option.  The asset with respect to a listed option will also be
extinguished upon the writing of an identical option in a closing
transaction.

Purchasing Call Options.  The Fund may purchase call options.  As
the holder of a call option, the Fund has the right to purchase the
underlying security or currency at the exercise price at any time
during the option period.  The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit
them to expire.  Call options may be purchased by the Fund for the
purpose of acquiring the underlying security or currency for the
Fund.  Utilized in this fashion, the purchase of call options
enables the Fund to acquire the security or currency at the
exercise price of the call option plus the premium paid.  At times
the net cost of acquiring the security or currency in this manner
may be less than the cost of acquiring the security or currency
directly.  This technique may also be useful to the Fund in
purchasing a large block of securities that would be more difficult
to acquire by direct market purchases.  So long as it holds such a
call option rather than the underlying security or currency itself,
the Fund is partially protected from any unexpected decline in the
market price of the underlying security or currency and in such
event could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.

The Fund may also purchase call options on underlying securities or
currencies it owns in order to protect unrealized gains on call
options previously written by it.  A call option would be purchased
for this purpose where tax considerations make it inadvisable to
realize such gains through a closing purchase transaction.  Call
options may also be purchased at times to avoid realizing losses
that would result in a reduction of the Fund's current return.

Futures Contracts and Related Options. The Fund may buy and sell
financial futures contracts, stock and bond index futures
contracts, interest rate futures contracts, foreign currency
futures contracts (collectively, "Futures Contracts") and options
on Futures Contracts for hedging purposes only.  A Futures
Contract is an agreement between two parties to buy or sell a
specified debt security at a set price on a future date.  An index
futures contract is an agreement to take or make delivery of an
amount of cash based on the difference between the value of the
index at the beginning and at the end of the contract period.  A
futures contract on a foreign currency is an agreement to buy or
sell a specified amount of a currency for a set price on a future
date.  The Fund may enter into Futures Contracts as a hedge against
changes in prevailing levels of interest rates, currency exchange
rates, securities indices or individual securities, in order to
establish more definitely the effective return on securities or
currencies held or committed to be acquired by the Fund.  The Fund
may enter into Futures Contracts based on financial indices
including any index of U.S. Government securities, foreign
government securities or corporate debt securities.

A Futures Contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific
financial instrument or currency for a specified price at a
designated date, time and place.  The purchaser of a Futures
Contract on an index agrees to take or make delivery of an amount
of cash equal to the difference between a specified dollar multiple
of the value of the index on the expiration date of the contract
("current contract value") and the price at which the contract was
originally struck.  No physical delivery of the debt securities
underlying the index is made.  Brokerage fees are incurred when a
Futures Contract is bought or sold, and margin deposits must be
maintained at all times that the Futures Contract is outstanding.

Although techniques other than sales and purchases of Futures
Contracts could be used to reduce the Fund's exposure to interest
rate and currency exchange rate fluctuations, the Fund may be able
to hedge its exposure more effectively and at a lower cost through
using Futures Contracts.

Although Futures Contracts typically require future delivery of and
payment for financial instruments or currencies, Futures Contracts
are usually closed out before the delivery date.  Closing out an
open Futures Contract sale or purchase is effected by entering into
an offsetting Futures Contract purchase or sale, respectively, for
the same aggregate amount of the identical financial instrument or
currency and the same delivery date.  If the offsetting purchase
price is less than the original sale price, the Fund realizes a
gain; if it is more, the Fund realizes a loss.  Conversely, if the
offsetting sale price is more than the original purchase price, the
Fund realizes a gain; if it is less, the Fund realizes a loss.  The
transaction costs must also be included in these calculations.
There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular
Futures Contract at a particular time.  If the Fund is not able to
enter into an offsetting transaction, the Fund will continue to be
required to maintain the margin deposits of the underlying
financial instrument or currency on the relevant delivery date.
The Fund intends to enter into Futures transactions only on
exchanges or boards of trade where there appears to be a liquid
secondary market.  However, there can be no assurance that such a
market will exist for a particular contract at a particular time.

As an example of an offsetting transaction, the contractual
obligations arising from the sale of one Futures Contract of
September Treasury Bills on an exchange may be fulfilled at any
time before delivery under the Futures Contract is required (i.e.,
on a specific date in September, the "delivery month") by the
purchase of another Futures Contract of September Treasury Bills on
the same exchange.  In such instance the difference between the
price at which the Futures Contract was sold and the price paid for
the offsetting purchase, after allowance for transaction costs,
represents the profit or loss to the Fund.

Persons who trade in Futures Contracts may be broadly classified as
"hedgers" and "speculators."  Hedgers, whose business activity
involves investment or other commitment in securities or other
obligations, use the Futures markets to offset unfavorable changes
in value that may occur because of fluctuations in the value of the
securities and obligations held or committed to be acquired by them
or fluctuations in the value of the currency in which the
securities or obligations are denominated.  Debtors and other
obligors may also hedge the interest cost of their obligations.
The speculator, like the hedger, generally expects neither to
deliver nor to receive the financial instrument underlying the
Futures Contract, but, unlike the hedger, hopes to profit from
fluctuations in prevailing interest rates or currency exchange
rates.

The Fund 's Futures transactions will be entered into for
traditional hedging purposes; that is, Futures Contracts will be
sold to protect against a decline in the price of securities or
currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of
securities or currencies it has committed to purchase or expects to
purchase.

"Margin" with respect to Futures Contracts is the amount of money
that must be deposited by the Fund with a broker in order to
initiate Futures trading and to maintain the Fund's open positions
in Futures Contracts.  A margin deposit made when the Futures
Contract is entered into ("initial margin") is intended to assure
the Fund's performance of the Futures Contract.  The margin
required for a particular Futures Contract is set by the exchange
on which the Futures Contract is traded, and may be significantly
modified from time to time by the exchange during the term of the
Futures Contract.    As the value of the security, index or
currency fluctuates, either party to the contract is required to
make additional margin payments, known as "variation margin," to
cover any additional obligation it may have under the contract.
In addition, when the Fund enters into a Futures Contract, it will
segregate assets or "cover" its position in accordance with the
1940 Act.  With respect to positions in futures and related
options that do not constitute "bona fide hedging" positions as
defined in regulations of the Commodity Futures Trading
Commission, the Fund will not enter into a futures contract or
related option contract if, immediately thereafter, the aggregate
initial margin deposits relating to such positions plus premiums
paid by it for open futures option positions, less the amount by
which any such options are "in-the-money," would exceed 5% of the
Fund's total assets.  The value of the underlying securities on
which Futures Contracts will be written at any one time will not
exceed 25% of the total assets of the Fund.

If the price of an open Futures Contract changes (by increase in
the case of a sale or by decrease in the case of a purchase) so
that the loss on the Futures Contract reaches a point at which the
margin on deposit does not satisfy margin requirements, the broker
will require an increase in the margin deposit ("variation
margin").  If, however, the value of a position increases because
of favorable price changes in the Futures Contract so that the
margin deposit exceeds the required margin, it is anticipated that
the broker will pay the excess to the Fund.  In computing daily net
asset values, the Fund will mark to market the current value of its
open Futures Contracts. The Fund expects to earn interest income on
its margin deposits.

See "Additional Risk Factors" below for more information on the
special risks associated with Futures Contracts.

Options on Futures Contracts.  Options on Futures Contracts are
similar to options on securities or currencies except that options
on Futures Contracts give the purchaser the right, in return for
the premium paid, to assume a position in a Futures Contract (a
long position if the option is a call and a short position if the
option is a put), rather than to purchase or sell the Futures
Contract, at a specified exercise price at any time during the
period of the option.  Upon exercise of the 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, at
exercise, 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.  If an option is exercised on the last trading day prior
to the expiration date of the option, the settlement will be made
entirely in cash equal to the difference between the exercise price
of the option and the closing level of the securities or currencies
upon which the Futures Contracts are based on the expiration date.
Purchasers of options who fail to exercise their options prior to
the exercise date suffer a loss of the premium paid.

As an alternative to purchasing call and put options on Futures,
the Fund may purchase call and put options on the underlying
securities or currencies themselves (see "Purchasing Put Options"
and "Purchasing Call Options" above).  Such options would be used
in a manner identical to the use of options on Futures Contracts.

To reduce or eliminate the leverage then employed by the Fund or to
reduce or eliminate the hedge position then currently held by the
Fund, the Fund may seek to close out an option position by selling
an option covering the same securities or currency and having the
same exercise price and expiration date.  The ability to establish
and close out positions on options on Futures Contracts is subject
to the existence of a liquid market.  It is not certain that this
market will exist at any specific time.

In order to assure that the Fund will not be deemed to be a
"commodity pool" for purposes of the Commodity Exchange Act,
regulations of the Commodity Futures Trading Commission ("CFTC")
require that the Fund enter into transactions in Futures Contracts
and options on Futures Contracts only (i) for bona fide hedging
purposes (as defined in CFTC regulations), or (ii) for non-hedging
purposes, provided that the aggregate initial margin and premiums
on such non-hedging positions does not exceed 5% of the liquidation
value of the Fund's assets.  The Fund will enter into transactions
in Futures Contracts and options on Futures Contracts only for
hedging purposes.

Supplementary Description of Interest Rate Futures Contracts and
Related Options.  Currently, Futures Contracts can be purchased
and sold on such securities as U.S. Treasury bonds, U.S. Treasury
notes, GNMAs and U.S. Treasury bills.  Unlike when the Fund
purchases or sells a security, no price is paid or received by the
Fund upon the purchase or sales of a Futures Contract.  The Fund
will initially be required to deposit with the custodian or the
broker an amount of "initial margin" of cash or U.S. Treasury
bills.  The nature of initial margin in futures transactions is
different from that of margin in security transactions in that
futures contract initial margin does not involve the borrowing of
funds by the customer to finance the transaction.  Rather, the
initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied.  Subsequent payments, called
maintenance margin, to and from the broker, will be made on a daily
basis as the price of the underlying debt security fluctuates,
making the long and short positions in the futures contract more or
less valuable, a process known as "marking-to-market."  For
example, when the Fund has purchased a futures contract and the
price of the underlying debt security has risen, that position will
have increased in value and the Fund will receive from the broker a
maintenance margin payment equal to that increase in value.
Conversely, when the Fund has purchased a futures contract and the
price of the underlying debt security has declined, the position
would be less valuable and the Fund would be required to make a
maintenance margin payment to the broker.  At any time prior to
expiration of the futures contract, the Fund may elect to close the
position by taking an opposite position which will operate to
terminate the Fund's position in the futures contract.  A final
determination of maintenance margin is then made, additional cash
is required to be paid by or released to the Fund, and the Fund
realizes a loss or a gain.

While futures contracts based on debt securities do provide for
the delivery and acceptance of securities, such deliveries and
acceptances are very seldom made.  Generally, the futures contract
is terminated by entering into an offsetting transaction.  An
offsetting transaction for a futures contract sale is effected by
the Fund entering into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument and
same delivery date.  If the price in the sale exceeds the price in
the offsetting purchase, the Fund pays the difference and realizes
the loss.  Similarly, the closing out of a futures contract
purchase is effected by the Fund entering into a futures contract
sale.  If the offsetting sale price exceeds the purchase price,
the Fund realizes a gain, and if the purchase price exceeds the
offsetting price, the Fund realizes a loss.

Forward Currency Contracts and Options on Currency.  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. The Fund 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.  The Fund may engage in forward
currency transactions in anticipation of, or to protect itself
against, fluctuations in exchange rates. The 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, the Fund might 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, the Fund might purchase a currency
forward to "lock in" the price of securities denominated in that
currency which it anticipates purchasing.

The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency
denominated asset that is the subject of the hedge generally will
not be precise.  In addition, the Fund may not always be able to
enter into foreign currency forward contracts at attractive prices
and this will limit the Fund's ability to use such contracts to
hedge or cross-hedge its assets.  Also, with regard to the Fund's
use of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies
relative to the U.S. dollar will continue.  Thus, at any time poor
correlation may exist between movements in the exchange rates of
the foreign currencies underlying the Fund's cross-hedges and the
movements in the exchange rates of the foreign currencies in which
the Fund's assets that are the subject of such cross-hedges are
denominated.

Forward contracts are traded in an interbank market conducted
directly between currency traders (usually large commercial banks)
and their customers.  A forward contract generally has no deposit
requirement and is consummated without payment of any commission.
The Fund, however, may enter into forward contracts with deposit
requirements or commissions.

A put option gives the Fund, as purchaser, the right (but not the
obligation) to sell a specified amount of currency at the exercise
price until the expiration of the option.  A call option gives the
Fund, as purchaser, the right (but not the obligation) to purchase
a specified amount of currency at the exercise price until its
expiration.  The Fund might purchase a currency put option, for
example, to protect itself during the contract period against a
decline in the value of a currency in which it holds or anticipates
holding securities.  If the currency's value should decline, the
loss in currency value should be offset, in whole or in part, by an
increase in the value of the put.  If the value of the currency
instead should rise, any gain to the Fund would be reduced by the
premium it had paid for the put option.  A currency call option
might be purchased, for example, in anticipation of, or to protect
against, a rise in the value of a currency in which the Fund
anticipates purchasing securities.

The Fund 's ability to establish and close out positions in foreign
currency options is subject to the existence of a liquid market.
There can be no assurance that a liquid market will exist for a
particular option at any specific time.  In addition, options on
foreign currencies are affected by all of those factors that
influence foreign exchange rates and investments generally.

A position in an exchange-listed option may be closed out only on
an exchange that provides a secondary market for identical options.
Exchange markets for options on foreign currencies exist but are
relatively new, and the ability to establish and close out
positions on the exchanges is subject to maintenance of a liquid
secondary market.  Closing transactions may be effected with
respect to options traded in the OTC markets (currently the primary
markets for options on foreign currencies) only by negotiating
directly with the other party to the option contract or in a
secondary market for the option if such market exists.  Although
the Fund intends to purchase only those options for which there
appears to be an active secondary market, there is no assurance
that a liquid secondary market will exist for any particular option
at any specific time.  In such event, it may not be possible to
effect closing transactions with respect to certain options, with
the result that the Fund would have to exercise those options which
it has purchased in order to realize any profit.  The staff of the
SEC has taken the position that, in general, purchased OTC options
and the underlying securities used to cover written OTC options are
illiquid securities.  However, the Fund may treat as liquid the
underlying securities used to cover written OTC options, provided
it has arrangements with qualified dealers who agree that the Fund
may repurchase any option it writes for a maximum price to be
calculated by a predetermined formula.  In these cases, the OTC
option itself would only be considered illiquid to the extent that
the maximum repurchase price under the formula exceeds the
intrinsic value of the option.

Interest Rate Swaps, Caps and Floors.  Among the hedging
transactions into which the Fund may enter are interest rate swaps
and the purchase or sale of interest rate caps and floors.  The
Fund expects to enter into these transactions primarily to preserve
a return or spread on a particular investment or portion of its
investment or to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date.  The
Fund intends to use these transactions as a hedge and not as a
speculative investment.  The Fund will not sell interest rate caps
or floors that it does not own.  Interest rate swaps involve the
exchange by the 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 payments of
interest on a notional principal amount from the party selling such
interest rate floor.

The Fund may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending on
whether it is hedging its assets or its liabilities, and will
usually enter into interest rate swaps on a net basis, i.e., the
two payment streams are netted, with the Fund receiving or paying,
as the case may be, only the net amount of the two payments.
Inasmuch as these hedging transactions are entered into for good
faith hedging purposes, the investment adviser and the Fund
believes 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 the Fund's
obligations over its entitlement with respect to each interest rate
swap will be accrued on a daily basis and an amount of cash or
liquid securities having an aggregate net asset value at least
equal to the accrued excess will be maintained in a segregated
account by a custodian that satisfies the requirements of the 1940
Act.  The Fund will not enter into any interest rate swap, cap or
floor transaction unless the unsecured senior debt or the claims-
paying ability of the other party thereto is rated in the highest
rating category of at least one U.S. nationally recognized
statistical rating organization at the time of entering into such
transaction.  If there is a default by the other party to such a
transaction, the Fund will have contractual remedies pursuant to
the agreements related to the transaction.  The swap market has
grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as
agents utilizing swap documentation.  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.

New options and Futures Contracts and various combinations thereof
continue to be developed and the Fund may invest in any such
options and contracts as may be developed to the extent consistent
with its investment objective and regulatory requirements
applicable to investment companies.

Equity Swaps.  The Fund may enter into swaps based upon the value
of various single equity securities, baskets or indices.  A swap
is a separate contract that does not require ownership of the
underlying stock.  In a swap, the Fund will agree with a swap
dealer to make payments based upon changes in the value of a
security.  The Fund can take either position in the swap; that is,
the Fund may be the party that receives a payment following an
increase in value and pays following a decrease or vice versa.  In
some cases, the Fund also may be required to make (or receive)
dividend payments consistent with the underlying security or make
(or receive) additional payments on the effective date and/or
termination date of the swap.  One example of a situation in which
the Fund may use an equity swap is to mimic some of the benefits
of ownership of "local shares" in a country in which the Fund, as
a foreigner, is prohibited from owning local shares.  The terms of
the swaps actually entered by the Fund are negotiated between the
parties and may vary significantly.

Sovereign Debt.  The Fund may invest in sovereign debt, which may
trade at a substantial discount from face value. The Fund may hold
and trade sovereign debt of emerging market countries in
appropriate circumstances and to participate in debt conversion
programs.  Emerging country Sovereign Debt involves a high degree
of risk, is generally lower-quality debt, and is considered
speculative in nature.  The issuer or governmental authorities that
control sovereign debt repayment ("sovereign debtors") may be
unable or unwilling to repay principal or interest when due in
accordance with the terms of the debt.  A sovereign debtor's
willingness or ability to repay principal and interest due in a
timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date a payment
is due, the relative size of the debt service burden to the economy
as a whole, the sovereign debtor's policy towards the International
Monetary Fund (the "IMF") and the political constraints to which
the sovereign debtor may be subject.  Sovereign debtors may also be
dependent on expected disbursements from foreign governments,
multilateral agencies and others abroad to reduce principal and
interest arrearage on their debt.  The commitment of these third
parties to make such disbursements may be conditioned on the
sovereign debtor's implementation of economic reforms or economic
performance and the timely service of the debtor's obligations.
The sovereign debtor's failure to meet these conditions may cause
these third parties to cancel their commitments to provide funds to
the sovereign debtor, which may further impair the debtor's ability
or willingness to timely service its debts.

Brady Bonds.  The Fund may invest in Brady Bonds as part of its
investment in Sovereign Debt of countries that have restructured or
are in the process of restructuring their Sovereign Debt pursuant
to the Brady Plan (discussed below).

Brady Bonds are issued under the framework of the Brady Plan, an
initiative announced by former U.S. Treasury Secretary Nicholas F.
Brady in 1989 as a mechanism for debtor nations to restructure
their outstanding external indebtedness.  The Brady Plan
contemplates, among other things, the debtor nation's adoption of
certain economic reforms and the exchange of commercial bank debt
for newly issued bonds.  In restructuring its external debt under
the Brady Plan framework, a debtor nation negotiates with its
existing bank lenders as well as the World Bank or IMF.  The World
Bank or IMF supports the restructuring by providing funds pursuant
to loan agreements or other arrangements that enable the debtor
nation to collateralize the new Brady Bonds or to replenish
reserves used to reduce outstanding bank debt.  Under these loan
agreements or other arrangements with the World Bank or IMF,
debtor nations have been required to agree to implement certain
domestic monetary and fiscal reforms.  The Brady Plan sets forth
only general guiding principles for economic reform and debt
reduction, emphasizing that solutions must be negotiated on a
case-by-case basis between debtor nations and their creditors.

Agreements implemented under the Brady Plan are designed to
achieve debt and debt-service reduction through specific options
negotiated by a debtor nation with its creditors.  As a result,
each country offers different financial packages.  Options have
included the exchange of outstanding commercial bank debt for
bonds issued at 100% of face value of such debt, bonds issued at a
discount of face value of such debt, and bonds bearing an interest
rate that increases over time and the advancement of the new money
for bonds.  The principal of certain Brady Bonds has been
collateralized by U.S. Treasury zero coupon bonds with a maturity
equal to the final maturity of the Brady Bonds.  Collateral
purchases are financed by the IMF, World Bank and the debtor
nation's reserves.  Interest payments may also be collateralized
in part in various ways.

Brady Bonds are often viewed as having three or four valuation
components: (i) the collateralized repayment of principal at final
maturity; (ii) the collateralized interest payments; (iii) the
uncollateralized interest payment; and (iv) any uncollateralized
interest and principal at maturity (these uncollateralized amounts
constitute the " residual risk").  In light of the residual risk
of Brady Bonds and, among other factors, the history of defaults
with respect to commercial bank loans by public and private
entities of countries issuing Brady Bonds, investments in Brady
Bonds can viewed as speculative.

ADDITIONAL RISK FACTORS

Risks associated with the Fund and its investment strategies are
described in the prospectus and in the above discussion of the
Fund's investment objectives and management policies.  The
following additional risk factors are intended to supplement the
risks described in the prospectus and other parts of this SAI.

General.  Investors should realize that risk of loss is inherent
in the ownership of any securities and that the Fund's net asset
value will fluctuate, reflecting fluctuations in the market value
of its portfolio positions.

Below Investment Grade Fixed Income Securities.  Securities which
are rated BBB by Standard & Poor's Ratings Group ("S&P') or Baa by
Moody's Investor Services, Inc. ("Moody's") are generally regarded
as having adequate capacity to pay interest and repay principal,
but may have some speculative characteristics.  Securities rated
below Baa by Moody's or BBB by S&P may have speculative
characteristics, including the increased possibility of default or
bankruptcy of the issuers of such securities, market price
volatility based upon interest rate sensitivity, questionable
creditworthiness and relative liquidity of the secondary trading
market.  Because high yield bonds have been found to be more
sensitive to adverse economic changes or individual corporate
developments and less sensitive to interest rate changes than
higher-rated investments, an economic downturn could disrupt the
market for high yield bonds and adversely affect the value of
outstanding bonds and the ability of issuers to repay principal
and interest.  In addition, in a declining interest rate market,
issuers of high yield bonds may exercise redemption or call
provisions, which may force the Fund, to the extent it owns such
securities, to replace those securities with lower yielding
securities.  This could result in a decreased return.

Foreign Securities.   Investments in securities of foreign issuers
involve certain risks not ordinarily associated with investments
in securities of domestic issuers.  Such risks include
fluctuations in foreign exchange rates, future political and
economic developments, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions.
Since the Fund will invest heavily in securities denominated or
quoted in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the value of
securities in its portfolio and the unrealized appreciation or
depreciation of investments so far as U.S. investors are
concerned.  In addition, with respect to certain countries, there
is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic
developments which could adversely affect investments in those
countries.

There may be less publicly available information about a foreign
company than about a U.S. company, and foreign companies may not
be subject to accounting, auditing, and financial reporting
standards and requirements comparable to or as uniform as those of
U.S. companies.  Foreign securities markets, while growing in
volume, have, for the most part, substantially less volume than
U.S. markets, and securities of many foreign companies are less
liquid and their price more volatile than securities of comparable
U.S. companies.  Transaction costs on foreign securities markets
are generally higher than in the U.S.  There is generally less
government supervision and regulation of exchanges, brokers and
issuers than there is in the U.S.  The Fund might have greater
difficulty taking appropriate legal action in foreign courts.
Dividend and interest income from foreign securities will
generally be subject to withholding taxes by the country in which
the issuer is located and may not be recoverable by the Fund or
the investors.  Capital gains are also subject to taxation in some
foreign countries.

Currency Risks.  The U.S. dollar value of securities denominated
in a foreign currency will vary with changes in currency exchange
rates, which can be volatile.  Accordingly, changes in the value
of the currency in which the Fund's investments are denominated
relative to the U.S. dollar will affect the Fund's net asset
value.  Exchange rates are generally affected by the forces of
supply and demand in the international currency markets, the
relative merits of investing in different countries and the
intervention or failure to intervene of U.S. or foreign
governments and central banks.  However, currency exchange rates
may fluctuate based on factors intrinsic to a country's economy.
Some emerging market countries also may have managed currencies,
which are not free floating against the U.S. dollar.  In addition,
emerging markets are subject to the risk of restrictions upon the
free conversion of their currencies into other currencies.  Any
devaluations relative to the U.S. dollar in the currencies in
which the Fund's securities are quoted would reduce the Fund's net
asset value per share.

Special Risks of Countries in the Asia Pacific Region.   Certain
of the risks associated with international investments are
heightened for investments in these countries. For example, some
of the currencies of these countries have experienced devaluations
relative to the U.S. dollar, and adjustments have been made
periodically in certain of such currencies.  Certain countries,
such as Indonesia, face serious exchange constraints.
Jurisdictional disputes also exist, for example, between South
Korea and North Korea.  In addition, Hong Kong reverted to Chinese
administration on July 1, 1997.  The long-term effects of this
reversion are not known at this time.

Securities of Developing/Emerging Markets Countries.   A
developing or emerging markets country generally is considered to
be a country that is in the initial stages of its
industrialization cycle. Investing in the equity markets of
developing countries involves exposure to economic structures that
are generally less diverse and mature, and to political systems
that can be expected to have less stability, than those of
developed countries. Historical experience indicates that the
markets of developing countries have been more volatile than the
markets of the more mature economies of developed countries;
however, such markets often have provided higher rates of return
to investors. The emerging market countries in which the Fund
invests have markets that are less liquid than markets in the U.S.
In changing markets the Fund may not be able to sell desired
amounts of securities at reasonable prices.  Less information is
available about these issuers and markets because of less rigorous
accounting and regulatory standards than in the U.S.

One or more of the risks discussed above could affect adversely
the economy of a developing market or the Fund's investments in
such a market.  In Eastern Europe, for example, upon the accession
to power of Communist regimes in the past, the governments of a
number of Eastern European countries expropriated a large amount
of property.  The claims of many property owners against those of
governments may remain unsettled.  There can be no assurance that
any investments that the Fund might make in such emerging markets
would not be expropriated, nationalized or otherwise confiscated
at some time in the future.  In such an event, the Fund could lose
its entire investment in the market involved.  Moreover, changes
in the leadership or policies of such markets could halt the
expansion or reverse the liberalization of foreign investment
policies now occurring in certain of these markets and adversely
affect existing investment opportunities.

Many of the Fund's investments in the securities of emerging
markets may be unrated or rated below investment grade. 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.


Securities of Small Capitalization Companies.  Investing in
smaller capitalization stocks can involve greater risk than is
customarily associated with investing in stocks of larger, more
established companies.  For example, smaller capitalization
companies often have limited product lines, markets, or financial
resources, may be dependent for management on one or a few key
persons, and can be more susceptible to losses.  Also, their
securities may be thinly traded (and therefore have to be sold at
a discount from current prices or sold in small lots over an
extended period of time), may be followed by fewer investment
research analysts and may be subject to wider price swings and
thus may create a greater chance of loss than securities of larger
capitalization companies.  Transaction costs in stocks of smaller
capitalization companies may be higher than those of larger
capitalization companies.

Derivative Instruments.  In accordance with its investment
policies, the Fund may invest in certain derivative instruments
which are securities or contracts that provide for payments based
on or "derived" from the performance of an underlying asset, index
or other economic benchmark.  Essentially, a derivative instrument
is a financial arrangement or a contract between two parties (and
not a true security like a stock or a bond).  Transactions in
derivative instruments can be, but are not necessarily, riskier
than investments in conventional stocks, bonds and money market
instruments.  A derivative instrument is more accurately viewed as
a way of reallocating risk among different parties or substituting
one type of risk for another.  Every investment by the Fund,
including an investment in conventional securities, reflects an
implicit prediction about future changes in the value of that
investment.  Every Fund investment also involves a risk that the
portfolio manager's expectations will be wrong.  Transactions in
derivative instruments often enable the Fund to take investment
positions that more precisely reflect the portfolio manager's
expectations concerning the future performance of the various
investments available to the Fund.  Derivative instruments can be
a legitimate and often cost-effective method of accomplishing the
same investment goals as could be achieved through other
investment in conventional securities.

Derivative contracts include options, futures contracts, forward
contracts, forward commitment and when-issued securities
transactions, forward foreign currency exchange contracts and
interest rate, mortgage and currency swaps.  The following are the
principal risks associated with derivative instruments:

Market risk:  The instrument will decline in value or that an
alternative investment would have appreciated more, but this is no
different from the risk of investing in conventional securities.

Leverage and associated price volatility:  Leverage causes
increased volatility in the price and magnifies the impact of
adverse market changes, but this risk may be consistent with the
investment objective of even a conservative fund in order to
achieve an average portfolio volatility that is within the
expected range for that type of fund.

Credit risk:  The issuer of the instrument may default on its
obligation to pay interest and principal.

Liquidity and valuation risk:  Many derivative instruments are
traded in institutional markets rather than on an exchange.
Nevertheless, many derivative instruments are actively traded and
can be priced with as much accuracy as conventional securities.
Derivative instruments that are custom designed to meet the
specialized investment needs of a relatively narrow group of
institutional investors such as the Fund are not readily
marketable and are subject to the Fund's restrictions on illiquid
investments.

Correlation risk:  There may be imperfect correlation between the
price of the derivative and the underlying asset.  For example,
there may be price disparities between the trading markets for the
derivative contract and the underlying asset.

Each derivative instrument purchased for the Fund's portfolio is
reviewed and analyzed by the Fund's portfolio manager to assess
the risk and reward of each such instrument in relation the Fund's
portfolio investment strategy.  The decision to invest in
derivative instruments or conventional securities is made by
measuring the respective instrument's ability to provide value to
the Fund and its shareholders.

Special Risks of Using Futures Contracts.  The prices of futures
contracts are volatile and are influenced by, among other things,
actual and anticipated changes in interest rates, which in turn
are affected by fiscal and monetary policies and national and
international political and economic events.

At best, the correlation between changes in prices of futures
contracts and of the securities or currencies being hedged can be
only approximate.  The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative
market demand for futures and for debt securities or currencies,
including technical influences in futures trading; and differences
between the financial instruments being hedged and the instruments
underlying the standard futures contracts available for trading,
with respect to interest rate levels, maturities, and
creditworthiness of issuers.  A decision of whether, when, and how
to hedge involves skill and judgment, and even a well-conceived
hedge may be unsuccessful to some degree because of unexpected
market behavior or interest rate trends.

To compensate for the imperfect correlation of movements in the
price of debt securities being hedged and movements in the prices
of the futures contracts, the Fund may buy or sell futures
contracts in a greater dollar amount of the securities being
hedged if the historical volatility of the prices of such
securities has been greater than the historical volatility of the
futures contracts.  Conversely, the Fund may buy or sell fewer
futures contracts if the historical volatility of the price of the
securities being hedged is less than the historical volatility of
the futures contracts.  It is also possible that, where the Fund
has sold futures to hedge its portfolio against a decline in the
market, the market may advance and the value of securities held in
that Fund's portfolio may decline.  If this occurred, the Fund
would lose money on the futures contracts and also experience a
decline in value in its portfolio securities.  However, while this
could occur for a very brief period or to a very small degree,
over time the value of a diversified portfolio will tend to move
in the same direction as the futures contracts.  Where futures are
purchased to hedge against a possible increase in prices of
securities before the Fund is able to invest its cash (or cash
equivalents) in U.S. government securities (or options) in an
orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest in U.S.
government securities or options at that time because of concern
as to possible further market decline or for other reasons, the
Fund will realize a loss on the futures contract that is not
offset by a reduction in the price of securities purchased.

Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage.  As a result, a
relatively small price movement in a futures contract may result
in immediate and substantial loss, as well as gain, to the Fund.
For example, if at the time of purchase, 10% of the value of the
futures contract is deposited as margin, a subsequent 10% decrease
in the value of the futures contract would result in a total loss
of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out.  A 15% decrease would
result in a loss equal to 150% of the original margin deposit, if
the futures contract were closed out.  Thus, a purchase or sale of
a futures contract may result in losses in excess of the amount
invested in the futures contract. The Fund, however, would
presumably have sustained comparable losses if, instead of the
futures contract, it had invested in the underlying financial
instrument and sold it after the decline.  Where the Fund enters
into futures transactions for non-hedging purposes, it will be
subject to greater risks and could sustain losses which are not
offset by gains on other of the Fund's assets.

Furthermore, in the case of a futures contract purchase, in order
to be certain that the Fund has sufficient assets to satisfy its
obligations under a futures contract, the Fund will segregate and
commit to back the futures contract with an amount of cash and
liquid securities equal in value to the current value of the
underlying instrument less the margin deposit.

In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
futures contracts and the portion of the portfolio being hedged,
the market prices of futures contracts may be affected by certain
factors.  First, all participants in the futures market are
subject to margin deposit and maintenance requirements.  Rather
than meeting additional margin deposit requirements, investors may
close futures contracts though offsetting transactions which could
distort the normal relationship between the debt securities and
futures markets; second, from the point of view of speculators,
the deposit requirements in the futures market are less onerous
than margin requirements in the securities market.  Therefore,
increased participation by speculators in the futures market may
also cause temporary price distortions.  Due to the possibility of
price distortion in the futures market and because of the
imperfect correlation between movements in the debt securities and
movements in the prices of futures contracts, a correct forecast
of interest rate trends by the investment advisor or sub-advisor
may still not result in a successful hedging transaction over a
very short time frame.

Positions in futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for
such futures.  Although the Fund intends to purchase or sell
futures only on exchanges or boards of trade where there appears
to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange or board of trade will
exist for any particular contract or at any particular time.  In
such event, it may not be possible to close a futures position,
and in the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation
margin.  However, in the event that the futures contracts have
been used to hedge portfolio securities, such securities will not
be sold until the futures contracts can be terminated.  In such
circumstances, an increase in the price of the securities, if any,
may partially or completely offset losses on the futures
contracts.  However, as described above, there is no guarantee
that the price of the securities will, in fact, correlate with the
price movements of the futures contracts and thus provide an
offset to losses on futures contracts.  Successful use of futures
contracts by the Fund is also subject to the investment adviser's
and/or sub-advisor's ability to predict correctly movements in the
direction of interest rates and other factors affecting markets of
debt securities.  For example, if the Fund has hedged against the
possibility of an increase in interest rates which would adversely
affect debt securities held in its portfolio and prices of such
securities increase instead, the Fund will lose part or all of the
benefit of the increased value of its securities which it has
hedged because it will have offsetting losses in its futures
positions.  In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily
variation margin requirements.  Such sale of securities may be,
but will not necessarily be, at increased prices which reflect the
rising market.  The Fund may have to sell securities at a time
when it may be disadvantageous to do so.

Most U.S. Futures Exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day.
The daily limit establishes the maximum amount that the price of a
futures contract may vary either up or down from the previous
day's settlement price at the end of a trading session.  Once the
daily limit has been reached in a particular type of futures
contract, no additional trades may be made on that day at a price
beyond that limit.  The daily limit governs only price movement
during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of
unfavorable positions.  Futures contract prices have occasionally
moved 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 addition to the risks which apply to all options transactions,
there are several special risks relating to options on futures
contracts.  The ability to establish and close out positions on
such options will be subject to the development and maintenance of
a liquid secondary market.  It is not certain that this market
will develop.  The Fund will not purchase options on futures
contracts on any exchange unless and until, in the investment
advisor's opinion (and/or sub-advisor's opinion), the market for
such options has developed sufficiently that the risks in
connection with options on futures contracts are not greater than
the risks in connection with futures contracts.  Compared to the
use of futures contracts, the purchase of options on futures
contracts involves less potential risk to the Fund because the
maximum amount of risk is the premium paid for the options (plus
transaction costs).  However, there may be circumstances when the
use of an option on a futures contract would result in a loss to
the Fund when the use of a futures contract would not, such as
when there is no movement in the prices of debt securities.
Writing an option on a futures contract involves risks similar to
those arising in the sale of futures contracts, as described
above.

Economic and Monetary Union (EMU). As part of EMU, on January 1,
1999 11 European countries adopted a single common currency -- the
Euro; however, 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 may
create new economic opportunities for investors, such as easier
cross-border mergers, acquisitions and similar restructurings,
more efficient distribution and product packaging and greater
competition.  However, EMU and the introduction of the Euro
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 Fund's portfolios; (iv) there is
uncertainty concerning the fluctuation of the Euro relative to
non-Euro currencies; 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 Fund.

Portfolio Turnover.   The Fund may purchase or sell securities
without regard to the length of time the security has been held
and thus may experience a high rate of portfolio turnover. A 100%
turnover rate would occur, for example, if all the securities in a
portfolio were replaced in a period of one year. Under certain
market conditions, the Fund may experience a high rate of
portfolio turnover. This may occur, for example, if the Fund
writes a substantial number of covered call options and the market
prices of the underlying securities appreciate. The rate of
portfolio turnover is not a limiting factor when the manager deems
it desirable to purchase or sell securities or to engage in
options transactions.

INVESTMENT RESTRICTIONS

The Company has adopted the following investment restrictions with
respect to the Fund.  Restrictions 1 through 8 cannot be changed
for the Fund without approval by the holders of a majority of the
outstanding shares of the respective Fund, defined as the lesser
of (a) 67% or more of the Fund's shares present at a meeting, if
the holders of more than 50% of the outstanding shares are present
in person or by proxy or (b) more than 50% of the Fund's
outstanding shares.  The remaining restrictions may be changed by
the Board of Directors at any time (subject to applicable
regulatory provisions).  The Fund may not:

1.	Deviate from the definition of a "diversified company" as
defined in 1940 Act.

2.	Issue senior securities as defined in the 1940 Act and any
rules and orders thereunder, except as permitted under the
1940 Act.

3.	Invest more than 25% of its total assets in securities, the
issuers of which conduct their principal business
activities in the same industry.  For purposes of this
limitation, U.S. or foreign government securities and
securities of state or municipal governments and their
political subdivisions are not considered to be issued by
members of any industry.

4.	The Fund will not make loans.  This restriction does not
apply to:  (a) the purchase of debt obligations in which the
Fund may invest consistent with its investment objectives
and policies; (b) repurchase agreements; and (c) loans of
its portfolio securities.

5.	The Fund will not engage in the business of underwriting
securities issued by other persons, except to the extent
that the Fund may technically be deemed to be an underwriter
under the U.S. Securities Act of 1933, as amended (the "1933
Act"), in disposing of portfolio securities.

6.	The Fund will not purchase or sell real estate, real estate
mortgages, commodities or commodity contracts, but this
restriction shall not prevent the Fund from (a) investing in
and selling securities of issuers engaged in the real estate
business and securities which are secured by real estate or
interests therein; (b) holding or selling real estate
received in connection with securities it holds; (c) trading
in futures contracts and option on futures contracts or (d)
investing in or purchasing real estate investment trust
securities.

7.	The Fund will not purchase any securities on margin (except
for such short-term credits as are necessary for the
clearance of purchases and sales of portfolio securities) or
sell any securities short (except against the box).  For
purposes of this restriction, the deposit or payment by the
Fund of underlying securities and other assets in escrow and
collateral agreements with respect to initial or maintenance
margin in connection with futures contracts and related
options and options on securities, indexes or similar items
is not considered to be the purchase of a security on
margin.

8.	The Fund will not borrow money, except that (a) the Fund may
borrow from banks in an amount not exceeding 33 1/3% of the
value of the Fund's total assets (including the amount
borrowed) valued at market less liabilities (not including
the amount borrowed) and (b) the Fund may, to the extent
consistent with its investment policies, enter into reverse
repurchase agreements, forward roll transactions and similar
investment strategies and techniques.

9.	The Fund will not purchase or otherwise acquire any security
if, as a result, more than 15% of its net assets would be
invested in securities that are illiquid.

10.	Invest in companies for the purpose of exercising management
or control.

11.	Invest in securities of other investment companies, except
as part of a merger, consolidation, or acquisition of assets
or as permitted by Section 12d-1(A) through (E) the 1940
Act.

BROKERAGE AND PORTFOLIO TRANSACTIONS

Hansberger is responsible for allocating the Fund's brokerage.
Twice a year, Hansberger, through its securities analysts and
trading personnel, will consider the amount and nature of research
and research services provided by brokers, as well as the extent to
which such services are relied upon, and attempt to allocate a
portion of the brokerage business of the Fund and other advisory
clients on the basis of that consideration.  In addition, brokers
may suggest a level of business they would like to receive in
order to continue to provide such services.  The actual brokerage
business received by a broker may be more or less than the
suggested allocations, depending upon the Hansberger's evaluation
of all applicable considerations.  Orders may be directed to any
broker including, to the extent and in the manner permitted by
applicable law, Salomon Smith Barney .  The Fund will not deal with
Salomon Smith Barney in any transaction in which Salomon Smith
Barney acts as principal.

The Fund attempts to obtain the most favorable execution of the
Fund's transaction, that is, the best combination of net price and
prompt reliable execution.  In the opinion of Hansberger; however,
it is not possible to determine in advance that any particular
broker will actually be able to effect the most favorable execution
because, in the context of a constantly changing market, order
execution involves judgments as to price, commission rates, volume,
the direction of the market and the likelihood of future change.
In making its decision as to which broker or brokers are most
likely to provide the most favorable execution, Hansberger takes
into account the relevant circumstances.  These include, in varying
degrees, the size of the order, the importance of prompt execution,
the breadth and trends of the market in the particular security,
anticipated commission rates, the broker's familiarity with such
security including its contacts with possible buyers and sellers
and its level of activity in the security, the possibility of a
block transaction and the general record of the broker for prompt,
competent and reliable service in all aspects of order processing,
execution and settlement.

Commissions are negotiated and take into account several factors
which typically include, but are not limited to, the difficulty
involved in execution of a transaction, the time it took to
conclude, the extent of the broker's commitment of its own capital,
if any, and the price received.  Anticipated commission rates are
an important consideration in all trades and are weighed along with
the other relevant factors affecting order execution set forth
above.  In allocating brokerage among those brokers who are
believed to be capable of providing equally favorable execution,
the Fund takes into consideration the fact that a particular broker
may, in addition to execution capability, provide other services to
the Fund such as research and statistical information.  It is not
possible to place a dollar value on such services nor does their
availability reduce Hansberger's expenses in a determinable amount.
These various services may, however, be useful to Hansberger in
connection with its services rendered to other advisory clients and
not all such services may be used in connection with the Fund.

Fund transactions and brokerage

Hansberger is responsible for decisions to buy and sell securities
for the Fund and for the placement of the Fund's investment
business and the negotiation of the commissions to be paid on such
transactions.  It is the policy of Hansberger to seek the best
execution at the best security price available with respect to
each transaction, in light of the overall quality of brokerage and
research services provided to Hansberger or the Fund.  In over-
the-counter transactions, orders are placed directly with a
principal market maker unless it is believed that better price and
execution can be obtained using a broker.  In determining the
abilities of a broker or dealer to obtain best execution,
Hansberger considers relevant factors including: the ability and
willingness of the broker or dealer to facilitate the Fund's
portfolio transaction by participating therein for its own
account; speed, efficiency and confidentiality; familiarity with
the market for a particular security; and the reputation and
perceived soundness of the broker. The best price to the Fund
means the best net price without regard to the mix between
purchase or sale price and commissions, if any.  In selecting
broker- dealers and in negotiating commissions, Hansberger
considers a variety of factors, including best price and
execution, the full range of brokerage services provided by the
broker, as well as its capital strength and stability, and the
quality of the research and research services provided by the
broker. Consistent with the foregoing primary considerations, the
Conduct Rules of the National Association of Securities Dealers,
Inc. (the "NASD") and such other policies as the Directors may
determine, Hansberger may consider sales of shares of the Fund as
a factor in the selection of broker-dealers to execute the Fund's
portfolio transactions.  However, since shares of the Fund are not
marketed through intermediary brokers or dealers, it is not the
Fund's practice to allocate brokerage or principal business on the
basis of sales of shares which may be made through such firms.

Section 28(e) of the Securities Exchange Act of 1934 ("Section
28(e)") permits an investment adviser, under certain
circumstances, to cause an account to pay a broker or dealer a
commission for effecting a transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting the transaction in recognition of the value of the
brokerage and research services provided by the broker or dealer.
Brokerage and research services include (a) furnishing advice as
to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; (b) furnishing
analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the
performance of accounts; and (c) effecting securities transactions
and performing functions incidental thereto (such as clearance,
settlement, and custody).

In carrying out the provisions of the Sub-Advisory Agreement,
Hansberger may cause the Fund to pay, to a broker that provides
brokerage and research services to Hansberger, a commission for
effecting a securities transaction in excess of the amount another
broker would have charged for effecting the transaction.
Hansberger believes it is important to its investment decision-
making process to have access to independent research.  The Sub-
Advisory Agreements provide that such higher commissions will not
be paid by the Fund unless Hansberger determines in good faith
that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular
transaction or Hansberger's overall responsibilities with respect
to the accounts as to which it exercises investment discretion.

Generally, research services provided by brokers may include
information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax
law interpretations, political developments, legal developments
affecting portfolio securities, technical market action, pricing
and appraisal services, credit analysis, risk measurement
analysis, performance analysis, and analysis of corporate
responsibility issues.  Such research services are primarily in
the form of written reports, telephone contacts, and personal
meetings with security analysts.  In addition, such research
services may be provided in the form of access to various
computer- generated data, computer hardware and software, and
meetings arranged with corporate and industry spokespersons,
economists, academicians, and government representatives.  In some
cases, research services are generated by third parties but are
provided to Hansberger by or through brokers.  Such brokers may
pay for all or a portion of computer hardware and software costs
relating to the pricing of securities.

Where Hansberger itself receives both administrative benefits and
research and brokerage services from the services provided by
brokers, it makes a good faith allocation between the
administrative benefits and the research and brokerage services,
and will pay for any administrative benefits with cash. In making
good faith allocations of costs between administrative benefits
and research and brokerage services, a conflict of interest may
exist by reason of Hansberger's allocation of the costs of such
benefits and services between those that primarily benefit
Hansberger and those that primarily benefit the Fund and other
advisory clients.

From time to time, Hansberger may purchase securities for the Fund
in a fixed price offering.  In these situations, the seller may be
a member of the selling group that will, in addition to selling
the securities to the Fund and other advisory clients, provide
Hansberger with research.  The NASD has adopted rules expressly
permitting these types of arrangements under certain
circumstances.  Generally, the seller will provide research
"credits" in these situations at a rate that is higher than the
rate available for typical secondary market transactions.  These
arrangements may not fall within the safe harbor of Section 28(e).

Twice a year, Hansberger, through its securities analysts and
trading personnel, will consider the amount and nature of research
and research services provided by brokers, as well as the extent
to which such services are relied upon, and attempt to allocate a
portion of the brokerage business of the Fund and other advisory
clients on the basis of that consideration.  In addition, brokers
may suggest a level of business they would like to receive in
order to continue to provide such services.  The actual brokerage
business received by a broker may be more or less than the
suggested allocations, depending upon Hansberger's evaluation of
all applicable considerations.

Hansberger may direct the purchase of securities on behalf of the
Fund and other advisory clients in secondary market transactions,
in public offerings directly from an underwriter, or in privately
negotiated transactions with an issuer.  When Hansberger believes
the circumstances so warrant, securities purchased in public
offerings may be resold shortly after acquisition in the immediate
aftermarket for the security in order to take advantage of price
appreciation from the public offering price or for other reasons.
Short-term trading of securities acquired in public offerings, or
otherwise, may result in higher portfolio turnover and associated
brokerage expenses.

Hansberger is responsible for selecting brokers in connection with
foreign securities transactions.  The fixed commissions paid in
connection with most foreign stock transactions are usually higher
than negotiated commissions on U.S. stock transactions.  Foreign
stock exchanges and brokers are subject to less government
supervision and regulation as compared with the U.S. exchanges and
brokers.  In addition, foreign security settlements may in some
instances be subject to delays and related administrative
uncertainties.

Hansberger places portfolio transactions for other advisory
accounts, including other mutual funds managed by Hansberger.
Research services furnished by firms through which the Fund
effects its securities transactions may be used by Hansberger in
servicing all of its accounts; not all of such services may be
used by Hansberger in connection with the Fund.  In the opinion of
Hansberger, it is not possible to measure separately the benefits
from research services to each of the accounts (including the
Fund) managed by Hansberger.  Because the volume and nature of the
trading activities of the accounts are not uniform, the amount of
commissions in excess of those charged by another broker paid by
each account for brokerage and research services will vary.
However, in the opinion of Hansberger, such costs to the Fund will
not be disproportionate to the benefits received by it on a
continuing basis.

