SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM N-1A



REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

Pre-Effective Amendment No._____

Post-Effective Amendment No.   25

and

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940

SMITH BARNEY WORLD FUNDS, INC.

 (Exact name of Registrant as Specified
 in the Articles of Incorporation)

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

           (212) 783-0693
(Registrant's Telephone Number, Including Area Code)

Christina T. Sydor
7 World Trade Center, New York, New York 10048 (39th floor)
(Name and Address of Agent For Service)


Approximate Date of Public Offering: Continuous

It is proposed that this filing will become effective
(check appropriate box)

 ____  Immediately upon filing pursuant to paragraph (b)
_ XXX  On February 28, 2001 pursuant to paragraph (b)
_____  60 days after filing pursuant to paragraph (a) (1)
_____  On (date) pursuant to paragraph (a) (1)
_____  75 days after filing pursuant to paragraph (a) (2)
_____  On (date) pursuant to paragraph (a) (2) of Rule 485.

If appropriate, check the following box:

_____ This post-effective amendment designates a new effective
           date for a previously filed post-effective amendment

PART A  Prospectus
[LOGO] Smith Barney
       Mutual Funds

Your Serious Money. Professionally Managed.(SM)

PROSPECTUS


International
All Cap Growth
Portfolio


Class A, B, L and Y Shares

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

February 28, 2001

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

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

<PAGE>

International All Cap Growth Portfolio

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                                    Contents
--------------------------------------------------------------------------------

Investments, risks and performance ............................................2

More on the fund's investments ................................................6

Management ....................................................................7


Choosing a class of shares to buy .............................................8

Comparing the fund's classes ..................................................9

Sales charges ................................................................10

More about deferred sales charges ............................................13

Buying shares ................................................................14

Exchanging shares ............................................................15

Redeeming shares .............................................................17

Other things to know about share transactions ................................19

Dividends, distributions and taxes ...........................................21

Share price ..................................................................22

Financial highlights .........................................................23



                                                   Smith Barney Mutual Funds   1
<PAGE>

--------------------------------------------------------------------------------
   Investments, risks and performance
--------------------------------------------------------------------------------

Investment objective

The fund seeks total return on its assets from growth of capital and income.

Principal investment strategies

Key investments The fund invests primarily in equity securities of foreign
companies. Equity securities include exchange traded and over-the-counter common
stocks and preferred shares, debt securities convertible into equity securities,
and warrants and rights relating to equity securities.

Selection process The manager emphasizes individual security selection while
diversifying the fund's investments across regions and countries which can help
to reduce risk. While the manager selects investments primarily for their
capital appreciation potential, some investments have an income component as
well. Companies in which the fund invests may have large, mid or small size
market capitalizations and may operate in any market sector. Market conditions
around the world change constantly as does the location of potential investment
opportunities. Depending on the manager's assessment of overseas potential for
long-term growth, the fund's emphasis among foreign markets (including emerging
markets) and types of issuers may vary.

In selecting individual companies for investment, the manager looks for the
following:

o     Above average earnings growth
o     High relative return on invested capital
o     Experienced and effective management
o     Effective research, product development and marketing
o     Competitive advantages
o     Strong financial condition or stable or improving credit quality

By spreading the fund's investments across many international markets, the
manager seeks to reduce volatility compared to an investment in a single region.
Unlike global mutual funds which may allocate a substantial portion of assets to
the U.S. markets, the fund invests substantially all of its assets in countries
outside of the U.S.

In allocating assets among countries and regions, the economic and political
factors the manager evaluates include:

o     Low or decelerating inflation which creates a favorable environment for
      securities markets
o     Stable governments with policies that encourage economic growth, equity
      investment and development of securities markets


                                      International All Cap Growth Portfolio   2
<PAGE>

o     Currency stability
o     The range of individual investment opportunities

Principal risks of investing in the fund

Investing in foreign securities can bring added benefits, but it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if:

o     Foreign securities prices decline
o     Adverse governmental action or political, economic or market instability
      affects a foreign country or region
o     The currency in which a security is priced declines in value relative to
      the U.S. dollar
o     The manager's judgment about the attractiveness, value or potential
      appreciation of a particular security proves to be incorrect



The fund invests in certain European countries where the securities markets are
less liquid and more volatile than markets in the U.S. In some European
countries, less information is available about issuers and markets because of
less rigorous accounting and regulatory standards than in the U.S. Currency
fluctuations could erase investment gains or add to investment losses. The risks
of investing in the emerging markets of Eastern Europe are substantially greater
than investing in the more developed markets of Western Europe.

Who may want to invest The fund may be an appropriate investment if you:

o     Are seeking to participate in the long-term growth potential of
      international markets
o     Currently have exposure to U.S. stock markets and wish to diversify your
      investment portfolio by adding non-U.S. stocks that may not move in tandem
      with U.S. stocks
o     Are comfortable with the risks of the stock market and the special risks
      of investing in foreign securities, including emerging market securities


3   Smith Barney Mutual Funds
<PAGE>

Risk return bar chart

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future. This bar chart
shows the performance of the fund's Class A shares for each of the past 10
years. Class B, L and Y shares would have different performance because of their
different expenses. The performance information in the chart does not reflect
sales charges, which would reduce your return.

                         Total Return for Class A Shares

                               [GRAPHIC OMITTED]

   [The following table was depicted as a bar chart in the printed material.]

    91     92      93      94      95      96     97      98      99      00
--------------------------------------------------------------------------------
  37.80%  0.49%  52.78%  (8.90)%  2.64%  13.60%  1.91%  11.74%  60.26%  (30.77)%

                        Calendar years ended December 31

Quarterly returns:

Highest: 42.91% in 4th quarter 1999; Lowest: (17.96)% in 2nd quarter 2000.



Risk return table

This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown with that of the MSCI
EAFE Index, a broad-based unmanaged index of foreign stocks. This table assumes
imposition of the maximum sales charge applicable to the class, redemption of
shares at the end of the period, and reinvestment of distributions and
dividends.

--------------------------------------------------------------------------------
                          Average Annual Total Returns
                     Calendar Years Ended December 31, 2000
--------------------------------------------------------------------------------
 Class            1 year    5 years   10 years   Since Inception  Inception Date
--------------------------------------------------------------------------------
   A             (34.23)%    6.40%     10.43%*       9.88%*           2/18/86
--------------------------------------------------------------------------------
   B             (34.01)%    6.49%       n/a          4.07%          11/07/94
--------------------------------------------------------------------------------
   L             (32.48)%    6.44%       n/a          8.42%          01/04/93
--------------------------------------------------------------------------------
   Y             (30.47)%    7.90%       n/a          5.91%          06/16/94
--------------------------------------------------------------------------------

MSCI EAFE Index  (14.17)%    7.13%      8.24%          **               **
--------------------------------------------------------------------------------
*     The fund's performance also includes returns on the Fenimore International
      Fund. Smith Barney assumed management in November 1991.
**    Index comparison begins on 12/31/90.



4   International All Cap Growth Portfolio
<PAGE>

Fee table

This table sets forth the fees and expenses you will pay if you invest in fund
shares.

--------------------------------------------------------------------------------
                                Shareholder fees
--------------------------------------------------------------------------------
(fees paid directly from your investment)   Class A   Class B   Class L  Class Y
--------------------------------------------------------------------------------
Maximum sales charge (load) imposed
on purchases (as a % of offering price)      5.00%     None      1.00%    None
--------------------------------------------------------------------------------
Maximum deferred sales charge (load)
(as a % of the lower of net asset
value at purchase or redemption)             None*     5.00%     1.00%    None
--------------------------------------------------------------------------------
                         Annual fund operating expenses
--------------------------------------------------------------------------------
(expenses deducted from fund assets)        Class A   Class B   Class L  Class Y
--------------------------------------------------------------------------------
Management fee                               0.85%     0.85%     0.85%    0.85%
--------------------------------------------------------------------------------
Distribution and service (12b-1) fees        0.25%     1.00%     1.00%    None
--------------------------------------------------------------------------------

Other expenses                               0.11%     0.21%     0.19%    0.07%
--------------------------------------------------------------------------------
Total annual fund operating expenses         1.21%     2.06%     2.04%    0.92%

* You may buy Class A shares in amounts of $1,000,000 or more at net asset value
(without an initial sales charge) but if you redeem those shares within 12
months of their purchase, you will pay a deferred sales charge of 1.00%.


Example

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

o     You invest $10,000 in the fund for the period shown
o     Your investment has a 5% return each year
o     You reinvest all distributions and dividends without a sales charge
o     The fund's operating expenses remain the same


--------------------------------------------------------------------------------
                       Number of years you own your shares
--------------------------------------------------------------------------------
                                         1 year   3 years    5 years   10 years
--------------------------------------------------------------------------------
Class A (with or without redemption)      $617      $865      $1132      $1893
--------------------------------------------------------------------------------
Class B (redemption at end of period)     $709      $946      $1208      $2172
--------------------------------------------------------------------------------
Class B (no redemption)                   $209      $646      $1108      $2172
--------------------------------------------------------------------------------
Class L (redemption at end of period)     $405      $733      $1187      $2445
--------------------------------------------------------------------------------
Class L (no redemption)                   $305      $733      $1187      $2445
--------------------------------------------------------------------------------
Class Y (redemption at end of period)     $ 94      $293      $ 509      $1131
--------------------------------------------------------------------------------
Class Y (no redemption)                   $ 94      $293      $ 509      $1131
--------------------------------------------------------------------------------



                                                   Smith Barney Mutual Funds   5
<PAGE>

--------------------------------------------------------------------------------
   More on the fund's investments
--------------------------------------------------------------------------------

Currency transactions The fund may enter into transactions to buy or sell
currencies at a future date, which may be a few days or a number of months. The
fund may enter into these forward currency contracts to:

o     Settle transactions in securities quoted in foreign currencies
o     Attempt to protect against the economic impact of adverse changes in the
      value of the U.S. dollar.

The fund may not fully benefit from or may lose money on forward currency
transactions if changes in currency rates do not occur as anticipated or do not
correspond accurately to changes in the value of the fund's holdings.

Debt securities The fund may invest up to 20% of its assets in debt securities
of foreign corporate and governmental issuers as well as U.S. Government
securities and money market obligations of U.S. issuers. The fund may invest in
all types of debt securities of any maturity or credit quality. These securities
may be denominated in U.S. dollars or other currencies and may pay fixed or
variable rates of interest. The value of debt securities will go down if
interest rates go up, or the credit rating of the security is downgraded or the
issuer defaults on its obligation to pay principal or interest. These risks are
greater for debt securities rated below investment grade.

Emerging markets The fund may invest up to 20% of assets in issuers located or
doing business in emerging markets. Emerging market investments offer the
potential of significant gains but also involve greater risks than investing in
more developed countries. Political or economic stability, lack of market
liquidity and government actions such as currency controls or seizure of private
businesses or property are more likely in emerging markets.

Defensive investing The fund may depart from its principal investment strategies
in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.


6   International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Management
--------------------------------------------------------------------------------

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

Jeffrey Russell and James Conheady, investment officers of the manager and
managing directors of Salomon Smith Barney, have been responsible for the
day-to-day management of the fund since its inception. Maurits E. Edersheim,
head of Salomon Smith Barney's international equity team, has general
responsibility for Salomon Smith Barney's international equity investment
operations.

Management fee For its services, the manager received a fee during the fund's
last fiscal year equal to 0.85% of the fund's average daily net assets.

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

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

Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). The transfer agent has entered into a sub-transfer agency and
services agreement with PFPC Global Fund Services to serve as the fund's
sub-transfer agent (the "sub-transfer agent"). The sub-transfer agent will
perform certain functions including shareholder recordkeeping and accounting
services.


                                                   Smith Barney Mutual Funds   7
<PAGE>

--------------------------------------------------------------------------------
  Choosing a class of shares to buy
--------------------------------------------------------------------------------

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

o     If you plan to invest regularly or in large amounts, buying Class A shares
      may help you reduce sales charges and ongoing expenses.
o     For Class B shares, all of your purchase amount and, for Class L shares,
      more of your purchase amount (compared to Class A shares) will be
      immediately invested. This may help offset the higher expenses of Class B
      and Class L shares, but only if the fund performs well.
o     Class L shares have a shorter deferred sales charge period than Class B
      shares. However, because Class B shares convert to Class A shares, and
      Class L shares do not, Class B shares may be more attractive to long-term
      investors.

You may buy shares from:

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

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

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


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



<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
---
                                                   Initial
Additional
--------------------------------------------------------------------------------
---
                                         Classes A, B, L     Class Y    All
Classes
--------------------------------------------------------------------------------
---
<S>                                          <C>           <C>              <C>
General                                      $1,000        $5 million       $50
--------------------------------------------------------------------------------
---
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts                $250         $5 million       $50
--------------------------------------------------------------------------------
---
Qualified Retirement Plans*                    $25         $5 million       $25
--------------------------------------------------------------------------------
---
Simple IRAs                                    $1              n/a          $1
--------------------------------------------------------------------------------
---
Monthly Systematic Investment Plans            $25             n/a          $25
--------------------------------------------------------------------------------
---
Quarterly Systematic Investment Plans          $50             n/a          $50
</TABLE>

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


8   International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Comparing the fund's classes
--------------------------------------------------------------------------------


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


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
--------------------------------
                              Class A                   Class B
Class L              Class Y
--------------------------------------------------------------------------------
--------------------------------
<S>                        <C>                       <C>                    <C>
<C>
Key features               o Initial sales           o No initial           o
Initial sales      o No initial
                             charge                    sales charge
charge is            or deferred
                           o You may qual-           o Deferred
lower than           sales charge
                             ify for reduc-            sales charge
Class A            o Must invest
                             tion or waiver            declines             o
Deferred sales       at least
                             of initial sales          over time
charge for           $5 million
                             charge                  o Converts to
only 1 year        o Lower annual
                           o Lower annual              Class A after        o
Does not con-        expenses than
                             expenses than             8 years
vert to Class A      the other
                             Class B and             o Higher annual        o
Higher annual        classes
                             Class L                   expenses than
expenses than
                                                       Class A
Class A

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

Initial sales              Up to 5.00%;              None
1.00%                None
Charge                     reduced for
                           large purchases
                           and waived for
                           certain investors;
                           no charge for
                           purchases of
                           $1,000,000 or
                           more

--------------------------------------------------------------------------------
--------------------------------
Deferred                   1.00% on pur-             Up to 5.00%
1.00% if you         None
sales charge               chases of                 charged when
redeem within
                           $1,000,000 or             you redeem             1
year of
                           more if you               shares. The
purchase
                           redeem within             charge is
                           1 year of                 reduced over
                           purchase                  time and there
                                                     is no deferred
                                                     sales charge
                                                     after 6 years

--------------------------------------------------------------------------------
--------------------------------
Annual                     0.25% of aver-            1.00% of average
1.00% of average     None
distribution               age daily net             daily net assets
daily net assets
and service                assets
fees


--------------------------------------------------------------------------------
--------------------------------
Exchange                   Class A shares            Class B shares
Class L shares       Class Y shares
privilege*                 of most Smith             of most Smith          of
most Smith        of most Smith
                           Barney funds              Barney funds.
Barney funds         Barney funds

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

* Ask your Service Agent for the Smith Barney funds available for exchange.


                                                   Smith Barney Mutual Funds   9
<PAGE>

--------------------------------------------------------------------------------
  Sales charges
--------------------------------------------------------------------------------

Class A shares

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

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

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

--------------------------------------------------------------------------------
                                                                  Broker/Dealer
                                      Sales Charge as a % of:     Commission
                                     Offering      Net amount     as a % of
Amount of purchase                   price (%)    invested (%)    offering price
--------------------------------------------------------------------------------
Less than $25,000                       5.00          5.26              4.50
--------------------------------------------------------------------------------
$25,000 but less than $50,000           4.25          4.44              3.83
--------------------------------------------------------------------------------
$50,000 but less than $100,000          3.75          3.90              3.38
--------------------------------------------------------------------------------
$100,000 but less than $250,000         3.25          3.36              2.93
--------------------------------------------------------------------------------
$250,000 but less than $500,000         2.75          2.83              2.48
--------------------------------------------------------------------------------
$500,000 but less than $1,000,000       2.00          2.04              1.80
--------------------------------------------------------------------------------
$1,000,000 or more                        -0-           -0-       up to 1.00*

* A distributor pays up to 1.00% to a Service Agent.

Investments of $1,000,000 or more You do not pay an initial sales charge when
you buy $1,000,000 or more of Class A shares. However, if you redeem these Class
A shares within one year of purchase, you will pay a deferred sales charge of
1%.


10  International All Cap Growth Portfolio
<PAGE>

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

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

      o     by you, or
      o     by members of your immediate family,

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

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

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


o     Employees of NASD members
o     Investors participating in a fee-based program sponsored by certain
      broker/dealers affiliated with Citigroup
o     Investors who redeemed Class A shares of a Smith Barney fund in the past
      60 days, if the investor's Service Agent is notified

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


Class B shares

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


                                                   Smith Barney Mutual Funds  11
<PAGE>


--------------------------------------------------------------------------------
                                                                     6th through
Year after purchase          1st      2nd     3rd      4th      5th      8th
--------------------------------------------------------------------------------
Deferred sales charge        5%       4%      3%       2%       1%       0%
--------------------------------------------------------------------------------

Service Agents selling Class B shares receive a commission of up to 4.50% of the
purchase price of the Class B shares they sell. Service Agents also receive a
service fee at an annual rate equal to 0.25% of the average daily net assets
represented by the Class B shares they are servicing.

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

--------------------------------------------------------------------------------
  Shares issued:           Shares issued:              Shares issued:
  At initial               On reinvestment of          Upon exchange from
  purchase                 dividends and               another Smith Barney
                           distributions               fund
--------------------------------------------------------------------------------
Eight years after the      In same proportion as       On the date the shares
date of purchase           the number of Class B       originally acquired
                           shares converting is to     would have converted
                           total Class B shares you    into Class A shares
                           own (excluding shares
                           issued as dividends)

Class L shares


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


Service Agents selling Class L shares receive a commission of up to 2.00% of the
purchase price of the Class L shares they sell. Starting in the thirteenth
month, Service Agents also receive an annual fee of up to 1.00% of the average
daily net assets represented by the Class L shares held by their clients.


Class Y shares

You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $5,000,000 initial
investment requirement. You can also use a letter of intent to meet this
requirement by buying Class Y shares over a 6-month period. To qualify, you must
initially invest $1,000,000.


12  International All Cap Growth Portfolio
<PAGE>


--------------------------------------------------------------------------------
  More about deferred sales charges
--------------------------------------------------------------------------------


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

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

o     Shares exchanged for shares of another Smith Barney fund
o     Shares representing reinvested distributions and dividends
o     Shares no longer subject to the deferred sales charge


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


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

The fund's distributor receives deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Service Agent.

Deferred sales charge waivers

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

o     On payments made through certain systematic withdrawal plans
o     On certain distributions from a retirement plan
o     For involuntary redemptions of small account balances
o     For 12 months following the death or disability of a shareholder

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


                                                   Smith Barney Mutual Funds  13
<PAGE>


--------------------------------------------------------------------------------
  Buying shares
--------------------------------------------------------------------------------


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

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

                        o     Class of shares being bought
                        o     Dollar amount or number of shares being bought

                        Your Service Agent may charge an annual account
                        maintenance fee.

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

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

                        o     Write the fund at the following address:


                                 Smith Barney World Funds, Inc.
                                 International All Cap Growth Portfolio
                                 (Specify class of shares)
                                 PFPC Global Fund Services
                                 P.O. Box 9699
                                 Providence, RI 02940-9699


                        o     Enclose a check to pay for the shares. For initial
                              purchases, complete and send an account
                              application.
                        o     For more information, call the transfer agent at
                              1-800-451-2010.

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

           Through a    You may authorize your Service Agent or the sub-transfer
          systematic    agent to transfer funds automatically from (i) a regular
     investment plan    bank account, (ii) cash held in a brokerage account
                        opened with a Service Agent or (iii) certain money
                        market funds, in order to buy shares on a regular basis.

                        o     Amounts transferred should be at least: $25
                              monthly or $50 quarterly.
                        o     If you do not have sufficient funds in your
                              account on a transfer date, your Service Agent or
                              the sub-transfer agent may charge you a fee.

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


14  International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Exchanging shares
--------------------------------------------------------------------------------


        Smith Barney    You should contact your Service Agent to exchange into
offers a distinctive    other Smith Barney funds. Be sure to read the prospectus
     family of funds    of the Smith Barney fund you are exchanging into. An
    tailored to help    exchange is a taxable transaction.
    meet the varying
 needs of both large    o     You may exchange shares only for shares of the
           and small          same class of another Smith Barney fund. Not all
          investors.          Smith Barney funds offer all classes.
                        o     Not all Smith Barney funds may be offered in your
                              state of residence. Contact your Service Agent or
                              the transfer agent.
                        o     You must meet the minimum investment amount for
                              each fund (except for systematic investment plan
                              exchanges).

                        o     If you hold share certificates, the transfer agent
                              must receive the certificates endorsed for
                              transfer or with signed stock powers (documents
                              transferring ownership of certificates) before the
                              exchange is effective.
                        o     The fund may suspend or terminate your exchange
                              privilege if you engage in an excessive pattern of
                              exchanges.

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

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

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


                                                   Smith Barney Mutual Funds  15
<PAGE>

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


        By telephone    If you do not have a brokerage account with a Service
                        Agent, you may be eligible to exchange shares through
                        the fund. You must complete an authorization form to
                        authorize telephone transfers. If eligible, you may make
                        telephone exchanges on any day the New York Stock
                        Exchange is open. Call the transfer agent at
                        1-800-451-2010 between 9:00 a.m. and 4:00 p.m. (Eastern
                        time).


                        You can make telephone exchanges only between accounts
                        that have identical registrations.
--------------------------------------------------------------------------------
             By mail    If you do not have a brokerage account, contact your
                        Service Agent or write to the sub-transfer agent at the
                        address on the following page.

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


16  International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Redeeming shares
--------------------------------------------------------------------------------

           Generally    Contact your Service Agent to redeem shares of the fund.

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

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

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

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

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

             By mail    For accounts held directly at the fund, send written
                        requests to the fund at the following address:


                          Smith Barney World Funds, Inc.
                          International All Cap Growth Portfolio
                          (Specify class of shares)
                          c/o PFPC Global Fund Services
                          P.O. Box 9699
                          Providence, RI 02940-9699


                        Your written request must provide the following:

                        o     The fund and account number
                        o     The class of shares and the dollar amount or
                              number of shares to be redeemed
                        o     Signatures of each owner exactly as the account is
                              registered

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


                                                   Smith Barney Mutual Funds  17
<PAGE>

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

        By telephone    If you do not have a brokerage account with a Service
                        Agent, you may be eligible to redeem shares (except
                        those held in retirement plans) in amounts up to $50,000
                        per day through the fund. You must complete an
                        authorization form to authorize telephone redemptions.
                        If eligible, you may request redemptions by telephone on
                        any day the New York Stock Exchange is open. Call the
                        transfer agent at 1-800-451-2010 between 9:00 a.m. and
                        4:00 p.m. (Eastern time).

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

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

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

                        The following conditions apply:

                        o     Your shares must not be represented by
                              certificates
                        o     All dividends and distributions must be reinvested

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


18  International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Other things to know about share transactions
--------------------------------------------------------------------------------

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

o     Name of the fund
o     Account number
o     Class of shares being bought, exchanged or redeemed
o     Dollar amount or number of shares being bought, exchanged or redeemed
o     Signature of each owner exactly as the account is registered


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


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

o     Are redeeming over $50,000
o     Are sending signed share certificates or stock powers to the sub-transfer
      agent
o     Instruct the sub-transfer agent to mail the check to an address different
      from the one on your account
o     Changed your account registration
o     Want the check paid to someone other than the account owner(s)
o     Are transferring the redemption proceeds to an account with a different
      registration

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


                                                   Smith Barney Mutual Funds  19
<PAGE>

The fund has the right to:

o     Suspend the offering of shares
o     Waive or change minimum and additional investment amounts
o     Reject any purchase or exchange order
o     Change, revoke or suspend the exchange privilege
o     Suspend telephone transactions
o     Suspend or postpone redemptions of shares on any day when trading on the
      New York Stock Exchange is restricted, or as otherwise permitted by the
      Securities and Exchange Commission
o     Pay redemption proceeds by giving you securities. You may pay transaction
      costs to dispose of the securities.

Small account balances If your account falls below $500 ($250 for IRAs) because
of a redemption of fund shares, the fund may ask you to bring your account up to
the applicable minimum investment amounts. If you choose not to do so within 60
days, the fund may close your account and send you the redemption proceeds.

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

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


20  International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Dividends, distributions and taxes
--------------------------------------------------------------------------------

Dividends The fund generally pays dividends, if any, quarterly, and makes
capital gain distributions, if any, once a year, typically in December. The fund
may pay additional distributions and dividends at other times if necessary for
the fund to avoid a federal tax. Capital gain distributions and dividends are
reinvested in additional fund shares of the same class you hold. The fund
expects distributions to be primarily from both income and gains. You do not pay
a sales charge on reinvested distributions or dividends. Alternatively, you can
instruct your Service Agent, the transfer agent or the sub-transfer agent to
have your distributions and/or dividends paid in cash. You can change your
choice at any time to be effective as of the next distribution or dividend,
except that any change given to your Service Agent, the transfer agent or the
sub-transfer agent less than five days before the payment date will not be
effective until the next distribution or dividend is paid.

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

--------------------------------------------------------------------------------
  Transaction                                    Federal tax status
--------------------------------------------------------------------------------
Redemption or exchange of shares                 Usually capital gain or loss;
                                                 long-term only if shares owned
                                                 more than one year
--------------------------------------------------------------------------------
Long-term capital gain distributions             Long-term capital gain
--------------------------------------------------------------------------------
Short-term capital gain distributions            Ordinary income
--------------------------------------------------------------------------------
Dividends                                        Ordinary income
--------------------------------------------------------------------------------

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

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


                                                   Smith Barney Mutual Funds  21
<PAGE>

--------------------------------------------------------------------------------
  Share price
--------------------------------------------------------------------------------

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

The fund generally values its fund securities based on market prices or
quotations. The fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices or
quotations are not readily available, or when the value of a security has been
materially affected by events occurring after a foreign exchange closes, the
fund may price those securities at fair value. Fair value is determined in
accordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than
another fund using market quotations to price the same securities.

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

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

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


22  International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Financial highlights
--------------------------------------------------------------------------------


The financial highlights tables are intended to help you understand the
performance of each class for the past 5 years. Certain information reflects
financial results for a single share. Total return represents the rate that a
shareholder would have earned (or lost) on a fund share assuming reinvestment of
all dividends and distributions. The information in the following tables was
audited by KPMG LLP, independent auditors, whose report, along with the fund's
financial statements, is included in the annual report (available upon request).


--------------------------------------------------------------------------------
  For a Class A share of capital stock
  outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                   2000(1)         1999(1)         1998(1)
1997(1)         1996(1)
--------------------------------------------------------------------------------
---------------------------
<S>                              <C>             <C>             <C>
<C>             <C>
Net asset value,
  beginning of year              $   26.75       $   20.39       $   20.36
$   18.64       $   17.15
--------------------------------------------------------------------------------
---------------------------

Income (loss) from operations:
  Net investment income (loss)       (0.08)          (0.03)          (0.00)*
(0.04)           0.01
  Net realized and
    unrealized gain                   0.06            6.39            0.03
1.77            1.65

--------------------------------------------------------------------------------
---------------------------
Total income (loss)
  from operations                    (0.02)           6.36            0.03
1.73            1.66
--------------------------------------------------------------------------------
---------------------------
Less distributions from:
  Net investment income(2)           (0.38)             --              --
(0.01)          (0.17)
  Net realized gains                 (1.86)             --              --
--              --
--------------------------------------------------------------------------------
---------------------------
Total distributions                  (2.24)             --              --
(0.01)          (0.17)
--------------------------------------------------------------------------------
---------------------------
Net asset value, end of year     $   24.49       $   26.75       $   20.39
$   20.36       $   18.64
--------------------------------------------------------------------------------
---------------------------
Total return                         (1.62)%         31.19%           0.15%
9.30%           9.78%
--------------------------------------------------------------------------------
---------------------------
Net assets,
  end of year (000)'s            $ 683,133       $ 598,043       $ 453,029
$ 464,796       $ 513,870
--------------------------------------------------------------------------------
---------------------------
Ratios to average net assets:
  Expenses(3 )                        1.21%           1.28%           1.28%
1.31%           1.35%
  Net investment
    income (loss)                    (0.29)          (0.13)           0.00**
(0.18)           0.17
--------------------------------------------------------------------------------
---------------------------
Portfolio turnover rate                 26%             31%             25%
35%             46%
--------------------------------------------------------------------------------
---------------------------
</TABLE>
(1)   Per share amounts calculated using the monthly average shares method.
(2)   Distributions from net investment income include short-term capital gains,
      if any, for federal income tax purposes.
(3)   During the year ended October 31, 1996, the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio for Class A would have been
      1.29%.
*     Amount represents less than $0.01.
**    Amount represents less than 0.01%.


                                                   Smith Barney Mutual Funds  23
<PAGE>

--------------------------------------------------------------------------------
  For a Class B share of capital stock
  outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                       2000(1)         1999(1)         1998(1)
1997(1)         1996(1)

--------------------------------------------------------------------------------
-------------------------------
<S>                                  <C>             <C>             <C>
<C>             <C>
Net asset value, beginning of year   $   26.13       $   20.08       $   20.22
$   18.65       $   17.17
--------------------------------------------------------------------------------
-------------------------------
Income (loss) from operations:

  Net investment loss                    (0.33)          (0.23)          (0.18)
(0.20)          (0.08)
  Net realized and unrealized
    gain                                  0.07            6.28            0.04
1.77            1.60

--------------------------------------------------------------------------------
-------------------------------
Total income (loss) from
  operations                             (0.26)           6.05           (0.14)
1.57            1.52
--------------------------------------------------------------------------------
-------------------------------
Less distributions from:
  Net investment income(2)               (0.12)             --              --
--           (0.04)
  Net realized gains                     (1.86)             --              --
--              --
--------------------------------------------------------------------------------
-------------------------------
Total distributions                      (1.98)             --              --
--           (0.04)
--------------------------------------------------------------------------------
-------------------------------
Net asset value, end of year         $   23.89       $   26.13       $   20.08
$   20.22       $   18.65
--------------------------------------------------------------------------------
-------------------------------
Total return                             (2.43)%         30.13%          (0.69)%
8.42%           8.89%
--------------------------------------------------------------------------------
-------------------------------
Net assets, end of year (000)'s      $ 192,707       $ 200,071       $ 180,980
$ 231,148       $ 212,294
--------------------------------------------------------------------------------
-------------------------------
Ratios to average net assets:
  Expenses(3)                             2.06%           2.08%           2.09%
2.11%           2.11%
  Net investment income (loss)           (1.15)          (1.01)          (0.84)
(0.95)          (0.58)
--------------------------------------------------------------------------------
-------------------------------
Portfolio turnover rate                     26%             31%             25%
35%             46%
--------------------------------------------------------------------------------
-------------------------------
</TABLE>
(1)   Per share amounts calculated using the monthly average shares method.
(2)   Distributions from net investment income include short-term capital gains,
      if any, for federal income tax purposes.
(3)   During the year ended October 31, 1996 the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio for Class B would have been
      2.04%.


