As filed with the Securities and Exchange Commission on February 
26, 1999
Securities Act Registration No. 33-75644
Investment Company Act Registration No. 811-8372
	
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. 11

and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940	
 
__________________			

Travelers Series Fund Inc.
(a Maryland Corporation)
(Exact Name of Registrant as Specified in Charter)

388 Greenwich Street 
New York, New York  10013
(Address of Principal Executive Offices)

(212) 816-6474
(Registrant's Telephone Number, including Area Code)

Christina T. Sydor, Secretary
Travelers Series Fund Inc.
388 Greenwich Street
New York, New York  10013
(Name and Address of Agent for Service)
__________________


Approximate Date of Proposed Public Offering:  Continuous.
It is proposed that this filing will become effective (check 
appropriate box):

[   ]  Immediately upon filing pursuant to paragraph 485(b) 
[ X ]  On February 28, 1999 pursuant to paragraph (b)
[   ]  60 days after filing pursuant to paragraph (a)(1)
[  ]  On date pursuant to paragraph (a)(1) 
[   ]  75 days after filing pursuant to paragraph (a)(2) of rule 
485
[   ]  On (date) pursuant to paragraph (a)(2) 

If appropriate, check the following box:
[   ]  This post-effective amendment designates a new effective 
date 
for a previously filed post-effective amendment.


 
This Registration Statement contains thirteen portfolios of 
Travelers Series Fund Inc. (the "Fund").  Numerous other versions 
of prospectuses will be created from this Registration Statement.  
The distribution system for each version of the prospectus is 
different.  These prospectuses will be filed with the Commission 
pursuant to Rule 497.
 
 
PART A
Prospectus

<PAGE>
 
Travelers Series Fund Inc.

Prospectus

February 28, 1999








                 Equity Funds
---------------------------------------------------
Smith Barney Pacific Basin Portfolio
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
Smith Barney Large Capitalization Growth Portfolio
Alliance Growth Portfolio
AIM Capital Appreciation Portfolio
Van Kampen Enterprise Portfolio


              Fixed Income Funds
---------------------------------------------------
GT Global Strategic Income Portfolio
Travelers Managed Income Portfolio
Putnam Diversified Income Portfolio
Smith Barney High Income Portfolio
MFS Total Return Portfolio
Smith Barney Money Market Portfolio


Shares of each fund are offered only to insurance company Separate Accounts
which fund certain variable annuity and variable life insurance contracts. This
prospectus should be read together with the prospectus for those contracts.

The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
 
     Contents
 
Travelers Series Fund Inc. consists of 13 separate investment funds, each with
its own investment objective and policies. Each fund offers different levels of
potential return and involves different levels of risk.
--------------------------------------------------------------------------------
<TABLE>   
 
<CAPTION>
                   Fund Goals and Strategies                           Page
                 ----------------------------------------------------------
                   <S>                                                 <C>
                   Smith Barney Pacific Basin Portfolio                   2
 
                   Smith Barney International Equity Portfolio            4
 
                   Smith Barney Large Cap Value Portfolio                 6
 
                   Smith Barney Large Capitalization Growth Portfolio     8
 
                   Alliance Growth Portfolio                             10
 
                   AIM Capital Appreciation Portfolio                    12
 
                   Van Kampen Enterprise Portfolio                       14
 
                   MFS Total Return Portfolio                            16
 
                   GT Global Strategic Income Portfolio                  18
 
                   Travelers Managed Income Portfolio                    20
 
                   Putnam Diversified Income Portfolio                   22
 
                   Smith Barney High Income Portfolio                    24
 
                   Smith Barney Money Market Portfolio                   26
 
                   More on the Funds' Investments                        28
 
                   Management                                            32
 
                   Share Transactions                                    38
 
                   Share Price                                           38
 
                   Dividends, Distributions and Taxes                    39
 
                   Financial Highlights                                  40
</TABLE>    
--------------------------------------------------------------------------------
       
You should know:
 
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.
 
 
<PAGE>
 
        
     Fund Goals and Strategies     
 
Smith Barney Pacific Basin Portfolio
          
 Investment goal     
    
 Long-term capital appreciation.     
    
 Key investments     
    
 The fund invests primarily in equity securities of companies in the Asia
 Pacific region. Equity securities include exchange traded and over-the-counter
 common stocks, preferred shares, debt securities convertible into equity
 securities, depository receipts and warrants and rights relating to equity
 securities.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The manager emphasizes individual security selection while
                 allocating the fund's investments among companies in the Asia
                 Pacific region. Companies in which the fund invests may have
                 large, mid or small size market capitalizations and may
                 operate in any market sector. Depending on the manager's
                 assessment of long-term growth potential, the fund's emphasis
                 among Asia Pacific region markets and issuers may vary.
 
                 In selecting individual companies for investment, the manager
                 looks for:
 
                 . Above average earnings growth
                 . High relative return on invested capital
                 . Experienced and effective management
                 . Competitive advantages, such as high market share or
                   special licenses and patents
                 . Strong financial condition
 
                 The economic and political factors that the manager evaluates
                 include:
 
                 . Economic stability and favorable prospects for economic
                   growth
                 . Inflationary trends which create a favorable environment
                   for securities markets
                 . Government policies toward business affecting economic
                   growth and securities markets
                 . Currency stability
                 . Monetary and fiscal trends
 
Travelers Series Fund
 
 2
<PAGE>
 
Principal risks of investing in the fund
 
While investing in Asia Pacific region securities can bring added benefits, it
may also involve risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
 
 . Stock prices of securities in the Asia Pacific region decline
 . Economic, political or social instabilities significantly disrupt the
  principal financial markets in the Asia Pacific region
 . Factors creating volatility in one Asia Pacific region country negatively
  impact values or trading in other countries in the region
 . Currency fluctuations negatively impact the fund's portfolio
 . The government of one or more countries in the region imposes restrictions on
  currency conversion or trading
 . The economies in the Asia Pacific region grow at a slow rate or experience a
  downturn or recession
 . In changing markets the fund may not be able to sell securities in desired
  amounts at prices it considers reasonable
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular stock proves to be incorrect
 
Many Asia Pacific region countries in which the fund invests have markets that
are less liquid and more volatile than markets in the U.S. In some Asia Pacific
countries, there is also less information available about issuers and markets
because of less rigorous accounting and regulatory standards than in the U.S.
These risks are considered greater in the case of those Asia Pacific countries
that are emerging markets. To the extent the fund concentrates its investments
in one or more countries due to their large market capitalization in the Asia
Pacific region, such as Japan, the fund will be subject to greater risks than
if its assets were not so concentrated.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the MSCI All Country Asia Pacific Index ("MSCI Index"), a broad-based unmanaged
index of Asia-Pacific foreign stocks. Past performance does not necessarily 
indicate how the fund will perform in the future. Performance figures do not 
reflect expenses incurred from investing through a Separate Account. These 
expenses will reduce performance. Please refer to the Separate Account 
prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                         1995   1996     1997    1998
                         ----   ----    ------   ----
                         2.40%  9.34%   -27.99%  7.32%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:22.99% in 4th quarter 1998     
   
Lowest:(25.00)% in 4th quarter 1997     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
            One  Since
            year inception
--------------------------
<S>         <C>  <C>
Fund        7.32   (5.24)
MSCI Index  2.03   (8.59)*
--------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              3
<PAGE>
 
        
     Fund Goals and Strategies     
 
Smith Barney International Equity Portfolio
          
 Investment goal     
    
 Total return on its assets from growth of capital and income.     
    
 Key investments     
    
 The fund invests primarily in equity securities of foreign companies. Equity
 securities include exchange traded and over-the-counter common stocks and
 preferred shares, debt securities convertible into equity securities, and
 warrants and rights.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The manager emphasizes individual security selection while
                 diversifying the fund's investments across regions and
                 countries which can help to reduce risk. While the manager
                 selects investments primarily for their capital appreciation
                 potential, some investments have an income component as well.
                 Companies in which the fund invests may have large, mid or
                 small size market capitalizations and may operate in any
                 market sector. Market conditions around the world change
                 constantly as does the location of potential investment
                 opportunities. Depending on the manager's assessment of
                 overseas potential for long-term growth, the fund's emphasis
                 among foreign markets and types of issuers may vary.
 
                 In selecting individual companies for investment, the manager
                 looks for:
 
                 . Above average earnings growth
                 . High relative return on invested capital
                 . Experienced and effective management
                 . Competitive advantages
                 . Strong financial condition
                 . The range of individual investment opportunities
 
                 By spreading the fund's investments across many international
                 markets, the manager seeks to reduce volatility compared to
                 an investment in a single region. Unlike global mutual funds
                 which may allocate a substantial portion of assets to the
                 U.S. markets, the fund invests substantially all of its
                 assets in countries outside of the U.S.
 
                 In allocating assets among countries and regions, the
                 economic and political factors that the manager evaluates
                 include:
 
                 . Low or decelerating inflation which creates a favorable
                   environment for securities markets
                 . Stable government with policies that encourage economic
                   growth, equity investment and development of securities
                   markets
                 . Currency stability
 
Travelers Series Fund
 
 4
<PAGE>
 
Principal risks of investing in the fund
 
While investing in foreign securities can bring added benefits, it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
 
 . Foreign stock prices decline
 . Adverse governmental action or political, economic or market instability
  occurs in a foreign country
 . The currency in which a security is priced declines in value relative to the
  U.S. dollar
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular stock proves to be incorrect
 
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some foreign countries,
there is also less information available about foreign issuers and markets
because of less rigorous accounting and regulatory standards than in the U.S.
Currency fluctuations could erase investment gains or add to investment losses.
The risk of investing in foreign securities is greater in the case of emerging
markets.
   
In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency began on January 1, 1999. There are significant political and economic
risks associated with EMU, which may increase the volatility of European
markets and present valuation problems for the fund.     
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the MSCI EAFE-GDP Weighted Index ("MSCI Index"), a broad-based unmanaged index 
of foreign stocks. Past performance does not necessarily indicate how the fund 
will perform in the future. Performance figures do not reflect expenses incurred
from investing through a Separate Account. These expenses will reduce
performance. Please refer to the Separate Account prospectus for more
information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                          1995    1996   1997    1998
                         -----   -----   ----    ----
                         11.26%  17.72%  2.71%   6.51%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:14.02% in 4th quarter 1998     
   
Lowest:(19.72)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
            One   Since
            year  inception
---------------------------
<S>         <C>   <C>
Fund         6.51    7.29
MSCI Index  27.12   11.37*
---------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              5
<PAGE>
 
        
     Fund Goals and Strategies     
 
Smith Barney Large Cap Value Portfolio
          
 Investment goal     
    
 Current income and long-term growth of income and capital.     
    
 Key investments     
    
 The fund invests primarily in common stocks of U.S. companies having market
 capitalizations of at least $5 billion at the time of investment.     
--------------------------------------------------------------------------------
 
                 Selection process
                    
                 The manager employs a two-step selection process. First, the
                 manager uses proprietary models and fundamental research to
                 try to find stocks that are underpriced in the market
                 relative to their fundamental value. The manager looks for
                 the following:     
                        
                 . Low market valuations measured by the manager's valuation
                   models
                 . Above average dividend yields and established dividend
                   records
                        
                 . High return on invested capital and strong cash flow
                 . Liquidity
                    
                 Next, the manager looks for a positive catalyst in the
                 company's near term outlook which the manager believes would
                 accelerate earnings.     
                    
                 These catalysts include positive changes in earnings
                 prospects because of:     
                    
                 . New management     
                    
                 . Effective research, product development and marketing     
                    
                 . A business strategy not yet recognized by the marketplace
                          
                 . Regulatory changes favoring the company     
 
Travelers Series Fund
 
 6
<PAGE>
 
Principal risks of investing in the fund
 
While investing in large capitalization value securities can bring added
benefits, it may also involve additional risks. Investors could lose money on
their investment in the fund, or the fund may not perform as well as other
investments, if any of the following occurs:
 
 . The U.S. stock market goes down.
 . Value stocks or larger capitalization stocks are temporarily out of favor.
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular stock proves to be incorrect.
 . An adverse event, such as negative press reports about a company in the fund,
  depresses the value of the company's stock.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks. Past
performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. These expenses will reduce performance. Please
refer to the Separate Account prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                         1995    1996    1997    1998
                         -----   -----   -----   ----
                         30.08%  19.79%  26.63%  9.82%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:13.92% in 4th quarter 1998     
   
Lowest:(12.87)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
               One   Since
               year  inception
------------------------------
<S>            <C>   <C>
Fund            9.82   18.84
S&P 500 Index  28.60   28.03*
------------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              7
<PAGE>
 
        
     Fund Goals and Strategies     
 
Smith Barney Large Capitalization Growth Portfolio
          
 Investment goal     
    
 Long-term growth of capital.     
    
 Key investments     
    
 The fund invests primarily in equity securities of
 U.S. companies having a market capitalization of at
 least $5 billion at the time of investment.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The manager emphasizes individual security selection while
                 diversifying the fund's investments across industries which
                 may help to reduce risk. The manager attempts to identify
                 established large capitalization companies with the highest
                 growth potential. The manager then analyzes each company in
                 detail, ranking its management, strategy and competitive
                 market position. Finally, the manager attempts to identify
                 the best values available among the growth companies
                 identified.
 
                 In selecting individual companies for investment, the manager
                 looks for:
 
                 . Favorable earnings prospects
                 . Technological innovation
                 . Industry dominance
                 . Competitive products and services
                 . Global scope
                 . Long term history of performance
                 . Consistent and sustainable long-term growth in dividends
                   and earnings per share
                 . Strong cash flow
                 . High return on equity
                 . Strong financial condition
                 . Experienced and effective management
 
Travelers Series Fund
 
 8
<PAGE>
 
   
Principal risks of investing in the fund     
   
While investing in large capitalization growth securities can bring added
benefits, it may also involve additional risks. Investors could lose money on
their investment in the fund, or the fund may not perform as well as other
investments, if any of the following occurs:     
   
 . The U.S. stock market goes down.     
   
 . Growth stocks or large capitalization stocks are temporarily out of favor.
         
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular stock proves to be incorrect.     
   
 . An adverse event, such as negative press reports about a company in the fund,
  depresses the value of the company's stock.     
 
--------------------------------------------------------------------------------
   
Fund performance     
   
As the fund has not been in operation for a full calendar year, no performance
information is included in this prospectus.     
 
                                                           Travelers Series Fund
 
                                                                              9
<PAGE>
 
        
     Fund Goals and Strategies     
 
Alliance Growth Portfolio
          
 Investment goal     
    
 Long-term growth of capital.     
    
 Key investments     
    
 The fund invests primarily in equity securities of
 U.S. companies. Equity securities include exchange
 traded and over-the-counter common stocks and
 preferred stock, debt securities convertible into
 equity securities, and warrants and rights relating
 to equity securities.     
    
 The fund may also invest in fixed income securities
 for capital appreciation, including lower quality
 fixed income securities.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The subadviser emphasizes individual security selection while
                 spreading investments among many industries and sectors. The
                 subadviser identifies individual companies that it believes
                 offer exceptionally high prospects for growth and uses
                 qualitative analysis to control risk. The subadviser also
                 over- and underweights particular industry sectors depending
                 on the subadviser's outlook for each sector.
 
                 In selecting individual companies and sectors for investment
                 the subadviser looks for the following:
 
                 . Favorable earnings outlook
                 . Above average growth rates at reasonable market valuations
                 . Experienced and effective management
                 . High relative return on invested capital
                 . Strong financial condition
                 . Effective research, product development and marketing
 
Travelers Series Fund
 
10
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in growth securities can bring added benefits, it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
 
 . Stock markets decline.
 . Growth stocks are temporarily out of favor.
 . An adverse event, such as negative press reports about a company in the fund,
  depresses the value of the company's stock.
 . The subadviser's judgment about the attractiveness, value or potential
  appreciation of a particular stock proves to be incorrect.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Russell 1000 Index, a broad-based index of smaller capitalization stocks.
Past performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. These expenses will reduce performance. Please
refer to the Separate Account prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                         1995    1996    1997    1998
                         ----    ----    ----    ----
                         34.87%  24.41%  29.02%  29.05%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:31.22% in 4th quarter 1998     
   
Lowest:(17.35)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                    One   Since
                    year  inception
-----------------------------------
<S>                 <C>   <C>
Fund                29.05   27.58
Russell 1000 Index  27.02   27.47*
-----------------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              11
<PAGE>
 
        
     Fund Goals and Strategies     
 
AIM Capital Appreciation Portfolio
          
 Investment goal     
    
 Capital appreciation.     
    
 Key investments     
    
 The fund invests primarily in common stocks of U.S.
 companies with an emphasis on medium-sized and
 smaller growth companies.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The subadviser emphasizes individual security selection while
                 diversifying the fund's investments across industries, which
                 may help to reduce risk. The subadviser seeks to identify
                 companies having a consistent record of long-term above
                 average growth in earnings as well as companies that are only
                 beginning to experience significant and sustainable earnings
                 growth.
 
                 In selecting individual companies for investment, the manager
                 looks for the following:
 
                 . New or innovative products, services or processes that
                   should enhance future earnings
                 . Increasing market share
                 . Experienced and effective management
                 . Competitive advantages
 
                 The subadviser then employs a disciplined review process to
                 identify and remove from the fund's portfolio any investments
                 that are not achieving their expected growth potential.
 
Travelers Series Fund
 
12
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in smaller growth securities can bring added benefits, it may
also involve risks. Investors could lose money on their investment in the fund,
or the fund may not perform as well as other investments, if any of the
following occurs:
 
 . The U.S. stock market declines.
 . Midcap and smallcap growth stocks are temporarily out of favor.
 . An adverse event, such as negative press reports about a company in the
  fund's portfolio, depresses the value of the company's stock.
 . The subadviser's judgment about the attractiveness, value or potential
  appreciation of a particular stock proves to be incorrect.
 
The fund may invest in relatively new or unseasoned companies that are in their
early stages of development. Smaller, unseasoned companies present greater
risks than securities of larger, more established companies because:
 
 . They may be dependent on a small number of products or services for their
  revenues
 . They may lack substantial capital reserves to make needed capital investments
  or absorb losses
 . They may have less experienced management
 . Their securities may be less widely traded, less liquid and more volatile
 . Recession or adverse economic trends are more likely to sharply and
  negatively affect their earnings and financial condition
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Lipper Midcap Index, a broad-based index of mid-cap stocks. Past
performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. These expenses will reduce performance. Please
refer to the Separate Account prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                            1996     1997     1998
                            ----     ----     ----
                            15.01%   12.15%   17.21%
   
This bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on October 10, 1995.     
 
Quarterly returns:
   
Highest:23.76% in 4th quarter 1998     
   
Lowest:(15.52)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                     One   Since
                     year  inception
------------------------------------
<S>                  <C>   <C>
Fund                 17.21   12.27
Lipper Midcap Index  13.92   16.51*
------------------------------------
</TABLE>    
   
* Index comparisons begin on October 31, 1995     
 
                                                           Travelers Series Fund
 
                                                                              13
<PAGE>
 
        
     Fund Goals and Strategies     
   
Van Kampen Enterprise Portfolio     
          
 Investment goal     
    
 Capital appreciation.     
    
 Key investments     
    
 The fund invests primarily in common stocks of U.S.
 growth companies.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The subadviser emphasizes individual security selection while
                 diversifying the fund's investments across industries, which
                 can help reduce risk. The subadviser seeks promising growth
                 opportunities by investing primarily in large and mid-
                 capitalization companies. The subadviser emphasizes growth
                 companies but may also invest in companies in cyclical
                 industries during periods when their securities appear
                 attractive to the subadviser for capital appreciation.
                    
                 The subadviser frequently meets with company managements to
                 help assess individual companies for potential investment.
                 The subadviser looks for companies with an attractive current
                 valuation and a combination of positive future fundamentals,
                 such as one or more of the following:     
                        
                 . Accelerating earnings growth
                 . Consistent earnings growth
                 . Better than expected earnings, often related to new
                   products, processes or services or cost reductions
                 . Positive changes in a company or its industry or regulatory
                   environment
 
                 The subadviser also employs an active sell discipline and
                 will generally sell stock if it determines:
                    
                 . The company's future fundamentals have deteriorated     
                    
                 . The company's stock has reached full or excessive valuation
                   levels     
 
Travelers Series Fund
 
14
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in securities of large and medium capitalization companies can
bring added benefits, it may also involve risks. Investors could lose money on
their investment in the fund, or the fund may not perform as well as other
investments, if any of the following occurs:
 
 . The U.S. stock market declines.
 . Large and medium capitalization stocks or growth stocks are temporarily out
  of favor.
 . An adverse event, such as negative press reports about a company in the
  fund's portfolio, depresses the value of the company's stock or industry.
 . The subadviser's judgment about the attractiveness, value or potential
  appreciation of a particular stock or industry proves to be incorrect.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the returns of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks, and the Lipper
Growth Funds Index ("Lipper Index"), which shows average returns for funds 
having an investment objective similar to that of the fund's. Past performance
does not necessarily indicate how the fund will perform in the future. 
Performance figures do not reflect expenses incurred from investing through a 
Separate Account. These expenses will reduce performance. Please refer to the 
Separate Account prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                         1995    1996    1997    1998
                         -----   -----   -----   -----
                         32.55%  23.04%  28.59%  25.12%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:25.03% in 4th quarter 1998     
   
Lowest:(14.75)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
               One   Since
               year  inception
------------------------------
<S>            <C>   <C>
Fund           25.12   23.93
S&P 500 Index  28.60   28.03*
Lipper Index   25.69   23.68*
------------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              15
<PAGE>
 
        
     Fund Goals and Strategies     
 
MFS Total Return Portfolio
          
 Investment goals     
    
 Primary: Above average income (compared to a
 portfolio invested entirely in equity securities)
 consistent with the prudent employment of capital.
        
 Secondary: Growth of capital and income.     
    
 Key investments     
    
 The fund invests in a broad range of equity and
 fixed income securities of both U.S. and foreign
 issuers.     
    
 The fund's equity securities include common and
 preferred stock; bonds, warrants or rights
 convertible into stock and depositary receipts for
 those securities.     
    
 The fund's fixed income securities include
 corporate debt obligations of any maturity, Brady
 bonds, U.S. Government securities, mortgage-backed
 securities, zero-coupon bonds, deferred interest
 bonds and payment in kind bonds.     
    
 Credit quality: The fund's assets may consist of
 both investment grade and lower quality securities.
 The fund may invest up to 20% of the fund's assets
 in nonconvertible fixed income securities rated
 below investment grade or unrated securities of
 equivalent quality.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 Under normal market conditions and depending on the
                 subadviser's view of economic and money market conditions,
                 fiscal and monetary policy and security values, the fund's
                 assets will be allocated among fixed income and equity
                 investments within the following ranges:
 
                 . between 40%   . at least 25%
                   and 75% in      in non-
                   equity          convertible
                   securities      fixed income
                                   securities
 
                 Equity investments
 
                 The subadviser uses a "bottom up" investment approach in
                 selecting securities based on its fundamental analysis of an
                 individual security's value. In selecting individual equity
                 securities for investment, the subadviser seeks companies:
 
                 . that are undervalued in the market relative to their long
                   term potential because the market has overlooked them or
                   because they are temporarily out of favor in the market due
                   to market declines, poor economic conditions or adverse
                   regulatory or other changes
                 . that generally have low price to book, price to sales
                   and/or price to earnings ratios
                 . with relatively large market capitalizations (i.e., market
                   capitalizations of $5 billion or more).
 
                 The subadviser also invests in convertible securities that
                 generally provide a fixed income stream and an opportunity to
                 participate in an increase in the market price of the
                 underlying common stock.
 
                 Fixed income investments
                    
                 The subadviser periodically assesses the three month outlook
                 for inflation rate changes, economic growth and other fiscal
                 measures and their effect on U.S. Treasury interest rates.
                 Using that assessment, the subadviser determines a probable
                 difference between total Returns on U.S. Treasury securities
                 and on other types of fixed income securities and selects
                 those securities the subadviser believes will deliver
                 favorable returns.     
                        
Travelers Series Fund
 
16
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in a mix of equity and debt securities can bring added
benefits, it may also involve additional risks. Investors could lose money in
the fund or the fund's performance could fall below other possible investments
if any of the following occurs:
 
 . The subadviser's allocation of investments between equity and fixed income
  securities could cause the fund to miss attractive investment opportunities
  by underweighting markets that generate significant returns or cause the fund
  to incur losses by overweighting markets that experience significant
  declines.
 . The subadviser's judgment about the attractiveness, value or potential
  appreciation of a particular security proves to be incorrect.
 . Equity investments lose their value due to a decline in the U.S. stock
  market.
 . Value or large capitalization stocks are temporarily out of favor.
 . An adverse event, such as negative press reports about a company in the
  fund's portfolio, depresses the value of the company's stock.
 . Fixed income investments lose their value due to an increase in interest
  rates.
 . The issuer of a debt security in the fund defaults on its obligation to pay
  principal or interest, has its credit rating downgraded by a rating
  organization or is perceived by the market to be less creditworthy.
 . Mortgage and asset backed securities are subject to the same default risks of
  other fixed income securities, but it may be more difficult to enforce rights
  against the assets underlying these securities in case of default.
 . As a result of declining interest rates, the issuer of a security exercises
  its right to prepay principal earlier than scheduled, forcing the fund to
  reinvest in lower yielding securities. This is known as call risk.
 . As a result of rising interest rates, the issuer of a security exercises its
  right to pay principal later than scheduled, which will lock in a below-
  market interest rate and reduce the value of the security. This is known as
  extension risk.
 . Securities with longer maturities are more sensitive to interest rate changes
  and may be more volatile.
 
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
 
Many foreign countries in which the fund invests have less liquid and more
volatile markets than in the U.S. In some of the foreign countries in which the
fund invests, there is also less information available about foreign issuers
and markets because of less rigorous accounting and regulatory standards than
in the U.S. Currency fluctuations could erase investment gains or add to
investment losses. The risk of investing in foreign securities is greater in
the case of less developed countries.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the returns of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks, and the Lehman
Brothers Government/Corporate Bond Index ("Lehman Brothers Index"), a broad-
based unmanaged index of bonds issued by the U.S. government and its agencies
as well as certain corporate issuers. Past performance does not necessarily 
indicate how the fund will perform in the future. Performance figures do not
reflect expenses incurred from investing through a Separate Account. These 
expenses will reduce performance. Please refer to the Separate Account 
prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                        1995     1996     1997     1998
                        -----    -----    -----    -----
                        25.70%   14.51%   21.18%   11.67%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest: 9.87% in 2nd quarter 1997     
   
Lowest:(4.06)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                       One   Since
                       year  inception
--------------------------------------
<S>                    <C>   <C>
Fund                   11.67   15.26
S&P 500 Index          28.60   28.03*
Lehman Brothers Index   9.47    9.22*
--------------------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              17
<PAGE>
 
        
     Fund Goals and Strategies     
 
GT Global Strategic Income Portfolio
          
 Investment goals     
    
 Primary: High current income    Secondary: Capital appreciation     
    
 Key investments     
    
 The fund invests primarily in debt securities of
 U.S. and foreign companies, banks and governments,
 including those in emerging markets.     
    
 Credit Quality: At least 50% of the fund's assets
 consist of debt securities that are investment
 grade at the time of purchase. The remainder may
 consist of lower-quality bonds whose credit quality
 is considered the equivalent of U.S. corporate debt
 securities commonly known as "junk bonds."     
    
 Duration: The fund's average duration will gener-
 ally vary from 3 to 7 years depending on the
 subadviser's outlook for interest rates. Individual
 securities may be of any maturity.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The subadviser uses a combination of a "top-down" approach
                 and quantitative models to create an optimal risk/return
                 allocation of the fund's assets among debt securities of
                 issuers in three separate investment areas: (1) the United
                 States, (2) developed foreign countries, and (3) emerging
                 markets. The subadviser then selects individual debt
                 securities within each area on the basis of its views as to
                 the values available in the marketplace.
                    
                 In allocating investments among countries and asset classes,
                 the subadviser evaluates the following:     
 
                 . Currency,          . Growth rate forecasts
                   inflation and      . Fiscal policies
                   interest rate      . Political outlook
                   trends
                 . Proprietary risk
                   measures
                 . Balance of
                   payments status
 
                 In selecting individual debt securities, the subadviser
                 evaluates the following:
 
                 . Yield              . Issue classification
                 . Maturity           . Credit quality
                 . Call or
                   prepayment risk
 
Travelers Series Fund
 
18
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in global debt securities can bring added benefits, it may also
involve risks. Investors could lose money in the fund or the fund's performance
could fall below other possible investments if any of the following occurs:
 
 . Debt securities lose their value due to an increase in market interest rates
  in one or more regions, a decline in an issuer's credit rating or financial
  condition or a default by an issuer.
 . As a result of declining interest rates, the issuer of a security exercises
  its right to prepay principal earlier than scheduled, forcing the fund to
  reinvest in lower yielding securities. This is known as call or prepayment
  risk.
 . As a result of rising interest rates, the issuer of a security exercises its
  right to pay principal later than scheduled, which will lock in a below-
  market interest rate and reduce the value of the security. This is known as
  extension risk.
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular security proves to be incorrect.
 . An unhedged currency in which a security is priced declines in value relative
  to the U.S. dollar
 . The subadviser's judgment about the attractiveness, relative yield, value or
  potential appreciation of a particular security, or the stability of a
  particular government proves to be incorrect.
 
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
 
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.
   
In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency began on January 1, 1999. There are significant political and economic
risks associated with EMU, which may increase the volatility of European
markets and present valuation problems for the fund.     
 
The fund is NOT diversified, which means that it can invest a higher percentage
of its assets in any one issuer than a diversified fund. Being non-diversified
may magnify the fund's losses from adverse events affecting a particular
issuer.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the J.P. Morgan Global Bond Index ("Morgan Index"), a broad-based unmanaged
index of domestic and foreign bonds. Past performance does not necessarily
indicate how the fund will perform in the future. Performance figures do not
reflect expenses incurred from investing through a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account
prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                       1995     1996     1997      1998
                       -----    -----    -----     -----
                       20.09%   18.70%   7.41%     -1.54%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:7.64% in 3rd quarter 1996     
   
Lowest:(5.35)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
              One    Since
              year   inception
------------------------------
<S>           <C>    <C>
Fund          (1.54)   8.24
Morgan Index  15.31    9.1*         *
------------------------------
</TABLE>    
   
* Index comparison begins on June 30, 1994.     
 
                                                           Travelers Series Fund
 
                                                                              19
<PAGE>
 
        
     Fund Goals and Strategies     
 
Travelers Managed Income Portfolio
          
 Investment goal     
    
 High current income consistent with prudent risk of capital.     
    
 Key investments     
    
 The fund invests primarily in U.S. corporate debt
 obligations and U.S. government securities,
 including mortgage and asset backed securities, but
 may also invest to a limited extent in foreign
 issuers.     
    
 Credit Quality: The fund invests primarily in
 investment grade obligations. Up to 35% of the
 fund's assets may be invested in below investment
 grade obligations with no minimum rating.     
    
 Duration: At least 65% of the fund's assets are
 invested in securities having durations of 10 years
 or less. The fund's average portfolio duration will
 vary between 2 to 5 years depending on the
 manager's outlook for interest rates.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The manager uses a three step "top down" investment approach
                 to selecting investments for the fund by identifying
                 undervalued sectors and individual securities. Specifically,
                 the manager:
 
                 . Determines appropriate sector and maturity weightings based
                   on the manager's intermediate and long-term assessments of
                   broad economic and interest rate trends
                 . Uses fundamental research methods to identify undervalued
                   sectors of the government and corporate debt markets and
                   adjusts portfolio positions to take advantage of new
                   information
                 . Analyzes yield maturity, issue classification and quality
                   characteristics to identify individual securities that
                   present what the manager consider the optimal balance of
                   potential return and manageable risk
 
Travelers Series Fund
 
20
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in debt securities can bring added benefits, it may also
involve risks. Investors could lose money in the fund or the fund's performance
could fall below other possible investments if any of the following occurs:
 
 . The issuer of a debt security in the fund defaults on its obligation to pay
  principal or interest, has its credit rating downgraded by a rating
  organization or is perceived by the market to be less creditworthy.
 . Interest rates go up, causing the prices of debt securities in the fund to
  fall.
 . As a result of declining interest rates, the issuer of a security exercises
  its right to prepay principal earlier than scheduled, forcing the fund to
  reinvest in lower yielding securities. This is known as call or prepayment
  risk.
 . As a result of rising interest rates, the issuer of a security exercises its
  right to pay principal later than scheduled, which will lock in a below-
  market interest rate and reduce the value of the security. This is known as
  extension risk.
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular security proves to be incorrect.
 
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
 
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.
   
In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency began in 1999. There are significant political and economic risks
associated with EMU, which may increase the volatility of European markets and
present valuation problems for the fund.     
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Lehman Brothers Intermediate Government/Corporate Index ("Lehman Brothers
Index"), a broad-based index of bonds issued by the U.S. government and its 
agencies as well as certain corporate issuers. Prior to 1998, the fund compared
its performance with the Lehman Aggregate Bond Index. The manager believes that
the Lehman Intermediate Government/Corporate Index is a more appropriate 
benchmark because it more closely parallels the fund's holdings. Past 
performance does not necessarily indicate how the fund will perform in the 
future. Performance figures do not reflect expenses incurred from investing 
through a Separate Account. These expenses will affect performance. Please 
refer to the Separate Account prospectus for more information on expenses. 
    
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                       1995     1996    1997    1998
                       -----    ----    ----    ----
                       16.02%   2.93%   9.72%   5.07%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:5.75% in 2nd quarter 1995     
   
Lowest:(2.39)% in 1st quarter 1996     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                       One  Since
                       year inception
-------------------------------------
<S>                    <C>  <C>
Fund                   5.07   7.35
Lehman Brothers Index  8.44   7.99*
-------------------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              21
<PAGE>
 
        
     Fund Goals and Strategies     
 
Putnam Diversified Income Portfolio
          
 Investment goal     
    
 High current income consistent with preservation of capital.     
    
 Key investments     
    
 The fund invests primarily in debt securities of
 U.S. and foreign governments and corporations.     
    
 Credit Quality: The fund may invest in securities
 with a wide range of credit qualities depending on
 the particular sector of the fixed income securi-
 ties market in which the manager invests.     
    
 Duration: The Fund's duration will generally vary
 from 3 to 7 years depending on market conditions
 and the subadviser's outlook for interest rates.
 Individual securities may be of any duration.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 The subadviser combines "top down" and "bottom up" investment
                 styles, with an emphasis on active sector strategies. The
                 subadviser believes that actively allocating the fund's
                 investments among sectors of the fixed income securities
                 markets, as opposed to investing in any one sector, will
                 better enable the fund to control risk while pursuing its
                 objective of high current income.
 
                 The subadviser allocates its investment among the following
                 three sectors of the fixed income securities market:
 
                 . A U.S. Government Sector, consisting primarily of
                   securities of the U.S. government, its agencies and
                   instrumentalities and related options, futures and
                   repurchase agreements. The subadviser allocates at least
                   20% of the fund to the U.S. Government Sector;
                 . A High Yield Sector, consisting primarily of high yielding,
                   lower-rated, high risk U.S. and foreign corporate fixed-
                   income securities commonly called "junk bonds"; and
                 . An International Sector, consisting primarily of
                   obligations of foreign governments, their agencies and
                   instrumentalities, supranational entities, and foreign
                   corporations, including issuers in emerging markets, and
                   related options and futures.
 
                 The subadviser over- and underweights investments in each
                 sector depending on the subadviser's views on economic,
                 interest rate and political trends. The subadviser utilizes
                 proprietary techniques to organize and rank opportunities
                 presented by the various sectors.
 
                 In making sector allocations, the subadviser evaluates:
 
                 . Capital flows    . Default trends
                 . Political        . Interest rate forecasts
                   trends
 
                 Specialists managing each sector then select individual
                 securities within each sector that represent risk/return
                 opportunities believed optimal. In selecting securities for
                 investment, the subadviser looks for favorable yield,
                 maturity, issue classification and quality characteristics.
 
Travelers Series Fund
 
22
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in fixed income securities can bring added benefits, it may
also involve additional risks. Investors could lose money in the fund or the
fund's performance could fall below other possible investments if any of the
following occurs:
 
 . Fixed income securities lose their value due to an increase in market
  interest rates in one or more regions, a decline in an issuer's credit rating
  or financial condition or a default by an issuer.
 . As a result of declining interest rates, the issuer of a security exercises
  its right to prepay principal earlier than scheduled, forcing the fund to
  reinvest in lower yielding securities. This is known as call or prepayment
  risk.
 . As a result of rising interest rates, the issuer of a security exercises its
  right to pay principal later than scheduled, which will lock in a below-
  market interest rate and reduce the value of the security. This is known as
  extension risk.
 . An unhedged currency in which a security is priced declines in value relative
  to the U.S. dollar
 . The subadviser's judgment about the attractiveness, relative yield, value or
  potential appreciation of a particular security, or the stability of a
  particular government proves to be incorrect.
 
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
 
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the returns of
the Lehman Brothers Aggregate Bond Index and the Salomon Brothers Non-U.S.
World Government Bond Index, both of which are broad-based indices. (The Lehman
index consists of a variety of domestically issued bonds.  The Salomon index 
consists of foreign government bonds.) Past performance does not necessarily 
indicate how the fund will perform in the future. Performance figures do not 
reflect expenses incurred from investing through a Separate Account. Please 
refer to the Separate Account prospectus for more information on expenses. 
    
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                       1995     1996      1997      1998
                       -----    ----      ----      -----
                       17.49%   8.14%     7.69%     0.67%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:4.97% in 1st quarter 1995     
   
Lowest:(3.34)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                        One   Since
                        year  inception
---------------------------------------
<S>                     <C>   <C>
Fund                     0.67   7.65
Lehman Brothers Index    8.69   9.07*
Salomon Brothers Index  17.79   8.34*
---------------------------------------
</TABLE>    
   
* Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              23
<PAGE>
 
        
     Fund Goals and Strategies     
 
Smith Barney High Income Portfolio
          
 Investment goal     
    
 Primary: High current income    Secondary: Capital appreciation     
    
 Key investments     
    
 The fund invests primarily in high yielding,
 corporate debt obligations and preferred stock of
 U.S. and foreign issuers, but may also invest in
 foreign issuers.     
    
 Credit Quality: The fund invests primarily in below
 investment grade securities, but may not invest
 more than 10% in securities rated lower than B or
 unrated securities of comparable quality. Below in-
 vestment grade securities are commonly known as
 "junk bonds."     
    
 Maturity: Although the fund may invest in securi-
 ties of any maturity, under current market condi-
 tions, the fund intends to have an average remain-
 ing maturity of between five and ten years.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 In selecting securities, the manager considers and compares
                 the relative yields of various types of obligations. The
                 manager seeks to maximize current income by generally
                 purchasing securities of lower credit quality, but offering
                 higher current yield. In selecting securities for the fund,
                 the manager employs a forward looking strategy seeking to
                 identify companies that exhibit favorable earnings prospects
                 or demonstrate a potential for higher ratings over time.
 
                 The manager looks for:
 
                 .  "Fallen angels" or companies that are repositioning in the
                    marketplace which the manager believes are temporarily
                    undervalued, and
                    
                 .  Younger companies with smaller capitalizations that have
                    exhibited improving financial strength or improving credit
                    ratings over time     
 
                 The manager selects individual debt securities by comparing
                 yield, maturity, issue classification and quality
                 characteristics. Investments in these companies may increase
                 the fund's potential for capital appreciation and reduce the
                 fund's credit risk exposure.
 
                 The manager also employs an active sell strategy to dispose
                 of securities that no longer meet the manager's investment
                 criteria to harvest gains for reinvestment in new securities
                 exhibiting characteristics as described above.
 
Travelers Series Fund
 
24
<PAGE>
 
       
Principal risks of investing in the fund
 
While investing in high yield securities can bring added benefits, it may also
involve additional risks. Investors could lose money in the fund or the fund's
performance could fall below other possible investments if any of the following
occurs:
 
 . The issuer of a debt security in the fund defaults on its obligation to pay
  principal or interest, has its credit rating downgraded by a rating
  organization or is perceived by the market to be less creditworthy.
 . Interest rates go up, causing the prices of debt securities in the fund to
  fall.
 . As a result of declining interest rates, the issuer of a security exercises
  its right to prepay principal earlier than scheduled, forcing the fund to
  reinvest in lower yielding securities. This is known as call or prepayment
  risk.
 . As a result of rising interest rates, the issuer of a security exercises its
  right to pay principal later than scheduled, which will lock in a below-
  market interest rate and reduce the value of the security. This is known as
  extension risk.
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular security proves to be incorrect.
 
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
 
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.
 
--------------------------------------------------------------------------------
 
Fund performance
   
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the returns of
the Salomon Brothers Intermediate High Yield Index ("Salomon Index") and the
Bear Stearns High Yield Index ("Bear Stearns Index"), both of which are broad-
based indices of high yield corporate bonds. Past performance does not
necessarily indicate how the fund will perform in the future. Performance
figures do not reflect expenses incurred from investing through a Separate
Account. These expenses will reduce performance. Please refer to the Separate
Account prospectus for more information on expenses.     
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                       1995     1996     1997     1998
                       -----    -----    -----    ----
                       19.18%   13.13%   13.85%   0.44%
   
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:5.35% in 2nd quarter 1997     
   
Lowest:(5.79)% in 3rd quarter 1998     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                    One  Since
                    year inception
----------------------------------
<S>                 <C>  <C>
Fund                0.44    9.86
Salomon Index       3.60   10.74*
Bear Stearns Index  2.08   10.85*
----------------------------------
</TABLE>    
   
*Index comparisons begin on June 30, 1994     
 
                                                           Travelers Series Fund
 
                                                                              25
<PAGE>
 
        
     Fund Goals and Strategies     
 
Smith Barney Money Market Portfolio
          
 Investment goal     
    
 Maximize current income consistent with
 preservation of capital. The fund seeks to maintain
 a stable $1 share price.     
    