If purchase or sale of securities consistent with the investment
policies of the Fund and one or more of these other clients served
by Hansberger is considered at or about the same time,
transactions in such securities will be allocated securities on a
prorate basis.

The board of directors of the Fund has adopted certain policies and
procedures incorporating the standard of Rule 17e-1 issued by the
SEC under the 1940 Act which requires that the commissions paid to
Salomon Smith Barney must be "reasonable and fair compared to the
commission fee or other remuneration received or to be received by
other brokers in connection with comparable transactions involving
similar securities during a comparable period of time." The Rule
and the policy and procedures also contain review requirements and
require SBFM and Hansberger to furnish reports to the board of
directors and to maintain records in connection with such reviews.

The following table sets forth certain information regarding the
Fund's payment of brokerage commissions to Salomon Smith Barney:

Period
Ended
April 30,


Total Brokerage Commissions


2001
$756,223
2000
$601,379
1999
$712,982



Commissions paid to
Salomon Smith Barney

2001
2000
$30,625
$43,572
1999
$25,314



% of Total Brokerage
Commissions paid to
Salomon Smith Barney
2001
4.85%
2000
7.25%
1999
3.55%



% of Total Transactions
Involving Commissions paid
to Salomon Smith Barney
2001
5.00%
2000
9.40%
1999
5.36%

General

Investors may purchase shares from a Salomon Smith Barney
Financial Consultant, or from a broker dealer, financial
intermediary, financial institution (each called a "Service
Agent").  In addition, certain investors, including qualified
retirement plans purchasing through certain Service Agents, may
purchase shares directly from the Fund.  When purchasing shares of
the Fund, investors must specify whether the purchase is for Class
A, Class B, Class L or Class Y shares.  Salomon Smith Barney and
Service Agents 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 the Transfer Agent are not subject to a maintenance
fee.

Investors in Class A, Class B and Class L shares may open an
account in the Fund by making an initial investment of at least
$1,000 for each account, or $250 for an IRA or a Self-Employed
Retirement Plan, in the Fund. 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(c) of the Internal Revenue Code
of 1986, as amended ("the Code"), the minimum initial investment
required for Class A, Class B and Class L shares and the
subsequent investment requirement for all Classes in the Fund is
$25.  For shareholders purchasing shares of the Fund through the
Systematic Investment Plan on a monthly basis, the minimum initial
investment requirement for Class A, Class B and Class L shares and
subsequent investment requirement for all Classes is $25.  For
shareholders purchasing shares of the Fund through the Systematic
Investment Plan on a quarterly basis, the minimum initial
investment required 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 for Class A shares
for employees of Citigroup and its subsidiaries, including Salomon
Smith Barney, unitholders who invest distributions from, or
proceeds from a sale of, a Unit Investment Trust ("UIT") sponsored
by Salomon Smith Barney, and Directors/Trustees of any of the
Smith Barney Mutual Funds, and their spouses and children. The
Fund reserves 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 the sub-transfer agent. Share
certificates are issued only upon a shareholder's written request
to the sub-transfer agent.

Purchase orders received by the Fund or a Salomon Smith Barney
Financial Consultant prior to the close of regular trading on the
New York Stock Exchange ("NYSE"), on any day the Fund calculates
its net asset value, are priced according to the net asset value
determined on that day (the ''trade date'').  Orders received by a
Service Agent 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, provided
the order is received by the Fund or the Fund's agent prior to its
close of business. For shares purchased through a Service Agent
purchasing through Salomon Smith Barney, payment for shares of the
Fund is due on the third business day after the trade date. In all
other cases, payment must be made with the purchase order.

Systematic Investment Plan.  Shareholders may make additions to
their accounts at any time by purchasing shares through a service
known as the Systematic Investment Plan.  Under the Systematic
Investment Plan, Salomon Smith Barney or the sub-transfer agent is
authorized through preauthorized transfers of at least $25 on a
monthly basis or at least $50 on a quarterly basis to charge the
shareholder's account held with a bank or other financial
institution on a monthly or quarterly basis as indicated by the
shareholder, to provide for systematic additions to the
shareholder's Fund account.  A shareholder who has insufficient
funds to complete the transfer will be charged a fee of up to $25
by Salomon Smith Barney or the sub-transfer agent.  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 Fund or a Service Agent.

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:


Sales Charge



Amount of
Investment
% of Offering
Price
% of Amount
Invested
Dealers'
Reallowance as %
of Offering Price
Less than $25,000
5.00
5.26
4.50
$25,000 - 49,999
4.25
4.44
3.83
50,000 - 99,999
3.75
3.90
3.38
100,000-249,999
3.25
3.36
2.93
250,000-499,999
2.75
2.86
2.48
500,000   999,999
2.00
2.04
1.80
1,000,000 and
over
-0-*
-0-*
-0-*

*	Purchases of Class A shares of $1,000,000 or more will be
made at net asset value without any initial sales charge,
but will be subject to a deferred sales charge ("Deferred
Sales Charge") of 1.00% on redemptions made within 12 months
of purchase.  The Deferred Sales Charge on Class A shares is
payable to Salomon Smith Barney, which compensates Salomon
Smith Barney Financial Consultants and Service Agents
clients make purchases of $1,000,000 or more.  The Deferred
Sales Charge is waived in the same circumstances in which
the Deferred Sales Charge applicable to Class B and Class L
shares is waived.  See "Deferred Sales Charge Alternatives"
and "Waivers of Deferred Sales Charge."

Members of the selling group may receive up to 90% of the sales
charge and may be deemed to be underwriters of the Fund as defined
in the 1933 Act.  The reduced sales charges shown above apply to
the aggregate of purchases of Class A shares of the Fund made at
one time by "any person," which includes an individual 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 Fund 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 except for purchases
of Class Y shares by Smith Barney Allocation Series Inc., for
which there is no minimum purchase amount).

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 funds
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 Fund 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 fund which (i) was
sponsored by the Salomon Smith Barney 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 the Fund (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 the Fund, 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 a UIT sponsored by Salomon Smith Barney;
(i) purchases by investors participating in a Salomon Smith Barney
fee-based arrangement; and (j) purchases by Section 403(b) or
Section 401(a) or (k) accounts associated with Copeland Retirement
Programs. In order to obtain such discounts, the purchaser must
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 the Fund 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 Fund 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 preceding sales charge table
includes (i) all Class A shares of the Fund 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 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 Salomon Smith Barney
Financial Consultant 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 (except purchases of Class Y shares
by Smith Barney Allocation Series Inc., for which there is no
minimum purchase amount  Investors must make an initial minimum
purchase of $5,000,000 in Class Y shares of the Fund and agree to
purchase a total of $15,000,000 of Class Y shares of the Fund
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 Fund's Class
A shares, which may include a Deferred Sales Charge of 1.00%.
Please contact a Salomon Smith Barney Financial Consultant or the
transfer agent for further information.

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 that are redeemed will not be subject
to a Deferred Sales Charge to the extent the value of such shares
represents: (a) capital appreciation of Fund 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 Smith Barney 401(k) and
ExecChoiceTM Programs.''


Year Since Purchase
Payment Was Made


Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

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.

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 Fund shares being
redeemed will be considered to represent, as applicable, capital
appreciation or dividend and capital gain distribution
reinvestments in such other funds. For federal income tax
purposes, the amount of the Deferred Sales Charge will reduce the
gain or increase the loss, as the case may be, on the amount
realized on 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 of the Fund at $10 per share for a cost of $1,000.
Subsequently, the investor acquired 5 additional shares of the
Fund 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'') (provided, however, that
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 the Fund 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 Salomon Smith Barney in the case of shareholders
who are also Salomon Smith Barney clients or by the transfer agent
in the case of all other shareholders) 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. The
Fund 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 $1 million.

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 Salomon Smith Barney Financial
Consultant 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 Fund. 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 Fund 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 Fund. Any Class
L shares not converted will continue to be subject to the
distribution fee.

Participating plans wishing to acquire shares of the Fund 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.

Retirement Programs Investing in Class B Shares:   Class B shares
of the Fund are not available for purchase by participating plans
opened on or after June 21, 1996, but may continue to be purchased
by any participating plan in the Smith Barney 401(k) Program
opened prior to such date and originally investing in such Class.
Class B shares acquired are subject to a Deferred Sales Charge of
3.00% of redemption proceeds if the participating plan terminates
within eight years of the date the participating plan first
enrolled in the Smith Barney 401(k) Program.

At the end of the eighth year after the date the participating
plan enrolled in the Smith Barney 401(k) Program, the
participating plan will be offered the opportunity to exchange all
of its Class B shares for Class A shares of the same Fund. Such
participating plan 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 the exchange has occurred, a participating
plan will not be eligible to acquire additional Class B shares,
but instead may acquire Class A shares of the same Fund. If the
participating plan elects not to exchange all of its Class B
shares at that time, each Class B share held by the participating
plan will have the same conversion feature as Class B shares held
by other investors. See "Purchase of Shares-Deferred Sales Charge
Alternatives."

No Deferred Sales Charge is imposed on redemptions of Class B
shares to the extent the net asset value of the shares redeemed
does not exceed the current net asset value of the shares
purchased through reinvestment of dividends or capital gain
distributions, plus the current net asset value of Class B shares
purchased more than eight years prior to the redemption, plus
increases in the net asset value of the shareholder's Class B
shares above the purchase payments made during the preceding eight
years. Whether or not the Deferred Sales Charge applies to the
redemption by a participating plan depends on the number of years
since the participating plan first became enrolled in the Smith
Barney 401(k) Program, unlike the applicability of the Deferred
Sales Charge to redemptions by other shareholders, which depends
on the number of years since those shareholders made the purchase
payment from which the amount is being redeemed.

The Deferred Sales Charge will be waived on redemptions of Class B
shares in connection with lump-sum or other distributions made by
a participating plan as a result of: (a) the retirement of an
employee in the participating plan; (b) the termination of
employment of an employee in the participating plan; (c) the death
or disability of an employee in the participating plan; (d) the
attainment of age 591/2 by an employee in the participating plan;
(e) hardship of an employee in the participating plan to the
extent permitted under Section 401(k) of the Code; or (f)
redemptions of shares in connection with a loan made by the
participating plan to an employee.

REDEMPTION OF SHARES

General. The Fund is required to redeem the shares 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 request
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 transfer agent receives further
instructions from Salomon Smith Barney, or if the shareholder's
account is not with Salomon Smith Barney, from the shareholder
directly.  The redemption proceeds will be remitted on or before
the third business day following receipt of proper tender, except
on 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 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.

Shares held by Salomon Smith Barney as custodian must be redeemed
by submitting a written request to a Salomon Smith Barney
Financial Consultant.  Shares other than those held by Salomon
Smith Barney as custodian may be redeemed through an investor's
Salomon Smith Barney Financial Consultant or a Service Agent, or
by submitting a written request for redemption to:

	Smith Barney Hansberger Global Value Fund or
	Class A, B, L or Y (please specify)
	c/o PFPC Global Fund Services
	P.O. Box 9699,
	Providence Rhode Island 02940-9699.

A written redemption request must (a) state the name of the Fund
for which you are redeeming shares, (b) state the Class and number
or dollar amount of shares to be redeemed, (c) identify the
shareholder' s account number and (d) 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 Transfer Agent together with
the redemption request.  Any signature appearing on a share
certificate, stock power or written redemption request in excess
of $2,000 must be guaranteed by an eligible guarantor institution
such as a domestic bank, savings and loan institution, domestic
credit union, member bank of the Federal Reserve System or member
firm of a national securities exchange.  Written redemption
requests of $2,000 or less do not require a signature guarantee
unless more than one such redemption request is made in any 10-day
period.  Redemption proceeds will be mailed to an investor's
address of record.  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.

Automatic Cash Withdrawal Plan.  An automatic cash withdrawal plan
(the "Withdrawal Plan") is available to shareholders who own
shares with a value of at least $10,000 ($5,000 for retirement
plan accounts) and who wish to receive specific amounts of cash
monthly or quarterly.  Withdrawals of at least $50 may be made
under the Withdrawal Plan by redeeming as many shares of the Fund
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 shareholder's investment in
the Fund, there will be a reduction in the value of the
shareholder's investment and continued withdrawal payments may
reduce the shareholder's investment and ultimately exhaust it.
Withdrawal payments should not be considered as income from
investment in the Fund.  Furthermore, as it generally would not be
advantageous to a shareholder to make additional investments in
the Fund at the same time that he or she is participating in the
Withdrawal Plan, purchases by such shareholders in amounts of less
than $5,000 will not ordinarily be permitted.  The withdrawal plan
will be carried over on exchanges between funds or Classes of the
Fund.

Shareholders who wish to participate in the Withdrawal Plan and
who hold their shares in certificate form must deposit their share
certificates with the Transfer Agent as agent for Withdrawal Plan
members.  All dividends and distributions on shares in the
Withdrawal Plan are automatically reinvested at net asset value in
additional shares of the Company.  Withdrawal Plans should be set
up with a Salomon Smith Barney Financial Consultant.  A
shareholder who purchases shares directly through the sub-transfer
agent may continue to do so and applications for participation in
the Withdrawal Plan must be received by the sub-transfer no later
than the eighth day of the month to be eligible for participation
beginning with that month's withdrawal.  For further information
regarding the automatic cash withdrawal plan, shareholders should
contact a Salomon Smith Barney Financial Consultant or the Fund's
sub-transfer agent.

Telephone Redemption And Exchange Program.  Shareholders who do
not have a Salomon Smith Barney brokerage account may be eligible
to redeem and exchange Fund shares by telephone.  To determine if
a shareholder is entitled to participate in this program, he or
she should contact the Transfer Agent at 1-800-451-2010.  Once
eligibility is confirmed, the shareholder must complete and return
a Telephone/Wire Authorization Form, along with a signature
guarantee that will be provided by the Transfer Agent upon
request.  (Alternatively, an investor may authorize telephone
redemptions on the new account application with the applicant's
signature guarantee when making his/her initial investment in the
Fund.)

Redemptions.  Redemption requests of up to $50,000 of any Class or
Classes of the Fund's shares may be made by eligible shareholders
by calling the Transfer Agent at 1 800 451 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.  Redemption requests received after
the close of regular trading on the NYSE are priced at the net
asset value next determined.  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 have a correspondent
relationship with a member bank.  The Fund reserves the right to
charge shareholders a nominal fee for each wire redemption.  Such
charges, if any, will be assessed against the shareholder's
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 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 1-800-451-2010 between 9:00 a.m. and 4:00 p.m.
(New York City time) on any day on which the NYSE is open.
Exchange requests received after the close of regular trading on
the NYSE are processed at the net asset value next determined.

Additional Information regarding Telephone Redemption and Exchange
Program.  Neither the Fund nor its agents will be liable for
following instructions communicated by telephone that are
reasonably believed to be genuine. The Fund 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 Fund 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.

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 and holiday closings), (b) when
trading in markets the Fund normally utilizes is restricted, or an
emergency as determined by the SEC exists, so that disposal of the
Fund'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 the protection of the Fund's shareholders.

Distributions in Kind.  If the board of directors of the Company
determines that it would be detrimental to the best interests of
the remaining shareholders of the Fund to make a redemption
payment wholly in cash, the Fund may pay, in accordance with the
SEC rules, any portion of a redemption in excess of the lesser of
$250,000 or 1% of the Fund's net assets by a distribution in kind
of portfolio securities in lieu of cash.  Shareholders should
expect to incur brokerage costs when subsequently selling shares
redeemed in kind.

EXCHANGE PRIVILEGE

General.  Except as noted below, shareholders of any fund of the
Smith Barney Mutual Funds may exchange all or part of their shares
for shares of the same Class of other funds of the Smith Barney
Mutual Funds, to the extent such shares are offered for sale in
the shareholder's state of residence and provided your registered
representative or your investment dealer is authorized to
distribute shares of the fund, on the basis of relative net asset
value per share at the time of exchange.  Class B shares of any
fund may be exchanged without a Deferred Sales Charge.  Class B
shares of the Fund exchanged for Class B shares of another fund
will be subject to the higher applicable Deferred Sales Charge of
the Fund and, for the purposes of calculating Deferred Sales
Charge rates and conversion periods, will be deemed to have been
held since the date the shares being exchanged were deemed to be
purchased.  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.

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 the fund
into which an exchange is being considered.  Prospectuses may be
obtained from a Salomon Smith Barney Financial Consultant.

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

Class B Exchanges.  In the event a Class B shareholder wishes to
exchange all or a portion of his or her shares into any of the
funds imposing a higher Deferred Sales Charge than that imposed by
the Fund, 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 Fund 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 Fund that have been exchanged.

Class A and Class Y Exchanges.  Class A and Class Y shareholders
of the Fund who wish to exchange all or a portion of their shares
for shares of the respective Class in any of the funds identified
above may do so without imposition of any charge.

Additional Information Regarding Exchanges.  The Fund is not
designed to provide investors with a means of speculation on
short-term market movements.  A pattern of frequent exchanges by
investors can be disruptive to efficient portfolio management and,
consequently, can be detrimental to the Fund and its shareholders.
Accordingly, if the Fund's management in its sole discretion
determines that an investor is engaged in excessive trading, the
Fund, with or without prior notice, may temporarily or permanently
terminate the availability to that investor of Fund exchanges, or
reject in whole or part any purchase or exchange request with
respect to such investor's account.  Such investors also may be
barred from purchases and exchanges involving other funds in the
Smith Barney Mutual Fund family.   Accounts under common ownership
or control will be considered as one account for purposes of
determining a pattern of excessive trading.  The Fund may notify
an investor of rejection of a purchase or exchange order after the
day the order is placed.  If an exchange request is rejected, the
Fund will take no other action with respect to the shares until it
receives further instructions from the investor.  The Fund's
policy on excessive trading applies to investors who invest in the
Fund directly or through Service Agents, but does not apply to any
systematic investment  plans described in the prospectus.

During times of drastic economic or market conditions, the Fund
may suspend the Exchange Privilege temporarily without notice and
treat exchange requests based on their separate components
redemption orders with a simultaneous request to purchase the
other fund's shares.  In such a case, the redemption request would
be processed at the Fund's next determined net asset value but the
purchase order would be effective only at the net asset value next
determined after the fund being purchased formally accepts the
order, which may result in the purchase being delayed.

Certain shareholders may be able to exchange shares by telephone.
See "Redemption of Shares Telephone Redemption and Exchange
Program" .  Exchanges will be processed at the net asset value
next determined.  Redemption procedures discussed below are also
applicable for exchanging shares, and exchanges will be made upon
receipt of all supporting documents in proper form.  If the
account registration of the shares of the fund being acquired is
identical to the registration of the shares of the fund exchanged,
no signature guarantee is required.  A capital gain or loss for
tax purposes will be realized upon the exchange, depending upon
the cost or other basis of shares redeemed.  Before exchanging
shares, investors should read the current prospectus describing
the shares to be acquired.  The Company reserves the right to
modify or discontinue exchange privileges upon 60 days' prior
notice to shareholders.

DISTRIBUTOR

Salomon Smith Barney, Inc., located at 388 Greenwich Street, New
York, New York 10013 serves as the Fund's distributor pursuant to
a written agreement dated June 5, 2000 (the "Distribution
Agreement") which was approved by the Fund's Board of Directors,
including a majority of the independent Directors, on July 26,
2001.  This Distribution Agreement replaces the Distribution
Agreement with CFBDS, Inc.

When payment is made by the investor before the settlement date,
unless otherwise directed by the investor, the funds will be held
as a free credit balance in the investor's brokerage account, and
Salomon Smith Barney may benefit from the temporary use of the
funds.  The investor may designate another use for the funds prior
to settlement date, such as investment in a money market fund
(other than Salomon Smith Barney Exchange Reserve Fund) of the
Smith Barney Mutual Funds.  If the investor instructs Salomon
Smith Barney to invest the funds in a Smith Barney money market
fund, the amount of the investment will be included as part of the
average daily net assets of both the Company and the money market
fund, and affiliates of Salomon Smith Barney that serve the funds
in an investment advisory capacity will benefit from the fact that
they are receiving fees from both such investment companies for
managing these assets computed on the basis of their average daily
net assets.  The Company's board of directors has been advised of
the benefits to Salomon Smith Barney resulting from these
settlement procedures and will take such benefits into
consideration when reviewing the Management and Distribution
Agreements for continuance.


Class A share sales charges paid to Salomon Smith Barney:

For the Fiscal Year
Ended April 30, 2000
For the Fiscal Year
Ended April 30, 2001
$27,000
$19,000

Class L share sales charges paid to Salomon Smith Barney:

For The Fiscal Year
Ended April 30, 2000
For the Fiscal Year
Ended April 30, 2001
$12,000
$9,000

Class B share Deferred Sales Charge paid to Salomon Smith Barney:

For The Fiscal Year
Ended April 30, 2000
For the Fiscal Year
Ended April 30, 2001
$144,000
$122,000

Class L share Deferred Sales Charge paid to Salomon Smith Barney:

For The Fiscal Year
Ended April 30, 2000
For The Fiscal Year
Ended April 30, 2001
$1,000
$1,000

Distribution Arrangements

To compensate Salomon Smith Barney for the services it provides
and for the expense it bears under the Distribution Agreement, the
Company has adopted a services and distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act.  Under the Plan, the
Fund pays Salomon Smith Barney a service fee, accrued daily and
paid monthly, calculated at the annual rate of 0.25% of the value
of the Fund's average daily net assets attributable to the Class
A, Class B and Class L shares.  In addition, the Fund pays Salomon
Smith Barney a distribution fee, with respect to the Class B and
Class L shares primarily intended to compensate Salomon Smith
Barney for its initial expense of paying its Financial Consultants
a commission upon sales of those shares.  Such shares'
distribution fees, which are accrued daily and paid monthly, are
calculated at the annual rate of 0.75% of the value of average
daily net assets attributable to the Class B and Class L shares.

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

Total Service and Distribution Plan fees incurred by the Fund for
the period ended April 30, 1999 and the fiscal year ended April
30, 2001 were:

	2000
Class A Shares
Class B
Shares
Class L Shares
$41,479
$344,384
$90,313


					2001
Class A Shares
Class B
Shares
Class L Shares
$35,180
$256,784
$77,413

For the fiscal year ended April 30, 2001, Salomon Smith Barney,
incurred distribution expenses for the the Fund totalling $136,615
consisting of $10,957 for advertising, $2,858 for printing and
mailing of Prospectuses, $135,504 for support services, $(4,383)
to Salomon Smith Barney Financial Consultants, and $(8,320) in
accruals for interest on the excess of Smith Barney expenses
incurred in distributing the Fund's shares over the sum of the
distribution fees and Deferred Sales Charge received by Salomon
Smith Barney from the Fund.

VALUATION OF SHARES

The Fund's net asset value per share is determined as of the close
of regular trading on the NYSE on each day that the NYSE is open,
by dividing the value of the Fund's net assets attributable to
each Class by the total number of shares of the Class outstanding.
Each Class' net asset value per share is calculated on each day,
Monday through Friday, except days on which the NYSE is closed.
The NYSE currently is scheduled to be closed on New Year's Day,
President's Day, Good Friday, Martin Luther King Jr. Day, 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 the Fund in
valuing its assets.

Generally, the Fund's investments are valued at market value, or,
in the absence of a market value with respect to any securities,
at fair value.  Securities listed on an exchange are valued on the
basis of the last sale prior to the time the valuation is made.
If there has been no sale since the immediately previous
valuation, then the current bid price is used.  Quotations are
taken from the exchange where the security is primarily traded.
Portfolio securities which are primarily traded on foreign
exchanges may be valued with the assistance of a pricing service
and are generally valued at the preceding closing values of such
securities on their respective exchange, except that when an
occurrence subsequent to the time a foreign security is valued is
likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by
or under the direction of the board of directors.  Over-the-
counter securities are valued on the basis of the bid price at the
close of business on each day.  Unlisted foreign securities are
valued at the mean between the last available bid and offer price
prior to the time of valuation.  Any assets or liabilities
initially expressed in terms of foreign currencies will be
converted into U.S. dollar values at the mean between the bid and
offered quotations of such currencies against U.S. dollars as last
quoted by any recognized dealer.  Securities for which market
quotations are not readily available are valued at fair value.
Notwithstanding the above, bonds and other fixed-income securities
are valued by using market quotations and may be valued on the
basis of prices provided by a pricing service approved by the
board of directors.

A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the
primary market for such security.  All assets and liabilities
initially expressed in foreign currency values will be converted
into U.S. dollar values at the mean between the bid and offered
quotations of such currencies against U.S. dollars as last quoted
by any recognized dealer. If such quotations are not available,
the rate of exchange will be determined in good faith by the board
of directors.  In carrying out the board of directors' valuation
policies, SBFM, as administrator, may consult with an independent
pricing service.

Debt securities of U.S. issuers (other than U.S. government
securities and short-term investments) are valued by SBFM, as
administrator, after consultation with a pricing service approved
by the board of directors.  When, in the judgment of the pricing
service, quoted bid prices for investments are readily available
and are representative of the bid side of the market, these
investments are valued at the mean between the quoted bid prices
and asked prices.  Investments for which, in the judgment of the
pricing service, there are not readily obtainable market
quotations are carried at fair value as determine by the pricing
service.  The procedures of the pricing service are reviewed
periodically by the officers of the Company under the general
supervision and responsibility of the board of directors.

PERFORMANCE DATA

From time to time, the Fund may quote its yield, average annual
total return or total return in advertisements or in reports and
other communications to shareholders.  The Fund may include
comparative performance information in advertising or marketing
the Fund's shares.  Such performance information may include data
from Lipper Analytical Services, Inc., Morningstar, Inc. and other
financial publications, and may be included in various industry
and financial publications, such as:  Barron's, Business Week, CDA
Investment Technologies, Inc., Changing Times, Forbes, Fortune,
Institutional Investor, Investor's Business Daily, Money,
Morningstar Mutual Fund Values, The New York Times, USA Today and
The Wall Street Journal.  To the extent any advertisement or sales
literature of the Fund describes the expenses or performance of a
Class, it will also disclose such information for the other
Classes.

Yield.  The Fund'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/cd + 1)6 - 1]


Where:
a =
Dividends and interest earned during the period.

b =
Expenses accrued for the period (net of
reimbursement).

c =
The average daily number of shares outstanding
during the period that were entitled to receive
dividends.

d =
The maximum offering price per share on the last day
of the period.

For the purpose of determining the interest earned (variable "a"
in the formula) on debt obligations purchased by the Fund 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.


Average Annual Total Return.  "Average annual total return"
figures, as described below, are computed according to a formula
prescribed by the SEC.  The formula can be expressed as follows:

P(1+T)n = ERV

Where:
P 	=
a hypothetical initial payment of $1,000.

T	=
Average annual total return.

n 	=
Number of years.

ERV	=
Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a 1-
, 5- or 10-year period at the end of the 1-, 5-
or 10- year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions.  A Class' total
return figures calculated in accordance with
the above formula assume that the maximum
applicable sales charge or maximum applicable
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.


Aggregate Total Return.  Aggregate total return, as described
below, represents the cumulative change in the value of an
investment in the Class for the specified period and are computed
by the following formula:


	AGGREGATE TOTAL RETURN = 			ERV-P
				P

Where:
P 	=
a hypothetical initial payment of $1,000.

ERV	=
Ending Redeemable Value of a hypothetical
$10,000 investment made at the beginning of a
1-, 5- or 10-year period (a fractional portion
thereof) at the end of the 1-, 5- or 10- year
period (or fractional portion thereof),
assuming reinvestment of all dividends and
distributions.

The total returns below show what an investment in the Fund would
have earned over a specified period of time (one, five or ten
years or since inception) without assuming the payment of the
maximum sales load when the investment was first made and that all
distributions and dividends by the Fund were invested on the
reinvestment dates during the period, less all recurring fees.
The following chart reflects the financial performance of the Fund
through the period ended April 30, 2001 for the one year period
and since inception:


Total Returns



Since
Incepti
on

Since



Clas
s

1 Year
Average
Annual
Inception
Cumulative
Global Value Fund




Inception: 12/19/97
A
(10.10)
%
1.53%
5.22%
Inception: 12/19/97
B
(10.82)
2.50
0.74
Inception: 12/19/97
L
(10.75)
2.50
0.74
Inception: 3/10/98
Y
(9.64)
(1.02)
(3.18)


The total returns below show what an investment in the Fund would
have earned over a specified period of time (one, five or ten
years or since inception) assuming the payment of the maximum
sales load when the investment was first made and that all
distributions and dividends by the Fund were invested on the
reinvestment dates during the period, less all recurring fees.
The average annual total return is derived from this total return,
which provides the ending redeemable value.  The following chart
reflects the financial performance of the Fund through the period
ended April 30, 2001 for the one year period and since inception:
Total Returns



Since
Incepti
on

Since



Clas
s

1 Year
Average
Annual
Inception
Cumulative
Global Value Fund




Inception:
A
(14.58)
%
(0.01)%
(0.04)%
Inception:
B
(15.28)
0.15
0.50
Inception:
L
(12.52)
0.43
1.44
Inception:
Y
(9.64)
(1.02)
(3.18)

It is important to note that the yield and total return formulas
set forth above are based on historical earnings and are not
intended to indicate future performance.  A Class' performance
will vary from time to time depending upon market conditions, the
composition of the Fund's investment portfolio and operating
expenses and the expenses exclusively attributable to the Class.
Consequently, any given performance quotation should not be
considered representative of the Class' performance for any
specified period in the future.  Because performance will vary, it
may not provide a basis for comparing an investment in the Class
with certain bank deposits or other investments that pay a fixed
yield for a stated period of time.  Investors comparing the Class'
performance with that of other mutual funds should give
consideration to the quality and maturity of the respective
investment companies' portfolio securities.


Performance Information.  Performance information may be useful in
evaluating the Fund and for providing a basis for comparison with
other financial alternatives.  Since the performance of the Fund
changes in response to fluctuations in market conditions, interest
rates and Fund expenses, no performance quotation should be
considered a representation as to the Fund's performance for any
future period.

The Fund may from time to time compare its investment results with
the following:

	(1) The Consumer Price Index, which is a measure of the
average change in prices over time in a fixed market
basket of goods and services (e.g., food, clothing,
shelter, fuels, transportation fares, charges for
doctors' and dentists' services, prescription
medicines, and other goods and services that people buy
for day-to-day living).

	(2) Data and mutual fund rankings published or prepared
by Lipper Analytical Services, Inc., which ranks mutual
funds by overall performance, investment objectives and
assets.

	(3) Dow Jones Industrial Average which is a price-
weighted average of 30 actively traded stocks of highly
reputable companies prepared by Dow Jones & Co.

	(4) Financial News Composite Index.

	(5) Morgan Stanley Capital International World Indices,
including, among others, the Morgan Stanley Capital
International Europe, Australia, Far East Index ("EAFE
Index").  The EAFE Index is an unmanaged index of more
than 800 companies of Europe, Australia and the Far
East.

	(6) Data and comparative performance rankings published
or prepared by CDA Investment Technologies, Inc.

	(7) Data and comparative performance rankings published
or prepared by Wiesenberger Investment Company Service.

Indices prepared by the research departments of such financial
organizations as Salomon Brothers, Inc., Merrill Lynch, Bear
Stearns & Co., Inc., Morgan Stanley, and Ibbottson Associates may
be used, as well as information provided by the Federal Reserve
Board.  In addition, performance rankings and ratings reported
periodically in national financial publications, including but not
limited to Money Magazine, Forbes, Business Week, The Wall Street
Journal and Barron's may also be used.

DIVIDENDS AND DISTRIBUTIONS

The Fund's policy is to distribute substantially all its
investment income (that is, its income other than its net realized
capital gains) and net realized capital gains, if any, once a
year, normally at the end of the year in which earned or at the
beginning of the next year.

If a shareholder does not otherwise instruct, dividends and
capital gain distributions will be reinvested automatically in
additional shares of the same Class at net asset value, subject to
no sales charge or Deferred Sales Charge.  In order to avoid the
application of a 4.00% non-deductible excise tax on certain
undistributed amounts of ordinary income and capital gains, the
Fund may make an additional distribution shortly before December
31 in each year of any undistributed ordinary income or capital
gains and expects to pay any other dividends and distributions
necessary to avoid the application of this tax.

The per share dividends on Class B and Class L shares of the Fund
may be lower than the per share dividends on Class A and Class Y
shares principally as a result of the distribution fee applicable
with respect to Class B and Class L shares.  The per share
dividends on Class A shares of the Fund may be lower than the per
share dividends on Class Y shares principally as a result of the
service fee applicable to Class A shares.  Distributions of
capital gains, if any, will be in the same amount for Class A,
Class B, Class L and Class Y shares.

TAXES

The following summary addresses the principal United States income
tax considerations regarding the purchase, ownership and
disposition of shares in the Fund.

General. The Fund intends to qualify and elect to be treated for
each taxable year as a "regulated investment company" under
Sections 851-855 of the Code.  To so qualify, the Fund must, among
other things, (i) derive at least 90% of its gross income in each
taxable year from dividends, interest, proceeds from loans of
stock and securities, gains from the sale or other disposition of
stock, securities or foreign currency, or certain other income
(including but not limited to gains from options, futures and
forward contracts) derived from its business of investing in
stock, securities or currency; and (ii) diversify its holdings so
that, at the end of each quarter of its taxable year, the
following two conditions are met: (a) at least 50% of the market
value of the Fund's total assets is represented by cash, U.S.
Government securities, securities of other regulated investment
companies and other securities,  with such other securities
limited, in respect of any one issuer, to an amount not greater
than 5% of the Fund's assets and not more than 10% of the
outstanding voting securities of such issuer; and (b) not more
than 25% of the value of the Fund's assets is invested in
securities (other than U.S. government securities or securities of
other regulated investment companies) of any one issuer or any two
or more issuers that theFund controls and which are determined to
be engaged in the same or similar trades or business or related
trades or businesses.  The diversification requirements described
above may limit the Fund's ability to engage in hedging
transactions by writing or buying options or by entering into
futures or forward contracts.

Foreign currency gains that are not directly related to the Fund's
principal business of investing in stock or securities, or options
or forward contracts thereon, might be excluded by regulations from
income that counts toward the 90% gross income requirement
described above.

As a regulated investment company, the Fund will not be subject to
U.S. federal income tax on net investment income and net long-term
capital gains distributed to shareholders if, as is intended, the
Fund distributes at least 90% of its ordinary income and net short-
term and long-term capital gains to the Fund's shareholders each
year.

The Fund, however, will generally be subject to a nondeductible
excise tax of 4% to the extent that it does not meet certain
minimum distribution requirements as of the end of each calendar
year.  The Fund intends to make timely distributions of its income
(including any net capital gains) in compliance with these
requirements.  As a result, it is anticipated that the Fund will
not be subject to the excise tax.

For federal income tax purposes, dividends declared by the Fund in
October, November or December as of a record date in such month and
which are actually paid in January of the following year will be
treated as if they were paid on December 31.  These dividends will
be taxable to shareholders in the year declared, and not in the
year in which shareholders actually receive the dividend.

Gains or losses that the Fund recognizes upon the sale or other
disposition of stock or securities will be treated as long-term
capital gains or losses if the securities have been held by it for
more than one year, except in certain cases where the Fund sells
the stock or security short or acquires a put or writes a call
thereon.  Other gains or losses on the sale of stock or securities
will be short-term capital gains or losses.  Gains and losses on
the sale, lapse or other termination of options on stock or
securities will generally be treated as gains and losses from the
sale of stock or securities.  If an option written for the Fund
lapses or is terminated through a closing transaction, the Fund may
realize a short-term capital gain or loss, depending on whether the
premium income is greater or less than the amount paid in the
closing transaction.  If the Fund sells stock or securities
pursuant to the exercise of a call option written by it, the Fund
will add the premium received to the sale price of the stock or
securities delivered in determining the amount of gain or loss on
the sale.


At April 30, 2001, the Fund had approximately $6,012,000 of unused
capital loss carryforwards.  For federal income tax purposes,
these amounts are available to be applied against future realized
capital gains, if any.  The carryovers expire as follows:

April 30,
2006
April 30,
2007
April 30,
2008
Total
$547,000
$1,489,000
$3,985,000
$6,021,000

Under the Code, gains or losses attributable to foreign currency
contracts, or to fluctuations in exchange rates between the time
the Fund accrues income or receivables or expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such income or pays such liabilities, are treated
as ordinary income or ordinary loss.  Similarly, gains or losses on
the disposition of debt securities held by the Fund denominated in
foreign currency, to the extent attributable to fluctuations in
exchange rates between the acquisition and disposition dates, are
also treated as ordinary income or loss.

Forward currency contracts, options and futures contracts entered
into by the Fund may create "straddles" for federal income tax
purposes and this may affect the character and timing of gains or
losses realized by the Fund on such contracts or options or on the
underlying securities.

Certain options, futures and foreign currency contracts held by the
Fund at the end of each fiscal year will be required to be "marked
to market" for federal income tax purposes; that is, treated as
having been sold at market value.  Sixty percent of any capital
gain or loss recognized on these deemed sales and on actual
dispositions will be treated as long-term capital gain or loss, and
the remainder will be treated as short-term capital gain or loss
regardless of how long the Fund has held such options or contracts.

If the Fund purchases shares in certain foreign investment
entities, referred to as "passive foreign investment companies,"
the Fund itself may be subject to U.S. federal income tax and an
additional charge in the nature of interest on a portion of any
"excess distribution" from such company or gain from the
disposition of such shares, even if the distribution or gain is
distributed by the Fund to its shareholders in a manner that
satisfies the requirements described above.  If the Fund were able
and elected to treat a passive foreign investment company as a
"qualified electing fund," in lieu of the treatment described
above, the Fund would be required each year to include in income,
and distribute to shareholders in accordance with the distribution
requirements described above, the Fund's pro rata share of the
ordinary earnings and net capital gains of the company, whether or
not actually received by the Fund.

Redemption of Shares.  Any gain or loss realized on the redemption
or exchange of Fund shares by a shareholder who holds such shares
as a capital asset will be treated as long-term capital gain or
loss if the shares have been held for more than one year, and
otherwise as short-term capital gain or loss.

However, any loss realized by a shareholder upon the redemption or
exchange of Fund shares held six months or less will be treated as
long-term capital loss to the extent of any long-term capital gain
distributions received by the shareholder with respect to such
shares.  Additionally, any loss realized on a redemption or
exchange of Fund shares will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30
days before and ending 30 days after such disposition, such as
pursuant to reinvestment of dividends in Fund shares.

Backup Witholding.  The Fund may be required to withold, for United
States federal income tax purposes, up to 31% of the dividends,
distributions and redemption proceeds payable to shareholders who
fail to provide the Fund with their correct taxpayer identification
number or to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding.
Certain shareholders are exempt from backup withholding.  Backup
withholding is not an additional tax and any amount withheld may be
credited against a shareholder's United States federal income tax
liabilities.

Notices to Shareholders.  Statements as to the tax status of each
shareholder's dividends and distributions will be mailed annually.
Each shareholder also will receive, if appropriate, various
written notices after the close of the Fund's prior taxable year
as to the federal income tax status of his or her dividends and
distributions which were received from the Fund during the Fund's
prior taxable year.  Shareholders should consult their own tax
advisors about the status of the Fund's dividends and
distributions for state and local tax liabilities.

MINIMUM ACCOUNT SIZE

The Fund reserves the right to involuntarily liquidate any
shareholder's account in the Fund if the aggregate net asset value
of the shares held in the Fund account is less than $500.  (If a
shareholder has more than one account in the Fund, each account
must satisfy the minimum account size).  The Fund, however, will
not redeem shares based solely on market reductions in net asset
value.  Before the Fund 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.

FINANCIAL STATEMENTS

The Fund's annual report for the fiscal year ended April 30, 2001,
including the Fund's audited financial statements, as filed with
the Securities and Exchange Commission (Accession number
00000950130-01-50298) is incorporated by reference, in its
entirety, into this statement of additional information.

ADDITIONAL INFORMATION

The Company was incorporated on September 29, 1981 under the name
Hutton Investment Series Inc.  The Company's corporate name was
changed on December 29, 1988, July 30, 1993 and October 28, 1994,
to SLH Investment Portfolios Inc., Smith Barney Shearson
Investment Funds Inc., and Smith Barney Investment Funds Inc.
respectively.

OTHER INFORMATION

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 four "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

BOND (AND NOTE) RATINGS

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

	Aaa - Bonds that are rated "Aaa" are judged to be of the best
quality.  They carry the smallest degree of investment risk and are
generally referred to as "gilt edge."  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 that 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 therefore not well safeguarded during both good and
bad times over the future.  Uncertainty of position characterizes
bonds in this class.

	B - Bonds that are rated B generally lack characteristics of
desirable investments.  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 that are rated Caa are of poor standing.  These
issues may be in default or present elements of danger may exist
with respect to principal or interest.

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

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

	Moody's applies the numerical modifiers 1, 2 and 3 in each
generic rating classification from Aa through B.  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 ("S&P")

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

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

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

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

	BB, B and CCC - Bonds rated BB and B are 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 represents a lower degree if speculation than B
and CCC the highest degree of speculation.  While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.

	C - The rating C is reserved for income bonds on which no
interest is being paid.

	D - Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.

	S&P's letter ratings may be modified by the addition of a
plus or a minus sign, which is used to show relative standing
within the major rating categories, except in the AAA category.

COMMERCIAL PAPER RATINGS

Moody's

Issuers rated "Prime-1" (or related supporting institutions) have a
superior capacity for repayment of short-term promissory
obligations.  Prime-1 repayment capacity 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 a
strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics
cited above but to a lesser degree.  Earnings trends and coverage
ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions.  Ample alternate liquidity is
maintained.


S&P

A-1 - This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety
characteristics will be denoted 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.



Smith Barney
Premier Selections All Cap Growth Fund
Seven World Trade Center
New York, New York 10048
1-800-451-2010

Statement of Additional
Information


August 28, 2001

This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current combined Prospectus
of Smith Barney Premier Selections All Cap Growth Fund (the "Fund"), the
Smith Barney Premier Selections Global Growth Fund and the Smith Barney
Premier Selections Large Cap Fund dated August 28, 2001, as amended or
supplemented from time to time, and should be read in conjunction with
the Fund's Prospectus. The Fund is a series of Smith Barney Investment
Funds Inc. (the "Company"). The Fund's Prospectus may be obtained from a
Service Agent (as defined on page 31) or by writing or calling the Fund
at the address or telephone number set forth above. This SAI, although
not in itself a prospectus, is incorporated by reference into the
Prospectus in its entirety.

TABLE OF CONTENTS
Page

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES	2
INVESTMENT RESTRICTIONS	15
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY	16
PURCHASE OF SHARES	24
REDEMPTION OF SHARES	34
VALUATION OF SHARES	39
EXCHANGE PRIVILEGE	40
PERFORMANCE DATA	41
DIVIDENDS, DISTRIBUTIONS AND TAXES	43
ADDITIONAL INFORMATION	48
FINANCIAL STATEMENTS	49
OTHER INFORMATION	49




INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The prospectus discusses the Fund's investment objective and policies.
This section contains supplemental information concerning the types of
securities and other instruments in which the Fund may invest, the
investment policies and portfolio strategies the Fund may utilize and
certain risks associated with these investments, policies and
strategies.  Smith Barney Management LLC ("SBFM" or the "Manager")
serves as investment manager to the Fund.

Large Cap Growth Segment of the Fund

The Fund normally invests approximately 30% of its total assets in
equity securities of large capitalization companies defined as companies
whose market capitalization is within the market capitalization range of
companies within the Russell 1000 Growth Index that are dominant in
their industries, global in scope and have a long- term history of
performance.  The Fund does have the flexibility, however, to invest the
balance in companies with other market capitalizations.

Under normal market conditions, the majority of the Fund's portfolio
will consist of common stock, but it also may contain money market
instruments for cash management purposes.  The Fund reserves the right,
as a defensive measure, to hold money market securities, including
repurchase agreements or cash, in such proportions as, in the opinion of
management, prevailing market or economic conditions warrant.

Mid Cap Growth Segment of the Fund

The Fund is an open-end, diversified, management investment company
whose investment objective is to seek long-term growth of capital by
investing, under normal market conditions, approximately 40% of its
total assets in equity securities of medium-sized companies. Medium
sized companies are those whose market capitalization is within the
market capitalization range of companies in the S&P 400 Mid Cap Index
("Index") at the time of investment.  The size of the companies in the
Index changes with market conditions and the composition of the Index.
Investing in medium-capitalization stocks may involve greater risk than
investing in large capitalization stocks since they can be subject to
more abrupt or erratic movements.  However, they tend to involve less
risk than stocks of small capitalization companies.

The Fund normally invests in all types of equity securities, including
common stocks, preferred stocks, securities that are convertible into
common or preferred stocks, such as warrants and convertible bonds, and
depository receipts for those securities.  The Fund may maintain a
portion of its assets in U.S. Government securities, money market
obligations, and in cash to provide for payment of the Fund's expenses
and to meet redemption requests.  It is the policy of the Fund to be as
fully invested in equity securities as practicable at all times.

Small Cap Growth Segment

The Fund normally invests approximately 30% of its total assets in
companies that possess a marketcapitalization within the market range of
companies within the Russell 2000 Growth Index.  The Small Cap Growth
segment manager focuses on companies that exhibit attractive growth
characteristics.

FOREIGN SECURITIES

The Fund may invest in securities of foreign issuers in the form of
American Depository Receipts ("ADRs"), European Depository Receipts
("EDRs") or similar securities representing interests in the common
stock of foreign issuers.  Management intends to limit  the Fund's
investment in these types of securities to 25% of the Fund's net assets.
ADRs are receipts, typically issued by a U.S. bank or trust company,
which evidence ownership of underlying securities issued by a foreign
corporation.  EDRs are receipts issued in Europe which evidence a
similar ownership arrangement.  Generally, ADRs, in registered form, are
designed for use in the U.S. securities markets and EDRs are designed
for use in European securities markets.  The underlying securities are
not always denominated in the same currency as the ADRs or EDRs.
Although investment in the form of ADRs or EDRs facilitates trading in
foreign securities, it does not mitigate the risks associated with
investing in foreign securities.

Investments in foreign securities incur higher costs than investments in
U.S. securities, including higher costs in making securities
transactions as well as foreign government taxes which may reduce the
investment return of the Fund.  In addition, foreign investments may
include additional risks associated with currency exchange rates, less
complete financial information about individual companies, less market
liquidity and political instability.

LENDING PORTFOLIO SECURITIES

Consistent with applicable regulatory requirements and for cash
management purposes, the Fund may lend securities from its portfolio to
brokers, dealers and other financial organizations. The  Fund may not
lend its portfolio securities to the Manager or its affiliates unless it
has applied for and received specific authority from the SEC. Loans of
portfolio securities by the Fund will be collateralized by cash, letters
of credit or U.S. government securities that are maintained at all times
in an amount equal to at least 100% of the current market value of the
loaned securities.

In lending its portfolio securities, the 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. Requirements of the SEC,
which may be subject to future modifications, currently provide that the
following conditions must be met whenever the Fund's portfolio
securities are loaned: (a) the Fund must receive at least 102% cash
collateral or equivalent securities from the borrower; (b) the borrower
must increase such collateral whenever the market value of the
securities 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 an amount equal to 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; however, if a material event
adversely affecting the investment occurs, the Company's Board of
Directors 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 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 the Manager to be of good standing
and will not be made unless, in the judgment of the Manager, the
consideration to be earned from such loans would justify the risk. From
time to time, the Fund may return a part of the interest earned from the
investment of collateral received for securities loaned to: (a) the
borrower; and/or (b) a third party, which is unaffiliated with the Fund,
the Manager and which is acting as a "finder."

