As filed with the Securities and Exchange Commission 
on April 15, 1998
	Securities Act Registration No. 33 -43446
	Investment Company Act Registration No. 811-
6444
	

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. 19		[X]

and/or
REGISTRATION STATEMENT UNDER
	THE INVESTMENT COMPANY ACT OF 1940	[   ]
AMENDMENT NO. 19
	__________________			[   ]
Smith Barney Investment Trust
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street 
New York, New York  10013
(Address of Principal Executive Offices)
(212) 816-6474
(Registrants Telephone Number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Investment Trust
388 Greenwich Street
New York, New York  10013
(Name and Address of Agent for Service)
_____________________
Copies to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York  10022
_______________
Approximate Date of Proposed Public Offering:  
Continuous.
It is proposed that this filing will become effective 
(check appropriate 
box):
[]	Immediately upon filing pursuant to 	[  ]
	On (date) pursuant to 
paragraph (b)
	paragraph (b) of Rule 485
[  ]	60 days after filing pursuant to	[  ]
	On (date) pursuant to
	paragraph (a)(1)		paragraph (a)(1)
[X]	75 days after filing pursuant to	[  ]
	On (date) pursuant to
	paragraph (a)(2)		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.

Title of Securities Being Registered:  Shares of 
Beneficial Interest


SMITH BARNEY INVESTMENT TRUST

FORM  N-1A


CONTENTS OF REGISTRATION STATEMENT

Front Cover

Contents Page

Cross Reference Sheet


Part A: 
PROSPECTUS  
<PAGE>
 
 
                                                                    SMITH BARNEY
                                                                         Mid Cap
                                                                           Blend
                                                                            Fund
                                                                    JUNE  , 1998
 
                                                   PROSPECTUS BEGINS ON PAGE ONE
 
 
LOGO
P R O S P E C T U S
<PAGE>
 
PROSPECTUS                                                        JUNE  , 1998
 
 
Smith Barney
Mid Cap Blend Fund
388 Greenwich Street
New York, New York 10013
1-800-451-2010
 
  Smith Barney Mid Cap Blend Fund (the Fund) is a mutual fund that seeks
long-term growth of capital by investing, under normal market conditions, at
least 65% of its total assets in the equity securities of medium-sized compa-
nies with market capitalizations of between $1 billion and $5 billion at the
time of investment.
 
  The Fund is one of a number of funds, each having distinct investment objec-
tives and policies making up the Smith Barney Investment Trust (the Trust).
The Trust is an open-end management investment company commonly referred to as
a mutual fund.
 
  The initial subscription period for shares is schedules to end on July   ,
1998, (the Subscription Period). After the expiration of the Subscription
Period or a limited continuous offering period, the Fund will suspend the
offering of shares to the public. A continuous offering of shares is expected
to commence on or about August   , 1998. See Purchase of Shares.
 
  This Prospectus sets forth concisely certain information about the Fund,
including sales charges, distribution and service fees and expenses, that pro-
spective investors will find helpful in making an investment decision. Invest-
ors are encouraged to read this Prospectus carefully and retain it for future
reference.
 
  Shares of the other Funds offered by the Trust are described in separate pro-
spectuses that may be obtained by calling the Trust at 1-800-451-2010.
 
  Additional information about the Fund is contained in a Statement of Addi-
tional Information, (the SAI) dated June  , 1998, as amended or supplemented
from time to time, that is available upon request and without charge by calling
or writing the Fund at the telephone number or address set forth above or by
contacting a Smith Barney Financial Consultant. The SAI has been filed with the
Securities and Exchange Commission (the SEC) and is incorporated by reference
into this Prospectus in its entirety.
 
SMITH BARNEY INC.
Distributor
 
MUTUAL MANAGEMENT CORP.
Investment Manager
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
 
                                                                               1
<PAGE>
 
TABLE OF CONTENTS
 
 
<TABLE>
<S>                                           <C>
PROSPECTUS SUMMARY                              3
-------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES    9
-------------------------------------------------
VALUATION OF SHARES                            11
-------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES             11
-------------------------------------------------
PURCHASE OF SHARES                             12
-------------------------------------------------
EXCHANGE PRIVILEGE                             23
-------------------------------------------------
REDEMPTION OF SHARES                           27
-------------------------------------------------
MINIMUM ACCOUNT SIZE                           29
-------------------------------------------------
PERFORMANCE                                    30
-------------------------------------------------
MANAGEMENT OF THE TRUST AND THE FUND           30
-------------------------------------------------
DISTRIBUTOR                                    31
-------------------------------------------------
ADDITIONAL INFORMATION                         32
-------------------------------------------------
APPENDIX A                                     34
</TABLE>
--------------------------------------------------------------------------------
 
  No person has been authorized to give any information or to make any repre-
sentations in connection with this offering other than those contained in this
Prospectus and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Fund or the distribu-
tor. This Prospectus does not constitute an offer by the Fund or the distribu-
tor to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
 
--------------------------------------------------------------------------------
 
2
<PAGE>
 
PROSPECTUS SUMMARY
 
  The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the SAI. Cross references in this
summary are to headings in this Prospectus. See Table of Contents.
 
INVESTMENT OBJECTIVE The Fund is an open-end, diversified, management invest-
ment company whose investment objective is to seek long-term growth of capital
by investing, under normal market conditions, at least 65% of its total assets
in the equity securities of medium-sized companies with market capitalizations
of between $1 billion and $5 billion at the time of investment. See Invest-
ment Objective and Management Policies.
 
ALTERNATIVE PURCHASE ARRANGEMENTS The Fund offers several classes of shares
(Classes) to investors designed to provide them with the flexibility of
selecting an investment best suited to their needs. The general public is
offered three classes of shares: Class A shares, Class B shares and Class L
shares, which differ principally in terms of sales charges and rates of
expenses to which they are subject. A fourth Class of shares, Class Y shares,
is offered only to investors meeting an initial investment minimum of
$15,000,000. See Purchase of Shares and Redemption of Shares.
 
  Class A Shares. Class A shares are sold at net asset value plus an initial
sales charge of up to 5.00% and are subject to an annual service fee of 0.25%
of the average daily net assets of the Class. The initial sales charge may be
reduced or waived for certain purchases. Purchases of Class A shares of
$500,000 or more will be made at net asset value with no initial sales charge,
but will be subject to a contingent deferred sales charge (CDSC) of 1.00% on
redemptions made within 12 months of purchase. See Prospectus Summary--Reduced
or No Initial Sales Charge.
 
  Class B Shares. Class B shares are offered at net asset value subject to a
maximum CDSC of 5.00% of redemption proceeds, declining by 1.00% each year
after the date of purchase to zero. This CDSC may be waived for certain redemp-
tions. Class B shares are subject to an annual service fee of 0.25% and an
annual distribution fee of 0.75% of the average daily net assets of the Class.
The Class B shares distribution fee may cause that Class to have higher
expenses and pay lower dividends than Class A shares.
 
  Class B Shares Conversion Feature. Class B shares will convert automatically
to Class A shares, based on relative net asset value, eight years after the
date of the original purchase. Upon conversion, these shares will no longer be
subject to an annual distribution fee. In addition, a certain portion of Class
B shares that have been acquired through the reinvestment of dividends and dis-
tributions (Class B Dividend Shares) will be converted at that time. See
Purchase of Shares--Deferred Sales Charge Alternatives.
 
                                                                               3
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
  Class L Shares. Class L shares are sold at net asset value plus an initial
sales charge of 1.00%. They are subject to an annual service fee of 0.25% and
an annual distribution fee of 0.75% of the average daily net assets of the
Class, and investors pay a CDSC of 1.00% if they redeem Class L shares within
12 months of purchase. The CDSC may be waived for certain redemptions. The
Class L shares distribution fee may cause that Class to have higher expenses
and pay lower dividends than Class A shares. Purchases of Fund shares, which
when combined with current holdings of Class L shares of the Fund equal or
exceed $500,000 in the aggregate, should be made in Class A shares at net
asset value with no sales charge, and will be subject to a CDSC of 1.00% on
redemptions made within 12 months of purchase.
 
  Class Y Shares. Class Y shares are available only to investors meeting an
initial investment minimum of $15,000,000. Class Y shares are sold at net
asset value with no initial sales charge or CDSC. They are not subject to any
service or distribution fees.
 
  In deciding which Class of Fund shares to purchase, investors should con-
sider the following factors, as well as any other relevant facts and circum-
stances:
 
  Intended Holding Period. The decision as to which Class of shares is more
beneficial to an investor depends on the amount and intended duration of his
or her investment. Shareholders who are planning to establish a program of
regular investment may wish to consider Class A shares; as the investment
accumulates, shareholders may qualify for reduced sales charges and the shares
are subject to lower ongoing expenses over the term of the investment. As an
alternative, Class B are sold without any initial sales charge so the entire
purchase price is immediately invested in the Fund. Any investment return on
these additional invested amounts may partially or wholly offset the higher
annual expenses of these Classes. Because the Funds future return cannot be
predicted, however, there can be no assurance that this would be the case.
 
  Finally, investors should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of their own investment time
frame. For example, while Class L shares have a shorter CDSC period than Class
B shares, they do not have a conversion feature and therefore are subject to
an ongoing distribution fee. Thus, Class B shares may be more attractive than
Class L shares to investors with longer term investment outlooks.
 
  Reduced or No Initial Sales Charge. The initial sales charge on Class A
shares may be waived for certain eligible purchasers, and the entire purchase
price will be immediately invested in the Fund. In addition, Class A share
purchases of $500,000 or more will be made at net asset value with no initial
sales charge, but will be subject to a CDSC of 1.00% on redemptions made
within 12 months of purchase. The $500,000 investment may be met by adding the
purchase to the net asset value
 
4
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
of all Class A shares offered with a sales charge held in funds sponsored by
Smith Barney Inc. (Smith Barney) listed under Exchange Privilege. Class A
share purchases may also be eligible for a reduced initial sales charge. See
Purchase of Shares. Because the ongoing expenses of Class A shares may be
lower than those for Class B and Class L shares, purchasers eligible to pur-
chase Class A shares at net asset value or at a reduced sales charge should
consider doing so.
 
  Smith Barney Financial Consultants may receive different compensation for
selling different Classes of shares. Investors should understand that the pur-
pose of the CDSC on the Class B and Class L shares is the same as that of the
initial sales charge on the Class A shares.
 
  See Purchase of Shares and Management of the Fund for a complete descrip-
tion of the sales charges and service and distribution fees for each Class of
shares and Valuation of Shares, Dividends, Distributions and Taxes and
Exchange Privilege for other differences between the Classes of shares.
 
SMITH BARNEY 401(K) AND EXECCHOICE(TM) PROGRAMS Investors may be eligible to
participate in the Smith Barney 401(k) Program, which is generally designed to
assist plan sponsors in the creation and operation of retirement plans under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the Code),
as well as other types of participant directed, tax-qualified employee benefit
plans. Other investors may be eligible to participate in the Smith Barney
ExecChoice(TM) Program. Class A and Class L shares are available as investment
alternatives under both of these programs. See Purchase of Shares--Smith Bar-
ney 401(k) and ExecChoice(TM) Programs.
 
PURCHASE OF SHARES Shares may be purchased through a brokerage account main-
tained by Smith Barney during the Initial Subscription Period. During the con-
tinuous offering period, shares may also be purchased through a brokerage
account maintained with Smith Barney, a broker that clears securities transac-
tions through Smith Barney on a fully disclosed basis (an Introducing Broker)
or an investment dealer in the selling group. In addition, certain investors,
including qualified retirement plans and certain institutional investors, may
purchase shares directly from the Fund through the Funds transfer agent, First
Data Investors Services Group, Inc. (First Data or Transfer Agent). See
Purchase of Shares. The initial subscription period for shares is scheduled
to end on July   , 1998, (the Subscription Period). After the expiration of
the Subscription Period or a limited continuous offering period, the Fund will
suspend the offering of shares to the public. A continuous offering of shares
is expected to commence on or about August   , 1998. See Purchase of Shares.
 
INVESTMENT MINIMUMS Investors in Class A, Class B and Class L shares may open
an account by making an initial investment of at least $1,000 for each
 
                                                                               5
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
account, or $250 for an individual retirement account (IRA) or a Self-
Employed Retirement Plan. Investors in Class Y shares may open an account for
an initial investment of $15,000,000. Subsequent investments of at least $50
may be made for all Classes. For participants in retirement plans qualified
under Section 403(b)(7) or Section 401(a) of the Code, the minimum initial
investment require ment for Class A, Class B and Class L shares and the subse-
quent investment requirement for all Classes of shares is $25. The minimum
investment requirements for purchases of Fund shares through the Systematic
Investment Plan are described below. See Purchase of Shares.
 
SYSTEMATIC INVESTMENT PLAN During the continuous offering period, the Fund
offers shareholders a Systematic Investment Plan under which they may autho-
rize the automatic placement of a purchase order each month or quarter for
Fund shares. The minimum initial investment requirement for Class A, Class B
and Class L shares and the subsequent investment requirement for all Classes
for shareholders purchasing shares through the Systematic Investment Plan on a
monthly basis is $25 and on a quarterly basis is $50. See Purchase of
Shares.
 
REDEMPTION OF SHARES Shares may be redeemed on each day the New York Stock
Exchange, Inc. (NYSE) is open for business. See Purchase of Shares and
Redemption of Shares.
 
MANAGEMENT OF THE FUND Mutual Management Corp. (MMC or the Manager),
formerly known as Smith Barney Mutual Funds Management Inc., serves as the
Funds investment manager. The Manager is a wholly owned subsidiary of Salomon
Smith Barney Holdings Inc, (Holdings) formerly known as Smith Barney
Holdings. Holdings is a wholly owned subsidiary of Travelers Group Inc.
(Travelers), a diversified financial services holding company engaged,
through its subsidiaries, principally in four business segments: Investment
Services including Asset Management, Consumer Finance Services, Life Insurance
Services and Property & Casualty Insurance Services. See Management of the
Trust and the Fund.
 
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for shares of the same
Class of certain other funds of the Smith Barney Mutual Funds at the respec-
tive net asset values next determined. See Exchange Privilege.
 
VALUATION OF SHARES Net asset value of the Fund for the prior day generally is
quoted daily in the financial section of most newspapers and is also available
from Smith Barney Financial Consultants. See Valuation of Shares.
 
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income and distribu-
tions of net realized capital gains, if any, are declared and paid annually.
See Dividends, Distributions and Taxes.
 
6
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on shares of a
Class will be reinvested automatically, unless otherwise specified by an
investor, in additional shares of the same Class at current net asset value.
Shares acquired by dividend and distribution reinvestments will not be subject
to any sales charge or CDSC. Class B shares acquired through dividend and dis-
tribution reinvestments will become eligible for conversion to Class A shares
on a pro rata basis. See Dividends, Distributions and Taxes.
 
RISK FACTORS AND SPECIAL CONSIDERATIONS There can be no assurance that the
Funds investment objective will be achieved. The value of the Funds invest-
ments, and thus the net asset value of the Funds shares, will fluctuate in
response to changes in market and economic conditions, as well as the finan-
cial condition and prospects of issuers in which the Fund invests. The Fund
may invest in foreign securities, though management intends to limit such
investments to 10% of the Funds assets. Foreign investments may include addi-
tional risks associated with currency exchange rates, less complete financial
information about individual companies, less market liquidity and political
instability. See Investment Objective and Management Policies.
 
THE FUNDS EXPENSES The following expense table lists the costs and expenses
an investor will incur either directly or indirectly as a shareholder of the
Fund, based on the maximum sales charge or maximum CDSC that may be incurred
at the time of purchase or redemption and the Funds estimated operating
expenses:
 
<TABLE>
<CAPTION>
  SMITH BARNEY
  MID CAP BLEND FUND                            CLASS A CLASS B CLASS L CLASS Y
-------------------------------------------------------------------------------
  <S>                                           <C>     <C>     <C>     <C>
  SHAREHOLDER TRANSACTION EXPENSES
    Maximum sales charge imposed on purchases
     (as a percentage of offering price)         5.00%   None    1.00%   None
    Maximum CDSC (as a percentage of original
     cost or redemption proceeds, whichever is
     lower)                                      None*   5.00%   1.00%   None
-------------------------------------------------------------------------------
  ANNUAL FUND OPERATING EXPENSES
    (as a percentage of average net assets)
    Management fees                              0.75%   0.75%   0.75%   0.75%
    12b-1 fees**                                 0.25    1.00    1.00    None
    Other expenses***                            0.15    0.15    0.15    0.07
-------------------------------------------------------------------------------
  TOTAL FUND OPERATING EXPENSES                  1.15%   1.90%   1.90%   0.82%
-------------------------------------------------------------------------------
</TABLE>
   * Purchases of Class A shares of $500,000 or more will be made at net asset
     value with no sales charge, but will be subject to a CDSC of 1.00% on
     redemptions made within 12 months of purchase.
  ** Upon conversion of Class B shares to Class A shares, such shares will no
     longer be subject to a distribution fee. Class L shares do not have a
     conversion feature and, therefore, are subject to an ongoing distribution
     fee. As a result, long-term shareholders of Class L shares may pay more
     than the economic equivalent of the maximum front-end sales charge
     permitted by the NASD.
 *** Other Expenses have been estimated based on expenses the Fund has
     incurred during its fiscal year ended November 30, 1997.
 
                                                                              7
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
  The sales charge and CDSC set forth in the above table are the maximum
charges imposed on purchases or redemptions of Fund shares and investors may
actually pay lower or no charges, depending on the amount purchased and, in the
case of Class B, Class L and certain Class A shares, the length of time the
shares are held and whether the shares are held through the Smith Barney 401(k)
and ExecChoice(TM) Programs. See Purchase of Shares and Redemption of
Shares. Smith Barney receives an annual 12b-1 service fee of 0.25% of the
value of average daily net assets of Class A shares. For Class B and Class L
shares, Smith Barney receives an annual 12b-1 fee of 1.00% of the value of
average daily net assets of each respective Class, consisting of a 0.75% dis-
tribution fee and a 0.25% service fee. Other expenses in the above table
include fees for shareholder services, custodial fees, legal and accounting
fees, printing costs and registration fees.
 
 EXAMPLE
  The following example is intended to assist an investor in understanding the
various costs that an investor in the Fund will bear directly or indirectly.
The example assumes payment by the Fund of operating expenses at the levels set
forth in the table above. See Purchase of Shares, Redemption of Shares and
Management of the Trust and the Fund.
 