 Key investments     
    
 The fund invests exclusively in high quality U.S.
 dollar denominated short term debt securities.
 These include commercial paper, corporate and
 municipal obligations, obligations of U.S. and
 foreign banks, securities of the U.S. Government,
 its agencies or instrumentalities and related
 repurchase agreements.     
    
 Credit Quality: The fund invests exclusively in se-
 curities rated by a nationally recognized rating
 organization in the two highest short term rating
 categories, or if unrated, of equivalent quality.
        
 Effective Maturity: The fund invests exclusively in
 securities having remaining effective maturities of
 397 days or less, and maintains a dollar-weighted
 portfolio maturity of 90 days or less.     
--------------------------------------------------------------------------------
 
                 Selection process
 
                 In selecting investments for the fund, the manager looks for:
 
                 . The best relative values based on an analysis of interest
                   rate sensitivity, yield and price.
                 . Issuers offering minimal credit risk.
                 . Maturities consistent with the manager's outlook for
                   interest rates.
 
 
Travelers Series Fund
 
26
<PAGE>
 
       
Principal risks of investing in the fund
 
Although the fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund, or the fund could
underperform other short term debt instruments or money market funds if any of
the following occurs:
 
 . Interest rates rise sharply.
 . An issuer of the fund's securities defaults, or has its credit rating
  downgraded.
 . Sectors or issuers the fund has emphasized fail to perform as expected.
 . The manager's judgment about the attractiveness, value or potential
  appreciation of a particular security proves to be incorrect.
 
The value of the fund's foreign securities may go down because of unfavorable
government actions, political instability or the more limited availability of
accurate information about foreign issuers.
 
--------------------------------------------------------------------------------
 
Fund performance
 
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the 90-day U.S. Treasury bill. Past performance does not necessarily indicate 
how the fund will perform in the future. Performance figures do not reflect
expenses incurred from investing through a Separate Account. These expenses 
will reduce performance.  Please refer to the Separate Account prospectus for 
more information on expenses.
 
                                % Total Return
 
                           [BAR CHART APPEARS HERE]
 
                       Calendar years ended December 31
 
                        1995    1996    1997    1998
                        ----    ----    ----    ----
                        5.43%   4.94%   5.09%   5.04%
   
The bar chart shows the performance of the Fund's shares for each of the full
calendar years since its inception on June 16, 1994.     
 
Quarterly returns:
   
Highest:1.37% in 2nd quarter 1995     
   
Lowest:1.15% in 4th quarter 1994     
 
Average Annual Total Returns
(for the periods ended December 31, 1998)
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
               One  Since
               year inception
-----------------------------
<S>            <C>  <C>
Fund           5.04   5.02
Treasury bill  5.06   5.28*   *
-----------------------------
</TABLE>    
   
* Index comparison begins on June 30, 1994.     
   
The fund's 7-day yield as of December 31, 1998 was 4.63%. Call toll free 
1-877-795-2703
for the fund's current 7-day yield.     
 
                                                           Travelers Series Fund
 
                                                                              27
<PAGE>
 
   
More on the Funds' Investments     
 
Additional investments and investment techniques
--------------------------------------------------------------------------------
 
Each fund de-    Smith Barney Pacific Basin Portfolio
scribes its      Although the fund intends to be fully invested in equity se-
investment ob-   curities, it may invest up to 20% of its assets in investment
jective and      grade debt securities.
its principal
investment       Smith Barney International Equity Portfolio
strategies and   The fund may invest up to 20% of its assets in debt securi-
risks under      ties of any credit quality or maturity of foreign corporate
"Fund Goals      and governmental issuers, as well as U.S. government securi-
and Strate-      ties and money market obligations of U.S. and foreign corpo-
gies."           rate issuers.
 
This section     Smith Barney Large Capitalization Growth Portfolio
provides addi-   Although the fund intends to be fully invested in equity se-
tional infor-    curities of growth companies, it may invest up to 35% of its
mation about     total assets in money market instruments for cash management
the funds' in-   purposes.
vestments and
certain port-    Alliance Growth Portfolio
folio manage-    Although the fund invests primarily in U.S. equity securi-
ment tech-       ties, it may also invest up to 25% of its assets in high
niques the       yield securities with no minimum credit quality restriction,
funds may use.   and may also invest up to 15% in foreign securities.
More informa-
tion about the   MFS Total Return Portfolio
funds' invest-   The fund may invest without limit in ADRs and up to 20% of
ments and        its total assets in foreign securities.
portfolio man-
agement tech-    Travelers Managed Income Portfolio
niques, some     The fund may invest up to 35% of its total assets in non-in-
of which en-     vestment grade debt obligations, commonly known as "junk
tail risks, is   bonds." The fund may also invest up to 35% of its total as-
included in      sets in fixed-income obligations having durations longer than
the statement    10 years. The fund may also invest up to 25% of its assets in
of additional    asset-backed and mortgage-backed securities, including CMOs.
information
(SAI).           Smith Barney High Income Portfolio
                 Although the fund invests primarily in high yield securities,
                 the fund may also invest up to 35% of its assets in common
                 stock and common stock equivalents, including convertible se-
                 curities, options, warrants and rights. The fund may invest
                 up to 20% of its assets in foreign currency denominated secu-
                 rities and without limit in U.S. dollar denominated securi-
                 ties of foreign issuers.
------------------------------------------------------------------------------- 


Travelers Series Fund
 
28
<PAGE>
 

--------------------------------------------------------------------------------
Equity           Subject to its particular investment policies, each of these
investments      funds may invest in all types of equity securities. Equity
Each equity      securities include exchange-traded and over-the-counter (OTC)
fund, MFS To-    common and preferred stocks, warrants, rights, investment
tal Return       grade convertible securities, receipts and shares, trust cer-
Portfolio and    tificates, limited partnership interests, shares of other in-
Smith Barney     vestment companies, real estate investment trusts and equity
High Income      participations.
Portfolio
 
--------------------------------------------------------------------------------
 
Fixed income
investments      Subject to its particular investment policies, each fund may
Each fixed in-   invest in fixed income securities. Fixed income investments
come fund and,   include bonds, notes (including structured notes), mortgage-
to a limited     related securities, asset-backed securities, convertible se-
extent, each     curities, Eurodollar and Yankee dollar instruments, preferred
equity fund      stocks and money market instruments. Fixed income securities
                 may be issued by U.S. and foreign corporations or entities;
                 U.S. and foreign banks; the U.S. government, its agencies,
                 authorities, instrumentalities or sponsored enterprises;
                 state and municipal governments; supranational organizations;
                 and foreign governments and their political subdivisions.
 
                 Fixed income securities may have all types of interest rate
                 payment and reset terms, including fixed rate, adjustable
                 rate, zero coupon, contingent, deferred, payment in kind and
                 auction rate features.
 
MFS Total        Each of these funds may invest in mortgage-backed and asset-
Return,          backed securities. Mortgage-related securities may be issued
Travelers Managed by private companies or by agencies of the U.S. government
Income, Putnam   and represent direct or indirect participations in, or are
Diversified      collateralized by and payable from, mortgage loans secured by
Income and       real property. Asset-backed securities represent participa-
Smith Barney     tions in, or are secured by and payable from, assets such as
High Income      installment sales or loan contracts, leases, credit card re-
Portfolios       ceivables and other categories of receivables.
 
--------------------------------------------------------------------------------
 
                 Credit quality
 
                 If a security receives different ratings, a fund will treat
                 the securities as being rated in the highest rating category.
                 A fund may choose not to sell securities that are downgraded
                 after their purchase below the fund's minimum acceptable
                 credit rating. Each fund's credit standards also apply to
                 counterparties to OTC derivatives contracts.
 
                 Investment grade securities
 
                 Securities are investment grade if:
 
                 . They are rated, respectively, in one of the top four long-
                   term rating categories of a nationally recognized
                   statistical rating organization.
                 . They have received a comparable short-term or other rating.
                 . They are unrated securities that the manager believes are
                   of comparable quality to investment grade securities.
--------------------------------------------------------------------------------

                                                           Travelers Series Fund
 
                                                                              29
<PAGE>
 

--------------------------------------------------------------------------------
                 High yield, lower quality securities
 
Alliance            
Growth, MFS      Each of these funds may invest in fixed income securities
Total            that are high yield, lower quality securities rated by a rat-
Return,          ing organization below its top four long term rating catego-
Travelers        ries or unrated securities determined by the manager or
Managed          subadviser to be of equivalent quality. The issuers of lower
Income, Putnam   quality bonds may be highly leveraged and have difficulty
Diversified      servicing their debt, especially during prolonged economic
                 recessions or periods of rising interest rates. The prices of
Income, GT       lower quality securities are volatile and may go down due to
Global           market perceptions of deteriorating issuer credit-worthiness
Strategic        or economic conditions. Lower quality securities may become
                 illiquid and hard to value in down markets.     
              
Income and    
Smith Barney  
High          
              
Income        
Portfolios    
only          
Alliance
Growth Portfo-
lio may invest
in these secu-
rities primar-
ily for their
capital growth
potential
 
--------------------------------------------------------------------------------
 
Foreign and      Each fund may invest in foreign securities, although the for-
emerging         eign investments of Smith Barney Money Market Portfolio are
market           limited to U.S. dollar denominated investments issued by for-
investments      eign branches of U.S. banks and by U.S. and foreign branches
                 of foreign banks.
 
                 Investments in securities of foreign entities and securities
                 quoted or denominated in foreign currencies involve special
                 risks. These include possible political and economic insta-
                 bility and the possible imposition of exchange controls or
                 other restrictions on investments. If a fund invests in secu-
                 rities denominated or quoted in currencies other than the
                 U.S. dollar, changes in foreign currency rates relative to
                 the U.S. dollar will affect the U.S. dollar value of the
                 fund's assets.
                     
Smith Barney     Emerging market investments offer the potential of signifi-
Pacific Basin,   cant gains but also involve greater risks than investing in
Smith Barney     more developed countries. Political or economic instability,
International    lack of market liquidity and government actions such as cur-
Equity, MFS      rency controls or seizure of private business or property may
Total Return,    be more likely in emerging markets. 
Putnam
Diversified
Income and GT
Global
Strategic
Income
Portfolios
only     
 
                 Sovereign government and supranational debt
 
MFS Total        These funds may invest in all types of fixed income securi-
Return,          ties of governmental issuers in all countries, including
Travelers        emerging markets. These sovereign debt securities may in-
Managed          clude:
Income, Putnam
Diversified      . Fixed income securities issued or guaranteed by
Income and GT      governments, governmental agencies or instrumentalities and
Global             political subdivisions located in emerging market
Strategic          countries.
Income           . Participations in loans between emerging market governments
Portfolios         and financial institutions.
only             . Fixed income securities issued by government owned,
                   controlled or sponsored entities located in emerging market
                   countries.
                 . Interests in entities organized and operated for the
                   purpose of restructuring the investment characteristics of
                   instruments issued by any of the above issuers.
                 . Brady Bonds.
                 . Fixed income securities issued by corporate issuers, banks
                   and finance companies located in emerging market countries.
--------------------------------------------------------------------------------

Travelers Series Fund

30
<PAGE>
 

--------------------------------------------------------------------------------
                 . Fixed income securities issued by supranational entities
                   such as the World Bank or the European Economic Community
                   (A supranational entity is a bank, commission or company
                   established or financially supported by the national
                   governments of one or more countries to promote
                   reconstruction or development.)
 
--------------------------------------------------------------------------------
 
Derivatives      Each fund may, but need not, use derivative contracts, such
and hedging      as futures and options on securities, securities indices or
techniques       currencies; options on these futures; forward currency con-
                 tracts; and interest rate or currency swaps for any of the
All funds ex-    following purposes:
cept Smith
Barney Money     . To hedge against the economic impact of adverse changes in
Market Portfo-     the market value of its securities, due to changes in stock
lio                market prices, currency exchange rates or interest rates
                 . As a substitute for buying or selling securities
                 . To enhance the fund's return
 
                 A derivative contract will obligate or entitle a fund to de-
                 liver or receive an asset or cash payment that is based on
                 the change in value of one or more securities, currencies or
                 indices. Even a small investment in derivative contracts can
                 have a big impact on a fund's stock market, currency and in-
                 terest rate exposure. Therefore, using derivatives can dis-
                 proportionately increase losses and reduce opportunities for
                 gains when stock prices, currency rates or interest rates are
                 changing. A fund may not fully benefit from or may lose money
                 on derivatives if changes in their value do not correspond
                 accurately to changes in the value of the fund's holdings.
                 The other parties to certain derivative contracts present the
                 same types of credit risk as issuers of fixed income securi-
                 ties. Derivatives can also make a fund less liquid and harder
                 to value, especially in declining markets.
 
--------------------------------------------------------------------------------
 
Securities          
lending          Each fund, except Van Kampen Enterprise Portfolio, may engage
                 in securities lending to increase its net investment income.
                 Each fund will only lend securities if the loans are callable
                 by the fund at any time and the loans are continuously se-
                 cured by cash or liquid securities equal to no less than the
                 market value, determined daily, of the securities loaned. The
                 risks in lending securities consist of possible delay in re-
                 ceiving additional collateral, delay in recovery of securi-
                 ties when the loan is called or possible loss of collateral
                 should the borrower fail financially.     
 
--------------------------------------------------------------------------------
 
Defensive        Each fund may depart from its principal investment strategies
investing        in response to adverse market, economic or political condi-
                 tions by taking temporary defensive positions in all types of
                 money market and short-term debt securities. If a fund takes
                 a temporary defensive position, it may be unable to achieve
                 its investment goal.
 
--------------------------------------------------------------------------------
 
Portfolio
turnover         Each fund may engage in active and frequent trading to
                 achieve its principal investment strategies. Frequent trading
                 also increases transaction costs, which could detract from a
                 fund's performance.
--------------------------------------------------------------------------------
 
                                                           Travelers Series Fund
 
                                                                              31
<PAGE>
 
 
Management
 
The managers
   
SSBC Fund Management Inc. (SSBC), Travelers Investment Adviser Inc. (TIA) or
Travelers Asset Management International Corporation (TAMIC) is each fund's
manager. Citigroup businesses produce a broad range of financial services --
 asset management, banking and consumer finance, credit and charge cards,
insurance, investments, investment banking and trading -- and use diverse
channels to make them available to consumer and corporate customers around the
world. SSBC and TAMIC select investments for the funds for which they serve as
managers. TIA has engaged subadvisers to select investments for funds for which
TIA serves as manager.     
   
SSBC Fund Management Inc.     
   
SSBC Fund Management Inc. is a wholly owned subsidiary of Citigroup, a
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. SSBC is located at 388 Greenwich Street, New York,
New York 10013. SSBC acts as investment manager to investment companies having
aggregate assets of approximately $115 billion.     
   
SSBC manages the investment operations of the following funds (Smith Barney
funds) and receives from each fund for these services the fee indicated:     
 
  -------------------------------------------------
<TABLE>   
<CAPTION>
                             Actual management fee
                             paid for the fiscal year  Contractual
                             ended October 31, 1998    management fee paid
                             (as a percentage          (as a percentage
                             of the fund's             of the fund's
   Fund                      average daily net assets) average daily net assets)
  ------------------------------------------------------------------------------
   <S>                       <C>                       <C>
   Smith Barney Pacific
   Basin Portfolio                  0.90%                     0.90%
   Smith Barney
   International Equity
   Portfolio                        0.90%                     0.90%
   Smith Barney Large Cap
   Value Portfolio                  0.65%                     0.65%
   Smith Barney Large
   Capitalization Growth
   Portfolio                        0.00%*                    0.75%
   Smith Barney High Income
   Portfolio                        0.60%                     0.60%
   Smith Barney Money
   Market Portfolio                 0.50%                     0.50%**
  ------------------------------------------------------------------------------
</TABLE>    
     

   * Amount paid represents less than 0.01%.
  ** Prior to March 11, 1998, the annual management
    fee paid to SSBC was 0.60% of the average
    daily net assets of the fund.     
 
Travelers Series Fund
 
32
<PAGE>
 
 
Travelers Investment Adviser Inc.
   
Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation (Plaza), which is an indirect wholly owned subsidiary of
Citigroup. TIA is located at 388 Greenwich Street, New York, New York 10013.
TIA, an affiliate of SSBC, acts as investment manager to investment companies
having aggregate assets of approximately $2.3 billion.     
 
TIA manages the investment operations of the following funds (TIA funds) and
receives for these services from each fund the fee indicated:
 
<TABLE>
  ------------------------------------------------------------------------------
<CAPTION>
                             Actual management fee
                             paid for the fiscal year  Contractual management
                             ended October 31, 1998    fee paid
                             (as a percentage          (as a percentage
                             of the fund's             of the fund's
   Fund                      average daily net assets) average daily net assets)
  ------------------------------------------------------------------------------
   <S>                       <C>                       <C>
   Alliance Growth
   Portfolio                        0.80%                      0.80%
   AIM Capital Appreciation
   Portfolio                        0.80%                      0.80%
   Van Kampen Enterprise
   Portfolio                        0.70%                      0.70%
   MFS Total Return
   Portfolio                        0.80%                      0.80%
   GT Global Strategic
   Income Portfolio                 0.80%                      0.80%
   Putnam Diversified
   Income Portfolio                 0.75%                      0.75%
  ------------------------------------------------------------------------------
</TABLE>
 
Travelers Asset Management International Corporation
   
Travelers Asset Management International Corporation (TAMIC) is a wholly owned
subsidiary of Citigroup and an affiliate of SSBC. TAMIC is located at One Tower
Square--10PB, Hartford, Connecticut 06183-2030. TAMIC also acts as investment
adviser or subadviser for other investment companies used to fund variable
products, as well as for individual and pooled pension and profit-sharing
accounts, and for affiliated domestic insurance companies.     
 
TAMIC manages the investment operations of the following funds (TAMIC funds)
and receives for these services from each fund the fee indicated:
 
<TABLE>
  ------------------------------------------------------------------------------
<CAPTION>
                             Actual management fee
                             paid for the fiscal year  Contractual management
                             ended October 31, 1998    fee paid
                             (as a percentage          (as a percentage
                             of the fund's             of the fund's
   Fund                      average daily net assets) average daily net assets)
  ------------------------------------------------------------------------------
   <S>                       <C>                       <C>
   Travelers Managed Income
   Portfolio                          0.65%                      0.65%
  ------------------------------------------------------------------------------
</TABLE>
 
                                                           Travelers Series Fund
 
                                                                              33
<PAGE>
 
 
The Subadvisers and Portfolio Managers
   
The Smith Barney funds are managed solely by SSBC. The TAMIC funds are managed
solely by TAMIC. Each of the TIA funds' investments are selected by a
subadviser which is supervised by TIA. The table below sets forth the name and
business experience of each fund's portfolio manager, including where
applicable, the portfolio manager employed by the subadviser.     
 
<TABLE>   
<CAPTION>
  Fund                    Portfolio Manager and Subadviser       Business Experience
 
  <S>                     <C>                                    <C>
  Smith Barney Pacific    David S. Ishibashi (since 1996)        Investment Officer, SSBC; Vice
  Basin Portfolio         SSBC                                   President, Salomon Smith Barney.
                          388 Greenwich Street
                          New York, New York 10013
 
                          Scott Kalb (since 1996)                Investment Officer, SSBC;
                          SSBC                                   Managing Director, Salomon Smith
                                                                 Barney.
--------------------------------------------------------------------------------------------------
  Smith Barney            James Conheady (since inception)       Investment Officer, SSBC; Vice
  International Equity    SSBC                                   President, Travelers Series Fund;
  Portfolio               388 Greenwich Street                   Managing Director, Salomon Smith
                          New York, New York 10013               Barney.
 
                          Jeffrey Russell (since inception)      Investment Officer, SSBC; Vice
                          SSBC                                   President, Travelers Series Fund;
                                                                 Managing Director, Salomon Smith
                                                                 Barney.
--------------------------------------------------------------------------------------------------
  Smith Barney Large Cap  Ellen Cardozo Sonsino (since 1998)     Investment Officer, SSBC;
  Value Portfolio         SSBC                                   Managing Director and Senior
                          388 Greenwich Street,                  Equity Portfolio Manager, Salomon
                          New York, New York 10013               Smith Barney.
--------------------------------------------------------------------------------------------------
  Smith Barney Large      Alan Blake (since inception)           Investment Officer, SSBC;
  Capitalization Growth   SSBC                                   Managing Director, Salomon Smith
  Portfolio               388 Greenwich Street                   Barney.
                          New York, New York 10013
--------------------------------------------------------------------------------------------------
  Alliance Growth         Tyler Smith (since inception)          Senior Vice President, Alliance
  Portfolio               Alliance Capital Management L.P.       Capital.
                          1345 Avenue of the Americas
                          New York, New York 10105
--------------------------------------------------------------------------------------------------
</TABLE>    
 
Travelers Series Fund
 
34
<PAGE>
 
<TABLE>   
<CAPTION>
  Fund                      Portfolio Manager and Subadviser       Business Experience
  <S>                       <C>                                    <C>
  AIM Capital Appreciation  Kenneth A. Zschappel (since inception) Vice President, A I M Capital.
  Portfolio                 A I M Capital Management, Inc.
                            11 Greenway Plaza,
                            Suite 100
                            Houston, TX 77046
 
                            Charles D. Scavone (since inception)   Vice President, A I M Capital.
                            A I M Capital Management               Associate Portfolio Manager, Van
                                                                   Kampen Capital Asset Management,
                                                                   Inc. from 1994 to 1996. Prior to
                                                                   that, Equity Research
                                                                   Analyst/Assistant Portfolio
                                                                   Manager, Texas Commerce
                                                                   Investment Management Company
                                                                   from 1991 to 1994.
 
                            David P. Barnard (since inception)     Vice President, A I M Capital.
                            A I M Capital Management
 
                            Robert M. Kippes (since inception)     Vice President, A I M Capital.
                            A I M Capital Management
----------------------------------------------------------------------------------------------------
  Van Kampen Enterprise     Jeff New (since July 1994)             Senior Vice President, Van Kampen
  Portfolio                 Van Kampen Asset Management, Inc.      Asset Management; Senior Vice
                            One Parkview Plaza                     President, Van Kampen Investment
                            Oakbrook Terrace, IL 60181             Advisory, Inc.
----------------------------------------------------------------------------------------------------
  MFS Total Return          David M. Calabro (since inception)     Senior Vice President, MFS.
  Portfolio                 Massachusetts Financial Services
                            Company
                            500 Boylston Street
                            Boston, MA 02116
 
                            Geoffrey L. Kurinsky (since inception) Senior Vice President, MFS.
                            MFS
 
                            Constantinos Mokas (since 1998)        Vice President, MFS.
                            MFS
 
                            Lisa B. Nurme (since inception)        Senior Vice President, MFS.
                            MFS
 
                            Maura A. Shaughnessy (since inception) Senior Vice President, MFS.
                            MFS
----------------------------------------------------------------------------------------------------
</TABLE>    
 
                                                           Travelers Series Fund
 
                                                                              35
<PAGE>
 
<TABLE>   
<CAPTION>
  Fund                      Portfolio Manager and Subadviser       Business Experience
  <S>                       <C>                                    <C>
  GT Global Strategic       Cheng-Hock Lau (since 1996)            Chief Investment Officer, Fixed
  Income Portfolio          INVESCO (NY), Inc.                     Income, INVESCO since 1996.
                            1166 Avenue of the Americas            Senior Portfolio Manager for
                            New York, NY 10036                     Global/International Fixed
                                                                   Income, Chancellor LGT from 1995
                                                                   to 1996. Prior to that, Senior
                                                                   Vice President and Senior
                                                                   Portfolio Manager, Fiduciary
                                                                   Trust Company International from
                                                                   1993 to 1995. Prior to that, Vice
                                                                   President, Bankers Trust Company
                                                                   from 1991 to 1993.
 
                            David Hughes (since 1998)              Head of Global Fixed Income,
                            INVESCO (NY), Inc.                     North America, INVESCO since
                                                                   1997. Senior Portfolio Manager,
                                                                   Global/International Fixed
                                                                   Income, INVESCO from July 1995 to
                                                                   December 1997. Prior to that, Mr.
                                                                   Hughes was employed by Chancellor
                                                                   Capital from July 1995 to October
                                                                   1996. Prior to that, Assistant
                                                                   Vice President, Fiduciary Trust
                                                                   Company International from 1994
                                                                   to 1995.
 
                            Craig Munro (since 1998)               Portfolio Manager, INVESCO since
                            INVESCO (NY), Inc.                     August 1997. Prior thereto, Vice
                                                                   President and Senior Analyst,
                                                                   Emerging Markets Group, Global
                                                                   Fixed Income Division, Merrill
                                                                   Lynch Asset Management from 1993
                                                                   to August 1997.
----------------------------------------------------------------------------------------------------
  Travelers Managed Income  F. Denney Voss (since 1998)            Executive Vice President, Salomon
  Portfolio                 TAMIC                                  Smith Barney.
                            One Tower Square--10PB
                            Hartford, Connecticut 06183-2030
----------------------------------------------------------------------------------------------------
  Putnam Diversified        Jennifer Evans Leichter (since 1998)   Managing Director and Chief
  Income Portfolio          Putnam Investment Management, Inc.     Investment Officer, Corporate
                            One Post Office Square                 Credit Group, Putnam Management.
                            Boston, MA 02109
----------------------------------------------------------------------------------------------------
  Smith Barney High Income  John C. Bianchi (since inception)      Investment Officer, SSBC;
  PortFolio                 MMC                                    Managing Director, Salomon Smith
                            388 Greenwich Street                   Barney.
                            New York, New York 10013
----------------------------------------------------------------------------------------------------
</TABLE>    
 
Travelers Series Fund
 
36
<PAGE>
 
<TABLE>   
<CAPTION>
  Fund                    Portfolio Manager and Subadviser       Business Experience
  <S>                     <C>                                    <C>
  Money Market Portfolio  Martin Hanley (since inception)        Investment Officer, SSBC; Vice
                          SSBC                                   President, Salomon Smith Barney.
                          388 Greenwich Street
                          New York, New York 10013
-------------------------------------------------------------------------------------------------
</TABLE>    
   
Year 2000 Issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. Individual companies and governmental issuers that
securities held by a fund may also be adversely affected by the cost of
addressing their Year 2000 systems problems, which could be substantial. The
managers are addressing the Year 2000 issue for their systems. The funds have
been informed by their other service providers that they are taking similar
measures. Although the funds do not expect the Year 2000 issue to adversely
affect them, the funds cannot guarantee that their efforts or the efforts of
their service providers to correct the problem will be successful.     
   
Additional information about the subadvisors     
   
Alliance Capital Management. Alliance is a global investment adviser providing
diversified services to institutions and individuals through a broad line of
investments including approximately 249 fund portfolios. Alliance manages over
$286 billion in assets.     
   
A I M Capital Management, Inc. AIM is a wholly owned subsidiary of A I M
Advisors, Inc., a registered investment adviser. AIM and A I M Advisors, Inc.
manage approximately $109 billion in assets.     
   
Van Kampen Asset Management, Inc. Van Kampen is a diversified asset management
Company.  Van Kampen and its affiliates manage more than $75 billion in assets.
    
   
Massachusetts Financial Services Company. MFS and its predecessor organizations
have a history of money management dating from 1924. The MFS organization
manages approximately $100 billion on behalf of 4 million investor accounts.
       
INVESCO (NY), Inc. INVESCO (NY) and its institutional affiliates manage 
approximately $94 billion in assets.     
   
Putnam Investment Management, Inc. Putnam has managed mutual funds since 1937.
Putnam and its affiliates manage approximately $290 billion in assets.     
 
                                                           Travelers Series Fund
 
                                                                              37
<PAGE>
 
Share Transactions
   
Availability of the funds     
 
Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through
their separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.
   
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations.
The company currently does not foresee any disadvantages to investors arising
from the fact that each fund may offer its shares to different insurance
company separate accounts that serve as the investment medium for their
variable annuity and variable life products. Nevertheless, the Board of
Directors intends to monitor events to identify any material irreconcilable
conflicts which may arise, and to determine what action, if any, should be
taken in response to these conflicts. If a conflict were to occur, one or more
insurance companies' separate accounts might be required to withdraw their
investments in one or more funds and shares of another fund may be substituted.
In addition, the sale of shares may be suspended or terminated if required by
law or regulatory authority or is in the best interests of the funds'
shareholders.     
   
Redemption of shares     
 
The redemption price of the shares of each fund will be the net asset value
next determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted
to a separate account on or before the third day following receipt of the
request in good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
 
Share Price
 
Each fund's net asset value is the value of its assets minus its liabilities.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, each fund accelerates the calculation of its net asset value to the
actual closing time.
   
Each fund generally values its fund securities based on market prices or
quotations. To the extent a fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices are
not readily available, or when the manager believes that they are unreliable or
that the value of a security has been materially affected by events occurring
after a foreign exchange closes, the funds may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund that uses market quotations to
price the same securities.     
 
International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.
 
Unless there are extraordinary or unusual circumstances, Smith Barney Money
Market Portfolio uses the amortized cost method of valuing its money market
securities. Under the amortized cost method, assets are valued by constantly
amortizing over the remaining life of an instrument the difference between the
principal amount due at maturity and the cost of the instrument to the fund.
 
Travelers Series Fund
 
38
<PAGE>
 
Dividends, Distributions and Taxes
   
Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
Separate Accounts and to holders of the Contracts.     
 
Each fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment.
An alternative diversification test may be satisfied under certain
circumstances. If a fund should fail to comply with these regulations or fails
to qualify for the special tax treatment afforded regulated investment
companies under the Code, Contracts invested in that fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
 
                                                           Travelers Series Fund
 
                                                                              39
<PAGE>
 
Financial Highlights
   
The financial highlights tables are intended to help you understand the
performance of each fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
LLP, independent accountants, whose report, along with each fund's financial
statements, are included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total returns
represent the rate that a shareholder would have earned (or lost) on a share of
a fund assuming reinvestment of all dividends and distributions.     
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                  Smith Barney Pacific Basin
                            1998(1)    1997      1996     1995       1994(2)
-------------------------------------------------------------------------------
<S>                         <C>       <C>       <C>      <C>         <C>
Net asset value, beginning
 of year                    $  8.04   $  9.75   $  8.95  $ 10.10     $10.00
-------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income
  (loss) (3)                     --     (0.01)     0.08    (0.04)(4)  (0.04)
-------------------------------------------------------------------------------
Total income (loss) from
 operations                   (1.14)    (1.65)     0.83    (1.15)      0.10
-------------------------------------------------------------------------------
Less distributions from:
 Net investment income        (0.09)    (0.06)    (0.03)      --         --
-------------------------------------------------------------------------------
Total distributions           (0.09)    (0.06)    (0.03)      --         --
-------------------------------------------------------------------------------
Net asset value, end of
 year                       $  6.81   $  8.04   $  9.75  $  8.95     $10.10
-------------------------------------------------------------------------------
Total return                 (14.09)%  (17.02)%    9.26%  (11.39)%     1.00%(5)
-------------------------------------------------------------------------------
Net assets, end of year
 (000's)                    $12,728   $18,225   $16,657  $ 7,122     $4,238
-------------------------------------------------------------------------------
Ratios to average net
 assets:
 Expenses (3)                  1.56%     1.38%     1.34%    1.83%      1.26%(6)
 Net investment income
  (loss)                      (0.03)    (0.08)     0.47    (0.51)     (0.93)(6)
-------------------------------------------------------------------------------
Portfolio turnover rate         136%      156%       59%      28%        --
-------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the average shares method.
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
(3) The manager waived all or part of its fees for the years ended October 31,
    1996, October 31, 1995 and the period ended October 31, 1994. In addition,
    the Manager reimbursed the fund $9,778 in expenses for the period ended
    October 31, 1994. If such fees were not waived and expenses not reimbursed,
    the per share increase in net investment loss and the ratios of expenses to
    average net assets for the fund would have been as follows:
 
  -----------------------------------------------------------------------------
<CAPTION>
                                                 1996     1995        1994
  -----------------------------------------------------------------------------
<S>                         <C>       <C>       <C>      <C>         <C>
  Per Share Decreases in Net Investment
  Income                                         $0.02    $0.03       $0.06
  -----------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and
  Reimbursement                                   1.58%    2.23%       2.82%(6)
  -----------------------------------------------------------------------------
</TABLE>    
 
  In addition, during the years ended October 31, 1995 and 1996, the fund
  earned credits from the custodian, which reduces service fees incurred. If
  the credits are taken into consideration the expense ratios for these periods
  were 1.17% and 1.30%, respectively. Figures before October 31, 1995 have not
  been restated to reflect these adjustments.
   
(4) Includes realized gains and losses from foreign currency transactions.     
   
(5) Not annualized.     
   
(6) Annualized.     
 
Travelers Series Fund
 
40
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                              Smith Barney International Equity
                            1998       1997      1996     1995      1994(1)
-------------------------------------------------------------------------------
<S>                       <C>        <C>       <C>       <C>        <C>
Net asset value,
 beginning of year        $  13.23   $  12.18  $  10.48  $ 10.55    $ 10.00
-------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income
  (loss)(2)                   0.05       0.01      0.02     0.03(3)   (0.03)
 Net realized and
  unrealized gain (loss)     (0.68)      1.05      1.69    (0.10)      0.58
-------------------------------------------------------------------------------
Total income (loss) from
 operations                  (0.63)      1.06      1.71    (0.07)      0.55
-------------------------------------------------------------------------------
Less distributions from:
 Net investment income          --      (0.01)    (0.01)      --         --
-------------------------------------------------------------------------------
Total distributions             --      (0.01)    (0.01)      --         --
-------------------------------------------------------------------------------
Net asset value, end of
 year                     $  12.60   $  13.23  $  12.18  $ 10.48    $ 10.55
-------------------------------------------------------------------------------
Total return                 (4.76)%     8.73%    16.36%   (0.66)%     5.50%(4)
-------------------------------------------------------------------------------
Net assets, end of year
 (000's)                  $224,207   $219,037  $143,323  $53,538    $13,811
-------------------------------------------------------------------------------
Ratios to average net
 assets:
 Expenses (2)                 1.00%      1.01%     1.10%    1.44%      1.20%(5)
 Net investment income
  (loss)                      0.37       0.09      0.23     0.25      (0.73)(5)
-------------------------------------------------------------------------------
 Portfolio turnover rate        34%        38%       41%      29%        --
-------------------------------------------------------------------------------
</TABLE>    
(1) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(2) The manager waived part of its fees for the period ended October 31, 1994
    for the fund. If such fees were not waived the effect of the per share
    increase in net investment loss for the fund would have been $0.03 and the
    ratio of expenses to average net assets would have been 2.00%(5).     
 
    In addition, during the years ended October 31, 1995 and 1996, the fund
    earned credits from the custodian, which reduces service fees incurred. If
    the credits are taken into consideration the expense ratios for these
    periods were 1.21% and 1.05%, respectively. Figures before October 31, 1995
    have not been restated to reflect these adjustments.
 
(3) Includes realized gains and losses from foreign currency transactions.
(4) Not annualized.
(5) Annualized.
 
                                                           Travelers Series Fund
 
                                                                              41
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                     Smith Barney Large Cap Value
                              1998(1)     1997      1996     1995    1994(2)
--------------------------------------------------------------------------------
<S>                           <C>       <C>       <C>       <C>      <C>
Net asset value, beginning
 of year                      $  17.90  $  14.84  $  12.12  $ 10.14  $10.00
--------------------------------------------------------------------------------
Income from operations:
 Net investment income (3)        0.31      0.25      0.32     0.28    0.11
 Net realized and unrealized
  gain                            1.47      3.16      2.62     1.76    0.03
--------------------------------------------------------------------------------
Total income from operations      1.78      3.41      2.94     2.04    0.14
--------------------------------------------------------------------------------
Less distributions from:
 Net investment income           (0.21)    (0.18)    (0.17)   (0.06)     --
 Net realized gains              (0.53)    (0.17)    (0.05)      --      --
--------------------------------------------------------------------------------
Total distributions              (0.74)    (0.35)    (0.22)   (0.06)     --
--------------------------------------------------------------------------------
Net asset value, end of year  $  18.94  $  17.90  $  14.84  $ 12.12  $10.14
--------------------------------------------------------------------------------
Total return                      9.65%    23.38%    24.55%   20.21%   1.40%(4)
--------------------------------------------------------------------------------
Net assets, end of year
 (000's)                      $423,570  $287,333  $138,712  $39,364  $6,377
--------------------------------------------------------------------------------
Ratios to average net
 assets:
 Expenses (3)                     0.68%     0.69%     0.73%    0.73%   0.73%(5)
 Net investment income            1.59      2.01      2.35     2.70    2.82  (5)
--------------------------------------------------------------------------------
Portfolio turnover rate             36%       46%       32%      38%      2%
--------------------------------------------------------------------------------
</TABLE>    
   
(1) Per share amounts have been calculated using the monthly average shares
    method.     
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(3) The manager waived all or part of its fees for the year ended October 31,
    1995 and the period ended October 31, 1994. In addition, the Manager
    reimbursed the fund for $13,120 in expenses for the period ended October
    31, 1994. If such fees were not waived and expenses not reimbursed, the per
    share decreases in net investment income and the ratios of expenses to
    average net assets for the fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                           1995   1994
  -----------------------------------------
   <S>                     <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.02  $0.05
  -----------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            0.94%  2.08%(5)
  -----------------------------------------
</TABLE>
 
(4) Not annualized.
(5) Annualized.
 
Travelers Series Fund
 
42
<PAGE>
 
   
For a share of capital stock outstanding throughout the period ended October
31.     
 
<TABLE>   
<CAPTION>
                                      Smith Barney Large Cap Growth
                                                 1998(1)
-------------------------------------------------------------------
<S>                                   <C>
Net asset value, beginning of period             $ 10.00
-------------------------------------------------------------------
Loss from operations:
 Net investment income (3)                          0.01
 Net realized and unrealized loss                  (0.11)(3)
-------------------------------------------------------------------
Total loss from operations                         (0.10)
-------------------------------------------------------------------
Less distributions from:
 Net investment income                                --
 Net realized gains                                   --
-------------------------------------------------------------------
Total distributions                                   --
-------------------------------------------------------------------
Net asset value, end of period                   $  9.90
-------------------------------------------------------------------
Total return                                       (1.00)%(4)
-------------------------------------------------------------------
Net assets, end of period (000's)                $20,787
-------------------------------------------------------------------
Ratios to average net assets:(5)
 Expenses (2)                                       1.00%
 Net investment income                              0.52
-------------------------------------------------------------------
Portfolio turnover rate                                1%
-------------------------------------------------------------------
</TABLE>    
   
(1) For the period from May 1, 1998 (commencement of operations) to October 31,
    1998.     
   
(2) The manager waived part of its fees for the period ended October 31, 1998.
    If such fees were not waived and expenses not reimbursed, the per share
    decreases in net investment income and the ratios of expenses to average
    net assets for the fund would have been $0.02 and 1.77%(5) respectively.
           
(3) The amount shown may not be consistent with the change in aggregate gains
    and losses of portfolio securities due to the timing of sales and
    redemptions of fund shares throughout the year.     
   
(4) Not annualized.     
   
(5) Annualized.     
 
                                                           Travelers Series Fund
 
                                                                              43
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                          Alliance Growth
                              1998      1997      1996      1995    1994(1)
-------------------------------------------------------------------------------
<S>                         <C>       <C>       <C>       <C>       <C>
Net asset value, beginning
 of year                    $  20.82  $  16.30  $  13.28  $  10.65  $ 10.00
-------------------------------------------------------------------------------
Income from operations:
 Net investment income (2)      0.11      0.05      0.04      0.14     0.06
 Net realized and
  unrealized gain               2.69      5.11      3.39      2.61     0.59
-------------------------------------------------------------------------------
Total income from
 operations                     2.80      5.16      3.43      2.75     0.65
-------------------------------------------------------------------------------
Less distributions from:
 Net investment income         (0.04)    (0.02)    (0.09)    (0.02)      --
 Net realized gains            (1.44)    (0.62)    (0.32)    (0.10)      --
-------------------------------------------------------------------------------
Total distributions            (1.48)    (0.64)    (0.41)    (0.12)      --
-------------------------------------------------------------------------------
Net asset value, end of
 year                       $  22.14  $  20.82  $  16.30  $  13.28  $ 10.65
-------------------------------------------------------------------------------
Total return                   12.92%    32.59%    26.55%    26.18%    6.50%(3)
-------------------------------------------------------------------------------
Net assets, end of year
 (000's)                    $774,942  $544,526  $294,596  $111,573  $17,086
-------------------------------------------------------------------------------
Ratios to average net
 assets:
 Expenses (2)                   0.82%     0.82%     0.87%     0.90%    0.88%(4)
 Net investment income          0.59      0.32      0.39      1.24     1.47(4)
-------------------------------------------------------------------------------
Portfolio turnover rate           40%       66%       88%       78%      37%
-------------------------------------------------------------------------------
</TABLE>    
(1) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(2) The manager waived all or part of its fees for the year ended October 31,
    1995 and the period ended October 31, 1994. In addition, the Manager
    reimbursed the fund for $3,500 in expenses for the period ended October 31,
    1994. If such fees were not waived and expenses not reimbursed, the per
    share decreases in net investment income and the ratios of expenses to
    average net assets for the fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                           1995   1994
  -----------------------------------------
   <S>                     <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.01  $0.03
  -----------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            0.97%  1.76%(4)
  -----------------------------------------
</TABLE>
 
(3) Not Annualized.
(4) Annualized.
 