REPURCHASE AGREEMENTS
The Fund may agree to purchase securities from a bank or recognized
securities dealer and simultaneously commit to resell the securities to
the bank or dealer at an agreed-upon date and price reflecting a market
rate of interest unrelated to the coupon rate or maturity of the
purchased securities ("repurchase agreements"). The Fund would maintain
custody of the underlying securities prior to their repurchase; thus,
the obligation of the bank or dealer to pay the repurchase price on the
date agreed to would be, in effect, secured by such securities.  If the
value of such securities were less than the repurchase price, plus
interest, the other party to the agreement would be required to provide
additional collateral so that at all times the collateral is at least
102% of the repurchase price plus accrued interest. Default by or
bankruptcy of a seller would expose the Fund to possible loss because of
adverse market action, expenses and/or delays in connection with the
disposition of the underlying obligations. The financial institutions
with which the Fund may enter into repurchase agreements will be banks
and non-bank dealers of U.S. Government securities that are listed on
the Federal Reserve Bank of New York's list of reporting dealers, if
such banks and non-bank dealers are deemed creditworthy by the Fund's
Manager.  The Manager will continue to monitor creditworthiness of the
seller under a repurchase agreement, and will require the seller to
maintain during the term of the agreement the value of the securities
subject to the agreement to equal at least 102% of the repurchase price
(including accrued interest).  In addition, the Manager will require
that the value of this collateral, after transaction costs (including
loss of interest) reasonably expected to be incurred on a default, be
equal to 102% or greater than the repurchase price (including accrued
premium) provided in the repurchase agreement or the daily amortization
of the difference between the purchase price and the repurchase price
specified in the repurchase agreement.  The Manager will mark-to-market
daily the value of the securities. Repurchase agreements are considered
to be loans by the Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements. A reverse
repurchase agreement involves the sale of a money market instrument by
the Fund and its agreement to repurchase the instrument at a specified
time and price. The Fund will maintain a segregated account consisting
of U.S. government securities or cash or cash equivalents to cover its
obligations under reverse repurchase agreements with broker-dealers and
other financial institutions. The Fund will invest the proceeds in other
money market instruments or repurchase agreements maturing not later
than the expiration of the reverse repurchase agreement. Under the
Investment Company Act of 1940, as amended, reverse repurchase
agreements may be considered borrowings by the seller.

Reverse repurchase agreements create opportunities for increased returns
to the shareholders of the Fund but, at the same time, create special
risk considerations. 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. 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 this type of
investment technique had not been used. Conversely, if the income or
other gain from the incremental assets is not sufficient to cover this
cost, the net income or other gain of the Fund will be less than if the
reverse repurchase agreement had not been used.

Each Segment currently intends to invest not more than 33% of its net
assets in reverse repurchase agreements.


WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS

In order to secure what the Manager considers to be an advantageous
price or yield, the Fund may purchase U.S. government securities on a
when-issued basis or purchase or sell U.S. government securities for
delayed delivery. The Fund will enter into such purchase transactions
for the purpose of acquiring portfolio securities and not for the
purpose of leverage. Delivery of the securities in such cases occurs
beyond the normal settlement periods, but no payment or delivery is made
by the 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, the Fund relies on the other party to consummate
the transaction and may be disadvantaged if the other party fails to do
so.

U.S. government securities normally are subject to changes in value
based upon changes, real or anticipated, in the level of interest rates
and, to a lesser extent, the public's perception of the creditworthiness
of the issuers. In general, U.S. government securities tend to
appreciate when interest rates decline and depreciate when interest
rates rise. Purchasing U.S. government securities on a when-issued basis
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.

The Fund will at times maintain in a segregated account cash or liquid
securities equal to the amount of the Fund's when-issued or delayed-
delivery commitments. For the purpose of determining the adequacy of the
securities in the account, the deposited securities will be valued at
market or fair value. If the market or fair value of such securities
declines, additional cash or securities will be placed in the account on
a daily basis so the value of the account will equal the amount of such
commitments by the Fund. Placing securities rather than cash in the
account may have a leveraging effect on the Fund's assets. That is, to
the extent the Fund remains substantially fully invested in securities
at the time that it has committed to purchase securities on a when-
issued basis, there will be greater fluctuation in its net asset value
than if it had set aside cash to satisfy its purchase commitments. On
the settlement date, the Fund will meet its obligations from then
available cash flow, the sale of securities held in the separate
account, the sale of other securities or, although it normally would not
expect to do so, from the sale of the when-issued or delayed-delivery
securities themselves (which may have a greater or lesser value than the
Fund's payment obligations).

MONEY MARKET INSTRUMENTS

As stated in the Prospectus, the Fund may invest for temporary defensive
purposes in corporate and government bonds and notes and money market
instruments. Money market instruments in which the Fund may invest
include: U.S. government securities; certificates of deposit, time
deposits and bankers' acceptances issued by domestic banks (including
their branches located outside the United States and subsidiaries
located in Canada), domestic branches of foreign banks, savings and loan
associations and similar institutions; high grade commercial paper; and
repurchase agreements with respect to the foregoing types of
instruments. The following is a more detailed description of such money
market instruments.

Certificates of deposit ("CDs") are short-term negotiable obligations of
commercial banks. Time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at
stated interest rates. Bankers' acceptances are time drafts drawn on
commercial banks by borrowers usually in connection with international
transactions.

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 the Fund, depending upon the principal
amounts of CDs of each bank held by the Fund) and are subject to Federal
examination and to a substantial body of Federal law and regulation. As
a result of governmental regulations, domestic branches of domestic
banks are generally required to, among other things, maintain specified
levels of reserves, and are subject to other supervision and regulation
designed to promote financial soundness.

Obligations of foreign branches of domestic 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
government regulation. Such obligations are subject to different risks
than are those of domestic banks or domestic 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
domestic banks are not necessarily subject to the same or similar
regulatory requirements that apply to domestic 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 domestic bank than
about a domestic bank. CDs issued by wholly owned Canadian subsidiaries
of domestic banks are guaranteed as to repayment of principal and
interest (but not as to sovereign risk) by the domestic parent bank.

Obligations of domestic 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 governmental
regulation as well as governmental action in the country in which the
foreign bank has its head office. A domestic 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 view of the foregoing factors associated with the purchase of CDs and
TDs issued by foreign branches of domestic banks or by domestic branches
of foreign banks, SBFM will carefully evaluate such investments on a
case-by-case basis.

Savings and loan associations whose CDs may be purchased by the Fund are
supervised by the Office of Thrift Supervision and are insured by the
Savings Association Insurance Fund, which is administered by the FDIC
and is backed by the full faith and credit of the U.S. government. As a
result, such savings and loan associations are subject to regulation and
examination.

OPTIONS, FUTURES AND CURRENCY STRATEGIES

The Fund may use forward currency contracts and certain options and
futures strategies to attempt to hedge its portfolio, i.e., reduce the
overall level of investment risk normally associated with the Fund.
There can be no assurance that such efforts will succeed.

In order to assure that the Fund will not be deemed to be a "commodity
pool" for purposes of the Commodity Exchange Act, regulations of the
Commodity Futures Trading Commission ("CFTC") require that the Fund
enter into transactions in futures contracts and options on futures only
(i) for bona fide hedging purposes (as defined in CFTC regulations), or
(ii) for non-hedging purposes, provided that the aggregate initial
margin and premiums on such non-hedging positions do not exceed 5% of
the liquidation value of the Fund's assets. To attempt to hedge against
adverse movements in exchange rates between currencies, the Fund may
enter into forward currency contracts for the purchase or sale of a
specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S.
dollar or may involve two foreign currencies. The Fund may enter into
forward currency contracts either with respect to specific transactions
or with respect to its portfolio positions. For example, when the
investment adviser anticipates making a purchase or sale of a security,
it may enter into a forward currency contract in order to set the rate
(either relative to the U.S. dollar or another currency) at which the
currency exchange transaction related to the purchase or sale will be
made ("transaction hedging"). Further, when the investment adviser
believes that a particular currency may decline compared to the U.S.
dollar or another currency, the Fund may enter into a forward contract
to sell the currency the Manager expects to decline in an amount
approximating the value of some or all of the Fund's securities
denominated in that currency, or when the Manager believes that one
currency may decline against a currency in which some or all of the
portfolio securities held by the Fund are denominated, it may enter into
a forward contract to buy the currency expected to decline for a fixed
amount ("position hedging"). In this situation, the Fund may, in the
alternative, enter into a forward contract to sell a different currency
for a fixed amount of the currency expected to decline where the Manager
believes that the value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the value of
the currency in which portfolio securities of the Fund are denominated
("cross hedging"). The Fund's custodian places (i) cash, (ii) U.S.
Government securities or (iii) equity securities or debt securities (of
any grade) in certain currencies provided such assets are liquid,
unencumbered and marked to market daily, or other high-quality debt
securities denominated in certain currencies in a separate account of
the Fund having a value equal to the aggregate account of the Fund's
commitments under forward contracts entered into with respect to
position hedges and cross-hedges. If the value of the securities placed
in a separate account declines, additional cash or securities are placed
in the account on a daily basis so that the value of the amount will
equal the amount of the Fund's commitments with respect to such
contracts.

For hedging purposes, the Fund may write covered call options and
purchase put and call options on currencies to hedge against movements
in exchange rates and on debt securities to hedge against the risk of
fluctuations in the prices of securities held by the Fund or which the
Manager intends to include in its portfolio. The Fund also may use
interest rates futures contracts and options thereon to hedge against
changes in the general level in interest rates.

The Fund may write call options on securities and currencies only if
they are covered, and such options must remain covered so long as the
Fund is obligated as a writer. A call option written by the Fund is
"covered" if the Fund owns the securities or currency underlying the
option or has an absolute and immediate right to acquire that security
or currency without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian) upon
conversion or exchange of other securities or currencies held in its
portfolio. A call option is also covered if the Fund holds on a share-
for-share basis a call on the same security or holds a call on the same
currency as the call written where the exercise price of the call held
is equal to less than the exercise price of the call written or greater
than the exercise price of the call written if the difference is
maintained by the Fund in cash, Treasury bills or other high-grade,
short-term obligations in a segregated account with its custodian.

Although the Fund might not employ the use of forward currency
contracts, options and futures, the use of any of these strategies would
involve certain investment risks and transaction costs to which it might
not otherwise be subject. These risks include: dependence on the
investment adviser's ability to predict movements in the prices of
individual debt securities, fluctuations in the general fixed-income
markets and movements in interest rates and currency markets, imperfect
correlation between movements in the price of currency, options, futures
contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; the fact that skills and
techniques needed to trade options, futures contracts and options
thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; lack of
assurance that a liquid market will exist for any particular option,
futures contract or options thereon at any particular time.

Over-the-counter options in which the Fund may invest differ from
exchange traded options in that they are two-party contracts, with price
and other terms negotiated between buyer and seller, and generally do
not have as much market liquidity as exchange-traded options.  The Fund
may be required to treat as illiquid over-the-counter options purchased
and securities being used to cover certain written over-the-counter
options.

The Fund may purchase put and call options in anticipation of declines
in the value of portfolio securities or increases in the value of
securities to be acquired.  In the event that the expected changes
occur, the Fund may be able to offset the resulting adverse effect on
its portfolio, in whole or in part, through the options purchased.  The
risk assumed by the Fund in connection with such transactions is limited
to the amount of the premium and related transaction costs associated
with the option, although the Fund may be required to forfeit such
amounts in the event that the prices of securities underlying the
options do not move in the direction or to the extent anticipated.

OPTIONS ON SECURITIES

As discussed more generally above, the Fund may engage in the writing of
covered call options. The Fund may also purchase put and call options
and enter 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. 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 the 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 the Fund will normally have expiration dates between
one and six months from the date written. The exercise price of the
options may be below, equal to, or above the current 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.

The Fund may write (a) in-the-money call options when SBFM expects the
price of the underlying security to remain flat or decline moderately
during the option period, (b) at-the-money call options when SBFM
expects the price of the underlying security to remain flat or advance
moderately during the option period and (c) out-of-the-money call
options when SBFM expects that the price of the 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 as such call options are
used in equivalent transactions.

So long as the obligation of the 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 it 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.  The 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, the Fund will be required to
deposit in escrow the underlying security or other assets in accordance
with the rules of the Options Clearing Corporation ("Clearing
Corporation") or similar clearing corporation and the securities
exchange on which the option is written.

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. The Fund expects to write
options only on national securities exchanges or in the over-the-counter
market. The Fund may purchase put options issued by the Clearing
Corporation or in the over-the-counter market.

The 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 the
Fund has purchased an option and engages in a closing sale transaction,
whether it recognizes a profit or loss will depend upon whether the
amount received in the closing sale transaction is more or less than the
premium the Fund initially paid for the original option plus the related
transaction costs.

Although the Fund generally will purchase or write only those options
for which SBFM 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 certain of the facilities of the Clearing Corporation and
national securities exchanges inadequate and resulted in the institution
of special procedures, such as trading rotations, restrictions on
certain types of orders or trading halts or suspensions in one or more
options. There can be no assurance that similar events, or events that
may otherwise interfere with the timely execution of customers' orders,
will not recur. In such event, it might not be possible to effect
closing transactions in particular options. If, as a covered call option
writer, the Fund is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise.

Securities exchanges generally have established limitations governing
the maximum number of calls and puts of each class which may be held or
written, or exercised within certain 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 Fund and other clients of SBFM 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 the 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, the Fund may purchase or temporarily borrow the underlying
securities for purposes of physical delivery. By so doing, the Fund will
not bear any market risk because a 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.

Although SBFM will attempt to take appropriate measures to minimize the
risks relating to the Fund's writing of call options and purchasing of
put and call options, there can be no assurance that the Fund will
succeed in its option-writing program.

STOCK INDEX OPTIONS

The Fund may purchase put and call options and write call options on
domestic stock indexes listed on domestic exchanges in order to realize
its investment objective of capital appreciation or 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 the Canadian Market Portfolio Index, or a
narrower market index such as the Standard & Poor's 100. Indexes also
are based on an industry or market segment such as the American Stock
Exchange Oil and Gas Index or the Computer and Business Equipment Index.

Options on stock indexes are generally similar to options on stock
except that 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 or a foreign currency,
as the case may be, 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 option 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 the securities portfolio of the Fund 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 the 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 the Fund of options on stock indexes will
be subject to SBFM'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 price of individual stocks.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The Fund may invest in stock index futures contracts and options on
futures contracts that are traded on a domestic exchange or board of
trade.

The purpose of entering into a futures contract by the Fund is to
protect the Fund from fluctuations in the value of securities without
actually buying or selling the securities. For example, in the case of
stock index futures contracts, if the Fund anticipates an increase in
the price of stocks that it intends to purchase at a later time, the
Fund could enter into contracts to purchase the stock index (known as
taking a "long" position) as a temporary substitute for the purchase of
stocks. If an increase in the market occurs that influences the stock
index as anticipated, the value of the futures contracts increases and
thereby serves as a hedge against the Fund's not participating in a
market advance. The Fund then may close out the futures contracts by
entering into offsetting futures contracts to sell the stock index
(known as taking a "short" position) as it purchases individual stocks.

No consideration will be paid or received by the Fund upon the purchase
or sale of a futures contract. Initially, the Fund will be required to
deposit with the broker 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 exchange or board of trade on which the contract is
traded and brokers or members of such board of trade may charge a higher
amount). This amount is known as "initial margin" and is in the nature
of a performance bond or good faith deposit on the contract which is
returned to the Fund, upon termination of the futures contract, assuming
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 index or securities 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." In
addition, when the Fund enters into a long position in a futures
contract or an option on a futures contract, it must deposit into a
segregated account with the Fund's custodian an amount of cash or cash
equivalents equal to the total market value of the underlying futures
contract, less amounts held in the Fund's commodity brokerage account at
its broker. At any time prior to the expiration of a futures contract,
the 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.

There are several risks in connection with the use of futures contracts
as a hedging device. Successful use of futures contracts by the Fund is
subject to the ability of SBFM to predict correctly movements in the
stock market or in the direction of interest rates. These predictions
involve skills and techniques that may be different from those involved
in the management of investments in securities. In addition, there can
be no assurance there will be a perfect correlation between movements in
the price of the securities underlying the futures contract and
movements in the price of the securities that 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 market behavior or interest rates.

Positions in futures contracts may be closed out only on the exchange on
which they were entered into (or through a linked exchange) and no
secondary market exists for those contracts. In addition, although the
Fund intends to enter into futures contracts only if there is an active
market for the contracts, there is no assurance that an active market
will exist for the 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, the Fund would be required to make daily cash payments of
variation margin; in such circumstances, 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, no assurance can be given that the price of the securities
being hedged will correlate with the price movements in a futures
contract and thus provide an offset to losses on the futures contract.

CONVERTIBLE SECURITIES

Convertible securities in which the Mid Cap Growth Segment of the Fund
may invest, including both convertible debt and convertible preferred
stock, may be converted at either a stated price or stated rate into
underlying shares of common stock.  Because of this feature, convertible
securities enable an investor to benefit from increases in the market
price of the underlying common stock.  Convertible securities provide
higher yields than the underlying equity securities, but generally offer
lower yields than non-convertible securities of similar quality.  Like
bonds, the value of convertible securities fluctuates in relation to
changes in interest rates and, in addition, also fluctuates in relation
to the underlying common stock.



DEBT SECURITIES

The Fund may invest include notes, bills, commercial paper, obligations
issued or guaranteed by the government or any of its political
subdivisions, agencies or instrumentalities, and certificates of
deposit.  Debt securities represent money borrowed that obligate the
issuer (e.g., a corporation, municipality, government, government
agency) to repay the borrowed amount at maturity (when the obligation is
due and payable) and usually to pay the holder interest at specific
times.

All debt securities are subject to market risk and credit risk.  Market
risk relates to market-induced changes in a security's value, usually as
a result of changes in interest rates.  The value of the Fund's
investments in debt securities will change as the general levels of
interest rates fluctuate.  During periods of falling interest rates, the
value of the Fund's debt securities will generally rise.  Conversely,
during periods of rising interest rates, the value of the Fund's debt
securities will generally decline.  Credit risk relates to the ability
of the issuer to make payments of principal and interest.  The Fund has
no restrictions with respect to the maturities or duration of the debt
securities it holds.  The Fund's investment in fixed income securities
with longer terms to maturity or greater duration are subject to greater
volatility than the Fund's shorter-term securities.

The Fund may invest in U.S. Government securities.  Generally, these
securities include U.S. Treasury obligations and obligations issued or
guaranteed by U.S. Government agencies, instrumentalities or sponsored
enterprises.  U.S. Government securities also include Treasury receipts
and other stripped U.S. Government securities, where the interest and
principal components of stripped U.S. Government securities are traded
independently.  The Fund may also invest in zero coupon U.S. Treasury
securities and in zero coupon securities issued by financial
institutions, which represent a proportionate interest in underlying
U.S. Treasury securities.  A zero coupon security pays no interest to
its holder during its life and its value consists of the difference
between its face value at maturity and its cost.  The market values of
zero coupon securities generally are more volatile than the market
prices of securities that pay interest periodically.

ILLIQUID SECURITIES

The Fund each may invest up to an aggregate amount equal to 15% of its
net assets in illiquid securities, which term includes securities
subject to contractual or other restrictions on resale and other
instruments that lack readily available markets.

MASTER/FEEDER FUND STRUCTURE

The Board of Directors has the discretion to retain the current
distribution arrangement for the Fund while investing in a master fund
in a master/feeder fund structure.  A master/feeder fund structure is
one in which a fund (a "feeder fund"), instead of investing directly in
a portfolio of securities, invests most or all of its investment assets
in a separate registered investment company (the "master fund") with
substantially the same investment objective and policies as the feeder
fund.  Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at
the feeder fund level.  Based on the premise that certain of the
expenses of operating an investment portfolio are relatively fixed, a
larger investment portfolio may eventually achieve a lower ratio of
operating expenses to average net assets.  An existing investment
company is able to convert to a feeder fund by selling all of its
investments, which involves brokerage and other transaction costs and
realization of a taxable gain or loss, or by contributing its assets to
the master fund and avoiding transaction costs and, if proper procedures
are followed, the realization of taxable gain or loss.

INVESTMENT RESTRICTIONS

The investment restrictions below and the Fund's investment objective
have been adopted by the Company as fundamental policies of the Fund.
Under the 1940 Act, a fundamental policy may not be changed with respect
to a fund without the vote of a majority of the outstanding voting
securities of the fund.  Majority is defined in the 1940 Act as the
lesser of (a) 67% or more of the shares present at a fund meeting, if
the holders of more than 50% of the outstanding shares of the fund are
present or represented by proxy, or (b) more than 50% of outstanding
shares.

Under the investment restrictions adopted by the Company with respect to
the Fund: the Fund will not
1.	Invest more than 25% of its total assets in securities, the
issuers of which conduct their business activities in the same industry.
For purposes of this limitation, securities of the U.S. government
(including its agencies and instrumentalities) and securities of state
or municipal governments and their political subdivisions are not
considered to be issued by members of any industry.

2.	Borrow money, except that (a) the Fund 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 Fund may, to the extent
consistent with its investment policies, enter into reverse repurchase
agreements, forward roll transactions and similar investment strategies
and techniques.  To the extent that it engages in transactions described
in (a) and (b), the Fund will be limited so that no more than 331/3% 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.

3.	Issue "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

4.	Make loans.  This restriction does not apply to: (a) the purchase
of debt obligations in which the Fund 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.

5.	Purchase or sell real estate, real estate mortgages, commodities
or commodity contracts, but this restriction shall not prevent the Fund
from (a) investing in securities of issuers engaged in the real estate
business or the 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 Fund's investment objective and policies);  or (d) investing in real
estate investment trust securities.

6.	Engage in the business of underwriting securities issued by other
persons, except to the extent that the Fund may technically be deemed to
be an underwriter under the Securities Act of 1933, as amended, in
disposing of portfolio securities.

7.	Purchase or otherwise acquire any illiquid security except as
permitted under the 1940 Act for open-end investment companies, which
currently permits up to 15% of the Fund's net assets to be invested in
illiquid securities.

If any percentage restriction described above is complied with at the
time of an investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a
violation of such restriction.


DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The Directors and executive officers of the Company, 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 Fund, as defined in the 1940 Act, is indicated by an
asterisk.

Paul R. Ades, Director (Age 61).  Law firm of Paul R. Ades PLLC.  His
address is Argyle Square, 181 West Main Street, Suite C, P.O. Box 790,
Babylon, New York 11702.

Herbert Barg, Director (Age 78). Private investor. His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.

Dwight B. Crane, Director (Age 63). Professor, Graduate School of
Business Administration, Harvard University. His address is Harvard
Business School, Soldiers Field, Morgan Hall #371, Boston, Massachusetts
02163.

Frank G. Hubbard, Director (Age 63). President of Avatar International
Inc.; formerly Vice President, S&S Industries; Former Corporate Vice
President, Materials Management and Marketing Services of Huls America,
Inc.  His address is Avatar International, Inc., 87 Whittredge Road,
Summit, New Jersey 07901.

*Heath B. McLendon, Chairman of the Board, President and Chief Executive
Officer (Age 68). Managing Director of Salomon Smith Barney Inc.
("Salomon Smith Barney"); Director and President of SBFM and Travelers
Investment Adviser, Inc. ("TIA"); and formerly Chairman of the Board of
Smith Barney Strategy Advisers Inc. Mr. McLendon is a director of 78
investment companies associated with Citigroup Inc. ("Citigroup").  His
address is 7 World Trade Center, 45th Floor, New York, New York 10048.

Jerome H. Miller, Director (Age 62).  Retired, Former President, Asset
Management Group of Shearson Lehman Brothers.  His address is 27 Hemlock
Road, Manhasset, New York, NY  11030.

Ken Miller, Director (Age 58). President of Young Stuff Apparel Group,
Inc.  His address is 1411 Broadway, 6th Floor, Suite 610, New York, New
York 10018.

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; Senior Vice President and Treasurer of 83 investment
companies associated with Citigroup. His address is 125 Broad Street,
New York, New York 10004.

Alan Blake, Vice President and Investment Officer (Age 49).  Managing
Director of Salomon Smith Barney; Investment Officer of SBFM.  His
address is 7 World Trade Center, New York, New York 10048.

Lawrence Weissman, Vice President and Investment Officer (Age 38).
Managing Director of Salomon Smith Barney; Investment Officer of SBFM;
prior to 1998, portfolio manager at Neuberger & Berman, LLC; prior to
that he was a portfolio manager at TIAA-CREFF.  His address is Seven
World Trade Center, New York, New York 10048.

Timothy Woods, CFA, Vice President and Investment Officer (Age 39).
Managing Director of Salomon Smith Barney; prior to July 1999, Principal
at Bankers Trust Company and manager of the Small-Mid Cap Growth Team.
His address is Seven World Trade Center, New York, New York 10048.

Paul Brook, Controller (Age 47).  Director of Salomon Smith Barney; from
1997-1998 Managing Director of AMT Capital Services Inc.; prior to 1997
Partner with Ernst & Young LLP; 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; Secretary
of 60 investment companies associated with Citigroup.  Her address is
Seven World Trade Center, New York, New York 10048.

No officer, director or employee of Salomon Smith Barney or any parent
or subsidiary receives any compensation from the Company for serving as
an officer or Director of the Company.  The Company pays each Director
who is not an officer, director or employee of Salomon Smith Barney or
any of its affiliates a fee of $22,500 per annum plus $2,900 per meeting
attended and reimburses travel and out-of-pocket expenses.  During the
calendar year ended December 31, 2000 such expenses totaled $15,401.
The Directors of the Company were paid the following compensation for
the respective periods:









Name of Person


Aggregate
Compensation
from Company
Fiscal Year
End
04/30/01

Total Pension
or Retirement
Benefits
Accrued as
part of Fund
Expenses
Compensation
from Company
and Fund
Complex Paid
to Directors
Calendar Year
Ending
12/31/00


Number of
Funds for
Which
Director
Serves Within
Fund Complex





Paul R. Ades
$4,476
$0
$56,775
5
Herbert Barg
4,426
0
116,075
16
Dwight B. Crane
4,475
0
153,175
23
Frank G. Hubbard
4,474
0
56,675
5
Heath B. McLendon
0
0
0
78
Jerome Miller
4,473
0
56,275
5
Ken Miller
4,476
0
56,475
5

During the year in which they attain age 80, Directors are required to
change to emeritus status.  Directors Emeritus are entitled to serve in
emeritus status for a maximum of 10 years during which time they are
paid 50% of the annual retainer fee and meeting fees otherwise
applicable to the Fund Directors, together with reasonable out-of-pocket
expenses for each meeting attended.   Directors Emeritus received no
compensation from the Fund for the fiscal year ended April 30, 2001.

As of August 15, 2001, the Directors and Officers of the Fund as a
group, owned less than 1.00% of the outstanding common stock of the
Fund.

As of August 15, 2001, no person owned 5% or more of a class of shares
of the Fund.

SBFM (formerly known as SSB Citi Fund Management LLC) serves as
investment manager to the Fund pursuant to an investment management
agreement (the "Investment Management Agreement") with the Fund which
was approved by the Board of Directors, including a majority of
Directors who are not "interested persons" of the Fund or the Manager.
The Manager is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc. ("Holdings"), which in turn, is a wholly owned subsidiary
of Citigroup Inc. Subject to the supervision and direction of the
Company's Board of Directors, the Manager manages the Fund's portfolio
in accordance with the Fund's stated investment objective and policies,
makes investment decisions for the Fund, places orders to purchase and
sell securities, and employs professional portfolio managers and
securities analysts who provide research services to the Fund.  The
Manager pays the salary of any officer and employee who is employed by
both it and the Fund.  The Manager bears all expenses in connection with
the performance of its services. The Manager also: (a) assists in
supervising all aspects of the Fund's operations except those it
performs under its investment advisory agreement; b) supplies the Fund
with office facilities (which may be in SBFM's own offices), statistical
and research data, data processing services, clerical, accounting and
bookkeeping services, including, but not limited to, the calculation of
(i) the net asset value of shares of the Fund, (ii) applicable deferred
sales charges ("Deferred Sales Charges") and similar fees and charges
and (iii) distribution fees, internal auditing and legal services,
internal executive and administrative services, and stationary and
office supplies; and (c) prepares reports to shareholders of the Fund,
tax returns and reports to and filings with the Securities and Exchange
Commission ("SEC") and state blue sky authorities.

SBFM (through its predecessor entities) has been in the investment
counseling business since 1968 and renders investment advice to a wide
variety of individual, institutional and investment company clients that
had aggregate assets under management as of July 31, 2001 in excess of
$125 billion.

As compensation for investment management services, the Fund pays the
Manager a fee computed daily and paid monthly at the annual rate of
0.75% of the Fund's average daily net assets.  For the fiscal year ended
April 30, 2001, the Fund incurred $3,819,896 in management fees.

Code of Ethics

Pursuant to Rule 17j-1 of the 1940 Act, the Company, the investment
adviser 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 SEC.


Counsel and Auditors

Willkie Farr & Gallagher serve as counsel to the Company. The Directors
who are not "interested persons" of the Company have selected Stroock &
Stroock & Lavan LLP to serve as their legal counsel.

KPMG LLP, independent auditors, 757 Third Avenue, New York, New York
10017, serve as auditors of the Fund and has been selected to render an
opinion on the Fund's financial statements for the fiscal year ending
April 30, 2002.

Custodian and Transfer Agent

PFPC Trust Company ("PPFC"), located at 8800 Tinicum Blvd.,
Philadelphia, Pennsylvania 19153, serves as the custodian of the Fund.
Under its agreement with the Company on behalf of the Fund, PFPC holds
the Fund's portfolio securities and keeps all necessary accounts and
records. For its services, PFPC receives a monthly fee based upon the
month-end market value of securities held in custody and also receives
securities transaction charges. The assets of the Fund are held under
bank custodianship in compliance with the 1940 Act.

Citi Fiduciary Trust Company (the "transfer agent") located at 125 Broad
Street, New York, New York 10004, serves as the transfer agent and
shareholder services agent of the Fund.

PFPC Global Fund Services ("sub-transfer agent"), located at P.O. Box
9699, Providence Rhode Island 02940-9699, serves as a sub-transfer agent
to the Fund to render certain shareholder record-keeping and accounting
services functions.

The Fund has also engaged the services of Primerica Shareholder Services
("sub-transfer agent") as a sub-transfer agent for PFSI Accounts.  This
sub-transfer agent is located at 3100 Breckinridge Blvd., Bldg 200,
Duluth, GA 30099.

Distributors

Salomon Smith Barney, Inc., located at 388 Greenwich Street, New York,
New York 10013, and PFS Distributors, Inc. ("PFS Distributors"), located
at 3120 Breckinridge Blvd., Duluth, Georgia 30099 serve as the Fund's
distributors pursuant to separate written agreements dated June 5, 2000
(the "Distribution Agreements") which were approved by the Fund 's Board
of Directors, including a majority of the Directors who are not
interested persons of the Fund (the "Independent Directors"), on July
26, 2001.  These Distribution Agreements replace the Distribution
Agreement with CFBDS, Inc.

Salomon Smith Barney and PFS Distributors may be deemed to be
underwriters for purposes of the Securities Act of 1933. From time to
time, Salomon Smith Barney or PFS 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 Distributors
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 the Fund.

For the fiscal year ended April 30, 2001, Salomon Smith Barney and CFBDS
received $4,151,000 in sales charges from the sale of Class A shares.
For the fiscal year ended April 30, 2001, Salomon Smith Barney and CFBDS
received $2,675,000 in sales charges from the sale of Class L shares.
For the fiscal year ended April 30, 2001, Salomon Smith Barney received
$45,000 in contingent Deferred Sales Charges on redemptions of the
fund's Class A shares.  For the fiscal year ended April 30, 2001 Salomon
Smith Barney received $598,000 in Deferred Sales Charges on redemptions
of the fund's Class B shares.  For the fiscal year ended April 30, 2001,
Salomon Smith Barney received $170,000 in Deferred Sales Charges on
redemptions of the fund's Class L shares.

When payment is made by the investor before the settlement date, unless
otherwise noted by the investor, the funds will be held as a free credit
balance in the investor's brokerage account and Salomon Smith Barney may
benefit from the temporary use of the funds.  The Company's Board of
Directors has been advised of the benefits to Salomon Smith Barney
resulting from these settlement procedures and will take such benefits
into consideration when reviewing the Investment Management and
Distribution Agreements for continuance.

Distribution Arrangements

To compensate Salomon Smith Barney or PFS Investments Inc. ("PFSI") for
the services they provide and for the expense it bears under the
Distribution Agreement, the Fund has adopted a services and distribution
plan (the "Plan") pursuant to Rule l2b-1 under the 1940 Act. The only
Classes of shares being offered for sale through PFSI are Class A shares
and Class B shares. Under the Plan, Salomon Smith Barney is paid a fee
with respect to shares of each portfolio sold through Salomon Smith
Barney and PFSI is paid a fee with respect to shares of each portfolio
sold through PFSI.  Under the Plan, the Fund pays Salomon Smith Barney
or PFSI (who pays its Registered Representative), 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 Fund's average daily net assets
attributable to the Class A, Class B and Class L shares. In addition,
the Fund pays Salomon Smith Barney a distribution fee with respect to
the Class B and Class L shares (and pays PFSI with respect to Class A
and 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; payment to
and expenses of Salomon Smith Barney Financial Consultants, PFS
Investment 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 PFSI associated with the sale of fund shares, including
lease, utility, communications and sales promotion expenses. The Class B
and Class L distribution fee is calculated at the annual rate of 0.75%
of the value of the Fund's average daily net assets attributable to the
shares of the respective Class.

The following service and distribution fees were incurred by the Fund
pursuant to a Distribution Plan during the periods indicated:


Fiscal Year
Ended
4/30/01

Class A

$  101,713

Class B

$ 676,506

Class L

$ 4,023,253

Each of PFSI 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 are distribution expenses
within the meaning of the Plan and may be paid from amounts received by
Salomon Smith Barney from the fund under the Plan.

For the fiscal year ended April 30, 2001, Salomon Smith Barney incurred
distribution expenses totaling $16,822,071, consisting of $808,660 for
advertising, $39,242 for printing and making of prospectuses, $4,562,811
for support services, $11,283,712 to Salomon Smith Barney Financial
Consultants, and $127,646 for accruals for interest on the excess of
Salomon Smith Barney expenses incurred in distributing the Fund's shares
over the sum of the distributions fees and Deferred Sales Charges
received by Salomon Smith Barney from the Fund.

From time to time, PFSI or its 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, PFSI 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 the fund.

Under its terms, each Distribution Plan continues from year to year,
provided such continuance is approved annually by vote of the Board of
Directors, including a majority of the Independent Directors who have no
direct or indirect financial interest in the operation of the Plan.  The
Plan may not be amended to increase the amount of the service and
distribution fees without shareholder approval, and all amendments of
the Plan also must be approved by the directors including all of the
Independent Directors in the manner described above.  The Plan may be
terminated with respect to a Class at any time, without penalty, by vote
of a majority of the Independent Directors or, with respect to the Fund,
by vote of a majority of the outstanding voting securities of the Fund
(as defined in the 1940 Act).  Pursuant to the Plans, Salomon Smith
Barney and PFSI will provide the Board of Directors with periodic
reports of amounts expended under the Plan and the purpose for which
such expenditures were made.

Portfolio Transactions

The Manager arranges for the purchase and sale of the Fund's securities
and selects brokers and dealers (including Salomon Smith Barney) which
in its best judgment provide prompt and reliable execution at favorable
prices and reasonable commission rates.  The Manager may select brokers
and dealers that provide it with research services and may cause the
Fund to pay such brokers and dealers commissions which exceed those
other brokers and dealers may have charged, if it views the commissions
as reasonable in relation to the value of the brokerage and/or research
services.  In selecting a broker, including Salomon Smith Barney, for a
transaction, the primary consideration is prompt and effective execution
of orders at the most favorable prices. Subject to that primary
consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis.

Decisions to buy and sell securities for the Fund are made by the
Manager, subject to the overall supervision and review of the Company's
Board of Directors. Portfolio securities transactions for the Fund are
effected by or under the supervision of the Manager.

Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. There is generally no stated commission in the
case of securities traded in the over-the-counter market, but the price
of those securities includes an undisclosed commission or mark-up. Over-
the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and
executions may be obtained elsewhere. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and
the prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down. For the fiscal year ended April
30, 2001, the Fund paid total brokerage commissions of $809,824.

In executing portfolio transactions and selecting brokers or dealers, it
is the Fund's policy to seek the best overall terms available.  The
Manager, in seeking the most favorable price and execution, considers
all factors it deems relevant, including, for example, the price, the
size of the transaction, the reputation, experience and financial
stability of the broker-dealer involved and the quality of service
rendered by the broker-dealer in other transactions. The Manager
receives research, statistical and quotation services from several
broker-dealers with which it places the Fund's portfolio transactions.
It is possible that certain of the services received primarily will
benefit one or more other accounts for which the Manager exercises
investment discretion. Conversely, the Fund may be the primary
beneficiary of services received as a result of portfolio transactions
effected for other accounts. The Manager's fee under the management
agreement is not reduced by reason of its receiving such brokerage and
research services. The Company's Board of Directors, in its discretion,
may authorize the Manager to cause the Fund to pay a broker that
provides brokerage and research services to the Manager a commission in
excess of that which another qualified broker would have charged for
effecting the same transaction. Salomon Smith Barney will not
participate in commissions from brokerage given by the Fund to other
brokers or dealers and will not receive any reciprocal brokerage
business resulting therefrom. For the fiscal year ended April 30, 2001,
the Fund paid $10,252 in commissions on brokerage transactions directed
to brokers because of research provided.

In accordance with Section 17(e) of the 1940 Act and Rule 17e-1
thereunder, the Company's Board of Directors has determined that any
portfolio transaction for the Fund may be executed through Salomon Smith
Barney or an affiliate of Salomon Smith Barney if, in the Manager's
judgment, the use of Salomon Smith Barney or an affiliate is likely to
result in price and execution at least as favorable as those of other
qualified brokers and if, in the transaction, Salomon Smith Barney or
the affiliate charges the Fund a commission rate consistent with those
charged by Salomon Smith Barney or an affiliate to comparable
unaffiliated customers in similar transactions. In addition, under SEC
rules, Salomon Smith Barney may directly execute such transactions for
the Fund on the floor of any national securities exchange, provided: (a)
the Board of Directors has expressly authorized Salomon Smith Barney to
effect such transactions; and (b) Salomon Smith Barney annually advises
the Fund of the aggregate compensation it earned on such transactions.
For the fiscal year ended April 30, 2001, the fund paid $64,513 in
brokerage commissions to Salomon Smith Barney.

Even though investment decisions for the Fund are made independently
from those of the other accounts managed by the Manager, investments of
the kind made by the Fund also may be made by those other accounts. When
the Fund and one or more accounts managed by the Manager are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Manager to be equitable. In some cases, this procedure
may adversely affect the price paid or received by the Fund or the size
of the position obtained for or disposed of by the Fund.

The Fund will not purchase securities during the existence of any
underwriting or selling group relating to the securities, of which the
Manager is a member, except to the extent permitted by the SEC.  Under
certain circumstances, the Fund may be at a disadvantage because of this
limitation in comparison with other Funds that have similar investment
objectives but that are not subject to a similar limitation.

Portfolio Turnover

The Fund's portfolio turnover rate (the lesser of purchases or sales of
portfolio securities during the year, excluding purchases or sales of
short-term securities, divided by the monthly average value of portfolio
securities) is generally not expected to exceed 100%. The rate of
turnover will not be a limiting factor, however, when the Fund deems it
desirable to sell or purchase securities.
The Manager will rebalance the allocation of value and growth securities
in the Fund's portfolio at the end of each quarter and at any time in
which the percentage of the Fund's portfolio invested in either value or
growth securities equals or exceeds 55% of the Fund's total assets
invested in both value and growth securities for a period of more than
10 days.  As a result, when securities in either the value or growth
style segment of the Fund's portfolio have underperformed the securities
in the segment of the portfolio devoted to the other style, the Manager
will rebalance the portfolio to increase the Fund's assets allocated to
the style that underperformed, and decrease the assets allocated to the
style that outperformed, the other style.  The Manager will also monitor
the Fund's portfolio to ensure that no more than 25% of the Fund's
assets are concentrated in the securities of companies in the same
industry and that the Fund complies with its other investment policies.
The Manager may cause the Fund to sell or purchase securities to ensure
compliance with the Fund's investment policies. For the 2001 fiscal
year, the fund's portfolio turnover rate was 53%.

PURCHASE OF SHARES

General

Investors may purchase shares from a Salomon Smith Barney Financial
Consultant, a PFS Investments Registrered Representative, a broker-
dealer, financial intermediary or a financial institution (each called a
"Service Agent"). In addition, certain investors, including qualified
retirement plans purchasing through certain Service Agents, may purchase
shares directly from the Fund.  When purchasing shares of the Fund,
investors must specify whether the purchase is for Class A, Class B,
Class L or Class Y shares.  Salomon Smith Barney and Service Agents 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 a sub-transfer agent are not subject
to a maintenance fee.

Investors in Class A, Class B and Class L shares may open an account in
the Fund by making an initial investment of at least $1,000 for each
account, or $250 for an IRA or a Self-Employed Retirement Plan, in the
Fund. 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(c) of the Code, the
minimum initial investment required for Class A, Class B and Class L
shares and the subsequent investment requirement for all Classes in the
Fund is $25.  There are no minimum investment requirements for Class A
shares for employees of Citigroup and its subsidiaries, including
Salomon Smith Barney, unitholders who invest distributions from a Unit
Investment Trust ("UIT") sponsored by Salomon Smith Barney, and
Directors/Trustees of any of the Smith Barney Mutual Funds, and their
spouses and children.  The Fund reserves the right to waive or change
minimums, to decline any order to purchase its shares and to suspend the
offering of shares from time to time.  Shares purchased will be held in
the shareholder's account by the applicable sub-transfer agent. Share
certificates are issued only upon a shareholder's written request to the
applicable sub-transfer agent.

Purchase orders received by the Fund or a Salomon Smith Barney Financial
Consultant prior to the close of regular trading on the New York Stock
Exchange ("NYSE"), on any day the Fund calculates its net asset value,
are priced according to the net asset value determined on that day (the
''trade date'').  Orders received by a Salomon Smith Barney Financial
Consultant 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, provided the order is received by
the Fund or the Fund's agent prior to its close of business. For shares
purchased through a Service Agent purchasing through Salomon Smith
Barney, payment for shares of the Fund is due on the third business day
after the trade date. In all other cases, payment must be made with the
purchase order.

Systematic Investment Plan.  Shareholders may make additions to their
accounts at any time by purchasing shares through a service known as the
Systematic Investment Plan.  Under the Systematic Investment Plan,
Salomon Smith Barney or a sub-transfer agent is authorized through
preauthorized transfers of at least $25 on a monthly basis or at least
$50 on a quarterly basis (not available to PFSI Accounts) to charge the
shareholder's account held  with a bank or other financial institution
on a monthly (not available to PFSI Accounts) or quarterly basis as
indicated by the shareholder, to provide for systematic additions to the
shareholder's fund account. A shareholder who has insufficient funds to
complete the transfer will be charged a fee of up to $25 by Salomon
Smith Barney or a sub-transfer agent.  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
Fund or a Service Agent.

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:









Amount
of
Investme
nt

Sales Charge
As a %
of
Transaction

Sales
Charge as a
% of Amount
Invested

Broker/Dealer
Compensation
as %
Of Offering
Price

Less than
$25,000
5.00%
5.26%
4.50%
$ 25,000 -
49,999
4.25
4.44
3.83
50,000 -
99,999
3.75
3.90
3.38
100,000 -
249,999
3.25
3.36
2.93
250,000 -
499,999
2.75
2.83
2.48
500,000 -
999,000
2.00
2.04
1.80
1,000,000 or
more
-0-*
-0-*
-0-*

*	Purchases of Class A shares of $1,000,000 or more will be made at
net asset value without any initial sales charge, but will be
subject to a Deferred Sales Charge of 1.00% on redemptions made
within 12 months of purchase. The Deferred Sales Charge on Class A
shares is payable to Salomon Smith Barney, which compensates
Service Agents whose clients make purchases of $1,000,000 or more.
The Deferred Sales Charge is waived in the same circumstances in
which the Deferred Sales Charge applicable to Class B and Class L
shares is waived. See "Deferred Sales Charge Provisions" and
"Waivers of Deferred Sales Charge."

Members of the selling group may receive up to 90% of the sales charge
and may be deemed to be underwriters of the Fund as defined in the 1933
Act.  The reduced sales charges shown above apply to the aggregate of
purchases of Class A shares of the Fund made at one time by "any
person," which includes an individual 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 other Smith Barney Mutual Funds on June 12, 1998 will not be
subject to the 1.00% 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 (except purchases of Class Y shares by Smith
Barney Allocation Series Inc., for which there is no minimum purchase
amount).

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 funds 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 Fund 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 fund 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 the Fund (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 the Fund, 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 (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;  and (j) purchases of Class
A shares by Section 403(b) or Section 401(a) or (k) accounts associated
with Citistreet Retirement Programs. 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 the Fund 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 Fund
and of other Smith Barney Mutual Funds that are offered with a sales
charge as currently listed under "Exchange Privilege" then held by such
person and applying the sales charge applicable to such aggregate.  In
order to obtain such discount, the purchaser must provide sufficient
information at the time of purchase to permit verification that the
purchase qualifies for the reduced sales charge.  The right of
accumulation is subject to modification or discontinuance at any time
with respect to all shares purchased thereafter.

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 that the investor refers to such Letter when placing orders.
For purposes of a Letter of Intent, the "Amount of Investment" as
referred to in the preceding sales charge table includes (i) all Class A
shares of the Fund 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 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 Salomon Smith Barney Financial
Consultant 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 (except purchases of Class Y shares by Smith Barney
Allocation Series Inc., for which there is no minimum purchase amount).
Such investors must make an initial minimum purchase of $5,000,000 in
Class Y shares of the Fund and agree to purchase a total of $15,000,000
of Class Y shares of the Fund 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 Fund's Class A
shares, which may include a Deferred Sales Charge of 1.00%. Please
contact a Salomon Smith Barney Financial Consultant or the transfer
agent for further information.

Deferred Sales Charge Provisions

"Deferred Sales Charges Shares" are applicable to:(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
that 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 Fund 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.


Year Since Purchase Payment Was
Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

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 owned by the
shareholders 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 a redemption is made first of shares representing
capital appreciation, next of shares representing the reinvestment of
dividends and capital gain distributions and finally of other shares
held by the shareholder for the longest period of time.  The length of
time that 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 Fund shares being redeemed will be considered to represent, as
applicable, capital appreciation or dividend and capital gain
distribution reinvestments in such other funds.  For Federal income tax
purposes, the amount of the Deferred Sales Charge will reduce the gain
or increase the loss, as the case may be, on the amount realized on
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
of the Fund at $10 per share for a cost of $1,000.  Subsequently, the
investor acquired 5 additional shares of the Fund 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) redemptions of shares within 12 months
following the death or disability of the shareholder; (c) redemptions of
shares made in connection with qualified distributions from retirement
plans or IRAs upon the attainment of age 591/2; (d) involuntary
redemptions; and (e) redemptions of shares to effect a combination of
the Fund 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 Salomon Smith Barney in the case of shareholders who are also
Salomon Smith Barney clients or by the transfer agent in the case of all
other shareholders) 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. The Fund offers Class A, Class L, and, in limited
circumstances. 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 $1 million.

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 Salomon Smith Barney Financial
Consultant, 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 fund. 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 fund 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 fund. Any Class L shares not
converted will continue to be subject to the distribution fee.

Participating plans wishing to acquire shares of the Fund 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 Salomon
Smith Barney Financial Consultant.

Retirement Programs Investing in Class B Shares:   Class B shares of the
Fund are not available for purchase by participating plans opened on or
after June 21, 1996, but may continue to be purchased by any
participating plan in the Smith Barney 401(k) Program opened prior to
such date and originally investing in such Class. Class B shares
acquired are subject to a Deferred Sales Charge of 3.00% of redemption
proceeds if the participating plan terminates within eight years of the
date the participating plan first enrolled in the Smith Barney 401(k)
Program.

At the end of the eighth year after the date the participating plan
enrolled in the Smith Barney 401(k) Program, the participating plan will
be offered the opportunity to exchange all of its Class B shares for
Class A shares of the same fund. Such participating plan 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 the exchange has occurred, a participating
plan will not be eligible to acquire additional Class B shares, but
instead may acquire Class A shares of the same fund. If the
participating plan elects not to exchange all of its Class B shares at
that time, each Class B share held by the participating plan will have
the same conversion feature as Class B shares held by other investors.
See "Purchase of Shares-Deferred Sales Charge Alternatives."

No Deferred Sales Charge is imposed on redemptions of Class B shares to
the extent that the net asset value of the shares redeemed does not
exceed the current net asset value of the shares purchased through
reinvestment of dividends or capital gain distributions, plus the
current net asset value of Class B shares purchased more than eight
years prior to the redemption, plus increases in the net asset value of
the shareholder's Class B shares above the purchase payments made during
the preceding eight years. Whether or not the Deferred Sales Charge
applies to the redemption by a participating plan depends on the number
of years since the participating plan first became enrolled in the Smith
Barney 401(k) Program, unlike the applicability of the Deferred Sales
Charge to redemptions by other shareholders, which depends on the number
of years since those shareholders made the purchase payment from which
the amount is being redeemed.

