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                                   PROSPECTUS



                          GREENWICH STREET SERIES FUND

                             TOTAL RETURN PORTFOLIO

                                 April 30, 1998


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<PAGE>
 
                          GREENWICH STREET SERIES FUND
                             Total Return Portfolio
                              388 Greenwich Street
                            New York, New York 10013
                    Contract Owner Inquiries: (800) 451-2010

     Greenwich Street Series Fund is a diversified, open-end management
investment company (the "Fund"), with ten portfolios (the "Portfolios"), each
with separate goals and investment policies. Shares of the Total Return
Portfolio (the "Portfolio") may be acquired only by investing in a qualifying
variable annuity or variable life insurance contract (a "Contract") offered by
participating life insurance companies.

     The Portfolio's investment goal is to provide shareholders with total
return, consisting of long-term capital appreciation and income. The Portfolio
invests primarily in a diversified portfolio of dividend-paying common stocks.

     There can be no guarantee that the Portfolio's investment goal will be
achieved since any investment involves risks. Discussions of the Portfolio's
investments, and their related risks, are found in the sections of this
Prospectus entitled "Investment Goal and Policies of the Portfolio," "Additional
Investments" and "Special Considerations and Risk Factors."

     This Prospectus, which sets forth certain information about the Fund and
the Portfolio that you should know before investing, should be read in
conjunction with the applicable Contract prospectus and retained for future
reference. Additional information about the Fund and the Portfolio has been
filed with the Securities and Exchange Commission (the "SEC") in a document
entitled "Statement of Additional Information" (the "SAI"), dated April 30,
1998, as amended or supplemented from time to time, which is available upon
request and without charge by calling or writing the Fund at the telephone
number or address set forth below or by contacting a representative of a
participating life insurance company.

     The Fund is responsible only for statements that are included in this
Prospectus, the SAI or in authorized sales material. The SAI is incorporated by
reference into this Prospectus in its entirety. You cannot buy shares of the
Fund directly. You can invest in the Fund by buying separate accounts which Fund
Contracts offered by designated insurance companies.

THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT CONTRACT PROSPECTUS. BOTH
PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.


                 The date of this Prospectus is April 30, 1998.

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<PAGE>
 
                                    CONTENTS
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SUMMARY ...................................................................    1

EXPENSES OF THE PORTFOLIO .................................................    2

FINANCIAL HIGHLIGHTS ......................................................    2

INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO .............................    3

CERTAIN INVESTMENT STRATEGIES AND GUIDELINES ..............................    3

ADDITIONAL INVESTMENTS ....................................................    8

SPECIAL CONSIDERATIONS AND RISK FACTORS ...................................    9

PORTFOLIO TRANSACTIONS ....................................................   11

NET ASSET VALUE ...........................................................   12

HOW TO USE THE FUND .......................................................   12

DIVIDENDS AND TAXES .......................................................   13

MANAGEMENT OF THE FUND ....................................................   14

PORTFOLIO MANAGEMENT ......................................................   15

CUSTODIAN AND TRANSFER AGENT ..............................................   15

DISTRIBUTOR ...............................................................   15

ADDITIONAL INFORMATION ....................................................   15

THE PORTFOLIO'S PERFORMANCE ...............................................   16

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     No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI or the
Fund's official sales literature in connection with the offering of the Fund's
shares, and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Fund. This Prospectus does
not constitute an offer in any state in which, or to any person to whom, the
offer may not lawfully be made.
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<PAGE>
 
                                     SUMMARY
================================================================================

     The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the SAI. Cross-references in this
summary are to headings in the Prospectus.

     The Portfolio. The Portfolio is one of ten portfolios of the Fund, a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Portfolio's
investment objective is to provide shareholders with total return, consisting of
long-term capital appreciation and income. The Portfolio invests primarily in a
diversified portfolio of dividend-paying common stocks. See "Additional
Information."

     Management. Mutual Management Corp. ("MMC") serves as the Portfolio's
investment adviser and administrator. MMC is a wholly owned subsidiary of
Salomon Smith Barney Holdings Inc. ("Holdings"), which in turn is a wholly owned
subsidiary of Travelers Group, Inc., a diversified financial services holding
company engaged, through its subsidiaries, principally in four business
segments: Investment Services including Asset Management, Consumer Finance
Services, Life Insurance Services and Property & Casualty Insurance Services.
See "Management of the Fund."

     Buying Shares. Shares of the Portfolio are offered only to Contract owners
as set forth in the specific Contract prospectus. A Contract owner can direct
the allocation of part or all of his or her net purchase payment to the
Portfolio. In the future, the Fund may establish additional portfolios. See "How
to Use the Fund."

     Redeeming Shares. Shares may be redeemed as described in the applicable
Contract prospectus. See "How to Use the Fund."

     Risk Factors and Special Considerations. The non-publicly traded and
illiquid securities, which the Portfolio may hold, may have to be sold at lower
prices, or may remain unsold, when the Portfolio desires to dispose of them. The
foreign securities, including securities of developing countries, in which the
Portfolio may invest may be subject to certain risks in addition to those
inherent in U.S. investments. The medium- and lower-rated securities as well as
unrated securities and the securities of unseasoned issuers that the Portfolio
may hold, some of which have speculative characteristics, may be subject to
greater market fluctuation and risk of loss of income or principal than
higher-rated securities. The Portfolio may make certain investments and employ
certain investment techniques that involve other risks, including entering into
repurchase agreements, lending portfolio securities and entering into futures
contracts and related options as hedges. These risks and those associated with
when-issued and delayed-delivery transactions, put and call options, covered
option writing, short sales against the box, forward roll transactions, currency
exchange transactions, options on foreign currencies, interest rate and other
hedging transactions and reverse repurchase agreements, are described under
"Investment Goal and Policies of the Portfolio" and "Special Considerations and
Risk Factors."


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                                                                               1
<PAGE>
 
                            EXPENSES OF THE PORTFOLIO
================================================================================

     The Portfolio will bear its own expenses. Operating expenses for the
Portfolio generally will consist of all costs not specifically borne by the
Adviser and Administrator and/or the Fund's distributor, including
organizational costs, investment advisory and administration fees, fees for
necessary professional and brokerage services, fees for any pricing service, the
costs of regulatory compliance and costs associated with maintaining legal
existence and shareholder relations. From time to time, the Adviser and
Administrator may waive all or a portion of the fees payable to it by the
Portfolio, thereby reducing the expenses of the Portfolio. A detailed
description of the expenses involved in investing in a Contract and the
Portfolio is included in the Contract prospectus.


                              FINANCIAL HIGHLIGHTS
===============================================================================

     The following information for each year in the three-year period ended
December 31, 1997 has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Fund's Annual Report dated
December 31, 1997. The following information with respect to the two years ended
December 31, 1994 has been audited by other auditors. The information set out
below should be read in conjunction with the financial statements and related
notes that also appear in the Fund's Annual Report to Shareholders, which is
incorporated by reference into the SAI.

     For a share of beneficial interest outstanding throughout each period:
<TABLE>
<CAPTION>
Total Return Portfolio                                          1997           1996           1995           1994         1993(1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>            <C>            <C>            <C>            <C>   
Net Asset Value, Beginning of Year                             $15.73         $12.75         $10.78         $10.30         $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
     Net investment income(2)                                    0.37           0.26           0.43           0.34           0.01
     Net realized and unrealized gain (loss)                     2.26           2.97           2.19           0.42*          0.29
------------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations                              2.63           3.23           2.62           0.76           0.30
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Less Distributions From:
     Net investment income                                      (0.21)         (0.07)         (0.41)         (0.28)            --
     Net realized gains                                         (0.53)         (0.18)         (0.24)            --             --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions                                             (0.74)         (0.25)         (0.65)         (0.28)            --
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                                   $17.62         $15.73         $12.75         $10.78         $10.30
------------------------------------------------------------------------------------------------------------------------------------
Total Return                                                    16.84%         25.33%         25.04%          7.40%          3.00%++
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (millions)                               $274           $172            $78            $23             $3
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Ratios to Average Net Assets:
     Expenses(2)                                                 0.79%          0.83%          1.00%          1.00%          0.85%+
     Net investment income                                       3.24           3.06           3.80           3.84           1.93+
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                            75%            82%            81%           118%            --
------------------------------------------------------------------------------------------------------------------------------------
Average commissions paid on equity
     transactions(3)                                            $0.06          $0.06          $0.06             --             --
====================================================================================================================================
</TABLE>

(1)  For the period from December 3, 1993 (commencement of operations) to
     December 31, 1993.
  
(2)  The Adviser waived all or part of its fees for the year ended
     December 31, 1994 and the period ended December 31, 1993. In addition, IDS
     Life reimbursed expenses of $7,873 and $1,472 for the year ended December
     31, 1994 and the period ended December 31, 1993. If such fees were not
     waived and expenses reimbursed, the per share effect on net investment
     income and the expense ratios would have been as follows:

<TABLE>
<CAPTION>
                                    Net Investment Income             Expense Ratios Without Waivers
                                     Per Share Decrease                     and Reimbursements
                                -----------------------------         ------------------------------
     Portfolio                  1996    1995    1994    1993           1996    1995    1994    1993
     ---------                  ----    ----    ----    ----           ----    ----    ----    ----
<S>                              <C>     <C>    <C>     <C>             <C>     <C>    <C>    <C>   
     Total Return                N/A     N/A    $0.01   $0.02           N/A     N/A    1.11%  4.14%+
</TABLE>

(3)  As of September 1995 the SEC instituted new guidelines requiring the
     disclosure of average commissions per share. 

++   Total Return is not annualized, as it may not be representative of the
     total return for the year.

+    Annualized.

*    The amount shown in this caption for each share outstanding throughout the
     period may not accord with the change in the aggregate gains and losses in
     the portfolio securities for the period because of the timing of purchases
     and withdrawals of shares in relation to the fluctuating market values of
     the portfolio.


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2
<PAGE>
 
                  INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO
================================================================================

     Set forth below is a description of the investment goal and policies of the
 Portfolio. The investment goal of the Portfolio may not be changed without the
approval of the holders of a majority (as defined in the 1940 Act) of the
outstanding shares of the Portfolio. There can, of course, be no guarantee that
the Portfolio will achieve its investment goal. Additional information about
investment strategies that the Portfolio may employ and investment policies
mentioned below appears in the SAI.

Investment Goal

       The Portfolio's goal is to provide shareholders with total return,
consisting of long-term capital appreciation and income.

Investment Policies

     The Portfolio will seek to achieve its goal by investing primarily in a
diversified portfolio of dividend-paying common stocks. The Portfolio may engage
in various portfolio strategies involving options to seek to increase its return
and to hedge its portfolio against movements in the equity markets and interest
rates. Because the Portfolio seeks total return by emphasizing investments in
dividend-paying common stocks, it will not have as much investment flexibility
as total return funds, which may pursue their objective by investing in income
and equity securities without such an emphasis. The Portfolio may also invest up
to 10% of its assets in securities rated less than investment grade by Moody's,
S&P or the equivalent of another nationally recognized statistical rating
organization ("NRSRO") or, in unrated securities deemed by the Adviser to be of
comparable quality. The Portfolio may invest up to 35% of its assets in
interest-paying debt securities such as U.S. government securities, and other
securities, including convertible bonds, convertible preferred stock and
warrants. The Portfolio also may lend its portfolio securities and enter into
short sales against the box.

                  CERTAIN INVESTMENT STRATEGIES AND GUIDELINES
================================================================================

     Up to 15% of the total assets of the Portfolio may be invested in
securities with contractual or other restrictions on resale and other
instruments that are not readily marketable, including (a) repurchase agreements
with maturities greater than seven days, (b) futures contracts and related
options for which a liquid secondary market does not exist and (c) time deposits
maturing in more than seven calendar days. The Portfolio may borrow from banks
for temporary or emergency purposes, but not for leverage, in an amount up to 
33 1/3% of its assets, and may pledge its assets to the same extent in 
connection with such borrowings. Whenever borrowings from banks exceed 5% of the
value of the assets of the Portfolio, the Portfolio will not make any additional
investments. Except for the limitations on borrowing, the investment guidelines
set forth in this paragraph may be changed at any time without shareholder
consent by vote of the Board of Trustees of the Fund. A complete list of
investment restrictions that identifies additional restrictions that cannot be
changed without the approval of a majority of the Portfolio's outstanding shares
is contained in the SAI.

Repurchase Agreements

     The Portfolio may engage in repurchase agreement transactions on portfolio
securities, in each case with banks which are the issuers of instruments
acceptable for purchase by the Portfolio and with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. Under the terms of
a typical repurchase agreement, the Portfolio would acquire an underlying debt
obligation for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase, and the Portfolio to


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                                                                               3
<PAGE>
 
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Portfolio's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the Portfolio's
holding period. The value of the underlying securities will be monitored by the
Portfolio's investment adviser to ensure that it at least equals at all times
the total amount of the repurchase obligation, including interest. The Portfolio
bears a risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations and the Portfolio is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during the
period while the Portfolio seeks to assert these rights. The Adviser, acting
under the supervision of the Fund's Board of Trustees, reviews on an ongoing
basis the value of the collateral and the creditworthiness of those banks and
dealers with which the Portfolio enters into repurchase agreements to evaluate
potential risks.

Lending of Securities

     Consistent with applicable regulatory requirements, the Portfolio may lend
its portfolio securities to brokers, dealers and other financial organizations.
By lending its securities, the Portfolio 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. Loans of portfolio securities will be collateralized by cash,
letters of credit or U.S. government securities that are maintained at all times
in a segregated account with the Fund's custodian, in an amount at least equal
to 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 Portfolio. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially.

Futures and Options on Futures

     When deemed advisable by the Adviser, the Portfolio may enter into interest
rate futures contracts, stock index futures contracts and related options that
are traded on a U.S. exchange or board of trade. These transactions will be made
solely for the purpose of hedging against the effects of changes in the value of
portfolio securities due to anticipated changes in interest rates, market
conditions and currency values, as the case may be. The Portfolio will enter
into futures and options on futures to purchase stock indices in anticipation of
future purchases of securities ("long positions"). All futures and options
contracts will be entered into only when the transactions are economically
appropriate to the reduction of risks inherent in the management of the
Portfolio.

     An interest rate futures contract provides for the future sale by one party
and the purchase by the other party of a specified amount of a particular
financial instrument (debt security) at a specified price, date, time and place.
Similarly, a foreign currency futures contract provides for the future sale by
one party and the purchase by another party of a certain amount of a particular
currency at a specified price, date, time and place. Stock index futures
contracts are based on indices that reflect the market value of common stock of
the firms included in the indices. An index futures contract is an agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to the difference between the value of the index at the close of the
last trading day of the contract and the price at which the index contract was
originally entered into. An option on an interest rate, stock index or currency
futures contract gives 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) at a specified exercise price
at any time prior to the expiration date of the option.


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4
<PAGE>
 
     The use of futures contracts and options on futures contracts as a hedging
device involves several risks. There can be no assurance that there will be a
correlation between price movements in the underlying securities, index or
currency, on the one hand, and price movements in the securities that are the
subject of the hedge, on the other hand. Positions in futures contracts and
options on futures contracts may be closed out only on the exchange or board of
trade on which they were entered into, and there can be no assurance that an
active market will exist for a particular contract or option at any particular
time.

     The Portfolio may not enter into futures and options contracts for which
aggregate initial margin deposits and premiums paid for unexpired options to
establish such positions that are not bona fide hedging positions (as defined by
the Commodity Futures Trading Commission) exceed 5% of the fair market value of
the Portfolio's assets, after taking into account unrealized profits and
unrealized losses on futures contracts into which it has entered. With respect
to long positions in futures or options on futures, the Portfolio will "cover"
the position in a manner consistent with SEC guidance.

When-Issued Securities and Delayed-Delivery Transactions

     The Portfolio may purchase and sell securities on a when-issued basis,
which calls for the purchase (or sale) of securities at an agreed-upon price on
a specified future date. The Portfolio will enter into a when-issued transaction
for the purpose of acquiring portfolio securities and not for the purpose of
leverage. In such transactions, delivery of the securities occurs beyond the
normal settlement periods, but no payment or delivery is made by, and no
interest accrues to, the Portfolio prior to the actual delivery or payment by
the other party to the transaction. Due to fluctuations in the value of
securities purchased or sold on a when-issued or delayed-delivery basis, the
returns obtained on such securities may be higher or lower than the returns
available in the market on the dates when the investments are actually delivered
to the buyers. The Portfolio will establish a segregated account consisting of
cash, U.S. government securities, high-grade debt obligations or equity
securities in an amount equal to the amount of its when-issued and
delayed-delivery commitments, provided such securities are determined by the
Adviser to be liquid and unencumbered, and are marked to market daily pursuant
to guidelines established by the Trustees. Placing securities rather than cash
in the segregated account may have a leveraging effect on the Portfolio's net
assets. The Portfolio will not accrue income with respect to a when-issued
security prior to its stated delivery date.

Purchasing Options on Securities and Stock Indices

     The Portfolio may purchase put and call options that are traded on a U.S.
securities exchange, and also may purchase such options on foreign exchanges and
in the over-the-counter market. The Portfolio may utilize up to 10% of its
assets to purchase put options on portfolio securities and may do so at or about
the same time that it purchases the underlying security or at a later time. By
buying a put, the Portfolio limits its risk of loss from a decline in the market
value of the underlying security until the put expires. Any appreciation in the
value of and yield otherwise available from the underlying security, however,
will be partially offset by the amount of the premium paid for the put option
and any related transaction costs. The Portfolio may utilize up to 10% of its
assets to purchase call options on portfolio securities. Call options may be
purchased by the Portfolio in order to acquire the underlying securities for the
Portfolio at a price that avoids any additional cost that would result from a
substantial increase in the market value of a security. The Portfolio also may
purchase call options to increase its return to investors at a time when the
call is expected to increase in value due to anticipated appreciation of the
underlying security.


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                                                                               5
 
<PAGE>
 
    Prior to their expirations, put and call options may be sold in closing
sale transactions (sales by the Portfolio, prior to the exercise of options that
it has purchased, of options of the same series), and profit or loss from the
sale will depend on whether the amount received is more or less than the premium
paid for the option plus the related transaction costs.

     The Portfolio may purchase call options on stock indices. The Portfolio may
also write call options and buy put options on stock indices. Options on stock
indices are similar to options on securities. However, options on stock indices
do not involve the delivery of an underlying security; rather, the options
represent the holder's right to obtain from the writer in cash a fixed multiple
of the amount by which the exercise price 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 exercise date.

     A stock index measures the movement of a certain group of stocks by
assigning relative values to the common stocks included in the index. In
purchasing put options on a stock index, the Portfolio seeks to benefit from a
decline in the value of the stocks underlying the index or seeks to hedge
against the risk of loss on securities that it holds. In purchasing call options
on a stock index, the Portfolio seeks to participate in an advancing market in
anticipation of becoming more fully invested in equity securities.

     The advisability of using stock index options to hedge against the risk of
marketwide movements will depend on the extent of diversification of the stock
investments of the Fund and the sensitivity of its stock investments to factors
influencing the underlying index. The effectiveness of purchasing or writing
stock index options as a hedging technique will depend upon the extent to which
price movements in the Portfolio's securities investments correlate with price
movements in the stock index selected.

Covered Option Writing

     The Portfolio may write put and call options on securities. The Portfolio
realizes fees (referred to as "premiums") for granting the rights evidenced by
the options. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at a specified price at any time during the option period. In contrast, a call
option embodies the right of its purchaser to compel the writer of the option to
sell to the option holder an underlying security at a specified price at any
time during the option period. Thus, the purchaser of a put option written by
the Portfolio has the right to compel the Portfolio to purchase from it the
underlying security at the agreed-upon price for a specified time period, while
the purchaser of a call option written by the Portfolio has the right to
purchase from the Portfolio the underlying security owned by the Portfolio at
the agreed-upon price for a specified time period.

     Upon the exercise of a put option written by the Portfolio, the Portfolio
may suffer a loss equal to the difference between the price at which the
Portfolio is required to purchase the underlying security plus the premium
received for writing the option and its market value at the time of the option
exercise.

     Upon the exercise of a call option written by the Portfolio, the Portfolio
may suffer a loss equal to the difference between the security's market value at
the time of the option exercise less the premium received for writing the option
and the Portfolio's acquisition cost of the security.

     The Portfolio will write only covered options. Accordingly, whenever the
Portfolio writes a call option, it will continue to own or have the present
right to acquire the underlying security for as long as it remains obligated as
the writer of the option. To support its obligation to purchase the underlying
security if a put option is exercised, the Portfolio will either (a) deposit
with PNC Bank, National Association, the custodian of the Fund's investments
("PNC"), in a segregated account cash, U.S. government securities, high-grade
debt


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6
<PAGE>
 
obligations or equity securities having a value at least equal to the exercise
price of the underlying securities, provided such securities are determined by
the Adviser to be liquid and unencumbered, and are marked to market daily
pursuant to guidelines established by the Trustees or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates as
those written by the Portfolio) or an equivalent number of puts of the same
"class" (that is, puts on the same underlying security) with exercise prices
greater than those that it has written (or, if the exercise prices of the puts
that it holds are less than the exercise prices of those that it has written, it
will deposit the difference with its custodian in a segregated account).

     The Portfolio may engage in a closing purchase transaction to realize a
profit, to prevent an underlying security from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the outstanding
option's expiration). To effect a closing purchase transaction, the Portfolio
would purchase, prior to the holder's exercise of an option that the Portfolio
has written, an option of the same series as that on which the Portfolio desires
to terminate its obligation. The obligation of the Portfolio under an option
that it has written would be terminated by a closing purchase transaction, but
the Portfolio would not be deemed to own an option as the result of the
transaction. There can be no assurance that the Portfolio will be able to effect
closing purchase transactions at a time when it wishes to do so. To facilitate
closing purchase transactions, however, the Portfolio ordinarily will write
options only if a secondary market for the options exists on a U.S. securities
exchange or in the over-the-counter market. The staff of the SEC considers most
over-the-counter options to be illiquid. The ability to terminate options
positions established in the over-the-counter market may be more limited than in
the case of exchange-traded options and also may involve the risk that
securities dealers participating in such transactions would fail to meet their
obligations to the Portfolio.

Short Sales Against the Box

     The Portfolio may make short sales of common stock if, at all times when a
short position is open, the Portfolio owns the stock or owns preferred stocks or
debt securities convertible or exchangeable into the shares of common stock sold
short. Short sales of this kind are referred to as short sales "against the
box." The broker-dealer that executes a short sale generally invests cash
proceeds of the sale until they are paid to the Portfolio. Arrangements may be
made with the broker-dealer to obtain a portion of the interest earned by the
broker on the investment of short sale proceeds. The Portfolio will segregate
the common stock or convertible or exchangeable preferred stock or debt
securities in a special account with its custodian.

Real Estate Investment Trust

     The Portfolio may invest in real estate investment trusts ("REITs"). REITs
are entities which either own properties or make construction or mortgage loans.
Equity trusts own real estate directly and the value of, and income earned by,
the trust depends upon the income of the underlying properties and the rental
income they earn. Equity trusts may also include operating or finance companies.
Equity trusts can also realize capital gains by selling properties that have
appreciated in value. A mortgage trust can make construction, development or
long-term mortgage loans, and are sensitive to the credit quality of the
borrower. Mortgage trusts derive their income from interest payments. Hybrid
trusts combine the characteristics of both equity and mortgage trusts, generally
by holding both ownership interests and mortgage interests in real estate. The
values of securities issued by REITs are affected by tax and regulatory
requirements and by perceptions of management skill. They are also subject to
heavy cash flow dependency, defaults by borrowers or tenants, self-liquidation,
the possibility of failing to qualify for tax-free status under the Internal
Revenue Code of 1986, as amended (the "Code"), and failing to maintain exemption
from the Investment Company Act of 1940, as amended.


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                                                                               7
<PAGE>
 
                             ADDITIONAL INVESTMENTS
================================================================================

Money Market Instruments

     The Portfolio may, as a cash management tool, invest up to 35% of the value
of its total assets in cash and invest in short-term instruments and, for
temporary defensive purposes, may hold cash and invest in short-term instruments
without limitation. Short-term instruments in which the Portfolio may invest
include: U.S. government securities; obligations of banks having at least $1
billion in assets (including certificates of deposit, time deposits and bankers'
acceptances of U.S. or foreign banks, U.S. savings and loan associations and
similar institutions); commercial paper rated no lower than A-2 by S&P or
Prime-2 by Moody's or the equivalent from another NRSRO or, if unrated, of an
issuer having an outstanding, unsecured debt issue then rated within the two
highest rating categories; and repurchase agreements with respect to any of the
foregoing entered into with banks and non-bank dealers approved by the Fund's
Board of Trustees.

U.S. Government Securities

     The U.S. government securities in which the Portfolio may invest include:
direct obligations of the United States Treasury (such as Treasury Bills,
Treasury Notes and Treasury Bonds), and obligations issued by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as certificates issued by the
Government National Mortgage Association); securities that are supported by the
right of the issuer to borrow from the U.S. Treasury (such as securities of
Federal Home Loan Banks); and securities that are supported only by the credit
of the instrumentality (such as bonds issued by the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation). Treasury Bills have
maturities of less than one year, Treasury Notes have maturities of one to ten
years and Treasury Bonds generally have maturities of greater than ten years at
the date of issuance.

     The Portfolio may invest up to 5% of its net assets in U.S. government
securities for which the principal repayment at maturity, while paid in U.S.
dollars, is determined by reference to the exchange rate between the U.S. dollar
and the currency of one or more foreign countries ("Exchange Rate-Related
Securities"). Exchange Rate-Related Securities are issued in a variety of forms,
depending on the structure of the principal repayment formula. The principal
repayment formula may be structured so that the securityholder will benefit if a
particular foreign currency to which the security is linked is stable or
appreciates against the U.S. dollar. In the alternative, the principal repayment
formula may be structured so that the securityholder benefits if the U.S. dollar
is stable or appreciates against the linked foreign currency. Finally, the
principal repayment formula can be a function of more than one currency and,
therefore, be designed in either of the aforementioned forms or a combination of
those forms.

     Investments in Exchange Rate-Related Securities entail special risks. There
is the possibility of significant changes in rates of exchange between the U.S.
dollar and any foreign currency to which an Exchange Rate-Related Security is
linked. If currency exchange rates do not move in the direction or to the extent
anticipated at the time of purchase of the security, the amount of principal
repaid at maturity might be significantly below the par value of the security,
which might not be offset by the interest earned by the Portfolio over the term
of the security. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The imposition or modification of foreign
exchange controls by the United States or foreign governments or intervention by
central banks also could affect exchange rates. Finally, there is no assurance
that sufficient trading interest to create a liquid secondary market will exist
for


--------------------------------------------------------------------------------
8
<PAGE>
 
particular Exchange Rate-Related Securities due to conditions in the debt and
foreign currency markets. Illiquidity in the forward foreign exchange market and
the high volatility of the foreign exchange market may from time to time combine
to make it difficult to sell an Exchange Rate-Related Security prior to maturity
without incurring a significant price loss.

                     SPECIAL CONSIDERATIONS AND RISK FACTORS
================================================================================

Fixed-Income Securities

     The market value of fixed-income obligations of the Portfolio will be
affected by general changes in interest rates, which will result in increases or
decreases in the value of fixed-income obligations held by the Portfolio. The
market value of the Portfolio's fixed-income obligations can be expected to vary
inversely in relation to changes in prevailing interest rates. In addition,
fixed-income securities in which the Portfolio may invest may not yield as high
a level of current income as might be achieved by investing in securities with
less liquidity and safety and longer maturities.

Non-Publicly Traded and Illiquid Securities

     The Portfolio may purchase securities that are not publicly traded. The
sale of securities that are not publicly traded is typically restricted under
federal securities laws. As a result, the Portfolio may be forced to sell these
securities at less than fair market value or may not be able to sell them when
its investment adviser believes it desirable to do so. The Portfolio's
investments in illiquid securities are subject to the risk that should the
Portfolio desire to sell any of these securities when a ready buyer is not
available at a price that the Portfolio deems representative of their value, the
value of the Portfolio's net assets could be adversely affected.

Mortgage-Related Securities

     To the extent that the Portfolio purchases mortgage-related securities at a
premium, mortgage foreclosures and prepayments of principal by mortgagors (which
may be made at any time without penalty) may result in some loss of the
Portfolio's principal investment to the extent of the premium paid. The yield of
the Portfolio when investing in mortgage-related securities may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment. In addition, like other debt securities, the values of
mortgage-related securities, including government and government-related
mortgage pools, generally will fluctuate in relation to interest rates.

Foreign Securities

     The Portfolio may invest in obligations of companies and governments of
foreign nations, which involve certain risks in addition to the usual risks
inherent in U.S. investments. These risks include those resulting from
revaluation of currencies, future adverse political and 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 lack of uniform accounting, auditing and financial
reporting standards or of other regulatory practices and requirements comparable
to those applicable to U.S. companies. The performance of the Portfolio when
investing in foreign securities may be adversely affected by fluctuations in
value of one or more foreign currencies relative to the U.S. dollar. Moreover,
securities of many foreign companies may be less liquid and their prices more
volatile than those of securities of comparable U.S. companies. In addition,
with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other 


--------------------------------------------------------------------------------
                                                                               9
<PAGE>
 
assets of the Portfolio, including the withholding of dividends. Foreign
securities may be subject to foreign government taxes that could reduce the
return on such securities. Changes in foreign currency exchange rates may affect
the value of portfolio securities and the appreciation or depreciation of
investments. Investment in foreign securities also may result in higher expenses
due to the cost of converting foreign currency to U.S. dollars, the payment of
fixed brokerage commissions on foreign exchanges, which generally are higher
than commissions on U.S. exchanges, and the expense of maintaining securities
with foreign custodians.

