Securities Act Registration No. 33-43446
Investment Company Act Registration No. 811-6444


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
	Pre-Effective Amendment No.		[  ]
   	Post-Effective Amendment No. 33 		[X]

and/or
REGISTRATION STATEMENT UNDER
	THE INVESTMENT COMPANY ACT OF 1940		[X]
AMENDMENT NO. 33     					[X]
	__________________
Smith Barney Investment Trust
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
7 World Trade Center, 39th Floor
New York, New York  10048
(Address of Principal Executive Offices)
(212) 783-0693
(Registrants Telephone Number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Investment Trust
7 World Trade Center, 39th Floor
New York, New York  10048
(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 (b)
of Rule 485
[XX]	on March 30, 2001 pursuant to paragraph (b)
	of Rule 485
[  ]	60 days after filing pursuant to paragraph (a)(1)
of Rule 485
[  ]	On (date) pursuant to paragraph (a)(1) of Rule 485
[  ]	75 days after filing pursuant to paragraph (a)(2)
of rule 485
[  ]	On (date) pursuant to paragraph (a)(2) of Rule 485

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

Title of Securities Being Registered: Shares of
Beneficial

PART A - PROSPECTUS
For each of the following, dated March 30, 2001:

Smith Barney Intermediate Maturity California Municipals
Fund - A, L & Y shares,
Smith Barney Intermediate Maturity New York Municipals Fund
- A, L & Y shares,
Smith Barney Large Capitalization Growth Fund - A, B, L & Y
shares
Smith Barney Large Capitalization Growth Fund  - Z shares
and Smith Barney Mid Cap Core Fund - A, B, L, Y & 1 shares






                                  PROSPECTUS

                                 SMITH BARNEY
                                 INTERMEDIATE
                              MATURITY CALIFORNIA
                                MUNICIPALS FUND


Class A, L and Y Shares
March 30, 2001


The fund is a separate series of Smith Barney Investment
Trust, a Massachusetts
business trust.

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

                           [LOGO] Smith Barney
                                  Mutual Funds
                Your Serious Money. Professionally
Managed.(SM)


INVESTMENT PRODUCTS: NOT FDIC INSURED. NO BANK GUARANTEE.
MAY LOSE VALUE
<PAGE>


Smith Barney Intermediate Maturity California Municipals
Fund

 Contents


<TABLE>
<S>
<C>
Investments, risks and
performance..........................................   2
More on the fund's
investments..............................................
6
Management.................................................
 .................   6
Choosing a class of shares to
buy...........................................   8
Comparing the fund's
classes................................................   9
Sales
charges....................................................
 ...........  10
More about deferred sales
charges...........................................  12
Buying
shares.....................................................
 ..........  13
Exchanging
shares.....................................................
 ......  14
Redeeming
shares.....................................................
 .......  16
Other things to know about share
transactions...............................  18
Dividends, distributions and
taxes..........................................  20
Share
price......................................................
 ...........  21
Financial
highlights.................................................
 .......  22
</TABLE>

The fund is a separate series of Smith Barney Investment
Trust, a Massachusetts
business trust.




Smith Barney Mutual Funds


1
<PAGE>

 Investments, risks and performance


Investment objective
The fund seeks to provide California investors with as high
a level of current
income exempt from federal income taxes and California
state personal income
taxes as is consistent with the preservation of principal.

Principal investment strategies
Key investments The fund invests primarily in investment
grade municipal secu-
rities. These include securities issued by the State of
California and certain
other municipal issuers, political subdivisions, agencies
and public authori-
ties that pay interest which is exempt from federal income
and California per-
sonal income taxes. The fund maintains an average portfolio
maturity of between
three and ten years. The fund can invest up to 20% of its
assets in unrated
securities that the manager determines are investment
grade.

Selection process The manager selects securities primarily
by identifying
undervalued sectors and individual securities, while also
selecting securities
it believes will benefit from changes in market conditions.
In selecting indi-
vidual securities, the manager:

 .Uses fundamental credit analysis to estimate the relative
value and attrac-
  tiveness of various securities and sectors and to exploit
opportunities in
  the municipal bond market
 .May trade between general obligation and revenue bonds and
among various reve-
  nue bond sectors, such as housing, hospital and
industrial development, based
  on their apparent relative values
 .Considers the yields available for securities with
different maturities and a
  security's maturity in light of the outlook for the
issuer, its sector and
  interest rates
 .Identifies individual securities with the most potential
for added value, such
  as those involving unusual situations, new issuers, the
potential for credit
  upgrades, unique structural characteristics or innovative
features

Smith Barney Intermediate Maturity California Municipals
Fund

 2
<PAGE>


Principal risks of investing in the fund
Investors could lose money on their investment in the fund,
or the fund may not
perform as well as other investments, if:

 .Interest rates rise, causing the value of the fund's
portfolio to decline
 .The issuer of a security owned by the fund defaults on its
obligation to pay
  principal and/or interest or the security's credit rating
is downgraded
 .California municipal securities fall out of favor with
investors. The fund
  will suffer more than a national municipal fund from
adverse events affecting
  California municipal issuers
 .Unfavorable legislation affects the tax-exempt status of
municipal bonds
 .The manager's judgment about the attractiveness, value or
income potential of
  a particular security proves to be incorrect

It is possible that some of the fund's income distributions
may be, and distri-
butions of the fund's gains generally will be, subject to
federal and Califor-
nia state taxation. The fund may realize taxable gains on
the sale of its
securities or on transactions in derivative contracts. Some
of the fund's
income may be subject to the federal alternative minimum
tax. In addition, dis-
tributions of the fund's income and gains will be taxable
to investors in
states other than California.

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

Who may want to invest The fund may be an appropriate
investment if you are a
California taxpayer and:

 .Are in a high federal tax bracket seeking income that is
exempt from Califor-
  nia and federal taxation
 .Currently have exposure to other asset classes and are
seeking to broaden your
  investment portfolio
 .Are willing to accept the risks of municipal securities,
including the risks
  of concentrating in a single state



Smith Barney Mutual Funds


3
<PAGE>


Risk return bar chart

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

             Total Return for Class A Shares

                            [BAR CHART APPEARS HERE]

1992    1993    1994    1995    1996    1997    1998
1999    2000
----    ----    ----    ----    ----    ----    ----    ---
-    ----
7.59%   11.52% (4.82%)  14.63%  4.19%   7.48%   5.80%
(1.52%)  9.18%

                       Calendar years ended December 31

Quarterly returns:

Highest: 5.80% in 1st quarter 1995; Lowest: (4.64)% in 1st
quarter 1994

Risk return table
This table indicates the risks of investing in the fund by
comparing the aver-
age annual total return of each class for the periods shown
to that of the Leh-
man Brothers Municipal Bond Index (the "Lehman Index"), a
broad-based unmanaged
index of municipal bonds and the Lipper California
Municipal Fund Average (the
"Lipper Funds Average"), an average composed of the fund's
peer group of mutual
funds. This table assumes imposition of the maximum sales
charge applicable to
the class, redemption of shares at the end of the period,
and reinvestment of
distributions and dividends.

                          Average Annual Total Returns

                  Calendar Years Ended December 31, 2000

<TABLE>
<CAPTION>
Class                 1 year 5 years 10 years Since
Inception Inception Date
<S>                   <C>    <C>     <C>      <C>
<C>
 A                     6.99%  4.55%    n/a         5.61%
12/31/91
 L                     6.92%  4.53%    n/a         6.16%
11/08/94
 Y                     9.23%  5.17%    n/a         5.50%
09/08/95
Lehman Index          11.68%  5.84%    n/a         6.80%
*
Lipper Funds Average  12.86%  5.03%    n/a         6.25%
*
*Index Comparison begins on December 31, 1991.
</TABLE>

Smith Barney Intermediate Maturity California Municipals
Fund

 4
<PAGE>

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

                                Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment)
Class A Class L Class Y
<S>                                                     <C>
<C>     <C>
Maximum sales charge (load) imposed on purchases (as a
% of offering price)
2.00%   1.00%    None
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption)
None*   1.00%    None
                        Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets)
Class A Class L Class Y
<S>                                                     <C>
<C>     <C>
Management fees**
0.50%   0.50%   0.50%
Distribution and service (12b-1) fees
0.15%   0.35%    None
Other expenses
0.32%   0.33%   0.29%
                                                         --
---   -----   -----
Total annual fund operating expenses
0.97%   1.18%   0.79%

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

**Management has agreed to waive a portion of its
management fees. As a result
of these fee waivers currently in effect, the management
fees were 0.30%.

<TABLE>
<CAPTION>
                                    Class A Class L Class Y
<S>                                 <C>     <C>     <C>
Management fee waivers               0.20%   0.20%   0.20%
                                     -----   -----   -----
Net annual fund operating expenses   0.77%   0.98%   0.59%
</TABLE>

Management may discontinue or modify this management fee
waiver at any time.

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

 .You invest $10,000 in the fund for the period shown

 .Your investment has a 5% return each year
 .You reinvest all distributions and dividends without a
sales charge
 .The fund's operating expenses remain the same

                      Number of years you own your shares
<TABLE>
<CAPTION>
                                      1 year 3 years 5
years 10 years
<S>                                   <C>    <C>     <C>
<C>
Class A (with or without redemption)   $297   $503    $726
$1,366
Class L (with or without redemption)   $319   $471    $743
$1,517
Class L (no redemption)                $219   $471    $743
$1,517
Class Y (with or without redemption)   $ 81   $252    $439
$  978
</TABLE>



Smith Barney Mutual Funds


5
<PAGE>

 More on the fund's investments

California municipal securities California municipal
securities include debt
obligations issued by certain non-California governmental
issuers such as
Puerto Rico, the Virgin Islands and Guam. The interest on
California municipal
securities is exempt from federal income tax and California
personal income
tax. As a result, the interest rate on these bonds normally
is lower than it
would be if the bonds were subject to taxation.

The California municipal securities in which the fund
invests include general
obligation bonds, revenue bonds and notes, and municipal
leases. These securi-
ties may pay interest at fixed, variable or floating rates.
The fund may also
hold zero coupon securities which pay no interest during
the life of the obli-
gation but trade at prices below their stated maturity
value.

The fund normally invests in intermediate-term municipal
securities, which are
securities that have remaining maturities at the time of
purchase of three to
ten years. The fund normally maintains an average portfolio
maturity of between
three and ten years.

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

 Management

Manager The fund's investment adviser and administrator is
Citigroup Fund Man-
agement LLC (prior to March 30, 2001, known as SSB Citi
Fund Management LLC),
an affiliate of Salomon Smith Barney Inc. The manager's
address is 7 World
Trade Center, New York, New York 10048. The manager
oversees the selection of
the fund's investments and its general operations. The
manager and Salomon
Smith Barney are subsidiaries of Citigroup Inc. Citigroup
businesses produce a
broad range of financial services--asset management,
banking and consumer
finance, credit and charge cards, insurance, investments,
investment banking
and trading--and use diverse channels to make them
available to consumer and
corporate customers around the world.

Joseph P. Deane, investment officer of the manager and
senior vice president
and managing director of Salomon Smith Barney, has been
responsible for the
day-to-day management of the fund's portfolio since its
inception in 1991.
David T. Fare, investment officer of the manager and

Smith Barney Intermediate Maturity California Municipals
Fund

 6
<PAGE>


vice president of Salomon Smith Barney, currently shares
the responsibility for
the day-to-day management of the fund's portfolio, joining
Mr. Deane in 1998.
Mr. Deane and Mr. Fare have 31 and 14 years, respectively,
of securities busi-
ness experience.

Management fees For its services, the manager received a
management fee and
administrative fee during the Fund's last fiscal year equal
to 0.18% and 0.12%,
respectively, of the fund's average daily net assets.

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

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

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



Smith Barney Mutual Funds


7
<PAGE>

 Choosing a class of shares to buy

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

 .If you plan to invest regularly or in large amounts,
buying Class A shares may
  help you reduce sales charges and ongoing expenses.

 .Class L shares are sold with a lower initial sales charge
than Class A shares,
  which may also help to offset the higher annual expenses
of this class.
  Because the fund's future return cannot be predicted,
however, there can be
  no assurance that this would be the case for either
class.

You may buy shares from:

 .A broker-dealer, financial intermediary, financial
institution or a distribu-
  tor's financial consultant (each called a "Service
Agent").

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

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

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

<TABLE>
<CAPTION>
                                              Initial
Additional
                                      Classes A, L   Class
Y   All Classes
<S>                                   <C>          <C>
<C>
General                                  $1,000    $15
million     $50
Monthly Systematic Investment Plan        $25          n/a
$25
Quarterly Systematic Investment Plan      $50          n/a
$50
Uniform Gift to Minor Account             $250     $15
million     $50
</TABLE>

Smith Barney Intermediate Maturity California Municipals
Fund

 8
<PAGE>

 Comparing the fund's classes

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

<TABLE>
<CAPTION>
                   Class A       Class L       Class Y

<S>             <C>           <C>           <C>
Key features    .Initial      .Initial      .No initial
                 sales         sales         or deferred
                 charge        charge is     sales
                 .You may      lower than    charge
                 qualify for   Class A       .Minimum
                 reduction     .Deferred     investment
                 or waiver     sales         of at least
                 of initial    charge for    $15 million
                 sales         1 year        .Lower
                 charge        .Higher       annual
                 .Lower        annual        expenses
                 annual        expenses      than the
                 expenses      than Class    other clas-
                 than Class    A             ses
                 L
--------------------------------------------------------

Initial sales    Up to         1.00%         None
charge           2.00%;
                 reduced for
                 large pur-
                 chases and
                 waived for
                 certain
                 investors.
                 No charge
                 for pur-
                 chases of
                 $500,000 or
                 more
--------------------------------------------------------

Deferred sales   1.00% on      1.00% if      None
charge           purchases     you redeem
                 of $500,000   within 1
                 or more if    year of
                 you redeem    purchase
                 within 1
                 year of
                 purchase
--------------------------------------------------------

Annual           0.15% of      0.35% of      None
distribution     average       average
and service      daily net     daily net
fees             assets        assets
--------------------------------------------------------

Exchange         Class A       Class L       Class Y
Privilege*       shares        shares        shares
                 of most       of most       of most
                 Smith Bar-    Smith Bar-    Smith Bar-
                 ney funds     ney funds     ney funds
--------------------------------------------------------
</TABLE>

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


Smith Barney Mutual Funds


9
<PAGE>

 Sales charges

Class A shares

You buy Class A shares at the offering price, which is the
net asset value plus
a sales charge. You do not pay a sales charge on
investments of $500,000 or
more, or on the fund's distributions or dividends you
reinvest in additional
Class A shares.

The table below shows the rate of sales charge you pay,
depending on the amount
you purchase. The table below also shows the amount of
broker/dealer compensa-
tion that is paid out of the sales charge. This
compensation includes commis-
sions and other fees which Service Agents that sell shares
of the fund receive.
The distributor keeps up to approximately 10% of the sales
charge imposed on
Class A shares. Service Agents also will receive the
service fee payable on
Class A shares at an annual rate equal to 0.15% of the
average daily net assets
represented by Class A shares serviced by them.

<TABLE>
<CAPTION>
                    Sales Charge as a % of Broker/Dealer
                                           commission as %
                    Offering  Net amount   of offering
Amount of purchase  price (%) invested (%) price

<S>                 <C>       <C>          <C>
Less than $500,000    2.00        2.04          1.80
$500,000 or more       -0-         -0-           -0-
</TABLE>

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

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

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

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

 and for which a sales charge was paid, with the amount of
your next purchase
 of Class A shares for purposes of calculating the initial
sales

Smith Barney Intermediate Maturity California Municipals
Fund

10
<PAGE>

 charge. Certain trustees and fiduciaries may be entitled
to combine accounts
 in determining their sales charge.

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

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

 .Employees of NASD members

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

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

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

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

Service Agents selling Class L shares receive commissions
of up to 1.35% of the
purchase price of the Class L shares they sell. Starting in
the thirteenth
month Service Agents also receive an annual fee of 0.35% of
the average daily
net assets represented by the Class L shares held by their
clients.

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


Smith Barney Mutual Funds


11
<PAGE>


 More about deferred sales charges

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

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

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

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

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

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

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

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

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

Smith Barney Intermediate Maturity California Municipals
Fund

12
<PAGE>

 Buying shares

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

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

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

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

   Through the   Certain investors who are clients of
certain Service Agents
    fund         are eligible to buy shares directly from
the fund.

                 .Write the fund at the following address:

                      Smith Barney Investment Trust

                      Smith Barney Intermediate Maturity
California Municipals
                      Fund
                      (Specify class of shares)
                      c/o PFPC Global Fund Services
                      P.O. Box 9699
                      Providence, RI 02940-9699
                 .Enclose a check to pay for the shares.
For initial pur-
                   chases, complete and send an account
application.
                 .For more information, call the transfer
agent at 1-800-451-
                   2010.
-----------------------------------------------------------
---------------------
     Through a
    systematic   You may authorize your Service Agent or
the sub-transfer
    investment   agent to transfer funds automatically from
(i) a regular bank
          plan   account, (ii) cash held in a brokerage
account opened with a
                 Service Agent or (iii) certain money
market funds, in order
                 to buy shares on a regular basis.

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

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

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


Smith Barney Mutual Funds


13
<PAGE>


 Exchanging shares

  Smith Barney   You should contact your Service Agent to
exchange into other
      offers a   Smith Barney funds. Be sure to read the
prospectus of the
   distinctive   Smith Barney fund you are exchanging into.
An exchange is a
     family of   taxable transaction.
         funds
   tailored to
 help meet the
 varying needs
 of both large
     and small
     investors

                 .You may exchange shares only for shares
of the same class of
                   another Smith Barney fund. Not all Smith
Barney funds offer
                   all classes.

                 .Not all Smith Barney funds may be offered
in your state of
                   residence. Contact your Service Agent or
the transfer agent
                   for further information.

                 .You must meet the minimum investment
amount for each fund,
                   (except for systematic investment plan
exchanges).
                 .If you hold share certificates, the sub-
transfer agent must
                   receive the certificates endorsed for
transfer or with
                   signed stock powers (documents
transferring ownership of
                   certificates) before the exchange is
effective.
                 .The fund may suspend or terminate your
exchange privilege if
                   you engage in an excessive pattern of
exchanges.
-----------------------------------------------------------
---------------------

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

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

Smith Barney Intermediate Maturity California Municipals
Fund

14
<PAGE>


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

                 You can make telephone exchanges only
between accounts that
                 have identical registrations.
-----------------------------------------------------------
---------------------

       By mail
                 If you do not have a brokerage account,
contact your Service
                 Agent or write to the sub-transfer agent
at the address on
                 the following page.


Smith Barney Mutual Funds


15
<PAGE>

 Redeeming shares

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

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

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

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

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

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

                   Smith Barney Intermediate Maturity
California Municipals
                   Fund
                   (Specify class of shares)
                   c/o PFPC Global Fund Services
                   P.O. Box 9699
                   Providence, RI 02940-9699

                 Your written request must provide the
following:

                 .The name of the fund and account number

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

Smith Barney Intermediate Maturity California Municipals
Fund

16
<PAGE>

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

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

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

                 The following conditions apply:

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

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


Smith Barney Mutual Funds


17
<PAGE>

 Other things to know about share transactions

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

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

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

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

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

You can obtain a signature guarantee from most banks,
dealers, brokers, credit
unions and federal savings and loans institutions, but not
from a notary pub-
lic.

The fund has the right to:

 .Suspend the offering of shares
 .Waive or change minimum and additional investment amounts
 .Reject any purchase or exchange order
 .Change, revoke or suspend the exchange privilege
 .Suspend telephone transactions

Smith Barney Intermediate Maturity California Municipals
Fund

18
<PAGE>

 .Suspend or postpone redemptions of shares on any day when
trading on the New
  York Stock Exchange is restricted, or as otherwise
permitted by the Securi-
  ties and Exchange Commission
 .Pay redemption proceeds by giving you securities. You may
pay transaction
  costs to dispose of the securities

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

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

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


Smith Barney Mutual Funds


19
<PAGE>

 Dividends, distributions and taxes

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

Taxes The following table describes the tax consequences of
certain fund trans-
actions.

<TABLE>
<CAPTION>

California tax
 Transaction                          Federal tax status
status

<S>                                   <C>
<C>
Redemption or exchange of shares      Usually capital gain
Usually capital gain
                                      or loss; long-term
or loss
                                      only if shares owned
                                      more than one year
Long-term capital gain distributions  Taxable gain
Taxable gain

Short-term capital gain               Ordinary income
Ordinary income
distributions
Dividends                             Excluded from gross
Excluded from gross
                                      income if from
income if from
                                      interest on tax-
interest on
                                      exempt securities,
California municipal
                                      otherwise ordinary
securities,
                                      income
otherwise ordinary

income
</TABLE>

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

After the end of each year, the fund will provide you with
information about
the distributions and dividends you received and any
redemptions of shares dur-
ing the previous year. If you do not provide the fund with
your correct

Smith Barney Intermediate Maturity California Municipals
Fund

20
<PAGE>

taxpayer identification number and any required
certifications, you may be sub-
ject to back-up withholding of 31% of your distributions,
taxable dividends,
and redemption proceeds. Because each shareholder's
circumstances are different
and special tax rules may apply, you should consult your
tax adviser about your
investment in the fund.

 Share price

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

Generally, the fund's investments are valued by an
independent pricing service.
If market quotations or a valuation from the pricing
service is not readily
available for a security or if a security's value has been
materially affected
by events occurring after the close of the Exchange or
market on which the
security is principally traded, that security may be valued
by another method
that the fund's board believes accurately reflects fair
value. A fund that uses
fair value to price securities may value those securities
higher or lower than
another fund using market quotations to price the same
securities. A security's
valuation may differ depending on the method used for
determining value.

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

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


Smith Barney Mutual Funds


21
<PAGE>

 Financial highlights

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

 For a Class A share of beneficial interest outstanding
throughout each
 year ended November 30:
<TABLE>

<CAPTION>
                                2000(/1/) 1999(/1/)
1998     1997     1996
-----------------------------------------------------------
--------------------
 <S>                            <C>       <C>        <C>
<C>      <C>
 Net asset value, beginning of
 year                              $8.42     $8.85
$8.66    $8.55    $8.53
-----------------------------------------------------------
--------------------
 Income (loss) from
 operations:
 Net investment income(/2/)         0.38      0.37
0.39     0.40     0.40
 Net realized and unrealized
 gain (loss)                        0.16     (0.43)
0.19     0.11     0.02
-----------------------------------------------------------
--------------------
 Total income (loss) from
 operations                         0.54     (0.06)
0.58     0.51     0.42
-----------------------------------------------------------
--------------------
 Less distributions from:
 Net investment income             (0.38)    (0.37)
(0.39)   (0.40)   (0.40)
-----------------------------------------------------------
--------------------
 Total distributions               (0.38)    (0.37)
(0.39)   (0.40)   (0.40)
-----------------------------------------------------------
--------------------
 Net asset value, end of year      $8.58     $8.42
$8.85    $8.66    $8.55
-----------------------------------------------------------
--------------------
 Total return                       6.64%    (0.70)%
6.78%    6.13%    5.05%
-----------------------------------------------------------
--------------------
 Net assets, end of year
 (000)'s                         $30,800   $29,522
$28,303  $25,630  $24,537
-----------------------------------------------------------
--------------------
 Ratios to average net assets:
 Expenses(/2/)                      0.77%     0.84%
0.75%    0.75%    0.77%
 Net investment income              4.58      4.27
4.45     4.65     4.69
-----------------------------------------------------------
--------------------
 Portfolio turnover rate               8%       29%
8%       9%      15%
-----------------------------------------------------------
--------------------
</TABLE>

(/1/) Per share amounts have been calculated using the
monthly average shares
 method.

(/2/)The manager waived all or part of their fees for the
five years ended
     November 30, 2000. In addition, the manager reimbursed
the fund for
     $75,189 in expenses for the year ended November 30,
1996. If such fees had
     not been waived and expenses had not been reimbursed,
the per share effect
     on net investment income and the actual expense ratios
would have been as
     follows:

<TABLE>
<CAPTION>
         Per Share Decreases to        Expense Ratios
Without Fee
         Net Investment Income         Waivers and
Reimbursements

          2000  1999  1998  1997  1996  2000  1999  1998
1997  1996
-----------------------------------------------------------
---------

<S>      <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>
<C>   <C>
Class A  $0.02 $0.02 $0.02 $0.03 $0.07 0.97% 1.05% 1.00%
1.12% 1.54%
-----------------------------------------------------------
---------
</TABLE>

22

Smith Barney Intermediate Maturity California Municipals
Fund
<PAGE>


 For a Class L share of beneficial interest outstanding
throughout each year
 ended November 30:
<TABLE>
<CAPTION>
                                 2000(/1/) 1999(/1/)
1998(/2/)   1997    1996
-----------------------------------------------------------
--------------------
 <S>                             <C>       <C>        <C>
<C>     <C>
 Net asset value, beginning of
 year                              $8.42     $8.84
$8.65    $8.54   $8.52
-----------------------------------------------------------
--------------------
 Income (loss) from operations:
 Net investment income(/3/)         0.37      0.35
0.37     0.38    0.38
 Net realized and unrealized
 gain (loss)                        0.16     (0.42)
0.19     0.11    0.02
-----------------------------------------------------------
--------------------
 Total income (loss) from
 operations                         0.53     (0.07)
0.56     0.49    0.40
-----------------------------------------------------------
--------------------
 Less distributions from:
 Net investment income             (0.37)    (0.35)
(0.37)   (0.38)  (0.38)
-----------------------------------------------------------
--------------------
 Total distributions               (0.37)    (0.35)
(0.37)   (0.38)  (0.38)
-----------------------------------------------------------
--------------------
 Net asset value, end of year      $8.58     $8.42
$8.84    $8.65   $8.54
-----------------------------------------------------------
--------------------
 Total return                       6.42%    (0.79)%
6.57%    5.92%   4.84%
-----------------------------------------------------------
--------------------
 Net assets, end of year
 (000)'s                          $5,277    $5,144
$5,260   $3,419  $2,607
-----------------------------------------------------------
--------------------
 Ratios to average net assets:
 Expenses(/3/)                      0.98%     1.01%
0.97%    0.96%   0.98%
 Net investment income              4.38      4.09
4.22     4.44    4.48
-----------------------------------------------------------
--------------------
 Portfolio turnover rate               8%       29%
8%       9%     15%
-----------------------------------------------------------
--------------------
</TABLE>



(/1/Per)share amounts have been calculated using the
monthly average shares
    method.

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

(/3/The)manager waived all or part of their fees for the
five years ended
    November 30, 2000. In addition, the manager reimbursed
the fund for $75,189
    in expenses for the year ended November 30, 1996. If
such fees had not been
    waived and expenses had not been reimbursed, the per
share effect on net
    investment income and the expense ratios would have
been as follows:

<TABLE>
<CAPTION>
            Per Share Decreases to      Expense Ratios
Without Fee
             Net Investment Income      Waivers and
Reimbursements
         2000  1999  1998  1997  1996  2000  1999  1998
1997  1996
-----------------------------------------------------------
---------
<S>      <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>
<C>   <C>
Class L  $0.02 $0.02 $0.02 $0.03 $0.07 1.18% 1.22% 1.21%
1.33% 1.75%
-----------------------------------------------------------
---------
</TABLE>


Smith Barney Mutual Funds


23
<PAGE>


 For a Class Y share of beneficial interest outstanding
throughout each year
 ended November 30:
<TABLE>
<CAPTION>
                                      2000(/1/) 1999(/1/)
1998   1997   1996
-----------------------------------------------------------
-------------------
 <S>                                  <C>       <C>
<C>    <C>    <C>
 Net asset value, beginning of year     $8.44     $8.86
$8.66  $8.56  $8.54
-----------------------------------------------------------
-------------------
 Income (loss) from operations:
 Net investment income(/2/)              0.40      0.39
0.41   0.41   0.41
 Net realized and unrealized gain
 (loss)                                  0.16     (0.42)
0.19   0.11   0.02
-----------------------------------------------------------
-------------------
 Total income (loss) from operations     0.56     (0.03)
0.60   0.52   0.43
-----------------------------------------------------------
-------------------
 Less distributions from:
 Net investment income                  (0.40)    (0.39)
(0.40) (0.42) (0.41)
-----------------------------------------------------------
-------------------
 Total distributions                    (0.40)    (0.39)
(0.40) (0.42) (0.41)
-----------------------------------------------------------
-------------------
 Net asset value, end of year           $8.60     $8.44
$8.86  $8.66  $8.56
-----------------------------------------------------------
-------------------
 Total return                            6.82%    (0.40)%
7.09%  6.20%  5.22%
-----------------------------------------------------------
-------------------
 Net assets, end of year (000)'s         $332      $311
$312   $292   $274
-----------------------------------------------------------
-------------------
 Ratios to average net assets:
 Expenses(/2/)                           0.59%     0.65%
0.57%  0.56%  0.59%
 Net investment income                   4.76      4.46
4.62   4.84   4.87
-----------------------------------------------------------
-------------------
 Portfolio turnover rate                    8%       29%
8%     9%    15%
-----------------------------------------------------------
-------------------
</TABLE>

(/1/Per)share amounts have been calculated using the
monthly shares method.