The Deferred Sales Charge will be waived on redemptions of Class B
shares in connection with lump-sum or other distributions made by a
participating plan as a result of: (a) the retirement of an employee in
the participating plan; (b) the termination of employment of an employee
in the participating plan; (c) the death or disability of an employee in
the participating plan; (d) the attainment of age 591/2 by an employee
in the participating plan; (e) hardship of an employee in the
participating plan to the extent permitted under Section 401(k) of the
Code; or (f) redemptions of shares in connection with a loan made by the
participating plan to an employee.

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 their own account;
(c) a trusteer or other fiduciary purchasing shares for a single trust
estate or single fiduciary account; and (d) 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 the Fund 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
Salomon Smith Barney Financial Consultant or a Service Agent.

Salomon Smith Barney Accounts

Purchases of shares of the funds must be made through a brokerage
account maintained with Salomon Smith Barney, an introducing broker or
an investment dealer in the selling group. In addition, certain
investors, including qualified retirement plans and certain other
institutional investors, may purchase shares directly from the funds
through 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 Fund offers two Classes of shares to investors purchasing through
PFSI: Class A shares and Class B shares.

Initial purchase of shares of the Fund must be made through a PFS
Investments Registered Representative by completing the appropriate
application found in the prospectus.  The completed application should
be forwarded to Primerica Shareholder Services, P.O. Box 9662,
Providence, RI 02940-5016.  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
Primerica Shareholder Services.  In processing applications and
investments, Primerica Shareholder Services acts as agent for the
investor and for PFSI and also as agent for the distributor, in
accordance with the terms of the prospectus.  If the transfer agent
ceases to act as such, a successor company named by the Fund will act in
the same capacity so long as the account remains open.

Shares purchased will be held in the shareholder's account by Primerica
Shareholder Services.  Share certificates are issued only upon a
shareholder's written request to Primerica Shareholder Services. A
shareholder that has insufficient funds to complete any purchase will be
charged a fee of up to $30 per returned purchase by Primerica
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. Subsequent investments
of at least $50 may be made for each Class.  For the Fund's Systematic
Investment Plan, the minimum initial investment requirement for Class A
and Class B shares and the subsequent investment requirement for each
Class is $25.  There are no minimum investment requirements in Class A
shares for 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 Fund reserves the
right to waive or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to time.
Purchase orders received by the transfer agent or a sub-transfer agent
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.

Initial purchases of Fund 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 the Primerica
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
Primerica 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 may make additions to their accounts at any time.
Shareholders should contact Primerica 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 telephone subsequent
investments by any person in his account, he should decline the
telephone transaction option on the account application.  The minimum
telephone subsequent investment is $250 and can be up to a maximum of
$10,000.  By requesting a subsequent purchase by telephone, you
authorize Primerica Shareholder Services to transfer funds from the bank
account provided for the amount of the purchase.  A shareholder that has
insufficient funds to complete the transfer will be charged a fee of up
to $30 by Primerica 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
Primerica Shareholder Services.  Subsequent investments by telephone may
not be available if the shareholder cannot reach Primerica Shareholder
Services 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
subsequent investment procedure described above.

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. Primerica 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.

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 Primerica Shareholder Services may be
obtained by contacting the Client Services Department at (800) 544-5445.

Determination of Public Offering Price

The Fund offers its shares to current shareholders of the Fund on a
continuous basis.  The public offering price for a Class A, Class B and
Class Y share of the Fund is equal to the net asset value per share at
the time of purchase, plus for Class A shares an initial sales charge
based on the aggregate amount of the investment.  The public offering
price for Class A share purchases, including applicable rights of
accumulation, equaling or exceeding $500,000 is equal to the net asset
value per share at the time of purchase and no sales charge is imposed
at the time of purchase.  The public offering price for a Class L share
includes a 1.00% initial sales charge.  A Deferred Sales Charge is
imposed on certain redemptions of Class B shares, and on Class L shares
and Class A shares (purchased in amounts exceeding $500,000) redeemed
within one year of purchase.

REDEMPTION OF SHARES

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

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 together with the redemption request.  Any signature
appearing on a share certificate, stock power or written 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 unless
more than one such redemption request is made in any 10-day period or
the redemption proceeds are to be sent to an address other than the
address of record.  Unless otherwise directed, redemption proceeds will
be mailed to an investor's address of record.  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.

If a shareholder holds shares in more than one Class, any request 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 transfer agent receives further instructions from Salomon Smith
Barney, or if the shareholder's account is not with Salomon Smith
Barney, from the shareholder directly.  The redemption proceeds will be
remitted on or before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or as 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.

Distributions in Kind

If the Board of Directors of the Fund determines that it would be
detrimental to the best interests of the remaining shareholders to make
a redemption payment wholly in cash, the Fund may pay, in accordance
with SEC rules, any portion of a redemption in excess of the lesser of
$250,000 or 1.00% of the Fund's net assets by a distribution in kind of
portfolio securities in lieu of cash. Securities issued as a
distribution in kind may incur brokerage commissions when shareholders
subsequently sell those securities.

a. Salomon Smith Barney Accounts

Shares held by Salomon Smith Barney as custodian must be redeemed by
submitting a written request to a Salomon Smith Barney Financial
Consultant. 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 Investment Funds Inc.
  -Smith Barney Premier Selections All Cap Growth Fund
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
transfer agent together with the redemption request.  Any signature
appearing on a share certificate, stock power or written 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 unless
more than one such redemption request is made in any 10-day period.
Redemption proceeds will be mailed to an investor's address of record.
The  transfer agent may require additional supporting documents for
redemptions made by corporations, executors, administrators, directors
or guardians.  A redemption request will not be deemed properly received
until the transfer agent receives all required documents in proper form.
Redempton proceeds will be mailed to shareholder's address of record.

Telephone Redemption and Exchange Program.  Shareholders who do not have
a brokerage account may be eligible to redeem and exchange shares by
telephone.  To determine if a shareholder is entitled to participate in
this program, he or she should contact the transfer agent at 1-800-451-
2010.  Once eligibility is confirmed, the shareholder must complete and
return a Telephone/Wire Authorization Form, along with a signature
guarantee, that will be provided by a sub-transfer agent upon request.
(Alternatively, an investor may authorize telephone redemptions on the
new account application with the applicant's signature guarantee when
making his/her initial investment in the Fund.)

Redemptions.   Redemption requests of up to $50,000 of any class or
classes of shares of the Fund may be made by eligible shareholders by
calling the transfer agent at 1-800-451-2010.  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 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 have a correspondent relationship with a member bank.  The
Fund reserves the right to charge shareholders a nominal fee for each
wire redemption.  Such charges, if any, will be assessed against the
shareholder's 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 1-800-
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 Fund nor its agents will be liable for following
instructions communicated by telephone that are reasonably believed to
be genuine.  The Fund 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 Fund 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.

Redemptions in Kind.  In conformity with applicable rules of the SEC,
redemptions may be paid in portfolio securities, in cash or any
combination of both, as the Board of Directors may deem advisable;
however, payments shall be made wholly in cash unless the Board of
Directors believes economic conditions exist that would make such a
practice detrimental to the best interests of the Fund and its remaining
shareholders.  If a redemption is paid in portfolio securities, such
securities will be valued in accordance with the procedures described
under "Share Price" in the prospectus and a shareholder would incur
brokerage expenses if these securities were then converted to cash.

b.	PFS Investments Accounts

Shareholders may redeem for cash some or all of their shares of the Fund
at any time by sending a written request in proper form directly to a
sub-transfer agent, Primerica 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 Primerica 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 Primerica
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 Primerica Shareholder Services at (800) 544-
5445 between 8:00 a.m. and 8:00 p.m. eastern standard time to obtain the
proper forms.

A shareholder may utilize Primerica 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 Primerica
Shareholder Services at (800) 544-5445 between 9:00 a.m. and 6:00 p.m.
eastern time any day that the NYSE is open.  Telephone redemption may
not be available if the shareholder cannot reach Primerica Shareholder
Services 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.

A shareholder may utilize Primerica 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 Primerica
Shareholder Services at (800) 554-2374. Facsimile redemptions may not be
available if the shareholder cannot reach Primerica 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
Primerica 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. Primerica 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 monthly or quarterly.
Withdrawals of at least $50 may be made under the Withdrawal Plan by
redeeming as many shares of the Fund 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. (With respect to Withdrawal Plans in effect
prior to November 7, 1994, any applicable Deferred Sales Charge will be
waived on amounts withdrawn that do not exceed 2.00% per month of the
value of the shareholder's shares that are subject to a Deferred Sales
Charge). To the extent withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in the Fund, there will be a
reduction in the value of the shareholder's investment, and continued
withdrawal payments may reduce the shareholder's investment and
ultimately exhaust it. Withdrawal payments should not be considered as
income from investment in the Fund. Furthermore, as it generally would
not be advantageous to a shareholder to make additional investments in
the Fund at the same time he or she is participating in the Withdrawal
Plan, purchases by such shareholder in amounts of less than $5,000
ordinarily will not be permitted. All dividends and distributions on
shares in the Withdrawal Plan are reinvested automatically at net asset
value in additional shares of the Fund.

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.  For additional information, shareholders should contact a
Salomon Smith Barney Financial Consultant or one of the Fund's sub-
transfer agent. A shareholder who purchases shares directly through a
sub-transfer agent may continue to do so and applications for
participation in the Withdrawal Plan must be received by the sub-
transfer agent no later than the eighth day of the month to be eligible
for participation beginning with that month's withdrawal.

VALUATION OF SHARES

The net asset value per share of the Fund's Classes is calculated on
each day, Monday through Friday, except days on which the NYSE is
closed. The NYSE currently is scheduled to be closed on 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 the Fund in valuing its assets.

Securities listed on a national securities exchange will be valued on
the basis of the last sale on the date on which the valuation is made
or, in the absence of sales, at the mean between the closing bid and
asked prices. Over-the-counter securities will be valued at the mean
between the closing bid and asked prices on each day, or, if market
quotations for those securities are not readily available, at fair
value, as determined in good faith by the Company's Board of Directors.
Short-term obligations with maturities of 60 days or less are valued at
amortized cost, which constitutes fair value as determined by the
Company's Board of Directors. Amortized cost involves valuing an
instrument at its original cost to the Fund 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. All other securities and other assets of the Fund will be
valued at fair value as determined in good faith by the Company's Board
of Directors.

EXCHANGE PRIVILEGE

Except as noted below and in the Prospectus, shareholders of any of the
Smith Barney Mutual Funds may exchange all or part of their shares for
shares of the same class of other Smith Barney Mutual Funds, to the
extent such shares are offered for sale in the shareholder's state of
residence, on the basis of relative net asset value per share at the
time of exchange as follows:

A. Class A and Class Y shares of the Fund may be exchanged without
a sales charge for the respective shares of any of the Smith
Barney Mutual Funds.

B. Class B shares of any fund may be exchanged without a sales
charge. Class B shares of the Fund exchanged for Class B shares of
another Smith Barney Mutual Fund will be subject to the higher
applicable Deferred Sales Charge of the two funds and, for
purposes of calculating Deferred Sales Charge rates and conversion
periods, will be deemed to have been held since the date the
shares being exchanged were deemed to be purchased.

C. Class L shares of any fund may be exchanged without a sales
charge. For purposes of Deferred Sales Charge applicability, Class
L shares of the Fund exchanged for Class L shares of another Smith
Barney Mutual Fund will be deemed to have been owned since the
date the shares being exchanged were deemed to be purchased.

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 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 Salomon Smith Barney
Financial Consultant or 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 fund being acquired. Salomon
Smith Barney and PFSI reserve the right to reject any exchange request.
The exchange privilege may be modified or terminated at any time after
written notice to shareholders. As stated in the prospectus for shares
distributed through PFSI, the exchange privilege is limited.

Additional Information Regarding Exchanges.  The Fund is not designed to
provide investors with a means of speculation on short-term market
movements.  A pattern of frequent exchanges by investors can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund and its shareholders.  Accordingly, if the
Fund's management in its sole discretion determines that an investor is
engaged in excessive trading, the Fund, with or without prior notice,
may temporarily or permanently terminate the availability to that
investor of Fund exchanges, or reject in whole or part any purchase or
exchange request with respect to such investor's account.  Such
investors also may be barred from purchases and exchanges involving
other funds in the Smith Barney Mutual Fund family.   Accounts under
common ownership or control will be considered as one account for
purposes of determining a pattern of excessive trading. The Fund may
notify an investor of rejection of a purchase or exchange order after
the day the order is placed.  If an exchange request is rejected, the
Fund will take no other action with respect to the shares until it
receives further instructions from the investor.  The Fund's policy on
excessive trading applies to investors who invest in the Fund directly
or through Service Agents, but does not apply to any systematic
investment  plans described in the prospectus.

During times of drastic economic or market conditions, the Fund may
suspend the Exchange Privilege temporarily without notice and treat
exchange requests based on their separate components - redemption orders
with a simultaneous request to purchase the other fund's shares.  In
such a case, the redemption request would be processed at the Fund's
next determined net asset value but the purchase order would be
effective only at the net asset value next determined after the fund
being purchased formally accepts the order, which may result in the
purchase being delayed.

PERFORMANCE DATA

From time to time, the Company may advertise the Fund's total return and
average annual total return in advertisements and/or other types of
sales literature.  These figures are computed separately for Class A,
Class B, Class L and Class Y shares of the Fund.  These figures are
based on historical earnings and are not intended to indicate future
performance.  Total return is computed for a specified period of time
assuming deduction of the maximum sales charge, if any, from the initial
amount invested and reinvestment of all income dividends and capital
gain distributions on the reinvestment dates at prices calculated as
stated in this prospectus, then dividing the value of the investment at
the end of the period so calculated by the initial amount invested and
subtracting 100%.  The standard average annual total return, as
prescribed by the SEC is derived from this total return, which provides
the ending redeemable value.  Such standard total return information may
also be accompanied with nonstandard total return information for
differing periods computed in the same manner but without annualizing
the total return or taking sales charges into account.  The Company may
also include comparative performance information in advertising or
marketing the Fund's shares.  Such performance information may include
data from Lipper Analytical Services, Inc. and other financial
publications.

From time to time, the Company may quote the Fund's total return in
advertisements or in reports and other communications to shareholders.
The Company may include comparative performance information in
advertising or marketing the Fund'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, Investor's Business
Daily, Money, Morningstar Mutual Fund Values, The New York Times, USA
Today and The Wall Street Journal. To the extent any advertisement or
sales literature of the Fund describes the expenses or performance of
any Class it will also disclose such information for the other Classes.

Average Annual Total Return

"Average annual total return" figures are computed according to a
formula prescribed by the SEC. The formula can be expressed as follows:

	P (1 + T)n = ERV

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

The ERV assumes complete redemption of the hypothetical investment at
the end of the measuring period.  The Fund's net investment income
changes in response to fluctuations in interest rates and the expenses
of the Fund.

The Fund's average annual total return for Class A shares assuming the
maximum applicable sales charge was as follows for the periods indicated
(reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(23.08)% per annum during the period from the Fund's
commencement of operations on June 30, 2000, through April
30,2001.

Class A's average annual total return assumes that the maximum
applicable sales charge assessed by the Fund has been deducted from the
hypothetical investment.  Had the maximum 4.00% sales charge not been
deducted, Class A's average annual total return would have been (19.04)%
for the same period.

The Fund's average annual total return for Class B shares assuming the
maximum applicable Deferred Sales Charge was as follows for the periods
indicated (reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(23.50)% per annum during the period from the Fund's
commencement of operations on June 30, 2000, through April
30, 2001.

Had the maximum applicable Deferred Sales Charge not been deducted at
the time of redemption, Class B's average annual total return would have
been (19.47)% for the same period.

The Fund's average annual total return for Class L shares assuming the
maximum applicable Deferred Sales Charge was as follows for the periods
indicated (reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(21.11)% per annum during the period from the Fund's
commencement of operations on June 30, 2000, through April
30, 2001.

Had the maximum applicable Deferred Sales Charge not been deducted at
the time of redemption, Class L's average annual total return would have
been (19.47)% for the same period.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

The Fund's policy is to distribute its net investment income and net
realized capital gains, if any, annually.  The Fund may also pay
additional dividends shortly before December 31 from certain amounts of
undistributed ordinary income and capital gains realized in order to
avoid a federal excise tax liability.

If a shareholder does not otherwise instruct, dividends and capital
gains distributions will be reinvested automatically in additional
shares of the same Class at net asset value, subject to no sales charge
or Deferred Sales Charge.  A shareholder may change the option at any
time by notifying his Salomon Smith Barney Financial Consultant or
Dealer Representative.  A shareholder whose account is held directly at
the sub-transfer agent should notify the sub-transfer agent in writing,
requesting a change to this reinvest option.

The per share dividends on Class B and Class L shares of the Fund may be
lower than the per share dividends on Class A and Class Y shares
principally as a result of the distribution fee applicable with respect
to Class B and Class L shares. The per share dividends on Class A shares
of the Fund may be lower than the per share dividends on Class Y shares
principally as a result of the service fee applicable to Class A shares.
Distributions of capital gains, if any, will be in the same amount for
Class A, Class B, Class L and Class Y shares.

Taxes

The following is a summary of the material United States federal income
tax considerations regarding the purchase, ownership and disposition of
shares of the Fund.  Each prospective shareholder is urged to consult
his own tax adviser with respect to the specific federal, state, local
and foreign tax consequences of investing in the Fund.  The summary is
based on the laws in effect on the date of this SAI, which are subject
to change.


The Fund and Its Investments

The Fund intends to qualify to be treated as a regulated investment
company each taxable year under the Code.  To so qualify, the Fund must,
among other things: (a) derive at least 90% of its gross income in each
taxable year from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of stock
or securities or foreign currencies, or other income (including, but not
limited to, gains from options, futures or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the end of each
quarter of the Fund's taxable year, (i) at least 50% of the market value
of the Fund's assets is represented by cash, securities of other
regulated investment companies, United States government securities and
other securities, with such other securities limited, in respect of any
one issuer, to an amount not greater than 5% of the Fund's assets and
not greater than 10% of the outstanding voting securities of such issuer
and (ii) not more than 25% of the value of its assets is invested in the
securities (other than United States government securities or securities
of other regulated investment companies) of any one issuer or any two or
more issuers that the Fund controls and which are determined to be
engaged in the same or similar trades or businesses or related trades or
businesses.

As a regulated investment company, the Fund will not be subject to
United States federal income tax on its investment company taxable
income (i.e., taxable income other than any excess of net realized long-
term capital gains over net realized short-term capital losses ("net
capital gains")) and its net capital gains, if any, that it distributes
to its shareholders, provided an amount equal to at least 90% of its
investment company taxable income, plus or minus certain other
adjustments as specified in the Code, and 90% of its net tax-exempt
income for the taxable year is distributed in compliance with the Code's
timing and other requirements but will be subject to tax at regular
corporate rates on any taxable income or gains it does not distribute.
The Code imposes a 4% nondeductible excise tax on the Fund to the extent
it does not distribute by the end of any calendar year at least 98% of
its net investment income for that year and 98% of the net amount of its
capital gains (both long-term and short-term) for the one-year period
ending, as a general rule, on October 31 of that year.  For this
purpose, however, any income or gain retained by the Fund that is
subject to corporate income tax will be considered to have been
distributed by year-end.  In addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will be increased or
decreased to reflect any underdistribution or overdistribution, as the
case may be, from the previous year.  The Fund anticipates that it will
pay such dividends and will make such distributions as are necessary in
order to avoid the application of this tax.

If, in any taxable year, the Fund 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 Fund in computing its taxable income.  In addition, in
the event of a failure to qualify, the Fund's distributions, to the
extent derived from the Fund'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 Fund 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 the Fund failed to qualify as a
regulated investment company for a period greater than one taxable year,
the Fund may be required to recognize any net built-in gains with
respect to certain of its assets (the excess of the aggregate gains,
including items of income, over aggregate losses that would have been
realized if it had been liquidated) in order to qualify as a regulated
investment company in a subsequent year.

The Fund's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts
on foreign currencies) will be subject to special provisions of the Code
(including provisions relating to "hedging transactions" and
"straddles") that, among other things, may affect the character of gains
and losses realized by the Fund (i.e., may affect whether gains or
losses are ordinary or capital), accelerate recognition of income to the
Fund and defer Fund losses.  These rules could therefore affect the
character, amount and timing of distributions to shareholders.  These
provisions also (a) will require the Fund to mark-to-market certain
types of the positions in its portfolio (i.e., treat them as if they
were closed out) and (b) may cause the Fund to recognize income without
receiving cash with which to pay dividends or make distributions in
amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes.  The Fund will monitor its transactions, will
make the appropriate tax elections and will make the appropriate entries
in its books and records when it acquires any foreign currency, forward
contract, option, futures contract or hedged investment in order to
mitigate the effect of these rules and prevent disqualification of the
Fund as a regulated investment company.

The Fund's investment in Section 1256 contracts, such as regulated
futures contracts, most foreign currency forward contracts traded in the
interbank market and options on most stock indices, are subject to
special tax rules.  All section 1256 contracts held by the Fund at the
end of its taxable year are required to be marked to their market value,
and any unrealized gain or loss on those positions will be included in
the Fund's income as if each position had been sold for its fair market
value at the end of the taxable year.  The resulting gain or loss will
be combined with any gain or loss realized by the Fund from positions in
section 1256 contracts closed during the taxable year.  Provided such
positions were held as capital assets and were not part of a "hedging
transaction" nor part of a "straddle," 60% of the resulting net gain or
loss will be treated as long-term capital gain or loss, and 40% of such
net gain or loss will be treated as short-term capital gain or loss,
regardless of the period of time the positions were actually held by the
Fund.

Foreign Investments.  Dividends or other income (including, in some
cases, capital gains) received by the Fund from investments in foreign
securities may be subject to withholding and other taxes imposed by
foreign countries.  Tax conventions between certain countries and the
United States may reduce or eliminate such taxes in some cases.  The
Fund will not be eligible to elect to treat any foreign taxes paid by it
as paid by its shareholders, who therefore will not be entitled to
credits for such taxes on their own tax returns.  Foreign taxes paid by
the Fund will reduce the return from the Fund's investments.

Passive Foreign Investment Companies.  If the Fund purchases shares in
certain foreign investment entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United States federal income
tax on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a
taxable dividend by the Fund to its shareholders.  Additional charges in
the nature of interest may be imposed on the Fund in respect of deferred
taxes arising from such distributions or gains.  If the Fund were to
invest in a PFIC and elected to treat the PFIC as a "qualified electing
fund" under the Code, in lieu of the foregoing requirements, the Fund
might be required to include in income each year a portion of the
ordinary earnings and net capital gains of the qualified electing fund,
even if not distributed to the Fund, and such amounts would be subject
to the 90% and excise tax distribution requirements described above.  In
order to make this election, the Fund would be required to obtain
certain annual information from the PFICs in which it invests, which may
be difficult or not possible to obtain.

The Fund may also make an election that would result in the Fund being
treated as if it had sold and repurchased all of its PFIC stock at the
end of each year.  In this case, the Fund would report gains as ordinary
income and would deduct losses as ordinary losses to the extent of
previously recognized gains. The election, once made, would be effective
for all subsequent taxable years of the Fund, unless revoked with the
consent of the Internal Revenue Service (the "IRS").  By making the
election, the Fund could potentially ameliorate the adverse tax
consequences with respect to its ownership of shares in a PFIC, but in
any particular year may be required to recognize income in excess of the
distributions it receives from PFICs and its proceeds from dispositions
of PFIC stock.  The Fund may have to distribute this "phantom" income
and gain to satisfy its distribution requirement and to avoid imposition
of the 4% excise tax.  The Fund will make the appropriate tax elections,
if possible, and take any additional steps that are necessary to
mitigate the effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions.  Any dividend declared by the Fund in
October, November or December of any calendar year and payable to
shareholders of record on a specified date in such a month shall be
deemed to have been received by each shareholder on December 31 of such
calendar year and to have been paid by the Fund not later than such
December 31, provided such dividend is actually paid by the Fund during
January of the following calendar year.  The Fund intends to distribute
annually to its shareholders substantially all of its investment company
taxable income and any net capital gains.  The Fund currently expects to
distribute any such excess annually to its shareholders.  However, if
the Fund retains for investment an amount equal to all or a portion of
its net capital gains, it will be subject to a corporate tax (currently
at a rate of 35%) on the amount retained.  In that event, the Fund will
designate such retained amounts as undistributed capital gains in a
notice to its shareholders who (a) will be required to include in income
for United Stares federal income tax purposes, as long-term capital
gains, their proportionate shares of the undistributed amount, (b) will
be entitled to credit their proportionate shares of the 35% tax paid by
the Fund on the undistributed amount against their United States federal
income tax liabilities, if any, and to claim refunds to the extent their
credits exceed their liabilities, if any, and (c) will be entitled to
increase their tax basis, for United States federal income tax purposes,
in their shares by an amount equal to 65% of the amount of undistributed
net capital gains included in the shareholder's income.  Organizations
or persons not subject to federal income tax on such net capital gains
will be entitled to a refund of their pro rata share of such taxes paid
by the Fund upon filing appropriate returns or claims for refund with
the IRS.

Dividends of net investment income and distributions of net realized
short-term capital gains are taxable to a United States shareholder as
ordinary income, whether paid in cash or in shares.  Distributions of
net-long-term capital gains, if any, that the Fund designates as capital
gains dividends are taxable as long-term capital gains, whether paid in
cash or in shares and regardless of how long a shareholder has held
shares of the Fund.  Dividends and distributions paid by the Fund
attributable to dividends on stock of U.S. corporations received by the
Fund, with respect to which the Fund meets certain holding period
requirements, will be eligible for the deduction for dividends received
by corporations. Distributions in excess of the Fund's current and
accumulated earnings and profits will, as to each shareholder, be
treated as a tax-free return of capital to the extent of a shareholder's
basis in his shares of the Fund, and as a capital gain thereafter (if
the shareholder holds his shares of the Fund as capital assets).
Shareholders receiving dividends or distributions in the form of
additional shares should be treated for United States federal income tax
purposes as receiving a distribution in an amount equal to the amount of
money that the shareholders receiving cash dividends or distributions
will receive, and should have a cost basis in the shares received equal
to such amount.

Investors considering buying shares just prior to a dividend or capital
gain distribution should be aware that, although the price of shares
just purchased at that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may nevertheless be taxable
to them. If the Fund is the holder of record of any stock on the record
date for any dividends payable with respect to such stock, such
dividends are included in the Fund's gross income not as of the date
received but as of the later of (a) the date such stock became ex-
dividend with respect to such dividends (i.e., the date on which a buyer
of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date the Fund acquired such stock.  Accordingly,
in order to satisfy its income distribution requirements, the Fund may
be required to pay dividends based on anticipated earnings, and
shareholders may receive dividends in an earlier year than would
otherwise be the case.

Sales of Shares.  Upon the sale or exchange of his shares, a shareholder
will realize a taxable gain or loss equal to the difference between the
amount realized and his basis in 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, and will be long-term capital gain or loss if the
shares are held for more than one year and short-term capital gain or
loss if the shares are held for one year or less.  Any loss realized on
a sale or exchange will be disallowed to the extent the shares disposed
of are replaced, including replacement through the reinvesting of
dividends and capital gains distributions in the Fund, within a 61-day
period 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
increased to reflect the disallowed loss.  Any loss realized by a
shareholder on the sale of a Fund share held by the shareholder for six
months or less will be treated for United States federal income tax
purposes as a long-term capital loss to the extent of any distributions
or deemed distributions of long-term capital gains received by the
shareholder with respect to such share. If a shareholder incurs a sales
charge in acquiring shares of the Fund, disposes of those shares within
90 days and then 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 will not
be taken into account in computing gain or loss on the original shares
to the extent the subsequent sales charge is reduced.  Instead, the
disregarded portion of the original sales charge will be added to the
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 second 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.  The Fund may be required to withhold, for United
States federal income tax purposes, up to 31% of the dividends,
distributions and redemption proceeds payable to shareholders who fail
to provide the Fund with their correct taxpayer identification number or
to make required certifications, or who have been notified by the IRS
that they are subject to backup withholding.  Certain shareholders are
exempt from backup withholding.  Backup withholding is not an additional
tax and any amount withheld may be credited against a shareholder's
United States federal income tax liabilities.

Notices.  Shareholders will be notified annually by the Fund as to the
United States federal income tax status of the dividends, distributions
and deemed distributions attributable to undistributed capital gains
(discussed above in "Taxes - Taxation of United States Shareholders -
Dividends and Distributions") made by the Fund to its shareholders.
Furthermore, shareholders will also receive, if appropriate, various
written notices after the close of the Fund's taxable year regarding the
United States federal income tax status of certain dividends,
distributions and deemed distributions that were paid (or that are
treated as having been paid) by the Fund to its shareholders during the
preceding taxable year.

Other Taxation

Distributions also may be subject to additional state, local and foreign
taxes depending on each shareholder's particular situation.

The foregoing is only a summary of certain material tax consequences
affecting the Fund and its shareholders.  Shareholders are advised to
consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.

ADDITIONAL INFORMATION

The Company was incorporated on September 29, 1981 under the laws of the
state of Maryland under the name Hutton Investment Series Inc.  The
Company's corporate name was changed on December 29, 1988, July 30, 1993
and October 28, 1994, to SLH Investment Portfolios Inc., Smith Barney
Shearson Investment Funds Inc., and Smith Barney Investment Funds Inc.,
respectively.

The Company offers shares of eight separate series with a par value of
$.001 per share.  The Fund offers shares currently classified into four
Classes - A, B, L and Y.  Each Class of the Fund represents an identical
interest in the Fund's investment portfolio.  As a result, the Classes
have the same rights, privileges and preferences, except with respect
to:  (a) the designation of each Class; (b) the effect of the respective
sales charges; if any, for each class; (c) the distribution and/or
service fees borne by each Class pursuant to the Plan; (d) the expenses
allocable exclusively to each Class; (e) voting rights on matters
exclusively affecting a single Class; (f) the exchange privilege of each
Class; and (g) the conversion feature of the Class B shares.  The
Company's Board of Directors does not anticipate that there will be any
conflicts among the interests of the holders of the different Classes.
The Directors, on an ongoing basis, will consider whether any such
conflict exists and, if so, take appropriate action.

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 for the purpose of voting
upon the question or removal of any Director when requested in writing
to do so by the record holders of not less than 10% of the outstanding
shares of the Fund.  At such a meeting, a Director may be removed after
the holders of record of not less than a majority of the outstanding
shares of the Fund have declared that the Director be removed either by
declaration in writing or by votes cast in person or by proxy.  Except
as set forth above, the Directors shall continue to hold office and may
appoint successor Directors.

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

Annual and Semi-annual Reports.  The Fund sends its shareholders a semi-
annual report and an audited annual report, which include listings of
investment securities held by the Fund at the end of the period covered.
In an effort to reduce the Fund's printing and mailing costs, the Fund
consolidates the mailing of its semi-annual and annual reports by
household. This consolidation means that a household having multiple
accounts with the identical address of record will receive a single copy
of each report.  In addition, the Fund also consolidates the mailing of
its Prospectus so that a shareholder having multiple accounts (that is,
individual, IRA and/or Self-Employed Retirement Plan accounts) will
receive a single Prospectus annually. Shareholders who do not want this
consolidation to apply to their accounts should contact their Salomon
Smith Barney Financial Consultant or the Transfer Agent.

FINANCIAL STATEMENTS

The Fund's annual report for the fiscal year ended April 30, 2001 was
filed on July 6, 2001, Accession Number 0000950130-01-502898, and is
incorporated in its entirety by reference.


OTHER INFORMATION

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 four "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.




36

11
Smith Barney
Premier Selections Global Growth Fund
Seven World Trade Center
New York, New York 10048
1-800-451-2010

Statement of Additional
Information


August 28, 2001

This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current combined Prospectus
of Smith Barney Premier Selections Global Growth Fund (the "Fund"),
Smith Barney Premier Selections All Cap Growth Fund and the Smith Barney
Premier Selections Large Cap Fund dated August 28, 2001, as amended or
supplemented from time to time, and should be read in conjunction with
the Fund's Prospectus. The Fund is a series of Smith Barney Investment
Funds Inc. (the "Company"). The Fund's Prospectus may be obtained from a
Service Agent (as defined on page 41) or by writing or calling the Fund
at the address or telephone number set forth above. This SAI, although
not in itself a prospectus, is incorporated by reference into the
Prospectus in its entirety.

TABLE OF CONTENTS
Page

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES	2
INVESTMENT RESTRICTIONS	31
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY	32
PURCHASE OF SHARES	41
REDEMPTION OF SHARES	51
VALUATION OF SHARES	56
EXCHANGE PRIVILEGE	57
PERFORMANCE DATA	58
DIVIDENDS, DISTRIBUTIONS AND TAXES	60
ADDITIONAL INFORMATION	65
FINANCIAL STATEMENTS	66
OTHER INFORMATION	66




INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The prospectus discusses the Fund's investment objective and policies.
This section contains supplemental information concerning the types of
securities and other instruments in which the Fund may invest, the
investment policies and portfolio strategies the Fund may utilize and
certain risks associated with these investments, policies and
strategies.  Smith Barney Fund Management LLC ("SBFM" or the "Manager")
serves as investment manager to the Fund.

The Fund's investment objectives may be changed only by the ''vote of a
majority of the outstanding voting securities'' as defined in the
Investment Company Act of 1940 (the ''1940 Act'').   However, the Fund's
investment policies are nonfundamental, and thus may be changed by the
Board of Directors, provided such change is not prohibited by the Fund's
fundamental investment restrictions (described under Investment
Restrictions) or applicable law, and any such change will first be
disclosed in the then current prospectus.  Refer to the "Investment
Practices" and "Risk Factors" for further information on the Fund's
investments.

Under unusual economic or market conditions as determined by the
Manager, for defensive purposes the Fund may depart from its principal
investment strategies and temporarily invest all or a major portion of
its assets in all types of money market and short-term debt securities
(including U.S. money market securities).  To the extent the Fund's
assets are invested for temporary defensive purposes, they will not be
invested in a manner designed to achieve the Fund's investment
objective.

US Equity Segment

The investment objective of the US Equity segment is capital
appreciation.  Although the segment may receive current income from
dividends, interest and other sources, income is only an incidental
consideration of the Fund.  The segment attempts to achieve its
investment objective by investing primarily in common stocks of
companies that the Manager believes are experiencing, or have the
potential to experience, growth in earnings that exceed the average
earnings growth rate of companies having securities included in the S&P
500.  Although the Manager anticipates that the assets of the segment
ordinarily will be invested primarily in common stocks of U.S.
companies, the segment may invest in convertible securities, preferred
stocks, securities of foreign issuers, warrants and restricted
securities.  In addition, when the Manager believes that market
conditions warrant, the segment may invest for temporary defensive
purposes in corporate and U.S. government bonds and notes and money
market instruments.  The segment is also authorized to borrow in an
amount of up to 5% of its total assets for extraordinary or emergency
purposes, and may borrow up to 33 1/3% of its total assets less
liabilities, for leveraging purposes.  See  "Leveraging."

International Equity Segment

Under normal market conditions, the International Equity segment invests
at least 80% of its assets in  diversified equity securities consisting
of dividend and non-dividend paying common stock, preferred stock,
convertible debt and rights and warrants to obtain such securities and
may invest up to 20% of the Fund's assets in bonds, notes and other debt
securities (consisting of securities issued in the Eurocurrency markets
or obligations of the United States or foreign governments and their
political sub-divisions) or established non-United States issuers.

In seeking to achieve its objective, the International Equity segment
presently expects to invest its assets primarily in common stocks of
established non-United States companies which in the opinion of the
Manager have potential for growth of capital.

Except as otherwise provided, the International Equity segment will
invest at least 80% of its assets in companies organized or governments
located in any area of the world other than the United States, such as
the Far East (e.g., Japan, Hong Kong, Singapore, Malaysia), Western
Europe (e.g., United Kingdom, Germany, the Netherlands, France, Italy,
Switzerland), Eastern Europe (e.g., the Czech Republic, Hungary, Poland,
and the countries of the former Soviet Union), Central and South America
(e.g., Mexico, Chile, and Venezuela), Australia, Canada and such other
areas and countries as the Manager may determine from time to time.
Allocation of the Fund's investments will depend upon the relative
attractiveness of the international markets and particular issuers.
Concentration of the Fund's assets in one or a few countries or
currencies will subject the Fund to greater risks than if the Fund's
assets were not geographically concentrated.

It is expected that securities of the International Equity segment will
ordinarily be traded on a stock exchange or other market in the country
in which the issuer is principally based, but may also be traded on
markets in other countries including, in many cases, the United States
securities exchanges and over-the-counter markets.

To the extent that the assets of the Interntional Equity segment are not
otherwise invested as described above, the assets may be held in cash,
in any currency, or invested in U.S. as well as foreign high quality
money market instruments and equivalents.

Each of the following investment practices is subject to the limitations
set forth under "Investment Restrictions."

Foreign Securities (US Equity Segment)  The US Equity segment  may
invest up to 10% of its net assets (at the time of investment) in
foreign securities. The US Equity segment may invest directly in foreign
issuers or invest in depositary receipts.  The  investments in foreign
securities of the US Equity segment may involve greater risk than
investments in securities of U.S. issuers.  Because the value of a
depositary receipt is dependent upon the market price of an underlying
foreign security, depositary receipts are subject to most of the risk
associated with investing in foreign securities directly.  There are
certain risks involved in investing in foreign securities, including
those resulting from fluctuations in currency exchange rates,
revaluation of currencies, future political or economic developments and
the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public
information concerning issuers, and the fact that foreign companies are
not generally subject to uniform accounting, auditing and financial
reporting standards or to other regulatory practices and requirements
comparable to those applicable to domestic companies.  Moreover,
securities of many foreign companies may be less liquid and their prices
more volatile than securities of comparable domestic companies.  In
addition, with respect to certain foreign countries, there is the
possibility of expropriation, confiscatory taxation and limitations on
the use or removal of funds or other assets of the Fund, including the
withholding of dividends. The risks of investing in foreign securities
are greater for securities of emerging market issuers because political
or economic instability, lack of market liquidity, and negative
government actions like currency controls or seizure of private
businesses or property are more likely.

EQUITY SECURITIES

Common Stocks (International Equity Segment).  The International Equity
segment may purchase 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 Stocks and Convertible Securities (International Equity
Segment).  The International Equity segment may invest in convertible
debt and preferred stocks.  Convertible debt securities and preferred
stock entitle the holder to acquire the issuer's stock by exchange or
purchase for a predetermined rate.  Convertible securities are subject
both to the credit and interest rate risks associated with fixed income
securities and to the stock market risk associated with equity
securities.

Warrants (US Equity Segment)  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, warrants may be
considered more speculative than certain other types of investments.
Also, 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 (International Equity Segment).  The International Equity
segment may purchase warrants.  Warrants acquired by the International
Equity segment entitle it to buy common stock from the issuer at a
specified price and time.  Warrants are subject to the same market risks
as stocks, but may be more volatile in price.  The Fund's investment in
warrants will not entitle it to receive dividends or exercise voting
rights and will become worthless if the warrants cannot be profitably
exercised before the expiration dates.

REITs (International Equity Segment).  The International Equity segment
may invest in shares of real estate investment trusts (REITs), which are
pooled investment vehicles that invest in real estate or real estate
loans or interests.  Investing in REITs involves risks similar to those
associated with investing in equity securities of small capitalization
companies.  REITs are dependent upon management skills, are not
diversified, and are subject to risks of project financing, default by
borrowers, self-liquidation, and the possibility of failing to qualify
for the exemption from taxation on distributed amounts under the
Internal Revenue Code of 1986, as amended (the "Code").

Restricted Securities (US Equity Segment)  Restricted securities are
those that may not be sold publicly without first being registered under
the Securities Act of 1933, as amended (the "1933 Act").  For that
reason, the US Equity segment may not be able to dispose of restricted
securities at a time when, or at a price at which, it desires to do so
and may have to bear expenses associated with registering the
securities.  At any one time, the Fund's aggregate holdings of
restricted securities, repurchase agreements having a duration of more
than five business days, and securities lacking readily available market
quotations will not exceed 15% of the Fund's total assets.

Illiquid and Restricted Securities (International Equity Segment). The
International Equity segment may invest up to 15% of its assets in
securities (excluding those subject to Rule 144A under the 1933 Act),
with contractual or other restrictions on resale and other instruments
that are not readily marketable.

ADRs, EDRs and GDRs (International Equity Segment).  The International
Equity segment may also purchase American Depository Receipts ("ADRs"),
European Depository Receipts ("EDRs") and Global Depository Receipts
("GDRs") or other securities representing underlying shares of foreign
companies.  ADRs are publicly traded on exchanges or over-the-counter in
the United States and are issued through "sponsored" or "unsponsored"
arrangements.  In a sponsored ADR arrangement, the foreign issuer
assumes the obligation to pay some or all of the depository's
transaction fees, whereas under an unsponsored arrangement, the foreign
issuer assumes no obligation and the depository's transaction fees are
paid by the ADR holders.  In addition, less information is available in
the United States about an unsponsored ADR than about a sponsored ADR,
and the financial information about a company may not be as reliable for
an unsponsored ADR as it is for a sponsored ADR.  The fund may invest in
ADRs through both sponsored and unsponsored arrangements.

FIXED INCOME SECURITIES

To the extent that the Fund may invest in fixed income securities, it
may invest in the securities described below as noted.

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

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

Convertible securities generally are subordinated to other similar but
nonconvertible 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 non-convertible securities.

Corporate Debt Obligations (International Equity Segment).  The
International Equity segment may invest in corporate debt obligations
and zero coupon securities issued by financial institutions and
corporations.  Corporate debt obligations are subject to the risk of an
issuer's inability to meet principal and interest payments on the
obligations and may also be subject to price volatility due to such
factors as market interest rates, market perception of the
creditworthiness of the issuer and general market liquidity.  Zero
coupon securities are securities sold at a discount to par value and on
which interest payments are not made during the life of the security.

U.S. Government Securities (International Equity Segment).   The U.S.
Government securities in which the Fund may invest include: bills,
certificates of indebtedness, and notes and bonds issued by the U.S.
Treasury or by agencies or instrumentalities of the U.S. Government.
Some U.S. Government securities, such as U.S. Treasury bills and bonds,
are supported by the full faith and credit of the U.S. Treasury; others
are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as
those of the Student Loan Marketing Association and the Federal Home
Loan Mortgage Corporation ("FHLMC"), are supported only by the credit of
the instrumentality. Mortgage participation certificates issued by the
FHLMC generally represent ownership interests in a pool of fixed-rate
conventional mortgages. Timely payment of principal and interest on
these certificates is guaranteed solely by the issuer of the
certificates. Other investments will include Government National
Mortgage Association Certificates ("GNMA Certificates"), which are
mortgage-backed securities representing part ownership of a pool of
mortgage loans on which timely payment of interest and principal is
guaranteed by the full faith and credit of the U.S. Government. While
the U.S. Government guarantees the payment of principal and interest on
GNMA Certificates, the market value of the securities is not guaranteed
and will fluctuate.

Sovereign Debt Obligations (Interntional Equity Segment).  The
International Equity segment may purchase sovereign debt instruments
issued or guaranteed by foreign governments or their agencies, including
debt of developing countries. Sovereign debt may be in the form of
conventional securities or other types of debt instruments such as loans
or loan participations. 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 repayment of principal and interest may depend
on political as well as economic factors.  Although some sovereign debt,
such as Brady Bonds, is collateralized by U.S. Government securities,
repayment of principal and interest is not guaranteed by the U.S.
Government.

Loans and Other Direct Debt Instruments (International Equity Segment).
The International Equity segment may purchase interests in amounts owed
by a corporate, governmental, or other borrower to another party.  These
interests may represent amounts owed to lenders or lending syndicates
(loans and loan participations), to suppliers of goods or services
(trade claims or other receivables), or to other parties.  Direct debt
instruments involve the risk of loss in case of default or insolvency of
the borrower and may offer less legal protection to the Fund in the
event of fraud or misrepresentation.  In addition, loan participations
involve a risk of insolvency of the lending bank or other financial
intermediary.  Direct debt instruments may also include standby
financing commitments that obligate the Fund to supply additional cash
to the borrower on demand.

Floating and Variable Rate Income Securities (International Equity
Segment).  Income securities may provide for floating or variable rate
interest or dividend payments. The floating or variable rate may be
determined by reference to a known lending rate, such as a bank's prime
rate, a certificate of deposit rate or the London InterBank Offered Rate
(LIBOR).  Alternatively, the rate may be determined through an auction
or remarketing process.  The rate also may be indexed to changes in the
values of interest rate or securities indexes, currency exchange rates
or other commodities.  The amount by which the rate paid on an income
security may increase or decrease may be subject to periodic or lifetime
caps.  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 (International
Equity Segment). The International Equity segment may invest in "zero
coupon" and other deep discount securities of governmental or private
issuers.  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 (International Equity Segment).  The International
Equity segment may invest in income securities bearing coupon rates
higher than prevailing market rates.  Such "premium" securities are
typically purchased at prices greater than the principal amounts payable
on maturity.  The International Equity segment will not amortize the
premium paid for such securities in calculating its net investment
income.  As a result, in such cases the purchase of such securities
provides a fund a higher level of investment income distributable to
shareholders on a current basis than if the Fund purchased securities
bearing current market rates of interest.  If securities purchased by a
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, a fund will recognize a capital
loss if it holds such securities to maturity.

Yankee Bonds (International Equity Segment). The International Equity
segment may invest in U.S. dollar-denominated bonds sold in the United
States by non-U.S. issuers ("Yankee bonds").  As compared with bonds
issued in the United States, such bond issues normally carry a higher
interest rate but are less actively traded.

Loan Participations and Assignments (International Equity Segment). The
International Equity segment may invest a portion of its assets in loan
participations ("Participations").  By purchasing a Participation, the
International Equity segment acquires some or all of the interest of a
bank or other lending institution in a loan to a corporate or government
borrower.  The Participations typically will result in the International
Equity segment having a contractual relationship only with the lender
and not with the borrower.  The International Equity segment will have
the right to receive payments of principal, interest and any fees to
which it is entitled only from the lender selling the Participation and
only upon receipt by the lender of the payments from the borrower.  In
connection with purchasing Participations, the International Equity
segment generally will have no right to enforce compliance by the
borrower with the terms of the loan agreement relating to the loan, nor
any rights of set-off against the borrower, and the International Equity
segment may not directly benefit from any collateral supporting the loan
in which it has purchased the Participation.  As a result, the
International Equity segment will assume the credit risk of both the
borrower and the lender that is selling the Participation.  In the event
of the insolvency of the lender selling a Participation, the
International Equity segment may be treated as a general creditor of the
lender and may not benefit from any set-off between the lender and the
borrower.  The International Equity segment will acquire Participations
only if the lender interpositioned between the Fund and the borrower is
determined by management to be creditworthy.

The International Equity segment also may invest in assignments of
segments of loans from third parties ("Assignments").  When it purchases
Assignments from lenders, the Fund will acquire direct rights against
the borrower on the loan.  However, since Assignments are arranged
through private negotiations between potential assignees and assignors,
the rights and obligations acquired by the Fund as the purchaser of an
Assignment may differ from, and be more limited than, those held by the
assigning lender.  The International Equity segment may have difficulty
disposing of Assignments and Participations.  The liquidity of such
securities is limited, and the Fund anticipates that such securities
could be sold only to a limited number of institutional investors.  The
lack of a liquid secondary market could have an adverse impact on the
value of such securities and on the International Equity segment's
ability to dispose of particular Assignments or Participations when
necessary to meet the International Equity segment's liquidity needs or
in response to a specific economic event, such as a deterioration in the
creditworthiness of the borrower.  The lack of a liquid secondary market
for Assignments and Participations also may make it more difficult for
the International Equity segment to assign a value to those securities
or purposes of valuing the International Equity segment and calculating
its net asset value.

Short-Term Investments (The Fund).  In certain circumstances the Fund
may invest without limitation in all types of short-term money market
instruments, including U.S. Government securities; certificates of
deposit, time deposits 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. To the extent the Fund is
investing in short-term investments as a temporary defensive posture,
the applicable Fund's investment objective may not be achieved.

Commercial Paper (International Equity Segment). 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
the Fund, 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.  The Fund,
therefore, may not invest in a master demand note, if as a result, more
than 15% of the value of the International Equity segment's total assets
would be invested in such notes and other illiquid securities.