Medium-, Lower-Rated and Unrated Securities

     The Portfolio may invest in medium- or lower-rated securities and unrated
securities of comparable quality. Generally, these securities offer a higher
current yield than is offered by higher-rated securities, but also will likely
have some quality and protective characteristics that, in the judgment of the
rating organizations, are outweighed by large uncertainties or major risk
exposures to adverse conditions and are predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in accordance with
the terms of the obligation. The market values of certain of these securities
also tend to be more sensitive to individual corporate developments and changes
in economic conditions than higher-quality securities. In addition, medium- and
lower-rated securities and comparable unrated securities generally present a
higher degree of credit risk. Issuers of medium- and lower-rated, and comparable
unrated, securities are often highly leveraged and may not have more traditional
methods of financing available to them so that their ability to service their
debt obligations during a major economic downturn or during sustained periods of
rising interest rates may be impaired. The risk of loss due to default by such
issuers is significantly greater because medium- and lower-rated securities and
unrated securities generally are unsecured and frequently are subordinated to
the prior payment of senior indebtedness. In light of these risks, the Adviser,
in evaluating the creditworthiness of an issue, whether rated or unrated, will
take various factors established by the Fund's Board of Trustees into
consideration, which may include, as applicable, the issuer's financial
resources, its sensitivity to economic conditions and trends, the operating
history of and the community support for the facility financed by the issue, the
ability of the issuer's management and regulatory matters.

     The markets in which medium- and lower-rated or comparable unrated
securities are traded generally are more limited than those in which
higher-rated securities are traded. The existence of limited markets for these
securities may restrict the availability of securities for the Portfolio to
purchase and also may have the effect of limiting the ability of the Portfolio
to (a) obtain accurate market quotations for purposes of valuing securities and
calculating net asset value and (b) sell securities at their fair value either
to meet redemption requests or to respond to changes in the economy or the
financial markets. The market for medium-and lower-rated, and comparable
unrated, securities is relatively new and has not fully weathered a major
economic recession. Any such recession, however, would disrupt severely the
market for such securities and adversely affect the value of such securities,
and could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon.

     Fixed-income securities, including medium-and lower-rated, and comparable
unrated, securities, frequently have call or buy-back features that permit their
issuers to call or repurchase the securities from their holders, such as the
Portfolio. If an issuer exercises these rights during periods of declining
interest rates, the Portfolio may have to replace the security with a lower
yielding security resulting in a decreased return to the Portfolio.


--------------------------------------------------------------------------------
10
<PAGE>
 
     The market value of securities in lower rating categories is more volatile
than that of higher quality securities, and the markets in which medium- and
lower-rated or comparable unrated securities are traded are more limited than
those in which higher-rated securities are traded. Adverse publicity and
investor perceptions also may have a negative impact on the value and liquidity
of lower-rated, high yield securities, especially in a limited trading market.

     Subsequent to its purchase by the Portfolio, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Portfolio. Neither event will require sale of such securities by
the Portfolio involved, but the Portfolio's investment adviser will consider
such event in its determination of whether the Portfolio should continue to hold
the securities.

     Securities that are rated Ba by Moody's or BB by S&P have speculative
characteristics with respect to their capacity to pay interest and repay
principal. Securities that are rated B generally lack characteristics of the
desirable investment and assurance of interest and principal payments over any
long period of time may be small. Securities that are rated Caa or CCC are of
poor standing. These issues may be in default or present elements of danger with
respect to payment of principal or interest.

Securities of Unseasoned Issuers

     The Portfolio may invest in securities of unseasoned issuers, which may
have limited marketability and, therefore, may be subject to wide fluctuations
in market value. In addition, certain securities may lack a significant
operating history and may be dependent on products or services without an
established market share.

Year 2000

     The investment management services provided to the Fund by the Adviser and
the services provided to shareholders by Smith Barney, the Fund's distributor,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot recognize the year 2000, but revert to 1900
or some other date, due to the manner in which dates were encoded and
calculated. That failure could have a negative impact on the Fund's operations,
including the handling of securities trades, pricing and account services. The
Adviser and Smith Barney have advised the Fund that they have been reviewing all
of their computer systems and actively working on necessary changes to their
systems to prepare for the year 2000 and except that their systems will be
compliant before that date. In addition, the Adviser has been advised by the
Fund's custodian, transfer agent and accounting service agent that they are also
in the process of modifying their systems with the same goal. There can,
however, be no assurance that the Adviser, Smith Barney or any other service
provider will be successful, or that interaction with other non-complying
computer systems will not impair Fund services at that time.


                             PORTFOLIO TRANSACTIONS
================================================================================

     All orders for transactions in securities, options, futures contracts and
options on futures contracts on behalf of the Portfolio will be placed by the
Adviser with broker-dealers that the Adviser selects, including Smith Barney and
other affiliated brokers. The Portfolio may utilize Smith Barney or a Smith
Barney-affiliated broker in connection with a purchase or sale of securities
when the Adviser believes that the broker's charge for the transaction does not
exceed usual and customary levels. The same standard applies to the use of Smith
Barney or a Smith Barney-affiliated broker as a commodities broker in connection
with entering into futures contracts and options on futures contracts.


--------------------------------------------------------------------------------
                                                                              11
<PAGE>
 
                                 NET ASSET VALUE
================================================================================

     The value of an individual share of the Portfolio is the net asset value of
that share. The net asset value per share of the Portfolio will be calculated
each day, Monday through Friday, except on days when the New York Stock
Exchange, Inc. (the "NYSE") is closed. The NYSE is currently scheduled to be
closed on New Year's Day, President's Day, Martin Luther King, Jr. 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. Net asset value per share of the
Portfolio is determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time).

     Net asset value per share is computed by dividing the value of the
Portfolio's net assets by the total number of its shares outstanding. Generally,
the Portfolio's investments are valued at market value or, in the absence of a
market value with respect to any portfolio securities, at fair value as
determined by or under the direction of the Fund's Board of Trustees. A security
that is primarily traded on a U.S. or foreign exchange (including securities
traded through the National Market System) is valued at the last sale price on
that exchange or, if there were no sales during the day, at the current quoted
bid price. Portfolio securities that are primarily traded on foreign exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time a
value was so established is likely to have changed the value, then the fair
value of those securities will be determined by consideration of other factors
by or under the direction of the Fund's Board of Trustees or its delegates.
Over-the-counter securities that are not traded through the National Market
System and securities listed or traded on certain foreign exchanges whose
operations are similar to the U.S. over-the-counter market are valued on the
basis of the bid price at the close of business on each day. An option is
generally valued at the last sale price or, in the absence of a last sale price,
the last offer price. Investments in U.S. government securities (other than
short-term securities) are valued at the average of the quoted bid and asked
prices in the over-the-counter market. Short-term investments that mature in 60
days or less are valued at amortized cost when the Fund's Board of Trustees
determines that this constitutes fair value. The value of a futures contract
equals the unrealized gain or loss on the contract, which is determined by
marking the contract to the current settlement price for a like contract
acquired on the day on which the futures contract is being valued. A settlement
price may not be used if the market makes a limit move with respect to the
security, index or currency underlying the futures contract. In such event, the
futures contract will be valued at a fair market price to be determined by or
under the direction of the Fund's Board of Trustees. Further information
regarding the Fund's valuation policies is contained in the SAI.

                               HOW TO USE THE FUND
================================================================================

Investing in the Fund

     In order to invest in shares of the Fund, an investor must be a variable
annuity or variable life insurance contract owner. For further information
regarding a Contract, see the description provided in the Contract prospectus.

Sales Charges and Surrender Charges

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


--------------------------------------------------------------------------------
12
<PAGE>
 
Redeeming and Exchanging Shares

     A participating insurance company will redeem shares of the Portfolio in
response to full or partial surrenders under the terms of the Contract.
Generally, payment upon redemption will be made within three days after
receiving a valid redemption request (unless redemption is suspended or payment
is delayed as permitted in accordance with SEC regulations). The Portfolio will
use the net asset value at the close of trading on the NYSE on the day the
notice of surrender or transfer is received. If the request is received after
the close of trading on the NYSE, the shares will be redeemed at the net asset
value at the close of the next business day. The value of any redeemed shares
may be more or less than their original purchase price.

     A detailed description of how to surrender a Contract is included in the
Contract prospectus.

                               DIVIDENDS AND TAXES
================================================================================

Dividends

     Net Investment Income. Dividends and distributions will be automatically
reinvested, without a sales charge, in the shareholder's account at net asset
value in additional shares of the Portfolio, unless the shareholder instructs
the Portfolio to pay all dividends and distributions in cash. Net investment
income, including dividends on stocks and interest on bonds or other securities
the Fund holds, is distributed to the shareholders of the Portfolio annually.

     Capital Gains. Distributions of any net realized capital gains of the
Portfolio will be paid annually shortly after the close of the fiscal year in
which they are earned.

Taxes

     In the opinion of counsel to the Fund, the Portfolio will be treated as a
separate taxpayer with the result that, for federal income tax purposes, the
amounts of investment income and capital gains earned will be determined on a
Portfolio (rather than on a Fund-wide) basis.

     The Fund intends that the Portfolio will separately meet the requirements
for qualification each year as a "regulated investment company" within the
meaning of the Code. In order to qualify as a regulated investment company, the
Portfolio must meet certain income and diversification tests. As a regulated
investment company and provided certain distribution requirements are met, the
Portfolio will not be subject to federal income tax on its net investment income
and net capital gains that it distributes to its shareholders.

     Dividends paid by the Portfolio from taxable investment income and
distributions of short-term capital gains will be treated as ordinary income in
the hands of the shareholders for federal income tax purposes, whether received
in cash or reinvested in additional shares. Distributions of net long-term
capital gains will be treated as long-term capital gains in the hands of the
shareholders, if certain notice and designation requirements are satisfied,
whether paid in cash or reinvested in additional shares, regardless of the
length of time that the investor has held shares of the Portfolio. The Fund has
been informed that the separate accounts represented by the Contracts should,
for federal income tax purposes, be considered the shareholders of the
Portfolio.

     To comply with regulations under Section 817(h) of the Code, the Portfolio
will be required to diversify its investments so that on the last day of each
calendar quarter, or within 30 days thereafter, no more than 55% of the value of
its assets is represented by any one investment, no more than 70% is represented
by any two


--------------------------------------------------------------------------------
                                                                              13
<PAGE>
 
investments, no more than 80% is represented by any three investments and no
more than 90% is represented by any four investments. Generally, all securities
of the same issuer are treated as a single investment. For the purposes of
Section 817(h) of the Code, obligations of the United States Treasury and each
U.S. government agency or instrumentality are treated as securities of separate
issuers.

     The Treasury Department has indicated that it may issue future
pronouncements addressing the circumstances in which a variable contract owner's
control of the investments of a separate account may cause the variable contract
owner, rather than the insurance company, to be treated as the owner of the
assets held by the separate account. If the variable contract owner is
considered the owner of the securities underlying the separate account, income
and gains produced by those securities would be included currently in the
variable contract owner's gross income. It is not known what standards will be
set forth in such pronouncements or when, if ever, these pronouncements may be
issued.

     In the event that rules or regulations are adopted, there can be no
assurance that the Portfolio will be able to operate as currently described in
this Prospectus, or that the Fund will not have to change the investment goal or
investment policies of the Portfolio. While a Portfolio's investment goal is
fundamental and may be changed only by a vote of a majority of the Portfolio's
outstanding shares, the Fund's Board of Trustees reserves the right to modify
the investment policies of the Portfolio as necessary to prevent any such
prospective rules and regulations from causing a Contract owner to be considered
the owner of the shares of the Portfolio.

     Reference is made to the Contract prospectus for information regarding the
federal income tax treatment of distributions.

                             MANAGEMENT OF THE FUND
================================================================================

Board of Trustees

     Overall responsibility for management and supervision of the Fund and its
portfolios, including the Portfolio, rests with the Fund's Board of Trustees.
The Trustees approve all significant agreements between the Fund and the persons
or companies that furnish services to the Fund and the Portfolio, including
agreements with the Adviser, the Fund's custodian, transfer agent and
distributor. The day-to-day operations of the Portfolio are delegated to the
Adviser. The identities and backgrounds of the Trustees and officers of the
Fund, together with certain additional information about them, are contained in
the SAI.

Investment Advisers and Administrator

     Subject to the supervision and direction of the Fund's Board of Trustees,
the Adviser manages the Portfolio in accordance with the Portfolio's goal and
stated investment policies, makes investment decisions for the Portfolio, places
orders to purchase and sell securities on behalf of the Portfolio and employs
professional portfolio managers and securities analysts who provide research
services to the Portfolio.

     The Adviser, located at 388 Greenwich Street, New York, New York 10013,
provides investment advisory and management services to investment companies
affiliated with Holdings. The Adviser renders investment advice to investment
companies that had aggregate assets under management as of March 31, 1998, in
excess of $100.5 billion.

     The Adviser is paid an aggregate fee of 55% of the Portfolio's average net
assets. MMC, as the Administrator of the Portfolio, is paid a fee at the annual
percentage of 0.20% of the value of the Portfolio's average net assets.


--------------------------------------------------------------------------------
14
<PAGE>
 
                              PORTFOLIO MANAGEMENT
================================================================================

     John G. Goode is Vice President and Investment Officer of the Fund and
Chairman and Chief Investment Officer of the Davis Skaggs Investment Management
division of the Adviser.

     The Fund's management discussion and analysis, and additional performance
information regarding the portfolios of the Fund, including the Portfolio,
during the fiscal year ended December 31, 1997, is included in the Annual Report
dated December 31, 1997. A copy of the Annual Report may be obtained upon
request without charge from a representative of a participating life insurance
company or a Smith Barney Financial Consultant or by writing or calling the Fund
at the address or phone number listed on page one of this Prospectus.


                          CUSTODIAN AND TRANSFER AGENT
================================================================================

     PNC, located at 17th and Chestnut Streets, Philadelphia, Pennsylvania
19103, acts as custodian of the Fund's investments generally.

     First Data Investor Services Group, Inc., located at Exchange Place,
Boston, Massachusetts 02109, acts as the Fund's transfer and dividend paying
agent.

                                   DISTRIBUTOR
================================================================================

     Smith Barney, a subsidiary of Holdings, located at 388 Greenwich Street,
New York, New York, 10013, serves as distributor of the Fund's shares, for which
it receives no separate fee from the Fund. Insurance companies offering the
Contracts pay Smith Barney for the services it provides and the expenses it
bears in distributing the Contracts, including payment of commissions for sales.
Insurance companies offering the Contracts will bear certain additional costs in
connection with the offering of the Portfolio's shares, including the costs of
printing and distributing prospectuses, statements of additional information and
sales literature.


                             ADDITIONAL INFORMATION
================================================================================

Formation

     The Fund was organized on May 13, 1991, under the laws of the Commonwealth
of Massachusetts and is a business entity commonly known as a "Massachusetts
business trust." The Fund is registered with the SEC as a diversified, open-end
management investment company, as defined in the 1940 Act. The Fund commenced
operations on October 16, 1991, under the name Shearson Series Fund. On July 30,
1993, October 14, 1994 and July 24, 1997, the Fund changed its name to Smith
Barney Shearson Series Fund, Smith Barney Series Fund, and to Greenwich Street
Series Fund, respectively.

Shares of Beneficial Interest

     The Fund offers shares of beneficial interest of separate series with a par
value of $.001 per share. Shares of ten series have been authorized. When
matters are submitted for shareholder vote, shareholders of each portfolio will
have one vote for each full share owned and proportionate, fractional votes for
fractional shares held.

     For a discussion of the rights of Contract owners concerning the voting of
shares, please refer to the Contract prospectus. Generally, shares of the Fund
vote by individual portfolio on all matters except (a)


--------------------------------------------------------------------------------
                                                                              15
<PAGE>
 
matters affecting only the interests of more than one of the portfolios, in
which case shares of the affected Portfolios would be entitled to vote, or (b)
when the 1940 Act requires that shares of the portfolios be voted in the
aggregate. All shares of the Fund vote together as one series for the election
of Trustees. There will normally be no meetings of shareholders for the purpose
of electing Trustees unless less than a majority of the Trustees holding office
have been elected by shareholders, at which time the Trustees then in office
will call a shareholders' meeting for the election of Trustees. Any Trustee may
be removed from office upon the vote of shareholders holding at least two-thirds
of the Fund's outstanding shares at a meeting called for that purpose. The
Trustees are required to call such a meeting upon the written request of
shareholders holding at least 10% of the Fund's outstanding shares. In addition,
shareholders who meet certain criteria will be assisted by the Fund in
communicating with other shareholders in seeking the holding of such a meeting.

     The participating life insurance company will send owners of the Contract a
semi-annual report and an audited annual report, each of which includes a list
of the investment securities held by the Portfolio at the end of the period
covered. Contract owners may make inquiries regarding the Portfolio to a
representative of the participating life insurance company or their Smith Barney
Financial Consultant.

                           THE PORTFOLIO'S PERFORMANCE
================================================================================

Total Return

     From time to time, the Portfolio may advertise its "average annual total
return" over various periods of time. Such total return figures show the average
percentage change in value of an investment in the Portfolio from the beginning
date of the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Portfolio's shares and assume that any
income dividends and/or capital gains distributions made by the Portfolio during
the period were reinvested in shares of the Portfolio. Figures will be given for
recent one-, five- and ten-year periods (if applicable), and may be given for
other periods as well (such as from commencement of the Portfolio's operations,
or on a year-by-year basis). When considering average annual total return
figures for periods longer than one year, it is important to note that the
Portfolio's annual total return for any one year in the period might have been
greater or less than the average for the entire period. The Portfolio also may
use "aggregate" total return figures for various periods, representing the
cumulative change in value of an investment in the Portfolio for the specific
period (again reflecting changes in the Portfolio's share prices and assuming
reinvestment of dividends and distributions). Aggregate total returns may be
shown by means of schedules, charts or graphs and may indicate subtotals of the
various components of total return (i.e., change in value of initial investment,
income dividends and capital gains distributions).

     It is important to note that yield and total return figures are based on
historical earnings and are not intended to indicate future performance. The SAI
describes the method used to determine the Portfolio's yield and total return.
Shareholders may make inquiries regarding the Portfolio, including current yield
quotations or total return figures, to a representative of a participating life
insurance company or their Smith Barney Financial Consultant.

     In reports or other communications to shareholders or in advertising
material, the Portfolio may compare its performance with that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc. or
similar independent services that monitor the performance of mutual funds or
with other appropriate indices of investment securities, such as the S&P 500,
Salomon Brothers World Government Bond Index, Lehman Brothers Government Bond
Index and Lehman Brothers Mortgage-Backed Securities Index, with the Consumer
Price Index, Dow Jones Industrial Average or NASDAQ, or with investment or
savings vehicles. The performance information also may include evaluations of
the Portfolio published by nationally recognized


--------------------------------------------------------------------------------
16
<PAGE>
 
ranking services and by financial publications that are nationally recognized,
such as Barron's, Business Week, Forbes, Fortune, Institutional Investor,
Investor's Business Daily, Kiplinger's Personal Finance Magazine, Money,
Morningstar Mutual Fund Values, Mutual Fund Forecaster, The New York Times,
Stranger's Investment Advisor, USA Today, U.S. News & World Report and The Wall
Street Journal. Such comparative performance information will be stated in the
same terms in which the comparative data or indices are stated. Any such
advertisement also would include the standard performance information required
by the SEC as described above. For these purposes, the performance of the
Portfolio, as well as the performance of other mutual funds or indices, do not
reflect sales charges, the inclusion of which would reduce the Portfolio's
performance.

     The Portfolio may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.

     A Contract owner's actual return on its investment in this Portfolio will
be affected by Contract charges imposed by the separate accounts of the
participating life insurance companies.


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                                                                              17
<PAGE>
 
                       This page intentionally left blank
<PAGE>
 
================================================================================








                                   PROSPECTUS

L-12728                      Smith Barney Series Fund                SB Ed. 4-98





<PAGE>
 
   Travelers Life & Annuity [LOGO]            [GRAPHIC APPEARS HERE]
A Member of Travelers Group





===========================================
Underlying Fund                      
Prospectuses
===========================================
Greenwich Street Series Fund
Appreciation Portfolio       APRIL 30, 1998
===========================================
<PAGE>
 
                         GREENWICH STREET SERIES FUND
                            Appreciation Portfolio
                             388 Greenwich Street
                           New York, New York 10013
                   Contract Owner Inquiries: (800) 842-8573
                        Prospectus dated April 30, 1998


           Greenwich Street Series Fund (the "Fund") is a diversified, open-end
management investment company, with ten portfolios (the "Portfolios"), each with
separate goals and investment policies. Shares of the Appreciation Portfolio
(the "Portfolio") may be acquired only by investing in a qualifying variable
annuity or variable life insurance contract (a "Contract") offered by
participating life insurance companies.

           The Portfolio's goal is long-term appreciation of capital. The
Portfolio invests primarily in equity securities.

           There can be no guarantee that the Portfolio's goal will be achieved
because any investment involves risks. Discussions of the investments which the
Portfolio will make, and their related risks, are found in the sections of this
Prospectus entitled "Investment Goal and Policies of the Portfolio," "Additional
Investments" and "Special Considerations and Risk Factors."

           This Prospectus, which sets forth certain information about the Fund
and the Portfolio that you should know before investing, should be read in
conjunction with the applicable Contract prospectus and retained for future
reference. Additional information about the Fund and the Portfolio has been
filed with the Securities and Exchange Commission (the "SEC") in a document
entitled "Statement of Additional Information," (the "SAI") dated April 30,
1998, as amended or supplemented from time to time, which is available upon
request and without charge by calling or writing the Fund at the telephone
number or address set forth above or by contacting a representative of a
participating life insurance company or a Smith Barney Financial Consultant.

           The Fund is responsible only for statements that are included in this
Prospectus, the SAI or in authorized sales material. The SAI is incorporated by
reference into this Prospectus in its entirety. You cannot buy shares of the
Fund directly. You can invest in the Fund by buying separate accounts which fund
certain variable annuity and variable life insurance contracts (each referred to
herein as a "Contract") offered by designated insurance companies.

           THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS OF THE
CONTRACT. BOTH PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE
REFERENCE.

           THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.



                 The date of this Prospectus is April 30, 1998

--------------------------------------------------------------------------------
<PAGE>
 
                                   CONTENTS
================================================================================

SUMMARY............................................................  1

EXPENSES OF THE PORTFOLIO..........................................  2

FINANCIAL HIGHLIGHTS...............................................  2

INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO......................  3

CERTAIN INVESTMENT STRATEGIES AND GUIDELINES.......................  3

ADDITIONAL INVESTMENTS.............................................  4

SPECIAL CONSIDERATIONS AND RISK FACTORS............................  6

PORTFOLIO TRANSACTIONS.............................................  7

NET ASSET VALUE....................................................  7

HOW TO USE THE FUND................................................  8

DIVIDENDS AND TAXES................................................  8

MANAGEMENT OF THE FUND............................................. 10

PORTFOLIO MANAGEMENT............................................... 10

CUSTODIAN AND TRANSFER AGENT....................................... 10

DISTRIBUTOR........................................................ 11

ADDITIONAL INFORMATION............................................. 11

THE PORTFOLIO'S PERFORMANCE........................................ 12


--------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI or the
Fund's official sales literature in connection with the offering of the Fund's
shares, and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Fund. This Prospectus does
not constitute an offer in any state in which, or to any person to whom, the
offer may not lawfully be made.
--------------------------------------------------------------------------------

================================================================================
<PAGE>
 
                                    SUMMARY
================================================================================

        The following summary is qualified in its entirety by detailed
information appearing elsewhere in this Prospectus and in the SAI. Cross-
references in this summary are to headings in the Prospectus.

The Portfolio

        The Portfolio is one of ten Portfolios of the Fund, a diversified, open-
end management investment company registered under the Investment Company Act of
1940 as amended (the "1940 Act"). The Portfolio's investment objective is long-
term appreciation of capital. The Portfolio invests primarily in equity and
equity-related securities that are believed to afford attractive opportunities
for appreciation. See "Additional Information." 

Management 

        Mutual Management Corp., formerly known as Smith Barney Mutual Funds
Management Inc. ("MMC," the "Adviser" or the "Administrator") serves as the
Portfolio's investment adviser and administrator. MMC is a wholly owned
subsidiary of Salomon Smith Barney Holdings Inc. ("Holdings"), which in turn is
a wholly owned subsidiary of Travelers Group Inc., ("Travelers") a diversified
financial services holding company engaged, through its subsidiaries,
principally in four business segments: Investment Services including Asset
Management, Consumer Finance Services, Life Insurance Services and Property &
Casualty Insurance Services. See "Management of the Fund."

Buying Shares 

        Shares of the Portfolio are offered only to Contract owners as set forth
in the specific Contract prospectus. A Contract owner can direct the allocation
of part or all of his or her net purchase payment to the Portfolio. In the
future, the Fund may establish additional portfolios. See "How to Use the Fund."

Redeeming 

        Shares Shares may be redeemed as described in the applicable Contract
prospectus. See "How to Use the Fund."

Risk Factors and Special Considerations 

        Investors in the Portfolio should be aware of the following general
observations. The market value of fixed-income securities, which may constitute
a temporary part of the investments of the Portfolio, may vary inversely in
response to changes in prevailing interest rates. The non-publicly traded and
illiquid securities which the Portfolio may hold may have to be sold at lower
prices, or may remain unsold, when the Portfolio desires to dispose of them. The
foreign securities, including securities of developing countries, in which the
Portfolio may invest may be subject to certain risks in addition to those
inherent in U.S. investments. The Portfolio may make certain investments and
employ certain investment techniques that involve other risks, including
entering into repurchase agreements and lending portfolio securities. These
risks are described under "Investment Goal and Policies of the Portfolio" and
"Special Considerations and Risk Factors."

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

                                                                               1
<PAGE>
 
                           EXPENSES OF THE PORTFOLIO
================================================================================

        The Portfolio will bear its own expenses. Operating expenses for the
Portfolio generally will consist of all costs not specifically borne by the
Adviser and Administrator or the Fund's distributor, including
organizational costs, investment advisory and administration fees, fees
for necessary professional and brokerage services, fees for any pricing
service, the costs of regulatory compliance and costs associated with
maintaining legal existence and shareholder relations. From time to time,
the Adviser and/or Administrator of the Portfolio may waive all or a
portion of the fees payable to it by the Portfolio, thereby reducing the
expenses of the Portfolio. A detailed description of the expenses involved
in investing in a Contract and the Portfolio is included in the Contract
prospectus.


                             FINANCIAL HIGHLIGHTS
================================================================================

        The following information for each year in the three-year period ended
December 31, 1997 has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Fund's Annual Report dated
December 31, 1997. The following information for each of the years in the four
years ended December 31, 1994 has been audited by other independent auditors.
The information below should be read in conjunction with the financial
statements and related notes that also appear in the Fund's 1997 Annual Report
to Shareholders which is incorporated by reference into the SAI.

  For a share of capital stock outstanding throughout each year:

<TABLE>
<CAPTION> 

Appreciation Portfolio                              1997      1996      1995       1994      1993      1992        1991(1)
============================================================================================================================
<S>                                                <C>       <C>       <C>        <C>        <C>       <C>         <C> 
Net Asset Value, Beginning of Year                 $15.86    $14.39    $11.54     $11.80     $11.13    $10.49      $10.00
Income (Loss) From Operations:
   Net investment income(2)                          0.24      0.27      0.23       0.20       0.15      0.11        0.01  
   Net realized and unrealized gain (loss)           3.90      2.60      3.04      (0.32)      0.63      0.53        0.48 
----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations                  4.14      2.87      3.27      (0.12)      0.78      0.64        0.49
----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
   Net Investment income                            (0.21)    (0.25)    (0.21)     (0.14)     (0.11)     0.00*         --
   Net realized gains                               (1.06)    (1.15)    (0.21)        --         --        --          --
----------------------------------------------------------------------------------------------------------------------------
Total Distributions                                 (1.27)    (1.40)    (0.42)     (0.14)     (0.11)    (0.00)*        --
----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                       $18.73    $15.86    $14.39     $11.54     $11.80    $11.13      $10.49
----------------------------------------------------------------------------------------------------------------------------
Total Return                                        26.39%    19.77%    28.84%     (1.12)%     7.03%     6.13%       4.90%++
----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (millions)                   $144      $101       $94        $81        $78       $53         $11
----------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
   Expenses                                          0.80%     0.85%     0.97%      0.88%      1.01%     1.00%       0.94%+
   Net investment income                             1.68%     1.59      1.65       1.75       1.35      1.61        3.00+
----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate                                34%       39%       43%        61%        33%       14%
----------------------------------------------------------------------------------------------------------------------------
Average Commissions Paid on Equity
   Security Transactions(3)                         $0.06     $0.06     $0.06         --         --        --          --
============================================================================================================================
</TABLE> 

(1) For the period from October 16, 1991 (commencement of operations) to 
    December 31, 1991.
(2) The Investment Adviser waived all or part of its fees for the year ended
    December 31, 1992 and the period ended December 31, 1991. In addition, IDS
    Life reimbursed expenses of $29,950 and $7,264 for the year ended December
    31, 1992 and the period ended December 31, 1991. If such fees had not been
    waived and expenses reimbursed, the per share effect on net investment
    income would have been a decrease of $0.01 and the expense ratio would have
    been 1.16% and 3.64%.
(3) As of September 1995 the Securities and Exchange Commission instituted new
    guidelines requiring disclosure of average commissions per share.
 +  Total return is not annualized, as it may not be representative of the total
    return for the year.
 ++ Annualized.
 *  Amount represents less than $0.01.

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

2
<PAGE>
 
                 INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO
================================================================================

        Set forth below is a description of the investment goal and policies of
the Portfolio. The investment goal of the Portfolio may not be changed without
the approval of the holders of a majority (as defined in the 1940 Act) of the
outstanding shares of the Portfolio. There can, of course, be no guarantee that
the Portfolio will achieve its investment goal. Additional information about
investment strategies that the Portfolio may employ and investment policies
mentioned below appears in the SAI. A description of the corporate bond and
commercial paper rating systems of Standard & Poor's Ratings Group ("S&P"),
Moody's Investors Service, Inc. ("Moody's") and other nationally recognized
statistical rating organizations ("NRSROs") is also contained in the SAI.


Investment Goal 

        The Portfolio's goal is long-term appreciation of capital. 

Investment Policies 

        The Portfolio will attempt to achieve its goal by investing primarily
in equity and equity-related securities that are believed to afford attractive
opportunities for appreciation. For example, the Portfolio may invest in the
securities of companies whose earnings are expected to increase, companies whose
securities prices are lower than are believed justified in relation to their
underlying assets or earning power or companies in which changes are anticipated
that would result in improved operations or profitability. The Portfolio's
investments will be broadly diversified among different industries. In analyzing
securities for investment, the Adviser will consider many different factors,
including past growth records, management capability, future earnings prospects
and technological innovation, as well as general market and economic factors
that can influence the price of securities.