(/2/The)manager waived all or part of their fees for the
five years ended
    November 30, 2000. In addition, the manager reimbursed
the fund for $75,189
    in expenses for the year ended November 30, 1996. If
such fees had not been
    waived and expenses had not been reimbursed, the per
share effect on net
    investment income and the expense ratios would have
been as follows:

<TABLE>
<CAPTION>
            Per Share Decreases to        Expense Ratios
Without Fee
             Net Investment Income        Waivers and
Reimbursements
         2000  1999  1998   1997  1996  2000   1999   1998
1997  1996
<S>      <C>   <C>   <C>   <C>   <C>   <C>    <C>    <C>
<C>   <C>
Class Y  $0.02 $0.02 $0.02 $0.03 $0.07 $0.79% $0.86% $0.82%
0.94% 1.36%
</TABLE>

Smith Barney Intermediate Maturity California Municipals
Fund

24
<PAGE>

[LOGO]Smith Barney
      Mutual Funds
      Your Serious Money. Professionally Managed. (SM)


Smith Barney Intermediate Maturity California Municipals
Fund

An investment portfolio of Smith Barney Investment Trust

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

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

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

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

Visit Our Web Site. Our web site is located at
www.smithbarney.com

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

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

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

(Investment Company Act
file no. 811-06444)

FD0248 3/01



                                   PROSPECTUS



                                -----------------
                                  SMITH BARNEY
                                  INTERMEDIATE
                                MATURITY NEW YORK
                                 MUNICIPALS FUND
                                -----------------

Class A, L and Y Shares
March 30, 2001



The fund is a separate series of Smith Barney Investment
Trust, a Massachusetts
business trust.

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.

                        [SMITH BARNEY MUTUAL FUNDS LOGO]

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








SMITH BARNEY INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND


   CONTENTS


<TABLE>
<S>
<C>

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

More on the fund's investments.............................
8

Management.................................................
9

Choosing a class of shares to buy..........................
10

Comparing the fund's classes...............................
11

Sales charges..............................................
12

More about deferred sales charges..........................
14

Buying shares..............................................
15

Exchanging shares..........................................
17

Redeeming shares...........................................
19

Other things to know about share transactions..............
21

Dividends, distributions and taxes.........................
23

Share price................................................
25

Financial highlights.......................................
26
</TABLE>



The fund is a separate series of Smith Barney Investment
Trust, a Massachusetts
business trust.




                                                Smith
Barney Mutual Funds  1



   INVESTMENTS, RISKS AND PERFORMANCE

INVESTMENT OBJECTIVE

The fund seeks to provide New York investors with as high a
level of current
income exempt from federal income taxes and New York state
and New York City
personal income taxes as is consistent with the
preservation of principal.

PRINCIPAL INVESTMENT STRATEGIES

KEY INVESTMENTS  The fund invests primarily in investment
grade municipal
securities. These include securities issued by the State of
New York and certain
other municipal issuers, political subdivisions, agencies
and public authorities
that pay interest which is exempt from federal income and
New York state and New
York City personal income taxes. The fund maintains an
average portfolio
maturity of between three and ten years. The fund can
invest up to 20% of its
assets in unrated securities that the manager determines
are investment grade.

SELECTION PROCESS  The manager selects securities primarily
by identifying
undervalued sectors and individual securities, while also
selecting securities
it believes will benefit from changes in market conditions.
In selecting
individual securities, the manager:

- Uses fundamental credit analysis to estimate the relative
value and
  attractiveness of various securities and sectors and to
exploit opportunities
  in the municipal bond market

- May trade between general obligation and revenue bonds
and among various
  revenue bond sectors, such as housing, hospital and
industrial development,
  based on their apparent relative values

- Considers the yields available for securities with
different maturities and a
  security's maturity in light of the outlook for the
issuer, its sector and
  interest rates

- Identifies individual securities with the most potential
for added value, such
  as those involving unusual situations, new issuers, the
potential for credit
  upgrades, unique structural characteristics or innovative
features







2  Smith Barney Intermediate Maturity New York Municipals
Fund



PRINCIPAL RISKS OF INVESTING IN THE FUND

Investors could lose money on their investment in the fund,
or the fund may not
perform as well as other investments, if:

- Interest rates rise, causing the value of the fund's
portfolio to decline

- The issuer of a security owned by the fund defaults on
its obligation to pay
  principal and/or interest or the security's credit rating
is downgraded

- New York municipal securities fall out of favor with
investors. The fund may
  suffer more than a national fund from adverse events
affecting New York
  municipal issuers

- Unfavorable legislation affects the tax-exempt status of
municipal bonds

- The manager's judgment about the attractiveness, value or
income potential of
  a particular security proves to be incorrect

It is possible that some of the fund's income distributions
may be, and
distributions of the fund's gains generally will be,
subject to federal, New
York State and New York City taxation. The fund may realize
taxable capital
gains on the sale of its securities or on transactions in
derivative contracts.
Some of the fund's income may be subject to the federal
alternative minimum tax.
In addition, distributions of the fund's income and gains
will be taxable to
investors in states other than New York.

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


WHO MAY WANT TO INVEST  The fund may be an appropriate
investment if you are a
New York taxpayer and:



- Are in a high federal tax bracket seeking income exempt
from New York and
  federal taxation


- Currently have exposure to other asset classes and are
seeking to broaden your
  investment portfolio

- Are willing to accept the risks of municipal securities,
including the risks
  of concentrating in a single state




                                                   Smith
Barney Mutual Funds  3





RISK RETURN BAR CHART


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


                        TOTAL RETURN FOR CLASS A SHARES

[Risk bar chart]

<TABLE>
<S>                                 <C>
92                                  9.77%
93                                 10.56%
94                                 -3.92%
95                                 12.93%
96                                  3.75%
97                                  8.33%
98                                  5.63%
99                                 -2.12%
00                                 10.50%
</TABLE>

                        CALENDAR YEARS ENDED DECEMBER 31

QUARTERLY RETURNS

Highest: 4.63% in 1st quarter 1995;  Lowest: (4.82)% in 1st
quarter 1994.



4  Smith Barney Intermediate Maturity New York Municipals
Fund





RISK RETURN TABLE


This table indicates the risks of investing in the fund by
comparing the average
annual total return of each class for the periods shown to
that of the Lehman
Brothers Municipal Bond Index (the "Lehman Index"), an
unmanaged broad-based
index of municipal bonds and the Lipper New York
Intermediate Municipal Debt
Fund Average (the "Lipper Funds Average"), an average
composed of the fund's
peer group of mutual funds. This table assumes imposition
of the maximum sales
charge applicable to the class, redemption of shares at the
end of the period,
and reinvestment of distributions and dividends.



                          AVERAGE ANNUAL TOTAL RETURNS
                     CALENDAR YEARS ENDED DECEMBER 31, 2000



<TABLE>
<CAPTION>

SINCE     INCEPTION
         CLASS          1 YEAR    5 YEARS   10 YEARS
INCEPTION     DATE
  <S>                   <C>       <C>       <C>        <C>
<C>
           A              8.25%    4.71%       n/a
5.77%     12/31/91
           L              8.36%    4.70%       n/a
6.07%      12/5/94
           Y**              n/a      n/a       n/a
n/a      11/7/94
      Lehman Index       11.68%    5.84%       n/a
6.80%         *
  Lipper Funds Average    9.63%    4.84%       n/a
5.68%         *
</TABLE>


*  Index comparison begins on December 31, 1991.


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




                                                    Smith
Barney Mutual Funds  5



FEE TABLE

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


<TABLE>
<CAPTION>
  (FEES PAID DIRECTLY FROM YOUR INVESTMENT)  CLASS A
CLASS L   CLASS Y
  <S>                                        <C>       <C>
<C>
  Maximum sales charge (load) imposed on
  purchases                                   2.00%
1.00%     None

  Maximum deferred sales charge (load)
  (as a % of the lower of net asset value
  at purchase or redemption)                  None*
1.00%     None
</TABLE>


                         ANNUAL FUND OPERATING EXPENSES


<TABLE>
<CAPTION>
  (EXPENSES DEDUCTED FROM FUND ASSETS)   CLASS A   CLASS L
CLASS Y**
  <S>                                    <C>       <C>
<C>
  Management fees                         0.50%     0.50%
0.50%

  Distribution and service (12b-1) fees   0.15%     0.35%
None
  Other expenses                          0.24%     0.23%
0.24%
                                         -------   -------
-------

  Total annual fund operating
    expenses***                           0.89%     1.08%
0.74%
                                         =======   =======
=======
</TABLE>


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


**  For Class Y shares, "Other expenses" have been
estimated based on expenses
    incurred by Class A Shares because no Class Y Shares
were sold.



*** Management has agreed to waive a portion of its
management fees. As a result
    of the Management fee waivers currently in effect, the
actual management
    fees were 0.36%.



<TABLE>
<CAPTION>
                                           CLASS A   CLASS
L   CLASS Y
  <S>                                      <C>       <C>
<C>
  Management fee waivers                   (0.14)%
(0.14)%   (0.14)%
                                           -------   ------
-   -------

  Net annual portfolio operating expenses   0.75%     0.94%
0.60%
</TABLE>



Management may discontinue or modify this management fee
waiver at any time.





6  Smith Barney Intermediate Maturity New York Municipals
Fund


EXAMPLE

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

- You invest $10,000 in the fund for the period shown


- Your investment has a 5% return each year


- You reinvest all distributions and dividends without a
sales charge

- The fund's operating expenses remain the same

                      NUMBER OF YEARS YOU OWN YOUR SHARES


<TABLE>
<CAPTION>
                                          1 YEAR   3 YEARS
5 YEARS   10 YEARS
  <S>                                     <C>      <C>
<C>       <C>
  Class A (with or without redemption)     $289     $478
$683      $1,274

  Class L (with or without redemption)     $309     $440
$690      $1,404

  Class L (no redemption)                  $209     $440
$690      $1,404

  Class Y (with or without redemption)     $ 76     $237
$411      $  918
</TABLE>





                                                  Smith
Barney Mutual Funds  7




   MORE ON THE FUND'S INVESTMENTS

NEW YORK MUNICIPAL SECURITIES  New York municipal
securities include debt
obligations issued by certain non-New York governmental
issuers such as Puerto
Rico, the Virgin Islands and Guam. The interest on New York
municipal securities
is exempt from federal income tax and New York state and
New York City personal
income tax. As a result, the interest rate on these bonds
normally is lower than
it would be if the bonds were subject to taxation.

The New York municipal securities in which the fund invests
include general
obligation bonds, revenue bonds and notes, and municipal
leases. These
securities may pay interest at fixed, variable or floating
rates. The fund may
also hold zero coupon securities which pay no interest
during the life of the
obligation but trade at prices below their stated maturity
value.

The fund normally invests in intermediate-term municipal
securities, which are
securities that have remaining maturities at the time of
purchase of three to
ten years. The fund normally maintains an average portfolio
maturity of between
three and ten years.

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





8  Smith Barney Intermediate Maturity New York Municipals
Fund



   MANAGEMENT


MANAGER  The fund's investment adviser and administrator is
Citigroup Fund
Management LLC (prior to March 30, 2001, known as SSB Citi
Fund Management LLC),
an affiliate of Salomon Smith Barney, Inc. The manager's
address is 7 World
Trade Center, New York, New York 10048. The manager
oversees the selections of
the fund's investments and its general operations. The
manager and Salomon Smith
Barney are subsidiaries of Citigroup Inc. Citigroup
businesses produce a broad
range of financial services -- asset management, banking
and consumer finance,
credit and charge cards, insurance, investments, investment
banking and
trading -- and use diverse channels to make them available
to consumer and
corporate customers around the world.



Joseph P. Deane, investment officer of the manager and a
managing director of
Salomon Smith Barney, has been responsible for the day-to-
day management of the
fund's portfolio since February 2, 1999. Mr. Deane has 31
years of securities
business experience.



MANAGEMENT FEES  For its services, the manager received a
management fee and
administrative fee during the fund's last fiscal year equal
to 0.22% and 0.14%,
respectively, of the fund's average daily net assets.



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



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



TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT  Citi
Fiduciary Trust Company
serves as the fund's transfer agent and shareholder
servicing agent (the
"transfer agent"). The transfer agent has entered into a
sub-transfer agency and
services agreement with PFPC Global Fund Services to serve
as the fund's
sub-transfer agent (the "sub-transfer agent"). The sub-
transfer agent will
perform certain shareholder record keeping and accounting
services.





                                                   Smith
Barney Mutual Funds  9



   CHOOSING A CLASS OF SHARES TO BUY

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


- If you plan to invest regularly or in large amounts,
buying Class A shares may
  help you reduce sales charges and ongoing expenses.



- Class L shares are sold with a lower initial sales charge
than Class A shares,
  which may also help to offset the higher annual expenses
of this class.
  Because the fund's future return cannot be predicted,
however, there can be no
  assurance that this would be the case for either class.


You may buy shares from:


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



- The fund, but only if you are investing through certain
Service Agents.



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


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

<TABLE>
<CAPTION>
                                                 INITIAL
ADDITIONAL
                                        CLASSES A, L
CLASS Y     ALL CLASSES
  <S>                                   <C>            <C>
<C>
  General                                $1,000        $15
million       $50

  Monthly Systematic Investment Plans      $25
n/a       $25

  Quarterly Systematic Investment
  Plans                                    $50
n/a       $50

  Uniform Gift to Minor Accounts          $250         $15
million       $50
</TABLE>



10  Smith Barney Intermediate Maturity New York Municipals
Fund


   COMPARING THE FUND'S CLASSES


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


<TABLE>
<CAPTION>
                           CLASS A           CLASS L
CLASS Y
<S>                    <C>               <C>
<C>

KEY FEATURES           - Initial sales   - Initial sales
- No initial or
                         charge            charge is
deferred sales
                       - You may           lower than
charge
                         qualify for       Class A
- Minimum
                         reduction or    - Deferred sales
investment of
                         waiver of         charge for 1
at least $15
                         initial sales     year
million
                         charge          - Higher annual
- Lower annual
                       - Lower annual      expenses than
expenses than
                         expenses than     Class A
the other
                         Class L
classes
-----------------------------------------------------------
----------------

INITIAL SALES CHARGE     Up to 2.00%;      1.00%
None
                         reduced for
                         large
                         purchases and
                         waived for
                         certain
                         investors. No
                         charge for
                         purchases of
                         $500,000 or
                         more
-----------------------------------------------------------
----------------

DEFERRED SALES CHARGE    1.00% on          1.00% if you
None
                         purchases of      redeem within
                         $500,000 or       1 year of
                         more if you       purchase
                         redeem within
                         1 year of
                         purchase
-----------------------------------------------------------
----------------

ANNUAL DISTRIBUTION      0.15% of          0.35% of
None
AND SERVICE FEES         average           average
                         daily net         daily net
                         assets            assets
-----------------------------------------------------------
----------------

EXCHANGE PRIVILEGE*      Class A           Class L
Class Y
                         shares            shares
shares
                         of most Smith     of most Smith
of most Smith
                         Barney funds      Barney funds
Barney funds
</TABLE>

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


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





                                                 Smith
Barney Mutual Funds  11





   SALES CHARGES

CLASS A SHARES


You buy Class A shares at the offering price, which is the
net asset value plus
a sales charge. You do not pay a sales charge on
investments of $500,000 or
more, or on the fund's distributions or dividends you
reinvest in additional
Class A shares.



The table below shows the rate of sales charge you pay,
depending on the amount
you purchase. The table below also shows the amount of
broker/ dealer
compensation that is paid out of the sales charge. This
compensation includes
commissions and other fees which Service Agents that sell
shares of the fund
receive. The distributor keeps up to approximately 10% of
the sales charge
imposed on Class A shares. Service Agents also will receive
the service fee
payable on Class A shares at an annual rate equal to 0.15%
of the average daily
net assets represented by the Class A shares serviced by
them.



<TABLE>
<CAPTION>
                                        SALES CHARGE AS A %
OF:

BROKER DEALER

COMMISSION
                           OFFERING         NET AMOUNT
AS % OF
   AMOUNT OF PURCHASE      PRICE (%)       INVESTED (%)
OFFERING PRICE
<S>                        <C>             <C>
<C>
Less than $500,000           2.00              2.04
1.80
$500,000 or more              -0-              -0-
-0-
</TABLE>


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

QUALIFYING FOR A REDUCED CLASS A SALES CHARGE  There are
several ways you can
combine multiple purchases of Class A shares of Smith
Barney funds to take
advantage of the breakpoints in the sales charge schedule.

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

- by you, or

- by members of your immediate family,

and for which a sales charge was paid, with the amount of
your next purchase of
Class A shares for purposes of calculating the initial
sales




12  Smith Barney Intermediate Maturity New York Municipals
Fund


charge. Certain trustees and fiduciaries may be entitled to
combine accounts in
determining their sales charge.

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

WAIVERS FOR CERTAIN CLASS A INVESTORS  Class A initial
sales charges are waived
for certain types of investors, including:


- Employees of NASD members



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



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



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


CLASS L SHARES


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



Service Agents selling Class L shares receive commissions
of up to 1.35% of the
purchase price of the Class L shares they sell. Starting in
the thirteenth month
Service Agents also receive an annual fee of 0.35% of the
average daily net
assets represented by the Class L shares held by their
clients.


CLASS Y SHARES

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



                                                 Smith
Barney Mutual Funds  13




   MORE ABOUT DEFERRED SALES CHARGES

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

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

- Shares exchanged for another Smith Barney fund

- Shares representing reinvested distributions and
dividends

- Shares no longer subject to the deferred sales charge

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


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



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


DEFERRED SALES CHARGE WAIVERS

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

- On payments made through certain systematic withdrawal
plans

- For involuntary redemptions of small account balances

- For 12 months following the death or disability of a
shareholder


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




14  Smith Barney Intermediate Maturity New York Municipals
Fund



   BUYING SHARES


<TABLE>
<C>                    <S>

           Through a   You should contact your Service
Agent to open
       Service Agent   a brokerage account and make
arrangements to
                       buy shares.
                       If you do not provide the following
                       information, your order will be
rejected:
                       - Class of shares being bought
                       - Dollar amount or number of shares
being
                         bought
                       Your Service Agent may charge an
annual
                       account maintenance fee.
-----------------------------------------------------------
---------
         Through the   Certain investors who are clients of
certain
                fund   Service Agents are eligible to buy
shares
                       directly from the fund.
                       - Write the fund at the following
address:
                         SMITH BARNEY INVESTMENT TRUST
                         SMITH BARNEY INTERMEDIATE MATURITY
NEW
                         YORK MUNICIPALS FUND
                         (SPECIFY CLASS OF SHARES)
                         C/O PFPC GLOBAL FUND SERVICES
                         P.O. BOX 9699
                         PROVIDENCE, RHODE ISLAND 02940-
9699
                       - Enclose a check to pay for the
shares. For
                         initial purchases, complete and
send an
                         account application.
                       - For more information, call the
transfer
                         agent at 1-800-451-2010.
</TABLE>




                                                  Smith
Barney Mutual Funds  15





<TABLE>
<C>                    <S>

           Through a   You may authorize your Service Agent
or the
          systematic   sub-transfer agent to transfer funds
     investment plan   automatically from (i) a regular
bank
                       account, (ii) cash held in a
brokerage
                       account opened with a Service Agent
or (iii)
                       certain money market funds, in order
to buy
                       shares on a regular basis.
                       - Amounts transferred should be at
least: $25
                         monthly or $50 quarterly.
                       - If you do not have sufficient
funds in your
                         account on a transfer date, your
Service
                         Agent or the sub-transfer agent
may charge
                         you a fee.
                       For more information, contact your
Service
                       Agent, the transfer agent or consult
the SAI.
</TABLE>




16  Smith Barney Intermediate Maturity New York Municipals
Fund



   EXCHANGING SHARES


<TABLE>
<C>                    <S>
 Smith Barney offers   You should contact your Service
Agent to
       a distinctive   exchange into other Smith Barney
funds. Be
     family of funds   sure to read the prospectus of the
Smith
    tailored to help   Barney fund you are exchanging into.
An
    meet the varying   exchange is a taxable transaction.
       needs of both
     large and small   - You may exchange shares only for
shares of
           investors     the same class of another Smith
Barney fund.
                         Not all Smith Barney funds offer
all
                         classes.
                       - Not all Smith Barney funds may be
offered
                         in your state of residence.
Contact your
                         Service Agent or the transfer
agent for
                         further information.
                       - You must meet the minimum
investment amount
                         for each fund (except for
systematic
                         investment plan exchanges).
                       - If you hold share certificates,
the
                         sub-transfer agent must receive
the
                         certificates endorsed for transfer
or with
                         signed stock powers (documents
transferring
                         ownership of certificates) before
the
                         exchange is effective.
                       - The fund may suspend or terminate
your
                         exchange privilege if you engage
in an
                         excessive pattern of exchanges.
-----------------------------------------------------------
---------
           Waiver of   Your shares will not be subject to
an initial
    additional sales   sales charge at the time of the
exchange.
             charges
                       Your deferred sales charge (if any)
will
                       continue to be measured from the
date of your
                       original purchase. If the fund you
exchange
                       into has a higher deferred sales
charge, you
                       will be subject to that charge. If
you
                       exchange at any time into a fund
with a lower
                       charge, the sales charge will not be
reduced.
</TABLE>





                                                Smith
Barney Mutual Funds  17






<TABLE>
<C>                    <S>

        By telephone   If you do not have a brokerage
account with a
                       Service Agent, you may be eligible
to
                       exchange shares through the fund.
You must
                       complete an authorization form to
authorize
                       telephone transfers. If eligible,
you may
                       make telephone exchanges on any day
the New
                       York Stock Exchange is open. Call
the
                       transfer agent at 1-800-451-2010
between 9:00
                       a.m. and 4:00 p.m. (Eastern time).
                       You can make telephone exchanges
only between
                       accounts that have identical
registrations.
-----------------------------------------------------------
---------
             By mail   If you do not have a brokerage
account,
                       contact your Service Agent or write
to the
                       sub-transfer agent at the address on
the
                       following page.
</TABLE>




18  Smith Barney Intermediate Maturity New York Municipals
Fund



   REDEEMING SHARES


<TABLE>
<C>                    <S>
           Generally   Contact your Service Agent to redeem
shares
                       of the fund.
                       If you hold share certificates, the
                       sub-transfer agent must receive the
                       certificates endorsed for transfer
or with
                       signed stock powers before the
redemption is
                       effective.
                       If the shares are held by a
fiduciary or
                       corporation, other documents may be
required.
                       Your redemption proceeds will be
sent within
                       three business days after your
request is
                       received in good order. However, if
you
                       recently purchased your shares by
check, your
                       redemption proceeds will not be sent
to you
                       until your original check clears
which may
                       take up to 15 days.
                       If you have a brokerage account with
a
                       Service Agent, your redemption
proceeds will
                       be placed in your account and not
reinvested
                       without your specific instruction.
In other
                       cases, unless you direct otherwise,
your
                       redemption proceeds will be paid by
check
                       mailed to your address of record.
-----------------------------------------------------------
---------
             By mail   For accounts held directly at the
fund, send
                       written requests to the fund at the
following
                       address:
                        SMITH BARNEY INVESTMENT TRUST
                        SMITH BARNEY INTERMEDIATE MATURITY
NEW
                        YORK MUNICIPALS FUND
                        (SPECIFY CLASS OF SHARES)
                        C/O PFPC GLOBAL FUND SERVICES
                        P.O. BOX 9699
                        PROVIDENCE, RHODE ISLAND 02940-9699
                        Your written request must provide
the
                        following:
                       - The name of the fund and account
number
                       - The class of shares and the dollar
amount
                         or number of shares to be redeemed
                       - Signatures of each owner exactly
as the
                         account is registered
</TABLE>





                                                  Smith
Barney Mutual Funds  19




<TABLE>
<C>                    <S>

        By telephone   If you do not have a brokerage
account with a
                       Service Agent, you may be eligible
to redeem
                       shares in amounts up to $50,000 per
day
                       through the transfer agent. You must
complete
                       an authorization form to authorize
telephone
                       redemptions. If eligible, you may
request
                       redemptions by telephone on any day
the New
                       York Stock Exchange is open. Call
the
                       transfer agent at 1-800-451-2010
between 9:00
                       a.m. and 4:00 p.m. (Eastern time).
                       Your redemption proceeds can be sent
by check
                       to your address of record or by wire
or
                       electronic transfer (ACH) to a bank
account
                       designated on your authorization
form. You
                       must submit a new authorization form
to
                       change the bank account designated
to receive
                       wire or electronic transfers and you
may be
                       asked to provide certain other
documents. The
                       sub-transfer agent may charge a fee
on an
                       electronic transfer (ACH).
-----------------------------------------------------------
---------
      Automatic cash   You can arrange for the automatic
redemption
    withdrawal plans   of a portion of your shares on a
monthly or
                       quarterly basis. To qualify you must
own
                       shares of the fund with a value of
at least
                       $10,000 and each automatic
redemption must be
                       at least $50. If your shares are
subject to a
                       deferred sales charge, the sales
charge will
                       be waived if your automatic payments
do not
                       exceed 1% per month of the value of
your
                       shares subject to a deferred sales
charge.
                       The following conditions apply:
                       - Your shares must not be
represented by
                         certificates
                       - All dividends and distributions
must be
                         reinvested
                       For more information, contact your
Service
                       Agent or consult the SAI.
</TABLE>




20  Smith Barney Intermediate Maturity New York Municipals
Fund



   OTHER THINGS TO KNOW ABOUT SHARE TRANSACTIONS

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

- Name of the fund

- Account number

- Class of shares being bought, exchanged or redeemed

- Dollar amount or number of shares being bought, exchanged
or redeemed

- Signature of each owner exactly as the account is
registered


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


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


- Are redeeming over $50,000


- Are sending signed share certificates or stock powers to
the sub-transfer
  agent

- Instruct the sub-transfer agent to mail the check to an
address different from
  the one on your account

- Change your account registration

- Want the check paid to someone other than the account
owner(s)

- Are transferring the redemption proceeds to an account
with a different
  registration

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

The fund has the right to:

- Suspend the offering of shares

- Waive or change minimum and additional investment amounts

- Reject any purchase or exchange order

- Change, revoke or suspend the exchange privilege

- Suspend telephone transactions




                                                   Smith
Barney Mutual Funds  21



- Suspend or postpone redemptions of shares on any day when
trading on the New
  York Stock Exchange is restricted, or as otherwise
permitted by the Securities
  and Exchange Commission

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


SMALL ACCOUNT BALANCES  If your account falls below $500
because of a redemption
of fund shares, the fund may ask you to bring your account
up to the applicable
minimum investment amount. If you choose not to do so
within 60 days, the fund
may close your account and send you the redemption
proceeds.


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

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



22  Smith Barney Intermediate Maturity New York Municipals
Fund



   DIVIDENDS, DISTRIBUTIONS AND TAXES


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


TAXES  The following table describes the tax consequences
of certain fund
transactions.


<TABLE>
<CAPTION>
TRANSACTION            FEDERAL TAX STATUS   NEW YORK TAX
STATUS
<S>                    <C>                  <C>

Redemption or          Usually capital      Usually capital
  exchange of shares   gain or loss;        gain or loss
                       long-term only if
                       shares owned more
                       than one year
Long-term capital      Taxable gain         Taxable gain
  gain distributions

Short-term capital     Ordinary income      Ordinary income
  gain distributions
Dividends              Excluded from gross  Excluded from
gross
                       income if from       income if from
                       interest on tax-     interest on New
                       exempt securities,   York municipal
                       otherwise ordinary   securities,
                       income               otherwise
ordinary
                                            income
</TABLE>




                                                 Smith
Barney Mutual Funds  23



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

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



24  Smith Barney Intermediate Maturity New York Municipals
Fund



   SHARE PRICE


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


Generally, the fund's investments are valued by an
independent pricing service.
If market quotations or a valuation from the pricing
service is not readily
available for a security or if a security's value has been
materially affected
by events occurring after the close of the Exchange or
market on which the
security is principally traded, that security may be valued
by another method
that the fund's board believes accurately reflects fair
value. A fund that uses
fair value to price securities may value those securities
higher or lower than
another fund using market quotations to price the same
securities. A security's
valuation may differ depending on the method used for
determining value.


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



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





                                                 Smith
Barney Mutual Funds  25



   FINANCIAL HIGHLIGHTS


The financial highlights tables are intended to help you
understand the
performance of each class for the past 5 years. Certain
information reflects
financial results for a single share. Total return
represents the rate that a
shareholder would have earned (or lost) on an investment in
a class assuming
reinvestment of all dividends and distributions. The
information in the
following tables, was audited by KPMG LLP, independent
accountants, whose
report, along with the fund's financial statements, is
included in the annual
report (available upon request). No information is present
for Class Y shares
because no shares were outstanding during these fiscal
years.