24  International All Cap Growth Portfolio
<PAGE>

--------------------------------------------------------------------------------
  For a Class L share of capital stock
  outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                   2000(1)         1999(1)      1998(1)(2)
1997(1)       1996(1)

--------------------------------------------------------------------------------
------------------------
<S>                              <C>             <C>            <C>
<C>           <C>
Net asset value,
  beginning of year              $   25.76       $   19.79      $   19.93
$   18.38     $   16.93
--------------------------------------------------------------------------------
------------------------
Income (loss) from operations:
  Net investment loss                (0.31)          (0.22)         (0.17)
(0.22)        (0.13)
  Net realized and

    unrealized gain                   0.06            6.19           0.03
1.77          1.62

--------------------------------------------------------------------------------
------------------------
Total income (loss)
  from operations                    (0.25)           5.97          (0.14)
1.55          1.49
--------------------------------------------------------------------------------
------------------------
Less distributions from:
  Net investment income(3)           (0.12)             --             --
--         (0.04)
  Net realized gains                 (1.86)             --             --
--            --
--------------------------------------------------------------------------------
------------------------
Total distributions                  (1.98)             --             --
--         (0.04)
--------------------------------------------------------------------------------
------------------------
Net assets value, end of year    $   23.53       $   25.76      $   19.79
$   19.93     $   18.38
--------------------------------------------------------------------------------
------------------------
Total return                         (2.42)%         30.17%         (0.70)%
8.43%         8.85%
--------------------------------------------------------------------------------
------------------------
Net assets,
  end of year (000)'s            $ 190,144       $ 178,259      $ 152,569
$ 200,849     $ 229,514
--------------------------------------------------------------------------------
------------------------
Ratios to average net assets:
  Expenses(4)                         2.04%           2.07%          2.07%
2.12%         2.15%
  Net investment loss                (1.13)          (0.98)         (0.81)
(0.97)        (0.63)
--------------------------------------------------------------------------------
------------------------
Portfolio turnover rate                 26%             31%            25%
35%           46%
--------------------------------------------------------------------------------
------------------------
</TABLE>

(1)   Per share amounts calculated using the monthly average shares method.
(2)   On June 12, 1998, Class C shares were renamed Class L shares,
(3)   Distributions from net investment income include short-term capital gains,
      if any, for Federal income tax purposes.
(4)   During the year ended October 31, 1996, the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio for Class L would have been
      2.09%.


                                                   Smith Barney Mutual Funds  25
<PAGE>

--------------------------------------------------------------------------------
  For a Class Y share of capital stock
  outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                       2000(1)         1999(1)        1998(1)
1997(1)         1996(1)
--------------------------------------------------------------------------------
------------------------------
<S>                                  <C>             <C>                <C>
<C>             <C>
Net asset value, beginning of year   $   26.88       $   20.41          20.38
$   18.64       $   17.13
--------------------------------------------------------------------------------
------------------------------
Income (loss) from operations:
  Net investment income                  (0.00)*          0.03           0.08
0.04            0.18
  Net realized and unrealized

    gain                                  0.07            6.44           0.01
1.76            1.54

--------------------------------------------------------------------------------
------------------------------
Total income (loss)
  from operations                         0.07            6.47           0.09
1.80            1.72
--------------------------------------------------------------------------------
------------------------------
Less distributions from:
  Net investment income(2)               (0.49)             --          (0.06)
(0.06)          (0.21)
  Net realized gains                     (1.86)             --             --
--              --
--------------------------------------------------------------------------------
------------------------------
Total distributions                      (2.35)             --          (0.06)
(0.06)          (0.21)
--------------------------------------------------------------------------------
------------------------------
Net asset value, end of year         $   24.60       $   26.88      $   20.41
$   20.38       $   18.64
--------------------------------------------------------------------------------
------------------------------
Total return                             (1.31)%         31.70%          0.45%
9.68%          10.19%
--------------------------------------------------------------------------------
------------------------------
Net assets, end of year (000)'s      $ 338,192       $ 354,242      $ 333,979
$ 301,852       $ 200,427
--------------------------------------------------------------------------------
------------------------------
Ratio to average net assets:
  Expenses(3)                             0.92%           0.92%          0.91%
0.94%           0.96%
  Net investment income                  (0.01)           0.14           0.37
0.23            0.56
--------------------------------------------------------------------------------
------------------------------
Portfolio turnover rate                     26%             31%            25%
35%             46%
--------------------------------------------------------------------------------
------------------------------
</TABLE>
(1)   Per share amounts calculated using the monthly average shares method.
(2)   Distributions from net investment income include short-term capital gains,
      if any, for federal income tax purposes.
(3)   During the year ended October 31, 1996, the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio would have been 0.90%
*     Amount represents less than $0.01.


26  International All Cap Growth Portfolio
<PAGE>

                    (This page is left intentionally blank.)

<PAGE>

[LOGO] Smith Barney
       Mutual Funds

Your Serious Money. Professionally Managed.(SM)

International
All Cap Growth
Portfolio

An investment portfolio of
Smith Barney World Funds, Inc.

Shareholder reports Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that significantly affected the
fund's performance during its last fiscal year or period.

The fund sends only one report to a household if more than one account has the
same address. Contact your Service Agent or the transfer agent if you do not
want this policy to apply to you.

Statement of additional information The statement of additional information
provides more detailed information about the fund and is incorporated by
reference into (is legally part of) this prospectus.

You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent by calling the fund at 1-800-451-2010, or by writing to the fund at Smith
Barney Mutual Funds, 7 World Trade Center, 39th Floor, New York, New York 10048.



Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's (the "Commission") Public Reference Room in
Washington, D.C. In addition, information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090.
Reports and other information about the Fund are available on the EDGAR Database
on the Commission's Internet site at http://www.sec.gov. Copies of this
information may be obtained for a duplicating fee by electronic request at the
following E-mail address: publicinfo@sec.gov, or by writing the Commission's
Public Reference Section, Washington, D.C. 20549-0102.

If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not
lawfully sell its shares.


Your Serious Money. Professionally Managed. is a service mark of Salomon Smith
Barney



(Investment Company Act
file no. 811-06290)
FD02253 2/01

[LOGO] Smith Barney
       Mutual Funds

Your Serious Money. Professionally Managed.(SM)

PROSPECTUS

International All
Cap Growth
Portfolio

Class Z Shares

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

February 28, 2001

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

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

<PAGE>

International All Cap
Growth Portfolio

--------------------------------------------------------------------------------
                                    Contents
--------------------------------------------------------------------------------

Investments, risks and performance ........................................    2

More on the fund's investments ............................................    6

Management ................................................................    7

Buying, selling and exchanging Class Z shares .............................    8

Share price ...............................................................    9

Dividends, distributions and taxes ........................................   10

Financial highlights ......................................................   11

The Class Z shares described in this prospectus are offered exclusively for sale
to tax-exempt employee benefit and retirement plans of Salomon Smith Barney Inc.
or any of its affiliates.


                                                   Smith Barney Mutual Funds   1
<PAGE>

--------------------------------------------------------------------------------
  Investments, risks and performance
--------------------------------------------------------------------------------

Investment objective

The fund seeks total return on its assets from growth of capital and income.

Principal investment strategies

Key investments The fund invests primarily in equity securities of foreign
companies. Equity securities include exchange traded and over-the-counter common
stocks and preferred shares, debt securities convertible into equity securities,
and warrants and rights relating to equity securities.

Selection process The manager emphasizes individual security selection while
diversifying the fund's investments across regions and countries which can help
to reduce risk. While the manager selects investments primarily for their
capital appreciation potential, some investments have an income component as
well. Companies in which the fund invests may have large, mid or small size
market capitalizations and may operate in any market sector. Market conditions
around the world change constantly as does the location of potential investment
opportunities. Depending on the manager's assessment of overseas potential for
long-term growth, the fund's emphasis among foreign markets and types of issuers
may vary. In selecting individual companies for investment, the manager looks
for the following:

o     Above average earnings growth
o     High relative return on invested capital
o     Experienced and effective management
o     Effective research, product development and marketing
o     Competitive advantages
o     Strong financial condition or stable or improving credit quality

By spreading the fund's investments across many international markets, the
manager seeks to reduce volatility compared to an investment in a single region.
Unlike global mutual funds which may allocate a substantial portion of assets to
the U.S. markets, the fund invests substantially all of its assets in countries
outside of the U.S. In allocating assets among countries and regions, the
economic and political factors the manager evaluates include:

o     Low or decelerating inflation which creates a favorable environment for
      securities markets
o     Stable governments with policies that encourage economic growth, equity
      investment and development of securities markets
o     Currency stability
o     The range of individual investment opportunities


2   International All Cap Growth Portfolio
<PAGE>

Principal risks of investing in the fund

Investing in foreign securities can bring added benefits, but it may also
involve additional risks. Investors could lose money on their investment in the
fund or the fund may not perform as well as other investments, if:

o     Foreign stock prices decline
o     Adverse governmental action or political, economic or market instability
      affects a foreign country or region
o     The currency in which a security is priced declines in value relative to
      the U.S. dollar
o     The manager's judgment about the attractiveness, value or potential
      appreciation of a particular stock proves to be incorrect



The fund invests in certain European countries where the securities markets are
less liquid and more volatile than markets in the U.S. In some European
countries, less information is available about issuers and markets because of
less rigorous accounting and regulatory standards than in the U.S. Currency
fluctuations could erase investment gains or add to investment losses. The risks
of investing in the emerging markets of Eastern Europe are substantially greater
than investing in the more developed markets of Western Europe.

Who may want to invest The fund may be an appropriate investment if you:

o     Are seeking to participate in the long-term growth potential of
      international markets
o     Currently have exposure to U.S. stock markets and wish to diversify your
      investment portfolio by adding non-U.S. stocks that may not move in tandem
      with U.S. stocks
o     Are comfortable with the risks of the stock market and the special risks
      of investing in foreign securities, including emerging market securities


                                                   Smith Barney Mutual Funds   3
<PAGE>

Risk return bar chart


This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future. This bar chart
shows the performance of the fund's Class Z shares for each of the last six
calendar years.


--------------------------------------------------------------------------------
                        Total Return for Class Z Shares
--------------------------------------------------------------------------------

                               [GRAPHIC OMITTED]

   [The following table was depicted as a bar chart in the printed material.]

               95       96       97        98        99        00
             --------------------------------------------------------
             3.00%    14.06%    2.22%    12.13%    60.83%    (39.49)%

                        Calendar years ended December 31

Quarterly returns:

Highest: 43.03% in 4th quarter 1999; Lowest: (17.92)% in 2nd quarter 2000.

Risk return table

This table indicates the risks of investing in the fund by comparing the average
annual total return of Class Z shares for the periods shown with that of the
EAFE Index, a broad-based unmanaged index of foreign stocks. This table assumes
the reinvestment of distributions and dividends.


--------------------------------------------------------------------------------
                          Average Annual Total Returns
                     Calendar Years Ended December 31, 2000

--------------------------------------------------------------------------------
                    1 year    5 years  10 years  Since Inception  Inception Date
--------------------------------------------------------------------------------
Class Z            (30.49)%    7.88%      n/a         5.58%          11/07/94
--------------------------------------------------------------------------------
MSCI EAFE Index    (14.17)%    7.13%      n/a         8.24%              *
--------------------------------------------------------------------------------

* Index comparison begins on November 30, 1994.


4   International All Cap Growth Portfolio

<PAGE>

Fee table

This table sets forth the fees and expenses you will pay if you invest in fund
shares.

--------------------------------------------------------------------------------
                         Annual fund operating expenses
--------------------------------------------------------------------------------
(expenses deducted from fund assets)
--------------------------------------------------------------------------------
Management fee                                                             0.85%
--------------------------------------------------------------------------------

Other expenses                                                             0.07%

--------------------------------------------------------------------------------
Total annual fund operating expenses                                       0.92%
--------------------------------------------------------------------------------

Example

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

o     You invest $10,000 in the fund for the period shown
o     Your investment has a 5% return each year
o     You reinvest all distributions and dividends
o     The fund's operating expenses remain the same

--------------------------------------------------------------------------------
                      Number of years you own your shares
--------------------------------------------------------------------------------
                                           1 year   3 years   5 years   10 years
--------------------------------------------------------------------------------
Class Z (with or without redemption)        $ 94     $293       $509      $1131
--------------------------------------------------------------------------------


                                                   Smith Barney Mutual Funds   5
<PAGE>

--------------------------------------------------------------------------------
  More on the fund's investments
--------------------------------------------------------------------------------

Currency transactions The fund may enter into transactions to buy or sell
currencies at a future date, which may be a few days or a number of months. The
fund may enter into these forward currency contracts to:

o     Settle transactions in securities quoted in foreign currencies
o     Attempt to protect against the economic impact of adverse changes in the
      value of the U.S. dollar.

The fund may not fully benefit from or may lose money on forward currency
transactions if changes in currency rates do not occur as anticipated or do not
correspond accurately to changes in the value of the fund's holdings.

Debt securities The fund may invest up to 20% of its assets in debt securities
of foreign corporate and governmental issuers as well as U.S. Government
securities and money market obligations of U.S. issuers. The fund may invest in
all types of debt securities of any maturity or credit quality. These securities
may be denominated in U.S. dollars or other currencies and may pay fixed or
variable rates of interest. The value of debt securities will go down if
interest rates go up, or the credit rating of the security is downgraded or the
issuer defaults on its obligation to pay principal or interest. These risks are
greater for debt securities rated below investment grade.

Emerging markets The fund may invest up to 20% of assets in issuers located or
doing business in emerging markets. Emerging market investments offer the
potential of significant gains but also involve greater risks than investing in
more developed countries. Political or economic stability, lack of market
liquidity and government actions such as currency controls or seizure of private
businesses or property are more likely in emerging markets.

Defensive investing The fund may depart from its principal investment strategies
in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.


6   International All Cap Growth Portfolio

<PAGE>

--------------------------------------------------------------------------------
  Management
--------------------------------------------------------------------------------

Manager The fund's investment manager is SSB Citi Fund Management LLC, ("SSB
Citi") an affiliate of Salomon Smith Barney Inc. ("Salomon Smith Barney") The
manager's address is 7 World Trade Center, 39th Floor, New York, New York 10048.
The manager selects the fund's investments and oversees its operations. The
manager and Salomon Smith Barney are subsidiaries of Citigroup Inc. Citigroup
businesses produce a broad range of financial services -- asset management,
banking and consumer finance, credit and charge cards, insurance, investments,
investment banking and trading -- and use diverse channels to make them
available to consumer and corporate customers around the world.

Jeffrey Russell and James Conheady, investment officers of the manager and
managing directors of Salomon Smith Barney, have been responsible for the
day-to-day management of the fund since its inception. Maurits E. Edersheim,
head of Salomon Smith Barney's international equity team, has general
responsibility for Salomon Smith Barney's international equity investment
operations.

Management fee For its services, the manager received a fee during the fund's
last fiscal year equal to 0.85% of the fund's average daily net assets.



Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). The transfer agent has entered into a sub-transfer agency and
services agreement with PFPC Global Fund Services to serve as the fund's
sub-transfer agent (the "sub-transfer agent"). The sub-transfer agent will
perform certain functions including shareholder recordkeeping and accounting
services.


                                                   Smith Barney Mutual Funds   7
<PAGE>

--------------------------------------------------------------------------------
  Buying, selling and exchanging Class Z shares
--------------------------------------------------------------------------------

Buying You may buy, sell or exchange Class Z shares only through a "qualified
plan." A qualified plan is a tax-exempt employee benefit or retirement plan of
Salomon Smith Barney Inc. or one of its affiliates.

There are no minimum investment requirements for Class Z shares. However, the
fund reserves the right to change this policy at any time.

Orders to buy Class Z shares must be made in accordance with the terms of a
qualified plan. If you are a participant in a qualified plan, you may place an
order with your plan to buy Class Z shares at net asset value, without any sales
charge. Payment is due to Salomon Smith Barney on settlement date, which is the
third business day after your order is accepted. If you make payment prior to
this date, you may designate a temporary investment (such as a money market fund
of the Smith Barney funds) for payment until settlement date. The fund reserves
the right to reject any order to buy shares and to suspend the offering of
shares for a period of time.

Selling Qualified plans may redeem their shares on any day on which the fund
calculates its net asset value. You should consult the terms of your qualified
plan for special redemption provisions.

Exchanging You should consult your qualified plan for information about
available exchange options.

Other information The fund has the right to:

o     Suspend the offering of shares
o     Suspend or postpone redemptions of shares on any day when trading on the
      New York Stock Exchange is restricted, or as otherwise permitted by the
      Securities and Exchange Commission
o     Reject any purchase or exchange order
o     Change, revoke or suspend the exchange privilege


8   International All Cap Growth Portfolio

<PAGE>

--------------------------------------------------------------------------------
  Share price
--------------------------------------------------------------------------------


Qualified plans may buy, exchange or redeem shares at their net asset value next
determined after receipt of your request in good order. The fund's net asset
value is the value of its assets minus its liabilities. Net asset value is
calculated separately for each class of shares. The fund calculates its net
asset value every day the New York Stock Exchange is open. The Exchange is
closed on certain holidays listed in the SAI. This calculation is done when
regular trading closes on the Exchange.


The fund generally values its fund securities based on market prices or
quotations. The fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices or
quotations are not readily available, or when the value of a security has been
materially affected by events occurring after a foreign exchange closes, the
fund may price those securities at fair value. Fair value is determined in
accordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than
another fund using market quotations to price the same securities.

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

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

Your qualified plan must transmit all orders to buy, exchange or redeem shares
to the fund's agent before the agent's close of business.


                                                   Smith Barney Mutual Funds   9
<PAGE>

--------------------------------------------------------------------------------
  Dividends, distributions and taxes
--------------------------------------------------------------------------------

Dividends The fund generally pays dividends, if any, quarterly, and makes
capital gain distributions, if any, once a year, typically in December. The fund
may pay additional distributions and dividends at other times if necessary for
the fund to avoid a federal tax. Capital gain distributions and dividends are
reinvested in additional fund shares of the same class you hold. The fund
expects distributions to be primarily from both income and gains. You do not pay
a sales charge on reinvested distributions or dividends.

Taxes In general, redeeming Class Z shares, exchanging Class Z shares and
receiving distributions are all non-taxable events for purposes of federal
income taxation.

After the end of each year, the fund will provide you with information about the
distributions and dividends you received and any redemptions of shares during
the previous year. If you do not provide your qualified plan with your correct
taxpayer identification number and any required certifications, you may be
subject to back-up withholding of 31% of your distributions, dividends, and
redemption proceeds.

Because each shareholder's circumstances are different and special tax rules may
apply, you should consult your tax adviser about your investment in the fund.


10  International All Cap Growth Portfolio

<PAGE>

--------------------------------------------------------------------------------
  Financial highlights
--------------------------------------------------------------------------------

The financial highlights tables are intended to help you understand the
performance of Class Z shares since inception. Certain information reflects
financial results for a single share. Total return represents the rate that a
shareholder would have earned (or lost) on a fund share assuming reinvestment of
all dividends and distributions. The information in the following tables was
audited by KPMG LLP, independent auditors, whose report, along with the fund's
financial statements, are included in the annual report (available upon
request).

--------------------------------------------------------------------------------
  For a Class Z share of capital stock
  outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                          2000(1)       1999(1)     1998(1)
1997(1)      1996(1)
--------------------------------------------------------------------------------
---------------------
<S>                                   <C>           <C>         <C>          <C>
<C>
Net asset value, beginning of year    $  26.85      $  20.39    $  20.36     $
18.62     $  17.12
--------------------------------------------------------------------------------
---------------------
Income (loss) from operations:

  Net investment income (loss)           (0.00)*        0.04        0.08
0.05         0.14

  Net realized and unrealized
    gain                                  0.08          6.42        0.01
1.75         1.57
--------------------------------------------------------------------------------
---------------------
Total income (loss) from operations       0.08          6.46        0.09
1.80         1.71
--------------------------------------------------------------------------------
---------------------
Less distribution from:
  Net investment income(2)                0.49          --         (0.06)
(0.06)       (0.21)
  Net realized gains                      1.86          --          --
--           --
--------------------------------------------------------------------------------
---------------------

Total distributions                      (2.35)         --         (0.06)
(0.06)       (0.21)
--------------------------------------------------------------------------------
---------------------
Net asset value, end of year          $  24.58      $  26.85    $  20.39     $
20.36     $  18.62

--------------------------------------------------------------------------------
---------------------
Total return                             (1.28)%       31.68%       0.45%
9.69%       10.13%
--------------------------------------------------------------------------------
---------------------
Net assets, end of year (000)'s       $142,448      $137,212    $117,132
$131,709     $119,408
--------------------------------------------------------------------------------
---------------------
Ratios to average net assets:
  Expenses(3)                             0.92%         0.92%       0.92%
0.94%        0.97%

  Net investment income (loss)           (0.00)**       0.16        0.36
0.22         0.55

--------------------------------------------------------------------------------
---------------------
Portfolio turnover rate                     26%           31%         25%
35%          46%
--------------------------------------------------------------------------------
---------------------
</TABLE>
(1)   Per share amounts calculated using the monthly average shares method.
(2)   Distributions from net investment income include short-term capital gains,
      if any, for federal income tax purposes.

(3)   During the year ended October 31, 1996, the Portfolio earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratios would have been 0.91%.

*     Amount represents less than $0.01.
**    Amount represents less than 0.01%.


                                                   Smith Barney Mutual Funds  11
<PAGE>

                    (This page is intentionally left blank.)

<PAGE>

[LOGO] Smith Barney
       Mutual Funds

Your Serious Money. Professionally Managed.(SM)

International All
Cap Growth
Portfolio

An investment portfolio of
Smith Barney World Funds, Inc.


Shareholder reports Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that significantly affected the
fund's performance during its last fiscal year or period.


The fund sends only one report to a household if more than one account has the
same address. Contact your qualified plan or the transfer agent if you do not
want this policy to apply to you.

Statement of additional information The statement of additional information
provides more detailed information about the fund and is incorporated by
reference into (is legally a part of) this prospectus.


You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your
qualified plan, by calling the fund at 1-800-451-2010, or by writing to the fund
at Smith Barney Mutual Funds, 7 World Trade Center, 39th Floor, New York, New
York 10048.




Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's (the "Commission") Public Reference Room in
Washington, D.C. In addition, information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090.
Reports and other information about the Fund are available on the EDGAR Database
on the Commission's Internet site at http://www.sec.gov. Copies of this
information may be obtained for a duplicating fee by electronic request at the
following E-mail address: publicinfo@sec.gov, or by writing the Commission's
Public Reference Section, Washington, D.C. 20549-0102.

If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not
lawfully sell its shares.


Your Serious Money. Professionally Managed. is a service mark of Salomon Smith
Barney Inc.


(Investment Company Act
file no. 811-06290)


FD02254 2/01

[LOGO] Smith Barney
       Mutual Funds

Your Serious Money. Professionally Managed.(SM)

PROSPECTUS

Global
Government
Bond Portfolio

Class A, B, L and Y Shares

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

February 28, 2001

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

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

<PAGE>

                        Global Government Bond Portfolio

--------------------------------------------------------------------------------
                                    Contents
--------------------------------------------------------------------------------

Investments, risks and performance ............................................2

More on the fund's investments ................................................6

Management ....................................................................7

Choosing a class of shares to buy .............................................8

Comparing the fund's classes ..................................................9

Sales charges ................................................................10

More about deferred sales charges ............................................12

Buying shares ................................................................13


Exchanging shares ............................................................15


Redeeming shares .............................................................16

Other things to know about  share transactions ...............................18


Dividends, distributions and taxes ...........................................20

Share price ..................................................................21

Financial highlights .........................................................22



                                                   Smith Barney Mutual Funds   1

<PAGE>

--------------------------------------------------------------------------------
  Investments, risks and performance
--------------------------------------------------------------------------------

Investment objective

The fund seeks as high a level of current income and capital appreciation as is
consistent with its policy of investing principally in high quality bonds of the
United States and foreign governments.

Principal investment strategies

Key investments The fund invests primarily in high quality bonds issued or
guaranteed by the United States or foreign governments, their political
subdivisions or their agencies, authorities, or instrumentalities. These bonds
may be of any maturity or duration and may be denominated in various currencies.

Selection process In seeking to achieve its income objective, the manager
considers and compares the relative yields of various obligations of various
developed nations. In seeking to achieve its capital appreciation objective, the
manager seeks the best values currently available in the marketplace. In both
cases, the manager uses quantitative techniques to measure and assess risk.
Depending on the manager's outlook, the fund's emphasis among foreign markets
and between capital appreciation and income oriented investments may vary. The
fund will not invest more than 45% of its assets in a single country, other than
the United States. Allocation of the fund's investments will depend upon the
relative attractiveness of the global markets and particular issuers.

In allocating assets among countries and regions, the economic and political
factors the manager looks for include:

o     Political and economic stability and favorable inflation and government
      deficit prospects
o     Favorable currency movements

In selecting securities of particular issuers, the manager looks for:

o     Favorable yield, maturity, issue classification and quality
      characteristics
o     Strong financial condition or stable or improving credit quality


2   Global Government Bond Portfolio

<PAGE>

Principal risks of investing in the fund

Investing in global government securities can bring added benefits, but it may
also involve risks. Investors could lose money on their investment in the fund,
or the fund may not perform as well as other investments, if:

o     Government bond investments lose their value due to an increase in market
      interest rates in one or more regions, a decline in a government's credit
      rating or financial condition or a default by a government
o     Adverse governmental action or, political, economic or market instability
      affects a foreign country or region
o     An unhedged currency in which a security is priced declines in value
      relative to the U.S. dollar
o     The manager's judgment about the attractiveness, relative yield, value or
      potential appreciation of a particular security, or the stability of a
      particular government proves to be incorrect



The fund invests in certain European countries where the securities markets are
less liquid and more volatile than markets in the U.S. In some European
countries, less information is available about issuers and markets because of
less rigorous accounting and regulatory standards than in the U.S. Currency
fluctuations could erase investment gains or add to investment losses. The risks
of investing in the emerging markets of Eastern Europe are substantially greater
than investing in the more developed markets of Western Europe.

The fund is classified as "non-diversified," which means it may invest a larger
percentage of its assets in one issuer than a diversified fund. To the extent
the fund concentrates its assets in a particular issuer the fund will be more
susceptible to the negative events affecting that issuer.

Who may want to invest The fund may be an appropriate investment if you:

o     Are seeking current income and an opportunity to participate in the global
      bond markets
o     Currently have exposure to U.S. and foreign stock markets or U.S. bond
      markets and wish to broaden your investment portfolio
o     Are comfortable with the risks of fixed income securities and the special
      risks of investing in foreign securities, including emerging market
      securities
o     Are seeking higher but potentially more volatile returns than those
      offered by U.S. fixed income investments


                                                   Smith Barney Mutual Funds   3

<PAGE>

Risk return bar chart


This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future. This bar chart
shows the performance of the fund's Class A shares for each of the past nine
years. Class B, L and Y shares would have different performance because of their
different expenses. The performance information in the chart does not reflect
sales charges, which would reduce your return.


                               [GRAPHIC OMITTED]

--------------------------------------------------------------------------------
                        Total Return for Class A Shares
--------------------------------------------------------------------------------

   [The following table was depicted as a bar chart in the printed material.]

 92        93        94         95       96       97      98       99       00
--------------------------------------------------------------------------------
0.91%    19.13%    (3.99)%    15.36%    7.52%    8.15%   8.25%   (3.44)%   9.40%

                        Calendar years ended December 31

Quarterly returns:


Highest: 5.14% in 2nd quarter 1993;  Lowest: (3.61)% in 1st quarter 1992.


Risk return table

This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown with that of the J.P.
Morgan Global Government Bond Market Index ("MGBM Index"), a broad-based
unmanaged index of foreign debt securities. This table assumes the imposition of
the maximum sales charge applicable to the class, the redemption of shares at
the end of the period, and the reinvestment of distributions and dividends.

--------------------------------------------------------------------------------
                          Average Annual Total Returns
                     Calendar Years Ended December 31, 2000
--------------------------------------------------------------------------------
 Class          1 year    5 years   10 years    Since Inception   Inception Date
--------------------------------------------------------------------------------
   A             4.43%     4.92%       n/a           7.04%         07/22/91
--------------------------------------------------------------------------------
   B             4.37%     5.16%       n/a           6.81%         11/10/94
--------------------------------------------------------------------------------
   L             6.77%     5.19%       n/a           6.63%         01/04/93
--------------------------------------------------------------------------------
   Y             9.75%     6.27%       n/a           7.24%         02/19/93
--------------------------------------------------------------------------------
MGBM Index       2.34%     3.46%       n/a           7.23%                *
--------------------------------------------------------------------------------
*Index comparison begins on July 31, 1991


4   Global Government Bond Portfolio
<PAGE>

Fee table

This table sets forth the fees and expenses you will pay if you invest in fund
shares.

--------------------------------------------------------------------------------
                                Shareholder fees
--------------------------------------------------------------------------------
(fees paid directly from your investment)  Class A   Class B   Class L   Class Y
--------------------------------------------------------------------------------
Maximum sales charge (load) imposed
on purchases (as a % of offering price)     4.50%      None     1.00%      None
--------------------------------------------------------------------------------
Maximum deferred sales charge
(load) (as a % of the lower of net
asset value at purchase or redemption)      None*     4.50%     1.00%      None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                         Annual fund operating expenses
--------------------------------------------------------------------------------
(expenses deducted from fund assets)       Class A   Class B   Class L   Class Y
--------------------------------------------------------------------------------
Management fee                              0.75%     0.75%     0.75%     0.75%
--------------------------------------------------------------------------------

Distribution and service (12b-1) fees       0.25%     0.75%     0.70%      None
--------------------------------------------------------------------------------
Other expenses                              0.21%     0.26%     0.22%     0.10%

--------------------------------------------------------------------------------
Total annual fund operating expenses        1.21%     1.76%     1.67%     0.85%


*You may buy Class A shares in amounts of $500,000 or more at net asset value
(without an initial sales charge) but if you redeem those shares within 12
months of their purchase, you will pay a deferred sales charge of 1.00%.