Travelers Series Fund
 
44
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                         AIM Capital Appreciation
                                   1998       1997    1996(1)   1995(1)(2)
--------------------------------------------------------------------------------
<S>                              <C>        <C>       <C>       <C>          <C>
Net asset value, beginning of
 year                            $  12.68   $  10.76  $  10.00    $10.00
--------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income (loss)
  (3)                               (0.01)      0.02      0.02      0.02
 Net realized and unrealized
  gain (loss)                       (0.34)      1.91      0.75     (0.02)
--------------------------------------------------------------------------------
Total income (loss) from
 operations                         (0.35)      1.93      0.77        --
--------------------------------------------------------------------------------
Less distributions from:
 Net investment income              (0.02)     (0.01)    (0.01)       --
--------------------------------------------------------------------------------
Total distributions                 (0.02)     (0.01)    (0.01)       --
--------------------------------------------------------------------------------
Net asset value, end of year     $  12.31   $  12.68  $  10.76    $10.00
--------------------------------------------------------------------------------
Total return                        (2.79)%    17.96%     7.71%     0.00%(4)
--------------------------------------------------------------------------------
Net assets, end of year (000's)  $225,862   $202,846  $112,905    $8,083
--------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses (3)                        0.85%      0.85%     0.96%     1.00%(5)
 Net investment income (loss)       (0.06)      0.20      0.22      4.07(5)
--------------------------------------------------------------------------------
 Portfolio turnover rate               75%        56%       44%        6%
--------------------------------------------------------------------------------
</TABLE>    
(1) Per share amounts calculated using the monthly average shares method.
(2) For the period from October 10, 1995 (commencement of operations) to
    October 31, 1995.
   
(3) The manager waived all of its fees with respect to the fund for the period
    ended October 31, 1995. In addition, the Manager reimbursed the fund for
    $13,456 in expenses for the period ended October 31, 1995. If such fees
    were not waived and expenses not reimbursed, the per share decreases in net
    investment income and the ratios of expenses to average net assets for the
    fund would have been:     
 
  ------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                           1995
  ----------------------------------
   <S>                     <C>
   Per Share Decreases in
   Net Investment Income   $0.03
  ----------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            5.95%(5)
  ----------------------------------
</TABLE>    
   
(4) Not Annualized.     
   
(5) Annualized.     
       
                                                           Travelers Series Fund
 
                                                                              45
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                        Van Kampen Enterprise
                                1998      1997      1996     1995    1994(1)
-------------------------------------------------------------------------------
<S>                           <C>       <C>       <C>       <C>      <C>
Net asset value, beginning
 of year                      $  19.89  $  15.37  $  12.89  $ 10.38  $10.00
-------------------------------------------------------------------------------
Income from operations:
 Net investment income (2)        0.06      0.06      0.05     0.03    0.03
 Net realized and unrealized
  gain                            1.83      4.51      2.87     2.53    0.35
-------------------------------------------------------------------------------
Total income from operations      1.89      4.57      2.92     2.56    0.38
-------------------------------------------------------------------------------
Less distributions from:
 Net investment income           (0.05)    (0.05)    (0.04)   (0.02)     --
 Net realized gains              (1.17)       --     (0.40)   (0.03)     --
-------------------------------------------------------------------------------
Total distributions              (1.22)    (0.05)    (0.44)   (0.05)     --
-------------------------------------------------------------------------------
Net asset value, end of year  $  20.56  $  19.89  $  15.37  $ 12.89  $10.38
-------------------------------------------------------------------------------
Total return                      8.97%    29.81%    23.35%   24.74%   3.80%(3)
-------------------------------------------------------------------------------
Net assets, end of year
 (000's)                      $249,051  $196,583  $103,691  $32,447  $5,734
-------------------------------------------------------------------------------
Ratios to average net
 assets:
 Expenses (2)                     0.73%     0.74%     0.83%    0.88%   0.84%(4)
 Net investment income            0.35      0.41      0.53     0.65    0.79(4)
-------------------------------------------------------------------------------
Portfolio turnover rate             68%       75%      112%     180%     55%
-------------------------------------------------------------------------------
</TABLE>    
(1) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(2) The manager waived all or part of its fees for the year ended October 31,
    1995 and the period ended October 31, 1994. In addition, the 
    Manager reimbursed the fund for $19,007 in expenses for the period ended
    October 31, 1994. If such fees were not waived and expenses not reimbursed,
    the per share decreases in net investment income and the ratios of expenses
    to average net assets for the fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                           1995   1994
  -----------------------------------------
   <S>                     <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.06  $0.07
  -----------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            1.26%  2.66%(4)
  -----------------------------------------
</TABLE>    
 
(3) Not annualized.
(4) Annualized.
 
Travelers Series Fund
 
46
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                           MFS Total Return
                                1998      1997      1996     1995    1994(1)
--------------------------------------------------------------------------------
<S>                           <C>       <C>       <C>       <C>      <C>
Net asset value, beginning
 of year                      $  15.31  $  13.13  $  11.53  $  9.98  $10.00
--------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income (2)        0.32      0.38      0.33     0.45    0.13
 Net realized and unrealized
  gain (loss)                     1.36      2.27      1.62     1.15   (0.15)
--------------------------------------------------------------------------------
Total income (loss) from
 operations                       1.68      2.65      1.95     1.60   (0.02)
--------------------------------------------------------------------------------
Less distributions from:
 Net investment income           (0.28)    (0.29)    (0.27)   (0.05)     --
 Net realized gains              (0.48)    (0.18)    (0.08)      --      --
--------------------------------------------------------------------------------
Total distributions              (0.76)    (0.47)    (0.35)   (0.05)     --
--------------------------------------------------------------------------------
Net asset value, end of year    $16.23  $  15.31  $  13.13  $ 11.53  $ 9.98
--------------------------------------------------------------------------------
Total return                     10.94%    20.64%    17.16%   16.12%  (0.20)%(3)
--------------------------------------------------------------------------------
Net assets, end of year
 (000's)                      $462,274  $263,585  $134,529  $49,363  $8,504
--------------------------------------------------------------------------------
Ratios to average net
 assets:
 Expenses (2)                     0.84%     0.86%     0.91%    0.95%   0.93%(4)
 Net investment income            3.32      3.54      3.82     4.40    3.51(4)
--------------------------------------------------------------------------------
Portfolio turnover rate            118%       99%      139%     104%     18%
--------------------------------------------------------------------------------
</TABLE>    
(1) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(2) The manager waived all or part of its fees for the year ended October 31,
    1995 and the period ended October 31, 1994. In addition, the Manager
    reimbursed the fund for $13,857 in expenses for the period ended October
    31, 1994. If such fees were not waived and expenses not reimbursed, the per
    share decreases in net investment income and the ratios of expenses to
    average net assets for the fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                           1995   1994
  -----------------------------------------
   <S>                     <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.01  $0.06
  -----------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            1.06%  2.51%(4)
  -----------------------------------------
</TABLE>
 
(3) Not annualized.
(4) Annualized.
 
                                                           Travelers Series Fund
 
                                                                              47
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                     GT Global Strategic Income
                                1998     1997(1)   1996     1995     1994(2)
--------------------------------------------------------------------------------
<S>                            <C>       <C>      <C>      <C>       <C>
Net asset value, beginning of
 year                           $12.52   $ 12.45  $ 10.77  $ 9.95    $10.00
--------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income (3)        0.84      0.75     0.74    0.64(4)   0.17
 Net realized and unrealized
  gain (loss)                    (1.09)     0.36     1.36    0.28     (0.22)
--------------------------------------------------------------------------------
Total income (loss) from
 operations                      (0.25)     1.11     2.10    0.92     (0.05)
--------------------------------------------------------------------------------
Less distributions from:
 Net investment income           (0.66)    (0.46)   (0.42)  (0.10)       --
 Net realized gains              (0.64)    (0.58)      --      --        --
--------------------------------------------------------------------------------
Total distributions              (1.30)    (1.04)   (0.42)  (0.10)       --
--------------------------------------------------------------------------------
Net asset value, end of year    $10.97   $ 12.52  $ 12.45  $10.77    $ 9.95
--------------------------------------------------------------------------------
Total return                     (2.50)%    9.32%   20.07%   9.37%    (0.50)%(5)
--------------------------------------------------------------------------------
Net assets, end of year
 (000's)                       $28,131   $29,232  $19,152  $8,397    $2,624
--------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses (3)                     1.03%     1.07%    1.23%   1.47%     1.07%(6)
 Net investment income            7.31      6.05     6.87    6.44      4.58(6)
--------------------------------------------------------------------------------
Portfolio turnover rate            280%      161%     192%    295%       56%
--------------------------------------------------------------------------------
</TABLE>    
(1) Per share amounts calculated using the monthly average shares method.
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(3) The manager waived all or part of its fees for the years ended October 31,
    1996, October 31, 1995 and the period ended October 31, 1994. In addition,
    the Manager reimbursed the fund for $18,556 in expenses for the period
    ended October 31, 1994. If such fees were not waived and expenses not
    reimbursed, the per share decreases in net investment income and the ratios
    of expenses to average net assets for the fund would have been as follows:
        
  ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                           1996   1995   1994
  ------------------------------------------------
   <S>                     <C>    <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.02  $0.04  $0.13
  ------------------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            1.38%  1.93%  4.53%(6)
  ------------------------------------------------
</TABLE>
 
  In addition, during the years ended October 31, 1996 and 1995, the fund
  earned credits from the custodian which reduce service fees incurred. If the
  credits are taken into consideration the expense ratios for these periods
  were 1.11% and 1.11%, respectively. Figures before October 31, 1995 have not
  been restated to reflect these credits.
 
(4) Includes realized gains and losses from foreign currency transactions.
(5) Not annualized.
(6) Annualized.
 
Travelers Series Fund
 
48
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                         Travelers Managed Income
                                  1998(1)  1997(1)  1996(1)   1995    1994(2)
--------------------------------------------------------------------------------
<S>                               <C>      <C>      <C>      <C>      <C>
Net asset value, beginning of
 year                             $ 11.55  $ 11.06  $ 11.16  $ 10.04  $10.00
--------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income (3)           0.72     0.63     0.65     0.61    0.21
 Net realized and unrealized gain
  (loss)                            (0.06)    0.35    (0.14)    0.64   (0.17)
--------------------------------------------------------------------------------
Total income (loss) from
 operations                         (0.66)    0.98     0.51     1.25    0.04
--------------------------------------------------------------------------------
Less distributions from:
 Net investment income              (0.54)   (0.49)   (0.46)   (0.13)     --
 Net realized gains                 (0.02)      --    (0.15)      --      --
--------------------------------------------------------------------------------
Total distributions                 (0.56)   (0.49)   (0.61)   (0.13)     --
--------------------------------------------------------------------------------
Net asset value, end of year      $ 11.65  $ 11.55  $ 11.06  $ 11.16  $10.04
--------------------------------------------------------------------------------
Total return                         5.71%    9.19%    4.61%   12.68%   0.40%(4)
--------------------------------------------------------------------------------
Net assets, end of year (000's)   $57,556  $31,799  $23,532  $11,279  $3,840
--------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses (3)                        0.84%    0.87%    0.92%    0.92%   0.87%(5)
 Net investment income               6.11     6.48     6.19     6.13    5.67(5)
--------------------------------------------------------------------------------
Portfolio turnover rate               327%     259%     255%     170%     42%
--------------------------------------------------------------------------------
</TABLE>    
(1) Per share amounts calculated using the monthly average shares method.
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(3) The manager waived all or part of its fees for the year ended October 31,
    1995 and the period ended October 31, 1994. In addition, the Manager
    reimbursed the fund for $15,557 in expenses for the period ended October
    31, 1994. If such fees were not waived and expenses not reimbursed, the per
    share decreases in net investment income and the ratios of expenses to
    average net assets for the fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                           1995   1994
  -----------------------------------------
   <S>                     <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.04  $0.07
  -----------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            1.29%  2.91%(5)
  -----------------------------------------
</TABLE>
 
(4) Not annualized.
(5) Annualized.
 
                                                           Travelers Series Fund
 
                                                                              49
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                       Putnam Diversified Income
                                 1998       1997    1996(1)   1995    1994(2)
--------------------------------------------------------------------------------
<S>                            <C>        <C>       <C>      <C>      <C>
Net asset value, beginning of
 year                            $12.31   $  11.99  $ 11.46  $ 10.18  $10.00
--------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income (3)         0.57       0.67     0.78     0.79    0.23
 Net realized and unrealized
  gain (loss)                     (0.62)      0.30     0.27     0.58   (0.05)
--------------------------------------------------------------------------------
Total income (loss) from
 operations                       (0.05)      0.97     1.05     1.37    0.18
--------------------------------------------------------------------------------
Less distributions from:
 Net investment income            (0.42)     (0.56)   (0.39)   (0.09)     --
 Net realized gains               (0.14)     (0.09)   (0.13)      --      --
--------------------------------------------------------------------------------
Total distributions               (0.56)     (0.65)   (0.52)   (0.09)     --
--------------------------------------------------------------------------------
Net asset value, end of year     $11.70   $  12.31  $ 11.99  $ 11.46  $10.18
--------------------------------------------------------------------------------
Total return                      (0.65)%     8.44%    9.43%   13.55%   1.80%(4)
--------------------------------------------------------------------------------
Net assets, end of year
 (000's)                       $156,895   $121,601  $81,076  $31,514  $6,763
--------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses (3)                      0.87%      0.88%    0.96%    0.97%   0.98%(5)
 Net investment income             7.48       6.99     7.57     7.53    6.14(5)
--------------------------------------------------------------------------------
Portfolio turnover rate             191%       253%    2.55%     276%     20%
--------------------------------------------------------------------------------
</TABLE>    
(1) Per share amounts calculated using the monthly average shares method.
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(3) The manager waived all or part of its fees for the year ended October 31,
    1995 and the period ended October 31, 1994. In addition, the Manager
    reimbursed the fund for $19,028 in expenses for the period ended October
    31, 1994. If such fees were not waived and expenses not reimbursed, the per
    share decreases in net investment income and the ratios of expenses to
    average net assets of the fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                           1995   1994
  -----------------------------------------
   <S>                     <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.04  $0.07
  -----------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            1.31%  2.92%(5)
  -----------------------------------------
</TABLE>
 
(4) Not annualized.
(5) Annualized.
 
Travelers Series Fund
 
50
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                       Smith Barney High Income
                               1998(1)      1997     1996     1995    1994(2)
--------------------------------------------------------------------------------
<S>                            <C>        <C>       <C>      <C>      <C>
Net asset value, beginning of
 year                            $13.25   $  12.09  $ 11.26  $ 10.07  $10.00
--------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income (3)         1.21       0.88     1.14     0.93    0.29
 Net realized and unrealized
  gain (loss)                     (1.58)      1.00     0.19     0.48   (0.22)
--------------------------------------------------------------------------------
Total income (loss) from
 operations                       (0.37)      1.88     1.33     1.41    0.07
--------------------------------------------------------------------------------
Less distributions from:
 Net investment income            (0.74)     (0.66)   (0.50)   (0.22)     --
 Net realized gains               (0.17)     (0.06)      --       --      --
--------------------------------------------------------------------------------
Total distributions               (0.91)     (0.72)   (0.50)   (0.22)     --
--------------------------------------------------------------------------------
Net asset value, end of year     $11.97   $  13.25  $ 12.09  $ 11.26  $10.07
--------------------------------------------------------------------------------
Total return                      (3.38)%    16.24%   12.17%   14.30%   0.70%(4)
--------------------------------------------------------------------------------
Net assets, end of year
 (000's)                       $160,259   $123,726  $65,955  $20,450  $3,395
--------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses (3)                      0.67%      0.70%    0.84%    0.70%   0.69%(5)
 Net investment income             9.12       9.36     9.79     9.54    7.55(5)
--------------------------------------------------------------------------------
Portfolio turnover rate              82%        89%     104%      57%     15%
--------------------------------------------------------------------------------
</TABLE>    
   
(1) Per share amounts have been calculated using the monthly average shares
    method.     
   
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.     
   
(3) The manager waived all or part of its fees for the year ended October 31,
    1995 and the period ended October 31, 1994. In addition, the Manager
    reimbursed the fund for $17,664 in expenses for the period ended October
    31, 1994. If such fees were not waived and expenses not reimbursed, the per
    share decreases in net investment income and the ratios of expenses to
    average net assets for the fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                           1995   1994
  -----------------------------------------
   <S>                     <C>    <C>
   Per Share Decreases in
   Net Investment Income   $0.04  $0.07
  -----------------------------------------
   Expense Ratios Without
   Fee Waivers and
   Reimbursement            1.07%  2.60%(5)
  -----------------------------------------
</TABLE>    
   
(4) Not annualized.     
   
(5) Annualized.     
 
                                                           Travelers Series Fund
 
                                                                              51
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.
 
<TABLE>   
<CAPTION>
                                       Smith Barney Money Market
                                 1998      1997     1996     1995    1994(1)
-------------------------------------------------------------------------------
<S>                            <C>       <C>       <C>      <C>      <C>
Net asset value, beginning of
 year                          $   1.00  $   1.00  $  1.00  $  1.00  $ 1.00
-------------------------------------------------------------------------------
Income from operations:
 Net investment income (2)        0.050     0.049    0.049    0.052   0.014
-------------------------------------------------------------------------------
Total income from operations      0.050     0.049    0.049    0.052   0.014
-------------------------------------------------------------------------------
Less distributions from:
 Net investment income           (0.050)   (0.049)  (0.049)  (0.052) (0.014)
-------------------------------------------------------------------------------
Total distributions              (0.050)   (0.049)  (0.049)  (0.052) (0.014)
-------------------------------------------------------------------------------
Net asset value, end of year      $1.00  $   1.00  $  1.00  $  1.00  $ 1.00
-------------------------------------------------------------------------------
Total return                       5.11%     5.05%    5.05%    5.35%   1.46%(3)
-------------------------------------------------------------------------------
Net assets, end of year
 (000's)                       $164,677  $111,168  $99,150  $37,487  $5,278
-------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses (2)                      0.64%     0.65%    0.65%    0.65%   0.66%(4)
 Net investment income             4.99      4.94     4.86     5.26    3.83(4)
-------------------------------------------------------------------------------
</TABLE>    
(1) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
   
(2) The manager waived all or part of its fees with respect to the fund for the
    years ended October 31, 1997, 1996 and 1995 and the period ended October
    31, 1994. In addition, the Manager reimbursed the fund for $15,423 in
    expenses for the period ended October 31, 1994. If such fees were not
    waived and expenses not reimbursed, the per share decreases in net
    investment income and the ratios of expense to average net assets of the
    fund would have been as follows:     
 
  ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                            1997      1996    1995    1994
  -----------------------------------------------------------------------------
   <S>                                     <C>       <C>     <C>     <C>
   Per Share Decreases in Net Investment
   Income                                  $0.000(5) $0.001  $0.003  $0.005
  -----------------------------------------------------------------------------
   Expense Ratios Without Fee Waivers and
   Reimbursement                             0.67%     0.74%   0.94%   2.11%(4)
  -----------------------------------------------------------------------------
</TABLE>
 
(3) Not annualized.
(4) Annualized.
(5) Amount represents less than $0.001.
 
Travelers Series Fund
 
52
<PAGE>
 
Travelers Series Fund Inc.
 
Additional Information
 
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
   
The fund sends one report to a household if more than one account has the same
address. Contact the appropriate representative of a participating life 
insurance company or your Financial Consultant if you do not want this policy 
to apply to you.     
   
Statement of additional information. The statement of additional (SAI)
information provides more detailed information about the fund. It is
incorporated by reference into this prospectus.     
   
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-842-8573
or writing to Travelers Series Fund Inc., 388 Greenwich Street, MF2, New York, 
New York 10013.     
   
You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You may obtain copies of these
materials upon payment of a duplicating fee, by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-60019. You can get the same
reports and information free from the Commission's Internet web site at
http://www.sec.gov     
 
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.
 
               Smith Barney Pacific Basin Portfolio
               Smith Barney International Equity Portfolio
               Smith Barney Large Cap Value Portfolio
               Smith Barney Large Capitalization Growth Portfolio
               Alliance Growth Portfolio
               AIM Capital Appreciation Portfolio
                  
               Van Kampen Enterprise Portfolio     
               MFS Total Return Portfolio
               GT Global Strategic Income Portfolio
               Travelers Managed Income Portfolio
               Putnam Diversified Income Portfolio
               Smith Barney High Income Portfolio
               Smith Barney Money Market Portfolio
   
(Investment Company Act file no. 811-08372)     
   
L-12410 2/99     




PART B
Statement of Additional Information
   
February 28, 1999
    
STATEMENT OF ADDITIONAL INFORMATION

TRAVELERS SERIES FUND INC.
388 Greenwich Street
New York, New York  10013
   
1-800-842-8573
    

This Statement of Additional Information (the "SAI") is not a Prospectus. It 
is intended to provide more detailed information about Travelers Series Fund 
Inc. as well as matters already discussed in the Prospectus and therefore 
should be read in conjunction with the February 28, 1999 Prospectus which may 
be obtained, without charge, from the Company or your Salomon Smith Barney 
Financial Consultant. Shares of the Company may only be purchased by 
insurance company separate accounts.

Travelers Series Fund Inc. (the "Company"), the investment underlying certain 
variable annuity and variable life insurance contracts, offers a choice of 
thirteen portfolios (each, a "fund"):

The Smith Barney Pacific Basin Portfolio seeks long-term capital appreciation 
through investment primarily in equity securities of countries in the Asian 
Pacific region.

The Smith Barney International Equity Portfolio seeks total return on its 
assets from growth of capital and income and will invest at least 65% of its 
assets in a diversified portfolio of equity securities of established non-
U.S. issuers. 

The Smith Barney Large Cap Value Portfolio seeks current income and long-term 
growth of income and capital. This fund invests primarily, but not 
exclusively, in common stocks.

The Smith Barney Large Capitalization Growth Portfolio seeks long-term growth 
of capital by investing in equity securities of companies with market 
capitalization of at least $5 billion at the time of investment.

The Alliance Growth Portfolio seeks long-term growth of capital. Current 
income is only an incidental consideration.
   
The AIM Capital Appreciation Portfolio seeks to provide growth of capital by 
investing principally in common stocks, with an emphasis on small and medium-
sized growth companies.

The Van Kampen Enterprise Portfolio seeks capital appreciation by investing 
primarily in common stocks of companies which have above average potential 
for capital appreciation.
    
The MFS Total Return Portfolio seeks above-average income (compared to a fund 
invested entirely in equity securities) consistent with prudent employment of 
capital. While current income is the primary objective, the fund believes 
that there should be a reasonable opportunity for growth of capital and 
income. 

The GT Global Strategic Income Portfolio primarily seeks high current income 
and, secondarily, capital appreciation by investing primarily in the debt 
securities of U.S. and foreign companies, banks and governments, including 
those in emerging markets.

The Travelers Managed Income Portfolio seeks high current income consistent 
with what its investment adviser believes to be prudent risk of capital.  The 
fund invests primarily in U.S. corporate debt obligations and U.S. government 
securities, including mortgage and asset backed securities, but may also 
invest to a limited extent in foreign issuers.

The Putnam Diversified Income Portfolio seeks high current income consistent 
with preservation of capital.


The Smith Barney High Income Portfolio seeks high current income by investing 
at least 65% of its assets in high-yielding corporate debt obligations and 
preferred stock of U.S. and foreign issuers, but may also invest in foreign 
issuers. Capital appreciation is a secondary objective.

The Smith Barney Money Market Portfolio seeks maximum current income 
consistent with preservation of capital. 

Shares of Smith Barney Money Market Portfolio are not insured or guaranteed 
by the U.S. Government. There is no assurance that the fund will be able to 
maintain a stable net asset value of $1.00 per share.

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

Shares of each fund are offered only to insurance company separate accounts 
(the "Separate Accounts"), which fund certain variable annuity and variable 
life insurance contracts (the "Contracts"). The Separate Accounts invest in 
shares of one or more of the funds in accordance with allocation instructions 
received from Contract owners. Such allocation rights are further described 
in the accompanying Contract prospectus.

Shares of each fund are offered to Separate Accounts without a sales charge 
at their net asset value, next determined after receipt of an order by an 
insurance company. The offering of shares of a fund may be suspended from 
time to time and the Company reserves the right to reject any specific 
purchase order.


CONTENTS
   
Directors and Officers	3
Investment Objectives and Management Policies	4
Investment Practices	14
Risk Factors	33
Investment Restrictions	41
Portfolio Turnover	54
Performance Information	54
Determination of Net Asset Value	55
Availability of the Funds	56
Redemption of Shares	56
Management	56
Other Information about the Company	61
Financial Statements	63
Appendix - Ratings of Debt Obligations	A-1
    



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

VICTOR K. ATKINS, Director
Retired; 120 Montgomery Street, San Francisco, CA. Former President of Lips 
Propellers, Inc., a ship propeller repair company. Director of two investment 
companies associated with Salomon Smith Barney; 77. 

ABRAHAM E. COHEN, Director
Consultant to MeesPierson, Inc., a Dutch investment bank; Consultant to and 
Board Member, Chugai Pharmaceutical Co. Ltd.; Director of Agouron 
Pharmaceuticals, Inc., Akzo Nobel NV, Vasomedical, Inc., Teva Pharmaceutical 
Ind., Ltd., Neurobiological Technologies Inc., Vion Pharmaceuticals, Inc., 
BlueStone Capital Partners, LP. and The Population Council, an international 
public interest organization; 62. 

ROBERT A. FRANKEL, Director
Managing Partner of Robert A. Frankel Managing Consultants, 102 Grand Street, 
Croton-on-Hudson, NY. Director of seven investment companies associated with 
Salomon Smith Barney. Former Vice President of The Readers Digest 
Association, Inc.; 71. 

RAINER GREEVEN, Director
Partner of the law firm of Greeven & Ercklentz; 630 Fifth Avenue, New York, 
NY. Director of two investment companies associated with Salomon Smith 
Barney; 62. 

SUSAN M. HEILBRON, Director
Attorney; Lacey & Heilbron, 3 East 54th Street, New York, NY. Prior to 
November 1990, Vice President and General Counsel of MacMillan, Inc. and 
Executive Vice President of The Trump Organization. Director of two 
investment companies associated with Salomon Smith Barney; 54. 

*HEATH B. McLENDON, Chairman of the Board, President and Chief Executive 
Officer 
Managing Director of Salomon Smith Barney Inc. ("Salomon Smith Barney"), 
President of SSBC Fund Management Inc. (''SSBC'') and Travelers Investment 
Adviser, Inc. ("TIA"); Chairman or Co-Chairman of the Board of 59 investment 
companies associated with Salomon Smith Barney; 65.

*LEWIS E. DAIDONE, Senior Vice President and Treasurer 
Managing Director of Salomon Smith Barney, Senior Vice President and 
Treasurer (Chief Financial Officer) of the Smith Barney Mutual Funds; 
Director and Senior Vice President of SSBC and TIA; 41

*JAMES B. CONHEADY, Vice President and Investment Officer
Managing Director of Salomon Smith Barney. Formerly First Vice President of 
Drexel Burnham Lambert Incorporated; 63. 

*JEFFREY RUSSELL, Vice President and Investment Officer
Managing Director of Salomon Smith Barney. Formerly Vice President of Drexel 
Burnham Lambert Incorporated; 41. 

*JOHN C. BIANCHI, Vice President and Investment Officer
Managing Director of Salomon Smith Barney; Vice President and Investment 
Officer of certain other investment companies associated with Salomon Smith 
Barney; 43. 

*MARTIN HANLEY, Vice President and Investment Officer
Vice President of certain other investment companies associated with Salomon 
Smith Barney; 33.

*DAVID S. ISHIBASHI, Vice President and Investment Officer
Vice President of Salomon Smith Barney; formerly Head of Japanese equities 
desk at SG Warburg; 43


*SCOTT KALB, Vice President and Investment Officer
Managing Director of Salomon Smith Barney. Formerly Vice President of Drexel 
Burnham Lambert Incorporated; 43

*PHYLLIS M. ZAHORODNY, Vice President and Investment Officer
Managing Director of Salomon Smith Barney; Vice President and Investment 
Officer of certain other investment companies associated with Salomon Smith 
Barney; 41.

*IRVING DAVID, Controller
Director of Salomon Smith Barney; Controller of certain funds and various 
other Smith Barney Mutual Funds; Formerly Assistant Treasurer of First 
Investment Management Company; 38. 

*PAUL BROOK, Controller
Director of Salomon Smith Barney; Controller of certain funds and various 
other Smith Barney Mutual Funds since 1998; Prior to 1998, Managing Director 
of AMT Capital Services Inc.; Prior to 1997, Partner with Ernst & Young LLP; 
45

*CHRISTINA T. SYDOR, Secretary
Managing Director of Salomon Smith Barney and Secretary of Smith Barney 
Mutual Funds; Secretary and General Counsel of the SSBC and TIA; 48. 

___________________
*	Designates "interested persons" of the Company as defined in the 
Investment Company Act of 1940, as amended (the "1940 Act"), whose 
business address is 388 Greenwich Street, New York, New York 10013 unless 
otherwise noted. Such persons are not separately compensated for their 
services as Company officers or directors.

On February 6, 1999 Directors and officers owned in the aggregate less than 
1% of the outstanding securities of the Company.

The following table shows the compensation paid by the Company to each 
director during the Company's last fiscal year and the total compensation 
paid by the Smith Barney Mutual Funds complex for the calendar year ended 
December 31, 1998. None of the officers of the Company received any 
compensation from the Company for such period. Officers and interested 
directors of the Company are compensated by Salomon Smith Barney.
    



Director


Aggregate 
Compensation 
from the 
Company

Total 
Compensation
from Company 
and
Complex Paid 
to
Director

Number of Fund 
Companies for
Which Director 
Serves
Within Fund 
Complex
   
Victor K. Atkins
	$18,889.00
	$29,500.00
2
Abraham E. Cohen
	16,524.00
	20,100.00
2
Robert A. 
Frankel
	18,989.00
	72,250.00
9
Rainer Greeven
	17,689.00
	27,800.00
2
Susan M. 
Heilbron
	17,689.00
	27,800.00
2
Heath B. 
McLendon
	0
	0
59
James M. Shuart*
	13,133.00
	20,800.00
2

*  Effective July 28, 1998, Mr. Shuart resigned from the Company's Board of 
Directors.

    
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
   
Each fund's investment objectives (described as "Investment Goals" in the 
Prospectus) and certain investment restrictions (described under Investment 
Restrictions) may be changed only by the ''vote of a majority of the 
outstanding voting securities'' as defined in the 1940 Act. However, each 
fund's investment policies are nonfundamental, and thus may be changed by the 
Board of Directors, provided such change is not prohibited by the fund's 
fundamental investment restrictions or applicable law, and any such change 
will first be disclosed in the then current prospectus or SAI. 

Set forth below is discussion of certain nonfundamental investment policies 
for each fund.  Refer to the "Investment Practices" and "Risk Factors" 
Sections of this SAI for further information on the funds' investments.

    


Smith Barney Pacific Basin Portfolio

Pacific Basin Portfolio invests primarily in equity securities, including 
American Depository Receipts ("ADRs"), of companies in the Asia Pacific 
region. The Asia Pacific region currently includes Australia, Hong Kong, 
India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Papua New Guinea, 
the People's Republic of China, the Philippines, Singapore, South Korea, Sri 
Lanka, Taiwan and Thailand.  The manager may change this list at its 
discretion. The fund's manager considers a company to be in the Asia Pacific 
region if its securities trade on exchanges in the Asia Pacific region, it 
generates at least half of its revenue from the Asia Pacific region or it is 
organized under the laws of an Asia Pacific region country.

The fund will normally invest at least 80% of its total assets in equity 
securities of companies in the Asia Pacific region.  Equity securities 
include exchange traded and over-the-counter common stocks, preferred shares, 
debt securities convertible into equity securities, depository receipts and 
warrants and rights relating to equity securities. The fund may also invest 
up to 20% of its total assets in debt securities and other types of 
investments.  Concentration of the fund's assets in one or a few of the 
countries in the Asia Pacific Region and Asia Pacific currencies will subject 
the fund to greater risks than if the fund's assets were not geographically 
concentrated. 
   
It is expected that portfolio securities will ordinarily be traded on a stock 
exchange or other market in the country in which the issuer is principally 
based, but may also be traded on markets in other countries including, in 
many cases, the United States securities exchanges and over-the-counter 
markets. Debt securities in which the fund may invest will generally be rated 
at the time of purchase at least Baa by Moody's Investors Service Inc. 
("Moody's") or BBB by Standard and Poor's Ratings Group ("S&P"). Debt 
securities rated Baa or BBB may have speculative characteristics and changes 
in economic conditions or other circumstances are more likely to lead to a 
weakened capacity of their issuers to pay interest and repay principal than 
is the case with higher rated securities. 
    
The fund may enter into reverse repurchase agreements with broker/dealers and 
other financial institutions up to 5% of its net assets.

Smith Barney International Equity Portfolio

Under normal market conditions, International Equity Portfolio invests at 
least 80% of its assets in a diversified portfolio of equity securities and 
may invest up to 20% of its assets in bonds, notes and debt securities 
(consisting of securities issued in the Eurocurrency markets or obligations 
of the United States or foreign governments and their political sub-
divisions) or established non-United States issuers.

In seeking to achieve its objective, the fund invests its assets primarily in 
common stocks of foreign companies which in the opinion of the Manager have 
potential for growth of capital. However, there is no requirement that the 
fund invest exclusively in common stocks or other equity securities and, if 
deemed advisable, the fund may invest up to 20% of its assets in bonds, notes 
and other debt securities (including securities issued in the Eurocurrency 
markets or obligations of the United States or foreign governments and their 
political subdivisions).

The fund will generally invest its assets broadly among countries and will 
normally have represented in the portfolio business activities in not less 
than three different countries.  Except as stated below, the fund will invest 
at least 80% of its assets in companies organized or governments located in 
any area of the world other than the United States, such as the Far East 
(e.g., Japan, Hong Kong, Singapore, Malaysia), Western Europe (e.g., United 
Kingdom, Germany, the Netherlands, France, Italy, Switzerland), Eastern 
Europe (e.g., the Czech Republic, Hungary, Poland, and the countries of the 
former Soviet Union), Central and South America (e.g., Mexico, Chile, and 
Venezuela), Australia, Canada and such other areas and countries as the 
fund's manager may determine from time to time.  Concentration of the fund's 
assets in one or a few countries or currencies will subject the fund to 
greater risks than if the fund's assets were not geographically concentrated.

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

The fund may enter into reverse repurchase agreements with broker/dealers and 
other financial institutions up to 5% of its net assets. 

Smith Barney Large Cap Value Portfolio

Under normal market conditions at least 65% of the fund's assets will be 
invested in equity securities.

The fund may make investments in foreign securities, though management 
currently intends to limit such investments to 5% of the fund's assets, and 
an additional 10% of its assets may be invested in sponsored American 
Depositary Receipts ("ADRs"), which are certificates issued by U.S. banks 
representing the right to receive securities of a foreign issuer deposited 
with that bank or a correspondent bank. The fund will ordinarily purchase 
foreign securities that are traded in the U.S. It may, however, also purchase 
the securities of foreign issuers directly in foreign markets. The fund may 
also lend up to 20% of the value of its total assets and may purchase or sell 
securities on a when-issued or delayed delivery basis.

Although the fund may buy or sell covered put and covered call options up to 
15% of its net assets, provided such options are listed on a national 
securities exchange, the fund does not currently intend to commit more than 
5% of its assets to be invested in or subject to put and call options.

Smith Barney Large Capitalization Growth Portfolio

Under normal market conditions, the fund invests 65% of its assets in equity 
securities of companies with market capitalizations of at least $5 billion at 
the time of investment. The core holdings of the fund will be large 
capitalization companies that are dominant in their industries, global in 
scope and have a long term history of performance. The fund has the 
flexibility, however, to invest up to 35% of assets in companies with other 
market capitalizations. Companies with large market capitalizations typically 
have a large number of publicly held shares and a high trading volume 
resulting in a high degree of liquidity. Companies whose capitalization falls 
below this level after purchase will continue to be considered large 
capitalization companies for purposes of the 65% policy. 

The fund may invest in securities of non-U.S. issuers in the form of ADRs, 
European Depositary Receipts ("EDRs") or similar securities representing 
interests in the common stock of foreign issuers. Management intends to limit 
the fund's investment in these types of securities, to 10% of the fund's net 
assets. ADRs are receipts, typically issued by a U.S. bank or trust company, 
which evidence ownership of underlying securities issued by a foreign 
corporation. EDRs are receipts issued in Europe which evidence a similar 
ownership arrangement. Generally, ADRs, in registered form, are designed for 
use in the U.S. securities markets and EDRs are designed for use in European 
securities markets. The underlying securities are not always denominated in 
the same currency as the ADRs or EDRs. Although investment in the form of 
ADRs or EDRs facilitates in foreign securities, it does not mitigate the 
risks associated with investing in foreign securities.

Under normal market conditions, at least 65% of the fund's portfolio will 
consist of common stocks, but it also may contain money market instruments 
for cash management purposes, including U.S. government securities; 
certificates of deposit, time deposits and bankers' acceptances issued by 
domestic banks (including their branches located outside the United States 
and subsidiaries located in Canada), domestic branches of foreign banks, 
savings and loan associations and similar institutions; high grade commercial 
paper; and repurchase agreements with respect to such instruments.

Alliance Growth Portfolio

The fund invests primarily in equity securities. The fund may also invest a 
portion of its assets in developing countries or countries with new or 
developing capital markets.
   
Because the values of fixed-income securities are expected to vary inversely 
with changes in interest rates generally, when the subadviser expects a 
general decline in interest rates, the fund may also invest for capital 
growth in fixed-income securities. The fund may invest up to 25% of total 
assets in high-yield, high-risk, fixed-income and convertible securities 
rated at the time of purchase Ba or lower by Moody's or BB or lower by S&P, 
or, if unrated, judged by the subadviser to be of comparable quality. The 
fund will generally invest in fixed income securities with a minimum rating 
of Caa- by Moody's or CCC- by S&P or in unrated securities judged by the 
subadviser to be of comparable quality. However, from time to time, the fund 
may invest in securities rated in the lowest grades of Moody's (C) or S&P (D) 
or in unrated securities judged by the subadviser to be of comparable 
quality, if the subadviser determines that there are prospects for an upgrade 
or a favorable conversion into equity securities (in the case of convertible 
securities). Securities rated Ba or lower (and comparable unrated securities) 
are commonly referred to as "junk bonds." Securities rated D by S&P are in 
default.

Investment in non-publicly traded securities is restricted to 5% of the 
fund's total assets (not including Rule 144A Securities).
    

The fund may also invest in zero-coupon bonds, payment-in-kind bonds and real 
estate investment trusts. It may also buy and sell stock index futures 
contracts ("index futures") and may buy options on index futures and on stock 
indices for hedging purposes. The fund may buy and sell call and put options 
on index futures or on stock indices in addition to, or as an alternative to, 
purchasing or selling index futures or, to the extent permitted by applicable 
law, to earn additional income. The fund may also, for hedging purposes, 
purchase and sell futures contracts, options thereon and options with respect 
to U.S. Treasury securities, including U.S. Treasury bills, notes and bonds. 
The fund may also seek to increase its current return by writing covered call 
and put options on securities it owns or in which it may invest.

The fund may lend portfolio securities amounting to not more than 25% of its 
total assets and may enter into repurchase agreements on up to 25% of its 
total assets. It may also purchase securities for future delivery, which may 
increase its overall investment exposure and involves a risk of loss if the 
value of the securities declines prior to the settlement date. In addition, 
the fund may invest in real estate investment trusts.

AIM Capital Appreciation Portfolio
   
The fund invests principally in common stocks, with emphasis on medium-sized 
and smaller emerging growth companies.  Management of the fund will be 
particularly interested in companies that are likely to benefit from new or 
innovative products, services or processes that should enhance such 
companies' prospects for future growth in earnings.  As a result of this 
policy, the market prices of many of the securities purchased and held by the 
fund may fluctuate more widely than other equity securities.
    
Special Situations. Although the fund does not currently intend to do so, it 
may invest in "special situations."  A special situation arises when, in the 
opinion of management, the securities of a particular company will, within a 
reasonably estimable period of time, be accorded market recognition at an 
appreciated value solely by reason of a development applicable to that 
company, and regardless of general business conditions or movements of the 
market as a whole. Developments creating special situations might include, 
among others:  liquidations, reorganizations, recapitalizations, mergers, 
material litigation, technical breakthroughs and new management or management 
policies. Although large and well known companies may be involved, special 
situations more often involve comparatively small or unseasoned companies. 
Investments in unseasoned companies and special situations often involve much 
greater risk than is inherent in ordinary investments securities. The fund 
will not, however, purchase securities of any company with a record of less 
than three year's continuous operation (including that of predecessors) if 
such purchase cause the fund's investment in all such companies, taken at 
cost, to exceed 5% of the value of its total assets.

The fund may not invest more than 20% of its total assets in foreign 
securities, including ADRs as well as EDRs and other securities representing 
underlying securities of foreign issuers as foreign securities for purposes 
of this limitation.

The fund may also invest up to 15% of its net assets in illiquid securities, 
including repurchase agreements with maturities in excess of seven days. In 
addition, the fund may purchase domestic stock index futures contracts. It 
may also write (sell) covered call options on no more than 25% of the value 
of its net assets. 
   
Van Kampen Enterprise Portfolio

In addition to common stocks, the fund may invest in warrants and preferred 
stocks, and in the securities of other investment companies.  The fund may 
also invest up to 15% of the value of its total assets in securities of  
foreign issuers.
    
The fund generally holds a portion of its assets in investment grade short-
term debt securities in order to provide liquidity. The fund may also hold 
investment grade corporate or government bonds. The market prices of such 
bonds can be expected to vary inversely with changes in prevailing interest 
rates.
   
The fund expects to utilize options, futures contracts and options thereon in 
several different ways, depending upon the status of its portfolio and the 
subadviser's expectations concerning the securities markets. In times of 
stable or rising stock prices, the fund generally seeks to obtain maximum 
exposure to the stock market, i.e., to be "fully invested." Nevertheless, 
even when the fund is fully invested, prudent management requires that at 
least a small portion of assets be available as cash to honor redemption 
requests and for other short term needs. The fund may also have cash on hand 
that has not yet been invested. The portion of the fund's assets that is 
invested in cash equivalents does not fluctuate with stock market prices, so 
that, in times of rising market prices, the fund may underperform the market 
in proportion to the amount of cash equivalents in its portfolio. By 
purchasing stock index futures contracts, however, the fund can compensate 
for the cash portion of its assets and obtain performance equivalent to 
investing 100% of its assets in equity securities.