Commercial Bank Obligations (International Equity Segment).  For the
purposes of the International Equity segment's investment policies with
respect to bank obligations, obligations of foreign branches of U.S.
banks and of foreign banks may be general obligations of the parent bank
in addition to the issuing bank, or may be limited by the terms of a
specific obligation and by government regulation.  As with investment in
foreign securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject a fund to
investment risks that are different in some respects from those of
investments in obligations of domestic issuers.  Although a fund will
typically acquire obligations issued and supported by the credit of U.S.
or foreign banks having total assets at the time of purchase in excess
of U.S. $1 billion (or the equivalent thereof), this U.S. $1 billion
figure is not a fundamental investment policy or restriction of the
Fund.  For calculation purposes with respect to the U.S. $1 billion
figure, the assets of a bank will be deemed to include the assets of its
U.S. and foreign branches.

Money Market Instruments (US Equity Segment).  As stated in the
prospectus, the US Equity segment may invest for defensive purposes in
corporate and government bonds and notes and money market instruments.
Money market instruments in which the Fund may invest include: U.S.
government securities; certificates of deposit, time deposits and
bankers' acceptances issued by domestic banks (including their branches
located outside the United States and subsidiaries located in Canada),
domestic branches of foreign banks, savings and loan associations and
similar institutions; high grade commercial paper; and repurchase
agreements with respect to the foregoing types of instruments. The
following is a more detailed description of such money market
instruments.

Bank Obligations (US Equity Segment). Certificates of deposits ("CDs")
are short-term, negotiable obligations of commercial banks.  Time
deposits ("TDs") are non-negotiable deposits maintained in banking
institutions for specified periods of time at stated interest rates.
Bankers' acceptances are time drafts drawn on commercial banks by
borrowers, usually in connection with international transactions.

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 the Fund, depending upon the principal
amount of CDs of each bank held by the Fund) and are subject to federal
examination and to a substantial body of federal law and regulation.  As
a result of governmental 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 domestic 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.  Such obligations are subject to different
risks than are those of domestic banks or domestic 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 domestic banks are not necessarily subject to the same or
similar regulatory requirements that apply to domestic 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
domestic bank than about a domestic bank.  CDs issued by wholly owned
Canadian subsidiaries of domestic banks are guaranteed as to repayment
of principal and interest (but not as to sovereign risk) by the domestic
parent bank.

Obligations of domestic 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 governmental
regulation as well as governmental action in the country in which the
foreign bank has its head office.  A domestic 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 domestic branch of a foreign
bank than about a domestic bank.

In view of the foregoing factors associated with the purchase of CDs and
TDs issued by foreign branches of domestic banks or by domestic branches
of foreign banks, the Manager will carefully evaluate such investments
on a case-by-case basis.

Savings and loans associations whose CDs may be purchased by the Fund
are supervised by the Office of Thrift Supervision and are insured by
the Savings Association Insurance Fund which is administered by the FDIC
and is backed by the full faith and credit of the United States
government.  As a result, such savings and loan associations are subject
to regulation and examination.

DERIVATIVE CONTRACTS

Options, Futures and Currencies (International Equity Segment). The
International Equity segment may use forward currency contracts and
certain options and futures strategies to attempt to hedge its
portfolio, i.e., reduce the overall level of investment risk normally
associated with the Fund.  These hedging techniques are described in
detail below.

Writing Covered Call Options (International Equity Segment).  The
International Equity segment may write (sell) covered call options for
hedging purposes.  Covered call options will generally be written on
securities and currencies which, in the opinion of the Manager, are not
expected to make any major price moves in the near future but which,
over the long term, are deemed to be attractive investments for the
International Equity segment

A call option gives the holder (buyer) the right to purchase a security
or currency at a specified price (the exercise price) at any time until
a certain date (the expiration date).  So long as the obligation of the
writer of a call option continues, he may be assigned an exercise notice
by the broker-dealer through whom such option was sold, requiring him to
deliver the underlying security or currency against payment of the
exercise price.  This obligation terminates upon the expiration of the
call option, or such earlier time at which the writer effects a closing
purchase transaction by purchasing an option identical to that
previously sold.  The Manager and the Company believe that writing of
covered call options is less risky than writing uncovered or "naked"
options, which the International Equity segment will not do.

Portfolio securities or currencies on which call options may be written
will be purchased solely on the basis of investment considerations
consistent with International Equity segment's investment objective.
When writing a covered call option, the International Equity segment's,
in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security or currency above the exercise
price and retains the risk of loss should the price of the security or
currency decline.   Unlike one who owns securities or currencies not
subject to an option, the International Equity segment has no control
over when it may be required to sell the underlying securities or
currencies, since the option may be exercised at any time prior to the
option's expiration.  If a call option which the International Equity
segment has written expires, the International Equity segment will
realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security or
currency during the option period.  If the call option is exercised, the
Fund will realize a gain or loss from the sale of the underlying
security or currency.  The security or currency covering the call option
will be maintained in a segregated account of the International Equity
segment's custodian.

The premium the International Equity segment receives for writing a call
option is deemed to constitute the market value of an option.  The
premium the International Equity segment will receive from writing a
call option will reflect, among other things, the current market price
of the underlying security or currency, the relationship of the exercise
price to such market price, the implied price volatility of the
underlying security or currency, and the length of the option period.
In determining whether a particular call option should be written on a
particular security or currency, the Manager will consider the
reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.  The premium
received by the International Equity segment for writing covered call
options will be recorded as a liability in the Fund's statement of
assets and liabilities.  This liability will be adjusted daily to the
option's current market value, which will be calculated as described in
"DETERMINATION OF NET ASSET VALUE."  The liability will be extinguished
upon expiration of the option or delivery of the underlying security or
currency upon the exercise of the option.  The liability with respect to
a listed option will also be extinguished upon the purchase of an
identical option in a closing transaction.

Closing transactions will be effected in order to realize a profit or to
limit losses on an outstanding call option, to prevent an underlying
security or currency from being called, or to permit the sale of the
underlying security or currency.  Furthermore, effecting a closing
transaction will permit the Fund to write another call option on the
underlying security or currency with either a different exercise price,
expiration date or both.  If the Fund desires to sell a particular
security or currency from its portfolio on which it has written a call
option or purchases a put option, it will seek to effect a closing
transaction prior to, or concurrently with, the sale of the security or
currency.  There is no assurance that the Fund will be able to effect
such closing transactions at a favorable price.  If the International
Equity segment cannot enter into such a transaction, it may be required
to hold a security or currency that it might otherwise have sold, in
which case it would continue to be at market risk with respect to the
security or currency.

The International Equity segment will pay transaction costs in
connection with the writing of options and in entering into closing
purchase contracts.  Transaction costs relating to options activity are
normally higher than those applicable to purchases and sales of
portfolio securities.

Call options written by the International Equity segment, will normally
have expiration dates of less than nine months from the date written.
The exercise price of the options may be below, equal to or above the
current market values of the underlying securities or currencies at the
time the options are written.  From time to time, the Fund may purchase
an underlying security or currency for delivery in accordance with the
exercise of an option, rather than delivering such security or currency
from its portfolio.  In such cases, additional costs will be incurred.

The International Equity segment will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is less or
more, respectively, than the premium received from the writing of the
option.  Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying
security or currency, any loss resulting from the repurchase of a call
option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the International Equity
segment.

See "Additional Tax Information" for a discussion of federal income tax
treatment of covered call options.

Purchasing Put Options (International Equity Segment).  The
International Equity segment may purchase put options.  As the holder of
a put option, the International Equity segment has the right to sell the
underlying security or currency at the exercise price at any time during
the option period.  The International Equity segment may enter into
closing sale transactions with respect to such options, exercise them or
permit them to expire.

The International Equity segment may purchase a put option on an
underlying security or currency (a "protective put") owned by the
International Equity segment as a hedging technique in order to protect
against an anticipated decline in the value of the security or currency.
Such hedge protection is provided only during the life of the put option
when the International Equity segment, as the holder of the put option,
is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market
price or currency's exchange value.  For example, a put option may be
purchased in order to protect unrealized appreciation of a security or
currency when the Manager deems it desirable to continue to hold the
security or currency because of tax considerations.  The premium paid
for the put option and any transaction costs may reduce any capital gain
or, in the case of currency, ordinary income otherwise available for
distribution when the security or currency is eventually sold.

The International Equity segment may also purchase put options at a time
when the International Equity segment does not own the underlying
security or currency.  By purchasing put options on a security or
currency it does not own, the International Equity segment seeks to
benefit from a decline in the market price of the underlying security or
currency.  If the put option is not sold when it has remaining value,
and if the market price of the underlying security or currency remains
equal to or greater than the exercise price during the life of the put
option, the International Equity portion will lose its entire investment
in the put option.  In order for the purchase of a put option to be
profitable, the market price of the underlying security or currency must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale
transaction.

The premium paid by the International Equity segment when purchasing a
put option will be recorded as an asset in the International Equity's
segment statement of assets and liabilities.  This asset will be
adjusted daily to the option's current market value, as calculated by
the Fund.  The asset will be extinguished upon expiration of the option
or the delivery of the underlying security or currency upon the exercise
of the option.  The asset with respect to a listed option will also be
extinguished upon the writing of an identical option in a closing
transaction.

Purchasing Call Options (International Equity Segment).  The
International Equity segment may purchase call options.  As the holder
of a call option, International Equity segment has the right to purchase
the underlying security or currency at the exercise price at any time
during the option period.  The International Equity segment may enter
into closing sale transactions with respect to such options, exercise
them or permit them to expire.  Call options may be purchased by the
Fund for the purpose of acquiring the underlying security or currency
for its portfolio.  Utilized in this fashion, the purchase of call
options enables the Fund to acquire the security or currency at the
exercise price of the call option plus the premium paid.  At times the
net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly.  This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market
purchases.  So long as it holds such a call option rather than the
underlying security or currency itself, the International Equity segment
is partially protected from any unexpected decline in the market price
of the underlying security or currency and in such event could allow the
call option to expire, incurring a loss only to the extent of the
premium paid for the option.

The International Equity segment may also purchase call options on
underlying securities or currencies it owns in order to protect
unrealized gains on call options previously written by it.  A call
option would be purchased for this purpose where tax considerations make
it inadvisable to realize such gains through a closing purchase
transaction.  Call options may also be purchased at times to avoid
realizing losses that would result in a reduction of the International
Equity segment's current return.

Interest Rate and Currency Futures Contracts (International Equity
Segment). The International Equity segment may enter into interest rate
or currency futures contracts ("Futures" or "Futures Contracts") as a
hedge against changes in prevailing levels of interest rates or currency
exchange rates in order to establish more definitely the effective
return on securities or currencies held or committed to be acquired by
the Fund.  The Fund's hedging may include holding Futures as an offset
against anticipated changes in interest or currency exchange rates.  The
Interntional Equity segment may also enter into Futures Contracts based
on financial indices including any index of U.S. Government securities,
foreign government securities or corporate debt securities.

A Futures Contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument or currency for a specified price at a designated date, time
and place.  The purchaser of a Futures Contract on an index agrees to
take or make delivery of an amount of cash equal to the difference
between a specified dollar multiple of the value of the index on the
expiration date of the contract ("current contract value") and the price
at which the contract was originally struck.  No physical delivery of
the debt securities underlying the index is made.  Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits
must be maintained at all times that the Futures Contract is
outstanding.

Although techniques other than sales and purchases of Futures Contracts
could be used to reduce the International Equity segment's exposure to
interest rate and currency exchange rate fluctuations, the International
Equity segment may be able to hedge its exposure more effectively and at
a lower cost through using Futures Contracts.

Although Futures Contracts typically require future delivery of and
payment for financial instruments or currencies, Futures Contracts are
usually closed out before the delivery date.  Closing out an open
Futures Contract sale or purchase is effected by entering into an
offsetting Futures Contract purchase or sale, respectively, for the same
aggregate amount of the identical financial instrument or currency and
the same delivery date.  If the offsetting purchase price is less than
the original sale price, the Fund realizes a gain; if it is more, the
Fund realizes a loss.  Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is
less, the Fund realizes a loss.  The transaction costs must also be
included in these calculations.  There can be no assurance, however,
that the International Equity segment will be able to enter into an
offsetting transaction with respect to a particular Futures Contract at
a particular time.  If the International Equity segment is not able to
enter into an offsetting transaction, the International Equity segment
will continue to be required to maintain the margin deposits of the
underlying financial instrument or currency on the relevant delivery
date.  The Fund intends to enter into Futures transactions only on
exchanges or boards of trade where there appears to be a liquid
secondary market.  However, there can be no assurance that such a market
will exist for a particular contract at a particular time.

As an example of an offsetting transaction, the contractual obligations
arising from the sale of one Futures Contract of September Treasury
Bills on an exchange may be fulfilled at any time before delivery under
the Futures Contract is required (i.e., on a specific date in September,
the "delivery month") by the purchase of another Futures Contract of
September Treasury Bills on the same exchange.  In such instance the
difference between the price at which the Futures Contract was sold and
the price paid for the offsetting purchase, after allowance for
transaction costs, represents the profit or loss to the Fund.

Persons who trade in Futures Contracts may be broadly classified as
"hedgers" and "speculators."  Hedgers, whose business activity involves
investment or other commitment in securities or other obligations, use
the Futures markets to offset unfavorable changes in value that may
occur because of fluctuations in the value of the securities and
obligations held or committed to be acquired by them or fluctuations in
the value of the currency in which the securities or obligations are
denominated.  Debtors and other obligors may also hedge the interest
cost of their obligations.  The speculator, like the hedger, generally
expects neither to deliver nor to receive the financial instrument
underlying the Futures Contract, but, unlike the hedger, hopes to profit
from fluctuations in prevailing interest rates or currency exchange
rates.

The International Equity segment's Futures transactions will be entered
into for traditional hedging purposes; that is, Futures Contracts will
be sold to protect against a decline in the price of securities or
currencies that the Fund owns, or Futures Contracts will be purchased to
protect a fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.  The
International Equity segment may each also enter into Futures
transactions for non-hedging purposes, subject to applicable law.

"Margin" with respect to Futures Contracts is the amount of
International Equity segment that must be deposited by the Fund with a
broker in order to initiate Futures trading and to maintain the
International Equity segment's open positions in Futures Contracts.  A
margin deposit made when the Futures Contract is entered into ("initial
margin") is intended to assure the International Equity segment's
performance of the Futures Contract.  The margin required for a
particular Futures Contract is set by the exchange on which the Futures
Contract is traded, and may be significantly modified from time to time
by the exchange during the term of the Futures Contract.  Futures
Contracts are customarily purchased and sold on margins, which may be 5%
or less of the value of the Futures Contract being traded.

If the price of an open Futures Contract changes (by increase in the
case of a sale or by decrease in the case of a purchase) so that the
loss on the Futures Contract reaches a point at which the margin on
deposit does not satisfy margin requirements, the broker will require an
increase in the margin deposit ("variation margin").  If, however, the
value of a position increases because of favorable price changes in the
Futures Contract so that the margin deposit exceeds the required margin,
it is anticipated that the broker will pay the excess to the
International Equity segment.  In computing daily net asset values, the
International Equity segment will mark to market the current value of
its open Futures Contracts.  The International Equity segment expects to
earn interest income on its margin deposits.

See "Additional Tax Information" for a discussion of federal tax
treatment of Futures Contracts.

Options on Futures Contracts (International Equity Segment).  Options on
Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right,
in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position
if the option is a put), rather than to purchase or sell the Futures
Contract, at a specified exercise price at any time during the period of
the option.  Upon exercise of the 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, at exercise, 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.  If an option is exercised on the last
trading day prior to the expiration date of the option, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the securities or
currencies upon which the Futures Contracts are based on the expiration
date.  Purchasers of options who fail to exercise their options prior to
the exercise date suffer a loss of the premium paid.

As an alternative to purchasing call and put options on Futures, the
International Equity segment may purchase call and put options on the
underlying securities or currencies themselves (see "Purchasing Put
Options" and "Purchasing Call Options" above).  Such options would be
used in a manner identical to the use of options on Futures Contracts.

To reduce or eliminate the leverage then employed by the Fund or to
reduce or eliminate the hedge position then currently held by the
International Equity segment, the International Equity segment may seek
to close out an option position by selling an option covering the same
securities or currency and having the same exercise price and expiration
date.  The ability to establish and close out positions on options on
Futures Contracts is subject to the existence of a liquid market.  It is
not certain that this market will exist at any specific time.

In order to assure that the International Equity portion will not be
deemed to be "commodity pools" for purposes of the Commodity Exchange
Act, regulations of the Commodity Futures Trading Commission ("CFTC")
require that the Fund enter into transactions in Futures Contracts and
options on Futures Contracts only (i) for bona fide hedging purposes (as
defined in CFTC regulations), or (ii) for non-hedging purposes, provided
that the aggregate initial margin and premiums on such non-hedging
positions does not exceed 5% of the liquidation value of the
International Equity segment's assets.

Forward Currency Contracts, Options on Currency and Currency Swaps
(International Equity Segment).  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.  The International
Equity segment 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.  The International Equity segment engages in forward currency
transactions in anticipation of, or to protect itself against,
fluctuations in exchange rates.  The International Equity segment 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, a decline in the currency against the U.S. dollar.
Similarly, the International Equity segment might 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, the International Equity segment might
purchase a currency forward to "lock in" the price of securities
denominated in that currency which it anticipates purchasing.

The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency
denominated asset that is the subject of the hedge generally will not be
precise.  In addition, the International Equity segment may not always
be able to enter into foreign currency forward contracts at attractive
prices and this will limit the Fund's ability to use such contract to
hedge or cross-hedge its assets.  Also, with regard to the use of cross-
hedges by the International Equity segment, there can be no assurance
that historical correlations between the movement of certain foreign
currencies relative to the U.S. dollar will continue.  Thus, at any time
poor correlation may exist between movements in the exchange rates of
the foreign currencies underlying the cross-hedges of the International
Equity segment and the movements in the exchange rates of the foreign
currencies in which the assets of the International Equity segment that
are the subject of such cross-hedges are denominated.

Forward contracts are traded in an interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers.  A forward contract generally has no deposit requirement and
is consummated without payment of any commission.  The International
Equity segment, however, may enter into forward contracts with deposit
requirements or commissions.

A put option gives the International Equity segment, as purchaser, the
right (but not the obligation) to sell a specified amount of currency at
the exercise price until the expiration of the option.  A call option
gives the International Equity segment, as purchaser, the right (but not
the obligation) to purchase a specified amount of currency at the
exercise price until its expiration.  The International Equity segment
might purchase a currency put option, for example, to protect itself
during the contract period against a decline in the value of a currency
in which it holds or anticipates holding securities.  If the currency's
value should decline, the loss in currency value should be offset, in
whole or in part, by an increase in the value of the put.  If the value
of the currency instead should rise, any gain to the Fund would be
reduced by the premium it had paid for the put option.  A currency call
option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value of a currency in which the Fund
anticipates purchasing securities.

The ability of the International Equity segment to establish and close
out positions in foreign currency options is subject to the existence of
a liquid market.  There can be no assurance that a liquid market will
exist for a particular option at any specific time.  In addition,
options on foreign currencies are affected by all of those factors that
influence foreign exchange rates and investments generally.

A position in an exchange-listed option may be closed out only on an
exchange that provides a secondary market for identical options.
Exchange markets for options on foreign currencies exist but are
relatively new, and the ability to establish and close out positions on
the exchanges is subject to maintenance of a liquid secondary market.
Closing transactions may be effected with respect to options traded in
the OTC markets (currently the primary markets for options on foreign
currencies) only by negotiating directly with the other party to the
option contract or in a secondary market for the option if such market
exists.  Although the Fund intends to purchase only those options for
which there appears to be an active secondary market, there is no
assurance that a liquid secondary market will exist for any particular
option at any specific time.  In such event, it may not be possible to
effect closing transactions with respect to certain options, with the
result that the International Equity segment would have to exercise
those options which it has purchased in order to realize any profit.
The staff of the Securities and Exchange Commission ("SEC") has taken
the position that, in general, purchased OTC options and the underlying
securities used to cover written OTC options are illiquid securities.
However, the International Equity portion may treat as liquid the
underlying securities used to cover written OTC options, provided it has
arrangements with certain qualified dealers who agree that the
International Equity segment may repurchase any option it writes for a
maximum price to be calculated by a predetermined formula.  In these
cases, the OTC option itself would only be considered illiquid to the
extent that the maximum repurchase price under the formula exceeds the
intrinsic value of the option.

The International Equity segment may also enter into currency swaps.  A
currency swap is an arrangement whereby each party exchanges one
currency for another on a particular date and agrees to reverse the
exchange on a later date at a specific exchange rate.  Forward foreign
currency contracts and currency swaps are established in the interbank
market conducted directly between currency traders (usually large
commercial banks or other financial institutions) on behalf of their
customers.

Interest Rate Swaps, Caps and Floors (International Equity Segment).
Among the hedging transactions into which the International Equity
segment may enter are interest rate swaps and the purchase or sale of
interest rate caps and floors.  The International Equity segment expects
to enter into these transactions primarily to preserve a return or
spread on a particular investment or segment of its portfolio or to
protect against any increase in the price of securities the
International Equity segment anticipates purchasing at a later date.
The International Equity segment intends to use these transactions as a
hedge and not as a speculative investment.  The International Equity
segment will not sell interest rate caps or floors that it does not own.
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 payments of interest on a
notional principal amount from the party selling such interest rate
floor.

The International Equity segment may enter into interest rate swaps,
caps and floors on either an asset-based or liability-based basis,
depending on whether it is hedging its assets or its liabilities, and
will usually enter into interest rate swaps on a net basis, i.e., the
two payment streams are netted, with the International Equity segment
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 Manager and the International Equity
segment believe such obligations do not constitute senior securities
and, accordingly will not treat them as being subject to their borrowing
restrictions.  The net amount of the excess, if any, of the obligations
of the International Equity segment 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 by a custodian that satisfies the requirements of the 1940 Act.
The International Equity segment will not enter into any interest rate
swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in the highest
rating category of at least one nationally recognized rating
organization at the time of entering into such transaction.  If there is
a default by the other party to such a transaction, the International
Equity segment will have contractual remedies pursuant to the agreements
related to the transaction.  The swap market has grown substantially in
recent years with a large number of banks and investment banking firms
acting both as principals and as agents utilizing swap documentation.
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.

New options and Futures Contracts and various combinations thereof
continue to be developed and the International Equity segment may invest
in any such options and contracts as may be developed to the extent
consistent with their investment objectives and regulatory requirements
applicable to investment companies.

OTHER PRACTICES

Repurchase Agreements (US Equity Segment). The US Equity segment will
enter into repurchase agreements with banks which are the issuers of
instruments acceptable for purchase by the Fund and with certain dealers
on the Federal Reserve Bank of New York's list of reporting dealers.
Under the terms of a typical repurchase agreement, the Fund would
acquire an underlying obligation for a relatively short period (usually
not more than one week) subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding
period.  This arrangement results in a fixed rate of return that is not
subject to market fluctuations during the Fund's holding period.  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 the ability of the
US Equity segment 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 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 agreement.  The Manager,
acting under the supervision of the Board of Directors, reviews on an
ongoing basis to evaluate potential risks the value of the collateral
and the creditworthiness of those banks and dealers with which the US
Equity segment enters into repurchase agreements.

Repurchase Agreements (International Equity Segment).  The International
Equity segment may enter into repurchase agreements.  The International
Equity segment may invest in repurchase agreements up to 25% of its
total assets.  A repurchase agreement is a contract under which the Fund
acquires a security for a relatively short period (usually not more than
one week) subject to the obligation of the seller to repurchase and the
Fund to resell such security at a fixed time and price (representing the
Fund's cost plus interest).  It is the present intention of the
International Equity segment to enter into repurchase agreements only
upon receipt of fully adequate collateral and only with commercial banks
(whether U.S. or foreign) and registered broker-dealers.  Repurchase
agreements may also be viewed as loans made by a fund which are
collateralized primarily by the securities subject to repurchase.  The
International Equity segment bears a risk of loss in the event that the
other party to a repurchase agreement defaults on its obligations and
the International Equity segment is delayed in or prevented from
exercising its rights to dispose of the collateral securities.  Pursuant
to policies established by the Board of Directors, the Manager monitors
the creditworthiness of all issuers with which the International Equity
segment enters into repurchase agreements.

Reverse Repurchase Agreements (International Equity Segment).  The
International Equity segment does not currently intend to commit more
than 5% of its net assets to reverse repurchase agreements. The
International Equity segment may enter into reverse repurchase
agreements with broker/dealers and other financial institutions.  Such
agreements involve the sale of fund securities with an agreement to
repurchase the securities at an agreed-upon price, date and interest
payment, are considered to be borrowings by a fund and are subject to
the borrowing limitations set forth under "Investment Restrictions."
Since the proceeds of reverse repurchase agreements are invested, this
would introduce the speculative factor known as "leverage."  The
securities purchased with the funds obtained from the agreement and
securities collateralizing the agreement will have maturity dates no
later than the repayment date.  Generally the effect of such a
transaction is that the Fund can recover all or most of the cash
invested in the International Equity segment's securities involved
during the term of the reverse repurchase agreement, while in many cases
it will be able to keep some of the interest income associated with
those securities.  Such transactions are only advantageous if the
International Equity segment has an opportunity to earn a greater rate
of interest on the cash derived from the transaction than the interest
cost of obtaining that cash.   Opportunities to realize earnings from
the use of the proceeds equal to or greater than the interest required
to be paid may not always be available, and the Fund intends to use the
reverse repurchase technique only when the Manager believes it will be
advantageous to the International Equity segment.   The use of reverse
repurchase agreements may exaggerate any interim increase or decrease in
the value of the participating fund's assets.  The Fund's custodian bank
will maintain a separate account for the International Equity segment
with securities having a value equal to or greater than such
commitments.

Borrowing (International Equity Segment) . The Fund may borrow up to 33%
of the value of its total assets from banks for temporary or emergency
purposes, such as to meet the redemptions of the International Equity
segment.

Leveraging (US Equity Segment) The US Equity segment may from time to
time leverage its investments by purchasing securities with borrowed
money. The US Equity segment may borrow money only from banks and in an
amount not to exceed 33 1/3% of the total value of its assets less its
liabilities. The amount of borrowings by the US Equity segment also may
be limited by the availability and cost of credit and by restrictions
imposed by the Federal Reserve Board.

The US Equity segment is required under the Investment Company Act of
1940, as amended (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, asset coverage of the US
Equity segment drops below 300%, the US Equity segment must reduce its
outstanding bank debt 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 shares of the US Equity segment 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
shares of the US Equity segment 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 the net investment income of the US Equity segment in any
given period.

Leverage (International Equity Segment).  The International Equity
segment may borrow from banks, on a secured or unsecured basis, up to
33% of the value of its total assets and use the proceeds to make
additional investments.  Income and appreciation from such investments
will improve the Fund's performance if they exceed the associated
borrowing costs, but will impair a fund's performance if they are less
than the borrowing costs.  This speculative factor is known as
"leverage."

Leverage creates an opportunity for increased returns to shareholders of
the International Equity segment but, at the same time, creates special
risk considerations.  For example, leverage may exaggerate changes in
the net asset value of the shares of the International Equity segment
and in the yield of the International Equity segment.  Although the
principal or stated value of such borrowings will be fixed, the assets
of athe International Equity segment may change in value during the time
the borrowing is outstanding.  Leverage will create interest expenses
for the International Equity segment which 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
International Equity segment will have to pay in respect thereof, the
net income of the International Equity segment 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 International
Equity segment will be less than if leverage had not been used.  If the
amount of income from the incremental securities is insufficient to
cover the cost of borrowing, securities might have to be liquidated to
obtain required funds.  Depending on market or other conditions, such
liquidations could be disadvantageous to the International Equity
segment.

Lending of Portfolio Securities (US Equity Segment)  The US Equity
segment has the ability to lend securities from its portfolio to
brokers, dealers and other financial organizations. Such loans, if and
when made, will be consistent with applicable regulatory requirements.
The US Equity segment may not lend its portfolio securities to Salomon
Smith Barney or its affiliates unless it has applied for and received
specific authority from the SEC. Loans of portfolio securities by the US
Equity segment will be collateralized by cash, letters of credit or
securities issued or guaranteed by the United States government, its
agencies or instrumentalities ("U.S. government securities") which will
be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. From time to time, the US
Equity segment may return 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 US Equity segment
or with Salomon Smith Barney, and which is acting as a "finder."

In lending its portfolio securities, the US Equity segment 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 government securities are used as collateral.
Requirements of the SEC, which may be subject to future modifications,
currently provide that the following conditions must be met whenever
portfolio securities are loaned: (a) the US Equity segment 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 rises above the level of such collateral;
(c) the US Equity segment must be able to terminate the loan at any
time; (d) the US Equity segment must receive reasonable interest on the
loan, as well as an amount equal to any dividends, interest or other
distributions on the loaned securities, and any increase in market
value; (e) the US Equity segment may pay only reasonable custodian fees
in connection with the loan; and (f) voting rights on the loaned
securities may pass to the borrower; however, if a material event
adversely affecting the investment occurs, the Fund's Board of Directors
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 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 the Manager to be of good standing and
will not be made unless, in the judgment of the Manager the
consideration to be earned from such loans would justify the risk.

Securities Lending (International Equity Segment).  The International
Equity segment may lend securities in amounts up to one-third of total
assets.  International Equity segment may lend securities in amounts up
to 15% of total assets. The International Equity segment may seek to
increase its net investment income by lending its securities provided
such loans are callable at any time and are continuously secured by cash
or U.S. Government Obligations equal to no less than the market value,
determined daily, of the securities loaned.  The International Equtiy
segment will receive amounts equal to dividends or interest on the
securities loaned.  It will also earn income for having made the loan
because cash collateral pursuant to these loans will be invested in
short-term money market instruments.  In connection with lending of
securities the Fund may pay reasonable finders, administrative and
custodial fees.  Management will limit such lending to not more than
one-third of the value of the total assets of International Equity
segment.  Where voting or consent rights with respect to loaned
securities pass to the borrower, management will follow the policy of
calling the loan, in whole or in part as may be appropriate, to permit
the exercise of such voting or consent rights if the issues involved
have a material effect on the investment of the International Equity
segment in the securities loaned.  Apart from lending its securities and
acquiring debt securities of a type customarily purchased by financial
institutions, the International Equity segment will make loans to other
persons.

When-Issued and Delayed Delivery Securities (International Equity
Segment).  The International Equity segment may purchase or sell
securities on a when-issued or delayed delivery basis.  When-issued or
delayed delivery transactions arise when securities are purchased or
sold by the International Equity segment with payment and delivery
taking place in the future in order to secure what is considered to be
an advantageous price and yield to the International Equity segment at
the time of entering into the transaction. The Chase Manhattan Bank, the
Company's custodian (the "Custodian") will maintain, in a segregated
account of the applicable fund, cash, debt securities of any grade or
equity securities, having a value equal to or greater than the Fund's
purchase commitments, provided such securities have been determined by
the Manager to be liquid and unencumbered, and are mark to market daily,
pursuant to guidelines established by the Directors.  The Custodian will
likewise segregate securities sold on a delayed basis.  The payment
obligations and the interest rates that will be received are each fixed
at the time the International Equity segment enters into the commitment
and no interest accrues to the International Equity segment until
settlement.  Thus, it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the
general level of interest rates has changed.

Short Sales (International Equity Segment).  The International Equity
segment may sell securities "short against the box." While a short sale
is the sale of a security the International Equity segment does not own,
it is "against the box" if at all times when the short position is open,
the International Equity segment owns an equal amount of the securities
or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities sold
short.  The ability to use short sales to defer recognition of gains was
substantially limited by certain "constructive sale" tax provisions
enacted in 1997.

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

RISK FACTORS

US Equity Segment

Certain Risk Considerations.  Securities of the types of companies in
which the US Equity segment invests may be subject to significant price
fluctuation and above-average risk.  In addition, companies achieving an
earnings growth rate higher than that of S&P 500 companies tend to
reinvest their earnings rather than distribute them.  As a result, the
US Equity segment is not likely to receive significant dividend income
on its portfolio securities.  Accordingly, an investment in the Fund
should not be considered as a complete investment program and may not be
appropriate for all investors.

Portfolio Turnover. The investment policies of the US Equity segment may
result in its experiencing a greater portfolio turnover rate than
investment companies that seek to produce income or to maintain a
balanced investment position.  Although the portfolio turnover rate of
the US Equity segment cannot be predicted and will vary from year to
year, the Manager expects that the Fund's annual portfolio turnover rate
may exceed 100%, but will not exceed 200%.  A 100% portfolio turnover
rate would occur, for instance, if all securities in the US Equity
segment were replaced once during a period of one year.  A high rate of
portfolio turnover in any year will increase brokerage commissions paid
and could result in high amounts of realized investment gain subject to
the payment of taxes by shareholders.  Any realized short-term
investment gain will be taxed to shareholders as ordinary income.

International Equity Segment

General.  Investors should realize that risk of loss is inherent in the
ownership of any securities and that net asset value of the
International Equity segment will fluctuate, reflecting fluctuations in
the market value of its portfolio positions.

Non-diversification and Geographic Concentration.  A fund that is "non-
diversified" is permitted to invest a greater proportion of its assets
in the securities of a smaller number of issuers, and thus may be
subject to greater credit and liquidity risks with respect to its
individual portfolios than a fund that is more broadly diversified.  In
addition, concentration of a fund's assets in one or a few countries or
currencies will subject the Fund to greater risks than if the Fund's
assets were not geographically concentrated.

Fixed Income Securities.  Investments in fixed income securities may
subject the International Equity segment to risks, including the
following:

Interest Rate Risk.  When interest rates decline, the market value of
fixed income securities tends to increase.  Conversely, when interest
rates increase, the market value of fixed income securities tends to
decline.  The volatility of a security's market value will differ
depending upon the security's duration, the issuer and the type of
instrument.

Default Risk/Credit Risk.  Investments in fixed income securities are
subject to the risk that the issuer of the security could default on its
obligations, causing a fund to sustain losses on such investments.  A
default could impact both interest and principal payments.

Call Risk and Extension Risk.  Fixed income securities may be subject to
both call risk and extension risk.  Call risk exists when the issuer may
exercise its right to pay principal on an obligation earlier than
scheduled, which would cause cash flows to be returned earlier than
expected.  This typically results when interest rates have declined and
Interntional Equity segment will suffer from having to reinvest in lower
yielding securities.  Extension risk exists when the issuer may exercise
its right to pay principal on an obligation later than scheduled, which
would cause cash flows to be returned later than expected.  This
typically results when interest rates have increased, and the
International Equity segment will suffer from the inability to invest in
higher yield securities.

Below Investment Grade Fixed Income Securities.  Securities which are
rated BBB by S&P or Baa by Moody's are generally regarded as having
adequate capacity to pay interest and repay principal, but may have some
speculative characteristics.  Securities rated below Baa by Moody's or
BBB by S&P may have speculative characteristics, including the
possibility of default or bankruptcy of the issuers of such securities,
market price volatility based upon interest rate sensitivity,
questionable creditworthiness and relative liquidity of the secondary
trading market.  Because high yield bonds have been found to be more
sensitive to adverse economic changes or individual corporate
developments and less sensitive to interest rate changes than higher-
rated investments, an economic downturn could disrupt the market for
high yield bonds and adversely affect the value of outstanding bonds and
the ability of issuers to repay principal and interest.  In addition, in
a declining interest rate market, issuers of high yield bonds may
exercise redemption or call provisions, which may force the
International Equity segment, to the extent it owns such securities, to
replace those securities with lower yielding securities.  This could
result in a decreased return.

Foreign Securities. Investments in securities of foreign issuers involve
certain risks not ordinarily associated with investments in securities
of domestic issuers.  Such risks include fluctuations in foreign
exchange rates, future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental
laws or restrictions.  Since International Equity segment will invest
heavily in securities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency exchange rates will, to the
extent the Fund does not adequately hedge against such fluctuations,
affect the value of securities in the International Equity segment and
the unrealized appreciation or depreciation of investments so far as
U.S. investors are concerned.  In addition, with respect to certain
countries, there is the possibility of expropriation of assets,
confiscatory taxation, political or social instability or diplomatic
developments which could adversely affect investments in those
countries.

There may be less publicly available information about a foreign company
than about a U.S. company, and foreign companies may not be subject to
accounting, auditing, and financial reporting standards and requirements
comparable to or as uniform as those of U.S. companies.  Foreign
securities markets, while growing in volume, have, for the most part,
substantially less volume than U.S. markets, and securities of many
foreign companies are less liquid and their price more volatile than
securities of comparable U.S. companies.  Transaction costs on foreign
securities markets are generally higher than in the U.S.  There is
generally less government supervision and regulation of exchanges,
brokers and issuers than there is in the U.S. A fund might have greater
difficulty taking appropriate legal action in foreign courts. Dividend
and interest income from foreign securities will generally be subject to
withholding taxes by the country in which the issuer is located and may
not be recoverable by the Fund or investors.  Capital gains are also
subject to taxation in some foreign countries.

Currency Risks.  The U.S. dollar value of securities denominated in a
foreign currency will vary with changes in currency exchange rates,
which can be volatile.  Accordingly, changes in the value of the
currency in which investments of the International Equity segment are
denominated relative to the U.S. dollar will affect the Fund's net asset
value of the International Equity segment.  Exchange rates are generally
affected by the forces of supply and demand in the international
currency markets, the relative merits of investing in different
countries and the intervention or failure to intervene of U.S. or
foreign governments and central banks.  However, currency exchange rates
may fluctuate based on factors intrinsic to a country's economy.  Some
emerging market countries also may have managed currencies, which are
not free floating against the U.S. dollar.  In addition, emerging
markets are subject to the risk of restrictions upon the free conversion
of their currencies into other currencies.  Any devaluations relative to
the U.S. dollar in the currencies in which securities of the
International Equity segment are quoted would reduce the net asset value
per share of the International Equity portion.

Special Risks of countries in the Asia Pacific Region.  Certain of the
risks associated with international investments are heightened for
investments in these countries. For example, some of the currencies of
these countries have experienced devaluations relative to the U.S.
dollar, and adjustments have been made periodically in certain of such
currencies.  Certain countries, such as Indonesia, face serious exchange
constraints.  Jurisdictional disputes also exist, for example, between
South Korea and North Korea.  In addition, Hong Kong reverted to Chinese
administration on July 1, 1997.  The long-term effects of this reversion
are not known at this time.

Securities of Developing/Emerging Markets Countries.   A developing or
emerging markets country generally is considered to be a country that is
in the initial stages of its industrialization cycle. Investing in the
equity markets of developing countries involves exposure to economic
structures that are generally less diverse and mature, and to political
systems that can be expected to have less stability, than those of
developed countries. Historical experience indicates that the markets of
developing countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets
often have provided higher rates of return to investors.

One or more of the risks discussed above could adversely affect the
economy of a developing market or the Fund's investments in such a
market.  In Eastern Europe, for example, upon the accession to power of
Communist regimes in the past, the governments of a number of Eastern
European countries expropriated a large amount of property.  The claims
of many property owners against those of governments may remain
unsettled.  There can be no assurance that any investments that a fund
might make in such emerging markets would not be expropriated,
nationalized or otherwise confiscated at some time in the future.  In
such event, the Fund could lose its entire investment in the market
involved.  Moreover, changes in the leadership or policies of such
markets could halt the expansion or reverse the liberalization of
foreign investment policies now occurring in certain of these markets
and adversely affect existing investment opportunities.

Many of the Fund's investments in the securities of emerging markets may
be unrated or rated below investment grade. 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.

Restrictions on Foreign Investment.   Some countries prohibit or impose
substantial restrictions on investments in their capital markets,
particularly their equity markets, by foreign entities such as the
International Equity segment of the Fund.  As illustrations, certain
countries require governmental approval prior to investments by foreign
persons, or limit the amount of investment by foreign persons in a
particular company, or limit the investment by foreign persons to only a
specific class of securities of a company which may have less
advantageous terms than securities of the company available for purchase
by nationals or limit the repatriation of funds for a period of time.

A number of countries, such as South Korea, Taiwan and Thailand, have
authorized the formation of closed-end investment companies to
facilitate indirect foreign investment in their capital markets.  In
accordance with the 1940 Act, each fund may invest up to 10% of its
total assets in securities of closed-end investment companies.  This
restriction on investments in securities of closed-end investment
companies may limit opportunities for International Equity segment to
invest indirectly in certain smaller capital markets.  Shares of certain
closed-end investment companies may at times be acquired only at market
prices representing premiums to their net asset values.  If the
International Equity segment acquires shares in closed-end investment
companies, shareholders would bear both their proportionate share of
expenses in the company (including management and advisory fees) and,
indirectly, the expenses of such closed-end investment companies.

In some countries, banks or other financial institutions may constitute
a substantial number of the leading companies or the companies with the
most actively traded securities.  Also, the 1940 Act restricts the
Fund's investments in any equity security of an issuer which, in its
most recent fiscal year, derived more than 15% of its revenues from
"securities related activities," as defined by the rules thereunder.
These provisions may also restrict the Fund's investments in certain
foreign banks and other financial institutions.

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
United States.  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 the 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
the International Equity segment to make intended security purchases due
to settlement problems could cause the Fund to miss attractive
investment opportunities.  Inability to dispose of a portfolio security
due to settlement problems could result either in losses to the
International Equity segment due to subsequent declines in value of the
portfolio security or, if the International Equity segment has entered
into a contract to sell the security, could result in possible liability
to the purchaser.  Generally, there is less government supervision and
regulation of exchanges, brokers and issuers in countries having smaller
capital markets than there is in the United States.

Derivative Instruments.  In accordance with its investment policies, the
International Equity segment may invest in certain derivative
instruments which are securities or contracts that provide for payments
based on or "derived" from the performance of an underlying asset, index
or other economic benchmark.  Essentially, a derivative instrument is a
financial arrangement or a contract between two parties (and not a true
security like a stock or a bond).  Transactions in derivative
instruments can be, but are not necessarily, riskier than investments in
conventional stocks, bonds and money market instruments.  A derivative
instrument is more accurately viewed as a way of reallocating risk among
different parties or substituting one type of risk for another.  Every
investment by the International Equity segment, including an investment
in conventional securities, reflects an implicit prediction about future
changes in the value of that investment.  The investment of the
International Equity segment also involves a risk that the portfolio
Manager's expectations will be wrong.  Transactions in derivative
instruments often enable International Equity segment to take investment
positions that more precisely reflect the portfolio Manager's
expectations concerning the future performance of the various
investments available to the International Equity segment.  Derivative
instruments can be a legitimate and often cost-effective method of
accomplishing the same investment goals as could be achieved through
other investment in conventional securities.

Derivative contracts include options, futures contracts, forward
contracts, forward commitment and when-issued securities transactions,
forward foreign currency exchange contracts and interest rate, mortgage
and currency swaps.  The following are the principal risks associated
with derivative instruments.

Market risk:  The instrument will decline in value or that an
alternative investment would have appreciated more, but this is no
different from the risk of investing in conventional securities.

Leverage and associated price volatility:  Leverage causes increased
volatility in the price and magnifies the impact of adverse market
changes, but this risk may be consistent with the investment objective
of even a conservative fund in order to achieve an average portfolio
volatility that is within the expected range for that type of fund.

Credit risk:  The issuer of the instrument may default on its obligation
to pay interest and principal.

Liquidity and valuation risk:  Many derivative instruments are traded in
institutional markets rather than on an exchange.  Nevertheless, many
derivative instruments are actively traded and can be priced with as
much accuracy as conventional securities.  Derivative instruments that
are custom designed to meet the specialized investment needs of a
relatively narrow group of institutional investors such as the Fund are
not readily marketable and are subject to a fund's restrictions on
illiquid investments.

Correlation risk:  There may be imperfect correlation between the price
of the derivative and the underlying asset.  For example, there may be
price disparities between the trading markets for the derivative
contract and the underlying asset.

Each derivative instrument purchased for International Equity segment is
reviewed and analyzed by the portfolio manager of the International
Equity segment to assess the risk and reward of each such instrument in
relation the Fund's portfolio investment strategy.  The decision to
invest in derivative instruments or conventional securities is made by
measuring the respective instrument's ability to provide value to the
Interntional Equity segment and the Fund's shareholders.

Special Risks of Using Futures Contracts.  The prices of Futures
Contracts are volatile and are influenced by, among other things, actual
and anticipated changes in interest rates, which in turn are affected by
fiscal and monetary policies and national and international political
and economic events.

At best, the correlation between changes in prices of Futures Contracts
and of the securities or currencies being hedged can be only
approximate.  The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for
Futures and for debt securities or currencies, including technical
influences in Futures trading; and differences between the financial
instruments being hedged and the instruments underlying the standard
Futures Contracts available for trading, with respect to interest rate
levels, maturities, and creditworthiness of issuers.  A decision of
whether, when, and how to hedge involves skill and judgment, and even a
well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest rate trends.

Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage.  As a result, a relatively small
price movement in a Futures Contract may result in immediate and
substantial loss, as well as gain, to the investor.  For example, if at
the time of purchase, 10% of the value of the Futures Contract is
deposited as margin, a subsequent 10% decrease in the value of the
Futures Contract would result in a total loss of the margin deposit,
before any deduction for the transaction costs, if the account were then
closed out.  A 15% decrease would result in a loss equal to 150% of the
original margin deposit, if the Futures Contract were closed out.  Thus,
a purchase or sale of a Futures Contract may result in losses in excess
of the amount invested in the Futures Contract.  The International
Equity poriton, however, would presumably have sustained comparable
losses if, instead of the Futures Contract, it had invested in the
underlying financial instrument and sold it after the decline.  Where
the International Equity segment enters into Futures transactions for
non-hedging purposes, it will be subject to greater risks and could
sustain losses which are not offset by gains on other assets of the
International Equity segment.

Furthermore, in the case of a Futures Contract purchase, in order to be
certain that International Equity segment has sufficient assets to
satisfy its obligations under a Futures Contract, the Fund segregates
and commits to back the Futures Contract with an amount of cash and
liquid securities from the International Equity segment equal in value
to the current value of the underlying instrument less the margin
deposit.

Most U.S. Futures exchanges limit the amount of fluctuation permitted in
Futures Contract prices during a single trading day.  The daily limit
establishes the maximum amount that the price of a Futures Contract may
vary either up or down from the previous day's settlement price at the
end of a trading session.  Once the daily limit has been reached in a
particular type of Futures Contract, no trades may be made on that day
at a price beyond that limit.  The daily limit governs only price
movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of
unfavorable positions.  Futures Contract prices have occasionally moved
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.

The Fund

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 Fund's portfolios; (iv)
there is uncertainty concerning the fluctuation of the Euro relative to
non-Euro currencies during the transition period from January 1, 1999 to
December 31, 2000, and beyond; 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 Fund.

MASTER/FEEDER FUND STRUCTURE

The Board of Directors has the discretion to retain the current
distribution arrangement for the Fund while investing in a master fund
in a master/feeder fund structure.  A master/feeder fund structure is
one in which a fund (a "feeder fund"), instead of investing directly in
a portfolio of securities, invests most or all of its investment assets
in a separate registered investment company (the "master fund") with
substantially the same investment objective and policies as the feeder
fund.  Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at
the feeder fund level.  Based on the premise that certain of the
expenses of operating an investment portfolio are relatively fixed, a
larger investment portfolio may eventually achieve a lower ratio of
operating expenses to average net assets.  An existing investment
company is able to convert to a feeder fund by selling all of its
investments, which involves brokerage and other transaction costs and
realization of a taxable gain or loss, or by contributing its assets to
the master fund and avoiding transaction costs and, if proper procedures
are followed, the realization of taxable gain or loss.

INVESTMENT RESTRICTIONS

The investment restrictions below and the Fund's investment objective
have been adopted by the Company as fundamental policies of the Fund.
Under the 1940 Act, a fundamental policy may not be changed with respect
to a fund without the vote of a majority of the outstanding voting
securities of the fund.  Majority is defined in the 1940 Act as the
lesser of (a) 67% or more of the shares present at a fund meeting, if
the holders of more than 50% of the outstanding shares of the fund are
present or represented by proxy, or (b) more than 50% of outstanding
shares.

Under the investment restrictions adopted by the Company with respect to
the Fund, the Fund will not:
1.	Invest more than 25% of its total assets in securities, the
issuers of which conduct their business activities in the same industry.
For purposes of this limitation, securities of the U.S. government
(including its agencies and instrumentalities) and securities of state
or municipal governments and their political subdivisions are not
considered to be issued by members of any industry.