<TABLE>
<CAPTION>
  SMITH BARNEY
  MID CAP BLEND FUND                            1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------
  <S>                                           <C>    <C>     <C>     <C>
  An investor would pay the following expenses
  on a $1,000 investment, assuming (1) 5.00%
  annual return and (2) redemption at the end
  of each time period:
    Class A...................................
    Class B...................................
    Class L...................................
    Class Y...................................
  An investor would pay the following expenses
  on the same investment, assuming the same
  annual return and no redemption:
    Class A...................................
    Class B...................................
    Class L...................................
    Class Y...................................
-------------------------------------------------------------------------------
</TABLE>
 
  The example also provides a means for the investor to compare expense levels
of funds with different fee structures over varying investment periods. To
facilitate such comparison, all funds are required to utilize a 5.00% annual
return assumption. However, the Funds actual return will vary and may be
greater or less than 5.00%. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTA-
TION OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
 
 
8
<PAGE>
 
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
 
  The Funds investment objective is long-term growth of capital. This invest-
ment objective may not be changed without the approval of the holders of a
majority of the Funds outstanding shares. There can be no assurance that the
Funds investment objective will be achieved.
 
  The Fund attempts to achieve its investment objective by investing, under 
normal market conditions, substantially all of its assets in equity
 securities and at least 65% of its total assets in equity securities of
 medium-sized companies with market capitalizations of between $1 billion
 and $5 billion at the time of investment.
 Companies whose capitalization falls outside
 this range after purchase continue to be considered
 medium-sized companies for purposes of the 65% policy.
 Investing in medium-capitaliz
 
  In selecting the Funds equity investments, MMC seeks to identify companies
that exhibit growth and/or value attributes. When selecting stocks with growth
potential, MMC will evaluate the specific financial characteristics of the
issuer such as historical and forecasted earnings growth, sales growth, profit-
ability and return on equity.
 When selecting stocks with value characteristics,
 MMC will typically be looking at companies that are perhaps 
growing more slowly but whose valuation may be below average
 relative to earnings and/or assets. In addition, MMC will utilize an
 active quantitative investment strategy in a portion of the Fund.
  This portion willll provide added diversification and, in addition,
 will select securities using a proprietary technique that
 are believed to have a high probability of outperfo
sector. In identifying these securities,
 the Funds portfolio manager is supported by a
 quantitatively oriented investment
 using a proprietary technique that are believed to have a
 high probability of outperformsector. In identifying these 
securities, the Funds portfolio manager is supported by a
 quantitatively oriented investment
team.
 
  The Fund will normally invest in all types of equity securities, including
common stocks, preferred stocks, securities that are convertible into common or
preferred stocks, such as warrants and convertible bonds, and depository
receipts for those securities. The Fund may maintain a portion of its assets,
which will usually not exceed 10%,
 in U.S. Government securities, money market obligations,
 and in cash to provide for payment of the Funds expenses
 and to meet redemption requests. It is the policy of the Fund
 to be as fully invested in equity securities as practicable at all times.
 The Fund reserves the right, as a defensive measure, to
 hold money market securities, including repurchase agreements or
 cash, in such proportions as, in the opinion of management,
 prevailing market or economic conditions warr
 
  Consistent with its investment objective and policies described above, the
Fund may invest up to 25% of its total assets in foreign securities, including
both
 
                                                                               9
<PAGE>
 
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
 
direct investments and investments made through depository receipts. The Fund
may also invest in real estate investment trusts; purchase or sell securities
on a when-issued or delayed-delivery basis; enter into forward commitments to
purchase securities; lend portfolio securities; purchase and sell put and call
options; and enter into interest rate futures contracts, stock index futures
contracts and related options.
 
  The different types of securities and investment techniques used by the Fund
all involve risks of varying degrees. For example, with respect to common
stock, there can be no assurance of capital appreciation, and there is a risk
of market decline. With respect to debt securities, including money market
instruments, there is the risk that the issuer of a security may not be able to
meet its obligation to make scheduled interest or principal payments. See
Appendix A for a more complete discussion of certain of these securities and
investment techniques and the associated risks.
 
 PORTFOLIO TRANSACTIONS AND TURNOVER
 
  Transactions on behalf of the Fund are allocated to various brokers and deal-
ers by MMC in its best judgment. The primary consideration is prompt and effec-
tive execution of orders at the most favorable price. Subject to that primary
consideration, brokers and dealers, including Smith Barney, may be selected for
research, statistical or other services to enable MMC to supplement its own
research and analysis with the views and information of other securities firms.
 
  The Fund cannot accurately predict its portfolio turnover rate, but antici-
pates that its annual turnover will not exceed 100%. An annual turnover rate of
100% would occur if all of the securities held by the Fund were replaced once
during a period of one year. MMC will not consider turnover rate a limiting
factor in making investment decisions consistent with the Funds investment
objective and policies.
 
  Year 2000. The investment management services provided to the Fund by the
Manager and the services provided to shareholders by Smith Barney, the Funds
Distributor, depend on the smooth functioning of their computer systems. Many
computer software systems in use today cannot recognize the year 2000, but
revert to 1900 or some other date, due to the manner in which dates were
encoded and calculated. That failure could have a negative impact on the Funds
operations, including the handling of securities trades, pricing and account
services. The Manager and Smith Barney have advised the Fund that they have
been reviewing all of their computer systems and actively working on necessary
changes to their systems to prepare for the year 2000 and expect that their
systems will be compliant before that date. In addition, the Manager has been
advised by the Funds custodian, trans-
 
10
<PAGE>
 
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
 
fer agent and accounting service agent that they are also in the process of
modifying their systems with the same goal. There can, however, be no assur-
ance that the Manager, Smith Barney or any other service provider will be suc-
cessful, or that interaction with other non-complying computer systems will
not impair Fund services at that time.
 
VALUATION OF SHARES
 
 
  The Funds net asset value per share is determined as of the close of regu-
lar trading on the NYSE on each day that the NYSE is open, by dividing the
value of
the Funds net assets attributable to each Class by the total number of shares
of the Class outstanding.
 
  Generally, the Funds investments are valued at market value or, in the
absence of a market value with respect to any securities, at fair value as
determined by or under the direction of the Trusts Board of Trustees. Short-
term investments that mature in 60 days or less are valued at amortized cost.
Amortized cost involves valuing an investment at its cost initially and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. Further information regarding the Funds valuation
policies is contained in the SAI.
 
DIVIDENDS, DISTRIBUTIONS AND TAXES
 
 
 DIVIDENDS AND DISTRIBUTIONS
  The Funds policy is to distribute substantially all its net investment
income (that is, its income other than its net realized capital gains) and net
realized capital gains, if any, once a year, normally at the end of the year
in which earned or at the beginning of the next year.
 
  If a shareholder does not otherwise instruct, dividends and capital gains
distributions will be reinvested automatically in additional shares of the
same Class at net asset value, subject to no sales charge or CDSC. In order to
avoid the application of a 4.00% nondeductible excise tax on certain undis-
tributed amounts of ordinary income and capital gains, the Fund may make an
additional distribution, shortly before December 31 in each year, of any
undistributed ordinary income or capital gains and expects to pay any other
dividends and distributions necessary to avoid the application of this tax.
 
  The per share dividends on Class B and Class L shares of the Fund may be
lower than the per share dividends on Class A and Class Y shares principally
as a result of the distribution fee applicable with respect to Class B and
Class L shares.
 
                                                                             11
<PAGE>
 
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
 
The per share dividends on Class A shares of the Fund may be lower than the per
share dividends on Class Y shares principally as a result of the service fee
applicable to Class A shares. Distributions of capital gains, if any, will be
in the same amount for Class A, Class B, Class L and Class Y shares.
 
 TAXES
  The Fund intends to qualify each year as a regulated investment company under
the Code. Dividends paid from net investment income and distributions of net
realized short-term capital gains will be taxable to shareholders as ordinary
income, regardless of how long shareholders have held their Fund shares and
whether such dividends and distributions are received in cash or reinvested in
additional Fund shares. Distributions of net realized long-term capital gains
will be taxable to shareholders as long-term capital gains, regardless of how
long shareholders have held Fund shares and whether such distributions are
received in cash or are reinvested in additional Fund shares. Furthermore, as a
general rule, a shareholders gain or loss on a sale or redemption of Fund
shares will be a long-term capital gain or loss if the shareholder has held the
shares for more than one year and will be a short-term capital gain or loss if
the shareholder has held the shares for one year or less. Some of the Funds
dividends declared from net investment income may qualify for the Federal divi-
dends-received deduction for corporations.
 
  Statements as to the tax status of each shareholders dividends and distribu-
tions will be mailed annually. Each shareholder also will receive, if appropri-
ate, various written notices after the close of the Funds prior taxable year
as to the Federal income tax status of his or her dividends and distributions
which were received from the Fund during the Funds prior taxable year. Share-
holders should consult their own tax advisors regarding specific questions as
to the Federal and local tax consequences of investing in the Fund.
 
PURCHASE OF SHARES
 
 
 GENERAL
  The Fund currently offers four Classes of shares. Class A shares are sold to
investors with an initial sales charge and Class B shares are sold without an
initial sales charge but are subject to a CDSC payable upon certain redemp-
tions. Class L shares are sold to investors with an initial sales charge and
are subject to a CDSC payable upon certain redemptions. Class Y shares are sold
without an initial sales charge or CDSC and are available only to investors
investing a minimum of $15,000,000 (except, for purchases of Class Y shares by
Smith Barney Concert Allocation Series, Inc. for which there is no minimum pur-
chase amount). See Prospectus Summary--Alternative Purchase Arrangements for
a discussion of factors to consider in selecting which Class of shares to pur-
chase.
 
12
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
 INITIAL SUBSCRIPTION PERIOD
  Smith Barney, the Funds distributor, will solicit subscriptions for shares
of the Fund during the Subscription Period. Subscriptions for shares must be
made through a brokerage account maintained with Smith Barney or an Introducing
Broker. Shares of the Fund subscribed for during the Subscription Period for
which Smith Barney accepts purchase orders will be issued and sold by the Fund
on the third business day after the end of the Subscription Period (the Pur-
chase Date). Also on the Purchase Date, shareholders of other funds of the
Smith Barney Mutual Funds will be able to exchange shares of such funds for
shares of the Fund. On the Purchase Date, Smith Barney will notify the Fund of
the aggregate number of shares for which it has received and accepted
subscriptions, and the Fund will issue shares for such subscriptions and com-
merce operations.
 
  The Fund is offering its Class A shares to the public at a maximum purchase
price per share of $12.50, which equals the Class A share initial net asset
value per share of $11.88 plus the maximum sales charge set forth below under
Continuous Offerings. The Fund is offering its Class B, Class L and Class Y
shares to the public at each Class respective initial net asset value per
share of $11.88.
 
  The Fund and Smith Barney may in their discretion determine to withdraw the
offering without notice for any reason before the end of the Subscription Peri-
od. The Fund also reserves the right to refuse any order in whole or in part.
 
 CONTINUOUS OFFERINGS
 
  Smith Barney will suspend the offering of shares to the public immediately
after the expiration of the Subscription Period or within three weeks thereaf-
ter. During the three-week period, Smith Barney will commence a limited contin-
uous offering of shares to the public. Once Smith Barney suspends the offering
of shares to the public (the Closing Period), it is expected to do so for 30
days. This period may be lengthened or shortened in the absolute discretion of
Smith Barney. During the Closing Period, the Fund will invest the proceeds from
its Subscription Period and its continuous offering, if any, and existing
shareholders of the Fund may request redemptions, purchase additional shares
and exchange shares of the Fund for shares of certain other funds of the Smith
Barney Mutual Funds. See Exchange Privilege. Immediately after the expiration
of the Closing Period, Smith Barney expects to commence a continuous offering
of shares of the Fund.
 
  During the continuous offering, shares may be purchased through a brokerage
account maintained with Smith Barney. Shares may also be purchased through an
Introducing Broker or an investment dealer in the selling group. In addition,
certain investors, including qualified retirement plans and certain other
institutional investors, may purchase shares directly from the Fund through
First Data. When purchasing shares of the Fund, investors must specify whether
the purchase is for Class A,
 
                                                                              13
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
Class B, Class C or Class Y shares. Smith Barney and other broker/dealers may
charge their customers an annul account maintenance fee in connection with a
brokerage account through which an investor purchases or holds shares. Accounts
held directly at First Data are not subject to a maintenance fee.
 
  Investors in Class A, Class B and Class L shares may open an account by mak-
ing 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
 
14
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
open an account by making an initial investment of $15,000,000. Subsequent
investments of at least $50 may be made for all Classes. For participants in
retirement plans qualified under Section 403(b)(7) or Section 401(a) of the
Code, the minimum initial investment requirement 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 the subsequent invest-
ment requirement for all Classes is $25. For shareholders purchasing shares of
the Fund through the Systematic Investment Plan on a quarterly basis, the min-
imum initial investment requirement for Class A, Class B and Class L shares
and the subsequent investment requirement for all Classes is $50. There are no
minimum investment requirements for Class A shares purchases by employees of
Travelers and its subsidiaries, including Smith Barney, Directors or Trustees,
of any of the Smith Barney Mutual Funds, and their immediate family. The Fund
reserves the right to waive or change minimums, to decline any order to pur-
chase its shares and to suspend the offering of shares from time to time.
Shares purchased will be held in the shareholders account by the Funds
transfer agent. Share certificates are issued only upon a shareholders writ-
ten request to the Transfer Agent.
 
  Purchase orders received by the Fund or Smith Barney 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 dealers or Introducing Brokers 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 Smith Barney prior to Smith
Barneys close of business. For shares purchased through Smith Barney or
Introducing Brokers purchasing through Smith Barney, payment for Fund shares
is due on the third business day (the settlement date) after the trade date.
In all other cases, payments must be made with the purchase order.
 
 SYSTEMATIC INVESTMENT PLAN
  Shareholders may make additions to their accounts at any time by purchasing
shares through a service known as the Systematic Investment Plan. Under the
Systematic Investment Plan, Smith Barney or the 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 regular bank account or other financial
institution indicated by the shareholder to provide systematic additions to
the shareholders Fund account. A shareholder who has insufficient funds to
complete the transfer will be charged a fee of up to $25 by Smith Barney or
the Transfer Agent. The Systematic Investment Plan also authorizes Smith Bar-
ney to apply cash held in the sharehold-
 
                                                                             15
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
ers Smith Barney brokerage account or redeem the shareholders shares of a
Smith Barney money market fund to make additions to the account. Additional
information is available from the Fund or a Smith Barney Financial Consultant.
 
 INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
  The sales charges applicable to purchases of Class A shares of the Fund are
as follows:
 
<TABLE>
<CAPTION>
                                  SALES CHARGE
                         ------------------------------      DEALERS
                              % OF           % OF       REALLOWANCE AS % OF
  AMOUNT OF INVESTMENT   OFFERING PRICE AMOUNT INVESTED   OFFERING PRICE
---------------------------------------------------------------------------
  <S>                    <C>            <C>             <C>
  Less than $ 25,000          5.00%          5.26%             4.50%
  $ 25,000 -  49,999          4.00           4.17              3.60
    50,000 -  99,999          3.50           3.63              3.15
   100,000 - 249,999          3.00           3.09              2.70
   250,000 - 499,999          2.00           2.04              1.80
   500,000   and over          *               *                 *
---------------------------------------------------------------------------
</TABLE>
* Purchases of Class A shares of $500,000 or more will be made at net asset
  value without any initial sales charge but will be subject to a CDSC of 1.00%
  on redemptions made within 12 months of purchase. The CDSC on Class A shares
  is payable to Smith Barney, which compensates Smith Barney Financial
  Consultants and other dealers whose clients make purchases of $500,000 or
  more. The CDSC is waived in the same circumstances in which the CDSC
  applicable to Class B and Class L shares is waived. See Deferred Sales
  Charge Alternatives and Waivers of CDSC.
 
  Members of the selling group may receive up to 90% of the sales charge and
may be deemed to be underwriters of the Fund as defined in the Securities Act
of 1933, as amended.
 
  The reduced sales charges shown above apply to the aggregate of purchases of
Class A shares of 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.
 
 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 Travelers and its subsidiaries and of any of 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 NASD, provided such sales are
made upon the assurance of the purchaser that the purchase is made for invest-
ment purposes and that the securities will not be resold except through redemp-
tion or repurchase;
 
16
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
(b) offers of Class A shares to any other investment company to effect the com-
bination of such company with the Fund by merger, acquisition of assets or oth-
erwise; (c) purchases of Class A shares by any client of a newly employed Smith
Barney Financial Consultant (for a period up to 90 days from the commencement
of the Financial Consultants employment with Smith Barney), on the condition
the purchase of Class A shares is made with the proceeds of the redemption of
shares of a mutual fund which (i) was sponsored by the Financial Consultants
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 fund of the
Smith Barney Mutual Funds that are 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 man-
aged by registered investment advisory subsidiaries of Travelers; (f) direct
rollovers by plan participants of distributions from a 401(k) plan offered to
employees of Travelers 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 separate accounts used to fund
certain unregistered variable annuity contracts; and (h) purchases by investors
participating in a Smith Barney fee-based arrangement. 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 elimi-
nation 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 aggregat-
ing the dollar amount of the new purchase and the total net asset value of all
Class A shares of the Fund and of funds sponsored by Smith Barney which are
offered with a sales charge listed under Exchange Privilege then held by such
person and applying the sales charge applicable to such aggregate. In order to
obtain such discount, the purchaser must provide sufficient information at the
time of purchase to permit verification that the purchase qualifies for the
reduced sales charge. The right of accumulation is subject to modification or
discontinuance at any time with respect to all shares purchased thereafter.
 
 GROUP PURCHASES
  Upon completion of certain automated systems, a reduced sales charge or pur-
chase at net asset value will also be available to employees (and partners) of
the same employer purchasing as a group, provided each participant makes the
minimum initial investment required. The sales charge applicable to purchases
by each member of such a group will be determined by the table set forth above
under
 
                                                                              17
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
Initial Sales Charge Alternative--Class A Shares, and will be based upon the
aggregate sales of Class A shares of the Smith Barney Mutual Funds offered with
a sales charge to, and share holdings of, all members of the group. To be eli-
gible for such reduced sales charges or to purchase at net asset value, all
purchases must be pursuant to an employer- or partnership-sanctioned plan meet-
ing certain requirements. One such requirement is that the plan must be open to
specified partners or employees of the employer and its subsidiaries, if any.
Such plan may, but is not required to, provide for payroll deductions, IRAs or
investments pursuant to retirement plans under Sections 401 or 408 of the Code.
Smith Barney may also offer a reduced sales charge or net asset value purchase
for aggregating related fiduciary accounts under such conditions that Smith
Barney will realize economies of sales efforts and sales related expenses. An
individual who is a member of a qualified group may also purchase Class A
shares at the reduced sales charge applicable to the group as a whole. The
sales charge is based upon the aggregate dollar value of Class A shares offered
with a sales charge that have been previously purchased and are still owned by
the group, plus the amount of the current purchase. A qualified group is one
which (a) has been in existence for more than six months, (b) has a purpose
other than acquiring Fund shares at a discount and (c) satisfies uniform crite-
ria which enable Smith Barney to realize economies of scale in its costs of
distributing shares. A qualified group must have more than 10 members, must be
available to arrange for group meetings between representatives of the Fund and
the members, and must agree to include sales and other materials related to the
Fund in its publications and mailings to members at no cost to Smith Barney.
In order to obtain such reduced sales charge or to purchase at net asset value,
the purchaser must provide sufficient information at the time of purchase to
permit verification that the purchase qualifies for the reduced sales charge.
Approval of group purchase reduced sales charge plans is subject to the discre-
tion of Smith Barney.
 