If the subadviser anticipates a market decline, the fund may seek to reduce 
its exposure to the stock market by increasing its cash position.  By selling 
stock index futures contracts instead of portfolio securities, a similar 
result may be achieved to the extent that the performance of the stock index 
futures contracts correlates to the performance of the fund's securities. 
Sales of futures contracts could frequently be accomplished more rapidly and 
at less cost than the actual sale of securities. Once the desired hedged 
position has been effected, the fund could then liquidate securities in a 
more deliberate manner, reducing its futures position simultaneously to 
maintain the desired balance, or it could maintain the hedged position.

As an alternative to selling futures contracts, the fund can purchase puts 
(or futures puts) to hedge the fund's risk in a declining market. Since the 
value of a put increases as the underlying security declines below a 
specified level, the fund's value is protected against a market decline to 
the degree the performance of the put correlates with the performance of its 
investment portfolio. If the market remains stable or advances, the fund can 
refrain from exercising the put and its portfolio will participate in the 
advance, having incurred only the premium cost for the put.
    
MFS Total Return Portfolio
   
The fund's policy is to invest in a broad list of securities, including 
short-term obligations. The list may be diversified not only by companies and 
industries, but also by type of security. Fixed income securities and equity 
securities may be held by the fund. Some fixed income securities may also 
have a call on common stock by means of a conversion privilege or attached 
warrants. The fund may vary the percentage of assets invested in any one type 
of security in accordance with the subadviser's interpretation of economic 
and money market conditions, fiscal and monetary policy and underlying 
security values. The fund's debt investments may consist of both "investment 
grade" securities (rated Baa or higher by Moody's or BBB or better by S&P or 
Fitch IBCA, Inc. (formerly Fitch Investors Service, Inc.) ("Fitch")), 
securities that are unrated, and securities that are rated in the lower 
ratings categories (rated Ba or lower by Moody's or BB or lower by S&P or 
Fitch) (commonly known as "junk bonds"), including up to 20% of its net 
assets in nonconvertible fixed income securities that are in these lower 
ratings categories or comparable unrated securities. See Appendix A for a 
description of these ratings. Generally, most of the fund's long-term debt 
investments will consist of "investment grade" securities. It is not the 
fund's policy to rely exclusively on ratings issued by established credit 
rating agencies but rather to supplement such ratings with the subadviser's 
own independent and ongoing review of credit quality.

As noted above, the fund invests in unrated and lower-rated corporate debt 
securities, commonly known as "junk bonds." The fund may also invest in 
emerging market securities. The fund may also invest in emerging markets 
securities.
    
The fund will be managed actively with respect to the fund's fixed income 
securities and the asset allocations modified as the subadviser deems 
necessary. Although the fund does not intend to seek short-term profits, 
fixed income securities will be sold whenever the sub-adviser believes it is 
appropriate to do so without regard to the length of time the particular 
asset may have been held. With respect to its equity securities the fund does 
not intend to trade in securities for short-term profits and anticipates that 
portfolio securities ordinarily will be held for one year or longer. However, 
the fund will effect trades whenever it believes that changes in its 
portfolio securities are appropriate.

GT Global Strategic Income Portfolio
   
Debt securities in which the fund may invest include bonds, notes, 
debentures, and other similar instruments. The fund normally invests at least 
50% of its net assets in U.S. and foreign debt and other fixed income 
securities that, at the time of purchase, are rated investment grade (i.e., 
within the four highest categories for long-term debt) by Moody's or S&P or, 
if unrated, determined by the subadviser to be of comparable quality. No more 
than 50% of the fund's total assets may be invested in securities rated below 
investment grade. Such lower-rated securities involve a high degree of risk 
and are predominantly speculative. The fund may also invest in securities 
that are in default as to payment of principal and/or interest. 
    
For purposes of the fund's operations, "emerging markets" will consist of all 
countries determined by the subadviser to have developing or emerging 
economies and markets. These countries generally include every country in the 
world except the United States, Canada, Japan, Australia, New Zealand and 
most countries located in Western Europe. The fund will consider investment 
in, but not be limited to, the following emerging markets: Algeria, 
Argentina, Bolivia, Botswana, Brazil, Bulgaria, Chile, China, Colombia, Costa 
Rica, Cyprus, Czech Republic, Dominican Republic, Ecuador, Egypt, El 
Salvador, Finland, Greece, Ghana, Hong Kong, Hungary, India, Indonesia, 
Israel, Ivory Coast, Jamaica, Jordan, Kazakhstan, Kenya, Lebanon, Malaysia, 
Mauritius, Mexico, Morocco, Nicaragua, Nigeria, Oman, Pakistan, Panama, 
Paraguay, Peru, Philippines, Poland, Portugal, Republic of Slovakia, Russia, 
Singapore, Slovenia, South Africa, South Korea, Sri Lanka, Swaziland, Taiwan, 
Thailand, Turkey, Ukraine, Uruguay, Venezuela, Zambia and Zimbabwe. 

The fund will not be invested in all such markets at all times. Moreover, 
investing in some of those markets currently may not be desirable or 
feasible, due to the lack of adequate custody arrangements, overly burdensome 
repatriation requirements and similar restrictions, the lack of organized and 
liquid securities markets, unacceptable political risks or for other reasons.

An issuer in an emerging market is an entity: (i) for which the principal 
securities trading market is an emerging market, as defined above; (ii) that 
(alone or on a consolidated basis) derives 50% or more of its total revenue 
from either goods produced, sales made or services performed in emerging 
markets; or (iii) organized under the laws of, or with a principal office in, 
an emerging market.

The fund's investments in emerging market securities may consist 
substantially of Brady Bonds and other sovereign debt securities issued by 
emerging market governments that are traded in the markets of developed 
countries or groups of developed countries. The subadviser may invest in debt 
securities of emerging market issuers that it determines to be suitable 
investments for the fund without regard to ratings. Currently, the 
substantial majority of emerging market debt securities are considered to 
have a credit quality below investment grade.
   
The fund also may consider making investments in below-investment grade debt 
securities of corporate issuers in the United States and in developed foreign 
countries, subject to the overall 50% limitation. 
    
Pending investment of proceeds from new sales of fund shares or to meet 
ordinary daily cash needs, the fund may hold cash (U.S. dollars, foreign 
currencies or multinational currency units) and may invest its assets in high 
quality foreign or domestic money market instruments.

Asset Allocation.  The fund invests in debt obligations allocated among 
diverse markets and denominated in various currencies, including U.S. 
dollars, or in multinational currency units. The fund may purchase securities 
that are issued by the government or a company or financial institution of 
one country but denominated in the currency of another country (or a 
multinational currency unit). The fund is designed for investors who wish to 
accept the risks entailed in such investments, which are different from those 
associated with a portfolio consisting entirely of securities of U.S. issuers 
denominated in U.S. dollars.

The subadviser selectively will allocate the assets of the fund in securities 
of issuers in countries and in currency denominations where the combination 
of fixed income market returns, the price appreciation potential of fixed 
income securities and currency exchange rate movements will present 
opportunities primarily for high current income and secondarily for capital 
appreciation. In doing so, the subadviser intends to take full advantage of 
the different yield, risk and return characteristics that investment in the 
fixed income markets of different countries can provide for U.S. investors. 
Fundamental economic strength, credit quality and currency and interest rate 
trends will be the principal determinants of the emphasis given to various 
country, geographic and industry sectors within the fund. Securities held by 
the fund may be invested in without limitation as to maturity.

The subadviser selects securities of particular issuers on the basis of its 
views as to the best values then currently available in the marketplace. Such 
values are a function of yield, maturity, issue classification and quality 
characteristics, coupled with expectations regarding the local and world 
economies, movements in the general level and term of interest rates, 
currency values, political developments and variations in the supply of funds 
available for investment in the world bond market relative to the demands 
placed upon it.

The subadviser generally evaluates currencies on the basis of fundamental 
economic criteria (e.g., relative inflation and interest rate levels and 
trends, growth rate forecasts, balance of payments status and economic 
policies) as well as technical and political data. If the currency in which a 
security is denominated appreciates against the U.S. dollar, the dollar value 
of the security will increase. Conversely, if the exchange rate of the 
foreign currency declines, the dollar value of the security will decrease. 
However, the fund may seek to protect itself against such negative currency 
movements through the use of sophisticated investment techniques that include 
currency, options and futures transactions.
   
Selection of Debt Investments. In determining the appropriate distribution of 
investments among various countries and geographic regions for the fund, the 
subadviser ordinarily considers the following factors:  prospects for 
relative economic growth among the different countries in which the fund may 
invest; expected levels of inflation; government policies influencing 
business conditions; the outlook for currency relationships; and the range of 
the individual investment opportunities available to international investors. 
    
Although the fund values assets daily in terms of U.S. dollars, the fund does 
not intend to convert holdings of foreign currencies into U.S. dollars on a 
daily basis. The fund will do so from time to time, and investors should be 
aware of the costs of currency conversion. Although foreign exchange dealers 
do not charge a fee for conversion, they do realize a profit based on the 
difference ("spread") between the prices at which they are buying and selling 
various currencies. Thus, a dealer may offer to sell a foreign currency to 
the fund at one rate, while offering a lesser rate of exchange should the 
fund desire to sell that currency to the dealer. 

The fund may invest in the following types of money market instruments (i.e., 
debt instruments with less than 12 months remaining until maturity) 
denominated in U.S. dollars or other currencies:  (a) obligations issued or 
guaranteed by the U.S. or foreign governments, their agencies, 
instrumentalities or municipalities; (b) obligations of international 
organizations designed or supported by multiple foreign governmental entities 
to promote economic reconstruction or development; (c) finance company 
obligations, corporate commercial paper and other short-term commercial 
obligations; (d) bank obligations (including CDs, TDs, demand deposits and 
bankers' acceptances) subject to the restriction that the fund may not invest 
more than 25% of its total assets in bank securities; (e) repurchase 
agreements with respect to all the foregoing; and (f) other substantially 
similar short-term debt securities with comparable characteristics. 

According to the subadviser, more than 50% of the value of all outstanding 
government debt obligations throughout the world is represented by 
obligations denominated in currencies other than the U.S. dollar. Moreover, 
from time to time, the debt securities of issuers located outside the United 
States have substantially outperformed the debt obligations of U.S. issuers. 
Accordingly, the subadviser believes that the fund's policy of investing in 
debt securities throughout the world may enable the achievement of results 
superior to those produced by mutual funds with similar objectives to those 
of the fund that invest solely in debt securities of U.S. issuers. The fund 
may also purchase securities on a "when-issued basis" and may purchase or 
sell securities on a "forward commitment" basis in order to hedge against 
anticipated changes in interest rates and prices. 
   
The fund may borrow money from banks in an amount up to 33 1/3% of its total 
assets (including the amount borrowed), less all liabilities and indebtedness 
other than the borrowings and may use the proceeds for investment purposes. 
The fund will borrow for investment purposes only when the subadviser 
believes that such borrowings will benefit the fund, after taking into 
account considerations such as the cost of the borrowing and the likely 
investment returns on the securities purchased with the borrowed monies. In 
addition, the fund may borrow money for temporary or emergency purposes or 
payments in an amount not exceeding 5% of the value of its total assets (not 
including the amount borrowed) provided that the total amount borrowed by the 
fund for any purpose does not exceed 33 1/3% of its total assets. 
    
   
Nondiversification. As a "non-diversified" company under the 1940 Act, the 
fund will have the ability to invest more than 5% of its assets in the 
securities of any issuer. However, the fund intends to comply with 
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), 
which requires (among other things) that at least 50% of the fund's assets 
consist of U.S. Government securities, cash and cash items, securities of 
other regulated investment companies, and other securities, with such other 
securities limited in respect of any one issuer to not more than 5% of the 
value of the fund's total assets and not more than 10% of the outstanding 
voting securities of such issuer.  Also, holdings of a single issuer (with 
the same exceptions) may not exceed 25% of the fund's total assets.  These 
limits are measured at the end of each quarter of the fund's taxable year.  
Under the Subchapter M limits, "non-diversification" allows up to 50% of a 
fund's total assets to be invested in as few as two single issuers. In the 
event of decline of creditworthiness or default upon the obligations of one 
or more such issuers exceeding 5%, an investment in the fund will entail 
greater risk than in a portfolio having a policy of "diversification" because 
a high percentage of the fund's assets may be invested in securities of one 
or two issuers. Furthermore, a high percentage of investments among few 
issuers may result in a greater degree of fluctuation in the market value of 
the assets of the fund, and consequently a greater degree of fluctuation of 
the fund's net asset value, because the fund will be more susceptible to 
economic, political or regulatory developments affecting these securities 
than would be the case with a portfolio composed of varied obligations of 
more issuers.  The fund also intends to satisfy the diversification 
requirements of Section 817(h) of the Code.
    
Travelers Managed Income Portfolio
   
Under normal market conditions, (1) at least 65% of the fund's total assets 
will be invested in U.S. government securities and in investment-grade 
corporate debt obligations (i.e., rated within the four highest ratings 
categories of Moody's or S&P or in unrated obligations of comparable 
quality); and (2) at least 65% of the fund's total assets will be invested in 
debt obligations having durations of 10 years or less. The fund may only 
invest in U.S. government securities that are issued or guaranteed as to both 
principal and interest by the U.S. government or backed by the full faith and 
credit of the U.S. government or its agencies or instrumentalities.

The fund may invest up to 35% of its total assets in obligations rated below 
the four highest ratings of Moody's or S&P, with no minimum rating required. 
Such securities, which are considered to have speculative characteristics, 
include securities rated in the lowest rating categories of Moody's or S&P 
(commonly referred to as "junk bonds"), which are extremely speculative and 
may be in default with respect to payment of principal or interest.
    
The fund may also invest up to 35% of its total assets in fixed-income 
obligations having durations longer than 10 years, up to 25% of its total 
assets in convertible debt obligations and preferred stocks, and up to 20% of 
its total assets in securities of foreign issuers, including foreign 
governments. The fund will not invest in common stocks, and any common stocks 
received through conversion of convertible debt obligations will be sold in 
an orderly manner. Changes in interest rates will affect the value of the 
fund's portfolio investments.

Bank certificates of deposit and bankers' acceptances in which the fund may 
invest are limited to U.S. dollar-denominated instruments of domestic banks, 
including their branches located outside the United States, and of domestic 
branches of foreign banks. In addition, the fund may invest in U.S. dollar-
denominated, non-negotiable time deposits issued by foreign branches of 
domestic banks and London branches of foreign banks; and negotiable 
certificates of deposit issued by London branches of foreign banks. The 
foregoing investments may be made provided that the bank has capital, surplus 
and undivided profits (as of the date of its most recently published annual 
financial statements) in excess of $100 million as of the date of investment. 
Investments in obligations of foreign branches of domestic banks, foreign 
banks, and domestic branches of foreign banks involve risks that are 
different from investments in securities of domestic banks, and are discussed 
in more detail under "Risk Factors."
   
The fund may invest up to 25% of its total assets in securities representing 
interests in pools of assets such as mortgage loans, motor vehicle 
installment purchase obligations and credit card receivables ("asset backed 
securities"), which include classes of obligations collateralized by mortgage 
loans or mortgage-pass through certificates ("CMOs"). The fund is authorized 
to borrow money for temporary administrative purposes and to pledge its 
assets in connection with such borrowings. 
    
Putnam Diversified Income Portfolio
   
The subadviser believes that diversifying the fund's investments among the 
U.S. government sector, the high yield sector and the international sector, 
as opposed to investing in any one sector, will better enable the fund to 
preserve capital while pursuing its investment objective. Historically, the 
markets for U.S. government securities, lower-rated, high yielding U.S. 
corporate fixed-income securities, and debt securities of foreign issuers 
have tended to behave independently and have at times moved in opposite 
directions. The subadviser believes that when financial markets exhibit such 
a lack of correlation, a pooling of investments among these markets may 
produce greater preservation of capital and lower volatility over the long 
term than would be obtained by investing exclusively in any one of the 
markets.

The subadviser will continuously review the allocation of assets and make 
such adjustments as it deems appropriate, although there are no fixed limits 
on allocations among sectors, including investment in the high yield sector. 
Because of the importance of sector diversification to the fund's investment 
policies, the subadviser expects that a substantial portion of the fund's 
assets will normally be invested in each of the three market sectors 
described below. At times, the fund may hold a portion of its assets in cash 
and money market instruments.

U.S. Government Sector. The fund will invest assets allocated to the U.S. 
government sector primarily in U.S. government securities and may engage in 
options, futures, and repurchase transactions with respect to such 
securities. The fund may also enter into forward commitments for the purchase 
of U.S. government securities and make secured loans of its portfolio 
securities with respect to U.S. government securities. In purchasing 
securities for the U.S. government sector, the subadviser may take full 
advantage of the entire range of maturities of U.S. government securities and 
may adjust the average maturity of the investments held in the portfolio from 
time to time, depending on its assessment of relative yields of securities of 
different maturities and its expectations of future changes in interest 
rates. Under normal market conditions, the fund will invest at least 20% of 
its net assets in U.S. government securities. The fund may also invest assets 
allocated to the U.S. government sector in a variety of other debt 
securities, including asset-backed and mortgage-backed securities, such as 
CMOs, that are issued by private U.S. issuers. With respect to the U.S. 
government sector, the fund will only invest in privately issued debt 
securities that are investment grade at the time of purchase. The fund will 
not necessarily dispose of a security if its rating is reduced below these 
levels, although the subadviser will monitor the investment to determine 
whether continued investment in the security will assist in meeting the 
fund's investment objective.

High Yield Sector. The fund will invest assets allocated to the high yield 
sector primarily in high yielding, lower-rated higher risk U.S. and foreign 
corporate fixed-income securities, including debt securities, convertible 
securities and preferred stocks. Subject to the foregoing sentence, the fund 
may also purchase equity securities. The fund will not necessarily invest in 
the highest yielding securities available if in the subadviser's opinion the 
differences in yield are not sufficient to justify the higher risks involved. 
The fund may also invest in zero-coupon bonds and payment-in-kind bonds. 

At times, a substantial portion of the fund's assets may be invested in 
securities as to which the fund, by itself or together with other funds and 
accounts managed by the subadviser and its affiliates, holds a major portion 
or all of such securities. Under adverse market or economic conditions or in 
the event of adverse changes in the financial condition of the issuer, the 
fund could find it more difficult to sell such securities when the subadviser 
believes it advisable to do so or may be able to sell such securities only at 
prices lower than if such securities were more widely held. Under such 
circumstances, it may also be more difficult to determine the fair value of 
such securities for purposes of computing the fund's net asset value. In 
order to enforce its rights in the event of a default under such securities, 
the fund may be required to take possession of and manage assets securing the 
issuer's obligations on such securities, which may increase the fund's 
operating expenses and adversely affect the fund's net asset value. 

The high yield sector may invest in any security which is rated, at the time 
of purchase, at least Caa as determined by Moody's or CCC as determined by 
S&P's (or, the equivalent by another, nationally recognized statistical 
rating agency) or in any unrated security which the subadviser determines is 
at least of comparable quality, although up to 5% of the net assets of the 
fund (whether they are allocated to the high yield sector or the 
international sector) may be invested in securities rated below such quality, 
or in unrated securities that the subadviser determines are of comparable 
quality. 
    
International Sector. The fund will invest the assets allocated to the 
international sector in debt obligations and other fixed-income securities 
denominated in any currency including the U.S. dollar. These securities 
include:

*   debt obligations issued or guaranteed by foreign (including emerging 
markets), national, provincial, state or other governments with taxing 
authority, or by their agencies or instrumentalities; 

*   debt obligations of supranational entities (described below); and 

*   debt obligations and other fixed-income securities of foreign and U.S. 
corporate issuers. 

In the past, yields available from securities denominated in foreign 
currencies have often been higher than those of securities denominated in 
U.S. dollars. The subadviser will consider expected changes in foreign 
currency exchange rates in determining the anticipated returns of securities 
denominated in foreign currencies. 
       
Supranational entities include international organizations designated or 
supported by governmental entities to promote economic reconstruction or 
development and international banking institutions and related government 
agencies. Examples include the International Bank for Reconstruction and 
Development (the World Bank), the European Steel and Coal Community, the 
Asian Development Bank, and the Inter-American Development Bank. The 
governmental members or "stockholders" usually make initial capital 
contributions to the supranational entity and in many cases are committed to 
make additional capital contributions if the supranational entity is unable 
to repay its borrowing. Each supranational entity's leading activities are 
limited to a percentage of its total capital (including "callable capital" 
contributed by members at the entity's call), reserves, and net income.
   
Defensive Strategies. At times, the subadviser may judge that conditions in 
the securities market make pursuing the fund's basic investment strategy 
inconsistent with the best interests of its shareholders. At such times, the 
subadviser may temporarily use alternative strategies, primarily designed to 
reduce fluctuations in the value of the fund's assets. In implementing these 
"defensive" strategies, depending on the circumstances, the fund may 
temporarily reduce or suspend its option writing activities, shift its 
portfolio emphasis to higher-rated securities in the high yield sector, hedge 
currency risks in the international sector, or generally reduce the average 
maturity of its holdings in any or all of the sectors.
     
       
Smith Barney High Income Portfolio
   
The fund seeks to achieve its investment objectives by investing, under 
normal circumstances, at least 65% of its assets in high-yielding corporate 
debt obligations and preferred stock. The fund's manager may adjust the 
fund's average maturity when, based on interest rate trends and other market 
conditions, it deems it appropriate to do so. Up to 35% of the fund's assets 
may be invested in common stock or common stock equivalents, including 
convertible securities, options, warrants and rights. The fund's equity 
investments may be made in securities of companies of any size depending on 
the relative attractiveness of the company and the economic sector in which 
it operates. Fixed income securities purchased by the fund will generally be 
lower-rated securities, and may be rated as low as C by Moody's or D by S&P, 
or in non-rated income securities that the  manager determines to be of 
comparable quality. The fund will not purchase securities rated lower than B 
by both Moody's and S&P, if, immediately after such purchase, more than 10% 
of the fund's total assets are invested in such securities. The fund may 
invest in securities rated higher than Ba by Moody's and BB by S&P without 
limitation when the difference in yields between quality classifications is 
relatively narrow.
    
Smith Barney Money Market Portfolio
   
The fund operates as a money market fund, and utilizes certain investment 
policies so that, to the extent reasonably possible, its price per share will 
not change from $1.00, although no assurance can be given that this goal will 
be achieved on a continuous basis.  For example, the fund will not purchase a 
security which, after giving effect to any demand features, has a remaining 
maturity of greater than 13 months, or maintain a dollar-weighted average 
portfolio maturity in excess of 90 days (securities used as collateral for 
repurchase agreements are not subject to these restrictions).
    
The fund's investments are limited to dollar denominated instruments the 
Board of Directors determines present minimal credit risks and which are 
Eligible Securities at the time acquired by the fund.  The term Eligible 
Securities includes securities rated by the "Requisite NRSROs" in one of the 
two highest short-term rating categories, securities of issuers that have 
received such ratings with respect to other short-term debt securities and 
comparable unrated securities. "Requisite NRSROs" means (a) any two 
nationally recognized statistical rating organizations ("NRSROs") that have 
issued a rating with respect to a security or class of debt obligations of an 
issuer, or (b) one NRSRO, if only one NRSRO has issued such a rating at the 
time that the Portfolio acquires the security.  The NRSROs currently 
designated as such by the Securities and Exchange Commission (the "SEC") are 
S&P, Moody's, Fitch IBCA, Inc., Duff and Phelps Inc., and Thomson BankWatch. 
See Appendix A for a discussion of the ratings categories of the NRSROs.

The fund may enter into repurchase agreements collateralized by U.S. 
government securities with any broker/dealer or other financial institution 
that is deemed creditworthy by the manager, under guidelines approved by the 
fund's Board of Directors. The fund will not enter into a repurchase 
agreement on behalf of the fund if, as a result thereof, more than 10% of the 
fund's net assets (taken at current value) at that time would be subject to 
repurchase agreements maturing in more than seven days.

The following are also permitted investments for the fund:

High Quality Commercial Paper. The fund's purchase of commercial paper is 
restricted to direct obligations of issuers that at the time of purchase are 
Eligible Securities that are rated by at least one NRSRO in the highest 
category for short-term debt securities or comparable unrated securities. The 
fund may invest without limit in the dollar-denominated commercial paper of 
foreign issuers.

High Quality Corporate Obligations. Obligations of corporations that are: (1) 
rated AA or better by S&P or Aa or better by Moody's or (2) issued by an 
issuer that has a class of short-term debt obligations that are comparable in 
priority and security with the obligation and that have been rated in one of 
the two highest rating categories for short-term debt obligations. The fund 
will only invest in corporate obligations with remaining maturities of 13 
months or less.

Bank Obligations. Obligations (including certificates of deposit, bankers' 
acceptances and fixed time deposits) and securities backed by letters of 
credit of U.S. banks or other U.S. financial institutions that are members of 
the Federal Reserve System or the Federal Deposit Insurance Corporation 
("FDIC") (including obligations of foreign branches of such members) if 
either: (a) the principal amount of the obligation is insured in full by the 
FDIC, or (b) the issuer of such obligation has capital, surplus and undivided 
profits in excess of $100 million or total assets of $1 billion (as reported 
in its most recently published financial statements prior to the date of 
investment). Under current FDIC regulations, the maximum insurance payable as 
to any one certificate of deposit is $100,000; therefore, certificates of 
deposit in denominations greater than $100,000 that are purchased by the fund 
will not be fully insured. The fund currently intends to limit its investment 
in fixed time deposits with an ultimate maturity of from two business days to 
six months and will invest in such time deposits only if, when combined with 
other illiquid assets of the fund, not more than 10% of its assets would be 
invested in all such instruments. The fund may also invest in securities of 
foreign branches of U.S. banks. Such investments involve considerations that 
are not ordinarily associated with investing in domestic certificates of 
deposit. The fund may invest in instruments issued by domestic banks, 
including those issued by their branches outside the United States and 
subsidiaries located in Canada, and instruments issued by foreign banks 
through their branches located in the United States and the United Kingdom. 
In addition, the fund may invest in fixed time deposits of foreign banks 
issued through their branches located in Grand Cayman Island, London, Nassau, 
Tokyo and Toronto.

The purchase of obligations of foreign banks will involve similar investment 
and risk considerations that are applicable to investing in obligations of 
foreign branches of U.S. banks. These factors will be carefully considered by 
the Manager in selecting investments for the fund. See "Risk Factors." 

High Quality Municipal Obligations. Debt obligations of states, cities, 
counties, municipalities, municipal agencies and regional districts rated SP-
1+ or A-1 or AA or better by S&P or MIG 2, VMIG 2, or Prime-1 or Aa or better 
by Moody's or, if not rated, are determined by the Manager to be of 
comparable quality. At certain times, supply/demand imbalances in the tax-
exempt market cause municipal obligations to yield more than taxable 
obligations of equivalent credit quality and maturity length. The purchase of 
these securities could enhance the fund's yield. The fund will not invest 
more than 10% of its total assets in municipal obligations.

The fund may, to a limited degree, engage in short-term trading to attempt to 
take advantage of short-term market variations, or may dispose of the 
portfolio security prior to its maturity if it believes such disposition 
advisable or it needs to generate cash to satisfy redemptions. In such cases, 
the fund may realize a gain or loss.

As a matter of fundamental policy, the fund may borrow money from banks for 
temporary purposes but only in an amount up to 10% of the value of its total 
assets and may pledge its assets in an amount up to 10% of the value of its 
total assets only to secure such borrowings. The fund will borrow money only 
to accommodate requests for the redemption of shares while effecting an 
orderly liquidation of portfolio securities or to clear securities 
transactions and not for leveraging purposes. The fund may also lend its 
portfolio securities to brokers, dealers and other financial organizations. 
Such loans, if and when made, may not exceed 20% of the fund's total assets, 
taken at value. 

Notwithstanding any of the foregoing investment policies, the fund may invest 
up to 100% of its assets in U.S. government securities.

INVESTMENT PRACTICES
   
Each of the following investment practices is subject to any limitations set 
forth under "Investment Objectives and Management Policies" or under 
"Investment Restrictions. See "Risk Factors" for additional information about 
the risks of these investment practices.
    
EQUITY SECURITIES

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

Convertible Securities (each fund except Smith Barney Money Market 
Portfolio). Each fund may invest in convertible securities which are fixed-
income securities that may be converted at either a stated price or stated 
rate into underlying shares of common stock. Convertible securities have 
general characteristics similar to both fixed-income and equity securities. 
Although to a lesser extent than with fixed-income securities, the market 
value of convertible securities tends to decline as interest rates increase 
and, conversely, tends to increase as interest rates decline. In addition, 
because of the conversion feature, the market value of convertible securities 
tends to vary with fluctuations in the market value of the underlying common 
stocks and, therefore, also will react to variations in the general market 
for equity securities.

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

Convertible securities generally are subordinated to other similar but non-
convertible securities of the same issuer, although convertible bonds enjoy 
seniority in right of payment to all equity securities, and convertible 
preferred stock is senior to common stock of the same issuer. Because of the 
subordination feature, however, convertible securities typically have lower 
ratings than similar non-convertible securities.

Synthetic Convertible Securities (each fund except Smith Barney Money Market 
Portfolio).  Each fund may invest in synthetic convertible securities. 
Synthetic convertible securities differ from convertible securities in 
certain respects, including that each component of a synthetic convertible 
security has a separate market value and responds differently to market 
fluctuations. Investing in synthetic convertible securities involves the risk 
normally involved in holding the securities comprising the synthetic 
convertible security.

Unlike a convertible security, which is a single security, a synthetic 
convertible security is comprised of distinct securities that together 
resemble convertible securities in certain respects. Synthetic convertible 
securities are typically created by combining non-convertible bonds or 
preferred stocks with warrants or stock call options. The options that will 
form elements of synthetic convertible securities may be listed on a 
securities exchange or on the National Association of Securities Dealers 
Automated Quotation System "NASDAQ" or may be privately traded. The 
components of a synthetic convertible security generally are not offered as a 
unit and may be purchased and sold by the fund at different times. Synthetic 
convertible securities differ from convertible securities in certain 
respects, including that each component of a synthetic convertible security 
has a separate market value and responds differently to market fluctuations. 
       
Warrants or Rights (AIM Capital Appreciation, Smith Barney Large 
Capitalization Growth and GT Global Strategic Income Portfolios). Warrants or 
rights may be acquired by each fund in connection with other securities or 
separately and provide the fund with the right to purchase at a later date 
other securities of the issuer. Each fund has undertaken that its investment 
in warrants or rights, valued at the lower of cost or market, will not exceed 
5% of the value of its net assets and not more than 2% of such assets will be 
invested in warrants and rights which are not listed on the American or New 
York Stock Exchange. Warrants or rights acquired by a fund in units or 
attached to securities will be deemed to be without value for purposes of 
this restriction.
       
Real Estate Investment Trusts ("REITs") (Alliance Growth and Smith Barney 
High Income Portfolios). The fund may invest without limitations in shares of 
REITs. REITs are pooled investment vehicles which invest primarily in income 
producing real estate or real estate related loans or interests. REITs are 
generally classified as equity REITs,  mortgage REITs or a combination of 
equity and mortgage REITs. Equity REITs invest the majority of their assets 
directly in real property and derive income primarily from the collection or 
rents. Equity REITs may also include operating or finance companies. Equity 
REITs can also realize capital gains by selling properties that have 
appreciated in value. Mortgage REITs invest the majority of their assets in 
real estate mortgages and derive income from the collection of interest 
payments. REITs are not taxed on income distributed to shareholders provided 
they comply with several requirements of the Internal Revenue Code of 1986, 
as amended (the "Code"). A mortgage trust can make construction, development 
or long-term mortgage loans, which are sensitive to the credit quality of the 
borrower. Mortgage trusts derive their income from interest payments. Hybrid 
trusts combine the characteristics of both equity and mortgage trusts, 
generally by holding both ownership interests and mortgage interests in real 
estate. 

FIXED INCOME SECURITIES

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

U.S. Government Securities (each fund). Each fund may invest in U.S. 
government securities, which are debt obligations issued or guaranteed as to 
payment of principal and interest by the U.S. Government (including Treasury 
bills, notes and bonds, certain mortgage participation certificates and 
collateralized mortgage obligations) or by its agencies and instrumentalities 
(such as GNMA, the Student Loan Marketing Association, the Tennessee Valley 
Authority, the Bank for Cooperatives, the Farmers Home Administration, 
Federal Farm Credit Banks, Federal Home Loan Banks, Federal Intermediate 
Credit Banks, Federal Land Banks, the Export-Import Bank of the U.S., the 
Federal Housing Administration, FHLMC, the U.S. Postal Service, the Federal 
Financing Bank and FNMA). Some of these securities (such as Treasury bills) 
are supported by the full faith and credit of the U.S. Treasury; others (such 
as obligations of the Federal Home Loan Bank) are supported by the right of 
the issuer to borrow from the Treasury; while still others (such as 
obligations of FNMA and the Student Loan Marketing Association) are supported 
only by the credit of the instrumentality.

Zero Coupon, Pay-In-Kind and Delayed Interest Securities (Alliance Growth, 
MFS Total Return, GT Global Strategic Income, Travelers Managed Income, Smith 
Barney High Income and Putnam Diversified Income Portfolios).  A fund may 
invest in zero coupon, pay-in-kind and delayed interest securities as well as 
custodial receipts or certificates underwritten by securities dealers or 
banks that evidence ownership of future interest payments, principal payments 
or both on certain U.S. government securities.  Zero coupon securities pay no 
cash income to their holders until they mature and are issued at substantial 
discounts from their value at maturity. When held to maturity, their entire 
return comes from the difference between their purchase price and their 
maturity value. Zero-coupon and delayed interest securities are issued at a 
significant discount from their principal amount. While zero-coupon bonds do 
not require the periodic payment of interest, deferred interest bonds provide 
for a period of delay before the regular payment of interest begins. Payment-
in-kind bonds allow the issuer, at its option, to make current interest 
payments on the bonds either in cash or in additional bonds. Because interest 
on zero coupon, pay-in-kind and delayed interest securities is not paid on a 
current basis, the values of securities of this type are subject to greater 
fluctuations than are the values of securities that distribute income 
regularly and may be more speculative than such securities.

Custodial receipts evidencing specific coupon or principal payments have the 
same general attributes as zero coupon U.S. government securities but are not 
considered to be U.S. government securities. Although under the terms of a 
custodial receipt a fund is typically authorized to assert its rights 
directly against the issuer of the underlying obligation, the fund may be 
required to assert through the custodian bank such rights as may exist 
against the underlying issuer. Thus, in the event the underlying issuer fails 
to pay principal and/or interest when due, a fund may be subject to delays, 
expenses and risks that are greater than those that would have been involved 
if the fund had purchased a direct obligation of the issuer. In addition, in 
the event that the trust or custodial account in which the underlying 
security has been deposited is determined to be an association taxable as a 
corporation, instead of a non-taxable entity, the yield on the underlying 
security would be reduced in respect of any taxes paid.

Synthetic Security Positions (GT Global Strategic Income and Putnam 
Diversified Income Portfolios). A fund may utilize combinations of futures on 
bonds and forward currency contracts to create investment positions that have 
substantially the same characteristics as bonds of the same type on which the 
futures contracts are written. Investment positions of this type are 
generally referred to as "synthetic securities." For example, in order to 
establish a synthetic security position for the fund that is comparable to 
owning a Japanese government bond, the relevant subadviser might purchase 
futures contracts on Japanese government bonds in the desired principal 
amount and purchase forward currency contracts for Japanese Yen in an amount 
equal to the then current purchase price for such bonds in the Japanese cash 
market, with each contract having approximately the same delivery date.

The subadviser might roll over the futures and forward currency contract 
positions before taking delivery in order to continue the fund's investment 
position, or the subadviser might close out those positions, thus effectively 
selling the synthetic security. Further, the amount of each contract might be 
adjusted in response to market conditions and the forward currency contract 
might be changed in amount or eliminated in order to hedge against currency 
fluctuations.

Further, while these futures and currency contracts remain open, a fund will 
comply with applicable SEC guidelines to set aside cash, debt securities of 
any grade or equity securities, in a segregated account with its custodian in 
an amount sufficient to cover its potential obligations under such contracts; 
provided such securities have been determined by the subadviser to be liquid 
and unencumbered pursuant to guidelines established by the directors.

A subadviser would create synthetic security positions for a fund when it 
believes that it can obtain a better yield or achieve cost savings in 
comparison to purchasing actual bonds or when comparable bonds are not 
readily available in the market. Synthetic security positions are subject to 
the risk that changes in the value of purchased futures contracts may differ 
from changes in the value of the bonds that might otherwise have been 
purchased in the cash market. Also, while a subadviser believes that the cost 
of creating synthetic security positions generally will be materially lower 
than the cost of acquiring comparable bonds in the cash market, the 
subadviser will incur transaction costs in connection with each purchase of a 
futures or a forward currency contract. The use of futures contracts and 
forward currency contracts to create synthetic security positions also is 
subject to substantially the same risks as those that exist when these 
instruments are used in connection with hedging strategies. See "Investment 
Risks." 

Mortgage-Backed Securities (MFS Total Return, Travelers Managed Income, 
Putnam Diversified Income and Smith Barney High Income Portfolios). A fund 
may invest in mortgage backed securities, which are securities representing 
interests in "pools" of mortgage loans. Monthly payments of interest and 
principal by the individual borrowers on mortgages are "passed through" to 
the holders of the securities (net of fees paid to the issuer or guarantor of 
the securities) as the mortgages in the underlying mortgage pools are paid 
off. The average lives of mortgage pass-throughs are variable when issued 
because their average lives depend on prepayment rates. The average life of 
these securities is likely to be substantially shorter than their stated 
final maturity as a result of unscheduled principal prepayment. Prepayments 
on underlying mortgages result in a loss of anticipated interest, and all or 
part of a premium if any has been paid, and the actual yield (or total 
return) to a fund may be different than the quoted yield on the securities. 
Mortgage prepayments generally increase with falling interest rates and 
decrease with rising interest rates. Additional payment may be made out of 
unscheduled repayments of principal resulting from the sale of the underlying 
residential property, refinancing or foreclosure, net of fees or costs that 
may be incurred. Prepayments of principal on mortgage-backed securities may 
tend to increase due to refinancing of mortgages as interest rates decline. 
Like other fixed income securities, when interest rates rise the value of a 
mortgage pass-through security generally will decline; however, when interest 
rates are declining, the value of mortgage pass-through securities with 
prepayment features may not increase as much as that of other fixed-income 
securities.

Payment of principal and interest on some mortgage pass-through securities 
(but not the market value of the securities themselves) may be guaranteed by 
the full faith and credit of the U.S. government (in the case of securities 
guaranteed by the Government National Mortgage Association ("GNMA"); or 
guaranteed by agencies or instrumentalities of the U.S. government (such as 
the Federal National Mortgage Association ("FNMA") or the Federal Home Loan 
Mortgage Corporation, ("FHLMC") which are supported only by the discretionary 
authority of the U.S. government to purchase the agency's obligations). 
Mortgage pass-through securities may also be issued by non-governmental 
issuers (such as commercial banks, savings and loan institutions, private 
mortgage insurance companies, mortgage bankers and other secondary market 
issuers). Some of these mortgage pass-through securities may be supported by 
various forms of insurance or guarantees.

Interests in pools of mortgage-related securities differ from other forms of 
debt securities, which normally provide for periodic payment of interest in 
fixed amounts with principal payments at maturity or specified call dates. 
Instead, these securities provide a monthly payment which consists of both 
interest and principal payments. In effect, these payments are a "pass-
through" of the monthly payments made by the individual borrowers on their 
mortgage loans, net of any fees paid to the issuer or guarantor of such 
securities. Additional payments are caused by prepayments of principal 
resulting from the sale, refinancing or foreclosure of the underlying 
property, net of fees or costs which may be incurred. Some mortgage pass-
through securities (such as securities issued by the GNMA) are described as 
"modified pass-through." These securities entitle the holder to receive all 
interest and principal payments owed on the mortgages in the mortgage pool, 
net of certain fees, at the scheduled payment dates regardless of whether the 
mortgagor actually makes the payment.

The principal governmental guarantor of mortgage pass-through securities is 
the GNMA. GNMA is a wholly owned U.S. government corporation within the 
Department of Housing and Urban Development. GNMA is authorized to guarantee, 
with the full faith and credit of the U.S. government, the timely payment of 
principal and interest on securities issued by institutions approved by GNMA 
(such as savings and loan institutions, commercial banks and mortgage 
bankers) and backed by pools of FHA-insured or VA-guaranteed mortgages. These 
guarantees, however, do not apply to the market value or yield of mortgage 
pass-through securities. GNMA securities are often purchased at a premium 
over the maturity value of the underlying mortgages. This premium is not 
guaranteed and will be lost if prepayment occurs.

Government-related guarantors (i.e., whose guarantees are not backed by the 
full faith and credit of the U.S. government) include the FNMA and the FHLMC. 
FNMA is a government-sponsored corporation owned entirely by private 
stockholders. It is subject to general regulation by the Secretary of Housing 
and Urban Development. FNMA purchases conventional residential mortgages 
(i.e., mortgages not insured or guaranteed by any governmental agency) from a 
list of approved seller/servicers which include state and federally-chartered 
savings and loan associations, mutual savings banks, commercial banks, credit 
unions and mortgage bankers. Pass-through securities issued by FNMA are 
guaranteed as to timely payment by FNMA of principal and interest.