2.	Borrow money, except that (a) the Fund 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 Fund may, to the extent
consistent with its investment policies, enter into reverse repurchase
agreements, forward roll transactions and similar investment strategies
and techniques.  To the extent that it engages in transactions described
in (a) and (b), the Fund will be limited so that no more than 331/3% 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.

3.	Issue "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.

4.	Make loans.  This restriction does not apply to: (a) the purchase
of debt obligations in which the Fund 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.

5.	Purchase or sell real estate, real estate mortgages, commodities
or commodity contracts, but this restriction shall not prevent the Fund
from (a) investing in securities of issuers engaged in the real estate
business or the 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 Fund's investment objective and policies);  or (d) investing in real
estate investment trust securities.

6.	Engage in the business of underwriting securities issued by other
persons, except to the extent that the Fund may technically be deemed to
be an underwriter under the 1933 Act, as amended, in disposing of
portfolio securities.

7.	Purchase or otherwise acquire any illiquid security except as
permitted under the 1940 Act for open-end investment companies, which
currently permits up to 15% of the Fund's net assets to be invested in
illiquid securities.

If any percentage restriction described above is complied with at the
time of an investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a
violation of such restriction.

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The Directors and executive officers of the Company, 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 Fund, as defined in the 1940 Act, is indicated by an
asterisk.

Paul R. Ades, Director (Age 61). Law firm of Paul R. Ades, PLLC.  His
address is Argyle Square, 181 West Main Street, Suite C, P.O. Box 790,
Babylon, New York 11702.

Herbert Barg, Director (Age 78). Private investor. His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.

Dwight B. Crane, Director (Age 63). Professor, Graduate School of
Business Administration, Harvard University. His address is Harvard
Business School, Soldiers Field, Morgan Hall #371, Boston, Massachusetts
02163.

Frank G. Hubbard, Director (Age 63).  President of Avatar International
Inc.; formerly Vice President, S&S Industries; Former Corporate Vice
President, Materials Management and Marketing Services of Huls America,
Inc.  His address is Avatar International, Inc., 87 Whittredge Road,
Summit, New Jersey 07901.

*Heath B. McLendon, Chairman of the Board, President and Chief Executive
Officer (Age 68). Managing Director of Salomon Smith Barney Inc.
("Salomon Smith Barney"); Director and President of SBFM and Travelers
Investment Adviser, Inc. ("TIA"); and formerly Chairman of the Board of
Smith Barney Strategy Advisers Inc. Mr. McLendon is a director of 77
investment companies associated with Citigroup Inc. ("Citigroup").  His
address is 7 World Trade Center, 45th Floor, New York, New York 10048.

Jerome H. Miller, Director (Age 62).  Retired, Former President, Asset
Management Group of Shearson Lehman Brothers.  His address is 27 Hemlock
Road, Manhasset, New York, New York  11030.

Ken Miller, Director (Age 58). President of Young Stuff Apparel Group,
Inc.  His address is 1411 Broadway, 6th Floor, Suite 610, New York, New
York 10018.

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; Senior Vice President and Treasurer of 61 investment
companies associated with Citigroup. His address is 125 Broad Street,
New York, New York 10004.

Jeffrey Russell, CFA, Vice President and Investment Officer (Age 43).
Managing Director of Salomon Smith Barney; Investment Officer of SBFM.
His address is 7 World Trade Center, New York, New York 10048.

Richard Freeman, Vice President and Investment Officer (Age 46).
Managing Director of Salomon Smith Barney;  Investment Officer of SBFM.
His address is 7 World Trade Center, New York, New York 10048.

Paul Brook, Controller (Age 47).  Director of Salomon Smith Barney; from
1997-1998 Managing Director of AMT Capital Services Inc.; prior to 1997
Partner with Ernst & Young LLP; 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; Secretary
of 60 investment companies associated with Citigroup.  Her address is
Seven World Trade Center, New York, New York 10048.

No officer, director or employee of Salomon Smith Barney or any parent
or subsidiary receives any compensation from the Company for serving as
an officer or director of the Company.  The Company pays each Director
who is not an officer, director or employee of Salomon Smith Barney or
any of its affiliates a fee of $22,500 per annum plus $2,900 per meeting
attended and reimburses travel and out-of-pocket expenses.  During the
calendar year ended December 31, 2000 such expenses totaled $15,401.
The Directors of the Company were paid the following compensation for
the respective periods:








Name of Person


Aggregate
Compensation
from Company
Fiscal Year
End
 04/30/01

Total Pension
or Retirement
Benefits
Accrued as
part of Fund
Expenses
Compensation
from Company
and Fund
Complex Paid
to Directors
Calendar Year
Ending
12/31/00


Number of
Funds for
Which
Director
Serves Within
Fund Complex





Paul R. Ades
$2,760
$0
$56,775
5
Herbert Barg
2,760
0
116,075
16
Dwight B. Crane
2,757
0
153,175
23
Frank G. Hubbard
2,758
0
56,675
5
Heath B. McLendon
0
0
0
77
Jerome Miller
2,758
0
56,275
5
Ken Miller
2,760
0
56,475
5

Upon attainment of age 80, Directors are required to change to emeritus
status.  Directors Emeritus are entitled to serve in emeritus status for
a maximum of 10 years during which time they are paid 50% of the annual
retainer fee and meeting fees otherwise applicable to the Fund
Directors, together with reasonable out-of-pocket expenses for each
meeting attended.   Directors Emeritus received no compensation from the
Fund for the fiscal year.

As of August 15, 2001, the Directors and Officers of the Fund as a
group, owned less than 1.00% of the outstanding common stock of the
Fund.

As of August 15, 2001, the following shareholders beneficially owned 5%
or more of a class of shares of the Fund:

Class A

PFPC Brokerage Services
fbo Primerica Financial Services
211 South Gulph Road
King of Prussia, PA 19406
Owned 102,489.502 shares (5.8805%)

GKN Automotive Inc. Pension Plan
Attn. Jon Giannangeli
3300 University Drive
Auburn Hills, Michigan 48326-2389
owned 87,719.298 shares (5.0330%)

International Flavors & Fragrances Inc. Pension Plan
Doug Wetmore VP and CFO
521 West 57th Street
New York, New York 10019-2901
owned 87,719.298 shares (5.0330%)

Investment Manager - SBFM

SBFM (formerly known as SSB Citi Fund Management LLC) serves as
investment manager to the Fund pursuant to an investment management
agreement (the "Investment Management Agreement") with the Fund which
was approved by the Board of Directors, including a majority of
Directors who are not "interested persons" of the Fund or the Manager.
The Manager is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc. ("Holdings"), which in turn, is a wholly owned subsidiary
of Citigroup Inc. Subject to the supervision and direction of the
Company's Board of Directors, the Manager manages the Fund's portfolio
in accordance with the Fund's stated investment objective and policies,
makes investment decisions for the Fund, places orders to purchase and
sell securities, and employs professional portfolio managers and
securities analysts who provide research services to the Fund.  The
Manager pays the salary of any officer and employee who is employed by
both it and the Fund.  The Manager bears all expenses in connection with
the performance of its services. The Manager also: (a) assists in
supervising all aspects of the Fund's operations except those it
performs under its investment advisory agreement; b) supplies the Fund
with office facilities (which may be in SBFM's own offices), statistical
and research data, data processing services, clerical, accounting and
bookkeeping services, including, but not limited to, the calculation of
(i) the net asset value of shares of the Fund, (ii) applicable deferred
sales charges ("Deferred Sales Charges") and similar fees and charges
and (iii) distribution fees, internal auditing and legal services,
internal executive and administrative services, and stationary and
office supplies; and (c) prepares reports to shareholders of the Fund,
tax returns and reports to and filings with the SEC and state blue sky
authorities.

SBFM (through its predecessor entities) has been in the investment
counseling business since 1968 and renders investment advice to a wide
variety of individual, institutional and investment company clients
which had aggregate assets under management as of July 31, 2001 in
excess of $125 billion.

As compensation for investment management services, the Fund pays the
Manager a fee computed daily and paid monthly at the annual rate of
0.80% of the Fund's average daily net assets.  For the fiscal year ended
April 30, 2001, the Fund incurred $1,538,422 in management fees.

Code of Ethics

Pursuant to Rule 17j-1 of the 1940 Act, the Company, the investment
adviser 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 SEC.

Counsel and Auditors

Willkie Farr & Gallagher serve as counsel to the Company. The Directors
who are not "interested persons" of the Company have selected Stroock &
Stroock & Lavan LLP to serve as their legal counsel.

KPMG LLP, independent auditors, 757 Third Avenue, New York, New York
10017, serve as auditors of the Fund and will render an opinion on the
Fund's financial statements annually beginning with the fiscal period
ending April 30, 2002.

Custodian and Transfer Agent

PFPC Trust Company ("PFPC"), located at 8800 Tinicum Blvd.,
Philadelphia, Pennsylvania 19153, serves as the custodian of the Fund.
Under its agreement with the Company on behalf of the Fund, PFPC Bank
holds the Fund's portfolio securities and keeps all necessary accounts
and records. For its services, PFPC Bank receives a monthly fee based
upon the month-end market value of securities held in custody and also
receives securities transaction charges. The assets of the Fund are held
under bank custodianship in compliance with the 1940 Act.

Citi Fiduciary Trust Company (the "transfer agent") located at 125 Broad
Street, New York, New York 10004, serves as the transfer agent and
shareholder services agent of the Fund.

PFPC Global Fund Services ("sub-transfer agent"), located at P.O. Box
9699, Providence Rhode Island 02940-9699, serves as the Fund's sub-
transfer agent to render certain shareholder record-keeping and
accounting services functions.

The fund has also engaged the services of Primerica Shareholder Services
("sub-transfer agent") as a sub-transfer agent for PFSI Accounts.  This
sub-transfer agent is located at 3100 Breckinridge Blvd., Bldg 200,
Duluth, GA 30099.

Distributors

Salomon Smith Barney, Inc., located at 388 Greenwich Street, New York,
New York 10013, and PFS Distributors, Inc. ("PFS Distributors"), located
at 3120 Breckinridge Blvd., Duluth, Georgia 30099 serve as the Fund's
distributor pursuant to a written agreements dated June 5, 2000 (the
"Distribution Agreements") which were approved by the Fund 's Board of
Directors, including a majority of the Directors who are not interested
persons of the Fund (the "Independent Directors"), on July 26, 2001.
These Distribution Agreements replace the Distribution Agreement with
CFBDS, Inc.

Salomon Smith Barney and PFS Distributors may be deemed to be
underwriters for purposes of the 1933 Act. From time to time, Salomon
Smith Barney or PFS 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 Distributors 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 the Fund.

For the fiscal year ended April 30, 2001, Salomon Smith Barney and CFBDS
received $4,151,000 in sales charges from the sale of Class A shares.
For the fiscal year ended April 30, 2001, Salomon Smith Barney and CFBDS
received $2,675,000 in sales charges from the sale of Class L shares.
For the fiscal year ended April 30, 2001, Salomon Smith Barney received
$45,000 in contingent Deferred Sales Charges on redemptions of the
fund's Class A shares.  For the fiscal year ended April 30, 2001 Salomon
Smith Barney received $598,000 in Deferred Sales Charges on redemptions
of the fund's Class B shares.  For the fiscal year ended April 30, 2001,
Salomon Smith Barney received $170,000 in Deferred Sales Charges on
redemptions of the fund's Class L shares.

When payment is made by the investor before the settlement date, unless
otherwise noted by the investor, the funds will be held as a free credit
balance in the investor's brokerage account and Salomon Smith Barney may
benefit from the temporary use of the funds.  The Company's Board of
Directors has been advised of the benefits to Salomon Smith Barney
resulting from these settlement procedures and will take such benefits
into consideration when reviewing the Investment Management and
Distribution Agreements for continuance.

Distribution Arrangements

To compensate Salomon Smith Barney or PFS Investments Inc. ("PFSI") for
the services it provides and for the expense it bears under the
Distribution Agreement, the Fund has adopted a services and distribution
plan (the "Plan") pursuant to Rule l2b-1 under the 1940 Act. The only
Classes of shares being offered for sale through PFSI are Class A shares
and Class B shares. Under the Plan, Salomon Smith Barney is paid a fee
with respect to shares of each portfolio sold through Salomon Smith
Barney and PFSI is paid a fee with respect to shares of each portfolio
sold through PFSI.  Under the Plan, the Fund pays Salomon Smith Barney
or PFSI (who pays its Registered Representative), 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 Fund's average daily net assets
attributable to the Class A, Class B and Class L shares. In addition,
the Fund pays Salomon Smith Barney a distribution fee with respect to
the Class B and Class L shares (and pays PFSI with respect to Class A
and 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; payment to
and expenses of Salomon Smith Barney Financial Consultants, PFS
Investment 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 PFSI associated with the sale of fund shares, including
lease, utility, communications and sales promotion expenses. The Class B
and Class L distribution fee is calculated at the annual rate of 0.75%
of the value of the Fund's average daily net assets attributable to the
shares of the respective Class.

The following service and distribution fees were incurred by the Fund
pursuant to a Distribution Plan during the periods indicated:


Fiscal Year
Ended
4/30/01

Class A

$  39,336

Class B

$ 207,720

Class L

$ 1,557,963

Each of PFSI 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 are distribution expenses
within the meaning of the Plan and may be paid from amounts received by
Salomon Smith Barney from the Fund under the Plan.

For the fiscal year ended April 30, 2001, Salomon Smith Barney incurred
distribution expenses totaling $5,976,876, consisting of $297,828 for
advertising, $14,858 for printing and making of prospectuses, $1,687,030
for support services, $3,945,687 to Salomon Smith Barney Financial
Consultants, and $31,473 for accruals for interest on the excess of
Salomon Smith Barney expenses incurred in distributing the Fund's shares
over the sum of the distributions fees and Deferred Sales Charge
received by Salomon Smith Barney from the Fund.

From time to time, PFSI or its 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, PFSI 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 the Fund.

Under its terms, each Distribution Plan continues from year to year,
provided such continuance is approved annually by vote of the Board of
Directors, including a majority of the Independent Directors who have no
direct or indirect financial interest in the operation of the Plan.  The
Plan may not be amended to increase the amount of the service and
distribution fees without shareholder approval, and all amendments of
the Plan also must be approved by the Directors including all of the
Independent Directors in the manner described above.  The Plan may be
terminated with respect to a Class at any time, without penalty, by vote
of a majority of the Independent Directors or, with respect to the Fund,
by vote of a majority of the outstanding voting securities of the Fund
(as defined in the 1940 Act).  Pursuant to the Plans, Salomon Smith
Barney and PFSI will provide the Board of Directors with periodic
reports of amounts expended under the Plan and the purpose for which
such expenditures were made.

Portfolio Transactions

The Manager arranges for the purchase and sale of the Fund's securities
and selects brokers and dealers (including Salomon Smith Barney) which
in its best judgment provide prompt and reliable execution at favorable
prices and reasonable commission rates.  The Manager may select brokers
and dealers that provide it with research services and may cause the
Fund to pay such brokers and dealers commissions which exceed those
other brokers and dealers may have charged, if it views the commissions
as reasonable in relation to the value of the brokerage and/or research
services.  In selecting a broker, including Salomon Smith Barney, for a
transaction, the primary consideration is prompt and effective execution
of orders at the most favorable prices. Subject to that primary
consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis.

Decisions to buy and sell securities for the Fund are made by the
Manager, subject to the overall supervision and review of the Company's
Board of Directors. Portfolio securities transactions for the Fund are
effected by or under the supervision of the Manager.

Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. There is generally no stated commission in the
case of securities traded in the over-the-counter market, but the price
of those securities includes an undisclosed commission or mark-up. Over-
the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and
executions may be obtained elsewhere. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and
the prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down.  For the fiscal year ended
April 30, 2001, the Fund paid total brokerage commissions of $197,773.

In executing portfolio transactions and selecting brokers or dealers, it
is the Fund's policy to seek the best overall terms available.  The
Manager, in seeking the most favorable price and execution, considers
all factors it deems relevant, including, for example, the price, the
size of the transaction, the reputation, experience and financial
stability of the broker-dealer involved and the quality of service
rendered by the broker-dealer in other transactions. The Manager
receives research, statistical and quotation services from several
broker-dealers with which it places the Fund's portfolio transactions.
It is possible that certain of the services received primarily will
benefit one or more other accounts for which the Manager exercises
investment discretion. Conversely, the Fund may be the primary
beneficiary of services received as a result of portfolio transactions
effected for other accounts. The Manager's fee under the Management
Agreement is not reduced by reason of its receiving such brokerage and
research services. The Company's Board of Directors, in its discretion,
may authorize the Manager to cause the Fund to pay a broker that
provides brokerage and research services to the Manager a commission in
excess of that which another qualified broker would have charged for
effecting the same transaction. Salomon Smith Barney will not
participate in commissions from brokerage given by the Fund to other
brokers or dealers and will not receive any reciprocal brokerage
business resulting therefrom. For the fiscal year ended April 30, 2001,
the Fund paid $0 in commissions on brokerage transactions directed to
brokers because of research provided.

In accordance with Section 17(e) of the 1940 Act and Rule 17e-1
thereunder, the Company's Board of Directors has determined that any
portfolio transaction for the Fund may be executed through Salomon Smith
Barney or an affiliate of Salomon Smith Barney if, in the Manager's
judgment, the use of Salomon Smith Barney or an affiliate is likely to
result in price and execution at least as favorable as those of other
qualified brokers and if, in the transaction, Salomon Smith Barney or
the affiliate charges the Fund a commission rate consistent with those
charged by Salomon Smith Barney or an affiliate to comparable
unaffiliated customers in similar transactions. In addition, under SEC
rules, Salomon Smith Barney may directly execute such transactions for
the Fund on the floor of any national securities exchange, provided: (a)
the Board of Directors has expressly authorized Salomon Smith Barney to
effect such transactions; and (b) Salomon Smith Barney annually advises
the Fund of the aggregate compensation it earned on such transactions.
For the fiscal year ended April 30, 2001, the fund paid $14,557 in
brokerage commissions to Salomon Smith Barney.

Even though investment decisions for the Fund are made independently
from those of the other accounts managed by the Manager, investments of
the kind made by the Fund also may be made by those other accounts. When
the Fund and one or more accounts managed by the Manager are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Manager to be equitable. In some cases, this procedure
may adversely affect the price paid or received by the Fund or the size
of the position obtained for or disposed of by the Fund.

The Fund will not purchase securities during the existence of any
underwriting or selling group relating to the securities, of which the
Manager is a member, except to the extent permitted by the SEC.  Under
certain circumstances, the Fund may be at a disadvantage because of this
limitation in comparison with other funds that have similar investment
objectives but that are not subject to a similar limitation.

Portfolio Turnover

The Fund's portfolio turnover rate (the lesser of purchases or sales of
portfolio securities during the year, excluding purchases or sales of
short-term securities, divided by the monthly average value of portfolio
securities) is generally not expected to exceed 100%. The rate of
turnover will not be a limiting factor, however, when the Fund deems it
desirable to sell or purchase securities.
The Manager will rebalance the allocation of value and growth securities
in the Fund's portfolio at the end of each quarter and at any time in
which the percentage of the Fund's portfolio invested in either value or
growth securities equals or exceeds 55% of the Fund's total assets
invested in both value and growth securities for a period of more than
10 days.  As a result, when securities in either the value or growth
style segment of the Fund's portfolio have underperformed the securities
in the segment of the portfolio devoted to the other style, the Manager
will rebalance the portfolio to increase the Fund's assets allocated to
the style that underperformed, and decrease the assets allocated to the
style that outperformed, the other style.  The Manager will also monitor
the Fund's portfolio to ensure that no more than 25% of the Fund's
assets are concentrated in the securities of companies in the same
industry and that the Fund complies with its other investment policies.
The Manager may cause the Fund to sell or purchase securities to ensure
compliance with the Fund's investment policies. For the 2001 fiscal
year, the fund's portfolio turnover rate was 11%.

PURCHASE OF SHARES

General

Investors may purchase shares from a Salomon Smith Barney Financial
Consultant, a PFS Investments Registered Representative, a broker-
dealer, financial intermediary or a financial institution (each called a
"Service Agent"). In addition, certain investors, including qualified
retirement plans purchasing through certain Service Agents, may purchase
shares directly from the Fund.  When purchasing shares of the Fund,
investors must specify whether the purchase is for Class A, Class B,
Class L or Class Y shares.  Salomon Smith Barney and Service Agents 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 a sub-transfer agent are not subject
to a maintenance fee.

Investors in Class A, Class B and Class L shares may open an account in
the Fund by making an initial investment of at least $1,000 for each
account, or $250 for an IRA or a Self-Employed Retirement Plan, in the
Fund. 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(c) of the Code, the
minimum initial investment required for Class A, Class B and Class L
shares and the subsequent investment requirement for all Classes in the
Fund is $25.  There are no minimum investment requirements for Class A
shares for employees of Citigroup and its subsidiaries, including
Salomon Smith Barney, unitholders who invest distributions from, or
proceeds from a sale of, a Unit Investment Trust ("UIT") sponsored by
Salomon Smith Barney, and Directors/Trustees of any of the Smith Barney
Mutual Funds, and their spouses and children. The Fund reserves the
right to waive or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to time.  Shares
purchased will be held in the shareholder's account by the applicable
sub-transfer agent. Share certificates are issued only upon a
shareholder's written request to the applicable sub-transfer agent.

Purchase orders received by the Fund or a Salomon Smith Barney Financial
Consultant prior to the close of regular trading on the New York Stock
Exchange ("NYSE"), on any day the Fund calculates its net asset value,
are priced according to the net asset value determined on that day (the
''trade date'').  Orders received by a Salomon Smith Barney Financial
Consultant 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, provided the order is received by
the Fund or the Fund's agent prior to its close of business. For shares
purchased through Salomon Smith Barney or a Dealer Representative
purchasing through a Service Agent, payment for shares of the Fund is
due on the third business day after the trade date. In all other cases,
payment must be made with the purchase order.

Systematic Investment Plan.  Shareholders may make additions to their
accounts at any time by purchasing shares through a service known as the
Systematic Investment Plan.  Under the Systematic Investment Plan,
Salomon Smith Barney or a sub-transfer agent is authorized through
preauthorized transfers of at least $25 on a monthly basis or at least
$50 on a quarterly basis (not available to PFSI Accounts) to charge the
shareholder's account held  with a bank or other financial institution
on a monthly (not available to PFSI Accounts) or quarterly basis as
indicated by the shareholder, to provide for systematic additions to a
shareholder's Fund 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 a sub-transfer agent.  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
Fund or a Service Agent.

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:



Amount
of
Investme
nt

Sales Charge
as a %
of
Transaction

Sales
Charge as a
% of Amount
Invested

Broker/Dealer
Compensation
as %
Of Offering
Price
Less than
$25,000
5.00%
5.26%
4.50%
$ 25,000 -
49,999
4.25
4.44
3.83
50,000 -
99,999
3.75
3.90
3.38
100,000 -
249,999
3.25
3.36
2.93
250,000 -
499,999
2.75
2.83
2.48
500,000 -
999,000
2.00
2.04
1.80
1,000,000 or
more
-0-*
-0-*
-0-*

*	Purchases of Class A shares of $1,000,000 or more will be made at
net asset value without any initial sales charge, but will be
subject to a Deferred Sales Charge of 1.00% on redemptions made
within 12 months of purchase. The Deferred Sales Charge on Class A
shares is payable to Salomon Smith Barney, which compensates
Service Agents whose clients make purchases of $1,000,000 or more.
The Deferred Sales Charge is waived in the same circumstances in
which the Deferred Sales Charge applicable to Class B and Class L
shares is waived. See "Deferred Sales Charge Provisions" and
"Waivers of Deferred Sales Charge."

Members of the selling group may receive up to 90% of the sales charge
and may be deemed to be underwriters of the Fund as defined in the 1933
Act.  The reduced sales charges shown above apply to the aggregate of
purchases of Class A shares of the Fund made at one time by "any
person," which includes an individual 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 other Smith Barney Mutual Funds on June 12, 1998 will not be
subject to the 1.00% 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 (except purchases of Class Y shares by Smith
Barney Allocation Series Inc., for which there is no minimum purchase
amount).

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 funds 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 Fund 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 fund 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 the Fund (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 the Fund, 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 (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;  and (j) purchases of Class
A shares by Section 403(b) or Section 401(a) or (k) accounts associated
with Copeland Retirement Programs. In order to obtain such discounts,
the purchaser must 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 the Fund 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 Fund
and of other Smith Barney Mutual Funds that are offered with a sales
charge as currently listed under "Exchange Privilege" then held by such
person and applying the sales charge applicable to such aggregate.  In
order to obtain such discount, the purchaser must provide sufficient
information at the time of purchase to permit verification that the
purchase qualifies for the reduced sales charge.  The right of
accumulation is subject to modification or discontinuance at any time
with respect to all shares purchased thereafter.

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 that the investor refers to such Letter when placing orders.
For purposes of a Letter of Intent, the "Amount of Investment" as
referred to in the preceding sales charge table includes (i) all Class A
shares of the Fund 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 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 Salomon Smith Barney Financial
Consultant 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 (except purchases of Class Y shares by Smith Barney
Allocation Series Inc., for which there is no minimum purchase amount).
Such investors must make an initial minimum purchase of $5,000,000 in
Class Y shares of the Fund and agree to purchase a total of $15,000,000
of Class Y shares of the Fund 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 Fund's Class A
shares, which may include a Deferred Sales Charge of 1.00%. Please
contact a Salomon Smith Barney Financial Consultant or the transfer
agent for further information.




Deferred Sales Charge Provisions

"Deferred Sales Charges are applicable to:(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
that 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 Fund 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.


Year Since Purchase Payment Was
Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

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 owned by the
shareholders 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 a redemption is made first of shares representing
capital appreciation, next of shares representing the reinvestment of
dividends and capital gain distributions and finally of other shares
held by the shareholder for the longest period of time.  The length of
time that 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 Fund shares being redeemed will be considered to represent, as
applicable, capital appreciation or dividend and capital gain
distribution reinvestments in such other funds.  For Federal income tax
purposes, the amount of the Deferred Sales Charge will reduce the gain
or increase the loss, as the case may be, on the amount realized on
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
of the Fund at $10 per share for a cost of $1,000.  Subsequently, the
investor acquired 5 additional shares of the Fund 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) redemptions of shares within 12 months
following the death or disability of the shareholder; (c) redemptions of
shares made in connection with qualified distributions from retirement
plans or IRAs upon the attainment of age 591/2; (d) involuntary
redemptions; and (e) redemptions of shares to effect a combination of
the Fund 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 Salomon Smith Barney in the case of shareholders who are also
Salomon Smith Barney clients or by the transfer agent in the case of all
other shareholders) 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. The Fund offers Class A, Class L, and, in limited
circumstances, Class O 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 $1 million.

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 Salomon Smith Barney Financial
Consultant, 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 and/or Class O
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 fund. 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 fund 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 fund. Any Class L and/ or Class O
shares not converted will continue to be subject to the distribution
fee.

Participating plans wishing to acquire shares of the Fund 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 Salomon
Smith Barney Financial Consultant.

Retirement Programs Investing in Class B Shares:   Class B shares of a
fund are not available for purchase by participating plans opened on or
after June 21, 1996, but may continue to be purchased by any
participating plan in the Smith Barney 401(k) Program opened prior to
such date and originally investing in such Class. Class B shares
acquired are subject to a Deferred Sales Charge of 3.00% of redemption
proceeds if the participating plan terminates within eight years of the
date the participating plan first enrolled in the Smith Barney 401(k)
Program.

At the end of the eighth year after the date the participating plan
enrolled in the Smith Barney 401(k) Program, the participating plan will
be offered the opportunity to exchange all of its Class B shares for
Class A shares of the same fund. Such participating plan 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 the exchange has occurred, a participating
plan will not be eligible to acquire additional Class B shares, but
instead may acquire Class A shares of the same fund. If the
participating plan elects not to exchange all of its Class B shares at
that time, each Class B share held by the participating plan will have
the same conversion feature as Class B shares held by other investors.
See "Purchase of Shares-Deferred Sales Charge Alternatives."

No Deferred Sales Charge is imposed on redemptions of Class B shares to
the extent that the net asset value of the shares redeemed does not
exceed the current net asset value of the shares purchased through
reinvestment of dividends or capital gain distributions, plus the
current net asset value of Class B shares purchased more than eight
years prior to the redemption, plus increases in the net asset value of
the shareholder's Class B shares above the purchase payments made during
the preceding eight years. Whether or not the Deferred Sales Charge
applies to the redemption by a participating plan depends on the number
of years since the participating plan first became enrolled in the Smith
Barney 401(k) Program, unlike the applicability of the Deferred Sales
Charge to redemptions by other shareholders, which depends on the number
of years since those shareholders made the purchase payment from which
the amount is being redeemed.

The Deferred Sales Charge will be waived on redemptions of Class B
shares in connection with lump-sum or other distributions made by a
participating plan as a result of: (a) the retirement of an employee in
the participating plan; (b) the termination of employment of an employee
in the participating plan; (c) the death or disability of an employee in
the participating plan; (d) the attainment of age 591/2 by an employee
in the participating plan; (e) hardship of an employee in the
participating plan to the extent permitted under Section 401(k) of the
Code; or (f) redemptions of shares in connection with a loan made by the
participating plan to an employee.

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 their own account;
(c) a trustee or other fiduciary purchasing shares for a single trust
estate or single fiduciary account; and (d) 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 the Fund 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
Salomon Smith Barney Financial Consultant or a Service Agent.

Salomon Smith Barney Accounts

Purchases of shares of the funds must be made through a brokerage
account maintained with Salomon Smith Barney, an introducing broker or
an investment dealer in the selling group. In addition, certain
investors, including qualified retirement plans and certain other
institutional investors, may purchase shares directly from the funds
through 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 fund offers two Classes of shares to investors purchasing through
PFSI: Class A shares and Class B shares.

Initial purchase of shares of the Fund must be made through a PFS
Investments Registered Representative by completing the appropriate
application found in the prospectus.  The completed application should
be forwarded to Primerica Shareholder Services, P.O. Box 9662,
Providence, RI 02940-5016.  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
Primerica Shareholder Services.  In processing applications and
investments, Primerica Shareholder Services acts as agent for the
investor and for PFS Investments Inc. ("PFSI") and also as agent for the
distributor, in accordance with the terms of the prospectus.  If the
transfer agent ceases to act as such, a successor company named by the
Fund will act in the same capacity so long as the account remains open.

Shares purchased will be held in the shareholder's account by Primerica
Shareholder Services.  Share certificates are issued only upon a
shareholder's written request to a sub-transfer agent. A shareholder
that has insufficient funds to complete any purchase will be charged a
fee of up to $30 per returned purchase by Primerica 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. Subsequent investments
of at least $50 may be made for each Class.  For the Fund's Systematic
Investment Plan, the minimum initial investment requirement for Class A
and Class B shares and the subsequent investment requirement for each
Class is $25.  There are no minimum investment requirements in Class A
shares for 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 Fund reserves the
right to waive or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to time.
Purchase orders received by the transfer agent or sub-transfer agent
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.

Initial purchases of Fund 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 the Primerica
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
Primerica 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 may make additions to their accounts at any time.
Shareholders should contact Primerica 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 telephone subsequent
investments by any person in his account, he should decline the
telephone transaction option on the account application.  The minimum
telephone subsequent investment is $250 and can be up to a maximum of
$10,000.  By requesting a subsequent purchase by telephone, you
authorize Primerica Shareholder Services to transfer funds from the bank
account provided for the amount of the purchase.  A shareholder that has
insufficient funds to complete the transfer will be charged a fee of up
to $30 by Primerica 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
Primerica Shareholder Services.  Subsequent investments by telephone may
not be available if the shareholder cannot reach Primerica Shareholder
Services 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
subsequent investment procedure described above.

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. Primerica 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.

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 Primerica Shareholder Services may be
obtained by contacting the Client Services Department at (800) 544-5445.

Determination of Public Offering Price

The Fund offers its shares to current shareholders of the Fund on a
continuous basis.  The public offering price for a Class A, Class B and
Class Y share of the Fund is equal to the net asset value per share at
the time of purchase, plus for Class A shares an initial sales charge
based on the aggregate amount of the investment.  The public offering
price for Class A share purchases, including applicable rights of
accumulation, equaling or exceeding $500,000 is equal to the net asset
value per share at the time of purchase and no sales charge is imposed
at the time of purchase.  The public offering price for a Class L share
includes a 1.00% initial sales charge.  A Deferred Sales Charge is
imposed on certain redemptions of Class B shares, and on Class L shares
and Class A shares (purchased in amounts exceeding $500,000) redeemed
within one year of purchase.

REDEMPTION OF SHARES

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

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 sub-transfer agent
together with the redemption request.  Any signature appearing on a
share certificate, stock power or written 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 unless more than one such redemption
request is made in any 10-day period or the redemption proceeds are to
be sent to an address other than the address of record.  Unless
otherwise directed, redemption proceeds will be mailed to an investor's
address of record.  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.

If a shareholder holds shares in more than one Class, any request 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 transfer agent receives further instructions from Salomon Smith
Barney, or if the shareholder's account is not with Salomon Smith
Barney, from the shareholder directly.  The redemption proceeds will be
remitted on or before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or as 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.

Distributions in Kind

If the Board of Directors of the Fund determines that it would be
detrimental to the best interests of the remaining shareholders to make
a redemption payment wholly in cash, the Fund may pay, in accordance
with SEC rules, any portion of a redemption in excess of the lesser of
$250,000 or 1.00% of the Fund's net assets by a distribution in kind of
portfolio securities in lieu of cash. Securities issued as a
distribution in kind may incur brokerage commissions when shareholders
subsequently sell those securities.

a. Salomon Smith Barney Accounts

Shares held by Salomon Smith Barney as custodian must be redeemed by
submitting a written request to a Salomon Smith Barney Financial
Consultant. 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 Investment Funds Inc.
   -Smith Barney Premier Selections Global Growth Fund
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
transfer agent together with the redemption request.  Any signature
appearing on a share certificate, stock power or written 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 unless
more than one such redemption request is made in any 10-day period.
Redemption proceeds will be mailed to an investor's address of record.
The  transfer agent may require additional supporting documents for
redemptions made by corporations, executors, administrators, directors
or guardians.  A redemption request will not be deemed properly received
until the transfer agent receives all required documents in proper form.
Redempton proceeds will be mailed to shareholders' address of record.

Telephone Redemption and Exchange Program.  Shareholders who do not have
a brokerage account may be eligible to redeem and exchange shares by
telephone.  To determine if a shareholder is entitled to participate in
this program, he or she should contact the transfer agent at 1-800-451-
2010.  Once eligibility is confirmed, the shareholder must complete and
return a Telephone/Wire Authorization Form, along with a signature
guarantee, that will be provided by a sub-transfer agent upon request.
(Alternatively, an investor may authorize telephone redemptions on the
new account application with the applicant's signature guarantee when
making his/her initial investment in the Fund.)

Redemptions.   Redemption requests of up to $50,000 of any Class or
Classes of shares of the Fund may be made by eligible shareholders by
calling the transfer agent at 1-800-451-2010.  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 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 have a correspondent relationship with a member bank.  The
Fund reserves the right to charge shareholders a nominal fee for each
wire redemption.  Such charges, if any, will be assessed against the
shareholder's 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 1-800-
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 Fund nor its agents will be liable for following
instructions communicated by telephone that are reasonably believed to
be genuine.  The Fund 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 Fund 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.

Redemptions in Kind.  In conformity with applicable rules of the SEC,
redemptions may be paid in portfolio securities, in cash or any
combination of both, as the Board of Directors may deem advisable;
however, payments shall be made wholly in cash unless the Board of
Directors believes economic conditions exist that would make such a
practice detrimental to the best interests of the Fund and its remaining
shareholders.  If a redemption is paid in portfolio securities, such
securities will be valued in accordance with the procedures described
under "Share Price" in the prospectus and a shareholder would incur
brokerage expenses if these securities were then converted to cash.

b.	PFS Investments Accounts

Shareholders may redeem for cash some or all of their shares of the Fund
at any time by sending a written request in proper form directly to a
sub-transfer agent, Primerica Shareholder Services, at P.O. Box 105033,
Atlanta, Georgia 30348-5033. If you should have any questions concerning
how to redeem shares in your account after reviewing the information
below, please contact Primerica 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 Primerica
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 Primerica Shareholder Services at (800) 544-
5445 between 8:00 a.m. and 8:00 p.m. eastern standard time to obtain the
proper forms.

A shareholder may utilize Primerica 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 Primerica
Shareholder Services at (800) 544-5445 between 9:00 a.m. and 6:00 p.m.
eastern time any day that the NYSE is open.  Telephone redemption may
not be available if the shareholder cannot reach Primerica Shareholder
Services 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.

A shareholder may utilize Primerica 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 Primerica
Shareholder Services at (800) 554-2374. Facsimile redemptions may not be
available if the shareholder cannot reach Primerica Shareholder Services
by FAX, 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 Primerica
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. Primerica 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 monthly or quarterly.
Withdrawals of at least $50 may be made under the Withdrawal Plan by
redeeming as many shares of the Fund 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. (With respect to Withdrawal Plans in effect
prior to November 7, 1994, any applicable Deferred Sales Charge will be
waived on amounts withdrawn that do not exceed 2.00% per month of the
value of the shareholder's shares that are subject to a Deferred Sales
Charge). To the extent withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in the Fund, there will be a
reduction in the value of the shareholder's investment, and continued
withdrawal payments may reduce the shareholder's investment and
ultimately exhaust it. Withdrawal payments should not be considered as
income from investment in the Fund. Furthermore, as it generally would
not be advantageous to a shareholder to make additional investments in
the Fund at the same time he or she is participating in the Withdrawal
Plan, purchases by such shareholder in amounts of less than $5,000
ordinarily will not be permitted. All dividends and distributions on
shares in the Withdrawal Plan are reinvested automatically at net asset
value in additional shares of the Fund.

Shareholders who wish to participate in the Withdrawal Plan and who hold
their shares in certificate form must deposit their share certificates
with a sub-transfer agent as agent for Withdrawal Plan members.  For
additional information, shareholders should contact a Salomon Smith
Barney Financial Consultant or one of the Fund's sub-transfer agents. A
shareholder who purchases shares directly through a sub-transfer agent
may continue to do so and applications for participation in the
Withdrawal Plan must be received by a sub-transfer agent no later than
the eighth day of the month to be eligible for participation beginning
with that month's withdrawal.

VALUATION OF SHARES

The net asset value per share of the Fund's Classes is calculated on
each day, Monday through Friday, except days on which the NYSE is
closed. The NYSE currently is scheduled to be closed on 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 the Fund in valuing its assets.

Securities listed on a national securities exchange will be valued on
the basis of the last sale on the date on which the valuation is made
or, in the absence of sales, at the mean between the closing bid and
asked prices. Over-the-counter securities will be valued at the mean
between the closing bid and asked prices on each day, or, if market
quotations for those securities are not readily available, at fair
value, as determined in good faith by the Company's Board of Directors.
Short-term obligations with maturities of 60 days or less are valued at
amortized cost, which constitutes fair value as determined by the
Company's Board of Directors. Amortized cost involves valuing an
instrument at its original cost to the Fund 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. All other securities and other assets of the Fund will be
valued at fair value as determined in good faith by the Company's Board
of Directors.

EXCHANGE PRIVILEGE

Except as noted below and in the Prospectus, shareholders of any of the
Smith Barney Mutual Funds may exchange all or part of their shares for
shares of the same class of other Smith Barney Mutual Funds, to the
extent such shares are offered for sale in the shareholder's state of
residence, on the basis of relative net asset value per share at the
time of exchange as follows:

A. Class A and Class Y shares of the Fund may be exchanged without
a sales charge for the respective shares of any of the Smith
Barney Mutual Funds.

B. Class B shares of any fund may be exchanged without a sales
charge. Class B shares of the Fund exchanged for Class B shares of
another Smith Barney Mutual Fund will be subject to the higher
applicable Deferred Sales Charge of the two funds and, for
purposes of calculating Deferred Sales Charge rates and conversion
periods, will be deemed to have been held since the date the
shares being exchanged were deemed to be purchased.

C. Class L shares of any fund may be exchanged without a sales
charge. For purposes of Deferred Sales Charge applicability, Class
L shares of the Fund exchanged for Class L shares of another Smith
Barney Mutual Fund will be deemed to have been owned since the
date the shares being exchanged were deemed to be purchased.

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 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 Salomon Smith Barney
Financial Consultant or 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 fund 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. As stated in the prospectus for shares
distributed through PFS, the exchange privilege is limited.

Additional Information Regarding Exchanges.  The Fund is not designed to
provide investors with a means of speculation on short-term market
movements.  A pattern of frequent exchanges by investors can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund and its shareholders.  Accordingly, if the
Fund's management in its sole discretion determines that an investor is
engaged in excessive trading, the Fund, with or without prior notice,
may temporarily or permanently terminate the availability to that
investor of Fund exchanges, or reject in whole or part any purchase or
exchange request with respect to such investor's account.  Such
investors also may be barred from purchases and exchanges involving
other funds in the Smith Barney Mutual Fund family.   Accounts under
common ownership or control will be considered as one account for
purposes of determining a pattern of excessive trading. The Fund may
notify an investor of rejection of a purchase or exchange order after
the day the order is placed.  If an exchange request is rejected, the
Fund will take no other action with respect to the shares until it
receives further instructions from the investor.  The Fund's policy on
excessive trading applies to investors who invest in the Fund directly
or through Service Agents, but does not apply to any systematic
investment  plans described in the prospectus.

During times of drastic economic or market conditions, the Fund may
suspend the Exchange Privilege temporarily without notice and treat
exchange requests based on their separate components - redemption orders
with a simultaneous request to purchase the other fund's shares.  In
such a case, the redemption request would be processed at the Fund's
next determined net asset value but the purchase order would be
effective only at the net asset value next determined after the fund
being purchased formally accepts the order, which may result in the
purchase being delayed.

PERFORMANCE DATA

From time to time, the Company may advertise the Fund's total return and
average annual total return in advertisements and/or other types of
sales literature.  These figures are computed separately for Class A,
Class B, Class L and Class Y shares of the Fund.  These figures are
based on historical earnings and are not intended to indicate future
performance.  Total return is computed for a specified period of time
assuming deduction of the maximum sales charge, if any, from the initial
amount invested and reinvestment of all income dividends and capital
gain distributions on the reinvestment dates at prices calculated as
stated in this prospectus, then dividing the value of the investment at
the end of the period so calculated by the initial amount invested and
subtracting 100%.  The standard average annual total return, as
prescribed by the SEC is derived from this total return, which provides
the ending redeemable value.  Such standard total return information may
also be accompanied with nonstandard total return information for
differing periods computed in the same manner but without annualizing
the total return or taking sales charges into account.  The Company may
also include comparative performance information in advertising or
marketing the Fund's shares.  Such performance information may include
data from Lipper Analytical Services, Inc. and other financial
publications.

From time to time, the Company may quote the Fund's total return in
advertisements or in reports and other communications to shareholders.
The Company may include comparative performance information in
advertising or marketing the Fund's shares. Such performance information
may include the following industry and financial publications- Barron's,
Business Week, CDA Investment Technologies, Inc., Changing Times,
Forbes, Fortune, Institutional Investor, Investor's Business Daily,
Money, Morningstar Mutual Fund Values, The New York Times, USA Today and
The Wall Street Journal. To the extent any advertisement or sales
literature of the Fund describes the expenses or performance of any
Class it will also disclose such information for the other Classes.





Average Annual Total Return

"Average annual total return" figures are computed according to a
formula prescribed by the SEC. The formula can be expressed as follows:

	P (1 + T)n = ERV

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

The ERV assumes complete redemption of the hypothetical investment at
the end of the measuring period.  The Fund's net investment income
changes in response to fluctuations in interest rates and the expenses
of the Fund.

The Fund's average annual total return for Class A shares assuming the
maximum applicable sales charge was as follows for the periods indicated
(reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(19.67)% per annum during the period from the Fund's
commencement of operations on June 30, 2000, through April
30, 2001.

Class A's average annual total return assumes that the maximum
applicable sales charge assessed by the Fund has been deducted from the
hypothetical investment.  Had the maximum 4.00% sales charge not been
deducted, Class A's average annual total return would have been (15.44)%
for the same period.

The Fund's average annual total return for Class B shares assuming the
maximum applicable Deferred Sales Charge was as follows for the periods
indicated (reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(20.17)% per annum during the period from the Fund's
commencement of operations on June 30, 2000, through April
30, 2001.

Had the maximum applicable Deferred Sales Charge not been deducted at
the time of redemption, Class B's average annual total return would have
been (15.96)% for the same period.

The Fund's average annual total return for Class L shares assuming the
maximum applicable Deferred Sales Charge was as follows for the periods
indicated (reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(17.67)% per annum during the period from the Fund's
commencement of operations on June 30, 2000, through April
30, 2001.

Had the maximum applicable Deferred Sales Charge not been deducted at
the time of redemption, Class L's average annual total return would have
been (15.96)% for the same period.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

The Fund's policy is to distribute its net investment income and net
realized capital gains, if any, annually.  The Fund may also pay
additional dividends shortly before December 31 from certain amounts of
undistributed ordinary income and capital gains realized in order to
avoid a federal excise tax liability.

If a shareholder does not otherwise instruct, dividends and capital
gains distributions will be reinvested automatically in additional
shares of the same Class at net asset value, subject to no sales charge
or Deferred Sales Charge.  A shareholder may change the option at any
time by notifying his Salomon Smith Barney Financial Consultant or
Dealer Representative.  A shareholder whose account is held directly at
a sub-transfer agent should notify the sub-transfer agent in writing,
requesting a change to this reinvest option.

The per share dividends on Class B and Class L shares of the Fund may be
lower than the per share dividends on Class A and Class Y shares
principally as a result of the distribution fee applicable with respect
to Class B and Class L shares. The per share dividends on Class A shares
of the Fund may be lower than the per share dividends on Class Y shares
principally as a result of the service fee applicable to Class A shares.
Distributions of capital gains, if any, will be in the same amount for
Class A, Class B, Class L and Class Y shares.

Taxes

The following is a summary of the material United States federal income
tax considerations regarding the purchase, ownership and disposition of
shares of the Fund.  Each prospective shareholder is urged to consult
his own tax adviser with respect to the specific federal, state, local
and foreign tax consequences of investing in the Fund.  The summary is
based on the laws in effect on the date of this SAI, which are subject
to change.

The Fund and Its Investments

The Fund intends to qualify to be treated as a regulated investment
company each taxable year under the Code.  To so qualify, the Fund must,
among other things: (a) derive at least 90% of its gross income in each
taxable year from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of stock
or securities or foreign currencies, or other income (including, but not
limited to, gains from options, futures or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the end of each
quarter of the Fund's taxable year, (i) at least 50% of the market value
of the Fund's assets is represented by cash, securities of other
regulated investment companies, United States government securities and
other securities, with such other securities limited, in respect of any
one issuer, to an amount not greater than 5% of the Fund's assets and
not greater than 10% of the outstanding voting securities of such issuer
and (ii) not more than 25% of the value of its assets is invested in the
securities (other than United States government securities or securities
of other regulated investment companies) of any one issuer or any two or
more issuers that the Fund controls and which are determined to be
engaged in the same or similar trades or businesses or related trades or
businesses.

As a regulated investment company, the Fund will not be subject to
United States federal income tax on its investment company taxable
income (i.e., taxable income other than any excess of net realized long-
term capital gains over net realized short-term capital losses ("net
capital gains")) and its net capital gains, if any, that it distributes
to its shareholders, provided an amount equal to at least 90% of its
investment company taxable income, plus or minus certain other
adjustments as specified in the Code, and 90% of its net tax-exempt
income for the taxable year is distributed in compliance with the Code's
timing and other requirements but will be subject to tax at regular
corporate rates on any taxable income or gains it does not distribute.
The Code imposes a 4% nondeductible excise tax on the Fund to the extent
it does not distribute by the end of any calendar year at least 98% of
its net investment income for that year and 98% of the net amount of its
capital gains (both long-term and short-term) for the one-year period
ending, as a general rule, on October 31 of that year.  For this
purpose, however, any income or gain retained by the Fund that is
subject to corporate income tax will be considered to have been
distributed by year-end.  In addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will be increased or
decreased to reflect any underdistribution or overdistribution, as the
case may be, from the previous year.  The Fund anticipates that it will
pay such dividends and will make such distributions as are necessary in
order to avoid the application of this tax.