Example

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

o     You invest $10,000 in the fund for the period shown
o     Your investment has a 5% return each year
o     You reinvest all distributions and dividends without a sales charge
o     The fund's operating expenses remain the same


--------------------------------------------------------------------------------
                      Number of years you own your shares
--------------------------------------------------------------------------------
                                         1 year   3 years    5 years    10 years
--------------------------------------------------------------------------------
Class A (with or without redemption
  at end of period)                       $568      $817      $1,085     $1,850
--------------------------------------------------------------------------------
Class B (redemption at end of period)     $629      $854      $1,054     $1,928
--------------------------------------------------------------------------------
Class B (no redemption)                   $179      $554      $  954     $1,928
--------------------------------------------------------------------------------
Class L (redemption at end of period)     $368      $621      $  998     $2,056
--------------------------------------------------------------------------------
Class L (no redemption)                   $268      $621      $  998     $2,056
--------------------------------------------------------------------------------
Class Y (with or without redemption
  at end of period)                       $ 87      $271      $  471     $1,049
--------------------------------------------------------------------------------
Class Y (no redemption)                   $ 87      $271      $  471     $1,049
--------------------------------------------------------------------------------



                                                   Smith Barney Mutual Funds   5

<PAGE>

--------------------------------------------------------------------------------
  More on the fund's investments
--------------------------------------------------------------------------------

Other debt securities In addition to high quality debt securities of developed
country governments, the fund may also invest up to 10% of its assets in debt
instruments, including loans and loan participations, of governmental issuers in
developing countries. Lower quality securities may be unrated or below
investment grade or in default. These securities may be speculative and involve
high risk of loss. The fund may also invest up to 35% of its assets in U.S. and
foreign non-governmental debt securities that are rated A or better at the time
of purchase or, if unrated, are of comparable quality.

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

o     To hedge against the economic impact of adverse changes in the market
      value of its securities because of changes in bond prices, currency
      exchange rates or interest rates
o     As a substitute for buying or selling currencies or securities

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

Impact of high portfolio turnover The fund may engage in active and frequent
trading. This may lead to the realization and distribution to shareholders of
higher capital gains, increasing their tax liability. Frequent trading also
increases transaction costs, which could detract from the fund's performance.

Defensive investing The fund may depart from its principal investment strategies
in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.


6   Global Government Bond Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Management
--------------------------------------------------------------------------------


Manager The fund's investment manager is SSB Citi Fund Management LLC, ("SSB
Citi") an affiliate of Salomon Smith Barney Inc. ("Salomon Smith Barney"). The
manager's address is 7 World Trade Center, New York, New York 10048. The manager
selects the fund's investments and oversees its operations. The manager and
Salomon Smith Barney are subsidiaries of Citigroup Inc. Citigroup businesses
produce a broad range of financial services -- asset management, banking and
consumer finance, credit and charge cards, insurance, investments, investment
banking and trading -- and use diverse channels to make them available to
consumer and corporate customers around the world. Smith Barney Global Capital
Management, Inc., a U.S. registered investment adviser located at 10 Piccadilly,
London, England, furnishes the manager with information, advice and assistance
and is available for consultation to the fund.


Denis Mangan, investment officer of the manager and managing director of Smith
Barney Global Capital Management, Inc., has been responsible for the day-to-day
management of the fund since 1995.

Management fee For its services, the manager received a fee during the fund's
last fiscal year equal to 0.75% of the fund's average daily net assets.


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

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

Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). The transfer agent has entered into a sub-transfer agency and
services agreement with PFPC Global Fund Services to serve as the fund's
sub-transfer agent (the "sub-transfer agent"). The sub-transfer agent will
perform certain functions including shareholder recordkeeping and accounting
services.



                                                   Smith Barney Mutual Funds   7

<PAGE>

--------------------------------------------------------------------------------
  Choosing a class of shares to buy
--------------------------------------------------------------------------------

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

o     If you plan to invest regularly or in large amounts, buying Class A shares
      may help you reduce sales charges and ongoing expenses.
o     For Class B shares, all of your purchase amount and, for Class L shares,
      more of your purchase amount (compared to Class A shares) will be
      immediately invested. This may help offset the higher expenses of Class B
      and Class L shares, but only if the fund performs well.
o     Class L shares have a shorter deferred sales charge period than Class B
      shares. However, because Class B shares convert to Class A shares, and
      Class L shares do not, Class B shares may be more attractive to long-term
      investors.

You may buy shares from:


o     A broker/dealer, financial intermediary, financial institution or a
      distributor's financial consultants (each called a "Service Agent")
o     The fund, but only if you are investing through certain qualified plans or
      Service Agents

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

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


<TABLE>
<CAPTION>
                                                       Initial
Additional
--------------------------------------------------------------------------------
----------
                                           Classes A, B, L      Class Y
All Classes
--------------------------------------------------------------------------------
----------
<S>                                            <C>            <C>
<C>
General                                        $1,000         $15 million
$50
--------------------------------------------------------------------------------
----------
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts                  $250          $15 million
$50
--------------------------------------------------------------------------------
----------
Qualified Retirement Plans*                      $25          $15 million
$25
--------------------------------------------------------------------------------
----------
Simple IRAs                                      $1               n/a
$1
--------------------------------------------------------------------------------
----------
Monthly Systematic Investment Plans              $25              n/a
$25
--------------------------------------------------------------------------------
----------
Quarterly Systematic Investment Plans            $50              n/a
$50
</TABLE>

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


8   Global Government Bond Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Comparing the fund's classes
--------------------------------------------------------------------------------


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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
--------------------------------
                              Class A                   Class B
Class L              Class Y
--------------------------------------------------------------------------------
--------------------------------
<S>                        <C>                       <C>                    <C>
<C>
Key features               o Initial sales           o No initial           o
Initial sales      o No initial
                             charge                    sales charge
charge is            or deferred
                           o You may qual-           o Deferred
lower than           sales charge
                             ify for reduc-            sales charge
Class A            o Must invest
                             tion or waiver            declines             o
Deferred sales       at least
                             of initial sales          over time
charge for           $15 million
                             charge                  o Converts to
only 1 year        o Lower annual
                           o Lower annual              Class A after        o
Does not con-        expenses than
                             expenses than             8 years
vert to Class A      the other
                             Class B and             o Higher annual        o
Higher annual        classes
                             Class L                   expenses than
expenses than
                                                       Class A
Class A

--------------------------------------------------------------------------------
--------------------------------
Initial sales              Up to 4.50%;              None
1.00%                None
Charge                     reduced for
                           large purchases
                           and waived for
                           certain investors;
                           no charge for
                           purchases of
                           $500,000 or
                           more

--------------------------------------------------------------------------------
--------------------------------
Deferred                   1.00% on pur-             Up to 4.50%
1.00% if you         None
sales charge               chases of                 charged when
redeem within
                           $500,000 or               you redeem             1
year of
                           more if you               shares. The
purchase
                           redeem within             charge is
                           1 year of                 reduced over
                           purchase                  time and there
                                                     is no deferred
                                                     sales charge
                                                     after 6 years


--------------------------------------------------------------------------------
--------------------------------
Annual                     0.25% of aver-            0.75% of aver-
0.70% of aver-       None
distribution               age daily net             age daily net          age
daily net
and service                assets                    assets
assets
fees

--------------------------------------------------------------------------------
--------------------------------
Exchange                   Class A shares            Class B shares
Class L shares       Class Y shares
privilege*                 of most Smith             of most Smith          of
most Smith        of most Smith
                           Barney funds              Barney funds.
Barney funds         Barney funds

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


*Ask your Service Agent for the Smith Barney funds available for exchange.



                                                   Smith Barney Mutual Funds   9

<PAGE>

--------------------------------------------------------------------------------
  Sales charges
--------------------------------------------------------------------------------

Class A shares


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

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

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

--------------------------------------------------------------------------------
                                                                   Broker/Dealer
                                      Sales Charge as a % of:       Commission
                                     Offering      Net amount       as a % of
Amount of purchase                   price (%)    invested (%)    offering price
--------------------------------------------------------------------------------
Less than $25,000                      4.50          4.71             4.05
--------------------------------------------------------------------------------
$25,000 but less than $50,000          4.00          4.17             3.60
--------------------------------------------------------------------------------
$50,000 but less than $100,000         3.50          3.63             3.15
--------------------------------------------------------------------------------
$100,000 but less than $250,000        2.50          2.56             2.25
--------------------------------------------------------------------------------
$250,000 but less than $500,000        1.50          1.52             1.35
--------------------------------------------------------------------------------
$500,000 or more                        -0-           -0-              -0-
--------------------------------------------------------------------------------

Investments of $500,000 or more You do not pay an initial sales charge when you
buy $500,000 or more of Class A shares. However, if you redeem these Class A
shares within one year of purchase, you will pay a deferred sales charge of 1%.


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




10  Global Government Bond Portfolio

<PAGE>


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

      o     by you, or
      o     by members of your immediate family,

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


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

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

o     Employees of NASD members
o     Investors participating in a fee-based program sponsored by certain
      broker/dealers affiliated with Citigroup
o     Investors who redeemed Class A shares of a Smith Barney fund in the past
      60 days, if the investor's Service Agent is notified


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


Class B shares

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

--------------------------------------------------------------------------------
                                                                     6th through
Year after purchase          1st      2nd     3rd      4th      5th      8th
--------------------------------------------------------------------------------
Deferred sales charge        4.5%     4%      3%       2%       1%       0%
--------------------------------------------------------------------------------


Service Agents selling Class B shares receive a commission of up to 4.50% of the
purchase price of the Class B shares they sell. Service Agents also receive a
service fee at an annual rate equal to 0.25% of the average daily net assets
represented by the Class B shares they are servicing.

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



                                                   Smith Barney Mutual Funds  11

<PAGE>


--------------------------------------------------------------------------------
Shares issued:             Shares issued:                Shares issued:
At initial                 On reinvestment of            Upon exchange from
purchase                   dividends and                 another Smith Barney
                           distributions                 fund
--------------------------------------------------------------------------------


Eight years                In same proportion as         On the date the shares
after the date             the number of Class B         originally acquired
of purchase                shares converting is to       would have converted
                           total Class B shares you      into Class A shares
                           own (excluding shares
                           issued as dividends)

Class L shares

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


Service Agents selling Class L shares receive a commission of up to 2.00% of the
purchase price of the Class L shares they sell. Starting in the thirteenth
month, Service Agents also receive an annual fee of up to 1.00% of the average
daily net assets represented by the Class L shares held by their clients.


Class Y shares

You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of the fund over a 13-month period. To qualify, you
must initially invest $5,000,000. The initial investment requirement is
$2,000,000 for an institutional advisory client of a Citigroup investment
advisor.

More about deferred sales charges

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

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

o     Shares exchanged for shares of another Smith Barney fund
o     Shares representing reinvested distributions and dividends
o     Shares no longer subject to the deferred sales charge




12  Global Government Bond Portfolio
<PAGE>


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

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

The fund's distributor receives deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Service Agent.


Deferred sales charge waivers

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

o     On payments made through certain systematic withdrawal plans
o     On certain distributions from a retirement plan
o     For involuntary redemptions of small account balances
o     For 12 months following the death or disability of a shareholder


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


--------------------------------------------------------------------------------
  Buying shares
--------------------------------------------------------------------------------


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


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

                        o     Class of shares being bought
                        o     Dollar amount or number of shares being bought


                        Service Agent may charge an annual account maintenance
                        fee.


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


                                                   Smith Barney Mutual Funds  13
<PAGE>

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


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

                        o     Write the fund at the following address:
                                Smith Barney World Funds, Inc.
                                Global Government Bond Portfolio
                                (Specify class of shares)
                                c/o PFPC Global Fund Services
                                P.O. Box 9699
                                Providence, RI 02940-9699

                        o     Enclose a check to pay for the shares. For initial
                              purchases, complete and send an account
                              application.
                        o     For more information, call the transfer agent at
                              1-800-451-2010.
--------------------------------------------------------------------------------


           Through a    You may authorize your Service Agent or the sub-transfer
          systematic    agent to transfer funds automatically from (i) a regular
     investment plan    bank account, (ii) cash held in a brokerage account or
                        (iii) certain money market funds, in order to buy shares
                        on a regular basis.


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

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

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


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



14  Global Government Bond Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Exchanging shares
--------------------------------------------------------------------------------


        Smith Barney    You should contact your Service Agent to exchange into
offers a distinctive    other Smith Barney funds. Be sure to read the prospectus
     family of funds    of the Smith Barney fund you are exchanging into. An
    tailored to help    exchange is a taxable transaction.
    meet the varying
 needs of both large    o     You may exchange shares only for shares of the
           and small          same class of another Smith Barney fund. Not all
          investors.          Smith Barney funds offer all classes.
                        o     Not all Smith Barney funds may be offered in your
                              state of residence. Contact your Service Agent or
                              the transfer agent for further information.
                        o     You must meet the minimum investment amount for
                              each fund, except for systematic investment plan
                              exchanges.
                        o     If you hold share certificates, the transfer agent
                              must receive the certificates endorsed for
                              transfer or with signed stock powers (documents
                              transferring ownership of certificates) before the
                              exchange is effective.
                        o     The fund may suspend or terminate your exchange
                              privilege if you engage in an excessive pattern of
                              exchanges.
--------------------------------------------------------------------------------
           Waiver of    Your shares will not be subject to an initial sales
          additional    charge at the time of the exchange.
       sales charges
                        Your deferred sales charge (if any) will continue to be
                        measured from the date of your original purchase. If the
                        fund you exchange into has a higher deferred sales
                        charge, you will be subject to that charge. If you
                        exchange at any time into a fund with a lower charge,
                        the sales charge will not be reduced.
--------------------------------------------------------------------------------
        By telephone    If you do not have a brokerage account with a Service
                        Agent, you may be eligible to exchange shares through
                        the fund. You must complete an authorization form to
                        authorize telephone transfers. If eligible, you may make
                        telephone exchanges on any day the New York Stock
                        Exchange is open. Call the transfer agent at
                        1-800-451-2010 between 9:00 a.m. and 4:00 p.m. (Eastern
                        time).

                        You can make telephone exchanges only between accounts
                        that have identical registrations.
--------------------------------------------------------------------------------
             By mail    If you do not have a brokerage account, contact your
                        Service Agent or write to the sub-transfer agent at the
                        address on the following page.


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


                                                   Smith Barney Mutual Funds  15
<PAGE>

--------------------------------------------------------------------------------
  Redeeming shares
--------------------------------------------------------------------------------


           Generally    Contact your Service Agent to redeem shares of the fund.


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

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

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


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


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


             By mail    For accounts held directly at the fund, send written
                        requests to the Fund at the following address:


                          Smith Barney World Funds, Inc.
                          Global Government Bond Portfolio
                          (Specify class of shares)
                          c/o PFPC Global Fund Services
                          P.O. Box 9699
                          Providence, RI 02940-9699

                        Your written request must provide the following:


                        o     The fund and account number


                        o     The class of shares and the dollar amount or
                              number of shares to be redeemed
                        o     Signatures of each owner exactly as account is
                              registered

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


16  Global Government Bond Portfolio
<PAGE>

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


        By telephone    If you do not have a brokerage account Service Agent,
                        you may be eligible to redeem shares (except those held
                        in retirement plans) in amounts up to $50,000 per day
                        through the fund. You must complete an authorization
                        form to authorize telephone redemptions. If eligible,
                        you may request redemptions by telephone on any day the
                        New York Stock Exchange is open. Call the transfer agent
                        at 1-800-451-2010 between 9:00 a.m. and 4:00 p.m.
                        (Eastern time).

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


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

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

                        The following conditions apply:

                        o     Your shares must not be represented by
                              certificates
                        o     All dividends and distributions must be reinvested


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



                                                   Smith Barney Mutual Funds  17
<PAGE>

--------------------------------------------------------------------------------
  Other things to know about share transactions
--------------------------------------------------------------------------------

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

o     Name of the fund
o     Account number
o     Class of shares being bought, exchanged or redeemed
o     Dollar amount or number of shares being bought, exchanged or redeemed
o     Signature of each owner exactly as the account is registered


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


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


o     Are redeeming over $50,000 of shares


o     Are sending signed share certificates or stock powers to the sub-transfer
      agent
o     Instruct the sub-transfer agent to mail the check to an address different
      from the one on your account
o     Changed your account registration
o     Want the check paid to someone other than the account owner(s)
o     Are transferring the redemption proceeds to an account with a different
      registration

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


18  Global Government Bond Portfolio
<PAGE>

The fund has the right to:

o     Suspend the offering of shares
o     Waive or change minimum and additional investment amounts
o     Reject any purchase or exchange order
o     Change, revoke or suspend the exchange privilege
o     Suspend telephone transactions
o     Suspend or postpone redemptions of shares on any day when trading on the
      New York Stock Exchange is restricted, or as otherwise permitted by the
      Securities and Exchange Commission

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

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


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

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


                                                   Smith Barney Mutual Funds  19
<PAGE>

--------------------------------------------------------------------------------
  Dividends, distributions and taxes
--------------------------------------------------------------------------------


Dividends The fund generally declares and pays monthly dividends and makes
capital gain distributions, if any, once a year, typically in December. The fund
may pay additional distributions and dividends at other times if necessary for
the fund to avoid a federal tax. Capital gain distributions and dividends are
reinvested in additional fund shares of the same class that you hold. The fund
expects distributions to be primarily from income. You do not pay a sales charge
on reinvested distributions or dividends. Alternatively, you can instruct your
Service Agent, the transfer agent or the sub-transfer agent to have your
distributions and/or dividends paid in cash. You can change your choice at any
time to be effective as of the next distribution or dividend, except that any
change given to your Service Agent, the transfer agent or the sub-transfer agent
less than five days before the payment date will not be effective until the next
distribution or dividend is paid.


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

--------------------------------------------------------------------------------
  Transaction                                     Federal tax status
--------------------------------------------------------------------------------
Redemption or exchange of shares                  Usually capital gain or loss;
                                                  long-term only if shares owned
                                                  more than one year
--------------------------------------------------------------------------------
Long-term capital gain distributions              Long-term capital gain
--------------------------------------------------------------------------------
Short-term capital gain distributions             Ordinary income
--------------------------------------------------------------------------------
Dividends                                         Ordinary income
--------------------------------------------------------------------------------

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

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


20  Global Government Bond Portfolio
<PAGE>

--------------------------------------------------------------------------------
  Share price
--------------------------------------------------------------------------------

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

The fund generally values its fund securities based on market prices or
quotations. The fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices or
quotations are not readily available, or when the value of a security has been
materially affected by events occurring after a foreign exchange closes, the
fund may price those securities at fair value. Fair value is determined in
accordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than
another fund using market quotations to price the same securities.

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


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

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



                                                   Smith Barney Mutual Funds  21
<PAGE>

--------------------------------------------------------------------------------
  Financial highlights
--------------------------------------------------------------------------------


The financial highlights tables are intended to help you understand the
performance of each class for the past 5 years. Certain information reflects
financial results for a single share. Total return represents the rate that a
shareholder would have earned (or lost) on a fund share assuming reinvestment of
all dividends and distributions. The information in the following tables was
audited by KPMG LLP, independent auditors, whose report, along with the fund's
financial statements, is included in the annual report (available upon request).


--------------------------------------------------------------------------------
For a Class A share of capital stock
outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                       2000(1)        1999(1)        1998(1)
1997(1)        1996(1)
--------------------------------------------------------------------------------
---------------------------
<S>                                   <C>            <C>            <C>
<C>            <C>
Net asset value,
beginning of year                     $  11.18       $  11.88       $  12.22
$  12.55       $  12.30
--------------------------------------------------------------------------------
---------------------------
Income (loss) from operations:
  Net investment income                   0.48           0.51           0.54
0.59           0.70
  Net realized and
  unrealized gain (loss)                  0.17          (0.69)          0.39
0.38           0.42
--------------------------------------------------------------------------------
---------------------------
Total income (loss)
from operations                           0.65          (0.18)          0.93
0.97           1.12
--------------------------------------------------------------------------------
---------------------------
Less distribution from:
  Net investment income(2)               (0.88)         (0.52)         (0.22)
(1.22)         (0.87)
  Net realized gains                        --             --          (0.60)
(0.08)            --
  Capital                                   --             --          (0.45)
--             --
--------------------------------------------------------------------------------
---------------------------
Total distributions                      (0.88)         (0.52)         (1.27)
(1.30)         (0.87)
--------------------------------------------------------------------------------
---------------------------
Net asset value, end of year          $  10.95       $  11.18       $  11.88
$  12.22       $  12.55
--------------------------------------------------------------------------------
---------------------------

Total return                              6.13%         (1.62)%         8.08%
8.21%          9.41%

--------------------------------------------------------------------------------
---------------------------
Net assets, end of year (000)'s       $ 60,546       $ 68,532       $ 88,836
$ 94,957       $106,536
--------------------------------------------------------------------------------
---------------------------
Ratios to average net assets:

  Expenses(3)                             1.21%          1.26%          1.22%
1.26%          1.26%

  Net investment income                   4.35           4.39           4.58
4.82           5.69
--------------------------------------------------------------------------------
---------------------------
Portfolio turnover rate                    121%           164%           287%
367%           133%
--------------------------------------------------------------------------------
---------------------------
</TABLE>
(1)   Per share amounts have been calculated using the monthly average shares
      method.
(2)   Distributions from net investment income include short-term capital gains,
      if any, for federal income tax purposes.

(3)   During the year ended October 31, 1996, the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio would have been 1.24%.



22  Global Government Bond Portfolio
<PAGE>

--------------------------------------------------------------------------------
For a Class B share of capital stock
outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                       2000(1)       1999(1)      1998(1)
1997(1)       1996(1)
--------------------------------------------------------------------------------
----------------------
<S>                                   <C>           <C>           <C>
<C>           <C>
Net asset value, beginning of year    $ 11.16       $ 11.87       $ 12.22
$ 12.50       $ 12.26
--------------------------------------------------------------------------------
----------------------
Income (loss) from operations:
  Net investment income                  0.42          0.45          0.47
0.52          0.63
  Net realized and unrealized
    gain (loss)                          0.17         (0.69)         0.39
0.38          0.42
--------------------------------------------------------------------------------
----------------------
Total income (loss) from operations      0.59         (0.24)         0.86
0.90          1.05
--------------------------------------------------------------------------------
----------------------
Less distribution from:

  Net investment income(2)              (0.83)        (0.47)        (0.19)
(1.10)        (0.81)

  Net realized gains                       --            --         (0.60)
(0.08)           --
  Capital                                  --            --         (0.42)
--            --
--------------------------------------------------------------------------------
----------------------
Total distributions                     (0.83)        (0.47)        (1.21)
(1.18)        (0.81)
--------------------------------------------------------------------------------
----------------------
Net asset value, end of year          $ 10.92       $ 11.16       $ 11.87
$ 12.22       $ 12.50
--------------------------------------------------------------------------------
----------------------

Total return                             5.56%        (2.11)%        7.46%
7.62%         8.83%

--------------------------------------------------------------------------------
----------------------
Net assets, end of year (000)'s       $ 5,574       $ 9,485       $14,569
$19,690       $25,970
--------------------------------------------------------------------------------
----------------------
Ratios to average net assets:

  Expenses(3)                            1.76%         1.81%         1.77%
1.80%         1.81%

  Net investment income                  3.88          3.86          3.93
4.24          5.15
--------------------------------------------------------------------------------
----------------------
Portfolio turnover rate                   121%          164%          287%
367%          133%
--------------------------------------------------------------------------------
----------------------
</TABLE>

(1)   Per share amounts calculated using the monthly average shares method.
(2)   Distributions from net investment income include short-term capital gains,
      if any, for federal income tax purposes.

(3)   During the year ended October 31, 1996, the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio would have been 1.78%.



                                                   Smith Barney Mutual Funds  23

<PAGE>

--------------------------------------------------------------------------------
For a Class L share of capital stock
outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                   2000(1)      1999(1)         1998(1)(2)
1997(1)       1996(1)
--------------------------------------------------------------------------------
--------------------
<S>                               <C>           <C>              <C>
<C>           <C>
Net asset value,
beginning of  year                $ 11.15       $ 11.86          $ 12.19       $
12.47       $ 12.23
--------------------------------------------------------------------------------
--------------------
Income (loss) from operations:
  Net investment income              0.42          0.46             0.48
0.53          0.64
  Net realized and unrealized
  gain (loss)                        0.18         (0.70)            0.40
0.38          0.41
--------------------------------------------------------------------------------
--------------------
Total income (loss)
from operations                      0.60         (0.24)            0.88
0.91          1.05
--------------------------------------------------------------------------------
--------------------
Less distribution from:
  Net investment income(3)          (0.83)        (0.47)           (0.19)
(1.11)        (0.81)
  Net realized gains                   --            --            (0.60)
(0.08)           --
  Capital                              --            --            (0.42)
--            --
--------------------------------------------------------------------------------
--------------------
Total distributions                 (0.83)        (0.47)           (1.21)
(1.19)        (0.81)
--------------------------------------------------------------------------------
--------------------
Net assets value, end of year     $ 10.92       $ 11.15          $ 11.86       $
12.19       $ 12.47
--------------------------------------------------------------------------------
--------------------
Total return                         5.67%        (2.11)%           7.67%
7.73%         8.90%
--------------------------------------------------------------------------------
--------------------
Net assets, end of year (000)'s   $ 1,752       $ 1,731          $ 2,391       $
3,257       $ 3,986
--------------------------------------------------------------------------------
--------------------
Ratios to average net assets:
  Expenses(4)                        1.67%         1.72%            1.68%
1.69%         1.74%
  Net investment income              3.88          3.98             4.01
4.33          5.22
--------------------------------------------------------------------------------
--------------------
Portfolio turnover rate               121%          164%             287%
367%          133%
--------------------------------------------------------------------------------
--------------------
</TABLE>
(1)   Per share amounts have been calculated using the monthly average shares
      method.
(2)   On June 12, 1998, Class C shares were renamed Class L share.
(3)   Distributions from net investment income include short-term capital gains,
      if any, for Federal income tax purposes.

(4)   During the year ended October 31, 1996, the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio would have been 1.71%.



24  Global Government Bond Portfolio
<PAGE>

--------------------------------------------------------------------------------
For a Class Y share of capital stock
outstanding throughout each year ended October 31:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                2000           1999(1)
1998(1)        1997(1)        1996(1)
--------------------------------------------------------------------------------
-----------------------------------
<S>                                         <C>            <C>            <C>
<C>            <C>
Net asset value, beginning of year          $  11.03       $  11.70       $
12.03       $  12.39       $  12.14
--------------------------------------------------------------------------------
-----------------------------------
Income (loss) from operations:
  Net investment income                         0.51           0.54
0.59           0.63           0.73
  Net realized and unrealized gain (loss)       0.18          (0.68)
0.37           0.37           0.42
--------------------------------------------------------------------------------
-----------------------------------
Total income (loss) from operations             0.69          (0.14)
0.96           1.00           1.15
--------------------------------------------------------------------------------
-----------------------------------
Less distribution from:

  Net investment income(2)                     (0.89)         (0.53)
(0.23)         (1.28)         (0.90)

  Net realized gains                              --             --
(0.60)         (0.08)            --
  Capital                                         --             --
(0.46)            --             --
--------------------------------------------------------------------------------
-----------------------------------
Total distributions                            (0.89)         (0.53)
(1.29)         (1.36)         (0.90)
--------------------------------------------------------------------------------
-----------------------------------
Net asset value, end of year                $  10.83       $  11.03       $
11.70       $  12.03       $  12.39
--------------------------------------------------------------------------------
-----------------------------------
Total return                                    6.59%         (1.28)%
8.50%          8.61%          9.82%
--------------------------------------------------------------------------------
-----------------------------------
Net assets, end of year (000)'s             $ 47,145       $ 47,708       $
37,057       $ 28,097       $ 15,105
--------------------------------------------------------------------------------
-----------------------------------
Ratio to average net assets:
  Expenses(3)                                   0.85%          0.91%
0.83%          0.89%          0.84%
  Net investment income                         4.71           4.69
5.06           5.19           6.12
--------------------------------------------------------------------------------
-----------------------------------
Portfolio turnover rate                          121%           164%
287%           367%           133%
--------------------------------------------------------------------------------
-----------------------------------
</TABLE>
(1)   Per share amounts have been calculated using the monthly average shares
      method.
(2)   Distributions from net investment income include short-term capital gains,
      if any, for federal income tax purposes.

(3)   During the year ended October 31, 1996, the fund had earned credits from
      the custodian which reduced service fees incurred. If the credits are
      taken into consideration, the expense ratio would have been 0.81%.


                                                   Smith Barney Mutual Funds  25

<PAGE>

                    (This page is intentionally left blank.)


26  Global Government Bond Portfolio
<PAGE>

                    (This page is intentionally left blank.)


                                                   Smith Barney Mutual Funds  27
<PAGE>

[LOGO] Smith Barney
       Mutual Funds

Your Serious Money. Professionally Managed.(SM)

Global
Government
Bond Portfolio

An investment portfolio of
Smith Barney World Funds, Inc.


Shareholder reports Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that significantly affected the
fund's performance during its last fiscal year or period.

The fund sends only one report to a household if more than one account has the
same address. Contact your Service Agent or the transfer agent if you do not
want this policy to apply to you.


Statement of additional information The statement of additional information
provides more detailed information about the fund and is incorporated by
reference into (is legally part of) this prospectus.


You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent, by calling the fund at 1-800-451-2010, or by writing to the fund at Smith
Barney Mutual Funds, 7 World Trade Center, 39th Floor, New York, New York 10048.


Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's (the "Commission") Public Reference Room in
Washington, D.C. In addition, information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090.
Reports and other information about the Fund are available on the EDGARDatabase
on the Commission's Internet site at http://www.sec.gov. Copies of this
information may be obtained for a duplicating fee by electronic request at the
following E-mail address: publicinfo@sec.gov, or by writing the Commission's
Public Reference Section, Washington, D.C. 20549-0102.

If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not
lawfully sell its shares.


Your Serious Money. Professionally Managed. is a service mark of Salomon Smith
Barney


(Investment Company Act
file no. 811-06290)

FD 2/02255

<PAGE>

[SB] Smith Barney
[MF] Mutual Funds

Your Serious Money. Professionally Managed./SM/



P R O S P E C T U S


European

Portfolio

Class A, B, L and Y Shares
----------------------------------------------------
February 28, 2001



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


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


<PAGE>

European Portfolio

                   Contents

<TABLE>
<S>                                                                          <C>
Investments, risks and performance..........................................   2
More on the fund's investments..............................................   6
Management..................................................................   7
Choosing a class of shares to buy...........................................   8
Comparing the fund's classes................................................   9
Sales charges...............................................................  10
More about deferred sales charges...........................................  12
Buying shares...............................................................  13
Exchanging shares...........................................................  15
Redeeming shares............................................................  16
Other things to know about share transactions...............................  18
Dividends, distributions and taxes..........................................  20
Share price.................................................................  21
Financial highlights........................................................  22
</TABLE>


                                                       Smith Barney Mutual Funds

                                                                              1
<PAGE>

 Investments, risks and performance

Investment objective
The fund seeks long-term capital appreciation by investing in equity securities
of European issuers.

Principal investment strategies
Key investments The fund invests primarily in equity securities of companies
based in Western Europe and may also invest in the emerging markets of Eastern
Europe. Equity securities include common and preferred stocks, debt securities
convertible into equity securities, depositary receipts and warrants and rights
relating to equity securities.