        Under normal market conditions, substantially all, but not less than
65%, of the Portfolio's assets will consist of common stocks, but the Portfolio
also may hold securities convertible into common stocks and warrants. When the
Adviser believes that a conservative or defensive investment posture is
warranted or when opportunities for capital appreciation do not appear
attractive, the Portfolio may invest temporarily in debt obligations, preferred
securities or short-term money market instruments. The Portfolio may, from time
to time, lend its portfolio securities and invest in securities of non-U.S.
issuers in the form of depositary receipts representing interests in the common
stocks of foreign issuers.


                 CERTAIN INVESTMENT STRATEGIES AND GUIDELINES 
================================================================================

        In attempting to achieve its investment goals, the Portfolio may employ,
among others, one or more of the strategies set forth below. More detailed
information concerning these strategies and their related risks is contained in
the SAI.

        In the future, the Fund may desire to employ additional investment
strategies, including such hedging strategies as entering into futures contracts
and related options.

        Up to 10% of the total assets of the Portfolio may be invested in
securities with contractual or other restrictions on resale and other
instruments that are not readily marketable, including repurchase agreements
with maturities greater than seven days and time deposits maturing in more than
seven calendar days. The

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

                                                                               3
<PAGE>
 
Portfolio may borrow from banks for temporary or emergency purposes, but not for
leverage, in an amount up to 30% of its assets, and may pledge its assets to the
same extent in connection with such borrowings. Whenever borrowings from banks
exceed 5% of the value of the assets of the Portfolio, the Portfolio will not
make any additional investments. Except for the limitations on borrowing, the
investment guidelines set forth in this paragraph may be changed at any time
without shareholder consent by vote of the Board of Trustees of the Fund. A
complete list of investment restrictions that identifies additional restrictions
that cannot be changed without the approval of a majority of the Portfolio's
outstanding shares is contained in the SAI. 

Repurchase Agreements 

        The Portfolio may engage in repurchase agreement transactions on
portfolio securities, in each case with banks which are the issuers of
instruments acceptable for purchase by the Portfolio and with certain dealers
listed on the Federal Reserve Bank of New York's list of reporting dealers.
Under the terms of a typical repurchase agreement, the Portfolio would acquire
an underlying debt obligation for a relatively short period (usually not more
than one week) subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Portfolio's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Portfolio's holding period. The value of the underlying securities
will be monitored by the Portfolio's investment adviser to ensure that it at
least equals at all times the total amount of the repurchase obligation,
including interest. The Portfolio bears a risk of loss in the event that the
other party to a repurchase agreement defaults on its obligations and the
Portfolio is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the value of
the underlying securities during the period while the Portfolio seeks to assert
these rights. The Portfolio's investment adviser, acting under the supervision
of the Fund's Board of Trustees, reviews on an ongoing basis the value of the
collateral and the creditworthiness of those banks and dealers with which the
Portfolio enters into repurchase agreements to evaluate potential risks. A
repurchase agreement is considered to be a loan collateralized by the underlying
securities under the 1940 Act. 

Lending of Securities 

        Consistent with applicable regulatory requirements, the Portfolio may
lend its portfolio securities to brokers, dealers and other financial
organizations. By lending its securities, the Portfolio 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. Loans of the Portfolio's 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 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
Portfolio.


                            ADDITIONAL INVESTMENTS
================================================================================

Money Market Instruments

        The Portfolio may, as a cash management tool, hold up to 20% of the
value of its total assets in cash and invest in short-term instruments and, for
temporary defensive purposes, may hold cash and invest in short-term instruments
without limitation. Short-term instruments in which the Portfolio may invest
include: U.S. government securities; obligations of banks having at least $1
billion in assets (including certificates of deposit, time deposits and bankers'
acceptances of U.S. or foreign banks, U.S. savings and loan associations

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

4
<PAGE>
 
and similar institutions); commercial paper rated no lower than A-2 by S&P or
Prime-2 by Moody's or the equivalent from another NRSRO or, if unrated, of an
issuer having an outstanding, unsecured debt issue then rated within the two
highest rating categories; and repurchase agreements with respect to any of the
foregoing entered into with banks and non-bank dealers approved by the Fund's
Board of Trustees. 


U.S. Government Securities 

        The U.S. government securities in which the Portfolio may invest
include: direct obligations of the United States Treasury (such as Treasury
Bills, Treasury Notes and Treasury Bonds), and obligations issued by U.S.
government agencies and instrumentalities, including securities that are
supported by the full faith and credit of the United States (such as
certificates issued by GNMA); securities that are supported by the right of the
issuer to borrow from the U.S. Treasury (such as securities of Federal Home Loan
Banks); and securities that are supported only by the credit of the
instrumentality (such as bonds issued by FNMA and FHLMC). Treasury Bills have
maturities of less than one year, Treasury Notes have maturities of one to ten
years and Treasury Bonds generally have maturities of greater than ten years at
the date of issuance.

        The Portfolio may invest up to 5% of its net assets in U.S. government
securities for which the principal repayment at maturity, while paid in U.S.
dollars, is determined by reference to the exchange rate between the U.S. dollar
and the currency of one or more foreign countries ("Exchange Rate-Related
Securities"). Exchange Rate-Related Securities are issued in a variety of forms,
depending on the structure of the principal repayment formula. The principal
repayment formula may be structured so that the securityholder will benefit if a
particular foreign currency to which the security is linked is stable or
appreciates against the U.S. dollar. In the alternative, the principal repayment
formula may be structured so that the securityholder benefits if the U.S. dollar
is stable or appreciates against the linked foreign currency. Finally, the
principal repayment formula can be a function of more than one currency and,
therefore, be designed in either of the aforementioned forms or a combination of
those forms.

        Investments in Exchange Rate-Related Securities entail special risks.
There is the possibility of significant changes in rates of exchange between the
U.S. dollar and any foreign currency to which an Exchange Rate-Related Security
is linked. If currency exchange rates do not move in the direction or to the
extent anticipated at the time of purchase of the security, the amount of
principal repaid at maturity might be significantly below the par value of the
security, which might not be offset by the interest earned by the Portfolio over
the term of the security. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The imposition or modification of foreign
exchange controls by the United States or foreign governments or intervention by
central banks also could affect exchange rates. Finally, there is no assurance
that sufficient trading interest to create a liquid secondary market will exist
for particular Exchange Rate-Related Securities due to conditions in the debt
and foreign currency markets. Illiquidity in the forward foreign exchange market
and the high volatility of the foreign exchange market may from time to time
combine to make it difficult to sell an Exchange Rate-Related Security prior to
maturity without incurring a significant price loss.

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

                                                                               5
<PAGE>
 
                    SPECIAL CONSIDERATIONS AND RISK FACTORS
================================================================================

        This section describes certain investments of the Portfolio and related
risks. Further information concerning investments of the Portfolio and related
risks may be found in the SAI.

Fixed-Income Securities 

        The market value of fixed-income obligations of the Portfolio will be
affected by general changes in interest rates, which will result in increases or
decreases in the value of fixed-income obligations held by the Portfolio. The
market value of the Portfolio's fixed-income obligations can be expected to vary
inversely in relation to changes in prevailing interest rates. In addition,
fixed-income securities in which the Portfolio may invest may not yield as high
a level of current income as might be achieved by investing in securities with
less liquidity and safety and longer maturities.

Non-Publicly Traded and Illiquid Securities 

        The Portfolio may purchase securities that are not publicly traded.
The sale of securities that are not publicly traded is typically restricted
under federal securities laws. As a result, the Portfolio may be forced to sell
these securities at less than fair market value or may not be able to sell them
when the Adviser believes it desirable to do so. The Portfolio's investments in
illiquid securities are subject to the risk that should the Portfolio desire to
sell any of these securities when a ready buyer is not available at a price that
the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely affected. 

Foreign Securities 

        The Portfolio may invest in obligations of companies and governments of
foreign nations, which involve certain risks in addition to the usual risks
inherent in U.S. investments. These risks include those resulting from
revaluation of currencies, future adverse political and 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 lack of uniform accounting, auditing and financial
reporting standards or of other regulatory practices and requirements comparable
to those applicable to U.S. companies. The performance of the Portfolio
investing in foreign securities may be adversely affected by fluctuations in
value of one or more foreign currencies relative to the U.S. dollar. Moreover,
securities of many foreign companies may be less liquid and their prices more
volatile than those of securities of comparable U.S. companies. In addition,
with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Portfolio, including the withholding
of dividends. Foreign securities may be subject to foreign government taxes that
could reduce the return on such securities. Changes in foreign currency exchange
rates may affect the value of portfolio securities and the appreciation or
depreciation of investments. Investment in foreign securities also may result in
higher expenses due to the cost of converting foreign currency to U.S. dollars,
the payment of fixed brokerage commissions on foreign exchanges, which generally
are higher than commissions on U.S. exchanges, and the expense of maintaining
securities with foreign custodians.

Year 2000 

        The investment management services provided to the Portfolio by the
Adviser and the services provided to shareholders by Smith Barney, the Fund's
Distributor, depend on the smooth functioning of their computer systems. Many
computer software systems in use today cannot recognize the year 2000, but
revert to 1900 or some other date, due to the manner in which dates were encoded
and calculated. That failure could have

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

6
<PAGE>
 
a negative impact on the Portfolio's operations, including the handling of
securities trades, pricing and account services. The Adviser and Smith Barney
have advised the Portfolio that they have been reviewing all of their computer
systems and actively working on necessary changes to their systems to prepare
for the year 2000 and expect that their systems will be compliant before that
date. In addition, the Adviser has been advised by the Portfolio's custodian,
transfer agent and accounting service agent that they are also in the process of
modifying their systems with the same goal. There can, however, be no assurance
that the Adviser, Smith Barney or any other service provider will be successful,
or that interaction with other non-complying computer systems will not impair
Portfolio services at that time. 


                            PORTFOLIO TRANSACTIONS 
================================================================================

        All orders for transactions in securities on behalf of the Portfolio
will be placed by the Adviser with broker-dealers that the Adviser selects,
including Smith Barney and other affiliated brokers. The Portfolio may utilize
Smith Barney Inc. or a Smith Barney-affiliated broker in connection with a
purchase or sale of securities when the Adviser believes that the broker's
charge for the transaction does not exceed usual and customary levels.


                               NET ASSET VALUE 
================================================================================

        The value of an individual share of the Portfolio is the net asset value
of that share. The net asset value per share of the Portfolio will be calculated
separately on each day, Monday through Friday, except on days when the New York
Stock Exchange, Inc. (the "NYSE") is closed. The NYSE is currently scheduled to
be closed on New Year's Day, Martin Luther King, Jr. Day, President's 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. Net asset value per share of the
Portfolio is determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time).

        Net asset value per share is computed by dividing the value of the
Portfolio's net assets by the total number of its shares outstanding. Generally,
the Portfolio's investments are valued at market value or, in the absence of a
market value with respect to any portfolio securities, at fair value as
determined by or under the direction of the Fund's Board of Trustees. A security
that is primarily traded on a U.S. or foreign exchange (including securities
traded through the National Market System) is valued at the last sale price on
that exchange or, if there were no sales during the day, at the current quoted
bid price. Portfolio securities that are primarily traded on foreign exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time a
value was so established is likely to have changed the value, then the fair
value of those securities will be determined by consideration of other factors
by or under the direction of the Fund's Board of Trustees or its delegates. 
Over-the-counter securities that are not traded through the National Market
System and securities listed or traded on certain foreign exchanges whose
operations are similar to the U.S. over-the-counter market are valued on the
basis of the mean between the bid and asked prices at the close of business on
each day. Investments in U.S. government securities (other than short-term
securities) are valued at the average of the quoted bid and asked prices in the
over-the-counter market. Short-term investments that mature in 60 days or less
are valued at amortized cost when the Fund's Board of Trustees determines that
this constitutes fair value. Further information regarding the Fund's valuation
policies is contained in the SAI.

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

                                                                               7
<PAGE>
 
                              HOW TO USE THE FUND
================================================================================

Investing in the Fund

        Shares of the Fund are currently offered exclusively to Contract owners.
To find out which insurance companies offer Contracts that are eligible to
invest in the Fund, call the Fund at (800) 842-8573. For further information,
see the description provided in the Contract prospectus.

Sales Charges and Surrender Charges 

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


Redeeming and Exchanging Shares 

        The Fund will redeem shares in response to full or partial surrenders of
a Contract or a transfer of money from one Portfolio to another. Information on
how to transfer funds is described in the Contract prospectus. Generally,
payment upon redemption will be made within three business days after receiving
a valid redemption request (unless redemption is suspended or payment is delayed
as permitted in accordance with SEC regulations). The Fund will use the net
asset value at the close of trading on the NYSE on the day the notice of
surrender or transfer is received. If the request is received after the close of
trading on the NYSE, the shares will be redeemed at the net asset value at the
close of the next business day. The value of any redeemed shares may be more or
less than their original purchase price.

        A detailed description of how to surrender the Contract is included in
the Contract prospectus.


                             DIVIDENDS AND TAXES 
================================================================================

Dividends 

        Net Investment Income. Dividends and distributions will be automatically
reinvested, without a sales charge, in the shareholder's account at net asset
value in additional shares of the Portfolio, unless the shareholder instructs
the Portfolio to pay all dividends and distributions in cash. Net investment
income, including dividends on stocks and interest on bonds or other securities
the Fund holds, is distributed to the shareholders of the Portfolio annually.

        Capital Gains. Distributions of any net realized capital gains of the
Portfolio will be paid annually shortly after the close of the fiscal year in
which they are earned.

Taxes 

        In the opinion of counsel to the Fund, the Portfolio will be treated as
a separate taxpayer with the result that, for federal income tax purposes, the
amounts of investment income and capital gains earned will be determined on a
Portfolio (rather than on a Fund-wide) basis.

        The Fund intends that the Portfolio will separately meet the
requirements for qualification each year as a "regulated investment company"
within the meaning of the Internal Revenue Code of 1986, as amended (the

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

8
<PAGE>
 
"Code"). In order to qualify as a regulated investment company, the Portfolio
must meet certain income and diversification tests. As a regulated investment
company and provided certain distribution requirements are met, the Portfolio
will not be subject to federal income tax on its net investment income and net
capital gains that it distributes to its shareholders. 

        Dividends paid by the Portfolio from taxable investment income and
distributions of short-term capital gains will be treated as ordinary income in
the hands of the shareholders for federal income tax purposes, whether received
in cash or reinvested in additional shares. Distributions of net long-term
capital gains will be treated as long-term capital gains in the hands of the
shareholders, if certain notice and designation requirements are satisfied,
whether paid in cash or reinvested in additional shares, regardless of the
length of time the investor has held shares of the Portfolio. The Fund has been
informed that the separate accounts represented by the Contracts should, for
federal income tax purposes, be considered the shareholders of the Portfolio.

        To comply with regulations under Section 817(h) of the Code, the
Portfolio will be required to diversify its investments so that on the last day
of each calendar quarter no more than 55% of the value of its assets is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments and no
more than 90% is represented by any four investments. Generally, all securities
of the same issuer are treated as a single investment. For the purposes of
Section 817(h) of the Code, obligations of the United States Treasury and each
U.S. government agency or instrumentality are treated as securities of separate
issuers.

        The Treasury Department has indicated that it may issue future
pronouncements addressing the circumstances in which a variable contract owner's
control of the investments of a separate account may cause the variable contract
owner, rather than the insurance company, to be treated as the owner of the
assets held by the separate account. If the variable contract owner is
considered the owner of the securities underlying the separate account, income
and gains produced by those securities would be included currently in the
variable contract owner's gross income. It is not known what standards will be
set forth in such pronouncements or when, if at all, these pronouncements may be
issued.

        In the event that rules or regulations are adopted, there can be no
assurance that the Portfolio will be able to operate as currently described in
this Prospectus, or that the Fund will not have to change the investment
goal or investment policies of the Portfolio. While the Portfolio's investment
goal is fundamental and may be changed only by a vote of a majority of the
Portfolio's outstanding shares, the Fund's Board of Trustees reserves the right
to modify the investment policies of the Portfolio as necessary to prevent any
such prospective rules and regulations from causing a Contract owner to be
considered the owner of the shares of the Portfolio. 

        Reference is made to the Contract prospectus for information regarding
the federal income tax treatment of distributions.

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

                                                                               9
<PAGE>
 
                            MANAGEMENT OF THE FUND
================================================================================

Board of Trustees

        Overall responsibility for management and supervision of the Fund and
the Portfolio rests with the Fund's Board of Trustees. The Trustees approve all
significant agreements between the Fund and the persons or companies that
furnish services to the Fund and the Portfolio, including agreements with the
Adviser and Administrator of the Portfolio and with the Fund's custodian,
transfer agent and distributor. The day-to-day operations of the Portfolio are
delegated to the Adviser and Administrator of the Portfolio. The identities and
backgrounds of the Trustees and officers of the Fund, together with certain
additional information about them, are contained in the SAI.

Investment Adviser and Administrator 

        Subject to the supervision and direction of the Fund's Board of
Trustees, the Adviser manages the Portfolio in accordance with its goal and
stated investment policies, makes investment decisions for the Portfolio, places
orders to purchase and sell securities on behalf of the Portfolio and employs
professional portfolio managers and securities analysts who provide research
services to the Portfolio.

        MMC, located at 388 Greenwich Street, New York, New York 10013, provides
investment advisory and management services to investment companies affiliated
with Holdings. MMC renders investment advice to investment companies that had
aggregate assets under management as of March 31, 1998, of approximately $100.5
billion.

        The Adviser is paid an aggregate fee of 0.55% of the Portfolio's average
net assets. MMC, as the Administrator of the Portfolio, is paid a fee at the
annual percentage of 0.20% of the value of the Portfolio's average net assets.

        The management fee paid by the Portfolio is higher than
those fees paid by most other investment companies, but not necessarily higher
than those paid by funds with similar investment objectives and policies. See
"Management of the Fund." 


                             PORTFOLIO MANAGEMENT 
================================================================================

        Harry D. Cohen is a Vice President and Investment Officer of the Fund
and a Managing Director of Smith Barney. Prior to July 1993, Mr. Cohen served as
Executive Vice President of Shearson Lehman Brothers Inc. 

        The Fund's management discussion and analysis, and additional
performance information regarding the Portfolios during the fiscal year ended
December 31, 1997, is included in the Annual Report, dated December 31, 1997. A
copy of the Annual Report may be obtained upon request without charge from a
representative of a participating life insurance company or from their Smith
Barney Financial Consultant or by writing or calling of the Fund at the address
or phone number listed on the cover page of this Prospectus.


                         CUSTODIAN AND TRANSFER AGENT 
================================================================================

PNC Bank, National Association, located at 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103, acts as custodian of the Portfolio's
investment generally.

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

10
<PAGE>
 
        First Data Investor Services Group, Inc., is located at 4400 Computer
Drive, Westborough, Massachusetts 01581 acts as the Fund's Transfer Agent.

                                  DISTRIBUTOR
================================================================================

        Smith Barney, a subsidiary of Holdings, located at 388 Greenwich Street,
New York, New York 10013, serves as distributor of the Fund's shares, for which
it receives no separate fee from the Fund. Insurance companies offering the
Contracts pay Smith Barney for the services it provides and the expenses it
bears in distributing the Contracts, including payment of commissions for sales.
Insurance companies offering the Contracts will bear certain additional costs in
connection with the offering of the Fund's shares, including the costs of
printing and distributing prospectuses, statements of additional information and
sales literature.


                            ADDITIONAL INFORMATION
================================================================================

Formation

        The Fund was organized on May 13, 1991, under the laws of the
Commonwealth of Massachusetts and is a business entity commonly known as a
"Massachusetts business trust." The Fund is registered with the SEC as a
diversified, open-end management investment company, as defined in the 1940 Act.
The Fund commenced operations on October 16, 1991, under the name Shearson
Series Fund. On July 30, 1993, October 14, 1994 and July 24, 1997 the Fund
changed its name to Smith Barney Shearson Series Fund, Smith Barney Series Fund
and Greenwich Street Series Fund, respectively.

Shares of Beneficial Interest 

        The Fund offers shares of beneficial interest of separate series with a
par value of $0.001 per share. Shares of ten series have been authorized, which
represent the interests in ten portfolios. When matters are submitted for
shareholder vote, shareholders of each portfolio will have one vote for each
full share owned and proportionate, fractional votes for fractional shares held.

        For a discussion of the rights of Contract owners concerning the voting
of shares, please refer to the Contract prospectus.

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

        The participating life insurance company sends each owner of a Contract
a semi-annual report and an annual report, each of which includes a list of the
investment securities held by the Portfolio at the end of the period covered.
Contract owners may make inquiries regarding the Fund and the Portfolio,
including the current performance of the Portfolio, to a representative of a
participating life insurance company or their Smith Barney Financial Consultant.

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

                                                                              11
<PAGE>
 
                          THE PORTFOLIO'S PERFORMANCE
================================================================================

Total Return

        From time to time, the Portfolio may advertise its "average annual total
return" over various periods of time. Such total return figure shows average
percentage change in value of an investment in the Portfolio from the beginning
date of the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Portfolio's shares and assume that any
income dividends and/or capital gains distributions made by the Portfolio during
the period were reinvested in shares of the Portfolio. Figures will be given for
recent one-, five- and ten-year periods (if applicable), and may be given for
other periods as well (such as from commencement of the Portfolio's operations,
or on a year-by-year basis). When considering average annual total figures for
periods longer than one year, it is important to note that the Portfolio's
annual total return for any one year in the period might have been greater than
the average for the entire period. The Portfolio also may use "aggregate" total
return figures for various periods, representing the cumulative change in value
of an investment in the Portfolio for the specific period (again reflecting
changes in the Portfolio's share prices and assuming reinvestment of dividends
and distributions). Aggregate total returns may be shown by means of schedules,
charts or graphs and may indicate subtotals of the various components of total
return (i.e., change in value of initial investment, income dividends and
capital gains distributions). 

        It is important to note that total return figures are based on
historical earnings and are not intended to indicate future performance. The SAI
describes the method used to determine the Portfolio's total return.
Shareholders may make inquiries regarding the Portfolio, including total return
figures, to a representative of a participating life insurance company or their
Smith Barney Financial Consultant.

        In reports or other communications to shareholders or in advertising
material, the Portfolio may compare its performance with that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc. or
similar independent services that monitor the performance of mutual funds or
with other appropriate indices of investment securities, such as the S&P 500,
the Consumer Price Index, Dow Jones Industrial Average or NASDAQ, or with
investment or savings vehicles. The performance information also may include
evaluations of the Portfolio published by nationally recognized ranking services
and by financial publications that are nationally recognized, such as Barron's,
Business Week, Forbes, Fortune, Institutional Investor, Investor's Business
Daily, Kiplinger's Personal Finance Magazine, Money, Morningstar Mutual Fund
Values, Mutual Fund Forecaster, The New York Times, Stranger's Investment
Advisor, USA Today, U.S. News & World Report and The Wall Street Journal. Such
comparative performance information will be stated in the same terms in which
the comparative data or indices are stated. Any such advertisement also would
include the standard performance information required by the SEC as described
above. For these purposes, the performance of the Portfolio, as well as the
performance of other mutual funds or indices, does not reflect sales charges,
the inclusion of which would reduce the Portfolio's performance.

        The Portfolio may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.

        A Contract owner's actual return on its investment in this Portfolio
will be affected by Contract charges imposed by the separate accounts of the
participating life insurance companies.

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

12
<PAGE>
 
                     [This page intentionally left blank]
<PAGE>
 
                     [This page intentionally left blank]
<PAGE>
 
                   Travelers Life & Annuity [LOGO]
L-21162         A Member of Travelers Group          Underlying Fund Prospectus


<PAGE>
 
================================================================================


                                   PROSPECTUS


                          GREENWICH STREET SERIES FUND

                        INTERMEDIATE HIGH GRADE PORTFOLIO

                                 April 30, 1998

================================================================================
<PAGE>
 
                          GREENWICH STREET SERIES FUND
                        Intermediate High Grade Portfolio
                              388 Greenwich Street
                            New York, New York 10013
                    Contract Owner Inquiries: (800) 451-2010

     Greenwich Street Series Fund is a diversified, open-end management
investment company (the "Fund"), with ten portfolios (the "Portfolios"), each
with separate goals and investment policies. Shares of the Intermediate High
Grade Portfolio (the "Portfolio") may be acquired only by investing in a
qualifying variable annuity or variable life insurance contract (a "Contract")
offered by participating life insurance companies.

     The Portfolio's investment goal is to provide as high a level of current
income as is consistent with the protection of capital. The Portfolio invests in
U.S. government securities and high-grade corporate bonds of U.S. issuers.

     There can be no guarantee that the Portfolio's investment goal will be
achieved since any investment involves risks. Discussions of the Portfolio's
investments, and their related risks, are found in the sections of this
Prospectus entitled "Investment Goal and Policies of the Portfolio," "Additional
Investments" and "Special Considerations and Risk Factors."

     This Prospectus, which sets forth certain information about the Fund and
the Portfolio that you should know before investing, should be read in
conjunction with the applicable Contract prospectus and retained for future
reference. Additional information about the Fund and the Portfolio has been
filed with the Securities and Exchange Commission (the "SEC") in a document
entitled "Statement of Additional Information" (the "SAI"), dated April 30,
1998, as amended or supplemented from time to time, which is available upon
request and without charge by calling or writing the Fund at the telephone
number or address set forth below or by contacting a representative of a
participating life insurance company or their Smith Barney financial consultant.

     The Fund is responsible only for statements that are included in this
Prospectus, the SAI or in authorized sales material. The SAI is incorporated by
reference into this Prospectus in its entirety. You cannot buy shares of the
Fund. You can invest in the Fund by buying separate accounts which Fund
Contracts offered by designated insurance companies.

THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT CONTRACT PROSPECTUS. BOTH
PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.


                 The date of this Prospectus is April 30, 1998.


--------------------------------------------------------------------------------
<PAGE>
 
<TABLE>
<CAPTION>
                                    CONTENTS
================================================================================
<S>                                                                           <C>
SUMMARY ...................................................................    1

EXPENSES OF THE PORTFOLIO .................................................    2

FINANCIAL HIGHLIGHTS ......................................................    2

INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO .............................    3

CERTAIN INVESTMENT STRATEGIES AND GUIDELINES ..............................    3

ADDITIONAL INVESTMENTS ....................................................    8

SPECIAL CONSIDERATIONS AND RISK FACTORS ...................................    9

PORTFOLIO TRANSACTIONS ....................................................   13

NET ASSET VALUE ...........................................................   13

HOW TO USE THE FUND .......................................................   14

DIVIDENDS AND TAXES .......................................................   14

MANAGEMENT OF THE FUND ....................................................   16

PORTFOLIO MANAGEMENT ......................................................   16

CUSTODIAN AND TRANSFER AGENT ..............................................   16

DISTRIBUTOR ...............................................................   17

ADDITIONAL INFORMATION ....................................................   17

THE PORTFOLIO'S PERFORMANCE ...............................................   18
</TABLE>


--------------------------------------------------------------------------------
     No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement of
Additional Information or the Fund's official sales literature in connection
with the offering of the Fund's shares, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Fund. This Prospectus does not constitute an offer in any state in which,
or to any person to whom, the offer may not lawfully be made.
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
<PAGE>
 
                                     SUMMARY
================================================================================

     The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the SAI. Cross-references in this
summary are to headings in the Prospectus.

     The Portfolio. The Portfolio is one of ten portfolios of the Fund, a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Portfolio's
investment objective is to provide as high a level of current income as is
consistent with the protection of capital. The Portfolio invests in U.S.
government securities and high-grade corporate bonds of U.S. issuers. See
"Additional Information."

     Management. Mutual Management Corp. ("MMC", the "Adviser" or the
"Administrator") serves as the Portfolio's investment adviser and administrator.
MMC is a wholly owned subsidiary of Salomon Smith Barney Holdings Inc.
("Holdings"), which in turn is a wholly owned subsidiary of Travelers Group
Inc., a diversified financial services holding company engaged, through its
subsidiaries, principally in four business segments: Investment Services
including Asset Management, Consumer Finance Services, Life Insurance Services
and Property & Casualty Insurance Services. See "Management of the Fund."

     Buying Shares. Shares of the Portfolio are offered only to Contract owners
as set forth in the specific Contract prospectus. A Contract owner can direct
the allocation of part or all of his or her net purchase payment to the
Portfolio. In the future, the Fund may establish additional portfolios. See "How
to use the Fund."

     Redeeming Shares. Shares may be redeemed as described in the applicable
Contract prospectus. See "How to Use the Fund."

     Risk Factors and Special Considerations. Investors in the Portfolio should
be aware of the following general observations: The non-publicly traded and
illiquid securities which the Portfolio may hold may have to be sold at lower
prices, or may remain unsold, when the Portfolio desires to dispose of them.
Government-stripped mortgage-backed securities in which the Portfolio may invest
are sensitive to changes in interest rates and to prepayment of the mortgages.
The foreign securities in which the Portfolio may invest may be subject to
certain risks in addition to those inherent in U.S. investments. The medium- and
lower-rated securities as well as unrated securities and the securities of
unseasoned issuers that the Portfolio may hold, some of which have speculative
characteristics, may be subject to greater market fluctuation and risk of loss
of income or principal than higher-rated securities. The Portfolio may make
certain investments and employ certain investment techniques that involve other
risks, including entering into repurchase agreements, lending portfolio
securities and entering into futures contracts and related options as hedges.
These risks and those associated with when-issued and delayed-delivery
transactions, put and call options, covered option writing, forward roll
transactions and reverse repurchase agreements, are described under "Investment
Goal and Policies of the Portfolio" and "Special Considerations and Risk
Factors."


--------------------------------------------------------------------------------
                                                                               1
<PAGE>
 
                            EXPENSES OF THE PORTFOLIO
================================================================================

     The Portfolio will bear its own expenses. Operating expenses for the
Portfolio generally will consist of all costs not specifically borne by the
Adviser, Administrator and/or Distributor, including organizational costs,
investment advisory and administration fees, fees for necessary professional and
brokerage services, fees for any pricing service, the costs of regulatory
compliance and costs associated with maintaining legal existence and shareholder
relations. From time to time, the Adviser, Administrator and/or Distributor may
waive all or a portion of the fees payable to it by the Portfolio, thereby
reducing the expenses of the Portfolio. A detailed description of the expenses
involved in investing in a Contract and the Portfolio is included in the
Contract prospectus.