If, in any taxable year, the Fund 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 Fund in computing its taxable income.  In addition, in
the event of a failure to qualify, the Fund's distributions, to the
extent derived from the Fund'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 Fund 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 the Fund failed to qualify as a
regulated investment company for a period greater than one taxable year,
the Fund may be required to recognize any net built-in gains with
respect to certain of its assets (the excess of the aggregate gains,
including items of income, over aggregate losses that would have been
realized if it had been liquidated) in order to qualify as a regulated
investment company in a subsequent year.

The Fund's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts
on foreign currencies) will be subject to special provisions of the Code
(including provisions relating to "hedging transactions" and
"straddles") that, among other things, may affect the character of gains
and losses realized by the Fund (i.e., may affect whether gains or
losses are ordinary or capital), accelerate recognition of income to the
Fund and defer Fund losses.  These rules could therefore affect the
character, amount and timing of distributions to shareholders.  These
provisions also (a) will require the Fund to mark-to-market certain
types of the positions in its portfolio (i.e., treat them as if they
were closed out) and (b) may cause the Fund to recognize income without
receiving cash with which to pay dividends or make distributions in
amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes.  The Fund will monitor its transactions, will
make the appropriate tax elections and will make the appropriate entries
in its books and records when it acquires any foreign currency, forward
contract, option, futures contract or hedged investment in order to
mitigate the effect of these rules and prevent disqualification of the
Fund as a regulated investment company.

The Fund's investment in Section 1256 contracts, such as regulated
futures contracts, most foreign currency forward contracts traded in the
interbank market and options on most stock indices, are subject to
special tax rules.  All section 1256 contracts held by the Fund at the
end of its taxable year are required to be marked to their market value,
and any unrealized gain or loss on those positions will be included in
the Fund's income as if each position had been sold for its fair market
value at the end of the taxable year.  The resulting gain or loss will
be combined with any gain or loss realized by the Fund from positions in
section 1256 contracts closed during the taxable year.  Provided such
positions were held as capital assets and were not part of a "hedging
transaction" nor part of a "straddle," 60% of the resulting net gain or
loss will be treated as long-term capital gain or loss, and 40% of such
net gain or loss will be treated as short-term capital gain or loss,
regardless of the period of time the positions were actually held by the
Fund.

Foreign Investments.  Dividends or other income (including, in some
cases, capital gains) received by the Fund from investments in foreign
securities may be subject to withholding and other taxes imposed by
foreign countries.  Tax conventions between certain countries and the
United States may reduce or eliminate such taxes in some cases.  The
Fund will not be eligible to elect to treat any foreign taxes paid by it
as paid by its shareholders, who therefore will not be entitled to
credits for such taxes on their own tax returns.  Foreign taxes paid by
the Fund will reduce the return from the Fund's investments.

Passive Foreign Investment Companies.  If the Fund purchases shares in
certain foreign investment entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United States federal income
tax on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a
taxable dividend by the Fund to its shareholders.  Additional charges in
the nature of interest may be imposed on the Fund in respect of deferred
taxes arising from such distributions or gains.  If the Fund were to
invest in a PFIC and elected to treat the PFIC as a "qualified electing
fund" under the Code, in lieu of the foregoing requirements, the Fund
might be required to include in income each year a portion of the
ordinary earnings and net capital gains of the qualified electing fund,
even if not distributed to the Fund, and such amounts would be subject
to the 90% and excise tax distribution requirements described above.  In
order to make this election, the Fund would be required to obtain
certain annual information from the PFICs in which it invests, which may
be difficult or not possible to obtain.

The Fund may also make an election that would result in the Fund being
treated as if it had sold and repurchased all of its PFIC stock at the
end of each year.  In this case, the Fund would report gains as ordinary
income and would deduct losses as ordinary losses to the extent of
previously recognized gains. The election, once made, would be effective
for all subsequent taxable years of the Fund, unless revoked with the
consent of the Internal Revenue Service (the "IRS").  By making the
election, the Fund could potentially ameliorate the adverse tax
consequences with respect to its ownership of shares in a PFIC, but in
any particular year may be required to recognize income in excess of the
distributions it receives from PFICs and its proceeds from dispositions
of PFIC stock.  The Fund may have to distribute this "phantom" income
and gain to satisfy its distribution requirement and to avoid imposition
of the 4% excise tax.  The Fund will make the appropriate tax elections,
if possible, and take any additional steps that are necessary to
mitigate the effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions.  Any dividend declared by the Fund in
October, November or December of any calendar year and payable to
shareholders of record on a specified date in such a month shall be
deemed to have been received by each shareholder on December 31 of such
calendar year and to have been paid by the Fund not later than such
December 31, provided such dividend is actually paid by the Fund during
January of the following calendar year.  The Fund intends to distribute
annually to its shareholders substantially all of its investment company
taxable income and any net capital gains.  The Fund currently expects to
distribute any such excess annually to its shareholders.  However, if
the Fund retains for investment an amount equal to all or a portion of
its net capital gains, it will be subject to a corporate tax (currently
at a rate of 35%) on the amount retained.  In that event, the Fund will
designate such retained amounts as undistributed capital gains in a
notice to its shareholders who (a) will be required to include in income
for United Stares federal income tax purposes, as long-term capital
gains, their proportionate shares of the undistributed amount, (b) will
be entitled to credit their proportionate shares of the 35% tax paid by
the Fund on the undistributed amount against their United States federal
income tax liabilities, if any, and to claim refunds to the extent their
credits exceed their liabilities, if any, and (c) will be entitled to
increase their tax basis, for United States federal income tax purposes,
in their shares by an amount equal to 65% of the amount of undistributed
net capital gains included in the shareholder's income.  Organizations
or persons not subject to federal income tax on such net capital gains
will be entitled to a refund of their pro rata share of such taxes paid
by the Fund upon filing appropriate returns or claims for refund with
the IRS.

Dividends of net investment income and distributions of net realized
short-term capital gains are taxable to a United States shareholder as
ordinary income, whether paid in cash or in shares.  Distributions of
net long-term capital gains, if any, that the Fund designates as capital
gains dividends are taxable as long-term capital gains, whether paid in
cash or in shares and regardless of how long a shareholder has held
shares of the Fund.  Dividends and distributions paid by the Fund
attributable to dividends on stock of U.S. corporations received by the
Fund, with respect to which the Fund meets certain holding period
requirements, will be eligible for the deduction for dividends received
by corporations. Distributions in excess of the Fund's current and
accumulated earnings and profits will, as to each shareholder, be
treated as a tax-free return of capital to the extent of a shareholder's
basis in his shares of the Fund, and as a capital gain thereafter (if
the shareholder holds his shares of the Fund as capital assets).
Shareholders receiving dividends or distributions in the form of
additional shares should be treated for United States federal income tax
purposes as receiving a distribution in an amount equal to the amount of
money that the shareholders receiving cash dividends or distributions
will receive, and should have a cost basis in the shares received equal
to such amount.

Investors considering buying shares just prior to a dividend or capital
gain distribution should be aware that, although the price of shares
just purchased at that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may nevertheless be taxable
to them. If the Fund is the holder of record of any stock on the record
date for any dividends payable with respect to such stock, such
dividends are included in the Fund's gross income not as of the date
received but as of the later of (a) the date such stock became ex-
dividend with respect to such dividends (i.e., the date on which a buyer
of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date the Fund acquired such stock.  Accordingly,
in order to satisfy its income distribution requirements, the Fund may
be required to pay dividends based on anticipated earnings, and
shareholders may receive dividends in an earlier year than would
otherwise be the case.

Sales of Shares.  Upon the sale or exchange of his shares, a shareholder
will realize a taxable gain or loss equal to the difference between the
amount realized and his basis in 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, and will be long-term capital gain or loss if the
shares are held for more than one year and short-term capital gain or
loss if the shares are held for one year or less.  Any loss realized on
a sale or exchange will be disallowed to the extent the shares disposed
of are replaced, including replacement through the reinvesting of
dividends and capital gains distributions in the Fund, within a 61-day
period 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
increased to reflect the disallowed loss.  Any loss realized by a
shareholder on the sale of a Fund share held by the shareholder for six
months or less will be treated for United States federal income tax
purposes as a long-term capital loss to the extent of any distributions
or deemed distributions of long-term capital gains received by the
shareholder with respect to such share. If a shareholder incurs a sales
charge in acquiring shares of the Fund, disposes of those shares within
90 days and then 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 will not
be taken into account in computing gain or loss on the original shares
to the extent the subsequent sales charge is reduced.  Instead, the
disregarded portion of the original sales charge will be added to the
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 second 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.  The Fund may be required to withhold, for United
States federal income tax purposes, up to 31% of the dividends,
distributions and redemption proceeds payable to shareholders who fail
to provide the Fund with their correct taxpayer identification number or
to make required certifications, or who have been notified by the IRS
that they are subject to backup withholding.  Certain shareholders are
exempt from backup withholding.  Backup withholding is not an additional
tax and any amount withheld may be credited against a shareholder's
United States federal income tax liabilities.

Notices.  Shareholders will be notified annually by the Fund as to the
United States federal income tax status of the dividends, distributions
and deemed distributions attributable to undistributed capital gains
(discussed above in "Taxes - Taxation of United States Shareholders -
Dividends and Distributions") made by the Fund to its shareholders.
Furthermore, shareholders will also receive, if appropriate, various
written notices after the close of the Fund's taxable year regarding the
United States federal income tax status of certain dividends,
distributions and deemed distributions that were paid (or that are
treated as having been paid) by the Fund to its shareholders during the
preceding taxable year.

Other Taxation

Distributions also may be subject to additional state, local and foreign
taxes depending on each shareholder's particular situation.

The foregoing is only a summary of certain material tax consequences
affecting the Fund and its shareholders.  Shareholders are advised to
consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.

ADDITIONAL INFORMATION

The Company was incorporated on September 29, 1981 under the laws of the
state of Maryland under the name Hutton Investment Series Inc.  The
Company's corporate name was changed on December 29, 1988, July 30, 1993
and October 28, 1994, to SLH Investment Portfolios Inc., Smith Barney
Shearson Investment Funds Inc., and Smith Barney Investment Funds Inc.,
respectively.

The Company offers shares of eight separate series with a par value of
$.001 per share.  The Fund offers shares currently classified into four
Classes - A, B, L and Y.  Each Class of the Fund represents an identical
interest in the Fund's investment portfolio.  As a result, the Classes
have the same rights, privileges and preferences, except with respect
to:  (a) the designation of each Class; (b) the effect of the respective
sales charges; if any, for each Class; (c) the distribution and/or
service fees borne by each Class pursuant to the Plan; (d) the expenses
allocable exclusively to each Class; (e) voting rights on matters
exclusively affecting a single Class; (f) the exchange privilege of each
Class; and (g) the conversion feature of the Class B shares.  The
Company's Board of Directors does not anticipate that there will be any
conflicts among the interests of the holders of the different Classes.
The Directors, on an ongoing basis, will consider whether any such
conflict exists and, if so, take appropriate action.

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 for the purpose of voting
upon the question or removal of any Director when requested in writing
to do so by the record holders of not less than 10% of the outstanding
shares of the Fund.  At such a meeting, a Director may be removed after
the holders of record of not less than a majority of the outstanding
shares of the Fund have declared that the Director be removed either by
declaration in writing or by votes cast in person or by proxy.  Except
as set forth above, the Directors shall continue to hold office and may
appoint successor Directors.

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

Annual and Semi-annual Reports.  The Fund sends its shareholders a semi-
annual report and an audited annual report, which include listings of
investment securities held by the Fund at the end of the period covered.
In an effort to reduce the Fund's printing and mailing costs, the Fund
consolidates the mailing of its semi-annual and annual reports by
household. This consolidation means that a household having multiple
accounts with the identical address of record will receive a single copy
of each report.  In addition, the Fund also consolidates the mailing of
its Prospectus so that a shareholder having multiple accounts (that is,
individual, IRA and/or Self-Employed Retirement Plan accounts) will
receive a single Prospectus annually. Shareholders who do not want this
consolidation to apply to their accounts should contact their Salomon
Smith Barney Financial Consultant or the transfer agent.

FINANCIAL STATEMENTS

The Fund's annual report for the fiscal year ended April 30, 2001 was
filed on July 6, 2001, Accession Number 0000950130-01-502898, and is
incorporated in its entirety by reference.

OTHER INFORMATION

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 four "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.



36

13
Smith Barney
Premier Selections Large Cap Fund
Seven World Trade Center
New York, New York 10048
1-800-451-2010

Statement of Additional
Information


August 28, 2001

This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current combined Prospectus
of Smith Barney Premier Selections Large Cap Fund (the "Fund"), Smith
Barney Premier Selections All Cap Growth Fund and the Smith Barney
Premier Selections Global Growth Fund dated August 28, 2001 as amended
or supplemented from time to time, and should be read in conjunction
with the Fund's Prospectus.  The Fund is a series of Smith Barney
Investment Funds Inc. (the "Company").  The Fund's Prospectus may be
obtained from a Service Agent (as defined on page 22) or by writing or
calling the Fund at the address or telephone number set forth above.
This SAI, although not in itself a prospectus, is incorporated by
reference into the Prospectus in its entirety.

TABLE OF CONTENTS
Page

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES	2
INVESTMENT RESTRICTIONS	12
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY	14
PURCHASE OF SHARES	22
REDEMPTION OF SHARES	33
VALUATION OF SHARES	37
EXCHANGE PRIVILEGE	38
PERFORMANCE DATA	39
DIVIDENDS, DISTRIBUTIONS AND TAXES	41
ADDITIONAL INFORMATION	46
FINANCIAL STATEMENTS	47
OTHER INFORMATION	47




INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The prospectus discusses the Fund's investment objective and policies.
This section contains supplemental information concerning the types of
securities and other instruments in which the Fund may invest, the
investment policies and portfolio strategies the Fund may utilize and
certain risks associated with these investments, policies and
strategies.  Smith Barney Fund Management LLC ("SBFM" or the "Manager")
serves as investment manager to the Fund.

The Fund normally invests approximately 50% (i.e. up to twenty stocks)
of its total assets in equity securities of large capitalization
companies in each Fund segment, Value and Growth.  The Fund does have
the flexibility, however, to invest the balance in companies with
smaller market capitalizations. The Fund defines large market
capitalization companies as those with market capitalization of $5
billion or more at the time of the Fund's investment.

Under normal market conditions, the majority of the Fund's portfolio
will consist of common stock.  The Fund, however, reserves the right, as
a defensive measure, to hold any type of money market securities, and
short-term debt securities cash, in such proportions as, in the opinion
of management, prevailing market or economic conditions warrant.

When-Issued Securities and Delayed-Delivery Transactions.  The Fund may
purchase securities on a "when-issued" basis, for delayed delivery
(i.e., payment or delivery occur beyond the normal settlement date at a
stated price and yield) or on a forward commitment basis.  The Fund does
not intend to engage in these transactions for speculative purposes, but
only in furtherance of its investment goal.  These transactions occur
when securities are purchased or sold by the Fund with payment and
delivery taking place in the future to secure what is considered an
advantageous yield and price to the Fund at the time of entering into
the transaction.  The payment obligation and the interest rate that will
be received on when-issued securities are fixed at the time the buyer
enters into the commitment.  Because of fluctuations in the value of
securities purchased or sold on a when-issued, delayed-delivery or
forward commitment basis, the prices obtained on such securities may be
higher or lower than the prices available in the market on the dates
when the investments are actually delivered to the buyers.
When the Fund agrees to purchase when-issued, delayed-delivery or
forward commitment securities, the Fund will set aside cash or liquid
securities equal to the amount of the commitment in a segregated account
on the Fund's books.  Normally, the custodian will set aside portfolio
securities to satisfy a purchase commitment, and in such a case the Fund
may be required subsequently to place additional assets in the
segregated account in order to ensure that the value of the account
remains equal to the amount of the Fund's commitment. The assets
contained in the segregated account will be marked-to-market daily.  It
may be expected that the Fund's net assets will fluctuate to a greater
degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash.  When the Fund engages in
when-issued, delayed-delivery or forward commitment transactions, it
relies on the other party to consummate the trade.  Failure of the
seller to do so may result in the Fund's incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.

Foreign Securities.  The Fund may invest in securities of foreign
issuers. Such investments involve certain risks not ordinarily
associated with investments in securities of domestic issuers.  Such
risks include currency exchange control regulations and costs, the
possibility of expropriation, seizure, or nationalization of foreign
deposits, less liquidity and volume and more volatility in foreign
securities markets and the impact of political, social, economic or
diplomatic developments or the adoption of other foreign government
restrictions that might adversely affect the payment of principal and
interest on or market value of securities.  If it should become
necessary, the Fund might encounter greater difficulties in invoking
legal processes abroad than would be the case in the United States.  In
addition, there may be less publicly available information about a non-
U.S. company, and non-U.S. companies are not generally subject to
uniform accounting and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies.
Furthermore, some of these securities may be subject to foreign
brokerage and withholding taxes.

The Fund may also invest in securities of foreign issuers in the form of
American Depository Receipts ("ADRs"), European Depository Receipts
("EDRs") or similar securities representing interests in the common
stock of foreign issuers.  Management intends to limit  the Fund's
investment in these types of securities to 10% of the Fund's net assets.
ADRs are receipts, typically issued by a U.S. bank or trust company,
which evidence ownership of underlying securities issued by a foreign
corporation.  EDRs are receipts issued in Europe which evidence a
similar ownership arrangement.  Generally, ADRs, in registered form, are
designed for use in the U.S. securities markets and EDRs are designed
for use in European securities markets.  The underlying securities are
not always denominated in the same currency as the ADRs or EDRs.
Although investment in the form of ADRs or EDRs facilitates trading in
foreign securities, it does not mitigate the risks associated with
investing in foreign securities.  However, by investing in ADRs or EDRs
rather than directly in foreign issuers' stock, the Fund can avoid
currency risks during the settlement period for either purchases or
sales.  In general, there is a large, liquid market in the United States
for many ADRs and EDRs.  The information available for ADRs and EDRs is
subject to the accounting, auditing and financial reporting standards of
the domestic market or exchange on which they are traded, which
standards are more uniform and more exacting that those to which many
foreign issuers may be subject.

Investments in foreign securities incur higher costs than investments in
U.S. securities, including higher costs in making securities
transactions as well as foreign government taxes which may reduce the
investment return of the Fund.  In addition, foreign investments may
include additional risks associated with currency exchange rates, less
complete financial information about individual companies, less market
liquidity and political instability.

Money Market Instruments. The Fund may invest for temporary defensive
purposes in short-term corporate and government bonds and notes and
money market instruments.  Money market instruments include: obligations
issued or guaranteed by the United States government, its agencies or
instrumentalities ("U.S. government securities"); certificates of
deposit, time deposits 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.  Certificates of deposit ("CDs") are
short-term, negotiable obligations of commercial banks.  Time deposits
("TDs") are non-negotiable deposits maintained in banking institutions
for specified periods of time at stated interest rates.  Bankers'
acceptances are time drafts drawn on commercial banks by borrowers,
usually in connection with international transactions.

Repurchase Agreements.  The Fund may agree to purchase securities from a
bank or recognized securities dealer and simultaneously commit to resell
the securities to the bank or dealer at an agreed-upon date and price
reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased securities ("repurchase agreements"). The Fund
would maintain custody of the underlying securities prior to their
repurchase; thus, the obligation of the bank or dealer to pay the
repurchase price on the date agreed to would be, in effect, secured by
such securities.  If the value of such securities were less than the
repurchase price, plus interest, the other party to the agreement would
be required to provide additional collateral so that at all times the
collateral is at least 102% of the repurchase price plus accrued
interest.  Default by or bankruptcy of a seller would expose the Fund to
possible loss because of adverse market action, expenses and/or delays
in connection with the disposition of the underlying obligations.  The
financial institutions with which the Fund may enter into repurchase
agreements will be banks and non-bank dealers of U.S. Government
securities on the Federal Reserve Bank of New York's list of reporting
dealers, if such banks and non-bank dealers are deemed creditworthy by
the Fund's Manager. The Manager will continue to monitor
creditworthiness of the seller under a repurchase agreement, and will
require the seller to maintain during the term of the agreement the
value of the securities subject to the agreement to equal at least 102%
of the repurchase price (including accrued interest).  In addition, the
Manager will require that the value of this collateral, after
transaction costs (including loss of interest) reasonably expected to be
incurred on a default, be equal to at least 102% the repurchase price
(including accrued premium) provided in the repurchase agreement or the
daily amortization of the difference between the purchase price and the
repurchase price specified in the repurchase agreement. The Manager will
mark-to-market daily the value of the securities.  Repurchase agreements
are considered to be loans by the Fund under the Investment Company Act
of 1940, as amended (the "1940 Act").
Reverse Repurchase Agreements.  The Fund may enter into reverse
repurchase agreements which involve the sale of Fund securities with an
agreement to repurchase the securities at an agreed-upon price, date and
interest payment and have the characteristics of borrowing.  Since the
proceeds of borrowings under reverse repurchase agreements are invested,
this would introduce the speculative factor known as "leverage."  The
securities purchased with the funds obtained from the agreement and
securities collateralizing the agreement will have maturity dates no
later than the repayment date.  Generally the effect of such a
transaction is that the Fund can recover all or most of the cash
invested in the portfolio securities involved during the term of the
reverse repurchase agreement, while in many cases it will be able to
keep some of the interest income associated with those securities.  Such
transactions are only advantageous if the Fund has an opportunity to
earn a greater rate of interest on the cash derived from the transaction
than the interest cost of obtaining that cash.  Opportunities to realize
earnings from the use of the proceeds equal to or greater than the
interest required to be paid may not always be available, and the Fund
intends to use the reverse repurchase technique only when the Manager
believes it will be advantageous to the Fund.  The use of reverse
repurchase agreements may exaggerate any interim increase or decrease in
the value of the Fund's assets.  The Fund's custodian bank will maintain
a separate account for the Fund with securities having a value equal to
or greater than such commitments.
Lending of Portfolio Securities.  Consistent with applicable regulatory
requirements, the Fund may lend portfolio securities to brokers, dealers
and other financial organizations that meet capital and other credit
requirements or other criteria established by the Board.  The Fund will
not lend portfolio securities to affiliates of the Manager unless they
have applied for and received specific authority to do so from the
Securities and Exchange Commission ("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
equal to at least 102% of the current market value of the loaned
securities.  Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the
account of the Fund.  From time to time, the Fund may return a part of
the interest earned from the investment of collateral received for
securities loaned to the borrower and/or a third party that is
unaffiliated with the Fund and that is acting as a "finder."
By lending its securities, the Fund can increase its income by
continuing to receive interest and any dividends on the loaned
securities as well as by either investing the collateral received for
securities loaned 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.  Although the generation of income is not the
primary investment goal of the Fund, income received could be used to
pay the Fund's expenses and would increase an investor's total return.
The Fund will adhere to the following conditions whenever its portfolio
securities are loaned: (i) the Fund must receive at least 102% cash
collateral or equivalent securities of the type discussed in the
preceding paragraph from the borrower; (ii) the borrower must increase
such collateral whenever the market value of the securities rises above
the level of such collateral; (iii) the Fund must be able to terminate
the loan at any time; (iv) 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; (v) the Fund may
pay only reasonable custodian fees in connection with the loan; and (vi)
voting rights on the loaned securities may pass to the borrower,
provided, however, that if a material event adversely affecting the
investment occurs, the Board must terminate the loan and regain the
right to vote the securities.  Loan agreements involve certain risks in
the event of default or insolvency of the other party including possible
delays or restrictions upon a Fund's ability to recover the loaned
securities or dispose of the collateral for the loan.
Illiquid Securities.  The Fund may invest up to an aggregate amount of
15% of its net assets in illiquid securities, which term includes
securities subject to contractual or other restrictions on resale and
other instruments that lack readily available markets.

Non-Diversified Classification.  The Fund is classified as a non-
diversified fund under the 1940 Act which means the Fund is not limited
by the Act in the proportion of its assets it may invest in the
obligations of a single issuer.  The Fund intends to conduct its
operations, however, so as to qualify as a "regulated investment
company" for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"), which will relieve the Fund of any liability for Federal
income tax to the extent its earnings are distributed to shareholders.
To qualify as a regulated investment company, the Fund will, among other
things, limit its investments so that, at the close of each quarter of
the taxable year (a) not more than 25% of the market value of the Fund's
total assets will be invested in the securities of a single issuer and
(b) with respect to 50% of the market value of its total assets, not
more than 5% of the market value of its total assets will be invested in
the securities of a single issuer and the Fund will not own more than
10% of the outstanding voting securities of a single issuer.

Master/feeder fund structure.  The Board of Directors has the discretion
to retain the current distribution arrangement for the Fund while
investing in a master fund in a master/feeder fund structure.  A
master/feeder fund structure is one in which a fund (a "feeder fund"),
instead of investing directly in a portfolio of securities, invests most
or all of its investment assets in a separate registered investment
company (the "master fund") with substantially the same investment
objective and policies as the feeder fund.  Such a structure permits the
pooling of assets of two or more feeder funds, preserving separate
identities or distribution channels at the feeder fund level.  Based on
the premise that certain of the expenses of operating an investment
portfolio are relatively fixed, a larger investment portfolio may
eventually achieve a lower ratio of operating expenses to average net
assets.  An existing investment company is able to convert to a feeder
fund by selling all of its investments, which involves brokerage and
other transaction costs and realization of a taxable gain or loss, or by
contributing its assets to the master fund and avoiding transaction
costs and, if proper procedures are followed, the realization of taxable
gain or loss.

Options, Futures and Currency Strategies.  The Fund may use forward
currency contracts and certain options and futures strategies to attempt
to hedge its portfolio, i.e., reduce the overall level of investment
risk normally associated with the Fund.  There can be no assurance that
such efforts will succeed.

In order to assure that the Fund will not be deemed to be a "commodity
pool" for purposes of the Commodity Exchange Act, regulations of the
Commodity Futures Trading Commission ("CFTC") require that the Fund
enter into transactions in futures contracts and options on futures only
(i) for bona fide hedging purposes (as defined in CFTC regulations), or
(ii) for non-hedging purposes, provided the aggregate initial margin and
premiums on such non-hedging positions do not exceed 5% of the
liquidation value of the Fund's assets.  To attempt to hedge against
adverse movements in exchange rates between currencies, the Fund may
enter into forward currency contracts for the purchase or sale of a
specified currency at a specified future date.  Such contracts may
involve the purchase or sale of a foreign currency against the U.S.
dollar or may involve two foreign currencies.  The Fund may enter into
forward currency contracts either with respect to specific transactions
or with respect to its portfolio positions.  For example, when the
Manager anticipates making a purchase or sale of a security, it may
enter into a forward currency contract in order to set the rate (either
relative to the U.S. dollar or another currency) at which the currency
exchange transaction related to the purchase or sale will be made
("transaction hedging").  Further, when the Manager believes a
particular currency may decline compared to the U.S. dollar or another
currency, the Fund may enter into a forward contract to sell the
currency the Manager expects to decline in an amount approximating the
value of some or all of the Fund's securities denominated in that
currency, or when the Manager believes one currency may decline against
a currency in which some or all of the portfolio securities held by the
Fund are denominated, it may enter into a forward contract to buy the
currency expected to decline for a fixed amount ("position hedging").
In this situation, the Fund may, in the alternative, enter into a
forward contract to sell a different currency for a fixed amount of the
currency expected to decline where the Manager believes the value of the
currency to be sold pursuant to the forward contract will fall whenever
there is a decline in the value of the currency in which portfolio
securities of the Fund are denominated ("cross hedging").  The Fund
places (i) cash, (ii) U.S. Government securities or (iii) equity
securities or debt securities (of any grade) in certain currencies
provided such assets are liquid, unencumbered and marked to market
daily, or other high-quality debt securities denominated in certain
currencies in a separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward contracts
entered into with respect to position hedges and cross-hedges.  If the
value of the securities placed in a separate account declines,
additional cash or securities are placed in the account on a daily basis
so that the value of the account will equal the amount of the Fund's
commitments with respect to such contracts.

For hedging purposes, the Fund may write covered call options and
purchase put and call options on currencies to hedge against movements
in exchange rates and on debt securities to hedge against the risk of
fluctuations in the prices of securities held by the Fund or which the
Manager intends to include in its portfolio.  The Fund also may use
interest rate futures contracts and options thereon to hedge against
changes in the general level in interest rates.

The Fund may write call options on securities and currencies only if
they are covered, and such options must remain covered so long as the
Fund is obligated as a writer.  A call option written by the Fund is
"covered" if the Fund owns the securities or currency underlying the
option or has an absolute and immediate right to acquire that security
or currency without additional cash consideration (or for additional
cash consideration held in a segregated account on the Fund's books)
upon conversion or exchange of other securities or currencies held in
its portfolio.  A call option is also covered if the Fund holds on a
share-for-share basis a call on the same security or holds a call on the
same currency as the call written where the exercise price of the call
held is equal to less than the exercise price of the call written or
greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, Treasury bills or other high-grade,
short-term obligations in a segregated account on the Fund's books.

The Fund may purchase put and call options in anticipation of declines
in the value of portfolio securities or increases in the value of
securities to be acquired.  If the expected changes occur, the Fund may
be able to offset the resulting adverse effect on its portfolio, in
whole or in part, through the options purchased.  The risk assumed by
the Fund in connection with such transactions is limited to the amount
of the premium and related transaction costs associated with the option,
although the Fund may lose such amounts if the prices of securities
underlying the options do not move in the direction or to the extent
anticipated.

Although the portfolio may use forward currency contracts, options and
futures, the use of any of these strategies would involve certain
investment risks and transaction costs. These risks include: dependence
on the Manager's ability to predict movements in the prices of
individual debt securities, fluctuations in the general fixed-income
markets and movements in interest rates and currency markets, imperfect
correlation between movements in the price of currency, options, futures
contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; the fact that skills and
techniques needed to trade options, futures contracts and options
thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; lack of
assurance that a liquid market will exist for any particular option,
futures contract or option thereon at any particular time.

Over-the-counter options in which the Fund may invest differ from
exchange traded options in that they are two-party contracts, with price
and other terms negotiated between buyer and seller, and generally do
not have as much market liquidity as exchange-traded options.  The Fund
may be required to treat as illiquid over-the-counter options purchased
and securities being used to cover certain written over-the-counter
options.

Options on Securities.  As discussed more generally above, the Fund may
engage in writing covered call options. The Fund may also purchase put
options and enter 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. 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 the 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 the Fund will normally have expiration dates between
one and six months from the date written. The exercise price of the
options may be below, equal to, or above the current market values of
the underlying securities when 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.

The Fund may write (a) in-the-money call options when the Manager
expects the price of the underlying security to remain flat or decline
moderately during the option period, (b) at-the-money call options when
the Manager expects the price of the underlying security to remain flat
or advance moderately during the option period and (c) out-of-the-money
call options when the Manager expects that the price of the 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 as such call options are
used in equivalent transactions.

So long as the obligation of the 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 it 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. The 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, the Fund will be required to
deposit in escrow the underlying security or other assets in accordance
with the rules of the Options Clearing Corporation ("Clearing
Corporation") or similar clearing corporation and the securities
exchange on which the option is written.

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.  The Fund expects to write
options only on national securities exchanges or in the over-the-counter
market.  The Fund may purchase put or call options issued by the
Clearing Corporation or in the over-the-counter market.

The Fund may realize a profit or loss upon entering into a closing
transaction. In cases in which the 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 the
Fund has purchased an option and engages in a closing sale transaction,
whether it recognizes a profit or loss will depend upon whether the
amount received in the closing sale transaction is more or less than the
premium the Fund initially paid for the original option plus the related
transaction costs.

Although the Fund generally will purchase or write only those options
for which the Manager 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 certain of the facilities of the Clearing Corporation and
national securities exchanges inadequate and resulted in the institution
of special procedures, such as trading rotations, restrictions on
certain types of orders or trading halts or suspensions in one or more
options. There can be no assurance that similar events, or events that
may otherwise interfere with the timely execution of customers' orders,
will not recur. In such event, it might not be possible to effect
closing transactions in particular options. If, as a covered call option
writer, the Fund is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise.

Securities exchanges generally have established limitations governing
the maximum number of calls and puts of each class which may be held or
written, or exercised within certain 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 Fund and other clients of the Manager
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 the 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, the Fund may purchase or temporarily borrow 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.

Although the Manager will attempt to take appropriate measures to
minimize the risks relating to the Fund's writing of call options and
purchasing of put and call options, there can be no assurance that the
Fund will succeed in its option-writing program.

Stock Index Options.  As described generally above, the Fund may
purchase put and call options and write call options on domestic stock
indexes listed on domestic exchanges in order to realize its investment
objective of long-term capital growth or 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 the Canadian Market Portfolio Index, or a narrower market index such
as the Standard & Poor's 100. Indexes also are based on an industry or
market segment such as the American Stock Exchange Oil and Gas Index or
the Computer and Business Equipment Index.

Options on stock indexes are generally similar to options on stock
except that 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 or a foreign currency,
as the case may be, 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 option 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 segment of the securities portfolio of the Fund 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 the 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 the Fund of options on stock indexes will
be subject to the Manager'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 price of individual stocks.

Futures Contracts and Options on Futures Contracts.  As described
generally above, the Fund may invest in stock index futures contracts
and options on futures contracts traded on a domestic exchange or board
of trade.  Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of a specific
security at a specified future time and at a specified price.  The
primary purpose of entering into a futures contract by the Fund is to
protect the Fund from fluctuations in the value of securities without
actually buying or selling the securities.  The Fund may enter into
futures contracts and options on futures to seek higher investment
returns when a futures contract is priced more attractively than stocks
comprising a benchmark index, to facilitate trading or to reduce
transaction costs.  The Fund will enter into futures contracts and
options only on futures contracts that are traded on a domestic exchange
or board of trade.  Assets committed to futures contracts will be
segregated on the Fund's books to the extent required by law.

The purpose of entering into a futures contract by the Fund is to
protect the Fund from fluctuations in the value of securities without
actually buying or selling the securities. For example, in the case of
stock index futures contracts, if the Fund anticipates an increase in
the price of stocks it intends to purchase at a later time, the Fund
could enter into contracts to purchase the stock index (known as taking
a "long" position) as a temporary substitute for the purchase of stocks.
If an increase in the market occurs that influences the stock index as
anticipated, the value of the futures contracts increases and thereby
serves as a hedge against the Fund's not participating in a market
advance. The Fund then may close out the futures contracts by entering
into offsetting futures contracts to sell the stock index (known as
taking a "short" position) as it purchases individual stocks. The Fund
can accomplish similar results by buying securities with long maturities
and selling securities with short maturities. But by using futures
contracts as an investment tool to reduce risk, given the greater
liquidity in the futures market, it may be possible to accomplish the
same result more easily and more quickly.

No consideration will be paid or received by the Fund upon the purchase
or sale of a futures contract. Initially, the Fund will be required to
deposit with the broker 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 exchange or board of trade on which the contract is
traded and brokers or members of such board of trade may charge a higher
amount). This amount is known as "initial margin" and is in the nature
of a performance bond or good faith deposit on the contract which is
returned to the Fund, upon termination of the futures contract, assuming
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 index or securities 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." In
addition, when the Fund enters into a long position in a futures
contract or an option on a futures contract, it must deposit into a
segregated account with the Fund's custodian an amount of cash or cash
equivalents equal to the total market value of the underlying futures
contract, less amounts held in the Fund's commodity brokerage account at
its broker. At any time prior to the expiration of a futures contract,
the 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.

There are several risks in connection with the use of futures contracts
as a hedging device. Successful use of futures contracts by the Fund is
subject to the ability of the Manager to predict correctly movements in
the stock market or in the direction of interest rates. These
predictions involve skills and techniques that may be different from
those involved in the management of investments in securities. In
addition, there can be no assurance that there will be a perfect
correlation between movements in the price of the securities underlying
the futures contract and movements in the price of the securities that
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 market behavior or interest rates.

Positions in futures contracts may be closed out only on the exchange on
which they were entered into (or through a linked exchange) and no
secondary market exists for those contracts. In addition, although the
Fund intends to enter into futures contracts only if there is an active
market for the contracts, there is no assurance that an active market
will exist for the 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, the Fund would be required to make daily cash payments of
variation margin; in such circumstances, 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, no assurance can be given that the price of the securities
being hedged will correlate with the price movements in a futures
contract and thus provide an offset to losses on the futures contract.

INVESTMENT RESTRICTIONS

The investment restrictions below and the Fund's investment objective
have been adopted by the Company as fundamental policies of the Fund.
Under the 1940 Act, a fundamental policy may not be changed with respect
to a fund without the vote of a majority of the outstanding voting
securities of the fund.  Majority is defined in the 1940 Act as the
lesser of (a) 67% or more of the shares present at a fund meeting, if
the holders of more than 50% of the outstanding shares of the fund are
present or represented by proxy, or (b) more than 50% of outstanding
shares.

Under the investment restrictions adopted by the Company with respect to
the Fund, the Fund will not:
1.	Invest more than 25% of its total assets in securities, the
issuers of which conduct their business activities in the same industry.
For purposes of this limitation, securities of the U.S. government
(including its agencies and instrumentalities) and securities of state
or municipal governments and their political subdivisions are not
considered to be issued by members of any industry.

2.	Borrow money, except that (a) the Fund 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 Fund may, to the extent
consistent with its investment policies, enter into reverse repurchase
agreements, forward roll transactions and similar investment strategies
and techniques.  To the extent that it engages in transactions described
in (a) and (b), the Fund will be limited so that no more than 331/3% 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.

3.	Issue "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

4.	Make loans.  This restriction does not apply to: (a) the purchase
of debt obligations in which the Fund 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.

5.	Purchase or sell real estate, real estate mortgages, commodities
or commodity contracts, but this restriction shall not prevent the Fund
from (a) investing in securities of issuers engaged in the real estate
business or the 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 Fund's investment objective and policies);  or (d) investing in real
estate investment trust securities.

6.	Engage in the business of underwriting securities issued by other
persons, except to the extent that the Fund may technically be deemed to
be an underwriter under the Securities Act of 1933, as amended, in
disposing of portfolio securities.

7.	Purchase or otherwise acquire any illiquid security except as
permitted under the 1940 Act for open-end investment companies, which
currently permits up to 15% of the Fund's net assets to be invested in
illiquid securities.

If any percentage restriction described above is complied with at the
time of an investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a
violation of such restriction.

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The Directors and executive officers of the Company, 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 Fund, as defined in the 1940 Act, is indicated by an
asterisk.

Paul R. Ades, Director (Age 61). Law firm of Paul R. Ades PLLC.  His
address is Argyle Square, 181 West Main Street, Suite C, P.O. Box 790,
Babylon, New York 11702.

Herbert Barg, Director (Age 78). Private investor. His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.

Dwight B. Crane, Director (Age 63). Professor, Graduate School of
Business Administration, Harvard University. His address is Harvard
Business School, Soldiers Field, Morgan Hall #371, Boston, Massachusetts
02163.

Frank G. Hubbard, Director (Age 63).  President of Avatar International
Inc.; formerly Vice  President, S&S Industries; Former Corporate Vice
President, Materials Management and Marketing Services of Huls America,
Inc.  His address is Avatar International, Inc., 87 Whittredge Road,
Summit, New Jersey 07901.

*Heath B. McLendon, Chairman of the Board, President and Chief Executive
Officer (Age 68). Managing Director of Salomon Smith Barney Inc.
("Salomon Smith Barney"); Director and President of SBFM and Travelers
Investment Adviser, Inc. ("TIA"); and formerly Chairman of the Board of
Smith Barney Strategy Advisers Inc. Mr. McLendon is a director of 77
investment companies associated with Citigroup Inc. ("Citigroup").  His
address is 7 World Trade Center, 45th Floor, New York, New York 10048.

Jerome H. Miller, Director (Age 62).  Retired, Former President, Asset
Management Group of Shearson Lehman Brothers.  His address is 27 Hemlock
Road, Manhasset, New York, NY  11030.

Ken Miller, Director (Age 58). President of Young Stuff Apparel Group,
Inc.  His address is 1411 Broadway, 6th Floor, Suite 610, New York, New
York 10018.

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; Senior Vice President and Treasurer of 83 investment
companies associated with Citigroup. His address is 125 Broad Street,
New York, New York 10004.

Alan Blake, Vice President and Investment Officer (Age 48).  Managing
Director of Salomon Smith Barney; Investment Officer of SBFM.  His
address is 7 World Trade Center, New York, New York 10048.

Giri Bogavelli, CFA, Vice President and Investment Officer (Age 35).
Managing Director of Salomon Smith Barney, Investment Officer of SBFM.
His address is 7 World Trade Center, New York, New York 10048.

Steven Craige, CFA, Vice President and Investment Officer (Age 50).
Managing Director of Salomon Smith Barney, Investment Officer of SBFM.
His address is 7 World Trade Center, New York, New York 10048.

Paul Brook, Controller (Age 47).  Director of Salomon Smith Barney; from
1997-1998 Managing Director of AMT Capital Services Inc.; prior to 1997
Partner with Ernst & Young LLP; 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; Secretary
of 60 investment companies associated with Citigroup.  Her address is
Seven World Trade Center, New York, New York 10048.

No officer, director or employee of Salomon Smith Barney or any parent
or subsidiary receives any compensation from the Company for serving as
an officer or Director of the Company.  The Company pays each Director
who is not an officer, director or employee of Salomon Smith Barney or
any of its affiliates a fee of $22,500 per annum plus $2,900 per meeting
attended and reimburses travel and out-of-pocket expenses.  During the
calendar year ended December 31, 2000 such expenses totaled $15,401.
The Directors of the Company were paid the following compensation:









Name of Person


Aggregate
Compensation
from Company
Fiscal Year
End
4/30/01

Total Pension
or Retirement
Benefits
Accrued as
part of Fund
Expenses
Compensation
from Company
and Fund
Complex Paid
to Directors
Calendar Year
Ending
12/31/00


Number of
Funds for
Which
Director
Serves Within
Fund Complex





Paul R. Ades
$4,950
$0
$56,775
5
Herbert Barg
4,900
0
116,075
16
Dwight B. Crane
4,948
0
153,175
23
Frank G. Hubbard
4,948
0
56,675
5
Heath B. McLendon
0
0
0
78
Jerome Miller
4,938
0
56,275
5
Ken Miller
4,950
0
56,475
5

During the year in which they attain the age 80, Directors are required
to change to emeritus status.  Directors Emeritus are entitled to serve
in emeritus status for a maximum of 10 years during which time they are
paid 50% of the annual retainer fee and meeting fees otherwise
applicable to the Fund Directors, together with reasonable out-of-pocket
expenses for each meeting attended. Directors Emeritus received no
compensation from the Fund for the fiscal year ended April 30, 2001.

As of August 15, 2001, the Directors and Officers of the fund as a
group, owned less than 1.00% of the outstanding common stock of the
fund.

As of August 15, 2001, no person beneficially owned 5% or more of a
class of shares of the Fund.

Investment Manager - SBFM

SBFM (formerly known as SSB Citi Fund Management LLC) serves as
investment manager to the Fund pursuant to an investment management
agreement (the "Investment Management Agreement") with the Fund which
was approved by the Board of Directors, including a majority of
Directors who are not "interested persons" of the Fund or the Manager.
The Manager is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc. ("Holdings"), which in turn, is a wholly owned subsidiary
of Citigroup Inc. Subject to the supervision and direction of the
Company's Board of Directors, the Manager manages the Fund's portfolio
in accordance with the Fund's stated investment objective and policies,
makes investment decisions for the Fund, places orders to purchase and
sell securities, and employs professional portfolio managers and
securities analysts who provide research services to the Fund.  The
Manager pays the salary of any officer and employee who is employed by
both it and the Fund.  The Manager bears all expenses in connection with
the performance of its services. The Manager also: (a) assists in
supervising all aspects of the Fund's operations except those it
performs under its investment advisory agreement; b) supplies the Fund
with office facilities (which may be in SBFM's own offices), statistical
and research data, data processing services, clerical, accounting and
bookkeeping services, including, but not limited to, the calculation of
(i) the net asset value of shares of the Fund, (ii) applicable deferred
sales charges ("Deferred Sales Charges") and similar fees and charges
and (iii) distribution fees, internal auditing and legal services,
internal executive and administrative services, and stationary and
office supplies; and (c) prepares reports to shareholders of the Fund,
tax returns and reports to and filings with the SEC and state blue sky
authorities.

SBFM (through its predecessor entities) has been in the investment
counseling business since 1968 and renders investment advice to a wide
variety of individual, institutional and investment company clients that
had aggregate assets under management as of July 31, 2001 in excess of
$125 billion.

As compensation for investment management services, the Fund pays the
Manager a fee computed daily and paid monthly at the annual rate of
0.75% of the Fund's average daily net assets.

For the fiscal year ended April 30, 2001 the Fund incurred $5,295,215 in
management fees.

Code of Ethics

Pursuant to Rule 17j-1 of the 1940 Act, the Company, the investment
adviser 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 SEC.

Counsel and Auditors

Willkie Farr & Gallagher serve as counsel to the Company. The Directors
who are not "interested persons" of the Company have selected Stroock &
Stroock & Lavan LLP to serve as their legal counsel.

KPMG LLP, independent auditors, 757 Third Avenue, New York, New York
10017, serve as auditors of the Fund and has been selected to render an
opinion on the Fund's financial statements for the fiscal year ending
April 30, 2002.

Custodian and Transfer Agent

PFPC Trust Company ("PFPC"), located at 8800 Tinicum Blvd.,
Philadelphia, Pennsylvania 19153, serves as the custodian of the Fund.
Under its agreement with the Company on behalf of the Fund, PFPC holds
the Fund's portfolio securities and keeps all necessary accounts and
records. For its services, PFPC receives a monthly fee based upon the
month-end market value of securities held in custody and also receives
securities transaction charges. The assets of the Fund are held under
bank custodianship in compliance with the 1940 Act.

Citi Fiduciary Trust Company (the "transfer agent") located at 125 Broad
Street, New York, New York 10004, serves as the transfer agent and
shareholder services agent of the Fund.

PFPC Global Fund Services ("sub-transfer agent"), located at P.O. Box
9699, Providence Rhode Island 02940-9699, serves as a sub-transfer agent
to the Fund to render certain shareholder record-keeping and accounting
services functions.

The Fund has engaged the services of PFS Shareholder Services as the
sub-transfer agent for PFSI Accounts ("sub-transfer agent").  This sub-
transfer agent is located at 3100 Breckinridge Blvd, Bldg 200, Duluth,
Georgia 30099-0062.

Distributors

Salomon Smith Barney, Inc., located at 388 Greenwich Street, New York,
New York 10013, and PFS Distributors, Inc. ("PFS Distributors"), located
at 3120 Breckinridge Blvd., Duluth, Georgia 30099 serve as the Fund's
distributors pursuant to a separate written agreements dated June 5,
2000 (the "Distribution Agreements") which were approved by the Fund 's
Board of Directors, including a majority of the Directors who are not
interested persons of the Fund (the "Independent Directors"), on July
26, 2001.  These Distribution Agreements replace the Distribution
Agreement with CFBDS, Inc.

Salomon Smith Barney and PFS Distributors may be deemed to be an
underwriter for purposes of the Securities Act of 1933. From time to
time, Salomon Smith Barney or PFS 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 Distributors
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 the Fund.

For the fiscal year ended April 30, 2001, Salomon Smith Barney and CFBDS
received $236,000 in sales charges from the sale of Class A shares.  For
the fiscal year ended April 30, 2001, Salomon Smith Barney and CFBDS
received $209,000 in sales charges from the sale of Class L shares.  For
the fiscal year ended April 30, 2001, Salomon Smith Barney received
$17,000 in contingent Deferred Sales Charges on redemptions of Class A
shares.  For the fiscal year ended April 30, 2001 Salomon Smith Barney
received $1,020,000 in Deferred Sales Charges on redemptions of the
Class B shares.  For the fiscal year ended April 30, 2001, Salomon Smith
Barney received $91,000 in Deferred Sales Charges on redemptions of
Class L shares.

When payment is made by the investor before the settlement date, unless
otherwise noted by the investor, the funds will be held as a free credit
balance in the investor's brokerage account and Salomon Smith Barney may
benefit from the temporary use of the funds.  The Company's Board of
Directors has been advised of the benefits to Salomon Smith Barney
resulting from these settlement procedures and will take such benefits
into consideration when reviewing the Investment Management and
Distribution Agreements for continuance.