Selection process The manager emphasizes individual security selection while
allocating the fund's investments among European countries. Companies in which
the fund invests may have large, mid-sized or small market capitalizations and
may operate in any market sector. Depending on the manager's assessment of
long-term growth potential, the fund's emphasis among European markets and
issuers may vary.

In selecting individual companies for investment, the manager looks for the
following:

 .Above average earnings growth
 .High relative return on invested capital
 .Experienced and effective management
 .Effective research, product development and marketing
 .Competitive advantages
 .Strong financial condition
 .Favorable trends experienced by certain U.S. companies that are likely to
  spread to comparable European companies
 .Increasing market share

By spreading the fund's investments across several European markets, the man-
ager seeks to reduce volatility compared to investments in a single country.

In allocating assets among countries, the economic and political factors the
manager evaluates include:

 .Interest rates and low or decelerating inflation
 .Stable governments with policies toward business that encourage economic
  growth and foster development of securities markets
 .Currency stability

European Portfolio

 2
<PAGE>


Principal risks of investing in the fund
Investing in European securities can bring added benefits, but it may also
involve risks. Investors could lose money on their investment in the fund, or
the fund may not perform as well as other investments, if:

 .European stock prices decline
 .Adverse governmental action, or political, economic or market instability
  affects one or more European countries
 .The currency in which a security is priced declines in value relative to the
  U.S. dollar
 .The manager's judgment about the attractiveness, value or potential apprecia-
  tion of a particular stock proves to be incorrect

The fund invests in certain European countries where the securities markets are
less liquid and more volatile than markets in the U.S. In some European coun-
tries, less information is available about issuers and markets because of less
rigorous accounting and regulatory standards than in the U.S. Currency fluctua-
tions could erase investment gains or add to investment losses. The risks of
investing in the emerging markets of Eastern Europe are substantially greater
than investing in the more developed markets of Western Europe.

Who may want to invest The fund may be an appropriate investment if you:

 .Are seeking to participate in the long-term growth potential of European mar-
  kets
 .Currently have exposure to U.S. stock markets and wish to broaden the diversi-
  fication of your investment portfolio
 .Are comfortable with the risks of the stock market and the special risks of
  concentrating in European securities

                                                       Smith Barney Mutual Funds

                                                                              3
<PAGE>


Risk return bar chart

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not neces-
sarily indicate how the fund will perform in the future. The bar chart shows
the performance of the fund's Class A shares for each of the past six years.
Class B, L and Y shares would have different performance because of their dif-
ferent expenses. The performance information in the chart does not reflect
sales charges, which would reduce your return.

                        Total Return for Class A Shares

                            (BAR GRAPH APPEARS HERE)

                     95       96      97       98       99      00
                     --       --      --       --       --      --
                   17.23%   29.12%   1.78%   24.31%   33.38%  (7.11)%

                       Calendar years ended December 31

Quarterly returns
Highest: 28.23% in 4th quarter 1999; Lowest: (20.91)% in 3rd quarter 1998

Risk return table
This table indicates the risks of investing in the fund by comparing the aver-
age annual total return of each class for the periods shown with that of the
MSCI European Market Index ("MSCI Index"), a broad-based unmanaged index of
foreign stocks. This table assumes the imposition of the maximum sales charge
applicable to the class, the redemption of shares at the end of the period, and
the reinvestment of distributions and dividends.

                          Average Annual Total Returns

                  Calendar Years Ended December 31, 2000
<TABLE>
<CAPTION>
Class       1 year   5 years 10 years Since inception Inception Date
<S>         <C>      <C>     <C>      <C>             <C>
 A          (11.76)% 13.97%    n/a        12.15%         02/07/94
 B          (12.23)% 14.11%    n/a        13.60%         11/07/94
 L           (9.70)% 14.07%    n/a        12.08%         02/14/94
 Y**            n/a    n/a     n/a          n/a          11/07/94
MSCI Index   (8.44)% 15.75%    n/a        13.44%            *
</TABLE>

 *Index comparison begins on February 28, 1994.

**There were no Class Y shares outstanding for the calendar year ended
December 31, 2000.

European Portfolio

 4
<PAGE>

Fee table
This table sets forth the fees and expenses you will pay if you invest in fund
shares.

                                Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment)     Class A Class B Class L Class Y
<S>                                           <C>     <C>     <C>     <C>
Maximum sales charge (load) imposed on
purchases (as a % of offering price)           5.00%    None   1.00%    None
Maximum deferred sales charge (load) (as a %
of the lower of net asset value at purchase
or redemption)                                 None*   5.00%   1.00%    None

                         Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets)          Class A Class B Class L Class Y**
<S>                                           <C>     <C>     <C>     <C>
Management fee                                 0.85%   0.85%   0.85%   0.85%
Distribution and service (12b-1) fees          0.25%   1.00%   1.00%    None
Other expenses                                 0.36%   0.46%   0.43%   0.36%**
                                               -----   -----   -----   -----
Total annual fund operating expenses           1.46%   2.31%   2.28%   1.21%
</TABLE>

*You may buy Class A shares in amounts of $1,000,000 or more at net asset value
(without an initial sales charge) but if you redeem those shares within 12
months of their purchase, you will pay a deferred sales charge of 1.00%.

**"Other Expenses" have been estimated based on expenses incurred by Class A
shares because no Class Y shares were outstanding for the year ended October
31, 2000.

Example
This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
 .You invest $10,000 in the fund for the period shown
 .Your investment has a 5% return each year
 .You reinvest all distributions and dividends without a sales charge
 .The fund's operating expenses remain the same

                      Number of years you own your shares
<TABLE>
<CAPTION>
                                       1 year 3 years 5 years 10 years
<S>                                    <C>    <C>     <C>     <C>
Class A (with or without redemption)    $641  $  939  $1,258   $2,159
Class B (redemption at end of period)   $734  $1,021  $1,335   $2,433
Class B (no redemption) without CDSC    $234  $  721  $1,235   $2,433
Class L (redemption at end of period)   $429  $  805  $1,308   $2,689
Class L (no redemption) without CDSC    $329  $  805  $1,308   $2,689
Class Y (with or without redemption)    $123  $  384  $  665   $1,466
</TABLE>

                                                       Smith Barney Mutual Funds

                                                                              5
<PAGE>

 More on the fund's investments

Debt and other securities The fund intends to be fully invested in equity secu-
rities. However, for cash management purposes, the fund may invest in debt
securities of U.S. and foreign corporate and governmental issuers or other
securities. Debt securities may be of any maturity, duration or credit quality
and may pay fixed or variable rates of principal and interest. The value of
debt securities will go down if interest rates go up, or the credit rating of
the security is downgraded or the issuer defaults on its obligation to pay
principal or interest. These risks are more severe for debt securities rated
below investment grade.

Currency transactions The fund may enter into transactions to buy or sell cur-
rencies at a future date, which may be a few days or a number of months. The
fund may enter into these forward currency contracts to:

 .Settle transactions in securities quoted in foreign currencies
 .Hedge against the economic impact of adverse changes in the value of the U.S.
  dollar

The fund may not fully benefit from or may lose money on forward currency
transactions if changes in currency rates do not occur as anticipated or do not
correspond accurately to changes in the value of the fund's holdings.

Defensive investing The fund may depart from its principal investment strate-
gies in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.

European Portfolio

 6
<PAGE>

 Management

Manager The fund's investment manager is SSB Citi Fund Management LLC ("SSB
Citi"), an affiliate of Salomon Smith Barney Inc. ("Salomon Smith Barney"). The
manager's address is 7 World Trade Center, 39th Floor, New York, New York
10048. The manager selects the fund's investments and oversees its operations.
The manager and Salomon Smith Barney are subsidiaries of Citigroup Inc.
Citigroup businesses produce a broad range of financial services--asset manage-
ment, banking and consumer finance, credit and charge cards, insurance, invest-
ments, investment banking and trading--and use diverse channels to make them
available to consumer and corporate customers around the world.

Rein van der Does, investment officer of the manager and managing director of
Salomon Smith Barney, has been responsible for day-to-day management of the
fund since inception. Maurits E. Edersheim, head of Salomon Smith Barney's
international equity team, has general responsibility for Salomon Smith
Barney's international equity investment operations.

Management fee For its services, the manager received a fee during the fund's
last fiscal year equal to 0.85% of the fund's average daily net assets.

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

In addition, the distributor may make payments for distribution and/or share-
holder servicing activities out of its past profits and other available sourc-
es. The distributor may also make payments for marketing, promotional or
related expenses to dealers. The amount of these payments is determined by the
distributor and may be substantial. The manager or an affiliate may make simi-
lar payments under similar arrangements.

Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). The transfer agent has entered into a sub-transfer agency
and services agreement with PFPC Global Fund Services to serve as the fund's
sub-transfer agent (the "sub-transfer agent"). The sub-transfer agent will per-
form certain functions including shareholder recordkeeping and accounting serv-
ices.

                                                       Smith Barney Mutual Funds

                                                                              7
<PAGE>

 Choosing a class of shares to buy

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

 .If you plan to invest regularly or in large amounts, buying Class A shares may
  help you reduce sales charges and ongoing expenses.
 .For Class B shares, all of your purchase amount and, for Class L shares, more
  of your purchase amount (compared to Class A shares) will be immediately
  invested. This may help offset the higher expenses of Class B and Class L
  shares, but only if the fund performs well.
 .Class L shares have a shorter deferred sales charge period than Class B
  shares. However, because Class B shares convert to Class A shares, and Class
  L shares do not, Class B shares may be more attractive to long-term invest-
  ors.

You may buy shares from:

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

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

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

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

<TABLE>
<CAPTION>
                                                 Initial           Additional
                                       Classes A, B, L   Class Y   All Classes
<S>                                    <C>             <C>         <C>
General                                    $1,000      $15 million     $50
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts              $250       $15 million     $50
Qualified Retirement Plans*                  $25       $15 million     $25
Simple IRAs                                  $1            n/a         $1
Monthly Systematic Investment Plans          $25           n/a         $25
Quarterly Systematic Investment Plans        $50           n/a         $50
</TABLE>

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

European Portfolio

 8
<PAGE>

 Comparing the fund's classes

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

<TABLE>
<CAPTION>
                           Class A     Class B     Class L     Class Y
<S>                      <C>         <C>         <C>         <C>
Key features             .Initial    .No initial .Initial    .No initial
                          sales       sales       sales       or
                          charge      charge      charge is   deferred
                          .You may    .Deferred   lower than  sales
                          qualify     sales       Class A     charge
                          for reduc-  charge      .Deferred   .Must
                          tion or     declines    sales       invest at
                          waiver of   over time   charge for  least $15
                          initial     .Converts   only 1      million
                          sales       to Class A  year        .Lower
                          charge      after 8     .Does not   annual
                          .Lower      years       convert to  expenses
                          annual      .Higher     Class A     than the
                          expenses    annual      .Higher     other
                          than Class  expenses    annual      classes
                          B and       than Class  expenses
                          Class L     A           than Class
                                                  A
------------------------------------------------------------------------
Initial sales charge     Up to       None        1.00%       None
                         5.00%;
                         reduced for
                         large pur-
                         chases and
                         waived for
                         certain
                         investors;
                         no charge
                         for pur-
                         chases of
                         $1,000,000
                         or more
------------------------------------------------------------------------
Deferred sales charge    1.00% on pur-  Up to 5.00% 1.00% if    None
                         chases of   charged     you redeem
                         $1,000,000  when you    within 1
                         or more if  redeem      year of
                         you redeem  shares. The purchase
                         within 1    charge is
                         year of     reduced
                         purchase    over time
                                     and there
                                     is no
                                     deferred
                                     sales
                                     charge
                                     after 6
                                     years
------------------------------------------------------------------------
Annual distribution and  0.25% of    1.00% of    1.00% of    None
service fees             average     average     average
                         daily net   daily net   daily net
                         assets      assets      assets
------------------------------------------------------------------------
Exchange Privilege*      Class A     Class B     Class L     Class Y
                         shares of   shares of   shares of   shares of
                         most Smith  most Smith  most Smith  most Smith
                         Barney      Barney      Barney      Barney
                         funds       funds       funds       funds
------------------------------------------------------------------------
</TABLE>

*Ask your Service Agent for the Smith Barney funds available for exchange.

                                                       Smith Barney Mutual Funds

                                                                              9
<PAGE>


 Sales charges

Class A shares

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

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

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

<TABLE>
<CAPTION>
                                                          Broker/Dealer
                                   Sales Charge as a % of Commission
                                   Offering  Net amount   as a % of
Amount of purchase                 price (%) invested (%) offering price
<S>                                <C>       <C>          <C>
Less than $25,000                    5.00        5.26             4.50
$25,000 but less than $50,000        4.25        4.44             3.83
$50,000 but less than $100,000       3.75        3.90             3.38
$100,000 but less than $250,000      3.25        3.36             2.93
$250,000 but less than $500,000      2.75        2.83             2.48
$500,000 but less than $1,000,000    2.00        2.04             1.80
$1,000,000 or more                    -0-         -0-       up to 1.00*
</TABLE>

*A distributor pays up to 1.00% to a Service Agent.

Investments of $1,000,000 or more You do not pay an initial sales charge when
you buy $1,000,000 or more of Class A shares. However, if you redeem these
Class A shares within one year of purchase, you will pay a deferred sales
charge of 1%.

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

European Portfolio

10
<PAGE>


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

 .by you, or
 .by members of your immediate family,

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

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

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

 .Employees of NASD members

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

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

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

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

<TABLE>
<CAPTION>
Year after purchase    1st 2nd 3rd 4th 5th 6th through 8th
<S>                    <C> <C> <C> <C> <C> <C>
Deferred sales charge   5%  4%  3%  2%  1%        0%
</TABLE>

Service Agents selling Class B shares receive a commission of up to 4.50% of
the purchase price of the Class B shares they sell. Service Agents also receive
a service fee at an annual rate equal to 0.25% of the average daily net assets
represented by the Class B shares they are servicing.

                                                       Smith Barney Mutual Funds

                                                                              11
<PAGE>


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

<TABLE>
<CAPTION>
Shares issued:                          Shares issued:     Shares issued:
At initial                              On reinvestment of Upon exchange from
purchase                                dividends and      another Smith
                                        distributions      Barney fund
<S>                                     <C>                <C>
Eight years after the date of purchase  In same proportion On the date the
                                        as the number of   shares originally
                                        Class B shares     acquired would
                                        converting is to   have converted
                                        total Class B      into Class A
                                        shares you own     shares
                                        (excluding shares
                                        issued as a
                                        dividend)
</TABLE>

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

Service Agents selling Class L shares receive a commission of up to 2.00% of
the purchase price of the Class L shares they sell. Starting in the thirteenth
month, Service Agents also receive an annual fee of up to 1.00% of the average
daily net assets represented by the Class L shares held by their clients.

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

 More about deferred sales charges

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

European Portfolio

12
<PAGE>


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

 .Shares exchanged for shares of another Smith Barney fund
 .Shares representing reinvested distributions and dividends
 .Shares no longer subject to the deferred sales charge

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

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

The Fund's distributor receives deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Service Agent.

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

 .On payments made through certain systematic withdrawal plans
 .On certain distributions from a retirement plan
 .For involuntary redemptions of small account balances
 .For 12 months following the death or disability of a shareholder

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

 Buying shares

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

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

                 .Class of shares being bought
                 .Dollar amount or number of shares being bought

                 Your Service Agent may charge an annual account maintenance
                 fee.
--------------------------------------------------------------------------------

                                                       Smith Barney Mutual Funds

                                                                              13
<PAGE>


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

                 .Write the fund at the following address:
                      Smith Barney World Funds, Inc.
                      European Portfolio
                      (Specify class of shares)
                      c/o PFPC Global Fund Services
                      P.O. Box 9699
                      Providence, Rhode Island 02940-9699
                 .Enclose a check to pay for the shares. For initial pur-
                   chases, complete and send an account application.
                 .For more information, call the transfer agent at1-800-451-
                   2010.
--------------------------------------------------------------------------------
     Through a
    systematic   You may authorize your Service Agent or the sub-transfer
    investment   agent to transfer funds automatically from (i) a regular bank
          plan   account, (ii) cash held in a brokerage account opened with a
                 Service Agent or (iii) certain money market funds, in order
                 to buy shares on a regular basis.

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

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

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

European Portfolio

14
<PAGE>


 Exchanging shares

  Smith Barney
      offers a   You should contact your Service Agent to exchange into other
   distinctive   Smith Barney funds. Be sure to read the prospectus of the
     family of   Smith Barney fund you are exchanging into. An exchange is a
         funds   taxable transaction.
   tailored to
 help meet the   .You may exchange shares only for shares of the same class of
 varying needs     another Smith Barney fund. Not all Smith Barney funds offer
 of both large     all classes.
     and small
    investors.   .Not all Smith Barney funds may be offered in your state of
                   residence. Contact your Service Agent or the transfer agent
                   for further information.

                 .You must meet the minimum investment amount for each fund
                   (except for systematic investment plan exchanges).

                 .If you hold share certificates, the transfer agent must
                   receive the certificates endorsed for transfer or with
                   signed stock powers (documents transferring ownership of
                   certificates) before the exchange is effective.
                 .The fund may suspend or terminate your exchange privilege if
                   you engage in an excessive pattern of exchanges.
--------------------------------------------------------------------------------
     Waiver of   Your shares will not be subject to an initial sales charge at
    additional   the time of the exchange.
 sales charges

                 Your deferred sales charge (if any) will continue to be mea-
                 sured from the date of your original purchase. If the fund
                 you exchange into has a higher deferred sales charge, you
                 will be subject to that charge. If you exchange at any time
                 into a fund with a lower charge, the sales charge will not be
                 reduced.
--------------------------------------------------------------------------------
  By telephone
                 If you do not have a brokerage account with a Service Agent,
                 you may be eligible to exchange shares through the fund. You
                 must complete an authorization form to authorize telephone
                 transfers. If eligible, you may make telephone exchanges on
                 any day the New York Stock Exchange is open. Call the trans-
                 fer agent at 1-800-451-2010 between 9:00 a.m. and 4:00 p.m.
                 (Eastern time).

                 You can make telephone exchanges only between accounts that
                 have identical registrations.
--------------------------------------------------------------------------------
       By mail
                 If you do not have a brokerage account, contact your Service
                 Agent or write to the sub-transfer agent at the address on
                 the following page.

                                                       Smith Barney Mutual Funds

                                                                              15
<PAGE>

 Redeeming shares

     Generally
                 Contact your Service Agent to redeem shares of the fund.

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

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

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

                 If you have a brokerage account with a Service Agent, your
                 redemption proceeds will be placed in your account and not
                 reinvested without your specific instruction. In other cases,
                 unless you direct otherwise, your redemption proceeds will be
                 paid by check mailed to your address of record.
--------------------------------------------------------------------------------
       By mail
                 For accounts held directly at the fund, send written requests
                 to the fund at the following address:
                   Smith Barney World Funds, Inc.
                   European Portfolio
                   (Specify class of shares)
                   c/o PFPC Global Fund Services
                   P.O. Box 9699
                   Providence, Rhode Island 02940-9699

                 Your written request must provide the following:

                 .The fund and account number
                 .The class of shares and the dollar amount or number of
                   shares to be redeemed
                 .Signatures of each owner exactly as the account is regis-
                   tered
--------------------------------------------------------------------------------

European Portfolio

16
<PAGE>

--------------------------------------------------------------------------------
  By telephone
                 If you do not have a brokerage account with a Service Agent,
                 you may be eligible to redeem shares (except those held in
                 retirement plans) in amounts up to $50,000 per day through
                 the fund. You must complete an authorization form to autho-
                 rize telephone redemptions. If eligible, you may request
                 redemptions by telephone on any day the New York Stock
                 Exchange is open. Call the transfer agent at 1-800-451-2010
                 between 9:00 a.m. and 4:00 p.m. (Eastern time).

                 Your redemption proceeds can be sent by check to your address
                 of record or by wire or electronic transfer (ACH) to a bank
                 account designated on your authorization form. You must sub-
                 mit a new authorization form to change the bank account des-
                 ignated to receive wire or electronic transfers and you may
                 be asked to provide certain other documents. The sub-transfer
                 agent may charge a fee on an electronic transfer (ACH).
--------------------------------------------------------------------------------
     Automatic   You can arrange for the automatic redemption of a portion of
          cash   your shares on a monthly or quarterly basis. To qualify you
    withdrawal   must own shares of the fund with a value of at least $10,000
         plans   ($5,000 for retirement plan accounts) and each automatic
                 redemption must be at least $50. If your shares are subject
                 to a deferred sales charge, the sales charge will be waived
                 if your automatic payments do not exceed 1% per month of the
                 value of your shares subject to a deferred sales charge.

                 The following conditions apply:

                 .Your shares must not be represented by certificates
                 .All dividends and distributions must be reinvested

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

                                                       Smith Barney Mutual Funds

                                                                              17
<PAGE>

 Other things to know about share transactions

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

 .Name of the fund
 .Account number
 .Class of shares being bought, exchanged or redeemed
 .Dollar amount or number of shares being bought, exchanged or redeemed
 .Signature of each owner exactly as the account is registered

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

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

 .Are redeeming over $50,000
 .Are sending signed share certificates or stock powers to the sub-transfer
  agent
 .Instruct the sub-transfer agent to mail the check to an address different from
  the one on your account
 .Changed your account registration
 .Want the check paid to someone other than the account owner(s)
 .Are transferring the redemption proceeds to an account with a different regis-
  tration

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

The fund has the right to:

 .Suspend the offering of shares
 .Waive or change minimum and additional investment amounts
 .Reject any purchase or exchange order
 .Change, revoke or suspend the exchange privilege
 .Suspend telephone transactions
 .Suspend or postpone redemptions of shares on any day when trading on the New
  York Stock Exchange is restricted, or as otherwise permitted by the Securi-
  ties and Exchange Commission

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

European Portfolio

18
<PAGE>


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

Excessive exchange transactions The manager may determine that a pattern of
frequent exchanges is detrimental to the fund's performance and other share-
holders. If so, the fund may limit additional purchases and/or exchanges by the
shareholder.

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

                                                       Smith Barney Mutual Funds

                                                                              19
<PAGE>

 Dividends, distributions and taxes

Dividends The fund generally pays dividends, if any, quarterly and makes capi-
tal gain distributions, if any, once a year, typically in December. The fund
may pay additional distributions and dividends at other times if necessary for
the fund to avoid a federal tax. Capital gain distributions and dividends are
reinvested in additional fund shares of the same class that you hold. The fund
expects distributions to be primarily from capital gain. You do not pay a sales
charge on reinvested distributions or dividends. Alternatively, you can
instruct your Service Agent or the transfer agent or the sub-transfer agent to
have your distributions and/or dividends paid in cash. You can change your
choice at any time to be effective as of the next distribution or dividend,
except that any change given to your Service Agent, the transfer agent, or the
sub-transfer agent less than five days before the payment date will not be
effective until the next distribution or dividend is paid.

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

<TABLE>
<CAPTION>
 Transaction                           Federal tax status
 <C>                                   <S>
 Redemption or exchange of shares      Usually capital gain or loss; long-term
                                       only if shares owned more than one year
 Long-term capital gain distributions  Long-term capital gain
 Short-term capital gain distributions Ordinary income
 Dividends                             Ordinary income
</TABLE>

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

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

20
<PAGE>

 Share price

You may buy, exchange or redeem shares at their net asset value, plus any
applicable sales charge, next determined after receipt of your request in good
order. The fund's net asset value is the value of its assets minus its liabili-
ties. Net asset value is calculated separately for each class of shares. The
fund calculates its net asset value every day the New York Stock Exchange is
open. The Exchange is closed on certain holidays listed in the SAI. This calcu-
lation is done when regular trading closes on the Exchange (normally 4:00 p.m.,
Eastern time).

The fund generally values its fund securities based on market prices or quota-
tions. The fund's currency conversions are done when the London stock exchange
closes, which is 12 noon Eastern time. When reliable market prices or quota-
tions are not readily available, or when the value of a security has been mate-
rially affected by events occurring after a foreign exchange closes, the fund
may price those securities at fair value. Fair value is determined in accor-
dance with procedures approved by the fund's board. A fund that uses fair value
to price securities may value those securities higher or lower than another
fund using market quotations to price the same securities.

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

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

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

                                                       Smith Barney Mutual Funds

                                                                              21
<PAGE>

 Financial highlights

The financial highlights tables are intended to help you understand the perfor-
mance of each class for the past 5 years. Certain information reflects finan-
cial results for a single share. Total return represents the rate that a
shareholder would have earned (or lost) on a fund share assuming reinvestment
of all dividends and distributions. The information in the following tables was
audited by KPMG LLP, independent auditors, whose report, along with the fund's
financial statements, is included in the annual report (available upon
request). No information is present for Class Y shares because none were out-
standing for the periods shown.

 For a Class A share of capital stock outstanding throughout each year ended
 October 31:
<TABLE>
<CAPTION>
                           2000(/1/)  1999(/1/)    1998(/1/) 1997(/1/)     1996
--------------------------------------------------------------------------------
-
 <S>                       <C>        <C>          <C>       <C>        <C>
 Net asset value,
 beginning of year           $22.58     $19.44       $18.23    $17.25    $14.67
--------------------------------------------------------------------------------
-
 Income (loss) from
 operations:
 Net investment income
 (loss)                       (0.01)     (0.00)*       0.06     (0.08)    (0.08)
 Net realized and
 unrealized gain               4.08       3.47         1.54      2.22      2.79
--------------------------------------------------------------------------------
-
 Total income from
 operations                    4.07       3.47         1.60      2.14      2.71
--------------------------------------------------------------------------------
-
 Less distributions from:
 Net investment income           --         --           --        --     (0.09)
 Net realized gains           (1.13)     (0.33)       (0.39)    (1.16)    (0.04)
--------------------------------------------------------------------------------
-
 Total distributions          (1.13)     (0.33)       (0.39)    (1.16)    (0.13)
--------------------------------------------------------------------------------
-
 Net asset value, end of
 year                        $25.52     $22.58       $19.44    $18.23    $17.25
--------------------------------------------------------------------------------
-
 Total return                 18.02%     18.02%        9.10%    12.88%    18.65%
--------------------------------------------------------------------------------
-
 Net assets, end of year
 (000)'s                    $47,080    $31,946      $27,563   $14,118   $10,528
--------------------------------------------------------------------------------
-
 Ratios to average net
 assets:
 Net investment income
 (loss)                       (0.04)%    (0.00)%**     0.30%    (0.42)%
(0.49)%
 Interest expense              0.07         --           --        --        --
 Other expenses                1.39       1.51         1.56      1.80      1.85
 Total expenses                1.46       1.51         1.56      1.80      1.85
--------------------------------------------------------------------------------
-
 Portfolio turnover rate         25%        17%          27%       28%       39%
--------------------------------------------------------------------------------
-
</TABLE>
(/1/) Per share amounts calculated using the monthly average shares method.

* Amount represents less than $0.01 per share.

** Amount represents less than 0.01%.

European Portfolio

22
<PAGE>

 For a Class B Share of capital stock
 outstanding throughout each year ended October 31:
<TABLE>
<CAPTION>
                           2000(/1/)  1999(/1/)  1998(/1/)  1997(/1/)     1996
--------------------------------------------------------------------------------
 <S>                       <C>        <C>        <C>        <C>        <C>
 Net asset value,
 beginning of year           $21.83     $18.95     $17.92     $17.09    $14.56
--------------------------------------------------------------------------------
 Income (loss) from
 operations:
 Net investment loss          (0.24)     (0.16)     (0.11)     (0.20)    (0.20)
 Net realized and
 unrealized gain               3.96       3.37       1.53       2.19      2.77
--------------------------------------------------------------------------------
 Total income from
 operations                    3.72       3.21       1.42       1.99      2.57
--------------------------------------------------------------------------------
 Less distributions from:
 Net realized gains           (1.13)     (0.33)     (0.39)     (1.16)    (0.04)
--------------------------------------------------------------------------------
 Total distributions          (1.13)     (0.33)     (0.39)     (1.16)    (0.04)
--------------------------------------------------------------------------------
 Net asset value, end of
 year                        $24.42     $21.83     $18.95     $17.92    $17.09
--------------------------------------------------------------------------------
 Total return                 17.00%     17.10%      8.24%     12.08%    17.72%
--------------------------------------------------------------------------------
 Net assets, end of year
 (000)'s                    $36,963    $37,575    $40,090    $29,221   $26,384
--------------------------------------------------------------------------------
 Ratios to Average Net
 Assets:
 Net investment loss          (0.93)%    (0.81)%    (0.56)%    (1.13)%   (1.22)%
 Interest expense              0.07        --         --         --        --
 Other expenses                2.24       2.28       2.32       2.52      2.59
 Total expenses                2.31       2.28       2.32       2.52      2.59
--------------------------------------------------------------------------------
 Portfolio turnover rate        25%        17%        27%        28%       39%
--------------------------------------------------------------------------------
</TABLE>
(/1/)Per share amounts calculated using the monthly average shares method.

                                                       Smith Barney Mutual Funds

                                                                              23
<PAGE>

 For a Class L Share of capital stock
 outstanding throughout each year ended October 31:
<TABLE>
<CAPTION>
                           2000(/1/)  1999(/1/)     1998(/1/)(/2/)   1997(/1/)
1996
--------------------------------------------------------------------------------
-------
 <S>                       <C>        <C>        <C>               <C>
<C>
 Net asset value,
 beginning of year           $21.79     $18.91    $17.86           $17.04
$14.51
--------------------------------------------------------------------------------
-------
 Income (loss) from
 operations:
 Net investment loss          (0.22)     (0.15)    (0.07)           (0.21)
(0.14)
 Net realized and
 unrealized gain               3.94       3.36      1.51             2.19
2.71
--------------------------------------------------------------------------------
-------
 Total income from
 operations                    3.72       3.21      1.44             1.98
2.57
--------------------------------------------------------------------------------
-------
 Less distributions from:
 Net realized gains           (1.13)     (0.33)    (0.39)           (1.16)
(0.04)
--------------------------------------------------------------------------------
-------
 Total distributions          (1.13)     (0.33)    (0.39)           (1.16)
(0.04)
--------------------------------------------------------------------------------
-------
 Net assets value, end of
 year                        $24.38     $21.79    $18.91           $17.86
$17.04
--------------------------------------------------------------------------------
-------
 Total return                 17.03%     17.14%     8.38%           12.06%
17.78%
--------------------------------------------------------------------------------
-------
 Net assets, end of year
 (000)'s                    $16,622    $11,597   $10,762           $3,110
$2,011
--------------------------------------------------------------------------------
-------
 Ratios to average net
 assets:
 Net investment loss          (0.84)%    (0.74)%   (0.37)%          (1.18)%
(1.17)%
 Interest expense              0.07         --        --               --
--
 Other expenses                2.21       2.24      2.18             2.54
2.52
 Total expenses                2.28       2.24      2.18             2.54
2.52
--------------------------------------------------------------------------------
-------
 Portfolio turnover rate        25%        17%       27%              28%
39%
--------------------------------------------------------------------------------
-------
</TABLE>
(/1/)Per share amounts calculated using the monthly average shares method.