                              FINANCIAL HIGHLIGHTS
================================================================================

     The following information for each year in the three year period ended
December 31, 1997, has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Fund's Annual Report dated
December 31, 1997. The information with respect to the four years ended December
31, 1994 has been audited by other independent auditors. The information set
forth below should be read in conjunction with the financial statements and
related notes that also appear in the Fund's Annual Report to Shareholders which
is incorporated by reference into the SAI.

     For a share of beneficial interest outstanding throughout each period:

<TABLE>
<CAPTION>
Intermediate High Grade Portfolio              1997        1996          1995        1994          1993         1992       1991(1)
====================================================================================================================================
<S>                                           <C>         <C>           <C>         <C>            <C>          <C>        <C> 
Net Asset Value, Beginning of Year             $10.70      $10.60         $9.66      $10.69        $10.29       $10.24     $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
    Net investment income(2)                     0.72        0.71          0.66        0.61          0.55         0.45       0.03
    Net realized and unrealized gain (loss)      0.21       (0.53)         1.00       (0.94)         0.26         0.08       0.21
---------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations              0.93        0.18          1.66       (0.33)         0.81         0.53       0.24
------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
    Net investment income                       (0.74)      (0.08)        (0.72)      (0.61)        (0.36)       (0.48)        --
    Net realized gains                             --          --            --       (0.09)        (0.05)          --         --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions                             (0.74)      (0.08)        (0.72)      (0.70)        (0.41)       (0.48)        --
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                   $10.89      $10.70        $10.60       $9.66        $10.69       $10.29     $10.24
------------------------------------------------------------------------------------------------------------------------------------
Total Return                                     8.67%       1.69%        17.76%      (3.05)%        8.00%        5.28%      2.40%++
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000's)               $15,100     $14,736       $16,152     $13,280        $9,859       $3,621       $697
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
    Expenses(2)                                  0.95%       0.90%         0.86%       0.85%         0.85%        0.85%      0.80%+
    Net investment income                        6.28        6.35%         6.63%       6.57%         5.25%        4.75%      4.49%+
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                            66%        116%          121%         90%          139%         124%        --
====================================================================================================================================
</TABLE>

(1)  For the period from October 31, 1991 (commencement of operations) to
     December 31, 1991.

(2)  The Investment Adviser waived all or part of its fees for the five-year
     period ended December 31, 1996 and the period ended December 31, 1991. In
     addition, IDS Life reimbursed expenses of $3,006, $12,616, $16,459, $15,865
     and $5,726 for the four-year period ended December 31, 1995 and the period
     ended December 31, 1991. If such fees were not waived or expenses
     reimbursed, the per share effect on net investment income and the expense
     ratios would have been as follows:

<TABLE>
<CAPTION>
                                                 Net Investment Income                        Expense Ratios Without Waivers
                                                  Per Share Decrease                                and Reimbursements
                                       ----------------------------------------           ---------------------------------------
Portfolio                               1996   1995   1994   1993   1992   1991           1996   1995   1994   1993   1992   1991  
---------                               ----   ----   ----   ----   ----   ----           ----   ----   ----   ----   ----   ----  
<S>                                    <C>    <C>    <C>    <C>    <C>    <C>             <C>    <C>    <C>    <C>    <C>   <C>   
Intermediate High Grade .............  $0.02  $0.01  $0.02  $0.05  $0.05  $0.17           1.07%  0.94%  1.05%  1.36%  2.28% 26.28%
</TABLE>
                                                                               
++   Total return is not annualized, as it may not be representative of the
     total return for the year.

+    Annualized.


--------------------------------------------------------------------------------
2
<PAGE>
 
                  INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO
================================================================================

     Set forth below is a description of the investment goal and policies of the
Portfolio. The investment goal of the Portfolio may not be changed without the
approval of the holders of a majority (as defined in the 1940 Act) of the
outstanding shares of the Portfolio. There can, of course, be no guarantee that
the Portfolio will achieve its investment goal. Additional information about
investment strategies that the Portfolio may employ and investment policies
mentioned below appears in the SAI.

Investment Goal

     The Portfolio's goal is to provide as high a level of current income as is
consistent with the protection of capital. This investment goal may not be
changed without the approval of the holders of a majority (as defined in the
1940 Act) of the outstanding shares of the Portfolio. There can, of course, be
no guarantee that the Portfolio will achieve its investment goal. Additional
information about investment strategies that the Portfolio may employ and
investment policies mentioned below appears in the SAI.

Investment Policies

     The Portfolio will seek to achieve its goal by investing, under normal
circumstances, substantially all - but no less than 65% - of its assets in U.S.
government securities and high-grade corporate bonds of U.S. issuers (i.e.,
bonds rated within the two highest rating categories by Standard & Poor's
Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") or, if not
rated, believed by the Adviser to be of comparable quality). Under normal market
conditions, the average weighted maturity of the Portfolio's assets will be
between three and ten years. The portion of the Portfolio's assets not invested
in intermediate-term U.S. government securities and U.S. corporate bonds may be
invested in short-term U.S. government and corporate obligations, convertible
securities and preferred stock that is not convertible into common stock. The
Portfolio may not hold securities rated lower than Baa by Moody's or BBB by S&P
or the equivalent from another nationally recognized statistical rating
organization ("NRSRO") or unrated securities deemed to be comparable to
securities rated below investment grade. The Portfolio may invest up to 10% of
its total assets in government stripped mortgage-backed securities and may
invest in floating or variable rate demand notes.

                  CERTAIN INVESTMENT STRATEGIES AND GUIDELINES
================================================================================

     In attempting to achieve its investment goals, the Portfolio may employ,
among others, one or more of the strategies set forth below. More detailed
information concerning these strategies and their related risks is contained in
the SAI.

     Up to 10% of the total assets of the Portfolio may be invested in
securities with contractual or other restrictions on resale and other
instruments that are not readily marketable, including (a) repurchase agreements
with maturities greater than seven days, (b) futures contracts and related
options for which a liquid secondary market does not exist and (c) time deposits
maturing in more than seven calendar days. The Portfolio may borrow from banks
for temporary or emergency purposes, but not for leverage, in an amount up to
30% of its assets, and may pledge its assets to the same extent in connection
with such borrowings. Whenever borrowings from banks exceed 5% of the value of
the assets of the Portfolio, the Portfolio will not make any additional
investments. Except for the limitations on borrowing, the investment guidelines
set forth in this paragraph may be changed at any time without shareholder
consent by vote of the Board of Trustees of the Fund. A complete list of
investment restrictions that identifies additional restrictions that cannot be
changed without the approval of a majority of the Portfolio's outstanding shares
is contained in the SAI.


--------------------------------------------------------------------------------
                                                                               3
<PAGE>
 
Repurchase Agreements

     The Portfolio may engage in repurchase agreement transactions on portfolio
securities, in each case with banks which are the issuers of instruments
acceptable for purchase by the Portfolio and with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. Under the terms of
a typical repurchase agreement, the Portfolio would acquire an underlying debt
obligation for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase, and the Portfolio to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Portfolio's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the Portfolio's
holding period. The value of the underlying securities will be monitored by the
Portfolio's investment adviser to ensure that it at least equals at all times
the total amount of the repurchase obligation, including interest. The Portfolio
bears a risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations and the Portfolio is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during the
period while the Portfolio seeks to assert these rights. The Portfolio's
investment adviser, acting under the supervision of the Fund's Board of
Trustees, reviews on an ongoing basis the value of the collateral and the
creditworthiness of those banks and dealers with which the Portfolio enters into
repurchase agreements to evaluate potential risks. A repurchase agreement is
considered to be a loan collateralized by the underlying securities under the
1940 Act.

Covered Option Writing

     The Portfolio may write put and call options on securities. The Portfolio
realizes fees (referred to as "premiums") for granting the rights evidenced by
the options. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at a specified price at any time during the option period. In contrast, a call
option embodies the right of its purchaser to compel the writer of the option to
sell to the option holder an underlying security at a specified price at any
time during the option period. Thus, the purchaser of a put option written by
the Portfolio has the right to compel the Portfolio to purchase from it the
underlying security at the agreed-upon price for a specified time period, while
the purchaser of a call option written by the Portfolio has the right to
purchase from the Portfolio the underlying security owned by the Portfolio at
the agreed-upon price for a specified time period.

     Upon the exercise of a put option written by the Portfolio, the Portfolio
may suffer a loss equal to the difference between the price at which the
Portfolio is required to purchase the underlying security plus the premium
received for writing the option and its market value at the time of the option
exercise. Upon the exercise of a call option written by the Portfolio, the
Portfolio may suffer a loss equal to the difference between the security's
market value at the time of the option exercise less the premium received for
writing the option and the Portfolio's acquisition cost of the security.

     The Portfolio will write only covered options. Accordingly, whenever the
Portfolio writes a call option, it will continue to own or have the present
right to acquire the underlying security for as long as it remains obligated as
the writer of the option. To support its obligation to purchase the underlying
security if a put option is exercised, the Portfolio that has written a put
option will either (a) deposit with PNC Bank, National Association, the
custodian of the Fund's investments ("PNC"), in a segregated account cash, U.S.
government securities, high-grade debt obligations or equity securities having a
value at least equal to the exercise price of the underlying securities,
provided such securities have been determined by the Adviser to be liquid and
unencumbered, and are marked to market daily pursuant to guidelines established
by the Trustees, or (b) continue to own an equivalent number of puts of the same
"series" (that is, puts on the same underlying security having the same exercise
prices and expiration dates as those written by the Portfolio) or an equivalent
number of puts of the same "class" (that is, puts 


--------------------------------------------------------------------------------
4
<PAGE>
 
on the same underlying security) with exercise prices greater than those that it
has written (or, if the exercise prices of the puts that it holds are less than
the exercise prices of those that it has written, it will deposit the difference
with PNC in a segregated account).

     The Portfolio may engage in a closing purchase transaction to realize a
profit, to prevent an underlying security from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the outstanding
option's expiration). To effect a closing purchase transaction, the Portfolio
would purchase, prior to the holder's exercise of an option that the Portfolio
has written, an option of the same series as that on which the Portfolio desires
to terminate its obligation. The obligation of the Portfolio under an option
that it has written would be terminated by a closing purchase transaction, but
the Portfolio would not be deemed to own an option as the result of the
transaction. There can be no assurance that the Portfolio will be able to effect
closing purchase transactions at a time when it wishes to do so. To facilitate
closing purchase transactions, however, the Portfolio ordinarily will write
options only if a secondary market for the options exists on a U.S. securities
exchange or in the over-the-counter market. The staff of the SEC considers most
over-the-counter options to be illiquid. The ability to terminate options
positions established in the over-the-counter market may be more limited than in
the case of exchange-traded options and also may involve the risk that
securities dealers participating in such transactions would fail to meet their
obligations to the Portfolio.

Lending of Securities

     Consistent with applicable regulatory requirements, the Portfolio may lend
its portfolio securities to brokers, dealers and other financial organizations.
By lending its securities, the Portfolio 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. Loans of portfolio securities will be collateralized by cash,
letters of credit or U.S. government securities that are maintained at all times
in a segregated account with the Fund's custodian, in an amount at least equal
to 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 Portfolio. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially.

Futures and Options on Futures

     When deemed advisable by the Adviser, the Portfolio may enter into interest
rate futures contracts and may enter into related options that are traded on a
U.S. exchange or board of trade. These transactions will be made solely for the
purpose of hedging against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates, market conditions and
currency values, as the case may be. All futures and options contracts will be
entered into only when the transactions are economically appropriate to the
reduction of risks inherent in the management of the Portfolio.

     An interest rate futures contract provides for the future sale by one party
and the purchase by the other party of a specified amount of a particular
financial instrument (debt security) at a specified price, date, time and place.
Similarly, a foreign currency futures contract provides for the future sale by
one party and the purchase by another party of a certain amount of a particular
currency at a specified price, date, time and place. Stock index futures
contracts are based on indices that reflect the market value of common stock of
the firms included in the indices. An index futures contract is an agreement
pursuant to which two parties 


--------------------------------------------------------------------------------
                                                                               5
<PAGE>
 
agree to take or make delivery of an amount of cash equal to the difference
between the value of the index at the close of the last trading day of the
contract and the price at which the index contract was originally entered into.
An option on an interest rate, stock index or currency futures contract gives
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 short position
if the option is a put) at a specified exercise price at any time prior to the
expiration date of the option.

     The use of futures contracts and options on futures contracts as a hedging
device involves several risks. There can be no assurance that there will be a
correlation between price movements in the underlying securities, index or
currency, on the one hand, and price movements in the securities that are the
subject of the hedge, on the other hand. Positions in futures contracts and
options on futures contracts may be closed out only on the exchange or board of
trade on which they were entered into, and there can be no assurance that an
active market will exist for a particular contract or option at any particular
time.

     The Portfolio may not enter into futures and options contracts for which
aggregate initial margin deposits and premiums paid for unexpired options to
establish such positions that are not bona fide hedging positions (as defined by
the Commodity Futures Trading Commission) exceed 5% of the fair market value of
the Portfolio's assets, after taking into account unrealized profits and
unrealized losses on futures contracts into which it has entered. With respect
to long positions in futures or options on futures, the Portfolio will "cover"
the position in a manner consistent with SEC guidance.

When-Issued Securities and Delayed-Delivery Transactions

     The Portfolio may purchase and sell securities on a when-issued basis,
which calls for the purchase (or sale) of securities at an agreed-upon price on
a specified future date. The Portfolio will enter into a when-issued transaction
for the purpose of acquiring portfolio securities and not for the purpose of
leverage. In such transactions, delivery of the securities occurs beyond the
normal settlement periods, but no payment or delivery is made by, and no
interest accrues to, the Portfolio prior to the actual delivery or payment by
the other party to the transaction. Due to fluctuations in the value of
securities purchased or sold on a when-issued or delayed-delivery basis, the
returns obtained on such securities may be higher or lower then the returns
available in the market on the dates when the investments are actually delivered
to the buyers. The Portfolio will establish a segregated account consisting of
cash, U.S. government securities, high-grade debt obligations or equity
securities in an amount equal to the amount of its when-issued and
delayed-delivery commitments, provided such securities have been determined by
the Manager to be liquid and unencumbered, and are marked to market daily
pursuant to guidelines established by the Trustees. Placing securities rather
than cash in the segregated account may have a leveraging effect on the
Portfolio's net assets. The Portfolio will not accrue income with respect to a
when-issued security prior to its stated delivery date.

Purchasing Options on Securities and Stock Indices

     The Portfolio may purchase put and call options that are traded on a U.S.
securities exchange. The Portfolio may utilize up to 10% of its assets to
purchase put options on portfolio securities and may do so at or about the same
time that it purchases the underlying security or at a later time. By buying a
put, the Portfolio limits its risk of loss from a decline in the market value of
the underlying security until the put expires. Any appreciation in the value of
and yield otherwise available from the underlying security, however, will be
partially offset by the amount of the premium paid for the put option and any
related transaction costs. The Portfolio may utilize up to 10% of its assets to
purchase call options on portfolio securities. Call options may 


--------------------------------------------------------------------------------
6
<PAGE>
 
be purchased by the Portfolio in order to acquire the underlying securities for
the Portfolio at a price that avoids any additional cost that would result from
a substantial increase in the market value of a security. The Portfolio also may
purchase call options to increase its return to investors at a time when the
call is expected to increase in value due to anticipated appreciation of the
underlying security.

     Prior to their expirations, put and call options may be sold in closing
sale transactions (sales by the Portfolio, prior to the exercise of options that
it has purchased, of options of the same series), and profit or loss from the
sale will depend on whether the amount received is more or less than the premium
paid for the option plus the related transaction costs.

Forward Roll Transactions

     In order to enhance current income, the Portfolio may enter into forward
roll transactions with respect to mortgage-related securities issued by GNMA,
FNMA and FHLMC. In a forward roll transaction, the Portfolio sells a mortgage
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. The mortgage securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories than those sold. During the period between the sale and repurchase,
the Portfolio 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 Portfolio exceeding the yield on the securities sold.
Forward roll transactions involve the risk that the market value of the
securities sold by the Portfolio may decline below the repurchase price of those
securities. At the time the Portfolio enters into a forward roll transaction, it
will place in a segregated custodial account cash, U.S. government securities,
high-grade debt obligations or equity securities having a value equal to the
repurchase price (including accrued interest), provided such securities have
been determined by the Adviser to be liquid and unencumbered, and are marked to
market daily pursuant to guidelines established by the Trustees, and will
subsequently monitor the account to insure that such equivalent value is
maintained. Forward roll transactions are considered to be borrowings by the
Portfolio.

Reverse Repurchase Agreements

     The Portfolio may enter into reverse repurchase agreement transactions with
member banks of the Federal Reserve System or with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. A reverse
repurchase agreement, which is considered a borrowing by the Portfolio, involves
a sale by the Portfolio of securities that it holds concurrently with an
agreement by the Portfolio to repurchase the same securities at an agreed-upon
price and date. The Portfolio typically will invest the proceeds of a reverse
repurchase agreement in money market instruments or repurchase agreements
maturing not later than the expiration of the reverse repurchase agreement. This
use of the proceeds is known as leverage. The Portfolio will enter into a
reverse repurchase agreement for leverage purposes only when the interest income
to be earned from the investment of the proceeds is greater than the interest
expense of the transaction. The Portfolio also may use the proceeds of reverse
repurchase agreements to provide liquidity to meet redemption requests when the
sale of the Portfolio's securities is considered to be disadvantageous. At the
time the Portfolio enters into a reverse repurchase agreement with a
broker-dealer (but not a bank), it will place in a segregated custodial account
cash, U.S. government securities, high-grade debt obligations or equity
securities having a value equal to its obligations under the reverse repurchase
agreements provided such securities have been determined by the manager to be
liquid and unencumbered, and are marked to market daily pursuant to guidelines
established by the Trustees.


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                                                                               7
<PAGE>
 
                             ADDITIONAL INVESTMENTS
================================================================================

Money Market Instruments

     The Portfolio may, as a cash management tool, hold up to 20% of the value
of its total assets in cash and invest in short-term instruments and, for
temporary defensive purposes, may hold cash and invest in short-term instruments
without limitation. Short-term instruments in which the Portfolio may invest
include: U.S. government securities; obligations of banks having at least $1
billion in assets (including certificates of deposit, time deposits and bankers'
acceptances of U.S. or foreign banks, U.S. savings and loan associations and
similar institutions); commercial paper rated no lower than A-2 by S&P or
Prime-2 by Moody's or the equivalent from another NRSRO or, if unrated, of an
issuer having an outstanding, unsecured debt issue then rated within the two
highest rating categories; and repurchase agreements with respect to any of the
foregoing entered into with banks and non-bank dealers approved by the Fund's
Board of Trustees.

U.S. Government Securities

     The U.S. government securities in which the Portfolio may invest include:
direct obligations of the United States Treasury (such as Treasury Bills,
Treasury Notes and Treasury Bonds), and obligations issued by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as certificates issued by
Government National Mortgage Association ("GNMA")); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury (such as
securities of Federal Home Loan Banks); and securities that are supported only
by the credit of the instrumentality (such as bonds issued by Federal National
Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation
("FHLMC")). Treasury Bills have maturities of less than one year, Treasury Notes
have maturities of one to ten years and Treasury Bonds generally have maturities
of greater than ten years at the date of issuance.

     The Portfolio may invest up to 5% of its net assets in U.S. government
securities for which the principal repayment at maturity, while paid in U.S.
dollars, is determined by reference to the exchange rate between the U.S. dollar
and the currency of one or more foreign countries ("Exchange Rate-Related
Securities"). Exchange Rate-Related Securities are issued in a variety of forms,
depending on the structure of the principal repayment formula. The principal
repayment formula may be structured so that the securityholder will benefit if a
particular foreign currency to which the security is linked is stable or
appreciates against the U.S. dollar. In the alternative, the principal repayment
formula may be structured so that the securityholder benefits if the U.S. dollar
is stable or appreciates against the linked foreign currency. Finally, the
principal repayment formula can be a function of more than one currency and,
therefore, be designed in either of the aforementioned forms or a combination of
those forms.

     Investments in Exchange Rate-Related Securities entail special risks. There
is the possibility of significant changes in rates of exchange between the U.S.
dollar and any foreign currency to which an Exchange Rate-Related Security is
linked. If currency exchange rates do not move in the direction or to the extent
anticipated at the time of purchase of the security, the amount of principal
repaid at maturity might be significantly below the par value of the security,
which might not be offset by the interest earned by the Portfolio over the term
of the security. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The imposition or modification of foreign
exchange controls by the 


--------------------------------------------------------------------------------
8
<PAGE>
 
United States or foreign governments or intervention by central banks also could
affect exchange rates. Finally, there is no assurance that sufficient trading
interest to create a liquid secondary market will exist for particular Exchange
Rate-Related Securities due to conditions in the debt and foreign currency
markets. Illiquidity in the forward foreign exchange market and the high
volatility of the foreign exchange market may from time to time combine to make
it difficult to sell an Exchange Rate-Related Security prior to maturity without
incurring a significant price loss.

                     SPECIAL CONSIDERATIONS AND RISK FACTORS
================================================================================

     This section describes certain investments of the Portfolio and related
risks. Further information concerning investments of the Portfolio and related
risks may be found in the Appendix to this Prospectus and in the SAI.

Fixed-Income Securities

     The market value of fixed-income obligations of the Portfolio will be
affected by general changes in interest rates, which will result in increases or
decreases in the value of fixed-income obligations held by the Portfolio. The
market value of the Portfolio's fixed-income obligations can be expected to vary
inversely in relation to changes in prevailing interest rates. In addition,
fixed-income securities in which the Portfolio may invest may not yield as high
a level of current income as might be achieved by investing in securities with
less liquidity and safety and longer maturities.

Non-Publicly Traded and Illiquid Securities

     The Portfolio may purchase securities that are not publicly traded. The
sale of securities that are not publicly traded is typically restricted under
federal securities laws. As a result, the Portfolio may be forced to sell these
securities at less than fair market value or may not be able to sell them when
its investment adviser believes it desirable to do so. The Portfolio's
investments in illiquid securities are subject to the risk that should the
Portfolio desire to sell any of these securities when a ready buyer is not
available at a price that the Portfolio deems representative of their value, the
value of the Portfolio's net assets could be adversely affected.

Government Stripped Mortgage-Backed Securities

     The Portfolio may invest up to 10% of its total assets in government
stripped mortgage-backed securities issued and guaranteed by GNMA, FNMA or
FHLMC. These securities represent beneficial ownership interests in either
periodic principal distributions ("principal-only") or interest distributions
("interest-only") on mortgage-backed certificates issued by GNMA, FNMA or FHLMC,
as the case may be. The certificates underlying government stripped
mortgage-backed securities represent all or part of the beneficial interest in
pools of mortgage loans.

     Investing in government stripped mortgage-backed securities involves the
risks normally associated with investing in mortgage-backed securities issued by
the government or government related entities. In addition, the yields on
government stripped mortgage-backed securities are extremely sensitive to the
prepayment experience on the mortgage loans underlying the certificates
collateralizing the securities. If a decline in the level of prevailing interest
rates results in a rate of principal prepayments higher than anticipated,
distributions of principal will be accelerated, thereby reducing the yield to
maturity on interest-only government stripped mortgage-backed securities and
increasing the yield to maturity on principal-only government stripped
mortgage-backed securities. Sufficiently high prepayment rates could result in
the Portfolio not fully 


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                                                                               9
<PAGE>
 
recovering its initial investment in an interest-only government stripped
mortgage-backed security. Government stripped mortgage-backed securities are
currently traded in an over-the-counter market maintained by several large
investment banking firms. There can be no assurance that the Portfolio will be
able to effect a trade of a government stripped mortgage-backed security at a
time when it wishes to do so, although the Portfolio will acquire government
stripped mortgage-backed securities only if a secondary market for the
securities exists at the time of acquisition.

Foreign Securities

     The Portfolio may invest in obligations of companies and governments of
foreign nations, which involve certain risks in addition to the usual risks
inherent in U.S. investments. These risks include those resulting from
revaluation of currencies, future adverse political and 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 lack of uniform accounting, auditing and financial
reporting standards or of other regulatory practices and requirements comparable
to those applicable to U.S. companies. The performance of the Portfolio when
investing in foreign securities may be adversely affected by fluctuations in
value of one or more foreign currencies relative to the U.S. dollar. Moreover,
securities of many foreign companies may be less liquid and their prices more
volatile than those of securities of comparable U.S. companies. In addition,
with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Portfolio, including the withholding
of dividends. Foreign securities may be subject to foreign government taxes that
could reduce the return on such securities. Changes in foreign currency exchange
rates may affect the value of portfolio securities and the appreciation or
depreciation of investments. Investment in foreign securities also may result in
higher expenses due to the cost of converting foreign currency to U.S. dollars,
the payment of fixed brokerage commissions on foreign exchanges, which generally
are higher than commissions on U.S. exchanges, and the expense of maintaining
securities with foreign custodians.

Medium-, Lower-Rated and Unrated Securities

     The Portfolio may invest in medium- or lower-rated securities and unrated
securities of comparable quality. Generally, these securities offer a higher
current yield than is offered by higher-rated securities, but also will likely
have some quality and protective characteristics that, in the judgment of the
rating organizations, are outweighed by large uncertainties or major risk
exposures to adverse conditions and are predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in accordance with
the terms of the obligation. The market values of certain of these securities
also tend to be more sensitive to individual corporate developments and changes
in economic conditions than higher-quality securities. In addition, medium- and
lower-rated securities and comparable unrated securities generally present a
higher degree of credit risk. Issuers of medium- and lower-rated, and comparable
unrated, securities are often highly leveraged and may not have more traditional
methods of financing available to them so that their ability to service their
debt obligations during a major economic downturn or during sustained periods of
rising interest rates may be impaired. The risk of loss due to default by such
issuers is significantly greater because medium- and lower-rated securities and
unrated securities generally are unsecured and frequently are subordinated to
the prior payment of senior indebtedness. In light of these risks, the Adviser,
in evaluating the creditworthiness of an issue, whether rated or unrated, will
take various factors established by the Fund's Board of Trustees into
consideration, which may include, as applicable, the issuer's financial
resources, its sensitivity to economic conditions and trends, the operating
history of and the community support for the facility financed by the issue, the
ability of the issuer's management and regulatory matters.


--------------------------------------------------------------------------------
10
<PAGE>
 
     The markets in which medium- and lower-rated or comparable unrated
securities are traded generally are more limited than those in which
higher-rated securities are traded. The existence of limited markets for these
securities may restrict the availability of securities for the Portfolio to
purchase and also may have the effect of limiting the ability of the Portfolio
to (a) obtain accurate market quotations for purposes of valuing securities and
calculating net asset value and (b) sell securities at their fair value either
to meet redemption requests or to respond to changes in the economy or the
financial markets. The market for medium- and lower-rated, and comparable
unrated, securities is relatively new and has not fully weathered a major
economic recession. Any such recession, however, would disrupt severely the
market for such securities and adversely affect the value of such securities,
and could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon.

     Fixed-income securities, including medium- and lower-rated, and comparable
unrated, securities, frequently have call or buy-back features that permit their
issuers to call or repurchase the securities from their holders, such as the
Portfolio. If an issuer exercises these rights during periods of declining
interest rates, the Portfolio may have to replace the security with a lower
yielding security resulting in a decreased return to the Portfolio.

     The market value of securities in lower rating categories is more volatile
than that of higher quality securities, and the markets in which medium- and
lower-rated or comparable unrated securities are traded are more limited than
those in which higher-rated securities are traded. Adverse publicity and
investor perceptions also may have a negative impact on the value and liquidity
of lower-rated, high-yield securities, especially in a limited trading market.

     Subsequent to its purchase by the Portfolio, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Portfolio. Neither event will require sale of such securities by
the Portfolio involved, but the Portfolio's investment adviser will consider
such event in its determination of whether the Portfolio should continue to hold
the securities.

     Securities that are rated Ba by Moody's or BB by S&P or the equivalent from
another NRSRO have speculative characteristics with respect to their capacity to
pay interest and repay principal. Securities that are rated B generally lack
characteristics of the desirable investment and assurance of interest and
principal payments over any long period of time may be small. Securities that
are rated Caa or CCC are of poor standing. These issues may be in default or
present elements of danger with respect to principal or interest.

Zero Coupon Securities

     The Portfolio may invest in zero coupon securities. A zero coupon security
is a debt obligation that does not entitle the holder to any periodic payments
of interest prior to maturity and therefore is issued and traded at a discount
from its face amount. Zero coupon securities may be created by separating the
interest and principal components of securities issued or guaranteed by the
United States government or one of its agencies or instrumentalities ("U.S.
Government securities") or issued by private corporate issuers. The discount
from face value at which zero coupon securities are purchased varies depending
on the time remaining until maturity, prevailing interest rates and the
liquidity of the security. Because the discount from face value is known at the
time of investment, investors holding zero coupon securities until maturity know
the total amount of their investment return at the time of investment. In
contrast, a portion of the total realized return from conventional
interest-paying obligations comes from the reinvestment of periodic interest.
Because the rate to be earned on these reinvestments may be higher or lower than
the rate quoted on the interest-paying obligations at the time of the original
purchase, the investor's return on reinvestments is uncertain even if the
securities are held to 


--------------------------------------------------------------------------------
                                                                              11
<PAGE>
 
maturity. This uncertainty is commonly referred to as reinvestment risk. With
zero coupon securities, however, there are no cash distributions to reinvest, so
investors bear no reinvestment risk if they hold the zero coupon securities to
maturity; holders of zero coupon securities, however, forego the possibility of
reinvesting at a higher yield than the rate paid on the originally issued
security. With both zero coupon and interest-paying securities, there is no
reinvestment risk on the principal amount of the investment.