 LETTER OF INTENT
  Class A Shares. A Letter of Intent for amounts of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales charge by aggregating
investments over a 13 month period, provided that the investor refers to such
Letter when placing orders. For purposes of a Letter of Intent, the Amount of
Investment as referred to in the preceding sales charge table includes pur-
chases of all Class A shares of the Fund and other Smith Barney Mutual Funds
offered with a sales charge over the 13 month period based on the total amount
of intended purchases plus the value of all Class A shares previously purchased
and still owned. An alternative is to compute the 13 month period starting up
to 90 days before the date of execution of a Letter of Intent. Each investment
made during the period receives the reduced sales charge applicable to the
total amount of the investment goal. If the goal is not achieved within the
period, the investor must pay the difference between the sales charges applica-
ble to the purchases made and the charges previ-
 
18

<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
ously paid, or an appropriate number of escrowed shares will be redeemed.
Please contact a Smith Barney Financial Consultant or First Data to obtain a
Letter of Intent application.
 
  Class Y Shares. A Letter of Intent may also be used as a way for investors to
meet the minimum investment requirement for Class Y shares. Such investors must
make an initial minimum purchase of $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 thirteen (13) months from the date of the Letter. If a total investment
of $15,000,000 is not made within the thirteen-month period, all Class Y shares
purchased to date will be transferred to Class A shares, where they will be
subject to all fees (including a service fee of 0.25%) and expenses applicable
to the Funds Class A shares, which may include a CDSC of 1.00%. The Fund
expects that such transfer will not be subject to Federal income taxes. Please
contact a Smith Barney Financial Consultant or First Data for further informa-
tion.
 
 DEFERRED SALES CHARGE ALTERNATIVES
  CDSC Shares are sold at the net asset value next determined without an ini-
tial sales charge so that the full amount of an investors purchase payment may
be immediately invested in the Fund. A CDSC, however, may be imposed on certain
redemptions of these shares. CDSC Shares are: (a) Class B shares; (b) Class L
shares; and (c) Class A shares that were purchased without an initial sales
charge but subject to a CDSC.
 
  Any applicable CDSC will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the time of
redemption. CDSC Shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (a) capital appreciation of
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 CDSC Shares, shares redeemed more than 12 months after their purchase.
 
  Class L shares and Class A shares that are CDSC Shares are subject to a 1.00%
CDSC if redeemed within 12 months of purchase. In circumstances in which the
CDSC is imposed on Class B shares, the amount of the charge will depend on the
number of years since the shareholder made the purchase payment from which the
amount is being redeemed. Solely for purposes of determining the number of
years since a purchase payment, all purchase payments made during a month will
be aggregated and deemed to have been made on the last day of the preceding
Smith Barney statement month. The following table sets forth the rates of the
charge for redemptions of Class B shares by shareholders, except in the case of
 
                                                                              19
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
Class B shares held under the Smith Barney 401(k) Program, as described below.
See Purchase of Shares--Smith Barney 401(k) and ExecChoice(TM) Programs.
 
<TABLE>
<CAPTION>
      YEAR SINCE PURCHASE
      PAYMENT WAS MADE      CDSC
---------------------------------
      <S>                   <C>
      First                 5.00%
      Second                4.00
      Third                 3.00
      Fourth                2.00
      Fifth                 1.00
      Sixth and thereafter  0.00
---------------------------------
</TABLE>
 
  Class B shares will convert automatically to Class A shares eight years
after the date on which they were purchased and thereafter will no longer be
subject to any distribution fees. There also will be converted at that time
such proportion of Class B Dividend Shares owned by the shareholder as the
total number of his or her Class B shares converting at the time bears to the
total number of outstanding Class B shares (other than Class B Dividend
Shares) owned by the shareholder. See Prospectus Summary--Alternative Pur-
chase Arrangements--Class B Shares Conversion Feature. The length of time
that CDSC Shares acquired through an exchange have been held will be calcu-
lated from the date that the shares exchanged were initially acquired in one
of the other applicable 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 CDSC will reduce the gain
or increase the loss, as the case may be, on the amount realized on redemp-
tion. The amount of any CDSC will be paid to Smith Barney.
 
  To provide an example, assume an investor purchased 100 Class B shares at
$10 per share for a cost of $1,000. Subsequently, the investor acquired 5
additional shares through dividend reinvestment. During the fifteenth month
after the purchase, the investor decided to redeem $500 of his or her invest-
ment. Assuming at the time of the redemption the net asset value had appreci-
ated to $12 per share, the value of the investors shares would be $1,260 (105
shares at $12 per share). The CDSC 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 CDSC
  The CDSC will be waived on: (a) exchanges (see Exchange Privilege); (b)
automatic cash withdrawals in amounts equal to or less than 1.00% per month of
the value of the shareholders shares at the time the withdrawal plan com-
mences (see Automatic Cash Withdrawal Plan) (provided, however, that auto-
matic cash
 
20
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
withdrawals in amounts equal to or less than 2.00% per month of the value of
the shareholders 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 1/2; (e) involuntary redemptions;
and (f) redemptions of shares to effect a combination of the Fund with any
investment company by merger, acquisition of assets or otherwise. In addition,
a shareholder who has redeemed shares from other Smith Barney Mutual Funds
may, under certain circumstances, reinvest all or part of the redemption pro-
ceeds within 60 days and receive pro rata credit for any CDSC imposed on the
prior redemption.
 
  CDSC waivers will be granted subject to confirmation (by Smith Barney in the
case of shareholders who are also Smith Barney clients or by the Transfer
Agent in the case of all other shareholders) of the shareholders status or
holdings, as the case may be.
 
 SMITH BARNEY 401(K) PROGRAM AND EXECCHOICE(TM) PROGRAMS
  Investors may be eligible to participate in the Smith Barney 401(k) Program
or the Smith Barney ExecChoice(TM) Program. To the extent applicable, the same
terms and conditions, which are outlined below, are offered to all plans par-
ticipating (Participating Plans) in these programs.
 
  Each Fund offers to Participating Plans Class A and Class L shares as
investment alternatives under the Smith Barney 401(k) and ExecChoice(TM) Pro-
grams. Class A and Class L shares acquired through the Participating Plans are
subject to the same service and/or distribution fees as the Class A and Class
L shares acquired by other investors; however, they are not subject to any
initial sales charge or CDSC. Once a Participating Plan has made an initial
investment in a Fund, all of its subsequent investments in the Fund must be in
the same Class of shares, except as otherwise described below.
 
  Class A Shares. Class A shares of a Fund are offered without any sales
charge or CDSC to any Participating Plan that purchases $1,000,000 or more of
Class A shares of one or more funds of the Smith Barney Mutual Funds.
 
  Class L Shares. Class L shares of a Fund are offered without any sales
charge or CDSC to any Participating Plan that purchases less than $1,000,000
of Class L shares of one or more funds of the Smith Barney Mutual Funds.
 
  401(k) and ExecChoice(TM) Plans Opened On or After June 21, 1996. At the end
of the fifth year after the date the Participating Plan enrolled in the Smith
Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program, if its total
Class L holdings in all non-money market Smith Barney Mutual Funds equal at
least $1,000,000, it will be offered the opportunity to exchange all of its
Class L shares
 
                                                                             21
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
for Class A shares of a Fund. (For Participating Plans that were originally
established through a Smith Barney retail brokerage account, the five year
period will be calculated from the date the retail brokerage account was
opened.) Such Participating Plans will be notified of the pending exchange in
writing within 30 days after the fifth anniversary of the 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 Plans holdings will be performed each quarter until either
the Participating Plan qualifies or the end of the eighth year.
 
  401(k) Plans Opened Prior to June 21, 1996. In any year after the date a Par-
ticipating Plan enrolled in the Smith Barney 401(k) Program, if its total Class
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 a
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) Program that has not previ-
ously qualified for an exchange into Class A shares will be offered the oppor-
tunity to exchange all of its Class L shares for Class A shares of a Fund,
regardless of asset size, at the end of the eighth year after the date the Par-
ticipating Plan enrolled in the Smith Barney 401(k) 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 of the Fund but instead may acquire Class
A shares of the Fund. Any Class L shares not converted will continue to be sub-
ject to the distribution fee.
 
  Participating Plans wishing to acquire shares of a Fund through the Smith
Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program must purchase
such shares directly from the Transfer Agent. For further information regarding
these Programs, investors should contact a Smith Barney Financial Consultant.
 
  Existing 401(k) Plans Investing in Class B Shares. Class B shares of the
Smith Barney Mutual Funds are not available for purchase by Participating Plans
opened on or after June 21, 1996, but may continue to be purchased by any Par-
ticipating Plan in the Smith Barney 401(k) Program opened prior to such date
and originally investing in such Class. Class B shares acquired are subject to
a CDSC of 3.00% of redemption proceeds, if the Participating Plan terminates
within eight years of the date the Participating Plan first enrolled in the
Smith Barney 401(k) Program.
 
22
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
  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
Fund. Such Participating Plan will be notified of the pending exchange in writ-
ing 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 Par-
ticipating Plan will not be eligible to acquire additional Class B shares of
the Fund but instead may acquire Class A shares of the Fund. If the Participat-
ing 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 fea-
ture as Class B shares held by other investors. See Purchase of Shares--
Deferred Sales Charge Alternatives.
 
  No CDSC is imposed on redemptions of Class B shares to the extent that the
net asset value of the shares redeemed does not exceed the current net asset
value of the shares purchased through reinvestment of dividends or capital gain
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 dur-
ing the preceding eight years. Whether or not the CDSC applies to the redemp-
tion by a Participating Plan depends on the number of years since the Partici-
pating Plan first became enrolled in the Smith Barney 401(k) Program, unlike
the applicability of the CDSC to redemptions by other shareholders, which
depends on the number of years since those shareholders made the purchase pay-
ment from which the amount is being redeemed.
 
  The CDSC will be waived on redemptions of Class B shares in connection with
lump-sum or other distributions made by a Participating Plan as a result of:
(a) the retirement of an employee in the Participating Plan; (b) the termina-
tion of employment of an employee in the Participating Plan; (c) the death or
disability of an employee in the Participating Plan; (d) the attainment of age
59 1/2 by an employee in the Participating Plan; (e) hardship of an employee in
the Participating Plan to the extent permitted under Section 401(k) of the
Code; or (f) redemptions of shares in connection with a loan made by the Par-
ticipating Plan to an employee.
 
EXCHANGE PRIVILEGE
 
 
  Except as otherwise noted below, shares of each Class may be exchanged at the
net asset value next determined for shares of the same Class in the following
Smith Barney Mutual Funds, to the extent shares are offered for sale in the
shareholders state of residence. Exchanges of Class A, Class B and Class L
shares are
 
                                                                              23
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
 
subject to minimum investment requirements and all shares are subject to the
other requirements of the fund into which exchanges are made.
 
 FUND NAME
  Growth Funds
    Concert Peachtree Growth Fund
    Smith Barney Aggressive Growth Fund Inc.
    Smith Barney Appreciation Fund Inc.
    Smith Barney Fundamental Value Fund Inc.
    Smith Barney Growth Opportunity Fund
    Smith Barney Managed Growth Fund
    Smith Barney Natural Resources Fund Inc.
    Smith Barney Small Cap Blend Fund, Inc.
    Smith Barney Special Equities Fund
 
  Growth and Income Funds
    Concert Social Awareness Fund
    Smith Barney Convertible Fund
    Smith Barney Funds, Inc.--Large Cap Value Fund
    Smith Barney Large Cap Blend Fund
    Smith Barney Premium Total Return Fund
    Smith Barney Utilities Fund
 
  Taxable Fixed-Income Funds
    **Smith Barney Adjustable Rate Government Income Fund
    Smith Barney Diversified Strategic Income Fund
    +++Smith Barney Funds, Inc.--Short-Term U.S. Treasury Securities Fund
    Smith Barney Funds, Inc.--U.S. Government Securities Fund
    Smith Barney Government Securities Fund
    Smith Barney High Income Fund
    Smith Barney Investment Grade Bond Fund
    Smith Barney Managed Governments Fund Inc.
    Smith Barney Total Return Bond Fund
 
  Tax-Exempt Funds
    Smith Barney Arizona Municipals Fund Inc.
    Smith Barney California Municipals Fund Inc.
    *Smith Barney Intermediate Maturity California Municipals Fund
    *Smith Barney Intermediate Maturity New York Municipals Fund
    Smith Barney Managed Municipals Fund Inc.
    Smith Barney Massachusetts Municipals Fund
    Smith Barney Muni Funds--Florida Portfolio
    Smith Barney Muni Funds--Georgia Portfolio
    *Smith Barney Muni Funds--Limited Term Portfolio
 
24
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
 
    Smith Barney Muni Funds--National Portfolio
    Smith Barney Muni Funds--New York Portfolio
    Smith Barney Muni Funds--Pennsylvania Portfolio
    Smith Barney New Jersey Municipals Fund Inc.
    Smith Barney Municipal High Income Fund
    Smith Barney Oregon Municipals Fund
    Smith Barney Tax-Exempt Income Fund
 
  Global-International Funds
    Smith Barney Hansberger Global Small Cap Value Fund
    Smith Barney Hansberger Global Value Fund
    Smith Barney World Funds, Inc.--Emerging Markets Portfolio
    Smith Barney World Funds, Inc.--European Portfolio
    Smith Barney World Funds, Inc.--Global Government Bond Portfolio
    Smith Barney World Funds, Inc.--International Balanced Portfolio
    Smith Barney World Funds, Inc.--International Equity Portfolio
    Smith Barney World Funds, Inc.--Pacific Portfolio
 
  Smith Barney Concert Allocation Series Inc.
    Smith Barney Concert Allocation Series Inc.--Balanced Portfolio
    Smith Barney Concert Allocation Series Inc.--Conservative Portfolio
    Smith Barney Concert Allocation Series Inc.--Growth Portfolio
    Smith Barney Concert Allocation Series Inc.--Global Portfolio
    Smith Barney Concert Allocation Series Inc.--High Growth Portfolio
    Smith Barney Concert Allocation Series Inc.--Income Portfolio
 
  Money Market Funds
    +Smith Barney Exchange Reserve Fund
    ++Smith Barney Money Funds, Inc.--Cash Portfolio
    ++Smith Barney Money Funds, Inc.--Government Portfolio
    ***Smith Barney Money Funds, Inc.--Retirement Portfolio
    +++Smith Barney Municipal Money Market Fund, Inc.
    +++Smith Barney Muni Funds--California Money Market Portfolio
    +++Smith Barney Muni Funds--New York Money Market Portfolio
--------------------------------------------------------------------------------
  * Available for exchange with Class A, Class L and Class Y shares of the
    Fund.
 ** Available for exchange with Class A and Class B shares of the Fund. In
    addition, Participating Plans opened prior to June 21, 1996 and investing
    in Class L shares of the Fund may exchange Fund shares for Class C shares
    of this Fund.
***Available for exchange with Class A shares of the Fund.
  + Available for exchange with Class B and Class C shares of the Fund.
 ++ Available for exchange with Class A and Class Y shares of the Fund. In
    addition, shareholders who own Class L shares of the Fund through the Smith
    Barney 401(k) and ExecChoice(TM) Programs may exchange those shares for
    Class L shares of this Fund.
+++Available for exchange with Class A and Class Y shares of the Fund.
 
 
                                                                              25
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
 
  Class B Exchanges. In the event a Class B shareholder wishes to exchange all
or a portion of his or her shares in any of the funds imposing a CDSC higher
than that imposed by the Fund, the exchanged Class B shares will be subject to
the higher applicable CDSC. Upon an exchange, the new Class B shares will be
deemed to have been purchased on the same date as the Class B shares of the
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 impo-
sition 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 Funds performance and its shareholders. The Manager
may determine that a pattern of frequent exchanges is excessive and contrary
to the best interests of the Funds other shareholders. In this event, the
Fund may, at its discretion, decide to limit additional purchases and/or
exchanges by a 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 Re-
demption of Shares--Telephone Redemption and Exchange Program. Exchanges will
be processed at the net asset value next determined. Redemption procedures
discussed below are also applicable for exchanging shares, and exchanges will
be made upon receipt of all supporting documents in proper form. If the
account registration of the shares of the fund being acquired is identical to
the registration of the shares of the fund exchanged, no signature guarantee
is required.
 
  A capital gain or loss for tax purposes will be realized upon the exchange,
depending upon the cost or other basis of shares redeemed. Before exchanging
shares, investors should read the current prospectus describing the shares to
be acquired. The Fund reserves the right to modify or discontinue exchange
privileges upon 60 days prior notice to shareholders.
 
26
<PAGE>
 
REDEMPTION OF SHARES
 
  The Fund is required to redeem shares tendered to it, as described below, at
a redemption price equal to their net asset value per share next determined
after receipt of a written request in proper form at no charge other than any
applicable CDSC. Redemption requests received after the close of regular trad-
ing 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 redemp-
tion must specify the Class being redeemed. In the event of a failure to spec-
ify which Class, or if the investor owns fewer shares of the Class than speci-
fied, the redemption request will be delayed until the Transfer Agent receives
further instructions from Smith Barney, or if the shareholders account is not
with Smith Barney, from the shareholder directly. The redemption proceeds will
be remitted on or before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or as permitted under
the Investment Company Act of 1940, as amended (the 1940 Act), in extraordi-
nary circumstances. Generally, if the redemption proceeds are remitted to a
Smith Barney brokerage account, these funds will not be invested for the share-
holders benefit without specific instruction and Smith Barney will benefit
from the use of temporarily uninvested funds. Redemption proceeds for shares
purchased by check, other than a certified or official bank check, will be
remitted upon clearance of the check, which may take up to ten days or more.
 