                   FOR A CLASS A SHARE OF BENEFICIAL
INTEREST
              OUTSTANDING THROUGHOUT EACH YEAR ENDED
NOVEMBER 30:


<TABLE>
<CAPTION>
                                  2000(1)  1999(1)   1998
1997     1996
<S>                               <C>      <C>      <C>
<C>      <C>
-----------------------------------------------------------
------------------
Net asset value, beginning of
  year                             $8.28    $8.76    $8.57
$8.47    $8.48
-----------------------------------------------------------
------------------
Income (loss) from operations:
  Net investment income(2)          0.39     0.38     0.40
0.41     0.41
  Net realized and unrealized
    gain (loss)                     0.18    (0.48)    0.19
0.10    (0.01)
-----------------------------------------------------------
------------------
Total income (loss) from
  operations                        0.57    (0.10)    0.59
0.51     0.40
-----------------------------------------------------------
------------------
Less distributions from:
  Net investment income            (0.39)   (0.38)   (0.40)
(0.41)   (0.41)
-----------------------------------------------------------
------------------
Total distributions                (0.39)   (0.38)   (0.40)
(0.41)   (0.41)
-----------------------------------------------------------
------------------
Net asset value, end of year       $8.46    $8.28    $8.76
$8.57    $8.47
-----------------------------------------------------------
------------------
Total return                        7.04%   (1.18)%   7.01%
6.23%    4.85%
-----------------------------------------------------------
------------------
Net assets, end of year (000)'s  $53,248  $59,896  $54,624
$48,759  $49,355
-----------------------------------------------------------
------------------
Ratios to average net assets:
  Expenses(2)                       0.75%    0.73%    0.70%
0.67%    0.66%
  Net investment income             4.67     4.47     4.59
4.83     4.86
-----------------------------------------------------------
------------------
Portfolio turnover rate               10%      23%      53%
52%      67%
-----------------------------------------------------------
------------------
</TABLE>



<TABLE>
<C>  <S>
(1)  Per share amounts have been calculated using the
average
     shares method.
(2)  The manager has waived all or part of its fees for
each of
     the years in the five-year period ended November 30,
2000.
     If such fees had not been waived, the per share effect
on
     net investment income and the expense ratios would
have been
     as follows:
</TABLE>



<TABLE>
<CAPTION>
                               PER SHARE DECREASE IN NET
EXPENSE RATIOS
                                   INVESTMENT INCOME
WITHOUT FEE WAIVERS
                           2000   1999   1998   1997   1996
2000   1999   1998   1997   1996
    -------------------------------------------------------
----------------------------------------
    <S>                    <C>    <C>    <C>    <C>    <C>
<C>    <C>    <C>    <C>    <C>
    Class A                $0.01  $0.01  $0.02  $0.03
$0.04      0.89%  0.88%  0.89%  0.98%  1.08%
    -------------------------------------------------------
----------------------------------------
</TABLE>





26  Smith Barney Intermediate Maturity New York Municipals
Fund




                  FOR A CLASS L() SHARE OF BENEFICIAL
INTEREST
              OUTSTANDING THROUGHOUT EACH YEAR ENDED
NOVEMBER 30:


<TABLE>
<CAPTION>
                                 2000(1)  1999(1)  1998(2)
1997     1996
-----------------------------------------------------------
-----------------
<S>                              <C>      <C>      <C>
<C>      <C>
Net asset value, beginning of
  year                             $8.27   $8.76     $8.57
$8.47   $8.48
-----------------------------------------------------------
-----------------
Income (loss) from operations:
  Net investment income(4)          0.37    0.37      0.38
0.39    0.39
  Net realized and unrealized
    gain (loss)                     0.19   (0.50)     0.19
0.10   (0.01)
-----------------------------------------------------------
-----------------
Total income (loss) from
  operations                        0.56   (0.13)     0.57
0.49    0.38
-----------------------------------------------------------
-----------------
Less distributions from:
  Net investment income            (0.37)  (0.36)    (0.38)
(0.39)  (0.39)
-----------------------------------------------------------
-----------------
Total distributions                (0.37)  (0.36)    (0.38)
(0.39)  (0.39)
-----------------------------------------------------------
-----------------
Net asset value, end of year       $8.46   $8.27     $8.76
$8.57   $8.47
-----------------------------------------------------------
-----------------
Total return                        6.97%  (1.49)%    6.79%
6.00%   4.64%
-----------------------------------------------------------
-----------------
Net assets, end of year (000)'s   $4,946  $4,957    $4,247
$2,283  $1,192
-----------------------------------------------------------
-----------------
Ratios to average net assets:
  Expenses(3)                       0.94%   0.92%     0.89%
0.89%   0.88%
  Net investment income             4.48    4.28      4.38
4.61    4.64
-----------------------------------------------------------
-----------------
Portfolio turnover rate               10%     23%       53%
52%     67%
-----------------------------------------------------------
-----------------
</TABLE>



<TABLE>
<C>  <S>
(1)  Per share amounts have been calculated using the
average
     shares method.
(2)  On June 12, 1998, Class C shares were renamed Class L
     shares.
(3)  The manager has waived all or part of its fees for
each of
     the years in the five-year period ended November 30,
2000.
     If such fees had not been waived, the per share effect
on
     net investment income and expense ratios would have
been as
     follows:
</TABLE>



<TABLE>
<CAPTION>
                              PER SHARE DECREASES TO NET
EXPENSE RATIOS
                                   INVESTMENT INCOME
WITHOUT FEE WAIVERS
                           2000   1999   1998   1997   1996
2000   1999   1998   1997   1996
    -------------------------------------------------------
----------------------------------------
    <S>                    <C>    <C>    <C>    <C>    <C>
<C>    <C>    <C>    <C>    <C>
    Class L                $0.01  $0.01  $0.01  $0.03
$0.02      1.08%  1.07%  1.09%  1.20%  1.30%
    -------------------------------------------------------
----------------------------------------
</TABLE>



                                                 Smith
Barney Mutual Funds  27



                     (This page intentionally left blank.)



[SALOMON SMITH BARNEY LOGO]


SMITH BARNEY
INTERMEDIATE
MATURITY
NEW YORK
MUNICIPALS FUND


AN INVESTMENT PORTFOLIO OF
SMITH BARNEY INVESTMENT TRUST


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



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


STATEMENT OF ADDITIONAL INFORMATION The statement of
additional information
provides more detailed information about the fund. It is
incorporated by
reference into (is legally a part of) this prospectus.


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

Visit our web site.  Our web site is located at
WWW.SMITHBARNEY.COM


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


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


(SM)YOUR SERIOUS MONEY. PROFESSIONALLY MANAGED. is a
service mark of Salomon
Smith Barney Inc.



(Investment Company Act
file no. 811-06444)
FD0247 3/01

<PAGE>

                                  PROSPECTUS



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

                            SMITH BARNEY LARGE
                          CAPITALIZATION GROWTH FUND

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

       Class A, B, L and Y Shares

       March 30, 2001



       The fund is a separate series of Smith Barney
Investment Trust, a
       Massachusetts business trust.


       The Securities and Exchange Commission has not
approved the fund's
       shares as an investment or determined whether this
prospectus is
       accurate or complete. Any statement to the contrary
is a crime.




                              [LOGO] Smith Barney
                                     Mutual Funds
                Your Serious Money. Professionally
Managed./SM/

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

<PAGE>

Smith Barney Large Capitalization Growth Fund

  Contents

<TABLE>
<CAPTION>
               <S>
<C>

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

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


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

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

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

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

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

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

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

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

               Other things to know about share
transactions 18

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

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

               Financial
highlights......................... 22
</TABLE>


The fund is a separate series of Smith Barney Investment
Trust, a Massachusetts
business trust.




Smith Barney Mutual Funds


1

<PAGE>

  Investments, risks and performance

Investment objective

The fund seeks long-term growth of capital.

Principal investment strategies

Key investments The fund invests primarily in equity
securities of companies
with large market capitalizations. Large capitalization
companies are those
with total market capitalizations of $5 billion or more at
the time of
investment. Equity securities include U.S. exchange traded
and over-the-counter
common stocks, debt securities convertible into equity
securities, and warrants
and rights relating to equity securities.

Selection process The manager emphasizes individual
security selection while
diversifying the fund's investments across 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 considers:

[_] Favorable earnings prospects
[_] Technological innovation
[_] Industry dominance
[_] Competitive products and services
[_] Global scope
[_] Long term operating history
[_] 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



Smith Barney Large Capitalization Growth Fund

2

<PAGE>


Principal risks of investing in the fund

Investors could lose money on their investments in the
fund, or the fund may
not perform as well as other investments, if:

[_] U.S. stock markets decline or perform poorly relative
to other types of
    investments
[_] An adverse company specific event, such as an
unfavorable earnings report,
    negatively affects the stock price of a company in
which the fund invests
[_] Large capitalization stocks fall out of favor with
investors
[_] The manager's judgment about the attractiveness, growth
prospects or
    potential appreciation of a particular stock proves to
be incorrect

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

[_] Are seeking to participate in the long-term growth
potential of the U.S.
    stock market
[_] Are looking for an investment with potentially greater
return but higher
    risk than fixed income investments
[_] Are willing to accept the risks of the stock market


3



Smith Barney Mutual Funds
<PAGE>

Risk return bar chart

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

                        Total Return for Class A Shares

                                    [CHART]
                       Calendar years ended December 31
                                98      56.00%
                                99      30.84%
                                00      (8.78)%

Quarterly returns:
Highest: 38.99% in 4th quarter 1998; Lowest: (12.69)% in
3rd quarter 1998

Risk return table

This table indicates the risks of investing in the fund by
comparing the
average annual total return of each class for the periods
shown with that of
the S&P 500 Composite Index, a broad-based unmanaged market
capitalization-weighted measure of 500 widely held common
stocks. This table
assumes the imposition of the maximum sales charge
applicable to the class, the
redemption of shares at the end of the period, and the
reinvestment of
distributions and dividends.

                         Average Annual Total Returns

                  Calendar Years Ended December 31, 2000


<TABLE>
<CAPTION>
                                            Since
Inception
                   Class          1 year  Inception   Date

                   <S>           <C>      <C>       <C>
                   A             (13.32)%    20.52%
8/29/97

                   B             (13.97)%    21.09%
8/29/97

                   L             (11.25)%    21.11%
8/29/97

                   Y              (8.43)%    21.39%
10/15/97

                   S&P 500 Index  (9.10)%    13.70%     *

</TABLE>

 * Index Comparison begins on August 29, 1997.


Smith Barney Large Capitalization Growth Fund

4

<PAGE>


Fee table

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

                               Shareholder fees

<TABLE>
<CAPTION>
   (fees paid directly from your investment) Class A Class
B Class L Class Y

   <S>                                       <C>     <C>
<C>     <C>
   Maximum sales charge (load) imposed
   on purchases (as a % of offering
   price)                                      5.00%
None   1.00%    None

   Maximum deferred sales charge (load)
   (as a % of the lower of net
   asset value at purchase or redemption)      None*
5.00%   1.00%    None

</TABLE>

                        Annual fund operating expenses

<TABLE>
<CAPTION>
     (expenses deducted from fund assets)  Class A Class B
Class L Class Y

     <S>                                   <C>     <C>
<C>     <C>
     Management fee                          0.75%   0.75%
0.75%   0.75%

     Distribution and service (12b-1) fees   0.25%   1.00%
1.00%    None

     Other expenses                          0.12%   0.11%
0.11%   0.01%

                                           ------- -------
------- -------
     Total annual fund operating expenses    1.12%   1.86%
1.86%   0.76%
                                           ======= =======
======= =======
</TABLE>

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

Example

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

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

                      Number of years you own your shares

<TABLE>
<CAPTION>
                                           1 year 3 years 5
years 10 years

     <S>                                   <C>    <C>
<C>     <C>
     Class A (with or without redemption)    $608    $838
$1,086   $1,795

     Class B (redemption at end of period)   $689    $885
$1,106   $1.986

     Class B (no redemption)                 $189    $585
$1,006   $1,986

     Class L (with redemption)               $387    $679
$1,096   $2,258

     Class L (no redemption)                 $287    $679
$1,096   $2,258

     Class Y (with or without redemption)    $ 78    $243
$  422   $  942

</TABLE>


5



Smith Barney Mutual Funds
<PAGE>



  More on the fund's investments

Foreign Investments The fund may invest up to 10% of its
net assets in the
securities of foreign issuers directly or in the form of
depositary receipts
representing an interest in those securities. The fund's
investments in
securities of foreign issuers involve greater risk than
investments in
securities of U.S. issuers. Many foreign countries the fund
invests in have
markets that are less liquid and more volatile than markets
in the U.S. In some
foreign countries, less information is 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 risks of investing in foreign
securities are greater for
securities of emerging market issuers because political or
economic
instability, lack of market liquidity, and negative
government actions like
currency controls or seizure of private businesses or
property are more likely.


Short-term investments While the fund intends to invest
substantially all of
its assets in equity securities, the fund may maintain up
to 35% of its assets
in money market instruments and/or cash to pay expenses and
meet redemption
requests. Generally, the value of these fixed income
obligations will decline
if interest rates rise, the credit rating of the security
is downgraded or the
issuer defaults on its obligation to pay principal or
interest.

Other investments The fund may invest up to 35% of its
assets in equity
securities of companies with total market capitalizations
below $5 billion
(i.e., medium or small capitalization companies).


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

6


Smith Barney Large Capitalization Growth Fund
<PAGE>


  Management


Manager The fund's manager is Citigroup Fund Management LLC
(prior to March 30,
2001, known as SSB Citi Fund Management LLC), an affiliate
of Salomon Smith
Barney Inc. The manager's address is 7 World Trade Center,
New York, New York
10048. The manager selects the fund's investments and
oversees its operations.
The manager and Salomon Smith Barney are subsidiaries of
Citigroup Inc.
Citigroup businesses produce a broad range of financial
services--asset
management, banking and consumer finance, credit and charge
cards, insurance,
investments, investment banking and trading--and use
diverse channels to make
them available to consumer and corporate customers around
the world.


Alan Blake, investment officer of the manager and managing
director of Salomon
Smith Barney, has been responsible for the day-to-day
management of the fund's
portfolio since its inception in 1997. Mr. Blake has more
than 22 years of
securities business experience.


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

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

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

Transfer agent and shareholder servicing agent Citi
Fiduciary Trust Company
serves as the fund's transfer agent and shareholder
servicing agent (the
"transfer agent"). The transfer agent has entered into sub-
transfer agency and
services agreements with PFPC Global Fund Services and PFS
Shareholder Services
to serve as the fund's sub-transfer agents (the "sub-
transfer agents"). The
sub-transfer agents perform certain shareholder record
keeping and accounting
services and functions.


7



Smith Barney Mutual Funds
<PAGE>


  Choosing a class of shares to buy

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

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

You may buy shares from:


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

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

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

<TABLE>
<CAPTION>
                                             Initial
Additional

                                   Classes A, B, L   Class
Y   All Classes

     <S>                           <C>             <C>
<C>
     General                           $1,000      $15
million     $50

     IRAs, Self Employed
     Retirement Plans, Uniform
     Gift to Minor Accounts             $250       $15
million     $50

     Qualified Retirement Plans*         $25       $15
million     $25

     Simple IRAs                         $1            n/a
$1

     Monthly Systematic Investment
     Plans                               $25           n/a
$25

     Quarterly Systematic
     Investment Plans                    $50           n/a
$50

</TABLE>

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

8


Smith Barney Large Capitalization Growth Fund
<PAGE>


  Comparing the fund's classes

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

<TABLE>
<CAPTION>
                    Class A            Class B
Class L          Class Y

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

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



9



Smith Barney Mutual Funds
<PAGE>


  Sales charges

Class A shares

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


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

<TABLE>
<CAPTION>
                                      Sales Charge as a %
of Broker/Dealer
                                      ---------------------
-   commission
                                      Offering  Net amount
as a % of
    Amount of purchase                price (%) invested
(%) offering price
    <S>                               <C>       <C>
<C>

    Less than $25,000                      5.00
5.26           4.50

    $25,000 but less than $50,000          4.25
4.44           3.83

    $50,000 but less than $100,000         3.75
3.90           3.38

    $100,000 but less than $250,000        3.25
3.36           2.93

    $250,000 but less than $500,000        2.75
2.83           2.48

    $500,000 but less than $1,000,000      2.00
2.04           1.80

    $1,000,000 or more                      -0-          -
0-     up to 1.00*

</TABLE>

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

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

10


Smith Barney Large Capitalization Growth Fund
<PAGE>



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

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

[_] by you, or
[_] by members of your immediate family,

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

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

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

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

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

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

<TABLE>
<CAPTION>
           Year after purchase   1st 2nd 3rd 4th 5th 6th
through 8th

           <S>                   <C> <C> <C> <C> <C> <C>
           Deferred sales charge  5%  4%  3%  2%  1%
0%

</TABLE>

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


11



Smith Barney Mutual Funds
<PAGE>



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

<TABLE>
<CAPTION>
     Shares issued:        Shares issued:           Shares
issued:
     At initial purchase   On reinvestment of       Upon
exchange from
                           dividends and            another
Smith Barney
                           distributions            fund

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

</TABLE>


Class L shares (available through certain Service Agents)

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

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


Class Y shares (available through certain Service Agents)

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


12


Smith Barney Large Capitalization Growth Fund
<PAGE>


  More about deferred sales charges

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

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

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

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

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


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

Deferred sales charge waivers

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

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

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


13



Smith Barney Mutual Funds
<PAGE>



  Buying shares

<TABLE>
<CAPTION>
<C>              <S>
       Through a You should contact your Service Agent to
open a bro-
   Service Agent kerage account and make arrangements to
buy shares.

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

                 [_]Class of shares being bought
                 [_]Dollar amount or number of shares being
bought

                 Your Service Agent may charge an annual
account
                 maintenance fee.

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

                 [_] Write the fund at the following
address:
                    Smith Barney Investment Trust
                    Smith Barney Large Capitalization
Growth Fund
                    (Specify class of shares)
                    c/o PFPC Global Fund Services
                    P.O. Box 9699
                    Providence, RI 02940-9699

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

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

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

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

</TABLE>

14


Smith Barney Large Capitalization Growth Fund
<PAGE>



  Exchanging shares

<TABLE>
<CAPTION>
<C>                  <S>
 Smith Barney offers You should contact your Service Agent
to exchange into
a distinctive family other Smith Barney funds. Be sure to
read the
of funds tailored to prospectus of the Smith Barney fund
you are
       help meet the exchanging into. An exchange is a
taxable transaction.
    varying needs of
      both large and [_]You may exchange shares only for
shares of the
     small investors    same class of another Smith Barney
fund. Not all
                        Smith Barney funds offer all
classes.
                     [_]Not all Smith Barney funds may be
offered in your
                        state of residence. Contact your
Service Agent or
                        the transfer agent for further
information.
                     [_]You must meet the minimum
investment amount
                        for each fund (except for
systematic investment
                        plan exchanges).
                     [_]If you hold share certificates, the
sub-transfer agent
                        must receive the certificates
endorsed for transfer or
                        with signed stock powers (documents
transferring
                        ownership of certificates) before
the exchange is
                        effective.
                     [_]The fund may suspend or terminate
your exchange
                        privilege if you engage in an
excessive pattern of
                        exchanges.

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

-----------------------------------------------------------
----------------------
        By telephone If you do not have a brokerage account
with a Service
                     Agent, you may be eligible to exchange
shares through
                     the fund. You must complete an
authorization form to
                     authorize telephone transfers. If
eligible, you may
                     make telephone exchanges on any day
the New York
                     Stock Exchange is open. For clients of
a PFS Invest-
                     ments Registered Representative, call
PFS Shareholder
                     Services at 1-800-544-5445 between
8:00 a.m. and 8:00
                     p.m. (Eastern time). All other
shareholders should call
                     the transfer agent at 1-800-451-2010
between 9:00 a.m.
                     and 4:00 p.m. (Eastern time). Requests
received after
                     the close of regular trading on the
Exchange are
                     priced at the net asset value next
determined.

                     You can make telephone exchanges only
between
                     accounts that have identical
registrations.

</TABLE>


15



Smith Barney Mutual Funds
<PAGE>



  By mail If you do not have a brokerage account, contact
your
          Service Agent or write to a sub-transfer agent at
the
          address listed below.

  Redeeming shares

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

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

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

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

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

-----------------------------------------------------------
--------
  By mail For accounts held directly at the fund, send
written re-
          quests to the fund at either of the following -
addresses:

          For clients of a PFS Investments Registered
Representa-
          tive, write PFS Shareholder Services at the
following
          address:

            PFS Shareholder Services
            P.O. Box 105033
            Atlanta, GA 30348-5033

          For all other investors, send your request to
PFPC
          Global Fund Services at the following address:

            Smith Barney Investment Trust
            Smith Barney Large Capitalization Growth Fund
            (Specify class of shares)
            c/o PFPC Global Fund Services
            P.O. Box 9699
            Providence, RI -02940-9699





16


Smith Barney Large Capitalization Growth Fund
<PAGE>



<TABLE>


<CAPTION>
<C>              <S>
                 Your written request must provide the
following:
                 [_]The name of the fund and account number
                 [_]The class of shares and the dollar
amount or
                    number of shares to be redeemed
                 [_]Signatures of each owner exactly as the
account is
                    registered

-----------------------------------------------------------
---------------------
    By telephone If you do not have a brokerage account
with a Service
                 Agent, you may be eligible to redeem
shares (except
                 those held in retirement plans) in amounts
up to
                 $50,000 per day through the fund. You must
complete
                 an authorization form to authorize
telephone re-
                 demptions. If eligible, you may request
redemptions by
                 telephone on any day the New York Stock
Exchange is
                 open. For clients of a PFS Investments
Registered Rep-
                 resentative, call PFS Shareholder Services
at 1-800-544-
                 5445 between 8:00 a.m. and 8:00 p.m.
(Eastern time).
                 All other shareholders should call the
transfer agent at
                 1-800-451-2010 between 9:00 a.m. and 4:00
p.m.
                 (Eastern time). Requests received after
the close of
                 regular trading on the Exchange are priced
at the net
                 asset value next determined.

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

-----------------------------------------------------------
---------------------
  Automatic cash You can arrange for the automatic
redemption of a
withdrawal plans portion of your shares on a monthly or
quarterly basis.
                 To qualify you must own shares of the fund
with a
                 value of at least $10,000 ($5,000 for
retirement plan
                 accounts) and each automatic redemption
must be at
                 least $50. If your shares are subject to a
deferred sales
                 charge, the sales charge will be waived if
your auto-
                 matic payments are equal to or less than
1% per
                 month of the value of your shares subject
to a deferred
                 sales charge.

                 The following conditions apply:

                 [_]Your shares must not be represented by
certificates
                 [_]All dividends and distributions must be
reinvested

                 For more information, contact your Service
Agent or consult the
                 SAI.
</TABLE>


17



Smith Barney Mutual Funds
<PAGE>


  Other things to know about share transactions

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

[_] Name of the fund
[_] Account number
[_] Class of shares being bought, exchanged or redeemed
[_] Dollar amount or number of shares being bought,
exchanged or redeemed

[_] Signature of each owner exactly as the account is
registered


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

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

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

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

The fund has the right to:

[_] Suspend the offering of shares
[_] Waive or change minimum and additional investment
amounts
[_] Reject any purchase or exchange order
[_] Change, revoke or suspend the exchange privilege
[_] Suspend telephone transactions

18


Smith Barney Large Capitalization Growth Funds
<PAGE>


[_] Suspend or postpone redemptions of shares on any day
when trading on the
    New York Stock Exchange is restricted, or as otherwise
permitted by the
    Securities and Exchange Commission
[_] Pay redemption proceeds by giving you securities. You
may pay transaction
    costs to dispose of the securities


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


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

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


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


19



Smith Barney Mutual Funds
<PAGE>


  Dividends, distributions and taxes

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

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

<TABLE>
<CAPTION>
      Transaction                           Federal tax
status

      <S>                                   <C>
      Redemption or exchange of shares      Usually capital
gain or loss;
                                            long-term only
if shares owned
                                            more than one
year

      Long-term capital gain distributions  Long-term
capital gain

      Short-term capital gain distributions Ordinary income

      Dividends                             Ordinary income

</TABLE>

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

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

20


Smith Barney Large Capitalization Growth Fund
<PAGE>


  Share price


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


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

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

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

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


21



Smith Barney Mutual Fund
<PAGE>


  Financial highlights

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

  For a Class A share of capital stock outstanding
throughout each year (except
  where noted) ended November 30:

<TABLE>
<CAPTION>
                                     2000/(1)/  1999/(1)/
1998/(1)/  1997/(2)/
 ----------------------------------------------------------
--------------------
 <S>                                 <C>        <C>
<C>       <C>
 Net asset value, beginning of year  $  23.94   $  17.41  $
12.28    $  11.88

 ----------------------------------------------------------
--------------------
 Income (loss) from operations:
  Net investment income (loss)          (0.10)     (0.06)
(0.04)       0.01
  Net realized and unrealized
   gain (loss)                          (1.49)      6.92
5.20        0.39

 ----------------------------------------------------------
--------------------
 Total income (loss) from operations    (1.59)      6.86
5.16        0.40

 ----------------------------------------------------------
--------------------
 Less distributions from:
  Net investment income (loss)             --         --
(0.02)         --
  Net realized gains (loss)             (0.04)     (0.33)
(0.01)         --
  Capital                               (0.00)*       --
--          --

 ----------------------------------------------------------
--------------------
 Total distributions                    (0.04)     (0.33)
(0.03)         --

 ----------------------------------------------------------
--------------------
 Net asset value, end of year        $  22.31   $  23.94  $
17.41    $  12.28

 ----------------------------------------------------------
--------------------
 Total return                           (6.67)%    39.50%
42.12%     3.37%++

 ----------------------------------------------------------
--------------------
 Net assets, end of year (000)'s     $859,170   $770,392
$324,664    $111,063

 ----------------------------------------------------------
--------------------
 Ratios to average net assets:
  Expenses                               1.12%      1.15%
1.19%      1.15%+
  Net investment income (loss)          (0.39)     (0.27)
(0.38)      0.38+

 ----------------------------------------------------------
--------------------
 Portfolio turnover rate                    8%         9%
14%          1%

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

/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.
/(2)/ For the period from August 29, 1997 (inception date)
to November 30,
    1997.
*   Amount represents less than $0.01 per share.
++  Total return is not annualized, as it may not be
representative of the
    total return for the year.
+   Annualized.

22


Smith Barney Large Capitalization Growth Fund
<PAGE>


  For a Class B share of capital stock outstanding
throughout each year (except
  where noted) ended November 30:

<TABLE>
<CAPTION>
                                     2000/(1)/    1999/(1)/
1998/(1)/  1997/(2)/
-----------------------------------------------------------
-----------------------
<S>                                 <C>          <C>
<C>       <C>
Net asset value, beginning of year  $    23.56   $    17.26
$  12.26    $  11.88

-----------------------------------------------------------
-----------------------
Income (loss) from operations:
 Net investment loss                     (0.29)
(0.22)    (0.17)      (0.01)
 Net realized and unrealized gain
  (loss)                                 (1.45)        6.85
5.19        0.39

-----------------------------------------------------------
-----------------------
Total income (loss) from operations      (1.74)        6.63
5.02        0.38

-----------------------------------------------------------
-----------------------
Less distributions from:
 Net investment income (loss)               --           --
(0.01)         --
 Net realized gains (loss)               (0.04)
(0.33)    (0.01)         --
 Capital                                 (0.00)*         --
--          --
-----------------------------------------------------------
-----------------------
Total distributions                      (0.04)
(0.33)    (0.02)         --

-----------------------------------------------------------
-----------------------
Net asset value, end of year        $    21.78   $    23.56
$  17.26    $  12.26

-----------------------------------------------------------
-----------------------
Total return                             (7.42)%
38.51%    41.02%     3.20%++

-----------------------------------------------------------
-----------------------
Net assets, end of year (000)'s     $1,760,246   $1,710,004
$636,464    $179,598

-----------------------------------------------------------
-----------------------
Ratios to average net assets:
 Expenses                                 1.86%
1.89%     1.95%      1.90%+
 Net investment loss                     (1.14)
(1.01)    (1.14)     (0.37)+

-----------------------------------------------------------
-----------------------
Portfolio turnover rate                      8%
9%       14%          1%

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

/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.
/(2)/ For the period from August 29, 1997 (inception date)
to November 30,
    1997.
*   Amount represents less than $0.01 per share.
++  Total return is not annualized, as it may not be
representative of the
    total return for the year.
+   Annualized.


23



Smith Barney Mutual Funds
<PAGE>


  For a Class L share of capital stock outstanding
throughout each year (except
  where noted) ended November 30:

<TABLE>
<CAPTION>
                                         2000/(1)/
1999/(1)/ 1998/(1)(2)/ 1997/(3)/
-----------------------------------------------------------
--------------------------
<S>                                      <C>        <C>
<C>          <C>
Net asset value, beginning of year       $  23.56   $
17.26    $  12.26     $ 11.88

-----------------------------------------------------------
--------------------------
Income (loss) from operations:
 Net investment loss                        (0.28)
(0.22)      (0.17)      (0.01)
 Net realized and unrealized gain (loss)    (1.46)
6.85        5.19        0.39

-----------------------------------------------------------
--------------------------
Total income (loss) from operations         (1.74)
6.63        5.02        0.38

-----------------------------------------------------------
--------------------------
Less distributions from:
 Net investment income (loss)                  --         -
-       (0.01)         --
 Net realized gains (loss)                  (0.04)
(0.33)      (0.01)         --
 Capital                                    (0.00)*       -
-          --          --

-----------------------------------------------------------
--------------------------
Total distributions                         (0.04)
(0.33)      (0.02)         --

-----------------------------------------------------------
--------------------------
Net asset value, end of year             $  21.78   $
23.56    $  17.26     $ 12.26

-----------------------------------------------------------
--------------------------
Total return                                (7.42)%
38.51%      41.02%     3.20%++

-----------------------------------------------------------
--------------------------
Net assets, end of year (000)'s          $889,298
$677,792    $187,741     $37,224

-----------------------------------------------------------
--------------------------
Ratios to average net assets:
 Expenses                                    1.86%
1.89%       1.96%      1.90%+
 Net investment loss                        (1.14)
(1.01)      (1.14)     (0.38)+

-----------------------------------------------------------
--------------------------
Portfolio turnover rate                         8%
9%         14%          1%

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

/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.
/(2)/ On June 12, 1998, Class C shares were renamed Class L
shares.
/(3)/ For the period from August 29, 1997 (inception date)
to November 30,
    1997.
*   Amount represents less than $0.01 per share.
++  Total return is not annualized, as it may not be
representative of the
    total return for the year.
+   Annualized.