     Zero coupon securities of the type held by the Portfolio can be sold prior
to their due date in the secondary market at their then prevailing market value
which, depending on prevailing levels of interest rates and the time remaining
to maturity, may be more or less than the securities' "accreted value;" that is,
their value based solely on the amount due at maturity and accretion of interest
to date. The market prices of zero coupon securities are generally more volatile
than the market prices of securities that pay interest periodically and,
accordingly, are likely to respond to a greater degree to changes in interest
rates than do non-zero coupon securities having similar maturities and yields.

Real Estate Investment Trust

     The Portfolio may invest in real estate investment trusts ("REITs"). REITs
are entities which either own properties or make construction or mortgage loans.
Equity trusts own real estate directly and the value of, and income earned by,
the trust depends upon the income of the underlying properties and the rental
income they earn. Equity trusts may also include operating or finance companies.
Equity trusts can also realize capital gains by selling properties that have
appreciated in value. A mortgage trust can make construction, development or
long-term mortgage loans, and are sensitive to the credit quality of the
borrower. Mortgage trusts derive their income from interest payments. Hybrid
trusts combine the characteristics of both equity and mortgage trusts, generally
by holding both ownership interests and mortgage interests in real estate. The
values of securities issued by REITs are affected by tax and regulatory
requirements and by perceptions of management skill. They are also subject to
heavy cash flow dependency, defaults by borrowers or tenants, self-liquidation,
the possibility of failing to qualify for tax-free status under the Internal
Revenue Code of 1986, as amended (the "Code"), and failing to maintain exemption
from the Investment Company Act of 1940, as amended.

Asset-Backed Securities

     The Portfolio may invest in asset-backed securities arising through the
grouping by governmental, government-related and private organizations of loans,
receivables and other assets originated by various lenders. Interests in pools
of these assets differ from other forms of debt securities, which normally
provide for periodic payment of interest in fixed amounts with principal paid at
maturity or specifies call dates. Instead, asset-backed securities provide
periodic payments that generally consist of both interest and principal
payments.

     The estimated life of an asset-backed security varies with the prepayment
experience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of an asset-backed security, will be primarily a
function of current market interest rates, although other economic and
demographic factors may be involved. For example, falling interest rates
generally result in an increase in the rate of prepayments of mortgage loans
while rising interest rates generally decrease the rate of prepayments. An
acceleration of prepayments in response to sharply falling interest rates will
shorten the security's average maturity and limit the potential appreciation in
the security's value relative to a conventional debt security. Consequently,
asset-backed securities are not as effective in locking in high long-term
yields. Conversely, in periods of sharply rising rates, prepayments generally
slow, increasing the security's average life and its potential for price
depreciation.


--------------------------------------------------------------------------------
12
<PAGE>
 
Year 2000

     The investment management services provided to the Fund by the Adviser and
the services provided to shareholders by Smith Barney, the Fund's distributor,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot recognize the year 2000, but revert to 1900
or some other date, due to the manner in which dates were encoded and
calculated. That failure could have a negative impact on the Fund's operations,
including the handling of securities trades, pricing and account services. The
Adviser and Smith Barney have advised the Fund that they have been reviewing all
of their computer systems and actively working on necessary changes to their
systems to prepare for the year 2000 and except that their systems will be
compliant before that date. In addition, the Adviser has been advised by the
Fund's custodian, transfer agent and accounting service agent that they are also
in the process of modifying their systems with the same goal. There can,
however, be no assurance that the Adviser, Smith Barney or any other service
provider will be successful, or that interaction with other non-complying
computer systems will not impair Fund services at that time.

                             PORTFOLIO TRANSACTIONS
================================================================================

     All orders for transactions in securities, options, futures contracts and
options on futures contracts on behalf of the Portfolio will be placed by the
Adviser with broker-dealers that the Adviser selects, including Smith Barney and
other affiliated brokers. The Portfolio may utilize Smith Barney or a Smith
Barney-affiliated broker in connection with a purchase or sale of securities
when the Adviser believes that the broker's charge for the transaction does not
exceed usual and customary levels. The same standard applies to the use of Smith
Barney or a Smith Barney-affiliated broker as a commodities broker in connection
with entering into futures contracts and options on futures contracts.

                                 NET ASSET VALUE
================================================================================

     The value of an individual share of the Portfolio is the net asset value of
that share. The net asset value per share of the Portfolio will be calculated
each day, Monday through Friday, except on days when the New York Stock
Exchange, Inc. (the "NYSE") is closed. The NYSE is currently scheduled to be
closed on New Year's Day, Presidents' Day, Martin Luther King, Jr. 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. Net asset value per share of the
Portfolio is determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time).

     Net asset value per share is computed by dividing the value of the
Portfolio's net assets by the total number of its shares outstanding. Generally,
the Portfolio's investments are valued at market value or, in the absence of a
market value with respect to any portfolio securities, at fair value as
determined by or under the direction of the Fund's Board of Trustees. A security
that is primarily traded on a U.S. or foreign exchange (including securities
traded through the National Market System) is valued at the last sale price on
that exchange or, if there were no sales during the day, at the current quoted
bid price. Portfolio securities that are primarily traded on foreign exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time a
value was so established is likely to have changed the value, then the fair
value of those securities will be determined by consideration of other factors
by or under the direction of the Fund's Board of Trustees or its delegates.
Over-the-counter securities that are not traded through the National Market
System and securities listed or traded on certain foreign exchanges whose
operations are similar to the U.S. over-the-counter market are valued on the
basis of the bid price at the close of business on each day. An option is
generally valued at the last sale 


--------------------------------------------------------------------------------
                                                                              13
<PAGE>
 
price or, in the absence of a last sale price, the last offer price. Investments
in U.S. government securities (other than short-term securities) are valued at
the average of the quoted bid and asked prices in the over-the-counter market.
Short-term investments that mature in 60 days or less are valued at amortized
cost when the Fund's Board of Trustees determines that this constitutes fair
value. The value of a futures contract equals the unrealized gain or loss on the
contract, which is determined by marking the contract to the current settlement
price for a like contract acquired on the day on which the futures contract is
being valued. A settlement price may not be used if the market makes a limit
move with respect to the security, index or currency underlying the futures
contract. In such event, the futures contract will be valued at a fair market
price to be determined by or under the direction of the Fund's Board of
Trustees. Further information regarding the Fund's valuation policies is
contained in the SAI.

                               HOW TO USE THE FUND
================================================================================

Investing in the Fund

     Shares of the Fund are currently offered exclusively to Contract owners. To
find out which insurance companies offer Contracts that are eligible to invest
in the Fund, call the Fund at (800) 451-2010. For further information, see the
description provided in the Contract prospectus.

Sales Charges and Surrender Charges

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

Redeeming and Exchanging Shares

     A participating insurance company will redeem shares of the Portfolio in
response to full or partial surrenders under the terms of the Contract.
Generally, payment upon redemption will be made within three days after
receiving a valid redemption request (unless redemption is suspended or payment
is delayed as permitted in accordance with SEC regulations). The Fund will use
the net asset value at the close of trading on the NYSE on the day the notice of
surrender or transfer is received. If the request is received after the close of
trading on the NYSE, the shares will be redeemed at the net asset value at the
close of the next business day. The value of any redeemed shares may be more or
less than their original purchase price.

     A detailed description of how to surrender a Contract is included in the
Contract prospectus.

                               DIVIDENDS AND TAXES
================================================================================

Dividends

     Net Investment Income. Dividends and distributions will be automatically
reinvested, without a sales charge, in the shareholder's account at net asset
value in additional shares of the Portfolio, unless the shareholder instructs
the Portfolio to pay all dividends and distributions in cash. Net investment
income, including dividends on stocks and interest on bonds or other securities
the Fund holds, is distributed to the shareholders of the Portfolio on an annual
basis. The shareholders of this Portfolio are the separate accounts of
participating life insurance companies.

     Capital Gains. Distributions of any net realized capital gains of the
Portfolio will be paid annually shortly after the close of the fiscal year in
which they are earned.

--------------------------------------------------------------------------------
14
<PAGE>
 
Taxes

     In the opinion of counsel to the Fund, the Portfolio will be treated as a
separate taxpayer with the result that, for federal income tax purposes, the
amounts of investment income and capital gains earned will be determined on a
Portfolio (rather than on a Fund-wide) basis.

     The Fund intends that the Portfolio will separately meet the requirements
for qualification each year as a "regulated investment company" within the
meaning of the Code. In order to qualify as a regulated investment company, the
Portfolio must meet certain income and diversification tests. As a regulated
investment company and provided certain distribution requirements are met, the
Portfolio will not be subject to federal income tax on its net investment income
and net capital gains that it distributes to its shareholders.

     Dividends paid by the Portfolio from taxable investment income and
distributions of short-term capital gains will be treated as ordinary income in
the hands of the shareholders for federal income tax purposes, whether received
in cash or reinvested in additional shares. Distributions of net long-term
capital gains will be treated as long-term capital gains in the hands of the
shareholders, if certain notice and designation requirements are satisfied,
whether paid in cash or reinvested in additional shares, regardless of the
length of time that the investor has held shares of the Portfolio. The Fund has
been informed that the separate accounts represented by the Contracts should,
for federal income tax purposes, be considered the shareholders of the
Portfolio.

     To comply with regulations under Section 817(h) of the Code, the Portfolio
will be required to diversify its investments so that on the last day of each
calendar quarter, or within 30 days thereafter, no more than 55% of the value of
its assets is represented by any one investment, no more than 70% is represented
by any two investments, no more than 80% is represented by any three investments
and no more than 90% is represented by any four investments. Generally, all
securities of the same issuer are treated as a single investment. For the
purposes of Section 817(h) of the Code, obligations of the United States
Treasury and each U.S. government agency or instrumentality are treated as
securities of separate issuers. Compliance with these diversification rules will
limit the ability of Portfolio, in particular, to invest more than 55% of their
assets in securities issued by a single agency or instrumentality of the U.S.
government.

     The Treasury Department has indicated that it may issue future
pronouncements addressing the circumstances in which a variable contract owner's
control of the investments of a separate account may cause the variable contract
owner, rather than the insurance company, to be treated as the owner of the
assets held by the separate account. If the variable contract owner is
considered the owner of the securities underlying the separate account, income
and gains produced by those securities would be included currently in the
variable contract owner's gross income. It is not known what standards will be
set forth in such pronouncements or when, if ever, these pronouncements may be
issued.

     In the event that rules or regulations are adopted, there can be no
assurance that the Portfolio will be able to operate as currently described in
this Prospectus, or that the Fund will not have to change the investment goal or
investment policies of the Portfolio. While the Portfolio's investment goal is
fundamental and may be changed only by a vote of a majority of the Portfolio's
outstanding shares, the Fund's Board of Trustees reserves the right to modify
the investment policies of a Portfolio as necessary to prevent any such
prospective rules and regulations from causing a Contract owner to be considered
the owner of the shares of the Portfolio.

     Reference is made to the Contract prospectus for information regarding the
federal income tax treatment of distributions.

--------------------------------------------------------------------------------
                                                                              15
<PAGE>
 
                             MANAGEMENT OF THE FUND
================================================================================

Board of Trustees

     Overall responsibility for management and supervision of the Fund and its
portfolios, including the Portfolio, rests with the Fund's Board of Trustees.
The Trustees approve all significant agreements between the Fund and the persons
or companies that furnish services to the Fund and the Portfolio, including
agreements with the Adviser, the Fund's custodian, transfer agent and
distributor. The day-to-day operations of the Portfolio are delegated to the
Adviser. The identities and backgrounds of the Trustees and officers of the
Fund, together with certain additional information about them, are contained in
the SAI.

Investment Adviser and Administrator

     Subject to the supervision and direction of the Fund's Board of Trustees,
the Adviser manages the Portfolio in accordance with the Portfolio's goal and
stated investment policies, makes investment decisions for the Portfolio, places
orders to purchase and sell securities on behalf of the Portfolio and employs
professional portfolio managers and securities analysts who provide research
services to the Portfolio.

     MMC, located at 388 Greenwich Street, New York, New York 10013, provides
investment advisory and management services to investment companies affiliated
with Holdings. The Adviser renders investment advice to investment companies
that had aggregate assets under management as of March 30, 1998 in excess of
$100.5 billion.

     The Adviser is paid an aggregate fee of 0.40% of the Portfolio's average
net assets. MMC, as the Administrator of the Portfolio, is paid a fee at the
annual percentage of 0.20% of the value of the Portfolio's average net assets.

                              PORTFOLIO MANAGEMENT
================================================================================

     G. Ruppert Vernon, Jr. is a Vice President and Investment Officer of the
Fund and a Managing Director of Smith Barney.

     The Fund's management discussion and analysis, and additional performance
information regarding the portfolios of the Fund, including the Portfolio,
during the fiscal year ended December 31, 1997, is included in the Annual Report
dated December 31, 1997. A copy of the Annual Report may be obtained upon
request without charge from a representative of a participating life insurance
company or Smith Barney Financial Consultant or by writing or calling the Fund
at the address or phone number listed on page one of this Prospectus.

                          CUSTODIAN AND TRANSFER AGENT
================================================================================

     PNC, located at 17th and Chestnut Streets, Philadelphia, Pennsylvania
19103, acts as custodian of the Fund's investments generally.

     First Data Investor Services Group, Inc., located at Exchange Place,
Boston, Massachusetts, 02109, acts as the Fund's transfer and dividend paying
agent.


--------------------------------------------------------------------------------
16
<PAGE>
 
                                   DISTRIBUTOR
================================================================================

     Smith Barney, a subsidiary of Holdings, located at 388 Greenwich Street,
New York, New York, 10013, serves as distributor of the Fund's shares, for which
it receives no separate fee from the Fund. Insurance companies offering the
Contracts pay Smith Barney for the services it provides and the expenses it
bears in distributing the Contracts, including payment of commissions for sales.
Insurance companies offering the Contracts will bear certain additional costs in
connection with the offering of the Portfolio's shares, including the costs of
printing and distributing prospectuses, statements of additional information and
sales literature.

                             ADDITIONAL INFORMATION
================================================================================

Formation

     The Fund was organized on May 13, 1991, under the laws of the Commonwealth
of Massachusetts and is a business entity commonly known as a "Massachusetts
business trust." The Fund is registered with the SEC as a diversified, open-end
management investment company, as defined in the 1940 Act. The Fund commenced
operations on October 16, 1991, under the name Shearson Series Fund. On July 30,
1993, October 14, 1994 and July 24, 1997, the Fund changed its name to Smith
Barney Shearson Series Fund, Smith Barney Series Fund and Greenwich Street
Series Fund, respectively.

Shares of Beneficial Interest

     The Fund offers shares of beneficial interest of separate series with a par
value of $.001 per share. Shares of ten series have been authorized. When
matters are submitted for shareholder vote, shareholders of each portfolio will
have one vote for each full share owned and proportionate, fractional votes for
fractional shares held.

     For a discussion of the rights of Contract owners concerning the voting of
shares, please refer to the Contract prospectus. Generally, shares of the Fund
vote by individual portfolio on all matters except (a) matters affecting only
the interests of more than one of the portfolios, in which case shares of the
affected portfolios would be entitled to vote, or (b) when the 1940 Act requires
that shares of the portfolios be voted in the aggregate. All shares of the Fund
vote together as one series for the election of Trustees. There will normally be
no meetings of shareholders for the purpose of electing Trustees unless less
than a majority of the Trustees holding office have been elected by
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Any Trustee may be removed
from office upon the vote of shareholders holding at least two-thirds of the
Fund's outstanding shares at a meeting called for that purpose. The Trustees are
required to call such a meeting upon the written request of shareholders holding
at least 10% of the Fund's outstanding shares. In addition, shareholders who
meet certain criteria will be assisted by the Fund in communicating with other
shareholders in seeking the holding of such a meeting.

     The participating life insurance company will send owners of the Contract a
semi-annual report and an audited annual report, each of which includes a list
of the investment securities held by the Portfolio at the end of the period
covered. Contract owners may make inquiries regarding the Portfolio from a
representative of the participating life insurance company or their Smith Barney
Financial Consultant.



--------------------------------------------------------------------------------
                                                                              17
<PAGE>
 
                           THE PORTFOLIO'S PERFORMANCE
================================================================================

Total Return

     From time to time, the Portfolio may advertise its "average annual total
return" over various periods of time. Such total return figures show the average
percentage change in value of an investment in the Portfolio from the beginning
date of the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Portfolio's shares and assume that any
income dividends and/or capital gains distributions made by the Portfolio during
the period were reinvested in shares of the Portfolio. Figures will be given for
recent one-, five- and ten-year periods (if applicable), and may be given for
other periods as well (such as from commencement of the Portfolio's operations,
or on a year-by-year basis). When considering average annual total return
figures for periods longer than one year, it is important to note that the
Portfolio's annual total return for any one year in the period might have been
greater or less than the average for the entire period. The Portfolio also may
use "aggregate" total return figures for various periods, representing the
cumulative change in value of an investment in the Portfolio for the specific
period (again reflecting changes in the Portfolio's share prices and assuming
reinvestment of dividends and distributions). Aggregate total returns may be
shown by means of schedules, charts or graphs and may indicate subtotals of the
various components of total return (i.e., change in value of initial investment,
income dividends and capital gains distributions).

     It is important to note that yield and total return figures are based on
historical earnings and are not intended to indicate future performance. The SAI
describes the method used to determine the Portfolio's yield and total return.
Shareholders may make inquiries regarding the Portfolio, including current yield
quotations or total return figures, to a representative of a participating life
insurance company or their Smith Barney Financial Consultant.

     In reports or other communications to shareholders or in advertising
material, the Portfolio may compare its performance with that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc. or
similar independent services that monitor the performance of mutual funds or
with other appropriate indices of investment securities, such as the S&P 500,
Salomon Brothers World Government Bond Index, Lehman Brothers Government Bond
Index and Lehman Brothers Mortgage-Backed Securities Index, with the Consumer
Price Index, Dow Jones Industrial Average or NASDAQ, or with investment or
savings vehicles. The performance information also may include evaluations of
the Portfolio published by nationally recognized ranking services and by
financial publications that are nationally recognized, such as Barron's,
Business Week, Forbes, Fortune, Institutional Investor, Investor's Business
Daily, Kiplinger's Personal Finance Magazine, Money, Morningstar Mutual Fund
Values, Mutual Fund Forecaster, The New York Times, Stranger's Investment
Advisor, USA Today, U.S. News & World Report and The Wall Street Journal. Such
comparative performance information will be stated in the same terms in which
the comparative data or indices are stated. Any such advertisement also would
include the standard performance information required by the SEC as described
above. For these purposes, the performance of the Portfolio, as well as the
performance of other mutual funds or indices, do not reflect sales charges, the
inclusion of which would reduce the Portfolio's performance.

     The Portfolio may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.

     A Contract owner's actual return on its investment in this Portfolio will
be affected by Contract charges imposed by the separate accounts of the
participating life insurance companies.

--------------------------------------------------------------------------------
18
<PAGE>
 
================================================================================








                                   PROSPECTUS

APO-2982-A                  Smith Barney Series Fund                 SB Ed. 4-98


================================================================================


 
                          GREENWICH STREET SERIES FUND
                             Equity Index Portfolio
                              388 Greenwich Street
                            New York, New York 10013
                    Contract Owner Inquiries: (800) 451-2010

     Greenwich Street Series Fund (the "Fund") is a diversified, open-end
management investment company, with ten portfolios (the "Portfolios"), each with
separate goals and investment policies. Shares of the Equity Index Portfolio
(the "Portfolio") may be acquired only by investing in a qualifying variable
annuity or variable life insurance contract (a "Contract") offered by
participating life insurance companies.

     The Portfolio's goal is to provide investment results that, before
deduction of operating expenses, match the price and yield performance of U.S.
publicly traded common stocks, as measured by the Standard & Poor's Daily Price
Index of 500 Common Stocks (the "S&P 500").

     There can be no guarantee that the Portfolio's goal will be achieved
because any investment involves risks. Discussions of the investments which the
Portfolio will make, and their related risks, are found in the sections of this
Prospectus entitled "Investment Goal and Policies of the Portfolio," "Additional
Investments" and "Special Considerations and Risk Factors."

     This Prospectus, which sets forth certain information about the Fund and
the Portfolio that you should know before investing, should be read in
conjunction with the applicable Contract prospectus and retained for future
reference. Additional information about the Fund and the Portfolio has been
filed with the Securities and Exchange Commission (the "SEC") in a document
entitled "Statement of Additional Information" (the "SAI"), dated April 30,
1998, as amended or supplemented from time to time, which is available upon
request and without charge by calling or writing the Fund at the telephone
number or address set forth above or by contacting a representative of a
participating life insurance company or their Smith Barney Financial Consultant.

     The Fund is responsible only for statements that are included in this
Prospectus, the SAI or in authorized sales material. The SAI is incorporated by
reference into this Prospectus in its entirety. You cannot buy shares of the
Fund directly. You can invest in the Fund by buying separate accounts which fund
Contracts offered by designated insurance companies.

THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS OF THE CONTRACT.
BOTH PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.


                  The date of this Prospectus is April 30, 1998


--------------------------------------------------------------------------------
<PAGE>
 
<TABLE>
<CAPTION>
                                    CONTENTS
================================================================================

<S>                                                                           <C>
SUMMARY ...................................................................    1

EXPENSES OF THE PORTFOLIO .................................................    2

FINANCIAL HIGHLIGHTS ......................................................    2

INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO .............................    3

CERTAIN INVESTMENT STRATEGIES AND GUIDELINES ..............................    3

ADDITIONAL INVESTMENTS ....................................................    7

SPECIAL CONSIDERATIONS AND RISK FACTORS ...................................    8

PORTFOLIO TRANSACTIONS ....................................................    9

NET ASSET VALUE ...........................................................    9

HOW TO USE THE FUND .......................................................   10

DIVIDENDS AND TAXES .......................................................   10

MANAGEMENT OF THE FUND ....................................................   11

PORTFOLIO MANAGEMENT ......................................................   12

CUSTODIAN AND TRANSFER AGENT ..............................................   12

DISTRIBUTOR ...............................................................   12

ADDITIONAL INFORMATION ....................................................   13

THE PORTFOLIO'S PERFORMANCE ...............................................   13
</TABLE>



--------------------------------------------------------------------------------
     No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement of
Additional Information or the Fund's official sales literature in connection
with the offering of the Fund's shares, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Fund. This Prospectus does not constitute an offer in any state in which,
or to any person to whom, the offer may not lawfully be made.
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
<PAGE>
 
                                     SUMMARY
================================================================================

     The following summary is qualified in its entirety by detailed information
appearing elsewhere in the Prospectus and in the SAI. Cross-references in this
summary are to headings in the Prospectus.

     The Portfolio. The Portfolio is one of ten portfolios of the Fund, a
diversified, open-end management investment company registered under the
Investment Company Act of 1940 as amended (the "1940 Act"). The Portfolio's
investment objective is to provide investment results that, before deduction of
operating expenses, match the price and yield performance of U.S. publicly
traded common stocks, as measured by the S&P 500. The Portfolio invests
primarily in the common stocks of companies represented in the S&P 500.

     Management. Travelers Investment Management Company ("TIMCO" or "Adviser")
serves as the Portfolio's investment adviser. TIMCO is a wholly owned subsidiary
of Travelers Group Inc., ("Travelers") a diversified financial services holding
company engaged, through its subsidiaries, principally in four business
segments: Investment Services including Asset Management, Consumer Finance
Services, Life Insurance Services and Property & Casualty Insurance Services.
Mutual Management Corp. ("MMC" or the "Administrator") serves as the Portfolio's
administrator. MMC is a wholly owned subsidiary of Salomon Smith Barney Holdings
Inc. ("Holdings"), which in turn is a wholly owned subsidiary of Travelers. See
"Management of the Fund."

     Buying Shares. Shares of the Portfolio are offered only to Contract owners
as set forth in the specific Contract prospectus. A contract owner can direct
the allocation of part or all of his or her net purchase payment to the
Portfolio. In the future, the Fund may establish additional portfolios. See "How
to Use the Fund."

     Redeeming Shares. Portfolio Shares may be redeemed as described in the
applicable Contract prospectus. See "How to Use the Fund."

     Risk Factors and Special Considerations. Investors in the Portfolio should
be aware of the following general observations: the non-publicly traded and
illiquid securities which the Portfolio may hold may have to be sold at lower
prices, or remain unsold, when the Portfolio desires to dispose of them. The
Portfolio may make certain investments and employ certain investment techniques
that involve other risks, including entering into repurchase agreements,
investing in exchange rate-related securities, lending portfolio securities, and
entering into futures contracts and related options as hedges. These risks and
those associated with put and call options and covered option writing are
described under "Investment Goals and Policies of the Portfolio," "Special
Considerations and Risk Factors."


--------------------------------------------------------------------------------
                                                                               1
<PAGE>
 
                            EXPENSES OF THE PORTFOLIO
================================================================================

     The Portfolio will bear its own expenses. Operating expenses for the
Portfolio generally will consist of all costs not specifically borne by the
Adviser and Administrator or the Fund's distributor, including organizational
costs, investment advisory and administration fees, fees for necessary
professional and brokerage services, fees for any pricing service, the costs of
regulatory compliance and costs associated with maintaining legal existence and
shareholder relations. From time to time, the Adviser and/or Administrator of
the Portfolio may waive all or a portion of the fees payable to it by the
Portfolio, thereby reducing the expenses of the Portfolio. A detailed
description of the expenses involved in investing in a Contract and the
Portfolio is included in the Contract prospectus.

                              FINANCIAL HIGHLIGHTS
================================================================================

     The following information for each year in the three-year period ended
December 31, 1997 has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Fund's Annual Report dated
December 31, 1997. The following information with respect to the four years
ended December 31, 1994 has been audited by other independent auditors. The
information set out below should be read in conjunction with the financial
statements and related notes that also appear in the Fund's Annual Report to
Shareholders which is incorporated by reference into the SAI.

     For a share of beneficial interest outstanding throughout each year:

<TABLE>
<CAPTION>
Equity Index Portfolio                         1997         1996         1995           1994        1993        1992      1991(1)
====================================================================================================================================
<S>                                           <C>         <C>          <C>            <C>          <C>         <C>        <C>   
Net Asset Value, Beginning of Year            $18.36       $15.58       $11.69         $11.90      $11.27      $10.62     $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
    Net investment income(2)                    0.12         0.22         0.25           0.23        0.20        0.17       0.04
    Net realized and unrealized gain (loss)     5.76         3.17         3.88          (0.14)       0.71        0.55       0.58
------------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations                    5.88         3.39         4.13           0.09        0.91        0.72       0.62
------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
    Net investment income (loss)               (0.17)       (0.23)       (0.23)         (0.15)      (0.16)      (0.02)        --
    Net realized gains                         (0.48)       (0.38)       (0.01)         (0.15)      (0.12)      (0.05)        --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions                            (0.65)       (0.61)       (0.24)         (0.30)      (0.28)      (0.07)        --
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                  $23.59       $18.36       $15.58         $11.69      $11.90      $11.27     $10.62
------------------------------------------------------------------------------------------------------------------------------------
Total Return                                   32.16%       21.68%       35.81%          0.85%       8.66%       6.74%      6.20%++
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000's)                  $35      $19,258      $15,230        $10,225      $8,842      $4,178     $1,733
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
    Expenses(2)                                 0.76%        1.06%        1.00%          1.00%       1.00%       1.00%      0.98+
    Net investment income                       1.08         1.37%        1.84%          2.10%       1.77%       2.10%      2.91+
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                            6%           7%           5%             1%          1%          8%        --
------------------------------------------------------------------------------------------------------------------------------------
Average commissions paid on
    equity transactions(3)                     $0.03        $0.04        $0.05             --          --          --         --
====================================================================================================================================
</TABLE>

(1)  For the period from October 16, 1991 (commencement of operations) to
     December 31, 1991.

(2)  The Investment Adviser waived all or part of its fees for the four-year
     period ended December 31, 1995 and the period ended December 31, 1991. In
     addition, IDS Life reimbursed expenses of $6,842, $25,496, $28,169, $31,633
     and $7,408 for the four-year period ended December 31, 1995 and the period
     ended December 31, 1991. If such fees had not been waived and expenses
     reimbursed, the per share effect on net investment income and the expense
     ratios would have been as follows:

<TABLE>
<CAPTION>
                                        Per Share Decreases to                                      Expense Ratios Without
                                         Net Investment Income                                    Waivers and Reimbursements
                            ---------------------------------------------             ----------------------------------------------
Portfolio                    1995      1994      1993      1992      1991             1995      1994      1993      1992      1991  
---------                    ----      ----      ----      ----      ----             ----      ----      ----      ----      ----  
<S>                         <C>       <C>       <C>       <C>       <C>               <C>       <C>       <C>       <C>       <C>   
Equity Index ............   $0.02     $0.06     $0.10     $0.15     $0.09             1.17%     1.53%     1.88%     2.89%     7.60%+
</TABLE>
                                                                           
(3)  As of September 1995, the SEC instituted new guidelines requiring the
     disclosure of average commissions per year.

*    Amount represents less than $0.01.

++   Total return is not annualized, as it may not be representative of the
     total return for the year.

+    Annualized.


--------------------------------------------------------------------------------
2
<PAGE>
 
                  INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO
================================================================================

     Set forth below is a description of the investment goal and policies of the
Portfolio. The investment goal of the Portfolio may not be changed without the
approval of the holders of a majority (as defined in the 1940 Act) of the
outstanding shares of the Portfolio. There can, of course, be no guarantee that
the Portfolio will achieve its investment goal. Additional information about
investment strategies that the Portfolio may employ and investment policies
mentioned below appears in the SAI.

Investment Goal

     The Portfolio's goal is to provide investment results that, before
deduction of operating expenses, match the price and yield performance of U.S.
publicly traded common stocks, as measured by the S&P 500. This investment goal
may not be changed without the approval of the holders of a majority, as defined
in the 1940 Act, of the outstanding shares of the Portfolio. There can, of
course, be no guarantee that the Portfolio will achieve its investment goals.
Additional information about investment strategies that the Portfolio may employ
and investment policies mentioned below appears in this Prospectus and in the
SAI.