(/2/)On June 12, 1998, Class C shares were renamed Class L shares.

European Portfolio

24
<PAGE>


                                                              SalomonSmithBarney
                                                    ----------------------------
                                                    A member of citigroup [LOGO]
European
Portfolio

An investment portfolio of Smith Barney World Funds, Inc.

Shareholder reports Annual and semiannual reports to shareholders provide addi-
tional information about the fund's investments. These reports discuss the mar-
ket conditions and investment strategies that significantly affected the fund's
performance during its last fiscal year or period.

The fund sends only one report to a household if more than one account has the
same address. Contact your Service Agent or the transfer agent if you do not
want this policy to apply to you.

Statement of additional information The statement of additional information
provides more detailed information about the fund and is incorporated by refer-
ence into (is legally part of) this prospectus.

You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent, by calling the fund at 1-800-451-2010, or by writing to the fund at
Smith Barney Mutual Funds, 7 World Trade Center, 39th Floor, New York, New York
10048.

Information about the fund (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the Pub-
lic Reference Room may be obtained by calling the Commission at 1-202-942-8090.
Reports and other information about the fund are available on the EDGAR Data-
base on the Commission's Internet site at http://www.sec.gov. Copies of this
information may be obtained for a duplicating fee by electronic request at the
following E-mail address: publicinfo@sec.gov, or by writing the Commission's
Public Reference Section, Washington, D.C. 20549-0102.

If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not law-
fully sell its shares.

Your Serious Money. Professionally Man- aged. is a service mark of Salomon
Smith Barney.

(Investment Company Actfile no. 811-06290)

FD0225 2/01

PART B  Statement of Additional Information

February 28, 2001


STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY WORLD FUNDS, INC.
7 World Trade Center
New York, New York 10048

Smith Barney World Funds, Inc. (the "Company") offers a choice of
three open-end management investment companies (each a "fund"):

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

The International All Cap Growth Portfolio seeks total
return on its assets from growth of capital and
income.  The fund seeks to achieve this objective by
investing primarily in a diversified portfolio of
equity securities of established foreign issuers.

The European Portfolio seeks long-term capital
appreciation by investing primarily in equity
securities of issuers based in countries of Europe.

In all cases, there can be no assurance that a fund will achieve
its investment objective.

Each fund offers three classes of shares which may be purchased at
the next-determined net asset value per share plus a sales charge
which, at the election of the investor, may be imposed (i) at the
time of purchase (Class A and Class L shares) and/or (ii) on a
deferred basis (Class B and Class L shares).  A fourth class of
shares (the Class Y shares) is sold at net asset value and is
available only to investors investing a minimum of $5,000,000 with
respect to the International All Cap Growth Portfolio and
$15,000,000 with respect to each of the other funds.  A fifth
class of shares of the International All Cap Growth Portfolio (the
Class Z shares) is offered only to tax-exempt retirement plans of
Salomon Smith Barney Inc.  These alternatives permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares and other circumstances.

This Statement of Additional Information is not a prospectus.  It
is intended to provide more detailed information about Smith
Barney World Funds, Inc. as well as matters already discussed in
the Prospectus of the applicable fund.  Therefore, it should be
read in conjunction with each Prospectus dated February 28, 2001
for the International All Cap Growth Portfolio, the Global
Government Bond Portfolio, and the European Portfolio, which may
be obtained from your Salomon Smith Barney Financial Consultant, a
broker/dealer, financial intermediary, or a financial institution
(each called a "Service Agent") or by writing or calling the
Company at the address set forth above.






TABLE OF CONTENTS

P
a
g
e

Directors, Advisory Director and Officers
	                3

Investment Policies
		  5

Investment Practices
		10

Risk Factors
		20

Investment Restrictions
		24

Additional Tax Information
		27

IRA and Other Prototype Retirement Plans
	`	29

Performance Information
	31

Determination of Net Asset Value
		34

Purchase of Shares
		35

Dividends and Distributions
		42

Investment Management and Other Services
		42

Custodian
	48

Independent Auditors
		48

Voting
		48

Other Information about the Company
		50

Financial Statements
		51

Appendix - Ratings of Debt Obligations
			A-1



DIRECTORS, ADVISORY DIRECTOR AND OFFICERS

Overall responsibility for management and supervision of each fund
rests with the Company's Board of Directors.  The directors
approve all significant agreements between the Company and the
companies that furnish services to the Company and the funds,
including agreements with the Company's distributor, investment
adviser, custodian and transfer agent.  The day-to-day operations
of each fund are delegated to that fund's manager.   The directors
and officers of the Company are listed below.

VICTOR K. ATKINS, Director
Retired; 2111 Forge Road, Santa Barbara, California 93108.  Former
President of Lips Propellers, Inc., a ship propeller repair
company.  Director of two investment companies associated with
Citigroup, Inc. ("Citigroup");    79.

ABRAHAM E. COHEN, Director
Consultant to and Board Member, Chugai Pharmaceutical Co. Ltd.;
Director of Agouron Pharmaceuticals, Inc., Akzo Nobel NV,
Vasomedical, Inc., Teva Pharmaceutical Ind., Ltd., Neurobiological
Technologies Inc., Vion Pharmaceuticals, Inc., BlueStone Capital
Partners, LP. and The Population Council, an international public
interest organization.  Director of two investment companies
associated with Citigroup; 64.

ROBERT A. FRANKEL, Director
Managing Partner of Robert A. Frankel Managing Consultants, 102
Grand Street, Croton-on-Hudson, NY.  Former Vice President of The
Readers Digest Association, Inc.; Director of nine investment
companies associated with Citigroup, 73.

*MICHAEL GELLERT, Director
Partner of Windcrest Partners, 122 E. 42nd Street, New York,
NewYork  10168.  Director of Devon Energy Corp., Humana, Inc.,
Premier Parks, Inc.; Seacor Smit Inc.; Cimilar A/S; Dalet
Technologies and numerous private companies.  Director of two
investment companies asociated with Citigroup; 69.

RAINER GREEVEN, Director
Partner of the law firm of Greeven & Ercklentz; 630 Fifth Avenue,
New York, NY.  Director of two investment companies associated
with Citgroup; 64.

SUSAN M. HEILBRON, Director
Attorney; Lacey & Heilbron, 3 East 54th Street, New York, NY.
Director of two investment companies associated with Citigroup;
56.

**HEATH B. McLENDON, Chairman of the Board, President and Chief
Executive Officer
Managing Director of Salomon Smith Barney Inc. ("Salomon Smith
Barney"); President of SSB Citi Fund Management LLC. ("SSB Citi"
or the "Manager") and Travelers Investment Adviser, Inc. ("TIA");
Chairman or Co-Chairman of the Board of 71 investment companies
associated with Citigroup and former Chairman of the Board of
Smith Barney Strategy Advisers Inc; 67.

**MAURITS E. EDERSHEIM, Chairman of the Company and Advisory
Director
Deputy Chairman of Smith Barney International Incorporated;
Director and President of Amstel Hudson Management Corp. (offshore
investment management); Director Esfinco NV (U.S. subsidiary of
Spanish Construction Company); 82.

**LEWIS E. DAIDONE, Senior Vice President and Treasurer
Managing Director of Salomon Smith Barney, Senior Vice President
and Treasurer (Chief Financial Officer) of the Smith Barney Mutual
funds; Director and Senior Vice President of SSB Citi and TIA: 43

**JAMES B. CONHEADY, Vice President and Investment Officer
Managing Director of Salomon Smith Barney; 65.

**JEFFREY RUSSELL, Vice President and Investment Officer
Managing Director of Salomon Smith Barney; 43.

**REIN VAN DER DOES, Vice President and Investment Officer
Managing Director of Salomon Smith Barney; 61.

**DENIS P. MANGAN, Vice President and Investment Officer
Vice President of Smith Barney Global Capital Management, Inc.
Formerly Vice President of J.P. Morgan and Citibank; 47.

**IRVING DAVID, Controller
Director of Salomon Smith Barney.  Formerly Assistant Treasurer of
First Investment Management Company; 40.

**CHRISTINA T. SYDOR, Secretary
Secretary;  Managing Director of Salomon Smith Barney. General
Counsel and Secretary of SSB Citi and TIA; 50.

*  Director as of December , 1998

**  Designates an "interested person" as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") whose business
address is 7 World Trade Center, New York, New York 10048.  Such
person is not separately compensated for services as a Company
officer or director.

On February 20, 2001 directors and officers owned, in the
aggregate, less than 1% of the outstanding shares of each of the
funds.

The following table shows the compensation paid by the Company to
each director during the Company's last fiscal year.  None of the
officers of the Company received any compensation from the Company
for such period.  The Company does not pay retirement benefits to
its directors and officers.  Officers and interested directors of
the Company are compensated by Salomon Smith Barney. All Directors
are reimbursed for travel and out-of pocket expenses.  During the
calendar year ended December 31, 2000, such expenses totaled
$1,990.

COMPENSATION TABLE


Name of
Person
Aggregate Compensation
from the Company
Compensation from
Company and Complex
Paid to Directors
Number of Funds
for Which
Director Serves
Within Fund
Complex
Victor Atkins
$7,131.00

$25,300.00
2
A. E. Cohen
7,331.00
25,500.00
2
Robert A.
Frankel
7,931.00
27,600.00
9
Michael
Gellert
7,831.00
28,800.00
2
Rainer
Greeven
7,931.00
27,600.00
2
Susan
Heilbron
7,831.00
29,600.00
2
Heath
McLendon
0
0
71


INVESTMENT POLICIES

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

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

Global Government Bond Portfolio

Under normal market conditions, the Global Government Bond
Portfolio invests at least 65% of its total assets in bonds issued
or guaranteed by the United States or foreign governments
(including foreign states, provinces, cantons and municipalities)
or their agencies, authorities, or instrumentalities denominated
in various currencies, including U.S. dollars, or in multinational
currency units, such as the Euro.   Except with respect to
government securities of less developed countries (see below), the
fund invests in foreign government securities only if the issue or
the issuer thereof is rated in the two highest rating categories
by Moody's Investors Service, Inc. ("Moody's") or Standard &
Poor's Ratings Group ("S&P") (see "APPENDIX   RATINGS OF DEBT
OBLIGATIONS"), or if unrated, are of comparable quality in the
determination of the Manager.

Consistent with its investment objective, under normal
circumstances the fund may invest up to 35% of its total assets in
debt obligations (including debt obligations convertible into
common stock) of United States or foreign corporations and
financial institutions and supranational entities.  Supranational
entities are international organizations, organized or supported
by government entities to promote economic reconstruction or
development and by international banking institutions and related
government agencies.  The supranational entities in which the fund
may invest are the World Bank, The Asian Development Bank, the
European Economic Community, the European Investment Bank, the
European Coal and Steel Community, Eurofima, Euratom, Council of
Europe, the European Bank for Construction and Development, the
International Finance Corporation and the Nordic Investment Bank.
Any non-government investment would be limited to issues that are
rated A or better by Moody's or S&P, or if not rated, are
determined by the Manager to be of comparable quality.  For
certain risks associated with investments in foreign issues, see
"RISK FACTORS."

The fund is organized as a non-diversified series and currently
contemplates investing primarily in obligations of the U.S. and of
developed nations (i.e., industrialized countries) which the
Manager believes to pose limited credit risks.  These countries
currently are Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, Luxembourg,
Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland and The United Kingdom.  The fund also will invest in
securities denominated in the currencies of such countries or in
multinational currency units.  Under normal market conditions the
fund invests at least 65% of its assets in issues of not less than
three different countries; issues of any one country (other than
the United States) will represent no more than 45% of the fund's
total assets.  Allocation of the fund's investments will depend
upon the relative attractiveness of the global markets and
particular issuers.  Concentration of the fund's assets in one or
a few countries or currencies will subject the fund to greater
risks than if the fund's assets were not geographically
concentrated.

In seeking to achieve its investment objective of current income,
the Manager considers and compares the relative yields of
obligations of various developed nations; whereas, in seeking to
achieve its objective of capital appreciation, it considers all of
the following factors, especially changes in currency values
against the U.S. dollar.  The Manager allocates the fund's assets
among securities of countries and in currency denominations where
opportunities for meeting the fund's investment objective are
expected to be the most attractive.  The Manager selects
securities of particular issuers on the basis of its views as to
the best values then currently available in the marketplace.  Such
values are a function of yield, maturity, issue classification and
quality characteristics, coupled with expectations regarding the
local and world economies, movements in the general level and term
of interest rates, currency values, political developments, and
variations of the supply of funds available for investment in the
world bond market relative to the demands placed upon it.  The
Manager generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation and interest rates
levels and trends, growth rate forecasts, balance of payments
status and economic policies) as well as technical and political
data.  If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the
security will increase, and conversely, a decline in the exchange
rate of the currency normally would adversely affect the value of
the security expressed in dollars.  Similarly, a decline in
interest rates on debt obligations generally increases the value
of debt obligations, and conversely, an increase in interest rates
generally decreases the value of such obligations.

Investments may be made from time to time in government
securities, including loan assignments and loan participations, of
less developed countries.  These include all countries other than
Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Holland, Ireland, Italy, Japan, Luxembourg, Norway,
Sweden, Switzerland, Spain, the United Kingdom and the United
States.  Countries may be added to or deleted as economic and
political conditions warrant.  Historical experience indicates
that the markets of less developed countries have been more
volatile than the markets of the more mature economies of
developed countries; however, such markets often provide rates of
return to investors commensurate with the credit and market risks.
The Manager does not intend to invest more than 10% of the fund's
assets in the government securities of less developed countries
and will not invest more than 5% of the fund's assets in the
government securities of any one such country.  Such investments
may be unrated or rated below investment grade or may be in
default.  Securities rated below investment grade (and comparable
unrated securities) are the equivalent of high yield, high risk
bonds.  Such securities are regarded as predominantly speculative
with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations and
involve major risk exposure to adverse business, financial,
economic, and political conditions, whether or not occurring
within the issuers' borders.

International All Cap Growth Portfolio

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

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

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

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

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



European Portfolio

The European Portfolio seeks to achieve its objective by investing
primarily in equity securities (common and preferred stock) of
issuers in the countries of Europe (the "Primary Investment
Area"), which includes Western Europe (e.g., France, Germany,
Italy, the Netherlands, Switzerland, United Kingdom) and Eastern
Europe (e.g., the Czech Republic, Hungary, Poland and the
countries of the former Soviet Union).  It is a fundamental policy
of the fund to invest, under normal circumstances, at least 65% of
its total assets in a diversified portfolio of equity securities
of issuers domiciled in the Primary Investment Area of the fund.
The fund will generally invest its assets broadly among countries
and will normally have represented in the portfolio business
activities in not less than three countries in the Primary
Investment Area. Allocation of the fund's investments will depend
upon the relative attractiveness of the markets and particular
issuers. Concentration of the fund's assets in one or a few
countries will subject the fund to greater risks than if the
fund's assets were not geographically concentrated.

In addition, the fund may invest up to 35% of its total assets in
other kinds of securities, e.g., convertible bonds, warrants,
Samurai and Yankee Bonds, Eurobonds, sponsored and unsponsored
ADRs and European Depository Receipts ("EDRs"), securities issued
by companies domiciled outside the Primary Investment Area of the
fund, including, but not limited to, U.S. and foreign government
securities, and U.S. and non-U.S. money market securities. Money
market securities will generally be held by the fund for temporary
defensive purposes. With respect to certain countries, investments
by the fund presently may only be made by acquiring shares of
other investment companies with local governmental authority to
invest in those countries. It is not expected that the income
yield of the fund will be significant.

The fund may also hold cash in U.S. dollars to meet redemption
requests and other expenses and cash in other currencies to meet
settlement requirements for foreign securities. The fund may
engage in currency exchange transactions with up to 100% of its
assets in order to protect against uncertainty in the level of
future exchange rates between a particular foreign currency and
the U.S. dollar or between foreign currencies in which the fund's
securities are or may be denominated. The fund may 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 fund's transactions in forward foreign currency
exchange contracts will be limited to hedging involving either
specific transactions or aggregate fund positions.

The fund may invest up to 5% of its assets in yen-denominated
bonds sold in Japan by non-Japanese issuers. Such bonds are
commonly called "Samurai Bonds" and correspond to "Yankee Bonds"
or dollar-denominated bonds sold in the United States by non-U.S.
issuers. As compared with domestic issues, e.g., those of the
government of Japan and its agencies, Samurai bond issues normally
carry a higher interest rate but are less actively traded and
therefore may be volatile. Moreover, as with other securities
denominated in foreign currencies, their value is affected by
fluctuations in currency exchange rates. It is the policy of the
fund to invest in Samurai bond issues only after taking into
account considerations of quality and liquidity, as well as yield.
These bonds would be issued by governments of the Organization for
Economic Cooperation and Development or would have AAA ratings.

As a fundamental policy, the fund may borrow money from a bank
only as a temporary measure for emergency or extraordinary
purposes in an amount not exceeding 10% of the value of its total
assets, and may invest no more than 15% of its total assets in
securities that are illiquid (i.e., trading in the security is
suspended or, in the case of unlisted securities, market makers do
not exist or will not entertain bids or offers). When the fund has
borrowed in excess of 5% of the value of its total assets, the
fund will not make further investments. The fund will not invest
more than 25% of the value of its total assets in the securities
of issuers engaged in any one industry (other than the U.S.
Government, its agencies and instrumentalities). The fund will
invest no more than 10% of the value of its net assets in warrants
valued at the lower of cost or market.



INVESTMENT PRACTICES

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

EQUITY SECURITIES

Common Stocks (all funds except the Global Government Bond
Portfolio).  Each fund except the Global Government Bond Portfolio
may purchase common stocks.  Common stocks are shares of a
corporation or other entity that entitle the holder to a pro rata
share of the profits of the corporation, if any, without
preference over any other shareholder or class of shareholders,
including holders of the entity's preferred stock and other senior
equity.  Common stock usually carries with it the right to vote
and frequently an exclusive right to do so.

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

Warrants (all funds except the Global Government Bond Portfolio).
Each fund except the Global Government Bond Portfolio may purchase
warrants.  Warrants acquired by a fund entitle it to buy common
stock from the issuer at a specified price and time.  Warrants are
subject to the same market risks as stocks, but may be more
volatile in price.  A fund's investment in warrants will not
entitle it to receive dividends or exercise voting rights and will
become worthless if the warrants cannot be profitably exercised
before the expiration dates.

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

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

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

FIXED INCOME SECURITIES

To the extent that each fund may invest in fixed income
securities, it may invest in the securities described below,
unless otherwise noted.

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

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

Sovereign Debt Obligations.  A fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments or their
agencies, including debt of developing countries. Sovereign debt
may be in the form of conventional securities or other types of
debt instruments such as loans or loan participations. Sovereign
debt of developing countries may involve a high degree of risk,
and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be
unable or unwilling to repay principal and interest when due, and
may require renegotiation or rescheduling of debt payments.  In
addition, prospects for repayment of principal and interest may
depend on political as well as economic factors.  Although some
sovereign debt, such as Brady Bonds, is collateralized by U.S.
Government securities, repayment of principal and interest is not
guaranteed by the U.S. Government.

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

Floating And Variable Rate Income Securities.  Income securities
may provide for floating or variable rate interest or dividend
payments. The floating or variable rate may be determined by
reference to a known lending rate, such as a bank's prime rate, a
certificate of deposit rate or the London InterBank Offered Rate
(LIBOR).  Alternatively, the rate may be determined through an
auction or remarketing process.  The rate also may be indexed to
changes in the values of interest rate or securities indexes,
currency exchange rates or other commodities.  The amount by which
the rate paid on an income security may increase or decrease may
be subject to periodic or lifetime caps.  Floating and variable
rate income securities include securities whose rates vary
inversely with changes in market rates of interest.  Such
securities may also pay a rate of interest determined by applying
a multiple to the variable rate.  The extent of increases and
decreases in the value of securities whose rates vary inversely
with changes in market rates of interest generally will be larger
than comparable changes in the value of an equal principal amount
of a fixed rate security having similar credit quality, redemption
provisions and maturity.

Zero Coupon, Discount and Payment-in-kind Securities.  A fund may
invest in "zero coupon" and other deep discount securities of
governmental or private issuers.  Zero coupon securities generally
pay no cash interest (or dividends in the case of preferred stock)
to their holders prior to maturity. Payment in kind securities
allow the lender, at its option, to make current interest payments
on such securities either in cash or in additional securities.
Accordingly, such securities usually are issued and traded at a
deep discount from their face or par value and generally are
subject to greater fluctuations of market value in response to
changing interest rates than securities of comparable maturities
and credit quality that pay cash interest (or dividends in the
case of preferred stock) on a current basis.

Premium Securities.  A fund may invest in income securities
bearing coupon rates higher than prevailing market rates.  Such
"premium" securities are typically purchased at prices greater
than the principal amounts payable on maturity.  A fund will not
amortize the premium paid for such securities in calculating its
net investment income.  As a result, in such cases the purchase of
such securities provides a fund a higher level of investment
income distributable to shareholders on a current basis than if
the fund purchased securities bearing current market rates of
interest.  If securities purchased by a fund at a premium are
called or sold prior to maturity, the fund will recognize a
capital loss to the extent the call or sale price is less than the
purchase price.  Additionally, a fund will recognize a capital
loss if it holds such securities to maturity.

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

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

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




Short-Term Investments.  In certain circumstances the funds may
invest without limitation in all types of short-term money market
instruments, including U.S. Government securities; certificates of
deposit, time deposits and bankers' acceptances issued by domestic
banks (including their branches located outside the United States
and subsidiaries located in Canada), domestic branches of foreign
banks, savings and loan associations and similar institutions;
high grade commercial paper; and repurchase agreements. To the
extent a fund is investing in short-term investments as a
temporary defensive posture, the applicable fund's investment
objective may not be achieved.

Commercial Paper.  Commercial paper consists of short-term
(usually from 1 to 270 days) unsecured promissory notes issued by
corporations in order to finance their current operations.  A
variable amount master demand note (which is a type of commercial
paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter
agreement between a commercial paper issuer and an institutional
lender, such as one of the funds, pursuant to which the lender may
determine to invest varying amounts.  Transfer of such notes is
usually restricted by the issuer, and there is no secondary
trading market for such notes.  Each fund, therefore, may not
invest in a master demand note, if as a result more than 15% of
the value of the fund's total assets would be invested in such
notes and other illiquid securities.

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

DERIVATIVE CONTRACTS



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

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

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

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

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

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

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

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

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

See "ADDITIONAL TAX INFORMATION" for a discussion of federal
income tax treatment of covered call options.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See "ADDITIONAL TAX INFORMATION" for a discussion of federal tax
treatment of Futures Contracts.

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

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

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

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

Forward Currency Contracts, Options on Currency and Currency Swaps
(All funds).  A forward currency contract is an obligation to
purchase or sell a currency against another currency at a future
date and price as agreed upon by the parties.  A fund may either
accept or make delivery of the currency at the maturity of the
forward contract or, prior to maturity, enter into a closing
transaction involving the purchase or sale of an offsetting
contract.  Each fund engages in forward currency transactions in
anticipation of, or to protect itself against, fluctuations in
exchange rates.  A fund might sell a particular foreign currency
forward, for example, when it holds bonds denominated in that
currency but anticipates, and seeks to be protected against,a
decline in the currency against the U.S. dollar.  Similarly, a
fund might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be
protected against, a decline in the U.S. dollar relative to other
currencies.  Further, a fund might purchase a currency forward to
"lock in" the price of securities denominated in that currency
which it anticipates purchasing.

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

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

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

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

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

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

Interest Rate Swaps, Caps and Floors (All funds). Among the
hedging transactions into which the funds may enter are interest
rate swaps and the purchase or sale of interest rate caps and
floors.  Each fund expects to enter into these transactions
primarily to preserve a return or spread on a particular
investment or portion of its portfolio or to protect against any
increase in the price of securities the fund anticipates
purchasing at a later date.  Each fund intends to use these
transactions as a hedge and not as a speculative investment.  Each
fund will not sell interest rate caps or floors that it does not
own.  Interest rate swaps involve the exchange by a fund with
another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed
rate payments.  The purchase of an interest rate cap entitles the
purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments of interest on a
notional principal amount from the party selling such interest
rate cap.  The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a
notional principal amount from the party selling such interest
rate floor.

A fund may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending on
whether it is hedging its assets or its liabilities, and will
usually enter into interest rate swaps on a net basis, i.e., the
two payment streams are netted, with the fund receiving or paying,
as the case may be, only the net amount of the two payments.
Inasmuch as these hedging transactions are entered into for good
faith hedging purposes, the Manager and the funds believe such
obligations do not constitute senior securities and, accordingly
will not treat them as being subject to their borrowing
restrictions.  The net amount of the excess, if any, of a fund's
obligations over its entitlements with respect to each interest
rate swap will be accrued on a daily basis and an amount of cash
or liquid securities having an aggregate net asset value at least
equal to the accrued excess will be maintained in a segregated
account by a custodian that satisfies the requirements of the 1940
Act.  The funds will not enter into any interest rate swap, cap or
floor transaction unless the unsecured senior debt or the claims-
paying ability of the other party thereto is rated in the highest
rating category of at least one nationally recognized rating
organization at the time of entering into such transaction.  If
there is a default by the other party to such a transaction, a
fund will have contractual remedies pursuant to the agreements
related to the transaction.  The swap market has grown
substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents
utilizing swap documentation.  As a result, the swap market has
become relatively liquid.  Caps and floors are more recent
innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps.

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

OTHER PRACTICES

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

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

Borrowing (All funds). Each fund may borrow up to 33% (except that
European Portfolio may borrow only up to 10%) of the value of its
total assets from banks for temporary or emergency purposes, such
as to meet the fund's redemptions.

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

Leverage creates an opportunity for increased returns to
shareholders of a fund but, at the same time, creates special risk
considerations.  For example, leverage may exaggerate changes in
the net asset value of the fund's shares and in the fund's yield.
Although the principal or stated value of such borrowings will be
fixed, the fund assets may change in value during the time the
borrowing is outstanding.  Leverage will create interest expenses
for the fund which can exceed the income from the assets retained.
To the extent the income or other gain derived from securities
purchased with borrowed funds exceeds the interest the fund will
have to pay in respect thereof, the fund's net income or other
gain will be greater than if leverage had not been used.
Conversely, if the income or other gain from the incremental
assets is not sufficient to cover the cost of leverage, the net
income or other gain of the fund will be less than if leverage had
not been used.  If the amount of income from the incremental
securities is insufficient to cover the cost of borrowing,
securities might have to be liquidated to obtain required funds.
Depending on market or other conditions, such liquidations could
be disadvantageous to the fund.

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

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

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

*  *  *  *  *  *  *  *

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


RISK FACTORS

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

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

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

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

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

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

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

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

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

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

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

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

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

Smaller capital markets, while often growing in trading volume,
have substantially less volume than U.S. markets, and securities
in many smaller capital markets are less liquid and their prices
may be more volatile than securities of comparable U.S. companies.
Brokerage commissions, custodial services, and other costs
relating to investment in smaller capital markets are generally
more expensive than in the United States.  Such markets have
different clearance and settlement procedures, and in certain
markets there have been times when settlements have been unable to
keep pace with the volume of securities transactions, making it
difficult to conduct such transactions.  Further, satisfactory
custodial services for investment securities may not be available
in some countries having smaller capital markets, which may result
in the fund incurring additional costs and delays in transporting
and custodying such securities outside such countries.  Delays in
settlement could result in temporary periods when assets of a fund
are uninvested and no return is earned thereon.  The inability of
a fund to make intended security purchases due to settlement
problems could cause the fund to miss attractive investment
opportunities.  Inability to dispose of a portfolio security due
to settlement problems could result either in losses to a fund due
to subsequent declines in value of the portfolio security or, if
the fund has entered into a contract to sell the security, could
result in possible liability to the purchaser.  Generally, there
is less government supervision and regulation of exchanges,
brokers and issuers in countries having smaller capital markets
than there is in the United States.

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

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

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

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

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

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

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

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

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

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

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

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

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

Economic and Monetary Union (EMU).  As part of EMU, on January 1,
1999 11 European countries adopted a single common currency -- the
Euro; however, budgetary decisions remain in the hands of each
participating country, but are subject to each country's
commitment to avoid "excessive deficits" and other more specific
budgetary criteria.  A European Central Bank is responsible for
setting the official interest rate within the Euro zone.  EMU may
create new economic opportunities for investors, such as easier
cross-border mergers, acquisitions and similar restructurings,
more efficient distribution and product packaging and greater
competition.  However, EMU and the introduction of the Euro
present unique risks and uncertainties for investors in EMU-
participating countries, including:  (i) monetary and economic
union on this scale has never before been attempted; (ii) there is
uncertainty whether participating countries will remain committed
to EMU in the face of changing economic conditions; (iii)
instability within EMU may increase the volatility of European
markets and may adversely affect the prices of securities of
European issuers in the funds' portfolios; (iv) there is
uncertainty concerning the fluctuation of the Euro relative to
non-Euro currencies; and (v) there is no assurance that interest
rate, tax and labor regimes of EMU-participating countries will
converge over time.  These and other factors may cause market
disruption and could adversely affect European securities and
currencies held by the funds.

INVESTMENT RESTRICTIONS

The Company has adopted the following restrictions and fundamental
policies that cannot be changed without approval by a "vote of a
majority of the outstanding voting securities" of each fund
affected by the change as defined in the 1940 Act and Rule 18f-2
thereunder (see "Voting").

Without the approval of a majority of its outstanding voting
securities, the Global Government Bond Portfolio may not:

1.		Change its subclassification as an open-end fund.;

2.		Change its subclassification as a non-diversified
company;

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

4.		Purchase or sell real estate, real estate mortgages,
commodities or commodity contracts,  but this
restriction shall not prevent the fund from (a)
investing in securities of issuers engaged in the real
estate business or the business of investing in real
estate (including interests in limited partnerships
owning or otherwise engaging in the real estate
business or the business of investing in real estate)
and securities which are secured by real estate or
interests therein; (b) holding or selling real estate
received in connection with securities it holds or
held; (c) trading in futures contracts and options on
futures contracts (including options on currencies to
the extent consistent with the fund's' investment
objective and policies); or (d) investing in real
estate investment trust securities.

5.		Borrow money, except that (a) the fund may borrow from
banks for temporary or emergency (not leveraging)
purposes, including the meeting of redemption requests
which might otherwise require the untimely disposition
of securities, and (b) the fund may, to the extent
consistent with its investment policies, enter into
reverse repurchase agreements, forward roll
transactions and similar investment strategies and
techniques.  To the extent that it engages in
transactions described in (a) and (b), the fund will
be limited so that no more than 33 1/3% of the value
of its total assets (including the amount borrowed),
valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) is
derived from such transactions.