  Shares held by Smith Barney as custodian must be redeemed by submitting a
written request to a Smith Barney Financial Consultant. Shares other than those
held by Smith Barney as custodian may be redeemed through an investors Finan-
cial Consultant, Introducing Broker or dealer in the selling group or by sub-
mitting a written request for redemption to:
 
  Smith Barney Mid Cap Blend Fund
  Class A, B, L or Y (please specify)
  c/o First Data Investor Services Group, Inc.
  P.O. Box 5128
  Westborough, Massachusetts 01581-5128
 
  A written redemption request must (a) state the Class and number or dollar
amount of shares to be redeemed, (b) identify the shareholders account number
and (c) be signed by each registered owner exactly as the shares are regis-
tered. If the shares to be redeemed were issued in certificate form, the cer-
tificates must be endorsed for transfer (or be accompanied by an endorsed stock
power) and must be submitted to First Data together with the redemption
request. Any signature appearing on a share certificate, stock power or written
redemption request in excess of $10,000 must be guaranteed by an eligible guar-
antor institution such as a domestic bank, savings and loan institution, domes-
tic credit union, member bank of the Fed-
 
                                                                              27
<PAGE>
 
REDEMPTION OF SHARES (CONTINUED)
 
eral 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 or
the redemption proceeds are to be sent to an address other than the address of
record. Unless otherwise directed, redemption proceeds will be mailed to an
investors address of record. First Data may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees or guardians. A redemption request will not be deemed properly
received until First Data receives all required documents in proper form.
 
 TELEPHONE REDEMPTION AND EXCHANGE PROGRAM
  Shareholders who do not have a Smith Barney brokerage account may be eligi-
ble to redeem and exchange Fund shares by telephone. To determine if a share-
holder is entitled to participate in this program, he or she should contact
First Data at 1-800-451-2010. Once eligibility is confirmed, the shareholder
must complete and return a Telephone/Wire Authorization Form, including a sig-
nature guarantee, that will be provided by First Data upon request. (Alterna-
tively, an investor may authorize telephone redemptions on the new account
application with a signature guarantee when making his/her initial investment
in the Fund.)
 
  Redemptions. Redemption requests of up to $10,000 of any class or classes of
the Funds shares may be made by eligible shareholders by calling First Data
at 1-800-451-2010. Such requests may be made between 9:00 a.m. and 4:00 p.m.
(New York City time) on any day the NYSE is open. Redemption requests received
after the close of regular trading on the NYSE are priced at the net asset
value next determined. Redemptions of shares (i) by retirement plans or (ii)
for which certificates have been issued are not permitted under this program.
 
  A shareholder will have the option of having the redemption proceeds mailed
to his/her address of record or wired to a bank account predesignated by the
shareholder. Generally, redemption proceeds will be mailed or wired, as the
case may be, on the next business day following the redemption request. In
order to use the wire procedures, the bank receiving the proceeds must be a
member of the Federal Reserve System or have a correspondent relationship with
a member bank. The Fund reserves the right to charge shareholders a nominal
fee for each wire redemption. Such charges, if any, will be assessed against
the shareholders 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 shareholders 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
 
28
<PAGE>
 
REDEMPTION OF SHARES (CONTINUED)
 
registration of the shares of the fund exchanged. Such exchange requests may
be made by calling First Data at 1-800-451-2010 between 9:00 a.m. and 4:00
p.m. (New York City time) on any day the NYSE is open. Exchange requests
received after the close of regular trading on the NYSE are priced at the net
asset value next determined.
 
  Additional Information Regarding Telephone Redemption and Exchange
Program. Neither the Fund nor its agents will be liable for following instruc-
tions 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 shareholders
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.
 
 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 funds or Classes of the Fund. Any applicable CDSC will not
be waived on amounts withdrawn by a shareholder that exceed 1.00% per month of
the value of the shareholders shares subject to the CDSC at the time the
withdrawal plan commences. (With respect to withdrawal plans in effect prior
to November 7, 1994, any applicable CDSC will be waived on amounts withdrawn
that do not exceed 2.00% per month of the shareholders shares subject to the
CDSC.) For further information regarding the automatic cash withdrawal plan,
shareholders should contact a Smith Barney Financial Consultant.
 
MINIMUM ACCOUNT SIZE
 
 
  The Fund reserves the right to involuntarily liquidate any shareholders
account in the Fund if the aggregate net asset value of the shares held in the
Fund account is less than $500. (If a shareholder has more than one account in
the Fund, each account must satisfy the minimum account size.) The Fund, how-
ever, will not redeem shares based solely on market reductions in net asset
value. Before the Fund exercises such right, shareholders will receive written
notice and will be permitted 60 days to bring accounts up to the minimum to
avoid involuntary liquidation.
 
                                                                             29
<PAGE>
 
PERFORMANCE
 
 
  From time to time the Fund may advertise its total return and average annual
total return in advertisements and/or other types of sales literature. These
figures are computed separately for Class A, Class B, Class L and Class Y
shares of the Fund. These figures are based on historical earnings and are not
intended to indicate future performance. Total return is computed for a speci-
fied period of time assuming deduction of the maximum sales charge, if any,
from the initial amount invested and reinvestment of all income dividends and
capital gain distributions on the reinvestment dates at prices calculated as
stated in this Prospectus, then dividing the value of the investment at the end
of the period so calculated by the initial amount invested and subtracting
100%. The standard average annual total return, as prescribed by the SEC is
derived from this total return, which provides the ending redeemable value.
Such standard total return information may also be accompanied with nonstandard
total return information for differing periods computed in the same manner but
without annualizing the total return or taking sales charges into account. The
Fund may also include comparative performance information in advertising or
marketing its shares. Such performance information may include data from Lipper
Analytical Services, Inc. and other financial publications.
 
MANAGEMENT OF THE TRUST AND THE FUND
 
 
 BOARD OF TRUSTEES
  Overall responsibility for the management and supervision of the Trust rests
with the Trusts Board of Trustees. The Trustees approve all significant agree-
ments between the Trust and the persons and companies that furnish services to
the Fund, including agreements with the Funds distributor, investment manager,
custodian and transfer agent. The day-to-day operations of the Fund are dele-
gated to the Funds investment manager. The SAI contains background information
regarding each Trustee of the Trust and executive officers of the Fund.
 
 INVESTMENT MANAGER--MMC
  MMC, located at 388 Greenwich Street, New York, New York 10013, serves as the
Funds investment manager pursuant to an investment management agreement
approved by the Trusts Board of Trustees. The Manager (through predecessor
entities) has been in the investment counseling business since 1934 and is a
registered investment adviser. The Manager renders investment advice to invest-
ment companies that had aggregate assets under management as of March 31, 1998
in excess of $100.5 billion.
 
  Subject to the supervision and direction of the Trusts Board of Trustees,
the Manager manages the Funds portfolio in accordance with the Funds stated
investment objective and policies, makes investment decisions for the Fund,
places orders to purchase and sell securities, and employs professional
portfolio managers and
 
30
<PAGE>
 
MANAGEMENT OF THE TRUST AND THE FUND (CONTINUED)
 
securities analysts who provide research services to the Fund. For investment
management services rendered, the Fund pays the Manager a monthly fee at the
annual rate of 0.75% of the value of the Funds average daily net assets.
 
 PORTFOLIO MANAGEMENT
      , Vice President and Investment Officer of the Fund, is the portfolio
manager and manages the day-to-day operations of the Fund, including making all
investment decisions.
 
DISTRIBUTOR
 
 
  Smith Barney distributes shares of the Fund as principal underwriter and as
such conducts a continuous offering pursuant to a best efforts arrangement
requiring Smith Barney to take and pay for only such securities as may be sold
to the public. Pursuant to a plan of distribution adopted by the Fund under
Rule 12b-1 under the 1940 Act (the Plan), Smith Barney is paid an annual
service fee with respect to Class A, Class B and Class L shares of the Fund at
the annual rate of 0.25% of the average daily net assets of the respective
Class. Smith Barney is also paid an annual distribution fee with respect to
Class B and Class L shares at the annual rate of 0.75% of the average daily net
assets attributable to those Classes. Class B shares which automatically con-
vert to Class A shares eight years after the date of original purchase will no
longer be subject to distribution fees. The fees are used by Smith Barney to
pay its Financial Consultants for servicing shareholder accounts and, in the
case of Class B and Class L shares, to cover expenses primarily intended to
result in the sale of those shares. These expenses include: advertising; the
cost of printing and mailing prospectuses to potential investors; payments to
and expenses of Smith Barney Financial Consultants and other persons who pro-
vide support services in connection with the distribution of shares; interest
and/or carrying charges; and indirect and overhead costs of Smith Barney asso-
ciated with the sale of Fund shares, including lease, utility, communications
and sales promotion expenses.

  The payments to Smith Barney Financial Consultants for selling shares of a
Class include a commission or fee paid by the investor or Smith Barney at the
time of sale and, with respect to Class A, Class B and Class L shares, a con-
tinuing fee for servicing shareholder accounts for as long as a shareholder
remains a holder of that Class. Smith Barney Financial Consultants may receive
different levels of compensation for selling different Classes of shares.
 
  Payments under the Plan are not tied exclusively to the distribution and
shareholder service expenses actually incurred by Smith Barney and the payments
may
 
                                                                              31
<PAGE>
 
DISTRIBUTOR (CONTINUED)
 
exceed distribution expenses actually incurred. The Funds Board of Directors
will evaluate the appropriateness of the Plan and its payment terms on a con-
tinuing basis and in so doing will consider all relevant factors, including
expenses borne by Smith Barney, amounts received under the Plan and proceeds of
the CDSC.
 
ADDITIONAL INFORMATION
 
 
  The Trust was organized on October 17, 1991 under the laws of the Common-
wealth of Massachusetts and is a business entity commonly known as a Massachu-
setts business trust. The Trust offers shares of beneficial interest of sepa-
rate funds with a par value of $.001 per share. The Fund offers shares of bene-
ficial interest currently classified into five Classes--A, B, L, Y and Z. Each
Class of the Fund represents an identical interest in the Funds investment
portfolio. As a result, the Classes have the same rights, privileges and pref-
erences, except with respect to: (a) the designation of each Class; (b) the
effect of the respective sales charges; if any, for each Class; (c) the distri-
bution and/or service fees borne by each Class pursuant to the Plan; (d) the
expenses allocable exclusively to each Class; (e) voting rights on matters
exclusively affecting a single Class; (f) the exchange privilege of each Class;
and (g) the conversion feature of the Class B shares. The Trusts Board of
Trustees does not anticipate that there will be any conflicts among the inter-
ests of the holders of the different Classes. The Trustees, on an ongoing
basis, will consider whether any such conflict exists and, if so, take appro-
priate action.
 
  The Fund does not hold annual shareholder meetings. There normally will be no
meetings of shareholders for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders, at which time the Trustees then in office will call a
shareholders meeting for the election of Trustees. Shareholders of record of
no less than two-thirds of the outstanding shares of the Trust may remove a
Trustee through a declaration in writing or by vote cast in person or by proxy
at a meeting called for that purpose. The Trustees will call a meeting for any
purpose upon written request of shareholders holding at least 10% of the
Trusts outstanding shares and the Trust will assist shareholders in calling
such a meeting as required by the 1940 Act.
 
  When matters are submitted for shareholder vote, shareholders of each Class
will have one vote for each full share owned and a proportionate, fractional
vote for any fractional share held of that Class. Generally, shares of the Fund
will be voted on a Fund-wide basis on all matters except matters affecting only
the interests of one Class, in which case only shares of the affected Class
would be entitled to vote.
 
  PNC Bank National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the Funds investments.
 
 
32
<PAGE>
 
ADDITIONAL INFORMATION (CONTINUED)
 
  First Data, located at Exchange Place, Boston, Massachusetts 02109, serves as
the Funds transfer agent.
 
  The Fund sends its shareholders a semi-annual report and an audited annual
report, which include listings of the investment securities held by the Fund at
the end of the reporting period. In an effort to reduce the Funds printing and
mailing costs, the Fund 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 accounts should contact their Smith Barney Financial Consultant or the
Funds Transfer Agent.
 
                                                                              33
<PAGE>
 
APPENDIX A
 
  Convertible Securities. Convertible securities are generally preferred secu-
rities or fixed-income securities that are convertible into common stock at
either a stated price or stated rate. The price of the convertible security
will normally vary in some proportion to changes in the price of the under-
lying common stock because of this conversion feature. A convertible security
will normally also provide a fixed income stream. For this reason, the con-
vertible security may not decline in price as rapidly as the underlying common
stock. Convertible securities rank senior to common stocks in an issuers cap-
ital structure and consequently entail less risk than the issuers common
stock. MMC will select convertible securities to be purchased by the Fund
based primarily upon its evaluation of the fundamental investment characteris-
tics and growth prospects of the issuer of the security. As a fixed income
security, a convertible security tends to increase in market value when inter-
est rates decline and decrease in value when interest rates rise. While con-
vertible securities generally offer lower interest or dividend yields than
non-convertible fixed income securities of similar quality, their value tends
to increase as the market value of the underlying stock increases and to
decrease when the value of the underlying stock decreases.
 
  Foreign Securities. In addition to direct investment in securities of for-
eign issuers, the Fund may also invest in securities of foreign issuers in the
form of sponsored and unsponsored American Depositary Receipts (ADRs), Euro-
pean Depositary Receipts (EDRs), Global Depositary Receipts (GDRs) or other
similar securities convertible into securities of foreign issuers. These secu-
rities may not necessarily be denominated in the same currency as the securi-
ties into which they may be converted. The Fund also may invest in securities
denominated in European Currency Units (ECUs). An ECU is a basket consisting
of a specified amount of currencies of certain of the twelve member states of
the European Community. In addition, the Fund may invest in securities denomi-
nated in other currency baskets.
 
  There are certain risks involved in investing in securities of companies and
governments of foreign nations that are in addition to the usual risks inher-
ent in domestic investments. These risks include those resulting from revalua-
tion of currencies, future adverse political and economical developments and
the possible imposition of currency exchange blockages or other foreign gov-
ernmental laws or restrictions, reduced availability of public information
concerning issuers and the lack of uniform accounting, auditing and financial
reporting standards or of other regulatory practices and requirements compara-
ble to those applicable to domestic companies. The yield of the Fund may be
adversely affected by fluctuations in value of one or more foreign currencies
relative to the U.S. dollar. Moreover, securities of many foreign companies
and their markets may be less liquid and their prices more volatile than those
of securities of comparable domestic companies. In addition, with
 
34
<PAGE>
 
APPENDIX A (CONTINUED)
 
respect to certain foreign countries, there is the possibility of expropria-
tion, nationalization, confiscatory taxation and limitations on the use or
removal of funds or other assets of the Fund, including the withholding of div-
idends. Foreign securities may be subject to foreign government taxes that
could reduce the yield on such securities. Because the Fund may invest in secu-
rities denominated or quoted in currencies other than the U.S. dollar, changes
in foreign currency exchange rates may adversely affect the value of portfolio
securities and the appreciation or depreciation of investments. Investment in
foreign securities also may result in higher expenses due to the cost of con-
verting foreign currency to U.S. dollars, the payment of fixed brokerage com-
missions on foreign exchanges, which generally are higher than commissions on
domestic exchanges, and the expense of maintaining securities with foreign cus-
todians, and the imposition of transfer taxes or transaction charges associated
with foreign exchanges.
 
  Real Estate Investment Trusts (REITS). The Fund may invest in REITS, which
are pooled investment vehicles that invest primarily in either real estate or
real estate related loans. The value of a REIT is affected by changes in the
value of the properties owned by the REIT or securing mortgage loans held by
the REIT. REITs are dependent upon cash flow from their investments to repay
financing costs and the ability of the REITs manager. REITs are also subject
to risks generally associated with investments in real estate. The Fund will
indirectly bear its proportionate share of any expenses, including management
fees, paid by a REIT in which it invests.
 
  Debt Securities. Debt securities in which the Fund may invest include notes
, bills, commercial paper, obligations issued or guaranteed by the government
 or any of its political subdivisions, 
agencies or instrumentalities, and certificates of deposit.
 Debt securities represent money borrowed that obligates the 
issuer (e.g., a corporation, municipality,
 government, government agency) to repay the borrowed amount at
 maturity (when the obligation is due and payable)
 and usually to pay the holder interest at s
 
  All debt securities are subject to market risk and credit risk. Market risk
relates to market-induced changes in a securitys value, usually as a result of
changes in interest rates. The value of the Funds investments in debt securi-
ties will change as the general levels of interest rates fluctuate. During
periods of falling interest rates, the value of the Funds debt securities will
generally rise. Conversely, during periods of rising interest rates, the value
of the Funds debt securities will generally decline. Credit risk relates to
the ability of the issuer to make payments of principal and interest. The Fund
has no restrictions with respect to the maturities or duration of the debt
securities it holds. The Funds investments in fixed income securities with
longer terms to maturity or greater duration are subject to greater volatility
than the Funds shorter-term securities.
 
                                                                              35
<PAGE>
 
APPENDIX A (CONTINUED)
 
 
  Money Market Instruments. Short-term instruments in which the Fund may invest
include obligations of banks having at least $1 billion in assets (including
certificates of deposit, time deposits and bankers acceptances of domestic or
foreign banks, domestic savings and loan associations and similar institu-
tions); commercial paper rated no lower than A-2 by Standard & Poors Ratings
Group (S&P) or Prime-2 by Moodys Investors Service, Inc. (Moodys) or the
equivalent from another nationally recognized statistical rating organization
(NRSRO) or, if unrated, of an issuer having an outstanding, unsecured debt
issue then rated within the two highest rating categories; and repurchase
agreements with respect to any of the foregoing entered into with banks and
non-bank dealers approved by the Trusts Board of Trustees.
 
  U.S. Government Securities. The Fund may invest in U.S. Government securi-
ties. Generally, these securities include U.S. Treasury obligations and obliga-
tions issued or guaranteed by U.S. Government agencies, instrumentalities or
sponsored enterprises. U.S. Government securities also include Treasury
receipts and other stripped U.S. Government securities, where the interest and
principal components of stripped U.S. Government securities are traded indepen-
dently. The Fund may also invest in zero coupon U.S. Treasury securities and in
zero coupon securities issued by financial institutions, which represent a pro-
portionate interest in underlying U.S. Treasury securities. A zero coupon secu-
rity pays no interest to its holder during its life and its value consists of
the difference between its face value at maturity and its cost. The market val-
ues of zero coupon securities generally are more volatile than the market
prices of securities that pay interest periodically.
 
  Repurchase Agreements. The Fund may enter into repurchase agreements in order
to earn income on available cash or as a temporary defensive measure. Under a
repurchase agreement, the Fund acquires securities subject to the sellers
agreement to repurchase at a specified time and price. If the seller becomes
subject to a proceeding under the bankruptcy laws or its assets are otherwise
subject to a stay order, the Funds right to liquidate the securities may be
restricted (during which time the value of the securities could decline). As
discussed in the SAI, the Fund has adopted certain procedures intended to mini-
mize the risks of investing in repurchase agreements.
 