Investment Policies

     The Portfolio will seek to achieve its goal by owning all 500 stocks in the
S&P 500 in proportion to their actual market capitalization weightings. The
Portfolio will be reviewed daily and adjusted, when necessary, to maintain
security weightings as close to those of the S&P 500 as possible, given the
amount of assets in the Portfolio at that time. The Portfolio may invest up to
5% of its assets in equity securities that are not included in the S&P 500 if
the Adviser believes such investments will assist the Portfolio in approximating
the return of the S&P 500. The Portfolio may use up to an additional 20% of its
assets to enter into stock index futures and related options to increase
efficiency, may lend portfolio securities and write covered options to help
offset operating expenses, and may acquire money market instruments. Portfolio
turnover is expected to be lower than for most other investment companies.

     No attempt will be made to manage the Portfolio in the traditional sense
using economic, financial and market analysis, nor will the adverse financial
situation of an issuer necessarily result in the elimination of its securities
from the Portfolio, unless the securities are removed from the S&P 500. From
time to time, administrative adjustments may be made in the Portfolio because of
changes in the composition of the S&P 500. The Adviser reserves the right to
remove an investment from the Portfolio if, in its opinion, the merit of the
investment has been substantially impaired by extraordinary events or financial
conditions.

     The Portfolio will use the S&P 500 as its standard for performance
comparison because the S&P 500 represents approximately 70% of the total market
value of all U.S. common stocks, is well known to investors and is
representative of the performance of publicly traded U.S. common stocks.

                  CERTAIN INVESTMENT STRATEGIES AND GUIDELINES
================================================================================

     In attempting to achieve its investment goals, the Portfolio may employ,
among others, one or more of the strategies set forth below. More detailed
information concerning these strategies and their related risks is contained in
the SAI.


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                                                                               3
<PAGE>
 
Index Strategy

     The Portfolio will invest in the common stocks of the companies represented
in the S&P 500 with the goal of matching, before deduction of operating
expenses, the price and yield performance of the S&P 500. The S&P 500 is
composed of 500 selected common stocks, most of which are listed on the NYSE.
S&P chooses the stocks to be included in the S&P 500 solely on a statistical
basis. The S&P 500 is a trademark of S&P and inclusion of a stock in the S&P 500
in no way implies an opinion by S&P as to its attractiveness as an investment.
S&P is neither a sponsor nor in any way affiliated with the Portfolio.

     The weightings of stocks in the S&P 500 are based on each stock's relative
total market value; that is, its market price per share times the number of
shares outstanding. The Adviser generally will select stocks for the Portfolio
in the order of their weightings in the S&P 500, beginning with the heaviest
weighted stocks.

     The Adviser expects that, once the Portfolio's assets reach $25 million,
the correlation between the performance of the Portfolio and that of the S&P 500
will be above 0.95, with a figure of 1.00 indicating perfect correlation.
Perfect correlation would be achieved when the Portfolio's net asset value per
share increases and decreases in exact proportion to changes in the S&P 500. The
Portfolio's ability to replicate the performance of the S&P 500 will depend to
some extent on the size of cash flows into and out of the Portfolio. Investment
changes to accommodate these cash flows will be made to maintain the similarity
of the Portfolio's assets to the S&P 500 to the maximum extent practicable.

     Up to 10% of the total assets of the Portfolio may be invested in
securities with contractual or other restrictions on resale and other
instruments that are not readily marketable, including repurchase agreements
with maturities greater than seven days and time deposits maturing in more than
seven calendar days. The Portfolio may borrow from banks for temporary or
emergency purposes, but not for leverage, in an amount up to 301/3% of its
assets, and may pledge its assets to the same extent in connection with such
borrowings. Whenever borrowings from banks exceed 5% of the value of the assets
of the Portfolio, the Portfolio will not make any additional investments. Except
for the limitations on borrowing, the investment guidelines set forth in this
paragraph may be changed at any time without shareholder consent by vote of the
Board of Trustees of the Fund. A complete list of investment restrictions that
identifies additional restrictions that cannot be changed without the approval
of a majority of the Portfolio's outstanding shares is contained in the SAI.

Futures and Options on Futures

     When deemed advisable by the Adviser, the Portfolio may enter into stock
index futures contracts and related options that are traded on a U.S. exchange
or board of trade. These transactions will be made solely for the purpose of
hedging against the effects of changes in the value of portfolio securities due
to anticipated changes in market conditions. The Portfolio will enter into
futures and options on futures to purchase stock indices in anticipation of
future purchases of securities ("long positions"). All futures and options
contracts will be entered into only when the transactions are economically
appropriate to the reduction of risks inherent in the management of the
Portfolio.

     Stock index futures are based on indices that reflect the market value of
common stock of the firms included in the indices. An index futures contract is
an agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally entered into. An option on a stock index futures
contract gives the purchaser the right, in return for the premium paid, to


--------------------------------------------------------------------------------
4
<PAGE>
 
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) at a specified exercise price at
any time prior to the expiration date of the option.

     The use of futures contracts and options on futures contracts as a hedging
device involves several risks. There can be no assurance that there will be a
correlation between price movements in the underlying securities or index, on
the one hand, and price movements in the securities that are the subject of the
hedge, on the other hand. Positions in futures contracts and options on futures
contracts may be closed out only on the exchange or board of trade on which they
were entered into, and there can be no assurance that an active market will
exist for a particular contract or option at any particular time.

     The Portfolio may not enter into futures and options contracts for which
aggregate initial margin deposits and premiums paid exceed 5% of the fair market
value of the Portfolio's assets, after taking into account unrealized profits
and unrealized losses on futures contracts into which it has entered. With
respect to long positions in futures or options on futures, a Portfolio will
"cover" the position in a manner consistent with SEC guidance.

Purchasing Options on Securities and Stock Indices

     The Portfolio may purchase call options on stock indices. Options on stock
indices are similar to options on securities, except options on stock indices do
not involve the delivery of an underlying security; rather, the options
represent the holder's right to obtain from the writer in cash a fixed multiple
of the amount by which the exercise price 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 exercise date.

     A stock index measures the movement of a certain group of stocks by
assigning relative values to the common stocks included in the index. The
advisability of using stock index options to hedge against the risk of
marketwide movements will depend on the extent of diversification of the stock
investments of the Portfolio and the sensitivity of its stock investments to
factors influencing the underlying index. The effectiveness of purchasing or
writing stock index options as a hedging technique will depend upon the extent
to which price movements in the Portfolio's securities investments correlate
with price movements in the stock index selected.

Covered Option Writing

     The Portfolio may write put and call options on securities. The Portfolio
realizes fees (referred to as "premiums") for granting the rights evidenced by
the options. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at a specified price at any time during the option period. In contrast, a call
option embodies the right of its purchaser to compel the writer of the option to
sell to the option holder an underlying security at a specified price at any
time during the option period. Thus, the purchaser of a put option written by
the Portfolio has the right to compel the Portfolio to purchase from it the
underlying security at the agreed-upon price for a specified time period, while
the purchaser of a call option written by the Portfolio has the right to
purchase from the Portfolio the underlying security owned by the Portfolio at
the agreed-upon price for a specified time period.

     Upon the exercise of a put option written by the Portfolio, the Portfolio
may suffer a loss equal to the difference between the price at which the
Portfolio is required to purchase the underlying security plus the premium
received for writing the option and its market value at the time of the option
exercise. Upon the exercise of a call option written by the Portfolio, the
Portfolio may suffer a loss equal to the difference between the security's
market value at the time of the option exercise less the premium received for
writing the option and the Portfolio's acquisition cost of the security.


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                                                                               5
<PAGE>
 
     The Portfolio will write only covered options. Accordingly, whenever the
Portfolio writes a call option, it will continue to own or have the present
right to acquire the underlying security for as long as it remains obligated as
the writer of the option. To support its obligation to purchase the underlying
security if a put option is exercised, the Portfolio that has written a put
option will either (a) deposit with the Portfolio's custodian in a segregated
account cash, U.S. government securities, debt obligations of any grade or
equity securities having a value equal to or greater than the exercise price of
the underlying securities, provided such securities have been determined by the
Investment Adviser to be liquid and unencumbered, and are marked to market daily
pursuant to guidelines established by the Trustees or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates as
those written by the Portfolio) or an equivalent number of puts of the same
"class" (that is, puts on the same underlying security) with exercise prices
greater than those that it has written (or, if the exercise prices of the puts
that it holds are less than the exercise prices of those that it has written, it
will deposit the difference with the Portfolio's custodian in a segregated
account).

     The Portfolio may engage in a closing purchase transaction to realize a
profit, to prevent an underlying security from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the outstanding
option's expiration). To effect a closing purchase transaction, the Portfolio
would purchase, prior to the holder's exercise of an option that the Portfolio
has written, an option of the same series as that on which the Portfolio desires
to terminate its obligation. The obligation of the Portfolio under an option
that it has written would be terminated by a closing purchase transaction, but
the Portfolio would not be deemed to own an option as the result of the
transaction. There can be no assurance that the Portfolio will be able to effect
closing purchase transactions at a time when it wishes to do so. To facilitate
closing purchase transactions, however, the Portfolio ordinarily will write
options only if a secondary market for the options exists on a U.S. securities
exchange or in the over-the-counter market. The staff of the SEC considers most
over-the-counter options to be illiquid. The ability to terminate options
positions established in the over-the-counter market may be more limited than in
the case of exchange-traded options and also may involve the risk that
securities dealers participating in such transactions would fail to meet their
obligations to the Portfolio.

Repurchase Agreements

     The Portfolio may engage in repurchase agreement transactions on portfolio
securities, in each case with banks which are the issuers of instruments
acceptable for purchase by the Portfolio and with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. Under the terms of
a typical repurchase agreement, the Portfolio would acquire an underlying debt
obligation for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase, and the Portfolio to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Portfolio's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the Portfolio's
holding period. The value of the underlying securities will be monitored by the
Adviser to ensure that it at least equals at all times the total amount of the
repurchase obligation, including interest. The Portfolio bears a risk of loss in
the event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed or prevented from exercising its rights
to dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period while the
Portfolio seeks to assert these rights. The Adviser, acting under the
supervision of the Fund's Board of Trustees, reviews on an ongoing basis the
value of the collateral and the creditworthiness of those banks and dealers with
which the Portfolio enters into repurchase agreements to evaluate potential
risks. A repurchase agreement is considered to be a loan collateralized by the
underlying securities under the 1940 Act.


--------------------------------------------------------------------------------
6
<PAGE>
 
Lending of Securities

     Consistent with applicable regulatory requirements, the Portfolio may lend
its portfolio securities to brokers, dealers and other financial organizations.
By lending its securities, the Portfolio 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. Loans of portfolio securities will be collateralized by cash,
letters of credit or U.S. government securities that are maintained at all times
in a segregated account with the Fund's custodian, in an amount at least equal
to 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 Portfolio. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially.

                             ADDITIONAL INVESTMENTS
================================================================================

Money Market Instruments

     The Portfolio may, as a cash management tool, hold up to 20% of the value
of its total assets in cash and invest in short-term instruments and, for
temporary defensive purposes, may hold cash and invest in short-term instruments
without limitation. Short-term instruments in which the Portfolio may invest
include: U.S. government securities; obligations of banks having at least $1
billion in assets (including certificates of deposit, time deposits and bankers'
acceptances of U.S. or foreign banks, U.S. savings and loan associations and
similar institutions); commercial paper rated no lower than A-2 by Standard
&Poor's Ratings Group ("S&P") or Prime-2 by Moody's Investors Service, Inc.
("Moody's") or the equivalent from another nationally recognized statistical
ratings organization ("NRSRO") or, if unrated, of an issuer having an
outstanding, unsecured debt issue then rated within the two highest rating
categories; and repurchase agreements with respect to any of the foregoing
entered into with banks and non-bank dealers approved by the Fund's Board of
Trustees.

     Currently, there are six NRSROs: S&P, Moody's, Fitch IBCA, Inc., Duff and
Phelps Credit Rating Co., IBCA Limited and its affiliate, IBCA, Inc. and Thomson
Bankwatch. A discussion of the ratings categories of the NRSROs is contained in
the Appendix to the SAI.

U.S. Government Securities

     The U.S. government securities in which the Portfolio may invest include:
direct obligations of the United States Treasury (such as Treasury Bills,
Treasury Notes and Treasury Bonds), and obligations issued by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as certificates issued by
Government National Mortgage Association); securities that are supported by the
right of the issuer to borrow from the U.S. Treasury (such as securities of
Federal Home Loan Banks); and securities that are supported only by the credit
of the instrumentality (such as bonds issued by Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation). Treasury Bills have
maturities of less than one year, Treasury Notes have maturities of one to ten
years and Treasury Bonds generally have maturities of greater than ten years at
the date of issuance.


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                                                                               7
<PAGE>
 
                     SPECIAL CONSIDERATIONS AND RISK FACTORS
================================================================================

Fixed-Income Securities

     The market value of fixed-income obligations of the Portfolio will be
affected by general changes in interest rates, which will result in increases or
decreases in the value of fixed-incone obligations held by the Portfolio. The
market value of the Portfolio's fixed-income obligations can be expected to vary
inversely in relation to changes in prevailing interest rates. In addition,
fixed-income securities in which the Portfolio may invest may not yield as high
a level of current income as might be achieved by investing in securities with
less liquidity and safety and longer maturities.

     Non-Publicly Traded and Illiquid Securities

     The Portfolio may purchase securities that are not publicly traded. The
sale of securities that are not publicly traded is typically restricted under
federal securities laws. As a result, the Portfolio may be forced to sell these
securities at less than fair market value or may not be able to sell them when
its investment adviser believes it desirable to do so. The Portfolio's
investments in illiquid securities are subject to the risk that should the
Portfolio desire to sell any of these securities when a ready buyer is not
available at a price that the Portfolio deems representative of their value, the
value of the Portfolio's net assets could be adversely affected.

     Mortgage-Related Securities

     To the extent that the Portfolio purchases mortgage-related securities at a
premium, mortgage foreclosures and prepayments of principal by mortgagors (which
may be made at any time without penalty) may result in some loss of the
Portfolio's principal investment to the extent of the premium paid. The yield of
the Portfolio when investing in mortgage-related securities may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment. In addition, like other debt securities, the values of
mortgage-related securities, including government and government-related
mortgage pools, generally will fluctuate in relation to interest rates.

     Foreign Securities

     The Portfolio may invest in obligations of companies and governments of
foreign nations, which involve certain risks in addition to the usual risks
inherent in U.S. investments. These risks include those resulting from
revaluation of currencies, future adverse political and 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 lack of uniform accounting, auditing and financial
reporting standards or of other regulatory practices and requirements comparable
to those applicable to U.S. companies. The performance of the Portfolio when
investing in foreign securities may be adversely affected by fluctuations in
value of one or more foreign currencies relative to the U.S. dollar. Moreover,
securities of many foreign companies may be less liquid and their prices more
volatile than those of securities of comparable U.S. companies. In addition,
with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Portfolio, including the withholding
of dividends. Foreign securities may be subject to foreign government taxes that
could reduce the return on such securities. Changes in foreign currency exchange
rates may affect the value of portfolio securities and the appreciation or
depreciation of investments. Investment in foreign securities also may result in
higher expenses due to the cost of converting foreign currency to U.S. dollars,
the payment of fixed brokerage commissions on foreign exchanges, which generally
are higher than commissions on U.S. exchanges, and the expense of maintaining
securities with foreign custodians.


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8
<PAGE>
 
     Year 2000

     The investment management services provided to the Fund by the Adviser and
the services provided to shareholders by Smith Barney, the Fund's distributor,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot recognize the year 2000, but revert to 1900
or some other date, due to the manner in which dates were encoded and
calculated. That failure could have a negative impact on the Fund's operations,
including the handling of securities trades, pricing and account services. The
Adviser and Smith Barney have advised the Fund that they have been reviewing all
of their computer systems and actively working on necessary changes to their
systems to prepare for the year 2000 and except that their systems will be
compliant before that date. In addition, the Adviser has been advised by the
Fund's custodian, transfer agent and accounting service agent that they are also
in the process of modifying their systems with the same goal. There can,
however, be no assurance that the Adviser, Smith Barney or any other service
provider will be successful, or that interaction with other non-complying
computer systems will not impair Fund services at that time.

                             PORTFOLIO TRANSACTIONS
================================================================================

     All orders for transactions in securities on behalf of the Portfolio will
be placed by the Adviser with broker-dealers that the Adviser selects, including
Smith Barney and other affiliated brokers. The Portfolio may utilize Smith
Barney or a Smith Barney-affiliated broker in connection with a purchase or sale
of securities when the Adviser believes that the broker's charge for the
transaction does not exceed usual and customary levels.

                                 NET ASSET VALUE
================================================================================

     The value of an individual share of the Portfolio is the net asset value of
that share. The net asset value per share of the Portfolio will be calculated
separately on each day, Monday through Friday, except on days when the New York
Stock Exchange, Inc. (the "NYSE") is closed. The NYSE is currently scheduled to
be closed on New Year's Day, President's Day, Martin Luther King, Jr. 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. Net asset value per share of the
Portfolio is determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time).

     Net asset value per share is computed by dividing the value of the
Portfolio's net assets by the total number of its shares outstanding. Generally,
the Portfolio's investments are valued at market value or, in the absence of a
market value with respect to any portfolio securities, at fair value as
determined by or under the direction of the Fund's Board of Trustees. A security
that is primarily traded on a U.S. or foreign exchange (including securities
traded through the National Market System) is valued at the last sale price on
that exchange or, if there were no sales during the day, at the current quoted
bid price. Portfolio securities that are primarily traded on foreign exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time a
value was so established is likely to have changed the value, then the fair
value of those securities will be determined by consideration of other factors
by or under the direction of the Fund's Board of Trustees or its delegates.
Over-the-counter securities that are not traded through the National Market
System and securities listed or traded on certain foreign exchanges whose
operations are similar to the U.S. over-the-counter market are valued on the
basis of the mean between the bid and asked prices at the close of business on
each day. Investments 


--------------------------------------------------------------------------------
                                                                               9
<PAGE>
 
in U.S. government securities (other than short-term securities) are valued at
the average of the quoted bid and asked prices in the over-the-counter market.
Short-term investments that mature in 60 days or less are valued at amortized
cost when the Fund's Board of Trustees determines that this constitutes fair
value. Further information regarding the Fund's valuation policies is contained
in the SAI.

                               HOW TO USE THE FUND
================================================================================

Investing in the Fund

     Shares of the Fund are currently offered exclusively to Contract owners. To
find out which insurance companies offer Contracts that are eligible to invest
in the Fund, call the Fund at (800) 451-2010. For further information, see the
description provided in the Contract prospectus.

Sales Charges and Surrender Charges

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

Redeeming and Exchanging Shares

     The Fund will redeem shares in response to full or partial surrenders of a
Contract. Generally, payment upon redemption will be made within three business
days after receiving a valid redemption request (unless redemption is suspended
or payment is delayed as permitted in accordance with SEC regulations). The Fund
will use the net asset value at the close of trading on the NYSE on the day the
notice of surrender or transfer is received. If the request is received after
the close of trading on the NYSE, the shares will be redeemed at the net asset
value at the close of the next business day. The value of any redeemed shares
may be more or less than their original purchase price.

     A detailed description of how to surrender the Contract is included in the
Contract prospectus.

                               DIVIDENDS AND TAXES
================================================================================

Dividends

     Net Investment Income. Dividends and distributions will be automatically
reinvested, without a sales charge, in the shareholder's account at net asset
value in additional shares of the Portfolio, unless the shareholder instructs
the Portfolio to pay all dividends and distributions in cash. Net investment
income, including dividends on stocks and interest on bonds or other securities
the Fund holds, is distributed to the shareholders of the Portfolio annually.

     Capital Gains. Distributions of any net realized capital gains of the
Portfolio will be paid annually shortly after the close of the fiscal year in
which they are earned.

Taxes

     In the opinion of counsel to the Fund, the Portfolio will be treated as a
separate taxpayer with the result that, for federal income tax purposes, the
amounts of investment income and capital gains earned will be determined on a
Portfolio (rather than on a Fund-wide) basis.


--------------------------------------------------------------------------------
10
<PAGE>
 
     The Fund intends that the Portfolio will separately meet the requirements
for qualification each year as a "regulated investment company" within the
meaning of the Code. In order to qualify as a regulated investment company, the
Portfolio must meet certain income and diversification tests. As a regulated
investment company and provided certain distribution requirements are met, the
Portfolio will not be subject to federal income tax on its net investment income
and net capital gains that it distributes to its shareholders.

     Dividends paid by the Portfolio from taxable investment income and
distributions of short-term capital gains will be treated as ordinary income in
the hands of the shareholders for federal income tax purposes, whether received
in cash or reinvested in additional shares. Distributions of net long-term
capital gains will be treated as long-term capital gains in the hands of the
shareholders, if certain notice and designation requirements are satisfied,
whether paid in cash or reinvested in addtional shares, regardless of the length
of time that the investor has held shares of the Portfolio. The Fund has been
informed that the separate accounts represented by the Contracts should, for
federal income tax purposes, be considered the shareholders of the Portfolio.

     To comply with regulations under Section 817(h) of the Code, the Portfolio
will be required to diversify its investments so that on the last day of each
calendar quarter, or within 30 days thereafter, no more than 55% of the value of
its assets is represented by any one investment, no more than 70% is represented
by any two investments, no more than 80% is represented by any three investments
and no more than 90% is represented by any four investments. Generally, all
securities of the same issuer are treated as a single investment. For the
purposes of Section 817(h) of the Code, obligations of the United States
Treasury and each U.S. government agency or instrumentality are treated as
securities of separate issuers.

     The Treasury Department has indicated that it may issue future
pronouncements addressing the circumstances in which a variable contract owner's
control of the investments of a separate account may cause the variable contract
owner, rather than the insurance company, to be treated as the owner of the
assets held by the separate account. If the variable contract owner is
considered the owner of the securities underlying the separate account, income
and gains produced by those securities would be included currently in the
variable contract owner's gross income. It is not known what standards will be
set forth in such pronouncements or when, if ever, these pronouncements may be
issued.

     In the event that rules or regulations are adopted, there can be no
assurance that the Portfolio will be able to operate as currently described in
this Prospectus, or that the Fund will not have to change the investment goal or
investment policies of the Portfolio. While a Portfolio's investment goal is
fundamental and may be changed only by a vote of a majority of the Portfolio's
outstanding shares, the Fund's Board of Trustees reserves the right to modify
the investment policies of the Portfolio as necessary to prevent any such
prospective rules and regulations from causing a Contract owner to be considered
the owner of the shares of the Portfolio.

     Reference is made to the Contract prospectus for information regarding the
federal income tax treatment of distributions.

                             MANAGEMENT OF THE FUND
================================================================================

Board of Trustees

     Overall responsibility for management and supervision of the Fund and the
Portfolio rests with the Fund's Board of Trustees. The Trustees approve all
significant agreements between the Fund and the persons or companies that
furnish services to the Fund and the Portfolio, including agreements with the
Adviser and Administrator of the Portfolio, and with the Fund's custodian,
transfer agent and distributor. The day-to-day


--------------------------------------------------------------------------------
                                                                              11
<PAGE>
 
operations of the Portfolio are delegated to the Adviser and Administrator of
the Portfolio. The identities and backgrounds of the Trustees and officers of
the Fund, together with certain additional information about them, are contained
in the SAI.

Investment Adviser

     Subject to the supervision and direction of the Fund's Board of Trustees,
the Adviser manages the Portfolio in accordance with its goal and stated
investment policies, makes investment decisions for the Portfolio, places orders
to purchase and sell securities on behalf of the Portfolio and employs
professional portfolio managers and securities analysts who provide research
services to the Portfolio.

     TIMCO, located at One Tower Square, Hartford, CT 06183-2030, provides
investment advisory and management services to investment companies affiliated
with Holdings. TIMCO renders investment advice to investment companies that had
aggregate assets under management as of March 31, 1998, of approximately $____
billion.

Administrator

     MMC, located at 388 Greenwich Street, New York, New York 10013, provides
investment advisory and management services to investment companies affiliated
with Holdings.

     The Adviser is paid an aggregate fee of 0.15% of the Portfolio's average
net assets. MMC, as the Administrator of the Portfolio, is paid a fee at the
annual percentage of 0.06% of the value of the Portfolio's average net assets.

                              PORTFOLIO MANAGEMENT
================================================================================

     Mr. Sandip A. Bhagat is a Vice President and Investment Officer of the
Fund, and President of TIMCO. Mr. Bhagat joined TIMCO in 1987.

     The Fund's management discussion and analysis, and additional performance
information regarding the portfolios of the Fund during the fiscal year ended
December 31, 1997, is included in the Annual Report, dated December 31, 1997. A
copy of the Annual Report may be obtained upon request without charge from a
representative of a participating life insurance company or by writing or
calling of the Fund at the address or phone number listed on the cover page of
this Prospectus.

                          CUSTODIAN AND TRANSFER AGENT
================================================================================

     PNC Bank, National Association, located at 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103, acts as custodian of the Portfolio's
investment generally.

     First Data Investor Serves Group, Inc., located at Exchange Place, Boston,
Massachusetts 02109, acts as the Portfolio's Transfer Agent.

                                   DISTRIBUTOR
================================================================================

     Smith Barney Inc., a subsidiary of Holdings, located at 388 Greenwich
Street, New York, New York 10013, serves as distributor of the Fund's shares,
for which it receives no separate fee from the Fund. Insurance companies
offering the Contracts pay Smith Barney for the services it provides and the
expenses it bears in distributing the Contracts, including payment of
commissions for sales. Insurance companies offering the Contracts will bear
certain additional costs in connection with the offering of the Fund's shares,
including the costs of printing and distributing prospectuses, statements of
additional information and sales literature.

--------------------------------------------------------------------------------
12
<PAGE>
 
                             ADDITIONAL INFORMATION
================================================================================

Formation

     The Fund was organized on May 13, 1991, under the laws of the Commonwealth
of Massachusetts and is a business entity commonly known as a "Massachusetts
business trust." The Fund registered with the SEC as a diversified, open-end
management investment company, as defined in the 1940 Act. The Fund commenced
operations on October 16, 1991, under the name Shearson Series Fund. On July 30,
1993, October 14, 1994 and July 24, 1997, the Fund changed its name to Smith
Barney Shearson Series Fund, Smith Barney Series Fund and Greenwich Street
Series Fund, respectively.

Shares of Beneficial Interest

     The Fund offers shares of beneficial interest of separate series with a par
value of $0.001 per share. Shares of ten series have been authorized, which
represent the interests in ten portfolios. When matters are submitted for
shareholder vote, shareholders of each portfolio will have one vote for each
full share owned and proportionate, fractional votes for fractional shares held.

     For a discussion of the rights of Contract owners concerning the voting of
shares, please refer to the Contract prospectus.

     Generally, shares of the Fund vote by individual portfolio on all matters
except (a) matters affecting only the interests of more than one of the
portfolios, in which case shares of the affected portfolios would be entitled to
vote, or (b) when the 1940 Act requires that shares of the portfolios be voted
in the aggregate. All shares of the Fund vote together as one series for the
election of Trustees. There will normally be no meetings of shareholders for the
purpose of electing Trustees unless less than a majority of the Trustees holding
office have been elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of Trustees. Any
Trustee may be removed from the office upon the vote of shareholders holding at
least two-thirds of the Fund's outstanding shares at a meeting called for that
purpose. The Trustees are required to call such a meeting upon the written
request of shareholders holding at least 10% of the Fund's outstanding shares.
In addition, shareholders who meet certain criteria will be assisted by the Fund
in communicating with other shareholders in seeking the holding of such a
meeting.

     The participating life insurance company sends each owner of a Contract a
semi-annual report and an annual report, each of which includes a list of the
investment securities held by the Portfolio at the end of the period covered.
Contract owners may make inquiries regarding the Fund and the Portfolio,
including the current performance of the Portfolio, to a representative of a
participating life insurance company or their Smith Barney Financial Consultant.

                           THE PORTFOLIO'S PERFORMANCE
================================================================================

Total Return

     From time to time, the Portfolio may advertise its "average annual total
return" over various periods of time. Such total return figure shows average
percentage change in value of an investment in the Portfolio from the beginning
date of the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Portfolio's shares and assume that any
income dividends and/or capital gains distributions made by the Portfolio during
the period were reinvested in shares of the Portfolio. Figures will be given for


--------------------------------------------------------------------------------
                                                                              13
<PAGE>
 
recent one-, five- and ten-year periods (if applicable), and may be given for
other periods as well (such as from commencement of the Portfolio's operations,
or on a year-by-year basis). When considering average annual total figures for
periods longer than one year, it is important to note that the Portfolio's
annual total return for any one year in the period might have been greater than
the average for the entire period. The Portfolio also may use "aggregate" total
return figures for various periods, representing the cumulative change in value
of an investment in the Portfolio for the specific period (again reflecting
changes in the Portfolio's share prices and assuming reinvestment of dividends
and distributions). Aggregate total returns may be shown by means of schedules,
charts or graphs and may indicate subtotals of the various components of total
return (i.e., change in value of initial investment, income dividends and
capital gains distributions).

     It is important to note that total return figures are based on historical
earnings and are not intended to indicate future performance. The SAI describes
the method used to determine the Portfolio's total return. Shareholders may make
inquiries regarding the Portfolio, including total return figures, to a
representative of a participating life insurance company or their Smith Barney
Financial Consultant.

     In reports or other communications to shareholders or in advertising
material, the Portfolio may compare its performance with that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc. or
similar independent services that monitor the performance of mutual funds or
with other appropriate indices of investment securities, such as the S&P 500,
the Consumer Price Index, Dow Jones Industrial Average or NASDAQ, or with
investment or savings vehicles. The performance information also may include
evaluations of the Portfolio published by nationally recognized ranking services
and by financial publications that are nationally recognized, such as Barron's,
Business Week, Forbes, Fortune, Institutional Investor, Investor's Business
Daily, Kiplinger's Personal Finance Magazine, Money, Morningstar Mutual Fund
Values, Mutual Fund Forecaster, The New York Times, Stranger's Investment
Advisor, USA Today, U.S. News & World Report and The Wall Street Journal. Such
comparative performance information will be stated in the same terms in which
the comparative data or indices are stated. Any such advertisement also would
include the standard performance information required by the SEC as described
above. For these purposes, the performance of the Portfolio, as well as the
performance of other mutual funds or indices, does not reflect sales charges,
the inclusion of which would reduce the Portfolio's performance.

     The Portfolio may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.