6.		Issue senior securities.

7.		Make loans.  This restriction does not apply to: (a)
the purchase of debt obligations in which the fund may
invest consistent with its investment objectives and
policies; (b) repurchase agreements; and (c) loans of
its portfolio securities, to the fullest extent
permitted under the 1940 Act.

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

9.		Enter into a Futures Contract or a commodity option
other than for bona fide hedging purposes and, if, as
a result thereof, more than 5% of the fund's total
assets (taken at market value at the time of entering
into the contract or commodity option) would be
committed to initial margin on futures contracts and
premiums on commodity options all within the meaning
of Regulation 4.5 of the CFTC.

In addition, the following policies have also been adopted by the
Global Government Bond Portfolio but are not fundamental and
accordingly may be changed by approval of the Board of Directors.
The fund may not:

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

2.		Have more than 15% of its total assets at any time
invested in or subject to puts, calls or combinations
thereof.

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

4.		Purchase or otherwise acquire any security if, as a
result, more than 15% of its net assets would be
invested in securities that are illiquid.

5.		Invest in securities of another investment company
except as permitted by Section 12(d)(1)(a) of the 1940
Act, or as part of a merger, consolidation, or
acquisition.

6.		Invest in securities of an issuer if the investment
would cause the fund to own more than 10% of any class
of securities of any one issuer.

7.		Purchase oil, gas or other mineral leases, rights or
royalty contracts or exploration or development
programs, except that the fund may invest in, or
sponsor such programs.

8.		Invest more than 5% of its total assets in securities
of companies having, together with their predecessors,
a record of less than three years of continuous
operation.

Without the approval of a majority of its outstanding voting
securities, the International All Cap Growth Portfolio and the
European Portfolio each may not:

1.		With respect to each of the European Portfolio and the
International All Cap Growth Portfolio, invest in a
manner that would cause it to fail to be a
"diversified company" under the 1940 Act and the
rules, regulations and orders thereunder.

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

3.		Purchase or sell real estate, real estate mortgages,
commodities or commodity contracts, but this
restriction shall not prevent the fund from (a)
investing in securities of issuers engaged in the real
estate business or the business of investing in real
estate (including interests in limited partnerships
owning or otherwise engaging in the real estate
business or the business of investing in real estate)
and securities which are secured by real estate or
interests therein; (b) holding or selling real estate
received in connection with securities it holds or
held; (c) trading in futures contracts and options on
futures contracts (including options on currencies to
the extent consistent with the funds' investment
objective and policies); or (d) investing in real
estate investment trust securities.

4.		With respect to the European Portfolio, borrow money,
except that (a) the fund may borrow from banks for
temporary or emergency (not leveraging) purposes,
including the meeting of redemption requests which
might otherwise require the untimely disposition of
securities, and (b) the fund may, to the extent
consistent with its investment policies, enter into
reverse repurchase agreements, forward roll
transactions and similar investment strategies and
techniques.  To the extent that it engages in
transactions described in (a) and (b), the fund will
be limited so that no more than 33 1/3% of the value
of its total assets (including the amount borrowed),
valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) valued
at the time the borrowing is made, is derived from
such transactions.

5.		With respect to the International All Cap Growth
Portfolio, borrow money, except that (a) the Portfolio
may borrow from banks under certain circumstances
where the fund's Manager reasonably believes that (i)
the cost of borrowing and related expenses will be
exceeded by the fund's return from investments of the
proceeds of the borrowing in portfolio securities, or
(ii) the meeting of redemption requests might
otherwise require the untimely disposition of
securities, in an amount not exceeding 33 1/3% of the
value of the fund's total assets (including the amount
borrowed), valued at the lesser of cost or market,
less liabilities (not including the amount borrowed)
and (b) the fund may, to the extent consistent with
its investment policies, enter into reverse repurchase
agreements,  forward roll transactions and similar
investment strategies and techniques.

6.		Make loans.  This restriction does not apply to: (a)
the purchase of debt obligations in which the fund may
invest consistent with its investment objectives and
policies; (b) repurchase agreements; and (c) loans of
its portfolio securities, to the fullest extent
permitted under the 1940 Act.

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

8.		Issue "senior securities".

In addition, the following policies have also been adopted by the
European Portfolio and the International All Cap Growth Portfolio,
but are not fundamental and accordingly may be changed by approval
of the Board of Directors.  The funds may not:

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

2.		Purchase interests in oil, gas and/or mineral
exploration or development programs (including mineral
leases), except for purchases of currencies and
futures and options and other related contracts as
described in the Prospectus from time to time and
except for the purchase of marketable securities
issued by companies that have such interests.

3.		Purchase securities of any other registered investment
company, except in connection with a merger,
consolidation, reorganization or acquisition of
assets; provided, however, that each of the funds may
also purchase shares of other investment companies
pursuant to Section 12(d)(1)(A) of the 1940 Act.

4.		Make investments in securities for the purpose of
exercising control over or managing the issuer.

5.		Purchase securities of any issuer (including any
predecessor) which has been in operation for less than
three years if immediately after such purchase more
than 5% of the value of the total assets of the fund
would be invested in such securities.

6.		Purchase or otherwise acquire any security if, as a
result, more than 15% of its net assets would be
invested in securities that are illiquid.

ADDITIONAL TAX INFORMATION

The following is a summary of the material federal tax
considerations affecting a fund of the Company.  In addition to
the considerations described below there may be other federal,
state, local or foreign tax applications to consider.  Because
taxes are a complex matter, prospective shareholders are urged to
consult their tax advisors for more detailed information with
respect to the tax consequences of any investment.

General

Each fund intends to qualify, as it has in prior years, under
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), for tax treatment as a separate regulated investment
company so long as such qualification is in the best interest of
its shareholders.  In each taxable year that each fund qualifies,
each fund will pay no federal income tax on its net investment
income and net short-term and long-term capital gains that are
distributed to shareholders in compliance with the Code's timing
and other requirements.

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

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

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

On October 31, 2000, the unused capital loss carryovers, by fund,
were approximately as follows: Global Government Bond Portfolio,
$3,785,000  For Federal income tax purposes, these amounts are
available to be applied against future capital gains of the fund
that has the carryovers, if any, that are realized prior to the
expiration of the applicable carryover.  The carryovers expire as
follows:


Name of
Fund
OCTOBER 31,





2003
200
4
2005
2006
2007
2008
Global
Gov't Bond
--
--
--
--
$2,148,
000
$1,637,000

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

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

If a fund purchases shares in certain foreign investment entities,
referred to as "passive foreign investment companies," the fund
itself may be subject to U.S. federal income tax and an additional
charge in the nature of interest on a portion of any "excess
distribution" from such company or gain from the disposition of
such shares, even if the distribution or gain is distributed by
the fund to its shareholders in a manner that satisfies the
requirements described above.  If the fund were able and elected
to treat a passive foreign investment company as a "qualified
electing fund," in lieu of the treatment described above, the fund
would be required each year to include in income, and distribute
to shareholders in accordance with the distribution requirements
described above, the fund's pro rata share of the ordinary
earnings and net capital gains of the company, whether or not
actually received by the fund.  The funds generally should be able
to make an alternative election to mark these investments to
market annually, resulting in the recognition of ordinary income
(rather than capital gain) or ordinary loss, subject to
limitations on the ability to use any such loss.

A fund may be required to treat amounts as taxable income or gain,
subject to the distribution requirements referred to above, even
though no corresponding amounts of cash are received concurrently,
as a result of (1) mark to market, constructive sale or other
rules applicable to passive foreign investment companies or
partnerships in which the fund invests or to certain options,
futures, forward contracts, or "appreciated financial positions"
or (2) the inability to obtain cash distributions or other amounts
due to currency controls or restrictions on repatriation imposed
by a foreign country with respect to the fund's investments in
issuers in such country or (3) tax rules applicable to debt
obligations acquired with "original issue discount," including
zero-coupon or deferred payment bonds and pay-in-kind debt
obligations, or to market discount if an election is made with
respect to such market discount.  The fund may therefore be
required to obtain cash to be used to satisfy these distribution
requirements by selling portfolio securities at times that it
might not otherwise be desirable to do so or borrowing the
necessary cash, thereby incurring interest expenses.

Income (including, in some cases, capital gains) received by a
fund from sources within foreign countries may be subject to
withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may
reduce or eliminate such taxes. It is impossible to determine the
rate of foreign tax in advance since the amount of the fund's
assets to be invested in various countries is not known. Such
foreign taxes would reduce the income of the fund distributed to
shareholders.

If, at the end of a fund's taxable year, more than 50% of the
value of that fund's total assets consist of stock or securities
of foreign corporations, the fund may make an election pursuant to
which qualified foreign income taxes paid by it will be treated as
paid directly by its shareholders. A fund will make this election
only if it deems the election to be in the best interests of
shareholders, and will notify shareholders in writing each year if
it makes the election and the amount of foreign taxes to be
treated as paid by the shareholders. If a fund makes such an
election, the amount of such qualified foreign taxes would be
included in the income of shareholders, and a shareholder other
than a foreign corporation or non-resident alien individual could
claim either a credit, provided that certain holding period
requirements are satisfied, or, provided the shareholder itemizes
deductions, a deduction for U.S. federal income tax purposes for
such foreign taxes. Tax-exempt shareholders generally will not be
able to use any credit or deduction. Shareholders who choose to
utilize a credit (rather than a deduction) for foreign taxes will
be subject to the limitation that the credit may not exceed the
shareholders' U.S. tax (determined without regard to the
availability of the credit) attributable to their total foreign
source taxable income. For this purpose, the portion of dividends
and distributions paid by the fund from its foreign source
ordinary income will be treated as foreign source income. The
fund's gains and losses from the sale of securities and from
certain foreign currency gains and losses will generally be
treated as derived from U.S. sources.

The limitation on the foreign tax credit is applied separately to
foreign source ''passive income,'' such as the portion of
dividends received from the fund that qualifies as foreign source
income. In addition, the foreign tax credit is allowed to offset
only 90% of the alternative minimum tax imposed on corporations
and individuals. Because of these limitations, shareholders may be
unable to claim a credit for the full amount of their
proportionate share of the qualified foreign income taxes paid by
a fund.

Prior to investing in shares of the fund, investors should consult
with their tax advisors concerning the federal, state and local
tax consequences of such an investment.

Distributions

If the net asset value of shares of a fund is reduced below a
shareholder's cost as a result of distribution by the fund, such
distribution will be taxable even though it represents a return of
invested capital.

Dividends from net investment income and distributions of realized
short-term capital gains, whether paid in cash or automatically
invested in additional shares of the fund, are taxable to
shareholders as ordinary income. The funds' dividends will not
qualify for the dividends received deduction for corporations.
Dividends and distributions by the funds may also be subject to
state and local taxes. Distributions out of net long-term capital
gains (i.e., net long-term capital gain in excess of net short-
term capital loss) are taxable to shareholders as long-term
capital gains. Information as to the tax status of dividends paid
or deemed paid in each calendar year will be mailed to
shareholders as early in the succeeding year as practical but not
later than January 31.

The Company is required to withhold and remit to the U.S. Treasury
31% of dividends, distributions and redemption proceeds to
shareholders who fail to provide a correct taxpayer identification
number (the Social Security number in the case of an individual)
or to make the required certifications, or who have been notified
by the Internal Revenue Service that they are subject to backup
withholding and who are not otherwise exempt. The 31% withholding
tax is not an additional tax, but is creditable against a
shareholder's federal income tax liability.  Distributions to
nonresident aliens and foreign entities may also be subject to
other withholding taxes.

Redemption of Shares

Any gain or loss realized on the redemption or exchange of fund
shares by a shareholder who is not a dealer in securities will be
treated as long-term capital gain or loss if the shares have been
held for more than one year, and otherwise as short-term capital
gain or loss, provided in each case that the transaction is
properly treated as a sale rather than a dividend for tax
purposes.

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

In determining gain or loss, a shareholder who redeems or
exchanges shares in a fund within 90 days of the acquisition of
such shares will not be entitled to include in tax basis the sales
charges incurred in acquiring such shares to the extent of any
subsequent reduction in sales charges due to any reinvestment
right for investing in the same fund or a different fund, such as
pursuant to the rights discussed in ''Exchange Privilege.''

IRA AND OTHER PROTOTYPE RETIREMENT PLANS

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

IRA, Rollover IRA and Simplified Employee Pension - IRA

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

The Taxpayer Relief Act of 1997 has changed the requirements for
determining whether or not you are eligible to make a deductible
IRA contribution.  Under the new rules effective beginning January
1, 1998, if you are considered an active participant in an
employer-sponsored retirement plan, you may still be eligible for
a full or partial deduction depending upon your combined adjusted
gross income ("AGI").  For married couples filing jointly for
1998, a full deduction is permitted if your combined AGI is
$50,000 or less ($30,000 for unmarried individuals); a partial
deduction will be allowed when AGI is between $50,000-$60,000
($30,000-$40,000 for an unmarried individual); and no deduction
when AGI is above $60,000 ($40,000 for an unmarried individual).
However, if you are married and your spouse is covered by an
employer-sponsored retirement plan, but you are not, you will be
eligible for a full deduction if your combined AGI is $150,000 or
less.  A partial deduction is permitted if your combined AGI is
between $150,000-$160,000 and no deduction is permitted after
$160,000.

The rules applicable to so-called "Roth IRAs" differ from those
described above.

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

An employer who has established a Simplified Employee Pension -
IRA ("SEP-IRA") on behalf of eligible employees may make a maximum
annual contribution to each participant's account of 15% (up to
$25,500) of each participant's compensation.  Compensation is
capped at $170,000 for 2000.

Paired Defined Contribution Prototype

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

PERFORMANCE INFORMATION

From time to time the Company may advertise a fund's total return,
average annual total return and yield in advertisements. The
Company may also quote the funds' total that eliminates the sales
charge or the initial investment.  In addition, in other types of
sales literature the Company may include a fund's current dividend
return.  These figures are based on historical earnings and are
not intended to indicate future performance.  The total returns
below show what an investment in the fund would have earned over a
specified period of time (one or five years or since inception)
assuming the payment of the maximum sales load when the investment
was first made and that all distributions and dividends by the
fund were invested on the reinvestment dates during the period,
less all recurring fees.  The average annual total return is
derived from this total return, which provides the ending
redeemable value.  The following chart reflects the financial
performance of the funds through the period ended October 31, 2000
for the one and five year periods and since inception:

Total Returns




5 Year


Since
Incepti
on

Since

Name of Fund

Clas
s

1 Year
Average
Annual
5 Year
Cumulativ
e
Average
Annual
Inception
Cumulative







International All
Cap Growth1






Inception: 11-22-91
A
(6.55)%
8.06%
47.36%
10.53%
336.30
Inception: 11-7-94
B
(7.00)%
8.13%
47.85%
5.77%
39.92%
Inception: 1-4-93
L
(4.30)%
8.07%
47.39%
9.61%
105.12%
Inception: 6-16-94
Y
(1.31)%
9.55%
57.78%
7.24%
56.20%
Inception: 11-7-94
Z
(1.28)%
9.55%
57.75%
6.99%
49.82%







Global Government
Bond






Inception: 7-22-91
A
1.33%
5.00%
27.60%
6.83%
84.71%
Inception: 11-18-94
B
1.15%
5.25%
29.16%
6.51%
45.62%
Inception: 1-4-93
L
3.66%
5.29%
29.38%
6.39%
62.37%
Inception: 2-19-93
Y
6.59%
6.37%
36.18%
7.00%
68.36%







European*






Inception: 2-7-94
A
12.11%
14.10%
93.40%
12.94%
126.91%
Inception: 11-7-94
B
12.00%
14.25%
94.67%
14.57%
125.74%
Inception: 2-14-94
L
14.86%
14.18%
94.09%
12.88%
125.64%







1 The International All Cap Growth Portfolio's performance record
includes the performance of the Fenimore International Fund
through November 22, 1991.  The shareholders of the Fenimore
International Fund approved a reorganization with the fund at
their October 31, 1991 shareholder's meeting.  As a result, all
shares of the Fenimore International Fund were exchanged at the
close of business on November 22, 1991 for shares of the fund.
Prior to November 22, 1991 the fund had not made an offering of
its shares.
*There are no Class Y shares outstanding.
The total returns below show what an investment in the fund would
have earned over a specified period of time (one or five years or
since inception) without assuming the payment of the maximum sales
load when the investment was first made and that all distributions
and dividends by the fund were invested on the reinvestment dates
during the period, less all recurring fees.  The following chart
reflects the financial performance of the funds through the period
ended October 31, 2000 for the one, and five year periods and
since inception:


Total Returns




5 Year


Since
Incepti
on

Since

Name of Fund

Clas
s

1 Year
Average
Annual
5 Year
Cumulativ
e
Average
Annual
Inception
Cumulative







International All
Cap Growth1






Inception: 11-22-91
A
(1.62)%
9.17%
55.10%
10.92%
359.10%
Inception: 11-7-94
B
(2.43)%
8.28%
48.85%
5.77%
39.92%
Inception: 1-4-93
L
(2.42)%
8.28%
48.87%
9.75%
107.12%
Inception: 6-16-94
Y
(1.31)%
9.55%
57.78%
7.24%
56.20%
Inception: 11-7-94
Z
1.28%
9.55%
57.75%
6.99%
49.82%







Global Government
Bond






Inception: 7-22-91
A
6.13%
5.97%
33.61%
7.37%
93.49%
Inception: 11-18-94
B
5.56%
5.40%
45.62%
6.51%
45.62%
Inception: 1-4-93
L
5.67%
5.49%
30.65%
6.53%
64.02%
Inception: 2-19-93
Y
6.59%
6.37%
36.18%
7.00%
68.36%







European*






Inception: 2-7-94
A
18.02%
15.27%
103.55%
13.80%
138.89%
Inception: 11-7-94
B
17.00%
14.37%
95.67%
14.57%
125.74%
Inception: 2-14-94
L
17.03%
14.42%
96.09%
13.06%
127.99%









1 The International All Cap Growth Portfolio's performance record
includes the performance of the Fenimore International Fund
through November 22, 1991.  The shareholders of the Fenimore
International Fund approved a reorganization with the fund at
their October 31, 1991 shareholder's meeting.  As a result, all
shares of the Fenimore International Fund were exchanged at the
close of business on November 22, 1991 for shares of the fund.
Prior to November 22, 1991 the fund had not made an offering of
its shares.

*There are no Class Y shares outstanding.

Note that, (i) prior to June 12, 1998, Class L shares were called
Class C shares; (ii) prior to November 7, 1994, Class C shares
were called Class B shares; and (iii) prior to November 7, 1994,
Class Y shares of Global Government Bond Portfolio were called
Class C shares.  Note further, that effective October 3, 1994,
with respect to the International All Cap Growth, and European,
Class C shares of each such fund were reclassified as additional
Class A shares.

The Global Government Bond Portfolio's yield is computed by
dividing the net investment income per share earned during a
specified thirty day period by the maximum offering price per
share on the last day of such period and analyzing the result.
For purposes of the yield calculation, interest income is
determined based on a yield to maturity percentage for each long-
term debt obligation in the portfolio; income on short-term
obligations is based on current payment rate.  For the 30-day
period ended October 31, 2000, the portfolio's Class A share,
Class B share, Class L share and Class Y share yields were 4.31%,
4.00%, 3.94% and 4.77%, respectively.

The Company calculates current dividend return for each fund by
dividing the dividends from investment income declared during the
most recent twelve months by the net asset value or the maximum
public offering price (including sales charge) on the last day of
the period for which current dividend return is presented.  From
time to time, the Company may include the fund's current dividend
return in information furnished to present or prospective
shareholders and in advertisements.

Each fund's current dividend return may vary from time to time
depending on market conditions, the composition of its investment
portfolio and operating expenses.  These factors and possible
differences in the methods used in calculating current dividend
return should be considered when comparing the fund's current
dividend return to yields published for other investment companies
and other investment vehicles.  Current dividend return should
also be considered relative to changes in the value of the fund's
shares and to the risks associated with the fund's investment
objective and policies.  For example, in comparing current
dividend returns with those offered by Certificates of Deposit
("CDs"), it should be noted that CDs are insured (up to $100,000)
and offer a fixed rate of return.

Standard total return information may also be accompanied with
nonstandard total return information for differing periods
computed in the same manner but without annualizing the total
return or taking sales charges into account.

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

A fund may from time to time compare its investment results with
the following:

(1)  Various Salomon Smith Barney World Bond Indices and
J.P. Morgan Global Bond Indices, which measure the total
return performance of high-quality securities in major
sectors of the worldwide bond markets.

(2)  The Lehman Brothers Government/Corporate Bond Index,
which is a comprehensive measure of all public obligations
of the U.S. Treasury (excluding flower bonds and  foreign
targeted issues), all publicly issued debt of agencies of
the U.S. Government (excluding mortgage-backed securities),
and all public, fixed-rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's
Investors Service ("Moody's") or BBB by Standard and Poor's
Ratings Group ("S&P"), or, in the case of nonrated bonds,
BBB by Fitch Investors Service (excluding Collateralized
Mortgage Obligations), or other similar indices.

(3)  Average of Savings Accounts, which is a measure of all
kinds of savings deposits, including longer-term
certificates (based on figures supplied by the U.S. League
of Savings Institutions).  Savings accounts offer a
guaranteed rate of return on principal, but no opportunity
for capital growth.  During a portion of the period, the
maximum rates paid on some savings deposits were fixed by
law.

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

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

(6)  Ibbottson Associates International Bond Index, which
provides a detailed breakdown of local market and currency
returns since 1960.

(7)  Standard & Poor's 500 Index ("S&P 500") which is a
widely recognized index composed of the capitalization-
weighted average of the price of 500 of the largest publicly
traded stocks in the U.S.

(8) Salomon Smith Barney Broad Investment Grade Bond Index
which is a widely used index composed of U.S. domestic
government, corporate and mortgage-back fixed income
securities.

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

(10)  Financial News Composite Index.

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

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

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

Indices prepared by the research departments of such financial
organizations as Salomon Smith Barney, Inc., Merrill Lynch, Bear
Stearns & Co., Inc., Morgan Stanley, and Ibbottson Associates may
be used, as well as information provided by the Federal Reserve
Board.  In addition, performance rankings and ratings reported
periodically in national financial publications, including but not
limited to Money Magazine, Forbes, Business Week, The Wall Street
Journal and Barron's may also be used.   Each fund may also
include comparative performance information in advertising or
marketing its shares. Such performance information may include
data from Lipper Analytical Services, Inc., Morningstar, Inc. and
other financial publications.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of each fund normally is determined
as of the close of regular trading on the New York Stock Exchange
("NYSE") on each day that the NYSE is open, by dividing the value
of the fund's net assets attributable to each Class by the total
number of shares of the Class outstanding.  If the NYSE closes
early, the fund accelerates the calculation of its net asset value
to the actual closing time.  The NYSE is closed for the following
holidays: New Year's Day, Martin Luther King Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

Securities for which market quotations are readily available are
valued at current market value or, in their absence, at fair
value. Securities traded on an exchange are valued at last sales
prices on the principal exchange on which each such security is
traded, or if there were no sales on that exchange on the
valuation date, the last quoted sale, up to the time of valuation,
on the other exchanges.  If instead there were no sales on the
valuation date with respect to these securities, such securities
are valued at the mean of the latest published closing bid and
asked prices.  Over-the-counter securities are valued at last
sales price or, if there were no sales that day, at the mean
between the bid and asked prices. Options, futures contracts and
options thereon that are traded on exchanges are also valued at
last sales prices as of the close of the principal exchange on
which each is listed or if there were no such sales on the
valuation date, the last quoted sale, up to the time of valuation,
on the other exchanges. In the absence of any sales on the
valuation date, valuation shall be the mean of the latest closing
bid and asked prices. Securities with a remaining maturity of 60
days or less are valued at amortized cost where the Board of
Directors has determined that amortized cost is fair value.
Premiums received on the sale of call options will be included in
the fund's net assets, and current market value of such options
sold by the fund will be subtracted from the fund's net assets.
Any other investments of the fund, including restricted securities
and listed securities for which there is a thin market or that
trade infrequently (i.e., securities for which prices are not
readily available), are valued at a fair value determined by the
Board of Directors in good faith. This value generally is
determined as the amount that the fund could reasonably expect to
receive from an orderly disposition of these assets over a
reasonable period of time but in no event more than seven days.
The value of any security or commodity denominated in a currency
other than U.S. dollars will be converted into U.S. dollars at the
prevailing market rate as determined by the Manager.

Securities for which market quotations are readily available are
valued on the basis of the prices reflected on the tape received
from an approved pricing service after the close of regular
trading on the NYSE on each day the NYSE is open.

Foreign securities trading may not take place on all days on which
the NYSE is open. Further, trading takes place in various foreign
markets on days on which the NYSE is not open. Accordingly, the
determination of the net asset value of the fund may not take
place contemporaneously with the determination of the prices of
investments held by such fund. Events affecting the values of
investments that occur between the time their prices are
determined and 4:00 P.M. on each day that the NYSE is open will
not be reflected in the fund's net asset value unless the Manager,
under the supervision of the Company's Board of Directors,
determines that the particular event would materially affect net
asset value. As a result, a fund's net asset value may be
significantly affected by such trading on days when a shareholder
has no access to that fund.

PURCHASE OF SHARES

Sales Charge Alternatives

The following classes of shares are available for purchase.  See
the Prospectus for a discussion of factors to consider in
selecting which Class of shares to purchase.

Class A Shares.  Class A shares are sold to investors at the
public offering price, which is the net asset value plus an
initial sales charge as follows:


Offering
Global Gov't
Price
 Bond
Portfolio
Offering Price
All Other Funds

Amount of
Investment

Sales Charge as %
of Offering Price

Sales Charge
as % of Amount
Invested

Sales Charge
as a %
Of Offering
Price

Sales Charge as
a %
Of Amount
Invested
Less than
$25,000
4.50%
4.71%
5.00%
5.26%
$ 25,000 -
49,999
4.00
4.17
4.00
4.17
50,000 -
99,999
3.50
3.63
3.50
3.63
100,000 -
249,999
2.50
2.56
3.00
3.09
250,000 -
499,999
1.50
1.52
2.00
2.04
500,000 and
over
-0-
-0-
*
*

*	Purchases of Class A shares of $500,000 or more will be made
at net asset value without any initial sales charge, but
will be subject to a deferred sales charge of 1.00% on
redemptions made within 12 months of purchase. The deferred
sales charge on Class A shares is payable to Salomon Smith
Barney, which compensates Salomon Smith Barney Financial
Consultants and Service Agents whose clients make purchases
of $500,000 or more. The deferred sales charge is waived in
the same circumstances in which the deferred sales charge
applicable to Class B and Class L shares is waived. See
"Deferred Sales Charge Alternatives" and "Waivers of
Deferred Sales Charge."

Members of the selling group may receive up to 90% of the sales
charge and may be deemed to be underwriters of the fund as defined
in the 1933 Act.  The reduced sales charges shown above apply to
the aggregate of purchases of Class A shares of the fund made at
one time by "any person," which includes an individual and his or
her immediate family, or a trustee or other fiduciary of a single
trust estate or single fiduciary account.

Class B Shares.  Class B shares are sold without an initial sales
charge but are subject to a deferred sales charge payable upon
certain redemptions.  See "Deferred Sales Charge Provisions"
below.

Class L Shares.  Class L shares are sold with an initial sales
charge of 1.00% (which is equal to 1.01% of the amount invested)
and are subject to a deferred sales charge payable upon certain
redemptions.  See "Deferred Sales Charge Provisions" below.  Until
June 22, 2001 purchases of Class L shares by investors who were
holders of Class C shares of the fund or other Smith Barney mutual
funds on June 12, 1998 will not be subject to the 1% initial sales
charge.

Class Y Shares.  Class Y shares are sold without an initial sales
charge or deferred sales charge and are available only to
investors investing a minimum of $15,000,000 (except for purchases
of Class Y shares (i) of the International All Cap Growth
Portfolio, for which the minimum initial investment is $5,000,000
and (ii) by Smith Barney Concert Allocation Series Inc., for which
there is no minimum purchase amount).

Class Z Shares  Class Z shares are sold exclusively to (a) tax-
exempt employee benefit and retirement plans of Salomon Smith
Barney, Inc. and its affiliates and (b) unit investment trusts
sponsored by Salomon Smith Barney and its affiliates.

General

Investors may purchase shares from a Service Agent or a Salomon
Smith Barney Financial Consultant.  In addition, certain
investors, including qualified retirement plans purchasing through
certain Service Agents, may purchase shares directly from the
fund.  When purchasing shares of the fund, investors must specify
whether the purchase is for Class A, Class B, Class L or Class Y
shares.  Salomon Smith Barney and Service Agents may charge their
customers an annual account maintenance fee in connection with a
brokerage account through which an investor purchases or holds
shares.  Accounts held directly at PFPC Global Fund Services
("sub-transfer agent") are not subject to a maintenance fee.


Investors in Class A, Class B and Class L shares may open an
account in the fund by making an initial investment of at least
$1,000 for each account, or $250 for an IRA or a Self-Employed
Retirement Plan, in the fund. Investors in Class Y shares may open
an account by making an initial investment of $15,000,000.
Subsequent investments of at least $50 may be made for all
Classes. For participants in retirement plans qualified under
Section 403(b)(7) or Section 401(c) of the Code, the minimum
initial investment required for Class A, Class B and Class L
shares and the subsequent investment requirement for all Classes
in the fund is $25.  For shareholders purchasing shares of the
fund through the Systematic Investment Plan on a monthly basis,
the minimum initial investment requirement for Class A, Class B
and Class L shares and subsequent investment requirement for all
Classes is $25.  For shareholders purchasing shares of the fund
through the Systematic Investment Plan on a quarterly basis, the
minimum initial investment required for Class A, Class B and Class
L shares and the subsequent investment requirement for all Classes
is $50.  There are no minimum investment requirements for Class A
shares for employees of Citigroup and its subsidiaries, including
Salomon Smith Barney, unitholders who invest distributions from a
Unit Investment Trust ("UIT") sponsored by Salomon Smith Barney,
and Directors/Trustees of any of the Smith Barney Mutual Funds,
and their spouses and children. The fund reserves the right to
waive or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to time.
Shares purchased will be held in the shareholder's account by the
sub-transfer agent. Share certificates are issued only upon a
shareholder's written request to the sub-transfer agent.