24


Smith Barney Large Capitalization Growth Fund
<PAGE>


  For a Class Y share of capital stock outstanding
throughout each year (except
  when noted) ended November 30:

<TABLE>
<CAPTION>
                                    2000/(1)/  1999/(1)/
1998/(1)/   1997/(2)/
<S>                                 <C>        <C>
<C>        <C>
Net asset value, beginning of year  $  24.14   $  17.49  $
12.29     $ 12.66

-----------------------------------------------------------
--------------------
Income (loss) from operations:
 Net investment income (loss)          (0.01)      0.02
(0.00)*      0.01
 Net realized and unrealized gain
  (loss)                               (1.52)      6.96
5.23       (0.38)

Total income (loss) from operations    (1.53)      6.98
5.23       (0.37)

-----------------------------------------------------------
--------------------
Less distributions from:
 Net investment income (loss)             --         --
(0.02)         --
 Net realized gains (loss)             (0.04)     (0,33)
(0.01)         --
 Capital                               (0.00)*

Total distributions                    (0.04)     (0.33)
(0.03)         --

-----------------------------------------------------------
--------------------
Net asset value, end of year        $  22.57      24.14  $
17.49     $ 12.29

-----------------------------------------------------------
--------------------
Total return                           (6.37)%    40.00%
42.61%    (2.92)%++

-----------------------------------------------------------
--------------------
Net assets, end of year (000)'s     $179,676   $186,369
$133,556     $84,758

-----------------------------------------------------------
--------------------
Ratio to average net assets:
 Expenses                               0.76%      0.78%
0.83%      0.82%+
 Net investment income (loss)          (0.04)      0.09%
(0.02)      0.54+

-----------------------------------------------------------
--------------------
Portfolio turnover rate                    8%         9%
14%          1%

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

/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.


/(2)/ For the period from October 15, 1997 (inception date)
to November 30,
    1997.
*   Amount represents less than $0.01 per share.
++  Total return is not annualized, as it may not be
representitive of the
    total return for the year.
+   Annualized.


25



Smith Barney Mutual Funds
<PAGE>



[LOGO] Smith Barney
       Mutual Funds
Your Serious Money. Professionally Managed/SM/

Smith Barney
Large Capitalization
Growth Fund

An investment portfolio of
Smith Barney Investment Trust

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

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

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


You can make inquiries about the fund or obtain shareholder
reports or the
statement of additional information (without charge) by
contacting your Service
Agent, by calling one of the fund's sub--transfer agents
(PFS Shareholders
Services at 1-800-544-5445 or PFPC Global Fund     Services
at 1-800-451-2010),
or by writing to the fund at Smith Barney Mutual Funds, 7
World Trade Center,
New York, New York 10048.

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

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

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

(Investment Company Act
file no. 811-06444)

FD01306 3/01




<PAGE>
                                  PROSPECTUS

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

                              SMITH BARNEY LARGE
                          CAPITALIZATION GROWTH FUND

            -------------------------------------------------------
       Class Z Shares

       March 30, 2001



       The fund is a separate series of Smith Barney Investment Trust, a
       Massachusetts business trust.

       The Securities and Exchange Commission has not approved the fund's
       shares as an investment or determind whether this prospectus is accurate
       or complete. Any statement to the contrary is a crime.


                           Smith Barney Mutual Funds
                        [LOGO] Smith Barney Mutual Funds

                Your Serious Money. Professionally Managed./sm/

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


<PAGE>


Smith Barney Large Capitalization Growth Fund

  Contents
<TABLE>
<CAPTION>
<S>                                             <C>
Investments, risks and performance ........................................    2

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

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

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

Dividends, distributions and taxes ........................................    9

Share price ...............................................................   10

Financial highlights ......................................................   11
</TABLE>


The fund is a separate series of Smith Barney Investment Trust, a Massachusetts
business trust.

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



                                                                               1

                                                       Smith Barney Mutual Funds
<PAGE>


                       Investments, risks and performance

Investment objective

The fund seeks long-term growth of capital.

Principal investment strategies

Key investments The fund invests primarily in equity securities of companies
with large market capitalizations. Large capitalization companies are those
with total market capitalizations of $5 billion or more at the time of
investment. Equity securities include U.S. exchange traded and over-the-counter
common stocks, debt securities convertible into equity securities, and warrants
and rights relating to equity securities.

Selection process The manager emphasizes individual security selection while
diversifying the fund's investments across 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 considers:

 . Favorable earnings prospects
 . Technological innovation
 . Industry dominance
 . Competitive products and services
 . Global scope
 . Long term operating history
 . 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

2



Smith Barney Large Capitalization Growth Fund--Class Z Shares
<PAGE>



Principal risks of investing in the fund

Investors could lose money on their investments in the fund, or the fund may
not perform as well as other investments, if:

 . U.S. stock markets decline, or perform poorly relative to other types of
  investments
 . An adverse company specific event, such as an unfavorable earnings report,
  negatively affects the stock price of a company in which the fund
  invests
 . Large capitalization stocks fall out of favor with investors
 . The manager's judgment about the attractiveness, growth prospects or
  potential appreciation of a particular stock proves to be incorrect

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

 . Are seeking to participate in the long-term growth potential of the U.S.
  stock market
 . Are looking for an investment with potentially greater return but higher
  risk than fixed income investments
 . Are willing to accept the risks of the stock market

                                                                               3


                                                       Smith Barney Mutual Funds
<PAGE>


Risk return bar chart


The bar chart below shows the fund's performance from the last year. Past
performance does not necessarily indicate how the fund will perform in the
future. The bar chart shows the performance of the fund's Class Z shares for
the past calendar year.



                     Total Return for Class Z Shares




                                    [CHART]

                            2000         (8.43)%

                        Calendar year ended December 31




Quarterly returns:

Highest: 7.69% in 1st quarter 2000; Lowest: (9.17)% in 4th quarter 2000.

Risk return table


This table indicates the risks of investing in the fund by comparing the
average annual total return of Class Z shares of the fund for the periods shown
with that of the S&P 500 Composite Index, a broad-based unmanaged market
capitalization-weighted measure of 500 widely held common stocks. This table
assumes the imposition of the maximum sales charge applicable to the class, the
redemption of shares at the end of the period, and the reinvestment of
distributions and dividends.

                         Average Annual Total Returns

                  Calendar Years Ended December 31, 2000

<TABLE>
<CAPTION>
                                             Since   Inception
                                   1 year  Inception   Date

                 <S>               <C>     <C>       <C>
                   Class Z         (8.43)%     9.77%    1/4/99

                   S&P 500 Index   (9.10)%     4.96%     *

</TABLE>

*Index comparison begins on January 4, 1999.


4



Smith Barney Large Capitalization Growth Fund--Class Z Shares
<PAGE>



Fee table

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

                        Annual fund operating expenses

<TABLE>
<CAPTION>
                   (expenses deducted from fund assets)

                  <S>                                    <C>
                   Management fee                        0.75%

                   Other expenses                        0.03%
                                                         -----
                   Total annual fund operating expenses  0.78%
                                                         =====
</TABLE>

Example

This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
 . You invest $10,000 in the fund for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends
 . The fund's operating expenses remain the same

                      Number of years you own your shares

<TABLE>
<CAPTION>
          1 year 3 years 5 years 10 years

<S>       <C>    <C>     <C>     <C>
 Class Z     $80    $249    $433     $966

</TABLE>


                                                                               5


                                                       Smith Barney Mutual Funds
<PAGE>


  More on the fund's investments

Foreign investments The fund may invest up to 10% of its net assets in the
securities of foreign issuers directly or in the form of depositary receipts
representing an interest in those securities. The fund's investments in
securities of foreign issuers involve greater risk than investments in
securities of U.S. issuers. Many foreign countries the fund invests in have
markets that are less liquid and more volatile than markets in the U.S. In some
foreign countries, less information is 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 risks of investing in foreign securities are greater for
securities of emerging market issuers because political or economic
instability, lack of market liquidity, and negative government actions like
currency controls or seizure of private businesses or property are more likely.


Short-term investments While the fund intends to invest substantially all of
its assets in equity securities, the fund may maintain up to 35% of its assets
in money market instruments and/or cash to pay expenses and meet redemption
requests. Generally, the value of these fixed income obligations will decline
if interest rates rise, the credit rating of the security is downgraded or the
issuer defaults on its obligation to pay principal or interest.

Other investments The fund may invest up to 35% of its assets in equity
securities of companies with total market capitalizations below $5 billion
(i.e., medium or small capitalization companies).


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

6



Smith Barney Large Capitalization Growth Fund--Class Z Shares
<PAGE>



  Management


Manager The fund's manager is Citigroup Fund Management LLC (prior to March 30,
2001, known as SSB Citi Fund Management LLC), an affiliate of Salomon Smith
Barney Inc. The manager's address is 7 World Trade Center, New York, New York
10048. The manager selects the fund's investments and oversees its operations.
The manager and Salomon Smith Barney are subsidiaries of Citigroup Inc.
Citigroup businesses produce a broad range of financial services--asset
management, banking and consumer finance, credit and charge cards, insurance,
investments, investment banking and trading--and use diverse channels to make
them available to consumer and corporate customers around the world.


Alan Blake, investment officer of the manager and managing director of Salomon
Smith Barney, has been responsible for the day to day management of the fund's
portfolio since its inception in 1997. Mr. Blake has more than 22 years of
securities business experience.

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



Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). Pursuant to a sub-transfer agency and services agreement
with the transfer agent, PFPC Global Fund Services serves as the fund's
sub-transfer agent (the "sub-transfer agent") to render certain shareholder
record keeping and accounting services and functions.

                                                                               7


                                                       Smith Barney Mutual Funds
<PAGE>


 Buying, redeeming and exchanging Class Z shares

<TABLE>
<CAPTION>
<C>            <S>
     Through a You may buy, redeem or exchange Class Z shares only
qualified plan through a "qualified plan." A qualified plan is a tax-
               exempt employee benefit or retirement plan of Salo-
               mon Smith Barney, Inc. or one of its affiliates.

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

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

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

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

               The fund has the right to:

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

8



Smith Barney Large Capitalization Growth Fund--Class Z Shares
<PAGE>


  Dividends, distributions and taxes

An investment in the fund will have the following consequences for a qualified
plan as the owner of shares in the fund. Qualified plan participants should
consult their plan document or tax advisors about the tax consequences of
participating in a qualified plan.

Dividends The fund generally pays dividends and makes capital gain
distributions, if any, once a year, typically in December. The fund may pay
additional distributions and dividends at other times if necessary for the fund
to avoid a federal tax. Capital gain distributions and dividends are reinvested
in additional Class Z shares. The fund expects distributions to be primarily
from capital gains. No sales charge is imposed on reinvested distributions or
dividends.

Taxes Provided that a qualified plan has not borrowed to finance its investment
in the fund, it will not be taxable on the receipt of dividends and
distributions from the fund.

Dividends and interest received by the fund from investing in foreign
securities may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. The fund's foreign tax payments will reduce the
amount of its dividends and distributions.

                                                                               9


                                                       Smith Barney Mutual Funds
<PAGE>


  Share price


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


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

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

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

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

10



Smith Barney Large Capitalization Growth Fund--Class Z Shares
<PAGE>


  Financial highlights


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

  For a Class Z share of capital stock outstanding throughout the year ended
  November 30:

<TABLE>
<CAPTION>
                                              2000/(1)/  1999/(1)(2)/

---------------------------------------------------------------------
<S>                                           <C>        <C>
 Net asset value, beginning of period         $  24.02      $ 19.48

---------------------------------------------------------------------
 Income from operations:
   Net investment income (loss)                  (0.01)        0.02
   Net realized and unrealized gain (loss)       (1.51)        4.85

---------------------------------------------------------------------
 Total income (loss) from operations             (1.52)        4.87

---------------------------------------------------------------------
 Less distributions from:
   Net investment income                            --           --
   Net realized gain                             (0.04)       (0.33)
   Capital                                       (0.00)*         --

 Total distributions                             (0.04)       (0.33)

---------------------------------------------------------------------
 Net asset value, end of period               $  22.46      $ 24.02

 Total return                                    (6.36)%    25.08%++

---------------------------------------------------------------------
 Net assets, end of period (000)'s            $116,429      $74,486

---------------------------------------------------------------------
 Ratios to average net assets+:
   Expenses                                       0.76%        0.78%
   Net investment income (loss)                  (0.03)        0.11

 Portfolio turnover rate                             8%           9%

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

/(1)/ Per share amounts have been calculated using the monthly average shares
      method.
/(2)/ For the period from January 4, 1999 (inception date) to November 30,
      1999.
*     Amount represents less than $0.01 per share.
++    Total return is not annualized, as it may not be representative of the
      total return for the year.
+     Annualized.

                                                                              11


                                                       Smith Barney Mutual Funds
<PAGE>


                   (This page is intentionally left blank.)
<PAGE>


[LOGO]  Smith Barney
        Mutual Funds
Your Serious Money. Professionally Managed./sm/

Smith Barney
Large Capitalization Growth Fund

An investment portfolio of Smith Barney Investment Trust

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

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

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


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

Visit our web site. Our web site is located at www.smithbarney.com


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

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


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

(Investment Company Act
file no. 811-06444)

FD01306 3/01




<PAGE>

                                  PROSPECTUS


     ------------------------------------------------------
--------------
                                 SMITH BARNEY
                                    MID CAP
                                   CORE FUND
     ------------------------------------------------------
--------------
      Class A, B, L, Y and 1 Shares
      March 30, 2001


      The fund is a separate series of Smith Barney
Investment Trust, a
      Massachusetts business trust.
      The Securities and Exchange Commission has not
approved the fund's shares
      as an investment or determined whether this
prospectus is acccurate or
      complete.
      Any statement to the contrary is a crime.

                             [LOGO]   Smith Barney
                                      Mutual Funds
                    Your Serious Money. Professionally
Managed./SM/

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

<PAGE>



Smith Barney Mid Cap Core Fund

  Contents



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

               More on the fund's
investments...............  7


Management...................................  9

               Choosing a class of shares to
buy............ 10

               Comparing the fund's
classes................. 11

               Sales
charges................................ 12

               More about deferred sales
charges............ 15

               Buying
shares................................ 16

               Exchanging
shares............................ 18

               Redeeming
shares............................. 20

               Other things to know about share
transactions 22

               Dividends, distributions and
taxes........... 24

               Share
price.................................. 25

               Financial
highlights......................... 26




The fund is a series of the Smith Barney Investment Trust,
a Massachusetts
business trust.


1



Smith Barney Mutual Funds
<PAGE>

  Investments, risks and performance

Investment objective
The fund seeks long-term growth of capital.
Principal investment strategies


Key investments The fund invests primarily in equity
securities of medium sized
companies. Medium sized companies are those whose market
capitalization is
within the market capitalization range of companies in the
S&P MidCap Index
(the "Index") at the time of the fund's investment. The
size of the companies
in the Index changes with market conditions and the
composition of the Index.
As of February 28, 2001, the largest market capitalization
of a company in the
Index was $10 billion and the smallest market
capitalization was $108 million.
Equity securities include exchange traded and over-the-
counter common stocks,
preferred stocks, debt securities convertible into equity
securities and
warrants and rights relating to equity securities. The fund
may also invest up
to 25% of its assets in securities of foreign issuers both
directly and through
depositary receipts for those securities.

Selection process The manager focuses on medium
capitalization companies that
exhibit attractive growth characteristics. The manager
selects individual
"growth" stocks for investment in two ways: by identifying
those companies
which exhibit the most favorable growth prospects and by
identifying those
companies which have favorable valuations relative to their
growth
characteristics. This strategy is commonly known as "growth
at a reasonable
price" and offers investors style diversification within a
single mutual fund.
In selecting individual companies for investment, the
manager considers:

 . Growth characteristics, including high historic growth
rates and high
  relative growth compared with companies in the same
industry or sector
 . Value characteristics, including low price/earnings
ratios and other
  statistics indicating a security is undervalued
 . Increasing profits and sales
 . Competitive advantages that could be more fully exploited
by a company
 . Skilled management committed to long-term growth
 . Potential for a long-term investment by the fund

The manager uses fundamental research to find stocks with
strong growth
potential and also uses quantitative analysis to determine
whether these stocks
are relatively undervalued or overvalued compared to stocks
with similar
fundamental characteristics. The manager's quantitative
valuations determine
whether and when the fund will purchase or sell the stocks
it identifies
through fundamental research.



Smith Barney Mid Cap Core Fund

 2

<PAGE>


Principal risks of investing in the fund
Investors could lose money on their investment in the fund,
or the fund may not
perform as well as other investments, if:


 . U.S. stock markets perform poorly relative to other types
of investments
 . An adverse company specific event, such as an unfavorable
earnings report,
  negatively affects the stock price of a company in which
the fund invests

 . Foreign securities prices decline

 . Medium capitalization stocks fall out of favor with
investors
 . The manager's judgment about the attractiveness, growth
prospects, value or
  potential appreciation of a particular stock proves to be
  incorrect

Because the fund invests primarily in medium capitalization
companies, an
investment in the fund may be more volatile and more
susceptible to loss than
an investment in a fund which invests primarily in large
capitalization
companies. Medium capitalization companies may have more
limited product lines,
markets and financial resources than large capitalization
companies. They may
have shorter operating histories and more erratic
businesses, although they
generally have more established businesses than small
capitalization companies.
The prices of medium capitalization company stocks tend to
be more volatile
than the prices of large capitalization company stocks.

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

 . Are seeking to participate in the long-term growth
potential of the U.S.
  stock market
 . Are looking for an investment with potentially greater
return but higher risk
  than a fund that invests primarily in large cap companies
 . Are willing to accept the risks of the stock market


3



Smith Barney Mutual Funds
<PAGE>

Risk return bar chart


This bar chart indicates the risks of investing in the fund
by showing changes
in the fund's performance from year to year. Past
performance does not
necessarily indicate how the fund will perform in the
future. The bar chart
shows the performance of the fund's Class A shares for each
of the past two
years. Class 1, B, L and Y shares have different
performance because of
different expenses. The performance information in the
chart does not reflect
sales charges, which would reduce your return.

                        Total Return for Class A Shares

                                    [CHART]

                        Calendar year ended December 31
                                1999     29.63%
                                2000     17.46%

Quarterly returns:


Highest: 23.91% in 4th quarter 1999; Lowest: (8.48)% in 4th
quarter 2000




Smith Barney Mid Cap Core Fund

 4

<PAGE>



Risk return table

This table indicates the risks of investing in the fund by
comparing the
average annual total return of each class for the periods
shown with that of
the S&P Mid Cap Index, a broad-based unmanaged market
capitalization-weighted
measure of 400 widely held common stocks. This table
assumes the imposition of
the maximum sales charge applicable to the class, the
redemption of shares at
the end of the period, and the reinvestment of
distributions and dividends.


                         Average Annual Total Returns

                  Calendar Years Ended December 31, 2000

<TABLE>
<CAPTION>
                           Since   Inception
                  1 year Inception   Date

<S>               <C>    <C>       <C>
Class A           11.58%  34.52%   09/01/98
Class B           11.60%  35.58%   09/01/98

Class L           14.42%  35.82%   09/01/98
Class Y           17.87%  31.46%   12/03/98

Class 1*           n/a   (16.12)%  09/11/00
S&P Mid Cap Index 17.51%  31.35%      **

</TABLE>

*Class 1 shares inception date is September 11, 2000 and
thus do not have a
return for a full calendar year.

**Index Comparison begins on 09/01/98.

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

                               Shareholder fees
<TABLE>
<CAPTION>
<S>                              <C>     <C>     <C>
<C>     <C>

 (fees paid directly from your
 investment)                     Class A Class B Class L
Class Y Class 1

 Maximum sales charge (load)
 imposed on purchases
 (as a % of offering price)       5.00%   None    1.00%
None    8.50%

 Maximum deferred sales charge
 (load) (as a % of the lower of
 net asset value at purchase or
 redemption)                      None*   5.00%   1.00%
None    None
</TABLE>

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


5



Smith Barney Mutual Funds
<PAGE>


<TABLE>
<CAPTION>
                     Annual fund operating expenses

  (expenses deducted from fund assets)  Class A Class B
Class L Class Y Class 1

 <S>                                    <C>     <C>     <C>
<C>     <C>
  Management fee                          0.75%   0.75%
0.75%   0.75%   0.75%

  Distribution and service (12b-1)
  fees                                    0.25%   1.00%
1.00%   None    None

  Other expenses*                         0.15%   0.15%
0.15%   0.07%   0.13%
                                        ------  ------  ---
---  ------  ------
  Total annual fund operating
  expenses                                1.15%   1.90%
1.90%   0.82%   0.88%
                                        ======  ======
======  ======  ======
</TABLE>

* "Other expenses" for Class 1 shares have been estimated
for the first full
fiscal year of performance.

Example
This example helps you compare the costs of investing in
the fund with the
costs of investing in other mutual funds. Your actual costs
may be higher or
lower. The example assumes:
[_] You invest $10,000 in the fund for the period shown

[_] Your investment has a 5% return each year
[_] You reinvest all distributions and dividends without a
sales charge
[_] The fund's operating expenses remain the same

                      Number of years you own your shares
<TABLE>
<CAPTION>

                                        1 year 3 years 5
years 10 years

<S>                                     <C>    <C>     <C>
<C>
 Class A (with or without redemption)     $611  $  847
$1,101   $1,828

 Class B (redemption at end of period)    $693  $  897
$1,126   $2,027

 Class B (no redemption)                  $193  $  597
$1,026   $2,027

 Class L (with redemption)                $391  $  691
$1,116   $2,300

 Class L (no redemption)                  $291  $  691
$1,116   $2,300

 Class Y (with or without redemption)     $ 84  $  262  $
455   $1,014

 Class 1 (with or without redemption)     $932  $1,107
$1,296   $1,842

</TABLE>

 6



Smith Barney Mid Cap Core Fund
<PAGE>


  More on the fund's investments

Secondary investment practices The fund may invest up to
35% of its assets in
equity securities of companies with market capitalizations
outside the market
capitalization range of companies in the Index (i.e., small
or large
capitalization companies).

Foreign investments The fund may invest up to 25% of its
assets in foreign
securities directly or in the form of depositary receipts
representing an
interest in those securities. The fund's investments in
securities of foreign
issuers involve greater risk than investments in securities
of U.S. issuers.
Many foreign countries the fund invests in have markets
that are less liquid
and more volatile than markets in the U.S. In some foreign
countries, less
information is 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
risks of investing in foreign securities are greater for
securities of emerging
market issuers because political or economic instability,
lack of market
liquidity, and negative government actions like currency
controls or seizure of
private businesses or property are more likely.


Short-term debt securities While the fund intends to be
substantially fully
invested in equity securities, the fund may maintain up to
10% of its assets in
money market instruments and/or cash to pay expenses and
meet redemption
requests. Generally, the value of these fixed income
obligations will decline
if interest rates rise, the credit rating of the security
is downgraded or the
issuer defaults on its obligation to pay principal or
interest.

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

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

A derivative contract will obligate or entitle the fund to
deliver or receive
an asset or cash payment based on the change in value of
one or more
securities, currencies or indices. Even a small investment
in derivative
contracts can have a big impact on the fund's stock market,
currency and
interest rate exposure. Therefore, using derivatives can
disproportionately


7



Smith Barney Mutual Funds
<PAGE>

increase losses and reduce opportunities for gains when
stock prices, currency
rates or interest rates are changing. The fund may not
fully benefit from or
may lose money on derivatives if changes in their value do
not correspond
accurately to changes in the value of the fund's holdings.

The other parties to certain derivative contracts present
the same types of
credit risk as issuers of fixed income securities.
Derivatives can also make
the fund less liquid and harder to value, especially in
declining markets.

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



Smith Barney Mid Cap Core Fund

 8

<PAGE>

  Management


Manager The fund's investment manager is Citigroup Fund
Management LLC (prior
to March 30, 2001, known as SSB Citi Fund Management LLC),
an affiliate of
Salomon Smith Barney Inc. The manager's address is 7 World
Trade Center, New
York, New York 10048. The manager selects the fund's
investments and oversees
its operations. The manager and Salomon Smith Barney are
subsidiaries of
Citigroup Inc. Citigroup businesses produce a broad range
of financial
services--asset management, banking and consumer finance,
credit and charge
cards, insurance, investments, investment banking and
trading--and use diverse
channels to make them available to consumer and corporate
customers around the
world.



Lawrence Weissman, investment officer of the manager and
managing director of
Salomon Smith Barney, has been responsible for the day-to-
day management of the
fund's portfolio since its inception in 1998. Susan
Kempler, investment officer
of the manager and managing director of Salomon Smith
Barney, currently shares
the responsibility for the day-to-day management of the
fund's portfolio. Ms.
Kempler has been involved in the fund since its inception.
Mr. Weissman and Ms.
Kempler have 16 years and 14 years, respectively, of
securities business
experience.

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


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


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

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


9



Smith Barney Mutual Funds

<PAGE>

  Choosing a class of shares to buy


You can choose among four classes of shares: Classes A, B,
L and Y. In
addition, you can buy additional Class 1 shares if you are
a Class 1
shareholder. Each class has different sales charges and
expenses, allowing you
to choose the class that best meets your needs. Which class
is more beneficial
to an investor depends on the amount and intended length of
the investment.


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

You may buy shares from:


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

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

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

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

<TABLE>
<CAPTION>
                                            Initial
Additional

                                        Classes A, B, L
Class Y   All Classes

<S>                                     <C>             <C>
<C>
 General                                    $1,000      $15
million     $50

 IRAs, Self Employed Retirement Plans,
 Uniform Gift to Minor Accounts             $  250      $15
million     $50

 Qualified Retirement Plans*                $   25      $15
million     $25

 Simple IRAs                                $    1
n/a         $ 1

 Monthly Systematic Investment Plans        $   25
n/a         $25

 Quarterly Systematic Investment Plans      $   50
n/a         $50

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



Smith Barney Mid Cap Core Fund

10

<PAGE>


  Comparing the fund's classes

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

<TABLE>
<CAPTION>
                    Class A         Class B        Class L
Class Y         Class 1
<S>             <C>             <C>             <C>
<C>             <C>

 Key            .Initial sales  .No initial     .Initial
sales .No initial or  .Only avail-
 features        charge          sales charge    charge is
deferred        able to eligi-
                .You may        .Deferred        lower than
sales charge    ble Class 1
                 qualify for     sales charge    Class A
 .Must invest     shareholders
                 reduction       declines       .Deferred
at least $15   .Higher ini-
                 or waiver of    over time       sales
charge   million         tial sales
                 initial sales  .Converts to     for only 1
 .Lower           charge
                 charge          Class A after   year
annual         .Lower
                .Lower           8 years        .Does not
expenses        annual
                 annual         .Higher          convert to
than the        expenses
                 expenses        annual          Class A
other classes   than Class
                 than Class B    expenses       .Higher
A, B and L
                 and Class L     than Class A    annual
                                                 expenses
                                                 than Class
A

-----------------------------------------------------------
------------------------------------
 Initial sales  Up to 5.00%;         None           1.00%
None       Up to 8.50%
 charge         reduced for
reduced for
                large
large
                purchases and
purchases
                waived for
                certain
                investors. No
                charge for
                purchases of
                $1,000,000 or
                more

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

-----------------------------------------------------------
------------------------------------
 Annual         0.25% of        1.00% of        1.00% of
None       None
 Distribution   average daily   average daily   average
daily
 and service    net assets      net assets      net assets
 fees

-----------------------------------------------------------
------------------------------------
 Exchange       Class A shares  Class B shares  Class L
shares Class Y shares  Class 1 Shares
 Privilege*     of most Smith   of most Smith   of most
Smith  of most Smith   of Smith
                Barney funds    Barney funds    Barney
funds   Barney funds    Barney funds

that offer

Class 1 shares

and Class A

shares of

certain other

Smith Barney

mutual funds

-----------------------------------------------------------
------------------------------------
</TABLE>
* Ask your Service Agent for the Smith Barney funds
available for exchange.


11



Smith Barney Mutual Funds
<PAGE>

  Sales charges

Class A shares

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


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

<TABLE>
<CAPTION>
                                       Sales Charge as a %
of Broker/Dealer
                                       --------------------
--   commission
                                       Offering  Net amount
as a % of
    Amount of purchase                 price (%) invested
(%) offering price
   <S>                                 <C>       <C>
<C>

    Less than $25,000                       5.00
5.26           4.50
    $25,000 but less than $50,000           4.25
4.44           3.83
    $50,000 but less than $100,000          3.75
3.90           3.38

    $100,000 but less than $250,000         3.25
3.36           2.93
    $250,000 but less than $500,000         2.75
2.83           2.48

    $500,000 but less than $1,000,000       2.00
2.04           1.80
    $1,000,000 or more                       -0-          -
0-     up to 1.00

</TABLE>


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

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

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



Smith Barney Mid Cap Core Fund

12

<PAGE>



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

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

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

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

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

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

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

Class B shares

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


13



Smith Barney Mutual Funds
<PAGE>



<TABLE>
<CAPTION>
 Year after purchase    1st 2nd 3rd 4th 5th 6th through 8th

<C>                     <C> <C> <C> <C> <C> <C>
 Deferred sales charge   5%  4%  3%  2%  1%              0%

</TABLE>


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

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

<TABLE>
<CAPTION>
     Shares issued:              Shares issued:
Shares issued:
     At initial purchase         On reinvestment of
Upon exchange from
                                 dividends and
another Smith Barney
                                 distributions
fund
    <S>                          <C>                    <C>

     Eight years after the date  In same proportion     On
the date the
     of purchase                 as the number of
shares originally
                                 Class B shares con-
acquired would have
                                 verting is to total
converted into Class
                                 Class B shares you     A
shares
                                 own (excluding
                                 shares issued as divi-
                                 dends)
</TABLE>

Class 1 Sales Charge
Class 1 shares are offered to eligible Class 1 shareholders
at the next
determined net asset value plus a sales charge. You do not
pay a sales charge
on a fund's distributions or dividends that you reinvest in
additional Class 1
shares.

You pay a lower sales charge as the size of your investment
increases to
certain levels called breakpoints.