  Reverse Repurchase Agreements. In order to generate additional income, the
Fund may engage in reverse repurchase agreement transactions with banks, bro-
ker-dealers and other financial intermediaries. Reverse repurchase agreements
are the same as repurchase agreements except that, in this instance, the Fund
would
 
36
<PAGE>
 
APPENDIX A (CONTINUED)
 
assume the role of seller/borrower in the transaction. The Fund will maintain
a segregated account consisting of assets determined to be liquid by MMC that
at all times are in an amount equal to its obligations under reverse repur-
chase agreements. The Fund will invest the proceeds in other money market
instruments or repurchase agreements maturing not later than the expiration of
the reverse repurchase agreement. Reverse repurchase agreements involve the
risk that the market value of the securities sold by the Fund may decline
below the repurchase price of the securities.
 
  When-Issued, Delayed-Delivery and Forward Commitment Transactions. The Fund
may purchase securities on a when-issued basis, may purchase and sell securi-
ties for delayed delivery and may make contracts to purchase securities for a
fixed price at a future date beyond normal settlement time (forward commit-
ments). When-issued transactions, delayed delivery purchases and forward com-
mitments involve a risk of loss if the value of the securities declines prior
to the settlement date, which risk is in addition to the risk of decline in
the value of the Funds other assets. Typically, no income accrues on securi-
ties the Fund has committed to purchase prior to the time delivery of the
securities is made, although the Fund may earn income on securities it has
deposited in a segregated account.
 
  Lending of Securities. Consistent with applicable regulatory requirements, 
the Fund may seek to increase its income by lending portfolio securities to 
entities deemed creditworthy by MMC. Such loans will usually be made to 
brokers, dealers and other financial organizations, and would be required 
to be secured continuously by collateral in cash, letters of credit or U.S. 
government securities, which are maintained at all times in an amount equal 
to the current market value of the loaned securities. Any gains would justify
the risk. 

	Options on Securities, Securities Indexes and Currencies.  
The Fund may write (sell) covered put and call options on 
securities, securities indexes and currencies ("Options") and 
purchase put and call Options that are traded on foreign or U.S. 
securities exchanges and over the counter.  The Fund will write 
such Options for the purpose of increasing its return and/or 
protecting the value of its portfolio.  In particular, where the 
Fund writes an Option that expires unexercised or is closed out by 
the Fund at a profit, it will retain the premium paid for the 
Option, which will increase its gross income and will offset in 
part the reduced value of a portfolio security in connection with 
which the Option may have been written or the increased cost of 
portfolio securities to be acquired.  However, the writing of 
Options constitutes only a partial hedge, up to the amount of the 
premium, less any transaction costs.  In contrast, if the price of 
the security underlying the Option moves adversely to the Fund's 
position, the Option may be exercised and the Fund will be 
required to purchase or sell the security at a disadvantageous 
price, resulting in losses that may only be partially offset by 
the amount of the premium.  The Fund may also write combinations 
of put and call Options on the same security, known as 
"straddles."  Such transactions generate additional premium 
income but also present increased risk.

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

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

	Futures Contracts and Options on Futures 
Contracts.  The Fund may enter into transactions in 
futures contracts and options on futures only (i) for 
bona fide hedging purposes (as defined in Commodities 
Futures Trading Commission regulations), or (ii) for 
non-hedging purposes, provided that the aggregate 
initial margin and premiums on such non-hedging 
positions do not exceed 5% of the liquidation value of 
the Fund's assets. 

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

		Among the several risks accompanying the 
utilization of futures contracts and options on 
futures contracts are: First, the successful use of 
futures and options is dependent upon the ability of 
the Investment Adviser to predict correctly movements 
in the stock market or in the direction of interest 
rates.  These predictions involve skills and 
techniques that may be different from those involved 
in the management of investments in securities.  If 
the prices of the underlying commodities move in an 
unanticipated manner, the Fund may lose the expected 
benefit of these futures or options transactions and 
may incur losses.  Second, positions in futures 
contracts and options on futures contracts may only be 
closed out by entering into offsetting transactions on 
the exchange where the position was entered into (or 
through a linked exchange), and as a result of daily 
price fluctuations limits there can be no assurance 
the offsetting transaction could be entered into at an 
advantageous price at a particular time.  
Consequently, the Fund may realize a loss on a futures 
contract or option that is not offset by an increase 
in the value of its portfolio securities that are 
being hedged or the fund may not be able to close a 
futures or options position without incurring a loss 
in the event of adverse price movements.



38
<PAGE>
 



 













                         SMITH BARNEY
                      ---------------------------------
                     A Member of TravelersGroup [LOGO]
 
 
 

                        SMITH BARNEY
                         MID CAP
                         BLEND FUND INC.
                        388 Greenwich Street
                        New York, New York 10013
                       FD       6/98





Part B: 

STATEMENT OF ADDITIONAL INFORMATION

Smith Barney
Mid Cap Blend Fund 
388 Greenwich Street
New York, New York 10013
1-800-451-2010



Statement of Additional 
Information
June   , 1998

This Statement of Additional Information (SAI) 
expands upon and supplements the information 
contained in the current Prospectus of Smith 
Barney Mid Cap Blend Fund (the Fund) dated 
June     , 1998, as amended or supplemented 
from time to time, and should be read in 
conjunction with the Funds Prospectus. The 
Fund is a sub-trust of Smith Barney Investment 
Trust (the Trust). The Funds Prospectus may 
be obtained from a Smith Barney Financial 
Consultant or by writing or calling the Fund at 
the address or telephone number set forth 
above. This SAI, although not in itself a 
prospectus, is incorporated by reference into 
the Prospectus in its entirety. 
CONTENTS

For ease of reference, the same section 
headings are used in both the Prospectus and 
this SAI, except where shown below:

Management of the Fund 
 ........................................................
 ...............................

Investment Objective and Management Policies 
 ...................................................

Purchase of Shares 
 ........................................................
 ........................................
 
Redemption of Shares 
 ........................................................
 ...................................

Distributor 
 ........................................................
 .....................................................

Valuation of Shares 
 ........................................................
 .......................................

Performance Data (See in the Prospectus Performance) 
 ...................................

Taxes (See in the Prospectus Dividends, Distributions 
and Taxes) ..................

Additional Information 
 .........................................................
 .................................



MANAGEMENT OF THE FUND

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

Smith Barney Inc. (Smith Barney or the 
Distributor)	
Distributor
Mutual Management Corp. (MMC or the Manager)	
Investment Manager
PNC Bank, National Association (PNC or the 
Custodian)	
Custodian
First Data Investor Services Group, Inc.,
(First Data or the Transfer Agent)	

Transfer Agent


These organizations and the functions they 
perform for the Fund are discussed in the 
Prospectus and in this SAI.





Trustees and Executive Officers of the Fund

The Trustees and executive officers of the 
Fund, together with information as to their 
principal business occupations during the past 
five years, are shown below. Each Trustee who 
is an interested person of the Fund, as 
defined in the Investment Company Act of 1940, 
as amended (the 1940 Act), is indicated by 
an asterisk. 

	Herbert Barg, Trustee (Age 74).  Private 
Investor.  His address is 273 Montgomery 
Avenue, Bala Cynwyd, Pennsylvania 19004.

	*Alfred J. Bianchetti, Trustee (Age 74).  
Retired; formerly Senior Consultant to Dean 
Witter Reynolds Inc.  His address is 19 Circle 
End Drive, Ramsey, New Jersey 07466.

	Martin Brody, Trustee (Age 76).  
Consultant, HMK Associates; Retired Vice 
Chairman of the Board of Restaurant Associates 
Corp.  His address is c/o HMK Associates, 30 
Columbia Turnpike, Florham Park, New Jersey 
07932.

	Dwight B. Crane, Trustee (Age 59).  
Professor, Harvard Business School.  His 
address is c/o Harvard Business School, 
Soldiers Field Road, Boston, Massachusetts 
02163.

	Burt N. Dorsett, Trustee (Age 66).  
Managing Partner of Dorsett McCabe Management. 
Inc., an investment counseling firm; Director 
of Research Corporation Technologies, Inc., a 
nonprofit patent clearing and licensing firm.  
His address is 201 East 62nd Street, New York, 
New York 10021.

	Elliot S. Jaffe, Trustee (Age 71).  
Chairman of the Board and President of The 
Dress Barn, Inc.  His address is 30 Dunnigan 
Drive, Suffern, New York 10901.

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

	Joseph J. McCann, Trustee (Age 67).  
Financial Consultant; Retired Financial 
Executive, Ryan Homes, Inc.  His address is 200 
Oak Park Place, Pittsburgh, Pennsylvania 15243.

	*Heath B. McLendon, Chairman of the Board 
and Investment Officer (Age 64).  Managing 
Director of Smith Barney, Chairman of the Board 
of Smith Barney Strategy Advisers Inc. and 
President of MMC and Travelers Investment 
Adviser, Inc. (TIA); prior to July 1993, 
Senior Executive Vice President of Shearson 
Lehman Brothers Inc., Vice Chairman of Shearson 
Asset Management.  Mr. McLendon is Chairman of 
the Board of 42 Smith Barney Mutual Funds. His 
address is 388 Greenwich Street, New York, New 
York 10013.

	Cornelius C. Rose, Jr., Trustee (Age 63).  
President, Cornelius C. Rose Associates, Inc., 
financial consultants, and Chairman and 
Director of Performance Learning Systems, an 
educational consultant.  His address is Fair 
Oaks, Enfield, New Hampshire 03748.

	James J. Crisona, Director Emeritus.  
Attorney; formerly Justice of the Supreme Court 
of the State of New York.  His address is 118 
East 60th Street, New York, New York 10022

	Lewis E. Daidone, Senior Vice President 
and Treasurer (Age 40).  Managing Director of 
Smith Barney, Chief Financial Officer of the 
Smith Barney Mutual Funds; Director and Senior 
Vice President of MMC and TIA. His address is 
388 Greenwich Street, New York, New York 10013.

	Christina T. Sydor, Secretary (Age 46). 
Managing Director of Smith Barney; General 
Counsel and Secretary of MMC and TIA.  Her 
address is 388 Greenwich Street, New York, New 
York 10013.

No officer, director or employee of Smith 
Barney or any parent or subsidiary of Smith 
Barney receives any compensation from the Fund 
for serving as an officer or Trustee of the 
Fund. The Trust pays each Trustee who is not an 
officer, director or employee of Smith Barney 
or any of their affiliates a fee of $4,000 per 
annum plus $500 per meeting attended. All 
Trustees are reimbursed for travel and out-of-
pocket expenses incurred to attend such 
meetings.

For the calendar year ended November 30, 1997, 
the Trustees of the Fund were paid the 
following compensation. 

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

Herbert Barg	$0	                    $0	
	           $105,175		     
18
Alfred Bianchetti	0		       0		
	51,000		     13
Martin Brody	0		       0		             
124,286		     21
Dwight B. Crane	0		       0		             
140,375		     24
Burt N. Dorsett*	0		       0		
	47,400		     13
Elliot S. Jaffe	0		       0		
	51,100		     13
Stephen E. Kaufman	0		       0		
	92,336		     15
Joseph J. McCann	0		       0		
	52,700		     13
Heath B. McLendon **	 -		       -		
	     -		     42
Cornelius C. Rose, Jr.	0		       0	
		51,400		     
13
James J. Crisona***	0		       0		
	20,575		     12

	

*      Designates an interested Trustee.
#   Upon attainment of age 80, Fund Trustees 
are required to change to emeritus status.  
Trustees Emeritus are entitled to serve in 
emeritus status for a maximum of 10 years, 
during which time they are paid 50% of the 
annual retainer fee and meeting fees 
otherwise applicable to Fund Trustees, 
together with reasonable out-of-pocket 
expenses for each meeting attended.  Mr. 
Crisona is a Trustee Emeritus and as such may 
attend meetings but has no voting rights. 
During the Funds last fiscal year,  aggregate 
compensation paid by the Fund to Trustees 
achieving emeritus status totaled $11,423
					


Investment Manager - MMC

MMC serves as investment manager to the Fund 
pursuant to an investment management agreement 
(the Investment Management Agreement) with 
the Trust which was approved by the Board of 
Trustees, including a majority of Trustees who 
are not interested persons of the Trust or 
the Manager.  The Manager is a wholly owned 
subsidiary of Salomon Smith Barney Holdings 
Inc. (Holdings), which in turn, is a wholly 
owned subsidiary of Travelers Group Inc. 
(Travelers).  The services provided by the 
Manager under the Investment Management 
Agreement are described in the prospectus under 
Management of the Trust and the Fund.  The 
Manager pays the salary of any officer and 
employee who is employed by both it and the 
Trust.  The Manager bears all expenses in 
connection with the performance of its 
services.

As compensation for investment management 
services, the Fund pays the Manager a fee 
computed daily and paid monthly at the annual 
rate of 0.75% of the Funds average daily net 
assets.



Counsel and Auditors

Willkie Farr & Gallagher serves as counsel to 
the Trust. The Trustees who are not interested 
persons of the Fund have selected Stroock & 
Stroock & Lavan  LLP to serve as their legal 
counsel. 

KPMG Peat Marwick LLP, independent accountants, 
345 Park Avenue, New York, New York 10154, 
serve as auditors of the Trust and will render 
an opinion on the Trusts financial statements 
annually beginning with the fiscal period 
ending  November 30, 1998.

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The Prospectus discusses the Funds investment 
objective and the policies it employs to 
achieve its objective. This section contains 
supplemental information concerning the types 
of securities and other instruments in which 
the Fund may invest, the investment policies 
and portfolio strategies that the Fund may 
utilize and certain risks attendant to such 
investments, policies and strategies.

Foreign Securities and American Depository 
Receipts
 
The Fund has the authority to invest up to 25% 
of its assets in foreign securities (including 
European Depository Receipts (EDRs) and Global 
Depository Receipts (GDRs)) and American 
Depository Receipts (ADRs) or other securities 
representing underlying shares of foreign 
companies.  EDRs are receipts issued in Europe 
which evidence ownership of underlying 
securities issued by a foreign corporations.  
ADRs are receipts typically issued by an 
American bank or trust company which evidence a 
similar ownership arrangement.  Generally, ADRs 
which are issued in registered form, are 
designed for use in the United States 
securities markets and EDRs, which are issued 
in bearer form, are designed for use in 
European securities markets.  GDRs are 
tradeable both in the U.S. and Europe and are 
designed for use throughout the world.

Investing in the securities of foreign 
companies involves special risks and 
considerations not typically associated with 
investing in U.S. companies. These include 
differences in accounting, auditing and 
financial reporting standards, generally higher 
commission rates on foreign portfolio 
transactions, the possibility of expropriation 
or confiscatory taxation, adverse changes in 
investment or exchange control regulations, 
political instability which could affect U.S. 
investments in foreign countries, and potential 
restrictions on the flow of international 
capital. Additionally, foreign securities often 
trade with less frequency and volume than 
domestic securities and therefore may exhibit 
greater price volatility. Many of the foreign 
securities held by the Fund will not be 
registered with, nor will the issuers thereof 
be subject to the reporting requirements of, 
the SEC. Accordingly, there may be less 
publicly available information about the 
securities and about the foreign company 
issuing them than is available about a domestic 
company and its securities. Moreover, 
individual foreign economies may differ 
favorably or unfavorably from the U.S. economy 
in such respects as growth of gross domestic 
product, rate of inflation, capital 
reinvestment, resource self-sufficiency and 
balance of payment positions. The Fund may 
invest in securities of foreign governments (or 
agencies or subdivisions thereof), and 
therefore many, if not all, of the foregoing 
considerations apply to such investments as 
well.

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

In lending its portfolio securities, the Fund 
can increase its income by continuing to 
receive interest on the loaned securities as 
well as by either investing the cash collateral 
in short-term instruments or obtaining yield in 
the form of interest paid by the borrower when 
U.S. government securities are used as 
collateral. Requirements of the SEC, which may 
be subject to future modifications, currently 
provide that the following conditions must be 
met whenever the Funds portfolio securities 
are loaned: (a) the Fund must receive at least 
100% cash collateral or equivalent securities 
from the borrower; (b) the borrower must 
increase such collateral whenever the market 
value of the securities rises above the level 
of such collateral; (c) the Fund must be able 
to terminate the loan at any time; (d) the Fund 
must receive reasonable interest on the loan, 
as well as an amount equal to any dividends, 
interest or other distributions on the loaned 
securities, and any increase in market value; 
(e) the Fund may pay only reasonable custodian 
fees in connection with the loan; and (f) 
voting rights on the loaned securities may pass 
to the borrower; however, if a material event 
adversely affecting the investment occurs, the 
Trusts Board of Trustees must terminate the 
loan and regain the right to vote the 
securities. The risks in lending portfolio 
securities, as with other extensions of secured 
credit, consist of possible delay in receiving 
additional collateral or in the recovery of the 
securities or possible loss of rights in the 
collateral should the borrower fail 
financially. Loans will be made to firms deemed 
by the Investment Adviser to be of good 
standing and will not be made unless, in the 
judgment of the Investment Adviser, the 
consideration to be earned from such loans 
would justify the risk. From time to time, the 
Fund may return a part of the interest earned 
from the investment of collateral received for 
securities loaned to:  (a) the borrower; and/or 
(b) a third party, which is unaffiliated with 
the Fund, the Investment Adviser or 
Administrator and which is acting as a 
finder.

Reverse Repurchase Agreements

The Fund may enter into reverse repurchase 
agreements.  A reverse repurchase agreement 
involves the sale of a money market instrument 
by the Fund and its agreement to repurchase the 
instrument at a specified time and price.  The 
Fund will maintain a segregated account 
consisting of U.S. government securities or 
cash or cash equivalents to cover its 
obligations under reverse repurchase agreements 
with broker-dealers and other financial 
institutions.  The Fund will invest the 
proceeds in other money market instruments or 
repurchase agreements maturing not later than 
the expiration of the reverse repurchase 
agreement.  Under the Investment Company Act of 
1940, as amended, reverse repurchase agreements 
may be considered borrowing by the seller.

Reverse repurchase agreements create 
opportunities for increased returns to the 
shareholders of the Fund but, at the same time, 
create special risk considerations.  Although 
the principal or stated value of such 
borrowings will be fixed, the Funds assets may 
change in value during the time the borrowing 
is outstanding.  To the extent the income or 
other gain derived from securities purchased 
with borrowed funds exceeds the interest or 
dividends the Fund will have to pay in respect 
thereof, the Funds net income or other gain 
will be greater than if this type of leverage 
had not been used.  Conversely, if the income 
or other gain from the incremental assets is 
not sufficient to cover this cost, the net 
income or other gain of the Fund will be less 
than if the reverse repurchase agreement had 
not been used.