FHLMC is also a government-sponsored corporation owned by private 
stockholders. FHLMC issues Participation Certificates ("PCs") which represent 
interests in conventional mortgages (i.e., not federally insured or 
guaranteed) from FHLMC's national portfolio. FHLMC guarantees timely payment 
of interest and ultimate collection of principal regardless of the status of 
the underlying mortgage loans. Commercial banks, savings and loan 
institutions, private mortgage insurance companies, mortgage bankers and 
other secondary market issuers also create pass-through pools of mortgage 
loans. Such issuers may also be the originators and/or servicers of the 
underlying mortgage-related securities. Pools created by such non-
governmental issuers generally offer a higher rate of interest than 
government and government-related pools because there are no direct or 
indirect government or agency guarantees of payments in the former pools. 
However, timely payment of interest and principal of mortgage loans in these 
pools may be supported by various forms of insurance or guarantees, including 
individual loan, title, pool and hazard insurance and letters of credit. The 
insurance and guarantees are issued by governmental entities, private 
insurers and the mortgage poolers. There can be no assurance that the private 
insurers or guarantors can meet their obligations under the insurance 
policies or guarantee arrangements. A fund may also buy mortgage-related 
securities without insurance or guarantees.

Collateralized mortgage obligations are a type of bond secured by an 
underlying pool of mortgages or mortgage pass-through certificates that are 
structured to direct payments on underlying collateral to different series of 
classes of the obligations.

Asset-Backed Securities (MFS Total Return, Travelers Managed Income, Putnam 
Diversified Income and Smith Barney High Income Portfolios). A fund may 
invest in asset-backed securities. These securities, issued by trusts and 
special purpose corporations, are backed by a pool of assets, such as credit 
card and automobile loan receivables, representing the obligations of a 
number of different parties. Asset-backed securities arise through the 
grouping by governmental, government-related and private organizations of 
loans, receivables and other assets originated by various lenders. Interests 
in pools of these assets differ from other forms of debt securities, which 
normally provide for periodic payment of interest in fixed amounts with 
principal paid at maturity or specified call dates. Instead, asset-backed 
securities provide periodic payments which generally consist of both interest 
and principal payments.

Corporate asset-backed securities present certain risks. For instance, in the 
case of credit card receivables, these securities may not have the benefit of 
any security interest in the related collateral. Credit card receivables are 
generally unsecured and the debtors are entitled to the protection of a 
number of state and federal consumer credit laws, many of which give such 
debtors the right to set off certain amounts owed on the credit cards, 
thereby reducing the balance due. Most issuers of automobile receivables 
permit the servicers to retain possession of the underlying obligations. If 
the servicer were to sell these obligations to another party, there is a risk 
that the purchaser would acquire an interest superior to that of the holders 
of the related automobile receivables. In addition, because of the large 
number of vehicles involved in a typical issuance and technical requirements 
under state laws, the trustee for the holders of the automobile receivables 
may not have a proper security interest in all of the obligations backing 
such receivables. Therefore, there is the possibility that recoveries on 
repossessed collateral may not, in some cases, be available to support 
payments on these securities.

Corporate asset-backed securities are often backed by a pool of assets 
representing the obligations of a number of different parties. To lessen the 
effect of failures by obligors to make payments on underlying assets, the 
securities may contain elements of credit support which fall into two 
categories:  (i) liquidity protection and (ii) protection against losses 
resulting from ultimate default by an obligor on the underlying assets. 
Liquidity protection refers to the provision of advances, generally by the 
entity administering the pool of assets, to ensure that the receipt of 
payments on the underlying pool occurs in a timely fashion. Protection 
against losses resulting from ultimate default ensures payment through 
insurance policies or letters of credit obtained by the issuer or sponsor 
from third parties. A fund will not pay any additional or separate fees for 
credit support. The degree of credit support provided for each issue is 
generally based on historical information respecting the level of credit risk 
associated with the underlying assets. Delinquency or loss in excess of that 
anticipated or failure of the credit support could adversely affect the 
return on an instrument in such a security.

FOREIGN INVESTMENTS
   
Depositary Receipts (each fund except Smith Barney Money Market Portfolio). 
For many foreign securities, there are U.S. dollar-denominated ADRs, which 
are traded in the United States on exchanges or over the counter and are 
sponsored and issued by domestic banks. ADRs represent the right to receive 
securities of foreign issuers deposited in a domestic bank or a correspondent 
bank. Because ADRs trade on United States securities exchanges, they are not 
generally treated as foreign securities.  Global Depositary Receipts ("GDRs") 
are receipts issued by either a U.S. or non-U.S. banking institution 
evidencing ownership of the underlying foreign securities.  Although 
investment in the form of ADRs, EDRs or GDRs facilitates trading in foreign 
securities, it does not mitigate the risks associated with investing in 
foreign securities. By investing in depositary receipts rather than directly 
in foreign issuers' stock, a fund can avoid currency risks during the 
settlement period for either purchases or sales. In general, there is a 
large, liquid market for many depositary receipts. The information available 
for depositary receipts is subject to the accounting, auditing and financial 
reporting standards of the domestic market or exchange on which they are 
traded, which standards are more uniform and more exacting that those to 
which many foreign issuers may be subject.

EDRs, which sometimes are referred to as Continental Depositary Receipts 
("CDRs") are receipts issued in Europe typically by foreign banks and trust 
companies that evidence ownership of either foreign or domestic securities. 
Generally, ADRs, in registered form, are designed for use in the United 
States securities markets, and GDRs, EDRs, and CDRs in bearer form, are 
designed for use in European securities markets.
    
   
Emerging Markets. (Smith Barney International Equity, Smith Barney Pacific 
Basin, Putnam Diversified Income, GT Global Strategic Income, Smith Barney 
High Income and MFS Total Return Portfolios). Emerging market countries 
include any country determined by the manager or subadviser, as the case may 
be, to have an emerging market economy, taking into account a number of 
factors, including the country's foreign currency debt rating, its political 
and economic stability and the development of its financial and capital 
markets. The manager or subadviser determines an issuer's principal trading 
market for its securities and the source of its revenues and assets. The 
issuer's principal activities generally are deemed to be located in a 
particular country if: (a) the security is issued or guaranteed by the 
government of that country or any of its agencies, authorities or 
instrumentalities; (b) the issuer is organized under the laws of, and 
maintains a principal office in, that country; (c) the issuer has its 
principal securities trading market in that country; or (d) the issuer has 
50% or more of its assets in that country.

Sovereign Debt Obligations. (Putnam Diversified Income, MFS Total Return and 
GT Global Strategic Income Portfolios). A fund may purchase sovereign debt 
instruments issued or guaranteed by foreign governments or their agencies, 
including debt of developing countries. Obligations of foreign governmental 
entities include obligations issued or guaranteed by national, provincial, 
state or other governments with taxing power or by their agencies. These 
obligations may or may not be supported by the full faith and credit of a 
foreign government. Sovereign debt may be in the form of conventional 
securities or other types of debt instruments such as loans or loan 
participations.  Sovereign debt of developing countries may involve a high 
degree of risk, and may be in default or present the risk of default.  
Governmental entities responsible for repayment of the debt may be unable or 
unwilling to repay principal and interest when due, and may require 
renegotiation or rescheduling of debt payments.  In addition, prospects for 
repayment of principal and interest may depend on political as well as 
economic factors.  Although some sovereign debt, such as Brady Bonds, is 
collateralized by U.S. Government securities, repayment of principal interest 
is not guaranteed by the U.S. Government.
    
Brady Bonds (Putnam Diversified Income, MFS Total Return and GT Global 
Strategic Income Portfolios). A fund may invest in Brady Bonds which are debt 
restructurings that provide for the exchange of cash and loans for newly 
issued bonds. Brady Bonds have been issued by the governments of Albania, 
Argentina, Brazil, Bulgaria, Costa Rica, Croatia, Dominican Republic, 
Ecuador, Ivory Coast, Jordan, Mexico, Morocco, Nigeria, Panama, Peru, 
Philippines, Poland, Slovenia, Uruguay, Venezuela and Vietnam and are 
expected to be issued by other emerging market countries.  Investors should 
recognize that Brady Bonds do not have a long payment history. In addition, 
Brady Bonds are often rated below investment grade.  Brady Bonds may be 
collateralized or uncollateralized, are issued in various currencies 
(primarily the U.S. dollar) and are actively traded in the secondary market 
for Latin American debt. The Salomon Brothers Brady Bond Index provides a 
benchmark that can be used to compare returns of emerging market Brady Bonds 
with returns in other bond markets, e.g., the U.S. bond market.

The funds may invest in either collateralized or uncollateralized Brady 
Bonds. U.S. dollar-denominated, collateralized Brady Bonds, which may be 
fixed rate par bonds or floating rate discount bonds, are collateralized in 
full as to principal by U.S. Treasury zero coupon bonds having the same 
maturity as the bonds. Interest payments on such bonds generally are 
collateralized by cash or securities in an amount that, in the case of fixed 
rate bonds, is equal to at least one year of rolling interest payments or, in 
the case of floating rate bonds, initially is equal to at least one year's 
rolling interest payments based on the applicable interest rate at that time 
and is adjusted at regular intervals thereafter. 

Samurai and Yankee Bonds (GT Global Strategic Income and Putnam Diversified 
Income Portfolios). Subject to their fundamental investment restrictions, 
these funds may invest in yen-denominated bonds sold in Japan by non-Japanese 
issuers ("Samurai bonds"), and may invest in dollar-denominated bonds sold in 
the United States by non-U.S. issuers ("Yankee bonds"). It is the policy of 
the funds to invest in Samurai or Yankee bond issues only after taking into 
account considerations of quality and liquidity, as well as yield.

   Investments in Other Investment Companies providing exposure to Foreign 
Markets (GT Global Strategic Income Portfolio). With respect to certain 
countries, investments by the fund presently may be made only by acquiring 
shares of other investment companies with local governmental approval to 
invest in those countries. The fund may invest in the securities of closed-
end investment companies within the limits of the 1940 Act. These limitations 
currently provide that, in general, the fund may purchase shares of a closed-
end investment company unless (a) such a purchase would cause the fund to own 
in the aggregate more than 3 percent of the total outstanding voting 
securities of the investment company or (b) such a purchase would cause the 
fund to have more than 5 percent of its total assets invested in the 
investment company or more than 10 percent of its aggregate assets invested 
in an aggregate of all such investment companies. Investment in such 
investment companies may also involve the payment of substantial premiums 
above the value of such companies' portfolio securities. The fund does not 
intend to invest in such vehicles or funds unless, in the judgment of 
management, the potential benefits of such investments justify the payment of 
any applicable premiums. The yield of such securities will be reduced by 
operating expenses of such companies including payments to the investment 
managers of those investment companies. At such time as direct investment in 
these countries is allowed, the fund will anticipate investing directly in 
these markets. 
    
Loan Participations, Assignments and Other Direct Indebtedness (Putnam 
Diversified Income, GT Global Strategic Income and MFS Total Return 
Portfolios). A fund may invest a portion of its assets in loan participations 
("Participations") and other direct claims against a borrower. By purchasing 
a Participation, a fund acquires some or all of the interest of a bank or 
other lending institution in a loan to a corporate or government borrower. 
The Participations typically will result in the fund having a contractual 
relationship only with the lender not the borrower. A fund will have the 
right to receive payments of principal, interest and any fees to which it is 
entitled only from the lender selling the Participation and only upon receipt 
by the lender of the payments from the borrower. Many such loans are secured, 
although some may be unsecured. Such loans may be in default at the time of 
purchase. Loans that are fully secured offer a fund more protection than an 
unsecured loan in the event of non-payment of scheduled interest or 
principal. However, there is no assurance that the liquidation of collateral 
from a secured loan would satisfy the corporate borrower's obligation, or 
that the collateral can be liquidated.

These loans are made generally to finance internal growth, mergers, 
acquisitions, stock repurchases, leveraged buy-outs and other corporate 
activities. Such loans are typically made by a syndicate of lending 
institutions, represented by an agent lending institution which has 
negotiated and structured the loan and is responsible for collecting 
interest, principal and other amounts due on its own behalf and on behalf of 
the others in the syndicate, and for enforcing its and their other rights 
against the borrower. Alternatively, such loans may be structured as a 
novation, pursuant to which a fund would assume all of the rights of the 
lending institution in a loan, or as an assignment, pursuant to which the 
fund would purchase an assignment of a portion of a lender's interest in a 
loan either directly from the lender or through an intermediary. A fund may 
also purchase trade or other claims against companies, which generally 
represent money owed by the company to a supplier of goods or services. These 
claims may also be purchased at a time when the company is in default.

Each fund will acquire Participations only if the lender interpositioned 
between the fund and the borrower is determined by management to be 
creditworthy.

Putnam Diversified Income and GT Global Strategic Income Portfolios may also 
invest in assignments of portions of loans from third parties 
("Assignments"). When a fund purchases Assignments from lenders, the fund 
will acquire direct rights against the borrower on the loan. However, since 
Assignments are arranged through private negotiations between potential 
assignees and assignors, the rights and obligations acquired by the fund as 
the purchaser of an Assignment may differ from, and be more limited than, 
those held by the assigning lender.

MONEY MARKET SECURITIES

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

Commercial Paper (each fund). With respect to each fund's investment policies 
with respect to commercial paper, such security consists of short-term 
(usually from 1 to 270 days) unsecured promissory notes issued by 
corporations in order to finance their current operations. A variable amount 
master demand note (which is a type of commercial paper) represents a direct 
borrowing arrangement involving periodically fluctuating rates of interest 
under a letter agreement between a commercial paper issuer and an 
institutional lender, pursuant to which the lender may determine to invest 
varying amounts. Transfer of such notes is usually restricted by the issuer, 
and there is no secondary trading market for such notes. Each fund, except 
Smith Barney Money Market Portfolio, therefore, may not invest in a master 
demand note, if as a result more than 15% of the value of each such fund's 
total assets would be invested in such notes and other illiquid securities. 
Smith Barney Money Market Portfolio may not invest in such notes if more than 
10% of the value of its total assets would be invested in such notes and 
other illiquid securities.

Indexed Commercial Paper (GT Global Strategic Income Portfolio). The fund may 
invest without limitation in commercial paper which is indexed to certain 
specific foreign currency exchange rates. The terms of such commercial paper 
provide that its principal amount is adjusted upwards or downwards (but not 
below zero) at maturity to reflect changes in the exchange rate between two 
currencies while the obligation is outstanding. The fund will purchase such 
commercial paper with the currency in which it is denominated and, at 
maturity, will receive interest and principal payments thereon in that 
currency, but the amount of principal payable by the issuer at maturity will 
change in proportion to the change (if any) in the exchange rate between the 
two specified currencies between the date the instrument is issued and the 
date the instrument matures. While such commercial paper entails the risk of 
loss of principal, the potential for realizing gains as a result of changes 
in foreign currency exchange rates enables the fund to hedge against a 
decline in the U.S. dollar value of investments denominated in foreign 
currencies while seeking to provide an attractive money market rate of 
return. The fund will not purchase such commercial paper for speculation.

OTHER INVESTMENT STRATEGIES
   
Illiquid and Restricted Securities. Each fund may purchase securities that 
are restricted as to resale ("restricted securities") under the Securities 
Act of 1933, as amended (the "1933 Act"). Some restricted securities can be 
offered and sold to "qualified institutional buyers" under Rule 144A under 
the 1933 Act. The Board of Directors may determine, based upon a continuing 
review of the trading markets for a specific restricted security, that such 
restricted securities are liquid and therefore not subject to the fund's 
restriction on illiquid investments. The Board of Directors has adopted 
guidelines and delegated to management the daily function of determining and 
monitoring liquidity of restricted securities available pursuant to Rule 
144A. The Board, however, retains sufficient oversight and is ultimately 
responsible for the determinations. Since it is not possible to predict with 
assurance exactly how the market for Rule 144A restricted securities will 
develop, the Board will carefully monitor each fund's investments in these 
securities, focusing on such important factors, among others, as valuation, 
liquidity and availability of information. Investments in restricted 
securities could have the effect of increasing the level of illiquidity in a 
fund to the extent that qualified institutional buyers become for a time 
uninterested in purchasing these restricted securities. 
    
Repurchase Agreements (each fund). Each fund may enter into repurchase 
agreements, wherein the seller agrees to repurchase a security from the fund 
at an agreed-upon future date, normally the next business day. The resale 
price is greater than the purchase price, which reflects the agreed-upon rate 
of return for the period the fund holds the security and which is not related 
to the coupon rate on the purchased security. Each fund requires continual 
maintenance of the market value of the collateral in amounts at least equal 
to the repurchase price plus accrued interest, thus risk is limited to the 
ability of the seller to pay the agreed-upon amount on the delivery date; 
however, if the seller defaults, realization upon the collateral by the fund 
may be delayed or limited or the fund might incur a loss if the value of the 
collateral securing the repurchase agreement declines and might incur 
disposition costs in connection with liquidating the collateral. A fund will 
only enter into repurchase agreements with broker/dealers or other financial 
institutions that are deemed creditworthy by the Manager under guidelines 
approved by the Board of Directors. It is the policy of each fund (except the 
Smith Barney Money Market Portfolio) not to invest in repurchase agreements 
that do not mature within seven days if any such investment together with any 
other illiquid assets held by a fund amount to more than 15% of that fund's 
net assets. The Smith Barney Money Market Portfolio may not invest in such 
securities if, together with any other illiquid assets held by it amount to 
more than 10% of its total assets.

Reverse Repurchase Agreements (Smith Barney Pacific Basin, Smith Barney 
International Equity and GT Global Strategic Income Portfolio). The fund may 
enter into reverse repurchase agreements with the same parties with whom it 
may enter into repurchase agreements. Repurchase agreements involve the sale 
of fund securities with an agreement to repurchase the securities at an 
agreed-upon price, date and interest payment and have the characteristics of 
borrowing. Since the proceeds of borrowings under reverse repurchase 
agreements are invested, this would introduce the speculative factor known as 
"leverage."  The securities purchased with the funds obtained from the 
agreement and securities collateralizing the agreement will have maturity 
dates no later than the repayment date. Generally the effect of such a 
transaction is that the fund can recover all or most of the cash invested in 
the fund securities involved during the term of the reverse repurchase 
agreement, while in many cases it will be able to keep some of the interest 
income associated with those securities. Such transactions are only 
advantageous if the fund has an opportunity to earn a greater rate of 
interest on the cash derived from the transaction than the interest cost of 
obtaining that cash. Opportunities to realize earnings from the use of the 
proceeds equal to or greater than the interest required to be paid may not 
always be available, and the fund intends to use the reverse repurchase 
technique only when management believes it will be advantageous to the fund. 
The use of reverse repurchase agreements may exaggerate any interim increase 
or decrease in the value of the participating fund's assets. The fund's 
custodian bank will maintain a separate account for the fund with securities 
having a value equal to or greater than such commitments. 

At the time the fund enters into a reverse repurchase agreement, it will 
establish and maintain a segregated account with an approved custodian 
containing cash or liquid securities that have a value no less than the 
repurchase price, including accrued interest. Reverse repurchase agreements 
will be treated as borrowings and will be considered in the fund's overall 
borrowing limitation.
   
Borrowing and Leverage (each fund). Each fund may borrow from banks, on a 
secured or unsecured basis. If the fund borrows and uses the proceeds to make 
additional investments, income and appreciation from such investments will 
improve its performance if they exceed the associated borrowing costs but 
impair its performance if they are less than such borrowing costs. This 
speculative factor is known as "leverage." Only  Smith Barney Pacific Basin, 
Smith Barney International Equity, and GT Global Strategic Income Portfolios 
will utilize leverage. In addition, AIM Capital Appreciation Portfolio may, 
but has no current intention to, engage in leverage. Should any fund engage 
in leverage, immediately after such borrowing the value of its assets, 
including the amount borrowed, less liabilities, must be equal to at least 
300% of the amount borrowed, plus all outstanding borrowings.
    
"Dollar Roll" Transactions (MFS Total Return, GT Global Strategic Income, 
Travelers Managed Income and Putnam Diversified Income Portfolios). A fund 
may enter into "dollar roll" transactions pursuant to which the fund sells 
fixed income securities for delivery in the current month and simultaneously 
contracts to repurchase substantially similar (i.e., same type, coupon and 
maturity) securities on a specified future date. The MFS Total Return 
Portfolio may enter in similar transactions pursuant to which the fund sells 
mortgage-backed securities for delivery in the future and simultaneously 
contracts to repurchase substantially similar securities on a specified 
future date (generally within 30 days). During the roll period, a fund 
forgoes principal and interest paid on the securities. The fund is 
compensated for the lost interest by the difference between the current sales 
price and the lower price for the future purchase (often referred to as the 
"drop") as well as by the interest earned on the cash proceeds of the initial 
sale. A fund may also be compensated by receipt of a commitment fee.

Since a fund will receive interest on the securities in which it invests the 
transaction proceeds, such transactions may involve leverage. However, since 
such securities must satisfy the quality requirements of the fund and will 
mature on or before the settlement date on the transaction, management 
believes that such transactions do not present the risks to the funds that 
are associated with other types of leverage. MFS Total Return Portfolio will 
only enter into covered rolls, where there is an offsetting cash position or 
a cash equivalent security position which matures on or before the forward 
settlement date of the dollar roll transaction. Dollar roll transactions are 
considered borrowings by the funds and will be subject to each fund's overall 
borrowing limitation. Dollar roll transactions are considered speculative.

Securities Lending (each fund except Smith Barney Large Capitalization 
Growth, Van Kampen Enterprise and Smith Barney Money Market Portfolios). A 
fund may seek to increase its net investment income by lending its securities 
provided such loans are callable at any time and are continuously secured by 
cash or U.S. government securities equal to no less than the market value, 
determined daily, of the securities loaned. The fund will receive amounts 
equal to dividends or interest on the securities loaned. It will also earn 
income for having made the loan because cash collateral pursuant to these 
loans will be invested in short-term money market instruments. In connection 
with lending of securities the fund may pay reasonable finders, 
administrative and custodial fees. 

Management will limit such lending to not more than the percentages shown 
below:



Fund

Limit as a %
of Total Assets

Smith Barney Pacific Basin 
Portfolio

15%

Smith Barney International Equity 
Portfolio

15%

Smith Barney Large Cap Value 
Portfolio

20%

Alliance Growth Portfolio

25%

AIM Capital Appreciation Portfolio

33 1/3%

MFS Total Return Portfolio

30%

GT Global Strategic Income 
Portfolio 

30%

Travelers Managed Income Portfolio

33 1/3%

Putnam Diversified Income 
Portfolio

25%

Smith Barney High Income Portfolio

20%

Where voting or consent rights with respect to loaned securities pass to the 
borrower, management will follow the policy of calling the loan, in whole or 
in part as may be appropriate, to permit the exercise of such voting or 
consent rights if the issues involved have a material effect on the fund's 
investment in the securities loaned. Apart from lending its securities and 
acquiring debt securities of a type customarily purchased by financial 
institutions, none of the foregoing funds will make loans to other persons. 
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 only be made to 
borrowers whom management deems to be of good standing and will not be made 
unless, in the judgment of management, the interest to be earned from such 
loans would justify the risk.

By lending its securities, a fund can increase its income by continuing to 
receive interest on the loaned securities, by investing the cash collateral 
in short-term instruments or by obtaining yield in the form of interest paid 
by the borrower when U.S. government securities are used as collateral. Each 
fund will adhere to the following conditions whenever it lends its 
securities: (1) the fund must receive at least 100% cash collateral or 
equivalent securities from the borrower, which amount of collateral will be 
maintained by daily marking to market; (2) the borrower must increase the 
collateral whenever the market value of the securities loaned rises above the 
level of the collateral; (3) the fund must be able to terminate the loan at 
any time; (4) the fund must receive reasonable interest on the loan, as well 
as any dividends, interest or other distributions on the loaned securities, 
and any increase in market value; (5) the fund may pay only reasonable 
custodian fees in connection with the loan; and (6) voting rights on the 
loaned securities may pass to the borrower, except that, if a material event 
adversely affecting the investment in the loaned securities occurs, the 
fund's Board of Directors must terminate the loan and regain the fund's right 
to vote the securities.

When-Issued, Delayed Delivery and Forward Commitment Securities (Smith Barney 
International Equity, Smith Barney Large Cap Value, Smith Barney Large 
Capitalization Growth, Alliance Growth, MFS Total Return, GT Global Strategic 
Income, Travelers Managed Income, Putnam Diversified Income and Smith Barney 
High Income Portfolios). A fund may purchase or sell securities on a when-
issued, delayed delivery or forward commitment basis. Such transactions arise 
when securities are purchased or sold by a fund with payment and delivery 
taking place in the future in order to secure what is considered to be an 
advantageous price and yield to the fund at the time of entering into the 
transaction. In when-issued or delayed-delivery transactions, delivery of the 
securities occurs beyond normal settlement periods, but no payment or 
delivery will be made by a fund prior to the actual delivery or payment by 
the other party to the transaction. A fund will not accrue income with 
respect to a when-issued or delayed-delivery security prior to its stated 
delivery date.

Purchasing such securities involves the risk of loss if the value of the 
securities declines prior to settlement date. The sale of securities for 
delayed delivery involves the risk that the prices available in the market on 
the delivery date may be greater than those obtained in the sale transaction. 
Each fund's custodian will maintain, in a segregated account on behalf of the 
fund, cash, U.S. government securities or other liquid securities having a 
value equal to or greater than the fund's purchase commitments; the custodian 
will likewise segregate securities sold on a delayed basis. Placing 
securities rather than cash in the segregated account may have a leveraging 
effect on the fund's net asset value per share. To the extent that the fund 
remains substantially fully invested in securities at the same time that it 
has committed to purchase securities on a when-issued or delayed-delivery 
basis, greater fluctuations in its net asset value per share may occur than 
if it had set aside cash to satisfy its purchase commitments. 

Short Sales Against the Box (AIM Capital Appreciation, Van Kampen Enterprise, 
GT Global Strategic Income, and Smith Barney High Income Portfolios). A fund 
may make short sales of securities in order to reduce market exposure and/or 
to increase its income if, at all times when a short position is open, (AIM 
Capital Appreciation Portfolio will limit investments such that nor more than 
10% of the value of its nets assets will be deposited as collateral for such 
sales at any time) the fund owns an equal or greater amount of such 
securities or owns preferred stock, debt or warrants convertible or 
exchangeable into an equal or greater number of the shares of the securities 
sold short. Short sales of this kind are referred to as short sales "against 
the box."  The broker-dealer that executes a short sale generally invests the 
cash proceeds of the sale until they are paid to the fund. Arrangements may 
be made with the broker-dealer to obtain a portion of the interest earned by 
the broker on the investment of short sale proceeds. The fund will segregate 
the securities against which short sales against the box have been made in a 
special account with its custodian.

DERIVATIVE CONTRACTS

Futures, Options and Currency Transactions (Smith Barney Pacific Basin, Smith 
Barney International Equity, Alliance Growth, AIM Capital Appreciation, Van 
Kampen Enterprise, MFS Total Return, GT Global Strategic Income, Putnam 
Diversified Income and Smith Barney High Income Portfolios). The following 
information on options, futures contracts and related options applies to the 
funds. In addition, new options and futures contracts and various 
combinations thereof continue to be developed and the funds may invest in any 
such options and contracts as may be developed to the extent consistent with 
its investment objective and regulatory and tax requirements applicable to 
investment companies. 

A fund may enter into contracts for the purchase or sale for future delivery 
of equity or fixed-income securities, foreign currencies or contracts based 
on financial indices including interest rates or an index of U.S. government 
or foreign government securities or equity or fixed-income securities 
("futures contracts"), and may buy and write put and call options to buy or 
sell futures contracts ("options on futures contracts"); provided, however, 
that the AIM Capital Appreciation Portfolio may only write covered call 
options. When a fund buys or sells a futures contract it incurs a contractual 
obligation to receive or deliver the underlying instrument (or a cash payment 
based on the difference between the underlying instrument's closing price and 
the price at which the contract was entered into) at a specified price on a 
specified date. An option on a futures contract gives a fund the right (but 
not the obligation) to buy or sell a futures contract at a specified price on 
or before a specified date.

The funds will not enter into transactions in futures contracts and options 
on futures contracts for speculation and will not enter into such 
transactions other than to hedge against potential changes in interest or 
currency exchange rates or the price of a security or a securities index 
which might correlate with or otherwise adversely affect either the value of 
the fund's securities or the prices of securities which the fund is 
considering buying at a later date. The Smith Barney Pacific Basin, Smith 
Barney International Equity, MFS Total Return and Smith Barney High Income 
Portfolios, however, may enter into futures contracts and options on futures 
contracts for non-hedging purposes, provided that the aggregate initial 
margin and premiums on such non-hedging positions does not exceed 5% of the 
liquidation value of a fund's assets.

Although futures contracts by their terms call for the delivery or 
acquisition of the underlying commodities or a cash payment based on the 
value of the underlying commodities, in most cases the contractual obligation 
is offset before the delivery date of the contract by buying, in the case of 
a contractual obligation to sell, or selling, in the case of a contractual 
obligation to buy, an identical futures contract on a commodities exchange. 
Such a transaction cancels the obligation to make or take delivery of the 
commodities. Since all transactions in the futures market are made through a 
member of, and are offset or fulfilled through a clearinghouse associated 
with, the exchange on which the contracts are traded, a fund will incur 
brokerage fees when it buys or sells futures contracts.

A fund will not (1) enter into any futures contracts or options on futures 
contracts if immediately thereafter the aggregate margin deposits on all 
outstanding futures contracts positions held by the fund and premiums paid on 
outstanding options on futures contracts, after taking into account 
unrealized profits and losses, would exceed 5% of the market value of the 
total assets of the fund or (2) enter into any futures contracts or options 
on futures contracts if the aggregate amount of the fund's commitments under 
outstanding futures contracts positions and options on futures contracts 
written by the fund would exceed the market value of the total assets of the 
fund.

Writing Covered Call Options (Smith Barney Pacific Basin, Smith Barney 
International Equity, Smith Barney Large Cap Value, Alliance Growth, AIM 
Capital Appreciation, Van Kampen Enterprise, MFS Total Return, GT Global 
Strategic Income Portfolio, Putnam Diversified Income and Smith Barney High 
Income Portfolios). A fund may write (sell) covered call options. A fund may 
write (sell) covered call options for hedging purposes or to increase its 
portfolio return. Covered call options will generally be written on 
securities and currencies which, in the opinion of management, are not 
expected to make any major price moves in the near future but which, over the 
long term, are deemed to be attractive investments for the fund. (AIM Capital 
Appreciation Portfolio will not write covered call options for speculative 
purposes).

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

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

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

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

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

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

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

Purchasing Call Options (Smith Barney Pacific Basin, Smith Barney 
International Equity, Smith Barney Large Cap Value, Alliance Growth, Van 
Kampen Enterprise, MFS Total Return, GT Global Strategic Income, Putnam 
Diversified Income and Smith Barney High Income Portfolios). A fund may 
purchase call options. As the holder of a call option, a fund has the right 
to purchase the underlying security or currency at the exercise price at any 
time during the option period. The fund may enter into closing sale 
transactions with respect to such options, exercise them or permit them to 
expire. Call options may be purchased by the fund for the purpose of 
acquiring the underlying security or currency for its portfolio. Utilized in 
this fashion, the purchase of call options enables the fund to acquire the 
security or currency at the exercise price of the call option plus the 
premium paid. At times the net cost of acquiring the security or currency in 
this manner may be less than the cost of acquiring the security or currency 
directly. This technique may also be useful to the fund in purchasing a large 
block of securities that would be more difficult to acquire by direct market 
purchases. So long as it holds such a call option rather than the underlying 
security or currency itself, the fund is partially protected from any 
unexpected decline in the market price of the underlying security or currency 
and in such event could allow the call option to expire, incurring a loss 
only to the extent of the premium paid for the option.

A fund may also purchase call options on underlying securities or currencies 
it owns in order to protect unrealized gains on call options previously 
written by it.  Call options may also be purchased at times to avoid 
realizing losses that would result in a reduction of the fund's current 
return. It is a policy of the GT Global Strategic Income Portfolio that 
aggregate premiums paid for put and call options will not exceed 5% of the 
fund's total assets at the time of purchase.

Purchasing Put Options (Smith Barney Pacific Basin, Smith Barney 
International Equity, Smith Barney Large Cap Value, Alliance Growth, Van 
Kampen Enterprise, MFS Total Return, GT Global Strategic Income, Putnam 
Diversified Income and Smith Barney High Income Portfolios). A fund may 
purchase put options. As the holder of a put option, the fund has the right 
to sell the underlying security or currency at the exercise price at any time 
during the option period. The fund may enter into closing sale transactions 
with respect to such options, exercise them or permit them to expire.

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

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

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

Options on Securities and on Foreign Currencies (each fund). In an effort to 
reduce fluctuations in net asset value or to increase portfolio return, the 
funds may write covered put and call options and may buy put and call options 
and warrants on securities traded on U.S. and foreign securities exchanges.  
AIM Capital Appreciation Portfolio may write (sell) only covered call 
options. The purpose of such transactions is to hedge against changes in the 
market value of portfolio securities caused by fluctuating interest rates, 
fluctuating currency exchange rates and changing market conditions, and to 
close out or offset existing positions in such options or futures contracts 
as described below. A fund may write and buy options on the same types of 
securities that the fund could buy directly and may buy options on financial 
indices as described above with respect to futures contracts. There are no 
specific limitations on the writing and buying of options on securities.

A put option gives the holder the right, upon payment of a premium, to 
deliver a specified amount of a security to the writer of the option on or 
before a fixed date at a predetermined price. A call option gives the holder 
the right, upon payment of a premium, to call upon the writer to deliver a 
specified amount of a security on or before a fixed date at a predetermined 
price.

A call option is "covered" if a fund owns the underlying security covered by 
the call. If a "covered" call option expires unexercised, the writer realizes 
a gain in the amount of the premium received. If the covered call option is 
exercised, the writer realizes either a gain or loss from the sale or 
purchase of the underlying security with the proceeds to the writer being 
increased by the amount of the premium. Prior to its expiration, a call 
option may be closed out by means of a purchase of an identical option. Any 
gain or loss from such transaction will depend on whether the amount paid is 
more or less than the premium received for the option plus related 
transaction costs. A fund also may write a covered call option to cross-hedge 
if the fund does not own the underlying security. The option is designed to 
provide a hedge against a decline in value in another security which the fund 
owns or has the right to acquire.

In purchasing an option, the fund would be in a position to realize a gain 
if, during the option period, the price of the underlying security increased 
(in the case of a call) or decreased (in the case of a put) by an amount in 
excess of the premium paid and would realize a loss if the price of the 
underlying security did not increase (in the case of a call) or decrease (in 
the case of a put) during the period by more than the amount of the premium. 
If a put or call option bought by the fund were permitted to expire without 
being sold or exercised, the fund would lose the amount of the premium.

Although they entitle the holder to buy equity securities, warrants on and 
options to purchase equity securities do not entitle the holder to dividends 
or voting rights with respect to the underlying securities, nor do they 
represent any rights in the assets of the issuer of those securities.

If a put or call option written by a fund were exercised, the fund would be 
obligated to buy or sell the underlying security at the exercise price. 
Writing a put option involves the risk of a decrease in the market value of 
the underlying security, in which case the option could be exercised and the 
underlying security would then be sold by the option holder to the fund at a 
higher price than its current market value. Writing a call option involves 
the risk of an increase in the market value of the underlying security, in 
which case the option could be exercised and the underlying security would 
then be sold by the fund to the option holder at a lower price than its 
current market value. Those risks could be reduced by entering into an 
offsetting transaction. The fund retains the premium received from writing a 
put or call option whether or not the option is exercised.

A fund may buy put and call options and may write covered put and call 
options on foreign currencies to hedge against declines in the U.S. dollar 
value of foreign currency-denominated securities held by the fund and against 
increases in the U.S. dollar cost of foreign currency-denominated securities 
being considered for purchase by the fund. As in the case of other options, 
however, the writing of an option on a foreign currency will constitute only 
a partial hedge, up to the amount of the premium received, and the fund could 
be required to buy or sell foreign currencies at disadvantageous exchange 
rates, thereby incurring losses. The purchase of an option on a foreign 
currency may constitute an effective hedge against fluctuations in exchange 
rates, although, in the event of rate movements adverse to the fund's options 
position, the option may expire worthless and the fund will lose the amount 
of the premium. There is no specific percentage limitation on a fund's 
investments in options on foreign currencies.

A fund may buy or write options in privately negotiated transactions on the 
types of securities and indices based on the types of securities in which the 
fund is permitted to invest directly. The fund will effect such transactions 
only with investment dealers and other financial institutions (such as 
commercial banks or savings and loan institutions) deemed creditworthy, and 
only pursuant to procedures adopted by management for monitoring the 
creditworthiness of those entities. To the extent that an option bought or 
written by the fund in a negotiated transaction is illiquid, the value of an 
option bought or the amount of the fund's obligations under an option written 
by the fund, as the case may be, will be subject to the fund's limitation on 
illiquid investments. In the case of illiquid options, it may not be possible 
for the fund to effect an offsetting transaction at a time when management 
believes it would be advantageous for the fund to do so.

Options on Securities Indices (Smith Barney Pacific Basin, Smith Barney 
International Equity, Alliance Growth, Van Kampen Enterprise, MFS Total 
Return, GT Global Strategic Income, Putnam Diversified Income and Smith 
Barney High Income Portfolios). A fund may enter into options on securities 
indices. Through the writing or purchase of index options, a fund can achieve 
many of the same objectives as through the use of options on individual 
securities. Options on securities indices are similar to options on a 
security except that, rather than the right to take or make delivery of a 
security at a specified price, an option on a securities index gives the 
holder the right to receive, upon exercise of the option, an amount of cash 
if the closing level of the securities index upon which the option is based 
is greater than, in the case of a call, or less than, in the case of a put, 
the exercise price of the option. This amount of cash is equal to the 
difference between the closing price of the index and the exercise price of 
the option. The writer of the option is obligated, in return for the premium 
received, to make delivery of this amount. Unlike options on securities 
(which require, upon exercise, delivery of the underlying security), 
settlements of options on securities indices, upon exercise thereof, are in 
cash, and the gain or loss of an option on an index depends on price 
movements in the market generally (or in a particular industry or segment of 
the market on which the underlying index base) rather than price movements in 
individual securities, as is the case with respect to options on securities.

When the fund writes an option on a securities index, it will be required to 
deposit with its custodian eligible securities equal in value to 100% of the 
exercise price in the case of a put, or the contract's value in the case of a 
call. In addition, where the fund writes a call option on a securities index 
at a time when the contract value exceeds the exercise price, the fund will 
segregate, until the option expires or is closed out, cash or cash 
equivalents equal in value to such excess.

Options on securities and index options involve risks similar to those risks 
relating to transactions in financial futures described above. Also, an 
option purchased by the fund may expire worthless, in which case the fund 
would lose the premium paid therefor.

Except as provided below, each fund intends to write over-the-counter options 
only with primary U.S. government securities dealers recognized by the 
Federal Reserve Bank of New York. Also, the contracts which each fund has in 
place with such primary dealers will provide that each fund has the absolute 
right to repurchase an option it writes at any time at a price which 
represents the fair market value, as determined in good faith through 
negotiation between the parties, but which in no event will exceed a price 
determined pursuant to a formula in the contract. Although the specific 
formula may vary between contracts with different primary dealers, the 
formula will generally be based on a multiple of the premium received by a 
fund for writing the option, plus the amount, if any, of the option's 
intrinsic value (i.e., the amount that the option is in-the-money). The 
formula may also include a factor to account for the difference between the 
price of the security and the strike price of the option if the option is 
written out-of-money. Each fund will treat all or a part of the formula price 
as illiquid for purposes of the SEC illiquidity ceiling. Each fund may also 
write over-the-counter options with non-primary dealers, including foreign 
dealers, and will treat the assets used to cover these options as illiquid 
for purposes of such SEC illiquidity ceiling.

Forward Currency Transactions (Smith Barney Pacific Basin, Smith Barney 
International Equity, Alliance Growth, MFS Total Return, GT Global Strategic 
Income, Putnam Diversified Income and Smith Barney High Income Portfolios). A 
fund may enter into forward foreign currency exchange contracts ("forward 
currency contracts") to attempt to minimize the risk to the fund from adverse 
changes in the relationship between the U.S. dollar and other currencies. A 
forward currency contract is an obligation to buy or sell an amount of a 
specified currency for an agreed price (which may be in U.S. dollars or a 
foreign currency) at a future date which is individually negotiated between 
currency traders and their customers. A fund may enter into a forward 
currency contract, for example, when it enters into a contract to buy or sell 
a security denominated in a foreign currency in order to "lock in" the U.S. 
dollar price of the security ("transaction hedge"). Additionally, when a fund 
believes that a foreign currency in which the portfolio securities are 
denominated may suffer a substantial decline against the U.S. dollar, the 
fund may enter into a forward currency contract to sell an amount of that 
foreign currency approximating the value of some or all of the portfolio 
securities denominated in that currency, or, when the fund believes that the 
U.S. dollar may suffer a substantial decline against a foreign currency, the 
fund may enter into a forward currency contract to buy that foreign currency 
for a fixed U.S. dollar amount ("position hedge"). A fund also may enter into 
a forward currency contract with respect to a currency where the fund is 
considering the purchase of investments denominated in that currency but has 
not yet done so ("anticipatory hedge"). In any of these circumstances the 
fund may, alternatively, enter into a forward currency contract with respect 
to a different foreign currency when the fund believes that the U.S. dollar 
value of that currency will correlate with the U.S. dollar value of the 
currency in which portfolio securities of, or being considered for purchase 
by, the fund are denominated ("cross hedge"). A fund may invest in forward 
currency contracts with stated contract values of up to the value of the 
fund's assets. The MFS Total Return and Putnam Diversified Income Portfolios 
may also enter into forward currency contracts for non-hedging purposes, 
subject to applicable law.

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

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

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

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

A position in an exchange-listed option may be closed out only on an exchange 
that provides a secondary market for identical options. Exchange markets for 
options on foreign currencies exist but are relatively new, and the ability 
to establish and close out positions on the exchanges is subject to 
maintenance of a liquid secondary market. Closing transactions may be 
effected with respect to options traded in the over-the-counter ("OTC") 
markets (currently the primary markets for options on foreign currencies) 
only by negotiating directly with the other party to the option contract or 
in a secondary market for the option if such market exists. Although the fund 
intends to purchase only those options for which there appears to be an 
active secondary market, there is no assurance that a liquid secondary market 
will exist for any particular option at any specific time. In such event, it 
may not be possible to effect closing transactions with respect to certain 
options, with the result that the fund would have to exercise those options 
which it has purchased in order to realize any profit. Any OTC options 
acquired by each fund and assets used as "cover" for OTC options written by 
the fund would be considered illiquid and subject to each fund's limitation 
on investing in such securities.