<TABLE>
<CAPTION>
 Amount of investment               Sales charge Sales
charge  Broker/Dealer
                                    as % of      as % of
commission
                                    offering     net amount
as a % of
                                    price        invested
offering price
<C>                                 <C>          <C>
<C>

 Less than $10,000                         8.50%
9.29%          7.00%
 $10,000 but less than $25,000             7.75%
8.40%          6.25%
 $25,000 but less than $50,000             6.00%
6.38%          5.00%
 $50,000 but less than $100,000            4.50%
4.71%          3.75%
 $100,000 but less than $250,000           3.50%
3.63%          3.00%
 $250,000 but less than $400,000           2.50%
2.56%          2.00%
 $400,000 but less than $600,000           2.00%
2.04%          1.60%
 $600,000 but less than $5,000,000         1.00%
1.01%          0.75%
 $5,000,000 or more                        0.25%
0.25%          0.20%
</TABLE>

14



Smith Barney Mid Cap Core Fund
<PAGE>



Class L shares (available through certain Service Agents)

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


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

Class Y shares (available through certain Service Agents)

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

  More about deferred sales charges

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

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

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

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

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

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



15



Smith Barney Mutual Funds
<PAGE>




Deferred sales charge waivers

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

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

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

  Buying shares

<TABLE>
<CAPTION>
<C>           <C>
    Through a You should contact your Service Agent to open
a
Service Agent brokerage account and make arrangements to
buy
              shares.

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

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

              Your Service Agent may charge an annual
account
              maintenance fee.
</TABLE>
-------------------------------------------------------
[S]

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

                 . Write the fund at the following address:
                     Smith Barney Investment Trust
                     Smith Barney Mid Cap Core Fund
                     (Specify class of shares)
                     c/o PFPC Global Fund Services
                     P.O. Box 9699
                     Providence, RI 02940-9699


16



Smith Barney Mid Cap Core Fund
<PAGE>


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

<CAPTION>
<C>             <C>

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

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

                For more information, contact your Service
Agent or the
                transfer agent or consult the SAI.
</TABLE>



17



Smith Barney Mutual Funds
<PAGE>

<TABLE>
<CAPTION>
<S>                  <C>
  Exchanging shares

 Smith Barney offers You should contact your Service Agent
to exchange
a distinctive family into other Smith Barney mutual funds.
Be sure to
of funds tailored to read the prospectus of the Smith
Barney fund you are
       help meet the exchanging into. An exchange is a
taxable transaction.
    varying needs of
      both large and . You may exchange shares only for
shares of the same
     small investors   class of another Smith Barney mutual
fund. Not all
                       Smith Barney funds offer all
classes.
                     . Not all Smith Barney funds may be
offered in your
                       state of residence. Contact -your
Service Agent or the
                       transfer agent for further
information.
                     . You must meet the minimum investment
amount for
                       each fund (except for systematic
investment plan
                       exchanges)
                     . If you hold share certificates, the
sub-transfer agent
                       must receive the certificates
endorsed for transfer or
                       with signed stock powers (documents
transferring
                       ownership of certificates) before
the exchange is
                       effective.
                     . The fund may suspend or terminate
your exchange
                       privilege if you engage in an
excessive pattern of
                       exchanges

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

-----------------------------------------------------------
--------------------
        By telephone If you do not have a brokerage account
with a Service
                     Agent, you may be eligible to exchange
shares through
                     the fund. You must complete an
authorization form to
                     authorize telephone transfers. If
eligible, you may make
                     telephone exchanges on any day the New
York Stock
                     Exchange is open. For clients of a PFS
Investments
                     Registered Representative, call PFS
Shareholder
                     Services at 1-800-544-5445 between
8:00 a.m. and 8:00
                     p.m. (Eastern time). All other
shareholders should call
                     the transfer agent at 1-800-451-2010
between 9:00 a.m.
                     and 4:00 p.m. (Eastern time). Requests
received after
</TABLE>



Smith Barney Mid Cap Core Fund

18

<PAGE>


                the close of regular trading on the
Exchange are priced
                at the net asset value next deter-mined.

                You can make telephone exchanges only
between ac-
                counts that have identical registrations.

        ---------------------------------------------------
------------
        By mail If you do not have a brokerage account,
contact your
                Service Agent or write to a sub-transfer
agent at the
                address on the following page.


19



Smith Barney Mutual Funds
<PAGE>

<TABLE>
<CAPTION>
      <S>       <C>
        Redeeming shares

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

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

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

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

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

      -----------------------------------------------------
---------------
        By mail For accounts held directly at the fund,
send written
                requests to the fund at either of the
following addresses:

                For clients of a PFS Investments Registered
Repre-
                sentative, write PFS Shareholder Services
at the
                following address:

                  PFS Shareholder Services
                  P.O. Box 105033
                  Atlanta, GA 30348-5033

                For all other investors, send your request
to PFPC
                Global Fund Services at the following
address:

                  Smith Barney Investment Trust
                  Smith Barney Mid Cap Core Fund
                  (Specify class of shares)
                  c/o PFPC Global Fund Services
                  P.O. Box 9699
                  Providence, RI 02940-9699
</TABLE>



Smith Barney Mid Cap Core Fund

20

<PAGE>



<TABLE>
<CAPTION>
<S>              <C>
                 Your written request must provide the
following:

                 . The name of the fund and account number
                 . The class of shares and the dollar
amount or num-
                   ber of shares to be redeemed
                 . Signatures of each owner exactly as the
account is
                   registered

-----------------------------------------------------------
---------------------
    By telephone If you do not have a brokerage account
with a Service
                 Agent, you may be eligible to redeem
shares (except
                 those held in retirement plans) in amounts
up to
                 $50,000 per day through the fund. You must
complete
                 an authorization form to authorize
telephone
                 redemptions. If eligible, you may request
redemptions by
                 telephone on any day the New York Stock
Exchange is
                 open. For clients of a PFS Investments
Registered
                 Representative, call PFS Shareholder
Services at 1-800-
                 544-5445 between 8:00 a.m. and 8:00 p.m.
(Eastern
                 time). All other shareholders should call
the transfer
                 agent at 1-800-451-2010 between 9:00 a.m.
and 4:00 p.m.
                 (Eastern time). Requests received after
the close of
                 regular trading on the Exchange are priced
at the net
                 asset value next determined.

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

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

                 The following conditions apply:

                 . Your shares must not be represented by
certificates
                 . All dividends and distributions must be
reinvested
                 For more information, contact your Service
Agent or consult the
                 SAI.
</TABLE>


21



Smith Barney Mutual Funds
<PAGE>


  Other things to know about share transactions

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

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


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

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

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

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

The fund has the right to:

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

22


Smith Barney Mid Cap Core Fund
<PAGE>


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


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

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

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


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



23



Smith Barney Mutual Funds
<PAGE>


  Dividends, distributions and taxes


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

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

<TABLE>
<CAPTION>
   Transaction                          Federal tax status
<S>                                     <C>

 Redemption or exchange of shares       Usually capital
gain or loss;
                                        long-term only if
shares
                                        owned more than one
year

 Long-term capital gain distributions   Long-term capital
gain

 Short-term capital gain distributions  Ordinary income

 Dividends                              Ordinary income

</TABLE>

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

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

24



Smith Barney Mid Cap Core Fund
<PAGE>


  Share price


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


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

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


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


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


25



Smith Barney Mutual Funds
<PAGE>


  Financial Highlights

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


  For a Class 1 share of capital stock outstanding
throughout the period ended
  November 30:
<TABLE>
<CAPTION>


2000/(1)(2)/

               --------------------------------------------
-----
               <S>                                  <C>
               Net asset value, beginning of period   $
25.17

               --------------------------------------------
-----
               Income (loss) from operations:
                Net investment income
0.04
                Net realized and unrealized loss
(3.97)

               --------------------------------------------
-----
               Total loss from operations
(3.93)

               --------------------------------------------
-----
               Less distributions from:
                Net investment income
--
                Net realized gains
(1.33)

               --------------------------------------------
-----
               Total distributions
(1.33)

               --------------------------------------------
-----
               Net asset value, end of year           $
19.91

               --------------------------------------------
-----
               Total return
(16.23)%++

               --------------------------------------------
-----
               Net assets, end of year (000)'s        $
3,542

               --------------------------------------------
-----
               Ratios to average net assets:
                Expenses
0.88%+
                Net investment income
0.72+

               --------------------------------------------
-----
               Portfolio turnover rate
69%

               --------------------------------------------
-----
</TABLE>
/(1)/ For the period from September 12, 2000 (inception
date) to November 30,
    2000.
/(2)/ Per share amounts have been calculated using the
monthly average shares
    method.
 ++ Total return is not annualized, as it may not be
representative of the
    total return for the year.
 +  Annualized.


26


Smith Barney Mid Cap Core Fund
<PAGE>


  For a Class A share of capital stock outstanding
throughout each year (except
  where noted) ended November 30:
<TABLE>
<CAPTION>
<S>                                  <C>       <C>
<C>

                                     2000/(1)/ 1999/(1)/
1998/(2)/

-----------------------------------------------------------
--------
Net asset value, beginning of period $  17.74  $  13.63
$ 11.40

-----------------------------------------------------------
--------
Income from operations:
 Net investment income                   0.07      0.04
0.02
 Net realized and unrealized gain        3.55      4.63
2.21

-----------------------------------------------------------
--------
Total income from operations             3.62      4.67
2.23

-----------------------------------------------------------
--------
Less distributions from:
 Net investment income                     --     (0.01)
--
 Net realized gains                     (1.47)    (0.55)
--

-----------------------------------------------------------
--------
Total distributions                     (1.47)    (0.56)
--

-----------------------------------------------------------
--------
Net asset value, end of period       $  19.89  $  17.74
$ 13.63

-----------------------------------------------------------
--------
Total return                            19.59%    34.36%
19.56%++

-----------------------------------------------------------
--------
Net assets, end of period (000)'s    $282,739  $130,534
$36,760

-----------------------------------------------------------
--------
Ratios to average net assets:
 Expenses                                1.15%     1.16%
1.27%+
 Net investment income                   0.31      0.21
0.78+

-----------------------------------------------------------
--------
Portfolio turnover rate                    69%       61%
15%

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


/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.

/(2)/ For the period from September 1, 1998 (inception
date) to November 30,
    1998.
 ++ Total return is not annualized, as it may not be
representative of the
    total return for the year.
 +  Annualized.



27



Smith Barney Mutual Funds
<PAGE>


  For a Class B share of capital stock outstanding
throughout each year (except
  where noted) ended November 30:
<TABLE>
<CAPTION>
<S>                                  <C>       <C>
<C>

                                     2000/(1)/ 1999/(1)/
1998/(2)/

-----------------------------------------------------------
--------
Net asset value, beginning of period $  17.58  $  13.60
$ 11.40

-----------------------------------------------------------
--------
Income (loss) from operations:
 Net investment income (loss)           (0.10)    (0.09)
0.00*
 Net realized and unrealized gain        3.53      4.62
2.20

-----------------------------------------------------------
--------
Total income from operations             3.43      4.53
2.20

-----------------------------------------------------------
--------
Less distributions from:
 Net realized gains                     (1.47)    (0.55)
--

-----------------------------------------------------------
--------
Total distributions                     (1.47)    (0.55)
--

-----------------------------------------------------------
--------
Net asset value, end of period       $  19.54  $  17.58
$ 13.60

-----------------------------------------------------------
--------
Total return                            18.68%    33.43%
19.30%++

-----------------------------------------------------------
--------
Net assets, end of period (000)'s    $456,844  $245,317
$69,153

-----------------------------------------------------------
--------
Ratios to average net assets:
 Expenses                                1.90%     1.90%
2.01%+
 Net investment income (loss)           (0.44)    (0.54)
0.02+

-----------------------------------------------------------
--------
Portfolio turnover rate                    69%       61%
15%

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


/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.

/(2)/ For the period from September 1, 1998 (inception
date) to November 30,
    1998.
*   Represents less than $0.01.
++  Total return is not annualized, as it may not be
representative of the
    total return for the year.
+   Annualized.

28


Smith Barney Mid Cap Core Fund
<PAGE>

  For a Class L share of capital stock outstanding
throughout each year (except
  where noted) ended November 30:
<TABLE>
<CAPTION>
       <S>                                  <C>       <C>
<C>

                                            2000/(1)/
1999/(1)/ 1998/(2)/

       ----------------------------------------------------
--------------
       Net asset value, beginning of period $  17.57  $
13.60    $ 11.40

       ----------------------------------------------------
--------------
       Income (loss) from operations:
        Net investment income (loss)           (0.10)
(0.09)     0.00*
        Net realized and unrealized gain        3.54
4.61       2.20

       ----------------------------------------------------
--------------
       Total income from operations             3.44
4.52       2.20

       ----------------------------------------------------
--------------
       Less distributions from:
        Net realized gains                     (1.47)
(0.55)        --

       ----------------------------------------------------
--------------
       Total distributions                     (1.47)
(0.55)        --

       ----------------------------------------------------
--------------
       Net assets value, end of period      $  19.54  $
17.57    $ 13.60

       ----------------------------------------------------
--------------
       Total return                            18.75%
33.35%  19.30%++

       ----------------------------------------------------
--------------
       Net assets, end of period (000)'s    $305,297
$167,671    $45,045

       ----------------------------------------------------
--------------
       Ratios to average net assets:
        Expenses                                1.90%
1.90%    2.01%+
        Net investment income (loss)           (0.44)
(0.54)     0.03+

       ----------------------------------------------------
--------------
       Portfolio turnover rate                    69%
61%       15%

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

/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.


/(2)/ For the period from September 1, 1998 (inception
date) to November 30,
    1998.


     * Amount represents less than $0.01.


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

 +  Annualized.



Smith Barney Mutual Funds


29

<PAGE>



  For a Class Y share of capital stock outstanding
throughout each year (except
  where noted) ended November 30:
<TABLE>
<CAPTION>
          <S>                                  <C>
<C>

          Class Y Shares                       2000/(1)/
1999/(1)(2)/

          -------------------------------------------------
----------
          Net asset value, beginning of period $  17.78
$  13.65

          -------------------------------------------------
----------
          Income from operations:
           Net investment income                   0.14
0.08
           Net realized and unrealized gain        3.57
4.61

          -------------------------------------------------
----------
          Total income from operations             3.71
4.69

          -------------------------------------------------
----------
          Less distributions from:
           Net investment income                     --
(0.01)
           Net realized gains                     (1.47)
(0.55)

          -------------------------------------------------
----------
          Total Distributions                     (1.47)
(0.56)

          -------------------------------------------------
----------
          Net assets value, end of period      $  20.02
$  17.78

          -------------------------------------------------
----------
          Total return                            20.06%
34.49%++

          -------------------------------------------------
----------
          Net assets, end of period (000)'s    $123,489
$112,075

          -------------------------------------------------
----------
          Ratios to average net assets+:
           Expenses                                0.82%
0.82%
           Net investment income                   0.63
0.50

          -------------------------------------------------
----------
          Portfolio turnover rate                    69%
61%

          -------------------------------------------------
----------
</TABLE>
/(1)/ Per share amounts have been calculated using the
monthly average shares
    method.


/(2)/ For the period from December 3, 1998 (inception date)
to November 30,
    1999.
 ++ Total return is not annualized, as it may not be
representative of the
    total return for the year.
 +  Annualized.

30



Smith Barney Mid Cap Core Fund
<PAGE>


                   (This page is intentionally left blank.)
<PAGE>


                   (This page is intentionally left blank.)
<PAGE>


[LOGO]  Smith Barney

        Mutual Funds

        Your Serious Money. Professionally Managed./sm/




Smith Barney Mid Cap Core Fund

An investment portfolio of Smith Barney Investment Trust

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

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

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

You can make inquiries about the fund or obtain shareholder
reports or the
statement of additional information (without charge) by
contacting your Service
Agent, by calling the fund's sub-transfer agents (PFS
Shareholder Services at
1-800-544-5445 or PFPC Global Fund Services at 1-800-451-
2010), or by writing
to the fund at Smith Barney Mutual Funds, 7 World Trade
Center, New York, New
York 10048.




Information about the fund (including the SAI) can be
reviewed and copied at
the Securities and Exchange Commission's (the "Commission")
Public Reference
Room in Washington, D.C. In addition, information on the
operation of the
Public Reference Room may be obtained by calling the
Commission at
1-202-942-8090. Reports and other information about the
fund are available on
the EDGAR Database on the Commission's Internet site at
http://www.sec.gov.
Copies of this information may be obtained for a
duplicating fee by electronic
request at the following E-mail address:
publicinfo@sec.gov, or by writing the
Commission's Public Reference Section, Washington, D.C.
20549-0102.
If someone makes a statement about the fund that is not in
this prospectus, you
should not rely upon that information. Neither the fund nor
the distributor is
offering to sell shares of the fund to any person to whom
the fund may not
lawfully sell its shares.

/SM/Your Serious Money. Professionally Managed. is a
service mark of Salomon
Smith Barney Inc.
(Investment Company Act file no. 811-06444)

FD01499 3/01







PART B - STATEMENT OF ADDITIONAL INFORMATION

For each of the following, dated March 30, 2001:

A combined Statement of Additional Information for Smith
Barney Intermediate Maturity California Municipals Fund and
Smith Barney Intermediate Maturity New York Municipals Fund

Smith Barney Large Capitalization Growth Fund - A, B, L & Y
shares and Z shares

Smith Barney Mid Cap Core Fund - A, B, L, Y & 1 shares





   March 30, 2001


STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY INVESTMENT TRUST

Smith Barney Intermediate Maturity California
Municipals Fund
Smith Barney Intermediate Maturity New York
Municipals Fund

7 World Trade Center
New York, New York 10048
(800) 451-2010

This Statement of Additional Information ("SAI") is
meant to be read in conjunction with the prospectuses
of the Smith Barney Intermediate Maturity California
Municipals Fund (the "California Fund") and the Smith
Barney Intermediate Maturity New York Municipals Fund
(the "New York Fund") dated March 30, 2001, as
amended or supplemented from time to time, and is
incorporated by reference in it entirety into the
Prospectuses. Additional information about each
fund's investments is available in each fund's annual
and semi-annual reports to shareholders which are
incorporated herein by reference.  The prospectuses
and copies of the reports may be obtained free of
charge by contacting a Salomon Smith Barney Financial
Consultant, a broker/dealer, financial intermediary,
financial institution (each called a "Service Agent")
or by writing or calling the fund at the address or
telephone number above.  The funds are separate
investment series of Smith Barney Investment Trust
(the "trust").

TABLE OF CONTENTS
Investment Objective and Management Policies for the
Funds	2
Risk Factors and Special Considerations Relating to
California
  and New York Municipal Securities	12
Portfolio Transactions	38
Portfolio Turnover	39
Investment Restrictions	40
Trustees of the Trust and Executive Officers of the
Fund	41
Investment  Management and Other Services	45
Purchase of Shares	50
Redemption of Shares	55
Valuation of Shares	56
Exchange Privilege	57
Performance Data	58
Dividends, Distributions and Taxes	62
Additional Information	67
Financial Statements 	69
Appendix A	....................70





INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES FOR THE
FUNDS

The prospectuses discuss the investment objective of
each fund and the principal policies employed to
achieve those objectives.  Supplemental information
is set out below concerning the types of securities
and other instruments in which the funds may invest,
the investment policies and strategies that the funds
may utilize and certain risks attendant to those
investments, policies and strategies.  Citigroup Fund
Management (prior to March 30, 2001, known as SSB
Citi Fund Management LLC ("CFM" or the "manager")
serves as investment adviser to each fund.

California and New York Fund

Under normal market conditions, each of the
California Fund and the New York Fund attempts to
invest 100% of its assets in a portfolio of
investment grade debt obligations issued by or on
behalf of the State of California and the State of
New York, respectively, and other states, territories
and possessions of the United States, the District of
Columbia and their respective authorities, agencies,
instrumentalities and political subdivisions
("Municipal Obligations").  For purposes of this SAI,
debt obligations issued by the State of California
and the State of New York, respectively, and its
political subdivisions, agencies and public
authorities (together with certain other governmental
issuers such as the Commonwealth of Puerto Rico), the
interest from which debt obligations is, in the
opinion of bond counsel to the issuer, excluded from
gross income for Federal income tax purposes and
exempt from California and New York State personal
income tax, respectively, are defined as "California
Exempt Obligations" and "New York Exempt
Obligations".   Collectively, California Exempt
Obligations and New York Exempt Obligation (defined
below) are referred to generally in this SAI  as
"Exempt Obligations."  The California fund will
operate subject to a fundamental investment policy
providing that, under normal market conditions, the
California Fund will invest at least 80% of its net
assets in California Exempt Obligations rated
investment grade.  Up to 20% of the fund's total
assets may be invested in unrated securities that are
deemed by the manager to be of a quality comparable
to investment grade. The fund will not invest in
California Exempt Obligations that are rated lower
than investment grade at the time of purchase. The
New York Fund will operate subject to a fundamental
investment policy providing that, under normal market
conditions, the fund will invest at least 80% of its
net assets in New York Exempt Obligations.  Up to 20%
of the fund's total assets may be invested in unrated
securities that are deemed by the manager to be of a
quality comparable to investment grade.  The fund
will not invest in New York Exempt Obligations that
are rated lower than Baa by Moody's Investors
Services, Inc. ("Moody's"), BBB by Standard & Poor's
Ratings Services, ("S&P"), or BBB by Fitch IBCA, Inc.
("Fitch"), at the time of purchase.

Securities Rating Criteria. The ratings of Moody's,
S&P, Fitch and other nationally recognized
statistical rating organizations ("NRSRO") represent
their opinions as to the quality of the Exempt
Obligations that they undertake to rate; the ratings
are relative and subjective and are not absolute
standards of quality.  The manager's judgment as to
credit quality of an Exempt Obligation, thus, may
differ from that suggested by the ratings published
by a rating service.  See Appendix for a description
of such organization's ratings.  The policies of the
funds as to ratings of portfolio investments will
apply only at the time of the purchase of a security,
and neither fund will be required to dispose of a
security in the event Moody's, S&P, Fitch or any
NRSRO downgrades its assessment of the credit
characteristics of the security's issuer.  In
addition, to the extent that ratings change as a
result of changes in rating organizations or their
rating systems or as a result of a corporate
restructuring of Moody's, S&P, Fitch or any NRSRO the
manager will attempt to use comparable ratings as
standards for each fund's investments.

Exempt Obligations rated no lower than Baa, MIG 3 or
Prime-1 by Moody's, BBB, SP-2 or A-1 by S&P, BBB or
F-1 by Fitch or have the equivalent rating of any
NRSRO are considered investment grade securities.
Although Exempt Obligations rated Baa by Moody's, BBB
by S&P or BBB by Fitch are considered to be
investment grade, they may be viewed as being subject
to greater risks than other investment grade
securities.  Although Exempt Obligations rated Baa by
Moody's, BBB by S&P or BBB by Fitch are considered to
be investment grade, they may be viewed as being
subject to greater risks than other investment grade
securities.  Exempt Obligations rated Baa by Moody's,
for example, are considered medium grade obligations
that lack outstanding investment characteristics and
have speculative characteristics as well.  Exempt
Obligations rated BBB by S&P are regarded as having
an adequate capacity to pay principal and interest.
Exempt Obligations rated BBB by Fitch are deemed to
be subject to a higher likelihood that their rating
will fall below investment grade than higher rated
bonds.

Maturity of Obligations Held By The Funds.  The
manager believes that each fund may offer an
attractive investment opportunity for investors
seeking a higher effective tax yield than a tax-
exempt money market fund or a tax-exempt short-term
bond fund and less fluctuation in net asset value
than a longer term tax-exempt bond fund.  Each fund
normally invests in intermediate maturity securities;
the weighted average maturity of each fund's
portfolio will normally be not less than three nor
more than 10 years.  The maximum remaining maturity
of the securities in which both the California Fund
and New York Fund normally invest will be no greater
than 20 years.

Exempt Obligations.  Exempt Obligations are
classified as general obligation bonds, revenue bonds
and notes.  General obligation bonds are secured by
the issuer's pledge of its full faith, credit and
taxing power for the payment of principal and
interest.  Revenue bonds are payable from the revenue
derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but
not from the general taxing power.  Notes are short-
term obligations of issuing municipalities or
agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues.
Exempt Obligations bear fixed, floating and variable
rates of interest, and variations exist in the
security of Exempt Obligations, both within a
particular classification and between
classifications.

The yields on, and values of, Exempt Obligations
depend on a variety of factors, including general
economic and monetary conditions, conditions in the
Exempt Obligation markets, size of a particular
offering, maturity of the obligation and rating of
the issue.  Consequently, Exempt Obligations with the
same maturity, coupon and rating may have different
yields or values, whereas obligations of the same
maturity and coupon with different ratings may have
the same yield or value.

Issuers of Exempt Obligations may be subject to the
provisions of bankruptcy, insolvency and other laws,
such as the Federal Bankruptcy Reform Act of 1978,
affecting the rights and remedies of creditors.  In
addition, the obligations of those issuers may become
subject to laws enacted in the future by Congress,
state legislatures or referenda extending the time
for payment of principal and/or interest, or imposing
other constraints upon enforcement of the obligations
or upon the ability of municipalities to levy taxes.
The possibility also exists that, as a result of
litigation or other conditions, the power or ability
of any issuer to pay, when due, the principal of, and
interest on, its obligations may be materially
affected.

Private Activity Bonds.  Each fund may invest without
limit in Exempt Obligations that are "private
activity bonds," as defined in the Internal Revenue
Code of 1986, as amended (the "Code"), which are in
most cases revenue bonds.  Private activity bonds
generally do not carry the pledge of the credit of
the issuing municipality, but are guaranteed by the
corporate entity on whose behalf they are issued.
Interest income on certain types of private activity
bonds issued after August 7, 1986 to finance non-
governmental activities is a specific tax preference
item for purposes of the Federal individual and
corporate alternative minimum taxes.  Individual and
corporate shareholders may be subject to a federal
alternative minimum tax to the extent the fund's
dividends are derived from interest on these bonds.
Dividends derived from interest income on Exempt
Obligations are a "current earnings" adjustment item
for purposes of the Federal corporate alternative
minimum tax.  See "Taxes."  Private activity bonds
held by a fund will be included in the term Exempt
Obligations for purposes of determining compliance
with the fund's policy of investing at least 80% of
its total assets in Exempt Obligations.

Related Instruments.  The fund may invest without
limit in Exempt Obligations that are repayable out of
revenues generated from economically related projects
or facilities or debt obligations whose issuers are
located in the same state.  Sizable investments in
these obligations could involve an increased risk to
the fund should any of the related projects or
facilities experience financial difficulties.

U.S. Government Securities.  Each fund may invest in
debt obligations of varying maturities issued or
guaranteed by the United States government, its
agencies or instrumentalities ("U.S. Government
Securities").  Direct obligations of the U.S.
Treasury include a variety of securities that differ
in their interest rates, maturities and dates of
issuance.  U.S. Government Securities also include
securities issued or guaranteed by the Federal
Housing Administration, Farmers Home Loan
Administration, Export-Import Bank of the United
States, Small Business Administration, Government
National Mortgage Association ("GNMA"), General
Services Administration, Central Bank for
Cooperatives, Federal Farm Credit Banks, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation
("FHLMC"), Federal Intermediate Credit Banks, Federal
Land Banks, Federal National Mortgage Association
("FNMA"), Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board and
Student Loan Marketing Association.  A fund may also
invest in instruments that are supported by the right
of the issuer to borrow from the U.S. Treasury and
instruments that are supported by the credit of the
instrumentality.  Because the U.S. government is not
obligated by law to provide support to an
instrumentality it sponsors, a fund will invest in
obligations issued by such an instrumentality only if
the manager determines that the credit risk with
respect to the instrumentality does not make its
securities unsuitable for investment by the fund.
Municipal Obligations. Each fund invests principally
in Municipal Obligations. Municipal Obligations are
debt obligations issued to obtain funds for various
public purposes, including construction of a wide
range of public facilities, refunding of outstanding
obligations, payment of general operating expenses
and extensions of loans to public institutions and
facilities.  Private activity bonds issued by or on
behalf of public authorities to finance privately
operated facilities are considered to be Municipal
Obligations if the interest paid on them qualifies as
excluded from gross income (but not necessarily from
alternative minimum taxable income) for Federal
income tax purposes in the opinion of bond counsel to
the issuer.  Municipal Obligations may be issued to
finance life care facilities, which are an
alternative form of long-term housing for the elderly
that offer residents the independence of a
condominium life-style and, if needed, the
comprehensive care of nursing home services.  Bonds
to finance these facilities have been issued by
various state industrial development authorities.
Because the bonds are secured only by the revenues of
each facility and not by state or local government
tax payments, they are subject to a wide variety of
risks, including a drop in occupancy levels, the
difficulty of maintaining adequate financial reserves
to secure estimated actuarial liabilities, the
possibility of regulatory cost restrictions applied
to health care delivery and competition from
alternative health care or conventional housing
facilities.

Municipal Leases.  Each fund may invest without limit
in "municipal leases."  Municipal leases may take the
form of a lease or an installment purchase contract
issued by state or local government authorities to
obtain funds to acquire a wide variety of equipment
and facilities such as fire and sanitation vehicles,
computer equipment and other capital assets.
Interest payments on qualifying municipal leases are
exempt from Federal income taxes and state income
taxes within the state of issuance.  Although lease
obligations do not constitute general obligations of
the municipality for which the municipality's taxing
power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease
obligation.  However, certain lease obligations
contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease
or installment purchase payments in future years
unless money is appropriated for such purpose on a
yearly basis.  In addition to the "non-appropriation"
risk, these securities represent a relatively new
type of financing that has not yet developed the
depth of marketability associated with more
conventional bonds.  Although "non-appropriation"
lease obligations are often secured by the underlying
property, disposition of the property in the event of
foreclosure might prove difficult.  Each fund may
invest in municipal leases without non-appropriation
clauses only when the municipality is required to
continue the lease under all circumstances except
bankruptcy.  There is no limitation on the percentage
of a fund's assets that may be invested in municipal
lease obligations.  In evaluating municipal lease
obligations, the manager will consider such factors
as it deems appropriate, which my include:  (a)
whether the lease can be canceled; (b) the ability of
the lease obligee to direct the sale of the
underlying assets; (c) the general creditworthiness
of the lease obligor; (d) the likelihood that the
municipality will discontinue appropriating funding
for the leased property in the event such property is
no longer considered essential by the municipality;
(e) the legal recourse of the lease obligee in the
event of such a failure to appropriate funding; (f)
whether the security is backed by a credit
enhancement such as insurance; and (g) any
limitations which are imposed on the lease obligor's
ability to utilize substitute property or services
other than those covered by the lease obligation.