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

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

Sales Charge Waivers and Reductions

Initial Sales Charge Waivers.  Purchases of Class A shares may be
made at net asset value without a sales charge in the following
circumstances: (a) sales to (i) Board Members and employees of
Citigroup and its subsidiaries and any Citigroup affiliated funds
including the Smith Barney Mutual Funds (including retired Board
Members and employees); the immediate families of such persons
(including the surviving spouse of a deceased Board Member or
employee); and to a pension, profit-sharing or other benefit plan
for such persons and (ii) employees of members of the National
Association of Securities Dealers, Inc., provided such sales are
made upon the assurance of the purchaser that the purchase is made
for investment purposes and that the securities will not be resold
except through redemption or repurchase; (b) offers of Class A
shares to any other investment company to effect the combination
of such company with the fund by merger, acquisition of assets or
otherwise; (c) purchases of Class A shares by any client of a
newly employed Salomon Smith Barney Financial Consultant (for a
period up to 90 days from the commencement of the Financial
Consultant's employment with Salomon Smith Barney), on the
condition the purchase of Class A shares is made with the proceeds
of the redemption of shares of a mutual fund which (i) was
sponsored by the Financial Consultant's prior employer, (ii) was
sold to the client by the Financial Consultant and (iii) was
subject to a sales charge; (d) purchases by shareholders who have
redeemed Class A shares in the fund (or Class A shares of another
Smith Barney Mutual Fund that is offered with a sales charge) and
who wish to reinvest their redemption proceeds in the fund,
provided the reinvestment is made within 60 calendar days of the
redemption; (e) purchases by accounts managed by registered
investment advisory subsidiaries of Citigroup; (f) direct
rollovers by plan participants of distributions from a 401(k) plan
offered to employees of Citigroup or its subsidiaries or a 401(k)
plan enrolled in the Smith Barney 401(k) Program (Note: subsequent
investments will be subject to the applicable sales charge); (g)
purchases by a separate account used to fund certain unregistered
variable annuity contracts; (h) investments of distributions from
or proceeds from a sale of a UIT sponsored by Salomon Smith
Barney; (i) purchases by investors participating in a Salomon
Smith Barney fee-based arrangement; and (j) purchases by Section
403(b) or Section 401(a) or (k) accounts associated with Copeland
Retirement Programs. In order to obtain such discounts, the
purchaser must provide sufficient information at the time of
purchase to permit verification that the purchase would qualify
for the elimination of the sales charge.

Right of Accumulation.  Class A shares of the fund may be
purchased by ''any person'' (as defined above) at a reduced sales
charge or at net asset value determined by aggregating the dollar
amount of the new purchase and the total net asset value of all
Class A shares of the fund and of most other Smith Barney Mutual
Funds that are offered with a sales charge then held by such
person and applying the sales charge applicable to such aggregate.
In order to obtain such discount, the purchaser must provide
sufficient information at the time of purchase to permit
verification that the purchase qualifies for the reduced sales
charge.  The right of accumulation is subject to modification or
discontinuance at any time with respect to all shares purchased
thereafter.

Letter of Intent - Class A Shares.  A Letter of Intent for an
amount of $50,000 or more provides an opportunity for an investor
to obtain a reduced sales charge by aggregating investments over a
13 month period, provided that the investor refers to such Letter
when placing orders.  For purposes of a Letter of Intent, the
''Amount of Investment'' as referred to in the preceding sales
charge table includes (i) all Class A shares of the fund and other
Smith Barney Mutual Funds offered with a sales charge acquired
during the term of the letter plus (ii) the value of all Class A
shares previously purchased and still owned.  Each investment made
during the period receives the reduced sales charge applicable to
the total amount of the investment goal.  If the goal is not
achieved within the period, the investor must pay the difference
between the sales charges applicable to the purchases made and the
charges previously paid, or an appropriate number of escrowed
shares will be redeemed.  The term of the Letter will commence
upon the date the Letter is signed, or at the options of the
investor, up to 90 days before such date.  Please contact a
Salomon Smith Barney Financial Consultant or the Transfer Agent to
obtain a Letter of Intent application.

Letter of Intent - Class Y Shares.  A Letter of Intent may also be
used as a way for investors to meet the minimum investment
requirement for Class Y shares (except purchases of Class Y shares
by Smith Barney Allocation Series Inc., for which there is no
minimum purchase amount).  For International All Cap Growth
Portfolio, investors must make an initial minimum purchase of
$1,000,000 in Class Y shares of the fund and agree to purchase a
total of $5,000,000 of Class Y of the fund within 6 months of the
date of the Letter.  For all of the other funds, investors must
make an initial minimum purchase of $5,000,000 in Class Y shares
of the fund and agree to purchase a total of $15,000,000 of Class
Y shares of the fund within 13 months from the date of the Letter.
If a total investment of $15,000,000 is not made within the 13-
month period, or $5 million is not made within 6 months for the
International All Cap Growth Portfolio, all Class Y shares
purchased to date will be transferred to Class A shares, where
they will be subject to all fees (including a service fee of
0.25%) and expenses applicable to the fund's Class A shares, which
may include a deferred sales charge of 1.00%.  Please contact a
Service Agent or the Transfer Agent for further information.

Deferred Sales Charge Provisions

''Deferred Sales Charge Shares'' are: (a) Class B shares; (b)
Class L shares; and (c) Class A shares that were purchased without
an initial sales charge but are subject to a deferred sales
charge.  A deferred sales charge may be imposed on certain
redemptions of these shares.

Any applicable deferred sales charge will be assessed on an amount
equal to the lesser of the original cost of the shares being
redeemed or their net asset value at the time of redemption.
Deferred Sales Charge Shares that are redeemed will not be subject
to a deferred sales charge to the extent that the value of such
shares represents: (a) capital appreciation of fund assets; (b)
reinvestment of dividends or capital gain distributions; (c) with
respect to Class B shares, shares redeemed more than five years
after their purchase; or (d) with respect to Class L shares and
Class A shares that are Deferred Sales Charge Shares, shares
redeemed more than 12 months after their purchase.

Class L shares and Class A shares that are Deferred Sales Charge
Shares are subject to a 1.00% deferred sales charge if redeemed
within 12 months of purchase. In circumstances in which the
deferred sales charge is imposed on Class B shares, the amount of
the charge will depend on the number of years since the
shareholder made the purchase payment from which the amount is
being redeemed.  Solely for purposes of determining the number of
years since a purchase payment, all purchase payments made during
a month will be aggregated and deemed to have been made on the
last day of the preceding Salomon Smith Barney statement month.
The following table sets forth the rates of the charge for
redemptions of Class B shares by shareholders, except in the case
of Class B shares held under the Salomon Smith Barney 401(k)
Program, as described below.     See ''Purchase of Shares Salomon
Smith Barney Retirement Programs.''



Deferred Sales Charge

Year Payment Was Made
Since Purchase
Global Government Bond
Portfolio
All other Funds



First
4.50%
5.00%
Second
4.00
4.00
Third
3.00
3.00
Fourth
2.00
2.00
Fifth
1.00
1.00
Sixth and thereafter
0.00
0.00


Class B shares will convert automatically to Class A shares eight
years after the date on which they were purchased and thereafter
will no longer be subject to any distribution fees. There will
also be converted at that time such proportion of Class B Dividend
Shares (Class B shares that were acquired through the reinvestment
of dividends and distributions) owned by the shareholder as the
total number of his or her Class B shares converting at the time
bears to the total number of outstanding Class B shares (other
than Class B Dividend Shares) owned by the shareholder.

In determining the applicability of any CDSC, it will be assumed
that a redemption is made first of shares representing capital
appreciation, next of shares representing the reinvestment of
dividends and capital gain distributions and finally of other
shares held by the shareholder for the longest period of time. The
length of time that Deferred Sales Charge Shares acquired through
an exchange have been held will be calculated from the date that
the shares exchanged were initially acquired in one of the other
Smith Barney Mutual Funds, and fund shares being redeemed will be
considered to represent, as applicable, capital appreciation or
dividend and capital gain distribution reinvestments in such other
funds. For Federal income tax purposes, the amount of the deferred
sales charge will reduce the gain or increase the loss, as the
case may be, on the amount realized on redemption. The amount of
any deferred sales charge will be paid to Salomon Smith Barney.

To provide an example, assume an investor purchased 100 Class B
shares of the fund at $10 per share for a cost of $1,000.
Subsequently, the investor acquired 5 additional shares of the
fund through dividend reinvestment.  During the fifteenth month
after the purchase, the investor decided to redeem $500 of his or
her investment.  Assuming at the time of the redemption the net
asset value had appreciated to $12 per share, the value of the
investor's shares would be $1,260 (105 shares at $12 per share).
The deferred sales charge would not be applied to the amount which
represents appreciation ($200) and the value of the reinvested
dividend shares ($60).  Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 4.00%
(the applicable rate for Class B shares) for a total deferred
sales charge of $9.60.

Waivers of Deferred Sales Charge

The deferred sales charge will be waived on: (a) exchanges (see
''Exchange Privilege''); (b) automatic cash withdrawals in amounts
equal to or less than 1.00% per month of the value of the
shareholder's shares at the time the withdrawal plan commences
(see ''Automatic Cash Withdrawal Plan'') (provided, however, that
automatic cash withdrawals in amounts equal to or less than 2.00%
per month of the value of the shareholder's shares will be
permitted for withdrawal plans that were established prior to
November 7, 1994); (c) redemptions of shares within 12 months
following the death or disability of the shareholder; (d)
redemptions of shares made in connection with qualified
distributions from retirement plans or IRAs upon the attainment of
age 59; (e) involuntary redemptions; and (f) redemptions of
shares to effect a combination of the fund with any investment
company by merger, acquisition of assets or otherwise. In
addition, a shareholder who has redeemed shares from other Smith
Barney Mutual Funds may, under certain circumstances, reinvest all
or part of the redemption proceeds within 60 days and receive pro
rata credit for any deferred sales charge imposed on the prior
redemption.

Deferred sales charge waivers will be granted subject to
confirmation (by Salomon Smith Barney in the case of shareholders
who are also Salomon Smith Barney clients or by the Transfer Agent
in the case of all other shareholders) of the shareholder's status
or holdings, as the case may be.

Salomon Smith Barney Retirement Programs

You may be eligible to participate in a retirement program
sponsored by Salomon Smith Barney or one of its affiliates. The
fund offers Class A and Class L shares at net asset value to
participating plans under the programs. You can meet minimum
investment and exchange amounts, if any by combining the plan's
investments in any of the Smith Barney mutual funds.

There are no sales charges when you buy or sell shares and the
class of shares you may purchase depends on the amount of your
initial investment and/or the date your account is opened.  Once a
class of shares is chosen, all additional purchases must be of the
same class.

For plans opened on or after March 1, 2000 that are not plans for
which Paychex Inc. or an affiliate provides administrative
services (a "Paychex Plan"), Class A shares may be purchased
regardless of the amount invested.

For plans opened prior to March 1, 2000 and for Paychex plans, the
class of shares you may purchase depends on the amount of your
initial investment:

Class A Shares.  Class A shares may be purchased by plans
investing at least $1million.

Class L Shares. Class L shares may be purchased by plans investing
less than $1 million.  Class L shares are eligible to exchange
into Class A shares not later than 8 years after the plan joined
the program.  They are eligible for exchange in the following
circumstances:

If the plan was opened on or after June 21, 1996 and a total of $1
million is invested in Smith Barney Funds Class L shares (other
than money market funds), all Class L shares are eligible for
exchange after the plan is in the program for 5 years.

If the plan was opened before June 21, 1996 and a total of
$500,000 is invested in Smith Barney Funds Class L shares (other
than money market funds) on December 31 in any year, all Class L
shares are eligible for exchange on or about March 31 of the
following year.

For more information, call your Service Agent or the Transfer
Agent.

Retirement Programs Opened On or After June 21, 1996.  If, at the
end of the fifth year after the date the participating plan
enrolled in the Smith Barney 401(k) Program or the ExecChoiceTM
Program, a participating plan's total Class L holdings in all non-
money market Smith Barney mutual funds equal at least $1,000,000,
the participating plan will be offered the opportunity to exchange
all of its Class L shares for Class A shares of the fund. (For
participating plans that were originally established through a
Salomon Smith Barney retail brokerage account, the five-year
period will be calculated from the date the retail brokerage
account was opened.) Such participating plans will be notified of
the pending exchange in writing within 30 days after the fifth
anniversary of the enrollment date and, unless the exchange offer
has been rejected in writing, the exchange will occur on or about
the 90th day after the fifth anniversary date. If the
participating plan does not qualify for the five-year exchange to
Class A shares, a review of the participating plan's holdings will
be performed each quarter until either the participating plan
qualifies or the end of the eighth year.

Retirement Programs Opened Prior to June 21, 1996.  In any year
after the date a participating plan enrolled in the Smith Barney
401(k) Program, if a participating plan's total Class L holdings
in all non-money market Smith Barney mutual funds equal at least
$500,000 as of the calendar year-end, the participating plan will
be offered the opportunity to exchange all of its Class L shares
for Class A shares of the fund. Such Plans will be notified in
writing within 30 days after the last business day of the calendar
year and, unless the exchange offer has been rejected in writing,
the exchange will occur on or about the last business day of the
following March.

Any participating plan in the Smith Barney 401(k) or the
ExecChoiceTM Program, whether opened before or after June 21,
1996, that has not previously qualified for an exchange into Class
A shares will be offered the opportunity to exchange all of its
Class L shares for Class A shares of the fund, regardless of asset
size, at the end of the eighth year after the date the
participating plan enrolled in the Smith Barney 401(k) Program or
ExecChoiceTM Program.  Such plans will be notified of the pending
exchange in writing approximately 60 days before the eighth
anniversary of the enrollment date and, unless the exchange has
been rejected in writing, the exchange will occur on or about the
eighth anniversary date. Once an exchange has occurred, a
participating plan will not be eligible to acquire additional
Class L shares, but instead may acquire Class A shares of the same
fund. Any Class L shares not converted will continue to be subject
to the distribution fee.

Participating plans wishing to acquire shares of the fund through
the Smith Barney 401(k) Program or the Smith Barney ExecChoiceTM
Program must purchase such shares directly from the transfer
agent. For further information regarding these Programs, investors
should contact a Salomon Smith Barney Financial Consultant.

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

At the end of the eighth year after the date the participating
plan enrolled in the Smith Barney 401 (k) Program, the
participating plan will be offered the opportunity to exchange all
of its Class B shares for Class A shares of the same fund.  Such
participating plan will be notified of the pending exchange in
writing approximately 60 days before the eighth anniversary of the
enrollment date and, unless the exchange has been rejected in
writing, the exchange will occur on or about the eighth
anniversary date.  Once the exchange has occurred, a participating
plan will not be eligible to acquire additional Class B shares,
but instead may acquire Class A shares ofa the same fund.  If the
participating plan elects not to exchange all of its Class B
shares at that time, each Class B share held by the participating
plan will have the same conversion feature as Class B shares held
by other investors.  See "Purchase of Shares-Deferred Sales Charge
Alternatives."

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

The deferred sales charge will be waived on redemptions of Class B
shares in connection with lump-sum or other distributions made by
a participating plan; as a result of (a) the retirement of an
employee in the participating plan; (b) the termination of
employment of an employee in the participating plan; (c) the death
or disability or an employee in the participating plan; (d) the
attainment of age 59  by an employee in the participating plan;
(e) hardship of an employee in the participating plan to the
extent permitted under Section 401(k) of the Code; or (f)
redemptions of shares in connection with a loan made by the
participating plan to an employee.

EXCHANGE PRIVILEGE

Except as otherwise noted below, shares of each Class of the fund
may be exchanged for shares of the same Class of certain Smith
Barney Mutual Funds, to the extent shares are offered for sale in
the shareholder's state of residence.  Exchanges of Class A, Class
B and Class L shares are subject to minimum investment
requirements and all shares are subject to the other requirements
of the fund into which exchanges are made.

Class B Exchanges.  If a Class B shareholder wishes to exchange
all or a portion of his or her shares in any of the funds imposing
a higher deferred sales charge than that imposed by the fund, the
exchanged Class B shares will be subject to the higher applicable
deferred sales charge. Upon an exchange, the new Class B shares
will be deemed to have been purchased on the same date as the
Class B shares of the fund that have been exchanged.

Class L Exchanges.  Upon an exchange, the new Class L shares will
be deemed to have been purchased on the same date as the Class L
shares of the fund that have been exchanged.

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

Additional Information Regarding the Exchange Privilege.  Although
the exchange privilege is an important benefit, excessive exchange
transactions can be detrimental to the fund's performance and its
shareholders. The manager may determine that a pattern of frequent
exchanges is excessive and contrary to the best interests of the
fund's other shareholders. In this event, the fund may, at its
discretion, decide to limit additional purchases and/or exchanges
by the shareholder. Upon such a determination, the fund will
provide notice in writing or by telephone to the shareholder at
least 15 days prior to suspending the exchange privilege and
during the 15 day period the shareholder will be required to (a)
redeem his or her shares in the fund or (b) remain invested in the
fund or exchange into any of the funds of the Smith Barney Mutual
Funds ordinarily available, which position the shareholder would
be expected to maintain for a significant period of time. All
relevant factors will be considered in determining what
constitutes an abusive pattern of exchanges.

Certain shareholders may be able to exchange shares by telephone.
See ''Redemption of Shares Telephone Redemptions and Exchange
Program.'' Exchanges will be processed at the net asset value next
determined.  Redemption procedures discussed below are also
applicable for exchanging shares, and exchanges will be made upon
receipt of all supporting documents in proper form.  If the
account registration of the shares of the fund being acquired is
identical to the registration of the shares of the fund exchanged,
no signature guarantee is required.  An exchange involves a
taxable redemption of shares, subject to the tax treatment
described in "Additional Tax Information" above, followed by a
purchase of shares of a different fund.  Before exchanging shares,
investors should read the current prospectus describing the shares
to be acquired.  The fund reserves the right to modify or
discontinue exchange privileges upon 60 days' prior notice to
shareholders.

REDEMPTION OF SHARES

The fund is required to redeem the shares of the fund tendered to
it, as described below, at a redemption price equal to their net
asset value per share next determined after receipt of a written
request in proper form at no charge other than any applicable
deferred sales charge. Redemption requests received after the
close of regular trading on the NYSE are priced at the net asset
value next determined.

If a shareholder holds shares in more than one Class, any request
for redemption must specify the Class being redeemed.  In the
event of a failure to specify which Class, or if the investor owns
fewer shares of the Class than specified, the redemption request
will be delayed until the Transfer Agent receives further
instructions from Salomon Smith Barney, or if the shareholder's
account is not with Salomon Smith Barney, from the shareholder
directly.  The redemption proceeds will be remitted on or before
the third business day following receipt of proper tender, except
on any days on which the NYSE is closed or as permitted under the
1940 Act in extraordinary circumstances. Generally, if the
redemption proceeds are remitted to a Salomon Smith Barney
brokerage account, these funds will not be invested for the
shareholder's benefit without specific instruction and Salomon
Smith Barney will benefit from the use of temporarily uninvested
funds. Redemption proceeds for shares purchased by check, other
than a certified or official bank check, will be remitted upon
clearance of the check, which may take up to fifteen days or more.

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

Smith Barney World Funds, Inc./[name of fund]
Class A, B, L or Y (please specify)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699

A written redemption request must (a) state the Class and number
or dollar amount of shares to be redeemed, (b) identify the
shareholder's account number and (c) be signed by each registered
owner exactly as the shares are registered. If the shares to be
redeemed were issued in certificate form, the certificates must be
endorsed for transfer (or be accompanied by an endorsed stock
power) and must be submitted to the sub-transfer agent together
with the redemption request. Any signature appearing on a share
certificate, stock power or written redemption request in excess
of $10,000 must be guaranteed by an eligible guarantor
institution, such as a domestic bank, savings and loan
institution, domestic credit union, member bank of the Federal
Reserve System or member firm of a national securities exchange.
Written redemption requests of $10,000 or less do not require a
signature guarantee unless more than one such redemption request
is made in any 10-day period. Redemption proceeds will be mailed
to an investor's address of record. The Transfer Agent may require
additional supporting documents for redemptions made by
corporations, executors, administrators, trustees or guardians. A
redemption request will not be deemed properly received until the
Transfer Agent receives all required documents in proper form.

Automatic Cash Withdrawal Plan.  The fund offers shareholders an
automatic cash withdrawal plan, under which shareholders who own
shares with a value of at least $10,000 may elect to receive cash
payments of at least $50 monthly or quarterly.  Retirement plan
accounts are eligible for automatic cash withdrawal plans only
where the shareholder is eligible to receive qualified
distributions and has an account value of at least $5,000.  The
withdrawal plan will be carried over on exchanges between Classes
of a fund.  Any applicable deferred sales charge will not be
waived on amounts withdrawn by a shareholder that exceed 1.00% per
month of the value of the shareholder's shares subject to the
deferred sales charge at the time the withdrawal plan commences.
(With respect to withdrawal plans in effect prior to November 7,
1994, any applicable deferred sales charge will be waived on
amounts withdrawn that do not exceed 2.00% per month of the value
of the shareholder's shares subject to the deferred sales charge.)
For further information regarding the automatic cash withdrawal
plan, shareholders should contact a Salomon Smith Barney Financial
Consultant or your Dealer Representative or the sub-transfer
agent.

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

Redemptions.   Redemption requests of up to $10,000 of any class
or classes of shares of a fund may be made by eligible
shareholders by calling the sub-transfer agent at 1-800-451-2010.
Such requests may be made between 9:00 a.m. and 4:00 p.m. (Eastern
time) on any day the NYSE is open.  Redemptions of shares (i) by
retirement plans or (ii) for which certificates have been issued
are not permitted under this program.

A shareholder will have the option of having the redemption
proceeds mailed to his/her address of record or wired to a bank
account predesignated by the shareholder.  Generally, redemption
proceeds will be mailed or wired, as the case may be, on the
business day following the redemption request. In order to use the
wire procedures, the bank receiving the proceeds must be a member
of the Federal Reserve System or have a correspondent relationship
with a member bank.  The fund reserves the right to charge
shareholders a nominal fee for each wire redemption.  Such
charges, if any, will be assessed against the shareholder's
account from which shares were redeemed.  In order to change the
bank account designated to receive redemption proceeds, a
shareholder must complete a new Telephone/Wire Authorization Form
and, for the protection of the shareholder's assets, will be
required to provide a signature guarantee and certain other
documentation.

Exchanges.  Eligible shareholders may make exchanges by telephone
if the account registration of the shares of the fund being
acquired is identical to the registration of the shares of the
fund exchanged.  Such exchange requests may be made by calling the
Transfer Agent at 1-800-451-2010 between 9:00 a.m. and 5:00 p.m.
(Eastern time) on any day on which the NYSE is open.

Additional Information Regarding Telephone Redemption and Exchange
Program.   Neither the fund  nor its agents will be liable for
following instructions communicated by telephone that are
reasonably believed to be genuine.  The fund and its agents will
employ procedures designed to verify the identity of the caller
and legitimacy of instructions (for example, a shareholder's name
and account number will be required and phone calls may be
recorded).  The fund reserves the right to suspend, modify or
discontinue the telephone redemption and exchange program or to
impose a charge for this service at any time following at least
seven (7) days' prior notice to shareholders.

DIVIDENDS AND DISTRIBUTIONS

Each fund except the Global Government Bond Portfolio declares and
pays income dividends at least annually on its shares.  The Global
Government Bond Portfolio declares and pays income dividends
monthly. Each fund makes annual distributions of capital gains, if
any, on its shares.  If a shareholder does not otherwise instruct,
dividends and capital gain distributions will be reinvested
automatically in additional shares of the same Class at net asset
value, subject to no initial or deferred sales charges.

Income dividends and capital gain distributions that are invested
are credited to shareholders' accounts in additional shares at the
net asset value as of the close of business on the payment date. A
shareholder may change the option at any time by notifying his or
her Salomon Smith Barney Financial Consultant. Accounts held
directly by the transfer agent should notify the transfer agent in
writing at least five business days prior to the payment date to
permit the change to be entered in the shareholder's account.

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

INVESTMENT MANAGEMENT AND OTHER SERVICES

Manager

SSB Citi Fund Management LLC (successor to SSBC Fund Management
Inc.) (the ''Manager'') serves as each fund's investment manager.
The Manager is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc. (''Holdings'').  Holdings is a wholly owned
subsidiary of Citigroup.  The Manager was incorporated on March
12, 1968 under the laws of Delaware and converted to a Delaware
limited liability company in 1999.  As of January 31, 2000 the
Manager had aggregate assets under management of in excess of
$127.4 billion.  The Manager and Salomon Smith Barney are each
located 7 World Trade Center, New York, New York 10048.  Holdings
is located at 388 Greenwich Street, New York, New York 10013.  The
term ''Smith Barney'' in the title of the Company and the funds
has been adopted by permission of Salomon Smith Barney and is
subject to the right of Salomon Smith Barney to elect that the
Company stop using the term in any form or combination of its
name.

The Manager manages the day-to-day operations of each fund
pursuant to a management agreement entered into by the Company on
behalf of the fund under which the Manager is responsible for
furnishing or causing to be furnished to the fund advice and
assistance with respect to the acquisition, holding or disposal of
securities and recommendations with respect to other aspects and
affairs of the fund and furnishes the fund with bookkeeping,
accounting and administrative services, office space and
equipment, and the services of the officers and employees of the
Company.  By written agreement the Research and other departments
and staff of Salomon Smith Barney furnish the Manager with
information, advice and assistance and are available for
consultation on the fund, thus Salomon Smith Barney may also be
considered an investment adviser to the Company.  Salomon Smith
Barney's services are paid for by the Manager on the basis of
direct and indirect costs to Salomon Smith Barney of performing
such services; there is no charge to the Company for such
services.  For the services provided by the Manager, the
management agreement provides that each fund will pay the Manager
an annual fee calculated as a percentage of the fund's average
daily net assets, paid monthly.

The Management Agreement for the Global Government Bond fund
provides for an annual fee calculated at the rate of 0.75% of the
fund's average daily net assets, paid monthly; each of the
Management Agreements for the International All Cap Growth
Portfolio and the European Portfolio provides for an annual fee
calculated at the rate of 0.85% of the fund's average daily net
assets, paid monthly.

For the fiscal years 1998, 1999 and 2000 the management fees for
each fund were as follows:

Fund
1998
1999
2000
International All Cap
Growth
$11,110,1
20
$10,291,301
$13,571,951
Global Government Bond
1,055,789
1,024,623
902,878
European
530,065
708,758
906,567

Each Management Agreement provides that all other expenses not
specifically assumed by the Manager under the Management Agreement
on behalf of the fund are borne by the Company.  Expenses payable
by the Company include, but are not limited to, all charges of
custodians (including sums as custodian and sums for keeping books
and for rendering other services to the Company) and shareholder
servicing agents, expenses of preparing, printing and distributing
all prospectuses, proxy material, reports and notices to
shareholders, all expenses of shareholders' and directors'
meetings, filing fees and expenses relating to the registration
and qualification of the Company's shares and the Company under
Federal or state securities laws and maintaining such
registrations and qualifications (including the printing of the
Company's registration statements), fees of auditors and legal
counsel, costs of performing portfolio valuations, out-of-pocket
expenses of directors and fees of directors who are not
"interested persons" as defined in the Act, interest, taxes and
governmental fees, fees and commissions of every kind, expenses of
issue, repurchase or redemption of shares, insurance expense,
association membership dues, all other costs incidental to the
Company's existence and extraordinary expenses such as litigation
and indemnification expenses.   Direct expenses are charged to
each fund; general corporate expenses are allocated on the basis
of the relative net assets.

The Manager also acts as investment adviser to numerous other
open-end investment companies.  Salomon Smith Barney also advises
profit-sharing and pension accounts.   Salomon Smith Barney and
its affiliates may in the future act as investment advisers for
other accounts.

Code of Ethics. Pursuant to Rule 17j-1 of the 1940 Act, the funds,
their investment advisers and principal underwriter have adopted
codes of ethics that permit personnel to invest in securities for
their own accounts, including securities that may be purchased or
held by the funds.  All personnel must place the interests of
clients first and avoid activities, interests and relationships
that might interfere with the duty to make decisions in the best
interests of the clients.  All personal securities transactions by
employees must adhere to the requirements of the codes and must be
conducted in such a manner as to avoid any actual or potential
conflict of interest, the appearance of such a conflict, or the
abuse of an employee's position of trust and responsibility.

Distributor. Effective June 5, 2000, the fund has entered into an
agreement with Salomon Smith Barney located at 388 Greenwich
Street, New York, New York 10013 to distribute the fund's shares on
a best efforts basis pursuant to a distribution agreement.  Prior
to June 5, 2000, CFBDS, Inc. served as the fund's distributor.

Commissions on Class A Shares. For the period November 1, 1997
through October 7, 1998 , for the period October 8, 1998 through
October 31, 1998 and for the fiscal years ended October 31, 1999
and October 31, 2000 the aggregate dollar amounts of commissions
on Class A shares, are as follows:


Class A

Name of Fund
11/01/97
through
10/07/98*
10/08/98
through
10/31/98**
11/01/98
through
10/31/99***
11/01/99
through
10/31/00***
*
Global Government Bond
$15,000
$1,000
$7,000
$4,000
International All Cap
Growth
467,000
51,000
646,000
2,031,000
European
213,000
29,000
181,000
182,000

*The entire amount was paid to Salomon Smith Barney.
**The following amounts were paid to Salomon Smith Barney:  $900,
$45,900, $0, $0, $26,100 and $0, respectively. The remainder was
paid to CFBDS.
***The following amounts were paid to Salomon Smith Barney:
$6,300, $581,400, $12,600, $5,400, $162,000 and $9,990.
****The following amounts were paid to Salomon Smith Barney:
$3,600, $1,827,000 and $163,800.
Commissions on Class L Shares.  For the period June 12, 1998
through October 7, 1998, for the period October 8, 1998 through
October 31, 1998 and for the fiscal years ended October 31, 1999
and October 31, 2000, the aggregate dollar amounts of commissions
on Class L shares are as follows:


Class L
(On June 12, 1998, Class C shares were
renamed Class L Shares)

Name of Fund
06/12/98
through
10/07/98*
10/08/98
through
10/31/98**
11/01/98
through
10/31/99***
11/01/99
through
10/31/00****
Global Government Bond
$0
$0
$0
$1,000
International All Cap Growth

25,000
1,000
67,000
400,000
European
61,000
1,000
33,000
48,000

*    The entire amount was paid to Salomon Smith Barney.
** The following amounts were paid to Salomon Smith Barney:  $0,
$900, $0, $0, $900, and $0, respectively. The remainder was
paid to CFBDS.
***The following amounts were paid to Salomon Smith Barney:  $0,
$60,300, $0, $2,700, $29,700 and $6,300.  The remainder was paid
to CFBDS.
****The following amounts were paid to Salomon Smith Barney: $900,
$360,000 and $43,200.