Distribution Arrangements

To compensate Salomon Smith Barney or PFS Investments Inc. ("PFSI") for
the services it provides and for the expense it bears under the
Distribution Agreement, the Fund has adopted a services and distribution
plan (the "Plan") pursuant to Rule l2b-1 under the 1940 Act. The only
Classes of shares being offered for sale through PFSI are Class A shares
and Class B shares. Under the Plan, Salomon Smith Barney is paid a fee
with respect to shares of each portfolio sold through Salomon Smith
Barney and PFSI is paid a fee with respect to shares of each portfolio
sold through PFSI.  Under the Plan, the Fund pays Salomon Smith Barney
or PFSI (who pays its Registered Representative), 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 Fund's average daily net assets
attributable to the Class A, Class B and Class L shares. In addition,
the Fund pays Salomon Smith Barney a distribution fee with respect to
the Class B and Class L shares (and pays PFSI with respect to Class A
and 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; payment to
and expenses of Salomon Smith Barney Financial Consultants, PFS
Investment 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 PFSI associated with the sale of fund shares, including
lease, utility, communications and sales promotion expenses. The Class B
and Class L distribution fee is calculated at the annual rate of 0.75%
of the value of the Fund's average daily net assets attributable to the
shares of the respective Class.

The following service and distribution fees were incurred by the Fund
pursuant to a Distribution Plan during the periods indicated:


Fiscal Year
Ended
4/30/00
Fiscal Year
Ended
4/30/01

Class A

$  284,783

$  379,225

Class B

$ 2,254,543

$3,155,461

Class L

$ 1,686,340

$2,368,802

Each of PFSI 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 are distribution expenses
within the meaning of the Plan and may be paid from amounts received by
Salomon Smith Barney from the fund under the Plan.

For the fiscal year ended April 30, 2001, Salomon Smith Barney incurred
distribution expenses totaling $3,883,305, consisting of $151,584 for
advertising, $39,338 for printing and making of prospectuses, $1,859,400
for support services, $1,832,823 to Salomon Smith Barney Financial
Consultants, and $160 for accruals for interest on the excess of Salomon
Smith Barney expenses incurred in distributing the Fund's shares over
the sum of the distributions fees and Deferred Sales Charges received by
Salomon Smith Barney from the Fund.

From time to time, PFSI or its 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, PFSI 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 the Fund.

Under its terms, the Distribution Plan continues from year to year,
provided such continuance is approved annually by vote of the Board of
Directors, including a majority of the Independent Directors who have no
direct or indirect financial interest in the operation of the Plan.  The
Plan may not be amended to increase the amount of the service and
distribution fees without shareholder approval, and all amendments of
the Plan also must be approved by the Directors including all of the
Independent Directors in the manner described above.  The Plan may be
terminated with respect to a Class at any time, without penalty, by vote
of a majority of the Independent Directors or, with respect to the Fund,
by vote of a majority of the outstanding voting securities of the Fund
(as defined in the 1940 Act).  Pursuant to the Plan, Salomon Smith
Barney and PFSI will provide the Board of Directors with periodic
reports of amounts expended under the Plan and the purpose for which
such expenditures were made.

Portfolio Transactions

The Manager arranges for the purchase and sale of the Fund's securities
and selects brokers and dealers (including Salomon Smith Barney) which
in its best judgment provide prompt and reliable execution at favorable
prices and reasonable commission rates.  The Manager may select brokers
and dealers that provide it with research services and may cause the
Fund to pay such brokers and dealers commissions which exceed those
other brokers and dealers may have charged, if it views the commissions
as reasonable in relation to the value of the brokerage and/or research
services.  In selecting a broker, including Salomon Smith Barney, for a
transaction, the primary consideration is prompt and effective execution
of orders at the most favorable prices. Subject to that primary
consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis.

Decisions to buy and sell securities for the Fund are made by the
Manager, subject to the overall supervision and review of the Company's
Board of Directors. Portfolio securities transactions for the Fund are
effected by or under the supervision of the Manager.

Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. There is generally no stated commission in the
case of securities traded in the over-the-counter market, but the price
of those securities includes an undisclosed commission or mark-up. Over-
the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and
executions may be obtained elsewhere. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and
the prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down.  For the fiscal year ended
April 30, 2001, the Fund paid total brokerage commissions of $251,459.

In executing portfolio transactions and selecting brokers or dealers, it
is the Fund's policy to seek the best overall terms available.  The
Manager, in seeking the most favorable price and execution, considers
all factors it deems relevant, including, for example, the price, the
size of the transaction, the reputation, experience and financial
stability of the broker-dealer involved and the quality of service
rendered by the broker-dealer in other transactions.  The Manager
receives research, statistical and quotation services from several
broker-dealers with which it places the Fund's portfolio transactions.
It is possible that certain of the services received primarily will
benefit one or more other accounts for which the Manager exercises
investment discretion.  Conversely, the Fund may be the primary
beneficiary of services received as a result of portfolio transactions
effected for other accounts.  The Manager's fee under the management
agreement is not reduced by reason of its receiving such brokerage and
research services. The Company's Board of Directors, in its discretion,
may authorize the Manager to cause the Fund to pay a broker that
provides brokerage and research services to the Manager a commission in
excess of that which another qualified broker would have charged for
effecting the same transaction. Salomon Smith Barney will not
participate in commissions from brokerage given by the Fund to other
brokers or dealers and will not receive any reciprocal brokerage
business resulting therefrom.  For the fiscal year ended April 30, 2001,
the Fund paid $10,252 in commissions on brokerage transactions directed
to brokers because of research provided.

In accordance with Section 17(e) of the 1940 Act and Rule 17e-1
thereunder, the Company's Board of Directors has determined that any
portfolio transaction for the Fund may be executed through Salomon Smith
Barney or an affiliate of Salomon Smith Barney if, in the Manager's
judgment, the use of Salomon Smith Barney or an affiliate is likely to
result in price and execution at least as favorable as those of other
qualified brokers and if, in the transaction, Salomon Smith Barney or
the affiliate charges the Fund a commission rate consistent with those
charged by Salomon Smith Barney or an affiliate to comparable
unaffiliated customers in similar transactions. In addition, under SEC
rules, Salomon Smith Barney may directly execute such transactions for
the Fund on the floor of any national securities exchange, provided: (a)
the Board of Directors has expressly authorized Salomon Smith Barney to
effect such transactions; and (b) Salomon Smith Barney annually advises
the Fund of the aggregate compensation it earned on such transactions.
For the fiscal year ended April 30, 2001, the Fund paid $19,580 in
brokerage commissions to Salomon Smith Barney.

Even though investment decisions for the Fund are made independently
from those of the other accounts managed by the Manager, investments of
the kind made by the Fund also may be made by those other accounts. When
the Fund and one or more accounts managed by the Manager are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Manager to be equitable. In some cases, this procedure
may adversely affect the price paid or received by the Fund or the size
of the position obtained for or disposed of by the Fund.

The Fund will not purchase securities during the existence of any
underwriting or selling group relating to the securities, of which the
Manager is a member, except to the extent permitted by the SEC.  Under
certain circumstances, the Fund may be at a disadvantage because of this
limitation in comparison with other Funds that have similar investment
objectives but that are not subject to a similar limitation.

Portfolio Turnover

The Fund's portfolio turnover rate (the lesser of purchases or sales of
portfolio securities during the year, excluding purchases or sales of
short-term securities, divided by the monthly average value of portfolio
securities) is generally not expected to exceed 100%. The rate of
turnover will not be a limiting factor, however, when the Fund deems it
desirable to sell or purchase securities.
The Manager will rebalance the allocation of value and growth securities
in the Fund's portfolio at the end of each quarter and at any time in
which the percentage of the Fund's portfolio invested in either value or
growth securities equals or exceeds 55% of the Fund's total assets
invested in both value and growth securities for a period of more than
10 days.  As a result, when securities in either the value or growth
style segment of the Fund's portfolio have underperformed the securities
in the segment of the portfolio devoted to the other style, the Manager
will rebalance the portfolio to increase the Fund's assets allocated to
the style that underperformed, and decrease the assets allocated to the
style that outperformed, the other style.  The Manager will also monitor
the Fund's portfolio to ensure that no more than 25% of the Fund's
assets are concentrated in the securities of companies in the same
industry and that the Fund complies with its other investment policies.
The Manager may cause the Fund to sell or purchase securities to ensure
compliance with the Fund's investment policies.  For the 2000 and 2001
fiscal years, the Fund's portfolio turnover rates were 15% and 10%,
respectively.

PURCHASE OF SHARES

General

Investors may purchase shares from a Salomon Smith Barney Financial
Consultant, a PFS Investments Registered Representative, a broker-
dealer, financial intermediary or a financial institution (each called a
"Service Agent").  In addition, certain investors, including qualified
retirement plans purchasing through certain Service Agents, may purchase
shares directly from the Fund.  When purchasing shares of the Fund,
investors must specify whether the purchase is for Class A, Class B,
Class L or Class Y shares.  Salomon Smith Barney and Service Agents 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 a sub-transfer agent are not subject
to a maintenance fee.

Investors in Class A, Class B and Class L shares may open an account in
the Fund by making an initial investment of at least $1,000 for each
account, or $250 for an IRA or a Self-Employed Retirement Plan, in the
Fund. 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(c) of the Code, the
minimum initial investment required for Class A, Class B and Class L
shares and the subsequent investment requirement for all Classes in the
Fund is $25.  There are no minimum investment requirements for Class A
shares for employees of Citigroup and its subsidiaries, including
Salomon Smith Barney, unitholders who invest distributions from, or
proceeds from a sale of, a Unit Investment Trust ("UIT") sponsored by
Salomon Smith Barney, and Directors/Trustees of any of the Smith Barney
Mutual Funds, and their spouses and children. The Fund reserves the
right to waive or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to time. Shares
purchased will be held in the shareholder's account by the applicable
sub-transfer agent. Share certificates are issued only upon a
shareholder's written request to the applicable sub-transfer agent.

Purchase orders received by the Fund or a Salomon Smith Barney Financial
Consultant prior to the close of regular trading on the New York Stock
Exchange ("NYSE"), on any day the Fund calculates its net asset value,
are priced according to the net asset value determined on that day (the
''trade date'').  Orders received by a Service Agent 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, provided the order is received by the Fund or the Fund's agent
prior to its close of business. For shares purchased through a Service
Agent purchasing through Salomon Smith Barney, payment for shares of the
Fund is due on the third business day after the trade date. In all other
cases, payment must be made with the purchase order.

Systematic Investment Plan.  Shareholders may make additions to their
accounts at any time by purchasing shares through a service known as the
Systematic Investment Plan.  Under the Systematic Investment Plan,
Salomon Smith Barney or the sub-transfer agent is authorized through
preauthorized transfers of at least $25 on a monthly basis or at least
$50 on a quarterly basis (not available to PFSI Accounts) to charge the
shareholder's account held  with a bank or other financial institution
on a monthly (not available to PFSI Accounts) or quarterly basis as
indicated by the shareholder, to provide for systematic additions to the
shareholder's Fund account.  A shareholder who has insufficient funds to
complete the transfer will be charged a fee of up to $25 by Salomon
Smith Barney or a sub-transfer agent.  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
Fund or a Service Agent.

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:





Amount
of
Investme
nt

Sales Charge
as a %
of
Transaction

Sales
Charge as a
% of Amount
Invested

Broker/Dealer
Compnesation
as %
Of Offering
Price

Less than
$25,000
5.00%
5.26%
4.50%
$ 25,000 -
49,999
4.25
4.44
3.83
50,000 -
99,999
3.75
3.90
3.38
100,000 -
249,999
3.25
3.36
2.93
250,000 -
499,999
2.75
2.83
2.48
500,000 -
999,999
2.00
2.04
1.80
1,000,000 or
more
-0-
-0-
-0-

*	Purchases of Class A shares of $1,000,000 or more will be made at
net asset value without any initial sales charge, but will be
subject to a Deferred Sales Charge of 1.00% on redemptions made
within 12 months of purchase. The Deferred Sales Charge on Class A
shares is payable to Salomon Smith Barney, which compensates
Service Agents whose clients make purchases of $1,000,000 or more.
The Deferred Sales Charge is waived in the same circumstances in
which the Deferred Sales Charge applicable to Class B and Class L
shares is waived. See "Deferred Sales Charge Provisions" and
"Waivers of Deferred Sales Charge."

Members of the selling group may receive up to 90% of the sales charge
and may be deemed to be underwriters of the Fund as defined in the 1933
Act.  The reduced sales charges shown above apply to the aggregate of
purchases of Class A shares of the Fund made at one time by "any
person," which includes an individual 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 other Smith Barney Mutual Funds on June 12, 1998 will not be
subject to the 1.00% 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 (except purchases of Class Y shares by Smith
Barney Allocation Series Inc., for which there is no minimum purchase
amount).

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 funds 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 Fund 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 fund 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 the Fund (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 the Fund, 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 (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;  and (j) purchases of Class
A shares by Section 403(b) or Section 401(a) or (k) accounts associated
with Citistreet Retirement Programs. 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 the Fund 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 Fund
and of other Smith Barney Mutual Funds that are offered with a sales
charge as currently listed under "Exchange Privilege" then held by such
person and applying the sales charge applicable to such aggregate.  In
order to obtain such discount, the purchaser must provide sufficient
information at the time of purchase to permit verification that the
purchase qualifies for the reduced sales charge.  The right of
accumulation is subject to modification or discontinuance at any time
with respect to all shares purchased thereafter.

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 that the investor refers to such Letter when placing orders.
For purposes of a Letter of Intent, the "Amount of Investment" as
referred to in the preceding sales charge table includes (i) all Class A
shares of the Fund 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 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 Salomon Smith Barney Financial
Consultant 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 (except purchases of Class Y shares by Smith Barney
Allocation Series Inc., for which there is no minimum purchase amount).
Such investors must make an initial minimum purchase of $5,000,000 in
Class Y shares of the Fund and agree to purchase a total of $15,000,000
of Class Y shares of the Fund 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 Fund's Class A
shares, which may include a Deferred Sales Charge of 1.00%. Please
contact a Salomon Smith Barney Financial Consultant or the transfer
agent for further information.

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
that 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 Fund 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.


Year Since Purchase Payment Was
Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

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 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 a redemption is made first of shares representing
capital appreciation, next of shares representing the reinvestment of
dividends and capital gain distributions and finally of other shares
held by the shareholder for the longest period of time.  The length of
time that 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 Fund shares being redeemed will be considered to represent, as
applicable, capital appreciation or dividend and capital gain
distribution reinvestments in such other funds.  For Federal income tax
purposes, the amount of the Deferred Sales Charge will reduce the gain
or increase the loss, as the case may be, on the amount realized on
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
of the Fund at $10 per share for a cost of $1,000.  Subsequently, the
investor acquired 5 additional shares of the Fund 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) redemptions of shares within 12 months
following the death or disability of the shareholder; (c) redemptions of
shares made in connection with qualified distributions from retirement
plans or IRAs upon the attainment of age 591/2; (d) involuntary
redemptions; and (e) redemptions of shares to effect a combination of
the Fund 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 Salomon Smith Barney in the case of shareholders who are also
Salomon Smith Barney clients or by the transfer agent in the case of all
other shareholders) 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. The Fund 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 $1 million.

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 Salomon Smith Barney Financial
Consultant, 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 fund.  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 fund 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 fund. Any Class L shares not
converted will continue to be subject to the distribution fee.

Participating plans wishing to acquire shares of the Fund 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 Salomon
Smith Barney Financial Consultant.

Retirement Programs Investing in Class B Shares:   Class B shares of a
Fund are not available for purchase by participating plans opened on or
after June 21, 1996, but may continue to be purchased by any
participating plan in the Smith Barney 401(k) Program opened prior to
such date and originally investing in such Class. Class B shares
acquired are subject to a Deferred Sales charge of 3.00% of redemption
proceeds if the participating plan terminates within eight years of the
date the participating plan first enrolled in the Smith Barney 401(k)
Program.

At the end of the eighth year after the date the participating plan
enrolled in the Smith Barney 401(k) Program, the participating plan will
be offered the opportunity to exchange all of its Class B shares for
Class A shares of the same Fund. Such participating plan 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 the exchange has occurred, a participating
plan will not be eligible to acquire additional Class B shares, but
instead may acquire Class A shares of the same Fund. If the
participating plan elects not to exchange all of its Class B shares at
that time, each Class B share held by the participating plan will have
the same conversion feature as Class B shares held by other investors.
See "Purchase of Shares-Deferred Sales Charge Alternatives."

No Deferred Sales Charge is imposed on redemptions of Class B shares to
the extent that the net asset value of the shares redeemed does not
exceed the current net asset value of the shares purchased through
reinvestment of dividends or capital gain distributions, plus the
current net asset value of Class B shares purchased more than eight
years prior to the redemption, plus increases in the net asset value of
the shareholder's Class B shares above the purchase payments made during
the preceding eight years. Whether or not the Deferred Sales Charge
applies to the redemption by a participating plan depends on the number
of years since the participating plan first became enrolled in the Smith
Barney 401(k) Program, unlike the applicability of the Deferred Sales
Charge to redemptions by other shareholders, which depends on the number
of years since those shareholders made the purchase payment from which
the amount is being redeemed.

The Deferred Sales Charge will be waived on redemptions of Class B
shares in connection with lump-sum or other distributions made by a
participating plan as a result of: (a) the retirement of an employee in
the participating plan; (b) the termination of employment of an employee
in the participating plan; (c) the death or disability of an employee in
the participating plan; (d) the attainment of age 591/2 by an employee in
the participating plan; (e) hardship of an employee in the participating
plan to the extent permitted under Section 401(k) of the Code; or (f)
redemptions of shares in connection with a loan made by the
participating plan to an employee.

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 their own account;
(c) a trustee or other fiduciary purchasing shares for a single trust
estate or single fiduciary account; and (d) 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 the Fund 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
Salomon Smith Barney Financial Consultant or a Service Agent.

Salomon Smith Barney Accounts

Purchases of shares of the funds must be made through a brokerage
account maintained with Salomon Smith Barney, an introducing broker or
an investment dealer in the selling group. In addition, certain
investors, including qualified retirement plans and certain other
institutional investors, may purchase shares directly from the funds
through 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 fund offers two Classes of shares to investors purchasing through
PFSI: Class A shares and Class B shares.

Initial purchase of shares of the Fund must be made through a PFS
Investments Registered Representative by completing the appropriate
application found in the prospectus.  The completed application should
be forwarded to Primerica Shareholder Services, P.O. Box 9662,
Providence, RI 02940-5016.  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
Primerica Shareholder Services.  In processing applications and
investments, Primerica Shareholder Services acts as agent for the
investor and for PFSI and also as agent for the distributor, in
accordance with the terms of the prospectus.  If the transfer agent
ceases to act as such, a successor company named by the Fund will act in
the same capacity so long as the account remains open.

Shares purchased will be held in the shareholder's account by Primerica
Shareholder Services.  Share certificates are issued only upon a
shareholder's written request to Primerica Shareholder Services. A
shareholder that has insufficient funds to complete any purchase will be
charged a fee of up to $30 per returned purchase by Primerica
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). Subsequent investments
of at least $50 may be made for each Class.  For the Fund's Systematic
Investment Plan, the minimum initial investment requirement for Class A
and Class B shares and the subsequent investment requirement for each
Class is $25.  There are no minimum investment requirements in Class A
shares for 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 Fund reserves the
right to waive or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to time.
Purchase orders received by the transfer agent or sub-transfer agent
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.

Initial purchases of Fund 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 Primerica
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
Primerica 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 may make additions to their accounts at any time.
Shareholders should contact Primerica 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 telephone subsequent
investments by any person in his account, he should decline the
telephone transaction option on the account application.  The minimum
telephone subsequent investment is $250 and can be up to a maximum of
$10,000.  By requesting a subsequent purchase by telephone, you
authorize Primerica Shareholder Services to transfer funds from the bank
account provided for the amount of the purchase.  A shareholder that has
insufficient funds to complete the transfer will be charged a fee of up
to $30 by Primerica 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
Primerica Shareholder Services.  Subsequent investments by telephone may
not be available if the shareholder cannot reach Primerica Shareholder
Services 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
subsequent investment procedure described above.

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. Primerica 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.

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 Primerica Shareholder Services may be
obtained by contacting the Client Services Department at (800) 544-5445.

Determination of Public Offering Price

The Fund offers its shares to current shareholders of the Fund on a
continuous basis.  The public offering price for a Class A, Class B and
Class Y share of the Fund is equal to the net asset value per share at
the time of purchase, plus for Class A shares an initial sales charge
based on the aggregate amount of the investment.  The public offering
price for Class A share purchases, including applicable rights of
accumulation, equaling or exceeding $500,000 is equal to the net asset
value per share at the time of purchase and no sales charge is imposed
at the time of purchase.  The public offering price for a Class L share
includes a 1.00% initial sales charge.  A Deferred Sales Charge is
imposed on certain redemptions of Class B shares, and on Class L shares
and Class A shares (purchased in amounts exceeding $500,000) redeemed
within one year of purchase.


REDEMPTION OF SHARES

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

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 sub-transfer agent
together with the redemption request.  Any signature appearing on a
share certificate, stock power or written 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 unless more than one such redemption
request is made in any 10-day period or the redemption proceeds are to
be sent to an address other than the address of record.  Unless
otherwise directed, redemption proceeds will be mailed to an investor's
address of record.  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.

If a shareholder holds shares in more than one Class, any request 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 transfer agent receives further instructions from Salomon Smith
Barney, or if the shareholder's account is not with Salomon Smith
Barney, from the shareholder directly.  The redemption proceeds will be
remitted on or before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or as 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.

Distributions in Kind

If the Board of Directors of the Fund determines that it would be
detrimental to the best interests of the remaining shareholders to make
a redemption payment wholly in cash, the Fund may pay, in accordance
with SEC rules, any portion of a redemption in excess of the lesser of
$250,000 or 1.00% of the Fund's net assets by a distribution in kind of
portfolio securities in lieu of cash. Securities issued as a
distribution in kind may incur brokerage commissions when shareholders
subsequently sell those securities.

a. Salomon Smith Barney Accounts

Shares held by Salomon Smith Barney as custodian must be redeemed by
submitting a written request to a Salomon Smith Barney Financial
Consultant. 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 Investment Series
   -Smith Barney Premier Selections Large Cap Fund
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
transfer agent together with the redemption request.  Any signature
appearing on a share certificate, stock power or written 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 unless
more than one such redemption request is made in any 10-day period.
Redemption proceeds will be mailed to an investor's address of record.
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.
Redempton proceeds will be mailed to shareholder's address of record.

Telephone Redemption and Exchange Program.  Shareholders who do not have
a brokerage account may be eligible to redeem and exchange shares by
telephone.  To determine if a shareholder is entitled to participate in
this program, he or she should contact the transfer agent at 1-800-451-
2010.  Once eligibility is confirmed, the shareholder must complete and
return a Telephone/Wire Authorization Form, along with a signature
guarantee, that will be provided by a sub-transfer agent upon request.
(Alternatively, an investor may authorize telephone redemptions on the
new account application with the applicant's signature guarantee when
making his/her initial investment in the fund.)

Redemptions.   Redemption requests of up to $50,000 of any class or
classes of shares of the fund may be made by eligible shareholders by
calling the transfer agent at 1-800-451-2010.  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 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 have a correspondent relationship with a member bank.  The
Fund reserves the right to charge shareholders a nominal fee for each
wire redemption.  Such charges, if any, will be assessed against the
shareholder's 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 1-800-
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 Fund nor its agents will be liable for following
instructions communicated by telephone that are reasonably believed to
be genuine.  The Fund 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 Fund 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.

Redemptions in Kind.  In conformity with applicable rules of the SEC,
redemptions may be paid in portfolio securities, in cash or any
combination of both, as the Board of Directors may deem advisable;
however, payments shall be made wholly in cash unless the Board of
Directors believes economic conditions exist that would make such a
practice detrimental to the best interests of the fund and its remaining
shareholders.  If a redemption is paid in portfolio securities, such
securities will be valued in accordance with the procedures described
under "Share Price" in the prospectus and a shareholder would incur
brokerage expenses if these securities were then converted to cash.

b.	PFS Investments Accounts

Shareholders may redeem for cash some or all of their shares of the Fund
at any time by sending a written request in proper form directly to a
sub-transfer agent, Primerica 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 Primerica 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 Primerica
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 Primerica Shareholder Services at (800) 544-
5445 between 8:00 a.m. and 8:00 p.m. eastern standard time to obtain the
proper forms.

A shareholder may utilize Primerica 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 Primerica
Shareholder Services at (800) 544-5445 between 9:00 a.m. and 6:00 p.m.
Eastern time any day that the NYSE is open.  Telephone redemption may
not be available if the shareholder cannot reach Primerica Shareholder
Services 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.

A shareholder may utilize Primerica 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 Primerica
Shareholder Services at (800) 554-2374. Facsimile redemptions may not be
available if the shareholder cannot reach Primerica 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
Primerica 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. Primerica 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 monthly or quarterly.
Withdrawals of at least $50 may be made under the Withdrawal Plan by
redeeming as many shares of the Fund 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. (With respect to Withdrawal Plans in effect
prior to November 7, 1994, any applicable Deferred Sales Charge will be
waived on amounts withdrawn that do not exceed 2.00% per month of the
value of the shareholder's shares that are subject to a Deferred Sales
Charge). To the extent withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in the Fund, there will be a
reduction in the value of the shareholder's investment, and continued
withdrawal payments may reduce the shareholder's investment and
ultimately exhaust it. Withdrawal payments should not be considered as
income from investment in the Fund. Furthermore, as it generally would
not be advantageous to a shareholder to make additional investments in
the Fund at the same time he or she is participating in the Withdrawal
Plan, purchases by such shareholder in amounts of less than $5,000
ordinarily will not be permitted. All dividends and distributions on
shares in the Withdrawal Plan are reinvested automatically at net asset
value in additional shares of the Fund.

Shareholders who wish to participate in the Withdrawal Plan and who hold
their shares in certificate form must deposit their share certificates
with the sub-transfer agent as agent for Withdrawal Plan members.  For
additional information, shareholders should contact a Salomon Smith
Barney Financial Consultant or the Fund's sub-transfer agent. A
shareholder who purchases shares directly through the sub-transfer agent
may continue to do so and applications for participation in the
Withdrawal Plan must be received by the sub-transfer agent no later than
the eighth day of the month to be eligible for participation beginning
with that month's withdrawal.

VALUATION OF SHARES

The net asset value per share of the Fund's Classes is calculated on
each day, Monday through Friday, except days on which the NYSE is
closed. The NYSE currently is scheduled to be closed on 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 the Fund in valuing its assets.

Securities listed on a national securities exchange will be valued on
the basis of the last sale on the date on which the valuation is made
or, in the absence of sales, at the mean between the closing bid and
asked prices. Over-the-counter securities will be valued at the mean
between the closing bid and asked prices on each day, or, if market
quotations for those securities are not readily available, at fair
value, as determined in good faith by the Company's Board of Directors.
Short-term obligations with maturities of 60 days or less are valued at
amortized cost, which constitutes fair value as determined by the
Company's Board of Directors. Amortized cost involves valuing an
instrument at its original cost to the Fund 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. All other securities and other assets of the Fund will be
valued at fair value as determined in good faith by the Company's Board
of Directors.

EXCHANGE PRIVILEGE

Except as noted below and in the Prospectus, shareholders of any of the
Smith Barney Mutual Funds may exchange all or part of their shares for
shares of the same class of other Smith Barney Mutual Funds, to the
extent such shares are offered for sale in the shareholder's state of
residence, on the basis of relative net asset value per share at the
time of exchange as follows:

A. Class A and Class Y shares of the Fund may be exchanged without
a sales charge for the respective shares of any of the Smith
Barney Mutual Funds.

B. Class B shares of any fund may be exchanged without a sales
charge. Class B shares of the Fund exchanged for Class B shares of
another Smith Barney Mutual Fund will be subject to the higher
applicable Deferred Sales Charge of the two funds and, for
purposes of calculating Deferred Sales Charge rates and conversion
periods, will be deemed to have been held since the date the
shares being exchanged were deemed to be purchased.

C. Class L shares of any fund may be exchanged without a sales
charge. For purposes of Deferred Sales Charge applicability, Class
L shares of the Fund exchanged for Class L shares of another Smith
Barney Mutual Fund will be deemed to have been owned since the
date the shares being exchanged were deemed to be purchased.

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 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 fund being acquired. Salomon
Smith Barney and PFSI reserve the right to reject any exchange request.
The exchange privilege may be modified or terminated at any time after
written notice to shareholders. As stated in the prospectus for shares
distributed through PFSI, the exchange privilege is limited.

Additional Information Regarding Exchanges.  The Fund is not designed to
provide investors with a means of speculation on short-term market
movements.  A pattern of frequent exchanges by investors can be
disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund and its shareholders.  Accordingly, if the
Fund's management in its sole discretion determines that an investor is
engaged in excessive trading, the Fund, with or without prior notice,
may temporarily or permanently terminate the availability to that
investor of Fund exchanges, or reject in whole or part any purchase or
exchange request with respect to such investor's account.  Such
investors also may be barred from purchases and exchanges involving
other funds in the Smith Barney Mutual Fund family.   Accounts under
common ownership or control will be considered as one account for
purposes of determining a pattern of excessive trading. The Fund may
notify an investor of rejection of a purchase or exchange order after
the day the order is placed.  If an exchange request is rejected, the
Fund will take no other action with respect to the shares until it
receives further instructions from the investor.  The Fund's policy on
excessive trading applies to investors who invest in the Fund directly
or through Service Agents, but does not apply to any systematic
investment  plans described in the prospectus.

During times of drastic economic or market conditions, the Fund may
suspend the Exchange Privilege temporarily without notice and treat
exchange requests based on their separate components - redemption orders
with a simultaneous request to purchase the other fund's shares.  In
such a case, the redemption request would be processed at the Fund's
next determined net asset value but the purchase order would be
effective only at the net asset value next determined after the fund
being purchased formally accepts the order, which may result in the
purchase being delayed.

PERFORMANCE DATA

From time to time, the Company may advertise the Fund's total return and
average annual total return in advertisements and/or other types of
sales literature.  These figures are computed separately for Class A,
Class B, Class L and Class Y shares of the Fund.  These figures are
based on historical earnings and are not intended to indicate future
performance.  Total return is computed for a specified period of time
assuming deduction of the maximum sales charge, if any, from the initial
amount invested and reinvestment of all income dividends and capital
gain distributions on the reinvestment dates at prices calculated as
stated in this prospectus, then dividing the value of the investment at
the end of the period so calculated by the initial amount invested and
subtracting 100%.  The standard average annual total return, as
prescribed by the SEC is derived from this total return, which provides
the ending redeemable value.  Such standard total return information may
also be accompanied with nonstandard total return information for
differing periods computed in the same manner but without annualizing
the total return or taking sales charges into account.  The Company may
also include comparative performance information in advertising or
marketing the Fund's shares.  Such performance information may include
data from Lipper Analytical Services, Inc. and other financial
publications.

From time to time, the Company may quote the Fund's total return in
advertisements or in reports and other communications to shareholders.
The Company may include comparative performance information in
advertising or marketing the Fund's shares. Such performance information
may include the following industry and financial publications- Barron's,
Business Week, CDA Investment Technologies, Inc., Changing Times,
Forbes, Fortune, Institutional Investor, Investor's Business Daily,
Money, Morningstar Mutual Fund Values, The New York Times, USA Today and
The Wall Street Journal. To the extent any advertisement or sales
literature of the Fund describes the expenses or performance of any
Class it will also disclose such information for the other Classes.


Average Annual Total Return

"Average annual total return" figures are computed according to a
formula prescribed by the SEC. The formula can be expressed as follows:

	P (1 + T)n = ERV

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

The ERV assumes complete redemption of the hypothetical investment at
the end of the measuring period.  The Fund's net investment income
changes in response to fluctuations in interest rates and the expenses
of the Fund.

The Fund's average annual total return for Class A shares assuming the
maximum applicable sales charge was as follows for the periods indicated
(reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(13.49)% for the one-year period ended April 30, 2001.

Class A's average annual total return assumes that the maximum
applicable sales charge assessed by the Fund has been deducted from the
hypothetical investment.  Had the maximum 4.00% sales charge not been
deducted, Class A's average annual total return would have been (8.93)%
for the same period.

The Fund's average annual total return for Class B shares assuming the
maximum applicable Deferred Sales Charge was as follows for the periods
indicated (reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(14.09)% for the one-year period ended April 30, 2001.

Had the maximum applicable Deferred Sales Charge not been deducted at
the time of redemption, Class B's average annual total return would have
been (9.63)% for the same period.

The Fund's average annual total return for Class L shares assuming the
maximum applicable Deferred Sales Charge was as follows for the periods
indicated (reflecting the waiver of the Fund's investment advisory and
administration fees and reimbursement of expenses):

(11.39)% for the one-year period ended April 30, 2001.

Had the maximum applicable Deferred Sales Charge not been deducted at
the time of redemption, Class L's average annual total return would have
been (9.63)% for the same period.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

The Fund's policy is to distribute its net investment income and net
realized capital gains, if any, annually.  The Fund may also pay
additional dividends shortly before December 31 from certain amounts of
undistributed ordinary income and capital gains realized in order to
avoid a federal excise tax liability.

If a shareholder does not otherwise instruct, dividends and capital
gains distributions will be reinvested automatically in additional
shares of the same Class at net asset value, subject to no sales charge
or Deferred Sales Charge.  A shareholder may change the option at any
time by notifying his Salomon Smith Barney Financial Consultant or
Dealer Representative.  A shareholder whose account is held directly at
the sub-transfer agent should notify the sub-transfer agent in writing,
requesting a change to this reinvest option.

The per share dividends on Class B and Class L shares of the Fund may be
lower than the per share dividends on Class A and Class Y shares
principally as a result of the distribution fee applicable with respect
to Class B and Class L shares. The per share dividends on Class A shares
of the Fund may be lower than the per share dividends on Class Y shares
principally as a result of the service fee applicable to Class A shares.
Distributions of capital gains, if any, will be in the same amount for
Class A, Class B, Class L and Class Y shares.

Taxes

The following is a summary of the material United States federal income
tax considerations regarding the purchase, ownership and disposition of
shares of the Fund.  Each prospective shareholder is urged to consult
his own tax adviser with respect to the specific federal, state, local
and foreign tax consequences of investing in the Fund.  The summary is
based on the laws in effect on the date of this SAI, which are subject
to change.

The Fund and Its Investments

The Fund intends to qualify to be treated as a regulated investment
company each taxable year under the Code.  To so qualify, the Fund must,
among other things: (a) derive at least 90% of its gross income in each
taxable year from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of stock
or securities or foreign currencies, or other income (including, but not
limited to, gains from options, futures or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the end of each
quarter of the Fund's taxable year, (i) at least 50% of the market value
of the Fund's assets is represented by cash, securities of other
regulated investment companies, United States government securities and
other securities, with such other securities limited, in respect of any
one issuer, to an amount not greater than 5% of the Fund's assets and
not greater than 10% of the outstanding voting securities of such issuer
and (ii) not more than 25% of the value of its assets is invested in the
securities (other than United States government securities or securities
of other regulated investment companies) of any one issuer or any two or
more issuers that the Fund controls and which are determined to be
engaged in the same or similar trades or businesses or related trades or
businesses.

As a regulated investment company, the Fund will not be subject to
United States federal income tax on its investment company taxable
income (i.e., taxable income other than any excess of net realized long-
term capital gains over net realized short-term capital losses ("net
capital gains")) and its net capital gains, if any, that it distributes
to its shareholders, provided an amount equal to at least 90% of its
investment company taxable income, plus or minus certain other
adjustments as specified in the Code, and 90% of its net tax-exempt
income for the taxable year is distributed in compliance with the Code's
timing and other requirements but will be subject to tax at regular
corporate rates on any taxable income or gains it does not distribute.
The Code imposes a 4% nondeductible excise tax on the Fund to the extent
it does not distribute by the end of any calendar year at least 98% of
its net investment income for that year and 98% of the net amount of its
capital gains (both long-term and short-term) for the one-year period
ending, as a general rule, on October 31 of that year.  For this
purpose, however, any income or gain retained by the Fund that is
subject to corporate income tax will be considered to have been
distributed by year-end.  In addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will be increased or
decreased to reflect any underdistribution or overdistribution, as the
case may be, from the previous year.  The Fund anticipates that it will
pay such dividends and will make such distributions as are necessary in
order to avoid the application of this tax.

If, in any taxable year, the Fund 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 Fund in computing its taxable income.  In addition, in
the event of a failure to qualify, the Fund's distributions, to the
extent derived from the Fund'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 Fund 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 the Fund failed to qualify as a
regulated investment company for a period greater than one taxable year,
the Fund may be required to recognize any net built-in gains with
respect to certain of its assets (the excess of the aggregate gains,
including items of income, over aggregate losses that would have been
realized if it had been liquidated) in order to qualify as a regulated
investment company in a subsequent year.

The Fund's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts
on foreign currencies) will be subject to special provisions of the Code
(including provisions relating to "hedging transactions" and
"straddles") that, among other things, may affect the character of gains
and losses realized by the Fund (i.e., may affect whether gains or
losses are ordinary or capital), accelerate recognition of income to the
Fund and defer Fund losses.  These rules could therefore affect the
character, amount and timing of distributions to shareholders.  These
provisions also (a) will require the Fund to mark-to-market certain
types of the positions in its portfolio (i.e., treat them as if they
were closed out) and (b) may cause the Fund to recognize income without
receiving cash with which to pay dividends or make distributions in
amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes.  The Fund will monitor its transactions, will
make the appropriate tax elections and will make the appropriate entries
in its books and records when it acquires any foreign currency, forward
contract, option, futures contract or hedged investment in order to
mitigate the effect of these rules and prevent disqualification of the
Fund as a regulated investment company.

The Fund's investment in Section 1256 contracts, such as regulated
futures contracts, most foreign currency forward contracts traded in the
interbank market and options on most stock indices, are subject to
special tax rules.  All section 1256 contracts held by the Fund at the
end of its taxable year are required to be marked to their market value,
and any unrealized gain or loss on those positions will be included in
the Fund's income as if each position had been sold for its fair market
value at the end of the taxable year.  The resulting gain or loss will
be combined with any gain or loss realized by the Fund from positions in
section 1256 contracts closed during the taxable year.  Provided such
positions were held as capital assets and were not part of a "hedging
transaction" nor part of a "straddle," 60% of the resulting net gain or
loss will be treated as long-term capital gain or loss, and 40% of such
net gain or loss will be treated as short-term capital gain or loss,
regardless of the period of time the positions were actually held by the
Fund.

Foreign Investments.  Dividends or other income (including, in some
cases, capital gains) received by the Fund from investments in foreign
securities may be subject to withholding and other taxes imposed by
foreign countries.  Tax conventions between certain countries and the
United States may reduce or eliminate such taxes in some cases.  The
Fund will not be eligible to elect to treat any foreign taxes paid by it
as paid by its shareholders, who therefore will not be entitled to
credits for such taxes on their own tax returns.  Foreign taxes paid by
the Fund will reduce the return from the Fund's investments.

Passive Foreign Investment Companies.  If the Fund purchases shares in
certain foreign investment entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United States federal income
tax on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a
taxable dividend by the Fund to its shareholders.  Additional charges in
the nature of interest may be imposed on the Fund in respect of deferred
taxes arising from such distributions or gains.  If the Fund were to
invest in a PFIC and elected to treat the PFIC as a "qualified electing
fund" under the Code, in lieu of the foregoing requirements, the Fund
might be required to include in income each year a portion of the
ordinary earnings and net capital gains of the qualified electing fund,
even if not distributed to the Fund, and such amounts would be subject
to the 90% and excise tax distribution requirements described above.  In
order to make this election, the Fund would be required to obtain
certain annual information from the PFICs in which it invests, which may
be difficult or not possible to obtain.

The Fund may also make an election that would result in the Fund being
treated as if it had sold and repurchased all of its PFIC stock at the
end of each year.  In this case, the Fund would report gains as ordinary
income and would deduct losses as ordinary losses to the extent of
previously recognized gains. The election, once made, would be effective
for all subsequent taxable years of the Fund, unless revoked with the
consent of the Internal Revenue Service (the "IRS").  By making the
election, the Fund could potentially ameliorate the adverse tax
consequences with respect to its ownership of shares in a PFIC, but in
any particular year may be required to recognize income in excess of the
distributions it receives from PFICs and its proceeds from dispositions
of PFIC stock.  The Fund may have to distribute this "phantom" income
and gain to satisfy its distribution requirement and to avoid imposition
of the 4% excise tax.  The Fund will make the appropriate tax elections,
if possible, and take any additional steps that are necessary to
mitigate the effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions.  Any dividend declared by the Fund in
October, November or December of any calendar year and payable to
shareholders of record on a specified date in such a month shall be
deemed to have been received by each shareholder on December 31 of such
calendar year and to have been paid by the Fund not later than such
December 31, provided such dividend is actually paid by the Fund during
January of the following calendar year.  The Fund intends to distribute
annually to its shareholders substantially all of its investment company
taxable income, and any net capital gains.  The Fund currently expects
to distribute any such excess annually to its shareholders.  However, if
the Fund retains for investment an amount equal to all or a portion of
its net capital gains, it will be subject to a corporate tax (currently
at a rate of 35%) on the amount retained.  In that event, the Fund will
designate such retained amounts as undistributed capital gains in a
notice to its shareholders who (a) will be required to include in income
for United Stares federal income tax purposes, as long-term capital
gains, their proportionate shares of the undistributed amount, (b) will
be entitled to credit their proportionate shares of the 35% tax paid by
the Fund on the undistributed amount against their United States federal
income tax liabilities, if any, and to claim refunds to the extent their
credits exceed their liabilities, if any, and (c) will be entitled to
increase their tax basis, for United States federal income tax purposes,
in their shares by an amount equal to 65% of the amount of undistributed
net capital gains included in the shareholder's income.  Organizations
or persons not subject to federal income tax on such net capital gains
will be entitled to a refund of their pro rata share of such taxes paid
by the Fund upon filing appropriate returns or claims for refund with
the IRS.

Dividends of net investment income and distributions of net realized
short-term capital gains are taxable to a United States shareholder as
ordinary income, whether paid in cash or in shares.  Distributions of
net-long-term capital gains, if any, that the Fund designates as capital
gains dividends are taxable as long-term capital gains, whether paid in
cash or in shares and regardless of how long a shareholder has held
shares of the Fund.  Dividends and distributions paid by the Fund
attributable to dividends on stock of U.S. corporations received by the
Fund, with respect to which the Fund meets certain holding period
requirements, will be eligible for the deduction for dividends received
by corporations. Distributions in excess of the Fund's current and
accumulated earnings and profits will, as to each shareholder, be
treated as a tax-free return of capital to the extent of a shareholder's
basis in his shares of the Fund, and as a capital gain thereafter (if
the shareholder holds his shares of the Fund as capital assets).
Shareholders receiving dividends or distributions in the form of
additional shares should be treated for United States federal income tax
purposes as receiving a distribution in an amount equal to the amount of
money that the shareholders receiving cash dividends or distributions
will receive, and should have a cost basis in the shares received equal
to such amount.

Investors considering buying shares just prior to a dividend or capital
gain distribution should be aware that, although the price of shares
just purchased at that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may nevertheless be taxable
to them. If the Fund is the holder of record of any stock on the record
date for any dividends payable with respect to such stock, such
dividends are included in the Fund's gross income not as of the date
received but as of the later of (a) the date such stock became ex-
dividend with respect to such dividends (i.e., the date on which a buyer
of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date the Fund acquired such stock.  Accordingly,
in order to satisfy its income distribution requirements, the Fund may
be required to pay dividends based on anticipated earnings, and
shareholders may receive dividends in an earlier year than would
otherwise be the case.

Sales of Shares.  Upon the sale or exchange of his shares, a shareholder
will realize a taxable gain or loss equal to the difference between the
amount realized and his basis in 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, and will be long-term capital gain or loss if the
shares are held for more than one year and short-term capital gain or
loss if the shares are held for one year or less.  Any loss realized on
a sale or exchange will be disallowed to the extent the shares disposed
of are replaced, including replacement through the reinvesting of
dividends and capital gains distributions in the Fund, within a 61-day
period 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
increased to reflect the disallowed loss.  Any loss realized by a
shareholder on the sale of a Fund share held by the shareholder for six
months or less will be treated for United States federal income tax
purposes as a long-term capital loss to the extent of any distributions
or deemed distributions of long-term capital gains received by the
shareholder with respect to such share. If a shareholder incurs a sales
charge in acquiring shares of the Fund, disposes of those shares within
90 days and then 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 will not
be taken into account in computing gain or loss on the original shares
to the extent the subsequent sales charge is reduced.  Instead, the
disregarded portion of the original sales charge will be added to the
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 second 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.  The Fund may be required to withhold, for United
States federal income tax purposes, up to 31% of the dividends,
distributions and redemption proceeds payable to shareholders who fail
to provide the Fund with their correct taxpayer identification number or
to make required certifications, or who have been notified by the IRS
that they are subject to backup withholding.  Certain shareholders are
exempt from backup withholding.  Backup withholding is not an additional
tax and any amount withheld may be credited against a shareholder's
United States federal income tax liabilities.

Notices.  Shareholders will be notified annually by the Fund as to the
United States federal income tax status of the dividends, distributions
and deemed distributions attributable to undistributed capital gains
(discussed above in "Taxes - Taxation of United States Shareholders -
Dividends and Distributions") made by the Fund to its shareholders.
Furthermore, shareholders will also receive, if appropriate, various
written notices after the close of the Fund's taxable year regarding the
United States federal income tax status of certain dividends,
distributions and deemed distributions that were paid (or that are
treated as having been paid) by the Fund to its shareholders during the
preceding taxable year.

Other Taxation

Distributions also may be subject to additional state, local and foreign
taxes depending on each shareholder's particular situation.

The foregoing is only a summary of certain material tax consequences
affecting the Fund and its shareholders.  Shareholders are advised to
consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.

ADDITIONAL INFORMATION

The Company was incorporated on September 29, 1981 under the laws of the
state of Maryland under the name Hutton Investment Series Inc.  The
Company's corporate name was changed on December 29, 1988, July 30, 1993
and October 28, 1994, to SLH Investment Portfolios Inc., Smith Barney
Shearson Investment Funds Inc., and Smith Barney Investment Funds Inc.,
respectively.

The Company offers shares of eight separate series with a par value of
$.001 per share.  The Fund offers shares currently classified into four
Classes - A, B, L and Y.  Each Class of the Fund represents an identical
interest in the Fund's investment portfolio.  As a result, the Classes
have the same rights, privileges and preferences, except with respect
to:  (a) the designation of each Class; (b) the effect of the respective
sales charges; if any, for each class; (c) the distribution and/or
service fees borne by each Class pursuant to the Plan; (d) the expenses
allocable exclusively to each Class; (e) voting rights on matters
exclusively affecting a single Class; (f) the exchange privilege of each
Class; and (g) the conversion feature of the Class B shares.  The
Company's Board of Directors does not anticipate that there will be any
conflicts among the interests of the holders of the different Classes.
The Directors, on an ongoing basis, will consider whether any such
conflict exists and, if so, take appropriate action.

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 for the purpose of voting
upon the question or removal of any Director when requested in writing
to do so by the record holders of not less than 10% of the outstanding
shares of the Fund.  At such a meeting, a Director may be removed after
the holders of record of not less than a majority of the outstanding
shares of the Fund have declared that the Director be removed either by
declaration in writing or by votes cast in person or by proxy.  Except
as set forth above, the Directors shall continue to hold office and may
appoint successor Directors.

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

Annual and Semi-annual Reports.  The Fund sends its shareholders a semi-
annual report and an audited annual report, which include listings of
investment securities held by the Fund at the end of the period covered.
In an effort to reduce the Fund's printing and mailing costs, the Fund
consolidates the mailing of its semi-annual and annual reports by
household. This consolidation means that a household having multiple
accounts with the identical address of record will receive a single copy
of each report.  In addition, the Fund also consolidates the mailing of
its Prospectus so that a shareholder having multiple accounts (that is,
individual, IRA and/or Self-Employed Retirement Plan accounts) will
receive a single Prospectus annually. Shareholders who do not want this
consolidation to apply to their accounts should contact their Salomon
Smith Barney Financial Consultant or the Transfer Agent.

FINANCIAL STATEMENTS

The Fund's annual report for the fiscal year ended April 30, 2001 was
filed on July 6, 2001, Accession Number 0000950130-01-502898, and is
incorporated in its entirety by reference.

OTHER INFORMATION

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 four "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.

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