Municipal leases that a fund may acquire will be both
rated and unrated.  Rated leases include those rated
investment grade at the time of investment or those
issued by issuers whose senior debt is rated
investment grade at the time of investment.  Each
fund may acquire unrated issues that the manager
deems to be comparable in quality to rated issues in
which the fund is authorized to invest.  A
determination that an unrated lease obligation is
comparable in quality to a rated lease obligation
will be subject to oversight and approval by the
trust's board of trustees.

Municipal leases held by a fund will be considered
illiquid securities unless the trust's board of
trustees determines on an ongoing basis that the
leases are readily marketable.  An unrated municipal
lease with a non-appropriation risk that is backed by
an irrevocable bank letter of credit or an insurance
policy issued by a bank or insurer deemed by the
manager to be of high quality and minimal credit
risk, will not be deemed to be illiquid solely
because the underlying municipal lease is unrated, if
the manager determines that the lease is readily
marketable because it is backed by the letter of
credit or insurance policy.

Zero Coupon Securities.  Each fund may invest up to
10% of its assets in zero coupon Exempt Obligations.
Zero coupon Exempt Obligations are generally divided
into two categories: pure zero obligations, which are
those that pay no interest for their entire life and
zero/fixed obligations, which pay no interest for
some initial period and thereafter pay interest
currently. In the case of a pure zero obligation, the
failure to pay interest currently may result from the
obligation's having no stated interest rate, in which
case the obligation pays only principal at maturity
and is issued at a discount from its stated principal
amount.  A pure zero obligation may, in the
alternative, carry a stated interest rate, but
provide that no interest is payable until maturity.
The value to the investor of a zero coupon Exempt
Obligation consists of the economic accretion either
of the difference between the purchase price and the
nominal principal amount (if no interest is stated to
accrue) or of accrued, unpaid interest during the
Exempt Obligation's life or payment deferral period.

Custodial Receipts.  Each fund may acquire custodial
receipts or certificates under-written by securities
dealers or banks that evidence ownership of future
interest payments, principal payments, or both, on
certain Exempt Obligations.  The underwriter of these
certificates or receipts typically purchases Exempt
Obligations and deposits the obligations in an
irrevocable trust or custodial account with a
custodian bank, which then issues receipts or
certificates evidencing ownership of the periodic
unmatured coupon payments and the final principal
payment on the obligations.  Custodial receipts
evidencing specific coupon or principal payments have
the same general attributes as zero coupon Exempt
Obligations described above.  Although under the
terms of a custodial receipt a fund would typically
be authorized to assert its rights directly against
the issuer of the underlying obligations, the fund
could be required to assert through the custodian
bank those rights as may exist against the underlying
issuer.  Thus, if the underlying issuer fails to pay
principal and/or interest when due, the 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, if 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 recognition of any taxes paid.

Exempt Obligation Components.  Each fund may invest
in Exempt Obligations, the interest rate on which has
been divided by the issuer into two different and
variable components, which together result in a fixed
interest rate.  Typically, the first of the
components (the "Auction Component") pays an interest
rate that is reset periodically through an auction
process; whereas the second of the components (the
"Residual Component") pays a residual interest rate
based on the difference between the total interest
paid by the issuer on the Exempt Obligation and the
auction rate paid on the Auction Component.  Each
fund may purchase both Auction and Residual
Components.

Because the interest rate paid to holders of Residual
Components is generally determined by subtracting
from a fixed amount the interest rate paid to the
holders of Auction Components, the interest rate paid
to Residual Component holders will decrease as the
Auction Component's rate increases and increase as
the Auction Component's rate decreases.  Moreover,
the magnitude of the increases and decreases in
market value of Residual Components may be larger
than comparable changes in the market value of an
equal principal amount of a fixed rate Exempt
Obligation having similar credit quality, redemption
provisions and maturity.

Floating and Variable Rate Instruments.  Each fund
may purchase floating and variable rate demand notes
and bonds, which are Exempt Obligations normally
having a stated maturity in excess of one year, but
which permit their holder to demand payment of
principal at any time, or at specified intervals.
The maturity of a floating or variable rate demand
note or bond will be deemed shortened by virtue of a
demand feature.

The issuer of floating and variable rate demand
obligations normally has a corresponding right, after
a given period, to prepay at its discretion the
outstanding principal amount of the obligations plus
accrued interest upon a specified number of days'
notice to the holders of these obligations. The
interest rate on a floating rate demand obligation is
based on a known lending rate, such as a bank's prime
rate, and is adjusted automatically each time that
rate is adjusted. The interest rate on a variable
rate demand obligation is adjusted automatically at
specified intervals. Frequently, floating and
variable rate obligations are secured by letters of
credit or other credit support arrangements provided
by banks.  Use of letters of credit or other credit
support arrangements will not adversely affect the
tax-exempt status of these obligations.  Because they
are direct lending arrangements between the lender
and borrower, floating and variable rate obligations
generally will not be traded.  In addition, generally
no secondary market exists for these obligations,
although their holders may demand payment at face
value.  For these reasons, when floating and variable
rate obligations held by a fund are not secured by
letters of credit or other credit support
arrangements, the fund's rights to demand payment is
dependent on the ability of the borrower to pay
principal and interest on demand.  The manager, on
behalf of the fund, will consider on an ongoing basis
the creditworthiness of the issuers of floating and
variable rate demand obligations held by the fund.

Participation Interests.  Each fund may purchase from
financial institutions tax-exempt participation
interests in Exempt Obligations.  A participation
interest gives the fund an undivided interest in the
Exempt Obligation in the proportion that the fund's
participation interest bears to the total amount of
the Exempt Obligation.  These instruments may have
floating or variable rates of interest.  If the
participation interest is unrated, it will be backed
by an irrevocable letter of credit or guarantee of a
bank that the trust's board of trustees has
determined meets certain quality standards, or the
payment obligation otherwise will be collateralized
by obligations of the United States government or its
agencies and instrumentalities ("U.S. government
securities").  The fund will have the right, with
respect to certain participation interests, to demand
payment, on a specified number of days' notice, for
all or any part of the fund's interest in the Exempt
Obligation, plus accrued interest.  Each fund intends
to exercise its right with respect to these
instruments to demand payment only upon a default
under the terms of the Exempt Obligation or to
maintain or improve the quality of its investment
portfolio.

Taxable Investments.  Under normal conditions, each
fund may hold up to 20% of its total assets in cash
or money market instruments, including taxable money
market instruments (collectively, "Taxable
Investments").  In addition, the manager believes
that if market conditions warrant, a fund may take a
temporary defensive posture and invest without
limitation in short-term Exempt Obligations and
Taxable Investments.  To the extent, a fund holds
Taxable Investments and, under certain market
conditions, certain floating and variable rate demand
obligations or Auction Components, the fund may not
achieve its investment objective.

Money market instruments in which the fund may invest
include: U.S. government securities; tax-exempt notes
of municipal issuers rated, at the time of purchase,
no lower than MIG 1 by Moody's, SP-1 by S&P of F-1 by
Fitch, have the equivalent rating by any NRSRO or, if
not rated, by issuers having outstanding, unsecured
debt then rated within the three highest rating
categories; bank obligations (including certificates
of deposit, time deposits and bankers acceptances of
domestic banks, domestic savings and loan
associations and similar institutions); commercial
paper rated no lower than P-1 by Moody's, A-1 by S&P
of F-1 by Fitch or the equivalent from any NRSRO or,
if unrated of an issuer having an outstanding,
unsecured debt issue then rated within the three
highest rating categories; and repurchase agreements.
At no time will the funds' investments in bank
obligations, including time deposits, exceed 25% of
the value of each fund's assets.

U.S. government securities in which the funds may
invest include direct obligations of the United
States and obligations issued by U.S. government
agencies and instrumentalities. Included among direct
obligations of the United States are Treasury Bills,
Treasury Notes and Treasury Bonds, which differ
principally in terms of their maturities.  Included
among the securities issued by U.S. government
agencies and instrumentalities are: securities that
are supported by the full faith and credit of the
United States (such as Government National Mortgager
Association certificates); securities that are
supported by the right of the issuer to borrow from
the United States Treasury (such as securities of
Federal Home Loan Banks); and securities that are
supported by the credit of the instrumentality (such
as Federal National Mortgage Association and Federal
Home Loan Mortgage Corporation bonds).

Investment Techniques

The fund may employ, among others, the investment
techniques described below, which may give rise to
taxable income:


Financial Futures and Options Transactions.  To hedge
against a decline in the value of Municipal Bonds it
owns or an increase in the price of Municipal Bonds
it proposes to purchase, each fund may enter into
financial futures contracts and invest in options on
financial futures contracts that are traded on a
domestic exchange or board of trade.  The futures
contracts or options on futures contracts that may be
entered into by the fund will be restricted to those
that are either based on an index of Municipal Bonds
or relate to debt securities the prices of which are
anticipated by the manager to correlate with the
prices of the Municipal Bonds owned or to be
purchased by a fund.

In entering into a financial futures contract, a fund
will be required to deposit with the broker through
which it undertakes the transaction an amount of cash
or cash equivalents equal to approximately 5% of the
contract amount.  This amount, which is known as
"initial margin," is subject to change by the
exchange or board of trade on which the contract is
traded, and members of the exchange or board of trade
may charge a higher amount.  Initial margin is in the
nature  of a performance bond or good faith deposit
on the contract that is returned to the fund upon
termination of the futures contract, assuming all
contractual obligations have been satisfied.  In
accordance with a process known as "marking-to
market," subsequent payments, known as "variation
margin," to and from the broker will be made daily as
the price of the index or securities underlying the
futures contract fluctuates, making the long and
short positions in the futures contract more or less
valuable.  At any time prior to the expiration of a
futures contract, the fund may elect to close the
position by taking an opposite position, which will
operate to terminate the fund's existing position in
the contract.

A financial futures contract provides for the future
sale by one party and the purchase by the other party
of a certain amount of a specified property at a
specified price, date, time and place.  Unlike the
direct investment in a futures contract, an option on
a financial futures contract gives the purchaser the
right, in return for the premium paid, to assume a
position in the financial futures contract at a
specified exercise price at the any time prior to the
expiration date of the option.  Upon exercise of an
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 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.  The
potential loss related to the purchase of an option
on financial futures contracts is limited to the
premium paid for the option (plus transaction costs).
The value of the option may change daily and that
change would be reflected in the net asset value of
the fund.

Regulations of the Commodity Futures Trading
Commission applicable to each fund require that a
fund's transactions in financial futures contracts
and options on financial futures contracts be engaged
in for bona fide hedging purposes, or if a fund
enters into futures contracts for speculative
purposes, that the aggregate initial margin deposits
and premiums paid by the fund will not exceed 5% of
the market value of its assets.  In addition, the
fund will, with respect to its purchases of financial
futures contracts, establish a segregated account on
the fund's books consisting of cash or cash
equivalents in an amount equal to the total market
value of the futures contracts, less the amount of
initial margin on deposit for the contracts.  Each
fund's ability to trade in financial futures
contracts and options on financial futures contracts
may be limited to some extent by the requirements of
the Code, applicable to a regulated investment
company that are described below under "Taxes."

Although each fund intends to enter into financial
futures contracts and options on financial futures
contracts that are traded on a domestic exchange or
board of trade only if an active market will exist
for them at any particular time.  If closing a
futures position in anticipation of adverse price
movements is not possible, the fund would be required
to make daily cash payments of variation margin.  In
those circumstances, an increase in the value of the
portion of the fund's investments being hedged, if
any, may offset partially or completely losses on the
futures contract.  No assurance can be given,
however, that the price of the securities being
hedged will correlate with the price movements in a
futures contract and, thus, provide an offset to
losses on the futures contract or option on the
futures contract.  In addition, in light of the risk
of an imperfect correlation between securities held
by the fund that are the subject of a hedging
transaction and the futures or options used as a
hedging device, the hedge may not be fully effective
because, for example, losses on the securities held
by the fund may be in excess of gains on the futures
contract or losses on the futures contract may be in
excess of gains on the securities held by the fund
that were the subject of the hedge.  In an effort to
compensate for the

imperfect correlation of movements in the price of
the securities being hedged and movements in the
price of futures contracts, each fund may enter into
financial futures contracts or options on financial
futures contracts in a greater or lesser dollar
amount than the dollar amount of the securities being
hedged if the historical volatility of the futures
contract has been less or greater than that of the
securities.  This "over hedging" or "under hedging"
may adversely affect a fund's net investment results
if market movements are not as anticipated when the
hedge is established.

If a fund has hedged against the possibility of an
increase in interest rates adversely affecting the
value of securities it holds and rates decrease
instead, the fund will lose part or all of the
benefit of the increased value of securities that it
has hedged because it will have offsetting losses in
its futures or options positions.  In addition, in
those situations, if the fund has insufficient cash,
it may have to sell securities to meet daily
variation margin requirements on the futures
contracts at a time when it may be disadvantageous to
do so.  These sales of securities may, but will not
necessarily, be at increased prices that reflect the
decline in interest rates.

When-Issued Securities and Delayed-Delivery
Transactions.  Each fund may purchase securities on a
"when-issued" basis or for delayed delivery (i.e.,
payment or delivery occur beyond the normal
settlement date at a stated price and yield). Each
fund does not intend to engage in these transactions
for speculative purposes, but only in furtherance of
its investment goal.  These transactions occur when
securities are purchased or sold by a fund with
payment and delivery taking place in the future to
secure what is considered an advantageous yield and
price to a fund at the time of entering into the
transaction.  The payment obligation and the interest
rate that will be received on when-issued securities
are fixed at the time the buyer enters into the
commitment.  Due to fluctuations in the value of
securities purchased or sold on a when-issued or
delayed-delivery basis, the prices obtained on such
securities may be higher or lower than the prices
available in the market on the dates when the
investments are actually delivered to the buyers.
When a fund agrees to purchase when-issued or
delayed-delivery securities, the fund will set aside
cash or liquid securities equal to the amount of the
commitment in a segregated account on the fund's
books.  Normally, the fund will set aside portfolio
securities to satisfy a purchase commitment, and in
such a case a fund may be required subsequently to
place additional assets in the segregated account on
the fund's books in order to ensure that the value of
the account remains equal to the amount of the fund's
commitment.  The assets contained in the segregated
account will be marked-to-market daily.  It may be
expected that a fund's net assets will fluctuate to a
greater degree when it sets aside portfolio
securities to cover such purchase commitments than
when it sets aside cash.  When a fund engages in
when-issued or delayed-delivery transactions, it
relies on the other party to consummate the trade.
Failure of the seller to do so may result in a fund's
incurring a loss or missing an opportunity to obtain
a price considered to be advantageous.
Stand-by Commitments.  Each fund may acquire "stand-
by commitments" with respect to Exempt Obligations
held in its portfolio.  Under a stand-by commitment,
a broker, dealer or bank is obligated to repurchase
at the fund's option specified securities at a
specified price and, in this way, stand-by
commitment, therefore, is subject to the ability of
the seller to make payment on demand.  A fund will
acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise
the rights afforded by the commitments for trading
purposes.  Each fund anticipates that stand-by
commitments will be available from brokers, dealers
and banks without the payment of any direct or
indirect consideration.  Each fund may pay for stand-
by commitments if payment is deemed necessary, thus
increasing to a degree the cost of the underlying
Exempt Obligations and similarly decreasing the
security's yield to the funds.

Illiquid Securities.  Each fund may invest up to 10%
of its net assets in illiquid securities, which term
includes securities subject to contractual or other
restrictions on resale and other instruments that
lack readily available markets.  In addition, up to
5% of the value of each fund's assets may be invested
in securities of entities that have been in
continuous operation for fewer than three years.

Repurchase Agreements.  Each fund may agree to
purchase securities from a bank or recognized
securities dealer and simultaneously commit to resell
the securities to the bank or dealer at an agreed-
upon date and price reflecting a market rate of
interest unrelated to the coupon rate or maturity of
the purchased securities ("repurchase agreements").
A fund would maintain custody of the underlying
securities prior to their repurchase; thus, the
obligation of the bank or dealer to pay the
repurchase price on the date agreed to would be, in
effect, secured by such securities.  If the value of
such securities were less than the repurchase price,
plus interest, the other party to the agreement would
be required to provide additional collateral so that
at all times the collateral is at least 102% of the
repurchase price plus accrued interest.  Default by
or bankruptcy of a seller would expose a fund to
possible loss because of adverse market action,
expenses and/or delays in connection with the
disposition of the underlying obligations.  The
financial institutions with which a fund may enter
into repurchase agreements will be banks and non-bank
dealers of U.S. Government securities that are on the
Federal Reserve Bank of New York's list of reporting
dealers, if such banks and non-bank dealers are
deemed creditworthy by the fund's manager.  The
manager will continue to monitor creditworthiness of
the seller under a repurchase agreement, and will
require the seller to maintain during the term of the
agreement the value of the securities subject to the
agreement to equal at least 102% of the repurchase
price (including accrued interest).  In addition, the
manager will require that the value of this
collateral, after transaction costs (including loss
of interest) reasonably expected to be incurred on a
default, be equal to 102% or greater than the
repurchase price (including accrued premium) provided
in the repurchase agreement or the daily amortization
of the difference between the purchase price and the
repurchase price specified in the repurchase
agreement.  The manager will mark-to-market daily the
value of the securities.  Repurchase agreements are
considered to be loans by a fund under the Investment
Company Act of 1940, as amended (the "1940 Act").
RISK FACTORS-INVESTING IN STATE MUNICIPAL OBLIGATIONS

The following summaries are included for the purpose
of providing certain information regarding the
economic climate and financial condition of the State
of California, the State of New York and Puerto Rico,
and are based primarily on information from official
statements made available in connection with the
issuance of certain securities and other documents
and sources and does not purport to be complete. The
trust has not undertaken to verify independently such
information and the trust assumes no responsibility
for the accuracy of such information. These summaries
do not provide information regarding most securities
in which the fund is permitted to invest and in
particular do not provide specific information on the
issuers or types of municipal securities in which the
fund invests or the private business entities whose
obligations support the payments on AMT-Subject bonds
in which the fund will invest. Therefore, the general
risk factors as to the credit of the state or its
political subdivisions discussed herein may not be
relevant to the fund.  Although revenue obligations
of a state or its political subdivisions may be
payable from a specific project or source, there can
be no assurance that future economic difficulties and
the resulting impact on state and local government
finances will not adversely affect the market value
of the fund or the ability of the respective obligors
to make timely payments of principal and interest on
such obligations.  In addition, a number of factors
may adversely affect the ability of the issuers of
municipal securities to repay their borrowings that
are unrelated to the financial or economic condition
of a state, and that, in some cases, are beyond their
control. Furthermore, issuers of municipal securities
are generally not required to provide ongoing
information about their finances and operations to
holders of their debt obligations, although a number
of cities, counties and other issuers prepare annual
reports.

Following is a brief summary of select state factors
affecting each fund. It does not represent a complete
analysis of every material fact effecting each
state's debt obligations. Each summary is based on a
sampling of offering statements for the debt of each
state's issuers, data from independent rating
agencies, and/or data reported in other public
sources. The funds have not independently verified
this information, and will not update it during the
year.

CALIFORNIA FUND

The Budget Process. The State's fiscal year begins on
July 1 and ends on June 30. The State operates on a
budget basis, using a modified accrual system of
accounting, with revenues credited in the period in
which they are measurable and available and
expenditures debited in the period in which the
corresponding liabilities are incurred.

The annual budget is proposed by the Governor by
January 10 of each year for the next fiscal year (the
"Governor's Budget"). Under State law, the annual
proposed Governor's Budget cannot provide for
projected expenditures in excess of projected
revenues and balances available from prior fiscal
years. Following the submission of the Governor's
Budget, the Legislature takes up the proposal.

Under the State Constitution, money may be drawn from
the Treasury only through an appropriation made by
law. The primary source of the annual expenditure
authorizations is the Budget Act as approved by the
Legislature and signed by the Governor. The Budget
Act must be approved by a two-thirds majority vote of
each House of the Legislature. The Governor may
reduce or eliminate specific line items in the Budget
Act or any other appropriations bill without vetoing
the entire bill. Such individual line-item vetoes are
subject to override by a two-thirds majority vote of
each House of the Legislature.

Appropriations also may be included in legislation
other than the Budget Act. Bills containing
appropriations (except for K-12 and community college
("K-14") education) must be approved by a two-thirds
majority vote in each House of the Legislature and be
signed by the Governor. Bills containing K-14
education appropriations require a simple majority
vote. Continuing appropriations, available without
regard to fiscal year, also may be provided by
statute or the State Constitution. There is
litigation pending concerning the validity of such
continuing appropriations. See "Litigation" below.

Funds necessary to meet an appropriation need not be
in the State Treasury at the time such appropriation
is enacted; revenues may be appropriated in
anticipation of their receipt.

The General Fund. The moneys of the State are
segregated into the General Fund and over 900 special
funds, including bond, trust and pension funds. The
General Fund consists of revenues received by the
State Treasury and not required by law to be credited
to any other fund, as well as earnings from the
investment of State moneys not allocable to another
fund. The General Fund is the principal operating
fund for the majority of governmental activities and
is the depository of most of the major revenue
sources of the State. The General Fund may be
expended as a consequence of appropriation measures
enacted by the Legislature and approved by the
Governor, as well as appropriations pursuant to
various constitutional authorizations and initiative
statutes.

The Special Fund for Economic Uncertainties. The
Special Fund for Economic Uncertainties ("SFEU") is
funded with General Fund revenues and was established
to protect the State from unforeseen revenue
reductions and/or unanticipated expenditure
increases. Amounts in the SFEU may be transferred by
the State Controller as necessary to meet cash needs
of the General Fund. The State Controller is required
to return moneys so transferred without payment of
interest as soon as there are sufficient moneys in
the General Fund.

In the 2000 Budget Act, signed on June 30, 2000, the
Department of Finance projected the SFEU will have a
balance of about $1.781 billion at June 30, 2001. The
SFEU projection reflects the enactment of the Budget
Act on June 30, 2000. This figure is based on the
latest projections of revenues and expenditures in
the 2000 Budget Act and trailer bills at that point
in time. As in any year, the Budget Act and related
trailer bills are not the only pieces of legislation
which appropriate funds. Other factors including re-
estimates of revenues and expenditures, existing
statutory requirements, and additional legislation
introduced and passed by the Legislature may impact
the reserve amount.

Inter-Fund Borrowings. Inter-fund borrowing is used
to meet temporary imbalances of receipts and
disbursements in the General Fund. As of June 30,
2000, the General Fund had no outstanding loans from
the SFEU, General Fund special accounts or other
special funds.

Investment of Funds. Moneys on deposit in the State's
Centralized Treasury System are invested by the
Treasurer in the Pooled Money Investment Account (the
"PMIA"). As of September, 30, 2000, the PMIA held
approximately $30.46 billion of State moneys and
$12.26 billion of moneys invested for about 2,815
local governmental entities through the Local Agency
Investment Fund.

Welfare Reform. The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (the "Welfare
Reform Law") has fundamentally reformed the nation's
welfare system. Among its many provisions, the
Welfare Reform Law includes: (1) conversion of Aid to
Families with Dependent Children ("AFDC") from an
entitlement program to a block grant titled Temporary
Assistance for Needy Families ("TANF"), with lifetime
time limits on TANF recipients, work requirements and
other changes; (ii) provisions denying certain
federal welfare and public benefits to legal
noncitizens (this provision has been amended by
subsequent federal law), allowing states to elect to
deny additional benefits (including TANF) to legal
noncitizens and generally denying almost all benefits
to illegal immigrants; and (iii) changes in the Food
Stamp program, including reducing maximum benefits
and imposing work requirements.

California's response to the federal welfare reforms
is embodied in Chapter 270, Statutes of 1997 and is
called California Work Opportunity and Responsibility
to Kids ("CalWORKs"), which replaced the former AFDC
and Greater Avenues to Independence programs,
effective January 1, 1998. Consistent with federal
law, CalWORKs contains time limits on receipt of
welfare aid, both lifetime as well as for any current
period on aid. The centerpiece of CalWORKs is the
linkage of eligibility to work participation
requirements. Administration of the new CalWORKs
program is largely at the county level, and counties
are given financial incentives for success in this
program.

The longer-term impact of the Welfare Reform Law and
CalWORKs is being evaluated by the RAND Corporation,
with a series of reports to be furnished and the
final report due October 2001. In the short-term,
implementation of the CalWORKs program has continued
the trend of declining welfare caseloads. The
CalWORKs caseload trend is projected to be 541,000 in
2000-01, down from 579,000 cases in 1999-00 and a
high of 921,000 cases in 1994-95.

The 2000-01 CalWORKs budget reflects California's
success in meeting the federally-mandated work
participation requirements for federal fiscal years
1998 and 1999. With that goal being met, the
federally-imposed maintenance-of-effort (MOE) level
for California is reduced from 80% of the federal
fiscal year 1994 baseline expenditures for the former
AFDC program ($2.9 billion) to 75% ($2.7 billion).

In 2000-01 California will continue to meet, but not
exceed, the federally-required $2.7 billion combined
State and county MOE requirement. Total CalWORKs-
related expenditures are estimated to be $7.0 billion
for 2000-01, including child care transfer amounts
for the Department of Education.

Local Governments. The primary units of local
government in California are the counties, ranging in
population from 1,200 in Alpine County to over
9,900,000 in Los Angeles County. Counties are
responsible for the provision of many basic services,
including indigent health care, welfare, jails and
public safety in unincorporated areas. There also are
about 475 incorporated cities and thousands of
special districts formed for education, utility and
other services. The fiscal condition of local
governments has been constrained since the enactment
of "Proposition 13" in 1978, which reduced and
limited the future growth of property taxes and
limited the ability of local governments to impose
"special taxes" (those devoted to a specific purpose)
without two-thirds voter approval. Counties, in
particular, have had fewer options to raise revenues
than many other local government entities and have
been required to maintain many services.

In the aftermath of Proposition 13, the State
provided aid to local governments from the General
Fund to make up some of the loss of property tax
moneys, including taking over the principal
responsibility for funding K-12 schools and community
colleges. During the recession, the Legislature
eliminated most of the remaining components of post-
Proposition 13 aid to local government entities other
than K-14 education districts by requiring cities and
counties to transfer some of their property tax
revenues to school districts. However, the
Legislature also provided additional funding sources
(such as sales taxes) and reduced certain mandates
for local services. Since then the State also has
provided additional funding to counties and cities
through such programs as health and welfare
realignment, welfare reform, trial court
restructuring, the Citizens' Option for Public Safety
("COPS") program supporting local public safety
departments, and various other measures.

The 2000 Budget Act provides significant assistance
to local governments, including $200 million set
aside for one-time discretionary funding to local
governments; $121.3 million for the COPS program to
support local front-line law enforcement, sheriffs'
departments for jail construction and operations, and
district attorneys for prosecution; $75 million for
technology funding for local law enforcement; $400
million for deferred maintenance of local streets and
roads; and hundreds of millions of dollars in
assistance in the areas of mental health, social
services, environmental protection, and public
safety. In addition, legislation was enacted in 1999
to provide approximately $35.8 million annual relief
to cities based on 1997-98 costs of jail booking and
processing fees paid to counties.

Historically, funding for the State's trial court
system was divided between the State and the
counties. In 1997, legislation consolidated the trial
court funding at the State level in order to
streamline the operation of the courts, provide a
dedicated revenue source, and relieve fiscal pressure
on the counties. Since then, the county general
purpose contribution for court operations was reduced
by $386 million and cities are retaining $62 million
in fine and penalty revenue previously remitted to
the State. The General Fund reimbursed the $448
million revenue loss to the Trial Court Trust Fund.

The entire statewide welfare system has been changed
in response to the change in federal welfare law
enacted in 1996 (see "Welfare Reform" above). Under
the CalWORKs program, counties are given flexibility
to develop their own plans, consistent with State
law, to implement the program and to administer many
of its elements, and their costs for administrative
and supportive services are capped at the 1996-97
levels. Counties also are given financial incentives
if, at the individual county level or statewide, the
CalWORKs program produces savings associated with
specified standards. Counties will still be required
to provide "general assistance" aid to certain
persons who cannot obtain welfare from other
programs.

State Appropriations Limit. The State is subject to
an annual appropriations limit imposed by Article
XIII B of the State Constitution (the "Appropriations
Limit"). The Appropriations Limit does not restrict
appropriations to pay debt service on voter-
authorized bonds.

Article XIII B prohibits the State from spending
"appropriations subject to limitation" in excess of
the Appropriations Limit. "Appropriations subject to
limitation," with respect to the State, are
authorizations to spend "proceeds of taxes," which
consist of tax revenues, and certain other funds,
including proceeds from regulatory licenses, user
charges or other fees to the extent that such
proceeds exceed "the cost reasonably borne by that
entity in providing the regulation, product or
service," but "proceeds of taxes" exclude most state
subventions to local governments, tax refunds and
some benefit payments such as unemployment insurance.
No limit is imposed on appropriations of funds which
are not "proceeds of taxes," such as reasonable user
charges or fees and certain other non-tax funds.

There are various types of appropriations excluded
from the Appropriations Limit. For example, debt
service costs of bonds existing or authorized by
January 1, 1979, or subsequently authorized by the
voters, appropriations required to comply with
mandates of courts or the federal government,
appropriations for qualified capital outlay projects,
most state subventions to local governments,
appropriations for tax refunds, appropriations of
revenues derived from any increase in gasoline taxes
and motor vehicle weight fees above January 1, 1990
levels, and appropriation of certain special taxes
imposed by initiative (e.g., cigarette and tobacco
taxes). The Appropriations Limit may be exceeded in
cases of emergency.