A fund also may enter into forward contracts to buy or sell at a later date 
instruments in which the fund may invest directly or on financial indices 
based on those instruments. The market for those types of forward contracts 
is developing and it is not currently possible to identify instruments on 
which forward contracts might be created in the future.

A fund may also enter into currency swaps where each party exchanges one 
currency for another on a particular date and agrees to reverse the exchange 
on a later date at a specific exchange rate.

Interest Rate, Securities Index, Financial Futures and Currency Futures 
Contracts (Smith Barney Pacific Basin, Smith Barney International Equity, 
Alliance Growth, MFS Total Return, GT Global Strategic Income, Putnam 
Diversified Income Portfolio and Smith Barney High Income Portfolios). A fund 
may enter into interest rate, securities index, financial futures and 
currency futures contracts ("Futures" or "Futures Contracts"). AIM Capital 
Appreciation Portfolio may enter into stock index futures contracts and Van 
Kampen Enterprise Portfolio may enter in stock index and interest rate 
futures contracts. A fund may enter into Futures Contracts as a hedge against 
changes in prevailing levels of interest rates or currency exchange rates in 
order to establish more definitely the effective return on securities or 
currencies held or committed to be acquired by the fund. A fund's hedging may 
include holding Futures as an offset against anticipated changes in interest 
or currency exchange rates. A fund may also enter into Futures Contracts 
based on financial indices including any index of U.S. government securities, 
foreign government securities or corporate debt securities.

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

The principal interest rate and currency Futures exchanges in the United 
States are the Board of Trade of the City of Chicago and the Chicago 
Mercantile Exchange. Futures exchanges and trading are regulated under the 
Commodity Exchange Act by the Commodity Futures Trading Commission. Futures 
are traded in London at the London International Financial Futures Exchange.

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

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

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

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

Each fund's Futures transactions will be entered into for traditional hedging 
purposes; that is, Futures Contracts will be sold to protect against a 
decline in the price of securities or currencies that the fund owns, or 
Futures Contracts will be purchased to protect a fund against an increase in 
the price of securities or currencies it has committed to purchase or expects 
to purchase.  Smith Barney International Equity, Smith Barney Pacific Basin, 
MFS Total Return and Smith Barney High Income Portfolios may each also enter 
into Futures transactions for non-hedging purposes, provided that the 
aggregate initial margin and premiums on such non-hedging positions does not 
exceed 5% of the liquidation value of a fund's assets.

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

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

Options on Futures Contracts (Smith Barney Pacific Basin, Smith Barney 
International Equity, Alliance Growth, Van Kampen Enterprise, MFS Total 
Return, GT Global Strategic Income, Putnam Diversified Income and Smith 
Barney High Income Portfolios). A fund may enter into options on Futures 
Contracts. Options on Futures Contracts are similar to options on securities 
or currencies except that options on Futures Contracts give the purchaser the 
right, in return for the premium paid, to assume a position in a Futures 
Contract (a long position if the option is a call and a short position if the 
option is a put), rather than to purchase or sell the Futures Contract, at a 
specified exercise price at any time during the period of the option. Upon 
exercise of the option, the delivery of the Futures position by the writer of 
the option to the holder of the option will be accompanied by delivery of the 
accumulated balance in the writer's Futures margin account which represents 
the amount by which the market price of the Futures Contract, at exercise, 
exceeds (in the case of a call) or is less than (in the case of a put) the 
exercise price of the option on the Futures Contract. If an option is 
exercised on the last trading day prior to the expiration date of the option, 
the settlement will be made entirely in cash equal to the difference between 
the exercise price of the option and the closing level of the securities or 
currencies upon which the Futures Contracts are based on the expiration date. 
Purchasers of options who fail to exercise their options prior to the 
exercise date suffer a loss of the premium paid.

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

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

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

Yield Curve Options (MFS Total Return Portfolio). The fund may enter into 
options on the "spread," or yield differential, between two fixed income 
securities, in transactions referred to as "yield curve" options. In contrast 
to other types of options, a yield curve option is based on the difference 
between the yields of designated securities, rather than the prices of the 
individual securities, and is settled through cash payments. Accordingly, a 
yield curve option is profitable to the holder if this differential widens 
(in the case of a call) or narrows (in the case of a put), regardless of 
whether the yields of the underlying securities increase or decrease.

Yield curve options may be used for the same purposes as other options on 
securities. Specifically, the fund may purchase or write such options for 
hedging purposes. For example, the fund may purchase a call option on the 
yield spread between two securities, if it owns one of the securities and 
anticipates purchasing the other security and wants to hedge against an 
adverse change in the yield spread between the two securities. The fund may 
also purchase or write yield curve options for other than hedging purposes 
(i.e., in an effort to increase its current income) if, in the judgment of 
management, the fund will be able to profit from movements in the spread 
between the yields of the underlying securities. The trading of yield curve 
options is subject to all of the risks associated with the trading of other 
types of options. In addition, however, such options present risk of loss 
even if the yield of one of the underlying securities remains constant, if 
the spread moves in a direction or to an extent which was not anticipated. 
Yield curve options written by the fund will be "covered". A call (or put) 
option is covered if the fund holds another call (or put) option on the 
spread between the same two securities and maintains in a segregated account 
with its custodian cash or cash equivalents sufficient to cover the fund's 
net liability under the two options. Therefore, the fund's liability for such 
a covered option is generally limited to the difference between the amount of 
the fund's liability under the option written by the fund less the value of 
the option held by the fund. Yield curve options may also be covered in such 
other manner as may be in accordance with the requirements of the 
counterparty with which the option is traded and applicable laws and 
regulations. Yield curve options are traded over-the-counter and because they 
have been only recently introduced, established trading markets for these 
securities have not yet developed.

Swaps and Swap-Related Products (Smith Barney Pacific Basin, Smith Barney 
International Equity, MFS Total Return, GT Global Strategic Income and Smith 
Barney High Income Portfolios). As one way of managing its exposure to 
different types of investments, a fund may enter into interest rate swaps, 
currency swaps and other types of available swap agreements, such as caps, 
collars and floors. Swaps involve the exchange by a fund with another party 
of cash payments based upon different interest rate indexes, currencies, and 
other prices or rates, such as the value of mortgage prepayment rates. For 
example, in the typical interest rate swap, a fund might exchange a sequence 
of cash payments based on a floating rate index for cash payments based on a 
fixed rate. Payments made by both parties to a swap transaction are based on 
a principal amount determined by the parties.

A fund may also purchase and sell caps, floors and collars. In a typical cap 
or floor agreement, one party agrees to make payments only under specified 
circumstances, usually in return for payment of a fee by the counterparty. 
For example, the purchase of an interest rate cap entitles the buyer, to the 
extent that a specified index exceeds a predetermined interest rate, to 
receive payments of interest on a contractually-based principal amount from 
the counterparty selling such interest rate cap. The sale of an interest rate 
floor obligates the seller to make payments to the extent that a specified 
interest rate falls below an agreed-upon level. A collar arrangement combines 
elements of buying a cap and selling a floor.

Swap agreements will tend to shift a fund's investment exposure from one type 
of investment to another. For example, if a fund agreed to exchange payments 
in dollars for payments in foreign currency, in each case based on a fixed 
rate, the swap agreement would tend to decrease the fund's exposure to U.S. 
interest rates and increase its exposure to foreign currency and interest 
rates. Caps and floors have an effect similar to buying or writing options. 
Depending on how they are used, swap agreements may increase or decrease the 
overall volatility of a fund's investments and its share price and yield.

Swap agreements are sophisticated hedging instruments that typically involve 
a small investment of cash relative to the magnitude of risks assumed. As a 
result, swaps can be highly volatile and may have a considerable impact on a 
fund's performance. Swap agreements are subject to risks related to the 
counterparty's ability to perform, and may decline in value if the 
counterparty's creditworthiness deteriorates. A fund may also suffer losses 
if it is unable to terminate outstanding swap agreements or reduce its 
exposure through offsetting transactions.  Each fund expects to enter into 
these transactions primarily to preserve a return or spread on a particular 
investment or portion of its portfolio or to protect against any increase in 
the price of securities the fund anticipates purchasing at a later date. Each 
fund intends to use these transactions as a hedge and not as a speculative 
investment. Swap agreements may be individually negotiated and structured to 
include exposure to a variety of different types of investments or market 
factors. Depending on their structure, swap agreements may increase or 
decrease a fund's exposure to long or short-term interest rates (in the U.S. 
or abroad), foreign currency values, mortgage securities, corporate borrowing 
rates, or other factors such as securities prices or inflation rates. Swap 
agreements can take many different forms and are known by a variety of names. 
A fund is not limited to any particular form or variety of swap agreement if 
management determines it is consistent with the fund's investment objective 
and policies.

A fund may enter into swaps, caps and floors on either an asset-based or 
liability-based basis, depending on whether it is hedging its assets or its 
liabilities, and will usually enter into interest rate swaps on a net basis, 
i.e., the two payment streams are netted with the fund receiving or paying, 
as the case may be, only the net amount of the two payments. Inasmuch as 
these hedging transactions are entered into for good faith hedging purposes, 
management and the funds believe such obligations do not constitute senior 
securities and, accordingly will not treat them as being subject to its 
borrowing restrictions. The net amount of the excess, if any, of a fund's 
obligations over its entitlements with respect to each interest rate swap 
will be accrued on a daily basis and an amount of cash or liquid securities 
having an aggregate net asset value at least equal to the accrued excess will 
be maintained in a segregated account by its custodian. If a fund enters into 
a swap agreement on other than a net basis, it will maintain cash or liquid 
assets with a value equal to the full amount of such fund's accrued 
obligations under the agreement. The funds will not enter into any swap, cap, 
floor or collar transaction unless the unsecured senior debt or the claims-
paying ability of the other party thereto is rated in the highest rating 
category of at least one nationally recognized rating organization at the 
time of entering into such transaction. The most significant factor in the 
performance of swaps, caps, floors and collars is the change in specific 
interest rate, currency or other factor that determines the amount of 
payments to be made under the arrangement. If management is incorrect in its 
forecasts of such factors, the investment performance of the fund would be 
less than what it would have been if these investment techniques had not been 
used. If a swap agreement calls for payments by the fund the fund must be 
prepared to make such payments when due. In addition, if the counterparty's 
creditworthiness declined, the value of the swap agreement would be likely to 
decline, potentially resulting in losses. If the counterparty defaults, the 
fund's risk of loss consists of the net amount of payments that the fund is 
contractually entitled to receive. The fund anticipates that it will be able 
to eliminate or reduce its exposure under these arrangements by assignment or 
other disposition or by entering into an offsetting agreement with the same 
or another counterparty. The swap market has grown substantially in recent 
years with a large number of banks and investment banking firms acting both 
as principals and as agents utilizing swap documentation. As a result, the 
swap market has become relatively liquid. Caps and floors are more recent 
innovations for which standardized documentation has not yet been developed 
and, accordingly, they are less liquid than swaps.

RISK FACTORS
   
General. Investors should realize that risk of loss is inherent in the 
ownership of any securities and that each fund's net asset value will 
fluctuate, reflecting the fluctuations in the market value of its portfolio 
positions (other than Smith Barney Money Market Portfolio). The following 
sections describe some of the important risk factors involved in connection 
with the types of investments or investment practices indicated.  See 
"Investment Objectives and Management Policies" and "Investment Practices" 
for a description of the permissible investments and investment practices of 
each fund.
    
Fixed Income Securities.  Investments in fixed income securities may subject 
the funds to risks, including the following.  

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

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

Call Risk and Extension Risk.  Fixed income securities may be subject 
to both call risk and extension risk.  Call risk exists when the issuer may 
exercise its right to pay principal on an obligation earlier than scheduled, 
which would cause cash flows to be returned earlier than expected.  This 
typically results when interest rates have declined and a fund will suffer 
from having to reinvest in lower yielding securities.  Extension risk exists 
when the issuer may exercise its right to pay principal on an obligation 
later than scheduled, which would cause cash flows to be returned later than 
expected.  This typically results when interest rates have increased, and a 
fund will suffer from the inability to invest in higher yield securities.
   
Foreign Securities (in general). Investments in foreign securities involve 
risks that are different in some respects from investments in securities of 
U.S. issuers, such as the risk of fluctuations in the value of the currencies 
in which they are denominated, the risk of adverse political, social, 
economic and diplomatic developments, the possible imposition of exchange 
controls or other foreign governmental laws or restrictions and, with respect 
to certain countries, the possibility of expropriation of assets, 
nationalization or confiscatory taxation or limitations on the removal of 
funds or other assets of the funds. Securities of some foreign companies and 
banks are less liquid and more volatile than securities of comparable 
domestic companies and banks. Non-U.S. securities markets, while growing in 
volume have, for the most part, substantially less volume than U.S. markets, 
and there is generally less government supervision and regulation of 
exchanges, brokers and issuers than there is in the U.S. Dividend and 
interest income (and, in some cases, capital gains) from non-U.S. securities 
will generally be subject to withholding or other taxes by the country in 
which the issuer is located and may not be recoverable by the fund or the 
investors. There also may be less publicly available information about 
foreign issuers than domestic issuers, and foreign issuers generally are not 
subject to the uniform accounting, auditing and financial reporting 
standards, practices and requirements applicable to domestic issuers. Delays 
may be encountered in settling securities transactions in certain foreign 
markets, and the funds will incur costs in converting foreign currencies into 
U.S. dollars. Investments in foreign securities also may result in higher 
expenses due to the cost of converting foreign currency to U.S. dollars, the 
payment of fixed brokerage commission on foreign exchanges, the expense of 
maintaining securities with foreign custodians, the imposition of transfer 
taxes or transaction charges associated with foreign exchanges or foreign 
withholding taxes. There is also a risk of the adoption of government 
regulations that might adversely affect the payment of principal and interest 
on securities held by a fund. In addition, a fund may encounter greater 
difficulties in invoking legal processes abroad than would be the case in the 
U.S. Finally, changes in foreign currency exchange rates will, to the extent 
a fund does not adequately hedge against such fluctuations, affect the value 
of securities in its portfolio and the unrealized appreciation or 
depreciation of investments so far as U.S. investors are concerned.

Emerging Markets Securities. Because of the special risks associated with 
investing in emerging markets, an investment in a fund that invests in 
emerging markets may be considered speculative. Investors are strongly 
advised to consider carefully the special risks involved in emerging markets, 
which are in addition to the usual risks of investing in developed foreign 
markets around the world.

The risks of investing in securities in emerging countries include: (i) less 
social, political and economic stability; (ii) the small current size of the 
markets for such securities and the currently low or nonexistent volume of 
trading, which result in a lack of liquidity and in greater price volatility; 
(iii) certain national policies which may restrict the fund's investment 
opportunities, including restrictions on investment in issuers or industries 
deemed sensitive to national interests; (iv) foreign taxation; and (v) the 
absence of developed structures governing private or foreign investment or 
allowing for judicial redress for injury to private property. 
    
Investors should note that upon the accession to power of authoritarian 
regimes, the governments of a number of emerging market countries previously 
expropriated large quantities of real and personal property similar to the 
property which maybe represented by the securities purchased by the funds. 
The claims of property owners against those governments were never finally 
settled. There can be no assurance that any property represented by 
securities purchased by funds will not also be expropriated, nationalized, or 
otherwise confiscated. If such confiscation were to occur, the funds could 
lose a substantial portion of their investments in such countries. Each 
fund's investments would similarly be adversely affected by exchange control 
regulation in any of those countries. 

Certain countries in which the funds may invest may have vocal minorities 
that advocate radical religious or revolutionary philosophies or support 
ethnic independence. Any disturbance on the part of such individuals could 
carry the potential for wide-spread destruction or confiscation of property 
owned by individuals and entities foreign to such country and could cause the 
loss of the funds' investment in those countries. 

Settlement mechanisms in emerging market securities may be less efficient and 
reliable than in more developed markets. In such emerging securities markets 
there may be share registration and delivery delays and failures.

Investing in emerging markets involves risks relating to potential political 
and economic instability within such markets and the risks of expropriation, 
nationalization, confiscation of assets and property, the imposition of 
restrictions on foreign investments and the repatriation of capital invested. 
In Eastern Europe, for example, upon the accession to power of Communist 
regimes in the past, the governments of a number of Eastern European 
countries expropriated a large amount of property. The claims of many 
property owners against those governments were never finally settled. There 
can be no assurance that any investments that a Portfolio might make in an 
emerging market would not be expropriated, nationalized or otherwise 
confiscated at some time in the future. In the event of such expropriation, 
nationalization or other confiscation in any emerging market, each fund could 
lose its entire investment in that market. Many emerging market countries 
have also experienced substantial, and in some periods extremely high, rates 
of inflation for many years. Inflation and rapid fluctuations in inflation 
rates have had and may continue to have negative effects on the economies and 
securities of certain emerging market countries.

Economies in emerging markets generally are dependent heavily upon 
international trade and, accordingly, have been and may continue to be 
affected adversely by trade barriers, exchange controls, managed adjustments 
in relative currency values and other protectionist measures imposed or 
negotiated by the countries with which they trade. These economies also have 
been and may continue to be affected adversely by economic conditions in the 
countries in which they trade.

The securities markets of emerging countries are substantially smaller, less 
developed, less liquid and more volatile than the securities markets of the 
United States and other more developed countries. Disclosure and regulatory 
standards in many respects are less stringent than in the United States and 
other major markets. There also may be a lower level of monitoring and 
regulation of emerging securities markets and the activities of investors in 
such markets, and enforcement of existing regulations has been extremely 
limited.

In addition, brokerage commissions, custodial services and other costs 
relating to investment in foreign markets generally are more expensive than 
in the United States, particularly with respect to emerging markets. Such 
markets have different settlement and clearance procedures. In certain 
markets there have been times when settlements have been unable to keep pace 
with the volume of securities transactions, making it difficult to conduct 
such transactions. The inability of a fund to make intended securities 
purchases due to settlement problems could cause it to miss attractive 
investment opportunities. Inability to dispose of a portfolio security caused 
by settlement problems could result either in losses to a fund due to 
subsequent declines in value of the portfolio security or, if the fund has 
entered into a contract to sell the security, could result in possible 
liability to the purchaser.

The risk also exists that an emergency situation may arise in one or more 
emerging markets as a result of which trading of securities may cease or may 
be substantially curtailed and prices for the portfolio securities in such 
markets may not be readily available. Section 22(e) of the 1940 Act permits a 
registered investment company to suspend redemption of its shares for any 
period during which an emergency exists, as determined by the SEC. 
Accordingly, if a fund believes that appropriate circumstances warrant, it 
will promptly apply to the SEC for a determination that an emergency exists 
within the meaning of Section 22(a) of the 1940 Act. During the period 
commencing from a fund's identification of such conditions until the date of 
SEC action, the portfolio securities in the affected markets will be valued 
at fair value as determined in good faith by or under the direction of the 
Board of Directors.
   
Sovereign Debt. Investments in the Sovereign debt of foreign countries 
involve special risks. The issuer of the debt or the governmental authorities 
that control the repayment of the debt may be unable or unwilling to repay 
principal or interest when due in accordance with the terms of such debt. 
Periods of economic uncertainty may result in the volatility of market prices 
of sovereign debt obligations, and in turn a fund's net asset value, to a 
greater extent than the volatility inherent in domestic fixed income 
securities.
    
A sovereign debtor's willingness or ability to repay principal and pay 
interest in a timely manner may be affected by, among other factors, its cash 
flow situation, the extent of its foreign reserves, the availability of 
sufficient foreign exchange on the date a payment is due, the relative size 
of the debt service burden to the economy as a whole, the sovereign debtor's 
policy toward principal international lenders and the political constraints 
to which a sovereign debtor may be subject. Emerging market governments could 
default on their sovereign debt. Such sovereign debtors also may be dependent 
on expected disbursements from foreign governments, multilateral agencies and 
other entities abroad to reduce principal and interest arrearages on their 
debt. The commitment on the part of these governments, agencies and others to 
make such disbursements may be conditioned on a sovereign debtor's 
implementation of economic reforms and/or economic performance and the timely 
service of such debtor's obligations. Failure to implement such reforms, 
achieve such levels of economic performance or repay principal or interest 
when due, may result in the cancellation of such third parties' commitments 
to lend funds to the sovereign debtor, which may further impair such debtor's 
ability or willingness to timely service its debts.

The occurrence of political, social or diplomatic changes in one or more of 
the countries issuing sovereign debt could adversely affect a fund's 
investments. Emerging markets are faced with social and political issues and 
some of them have experienced high rates of inflation in recent years and 
have extensive internal debt. Among other effects, high inflation and 
internal debt service requirements may adversely affect the cost and 
availability of future domestic sovereign borrowing to finance governmental 
programs, and may have other adverse social, political and economic 
consequences. Political changes or a deterioration of a country's domestic 
economy or balance of trade may affect the willingness of countries to 
service their sovereign debt. Although management intends to manage each fund 
in a manner that will minimize the exposure to such risks, there can be no 
assurance that adverse political changes will not cause a fund to suffer a 
loss of interest or principal on any of its holdings.

In recent years, some of the emerging market countries have encountered 
difficulties in servicing their sovereign debt obligations. Some of these 
countries have withheld payments of interest and/or principal of sovereign 
debt. These difficulties have also led to agreements to restructure external 
debt obligations in particular, commercial bank loans, typically by 
rescheduling principal payments, reducing interest rates and extending new 
credits to finance interest payments on existing debt. In the future, holders 
of emerging market sovereign debt securities may be requested to participate 
in similar rescheduling of such debt. Certain emerging market countries are 
among the largest debtors to commercial banks and foreign governments. 
Currently, Brazil, Russia and Mexico are among the largest debtors among 
developing countries. At times certain emerging market countries have 
declared moratoria on the payment of principal and interest on external debt; 
such a moratorium is currently in effect in certain emerging market 
countries. There is no bankruptcy proceeding by which a creditor may collect 
in whole or in part sovereign debt on which an emerging market government has 
defaulted.

The ability of emerging market governments to make timely payments on their 
sovereign debt securities is likely to be influenced strongly by a country's 
balance of trade and its access to trade and other international credits. A 
country whose exports are concentrated in a few commodities could be 
vulnerable to a decline in the international prices of one or more of such 
commodities. Increased protectionism on the part of a country's trading 
partners could also adversely affect its exports. Such events could diminish 
a country's trade account surplus, if any. To the extent that a country 
receives payments for its exports in currencies other than hard currencies, 
its ability to make hard currency payments could be affected.

As noted above, sovereign debt obligations issued by emerging market 
governments generally are deemed to be the equivalent in terms of quality to 
securities rated below investment grade by Moody's and S&P. Such securities 
are regarded as predominantly speculative with respect to the issuer's 
capacity to pay interest and repay principal in accordance with the terms of 
the obligations and involve major risk exposure to adverse conditions. Some 
of such securities, with respect to which the issuer currently may not be 
paying interest or may be in payment default, may be comparable to securities 
rated D by S&P or C by Moody's. The funds may have difficulty disposing of 
and valuing certain sovereign debt obligations because there may be a limited 
trading market for such securities. Because there is no liquid secondary 
market for many of these securities, each fund anticipates that such 
securities could be sold only to a limited number of dealers or institutional 
investors.

Currency Risks. The funds that invest substantially in securities denominated 
in currencies other than the U.S. dollar, or that hold foreign currencies, 
will be affected favorably or unfavorably by exchange control regulations or 
changes in the exchange rates between such currencies and the U.S. dollar. 
Changes in currency exchange rates will influence the value of each fund's 
shares and also may affect the value of dividends and interest earned by the 
funds and gains and losses realized by the funds. Currencies generally are 
evaluated on the basis of fundamental economic criteria (e.g., relative 
inflation and interest rate levels and trends, growth rate forecasts, balance 
of payments status and economic policies) as well as technical and political 
data. The exchange rates between the U.S. dollar and other currencies are 
determined by supply and demand in the currency exchange markets, the 
international balance of payments, governmental intervention, speculation and 
other economic and political conditions. If the currency in which a security 
is denominated appreciates against the U.S. dollar, the dollar value of the 
security will increase. Conversely, a decline in the exchange rate of the 
currency would adversely affect the value of the security expressed in U.S. 
dollars. 

Real Estate Investment Trusts. The values of securities issued by REITs are 
affected by tax and regulatory requirements and by perceptions of management 
skill. They are also subject to heavy cash flow dependency, defaults by 
borrowers or tenants, self-liquidation, the possibility of failing to qualify 
for the ability to avoid tax by satisfying distribution requirements under 
the Internal Revenue Code of 1986, as amended, and failing to maintain 
exemption from the 1940 Act. Also, the fund will indirectly bear its 
proportionate share of expenses incurred by REITs in which the fund invests. 
 REITs are also sensitive to factors such as changes in real estate values 
and property taxes, interest rates, overbuilding and creditworthiness of the 
issuer.

Zero Coupon, Pay-In-Kind and Delayed Interest Securities.  The values of 
these securities may be highly volatile as interest rates rise or fall.  In 
addition, the fund's investments in zero coupon, pay-in-kind and delayed 
interest securities will result in special tax consequences.  Although zero 
coupon securities do not make interest payments, for tax purposes a portion 
of the difference between a zero coupon security's maturity value and its 
purchase price is taxable income of the fund each year.  The value of zero-
coupon bonds is subject to greater fluctuation in market value in response to 
changes in market interest rates than bonds of comparable maturity which pay 
interest currently. Both zero-coupon and payment-in-kind bonds allow an 
issuer to avoid the need to generate cash to meet current interest payments. 
Accordingly, such bonds may involve greater credit risks than bonds that pay 
interest currently. Even though such bonds do not pay current interest in 
cash, the fund is nonetheless required to accrue interest income on such 
investments and to distribute such amounts at least annually to shareholders. 
Accordingly, for a fund to continue to qualify for tax treatment as a 
regulated investment company and to avoid income and possibly excise tax, the 
fund may be required to distribute as a dividend an amount that is greater 
than the total amount of cash it actually receives. These distributions must 
be made from the fund's cash assets or, if necessary, from the proceeds of 
sales of portfolio securities. The fund will not be able to purchase 
additional income-producing securities with cash used to make such 
distributions and its current income ultimately may be reduced as a result.
   
Ratings Categories. General. In general, the ratings of nationally recognized 
statistical rating organizations ("NRSROs") represent the opinions of these 
organizations as to the quality of securities that they rate. Such ratings, 
however, are relative and subjective, and are not absolute standards of 
quality and do not evaluate the market value risk of the securities. It is 
possible that an NRSRO might not change its rating of a particular issue to 
reflect subsequent events. These ratings may be used by a fund as initial 
criteria for the selection of portfolio securities, but each fund also will 
rely upon the independent advice of the manager or the subadviser, as the 
case may be, to evaluate potential investments. Management will take various 
factors into consideration in evaluating the creditworthiness of an issue, 
whether rated or non-rated. These factors may include, among others, the 
issuer's financial resources, its sensitivity to economic conditions and 
trends, the operating history of and the community support for the facility 
financed by the issue, the capabilities of the issuer's management, and 
regulatory matters.

Investment Grade Categories. In the highest four ratings categories for long-
term debt by an NRSRO are considered "investment grade." Obligations rated in 
the lowest of the top four ratings (Baa by Moody's or BBB by S&P) are 
considered to have some speculative characteristics. Unrated securities will 
be considered to be investment grade if deemed by the manager or subadviser 
to be comparable in quality to instruments so rated, or if other outstanding 
obligations of the issuers of such securities are rated Baa/BBB or better. 
For a description of the ratings, see Appendix A.
    
   Lower-Rated and Non-Rated Securities. The funds that may invest in debt 
securities rated below investment grade are subject to special risks, 
including a greater risk of loss of principal and non-payment of interest. An 
investor should carefully consider the following factors before investing in 
these funds.
    
Generally, lower-quality securities offer a higher return potential than 
higher-rated securities but involve greater volatility of price and greater 
risk of loss of income and principal, including the possibility of default or 
bankruptcy of the issuers of such securities. Lower-quality securities and 
comparable non-rated securities will likely have large uncertainties or major 
risk exposure to adverse conditions and are predominantly speculative with 
respect to the issuer's capacity to pay interest and repay principal in 
accordance with the terms of the obligation. The occurrence of adverse 
conditions and uncertainties would likely reduce the value of securities held 
by a fund, with a commensurate effect on the value of the fund's shares.

The markets in which lower-quality securities or comparable non-rated 
securities are traded generally are more limited than those in which higher-
quality securities are traded. The existence of limited markets for these 
securities may restrict the availability of securities for a fund to purchase 
and also may restrict the ability of a fund to obtain accurate market 
quotations for purposes of valuing securities and calculating net asset value 
or to sell securities at their fair value. The public market for lower-
quality securities and comparable non-rated securities is relatively new and 
has not fully weathered a major economic recession. Any such economic 
downturn could adversely affect the ability of issuers of lower-quality 
securities to repay principal and pay interest thereon.

While the market values of lower-quality securities and comparable non-rated 
securities tend to react less to fluctuations in interest rate levels than do 
those of higher-quality securities, the market values of certain of these 
securities also tend to be more sensitive to individual corporate 
developments and changes in economic conditions than higher-quality 
securities. In addition, lower-quality securities and comparable non-rated 
securities generally present a higher degree of credit risk. Issuers of 
lower-quality securities and comparable non-rated securities are often highly 
leveraged and may not have more traditional methods of  financing available 
to them so that their ability to service their debt obligations during an 
economic downturn or during sustained periods of rising interest rates may be 
impaired. The risk of loss due to default by such issuers is significantly 
greater because lower-quality securities and comparable non-rated securities 
generally are unsecured and frequently are subordinated to the prior payment 
of senior indebtedness. A Portfolio may incur additional expenses to the 
extent that it is required to seek recovery upon a default in the payment of 
principal or interest on its portfolio holdings.

Fixed-income securities, including lower-quality securities and comparable 
non-rated securities, frequently have call and buy-back features that permit 
their issuers to call or repurchase the securities from their holders, such 
as the funds. If an issuer exercises these rights during periods of declining 
interest rates, a fund may have to replace the security with a lower yielding 
security, resulting in a decreased return to the fund.
       
Securities of Unseasoned Issuers. The issuers of these securities may lack a 
significant operating history and be dependent on products or services 
without an established market share.
       
Borrowing and Leverage. Leverage creates an opportunity for increased returns 
to shareholders of a fund but, at the same time, creates special risk 
considerations. For example, leverage may exaggerate changes in the net asset 
value of a fund's shares and in the fund's yield. Although the principal or 
stated value of such borrowings will be fixed, the portfolio assets may 
change in value during the time the borrowing is outstanding. By leveraging 
the fund, changes in net asset values, higher or lower, may be greater in 
degree than if leverage was not employed. Leverage will create interest or 
dividend expenses for a fund which can exceed the income from the assets 
retained. To the extent the income or other gain derived from securities 
purchased with borrowed funds exceeds the interest and other charges the fund 
will have to pay in respect thereof, the fund's net income or other gain will 
be greater than if leverage had not been used. Conversely, if the income or 
other gain from the incremental assets is not sufficient to cover the cost of 
leverage, the net income or other gain of the fund will be less than if 
leverage had not been used. If the amount of income from the incremental 
securities is insufficient to cover the cost of borrowing, securities might 
have to be liquidated to obtain required funds. Depending on market or other 
conditions, such liquidations could be disadvantageous to a fund.

Reverse Repurchase Agreements. Reverse repurchase agreements involve the risk 
that the market value of the securities retained in lieu of sale by the fund 
may decline below the price of the securities the fund has sold but is 
obliged to repurchase. In the event the buyer of securities under a reverse 
repurchase agreement files for bankruptcy or becomes insolvent, such buyer or 
its trustee or receiver may receive an extension of time to determine whether 
to enforce the fund's obligation to repurchase the securities, and the fund's 
use of the proceeds of the reverse repurchase agreements may effectively be 
restricted pending such decision. 

Loan Participations or Assignments. The funds may have difficulty disposing 
of assignments and loan participations. The liquidity of such securities is 
limited, and each fund anticipates that such securities could be sold only to 
a limited number of institutional investors. The lack of a liquid secondary 
market could have an adverse impact on the value of such securities and on 
each fund's ability to dispose of particular assignments or participations 
when necessary to meet the fund's liquidity needs or in response to a 
specific economic event, such as a deterioration in the creditworthiness of 
the borrower. The lack of a liquid secondary market for assignments and 
participations also may make it more difficult for the fund to assign a value 
to those securities for purposes of valuing the fund's portfolio and 
calculating its net asset value.

Certain of the loan participations acquired by a fund may involve revolving 
credit facilities or other standby financing commitments which obligate the 
fund to pay additional cash on a certain date or on demand. These commitments 
may have the effect of requiring a fund to increase its investment in a 
company at a time when it might not otherwise decide to do so (including at a 
time when the company's financial condition makes it unlikely that such 
amounts will be repaid). To the extent that a fund is committed to advance 
additional funds, it will at all times hold and maintain in a segregated 
account cash or other high grade debt obligations in an amount sufficient to 
meet such commitments. A fund's ability to receive payments of principal, 
interest and other amounts due in connection with these investments will 
depend primarily on the financial condition of the borrower. In selecting the 
loan participations and other direct investments which a fund will purchase, 
management will rely upon its own credit analysis (and not that of the 
original lending institution's) of the borrower. As a fund may be required to 
rely upon another lending institution to collect and pass on to it amounts 
payable with respect to the loan and to enforce its rights under the loan, an 
insolvency, bankruptcy or reorganization of the lending institution may delay 
or prevent a fund from receiving such amounts. In such cases, a fund will 
evaluate as well the creditworthiness of the lending institution and will 
treat both the borrower and the lending institution as an "issuer" of the 
loan participation for purposes of certain investment restrictions pertaining 
to the diversification of the fund's portfolio investments. In connection 
with purchasing participations, a fund generally will have no right to 
enforce compliance by the borrower with the terms of the loan agreement 
relating to the loan, nor any rights of set-off against the borrower, and a 
fund may not directly benefit from any collateral supporting the loan in 
which it has purchased the participation. As a result, a fund will assume the 
credit risk of both the borrower and the lender that is selling the 
participation. 

The highly leveraged nature of many such loans may make such loans especially 
vulnerable to adverse changes in economic or market conditions. Investments 
in such loans may involve additional risks to a fund. For example, if a loan 
is foreclosed, a fund could become part owner of any collateral, and would 
bear the costs and liabilities associated with owning and disposing of the 
collateral. In addition, it is conceivable that under emerging legal theories 
of lender liability, a fund could be held liable as a co-lender. It is 
unclear whether loans and other forms of direct indebtedness offer securities 
law protection against fraud and misrepresentation. In the absence of 
definitive regulatory guidance, a fund relies on management's research in an 
attempt to avoid situations where fraud or misrepresentation could adversely 
affect the fund. In addition, loan participations and other direct 
investments may not be in the form of securities or may be subject to 
restrictions on transfer, and only limited opportunities may exist to resell 
such instruments. As a result, a fund may be unable to sell such investments 
at an opportune time or may have to resell them at less than fair market 
value. To the extent that management determines that any such investments are 
illiquid, a fund will include them in the investment limitations described 
below.

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

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

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

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

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

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

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

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

Special Investment Considerations and Risks With Respect to Futures, Options 
and Currency Transactions and Swaps and Swap-Related Products. The successful 
use of the investment practices described above with respect to futures 
contracts, options on futures contracts, forward contracts, options on 
securities and on foreign currencies, and swaps and swap-related products 
draws upon skills and experience which are different from those needed to 
select the other instruments in which the fund invests. Should interest or 
exchange rates or the prices of securities or financial indices move in an 
unexpected manner, a fund may not achieve the desired benefits of futures, 
options, swaps and forwards or may realize losses and thus be in a worse 
position than if such strategies had not been used. Unlike many exchange-
traded futures contracts and options on futures contracts, there are no daily 
price fluctuation limits with respect to options on currencies, forward 
contracts and other negotiated or over-the-counter instruments, and adverse 
market movements could therefore continue to an unlimited extent over a 
period of time. In addition, the correlation between movements in the price 
of the securities and currencies hedged or used for cover will not be perfect 
and could produce unanticipated losses.

With respect to interest rate swaps, each fund recognizes that such 
arrangements are relatively illiquid and will include the principal amount of 
the obligations owed to it under a swap as an illiquid security for purposes 
of the fund's investment restrictions except to the extent a third party 
(such as a large commercial bank) has guaranteed the fund's ability to offset 
the swap at any time.

A fund's ability to dispose of its positions in the foregoing instruments 
will depend on the availability of liquid markets in the instruments. Markets 
in a number of the instruments are relatively new and still developing, and 
it is impossible to predict the amount of trading interest that may exist in 
those instruments in the future. Particular risks exist with respect to the 
use of each of the foregoing instruments and could result in such adverse 
consequences to the fund as the possible loss of the entire premium paid for 
an option bought by the fund, and the inability of the fund, as the writer of 
a covered call option, to benefit from the appreciation of the underlying 
securities above the exercise price of the option. As a result, no assurance 
can be given that the fund will be able to use those instruments effectively 
for the purposes set forth above. 

In connection with its transactions in futures, options, swaps and forwards, 
each fund may be required to place assets in a segregated account with the 
fund's custodian bank to ensure that the fund will be able to meet its 
obligations under these instruments. Assets held in a segregated account 
generally may not be disposed of for so long as the fund maintains the 
positions giving rise to the segregation requirement. Segregation of a large 
percentage of the fund's assets could impede implementation of the fund's 
investment policies or the fund's ability to meet redemption requests or 
other current obligations.

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

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

Because of the low margin deposits required, futures trading involves an 
extremely high degree of leverage. As a result, a relatively small price 
movement in a futures contract may result in immediate and substantial loss, 
as well as gain, to the investor. For example, if at the time of purchase, 
10% of the value of the futures contract is deposited as margin, a subsequent 
10% decrease in the value of the futures contract would result in a total 
loss of the margin deposit, before any deduction for the transaction costs, 
if the account were then closed out. A 15% decrease would result in a loss 
equal to 150% of the original margin deposit, if the futures contract were 
closed out. Thus, a purchase or sale of a futures contract may result in 
losses in excess of the amount invested in the futures contract. The fund, 
however, would presumably have sustained comparable losses if, instead of the 
futures contract, it had invested in the underlying financial instrument and 
sold it after the decline.

Furthermore, in the case of a futures contract purchase, in order to be 
certain that the fund has sufficient assets to satisfy its obligations under 
a futures contract, the fund sets aside and commits to back the futures  
contract an amount of cash, U.S. government securities and other liquid, 
high-grade debt securities equal in value to the current value of the 
underlying instrument less the margin deposit. In the case of a futures 
contract sale, a fund will either set aside amounts as in the case of a 
futures contract purchase, own the security underlying the contract, or hold 
a call option permitting the fund to purchase the same futures contract at a 
price no higher than the contract price. Assets used as cover cannot be sold 
while the position in the corresponding futures contract is open, unless they 
are replaced with similar assets. As a result, the commitment of a 
significant portion of the fund's assets to cover could impede portfolio 
management or the fund's ability to meet redemption requests or other current 
obligations.

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

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

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

INVESTMENT RESTRICTIONS
   
The funds have adopted the following investment restrictions and policies 
that are "fundamental" and cannot be changed without the approval of a 
"majority of the outstanding voting securities" of the fund affected by the 
change, as defined under the 1940 Act (see "Voting"). Following the list of 
each fund's fundamental investment restrictions is a list of other policies 
or restrictions that are not fundamental. Investment policies and 
restrictions that are not fundamental may be changed by the Company's Board 
of Directors without shareholder approval. If a fund adheres to a percentage 
restriction at the time of investment, a later increase or decrease in 
percentage resulting from a change in values of portfolio securities or 
amount of total or net assets will not be considered a violation of any of 
the following policies.
    
Each of the Smith Barney Pacific Basin, Smith Barney International Equity and 
Smith Barney Large Cap Value Portfolios may 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.	Invest more than 25% of its total assets in securities, the 
issuers of which conduct their principal business activities in the same 
industry. For purposes of this limitation, securities of the U.S. government 
(including its agencies and instrumentalities) and securities of state or 
municipal governments and their political subdivisions are not considered to 
be issued by members of any industry.

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

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

5.	With respect to both Smith Barney Pacific Basin and Smith Barney 
International Equity  Portfolios, borrow money, except that (a) the fund may 
borrow from banks under certain circumstances where the fund's Manager 
reasonably believes that (i) the cost of borrowing and related expenses will 
be exceeded by the fund's return from investments of the proceeds of the 
borrowing in fund securities, or (ii) the meeting of redemption requests 
might otherwise require the untimely disposition of securities, in an amount 
not exceeding 33 1/3% of the value of the fund's total assets (including the 
amount borrowed), valued at the lesser of cost or market, less liabilities 
(not including the amount borrowed) valued at the time the borrowing is made 
and (b) the fund may, to the extent consistent with its investment policies, 
enter into reverse repurchase agreements, forward roll transactions and 
similar investment strategies and techniques.

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

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

Notwithstanding any other investment restriction of Smith Barney Pacific 
Basin Portfolio, Smith Barney International Equity Portfolio or Smith Barney 
Large Cap Value Portfolio, each such fund may invest all of its investable 
assets in an open-end management investment company having the same 
investment objective and restrictions as the fund.

In addition, the following nonfundamental policies have also been adopted by 
Smith Barney Pacific Basin Portfolio, Smith Barney International Equity 
Portfolio and Smith Barney Large Cap Value Portfolio. The funds may not:
    
1.	Purchase any securities on margin (except for such short-term 
credits as are necessary for the clearance of purchases and sales of 
portfolio securities) or sell any securities short (except "against the 
box"). For purposes of this restriction, the deposit or payment by the fund 
of underlying securities and other assets in escrow and collateral agreements 
with respect to initial or maintenance margin in connection with futures 
contracts and related options and options on securities, indexes or similar 
items is not considered to be the purchase of a security on margin. 