Deferred Sales Charges on Class A, B and L Shares  For the 1998,
1999 and 2000 fiscal years, the following deferred sales charges
were paid to Salomon Smith Barney on redemptions of the funds'
shares:


Class A

Name of Fund
Fiscal Year
Ended 10/31/98
Fiscal Year
Ended 10/31/99
Fiscal Year
Ended 10/31/00
Global Government Bond
$0
$0
$0
International All Cap
Growth
$5,000
10,000
13,000
European
7,0000
1,000
1,000


Class B

Name of Fund
Fiscal Year
Ended 10/31/98
Fiscal Year
Ended 10/31/99
Fiscal Year
Ended 10/31/00
Global Government Bond
$16,000
$8,000
$6,000
International All Cap Growth

568,000
384,000
230,000
European
259,000
106,000
76,000


Class L
(On June 12,1998, Class C shares were
renamed Class L Shares)

Name of Fund
Fiscal Year
Ended 10/31/98
Fiscal Year
Ended 10/31/99
Fiscal Year
Ended 10/31/00
Global Government Bond
$0
$0
$0
International All Cap Growth

11,000
19,000
38,000
European
8,000
6,000
4,000

For the 2000 fiscal year, the following sales charges received by
Salomon Smith Barney and CFBDS were approximately:

Name of Fund
Class A
Global Government Bond
$4,000
International All Cap Growth

2,031,000
European
182,000

Name of Fund
Class L
Global Government Bond
$1,000
International All Cap Growth

400,000
European
48,000

Distribution Arrangements.  To compensate Salomon Smith Barney for
the service it provides and for the expenses it bears, each fund
has adopted a plan of distribution (the "Plan") pursuant to Rule
12b 1 under the 1940 Act.  Under the Plan, each fund pays Salomon
Smith Barney a service fee, accrued daily and paid monthly,
calculated at the annual rate of 0.25% of the value of the fund's
average daily net assets attributable to the Class A, Class B and
Class L shares.  The service fee is primarily used to pay Salomon
Smith Barney Financial Consultants for servicing shareholder
accounts.  In addition, each fund pays Salomon Smith Barney a
distribution fee with respect to Class B and Class L to cover
expenses primarily intended to result in the sale of those shares.
These expenses include:  advertising expenses; the cost of
printing and mailing prospectuses to potential investors; payments
to and expenses of Salomon Smith Barney Financial Consultants and
other persons who provide support services in connection with the
distribution of shares; interest and/or carrying charges; and
indirect and overhead costs of Salomon Smith Barney associated
with the sale of fund shares, including lease, utility,
communications and sales promotion expenses.  For the Global
Government Bond Portfolio the Class B and Class L distribution fee
is calculated at the annual rate of 0.50% and 0.45% of the value
of the fund's average daily net assets attributable to the shares
of the respective Class.  For each of the other funds, the Class B
and Class L distribution fee is calculated at the annual rate of
0.75% of the value of such fund's average net assets attributable
to the shares of the respective Class.

Payments under each Plan are not tied exclusively to the
distribution and shareholder services expenses actually incurred
by Salomon Smith Barney and the payments may exceed distribution
expenses actually incurred. The Company's Board of Directors will
evaluate the appropriateness of each Plan and its payment terms on
a continuing basis and in so doing will consider all relevant
factors, including expenses borne by Salomon Smith Barney, amounts
received under the Plan and proceeds of the deferred sales
charges.


For the 1998, 1999 and 2000 fiscal years, the following
distribution and service fees were accrued and/or paid to Salomon
Smith Barney:


Class A

Name of Fund
Fiscal Year
Ended 10/31/98
Fiscal Year
Ended 10/31/99
Fiscal Year
Ended 10/31/00
Global Government Bond
$222,926
195,608
$157,951
International All Cap Growth

1,108,230
1,072,787
1,500,417
European
53,687
77,884
119,439



Class B

Name of Fund
Fiscal Year
Ended 10/31/98
Fiscal Year
Ended 10/31/99
Fiscal Year
Ended 10/31/00
Global Government Bond
$127,964
$91,284
$54,753
International All Cap Growth

2,106,818
1,856,625
2,344,221
European
350,335
403,279
430,114


Class L
(On June 12, 1998, Class C shares were
renamed Class L Shares)

Name of Fund
Fiscal Year
Ended 10/31/98
Fiscal Year
Ended 10/31/99
Fiscal Year
Ended 10/31/00
Global Government Bond
$20,234
$20,234
$12,318
International All Cap Growth

1,771,900
1,771,900
2,055,468
European
58,524
58,524
158,682

For the fiscal year ended October 31, 2000, Salomon Smith Barney
incurred the following distribution expenses for the funds:






Fund Name





Advertis
ing



Printing
and
Mailing
of
Prospectu
ses




Support
Service
s


Salomon
Smith
Barney
Financial
Consultant
s




Intere
st
Expens
e





Total
European
$5,981
$868
$61,359
$128,141
$7,895
$204,244
Global
Government
1,983
116
51,256
22,192
2,429
77,976
Internatio
nal All
Cap Growth
49,693
6,036
498,765
1,029,144
245,74
3
1,829,38
1



Salomon Smith Barney will pay for the printing, at printer's
overrun cost, of prospectuses and periodic reports after they have
been prepared, set in type and mailed to shareholders, and will
also pay the cost of distributing such copies used in connection
with the offering to prospective investors and will also pay for
supplementary sales literature and other promotional costs.  Such
expenses incurred by Salomon Smith Barney are distribution
expenses within the meaning of the Plans and may be paid from
amounts received by Salomon Smith Barney from the Company under
the Plans.

Brokerage and Portfolio Transactions

The Manager is responsible for allocating the Company's brokerage.
Orders may be directed to any broker including, to the extent and
in the manner permitted by applicable law, Salomon Smith Barney.
No fund will deal with Salomon Smith Barney in any transaction in
which Salomon Smith Barney acts as principal.

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

Commissions are negotiated and take into account the difficulty
involved in execution of a transaction, the time it took to
conclude, the extent of the broker's commitment of its own
capital, if any, and the price received.  Anticipated commission
rates are an important consideration in all trades and are weighed
along with the other relevant factors affecting order execution
set forth above.  In allocating brokerage among those brokers who
are believed to be capable of providing equally favorable
execution, the Company takes into consideration the fact that a
particular broker may, in addition to execution capability,
provide other services to the Company such as research and
statistical information.  These various services may, however, be
useful to the Manager or Salomon Smith Barney in connection with
its services rendered to other advisory clients and not all such
services may be used in connection with the Company.  For the
fiscal year ended October 31, 2000, the funds did not direct
brokerage transactions to brokers because of research services
provided.

The Board of Directors of the Company has adopted certain policies
and procedures incorporating the standard of Rule 17e-1 issued by
the SEC under the 1940 Act which requires that the commissions
paid to Salomon Smith Barney must be "reasonable and fair compared
to the commission fee or other remuneration received or to be
received by other brokers in connection with comparable
transactions involving similar securities during a comparable
period of time." The Rule and the policy and procedures also
contain review requirements and require the Manager to furnish
reports to the Board of Directors and to maintain records in
connection with such reviews.  In all trades directed to Salomon
Smith Barney, the Company has been assured that its orders will be
accorded priority over those received from Salomon Smith Barney
for its own accounts or for any of its directors, officers or
employees. The Company will not deal with Salomon Smith Barney in
any transaction in which Salomon Smith Barney acts as principal.

In placing orders for the Global Government Bond Portfolio's
transactions, the Manager seeks to obtain the best net results.
The Manager has no agreement or commitment to place orders with
any broker-dealer.  Debt securities are generally traded on a
"net" basis with a dealer acting as principal for its own account
without stated commission, although the price of the security
usually includes a profit to the dealer.  United States and
foreign government securities and money market instruments are
generally traded in the OTC markets.  In underwritten offerings,
securities are usually purchased at a fixed price which includes
an amount of compensation to the underwriter.  On occasion,
securities may be purchased directly from an issuer, in which case
no commissions or discounts are paid.  Dealers may receive
commissions on Futures, currency and options transactions
purchased on behalf of the fund.  Commissions or discounts in
foreign securities exchanges or OTC markets typically are fixed
and generally are higher than those in U.S. securities exchanges
or OTC markets.

The Company effects transactions with a view towards attaining
each fund's investment objective, and although it is not limited
by a predetermined rate of portfolio turnover, it is expected that
the annual turnover rate for each of the International All Cap
Growth Portfolio, the Global Government Bond Portfolio, and the
European Portfolio will not exceed 100% in normal circumstances.
A high portfolio turnover results in correspondingly greater
transaction costs in the form of brokerage commissions or dealer
spreads that a fund will bear directly, and may result in the
realization of net capital gains, distributions of which are
taxable to shareholders.

Shown below are the total brokerage fees paid by the Company on
behalf of the International All Cap Growth Portfolio and the
European Portfolio during 1998, 1999 and 2000.  Also shown is the
portion paid to Salomon Smith Barney and the portion paid to other
brokers for the execution of orders allocated in consideration of
research and statistical services or solely for their ability to
execute the order.  During fiscal year 2000, the total amount of
commissionable transactions was $1,110,177,698 of which
$63,347,201 (5.71%) was directed to Salomon Smith Barney and
executed by unaffiliated brokers and $1,046,830,497 (94.29%) of
which was directed to other brokers.
Commissions

Total
To Salomon Smith Barney
To Others
1998

2,626,706
189,693*
7.22
2,437,013
92.78
1999
2,594,887
161,411
6.22
2,433,476
93.78
2000
2,407,088
137,852
5.73
2,269,236
94.27

* Directed to Salomon Smith Barney and executed by unaffiliated
brokers.

CUSTODIAN

Portfolio securities and cash owned by the Company are held in the
custody of The Chase Manhattan Bank, Chase Metrotech Center,
Brooklyn, New York 11245.

INDEPENDENT AUDITORS

KPMG LLP, 757 Third Avenue, New York, New York 10017, has been
selected as the Company's independent auditors to examine and
report on the financial statements and financial highlights of the
Company for its fiscal year ending October 31, 2001.

VOTING

As permitted by Maryland law, there will normally be no meetings
of shareholders for the purpose of electing directors unless and
until such time as less than a majority of the directors holding
office have been elected by shareholders.  At that time, the
directors then in office will call a shareholders' meeting for the
election of directors.  The directors must call a meeting of
shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the
record holders of not less than 10% of the outstanding shares of
the Company.  At such a meeting, a director may be removed after
the holders of record of at least a majority of the outstanding
shares of the Company have voted that the director be removed by
votes cast in person or by proxy.  The Company will assist
shareholders in calling such a meeting as required by the 1940
Act. Except as set forth above, the directors shall continue to
hold office and may appoint successor directors.

As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding voting
securities" means the affirmative vote of the lesser of (a) more
than 50% of the outstanding shares of the Company (or the affected
fund or class) or (b) 67% or more of such shares present at a
meeting if more than 50% of the outstanding shares of the Company
(or the affected fund or class) are represented at the meeting in
person or by proxy.

The following table contains a list of shareholders who of record
or beneficially owned at least 5% of the outstanding shares of a
particular class of shares of a fund of the Company as of February
20, 2001.

GLOBAL GOVERNMENT BOND PORTFOLIO CLASS A                  PERCENTAGE OF
SHARES
1
Smith Barney Inc.
333 West 34th Street
New York, NY 10001
9.3030
GLOBAL GOVERNMENT BOND PORTFOLIO CLASS L                  PERCENTAGE OF
SHARES
1
Alberto M. Roca
SSB IRA Rollover Custodian
13792 Teal Shore Ct.
Houston, TX 77077-3421
8.3084
2
Anwar S. Choudhry TTES
Anwar S Choudhry MDSC
Profit Sharing Plan & Trust
U/A/D 10-10-92
149 Tomlin Circle
Burridge, IL 60521-4886
6.7244
3
Earlexe J. Egenberger SUC T-TEE
Willima D. Eggenberger Truswt
U/A/D 12/14/94
4837 Cliffside Drive
West Bloomfield, MI 48323-2472
6.4507
4
Else Nijsse Trust
Else Nijsse Trustee
UAD 5-29-87
7623 SW Afton Lane
Durham, OR 97224-7677
5.1355
GLOBAL GOVERNMENT BOND PORTFOLIO CLASS Y                  PERCENTAGE OF
SHARES
1
Smith Barney Concert Series, Inc.
Concert Balanced - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
44.9076
2
Smith Barney Concert Series, Inc.
Select Balanced - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
21.4651
3
Srs. Of Providence Community Support Trust
Intl. Inv.
Attn: Sr. Ann Margaret O'Hara
Trustee
St. Mary of the Woods, IN 47876-1096
11.4887
4
Smith Barney Concert Series, Inc.
Concert Conservative - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
11.1448
5
Pension Plan of Grand Lodge of Free and
Accepted Masons of PA and of the Masonic Homes
One North Broad Street
Philadelphia, PA 19107-2520
5.8571
6
Smith Barney Concert Series, Inc.
Select Conservative - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
5.1365
INTERNATIONAL ALL CAP GROWTH   CLASS Y                            PERCENTAGE
OF SHARES
1
Smith Barney Concert Series, Inc.
Concert Growth - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
28.4294
2.
Smith Barney Concert Series, Inc.
Concert High Growth - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
25.784
3.
Smith Barney Concert Series, Inc.
Select Growth - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
8.3947
4.
Smith Barney Concert Series, Inc.
Concert Balanced - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
8.0368
5.
Smith Barney Concert Series, Inc.
Select High Growth - PNC Bank, NA
Attn: Sheila Heacock
8500 Tinicum Boulevard, 3rd Floor, Suite 200
Philadelphia, PA 19153-3111
6.1241
INTERNATIONAL EQUITY PORTFOLIO CLASS Z                           PERCENTAGE
OF SHARES
1
State Street Bank & Trust - Custodian
The Travelers Group 401K Savings Plan
Attn: Rick Vest
825 Franklin Street
Boston, MA 02201
94.9261
2
Savings Incentive Plan for Citibank NA
State Street Bank & Trust Co. as
Subtrustee U/A/D 10/97
105 Rosemont Rd.
Westwood, MA 02090
6.0727


OTHER INFORMATION ABOUT THE COMPANY

General.  The Company, an open-end investment company, was
incorporated in Maryland on March 22, 1991. The Company has an
authorized capital of 1,000,000,000 shares with a par value of
$.001 per share. The Board of Directors has authorized the
issuance of six series of shares, each representing shares in one
of six separate funds and may authorize the issuance of additional
series of shares in the future.  The assets of each fund are
segregated and separately managed and a shareholder's interest is
in the assets of the fund in which he or she holds shares. Class
A, Class B, Class L, Class Y shares of a fund (and Class Z shares
of International All Cap Growth Portfolio) represent interests in
the assets of the fund and have identical voting, dividend,
liquidation and other rights on the same terms and conditions
except that expenses related to the distribution of each Class of
shares are borne solely by each Class and each Class of shares has
exclusive voting rights with respect to provisions of the fund's
Rule 12b-1 distribution plan which pertain to a particular Class.

Shareholder Meetings.  As described under ''Voting,'' the Company
ordinarily will not hold meetings of shareholders annually;
however, shareholders have the right to call a meeting upon a vote
of 10% of the Company's outstanding shares for the purpose of
voting to remove directors, and the Company will assist
shareholders in calling such a meeting as required by the 1940
Act. Shares do not have cumulative voting rights or preemptive
rights and are fully paid, transferable and nonassessable when
issued for payment as described in this Prospectus.

Minimum Account Size.  The Company reserves the right to
involuntarily liquidate any shareholder's account in the fund if
the aggregate net asset value of the shares held in the fund
account is less than $500. (If a shareholder has more than one
account in this fund, each account must satisfy the minimum
account size.) The Company, however, will not redeem shares based
solely on market reductions in net asset value. Before the Company
exercises such right, shareholders will receive written notice and
will be permitted 60 days to bring accounts up to the minimum to
avoid involuntary liquidation.

Styles of Fund Management:  In an industry where the average
portfolio manager has seven years of experience (source: ICI,
1998), the portfolio managers of Smith Barney Mutual Funds average
21 years in the industry and 15 years with the firm.

Smith Barney Mutual Funds offers more than 60 mutual funds.  We
understand that many investors prefer an active role in allocating
the mix of funds in their portfolio, while others want the asset
allocation decisions to be made by experienced managers.

That's why we offer four "styles" of fund management that can be
tailored ot suit each investor's unique financial goals.

Style Pure Series - Our style Pure Series funds stay fully
invested within their asset class and investment style, enabling
investors to make asset allocation decisions in conjunction with
their Salomon Smith Barney Financial Consultant.

Classic Investor Series - Our Classic Investor Series funds offer
a range of equity and fixed income strategies that seek to capture
opportunities across asset classes and investment styles using
disciplined investment approaches.

The Concert Allocation Series - As a fund of funds, investors can
select a Concert Portfolio that may help their investment needs.
As needs change, investors can easily choose another long-term,
diversified investment from our Concert family.

Special Discipline Series - Our Special Discipline Series funds
are designed for investors who are looking beyond more traditional
market categories: from natural resources to a roster of state-
specific municipal funds.


Transfer Agent and Sub-Transfer Agent:   Citi Fiduciary Trust
Company, located at 125 Broad Street, New York, New York 10004
serves as the Transfer Agent and shareholder services agent for
the fund.  PFPC Global Fund Services, located at P.O. Box 9699
Providence, R.I. 02940-9699 serves as the fund's sub-transfer
agent to render certain shareholder record keeping and accounting
services functions.

Annual and Semi-Annual Reports.  Management's discussion and
analysis, and additional performance information regarding the
funds during the fiscal year ended October 31, 2000 is included in
the annual reports dated October 31, 2000. A copy of the annual
report may be obtained upon request and without charge from a
Salomon Smith Barney Financial Consultant or by writing or calling
the Company at the address or phone number listed on page one of
this statement of additional information.

The Company sends its shareholders a semi-annual report and an
audited annual report, which include listings of the investment
securities held by the Company at the end of the period covered.
In an effort to reduce the Company's printing and mailing costs,
the Company plans to consolidate the mailing of its semi-annual
and annual reports by household.  This consolidation means that a
household having multiple accounts with the identical address of
record will receive a single copy of each report.  Shareholders
who do not want this consolidation to apply to their account
should contact their Salomon Smith Barney Financial Consultant or
the transfer agent.

FINANCIAL STATEMENTS

The Company's 2000 Annual
Reports to Shareholders (each filed on January 5, 2001; Accession
number 00000950130-01-000054), are incorporated herein by reference
in their entirety.


APPENDIX - RATINGS OF DEBT OBLIGATIONS BOND (AND NOTE) RATINGS

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

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

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

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

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

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

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

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

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

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

	Moody's applies the numerical modifiers 1, 2 and 3 in each
generic rating classification from Aa through B.  The modifier 1
indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.

Standard & Poor's Ratings Group ("Standard & Poors")

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

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

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

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

	BB, B and CCC - Bonds rated BB and B are regarded, on
balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of
the obligation.  BB represents a lower degree if speculation than
B and CCC the highest degree of speculation.  While such bonds
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

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

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

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

COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

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

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

Standard & Poor's Ratings Group

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

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


























PART C Other Information

Item 23.	Exhibits

a.1	Articles of Incorporation (1)
a.2	Articles Supplementary to Articles of Incorporation for
	International Equity Portfolio (2)
a.3	Articles of Amendment to the Articles of Incorporation
	for the Fund dated November 10, 1992 (3)
a.4	Articles Supplementary to Articles of Incorporation for
	the Fund dated December 8, 1992 (3)
a.5	Articles Supplementary to Articles of Incorporation for
	Pacific Portfolio and European Portfolio(10)
a.6	Articles Supplementary to Articles of Incorporation for
	International Balanced Portfolio (11)
a.7	Form of Articles Supplementary to Articles of
	Incorporation for Emerging Markets Portfolio(12)
a.8	Articles of Amendment to the Articles of Incorporation
	for the Fund dated June 4, 1991(13)
a.9	Articles Supplementary to Articles of Incorporation for
	the Fund dated July 13, 1994 (13)
a.10	Articles of Amendment to Articles of Incorporation for
	the Fund dated November 3, 1994(13)
a.11	Articles of Amendment to Articles of Incorporation for
	the Fund dated November 3, 1994(13)
a.12	Articles Supplementary to Articles of Incorporation for
	the Fund dated November 3, 1994(13)
a.13	Articles Supplementary to Articles of Incorporation for
	Emerging Markets Portfolio dated November 10, 1994(13)
a.14	Articles of Amendment for the Fund dated June 4, 1998(18)
b.	Bylaws (4)
c.	Form of Stock Certificates for the International
	Equity Portfolio, the Global Government Bond
	Portfolio, the Pacific Portfolio and the European
	Portfolio (9)

d.1	Form of Management Agreement for Global Government Bond
Portfolio
(16)
d.2	Form of Management Agreement for International Equity
Portfolio (16)
d.3	Form of Management Agreement for Pacific Portfolio (16)
d.4	Form of Management Agreement for European Portfolio (16)
d.5	Form of Management Agreement for International Balanced
Portfolio
(16)
d.6	Form of Management Agreement for Emerging Markets Portfolio
(16)
d.7	Form of Subadvisory Agreements(16)

e.1	Form of Distribution Agreement (16)
e.2	Selling Group Agreement (18)
e.3	Form of Distribution Agreement (17)

e.4.	Form of Distribution Agreement with Salomon Smith Barney is
filed herewith

f.	Not applicable
g.	Form of Custodian Agreement (15)

h.1.	Form of Transfer Agency Agreement  (16)
h.2.	Form of Transfer Agency Agreement dated
October 1, 1999 between the Registrant and Citi Fiduciary
Trust Company (f/k/a Smith Barney Private Trust Company)is
filed herewith.
h.3.	Form of Sub-Transfer Agency Agreement dated
October 1, 1999 between Citi Fiduciary Trust Company(f/k/a
Smith Barney Private Trust Company) and PFPC Global Fund
Services (f/k/a First Data Investor Services Group, Inc.)
is filed herewith.


i.	Opinion and Consent of Counsel (6)
j.	Auditors' Consent is filed herewith.
k.	Not applicable
l.	Form of Subscription Agreement (4)
m.1	Form of Amended Plan of Distribution Pursuant
to Rule 12b-1(18)
m.2	Plan of Distribution Pursuant to Rule 12b-1for Global
Government
Bond Portfolio (16)
m.3	Plan of Distribution Pursuant to Rule 12b-1for
International Equity Portfolio (16)

m.4	Plan of Distribution Pursuant to Rule 12b-1 for Pacific
Portfolio
(16)
m.5	Plan of Distribution Pursuant to Rule 12b-1 for European
Portfolio
(16)
m.6	Plan of Distribution Pursuant to Rule 12b-1 for
International
Balanced Portfolio (16)
m.7	Plan of Distribution Pursuant to Rule 12b-1 for Emerging
Markets
Portfolio(16)
n.	Financial Data Schedule is filed herewith

o. Rule 18f-3 Plan(18)
p. Code of Ethics is filed herewith.

Footnotes:

	(1) Incorporated by reference to the Fund's Registration
	Statement on Form N-1A filed on March 26, 1991.

	(2) Incorporated by reference to Post-Effective Amendment
	No. 2 to the Fund's Registration Statement on Form N-1A
filed
	on September 24, 1991.

	(3) Incorporated by reference to Post-Effective Amendment
	No. 6 to the Fund's Registration Statement on Form N-1A
filed
	on December 21, 1992.

	(4) Incorporated by reference to Pre-Effective Amendment
	No. 1 to the Fund's Registration Statement on Form N-1A
filed
	on May 27, 1991.

	(5) Intentionally left blank.

	(6) Incorporated by reference to Pre-Effective Amendment
	No. 2 to the Fund's Registration Statement on Form N-1A
filed
	on June 14, 1991.

	(7) Intentionally left blank.

	(8) Incorporated by reference to Post-Effective Amendment
	No. 3 to the Fund's Registration Statement on Form N-1A
filed
	on January 17, 1992.

	(9) Incorporated by reference to Post-Effective Amendment
	No. 8 to the Fund's Registration Statement on Form N-1A
filed
	on November 5, 1993.

	(10) Incorporated by reference to Post-Effective Amendment
	No. 9 to the Fund's Registration Statement on Form N-1A
filed
	on January 4, 1994.

	(11) Incorporated by reference to Post-Effective Amendment
	No. 12 to the Fund's Registration Statement on Form N-1A
filed
	on July 27, 1994.

	(12) Incorporated by reference to Post-Effective Amendment
	No. 14 to the Fund's Registration Statement on Form N-1A
filed
	on October 31, 1994.

	(13) Incorporated by reference to Post-Effective Amendment
	No. 15 to the Fund's Registration Statement on Form N-1A
filed
	on February 28, 1995.

	(14) Incorporated by reference to Post-Effective Amendment
	No. 17 to the Fund's Registration Statement on Form N-1A
filed
	on February 28, 1996.

	(15) Incorporated by reference to Post-Effective Amendment
	No. 18 to the Fund's Registration Statement on Form N-1A
filed
	on December 27, 1996.

	(16) Incorporated by reference to Post-Effective Amendment
	No. 19 to the Fund's Registration Statement on Form N-1A
filed
	on February 21, 1997.

	(17) Incorporated by reference to Post-Effective Amendment
	No. 22 to the Fund's Registration Statement on Form N-1A
filed
	on December 29, 1998.

	(18)  Incorporated by reference to Post-Effective Amendment
	No. 23 to the Fund's Registration Statement on Form N1-A
filed
	On February 25, 1999.



Item 24.	Persons Controlled by or under Common
		 Control with Registrant

		None.


Item 25.	Indemnification

		Reference is made to Article IX, of Registrant's
Articles
		of Incorporation for a complete statement of its
terms.

		Registrant is a named assured on a joint insured bond
pursuant
		to Rule 17g-1 of the Investment Company Act of 1940.
Other
		assureds include SSBC Fund Management Inc.
		(Registrant's Adviser) and affiliated investment
companies.

Item 26.	Business and other Connections of Investment Adviser


Investment Adviser - SSB Citi Fund Management LLC ("SSB Citi")
(successor to as Mutual Management Corp. Smith Barney Mutual
Funds
Management Inc. and Smith, Barney Advisers, Inc.) was
incorporated in December 1968 under the laws of the State of
Delaware. On September 21, 1999, SSB Citi was converted into a
Delaware Limited Liability Company. SSB Citi is a wholly owned
subsidiary of Salomon Smith Barney Holdings Inc. ("Holdings"),
which in turn is a wholly owned subsidiary of Citigroup Inc.
(formerly known as Travelers Group Inc.).  SSB Citi is registered
as an investment adviser under the Investment Advisers Act of
1940 (the "Advisers Act") and has, through its predecessors, been
in the investment counseling business since 1968.

The list required by this Item 26 of officers and directors of
SSB Citi together with information as to any other business,
profession, vocation or employment of a substantial nature
engaged in by such officers and directors during the past two
fiscal years, is incorporated by reference to Schedules A and D
of FORM ADV filed by SSB Citi pursuant to the Advisers Act (SEC
File No. 801-8314).



Item 27.	Principal Underwriters


(a) Salomon Smith Barney, Inc. ("Salomon Smith Barney") the
Registrant's Distributor, is also the distributor for the
following
Smith Barney funds: Smith Barney
Investment Series, Consulting Group Capital Markets Funds,
Greenwich
Street Series Fund, Smith Barney Adjustable Rate Government
Income
Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney
Appreciation Fund Inc., Smith Barney Arizona Municipals Fund
Inc.,
Smith Barney California Municipals Fund Inc., Smith Barney
Allocation Series Inc., Smith Barney Equity Funds, Smith Barney
Fundamental Value Fund Inc., Smith Barney Funds, Inc., Smith
Barney
Income Funds, Smith Barney Institutional Cash Management Fund,
Inc.,
Smith Barney Investment Funds Inc., Smith Barney Investment
Trust,
Smith Barney Managed Governments Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney Massachusetts Municipals Fund,
Smith Barney Money Funds, Inc., Smith Barney Muni Funds, Smith
Barney
Municipal Money Market Fund, Inc., Smith Barney
Sector Series Inc., Smith Barney New Jersey Municipals
Fund Inc., Smith Barney Oregon Municipals Fund Inc., Smith Barney
Principal Return Fund, Smith Barney Small Cap Core Fund, Inc.,
Smith
Barney Telecommunications Trust, Smith Barney Variable Account
Funds,
Smith Barney World Funds, Inc., Travelers Series Fund Inc., and
various series of unit investment trusts.

In addition, Salomon Smith Barney is also the distributor for the
Centurion Funds, Inc.

(b)	(b)	The information required by this Item 27 with respect
to each director and officer of Salomon Smith Barney is
incorporated by reference to Schedule A of Form BD filed by
Salomon Smith Barney pursuant to the Securities and Exchange Act
of 1934 (File No. 8-32417).

(c)	Not applicable.


Item 28.	Location of Accounts and Records

	(1)	With respect to the Registrant,
		Investment Adviser and Administrator:
		c/o Salomon Smith Barney Inc.
		7 World Trade Center
		New York, New York  10048

	(2)	With respect to the Registrant's Custodian:
		The Chase Manhattan Bank of New York
		Chase Metrotech Center
		Brooklyn, New York  11245


	(3)	With respect to the Registrant's Transfer Agent:
		Citi Fiduciary Trust Company
		125 Broad Street
		New York, New York  10004

	(4)	With respect to the Registrant's Sub-Transfer Agent:
		PFPC Global Fund Services
		P.O. Box 9699
		Providence, RI  02940-9699



Item 29.	 Management Services

		 There are no management related service contracts
not
discussed in Part A or Part B.

Item 30.	 Undertakings

		None.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 (the
"Securities
 Act") and the Investment Company Act of 1940, the Registrant
certifies
 that it meets all of the requirements for effectiveness of this
Post-
Effective Amendment to its Registration Statement under rule
485(b) under
 the Securities Act and has duly caused this Post-Effective
Amendment to
its Registration Statement to be signed on its behalf by the
undersigned,
 and where applicable, the true and lawful attorney-in-fact,
thereto duly
 authorized, in the City of New York and State of New York on the
28th day
 of February 2001.




			SMITH BARNEY WORLD FUNDS, INC.

			BY /s/ Heath B. McLendon
			   Heath B. McLendon,
			    Chief Executive Officer

     Pursuant to the requirements of the Securities Act of 1933,
this
 Post-
Effective Amendment to the Registration Statement has been signed
below by
the
following persons in the capacities and on the date indicated.

Signatures		Title					Date


/s/ Heath B. McLendon	Director, and
(Heath B. McLendon)	Chief Executive Officer
	   2/28/01



/s/Victor Atkins*       	Director

   2/28/01
(Victor Atkins)

/s/Abraham E. Cohen*		Director		   2/28/01
Abraham E. Cohen

/s/Robert Frankel*         	Director		   2/28/01
(Robert Frankel)

/s/ Michael Gellert*		Director		   2/28/01
(Michael Gellert)

/s/Rainer Greeven*         	Director		   2/28/01
(Rainer Greeven)

/s/Susan M. Heilbron*		Director		   2/28/01
(Susan M. Heibron)

/s/ Lewis E. Daidone		(Treasurer		   2/28/01
(Lewis E. Daidone)	Principal Financial
Officer) and Principal
Accounting Officer

*By:/s/ Christina T. Sydor				   2/28/01
(Christina T. Sydor)
Pursuant to Power of Attorney

EXHIBIT INDEX

e.4.	Form of Distribution Agreement with Salomon Smith Barney
h.2.	Form of Transfer Agency Agreement
h.3.	Form of Sub-Transfer Agency Agreement
j.	Auditor's Consent
n.	Financial Data Schedules
p.	Code of Ethics
Cover