The State's Appropriations Limit in each year is
based on the limit for the prior year, adjusted
annually for changes in state per capita personal
income and changes in population, and adjusted, when
applicable, for any transfer of financial
responsibility of providing services to or from
another unit of government or any transfer of the
financial source for the provisions of services from
tax proceeds to non tax proceeds. The measurement of
change in population is a blended average of
statewide overall population growth, and change in
attendance at local K-14 school districts. The
Appropriations Limit is tested over consecutive two-
year periods. Any excess of the aggregate "proceeds
of taxes" received over such two-year period above
the combined Appropriations Limits for those two
years is divided equally between transfers to K-14
school districts and refunds to taxpayers.

The Legislature has enacted legislation to implement
Article XIII B which defines certain terms used in
Article XIII B and sets forth the methods for
determining the Appropriations Limit. California
Government Code Section 7912 requires an estimate of
the Appropriations Limit to be included in the
Governor's Budget and thereafter to be subject to the
budget process and established in the Budget Act.

Proposition 98. On November 8, 1988, voters of the
State approved Proposition 98, a combined initiative
constitutional amendment and statute called the
"Classroom Instructional Improvement and
Accountability Act." Proposition 98 changed State
funding of public education below the university
level and the operation of the State Appropriations
Limit, primarily by guaranteeing K-14 schools a
minimum share of General Fund revenues. Under
Proposition 98 (as modified by Proposition 111, which
was enacted on June 5, 1990), K-14 schools are
guaranteed the greater of (a) in general, a fixed
percent of General Fund revenues ("Test 1"), (b) the
amount appropriated to K-14 schools in the prior
year, adjusted for changes in the cost of living
(measured as in Article XIII B by reference to State
per capita personal income) and enrollment ("Test
2"), or (c) a third test, which would replace Test 2
in any year when the percentage growth in per capita
General Fund revenues from the prior year plus one
half of one percent is less than the percentage
growth in State per capita personal income ("Test
3"). Under Test 3, schools would receive the amount
appropriated in the prior year adjusted for changes
in enrollment and per capita General Fund revenues,
plus an additional small adjustment factor. If Test 3
is used in any year, the difference between Test 3
and Test 2 would become a "credit" to schools which
would be the basis of payments in future years when
per capita General Fund revenue growth exceeds per
capita personal income growth. Legislation adopted
prior to the end of the 1988-89 Fiscal Year,
implementing Proposition 98, determined the K-14
schools' funding guarantee under Test 1 to be 40.3%
of the General Fund tax revenues, based on 1986-87
appropriations. However, that percent has been
adjusted to approximately 35% to account for a
subsequent redirection of local property taxes, since
such redirection directly affects the share of
General Fund revenues to schools.

Proposition 98 permits the Legislature by two-thirds
vote of both Houses, with the Governor's concurrence,
to suspend the K-14 schools' minimum funding formula
for a one-year period. Proposition 98 also contains
provisions transferring certain State tax revenues in
excess of the Article XIII B limit to K-14 schools.
See "State Finances--State Appropriations Limit"
above.

During the recession in the early 1990's, General
Fund revenues for several years were less than
originally projected, so that the original
Proposition 98 appropriations turned out to be higher
than the minimum percentage provided in the law. The
Legislature responded to these developments by
designating the "extra" Proposition 98 payments in
one year as a "loan" from future years' Proposition
98 entitlements, and also intended that the "extra"
payments would not be included in the Proposition 98
"base" for calculating future years' entitlements. By
implementing these actions, per-pupil funding from
Proposition 98 sources stayed almost constant at
approximately $4,200 from Fiscal Year 1991-92 to
Fiscal Year 1993-94.

In 1992, a lawsuit was filed, CALIFORNIA TEACHERS'
ASSOCIATION V. GOULD, which challenged the validity
of these off-budget loans. The settlement of this
case, finalized in July 1996, provides, among other
things, that both the State and K-14 schools share in
the repayment of prior years' emergency loans to
schools. Of the total $1.76 billion in loans, the
State is repaying $935 million by forgiveness of the
amount owed, while schools will repay $825 million.
The State share of the repayment will be reflected as
an appropriation above the current Proposition 98
base calculation. The schools' share of the repayment
will count as appropriations that count toward
satisfying the Proposition 98 guarantee, or from
"below" the current base. Repayments are spread over
the eight-year period of 1994-95 through 2001-02 to
mitigate any adverse fiscal impact.

Substantially increased General Fund revenues, above
initial budget projections, in the fiscal years 1994-
95 through 1999-00 have resulted in retroactive
increases in Proposition 98 appropriations from
subsequent fiscal years' budgets. Because of the
State's increasing revenues, per-pupil funding at the
K-12 level has increased by more than 50 percent from
the level in place in 1991-92, and to $6,701 per ADA
in 2000-01. A significant amount of the "extra"
Proposition 98 monies in the last few years has been
allocated to special programs. Since the State
expects General Fund revenue growth to continue in
2000-01, there also are new initiatives. See "Current
State Budget" for further discussion of education
funding.

Prior Fiscal Years' Financial Results

Following a severe recession beginning in 1990, the
State's financial condition improved markedly during
the fiscal years starting in 1995-96, due to a
combination of better than expected revenues,
slowdown in growth of social welfare programs, and
continued spending restraint based on actions taken
in earlier years. The State's cash position also
improved, and no external deficit borrowing occurred
over the end of the last five fiscal years.

The economy grew strongly during the fiscal years
beginning in 1995-96 and, as a result, the General
Fund took in substantially greater tax revenues
(around $2.2 billion in 1995-96, $1.6 billion in
1996-97, $2.4 billion in 1997-98, $1.7 billion in
1998-99 and $8.2 billion in 1999-00) than were
initially planned when the budgets were enacted.
These additional funds were largely directed to
school spending as mandated by Proposition 98, to
make up shortfalls from reduced federal health and
welfare aid in 1995-96 and 1996-97 and particularly
in 1998-99 to fund new program incentives, including
education spending above Proposition 98 minimums.

The principal features of the 1999 Budget Act include
the following:

1. Proposition 98 funding for K-12 schools was
increased by $1.6 billion in General Fund moneys
over revised 1998-99 levels, $108.6 million higher
than the minimum Proposition 98 guarantee. Of the
1999-00 funds, major new programs included money
for reading improvement, new textbooks, school
safety, improving teacher quality, funding teacher
bonuses, providing greater accountability for
school performance, increasing preschool care
programs and funding deferred maintenance of
school facilities. The 1999 Budget Act also
included $310 million as repayment of prior years'
loans to schools, as part of the settlement of the
CALIFORNIA TEACHERS' ASSOCIATION V. GOULD lawsuit.
See "State Finances -- Proposition 98" above.

2. Funding for higher education increased
substantially above the actual 1998-99 level.
General Fund support was increased by $184 million
(7.3%) for the University of California ("UC") and
$126 million (5.9 %) for the California State
University ("CSU") system. In addition, Community
Colleges funding increased by $324.3 million (6.6
%). As a result, undergraduate fees at UC and CSU
were reduced for the second consecutive year, and
the per-unit charge at Community Colleges was
reduced by $1.

3. Increased funding of nearly $600 million for
health and human services.

4. About $800 million from the General Fund was
directed toward infrastructure costs, including
$425 million in additional funding for the
Infrastructure Bank, initial planning costs for a
new prison in the Central Valley, additional
equipment for train and ferry service, and payment
of deferred maintenance for state parks.

5. The Legislature enacted a one-year additional
reduction of 10% of the Vehicle License Fee
("VLF") for calendar year 2000, at a General Fund
cost of about $250 million in each of fiscal years
1999-00 and 2000-01 to make up lost funding to
local governments. Several other targeted tax
cuts, primarily for businesses, were also
approved, at a cost of $54 million in 1999-00.

6. A one-time appropriation of $150 million, split
between cities and counties, was made to offset
property tax shifts during the early 1990's.
Additionally, an ongoing $50 million was
appropriated as a subvention to cities for jail
booking or processing fees charged by counties
when an individual arrested by city personnel is
taken to a county detention facility.

The combination of resurging exports, a strong stock
market, and a rapidly-growing economy in 1999 and
early 2000 resulted in unprecedented growth in
General Fund revenues during fiscal year 1999-00. The
latest estimates from the Department of Finance
indicate revenues of about $71.2 billion, an increase
of over 20% over final 1998-99 revenues and $8.2
billion higher than projected for the 1999 Budget
Act. The latest estimates indicate expenditures of
$67.2 billion in 1999-00, a $35 billion increase over
the 1999 Budget Act, but the result still left a
record balance in the SFEU at June 30, 2000 of over
$7.2 billion.

Current State Budget

The discussion below of the fiscal year 2000-01
budget is based on the State's estimates and
projections of revenues and expenditures for the
current fiscal year and must not be construed as
statements of fact. These estimates and projections
are based upon various assumptions as updated in the
2000 Budget Act, which may be affected by numerous
factors, including future economic conditions in the
State and the nation, and there can be no assurance
that the estimates will be achieved.

Fiscal Year 2000-2001 Budget. On January 10, 2000,
Governor Davis released his proposed budget for
fiscal year 2000-01. The 2000-01 Governor's Budget
("2000 Governor's Budget") generally reflected an
estimate that General Fund revenues for fiscal year
1999-00 would be higher than projections made at the
time of the 1999 Budget Act. Even these positive
estimates proved to be greatly understated as
continuing economic growth and stock market gains
resulted in a surge of revenues. The Administration
estimated in the 2000 May Revision that General Fund
revenues would total $70.9 billion in 1999-00 and
$73.8 billion in 2000-01, a two-year increase of
$12.3 billion above the 2000 Governor's Budget
revenue estimates. The latest estimates for 1999-00
are even higher, with revenues now estimated at $71.2
billion.

The 2000 Budget Act was signed by the Governor on
June 30, 2000, the second consecutive year the
State's Budget was enacted on time. The spending plan
assumes General Fund revenues and transfers of $73.9
billion, an increase of 3.8% above the estimates for
1999-00. The 2000 Budget Act appropriates $78.8
billion from the General Fund, an increase of 17.3%
over 1999-00, and reflects the use of $5.5 billion
from the SFEU. In order not to place undue pressure
on future budget years, about $7.0 billion of the
increased spending in 2000-01 will be for one-time
expenditures and investments.

The Department of Finance estimates the SFEU will
have a balance of $1.781 billion at June 30, 2001. In
addition, the Governor held back $500 million as a
set-aside for litigation costs. If this amount is not
fully expended during fiscal year 2000-01, the
balance will increase the SFEU. The Governor vetoed
just over $1 billion in General Fund and Special Fund
appropriations from the 2000 Budget Act in order to
achieve the budget reserve. Because of the State's
strong cash position, the Administration announced
that it would not undertake a revenue anticipation
note borrowing in 2000-01.

The 2000 Budget Act also includes Special Fund
expenditures of $15.6 billion and Bond Fund
expenditures of $5.0 billion. Special Fund revenues
are estimated at $16.5 billion.

Some of the features of the 2000 Budget Act were the
following:

1. Proposition 98 funding for K-12 schools was
increased by $3.0 billion in General Fund moneys
over revised 1999-00 levels, $1.4 billion higher
than the minimum Proposition 98 guarantee. Per
pupil spending is estimated at $6,701 per ADA, an
11% increase from the 1999 Budget Act. Of the
2000-01 funds, over $1.8 billion is allowed for
discretionary spending by school districts. Major
new programs included money for high school
scholarship to high-achieving students, English
language and literacy, improving teacher quality,
funding teacher bonuses and salaries for beginning
teachers, increasing investments in technology and
funding professional development institutes. The
2000 Budget Act also includes an income tax credit
to compensate credentialed teachers for the
purchase of classroom supplies and a $350 million
repayment of prior years' loans to schools, as
part of the settlement of the CALIFORNIA TEACHERS'
ASSOCIATION V. GOULD lawsuit. See also "State
Finances -- Proposition 98" above.

2. Funding for higher education increased
substantially above the revised 1999-00 level.
General Fund support was increased by $486 million
(17.9%) for the UC and $279 million (12.7%) for
the CSU system. In addition, Community Colleges
funding increased by $497 million (9.0%).
Undergraduate fees at UC and CSU and the per-unit
charge at Community Colleges will be unchanged.

3. Increased funding of $2.7 billion General Fund for
health and human services.

4. Significant moneys were devoted for capital
outlay. A total of $2.0 billion of General Fund
money was appropriated for transportation
improvements, supplementing gasoline tax revenues
normally used for that purpose. This was part of a
$6.9 billion Transportation Congestion Relief
Program to be implemented over six years. In
addition, the Budget Act included $570 million
from the General Fund in new funding for housing
programs.

5. A total of about $1.5 billion of tax relief was
enacted as part of the budget process. The VLF
reduction, started in 1998, was accelerated to the
final 67.5% level for calendar year 2001, two
years ahead of schedule. The acceleration will
cost the General Fund about $887 million in fiscal
year 2000-01 and $1.426 billion in fiscal year
2001-02. A one-time Senior Citizens Homeowner and
Renters Tax Assistance program will cost about
$154 million. A personal income tax credit for
teachers will cost $218 million and a refundable
credit for child care expenses will cost $195
million. Several other targeted tax cuts,
primarily for businesses, were also approved, at a
cost of $89 million in 2000-01.

6. A one-time appropriation of $200 million, to be
split between cities and counties, was made to
offset property tax shifts during the early
1990's. Additionally, $121 million was
appropriated for support of COPS, and $75 million
in one-time funding was provided for local law
enforcement agencies to purchase high technology
equipment.


The Legislature passed a number of bills with fiscal
impacts on the General Fund in 2000-01, which were
not included in the 2000-01 Budget, prior to the end
of its session on August 31, 2000. Among these were
bills to expedite the licensing of new power plants
($57.5 million cost), to establish a juvenile crime
prevention program ($122 million cost) and to augment
the Senior Citizens Property Tax Assistance Program
($60 million cost). Another bill would enhance
retirement benefits for both active and retired
teachers. Excess assets and normal cost surplus in
the program would fund the costs of enhanced benefits
and also provide a $100 million General Fund savings
for 2000-01 from reduced contributions to the State
Teachers Retirement system.

At this time, the Department of Finance has not
revised its revenue estimates and all other factors
which would impact overall General Fund results, so
the Department will not formally update the estimated
balance in the SFEU at June 30, 2001, until the next
Governor's Budget is released in January 2001.
However, based on results through the fist quarter of
fiscal year 2000-01, the Department of Finance has
estimated that revenues have been sufficiently strong
to make it likely that the State will end the fiscal
year at June 30, 2001 with a balance in the budget
reserve greater than 4% of General Fund revenues.
Based on this estimate, since the reserve for the
year ended June 30, 2000 was also above 4% of General
Fund revenues, the Governor announced on October 25,
2000 that, pursuant to provisions in the law enacted
in 1991 when the State sales tax rate was last
raised, the State sales tax rate would be reduced by
0.25% for a period of at least one calendar year,
effective January 1, 2001. This reduction will result
in approximately $525 million less General Fund
revenue in the last half of fiscal year 2000-01 and
approximately $575 million less in the first half of
fiscal year 2001-02. If the General Fund reserve
falls below 4% of General Fund revenue in the future,
the sales tax rate would be raised by 0.25%.

The Revenue and Expenditure assumptions set forth
have been based upon certain estimates of the
performance of the California and national economies
in calendar years 2000 and 2001. In the 2000 May
Revision released on May 15, 2000, the Department of
Finance projected that the California economy will
continue to show strong growth in 2000, followed by
more moderate gains in 2001. The projection assumes a
relatively flat stock market, and a 25% reduction in
stock option income in 2000-01. The economic
expansion has been market by strong growth in high
technology manufacturing and business services
(including software, computer programming and the
Internet), nonresidential construction, entertainment
and tourism-related industries. Growth in 1999 was
greater than earlier years in the economic expansion,
with 3.7% year-over-year increase in nonfarm payroll
employment. Unemployment, now less than 5%, is at the
lowest rate in over 30 years. Taxable sales in the
first quarter of 2000 are 10% above year-earlier
levels. Significant economic improvement in Asia
(Japan excluded), ongoing strength in NAFTA partners
Mexico and Canada, and stronger growth in Europe are
expected to further increase California-made exports
in 2000 and 2001. Nonresidential construction has
been strong for the past four years. New residential
construction has increased since lows of the early
1990's recession, but remains lower than during the
previous economic expansion in 1980's.

Economy and Population

Introduction. California's economy, the largest among
the 50 states and one of the largest in the world,
has major components in high technology, trade,
entertainment, agriculture, manufacturing, tourism,
construction and services. Since 1994, California's
economy has been performing strongly after suffering
a deep recession between 1990-93. Population and
Labor Force. The State's July 1, 1999 population of
over 34 million represented over 12 percent of the
total United States population.

California's population is concentrated in
metropolitan areas. As of the April 1, 1990 census,
96 percent resided in the 23 Metropolitan Statistical
Areas in the State. As of July 1, 1998, the 5-county
Los Angeles area accounted for 49 percent of the
State's population, with over 16.0 million residents,
and the 10-county San Francisco Bay Area represented
21 percent, with a population of over 7.0 million.

Subsequent Developments. The Legislature passed a
number of bills with fiscal impacts on the General
Fund in 2000-01, which were not included in the 2000-
01 Budget, prior to the end of its session on August
31, 2000. Among these were bills to expedite the
licensing new power plants ($57.5 million cost), to
establish a juvenile crime prevention program ($122
million cost) and to augment the Senior Citizens
Property Tax Assistance Program ($60 million cost).
Another bill would enhance retirement benefits for
both active and retired teachers. Excess assets and
normal cost surplus in the program would fund the
costs of enhanced benefits and also provide a $100
million General Fund savings for 2000-01 from reduced
contributions to the State Teachers Retirement
System. At this time, the Department of Finance has
not revised its revenue estimates and all other
factors which impact overall General Fund results, so
the Department will not formally update the estimated
balance in the SFEU at June 30, 2001, until the next
Governor's Budget is released in January, 2001.
However, based on results through the first quarter
of fiscal year 2000-01, the Department of Finance has
estimated that revenues have been sufficiently strong
to make it likely that the State will end the fiscal
year at June 30, 2001 with a balance in the budget
reserve greater than 4% of General Fund revenues.
Based on this estimate, since the reserve for the
year ended June 30, 2000 was also above 4% of General
Fund revenues, the Governor announced on October 25,
2000 that, pursuant to provisions in the law enacted
in 1991 when the State sales tax rate was last
raised, the State sales tax rate would be reduced by
0.25% for a period of at least one calendar year,
effective January 1, 2001. This reduction will result
in approximately $525 million less General Fund
revenue in the last half of fiscal year 2000-01 and
approximately $575 million less in the first half of
fiscal year 2001-02. If the General Fund reserve
falls below 4% of the General Fund revenue in the
future, the sales tax rate would be raised by 0.25%.
Litigation. Certain litigation is pending against
California or its officers or employees that, if
decided adversely, could require the State to make
significant future expenditures or could impair
future revenue sources. Among the more significant of
these cases are those that involve: (i) liability for
damages stemming from the 1986 Yuba River flood with
potential liability ranging from $800 million to $1.5
billion; (ii) a class action lawsuit regarding
property damages from 1997 flooding in Northern
California with potential liability of $2 billion;
(iii) lawsuits seeking reimbursement for state-
mandated costs of providing special education
programs for handicapped children with liability of
over $1 billion; the proposed settlement is subject
to ratification by the Legislature; (iv) lawsuits
related to contamination at the Stringfellow toxic
waste site seeking recovery for past cost of clean-up
estimated at $400 million to $600 million; (v) a
challenge to the authority of the State Controller to
make payments from the State Treasury in the absence
of a state budget; (vi) a suit brought by various
counties of California against the State regarding
whether property tax shifts from counties to school
districts is a reimbursable state mandated cost; the
impact to the General Fund could be as high as $10.0
billion; (vii) actions seeking relief requiring the
State to retroactively increase out-patient Medi-Cal
reimbursement rates; damages could exceed $500
million; (viii) three actions challenging the
constitutionality of Proposition 10, which increases
the excise tax on tobacco products with potential
liability of the $750 million collected annually; and
(ix) challenge seeking to overturn the tobacco Master
Settlement Agreement entered between 46 states and
the tobacco industry with potential liability of $1
billion annually; (x) challenges to the tobacco
settlement as it pertains to California, Utah and San
Francisco; (xi) a class action brought by six Medi-
Cal beneficiaries who have received medical treatment
for smoking-related diseases alleging the State owes
them an unspecified portion of the tobacco settlement
monies; (xii) a suit brought by former employees of
the State seeking back wages, damages and injunctive
relief; (xiii) a suit brought on behalf of the school
children of the Los Angeles Unified School District
against the State Allocation Board, the State Office
of Public School Construction and a number of State
officials alleging improper allocation of new public
43 school construction funds; (xiv) a class action
under the Americans with Disabilities Act and other
federal acts alleging the persons institutionalized
at Laguna Honda who require long term care should be
assessed as to whether they can be treated at home or
in community-based facilities with liability which
could exceed $400 million; and (xv) a class action
alleging that provider rates for community-based
services for developmentally disabled individuals are
discriminatory, because they result in unnecessary
institutionalization with liability which could
exceed $400 million.

In recent years, California began a large-scale
deregulation of its power utility industry. One
aspect of this deregulation is a mandatory cap on
energy prices that California utilities can charge to
their customers. Recent significant increases in the
market cost of energy purchased by many California
utilities has caused these utilities to come under
financial pressures, as they have been unable to pass
these increased costs to their customers. As a
result, many power utilities have begun to experience
difficulty purchasing sufficient energy to meet
demand and difficulty paying their suppliers. Some
California utilities have suspended debt service
payments on outstanding debt or payments to
suppliers. Two of the utility companies that are
experiencing these difficulties are Pacific Gas and
Electric ("PG&E") and Southern California Edison
("SCE"), two of the largest California utility
companies. Many California utilities, including PG&E
and SCE, have publicly stated that they may be forced
into bankruptcy as a result of this situation.
Moody's and S&P have downgraded their ratings of both
PG&E and SCE long term debt to Caa and CC,
respectively. Although California state officials and
the utilities are continuing to attempt to find a
solution to the electricity supply and pricing
problems, it is unclear at this time whether these
securities will be further downgraded or whether an
electric-rate increase or other action will improve
the credit ratings of these municipal securities. The
Adviser continues to monitor this situation.

NEW YORK FUND

Economic Outlook. New York (the State) is the third
most populous state in the nation and has a
relatively high level of personal wealth. The State's
economy is diverse with a comparatively large share
of the nation's finance, insurance, transportation,
communications and services employment, and a very
small share of the nation's farming and mining
activity. The State's location, air transport
facilities and natural harbors have made it an
important link in international commerce. Travel and
tourism constitute an important part of the economy.
Like the rest of the nation, New York has a declining
proportion of its workforce engaged in manufacturing,
and an increasing proportion engaged in service
industries.

Employment in New York grew strongly for the first
nine months of 2000, with the service sector
accounting for the largest increases. The State
economy added 166,600 new jobs, a growth rate of
2.0%, of which private sector employment added
154,100 of the additional jobs, growing by 2.2%. New
York's unemployment rate fell to 4.6% in September,
about one-half of its July 1992 peak of 8.9%. Total
employment is expected to grow 2.1% for all of 2000
and 1.7% for 2001, with the largest employment
increases concentrated in the services sector.
Projections for wages and personal income growth for
2000 reflect strong first quarter growth in bonus
payments. However, the recent prolonged weakness
exhibited by the stock market and the slowdown
projected for the national economy suggest that the
securities industry may not repeat its strong
current-year performance. The Division of the Budget
now projects wage growth of 9.4% for 2000, followed
by growth of 5.4% for 2001. Overall personal income
growth of 8.0% is projected for 2000, with 5.0%
growth in personal income expected for 2001. The
State forecast is subject to the same uncertainties
as the national forecast, as well as to some which
are more specific to New York. For example, with Wall
Street fueling a significant portion of the growth in
the State's revenues, New York is particularly
vulnerable to an unexpectedly poor performance by the
financial markets, which could reduce securities
industry rates of profit and bonus payment growth.

The national economy remains strong as the longest
economic expansion on record nears the end of its
tenth year. Real U.S. Gross Domestic Product (GDP)
grew by 4.8% during the first quarter of 2000,
followed by second quarter growth of 5.6%. Real U.S.
GDP is expected to grow 5.2% for all of 2000,
followed by 3.8% in 2001. The slowdown in the economy
is, in part, due to the Federal Reserve Board's six
interest rate hikes since June of 1999. Higher
interest rates, turbulence in the Middle East, higher
oil prices and lower-than-expected corporate profits
have heightened the uncertainty in the stock market.
If consumer confidence erodes, consumption spending
is expected to slow significantly. Personal income is
estimated to grow 6.4% for 2000. With slower growth
in wages and interest income, personal income growth
should slow to 5.8% in 2001. Employment is estimated
to grow 2.0% in 2000, but growth is expected to slow
to 1.6% in 2001, in line with the anticipated
economic slowdown. The unemployment rate is estimated
to average 4.0% for 2000, but could inch upward in
2001 as employment and output growth fall. The
primary risk to the national economic outlook is the
possibility of accelerating inflation due to an oil
shock or the nation's tight labor market. In
response, the Federal Reserve Board may feel
compelled to raise interest rates even further. With
the economy already slowing down, further rate hikes
could cause even weaker-than-expected growth toward
the end of 2001. Another potential risk to the
national economy lies in the uncertain future of the
financial markets. Should the stock markets undergo
future significant corrections, the resultant
reduction in the value of household wealth could
reduce consumption growth even further.
Alternatively, an acceleration in technology-induced
productivity growth could lead to enhanced economic
performance. 79 2000-2001 Fiscal Year (Executive
Budget Forecast). The State's current fiscal year
began on April 1, 2000 and ends on March 31, 2001. On
March 30, 2000, the State adopted the debt service
portion of the State budget for the 2000-01 fiscal
year; the remainder of the budget was enacted by the
Legislature on May 5, 2000. The Governor approved the
budget as passed by the Legislature. Prior to passing
the budget in its entirety for the current fiscal
year, the State enacted appropriations that permitted
the State to continue its operations.

Following enactment of the budget, the State prepared
a Financial Plan for the 2000-01 fiscal year (the
"2000-01 Financial Plan") that sets forth projected
receipts and disbursements based on the actions taken
by the Legislature. This section provides a summary
of the Financial Plan which was released on May 10,
2000. The State expects to update the Financial Plan
quarterly. The Office of the State Comptroller is
conducting a review of the 2000-01 Enacted Budget and
is expected to issue a report in early June 2000.

In 2000-01, General Fund disbursements, including
transfers to support capital projects, debt service
and other funds, are estimated at $39.55 billion, an
increase of $2.4 billion over 1999-2000. Projected
spending under the 2000-01 Enacted Budget is $992
million above the Governor's Executive Budget
recommendations, including 30-day amendments.

The 2000-01 Financial Plan projects closing balances
in the General Fund and other reserves of $3.2
billion, including 1.09 billion in the General Fund.
The balance is comprised of $675 million in reserves
for potential labor costs, $547 million in the Tax
Stabilization Reserve Fund (TSRF), $150 million in
the Contingency Reserve Fund (CRF), $338 million in
the Community Projects Fund (CPF), and $50 million in
reserves for other purposes. $1.2 billion is
projected for reserve in the STAR Special Revenue
Fund, $250 million in the Debt Reduction Reserve Fund
(DRRF) and $29 million in Universal Pre-K Reserve
Fund.

Several developments arising from negotiations on the
budget will affect State finances in subsequent
years. First, a portion of Legislative additions to
the 2000-01 Executive Budget will recur at higher
spending levels in 2001-02 and beyond, including
increased funding for school aid, tuition assistance,
and prescription drug coverage for the elderly.
Second, the Legislature enacted the Debt Reform Act
of 2000 (Debt Reform Act), which applies to new
State-supported debt issued on or after April 1,
2000, imposes caps on new debt outstanding and new
debt service costs, restricts the use of debt to
capital purposes only, and restricts the maximum term
of State debt issuances to no more than 30 years.
Finally, the State adopted an additional tax relief
package that will reduce tax receipts by $1.2 billion
when fully effective; this package includes the
elimination or reduction of gross receipts taxes on
energy, the expansion of the "Power for Jobs" energy
tax credit program, a college tuition deduction or
credit taken against personal income taxes, and
reduction of the marriage penalty for taxpayers who
file jointly.

Many complex political, social and economic forces
influence the State's economy and finances, which may
in turn affect the State Financial Plan. These forces
may affect the State unpredictably from fiscal year
to fiscal year and are influenced by governments,
institutions, and organizations that are not subject
to the State's control. The State Financial Plan is
also necessarily based upon forecasts of national and
State economic activity. Economic forecasts have
frequently failed to predict accurately the timing
and magnitude of changes in the national and State
economies. The Division of Budget believes that its
projections of receipts and disbursements relating to
the current State Financial Plan, and the assumptions
on which they are based, are reasonable. Actual
results, however, could differ materially and
adversely from the projections set forth here and
those projections may be changed materially and
adversely from time to time.

The State Financial Plan is based upon forecasts of
national and State economic activity developed
through both internal analysis and review of national
and State economic forecasts prepared by commercial
forecasting services and other public and private
forecasters. Economic forecasts have frequently
failed to predict accurately the timing and magnitude
of changes in the national and State economies. Many
uncertainties exist in forecasts of both the national
and State economies, including consumer attitudes
toward spending, the extent of corporate and
governmental restructuring, the condition of the
financial sector, federal fiscal and monetary
policies, the level of interest rates, and the
condition of the world economy, which could have an
adverse effect on the State. There can be no
assurance that the State economy will not experience
results in the current fiscal year that are worse 80
than predicted, with corresponding material and
adverse effects on the State's projections of
receipts and disbursements.