     A Contract owner's actual return on its investment in this Portfolio will
be affected by Contract charges imposed by the separate accounts of the
participating life insurance companies.


--------------------------------------------------------------------------------
                                                                              14
<PAGE>

 
L-21217 4/98

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

     Travelers Life & Annuity [LOGO]
     A Member of TravelersGroup





                                                            [GRAPHIC]









========================================================
Underlying Fund
Prospectuses
========================================================
Greenwich Street Series Fund
Appreciation Portfolio                   APRIL 30, 1998
Diversified Strategic Income Portfolio
========================================================
--------------------------------------------------------------------------------
<PAGE>
 
                          GREENWICH STREET SERIES FUND
                     Diversified Strategic Income Portfolio
                              388 Greenwich Street
                            New York, New York 10013
                    Contract Owner Inquiries: (800) 451-2010

     Greenwich Street Series Fund is a diversified, open-end management
investment company (the "Fund"), with ten portfolios (the "Portfolios"), each
with separate goals and investment policies. Shares of the Diversified Strategic
Income Portfolio (the "Portfolio") may be acquired only by investing in a
qualifying variable annuity or variable life insurance contract (a "Contract")
offered by participating life insurance companies.

     The Portfolio's investment goal is high current income. The Portfolio
invests primarily in three types of fixed-income securities -- U.S. government
and mortgage-related securities, foreign government bonds and corporate bonds
rated below investment grade.

     There can be no guarantee that the Portfolio's investment goal will be
achieved since any investment involves risks. Discussions of the Portfolio's
investments, and their related risks, are found in the sections of this
Prospectus entitled "Investment Goal and Policies of the Portfolio," "Additional
Investments" and "Special Considerations and Risk Factors."

     This Prospectus, which sets forth certain information about the Fund and
the Portfolio that you should know before investing, should be read in
conjunction with the applicable Contract prospectus and retained for future
reference. Additional information about the Fund and the Portfolio has been
filed with the Securities and Exchange Commission (the "SEC") in a document
entitled "Statement of Additional Information" (the "SAI"), dated April 29,
1997, as amended or supplemented from time to time, which is available upon
request and without charge by calling or writing the Fund at the telephone
number or address set forth above or by contacting a representative of a
participating life insurance company or their Smith Barney Financial Consultant.

     The Fund is responsible only for statements that are included in this
Prospectus, the SAI or in authorized sales material. The SAI is incorporated by
reference into this Prospectus in its entirety. You cannot buy shares of the
Fund directly. You can invest in the Fund by buying separate accounts which fund
certain variable annuity and variable life insurance contracts (each referred to
herein as a "Contract") offered by designated insurance companies.

THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT CONTRACT PROSPECTUS. BOTH
PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.


                 The date of this Prospectus is April 30, 1998.

--------------------------------------------------------------------------------
<PAGE>
 
                                    CONTENTS
================================================================================

     SUMMARY .............................................................    1

     EXPENSES OF THE PORTFOLIO ...........................................    2

     FINANCIAL HIGHLIGHTS ................................................    2

     INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO .......................    3

     CERTAIN INVESTMENT STRATEGIES AND GUIDELINES ........................    4

     ADDITIONAL INVESTMENTS ..............................................    9

     SPECIAL CONSIDERATIONS AND RISK FACTORS .............................   10

     PORTFOLIO TRANSACTIONS ..............................................   14

     NET ASSET VALUE .....................................................   14

     HOW TO USE THE FUND .................................................   15

     DIVIDENDS AND TAXES .................................................   15

     MANAGEMENT OF THE FUND ..............................................   17

     PORTFOLIO MANAGEMENT ................................................   17

     CUSTODIAN AND TRANSFER AGENT ........................................   18

     DISTRIBUTOR .........................................................   18

     ADDITIONAL INFORMATION ..............................................   18

     THE PORTFOLIO'S PERFORMANCE .........................................   19


--------------------------------------------------------------------------------
     No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI or 
the Fund's official sales literature in connection with the offering of 
the Fund's shares, and, if given or made, such other information or 
representations must not be relied upon as having been authorized by the 
Fund. This Prospectus does not constitute an offer in any state in which, 
or to any person to whom, the offer may not lawfully be made.
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
<PAGE>
 
                                     SUMMARY
================================================================================

     The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the SAI. Cross-references in this
summary are to headings in the Prospectus.

     The Portfolio. The Portfolio is one of ten portfolios of the Fund, a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Portfolio's
investment objective is high current income. The Portfolio invests primarily in
three types of fixed-income securities -- U.S. government and mortgage-related
securities, foreign government securities and corporate securities rated below
investment grade. See "Additional Information."

     Management. Mutual Management Corp. ("MMC" "Adviser" or "Administrator")
serves as the Portfolio's investment adviser and administrator. MMC is a wholly
owned subsidiary of Salomon Smith Barney Holdings Inc. ("Holdings"), which in
turn is a wholly owned subsidiary of Travelers Group Inc., a diversified
financial services holding company engaged, through its subsidiaries,
principally in four business segments: Investment Services including Asset
Management, Consumer Finance Services, Life Insurance Services and Property &
Casualty Insurance Services. Smith Barney Global Capital Management, Inc.
("Global Capital Management" or "Sub-Adviser") serves as sub-investment adviser
to the Portfolio, and is a wholly owned subsidiary of Holdings. See "Management
of the Fund."

     Buying Shares. Shares of the Portfolio are offered only to Contract owners
as set forth in the specific Contract prospectus. A Contract owner can direct
the allocation of part or all of his or her net purchase payment to the
Portfolio. In the future, Contract owners may be offered the opportunity to
invest in one or more of the other portfolios of the Fund. See "How to Use the
Fund."

     Redeeming Shares. Shares may be redeemed as described in the applicable
Contract prospectus. See "How to Use the Fund."

     Risk Factors and Special Considerations. Investors in the Portfolio should
be aware of the following general observations: the non-publicly traded and
illiquid securities which the Portfolio may hold may have to be sold at lower
prices, or may remain unsold, when the Portfolio desires to dispose of them. The
foreign securities in which the Portfolio may invest may be subject to certain
risks in addition to those inherent in U.S. investments. The medium- and
lower-rated securities as well as unrated securities and the securities of
unseasoned issuers that the Portfolio may hold, some of which have speculative
characteristics, may be subject to greater market fluctuation and risk of loss
of income or principal than higher-rated securities. The Portfolio may make
certain investments and employ certain investment techniques that involve other
risks, including entering into repurchase agreements, lending portfolio
securities and entering into futures contracts and related options as hedges.
These risks and those associated with when-issued and delayed-delivery
transactions, put and call options, covered option writing, forward roll
transactions and reverse repurchase agreements, are described under "Investment
Goal and Policies of the Portfolio" and "Special Considerations and Risk
Factors."

--------------------------------------------------------------------------------
                                                                               1
<PAGE>
 
                            EXPENSES OF THE PORTFOLIO
================================================================================

     The Portfolio will bear its own expenses. Operating expenses for the
Portfolio generally will consist of all costs not specifically borne by the
Adviser, Sub-Adviser, Administrator and/or Distributor, including organizational
costs, investment advisory and administration fees, fees for necessary
professional and brokerage services, fees for any pricing service, the costs of
regulatory compliance and costs associated with maintaining legal existence and
shareholder relations. From time to time, the Adviser, Sub-Adviser and
Administrator may waive all or a portion of the fees payable to it by the
Portfolio, thereby reducing the expenses of the Portfolio. A detailed
description of the expenses involved in investing in a Contract and the
Portfolio is included in the Contract prospectus.

                              FINANCIAL HIGHLIGHTS
================================================================================

     The following information for each year in the three-year period ended
December 31, 1997, has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Fund's Annual Report dated
December 31, 1997. The information with respect to the four years ended December
31, 1994 has been audited by other independent auditors. The information set
forth below should be read in conjunction with the financial statements and
related notes that also appear in the Fund's Annual Report to Shareholders which
is incorporated by reference into the SAI.

     For a share of beneficial interest outstanding throughout each period:

<TABLE>
<CAPTION>
Diversified Strategic Income Portfolio               1997        1996        1995        1994        1993        1992      1991(1)
====================================================================================================================================
<S>                                                <C>         <C>         <C>         <C>         <C>         <C>         <C>   
Net Asset Value, Beginning of Year                  $10.98      $10.01       $9.18      $10.07       $9.61      $10.14     $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
    Net investment income(2)(3)                       0.77        0.88        0.74        0.58        0.70        0.67       0.02
    Net realized and unrealized gain (loss)           0.12        0.24        0.70       (0.86)       0.47       (0.53)      0.12
------------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations                   0.89        1.12        1.44       (0.28)       1.17        0.14       0.14
------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
    Net investment income                            (0.98)      (0.15)      (0.61)      (0.58)      (0.61)      (0.67)        --
    Net realized gains on security transactions                     --          --          --       (0.04)         --         --
    Overdistribution of net realized gains                          --          --          --       (0.05)         --         --
    Capital                                             --          --          --       (0.03)      (0.01)         --         --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions                                  (0.98)      (0.15)      (0.61)      (0.61)      (0.71)      (0.67)        --
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                        $10.89      $10.98      $10.01       $9.18      $10.07       $9.61     $10.14
------------------------------------------------------------------------------------------------------------------------------------
Total Return                                          8.14%      11.16%      16.18%      (2.81)%     12.56%       1.42%      1.40%++
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000's)                    $62,558     $59,515     $59,316     $55,260     $43,244     $19,991     $3,914
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
    Expenses(2)                                       0.78%       0.84%       0.90%       0.95%       1.00%       1.00%      0.94%+
    Net investment income                             7.29        7.94        7.73        7.31        7.14        7.70       4.57+
------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 47%        106%         46%         54%         94%         65%      --
====================================================================================================================================
</TABLE>

(1)  For the period from October 31, 1991 (commencement of operations) to
     December 31, 1991.

(2)  The Adviser waived all or part of its fees for the two-year
     period ended December 31, 1993 and the period ended December 31, 1991. In
     addition, IDS Life reimbursed expenses of $2,816, $25,396 and $5,927 for
     the two-year period ended December 31, 1993 and the period ended December
     31, 1991. If such fees were not waived or expenses reimbursed, the per
     share effect on net investment income and the expense ratios would have
     been as follows:

<TABLE>
<CAPTION>
                                                     Net Investment Income                     Expense Ratios Without Waivers
                                                      Per Share Decrease                             and Reimbursements
                                          -----------------------------------------     ------------------------------------------
    Portfolio                             1996    1995   1994    1993   1992   1991     1996    1995    1994   1993    1992   1991
    ---------                             ----    ----   ----    ----   ----   ----     ----    ----    ----   ----    ----   ----
<S>                                        <C>     <C>    <C>   <C>     <C>    <C>       <C>     <C>     <C>   <C>     <C>    <C>
    Diversified Strategic Income .......   N/A     N/A    N/A   $0.00*  $0.03  $0.03     N/A     N/A     N/A   1.02%   1.41%  7.76%+
                                                                                                                      
</TABLE>

(3)  Includes realized gains and losses from foreign currency transactions for
     the four years ended December 31, 1995.

++   Total return is not annualized, as it may not be representative of the
     total return for the year.

+    Annualized.

*    Amount represents less than $0.01.

--------------------------------------------------------------------------------
2
<PAGE>
 
                  INVESTMENT GOAL AND POLICIES OF THE PORTFOLIO
================================================================================

     Set forth below is a description of the investment goal and policies of the
Portfolio. The investment goal of the Portfolio may not be changed without the
approval of the holders of a majority (as defined in the 1940 Act) of the
outstanding shares of the Portfolio. There can, of course, be no guarantee that
the Portfolio will achieve its investment goal. Additional information about
investment strategies that the Portfolio may employ and investment policies
mentioned below appears in the SAI.

Investment Goal

     The Portfolio's goal is high current income. This investment goal may not
be changed without the approval of the holders of a majority (as defined in the
1940 Act) of the outstanding shares of the Portfolio. There can, of course, be
no guarantee that the Portfolio will achieve its investment goal. Additional
information about investment strategies that the Portfolio may employ and
investment policies mentioned below appears in the SAI.

Investment Policies

     The Portfolio will seek to achieve its goal through allocating and
reallocating its assets primarily among three types of fixed-income securities -
- U.S. government and mortgage-related securities, foreign government securities
and corporate securities rated below investment grade. Under current market
conditions, the Adviser expects to maintain 50% of its assets in government and
mortgage-securities, 25% in foreign government securities and 25% of its assets
in high-yield corporate securities. The portions of the Portfolio's assets
invested in each type of security will vary from time to time and, at any time,
the Portfolio may be entirely invested in a single type of fixed-income
security. Under normal circumstances, substantially all -- but not less than 
65% -- of the Portfolio's assets will be invested in fixed-income securities,
including non-convertible preferred stocks.

     The Adviser and the Sub-Adviser will select investments on the basis of an
analysis of economic and market conditions and relative risks and opportunities
of those types of fixed-income securities. In general, the particular type or
types of fixed-income securities selected for investment by the Portfolio at any
given time will be those that, in the view of its Adviser, offer the highest
income available at the time, unless the Adviser believes that such income
potential is not sufficient to justify the higher risks associated with these
securities. The Portfolio generally will invest in intermediate- and long-term
fixed-income securities with the result that, under normal market conditions,
the weighted average maturity of the Portfolio's securities is expected to be
from four to in excess of 12 years.

     Mortgage-related securities in which the Portfolio may invest, which
include mortgage obligations collateralized by mortgage loans or mortgage
pass-through certificates, will be rated no lower than Aa by Moody's or AA by
S&P or, if unrated, will be deemed by the Adviser to be of comparable quality.
Under normal market conditions, the Portfolio's mortgage-related holdings can be
expected to consist primarily of securities issued or guaranteed by the
Government National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
The Portfolio may invest up to 35% of its assets in corporate fixed-income
securities of U.S. issuers rated Ba or lower by Moody's or BB or lower by S&P,
but not lower than Caa or CCC, respectively, or in unrated securities deemed by
the Adviser and the Sub-Adviser to be of comparable quality. Special
considerations arising from investment in lower-rated and unrated securities are
described in "Special Considerations and Risk Factors -- Medium-, Lower-Rated 
and Unrated Securities."

--------------------------------------------------------------------------------
                                                                               3
<PAGE>
 
     The Portfolio may also invest in fixed-income securities issued by
supranational organizations and may engage in transactions in options, interest
rate futures contracts, options on interest rate futures contracts, forward
currency contracts, options on foreign currencies and foreign currency futures
contracts. Up to 5% of the Portfolio's assets may be invested in developing
countries.

                  CERTAIN INVESTMENT STRATEGIES AND GUIDELINES
================================================================================

     In attempting to achieve its investment goals, the Portfolio may employ,
among others, one or more of the strategies set forth below. More detailed
information concerning these strategies and their related risks is contained in
the SAI.

     Up to 15% of the total assets of the Portfolio may be invested in
securities with contractual or other restrictions on resale and other
instruments that are not readily marketable, including (a) repurchase agreements
with maturities greater than seven days, (b) futures contracts and related
options for which a liquid secondary market does not exist and (c) time deposits
maturing in more than seven calendar days. This restriction does not apply to
securities subject to Rule 144A of the Securities Act of 1933, as amended ("Rule
144A Securities"). The Portfolio may borrow from banks for temporary or
emergency purposes, but not for leverage, in an amount up to 33 1/3% of its
assets, and may pledge its assets to the same extent in connection with such
borrowings. Whenever borrowings from banks exceed 5% of the value of the assets
of the Portfolio, the Portfolio will not make any additional investments. Except
for the limitations on borrowing, the investment guidelines set forth in this
paragraph may be changed at any time without shareholder consent by vote of the
Board of Trustees of the Fund. A complete list of investment restrictions that
identifies additional restrictions that cannot be changed without the approval
of a majority of the Portfolio's outstanding shares is contained in the SAI.

Repurchase Agreements

     The Portfolio may engage in repurchase agreement transactions on portfolio
securities, in each case with banks which are the issuers of instruments
acceptable for purchase by the Portfolio and with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. Under the terms of
a typical repurchase agreement, the Portfolio would acquire an underlying debt
obligation for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase, and the Portfolio to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Portfolio's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the Portfolio's
holding period. The value of the underlying securities will be monitored by the
Portfolio's investment adviser to ensure that it at least equals at all times
the total amount of the repurchase obligation, including interest. The Portfolio
bears a risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations and the Portfolio is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during the
period while the Portfolio seeks to assert these rights. The Adviser, acting
under the supervision of the Fund's Board of Trustees, reviews on an ongoing
basis the value of the collateral and the creditworthiness of those banks and
dealers with which the Portfolio enters into repurchase agreements to evaluate
potential risks. A repurchase agreement is considered to be a loan
collateralized by the underlying securities under the 1940 Act.

Covered Option Writing

     The Portfolio may write put and call options on securities. The Portfolio
realizes fees (referred to as "premiums") for granting the rights evidenced by
the options. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at a specified price 

--------------------------------------------------------------------------------
4
<PAGE>
 
at any time during the option period. In contrast, a call option embodies the
right of its purchaser to compel the writer of the option to sell to the option
holder an underlying security at a specified price at any time during the option
period. Thus, the purchaser of a put option written by the Portfolio has the
right to compel the Portfolio to purchase from it the underlying security at the
agreed-upon price for a specified time period, while the purchaser of a call
option written by the Portfolio has the right to purchase from the Portfolio the
underlying security owned by the Portfolio at the agreed-upon price for a
specified time period.

     Upon the exercise of a put option written by the Portfolio, the Portfolio
may suffer a loss equal to the difference between the price at which the
Portfolio is required to purchase the underlying security plus the premium
received for writing the option and its market value at the time of the option
exercise. Upon the exercise of a call option written by the Portfolio, the
Portfolio may suffer a loss equal to the difference between the security's
market value at the time of the option exercise less the premium received for
writing the option and the Portfolio's acquisition cost of the security.

     The Portfolio will write only covered options. Accordingly, whenever the
Portfolio writes a call option, it will continue to own or have the present
right to acquire the underlying security for as long as it remains obligated as
the writer of the option. To support its obligation to purchase the underlying
security if a put option is exercised, the Portfolio that has written a put
option will either (a) deposit with The Chase Manhattan Bank, the custodian of
the Portfolio's investments ("Chase"), in a segregated account cash, U.S.
government securities, debt obligations of any grade or equity securities having
a value at least equal to the exercise price of the underlying securities,
provided such securities have been determined by the Adviser to be liquid and
unencumbered, and are marked to market daily pursuant to guidelines established
by the Trustees, or (b) continue to own an equivalent number of puts of the same
"series" (that is, puts on the same underlying security having the same exercise
prices and expiration dates as those written by the Portfolio) or an equivalent
number of puts of the same "class" (that is, puts on the same underlying
security) with exercise prices greater than those that it has written (or, if
the exercise prices of the puts that it holds are less than the exercise prices
of those that it has written, it will deposit the difference with Chase in a
segregated account).

     The Portfolio may engage in a closing purchase transaction to realize a
profit, to prevent an underlying security from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the outstanding
option's expiration). To effect a closing purchase transaction, the Portfolio
would purchase, prior to the holder's exercise of an option that the Portfolio
has written, an option of the same series as that on which the Portfolio desires
to terminate its obligation. The obligation of the Portfolio under an option
that it has written would be terminated by a closing purchase transaction, but
the Portfolio would not be deemed to own an option as the result of the
transaction. There can be no assurance that the Portfolio will be able to effect
closing purchase transactions at a time when it wishes to do so. To facilitate
closing purchase transactions, however, the Portfolio ordinarily will write
options only if a secondary market for the options exists on a U.S. securities
exchange or in the over-the-counter market. The staff of the SEC considers most
over-the-counter options to be illiquid. The ability to terminate options
positions established in the over-the-counter market may be more limited than in
the case of exchange-traded options and also may involve the risk that
securities dealers participating in such transactions would fail to meet their
obligations to the Portfolio.

Lending of Securities

     Consistent with applicable regulatory requirements, the Portfolio may lend
its portfolio securities to brokers, dealers and other financial organizations.
By lending its securities, the Portfolio can increase its income by continuing
to receive interest on the loaned securities as well as by either investing the
cash collateral in short-

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                                                                               5
<PAGE>
 
term instruments or obtaining yield in the form of interest paid by the borrower
when U.S. government securities are used as collateral. Loans of portfolio
securities will be collateralized by cash, letters of credit or U.S. government
securities that are maintained at all times in a segregated account with Fund's
custodian, in an amount at least equal to 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
Portfolio. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delays in receiving additional collateral
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.

Futures and Options on Futures

     When deemed advisable by the Adviser or the Sub-Adviser, the Portfolio may
enter into interest rate futures contracts, foreign currency futures contracts
and may enter into related options that are traded on a U.S. exchange or board
of trade. These transactions will be made solely for the purpose of hedging
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates, market conditions and currency values, as
the case may be. All futures and options contracts will be entered into only
when the transactions are economically appropriate to the reduction of risks
inherent in the management of the Portfolio.

     An interest rate futures contract provides for the future sale by one party
and the purchase by the other party of a specified amount of a particular
financial instrument (debt security) at a specified price, date, time and place.
Similarly, a foreign currency futures contract provides for the future sale by
one party and the purchase by another party of a certain amount of a particular
currency at a specified price, date, time and place. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally entered into. An option on an interest rate, stock index
or currency futures contract gives 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 short position if the option is a put) at a specified
exercise price at any time prior to the expiration date of the option.

     The use of futures contracts and options on futures contracts as a hedging
device involves several risks. There can be no assurance that there will be a
correlation between price movements in the underlying securities, index or
currency, on the one hand, and price movements in the securities that are the
subject of the hedge, on the other hand. Positions in futures contracts and
options on futures contracts may be closed out only on the exchange or board of
trade on which they were entered into, and there can be no assurance that an
active market will exist for a particular contract or option at any particular
time.

     The Portfolio may not enter into futures and options contracts for which
aggregate initial margin deposits and premiums paid for unexpired options to
establish such positions that are not bona fide hedging positions (as defined by
the Commodity Futures Trading Commission) exceed 5% of the fair market value of
the Portfolio's assets, after taking into account unrealized profits and
unrealized losses on futures contracts into which it has entered. With respect
to long positions in futures or options on futures, the Portfolio will "cover"
the position in a manner consistent with SEC guidance.

When-Issued Securities and Delayed-Delivery Transactions

     The Portfolio may purchase and sell securities on a when-issued basis,
which calls for the purchase (or sale) of securities at an agreed-upon price on
a specified future date. The Portfolio will enter into a when-issued transaction
for the purpose of acquiring portfolio securities and not for the purpose of
leverage. In such transactions, delivery of the securities occurs beyond the
normal settlement periods, but no payment or 

--------------------------------------------------------------------------------
6
<PAGE>
 
delivery is made by, and no interest accrues to, the Portfolio prior to the
actual delivery or payment by the other party to the transaction. Due to
fluctuations in the value of securities purchased or sold on a when-issued or
delayed-delivery basis, the returns obtained on such securities may be higher or
lower then the returns available in the market on the dates when the investments
are actually delivered to the buyers. The Portfolio will establish a segregated
account consisting of cash, U.S. government securities, high-grade debt
obligations or equity securities in an amount equal to the amount of its
when-issued and delayed-delivery commitments, provided such securities have been
determined by the Adviser to be liquid and unencumbered, and are marked to
market daily pursuant to guidelines established by the Trustees. Placing
securities rather than cash in the segregated account may have a leveraging
effect on the Portfolio's net assets. The Portfolio will not accrue income with
respect to a when-issued security prior to its stated delivery date.

Purchasing Options on Securities

     The Portfolio may purchase put and call options that are traded on a U.S.
securities exchange, foreign exchanges, and in the over-the-counter market. The
Portfolio may utilize up to 10% of its assets to purchase put options on
portfolio securities and may do so at or about the same time that it purchases
the underlying security or at a later time. By buying a put, the Portfolio
limits its risk of loss from a decline in the market value of the underlying
security until the put expires. Any appreciation in the value of and yield
otherwise available from the underlying security, however, will be partially
offset by the amount of the premium paid for the put option and any related
transaction costs. The Portfolio may utilize up to 10% of its assets to purchase
call options on portfolio securities. Call options may be purchased by the
Portfolio in order to acquire the underlying securities for the Portfolio at a
price that avoids any additional cost that would result from a substantial
increase in the market value of a security. The Portfolio also may purchase call
options to increase its return to investors at a time when the call is expected
to increase in value due to anticipated appreciation of the underlying security.

     Prior to their expirations, put and call options may be sold in closing
sale transactions (sales by the Portfolio, prior to the exercise of options that
it has purchased, of options of the same series), and profit or loss from the
sale will depend on whether the amount received is more or less than the premium
paid for the option plus the related transaction costs.

Covered Option Writing

     The Portfolio may write put and call options on securities. The Portfolio
realizes fees (referred to as "premiums") for granting the rights evidenced by
the options. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at a specified price at any time during the option period. In contrast, a call
option embodies the right of its purchaser to compel the writer of the option to
sell to the option holder an underlying security at a specified price at any
time during the option period. Thus, the purchaser of a put option written by
the Portfolio has the right to compel the Portfolio to purchase from it the
underlying security at the agreed-upon price for a specified time period, while
the purchaser of a call option written by the Portfolio has the right to
purchase from the Portfolio the underlying security owned by the Portfolio at
the agreed-upon price for a specified time period.

     Upon the exercise of a put option written by the Portfolio, the Portfolio
may suffer a loss equal to the difference between the price at which the
Portfolio is required to purchase the underlying security plus the premium
received for writing the option and its market value at the time of the option
exercise. Upon the exercise of a call option written by the Portfolio, the
Portfolio may suffer a loss equal to the difference between the security's
market value at the time of the option exercise less the premium received for
writing the option and the Portfolio's acquisition cost of the security.

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                                                                               7
<PAGE>
 
     The Portfolio will write only covered options. Accordingly, whenever the
Portfolio writes a call option, it will continue to own or have the present
right to acquire the underlying security for as long as it remains obligated as
the writer of the option. To support its obligation to purchase the underlying
security if a put option is exercised, the Portfolio that has written a put
option will either (a) deposit with the Portfolio's custodian in a segregated
account cash, U.S. government securities, debt obligations of any grade or
equity securities having a value equal to or greater than the exercise price of
the underlying securities, provided such securities have been determined by the
Adviser to be liquid and unencumbered, and are marked to market daily
pursuant to guidelines established by the Trustees or (b) continue to own an
equivalent number of puts of the same "series" (that is, puts on the same
underlying security having the same exercise prices and expiration dates as
those written by the Portfolio) or an equivalent number of puts of the same
"class" (that is, puts on the same underlying security) with exercise prices
greater than those that it has written (or, if the exercise prices of the puts
that it holds are less than the exercise prices of those that it has written, it
will deposit the difference with the Portfolio's custodian in a segregated
account).

     The Portfolio may engage in a closing purchase transaction to realize a
profit, to prevent an underlying security from being called or put or, in the
case of a call option, to unfreeze an underlying security (thereby permitting
its sale or the writing of a new option on the security prior to the outstanding
option's expiration). To effect a closing purchase transaction, the Portfolio
would purchase, prior to the holder's exercise of an option that the Portfolio
has written, an option of the same series as that on which the Portfolio desires
to terminate its obligation. The obligation of the Portfolio under an option
that it has written would be terminated by a closing purchase transaction, but
the Portfolio would not be deemed to own an option as the result of the
transaction. There can be no assurance that the Portfolio will be able to effect
closing purchase transactions at a time when it wishes to do so. To facilitate
closing purchase transactions, however, the Portfolio with option-writing
authority ordinarily will write options only if a secondary market for the
options exists on a U.S. securities exchange or in the over-the-counter market.
The staff of the SEC considers most over-the-counter options to be illiquid. The
ability to terminate options positions established in the over-the-counter
market may be more limited than in the case of exchange-traded options and also
may involve the risk that securities dealers participating in such transactions
would fail to meet their obligations to the Portfolio involved.

Forward Roll Transactions

     In order to enhance current income, the Portfolio may enter into forward
roll transactions with respect to mortgage-related securities issued by GNMA,
FNMA and FHLMC. In a forward roll transaction, the Portfolio sells a mortgage
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. The mortgage securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories than those sold. During the period between the sale and repurchase,
the Portfolio 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 Portfolio exceeding the yield on the securities sold.
Forward roll transactions involve the risk that the market value of the
securities sold by the Portfolio may decline below the repurchase price of those
securities. At the time the Portfolio enters into a forward roll transaction, it
will place in a segregated custodial account cash, U.S. government securities,
high-grade debt obligations or equity securities having a value equal to the
repurchase price (including accrued interest), provided such securities have
been determined by the Adviser to be liquid and unencumbered, and are marked to
market daily pursuant to guidelines established by the Trustees, and will
subsequently monitor the account to insure that such equivalent value is
maintained. Forward roll transactions are considered to be borrowings by the
Portfolio.

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8
<PAGE>
 
Currency Exchange Transactions and Options on Foreign Currencies

     The Portfolio may engage in currency exchange transactions and purchase
exchange-traded put and call options on foreign currencies in order to protect
against uncertainty in the level of future currency exchange rates. The
Portfolio will conduct its currency exchange transactions either on a spot
(i.e., cash) basis at the rate prevailing in the currency exchange market or
through entering into forward contracts to purchase or sell currencies. The
Portfolio's dealings in forward currency exchange and options on foreign
currencies are limited to hedging involving either specific transactions or
portfolio positions. A forward currency contract involves an obligation to
purchase or sell a specific currency for an agreed-upon price at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties. These contracts are entered into in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. An option on a foreign currency gives the purchaser, in return
for a premium, the right to sell, in the case of a put, and buy, in the case of
a call, the underlying currency at a specified price during the term of the
option.