2.	Have more than 15% of its net assets invested in puts, calls, 
straddles, spreads or combinations thereof.

3.	Purchase oil, gas or other mineral leases, rights or royalty 
contracts or exploration or development programs, except that the fund may 
invest in the securities of companies which operate, invest in, or sponsor 
such programs.

4.	Invest more than 5% of its total assets in any issuer with less 
than three years of continuous operation (including that of predecessors) or 
so-called "unseasoned" equity securities that are not either admitted for 
trading on a national stock exchange or regularly quoted in the over-the-
counter market.

5.	Invest in any company for the purpose of exercising control of 
management.

6.	Acquire securities subject to restrictions on disposition or 
securities for which there is no readily available market, enter into 
repurchase agreements or purchase time deposits or variable amount master 
demand notes, if any of the foregoing have a term or demand feature of more 
than seven days, or purchase OTC options or set aside assets to cover OTC 
options written by the fund if, immediately after and as a result, the value 
of such securities would exceed, in the aggregate, 15% of the fund's net 
assets. Subject to this limitation, the Company's Board of Directors has 
authorized the fund to invest in restricted securities if such investment is 
consistent with the fund's investment objective and has authorized such 
securities to be considered to be liquid to the extent the Manager determines 
on a daily basis that there is a liquid institutional market for such 
securities. The Board of Directors retains ultimate ongoing responsibility 
for the determination that a restricted security is liquid.

7.	Invest in securities of another investment company except as 
permitted by Section 12(d)(1)(a) of the 1940 Act, or as part of a merger, 
consolidation, or acquisition.

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

3.	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.

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

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

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

7.	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

   In addition, the following nonfundamental policies have also been adopted by 
Smith Barney Large Capitalization Growth Portfolio. The fund may not:
    
1.	Purchase any securities on margin (except for such short-term 
credits as are necessary for the clearance of purchases and sales of 
portfolio securities) or sell any securities short (except "against the 
box"). For purposes of this restriction, the deposit or payment by the fund 
of underlying securities and other assets in escrow and collateral agreements 
with respect to initial or maintenance margin in connection with futures 
contracts and related options and options on securities, indexes or similar 
items is not considered to be the purchase of a security on margin.

2.	Invest in oil, gas or other mineral leases or exploration or 
development programs.

3.	Write or sell puts, calls, straddles, spreads or combinations of 
those transactions, except as permitted under the fund's investment objective 
and policies.

4.	Invest in securities of another investment company except as 
permitted by Section 12(d)(1)(a) of the 1940 Act, or as part of a merger, 
consolidation or acquisition

5.	Purchase a security if, as a result, the fund would then have 
more than 5% of its total assets invested in securities of issuers (including 
predecessors) that have been in continuous operation for fewer than three 
years, except that this limitation will be deemed to apply to the entity 
supplying the revenues from which the issue is to be paid, in the case of 
private activity bonds purchased.

6.	Make investments for the purpose of exercising control of 
management.

The Alliance Growth Portfolio may not:

1.	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.

2.	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.

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

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

5.	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.

6.	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.

7.	Invest more than 25% of its total assets in securities of any one 
industry. (Obligations of a foreign government and its agencies or 
instrumentalities constitute a separate "industry" from those of another 
foreign government.)

Notwithstanding any other investment restriction of Alliance Growth 
Portfolio, the fund may invest all of its investable assets in an open-end 
management investment company having the same investment objective and 
restrictions as the fund.

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

2.	Purchase securities issued by any other registered investment 
company or investment trust except (a) by purchase in the open market where 
no commission or profit to a sponsor or dealer results from such purchase 
other than the customary broker's commission, or (b) where no commission or 
profit to a sponsor or dealer results from such purchase, or (c) when such 
purchase, though not in the open market, is part of a plan of merger or 
consolidation; provided, however, that the fund will not purchase such 
securities if such purchase at the time thereof would cause more than 5% of 
its total assets (taken at market value) to be invested in the securities of 
such issuers; and, provided further, that the fund's purchases of securities 
issued by an open-end investment company will be consistent with the 
provisions of the 1940 Act.

3.	Make investments for the purpose of exercising control or 
management.

4.	Invest in interests in oil, gas, or other mineral exploration or 
development programs, although the fund may purchase securities which are 
secured by such interests and may purchase securities of issuers which invest 
in or deal in oil, gas or other mineral exploration or development programs.

5.	Purchase warrants, if, as a result, the fund would have more than 
5% of its total assets invested in warrants or more than 2% of its total 
assets invested in warrants which are not listed on the New York Stock 
Exchange or the American Stock Exchange.

The AIM Capital Appreciation Portfolio may 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.	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.

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

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 objectives and policies; (b) repurchase agreements; and (c) loans 
of its portfolio securities, to the fullest extent permitted under the 1940 
Act.

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

In addition, AIM Capital Appreciation Portfolio treats as fundamental its 
policy concerning borrowing. In accordance with this policy, the fund may 
borrow funds from a bank (including its custodian bank) to purchase or carry 
securities only if, immediately after such borrowing, the value of the fund's 
assets, including the amount borrowed, less its liabilities, is equal to at 
least 300% of the amount borrowed, plus all outstanding borrowings. For the 
purpose of determining this 300% asset coverage requirement, the fund's 
liabilities will not include the amount borrowed but will include the market 
value, at the time of computation, of all securities borrowed by the fund in 
connection with short sales. The amount of borrowing will also be limited by 
the applicable margin limitations imposed by the Federal Reserve Board. If at 
any time the value of the fund's assets should fail to meet the 300% asset 
coverage requirement, the fund will, within three days, reduce its borrowings 
to the extent necessary. The fund may be required to eliminate partially or 
totally its outstanding borrowings at times when it may not be desirable for 
it to do so.

   In addition, the following nonfundamental policies have also been adopted by 
AIM Capital Appreciation Portfolio.  The fund may not:
    
1.	Purchase warrants, valued at the lower of cost or market, in 
excess of 5% of the value of the Fund's net assets, and no more than 2% of 
such value may be warrants which are not listed on the New York or American 
Stock Exchanges. 

2.	Invest for the purpose of exercising control over or management 
of any company, except to the extent that in fund may purchase securities of 
other investment companies. 

3.	Invest in interests in oil, gas or other mineral exploration or 
development programs.

The Van Kampen Enterprise Portfolio may not:

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

2.	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.

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

4.	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 taking into account any rule or order of the SEC exempting 
the fund from the limitation imposed by Section 12(d)(1) of the 1940 Act.

5.	Invest more than 25% of its total assets in securities issued by 
companies in any one industry, provided, however, that this limitation 
excludes shares of other open-end investment companies owned by the fund but 
includes the fund's pro rata portion of the securities and other assets owned 
by any such company.

6.	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.

7.	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.

Notwithstanding any other investment restriction of Van Kampen Enterprise 
Portfolio, the fund may invest all of its investable assets in an open-end 
management investment company having the same investment objective and 
restrictions as the fund.
   
In addition, the following nonfundamental policies have also been adopted by 
Van Kampen Enterprise Portfolio. The fund may not:
    
1.	Invest more than 5% of the value of its total assets in 
securities of companies which (including predecessor companies or operations) 
have been in business less than three years, provided, however, that this 
limitation excludes shares of other open-end investment companies owned by 
the fund but includes the fund's pro rata portion of the securities and other 
assets owned by any such company.

2.	Acquire any private placement if it would cause more than 2% of 
the net assets of the fund, as determined at the time the fund agrees to any 
such acquisition, to be invested in private placements and other assets not 
having readily available market quotations, provided, however, that this 
limitation excludes shares of other open-end investment companies owned by 
the fund but includes the fund's pro rata portion of the securities and other 
assets owned by any such company; and, provided further, that this limitation 
excludes securities that have been issued pursuant to Rule 144A under the 
1933 Act ("Rule 144A securities").

3.	Invest more than 5% of its net assets in warrants or rights 
valued at the lower of cost or market, not more than 2% of its net assets in 
warrants or rights (valued on such basis) which are not listed on the New 
York or American Stock Exchanges. Warrants or rights acquired in units or 
attached to other securities are not subject to the foregoing limitations. 

5.	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.

6.	Invest in interests in oil, gas, or other mineral exploration or 
developmental programs.

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

8.	Make any investment in any security about which information is 
not available with respect to history, management, assets, earnings, and 
income of the issuer except to acquire shares of other open-end investment 
companies to the extent permitted by rule or order of the SEC exempting the 
fund from the limitations imposed by Section 12(d)(1) of the 1940 Act.

9.	Make any investment which involves promotion or business 
management by the fund or which would subject the fund to unlimited 
liability.

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

11.	Acquire securities of any other domestic or foreign investment 
company or investment fund except in connection with a plan of merger or 
consolidation with or acquisition of substantially all the assets of such 
other investment company or to acquire shares of other open-end investment 
companies to the extent permitted by rule or order of the SEC exempting the 
fund from the limitations imposed by Section 12(d)(1) of the 1940 Act.

The MFS Total Return Portfolio may not:

1.	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.

2.	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.

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

4.	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.

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 objectives and policies; (b) repurchase agreements; and (c) loans 
of its portfolio securities, to the fullest extent permitted under the 1940 
Act.

6.	Purchase any securities of an issuer of a particular industry, if 
as a result, more than 25% of its gross assets would be invested in 
securities of issuers whose principal business activities are in the same 
industry except (i) there is no limitation with respect to obligations issued 
or guaranteed by the U.S. government or its agencies and instrumentalities 
and repurchase agreements collateralized by such obligations.

Notwithstanding any other investment restriction of MFS Total Return 
Portfolio, the fund may invest all of its investable assets in an open-end 
management investment company having the same investment objective and 
restrictions as the fund.

   In addition, the following nonfundamental policies have also been adopted by 
MFS Total Return Portfolio. The fund may not:
    
1.	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.

2.	Purchase securities issued by any other investment company in 
excess of the amount permitted by the 1940 Act, except when such purchase is 
part of a plan of merger or consolidation.

3.	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.

4.	Purchase or sell any put or call options or any combination 
thereof, provided, that this shall not prevent (a) the purchase, ownership, 
holding or sale of (i) warrants where the grantor of the warrants is the 
issuer of the underlying securities or (ii) put or call options or 
combinations thereof with respect to securities, foreign currencies, indexes 
of securities, any type of swap or any type of futures contract or (b) the 
purchase, ownership, holding or sale of contracts for the future delivery of 
securities or currencies.

5.	Purchase or sell interests in oil, gas or mineral leases.

The GT Global Strategic Income Portfolio may not:

1.	Invest 25% or more of the value of its total assets in the 
securities of issuers conducting their principal business activities in the 
same industry, (provided, however, that the fund may invest all of its 
investable assets in an open-end management investment company with 
substantially the same investment objectives, policies and limitations as the 
fund) except that this limitation shall not apply to securities issued or 
guaranteed as to principal and interest by the U.S. government or any of its 
agencies or instrumentalities. 

2.	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.

3.	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.

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

5.	Borrow money in excess of 33 1/3% of its total assets (including 
the amount borrowed), less all liabilities and indebtedness (other than 
borrowing). This restriction shall not prevent the fund from entering into 
reverse repurchase agreements and engaging in "roll" transactions, provided 
that reverse repurchase agreements, "roll" transactions and any other 
transactions constituting borrowing by the fund may not exceed 1/3 of its 
total assets. In the event that the asset coverage for the fund's borrowings 
falls below 300%, the fund will reduce, within three days (excluding Sundays 
and holidays), the amount of its borrowings in order to provide for 300% 
asset coverage. Transactions involving options, futures contracts, options on 
futures contracts and forward currency contracts, and collateral arrangements 
relating thereto will not be deemed to be borrowings. 

6.	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.

For purposes of GT Global Strategic Income Portfolio's concentration policy 
contained in limitation (1) above, the fund intends to comply with the SEC 
staff positions that securities issued or guaranteed as to principal and 
interest by any single foreign government or any supranational organizations 
in the aggregate are considered to be securities of issuers in the same 
industry. 
   
In addition, the following nonfundamental investment policies have been 
adopted by the fund. The fund may not:
    
1.	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.

2.	Invest in securities of an issuer if the investment would cause 
the fund to own more than 10% of any class of securities of any one issuer 
(provided, however, that the fund may invest all of its investable assets in 
an open-end management investment company with substantially the same 
investment objectives, policies, and limitations as the fund). 

3.	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.

4.	Invest more than 10% of its total assets in shares of other 
investment companies and invest more than 5% of its total assets in any one 
investment company or acquire more than 3% of the outstanding voting 
securities of any one investment company (provided, however, that the fund 
may invest all of its investable assets in an open-end management investment 
company with substantially the same investment objectives, policies, and 
limitations as the fund). 

5.	Invest in companies for the purpose of exercising control or 
management (provided, however, that the fund may invest all of its investable 
assets in an open-end management investment company with substantially the 
same investment objectives, policies and limitations as the fund). 

6.	Invest in interests in oil, gas, or other mineral exploration or 
development programs.

7.	Invest more than 5% of its total assets in securities of 
companies having, together with their predecessors, a record of less than 
three years of continuous operation (provided, however, that the fund may 
invest all of its investable assets in an open-end management investment 
company with substantially the same investment objectives, policies, and 
limitations as the fund). 

The Travelers Managed Income Portfolio may not:

1.	Concentrate the portfolio investments in any industry by 
investing more than 25% of its gross assets in any one industry. There shall 
be no limitation on the purchase of U.S. Government securities by the fund 
when it adopts a defensive position.

2.	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.

3.	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.

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

5.	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.

6.	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.

7.	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.

8.	Purchase securities from or sell securities to any of its 
officers or directors, except with respect to its own shares and as is 
permissible under applicable statues, rules and regulations.

Notwithstanding any other investment restriction of Travelers Managed Income 
Portfolio, the fund may invest all of its investable assets in an open-end 
management investment company having the same investment objective and 
restrictions as the fund.
   
In addition, the following nonfundamental policies have also been adopted by 
Travelers Managed Income Portfolio. The fund may not:
    
1.	Purchase securities of any other investment company except as 
part of a plan of merger or consolidation.

2.	Purchase securities of companies which together with predecessors 
have a record of less than three years' continuous operation, if, as a 
result, more than 5% of the fund's net assets would then be invested in such 
securities. 

3.	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.

4.	Invest in puts, calls, straddles, spreads and any combination 
thereof. 

5.	Invest in oil, gas or other mineral exploration or development 
programs, provided, however, this shall not prohibit the fund from purchasing 
publicly traded securities of companies engaging in whole or in part in such 
activities. 

6.	Purchase or otherwise acquire any security if, as a result, more 
than 15% of its net assets would be invested in securities that are illiquid.

7.	Purchase securities of companies for the purpose of exercising 
control. 

The Putnam Diversified Income Portfolio may not:

1.	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.

2.	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.

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

4.	Make loans. This restriction does not apply to: (a) the purchase 
of debt obligations in which the fund may invest consistent with its 
investment objectives and policies; (b) repurchase agreements; and (c) loans 
of its portfolio securities, to the fullest extent permitted under the 1940 
Act.
5.	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.

6.	Invest more than 25% of its total assets in any one industry. 
(U.S. Government securities and securities of any foreign government, it 
agencies or instrumentalities, securities of supranational entities, and 
securities backed by the credit of a governmental entity are not considered 
to represent an industry.)

7.	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.
   
In addition, the following nonfundamental policy has also been adopted by the 
Putnam Diversified Income Portfolio. The fund may not:
    
1.	Invest in securities of other registered open-end investment 
companies except as they may be acquired as part of a merger or consolidation 
or acquisition of assets.

2.	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.

3.	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.

4.	Buy or sell oil, gas or other mineral leases, rights or royalty 
contracts. 

5.	Make investments for the purpose of gaining control of a 
company's management. 

Notwithstanding any other investment restriction of Putnam Diversified Income 
Portfolio, the fund may invest all of its investable assets in an open-end 
management investment company having the same investment objective and 
restrictions as the fund.

The Smith Barney High Income Portfolio may 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.	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.

3.	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.

4.	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.

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

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

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

Notwithstanding any other investment restriction of the Smith Barney High 
Income Portfolio, the fund may invest all of its investable assets in an 
open-end management investment company having the same investment objective 
and restrictions as the fund.
   
In addition, the following nonfundamental investment policies have been 
adopted by the Smith Barney High Income Portfolio. The fund may not:
    
1.	Purchase any securities on margin (except for such short-term 
credits as are necessary for the clearance of purchases and sales of 
portfolio securities) or sell any securities short (except "against the 
box"). For purposes of this restriction, the deposit or payment by the fund 
of underlying securities and other assets in escrow and collateral agreements 
with respect to initial or maintenance margin in connection with futures 
contracts and related options and options on securities, indexes or similar 
items is not considered to be the purchase of a security on margin.

2.	Invest in securities of other investment companies registered or 
required to be registered under the 1940 Act, except as they may be acquired 
as part of a merger, consolidation, reorganization, acquisition of assets or 
an offer of exchange, or to the extent permitted by the 1940 Act.

The Smith Barney Money Market Portfolio may not:

1.	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.

2.	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. 

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

4.	Invest more than 25% of its assets in the securities of issuers 
in any industry, except it may not invest less than 25% of its assets in bank 
obligations (including both domestic and foreign bank obligations) and it 
reserves freedom of action to concentrate in securities issued or guaranteed 
as to principal and interest by the U.S. Government, its agencies or 
instrumentalities.

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 objectives 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.	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.

Notwithstanding any other investment restriction of Smith Barney Money Market 
Portfolio, the fund may invest all of its investable assets in an open-end 
management investment company having the same investment objective and 
restrictions as the fund.
   
In addition, the following nonfundamental investment policies have been 
adopted by Smith Barney Money Market Portfolio. The fund may not:
    
1.	Acquire securities subject to restrictions on disposition or 
securities for which there is no readily available market, enter into 
repurchase agreements or purchase time deposits or variable amount master 
demand notes, if any of the foregoing have a term or demand feature of more 
than seven days if, immediately after and as a result, the value of such 
securities would exceed, in the aggregate, 10% of the fund's total assets. 
Subject to this limitation, the fund's Board of Directors has authorized the 
fund to invest in restricted securities if such investment is consistent with 
the fund's investment objective and has authorized such securities to be 
considered to be liquid to the extent the Manager determines on a daily basis 
that there is a liquid institutional market for such securities. The Board of 
Directors retains ultimate ongoing responsibility for the determination that 
a restricted security is liquid.

2.	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. 

3.	Write or purchase put or call options.

4.	Purchase or otherwise acquire any security if, as a result, more 
than 10% of its net assets would be invested in securities that are illiquid.

5.	Purchase or sell oil and gas interests.

6.	Invest in companies for the purposes of exercising control.

7.	Invest in securities of another investment company except as 
permitted by Section 12(d)(1) of the 1940 Act, or as part of a merger, 
consolidation, or acquisition. 


PORTFOLIO TURNOVER

Although it is anticipated that most investments of each fund (except Smith 
Barney Money Market Portfolio) will be long-term in nature, the rate of 
portfolio turnover will depend upon market and other conditions, and it will 
not be a limiting factor when management believes that portfolio changes are 
appropriate. The historical portfolio turnover rates for each fund (except 
Smith Barney Money Market Portfolio) are included in the Financial Highlights 
tables in the Prospectus. A higher rate of portfolio turnover may result in 
higher transaction costs, including brokerage commissions. Portfolio turnover 
rates for Smith Barney Money Market Portfolio are not shown because of the 
short-term nature of the investments owned by the fund.


PERFORMANCE INFORMATION

From time to time the Company may include a fund's total return, average 
annual total return, yield and current distribution return in advertisements 
and/or other types of sales literature. These figures are based on historical 
earnings and are not intended to indicate future performance. In addition, 
these figures will not reflect the deduction of the charges that are imposed 
on the Contracts by the Separate Account (see Contract prospectus) which, if 
reflected, would reduce the performance quoted. 
   
Total Return. Total return is computed for a specified period of time 
assuming reinvestment of all income dividends and capital gains distributions 
at net asset value on the ex-dividend dates at prices calculated as stated in 
the 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 over different periods of time by means of 
aggregate, average, year-by-year, or other types of total return figures. The 
standard total return shows what an investment in the fund would have earned 
over a specified period of time (one, five or ten years) assuming that all 
distributions and dividends by the fund were invested on the reinvestment 
dates during the period less all recurring fees. 
    
Yield. The yield of a fund refers to the net investment income earned by 
investments in the fund over a thirty-day period. Each fund's yield is 
computed by dividing the net investment income per share earned during a 
specified thirty day period by the net asset value per share on the last day 
of such period and annualizing the result. For purposes of the yield 
calculation, interest income is determined based on a yield to maturity 
percentage for each long-term fixed income obligation in the portfolio; 
income on short-term obligations is based on current payment rate. This net 
investment income is then annualized, i.e., the amount of income earned by 
the investments during that thirty-day period is assumed to be earned each 
30-day period for twelve periods and is expressed as a percentage of the 
investments. The yield quotation is calculated according to a formula 
prescribed by the SEC to facilitate comparison with yields quoted by other 
investment companies. 
   
Current Distribution Return. The Company calculates current distribution 
return for each fund by dividing the distributions from gross investment 
income declared during the most recent period by the net asset value per 
share on the last day of the period for which current distribution return is 
presented. A fund's current distribution return may vary from time to time 
depending on market conditions, the composition of its investment portfolio 
and operating expenses. These factors and possible differences in the methods 
used in calculating current distribution return, and the charges that are 
imposed on the Contracts by the Separate Account, should be considered when 
comparing the fund's current distribution return to yields published for 
other investment companies and other investment vehicles. From time to time, 
a fund may include its current distribution return in information furnished 
to present or prospective shareowners.
    
Current distribution return should also be considered relative to changes in 
the value of the fund's shares and to the risks associated with the fund's 
investment objective and policies. For example, in comparing current 
distribution returns with those offered by Certificates of Deposit ("CDs"), 
it should be noted that CDs are insured (up to $100,000) and offer a fixed 
rate of return. 

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


DETERMINATION OF NET ASSET VALUE
   
The net asset value of each fund's share will be determined on any day that 
the New York Stock Exchange is open. The New York Stock Exchange is closed in 
celebration of the following holidays: New Year's Day, Martin Luther King, 
Jr., President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, 
Thanksgiving Day and Christmas Day.
    
Net asset value is determined by dividing the fund's net assets by the number 
of its shares outstanding. Securities owned by a fund for which market 
quotations are readily available are valued at current market value or, in 
their absence, at fair value. Securities traded on an exchange are valued at 
last sales price on the principal exchange on which each such security is 
traded, or if there were no sales on that exchange on the valuation date, the 
last quoted sale, up to the time of valuation, on the other exchanges. If 
instead there were no sales on the valuation date with respect to these 
securities, such securities are valued at the mean of the latest published 
closing bid and asked prices. Over-the-counter securities are valued at last 
sales price or, if there were no sales that day, at the mean between the bid 
and asked prices. Options, futures contracts and options thereon that are 
traded on exchanges are also valued at last sales prices as of the close of 
the principal exchange on which each is listed or if there were no such sales 
on the valuation date, the last quoted sale, up to the time of valuation, on 
other exchanges. In the absence of any sales on the valuation date, valuation 
shall be the mean of the latest closing bid and asked prices. Fixed income 
obligations are valued at the mean of bid and asked prices based on market 
quotations for those securities or if no quotations are available, then for 
securities of similar type, yield and maturity. Securities with a remaining 
maturity of 60 days or less are valued at amortized cost where the Board of 
Directors has determined that amortized cost is fair value. Premiums received 
on the sale of call options will be included in the fund's net assets, and 
current market value of such options sold by a fund will be subtracted from 
that fund's net assets. Any other investments of a fund, including restricted 
securities and listed securities for which there is a thin market or that 
trade infrequently (i.e., securities for which prices are not readily 
available), are valued at a fair value determined by the Board of Directors 
in good faith. This value generally is determined as the amount that a fund 
could reasonably expect to receive from an orderly disposition of these 
assets over a reasonable period of time but in no event more than seven days. 
The value of any security or commodity denominated in a currency other than 
U.S. dollars will be converted into U.S. dollars at the prevailing market 
rate as determined by management.

Foreign securities trading may not take place on all days on which the NYSE 
is open. Further, trading takes place in various foreign markets on days on 
which the NYSE is not open. Accordingly, the determination of the net asset 
value of a fund may not take place contemporaneously with the determination 
of the prices of investments held by such fund. Events affecting the values 
of investments that occur between the time their prices are determined and 
4:00 P.M. on each day that the NYSE is open will not be reflected in a fund's 
net asset value unless management under the supervision of the Company's 
Board of Directors, determines that the particular event would materially 
affect the net asset value. As a result, a fund's net asset value may be 
significantly affected by such trading on days when a shareholder has no 
access to such fund. 


AVAILABILITY OF THE FUNDS

Investment in the Company is only available to owners of either variable 
annuity or variable life insurance contracts issued by insurance companies 
through their separate accounts. It is possible that in the future it may 
become disadvantageous for both variable annuity and variable life insurance 
separate accounts to be invested simultaneously in the Company. However, the 
Company does not currently foresee any disadvantages to the contractowners of 
the different contracts which are funded by such separate accounts. The Board 
monitors events for the existence of any material irreconcilable conflict 
between or among such owners, and each insurance company will take whatever 
remedial action may be necessary to resolve any such conflict. Such action 
could include the sale of fund shares by one or more of the insurance company 
separate accounts which fund these contracts, which could have adverse 
consequences to the fund. Material irreconcilable conflicts could result 
from, for example: (a) changes in state insurance laws; (b) changes in U.S. 
federal income tax laws; or (c) differences in voting instructions between 
those given by variable annuity contractowners and those given by variable 
life insurance contractowners. If the Board were to conclude that separate 
series of the Company should be established for variable annuity and variable 
life separate accounts, each insurance company would bear the attendant 
expenses. Should this become necessary, contractowners would presumably no 
longer have the economies of scale resulting from a larger combined mutual 
fund. 


REDEMPTION OF SHARES

Redemption payments shall be made wholly in cash unless the directors believe 
that economic conditions exist that would make such a practice detrimental to 
the best interests of a fund and its remaining shareowners. If a redemption 
is paid in portfolio securities, such securities will be valued in accordance 
with the procedures described under "Determination of Net Asset Value" in the 
Prospectus and a shareholder would incur brokerage expenses if these 
securities were then converted to cash.


MANAGEMENT

The Investment Managers. 
   
SSBC. SSBC Fund Management Inc. serves as the investment adviser to Smith 
Barney Pacific Basin Portfolio, Smith Barney International Equity Portfolio, 
Smith Barney Large Cap Value Portfolio, Smith Barney Large Capitalization 
Growth Portfolio, Smith Barney High Income Portfolio and Smith Barney Money 
Market Portfolio. SSBC manages the day to day operations of each such fund 
pursuant to a management agreement entered into by the Company on behalf of 
each fund. Under each management agreement, SSBC will (a) manage the fund's 
assets in accordance with the fund's investment objective(s) and policies as 
stated in the Prospectus and the SAI; (b) make investment decisions for the 
fund; (c) place purchase and sale orders for portfolio transactions on behalf 
of the fund; (d) employ professional portfolio managers and securities 
analysts who provide research services to the fund; (e) administer the fund's 
corporate affairs and, in connection therewith, furnish the fund with office 
facilities and with clerical, bookkeeping and recordkeeping services at such 
office facilities; and (f) prepare reports to shareholders and reports to and 
filings with the SEC and state blue sky authorities if applicable. In 
providing these services, SSBC will conduct a continual program of 
investment, evaluation and, if appropriate, sale and reinvestment of each 
fund's assets.

By written agreement, research and other departments and staff of Salomon 
Smith Barney will furnish SSBC with information, advice and assistance and 
will be available for consultation on the Company's funds. Thus, Salomon 
Smith Barney may also be considered an investment adviser to the Company. 
Salomon Smith Barney's services are paid for by SSBC; there is no charge to 
the Company for such services.

SSBC's name was formerly Mutual Management Corp., and also formerly Smith 
Barney Mutual Funds Management, Inc.
    
   
TIA. Travelers Investment Adviser, Inc. ("TIA" or the "Manager"), an 
affiliate of SSBC, manages the investment operations of Alliance Growth 
Portfolio, AIM Capital Appreciation Portfolio, Putnam Diversified Income 
Portfolio, MFS Total Return Portfolio, GT Global Strategic Income Portfolio 
and Van Kampen Enterprise Portfolio (each, a "TIA Portfolio") pursuant to 
management agreements entered into by the Company on behalf of each TIA 
Portfolio. 

TIA and the Company have entered into a subadvisory agreement with a 
different subadviser for each TIA Portfolio. Pursuant to each subadvisory 
agreement, the subadviser is responsible for the day to day operations and 
investment decisions for the respective fund and is authorized, in its 
discretion and without prior consultation with TIA, to: (a) manage the fund's 
assets in accordance with the fund's investment objective(s) and policies as 
stated in the Prospectus and the SAI; (b) make investment decisions for the 
fund; (c) place purchase and sale orders for portfolio transactions on behalf 
of the fund; and (d) employ professional portfolio managers and securities 
analysts who provide research services to the fund.

TIA has also entered into a sub-administrative services agreement with SSBC 
pursuant to which SSBC will: (a) assist TIA in supervising all aspects of 
each TIA Portfolio's operations; (b) supply each TIA Portfolio with office 
facilities, statistical and research services, data processing services, 
clerical, accounting and bookkeeping services; and (c) prepare reports to 
each TIA Portfolio's shareholders and prepare reports to and filings with the 
SEC and state blue sky authorities, if applicable. TIA pays SSBC, as sub-
administrator, a fee in an amount equal to an annual rate of 0.10% of each 
TIA Portfolio's average daily net assets.

Subject to the provisions of any applicable subadvisory agreement, TIA is 
responsible for the investment operations of each fund and for furnishing or 
causing to be furnished to each fund advice and assistance with respect to 
the purchase, retention and disposition of investments, in accordance with 
each fund's investment objectives, policies and restrictions as stated in the 
Prospectus and SAI.
    
   
TAMIC.  Travelers Asset Management International Corporation, an affiliate of 
SSBC and TIA, manages the investment operations of Travelers Managed Income 
Portfolio pursuant to a management agreement entered into by the Company on 
behalf of Travelers Managed Income Portfolio.  Under the agreement, TAMIC 
furnishes investment information and advice and makes recommendations with 
respect to the purchase and sale of investments based upon the fund's 
investment policies.  TAMIC has responsibility for the investment decisions 
of the fund, subject to the supervision, direction and approval of the Board 
of Directors.  
General. Under each management agreement SSBC, TIA or TAMIC, as the case may 
be, will administer the fund's corporate affairs, and, in connection 
therewith, is responsible for furnishing or causing to be furnished to each 
applicable fund advice and assistance with respect to the acquisition, 
holding or disposal of investments and recommendations with respect to other 
aspects and affairs of the fund, bookkeeping, accounting and administrative 
services, office space and equipment, and the services of the officers and 
employees of the Company. Each fund receives discretionary advisory services 
provided by the Manager or by a subadviser (pursuant to a Subadvisory 
Agreement) who is identified, retained, supervised and compensated by the 
Manager. 

Each management agreement further provides that all other expenses not 
specifically assumed by SSBC, TIA or TAMIC under the management agreement on 
behalf of a fund are borne by the Company. Expenses payable by the Company 
include, but are not limited to, all charges of custodians and shareholder 
servicing agents, expenses of preparing, printing and distributing all 
prospectuses, proxy material, reports and notices to shareholders, all 
expenses of shareholders' and directors' meetings, filing fees and expenses 
relating to the registration and qualification of the Company's shares and 
the Company under federal and state securities laws and maintaining such 
registrations and qualifications (including the printing of the Company's 
registration statements), fees of auditors and legal counsel, costs of 
performing portfolio valuations, out-of-pocket expenses of directors and fees 
of directors who are not "interested persons" of the Company as defined under 
the 1940 Act, interest, taxes and governmental fees, fees and commissions of 
every kind, expenses of issue, repurchase or redemption of shares, insurance 
expense, association membership dues, all other costs incident to the 
Company's existence and extraordinary expenses such as litigation and 
indemnification expenses. Direct expenses are charged to each of the 
Company's funds; general corporate expenses are allocated on the basis of 
relative net assets.

SSBC, TIA, TAMIC and each subadviser are subject to the supervision and 
direction of the Company's Board of Directors and manage the applicable fund 
in accordance with its investment objective and policies, make investment 
decisions for the fund, place orders to purchase and sell securities and 
employ professionals who provide research services. All orders for 
transactions in securities on behalf of a fund are made by management, with 
broker-dealers selected by management, including affiliated brokers. In 
placing orders management will seek to obtain the most favorable price and 
execution available. In selecting broker-dealers, management may consider 
research and brokerage services furnished to it and its affiliates.

Each management agreement shall continue from year to year if specifically 
approved at least annually as required by the 1940 Act, except that for the 
Large Cap Growth Portfolio, the fund is in an initial two-year term. Each 
Management Agreement further provides that it shall terminate automatically 
in the event of its assignment (as defined in the 1940 Act) and that it may 
be terminated without penalty by either party on not less than 60 days' 
written notice.
    
   
Management Fees. The Manager has agreed to waive its fee to the extent that 
the aggregate expenses of any of Smith Barney Large Cap Value Portfolio, 
Alliance Growth Portfolio, AIM Capital Appreciation Portfolio, Van Kampen 
Enterprise Portfolio, Travelers Managed Income Portfolio, Putnam Diversified 
Income Portfolio, Smith Barney High Income Portfolio, MFS Total Return 
Portfolio and Smith Barney Money Market Portfolio, exclusive of taxes, 
brokerage, interest and extraordinary expenses, such as litigation and 
indemnification expenses, exceed 1.25% of the average daily net assets for 
any fiscal year of each such fund. The Manager has agreed to waive its fee to 
the extent that the aggregate expenses of each of Smith Barney International 
Equity Portfolio, Smith Barney Pacific Basin Portfolio and GT Global 
Strategic Income Portfolio exclusive of taxes, brokerage, interest and 
extraordinary expenses, exceed 1.50% of the average daily net assets for any 
fiscal year of each such fund. Each of these voluntary expense limitations 
shall be in effect until it is terminated by notice to shareowners and by 
supplement to the then current Prospectus or SAI. 

Each management agreement also provides that SSBC, TIA or TAMIC shall not be 
liable to the Company for any error of judgment or mistake of law or for any 
loss suffered by the Company so long as it acted in good faith without 
willful misfeasance, bad faith or gross negligence in the performance of its 
duties or by reason of its reckless disregard of its obligations and duties 
under the management agreement. Each subadvisory agreement also provides that 
the subadviser shall not be liable to SSBC, TIA, TAMIC or the fund for any 
error of judgment or mistake of law or for any loss suffered by SSBC, TIA, 
TAMIC or the fund so long as it acted in good faith without willful 
misfeasance, bad faith or gross negligence in the performance of its duties 
or by reason of its reckless disregard of its obligations and duties under 
the subadvisory agreement.

For the periods shown, each fund paid the following management fee:







Fund

Fiscal Year
Ended
October 31,
1996

Fiscal Year
Ended
October 31,
1997

Fiscal 
Year
Ended
October 31
, 1998

Smith Barney Pacific Basin 
Portfolio*

$117,581

$175,112
$127,738

Smith Barney International 
Equity Portfolio

887,397

1,692,179

2,099,425

Smith Barney Large Cap Value 
Portfolio

564,232

1,399,650

2,461,022

Smith Barney Large 
Capitalization Growth 
Portfolio+

n/a

n/a

25,610

Alliance Growth Portfolio

1,624,602

3,268,019

5,537,281

AIM Capital Appreciation 
Portfolio

503,898

1,294,096

1,783,860

Van Kampen Enterprise Portfolio

482,803

1,045,925

1,677,943

MFS Total Return Portfolio

744,834

1,556,167

2,992,300

GT Global Strategic Income 
Portfolio++

109,949

201,225

244,014

Travelers Managed Income 
Portfolio

123,774

176,499

258,425

Putnam Diversified Income 
Portfolio

428,803

753,736

1,084,982

Smith Barney High Income 
Portfolio

262,657

558,996

915,654

Smith Barney Money Market 
Portfolio+++

425,361

650,916

622,117

*	The Manager waived $30,849 in 1996 of the management fees shown.
+	The Manager waived $25,521 of the management fees shown for the period 
from May 1, 1998 (commencement of 
	operations) to October 31, 1998.
++	The Manager waived $20,036 in 1996 of the management fees shown.
+++	The Manager waived $60,833 in 1996 and $24,546 in 1997 of the 
management fees shown.
    
The Subadvisers.
   
Alliance Growth Portfolio is advised by Alliance Capital Management L.P. 
("Alliance Capital"). Alliance Capital is a Delaware limited partnership with 
principal offices at 1345 Avenue of the Americas, New York, New York 10105. 
For the services provided to the fund by Alliance Capital, the Manager pays 
Alliance Capital an annual fee calculated at a rate of 0.375% of the fund's 
average daily net assets, paid monthly.

Alliance Capital is a leading international investment manager supervising 
client accounts with assets as of September 30, 1998 of more than $241.9 
billion (of which approximately $99.5 billion representing the assets of 
investment companies). Alliance Capital clients are primarily major corporate 
employee benefit funds, public employee retirement systems, investment 
companies, foundations and endowment funds and include employee benefit 
plans, as of September 30, 1998, for 34 of the Fortune 100 Companies. As of 
that date, Alliance Capital and its subsidiaries employed more than 1,700 
employees who operated out of six domestic offices and the overseas offices 
of subsidiaries in Chennai, Istanbul, London, Mumbai, New Delhi, Paris, 
Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore as well as 
affiliate offices in Bangalore, Cairo, Johannesburg, Vienna, Warsaw, Hong 
Kong, Sao Paulo, Seoul and Moscow. The 58 registered investment companies 
comprising more than 70 separate investment portfolios managed by Alliance 
Capital currently have more than three million shareholders. 
    
Alliance Capital Management Corporation ("ACMC") is the general partner of 
Alliance Capital and conducts no active business.  Alliance Capital is an 
indirect wholly owned subsidiary of The Equitable Life Assurance Society of 
the United States ("Equitable"), one of the largest life insurance companies 
in the United States and a wholly owned subsidiary of The Equitable Companies 
Incorporated ("ECI"), a holding company controlled by AXA, a French insurance 
holding company which at September 30, 1998 beneficially owned approximately 
58.5% of the outstanding voting shares of ECI. As of September 30, 1998, ACMC 
and Equitable Capital Management Corporation, each a wholly owned direct or 
indirect subsidiary of Equitable, together with Equitable, owned in the 
aggregate approximately 56.8% of the issued and outstanding units 
representing assignments of beneficial ownership of limited partnership 
interests in Alliance Capital ("Units").

AIM Capital Appreciation Portfolio is advised by A I M Capital Management, 
Inc. ("AIM Capital"). AIM Capital is located at 11 Greenway Plaza, Suite 100, 
Houston, Texas 77046 and is a wholly owned subsidiary of A I M Advisors, 
Inc., which is a wholly owned subsidiary of A I M Management Group Inc. A I M 
Management Group Inc. is a holding company engaged in the financial services 
business and is an indirect wholly owned subsidiary of AMVESCAP PLC. For 
services provided by AIM Capital, the Manager pays to AIM Capital an annual 
fee calculated at the rate of 0.375% of the fund's average daily net assets, 
paid monthly. 

   Van Kampen Enterprise Portfolio is advised by Van Kampen Asset Management, 
Inc. ("VKAC"). VKAC is located at One Parkview Plaza, Oakbrook Terrace, IL 
60181 and is a wholly owned subsidiary of Van Kampen American Capital, Inc., 
which is a wholly owned subsidiary of VK/AC Holding, Inc. VC/AC Holding, 
Inc., is a wholly owned subsidiary of MSAM Holdings II, Inc. which in turn, 
is a wholly owned subsidiary of Morgan Stanley, Dean Witter Discover & Co. 
For the services provided by VKAC, the Manager pays to VKAC an annual fee 
calculated at the rate of 0.325% of the fund's average daily net assets, paid 
monthly.
    
Putnam Diversified Income Portfolio is advised by Putnam Investment 
Management, Inc. ("Putnam Management"). Putnam Management is located at One 
Post Office Square, Boston, Massachusetts 02109. Putnam Management is a 
subsidiary of Putnam Investments, Inc., which, other than shares held by 
employees, is a wholly owned subsidiary of Marsh & McLennan Companies, Inc. 
For the services provided by Putnam Management, the Manager pays Putnam 
Management an annual fee calculated at the rate of 0.35% of the fund's 
average daily net assets, paid monthly. 

GT Global Strategic Income Portfolio is advised by AMVESCAP PLC ("AMVESCAP"). 
 AMVESCAP is a holding company formed in 1997 by the merger of INVESCO PLC 
and AIM Management Group, Inc. For the services provided by AMVESCAP, the 
Manager pays to AMVESCAP an annual fee calculated at the rate of 0.375% of 
the fund's average daily net assets, paid monthly.

MFS Total Return Portfolio is advised by Massachusetts Financial Services 
Company ("MFS"). MFS is located at 500 Boylston Street, Boston, Massachusetts 
02116 and is a subsidiary of Sun Life of Canada (U.S.) Financial Services 
Holdings, Inc., which is an indirect wholly owned subsidiary of Sun Life 
Assurance Company of Canada. For services provided by MFS, the Manager pays 
MFS an annual fee calculated at a rate equal to 0.375% of the fund's average 
daily net assets, paid monthly.

Portfolio Transactions and Distribution

CFBDS, Inc., located at 21 Milk Street, Boston MA 02109-5408 (the 
"Distributor"), distributes shares of the funds as principal underwriter. 
   