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

When-Issued Securities and Delayed Delivery 
Transactions

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

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

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

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

Certificates of deposit (CDs) are short-term 
negotiable obligations of commercial banks. 
Time deposits (TDs) are non-negotiable 
deposits maintained in banking institutions for 
specified periods of time at stated interest 
rates. Bankers acceptances are time drafts 
drawn on commercial banks by borrowers usually 
in connection with international transactions.
 
Domestic commercial banks organized under 
Federal law are supervised and examined by the 
Comptroller of the Currency and are required to 
be members of the Federal Reserve System and to 
be insured by the Federal Deposit Insurance 
Corporation (the FDIC). Domestic banks 
organized under state law are supervised and 
examined by state banking authorities but are 
members of the Federal Reserve System only if 
they elect to join. Most state banks are 
insured by the FDIC (although such insurance 
may not be of material benefit to the Fund, 
depending upon the principal amounts of CDs of 
each bank held by the Fund) and are subject to 
Federal examination and to a substantial body 
of Federal law and regulation. As a result of 
governmental regulations, domestic branches of 
domestic banks are generally required to, among 
other things, maintain specified levels of 
reserves, and are subject to other supervision 
and regulation designed to promote financial 
soundness.
 
Obligations of foreign branches of domestic 
banks, such as CDs and TDs, may be general 
obligations of the parent bank in addition to 
the issuing branch, or may be limited by the 
terms of a specific obligation and government 
regulation. Such obligations are subject to 
different risks than are those of domestic 
banks or domestic branches of foreign banks. 
These risks include foreign economic and 
political developments, foreign governmental 
restrictions that may adversely affect payment 
of principal and interest on the obligations, 
foreign exchange controls and foreign 
withholding and other taxes on interest income. 
Foreign branches of domestic banks are not 
necessarily subject to the same or similar 
regulatory requirements that apply to domestic 
banks, such as mandatory reserve requirements, 
loan limitations, and accounting, auditing and 
financial recordkeeping requirements. In 
addition, less information may be publicly 
available about a foreign branch of a domestic 
bank than about a domestic bank. CDs issued by 
wholly owned Canadian subsidiaries of domestic 
banks are guaranteed as to repayment of 
principal and interest (but not as to sovereign 
risk) by the domestic parent bank.
 
Obligations of domestic branches of foreign 
banks may be general obligations of the parent 
bank in addition to the issuing branch, or may 
be limited by the terms of a specific 
obligation and by governmental regulation as 
well as governmental action in the country in 
which the foreign bank has its head office. A 
domestic branch of a foreign bank with assets 
in excess of $1 billion may or may not be 
subject to reserve requirements imposed by the 
Federal Reserve System or by the state in which 
the branch is located if the branch is licensed 
in that state. In addition, branches licensed 
by the Comptroller of the Currency and branches 
licensed by certain states (State Branches) 
may or may not be required to: (a) pledge to 
the regulator by depositing assets with a 
designated bank within the state, an amount of 
its assets equal to 5% of its total 
liabilities; and (b) maintain assets within the 
state in an amount equal to a specified 
percentage of the aggregate amount of 
liabilities of the foreign bank payable at or 
through all of its agencies or branches within 
the state. The deposits of State Branches may 
not necessarily be insured by the FDIC. In 
addition, there may be less publicly available 
information about a domestic branch of a 
foreign bank than about a domestic bank.
 
In view of the foregoing factors associated 
with the purchase of CDs and TDs issued by 
foreign branches of domestic banks or by 
domestic branches of foreign banks, MMC will 
carefully evaluate such investments on a case-
by-case basis.
 
Savings and loan associations whose CDs may be 
purchased by the Fund are supervised by the 
Office of Thrift Supervision and are insured by 
the Savings Association Insurance Fund, which 
is administered by the FDIC and is backed by 
the full faith and credit of the U.S. 
government. As a result, such savings and loan 
associations are subject to regulation and 
examination.

 
Options on Securities
 
The Fund may engage in the writing of covered 
call options. The Fund may also purchase put 
options and enter into closing transactions. 
The Fund may write call options on securities 
only if they are covered, and such options must 
remain covered so long as the Fund is obligated 
as a writer.  A call option written by the Fund 
is covered if the Fund owns the securities 
underlying the option or has an absolute and 
immediate right to acquire that security 
without additional cash consideration (or for 
additional cash consideration held in a 
segregated account by its custodian) upon 
conversion or exchange of other securities held 
in its portfolio.  A call option is also 
covered if the Fund holds on a share-for-share 
basis a call on the same security as the call 
written where the exercise price of the call 
held is equal to less than the exercise price 
of the call written or greater than the 
exercise price of the call written if the 
difference is maintained by the Fund in cash, 
Treasury bills or other high-grade, short-term 
obligations in a segregated account with its 
custodian.
 
The principal reason for writing covered call 
options on securities is to attempt to realize, 
through the receipt of premiums, a greater 
return than would be realized on the securities 
alone. In return for a premium, the writer of a 
covered call option forfeits the right to any 
appreciation in the value of the underlying 
security above the strike price for the life of 
the option (or until a closing purchase 
transaction can be effected). Nevertheless, the 
call writer retains the risk of a decline in 
the price of the underlying security. 
Similarly, the principal reason for writing 
covered put options is to realize income in the 
form of premiums. The writer of a covered put 
option accepts the risk of a decline in the 
price of the underlying security. The size of 
the premiums the Fund may receive may be 
adversely affected as new or existing 
institutions, including other investment 
companies, engage in or increase their option-
writing activities.
 
Options written by the Fund will normally have 
expiration dates between one and six months 
from the date written. The exercise price of 
the options may be below, equal to, or above 
the current market values of the underlying 
securities at the times the options are 
written. In the case of call options, these 
exercise prices are referred to as in-the-
money, at-the-money and out-of-the-
money, respectively.
 
The Fund may write (a) in-the-money call 
options when MMC expects the price of the 
underlying security to remain flat or decline 
moderately during the option period, (b) at-
the-money call options when MMC expects the 
price of the underlying security to remain flat 
or advance moderately during the option period 
and (c) out-of-the-money call options when MMC 
expects that the price of the security may 
increase but not above a price equal to the sum 
of the exercise price plus the premiums 
received from writing the call option. In any 
of the preceding situations, if the market 
price of the underlying security declines and 
the security is sold at this lower price, the 
amount of any realized loss will be offset 
wholly or in part by the premium received. Out-
of-the-money, at-the-money and in-the-money put 
options (the reverse of call options as to the 
relation of exercise price to market price) may 
be utilized in the same market environments as 
such call options are used in equivalent 
transactions.

So long as the obligation of the Fund as the 
writer of an option continues, the Fund may be 
assigned an exercise notice by the broker-
dealer through which the option was sold, 
requiring it to deliver, in the case of a call, 
or take delivery of, in the case of a put, the 
underlying security against payment of the 
exercise price. This obligation terminates when 
the option expires or the Fund effects a 
closing purchase transaction. The Fund can no 
longer effect a closing purchase transaction 
with respect to an option once it has been 
assigned an exercise notice. To secure its 
obligation to deliver the underlying security 
when it writes a call option, or to pay for the 
underlying security when it writes a put 
option, the Fund will be required to deposit in 
escrow the underlying security or other assets 
in accordance with the rules of the Options 
Clearing Corporation (Clearing Corporation) 
or similar clearing corporation and the 
securities exchange on which the option is 
written.
 
An option position may be closed out only where 
there exists a secondary market for an option 
of the same series on a recognized securities 
exchange or in the over-the-counter market. The 
Fund expects to write options only on national 
securities exchanges or in the over-the-counter 
market. The Fund may purchase put options 
issued by the Clearing Corporation or in the 
over-the-counter market.
 
The Fund may realize a profit or loss upon 
entering into a closing transaction. In cases 
in which the Fund has written an option, it 
will realize a profit if the cost of the 
closing purchase transaction is less than the 
premium received upon writing the original 
option and will incur a loss if the cost of the 
closing purchase transaction exceeds the 
premium received upon writing the original 
option. Similarly, when the Fund has purchased 
an option and engages in a closing sale 
transaction, whether it recognizes a profit or 
loss will depend upon whether the amount 
received in the closing sale transaction is 
more or less than the premium the Fund 
initially paid for the original option plus the 
related transaction costs.
 
Although the Fund generally will purchase or 
write only those options for which MMC believes 
there is an active secondary market so as to 
facilitate closing transactions, there is no 
assurance that sufficient trading interest to 
create a liquid secondary market on a 
securities exchange will exist for any 
particular option or at any particular time, 
and for some options no such secondary market 
may exist. A liquid secondary market in an 
option may cease to exist for a variety of 
reasons. In the past, for example, higher than 
anticipated trading activity or order flow, or 
other unforeseen events, have at times rendered 
certain of the facilities of the Clearing 
Corporation and national securities exchanges 
inadequate and resulted in the institution of 
special procedures, such as trading rotations, 
restrictions on certain types of orders or 
trading halts or suspensions in one or more 
options. There can be no assurance that similar 
events, or events that may otherwise interfere 
with the timely execution of customers orders, 
will not recur. In such event, it might not be 
possible to effect closing transactions in 
particular options. If, as a covered call 
option writer, the Fund is unable to effect a 
closing purchase transaction in a secondary 
market, it will not be able to sell the 
underlying security until the option expires or 
it delivers the underlying security upon 
exercise.
 
Securities exchanges generally have established 
limitations governing the maximum number of 
calls and puts of each class which may be held 
or written, or exercised within certain 
periods, by an investor or group of investors 
acting in concert (regardless of whether the 
options are written on the same or different 
securities exchanges or are held, written or 
exercised in one or more accounts or through 
one or more brokers).   It is possible that the 
Fund and other clients of MMC and certain of 
their affiliates may be considered to be such a 
group.  A securities exchange may order the 
liquidation of positions found to be in 
violation of these limits, and it may impose 
certain other sanctions.
 
In the case of options written by the Fund that 
are deemed covered by virtue of the Funds 
holding convertible or exchangeable preferred 
stock or debt securities, the time required to 
convert or exchange and obtain physical 
delivery of the underlying common stocks with 
respect to which the Fund has written options 
may exceed the time within which the Fund must 
make delivery in accordance with an exercise 
notice. In these instances, the Fund may 
purchase or temporarily borrow the underlying 
securities for purposes of physical delivery. 
By so doing, the Fund will not bear any market 
risk because the Fund will have the absolute 
right to receive from the issuer of the 
underlying security an equal number of shares 
to replace the borrowed stock, but the Fund may 
incur additional transaction costs or interest 
expenses in connection with any such purchase 
or borrowing.
 
Although MMC will attempt to take appropriate 
measures to minimize the risks relating to the 
Funds writing of call options and purchasing 
of put and call options, there can be no 
assurance that the Fund will succeed in its 
option-writing program.
 
Stock Index Options
 
As described generally above, the Fund may 
purchase put and call options and write call 
options on domestic stock indexes listed on 
domestic exchanges in order to realize its 
investment objective of capital appreciation or 
for the purpose of hedging its portfolio. A 
stock index fluctuates with changes in the 
market values of the stocks included in the 
index. Some stock index options are based on a 
broad market index such as the New York Stock 
Exchange Composite Index or the Canadian Market 
Portfolio Index, or a narrower market index 
such as the Standard & Poors 100. Indexes also 
are based on an industry or market segment such 
as the American Stock Exchange Oil and Gas 
Index or the Computer and Business Equipment 
Index.
 
Options on stock indexes are generally similar 
to options on stock except that the delivery 
requirements are different. Instead of giving 
the right to take or make delivery of stock at 
a specified price, an option on a stock index 
gives the holder the right to receive a cash 
exercise settlement amount equal to (a) the 
amount, if any, by which the fixed exercise 
price of the option exceeds (in the case of a 
put) or is less than (in the case of a call) 
the closing value of the underlying index on 
the date of exercise, multiplied by (b) a fixed 
index multiplier. Receipt of this cash 
amount will depend upon the closing level of 
the stock index upon which the option is based 
being greater than, in the case of a call, or 
less than, in the case of a put, the exercise 
price of the option. The amount of cash 
received will be equal to such difference 
between the closing price of the index and the 
exercise price of the option expressed in 
dollars or a foreign currency, as the case may 
be, times a specified multiple. The writer of 
the option is obligated, in return for the 
premium received, to make delivery of this 
amount. The writer may offset its position in 
stock index options prior to expiration by 
entering into a closing transaction on an 
exchange or it may let the option expire 
unexercised.
 
The effectiveness of purchasing or writing 
stock index options as a hedging technique will 
depend upon the extent to which price movements 
in the portion of the securities portfolio of 
the Fund correlate with price movements of the 
stock index selected. Because the value of an 
index option depends upon movements in the 
level of the index rather than the price of a 
particular stock, whether the Fund will realize 
a gain or loss from the purchase or writing of 
options on an index depends upon movements in 
the level of stock prices in the stock market 
generally or, in the case of certain indexes, 
in an industry or market segment, rather than 
movements in the price of a particular stock. 
Accordingly, successful use by the Fund of 
options on stock indexes will be subject to 
MMCs ability to predict correctly movements in 
the direction of the stock market generally or 
of a particular industry. This requires 
different skills and techniques than predicting 
changes in the price of individual stocks.

Futures Contracts and Options on Futures 
Contracts

As described generally above, the Fund may 
invest in stock index futures contracts and 
options on futures contracts that are traded on 
a domestic exchange or board of trade.

The purpose of entering into a futures contract 
by the Fund is to protect the Fund from 
fluctuations in the value of securities without 
actually buying or selling the securities. For 
example, in the case of stock index futures 
contracts, if the Fund anticipates an increase 
in the price of stocks that it intends to 
purchase at a later time, the Fund could enter 
into contracts to purchase the stock index 
(known as taking a long position) as a 
temporary substitute for the purchase of 
stocks. If an increase in the market occurs 
that influences the stock index as anticipated, 
the value of the futures contracts increases 
and thereby serves as a hedge against the 
Funds not participating in a market advance. 
The Fund then may close out the futures 
contracts by entering into offsetting futures 
contracts to sell the stock index (known as 
taking a short position) as it purchases 
individual stocks. The Fund can accomplish 
similar results by buying securities with long 
maturities and selling securities with short 
maturities. But by using futures contracts as 
an investment tool to reduce risk, given the 
greater liquidity in the futures market, it may 
be possible to accomplish the same result more 
easily and more quickly.
 
No consideration will be paid or received by 
the Fund upon the purchase or sale of a futures 
contract. Initially, the Fund will be required 
to deposit with the broker an amount of cash or 
cash equivalents equal to approximately 1% to 
10% of the contract amount (this amount is 
subject to change by the exchange or board of 
trade on which the contract is traded and 
brokers or members of such board of trade may 
charge a higher amount). This amount is known 
as initial margin and is in the nature of a 
performance bond or good faith deposit on the 
contract which is returned to the Fund, upon 
termination of the futures contract, assuming 
all contractual obligations have been 
satisfied. Subsequent payments, known as 
variation margin, to and from the broker, 
will be made daily as the price of the index or 
securities underlying the futures contract 
fluctuates, making the long and short positions 
in the futures contract more or less valuable, 
a process known as marking-to-market. In 
addition, when the Fund enters into a long 
position in a futures contract or an option on 
a futures contract, it must deposit into a 
segregated account with the Funds custodian an 
amount of cash or cash equivalents equal to the 
total market value of the underlying futures 
contract, less amounts held in the Funds 
commodity brokerage account at its broker. At 
any time prior to the expiration of a futures 
contract, the Fund may elect to close the 
position by taking an opposite position, which 
will operate to terminate the Funds existing 
position in the contract.
 
There are several risks in connection with the 
use of futures contracts as a hedging device. 
Successful use of futures contracts by the Fund 
is subject to the ability of MMC to predict 
correctly movements in the stock market or in 
the direction of interest rates. These 
predictions involve skills and techniques that 
may be different from those involved in the 
management of investments in securities. In 
addition, there can be no assurance that there 
will be a perfect correlation between movements 
in the price of the securities underlying the 
futures contract and movements in the price of 
the securities that are the subject of the 
hedge. A decision of whether, when and how to 
hedge involves the exercise of skill and 
judgment, and even a well-conceived hedge may 
be unsuccessful to some degree because of 
market behavior or unexpected trends in market 
behavior or interest rates.
 
Positions in futures contracts may be closed 
out only on the exchange on which they were 
entered into (or through a linked exchange) and 
no secondary market exists for those contracts. 
In addition, although the Fund intends to enter 
into futures contracts only if there is an 
active market for the contracts, there is no 
assurance that an active market will exist for 
the contracts at any particular time. Most 
futures exchanges and boards of trade limit the 
amount of fluctuation permitted in futures 
contract prices during a single trading day. 
Once the daily limit has been reached in a 
particular contract, no trades may be made that 
day at a price beyond that limit. It is 
possible that futures contract prices could 
move to the daily limit for several consecutive 
trading days with little or no trading, thereby 
preventing prompt liquidation of futures 
positions and subjecting some futures traders 
to substantial losses. In such event, and in 
the event of adverse price movements, the Fund 
would be required to make daily cash payments 
of variation margin; in such circumstances, an 
increase in the value of the portion of the 
portfolio being hedged, if any, may partially 
or completely offset losses on the futures 
contract. As described above, however, no 
assurance can be given that the price of the 
securities being hedged will correlate with the 
price movements in a futures contract and thus 
provide an offset to losses on the futures 
contract.

Currency Strategies

To attempt to hedge against adverse movements 
in exchange rates between currencies, the Fund 
may enter into forward currency contracts for 
the purchase or sale of a specified currency at 
a specified future date.  Such contracts may 
involve the purchase or sale of a foreign 
currency against the U.S. dollar or may involve 
two foreign currencies.  The Fund may enter 
into forward currency contracts either with 
respect to specific transactions or with 
respect to its portfolio positions.  For 
example, when the investment adviser 
anticipates making a purchase or sale of a 
security, it may enter into a forward currency 
contract in order to set the rate (either 
relative to the U.S. dollar or another 
currency) at which the currency exchange 
transaction related to the purchase or sale 
will be made (transaction hedging).  
Further, when the investment adviser believes 
that a particular currency may decline compared 
to the U.S. dollar or another currency, the 
Fund may enter into a forward contract to sell 
the currency the investment adviser expects to 
decline in an amount approximating the value of 
some or all of the Funds securities 
denominated in that currency, or when the 
investment adviser believes that one currency 
may decline against a currency in which some or 
all of the portfolio securities held by the 
Fund are denominated, it may enter into a 
forward contract to buy the currency expected 
to decline for a fixed amount (position 
hedging).  In this situation, the Fund may, in 
the alternative, enter into a forward contract 
to sell a different currency for a fixed amount 
of the currency expected to decline where the 
investment manager believes that the value of 
the currency to be sold pursuant to the forward 
contract will fall whenever there is a decline 
in the value of the currency in which portfolio 
securities of the Fund are denominated (cross 
hedging).  The Funds custodian places (i) 
cash, (ii) U.S. Government securities or (iii) 
equity securities or debt securities (of any 
grade) in certain currencies provided such 
assets are liquid, unencumbered and marked to 
market daily, or other high-quality debt 
securities denominated in certain currencies in 
a separate account of the Fund having a value 
equal to the aggregate account of the Funds 
commitments under forward contracts entered 
into with respect to position hedges and cross-
hedges.  If the value of the securities placed 
in a separate account declines, additional cash 
or securities are placed in the account on a 
daily basis so that the value of the amount 
will equal the amount of the Funds commitments 
with respect to such contracts. 
 