Reverse Repurchase Agreements

     The Portfolio may enter into reverse repurchase agreement transactions with
member banks of the Federal Reserve System or with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. A reverse
repurchase agreement, which is considered a borrowing by the Portfolio, involves
a sale by the Portfolio of securities that it holds concurrently with an
agreement by the Portfolio to repurchase the same securities at an agreed-upon
price and date. The Portfolio typically will invest the proceeds of a reverse
repurchase agreement in money market instruments or repurchase agreements
maturing not later than the expiration of the reverse repurchase agreement. This
use of the proceeds is known as leverage. The Portfolio will enter into a
reverse repurchase agreement for leverage purposes only when the interest income
to be earned from the investment of the proceeds is greater than the interest
expense of the transaction. The Portfolio also may use the proceeds of reverse
repurchase agreements to provide liquidity to meet redemption requests when the
sale of the Portfolio's securities is considered to be disadvantageous. At the
time the Portfolio enters into a reverse repurchase agreement with a
broker-dealer (but not a bank), it will place in a segregated custodial account
cash, U.S. government securities, high-grade debt obligations or equity
securities having a value equal to its obligations under the reverse repurchase
agreements provided such securities have been determined by the manager to be
liquid and unencumbered, and are marked to market daily pursuant to guidelines
established by the Trustees.

                             ADDITIONAL INVESTMENTS
================================================================================

Money Market Instruments

     The Portfolio may, as a cash management tool, hold up to 20% of the value
of its total assets in cash and invest in short-term instruments and, for
temporary defensive purposes, may hold cash and invest in short-term instruments
without limitation. Short-term instruments in which the Portfolio may invest
include: U.S. government securities; obligations of banks having at least $1
billion in assets (including certificates of deposit, time deposits and bankers'
acceptances of U.S. or foreign banks, U.S. savings and loan associations and
similar institutions); commercial paper rated no lower than A-2 by S&P or
Prime-2 by Moody's or the equivalent from another nationally recognized
statistical rating organization ("NRSRO") or, if unrated, of an issuer having an
outstanding, unsecured debt issue then rated within the two highest rating
categories; and repurchase agreements with respect to any of the foregoing
entered into with banks and non-bank dealers approved by the Fund's Board of
Trustees.

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                                                                               9
<PAGE>
 
U.S. Government Securities

     The U.S. government securities in which the Portfolio may invest include:
direct obligations of the United States Treasury (such as Treasury Bills,
Treasury Notes and Treasury Bonds), and obligations issued by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as certificates issued by
GNMA); securities that are supported by the right of the issuer to borrow from
the U.S. Treasury (such as securities of Federal Home Loan Banks); and
securities that are supported only by the credit of the instrumentality (such as
bonds issued by FNMA) and FHLMC). Treasury Bills have maturities of less than
one year, Treasury Notes have maturities of one to ten years and Treasury Bonds
generally have maturities of greater than ten years at the date of issuance.

     The Portfolio may invest up to 5% of its net assets in U.S. government
securities for which the principal repayment at maturity, while paid in U.S.
dollars, is determined by reference to the exchange rate between the U.S. dollar
and the currency of one or more foreign countries ("Exchange Rate-Related
Securities"). Exchange Rate-Related Securities are issued in a variety of forms,
depending on the structure of the principal repayment formula. The principal
repayment formula may be structured so that the securityholder will benefit if a
particular foreign currency to which the security is linked is stable or
appreciates against the U.S. dollar. In the alternative, the principal repayment
formula may be structured so that the securityholder benefits if the U.S. dollar
is stable or appreciates against the linked foreign currency. Finally, the
principal repayment formula can be a function of more than one currency and,
therefore, be designed in either of the aforementioned forms or a combination of
those forms.

     Investments in Exchange Rate-Related Securities entail special risks. There
is the possibility of significant changes in rates of exchange between the U.S.
dollar and any foreign currency to which an Exchange Rate-Related Security is
linked. If currency exchange rates do not move in the direction or to the extent
anticipated at the time of purchase of the security, the amount of principal
repaid at maturity might be significantly below the par value of the security,
which might not be offset by the interest earned by the Portfolio over the term
of the security. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The imposition or modification of foreign
exchange controls by the United States or foreign governments or intervention by
central banks also could affect exchange rates. Finally, there is no assurance
that sufficient trading interest to create a liquid secondary market will exist
for particular Exchange Rate-Related Securities due to conditions in the debt
and foreign currency markets. Illiquidity in the forward foreign exchange market
and the high volatility of the foreign exchange market may from time to time
combine to make it difficult to sell an Exchange Rate-Related Security prior to
maturity without incurring a significant price loss.

                     SPECIAL CONSIDERATIONS AND RISK FACTORS
================================================================================

     This section describes certain investments of the Portfolio and related
risks. Further information concerning investments of the Portfolio and related
risks may be found in the Appendix to this Prospectus and in the SAI.

Fixed-Income Securities

     The market value of fixed-income obligations of the Portfolio will be
affected by general changes in interest rates, which will result in increases or
decreases in the value of fixed-income obligations held by the Portfolio. The
market value of the Portfolio's fixed-income obligations can be expected to vary
inversely in 

--------------------------------------------------------------------------------
10
<PAGE>
 
relation to changes in prevailing interest rates. In addition, fixed-income
securities in which the Portfolio may invest may not yield as high a level of
current income as might be achieved by investing in securities with less
liquidity and safety and longer maturities.

Non-Publicly Traded and Illiquid Securities

     The Portfolio may purchase securities that are not publicly traded. The
sale of securities that are not publicly traded is typically restricted under
federal securities laws. As a result, the Portfolio may be forced to sell these
securities at less than fair market value or may not be able to sell them when
the Adviser believes it desirable to do so. The Portfolio's investments in
illiquid securities are subject to the risk that should the Portfolio desire to
sell any of these securities when a ready buyer is not available at a price that
the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely affected.

Mortgage-Related Securities

     To the extent that the Portfolio purchases mortgage-related securities at a
premium, mortgage foreclosures and prepayments of principal by mortgagors (which
may be made at any time without penalty) may result in some loss of the
Portfolio's principal investment to the extent of the premium paid. The yield of
the Portfolio that invests in mortgage-related securities may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment. In addition, like other debt securities, the values of
mortgage-related securities, including government and government-related
mortgage pools, generally will fluctuate in relation to interest rates.

Foreign Securities

     The Portfolio may invest in obligations of companies and governments of
foreign nations, which involve certain risks in addition to the usual risks
inherent in U.S. investments. These risks include those resulting from
revaluation of currencies, future adverse political and 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 lack of uniform accounting, auditing and financial
reporting standards or of other regulatory practices and requirements comparable
to those applicable to U.S. companies. The performance of the Portfolio when
investing in foreign securities may be adversely affected by fluctuations in
value of one or more foreign currencies relative to the U.S. dollar. Moreover,
securities of many foreign companies may be less liquid and their prices more
volatile than those of securities of comparable U.S. companies. In addition,
with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other assets of the Portfolio, including the withholding
of dividends. Foreign securities may be subject to foreign government taxes that
could reduce the return on such securities. Changes in foreign currency exchange
rates may affect the value of portfolio securities and the appreciation or
depreciation of investments. Investment in foreign securities also may result in
higher expenses due to the cost of converting foreign currency to U.S. dollars,
the payment of fixed brokerage commissions on foreign exchanges, which generally
are higher than commissions on U.S. exchanges, and the expense of maintaining
securities with foreign custodians.

     In addition, the Portfolio may invest up to 5% of its total assets in
securities traded in markets of developing countries. A developing country
generally is considered to be a country that is in the initial stages of its
industrialization cycle. Investing in the equity and fixed-income markets of
developing countries involves exposure to economic structures that are generally
less diverse and mature, and to political systems that can be expected to have
less stability, than those of developed countries. Historical experience
indicates that the markets of developing countries have been more volatile than
the markets of the more mature economies of developed countries; however, such
markets often have provided higher rates of return to investors.

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                                                                              11
<PAGE>
 
Medium-, Lower-Rated and Unrated Securities

     The Portfolio may invest in medium- or lower-rated securities and unrated
securities of comparable quality. Generally, these securities offer a higher
current yield than is offered by higher-rated securities, but also will likely
have some quality and protective characteristics that, in the judgment of the
rating organizations, are outweighed by large uncertainties or major risk
exposures to adverse conditions and are predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in accordance with
the terms of the obligation. The market values of certain of these securities
also tend to be more sensitive to individual corporate developments and changes
in economic conditions than higher-quality securities. In addition, medium- and
lower-rated securities and comparable unrated securities generally present a
higher degree of credit risk. Issuers of medium- and lower-rated, and comparable
unrated, securities are often highly leveraged and may not have more traditional
methods of financing available to them so that their ability to service their
debt obligations during a major economic downturn or during sustained periods of
rising interest rates may be impaired. The risk of loss due to default by such
issuers is significantly greater because medium- and lower-rated securities and
unrated securities generally are unsecured and frequently are subordinated to
the prior payment of senior indebtedness. In light of these risks, the Adviser,
in evaluating the creditworthiness of an issue, whether rated or unrated, will
take various factors established by the Fund's Board of Trustees into
consideration, which may include, as applicable, the issuer's financial
resources, its sensitivity to economic conditions and trends, the operating
history of and the community support for the facility financed by the issue, the
ability of the issuer's management and regulatory matters.

     The markets in which medium- and lower-rated or comparable unrated
securities are traded generally are more limited than those in which
higher-rated securities are traded. The existence of limited markets for these
securities may restrict the availability of securities for the Portfolio to
purchase and also may have the effect of limiting the ability of the Portfolio
to (a) obtain accurate market quotations for purposes of valuing securities and
calculating net asset value and (b) sell securities at their fair value either
to meet redemption requests or to respond to changes in the economy or the
financial markets. The market for medium- and lower-rated, and comparable
unrated, securities is relatively new and has not fully weathered a major
economic recession. Any such recession, however, would disrupt severely the
market for such securities and adversely affect the value of such securities,
and could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon.

     Fixed-income securities, including medium- and lower-rated, and comparable
unrated, securities, frequently have call or buy-back features that permit their
issuers to call or repurchase the securities from their holders, such as the
Portfolio. If an issuer exercises these rights during periods of declining
interest rates, the Portfolio may have to replace the security with a lower
yielding security resulting in a decreased return to the Portfolio.

     The market value of securities in lower rating categories is more volatile
than that of higher quality securities, and the markets in which medium- and
lower-rated or comparable unrated securities are traded are more limited than
those in which higher-rated securities are traded. Adverse publicity and
investor perceptions also may have a negative impact on the value and liquidity
of lower-rated, high-yield securities, especially in a limited trading market.

     Subsequent to its purchase by the Portfolio, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Portfolio. Neither event will require sale of such securities by
the Portfolio involved, but the Portfolio's investment adviser will consider
such event in its determination of whether the Portfolio should continue to hold
the securities.

     Securities that are rated Ba by Moody's or BB by S&P or the equivalent from
another NRSRO have speculative characteristics with respect to their capacity to
pay interest and repay principal. Securities that are rated B generally lack
characteristics of the desirable investment and assurance of interest and
principal 

--------------------------------------------------------------------------------
12
<PAGE>
 
payments over any long period of time may be small. Securities that are rated
Caa or CCC are of poor standing. These issues may be in default or present
elements of danger with respect to principal or interest.

Securities of Unseasoned Issuers

     The Portfolio may invest in securities of unseasoned issuers, which may
have limited marketability and, therefore, may be subject to wide fluctuations
in market value. In addition, certain securities may lack a significant
operating history and may be dependent on products or services without an
established market share.

Zero Coupon Securities

     The Portfolio may invest in zero coupon securities. A zero coupon security
is a debt obligation that does not entitle the holder to any periodic payments
of interest prior to maturity and therefore is issued and traded at a discount
from its face amount. Zero coupon securities may be created by separating the
interest and principal components of securities issued or guaranteed by the
United States government or one of its agencies or instrumentalities ("U.S.
Government securities") or issued by private corporate issuers. The discount
from face value at which zero coupon securities are purchased varies depending
on the time remaining until maturity, prevailing interest rates and the
liquidity of the security. Because the discount from face value is known at the
time of investment, investors holding zero coupon securities until maturity know
the total amount of their investment return at the time of investment. In
contrast, a portion of the total realized return from conventional
interest-paying obligations comes from the reinvestment of periodic interest.
Because the rate to be earned on these reinvestments may be higher or lower than
the rate quoted on the interest-paying obligations at the time of the original
purchase, the investor's return on reinvestments is uncertain even if the
securities are held to maturity. This uncertainty is commonly referred to as
reinvestment risk. With zero coupon securities, however, there are no cash
distributions to reinvest, so investors bear no reinvestment risk it they hold
the zero coupon securities to maturity; holders of zero coupon securities,
however, forego the possibility of reinvesting at a higher yield than the rate
paid on the originally issued security. With both zero coupon and
interest-paying securities, there is no reinvesment risk on the principal amount
of the investment.

     Zero coupon securities of the type held by the Portfolio can be sold prior
to their due date in the secondary market at their then prevailing market value
which, depending on prevailing levels of interest rates and the time remaining
to maturity, may be more or less than the securities' "accreted value;" that is,
their value based solely on the amount due at maturity and accretion of interest
to date. The market prices of zero coupon securities are generally more volatile
than the market prices of securities that pay interest periodically and,
accordingly, are likely to respond to a greater degree to changes in interest
rates than do non-zero coupon securities having similar maturities and yields.

     Rule 144A Securities are unregistered securities restricted to purchase by
"qualified institutional buyers" pursuant to Rule 144A under the Securities Act
of 1933. Because Rule 144A Securities are freely transferable among qualified
institutional buyers, a liquid market may exist among such buyers. The Board of
Trustees has adopted guidelines and delegated to management the daily function
of determining and monitoring the liquidity of Rule 144A securities. However,
the Board of Trustees maintains sufficient oversight and is ultimately
responsible for the liquidity determinations. Investments in restricted
securities such as Rule 144A Securities could have the effect of increasing the
level of illiquidity in the Portfolio to the extent that there is temporarily no
market for these securities among qualified instititutional buyers.

Year 2000

     The investment management services provided to the Fund by the Adviser and
the services provided to shareholders by Smith Barney, the Fund's distributor,
depend on the smooth functioning of their computer 

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                                                                              13
<PAGE>
 
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or some other date, due to the manner in which dates
were encoded and calculated. That failure could have a negative impact on the
Fund's operations, including the handling of securities trades, pricing and
account services. The Adviser and Smith Barney have advised the Fund that they
have been reviewing all of their computer systems and actively working on
necessary changes to their systems to prepare for the year 2000 and except that
their systems will be complaint before that date. In addition, the Adviser has
been advised by the Fund's custodian, transfer agent and accounting service
agent that they are also in the process of modifying their systems with the same
goal. There can, however, be no assurance that the Adviser, Smith Barney or any
other service provider will be successful, or that interaction with other
non-complying computer systems will not impair Fund services at that time.

                             PORTFOLIO TRANSACTIONS
================================================================================

     All orders for transactions in securities, options, futures contracts and
options on futures contracts on behalf of the Portfolio will be placed by the
Adviser or the Sub-Adviser with broker-dealers that the Adviser or the
Sub-Adviser selects, including Smith Barney and other affiliated brokers. The
Portfolio may utilize Smith Barney or a Smith Barney-affiliated broker in
connection with a purchase or sale of securities when the Adviser or the
Sub-Adviser believes that the broker's charge for the transaction does not
exceed usual and customary levels. The same standard applies to the use of Smith
Barney or a Smith Barney-affiliated broker as a commodities broker in connection
with entering into futures contracts and options on futures contracts.

                                 NET ASSET VALUE
================================================================================

     The value of an individual share of the Portfolio is the net asset value of
that share. The net asset value per share of the Portfolio will be calculated
each day, Monday through Friday, except on days when the New York Stock
Exchange, Inc. (the "NYSE") is closed. The NYSE is currently scheduled to be
closed on New Year's Day, Presidents' Day, Martin Luther King, Jr. 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. Net asset value per share of the
Portfolio is determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time).

     Net asset value per share is computed by dividing the value of the
Portfolio's net assets by the total number of its shares outstanding. Generally,
the Portfolio's investments are valued at market value or, in the absence of a
market value with respect to any portfolio securities, at fair value as
determined by or under the direction of the Fund's Board of Trustees. A security
that is primarily traded on a U.S. or foreign exchange (including securities
traded through the National Market System) is valued at the last sale price on
that exchange or, if there were no sales during the day, at the current quoted
bid price. Portfolio securities that are primarily traded on foreign exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time a
value was so established is likely to have changed the value, then the fair
value of those securities will be determined by consideration of other factors
by or under the direction of the Fund's Board of Trustees or its delegates.
Over-the-counter securities that are not traded through the National Market
System and securities listed or traded on certain foreign exchanges whose
operations are similar to the U.S. over-the-counter market are valued on the
basis of the bid price at the close of business on each day. An option is
generally valued at the last sale price or, in the absence of a last sale price,
the last offer price. Investments in U.S. government securities (other than
short-term securities) are valued at the average of the quoted bid and asked
prices in the over-the-counter market. Short-term investments that mature in 60
days or less are valued at amortized cost when 

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14
<PAGE>
 
the Fund's Board of Trustees determines that this constitutes fair value. The
value of a futures contract equals the unrealized gain or loss on the contract,
which is determined by marking the contract to the current settlement price for
a like contract acquired on the day on which the futures contract is being
valued. A settlement price may not be used if the market makes a limit move with
respect to the security, index or currency underlying the futures contract. In
such event, the futures contract will be valued at a fair market price to be
determined by or under the direction of the Fund's Board of Trustees. Further
information regarding the Fund's valuation policies is contained in the SAI.

                               HOW TO USE THE FUND
================================================================================

Investing in the Fund

     Shares of the Fund are currently offered exclusively to Contract owners. To
find out which insurance companies offer Contracts that are eligible to invest
in the Fund, call the Fund at (800) 451-2010. For further information, see the
description provided in the Contract prospectus.

Sales Charges and Surrender Charges

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

Redeeming and Exchanging Shares

     A participating insurance company will redeem shares of the Portfolio in
response to full or partial surrenders under the terms of the Contract.
Generally, payment upon redemption will be made within three days after
receiving a valid redemption request (unless redemption is suspended or payment
is delayed as permitted in accordance with SEC regulations). The Fund will use
the net asset value at the close of trading on the NYSE on the day the notice of
surrender or transfer is received. If the request is received after the close of
trading on the NYSE, the shares will be redeemed at the net asset value at the
close of the next business day. The value of any redeemed shares may be more or
less than their original purchase price.

     A detailed description of how to surrender a Contract is included in the
Contract prospectus.

                               DIVIDENDS AND TAXES
================================================================================

Dividends

     Net Investment Income. Dividends and distributions will be automatically
reinvested, without a sales charge, in the shareholder's account at net asset
value in additional shares of the Portfolio, unless the shareholder instructs
the Portfolio to pay all dividends and distributions in cash. Net investment
income, including dividends on stocks and interest on bonds or other securities
the Fund holds, is distributed to the shareholders of the Portfolio on an annual
basis. The shareholders of this Portfolio are the separate accounts of
participating life insurance companies.

     Capital Gains. Distributions of any net realized capital gains of the
Portfolio will be paid annually shortly after the close of the fiscal year in
which they are earned.

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                                                                              15
<PAGE>
 
Taxes

     In the opinion of counsel to the Fund, the Portfolio will be treated as a
separate taxpayer with the result that, for federal income tax purposes, the
amounts of investment income and capital gains earned will be determined on a
Portfolio (rather than on a Fund-wide) basis.

     The Fund intends that the Portfolio will separately meet the requirements
for qualification each year as a "regulated investment company" within the
meaning of the Code. In order to qualify as a regulated investment company, the
Portfolio must meet certain income and diversification tests. As a regulated
investment company and provided certain distribution requirements are met, the
Portfolio will not be subject to federal income tax on its net investment income
and net capital gains that it distributes to its shareholders.

     Dividends paid by the Portfolio from taxable investment income and
distributions of short-term capital gains will be treated as ordinary income in
the hands of the shareholders for federal income tax purposes, whether received
in cash or reinvested in additional shares. Distributions of net long-term
capital gains will be treated as long-term capital gains in the hands of the
shareholders, if certain notice and designation requirements are satisfied,
whether paid in cash or reinvested in additional shares, regardless of the
length of time that the investor has held shares of the Portfolio. The Fund has
been informed that the separate accounts represented by the Contracts should,
for federal income tax purposes, be considered the shareholders of the
Portfolio.

     To comply with regulations under Section 817(h) of the Code, the Portfolio
will be required to diversify its investments so that on the last day of each
calendar quarter, or within 30 days thereafter, no more than 55% of the value of
its assets is represented by any one investment, no more than 70% is represented
by any two investments, no more than 80% is represented by any three investments
and no more than 90% is represented by any four investments. Generally, all
securities of the same issuer are treated as a single investment. For the
purposes of Section 817(h) of the Code, obligations of the United States
Treasury and each U.S. government agency or instrumentality are treated as
securities of separate issuers.

     The Treasury Department has indicated that it may issue future
pronouncements addressing the circumstances in which a variable contract owner's
control of the investments of a separate account may cause the variable contract
owner, rather than the insurance company, to be treated as the owner of the
assets held by the separate account. If the variable contract owner is
considered the owner of the securities underlying the separate account, income
and gains produced by those securities would be included currently in the
variable contract owner's gross income. It is not known what standards will be
set forth in such pronouncements or when, if ever, these pronouncements may be
issued.

     In the event that rules or regulations are adopted, there can be no
assurance that the Portfolio will be able to operate as currently described in
this Prospectus, or that the Fund will not have to change the investment goal or
investment policies of the Portfolio. While a Portfolio's investment goal is
fundamental and may be changed only by a vote of a majority of the Portfolio's
outstanding shares, the Fund's Board of Trustees reserves the right to modify
the investment policies of the Portfolio as necessary to prevent any such
prospective rules and regulations from causing a Contract owner to be considered
the owner of the shares of the Portfolio.

     Reference is made to the Contract prospectus for information regarding the
federal income tax treatment of distributions.

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16
<PAGE>
 
                             MANAGEMENT OF THE FUND
================================================================================

Board of Trustees

     Overall responsibility for management and supervision of the Fund and its
portfolios, including the Portfolio, rests with the Fund's Board of Trustees.
The Trustees approve all significant agreements between the Fund and the persons
or companies that furnish services to the Fund and the Portfolio, including
agreements with the Adviser, the Sub-Adviser, the Portfolio's custodian,
transfer agent and distributor. The day-to-day operations of the Portfolio are
delegated to the Adviser and/or the Sub-Adviser. The identities and backgrounds
of the Trustees and officers of the Fund, together with certain additional
information about them, are contained in the SAI.

Adviser, Sub-Adviser and Administrator

     Subject to the supervision and direction of the Fund's Board of Trustees,
the Adviser manages the Portfolio in accordance with the Portfolio's goal and
stated investment policies, makes investment decisions for the Portfolio, places
orders to purchase and sell securities on behalf of the Portfolio and employs
professional portfolio managers and securities analysts who provide research
services to the Portfolio.

     MMC, located at 388 Greenwich Street, New York, New York 10013, provides
investment advisory and management services to investment companies affiliated
with Holdings. MMC renders investment advice to investment companies that had
aggregate assets under management as of March 30, 1998 in excess of $100.5
billion.

     Global Capital Management, located at 10 Piccadilly, London, W1V 9LA
England, is a wholly owned subsidiary of Holdings. The Sub-Adviser is
responsible for and selects the Portfolio's investments in foreign securities
and selects brokers and dealers that execute the Portfolio's investments in
foreign securities. The Sub-Adviser renders investment advice to institutional
clients and investment companies with aggregate assets under management, as of
March 31, 1998, in excess of approximately $1 billion.

     The Adviser is paid an aggregate fee of 0.45% of the Portfolio's average
net assets. The Sub-Adviser is paid a fee by the Adviser at the annual
percentage of 0.15% of the value of the Portfolio's average net assets. MMC, as
the Administrator of the Portfolio, is paid a fee at the annual percentage of
0.20% of the value of the Portfolio's average net assets.

                              PORTFOLIO MANAGEMENT
================================================================================

     James C. Conroy is a Vice President and Investment Officer of the Fund
and a Managing Director of Smith Barney. Victor Filatov is a Vice President 
and Investment Officer of the Fund and a Managing Director of Smith Barney.

     The Fund's management discussion and analysis, and additional performance
information regarding the portfolios of the Fund, including the Portfolio,
during the fiscal year ended December 31, 1997, is included in the Annual Report
dated December 31, 1997. A copy of the Annual Report may be obtained upon
request without charge from a representative of a participating life insurance
company or a Smith Barney Financial Consultant or by writing or calling the Fund
at the address or phone number listed on page one of this Prospectus.

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                                                                              17
<PAGE>
 
                          CUSTODIAN AND TRANSFER AGENT
================================================================================

     Chase, located at MetroTech Center, Brooklyn, NY 11245, acts as custodian
of the Fund's investments generally.

     First Data Investor Services Group, Inc., located at Exchange Place,
Boston, Massachusetts, 02109, acts as the Fund's transfer and dividend paying
agent.

                                   DISTRIBUTOR
================================================================================

     Smith Barney, a subsidiary of Holdings, located at 388 Greenwich Street,
New York, New York, 10013, serves as distributor of the Fund's shares, for which
it receives no separate fee from the Fund. Insurance companies offering the
Contracts pay Smith Barney for the services it provides and the expenses it
bears in distributing the Contracts, including payment of commissions for sales.
Insurance companies offering the Contracts will bear certain additional costs in
connection with the offering of the Portfolio's shares, including the costs of
printing and distributing prospectuses, statements of additional information and
sales literature.

                             ADDITIONAL INFORMATION
================================================================================

Formation

     The Fund was organized on May 13, 1991, under the laws of the Commonwealth
of Massachusetts and is a business entity commonly known as a "Massachusetts
business trust." The Fund is registered with the SEC as a diversified, open-end
management investment company, as defined in the 1940 Act. The Fund commenced
operations on October 16, 1991, under the name Shearson Series Fund. On July 30,
1993, October 14, 1994 and July 24, 1997, the Fund changed its name to Smith
Barney Shearson Series Fund, Smith Barney Series Fund and Greenwich Street
Series Fund, respectivley.

Shares of Beneficial Interest

     The Fund offers shares of beneficial interest of separate series with a par
value of $.001 per share. Shares of ten series have been authorized. When
matters are submitted for shareholder vote, shareholders of each portfolio will
have one vote for each full share owned and proportionate, fractional votes for
fractional shares held.

     For a discussion of the rights of Contract owners concerning the voting of
shares, please refer to the Contract prospectus. Generally, shares of the Fund
vote by individual portfolio on all matters except (a) matters affecting only
the interests of more than one of the portfolios, in which case shares of the
affected portfolios would be entitled to vote, or (b) when the 1940 Act requires
that shares of the portfolios be voted in the aggregate. All shares of the Fund
vote together as one series for the election of Trustees. There will normally be
no meetings of shareholders for the purpose of electing Trustees unless less
than a majority of the Trustees holding office have been elected by
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Any Trustee may be removed
from office upon the vote of shareholders holding at least two-thirds of the
Fund's outstanding shares at a meeting called for that purpose. The Trustees are
required to call such a meeting upon the written request of shareholders holding
at least 10% of the Fund's outstanding shares. In addition, shareholders who
meet certain criteria will be assisted by the Fund in communicating with other
shareholders in seeking the holding of such a meeting.

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18
<PAGE>
 
     The participating life insurance company will send owners of the Contract a
semi-annual report and an audited annual report, each of which includes a list
of the investment securities held by the Portfolio at the end of the period
covered. Contract owners may make inquiries regarding the Portfolio to a
representative of the participating life insurance company or their Smith Barney
Financial Consultant.

                           THE PORTFOLIO'S PERFORMANCE
================================================================================

Total Return

     From time to time, the Portfolio may advertise its "average annual total
return" over various periods of time. Such total return figures show the average
percentage change in value of an investment in the Portfolio from the beginning
date of the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Portfolio's shares and assume that any
income dividends and/or capital gains distributions made by the Portfolio during
the period were reinvested in shares of the Portfolio. Figures will be given for
recent one-, five- and ten-year periods (if applicable), and may be given for
other periods as well (such as from commencement of the Portfolio's operations,
or on a year-by-year basis). When considering average annual total return
figures for periods longer than one year, it is important to note that the
Portfolio's annual total return for any one year in the period might have been
greater or less than the average for the entire period. The Portfolio also may
use "aggregate" total return figures for various periods, representing the
cumulative change in value of an investment in the Portfolio for the specific
period (again reflecting changes in the Portfolio's share prices and assuming
reinvestment of dividends and distributions). Aggregate total returns may be
shown by means of schedules, charts or graphs and may indicate subtotals of the
various components of total return (i.e., change in value of initial investment,
income dividends and capital gains distributions).

     It is important to note that yield and total return figures are based on
historical earnings and are not intended to indicate future performance. The SAI
describes the method used to determine the Portfolio's yield and total return.
Shareholders may make inquiries regarding the Portfolio, including current yield
quotations or total return figures, to a representative of a participating life
insurance company or their Smith Barney Financial Consultant.

     In reports or other communications to shareholders or in advertising
material, the Portfolio may compare its performance with that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc. or
similar independent services that monitor the performance of mutual funds or
with other appropriate indices of investment securities, such as the S&P 500,
Salomon Brothers World Government Bond Index, Lehman Brothers Government Bond
Index and Lehman Brothers Mortgage-Backed Securities Index, with the Consumer
Price Index, Dow Jones Industrial Average or NASDAQ, or with investment or
savings vehicles. The performance information also may include evaluations of
the Portfolio published by nationally recognized ranking services and by
financial publications that are nationally recognized, such as Barron's,
Business Week, Forbes, Fortune, Institutional Investor, Investor's Business
Daily, Kiplinger's Personal Finance Magazine, Money, Morningstar Mutual Fund
Values, Mutual Fund Forecaster, The New York Times, Stranger's Investment
Advisor, USA Today, U.S. News & World Report and The Wall Street Journal. Such
comparative performance information will be stated in the same terms in which
the comparative data or indices are stated. Any such advertisement also would
include the standard performance information required by the SEC as described
above. For these purposes, the performance of the Portfolio, as well as the
performance of other mutual funds or indices, do not reflect sales charges, the
inclusion of which would reduce the Portfolio's performance.

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                                                                              19
<PAGE>
 
     The Portfolio may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.

     A Contract owner's actual return on its investment in this Portfolio will
be affected by Contract charges imposed by the separate accounts of the
participating life insurance companies.


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  Travelers Life & Annuity [LOGO]                
  A Member of TravelersGroup                        Underlying Fund Prospectuses