The Company's Board of Directors has determined that agency transactions in 
equity securities for the Company may be executed through Salomon Smith 
Barney or any broker-dealer affiliate of Salomon Smith Barney (each, an 
"Affiliated Broker") if, in the judgment of management, the use of an 
Affiliated Broker is likely to result in price and execution at least as 
favorable to the Company as those obtainable through other qualified broker-
dealers, and if, in the transaction, the Affiliated Broker charges the 
Company a fair and reasonable rate consistent with that charged to comparable 
unaffiliated customers in similar transactions. The Company will not deal 
with Salomon Smith Barney in any transactions in which Salomon Smith Barney 
acts as principal. In addition, the Alliance Growth Portfolio will not deal 
with Donaldson, Lufkin & Jenrette ("DLJ") (an affiliate of Alliance Capital) 
in any transactions in which DLJ acts as principal. In addition, the Van 
Kampen Enterprise Portfolio may not deal with Morgan Stanley & Co., Inc. 
("Morgan Stanley") (an affiliate of VK/AC Holding, Inc.) in any transaction 
in which Morgan Stanley acts as principal.
    
   
Shown below are the total brokerage fees paid by the Company for the fiscal 
years ended October 31, 1996, October 31, 1997 and October 31, 1998 on behalf 
of the funds, the portion paid to Salomon Smith Barney and the portion paid 
to other brokers for the execution of orders allocated in consideration of 
research and statistical services or solely for their ability to execute the 
order. During the fiscal year ended October 31, 1996 the total amount of 
commissionable transactions was $948,677,922, $86,585,294 (9.13%) of which 
was directed to Salomon Smith Barney and executed by unaffiliated brokers and 
$862,092,628 (90.87%) of which was directed to other brokers. During the 
fiscal year ended October 31, 1997 the total amount of commissionable 
transactions was $1,618,030,296, $115,051,655 (7.11%) of which was directed 
to Salomon Smith Barney and executed by unaffiliated brokers and 
$1,502,978,641 (92.89%) of which was directed to other brokers. During the 
fiscal year ended October 31, 1998 the total amount of commissionable 
transactions was $2,302,807,589, $234,697,629 (10.19%) of which was directed 
to Salomon Smith Barney and executed by unaffiliated brokers and 
$2,068,109,960 (89.81%) of which was directed to other brokers. 


Commissions:



Fiscal Year 
Ended


Total

To Salomon
Smith Barney



To Others (for execution 
only)


October 31, 1996

$1,862,443

$142,038

(7.63%)

$1,720,405

(92.37%)

October 31, 1997

2,325,295

163,142

(7.02%)

2,162,153

(92.98%)

October 31, 1998

2,199,437

244,471

(11.12%)

1,954,966

(88.88%)
    
The Company attempts to obtain the most favorable execution of each portfolio 
transaction, that is, the best combination of net price and prompt reliable 
execution. In making its decision as to which broker or brokers are most 
likely to provide the most favorable execution, the management of the Company 
takes into account the relevant circumstances. These include, in varying 
degrees, the size of the order, the importance of prompt execution, the 
breadth and trends of the market in the particular security, anticipated 
commission rates, the broker's familiarity with such security including its 
contacts with possible buyers and sellers and its level of activity in the 
security, the possibility of a block transaction and the general record of 
the broker for prompt, competent and reliable service in all aspects of order 
processing, execution and settlement.

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

The Board of Directors of the Company has adopted certain policies and 
procedures incorporating the standard of Rule l7e-l issued by the Securities 
and Exchange Commission under the 1940 Act which requires that the 
commissions paid to any Affiliated Broker must be "reasonable and fair 
compared to the commission, fee or other remuneration received or to be 
received by other brokers in connection with comparable transactions 
involving similar securities during a comparable period of time." The Rule 
and the policy and procedures also contain review requirements and require 
management to furnish reports to the Board of Directors and to maintain 
records in connection with such reviews. 


OTHER INFORMATION ABOUT THE COMPANY

The Company, an open-end managed investment company, was incorporated in 
Maryland on February 22, 1994. The Company has an authorized capital of 
6,000,000,000 shares with a par value of $.00001 per share. The Board of 
Directors has authorized the issuance of thirteen series of shares, each 
representing shares in one of thirteen separate funds - Smith Barney Pacific 
Basin Portfolio, Smith Barney International Equity Portfolio, Smith Barney 
Large Cap Value Portfolio, Smith Barney Large Capitalization Growth 
Portfolio, Alliance Growth Portfolio, AIM Capital Appreciation Portfolio, Van 
Kampen Enterprise Portfolio, MFS Total Return Portfolio, GT Global Strategic 
Income Portfolio, Travelers Managed Income Portfolio, Putnam Diversified 
Income Portfolio, Smith Barney High Income Portfolio and Smith Barney Money 
Market Portfolio. The directors also have the power to create additional 
series of shares. The assets of each fund will be segregated and separately 
managed and a shareowner's interest is in the assets of the fund in which he 
or she holds shares.

The directors may also authorize the creation of additional series of shares 
and additional classes of shares within any series (which would be used to 
distinguish among the rights of different categories of shareholders, as 
might be required by future regulations or other unforeseen circumstances). 
The investment objectives, policies and restrictions applicable to additional 
funds would be established by the directors at the time such funds were 
established and may differ from those set forth in the Prospectus and this 
SAI. In the event of liquidation or dissolution of a fund or of the Company, 
shares of a fund are entitled to receive the assets belonging to that fund 
and a proportionate distribution, based on the relative net assets of the 
respective funds, of any general assets not belonging to any particular fund 
that are available for distribution.

The Articles of Incorporation may be amended only upon the vote of a majority 
of the shares of capital stock of the Company outstanding and entitled to 
vote, and in accordance with applicable law, except for certain amendments 
that may be made by the directors. 

The Articles of Incorporation further provide that the Company shall 
indemnify its directors, officers and employees against any liability to the 
Company or to a shareowner, except as such liability may arise from his or 
its own bad faith, willful misfeasance, gross negligence, or reckless 
disregard of his or its duties. With the exceptions stated, the Articles of 
Incorporation provide that a director, officer or employee is entitled to be 
indemnified against all liability in connection with the affairs of the 
Company. 

The Company shall continue without limitation of time subject to the 
provisions in the Articles of Incorporation concerning termination of the 
corporation or any of the series of the corporation by action of the 
shareowners or by action of the directors upon notice to the shareowners.

Voting Rights. The Company offers its shares only for purchase by insurance 
company separate accounts. Thus, the insurance company is technically the 
shareholder of the Company and, under the 1940 Act, is deemed to be in 
control of the Company. Nevertheless, with respect to any Company shareholder 
meeting, an insurance company will solicit and accept timely voting 
instructions from its contractowners who own units in a separate account 
investment division which corresponds to shares in the Company in accordance 
with the procedures set forth in the accompanying prospectus for the 
applicable contract issued by the insurance company and to the extent 
required by law. Shares of the Company attributable to contractowner 
interests for which no voting instructions are received will be voted by an 
insurance company in proportion to the shares for which voting instructions 
are received.

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

Shares of the Company entitle their owners to one vote per share; however, on 
any matter submitted to a vote of the shareowners, all shares then entitled 
to vote will be voted by individual fund unless otherwise required by the 
1940 Act (in which case all shares will be voted in the aggregate). For 
example, a change in investment policy for a fund would be voted upon only by 
shareowners of the fund involved. Additionally, approval of an amendment to a 
fund's advisory or subadvisory agreement is a matter to be determined 
separately by that fund. Approval of a proposal by the shareowners of one 
fund is effective as to that fund whether or not enough votes are received 
from the shareowners of the other funds to approve the proposal as to that 
fund. 

The directors themselves have the power to alter the number and the terms of 
office of the directors, and they may at any time lengthen their own terms or 
make their terms of unlimited duration (subject to certain removal 
procedures) and appoint their own successors, provided that in accordance 
with the 1940 Act always at least a majority, but in most instances, at least 
two-thirds of the directors have been elected by the shareowners of the 
Company. Shares do not have cumulative voting rights and therefore the owners 
of more than 50% of the outstanding shares of the Company may elect all of 
the directors irrespective of the votes of other shareowners. 

Custodians.  Portfolio securities and cash owned by the Company on behalf of 
Smith Barney Large Cap Value Portfolio, Smith Barney Large Capitalization 
Growth Portfolio, Alliance Growth Portfolio, AIM Capital Appreciation 
Portfolio, Van Kampen Enterprise Portfolio, MFS Total Return Portfolio, 
Travelers Managed Income Portfolio, Putnam Diversified Income Portfolio, 
Smith Barney High Income Portfolio, and Smith Barney Money Market Portfolio 
are held in the custody of PNC Bank, National Association, 17th and Chestnut 
Streets, Philadelphia, Pennsylvania 19103 (foreign securities, if any, will 
be held in the custody of The Barclays Bank, PLC).

Portfolio securities and cash owned by the Company on behalf of Smith Barney 
Pacific Basin Portfolio, Smith Barney International Equity Portfolio and GT 
Global Strategic Income Portfolio are held in the custody of Chase Manhattan 
Bank, Chase MetroTech Center, Brooklyn, New York 11245.

Independent Auditors.  KPMG LLP, 345 Park Avenue, New York, New York 10154, 
has been selected as the Company's independent auditors for its fiscal year 
ending October 31, 1999, to examine and report on the financial statements 
and financial highlights of the Company.

FINANCIAL STATEMENTS
   
The financial information contained under the following headings is hereby 
incorporated by reference to the Company's 1998 Annual Reports to 
Shareholders filed on December 30, 1998, accession number 91155-98-000737: 


Annual Report of:
Pages(s)in:


Smith Barney Large Cap Value Portfolio

Alliance Growth Portfolio

Van Kampen Enterprise Portfolio

Schedule of Investments 	
12-24
Statements of Assets and Liabilities	
25
Statements of Operations	
26
Statements of Changes in Net Assets	
27-29
Notes to Financial Statements	
30-35
Financial Highlights (for a share of capital stock of each 
series
outstanding through each year)	

36-38
Independent Auditors' Report	
39


MFS Total Return Portfolio

Travelers Managed Income Portfolio

Smith Barney Money Market Portfolio

Schedule of Investments	
9-30
Statements of Assets and Liabilities	
32
Statements of Operations	
33
Statements of Changes in Net Assets	
34-36
Notes to Financial Statements	
37-43
Financial Highlights (for a share of capital stock of each 
series
outstanding through each year)	

44-46
Independent Auditors' Report	
47

Smith Barney High Income Portfolio

Putnam Diversified Income Portfolio

Schedule of Investments	
9-43
Statements of Assets and Liabilities	
45
Statements of Operations	
46
Statements of Changes in Net Assets	
47-48
Notes to Financial Statements	
49-56
Financial Highlights (for a share of capital stock of each 
series
outstanding through each year)	

57-58
Independent Auditors' Report	
59




Smith Barney International Equity Portfolio

Smith Barney Pacific Basin Portfolio

GT Global Strategic Income Portfolio

Schedule of Investments	
14-22
Statements of Assets and Liabilities	
23
Statements of Operations	
24
Statements of Changes in Net Assets	
25-27
Notes to Financial Statements	
28-36
Financial Highlights (for a share of capital stock of each 
series
outstanding through each year)	

37-39
Independent Auditors' Report	
40


AIM Capital Appreciation Portfolio

Smith Barney Large Capitalization Growth Portfolio

Schedule of Investments	
9-19
Statements of Assets and Liabilities	
20
Statements of Operations	
21
Statements of Changes in Net Assets	
22-23
Notes to Financial Statements	
24-28
Financial Highlights (for a share of capital stock of each 
series
outstanding through each year)	

29-30
Independent Auditors' Report	
31-32

    

APPENDIX A

RATINGS ON DEBT OBLIGATIONS BOND (AND NOTES) 

Moody's Investors Service, Inc.

Aaa - Bonds that are rated "Aaa" are judged to be of the best quality. They 
carry the smallest degree of investment risk and are generally referred to as 
"gilt edged." Interest payments are protected by a large or by an 
exceptionally stable margin and principal is secure. While the various 
protective elements are likely to change, such changes as can be visualized 
are most unlikely to impair the fundamentally strong position of such issues.

Aa - Bonds that are rated "Aa" are judged to be of high quality by all 
standards. Together with the "Aaa" group they comprise what are generally 
known as high grade bonds. They are rated lower than the best bonds because 
margins of protection may not be as large as in "Aaa" securities or 
fluctuation of protective elements may be of greater amplitude or there may 
be other elements present that make the long term risks appear somewhat 
larger than in "Aaa" securities. 

A - Bonds that are rated "A" possess many favorable investment attributes and 
are to be considered as upper medium grade obligations. Factors giving 
security to principal and interest are considered adequate but elements may 
be present that suggest a susceptibility to impairment sometime in the 
future.

Baa - Bonds that are rated "Baa" are considered as medium grade obligations, 
i.e., they are neither highly protected nor poorly secured. Interest payments 
and principal security appear adequate for the present but certain protective 
elements may be lacking or may be characteristically unreliable over any 
great length of time. Such bonds lack outstanding investment characteristics 
and in fact have speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative elements; their 
future cannot be considered as well assured. Often the protection of interest 
and principal payments may be very moderate and thereby not well safeguarded 
during both good and bad times over the future. Uncertainty of position 
characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the desirable 
investment. Assurance of interest and principal payments or of maintenance of 
other terms of the contract over any long period of time may be small.

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in 
default or there may be present elements of danger with respect to principal 
or interest.

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

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

Note: The modifier 1 indicates that the security ranks in the higher end of 
its generic rating category; the modifier 2 indicates a mid-range ranking; 
and the modifier 3 indicates that the issue ranks in the lower end of its 
generic rating category.

Standard & Poor's

AAA - Debt rated "AAA" has the highest rating assigned by Standard & Poor's. 
Capacity to pay interest and repay principal is extremely strong.

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

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

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

BB, B, CCC, CC, C - Debt rated 'BB', 'B', 'CCC', 'CC' or 'C' is regarded, on 
balance, as predominantly speculative with respect to capacity to pay 
interest and repay principal in accordance with the terms of the obligation. 
'BB' indicates the lowest degree of speculation and 'C' the highest degree of 
speculation. While such debt will likely have some quality and protective 
characteristics, these are outweighed by large uncertainties or major risk 
exposures to adverse conditions. 

Plus (+) or Minus (-): The ratings from 'AA' to 'B' may be modified by the 
addition of a plus or minus sign to show relative standing within the major 
rating categories.

Provisional Ratings: The letter "p" indicates that the rating is provisional. 
A provisional rating assumes the successful completion of the project being 
financed by the debt being rated and indicates that payment of debt service 
requirements is largely or entirely dependent upon the successful and timely 
completion of the project. This rating, however, while addressing credit 
quality subsequent to completion of the project, makes no comment on the 
likelihood of, or the risk of default upon failure of, such completion. The 
investor should exercise judgment with respect to such likelihood and risk.

L - The letter "L" indicates that the rating pertains to the principal amount 
of those bonds where the underlying deposit collateral is fully insured by 
the Federal Savings & Loan Insurance Corp. or the Federal Deposit Insurance 
Corp. 

+ -	Continuance of the rating is contingent upon S&P's receipt of closing 
documentation confirming investments and cash flow.

* -	Continuance of the rating is contingent upon S&P's receipt of an 
executed copy of the escrow agreement. 

NR - Indicates no rating has been requested, that there is insufficient 
information on which to base a rating, or that S&P does not rate a particular 
type of obligation as a matter of policy. 

Fitch IBCA, Inc. 

AAA - Bonds rated AAA by Fitch have the lowest expectation of credit risk. 
The obligor has an exceptionally strong capacity for timely payment of 
financial commitments which is highly unlikely to be adversely affected by 
foreseeable events. 

AA - Bonds rated AA by Fitch have a very low expectation of credit risk. They 
indicate very strong capacity for timely payment of financial commitment. 
This capacity is not significantly vulnerable to foreseeable events. 

A - Bonds rated A by Fitch are considered to have a low expectation of credit 
risk. The capacity for timely payment of financial commitments is considered 
to be strong, but may be more vulnerable to changes in economic conditions 
and circumstances than bonds with higher ratings.

BBB - Bonds rated BBB by Fitch currently have a low expectation of credit 
risk. The capacity for timely payment of financial commitments is considered 
to be adequate. Adverse changes in economic conditions and circumstances, 
however, are more likely to impair this capacity. This is the lowest 
investment grade category assigned by Fitch.

BB - Bonds rated BB by Fitch carry the possibility of credit risk developing, 
particularly as the result of adverse economic change over time. Business or 
financial alternatives may, however, be available to allow financial 
commitments to be met. Securities rated in this category are not considered 
by Fitch to be investment grade.

B - Bonds rated B by Fitch carry significant credit risk, however, a limited 
margin of safety remains. Although financial commitments are currently being 
met, capacity for continued payment depends upon a sustained, favorable 
business and economic environment.

CCC, CC, C - Default on bonds rated CCC, CC, and C by Fitch is a real 
possibility. The capacity to meet financial commitments depends solely on a 
sustained, favorable business and economic environment. Default of some kind 
on bonds rated CC appears probable, a C rating indicates imminent default.

Plus and minus signs are used by Fitch to indicate the relative position of a 
credit within a rating category. Plus and minus signs however, are not used 
in the AAA category.

COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

Issuers rated "Prime-1" (or related supporting institutions) have a superior 
capacity for repayment of short-term promissory obligations. Prime-1 
repayment will normally be evidenced by the following characteristics: 
leading market positions in well-established industries; high rates of return 
on funds employed; conservative capitalization structures with moderate 
reliance on debt and ample asset protection; broad margins in earnings 
coverage of fixed financial changes and high internal cash generation; well-
established access to a range of financial markets and assured sources of 
alternate liquidity.

Issuers rated "Prime-2" (or related supporting institutions) have strong 
capacity for repayment of short-term promissory obligations. This will 
normally be evidenced by many of the characteristics cited above but to a 
lesser degree. Earnings trends and coverage ratios, while sound, will be more 
subject to variation. Capitalization characteristics, while still 
appropriate, may be more affected by external conditions. Ample alternate 
liquidity is maintained.

Standard & Poor's

A-1 - This designation indicates that the degree of safety regarding timely 
payment is either overwhelming or very strong. Those issuers determined to 
possess overwhelming safety characteristics will be denoted with a plus (+) 
sign designation.

A-2 - Capacity for timely payment on issues with this designation is strong. 
However, the relative degree of safety is not as high as for issues 
designated A-1.

Fitch IBCA, Inc.

Fitch's short-term ratings apply to debt obligations that are payable on 
demand or have original maturities of generally up to three years, including 
commercial paper, certificates of deposit, medium-term notes, and municipal 
and investment notes.

The short-term rating places greater emphasis than a long-term rating on the 
existence of liquidity necessary to meet financial commitment in a timely 
manner.

Fitch's short-term ratings are as follows:

F1+ - Issues assigned this rating are regarded as having the strongest 
capacity for timely payments of financial commitments. The "+" denotes an 
exceptionally strong credit feature.

F1 - Issues assigned this rating are regarded as having the strongest 
capacity for timely payment of financial commitments.

F2 - Issues assigned this rating have a satisfactory capacity for timely 
payment of financial commitments, but the margin of safety is not as great as 
in the case of the higher ratings.

F3 - The capacity for the timely payment of financial commitments is 
adequate; however, near-term adverse changes could result in a reduction to 
non investment grade.

Duff & Phelps Inc.

Duff 1+ - Indicates the highest certainty of timely payment: short-term 
liquidity is clearly outstanding, and safety is just below risk-free United 
States Treasury short-term obligations.

Duff 1 - Indicates a high certainty of timely payment.

Duff 2 - Indicates a good certainty of timely payment: liquidity factors and 
company fundamentals are sound. The Thomson BankWatch ("TBW")

TBW-1 - Indicates a very high degree of likelihood that principal and 
interest will be paid on a timely basis.

TBW-2 - While the degree of safety regarding timely repayment of principal 
and interest is strong, the relative degree of safety is not as high as for 
issues rated TBW-1.




PART C.  Other Information

Item 23. Exhibits


a.1	Articles of Incorporation dated as of February 18, 
1994 is incorporated by reference to Exhibit 1(a) to 
the Registration Statement on February 23, 1994.

a.2 	Amendment to Articles of Incorporation dated as of 
May 26,1994 is incorporated by reference to Exhibit 
1(b) to Pre-Effective Amendment No. 1 on June 10, 
1994.

a.3	Amendment to Articles of Incorporation dated as of 
June 7, 1994 is incorporated by reference to Exhibit 
1(c) to Pre-Effective Amendment No. 1 on June 10, 
1994.

a.4	Amendment to Articles of Incorporation dated as of 
February 17, 1999 is filed
herewith.

a.5	Amendment to Articles of Incorporation dated as of 
February 24, 1999 is filed
herewith.

b.	Bylaws of the Fund are incorporated by reference to 
Exhibit 2 to Pre-Effective Amendment No. 1 on June 
10, 1994.

c.	Not applicable

d.1	Management Agreement between Registrant on behalf of 
the Smith Barney Large Cap Value Portfolio (formerly 
known as Smith Barney Income and Growth Portfolio) 
and SSBC Fund Management Inc., formerly Mutual 
Management Corp. ("MMC") is incorporated by reference 
to Exhibit 5(a) to Pre-Effective Amendment No. 1 on 
June 10, 1994 and Post-Effective Amendment No. 1 
filed December 29, 1994.

d.2	Management Agreement between Registrant on behalf of 
the Alliance Growth Portfolio and MMC is incorporated 
by reference to Exhibit 5(b) to Pre-Effective 
Amendment No. 1 on June 10, 1994 and Post-Effective 
Amendment No. 1 filed December 29, 1994.  Form of 
Transfer and Assumption of Management Agreement from 
MMC to Travelers Investment Adviser, Inc. ("TIA") is 
filed herewith as Exhibit d.21. 

d.3	Management Agreement between Registrant on behalf of 
the Van Kampen Enterprise Portfolio and MMC is 
incorporated by reference to Exhibit 5(c) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed December 29, 1994. 
Form of Transfer and Assumption of Management 
Agreement from MMC to Travelers Investment Adviser, 
Inc. ("TIA") is filed herewith as Exhibit d.21.

d.4	Management Agreement between Registrant on behalf of 
the Smith Barney International Equity Portfolio and 
MMC is incorporated by reference to Exhibit 5(d) to 
Pre-Effective Amendment No. 1 on June 10, 1994 and 
Post-Effective Amendment No. 1 filed on December 29, 
1994.

d.5	Management Agreement between Registrant on behalf of 
the Smith Barney Pacific Basin Portfolio and MMC is 
incorporated by reference to Exhibit 5(e) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed on December 29, 1994.

d.6	Management Agreement between Registrant on behalf of 
the Putnam Diversified Income Portfolio and MMC is 
incorporated by reference to Exhibit 5(g) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed December 29, 1994. 
Form of Transfer and Assumption of Management 
Agreement from MMC to Travelers Investment Adviser, 
Inc. ("TIA") is filed herewith as Exhibit d.21.

d.7	Management Agreement between Registrant on behalf of 
the GT Global Strategic Income Portfolio and MMC is 
incorporated by reference to Exhibit 5(h) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed December 29, 1994. 
Form of Transfer and Assumption of Management 
Agreement from MMC to Travelers Investment Adviser, 
Inc. ("TIA") is filed herewith as Exhibit d.21.

d.8	Management Agreement between Registrant on behalf of 
the Smith Barney High Income Portfolio and MMC is 
incorporated by reference to Exhibit 5(i) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed December 29, 1994.

d.9	Management Agreement between Registrant on behalf of 
the MFS Total Return Portfolio and MMC is 
incorporated by reference to Exhibit 5(j) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed December 29, 1994.  
Form of Transfer and Assumption of Management 
Agreement from MMC to Travelers Investment Adviser, 
Inc. ("TIA") is filed herewith as Exhibit d.21.

d.10	Management Agreement between Registrant on behalf of 
the Smith Barney Money Market Portfolio and MMC is 
incorporated by reference to Exhibit 5(k) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed December 29, 1994.

d.11	Subadvisory Agreement for Alliance Growth Portfolio 
among Registrant, MMC and Alliance Capital Management 
L.P. is incorporated by reference to Exhibit 5(l) to 
Pre-Effective Amendment No. 1 on June 10, 1994 and 
Post-Effective Amendment No. 1 filed December 29, 
1994. Form of Agreement replacing  MMC with TIA as 
the adviser under the Subadvisory Agreement is filed 
herewith as Exhibit d.22.

d.12	Subadvisory Agreement for Van Kampen Enterprise 
Portfolio among Registrant, MMC and Van Kampen Asset 
Management, Inc. is incorporated by reference to 
Exhibit 5(m) to Pre-Effective Amendment No. 1 on June 
10, 1994 and Post-Effective Amendment No. 1 filed 
December 29, 1994. Form of Agreement replacing MMC 
with TIA as the adviser under the Subadvisory 
Agreement is filed herewith as Exhibit d.22.

d.13	Subadvisory Agreement for Putnam Diversified Income 
Portfolio among Registrant, MMC and Putnam Investment 
Management, Inc. is incorporated by reference to 
Exhibit 5(o) to Pre-Effective Amendment No. 1 on June 
10, 1994 and Post-Effective Amendment No. 1 filed 
December 29, 1994. Form of Agreement replacing  MMC 
with TIA as the adviser under the Subadvisory 
Agreement is filed herewith as Exhibit d.22.

d.14	Subadvisory Agreement for GT Global Strategic Income 
Portfolio among Registrant, MMC and Invesco (NY), 
formerly, G.T. Capital Management, Inc., is 
incorporated by reference to Exhibit 5(p) to Pre-
Effective Amendment No. 1 on June 10, 1994 and Post-
Effective Amendment No. 1 filed December 29, 1994.  
Form of Agreement replacing MMC with TIA as the 
adviser under the Subadvisory Agreement is filed 
herewith as Exhibit d.22.

d.15	Subadvisory Agreement for MFS Total Return Portfolio 
among Registrant, MMC and Massachusetts Financial 
Services Company is incorporated by reference to 
Exhibit 5(q) to Pre-Effective Amendment No. 1 on June 
10, 1994 and Post-Effective Amendment No. 1 filed 
December 29, 1994. Form of Agreement replacing MMC 
with TIA as the adviser under the Subadvisory 
Agreement is filed herewith as Exhibit d.22.

d.16	Subadvisory Agreement between MMC and Smith Barney 
Inc. is incorporated by reference to Exhibit 5(r) to 
Pre-Effective Amendment No. 1 on June 10, 1994 and 
Post-Effective Amendment No. 1 filed December 29, 
1994. 

d.17	Management Agreement between Registrant, on behalf of 
AIM Capital Appreciation Portfolio and MMC is 
incorporated by reference to Post-Effective Amendment 
No. 4 filed on February 28, 1996.  Form of Transfer 
and Assumption of Management Agreement from MMC to 
TIA is filed herewith as Exhibit d.21. 

d.18	Subadvisory Agreement among Registrant, MMC and AIM 
Capital Management, Inc. is incorporated by reference 
to Post-Effective Amendment No. 4 filed on February 
28, 1996. Form of Agreement replacing MMC with TIA as 
the adviser under the Subadvisory Agreement is filed 
herewith as Exhibit d.22.  

d.19	Form of Management Agreement between Registrant on 
behalf of its Smith Barney Large Capitalization 
Growth Portfolio and MMC is incorporated by reference 
to Exhibit 5(u) to Post-Effective Amendment No. 9 
filed on February 27, 1998.
 
d.20	Form of Management Agreement between Registrant on 
behalf of Travelers Managed Income Portfolio and 
Travelers Asset Management International Corporation 
is incorporated by reference to Exhibit d.22 to Post-
Effective Amendment No. 10 filed on December 23, 
1998.

d.21	Form of Transfer and Assumption of Management 
Agreement between MMC and TIA (filed herewith).

d.22	Form of Agreement replacing MMC with TIA as adviser 
under Subadvisory Agreement (filed herewith).

e.1	Distribution Agreement between Registrant and CFBDS, 
Inc. is incorporated by reference to Exhibit m.1 to 
Post-Effective Amendment No. 10 filed on December 23, 
1998.

e.2	Form of Selected Dealer Agreement between Registrant 
and CFBDS, Inc. (filed herewith).

f.	Not applicable.

g.1	Custodian Agreement between Registrant and PNC Bank, 
National Association is incorporated by reference to 
Exhibit 8 to Post-Effective Amendment No. 1 filed on 
December 29, 1994.

g.2	Global Custody Agreement between Barclays Bank PLC 
and PNC Bank is incorporated  by reference to Exhibit 
8 to Post-Effective Amendment No. 1 filed on December 
29, 1994.

g.3	Custodian Agreement between Registrant and Morgan 
Guaranty Trust Company of New York is incorporated by 
reference to Exhibit 8(c) to Post-Effective Amendment 
No. 4 filed on February 28, 1996.

g.4	Global Custody Agreement between The Chase Manhattan 
Bank and the Customer is incorporated by reference to 
Exhibit 8(d) to Post-Effective Amendment No. 7 filed 
on February 25, 1997.
 
h.1	Transfer Agency Agreement between Registrant and 
First Data Investor Services Group, Inc. is 
incorporated by reference to Exhibit 9 (b) to Post-
Effective Amendment No. 7 filed on February 25, 1997. 

i.	Opinion and Consent of Sullivan & Cromwell is 
incorporated by reference to Exhibit 10 to Pre-
Effective Amendment No. 1 on June 10, 1994.

j.	Auditors' Consent is filed herewith.
 
k.	Not applicable.

l.	Subscription Agreement between Registrant and The 
Travelers, Inc. is incorporated by reference to 
Exhibit 8 to Post-Effective Amendment No. 1 filed on 
December 29, 1994.

m	not applicable

n. Financial Data Schedule is filed herewith.

o.	not applicable

_________________________


Item 24.  Persons Controlled by or under Common Control with 
Registrant.

The Registrant is not controlled directly or indirectly by 
any person.  Information with respect to 
the Registrant's investment manager and each subadviser is 
set forth under the caption 
"Management" in the prospectus included in Part A of this 
Amendment to 
the Registration Statement on Form N-1A.

 Item 25.  Indemnification.

	Reference is made to ARTICLE IX of Registrant's Charter for 
a complete statement of its terms.

Insofar as indemnification for liability arising under the 
Securities Act of 1933 may be permitted to directors, 
officers and controlling persons of the registrant pursuant 
to the foregoing provisions, or otherwise, the registrant 
has been advised that in the opinion of the Securities and 
Exchange Commission such indemnification is against public 
policy as expressed in the Act and is, therefore, 
unenforceable.  In the event that a claim for 
indemnification against such liabilities (other than the 
payment by the registrant of expenses incurred or paid by a 
director, officer or controlling person of the registrant 
in the successful defense of any action, suit or 
proceeding) is asserted by such director, officer or 
controlling person in connection with the securities being 
registered, the registrant will, unless in the opinion of 
its counsel the matter has been settled by controlling 
precedent, submit to a court of appropriate jurisdiction 
the question whether such indemnification by it is against 
public policy as expressed in the Act and will be governed 
by the final adjudication of such issue."

Item 26. Business and other Connections of the Manager and each 
Subadviser.

See the material under the caption "Management" included in 
Part A (Prospectus) of this Registration Statement and the 
material appearing under the caption "Management 
Agreements" included in Part B (Statement of Additional 
Information) of this Registration Statement.
 
Information as to the Directors and Officers of SSBC Fund 
Management Inc. (formerly known as Mutual Management Corp.) 
is included in its Form ADV (File No. 801-8314), filed with 
the Commission, which is incorporated herein by reference 
thereto.

Information as to the Directors and Officers of Travelers 
Investment Adviser is included in its Form ADV (File No. 
801-52365), filed with the Commission, which is 
incorporated herein by reference thereto.

Information as to the Directors and Officers of Travelers 
Asset Management International Corporation is included in 
its Form ADV File No. 801-17003, filed with the Commission, 
which is incorporated herein by reference thereto. 
 
Information as to the Directors and Officers of Alliance 
Capital Management L.P. is included in its Form ADV (File 
No. 801-32361), filed with the Commission, which is 
incorporated herein by reference thereto.

Information as to the Directors and Officers of Putnam 
Investment Management, Inc. is included in its Form ADV 
(File No. 801-07974), filed with the Commission, which is 
incorporated herein by reference thereto.

Information as to the Directors and Officers of INVESCO 
(NY), Inc. (formerly G.T. Capital Management, Inc.) is 
included in its Form ADV (File No. 801-10254), filed with 
the Commission, which is incorporated herein by reference 
thereto.

Information as to the Directors and Officers of Van Kampen 
Asset Management, Inc. is included in its Form ADV (File 
No. 801-01669), filed with the Commission, which is 
incorporated herein by reference thereto.

Information as to the Directors and Officers of 
Massachusetts Financial Services Company is included in its 
Form ADV (File No. 801-07352 and 801-17352), filed with the 
Commission, which is incorporated herein by reference 
thereto.

Information as to the Directors and Officers of AIM Capital 
Management, Inc. is included in its Form ADV (File No. 801-
15211), with the Commission, which is incorporated herein 
by reference thereto.

Item 27.  Principal Underwriters

(a) CFBDS, Inc., ("CFBDS") the Registrant's Distributor, is 
also the distributor for the following Smith Barney funds: 
Concert Investment Series, Consulting Group Capital Markets 
Funds, Greenwich Street Series Fund, Smith Barney Adjustable 
Rate Government Income Fund, Smith Barney Aggressive Growth 
Fund Inc., Smith Barney Appreciation Fund Inc., Smith Barney 
Arizona Municipals Fund Inc., Smith Barney California 
Municipals Fund Inc., Smith Barney Concert Allocation Series 
Inc., Smith Barney Equity Funds, Smith Barney Fundamental 
Value Fund Inc., Smith Barney Funds, Inc., Smith Barney Income 
Funds, Smith Barney Institutional Cash Management Fund, Inc., 
Smith Barney Investment Funds Inc., Smith Barney Investment 
Trust, Smith Barney Managed Governments Fund Inc., Smith 
Barney Managed Municipals Fund Inc., Smith Barney 
Massachusetts Municipals Fund, Smith Barney Money Funds, Inc., 
Smith Barney Muni Funds, Smith Barney Municipal Money Market 
Fund, Inc., Smith Barney Natural Resources Fund Inc., Smith 
Barney New Jersey Municipals Fund Inc., Smith Barney Oregon 
Municipals Fund Inc., Smith Barney Principal Return Fund, 
Smith Barney Small Cap Blend Fund, Inc., Smith Barney 
Telecommunications Trust, Smith Barney Variable Account Funds, 
Smith Barney World Funds, Inc., and various series of unit 
investment trusts.

CFBDS also serves as the distributor for the following funds: The 
Travelers Fund UL for Variable Annuities, The Travelers Fund VA 
for Variable Annuities, The Travelers Fund BD for Variable 
Annuities, The Travelers Fund BD II for Variable Annuities, The 
Travelers Fund BD III for Variable Annuities, The Travelers Fund 
BD IV for Variable Annuities, The Travelers Fund ABD for Variable 
Annuities, The Travelers Fund ABD II for Variable Annuities, The 
Travelers Separate Account PF for Variable Annuities, The 
Travelers Separate Account PF II for Variable Annuities, The 
Travelers Separate Account QP for Variable Annuities, The 
Travelers Separate Account TM for Variable Annuities, The 
Travelers Separate Account TM II for Variable Annuities, The 
Travelers Separate Account Five for Variable Annuities, The 
Travelers Separate Account Six for Variable Annuities, The 
Travelers Separate Account Seven for Variable Annuities, The 
Travelers Separate Account Eight for Variable Annuities, The 
Travelers Fund UL for Variable Annuities, The Travelers Fund UL 
II for Variable Annuities, The Travelers Variable Life Insurance 
Separate Account One, The Travelers Variable Life Insurance 
Separate Account Two, The Travelers Variable Life Insurance 
Separate Account Three, The Travelers Variable Life Insurance 
Separate Account Four, The Travelers Separate Account MGA, The 
Travelers Separate Account MGA II, The Travelers Growth and 
Income Stock Account for Variable Annuities, The Travelers 
Quality Bond Account for Variable Annuities, The Travelers Money 
Market Account for Variable Annuities, The Travelers Timed Growth 
and Income Stock Account for Variable Annuities, The Travelers 
Timed Short-Term Bond Account for Variable Annuities, The 
Travelers Timed Aggressive Stock Account for Variable Annuities, 
The Travelers Timed Bond Account for Variable Annuities. 

In addition, CFBDS, the Registrant's Distributor, is also the 
distributor for CitiFunds Multi-State Tax Free Trust, CitiFunds 
Premium Trust, CitiFunds Institutional Trust, CitiFunds Tax Free 
Reserves, CitiFunds Trust I, CitiFunds Trust II, CitiFunds Trust 
III, CitiFunds International Trust, CitiFunds Fixed Income Trust, 
CitiSelect VIP Folio 200, CitiSelect VIP Folio 300, CitiSelect 
VIP Folio 400, CitiSelect VIP Folio 500, CitiFunds Small Cap 
Growth VIP Portfolio.  CFBDS is also the placement agent for 
Large Cap Value Portfolio, Small Cap Value Portfolio, 
International Portfolio, Foreign Bond Portfolio, Intermediate 
Income Portfolio, Short-Term Portfolio, Growth & Income 
Portfolio, U.S. Fixed Income Portfolio, Large Cap Growth 
Portfolio, Small Cap Growth Portfolio, International Equity 
Portfolio, Balanced Portfolio, Government Income Portfolio, Tax 
Free Reserves Portfolio, Cash Reserves Portfolio and U.S. 
Treasury Reserves Portfolio. 

In addition, CFBDS is also the distributor for the following 
Salomon Brothers funds: Salomon Brothers Opportunity Fund Inc., 
Salomon Brothers Investors Fund Inc., Salomon Brothers Capital 
Fund Inc., Salomon Brothers Series Funds Inc., Salomon Brothers 
Institutional Series Funds Inc., Salomon Brothers Variable Series 
Funds Inc.

In addition, CFBDS is also the distributor for the Centurion 
Funds, Inc.

(b)	The information required by this Item 27 with respect to 
each director and officer of CFBDS is incorporated by reference 
to Schedule A of Form BD filed by CFBDS pursuant to the 
Securities and Exchange Act of 1934 (File No. 8-32417).

(c)	Not applicable.


Item 28.  Location of Accounts and Records.

PNC Bank, National Association, 17th and Chestnut Streets, 
Philadelphia, Pennsylvania 19103, will maintain the 
custodian records for the Smith Barney Income and Growth 
Portfolio, Alliance Growth Portfolio, AIM Capital 
Appreciation Portfolio, Van Kampen American Capital 
Enterprise Portfolio, Travelers Managed Income Portfolio, 
Putnam Diversified Income Portfolio, Smith Barney High 
Income Portfolio, MFS Total Return Portfolio, Smith Barney 
Large Capitalization Growth Portfolio and Smith Barney 
Money Market Portfolio and The Chase Manhattan Bank, Chase 
MetroTech Center, Brooklyn, NY 11245 will maintain the 
custodian records for the Smith Barney International Equity 
Portfolio, Smith Barney Pacific Basin Portfolio and GT 
Global Strategic Income Portfolio, each as required by 
Section 31 (a) of the Investment Company Act of 1940, as 
amended (the "1940 Act").

First Data Investor Services Group, Inc., (formerly The 
Shareholder Services Group Inc.) 53 State Street, Boston, 
Massachusetts 02109-2873, will maintain the shareholder 
servicing agent records, required by Section 31 (a) of the 
1940 Act.

All other records required by Section 31 (a) of the 1940 
Act are maintained at the offices of the Registrant at 388 
Greenwich Street, New York, New York  10013 (and preserved 
for the periods specified by Rule 31a-2 of the 1940 Act).

Item 29.  Management Services.

Not Applicable.

Item 30.  Undertakings.

	Not Applicable.


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and 
the Investment Company Act of 1940, the Registrant, Travelers 
Series Fund, Inc., has duly caused this Post-Effective Amendment 
to its Registration Statement to be signed on its behalf by the 
undersigned or, where applicable, the true and lawful attorney-
in-fact, thereto duly authorized, in the City of New York, and 
State of New York on the 26th of February, 1999.
 

TRAVELERS SERIES FUND INC.


By: /s/Heath B. McLendon
Heath B. McLendon
Chairman of the Board, 
President and Chief Executive 
Officer 

Pursuant to the requirements of the Securities Act of 1933, this 
Post-Effective Amendment to the Registration Statement has been 
signed below by the following persons in the capacities and on 
the date indicated.
 
Signature
Title
Date


/s/Heath B. McLendon 
(Heath B. McLendon)

Chairman of the 
Board, President and 
Chief Executive 
Officer

February 26, 1999



/s/ Abraham E. Cohen
Director 
February 26, 1999
(Abraham E. Cohen)


/s/ Victor K. Atkins* 
Director
February 26, 1999
(Victor K. Atkins)


/s/ Robert A. Frankel* 
Director
February 26, 1999
(Robert A. Frankel)



/s/ Rainer Greeven* 
Director
February 26, 1999
(Rainer Greeven)


/s/ Susan M. Heilbron* 
Director
February 26, 1999
(Susan M. Heilbron)



/s/Lewis E. Daidone
Treasurer
February 26, 1999
(Lewis E. Daidone)
(Principal Financial 
and Accounting 
Officer)


______________________________________________________________

*Signed by Lewis E. Daidone, their duly authorized attorney-in-
fact, pursuant to power of attorney dated June 8, 1994.

By:	/s/Lewis E. Daidone      		February 26, 1999
Lewis E. Daidone


EXHIBIT INDEX

a.4	Amendment to Articles of Incorporation

a.5	Amendment to Articles of Incorporation

d.21	Form of Transfer and Assumption of Management Agreement  

d.22	Form of Agreement replacing MMC with TIA as adviser under 
	Subadvisory Agreement  

e.2	Form of Selected Dealer Agreement  

j.	Auditors' Consent

n. 	Financial Data Schedules