The Fund may write covered call options and 
purchase put and call options on currencies to 
hedge against movements in exchange rates and 
on debt securities to hedge against the risk of 
fluctuations in the prices of securities held 
by the Fund or which the investment adviser 
intends to include in its portfolio. 
 
Although the Fund might not employ the use of 
forward currency contracts, options and 
futures, the use of any of these strategies 
would involve certain investment risks and 
transaction costs to which it might not 
otherwise be subject.  These risks include: 
dependence on the investment advisers ability 
to predict movements in the prices of 
individual debt securities, fluctuations in the 
general fixed-income markets and movements in 
interest rates and currency markets, imperfect 
correlation between movements in the price of 
currency, options, futures contracts or options 
thereon and movements in the price of the 
currency or security hedged or used for cover; 
the fact that skills and techniques needed to 
trade options, futures contracts and options 
thereon or to use forward currency contracts 
are different from those needed to select the 
securities in which the Fund invests; lack of 
assurance that a liquid market will exist for 
any particular option, futures contract or 
options thereon at any particular time and 
possible need to defer or accelerate closing 
out certain options, futures contracts and 
options thereon in order to continue to qualify 
for the beneficial tax treatment afforded 
regulated investment companies under the 
Internal Revenue Code of 1986, as amended (the 
Code).  See Dividends, Distributions and 
Taxes. 

INVESTMENT RESTRICTIONS

The Fund has adopted the following investment 
restrictions for the protection of 
shareholders. Restrictions 1 through 7 below 
cannot be changed without approval by the 
holders of a majority of the outstanding shares 
of the Fund, defined as the lesser of (a) 67% 
or more of the Funds shares present at a 
meeting, if the holders of more than 50% of the 
outstanding shares are present in person or by 
proxy or (b) more than 50% of the Funds 
outstanding shares. The remaining restrictions 
may be changed by the Funds Board of Trustees 
at any time. In accordance with these 
restrictions,  the Fund will not: 

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

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 instumentalities) 
and securities of state or municipal 
governments and their political subdivisions 
are not considered to be issued by members of 
any industry.

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

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

7.   Purchase or 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.

8.   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.
 9.   	Invest in oil, gas or other mineral 
exploration or development programs. 

    10.   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.

11.   Purchase the securities of any other 
open-end investment company, except through a 
purchase on the open market involving no 
commission or profit to a sponsor or dealer 
(other than the customary stock exchange or 
over-the-counter brokerage commission) and 
except as part of a merger, consolidation or 
acquisition of assets. 

12.   Invest for the purpose of exercising 
control of management.

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

Portfolio Turnover

While the Funds portfolio turnover rate (the 
lesser of purchases or sales of portfolio 
securities during the year, excluding purchases 
or sales of short-term securities, divided by 
the monthly average value of portfolio 
securities) is generally not expected to exceed 
100%, it has in the past exceeded 100%.  The 
rate of turnover will not be a limiting factor, 
however, when the Fund deems it desirable to 
sell or purchase securities.  This policy 
should not result in higher brokerage 
commissions to the Fund, as purchases and sales 
of portfolio securities are usually effected as 
principal transactions.  Securities may be sold 
in anticipation of a rise in interest rates 
(market decline) or purchased in anticipation 
of a decline in interest rates (market rise) 
and later sold.  In addition, a security may be 
sold and another security of comparable quality 
purchased at approximately the same time to 
take advantage of what the Fund believes to be 
a temporary disparity in the normal yield 
relationship between the two securities.  These 
yield disparities may occur for reasons not 
directly related to the investment quality of 
particular issues or the general movement of 
interest rates, such as changes in the overall 
demand for, or supply of, various types of tax-
exempt securities.

Portfolio Transactions 
 
Decisions to buy and sell securities for the 
Fund are made by the Manager, subject to the 
overall review of the Trusts Board of Trustees.  
Although investment decisions for the Fund are 
made independently from those of the other 
accounts managed by the Manager, investments of 
the type that the Fund may make also may be 
made by those other accounts.  When the Fund 
and one or more other accounts managed by the 
Manager are prepared to invest in, or desire to 
dispose of, the same security, available 
investments or opportunities for sales will be 
allocated in a manner believed by the Manager 
to be equitable to each.  In some cases, this 
procedure may adversely affect the price paid 
or received by the Fund or the size of the 
position obtained or disposed of by the Fund.  
The Trust has paid no brokerage commissions 
since its commencement of operations.

Allocation of transactions on behalf of the 
Fund, including their frequency, to various 
dealers is determined by the Manager in its 
best judgment and in a manner deemed fair and 
reasonable to the Funds shareholders.  The 
primary considerations of the Manager in 
allocating transactions are availability of the 
desired security and the prompt execution of 
orders in an effective manner at the most 
favorable prices.  Subject to these 
considerations, dealers that provide 
supplemental investment research and 
statistical or other services to the Manager 
may receive orders for portfolio transactions 
by the Fund.  Information so received is in 
addition to, and not in lieu of, services 
required to be performed by the Manager, and 
the fees of the Manager are not reduced as a 
consequence of their receipt of the 
supplemental information.  The information may 
be useful to the Manager in serving both the 
Fund and other clients, and conversely, 
supplemental information obtained by the 
placement of business of other clients may be 
useful to the Manager in carrying out its 
obligations to the Fund.

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

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

PURCHASE OF SHARES

Volume Discounts

The schedules of sales charges described in the 
Prospectus apply to purchases of shares of the 
Fund made by any purchaser, which term is 
defined to include the following: (a) an 
individual; (b) an individuals spouse and his 
or her children purchasing shares for his or 
her own account; (c) a trustee or other 
fiduciary purchasing shares for a single trust 
estate or single fiduciary account; (d) a 
pension, profit-sharing or other employee 
benefit plan qualified under Section 401(a) of 
the Code and qualified employee benefit plans 
of employers who are affiliated persons of 
each other within the meaning of the 1940 Act; 
(e) tax-exempt organizations enumerated in 
Section 501(c)(3) or (13) of the Code; or (f) 
any other organized group of persons, provided 
that the organization has been in existence for 
at least six months and was organized for a 
purpose other than the purchase of investment 
company securities at a discount.  Purchasers 
who wish to combine purchase orders to take 
advantage of volume discounts should contact a 
Smith Barney Financial Consultant.

Combined Right of Accumulation

Reduced sales charges, in accordance with the 
schedules in the Prospectus, apply to any 
purchase of shares of a Fund by any 
purchaser (as defined above).  The reduced 
sales charge is subject to confirmation of the 
shareholders holdings through a check of 
appropriate records.  The Trust reserves the 
right to terminate or amend the combined right 
of accumulation at any time after written 
notice to shareholders.  For further 
information regarding the right of 
accumulation, shareholders should contact a 
Smith Barney Financial Consultant.

Determination of Public Offering Price

The Fund offers its shares to the public on a 
continuous basis.  The public offering price 
for a Class A and Class Y share of a Fund is 
equal to the net asset value per share at the 
time of purchase, plus for Class A shares an 
initial sales charge based on the aggregate 
amount of the investment.  The public offering 
price for a Class C share (and Class A share 
purchases, including applicable rights of 
accumulation, equaling or exceeding $500,000) 
is equal to the net asset value per share at 
the time of purchase and no sales charge is 
imposed at the time of purchase.  A contingent 
deferred sales charge (CDSC), however, is 
imposed on certain redemptions of Class C 
shares, and Class A shares when purchased in 
amounts exceeding $500,000.  The method of 
computation of the public offering price is 
shown in each Funds financial statements, 
incorporated by reference in their entirety 
into this SAI.

REDEMPTION OF SHARES

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

Distributions in Kind

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

Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the 
Withdrawal Plan) is available to 
shareholders who own shares with a value of at 
least $10,000 ($5,000 for retirement plan 
accounts) and who wish to receive specific 
amounts of cash monthly or quarterly. 
Withdrawals of at least $50 may be made under 
the Withdrawal Plan by redeeming as many shares 
of the Fund as may be necessary to cover the 
stipulated withdrawal payment. To the extent 
withdrawals exceed dividends, distributions and 
appreciation of a shareholders investment in 
the Fund, there will be a reduction in the 
value of the shareholders investment and 
continued withdrawal payments will reduce the 
shareholders investment and ultimately may 
exhaust it. Withdrawal payments should not be 
considered as income from investment in the 
Fund. Furthermore, as it generally would not be 
advantageous to a shareholder to make 
additional investments in the Fund at the same 
time he or she is participating in the 
Withdrawal Plan, purchases by such shareholders 
in amounts of less than $5,000 ordinarily will 
not be permitted.

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

DISTRIBUTOR

Smith Barney serves as the Trusts distributor 
on a best efforts basis pursuant to a written 
agreement (the Distribution Agreement), which 
was approved by the Trusts Board of Trustees.  

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

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

Distribution Arrangements

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

VALUATION OF SHARES

The net asset value per share of the Funds 
Classes is calculated on each day, Monday 
through Friday, except days on which the NYSE 
is closed.  The NYSE currently is scheduled to 
be closed on New Years Day, Martin Luther King, 
Jr. Day, Presidents Day, Good Friday, Memorial 
Day, Independence Day, Labor Day, Thanksgiving 
and Christmas, and on the preceding Friday or 
subsequent Monday when one of these holidays 
falls on a Saturday or Sunday, respectively.  
Because of the differences in distribution fees 
and Class-specific expenses, the per share net 
asset value of each Class may differ.  The 
following is a description of the procedures 
used by the Trust in valuing its assets.

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

EXCHANGE PRIVILEGE

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

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

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

	C.  Class L shares of any fund may be 
exchanged without a sales charge.  For 
purposes of CDSC applicability, Class L 
shares of the Fund exchanged for Class C 
shares of another Smith Barney Mutual 
Fund will be deemed to have been owned 
since the date the shares being exchanged 
were deemed to be purchased. 
 
The exchange privilege enables shareholders to 
acquire shares of the same Class in a fund with 
different investment objectives when they 
believe that a shift between funds is an 
appropriate investment decision. This privilege 
is available to shareholders residing in any 
state in which the fund shares being acquired 
may legally be sold. Prior to any exchange, the 
shareholder should obtain and review a copy of 
the current prospectus of each fund into which 
an exchange is being considered. Prospectuses 
may be obtained from a Smith Barney Financial 
Consultant.
 
Upon receipt of proper instructions and all 
necessary supporting documents, shares 
submitted for exchange are redeemed at the 
then-current net asset value and the proceeds 
are immediately invested, at a price as 
described above, in shares of the fund being 
acquired. Smith Barney reserves the right to 
reject any exchange request. The exchange 
privilege may be modified or terminated at any 
time after written notice to shareholders.

PERFORMANCE DATA

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

Average Annual Total Return

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

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

T
=
average annual total return.

n
=
number of years.

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



Aggregate Total Return

Aggregate total return figures represent the 
cumulative change in the value of an investment 
in the Fund for the specified period and are 
computed by the following formula:

ERV-P
    P

Where:
P
=
a hypothetical initial payment of $10,000.

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


Performance will vary from time to time 
depending on market conditions, the composition 
of the Funds portfolio and operating expenses.  
Consequently, any given performance quotation 
should not be considered representative of the 
Funds performance for any specified period in 
the future. Because performance will vary, it 
may not provide a basis for comparing an 
investment in the Fund with certain bank 
deposits or other investments that pay a fixed 
yield for a stated period of time.

TAXES

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

The Trust intends to qualify each year as a 
regulated investment company under the Code. If 
the Fund (a) qualifies as a regulated 
investment company and (b) distributes to its 
shareholders at least 90% of its net investment 
income (including, for this purpose, its net 
realized short-term capital gains), the Fund 
will not be liable for Federal income taxes to 
the extent that its net investment income and 
its net realized long- and short-term capital 
gains, if any, are distributed to its 
shareholders. 

As described above, the Fund may invest in 
futures contracts and options on futures 
contracts that are traded on a U.S exchange or 
board of trade.  As a general rule, these 
investment activities will increase or decrease 
the amount of long-term and short-term capital 
gains or losses realized by the Fund and,  
thus,  will affect the amount of capital gains 
distributed to the Funds shareholder.

For federal income tax purposes, gain or loss 
on the futures and options described above 
(collectively referred to as Section 1256 
Contracts) would, as a general rule, be taxed 
pursuant to a special mark-to-market system.  
Under the mark-to-market system, the Fund may 
be treated as realizing a greater or lesser 
amount of gains or losses than actually 
realized.  As a general rule, gain or loss on 
Section 1256 Contracts is treated as 60% long-
term capital gain or loss and 40% short-term 
capital gain or loss, and as a result, the 
mark-to market will generally affect the amount 
of capital gains or losses taxable to the Fund 
and the amount of distributions taxable to a 
shareholder.  Moreover, if the Fund invests in 
both Section 1256 and offsetting positions in 
those contracts,  then the Fund may not be able 
to receive the benefit of certain realized 
losses for an indeterminate period of time.  
The Fund expects that its activities with 
respect to Section 1256 Contracts and 
offsetting position in those Contracts (1) will 
not cause it or its shareholders to be treated 
as receiving a materially greater amount of 
capital gains or distributions than actually 
realized or received and (2) will permit it to 
use substantially all of its losses for the 
fiscal years in which the losses actually 
occur.

Gains or losses on the sales of stock or 
securities by the Fund generally will be long-
term capital gains or losses if the Fund has 
held the stock or securities for more than one 
year. Gains or losses on sales of stock or 
securities held for not more than one year 
generally will be short-term capital gains or 
losses. 

Foreign countries may impose withholding and 
other taxes on dividends and interest paid to 
the Fund with respect to investments in foreign 
securities. However, certain foreign countries 
have entered into tax conventions with the 
United States to reduce or eliminate such 
taxes.  Distributions of long-term capital 
gains will be taxable to shareholders as such, 
whether paid in cash or reinvested in 
additional shares and regardless of the length 
of time that the shareholder has held his or 
her interest in the Fund. If a shareholder 
receives a distribution taxable as long-term 
capital gain with respect to his or her 
investment in the Fund and redeems or exchanges 
the shares before he or she has held them for 
more than six months, any loss on the 
redemption or exchange that is less than or 
equal to the amount of the distribution will be 
treated as a long-term capital loss.

Any net long-term capital gains realized by the 
Fund will be distributed annually as described 
in the Prospectus. Such distributions (capital 
gain dividends) will be taxable to 
shareholders as long-term capital gains, 
regardless of how long a shareholder has held 
Fund shares, and will be designated as capital 
gain dividends in a written notice mailed by 
the Fund to shareholders after the close of the 
Funds prior taxable year. If a shareholder 
receives a capital gain dividend with respect 
to any share and if the share has been held by 
the shareholder for six months or less, then 
any loss on the sale or exchange of such share 
will be treated as a long-term capital loss to 
the extent of the capital gain dividend. 

Investors considering buying shares of the Fund 
on or just prior to a record date for a taxable 
dividend or capital gain distribution should be 
aware that, regardless of whether the price of 
the Fund shares to be purchased reflects the 
amount of the forthcoming dividend or 
distribution payment, any such payment will be 
a taxable dividend or distribution payment.

If a shareholder fails to furnish a correct 
taxpayer identification number, fails fully to 
report dividend and interest income, or fails 
to certify that he or she has provided a 
correct taxpayer identification number and that 
he or she is not subject to backup 
withholding, then the shareholder may be 
subject to a 31% backup withholding tax with 
respect to (a) any taxable dividends and 
distributions and (b) the proceeds of any 
redemptions of Fund shares. An individuals 
taxpayer identification number is his or her 
social security number. The backup withholding 
tax is not an additional tax and may be 
credited against a shareholders regular 
Federal income tax liability. 

The foregoing is only a summary of certain tax 
considerations generally affecting the Fund and 
its shareholders and is not intended as a 
substitute for careful tax planning. 
Shareholders are urged to consult their tax 
advisors with specific reference to their own 
tax situations, including their state and local 
tax liabilities.

ADDITIONAL INFORMATION

The Trust was organized as an unincorporated 
business trust on October 17, 1991 under the 
name Shearson Lehman Brothers Intermediate-Term 
Trust.  On November 20, 1991, July 30, 1993, 
October 14, 1994 and August 16, 1995, the 
Trusts name was changed to Shearson Lehman 
Brothers Income Trust, Smith Barney Shearson 
Income Trust, Smith Barney Income Trust and 
Smith Barney Investment Trust, respectively.

PNC Bank, located at 17th and Chestnut Streets, 
Philadelphia, Pennsylvania 19103, serves as the 
custodian of the Fund.  Under its agreement 
with the Trust on behalf of the Fund, PNC Bank 
holds the Funds portfolio securities and keeps 
all necessary accounts and records.  For its 
services, PNC Bank receives a monthly fee based 
upon the month-end market value of securities 
held in custody and also receives securities 
transaction charges.  The assets of the Fund 
are held under bank custodianship in compliance 
with the 1940 Act.

First Data, located at Exchange Place, Boston, 
Massachusetts 02109, serves as the Trusts 
transfer agent. Under the transfer agency 
agreement, First Data maintains the shareholder 
account records for the Trust, handles certain 
communications between shareholders and the 
Trust and distributes dividends and 
distributions payable by the Trust. For these 
services, First Data receives a monthly fee 
computed on the basis of the number of 
shareholder accounts it maintains for the Trust 
during the month and is reimbursed for out-of-
pocket expenses.



					


					Smith Barney

					Mid Cap Blend 
Fund
						


Statement of

Additional 
Information















June    , 1998




Smith Barney
Mid Cap Blend Fund 
388 Greenwich Street
New York, New York 10013
							
	SMITH BARNEY
							
	A Member of Travelers Group 




39


Part C:	Other Information

SMITH BARNEY INVESTMENT TRUST

FORM N-1A

CROSS-REFERENCE SHEET
PURSUANT TO RULE 495(b)


Part A Item No.

Prospectus Caption

1.  Cover Page
Cover Page

2.  Synopsis
Prospectus Summary

3.  Financial Highlights
Financial Highlights

4.  General Description of 
Registrant

Cover Page; Prospectus Summary; 
Investment Objective and Management Policies; 
Additional Information - Appendix A

5.  Management of the Fund
Management of the Trust and the 
Fund; Distributor; Additional 
Information; Annual Report

6.  Capital Stock and Other 
Securities
Investment Objective and 
Management Policies; Dividends, 
Distributions and Taxes; 
Additional Information - Appendix A

7.  Purchase of Securities Being 
Offered
Purchase of Shares; Valuation of 
Shares; Exchange Privilege; 
Redemption of Shares; Minimum 
Account Size; Distributor; 
Additional Information

8.  Redemption or Repurchase
Purchase of Shares; Redemption of 
Shares; Exchange Privilege

9.  Pending Legal Proceedings
Not applicable

Part B Item No.
Statement of Additional 
Information Caption

10.  Cover Page
Cover Page

11.  Table of Contents
Table of Contents

12.  General Information and 
History
Distributor; Additional 
Information

13.  Investment Objective and 
Policies
Investment Objectives and 
Management Policies

14.  Management of the Fund
Management of the Trust and the 
Funds; Distributor

15.  Control Persons and Principal 
Holders of Securities
Management of the Trust and the 
Funds

16.  Investment Advisory and Other 
Services
Management of the Trust and the 
Funds; Distributor

17.  Brokerage Allocation and Other 
Services
Investment Objectives and 
Management Policies; Distributor

18.  Capital Stock and Other 
Securities
Investment Objectives and 
Management Policies; Purchase of 
Shares; Redemption of Shares; 
Taxes

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

20.  Tax Status
Taxes

21.  Underwriters
Distributor

22.  Calculation of Performance 
Data
Performance Data

23.  Financial Statements
Financial Statements


     PART A

PROSPECTUS

PART B
STATEMENT OF ADDITIONAL INFORMATION

PART  C
OTHER INFORMATION


Item 24.	Financial Statements and Exhibits

(a)  Financial Statements


    
   
	Smith Barney Intermediate Maturity California 
Municipals Fund, Smith Barney Intermediate Maturity 
New York Municipals Fund and Smith Barney Large 
Capitalization Growth Fund Annual Reports for the 
fiscal year ended November 30, 1997 were filed on 
January 30, 1998 as Accession Number 91155-98-000062. 
    

	Included in Part C:

	Consent of Independent Accountants is to be 
filed by Amendment.

(b)	Exhibits

	Unless otherwise noted, all references are to 
the Registrants 
Registration Statement on Form N-1A (the Registration 
Statement) as filed with the Securities and Exchange 
Commission (SEC) on October 21, 1991 (File Nos. 
33-43446 and 811-6444).

	(1)(a) Registrants Master Trust Agreement dated 
October 17, 1991 and Amendments to the Master Trust 
Agreement dated November 21, 1991 and July 30,1993, 
respectively, are incorporated by reference to Post-
Effective Amendment No. 4 to the Registration 
Statement filed on January 28, 1994 (Post-Effective 
Amendment No. 4).

	(b)  Amendments to the Master Trust Agreement 
dated October 14, 1994 and November 7, 1994, 
respectively, are incorporated by reference to the 
Registration Statement filed on Form N-14 on January 
6, 1995 (the N-14).

	(c)  Amendments to the Master Trust Agreement 
dated July 20, 1995 and August 10, 1995 are 
incorporated by reference to Post-Effective Amendment 
No. 9 to the Registration Statement filed on August 
29, 1995 (Post-Effective Amendment No. 9).

   	(d) Amended and Restated Master Trust Agreement 
dated February 28, 1998 is incorporated by reference 
to Post Effective Amendment No. 18 to the 
Registration Statement filed on March 30, 1998 (Post-
Effective Amemendment No, 18).    
	
(2)  Registrants by-laws are incorporated by 
reference to the 
Registration Statement.

	(3)  Not Applicable.

	(4) (a) Registrants form of stock certificate 
for Smith Barney
S&P 500 Index Fund is incorporated by reference to 
Post-Effective Amendment No. 16 to the Registration 
Statement filed on December 29, 1997. 

	(4) (b) Registrants form of stock certificate 
for Smith Barney
Large Capitalization Growth Fund is incorporated by 
reference to Post-
Effective Amendment No.17 to the Registration 
Statement filed on February 20, 1998 (Post-Effective 
Amendment No. 17). 
	

    (4) (c) Registrants form of stock certificate for 
Smith Barney Mid Cap Blend Fund is to be filed by 
amendment.    

	(5)(a)  Investment Advisory Agreement between 
the Registrant and 
Greenwich Street Advisors dated July 30, 1993 is 
incorporated by reference to Post-Effective Amendment 
No. 3 to the Registration Statement filed on December 
1, 1993 (Post-Effective Amendment No. 3).

	(b)  Transfer of Investment Advisory Agreement 
dated November 7, 1994 between the Registrant on 
behalf of Smith Barney Intermediate Maturity 
California Municipals Fund, Greenwich Street Advisors 
and Mutual Management Corp. is incorporated by 
reference to the N-14.

	(c)  Form of Transfer of Investment Advisory 
Agreement for Smith Barney Limited Maturity 
Municipals Fund, Smith Barney Intermediate Maturity 
New York Municipals Fund and Smith Barney Limited 
Maturity Treasury Fund is incorporated by reference 
to Post-Effective Amendment No. 6 to the Registration 
Statement filed on January 27, 1995 (Post-Effective 
Amendment No. 6).

	(d)  Form of Investment Advisory Agreement 
between the Registrant on behalf of Smith Barney S&P 
500 Index Fund and Travelers Investment 
Management Company dated December 11, 1997 is 
incorporated by reference to Post Effective Amendment 
No. 15 to the Registration Statement
filed on December 12, 1997.

	(e)  Form of Investment Management Agreement 
between the Registrant on behalf of Smith Barney 
Large Capitalization Growth Fund and Mutual 
Management Corp. (f/k/a Smith Barney Mutual Funds 
Management Inc.) is incorporated by reference to 
Post-Effective Amendment No. 17 to the Registration 
Statement filed on February 20,1998 (Post-Effective 
Amendment No. 17) 

(f)  Form of Investment Management Agreement 
between Smith Barney Mid Cap Blend Fund and Mutual 
Management Corp  (f/k/a Smith Barney Mutual Funds 
Management Inc.) is incorporated by reference to 
Post-Effective Amendment No. 17 to the Registration 
Statement filed on February 20,1998 (Post-Effective 
Amendment No. 17)


	(6)(a)  Distribution Agreement between the 
Registrant and Smith Barney Shearson Inc. dated July 
30, 1993 is incorporated by reference to Post-
Effective Amendment No. 3.

	(b)  Form of Distribution Agreement between the 
Registrant on behalf of Smith Barney S&P 500 Index 
Fund and PFS Distributors is incorporated by 
reference to Post-Effective Amendment No. 10.

	(7)  Not Applicable.

	(8)  Form of Custody Agreement with PNC Bank, 
National Association, is incorporated by reference to 
Post-Effective Amendment No. 9.

	(9)(a)  Administration Agreement between the 
Registrant on behalf of Smith Barney Intermediate 
Maturity California Municipals Fund and Smith Barney 
Advisers, Inc. (SBA) is incorporated by reference to 
the N-14.

	(b)  Form of Administration Agreement between 
the Registrant on behalf of Smith Barney Limited 
Maturity Municipals Fund and Smith Barney 
Intermediate Maturity New York Municipals Fund and 
SBA is incorporated by reference to Post-Effective 
Amendment No. 6.

	(c)  Form of Administration Agreement between 
the Registrant on behalf of Smith Barney S&P 500 
Index Fund and Mutual Management Corp. is 
incorporated by reference to Post Effective Amendment 
No. 15.

	(d)  Transfer Agency Agreement with First Data 
Investor Services
 Group, Inc. (formerly known as The Shareholder 
Services Group Inc.)
is incorporated by reference to Post-Effective 
Amendment No. 3.

	(e)  Form of Sub-Transfer Agency Agreement 
between the Registrant on behalf of Smith Barney S&P 
500 Index Fund and PFS Shareholder Services is 
incorporated by reference to Post-Effective Amendment 
No. 10.

	(10)  Opinion of counsel regarding legality of 
shares being 
registered is incorporated by reference to Pre-
Effective Amendment No. 1 to the Registration 
Statement filed on December 6, 1991.

	(11)  Consent of Independent Accountants is to 
be filed by Amendment.


	(12)  Not Applicable.

	(13)  Purchase Agreement between the Registrant 
and Shearson Lehman Brothers Inc. is incorporated by 
reference to Pre-Effective Amendment No. 1.

	(14)  Not Applicable.

	(15)(a)  Amended Service and Distribution Plan 
pursuant to Rule 12b-1 between  the Registrant on 
behalf of Smith Barney Intermediate Maturity 
California Municipals Fund and Smith Barney Inc. is 
incorporated by reference to the N-14.

	(b) Form of Amended Service and Distribution 
Plan pursuant to Rule 12b-1 between the Registrant on 
behalf of Smith Barney Limited Maturity Municipals 
Fund and Smith Barney Intermediate Maturity New York 
Municipals Fund and Smith Barney Inc. is incorporated 
by reference to Post-Effective Amendment No. 6.

	(c)  Form of Shareholder Services and 
Distribution Plan pursuant to Rule 12b-1 between the 
Registrant on behalf of Smith Barney S&P 500 Index 
Fund is incorporated by reference to Post Effective 
Amendment No. 15.

	(d) Form of Service and Distribution Plan 
pursuant to Rule 12b-1 
between the Registrant on behalf of the Fund and 
Smith Barney
Large Capitalization Growth Fund is incorporated by 
reference to Post
Effective Amendment No. 17 to the Registration 
Statement filed on
February 20, 1998 (Post-Effective Amendment No. 
17). 

	(e) Form of Service and Distribution Plan 
pursuant to Rule 12b-1 
between the Registrant on behalf of the Fund and 
Smith Barney
Large Capitalization Growth Fund is incorporated by 
reference to Post
Effective Amendment No. 17 to the Registration 
Statement filed on
February 20, 1998 (Post-Effective Amendment No. 
17).

	(16)  Performance Data is incorporated by 
reference to Post-Effective Amendment No. 2 to the 
Registration Statement filed on April 1, 1993.

	(17)  Financial Data Schedule is to be filed by 
Amendment.

	(18) Plan adopted pursuant to Rule 18f-3(d) of 
the Investment Company Act of 1940, as amended, is 
incorporated by reference to Post-Effective Amendment 
No. 10.

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

		None

   
Item 26.	Number of Holders of Securities

		(1)				(2)
	Title of Class					
	Beneficial Interest par value	Number of Record 
Holders
	$0.001 per share		as of April 13, 1998 

	
	Intermediate Maturity California 	Class A 457
	Municipals Fund		      	Class C  78
						      Class Y   3
	
	Intermediate Maturity New York	Class A 
1094
	Municipals Fund			      Class C   
63
				
	Smith Barney S&P 500			Class A 875
	Index Fund		      		Class D   0

	Large Capitalization Growth Fund 	Class A 
10,332
						      Class B 
22,451
					      	Class C  
4,484
						      Class Y      
6

	

Item 27.	Indemnification

	The response to this item is incorporated by 
reference to Pre-Effective Amendment No. 1.

Item 28(a).	Business and Other Connections of 
Investment Adviser

Investment Adviser and Administrator - Mutual 
Management Corp. (f/k/a Smith Barney Mutual Funds 
Management Inc.), formerly known as Smith Barney 
Advisers, Inc., was incorporated in December 1968 
under the laws of the State of Delaware. MMC is a 
wholly owned subsidiary of Smith Barney Holdings Inc. 
(formerly known as Smith Barney Shearson Holdings 
Inc.), which in turn is a wholly owned subsidiary of 
Travelers Group Inc. (Travelers).  MMC 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 1934.  MMC 
serves as the Investment Adviser and Administrator 
for Smith Barney Intermediate Maturity California 
Fund and Smith Barney Intermediate Maturity New York 
Fund and Investment Manager for Smith Barney Large 
Capitalization Growth Fund.

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


Investment Adviser - Travelers Investment Management 
Company. (TIMCO).  TIMCO serves as the investment 
adviser for S&P 500 Index Fund pursuant to a written 
agreement (the Advisory Agreement). TIMCO was 
incorporated on August 31, 1967 under the laws of the 
State of Connecticut.  TIMCO is a wholly owned 
subsidiary of Salomon Smith Barney Holdings Inc. 
(formerly known as Smith Barney Holdings Inc.), which 
in turn is a wholly owned subsidiary of Travelers 
Group Inc. (Travelers). 
TIMCO is registered as an investment adviser under 
the Investment Advisers Act of 1940 (the Advisers 
Act) since 1971 and has, through its predecessors, 
been in the investment counseling business since 
1967.

 The list required by this Item 28 of the officers 
and directors of TIMCO 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 SBA pursuant to the 
Advisers Act (SEC File No.801-07212. 



    
   

 Item 29.	Principal Underwriters

    
   
Smith Barney Inc. (Smith Barney) currently acts as 
a distributor for Concert Allocation Series; Concert 
Investment Series; Consulting Group Capital Markets 
Funds; Global Horizons Investment Series (Cayman 
Islands); Greenwich Street California Municipal Fund 
Inc.; Greenwich Street Municipal Fund Inc.; Greenwich 
Street Series Fund; High Income Opportunity Fund 
Inc.; The Italy Fund Inc.; Managed High Income 
Portfolio Inc.; Managed Municipals Portfolio II Inc.; 
Managed Municipals Portfolio Inc.; Municipal High 
Income Fund Inc.; Puerto Rico Daily Liquidity Fund 
Inc.; 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 Concert Allocation 
Series Inc.; Smith Barney Small Cap Blend Fund, Inc.; 
Smith Barney Equity Funds; Smith Barney Fundamental 
Value Fund Inc.; Smith Barney Funds, Inc.; Smith 
Barney Income Funds; Smith Barney Income Trust; Smith 
Barney Institutional Cash Management Fund, Inc.; 
Smith Barney Intermediate Municipal 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 Fund, Inc.; Smith Barney Municipal 
Money Market Fund, Inc.; Smith Barney Natural 
Resources Fund Inc.; Smith Barney New Jersey 
Municipals Fund Inc.; Smith Barney Oregon Municipals 
Fund Inc.; Smith Barney Principal Return Fund; Smith 
Barney Telecommunications Trust; Smith Barney 
Variable Account Funds; Smith Barney World Funds, 
Inc.; Smith Barney Worldwide Special Fund N.V. 
(Netherlands Antilles); Travelers Series Fund Inc.; 
The USA High Yield Fund N.V.; Worldwide Securities 
Limited  (Bermuda); Zenix Income Fund Inc. and 
various series of unit investment trusts.
    

Smith Barney is wholly owned subsidiary of Salomon 
Smith Barney Holdings Inc. (formerly known as Smith 
Barney Holdings Inc.)

The information required by this Item 29 with respect 
to each director, 
officer and partner of Smith Barney is incorporated 
by reference to Schedule A of FORM BD filed by Smith 
Barney pursuant to the Securities Exchange Act of 
1934 (SEC File No. 812-8510).  

Item 30.	Location of Accounts and Records

	(1)	Smith Barney Investment Trust
		388 Greenwich Street
		New York, New York 10013

	(2)	Mutual Management Corp. (f/k/a Smith 
Barney Mutual Funds
Management Inc.)
		388 Greenwich Street
		New York, New York 10013
(Records relating to its function as 
investment adviser to certain of the 
Funds and administrator to all of the 
Funds)


(3)	Travelers Investment Management Company
One Tower Square
Hartford, CT 06183-2030
(Records relating to its function as investment 
adviser to Smith 
Barney S&P 500 Index Fund) 
	
(4)	PNC Bank, National Association
	17th and Chestnut Streets
	Philadelphia, PA  19103
	(Records relating to its function as custodian)

	(5)	First Data Investor Services Group, Inc.
		One Exchange Place
		Boston, Massachusetts 02109
(Records relating to its function as 
Transfer Agent and Dividend Paying Agent)

Item 31.	Management Services

		Not Applicable

Item 32.	Undertakings

	(a) 	The Registrant hereby undertakes to 
furnish to each person 
to whom a prospectus of the Registrant is delivered, 
a copy of the 
Registrants latest annual report, upon request and 
without charge.

485 (b) Certification
	The Registrant hereby certifies that it meets 
all requirements for effectiveness pursuant to Rule 
485(b) under the Securities Act of 1933, as amended. 


SIGNATURES

	Pursuant to the requirements of the Securities 
Act of 1933, and the Investment Company Act of 1940, 
the Registrant, SMITH BARNEY INVESTMENT TRUST, has 
duly caused this registration statement to be signed 
on its behalf by the undersigned, thereto duly 
authorized in the City of New York, in the State of 
New York on the     15th day of April, 1998.     

							SMITH 
BARNEY
							INVESTMENT 
TRUST

							/s/Heath B. 
McLendon
							Heath B. 
McLendon, Chief
							Executive 
Officer

	Pursuant to the requirements of the Securities 
Act of 1933, this 
registration statement has been signed below by the 
following persons in the 
capacities and on the date indicated.

Signature			Title				Date
/s/Heath B. McLendon		Chairman of the Board	
	4/15/98
Heath B. McLendon		(Chief Executive Officer)
				

/s/Lewis E. Daidone	Treasurer			
	4/15/98
Lewis E. Daidone	(Chief Financial and
			Accounting Officer)

/s/Herbert Barg*	Trustee				
	4/15/98
Herbert Barg

/s/Alfred J. Bianchetti*	Trustee		
	4/15/98		Alfred J. Bianchetti

/s/Martin Brody*	Trustee				
	4/15/98
Martin Brody

/s/Dwight B. Crane*	Trustee			
	4/15/98
Dwight B. Crane

/s/Burt N. Dorsett*	Trustee			
	4/15/98
Burt N. Dorsett

/s/Elliot S. Jaffe*	Trustee			
	4/15/98
Elliot S. Jaffe

/s/Stephen E. Kaufman*Trustee				
	4/15/98
Stephen E. Kaufman

/s/Joseph J. McCann*	Trustee			
	4/15/98
Joseph J. McCann

/s/Cornelius C. Rose, Jr.*	Trustee		
	4/15/98
Cornelius C. Rose, Jr.

_____________________________________________________
________________
* Signed by Heath B. McLendon, their duly authorized 
attorney-in-fact, 
pursuant to power
of attorney dated January 27, 1995.

/s/ Heath B. McLendon
Heath B. McLendon