Four governmental fund types comprise the State
Financial Plan: the General Fund, the Special Revenue
Funds, the Capital Projects Funds, and the Debt
Service Funds. The State's fund structure adheres to
the accounting standards of the Governmental
Accounting Standards Board. The General Fund is the
principal operating fund of the State and is used to
account for all financial transactions except those
required to be accounted for in another fund. It is
the State's largest fund and receives almost all
State taxes and other resources not dedicated to
particular purposes. General Fund moneys are also
transferred to other funds, primarily to support
certain capital projects and debt service payments in
other fund types.

Projected General Fund Receipts. Total General Fund
receipts and transfers from other funds in 2000-01
are projected to be $39.72 billion, an increase of
$2.32 billion over 1999-2000. Although receipt
results remained strong, several factors with a
potentially negative impact mitigate against an
upward revision in the receipt estimates at this
time, including a possible slowdown in national
economic activity engineered by Federal Reserve Board
policy; an easing of growth in equity markets; and
continued uncertainty with respect to financial
sector profits and bonus payments. The transfer of
$3.4 billion in net resources from 1999-2000 to the
2000-01 fiscal period has the effect of exaggerating
the growth in State receipts from year to year by
depressing reported 1999-2000 figures and inflating
2000-01 projections.

Net General Fund personal income tax collections for
2000-01 are projected to reach $24.33 billion, an
increase of $4.0 billion over 1999-2000. Much of this
increase in associated with the $3.4 billion net
impact of the transfers of the surplus from 1999-2000
to the current year as partially offset by the
diversion of an additional $1.99 billion in
additional receipts to the School Tax Relief (STAR)
Fund. In its third year, STAR now provides statewide
school property tax relief to all homeowners for
their primary residence. Adjusted for these
transactions, the growth in net income tax receipts
is roughly $1.3 billion, an increase of nearly 5%.

User tax and fees are projected at $7.02 billion in
2000-01, a decrease of $583 million from 1999-2000.
The sales tax and cigarette tax components of this
category account for virtually all of the 2000-01
decline.

Business tax receipts are expected to total $4.23
billion in 2000-01, $332 million below 1999-2000
fiscal year results. The year-over-year decline in
projected receipts is largely due to statutory
changes.

Receipts from other taxes, which are comprised
primarily of receipts from estate and gift taxes,
real property gains tax and pari-mutuel taxes on
wagering, are projected to total $766 million, $341
million below last year's amount. The primary factors
accounting for the decline include: an adverse tax
tribunal decision, pari-mutuel tax reductions and
reductions in estate and gift taxes.

Miscellaneous receipts includes license revenues,
income from fees and fines, abandoned property
receipts, investment income, and a portion of the
assessments levied on medical providers.
Miscellaneous receipts are expected to total $1.34
billion in 2000-01, a decline of $309 million from
1999-2000. This reflects the loss of non-recurring
receipts received in 1999-2000 and the phase-out of
the medical provider assessments completed in January
2000. Transfers from other funds to the General Fund
consist primarily of tax revenues in excess of debt
service requirements. Transfers to the General Fund
are expected to total $2.03 billion, or $1.08 million
less than last year.

General Fund Disbursements. The 2000-01 Financial
Plan projects General Fund disbursements and
transfers to capital, debt service and other funds of
$39.55 billion, an increase of $2.38 billion over
1999-2000. Following the pattern of the last three
fiscal years, education programs receive the largest
share of new funding contained in the 2000-01
Financial Plan. School aid is expected to grow by
$850 million or 8.0% over 1999-2000 (on a State
fiscal year basis). Outside of education, the largest
growth in spending is for State operations ($1.02
billion) and general State charges ($182 million).
These increases were offset, in part, by spending
reductions or actions in health and social welfare,
and in general State charges.

Grants to Local Governments is the largest category
of General Fund disbursements and includes financial
assistance to local governments and not-for-profit
corporations, as well as entitlement benefits to
individuals. Grants to Local Governments are
projected at $26.86 billion in 2000-01, an increase
of $1.23 billion over 1999-2000.

General Fund spending for school aid is projected at
$11.47 billion on a State fiscal year basis, an
increase of $850 million from 1999-2000. The
Executive Budget provides additional funding for
operating aid, building aid, and textbook and
computer aids. For all other educational programs,
disbursements are projected to grow by $376 million
to $3.23 billion.

Medicaid costs are estimated at $5.59 billion
reflecting a 4% spending growth, essentially
unchanged from 1999-2000. Spending on welfare is
projected at $1.20 billion, a decline of $77 million.
Revenue sharing and other general purpose aid to
local governments in projected at $923 million.

State Operations spending reflects the costs of
operating State agencies. The State estimates that
disbursements for State Operations in 2000-01 will
total $7.62 billion. Compared to 1999-2000, spending
for State Operations is projected to increase by
$1.02 billion. The growth reflects a reduction in
one-time receipts from the State University that had
offset General Fund spending in 1999-2000 ($38
million), and a decrease in federal grant awards from
the Department of Correctional Services ($56
million), a portion of which is timing-related, costs
of salary related increases and inflation ($100
million), the labor contract between the United
University Professionals (UUP) and the State
University ($30 million), the development of
computerized systems in various State agencies ($80
million), increases in the Judiciary budget ($52
million), and higher costs in the Department of
Correctional Services in 2000-01 ($32 million).

General State Charges spending in this category,
which accounts primarily for fringe benefits for
State employees and retirees, is projected to total
$2.27 billion in 2000-01. Disbursements for General
State Charges are projected to increase by $182
million from the prior year. The 2000-01 spending
estimate continues to assume the $250 million in
proceeds from the privatization of the Medical
Malpractice Insurance Association.

Short and long-term Debt Service is projected at
$2.26 billion in 2000-01, an increase of $18 million
over 1999-2000. The growth reflects debt service
costs from bond sales in prior years and certain
sales planned for 2000-01. Capital Projects and all
other transfers spending is estimated at $528 million
in 2000-01, a decrease of $117 million from 1999-
2000.

General Fund Balance. The 2000-01 Financial Plan
projects a closing balance of $1.09 billion in the
General Fund. The balance is comprised of $50 million
in reserve for future needs, $547 million in the Tax
Stabilization Reserve Fund, $250 million in the Debt
Reduction Reserve Fund, $150 million in the
Contingency Reserve Fund and $338 million in the
Community Projects Fund.

Special Revenue Funds. Special Revenue Funds are used
to account for the proceeds of specific revenue
sources such as federal grants that are legally
restricted, either by the Legislature or outside
parties, to expenditures for specified purposes. For
2000-01 projected disbursements in this fund type
total $33.25 billion, an increase of $2.03 billion
(6.5%) over 1999-2000 levels. Disbursements from
federal funds, primarily the federal share of
Medicaid and other social services programs, are
projected to total $22.87 billion in the 2000-01
fiscal year. Remaining growth in federal funds is
primarily for the Child Health Plus program ($86
million), as well as increased spending in certain
social service programs. State special revenue
spending is projected to be $10.38 billion, an
increase of $1.23 million from last year.

Capital Project Funds. Capital Projects Funds
spending in 2000-01 is projected at $4.35 billion, an
increase of $124 million or 2.9% from last year.
Transportation, environmental, education and school
construction are the major sources of spending growth
in this category. 82 Debt Service Funds. Debt Service
Funds spending are estimated at $3.79 billion in
2000-01, up $206 million or 5.7 % from 1999-2000.
Transportation purposes, including debt service on
bonds issued for State and local highway and bridge
programs financed through the New York State Thruway
Authority and supported by the Dedicated Highway and
Bridge Trust Fund, account for $127 million of the
year-to-year growth. Debt service for educational
purposes, including State and City University
programs financed through the Dormitory Authority,
will increase by $59 million. The remaining growth is
for a variety of programs in mental health and
corrections, and for general obligation financings.

Out-Year Projections of Receipts and Disbursements.
State law requires the Governor to propose a balanced
budget each year. Preliminary analysis by the
Division of the Budget (DOB) indicates that the State
will have a 2001-02 budget gap of approximately $2
billion, which is comparable with gaps projected
following enactment of recent budgets. This estimate
includes the projected costs of new collective
bargaining agreements, no assumed operating
efficiencies, as well as the planned application of
approximately $1.2 billion in STAR tax reduction
services. In recent years, the State has closed
projected budget gaps which have ranged from $5
billion to less than $1 billion. DOB will formally
update its projections of receipts and disbursements
for future years as part of the Governor's 2001-02
Executive Budget. The revised expectations for these
years will reflect the updated estimates of receipts
and disbursements as well as new 2001-02 Executive
Budget recommendations.

Sustained growth in the State's economy could
contribute to closing projected budget gaps over the
next several years, both in terms of higher-than-
projected tax receipts and in lower-than-expected
entitlement spending. Savings from initiatives by
State agencies to deliver services more efficiently,
workforce management efforts, maximization of federal
and non-General Fund spending offsets, and other
actions necessary to help bring projected
disbursements and receipts into balance. The
projections do not assume any gap-closing benefit
from the potential settlement of State claims against
the tobacco industry.

Prior Fiscal Years. New York State's financial
operations have improved during recent fiscal years.
During its last eight fiscal years, the State has
recorded balanced budgets on a cash basis, with
positive year-end fund balances.

1999-2000 Fiscal Year. The State ended its 1999-2000
fiscal year in balance on a cash basis, with a
General Fund cash-basis surplus of $1.51 billion as
reported by DOB. As in recent years, strong growth in
receipts above forecasted amounts produced most of
the year-end surplus. Spending was also modestly
below projections, further adding to the surplus. The
State reported a closing balance of $1.17 billion in
the General Fund, an increase of $275 million over
the closing balance from the prior year. The balance
was held in four accounts within the General Fund:
the Tax Stabilization Reserve Fund (TSRF), the
Contingency Reserve Fund (CRF), the Debt Reduction
Reserve Fund (DRRF) and the Community Projects Fund
(CPF) which is used to finance legislative
initiatives. The balance is comprised of $547 million
in the TSRF after a deposit of $74 million in 1999-
2000; $107 million in the CRF; $250 million in the
DRRF; and $263 million in the CPF.

The closing fund balance excludes $3.97 billion that
the State deposited into the tax refund reserve
account at the close of 1999-2000 to pay for tax
refunds in 2000-01 of which $521 million was made
available as a result of the Local Government
Assistance Corporation (LGAC) financing program and
was required to be on deposit as of March 31, 2000.
The tax refund reserve account transaction has the
effect of decreasing reported personal income tax
receipts in 1999-2000, while increasing reported
receipts in 2000-01.

General Fund receipts and transfers from other funds
(net of tax refund reserve account activity) for the
1999-2000 fiscal year totaled $37.40 billion, an
increase of 1.6% over 1998-99. General Fund
disbursements and transfers to other funds totaled
$37.17 billion, an increase of 1.6% from the prior
fiscal year.

1998-99 Fiscal Year. The State ended its 1998-99
fiscal year on March 31, 1999 in balance on a cash
basis, with a General Fund cash surplus as reported
by the DOB of $1.82 billion. The cash surplus was
derived primarily from higher-than-projected tax
collections as a result of continued economic growth,
particularly in the financial markets and the
securities industries. The State reported a General
Fund closing cash balance of $892 million, an
increase of $254 million from the prior fiscal year.
The TSRF closing balance was $473 million, following
an additional deposit of $73 million in 1998-99. The
CRF closing balance was $107 million, following a
deposit of $39 million in 1998-99. The CPF, which
finances legislative initiatives, closed the fiscal
year with a balance of $312 million.

The closing fund balance excludes $2.31 billion that
the State deposited into the tax refund reserve
account at the close of 1998-99 to pay for tax
refunds in 1999-2000 of which $521 million was made
available as a result of the Local Government
Assistance Corporation (LGAC) financing program and
was required to be on deposit as of March 31, 1999.

General Fund receipts and transfers from other funds
(net of tax refund reserve-account activity), for the
1998-99 fiscal year totaled $36.82 billion, an
increase of 6.2% from 1997-98 levels. General Fund
disbursements and transfers to other funds totaled
$36.57 billion for the 1998-99 fiscal year, an
increase of 6.1% from 1997-98 levels.

1997-98 Fiscal Year. The State ended its 1997-98
fiscal year in balance on a cash basis, with a
General Fund cash surplus as reported by DOB of
approximately $2.04 billion. The cash surplus was
derived primarily from-higher-than-anticipated
receipts and lower spending on welfare, Medicaid, and
other entitlement programs.

The General Fund had a closing balance of $638
million, an increase of $205 million from the prior
fiscal year. The TSRF closing balance was $400
million, following a required deposit of $15 million
(repaying a transfer made in 1991-92) and an
additional deposit of $68 million made from the 1997-
98 surplus. The CRF closing balance was $68 million,
following a $27 million deposit from the surplus. The
CPF closed the fiscal year with a balance of $170
million. The General Fund closing balance did not
include $2.39 billion in the tax refund reserve
account, of which $521 million was made available as
a result of the LGAC financing program and was
required to be on deposit on March 31, 1998.

General Fund receipts and transfers from other funds
(net of tax refund reserve account activity) for the
1997-98 fiscal year totaled $34.67 billion, an annual
increase of 4.9% over 1996-97. General Fund
disbursements and transfers to other funds were
$34.47 billion, an annual increase of 4.8%.

Debt and Other Financing Activities 2000-01

Borrowing Plan. The State's 2000-01 borrowing plan
projects issuances of $367 million in general
obligation bonds (including $45 million for purposes
of redeeming outstanding Bond Anticipation Notes
(BANs). The State does not anticipate issuing new
BANs during the 2000-01 fiscal year. The State
expects to issue up to $276 million in Certificates
of Participation (COPs) to finance equipment
purchases (including costs of issuance, reserve
funds, and other costs) during the 2000-01 fiscal
year. Of this amount, it is anticipated that
approximately $76 million will be used to finance
agency equipment acquisitions. Approximately $200
million is expected to finance the purchase of new
welfare computer systems designed to improve case
management, fraud detection and child support
collection capabilities.

Borrowings by public authorities pursuant to lease-
purchase and contractual-obligation financings for
capital programs of the State are projected to total
approximately $4.54 billion, including costs of
issuance, reserve funds, and other costs, net of
anticipated refundings and other adjustments in 2000-
01. Included therein are borrowings by: (i) the
Dormitory Authority of the State of New York (DASNY)
for the State University of New York (SUNY); the City
University of New York (CUNY); health and mental
health facilities; child care facilities; biomedical
facilities; the Judicial Training Institute, school
construction (RESCUE); and university facilities
(JOBS 2000); (ii) the Thruway Authority for the
Dedicated Highway and Bridge Trust Fund and
Consolidated Highway Improvement Program; (iii) the
Urban Development Corporation (UDC) (doing business
as the Empire State Development Corporation) for
prisons, youth facilities and economic development
purposes; (iv) the Environmental Facilities
Corporation (EFC) for environmental projects; and (v)
the Housing Finance Agency (HFA) for housing
programs. These borrowings include the Community
Enhancement Facilities Assistance Program (CEFAP) for
economic development purposes. Four public
authorities (Thruway Authority, DASNY, 84 UDC and
HFA) are authorized to issue bonds under this
program. Borrowings for 2000-01 also include
Strategic Investment Program (SIP) for environmental,
historic preservation, economic development, arts and
cultural purposes. The projections of State
borrowings for the 2000-01 fiscal year are subject to
change as market conditions, interest rates and other
factors vary throughout the fiscal year.

Outstanding Debt of the State and Certain
Authorities. For purposes of analyzing the financial
condition of the State, debt of the State and of
certain public authorities may be classified as
State-supported debt, which includes general
obligation debt of the State and lease-purchase and
contractual obligations of public authorities (and
municipalities) where debt service is paid from State
appropriations (including dedicated tax sources, and
other revenues such as patient charges and dormitory
facilities rentals). In addition, a broader
classification, referred to as State-related debt,
includes State-supported debt, as well as certain
types of contingent obligations, including moral
obligation financings, certain contingent
contractual-obligation financing arrangements, and
State-guaranteed debt where debt service is expected
to be paid from other sources and State
appropriations in that they may be made and used only
under certain circumstances.

State-Supported and State-Related Debt Outstanding.
The first type of State-supported debt, general
obligation debt, is currently authorized for three
programmatic categories: transportation,
environmental and housing. As of March 31, 2000, the
total amount of outstanding general obligation debt
was $4.6 billion, including $45 million in BANs.

The second type of State-supported debt, lease-
purchase and contractual-obligation financing
arrangements with public authorities and
municipalities, has been used primarily by the State
to finance the State's highway and bridge program,
SUNY and CUNY buildings, health and mental hygiene
facilities, prison construction and rehabilitation,
and various other State capital projects.

The State has utilized and expects to continue to
utilize lease-purchase and contractual-obligation
financing arrangements to finance its capital
programs, in addition to authorized general
obligation bonds. Total outstanding State-supported
debt as of March 31, 2000 was $36.8 billion.

The category of State-related debt includes the
State-supported debt described above, moral
obligation and certain other financings and State-
guaranteed debt. Total outstanding State-related debt
as of March 31, 2000 was $38.6 billion.

Certain Litigation. The legal proceedings noted below
involve State finances and programs and miscellaneous
civil rights, real property, contract and other tort
claims in which the State is a defendant and the
potential monetary claims sought against the State
are substantial, generally in excess of $100 million.
These proceedings could adversely affect the
financial condition of the State in the 2000-01
fiscal year or thereafter.

Among the more significant of these cases are those
that involve: (i) the validity of agreements and
treaties by which various Indian tribes transferred
to New York title to certain land in New York; (ii)
challenges to the constitutionality of certain
sections of the Public Health Law, which impose a tax
on the gross receipts hospitals and residential
health care facilities receive from all patient care
services; (iii) alleged responsibility of New York
officials to assist in remedying racial segregation
in the City of Yonkers; (iv) a challenge to the
Governor of New York regarding the application of his
constitutional line item veto authority to certain
portions of budget bills; (v) a case calling for the
enforcement of sales and excise taxes imposed on
motor fuel and tobacco products sold to non-Indian
consumers on Indian reservations; and (vi) several
cases challenging provisions which alter the nursing
home Medicaid reimbursement methodology.

The City of New York. The fiscal health of the State
may be affected by the fiscal health of New York City
(the City), which continues to receive significant
financial assistance from the State. The City depends
on State aid both to enable the City to balance its
budget and to meet its cash requirements. The State
may also be affected by the ability of the City and
certain entities issuing debt for the benefit of the
City to market their securities successfully in the
public credit markets. 85 The City has achieved
balanced operating results for each of its fiscal
years since 1981 as measured by the GAAP standards in
force at that time. The City prepares a four-year
financial plan (Financial Plan) annually and updates
it periodically, and prepares a comprehensive annual
financial report each October describing its most
recent fiscal year.

To successfully implement its Financial Plan, the
City and certain entities issuing debt for the
benefit of the City must market their securities
successfully. This debt is issued to finance the
rehabilitation of the City's infrastructure and other
capital needs and to refinance existing debt, as well
as to finance seasonal needs. In City fiscal years
1997-98, 1998-99 and 1999-2000, the State
Constitutional debt limit would have prevented the
City from entering into new capital contracts. To
prevent disruptions in the capital program, two
actions were taken to increase the City's capital
financing capacity: (i) the State Legislature created
the New York City Transitional Finance Authority
(TFA) in 1997, and (ii) in 1999, the City created
TSASC, Inc. a not-for-profit corporation empowered to
issue tax-exempt debt backed by tobacco settlement
revenues. During the 2000 legislative session, the
State enacted legislation that increased the
borrowing authority of the TFA by $4 billion, to
$11.5 billion, which the City expects will provide
sufficient financing capacity to continue its capital
program over the next four fiscal years.

In response to the City's fiscal crisis in 1975, the
State took action to assist the City in returning to
fiscal stability. Among those actions, the State
established the Municipal Assistance Corporation for
the City of New York (NYC MAC) to provide financing
assistance to the City; the New York State Financial
Control Board (the Control Board) to oversee the
City's financial affairs; and the Office of the State
Deputy Comptroller for the City of New York (OSDC) to
assist the Control Board in exercising its powers and
responsibilities. A "control period" existed from
1975 to 1986 during which the City was subject to
certain statutorily-prescribed fiscal controls. The
Control Board terminated the control period in 1986
when certain statutory conditions were met. State law
requires the Control Board to reimpose a control
period upon the occurrence or "substantial likelihood
and imminence" of the occurrence of certain events,
including (but not limited to) a City operating
budget deficit of more than $100 million or impaired
access to the public credit markets.

Currently, the City and its Covered Organizations
(i.e., those organizations which receive or may
receive moneys from the City directly, indirectly or
contingently) operate under the Financial Plan. The
City's Financial Plan summarizes its capital, revenue
and expense projections and outlines proposed gap-
closing programs for years with projected budget
gaps. The City's projections set forth in the
Financial Plan are based on various assumptions and
contingencies, some of which are uncertain and may
not materialize. Unforseen developments and changes
in major assumptions could significantly affect the
City's ability to balance its budget as required by
State law and to meet its annual cash flow and
financing requirements.

Other Localities. Certain localities outside New York
City have experienced financial problems and have
requested and received additional State assistance
during the last several State fiscal years. The
potential impact on the State of any future requests
by localities for additional oversight or financial
assistance is not included in the projections of the
State's receipts and disbursements for the State's
2000-01 fiscal year.

To help resolve persistent fiscal difficulties in
Nassau County, the State enacted legislation (Chapter
84 of the Laws of 2000) creating the Nassau County
Interim Finance Authority. The Authority is empowered
to issue bonds, backed solely by diverted Nassau
Country sales tax revenues, to achieve short-term
budget relief and ensure credit market access for the
County. The Authority may also impose financial plan
requirements on Nassau County. The State has
appropriated $30 million in transitional assistance
to the County for State fiscal year 2000-01, and the
Governor has proposed providing up to $75 million in
State assistance over the next four State fiscal
years. Allocation of any such assistance is
contingent upon the Authority's approval of Nassau
County's financial plan.

The State has provided extraordinary financial
assistance to select municipalities, primarily
cities, since the 1996-97 fiscal year. Funding has
essentially been continued or increased in each
subsequent fiscal year. Such funding in 2000-01
totals $200.4 million. The 2000-01 Enacted Budget
also increased General Purpose State Aid for local
governments by $11 million to $562 million. 86 While
the distribution of General Purpose State Aid for
local governments was originally based on a statutory
formula, in recent years both the total amount
appropriated and the shares appropriated to specific
localities have been determined by the Legislature. A
State commission established to study the
distribution and amounts of general purpose local
government aid failed to agree on any recommendations
for a new formula.

Counties, cities, towns, villages and school
districts have engaged in substantial short-term and
long-term borrowings. In 1998, the total indebtedness
of all localities in the State other than New York
City was approximately $20.3 billion. A small portion
(approximately $80 million) of that indebtedness
represented borrowing to finance budgetary deficits
and was issued pursuant to State enabling
legislation. State law requires the Comptroller to
review and make recommendations concerning the
budgets of those local government units (other than
New York City) authorized by State law to issue debt
to finance deficits during the period that such
deficit financing is outstanding. Twenty-three
localities had outstanding indebtedness for deficit
financing at the close of their fiscal year ending in
1998.

Like the State, local governments must respond to
changing political, economic and financial influences
over which they have little or no control. Such
changes may adversely affect the financial condition
of certain local governments. For example, the
federal government may reduce (or in some cases
eliminate) federal funding of some local programs
which, in turn, may require local governments to fund
these expenditures from their own resources. It is
also possible that the State, New York City, Nassau
County or any of their respective public authorities
may suffer serious financial difficulties that could
jeopardize local access to the public credit markets,
which may adversely affect the marketability of notes
and bonds issued by localities within the State.
Localities may also face unanticipated problems
resulting from certain pending litigation, judicial
decisions and long-range economic trends. Other
large-scale potential problems, such as declining
urban populations, increasing expenditures, and the
loss of skilled manufacturing jobs, may also
adversely affect localities and necessitate State
assistance.

Authorities. The fiscal stability of the State is
related in part to the fiscal stability of its public
authorities. Public authorities are not subject to
the constitutional restrictions on the incurrence of
debt that apply to the State itself and may issue
bonds and notes within the amounts and restrictions
set forth in legislative authorization. The State's
access to the public credit markets could be impaired
and the market price of its outstanding debt may be
materially and adversely affected if any of its
public authorities default on their respective
obligations, particularly those using the financing
techniques referred to as State-supported or State-
related debt. As of December 31, 1999, there were 17
public authorities that had outstanding debt of $100
million or more, and the aggregate outstanding debt,
including refunding bonds, of all State Public
Authorities was $95 billion, only a portion of which
constitutes State-supported or State-related debt.

Beginning in 1998, the Long Island Power Authority
(the LIPA) assumed responsibility for the provision
of electric utility services previously provided by
Long Island Lighting Company for Nassau, Suffolk and
a portion of Queen Counties, as part of an estimated
$7 billion financing plan. As of the date of May
2000, LIPA has issued over $7 billion in bonds
secured solely by ratepayer charges. LIPA's debt is
not considered either State-supported or State-
related debt.

The Metropolitan Transit Authority (the MTA) oversees
the operation of subway and bus lines in New York
City by its affiliates, the New York City Transit
Authority and Manhattan and Bronx Surface Transit
Operating Authority (collectively, the TA). The MTA
operates certain commuter rail and bus services in
the New York Metropolitan area through MTA's
subsidiaries, the Long Island Rail Road Company, the
Metro-North Commuter Railroad Company and the
Metropolitan Suburban Bus Authority. In addition, the
Staten Island Rapid Transit Operating Authority, an
MTA subsidiary, operates a rapid transit line on
Staten Island. Through its affiliated agency, the
Triborough Bridge and Tunnel Authority (the TBTA),
the MTA operates certain intrastate toll bridges and
tunnels. Because fare revenues are not sufficient to
finance the mass transit portion of these operations,
the MTA has depended on, and will continue to depend
on, operating support from the State, local
governments and TBTA, including loans, grants and
subsidies. If current revenue projections are not
realized and/or operating expenses exceed current
projections, the TA or commuter railroads may be
required to seek additional State assistance, raise
fares or take other actions.

Since 1980, the State has enacted several taxes,
including a surcharge on the profits of banks,
insurance corporations and general business
corporations doing business in the 12-county
Metropolitan Transportation Region served by the MTA
and a special one-quarter of 1% regional sales and
use tax, that provide revenue for mass transit
purposes, including assistance to the MTA. Since
1987, State law has required that the proceeds of a
one-quarter of 1% mortgage recording tax paid on
certain mortgages in the Metropolitan Transportation
Region be deposited in a special MTA fund for
operating or capital expenses. In 1993, the State
dedicated a portion of certain additional State
petroleum business tax receipts to fund operating or
capital assistance to the MTA. For the 2000-01 State
fiscal year, total State assistance to the MTA is
projected to total approximately $1.35 billion.

State legislation accompanying the 2000-01 Enacted
State budget increased the aggregate bond cap for the
MTA, TBTA and TA to $16.5 billion in order to finance
a portion of the $17.1 billion MTA capital plan for
the 2000 through 2004 calendar years (the "2000-04
Capital Program"). On May 4, 2000, the Capital
Program Review Board approved the MTA's $17.1 billion
capital program for transit purposes for 2000 through
2004. The 2000-04 Capital Program is the fifth
capital plan since the Legislature authorized
procedures for the adoption, approval and amendment
of MTA capital programs and is designed to upgrade
the performance of the MTA's transportation systems
by investing in new rolling stock, maintaining
replacement schedules for existing assets, bringing
the MTA system into a state of good repair, and
making major investments in system expansion projects
such as the Second Avenue Subway project and the East
Side Access project.

The currently approved 2000-04 Capital Program
assumes the issuance of an estimated $8.9 billion in
new money bonds. The remainder of the plan is
projected to be financed with assistance from the
Federal Government, the State, the City of New York,
and from various other revenues generated from
actions taken by the MTA. In addition, $1.6 billion
in State support is projected to be financed using
proceeds from State general obligation bonds under
the proposed $3.8 billion Transportation
Infrastructure Bond Act of 2000, if approved by the
voters in the November 2000 general election.
Further, the enacted State budget authorized the MTA
to undertake a major debt restructuring initiative
which will enable the MTA to refund approximately
$13.7 billion in bonds, consolidate its credit
sources, and obviate the need for debt service
reserves. The authorization for debt restructuring
includes outstanding bonds secured by service
contracts with the State.

There can be no assurance that all the necessary
governmental actions for future capital programs will
be taken, that funding sources currently identified
will not be decreased or eliminated, that the
Transportation Infrastructure Bond Act will be
approved by voters or that the 2000-04 Capital
Program, or parts thereof, will not be delayed or
reduced. Should the Transportation and Infrastructure
Bond Act be defeated, the State could come under
pressure to provide additional funding to the MTA.
Should funding levels fall below current projections,
the MTA would have to revise its 2000-04 Capital
Program accordingly. If the 2000-04 Capital Program
is delayed or reduced ridership causes fare revenues
to decline, the MTA's ability to meet its operating
expenses without additional State assistance could be
impaired.

PUERTO RICO, THE U.S. VIRGIN ISLANDS AND GUAM
Puerto Rico. Puerto Rico has a diversified economy
dominated by the manufacturing and service sectors.
The North American Free Trade Agreement ("NAFTA"),
which became effective January 1, 1994, has led to
loss of lower wage jobs such as textiles, but
economic growth in other areas, particularly tourism,
construction and the high technology areas have
compensated for that loss. Puerto Rico's economy has
expanded in the 1990's in step with the U.S. economy.
In 1999 Puerto Rico's GNP grew at 4.2%, the highest
annual rate this decade.

The Commonwealth of Puerto Rico differs from the
states in its relationship with the federal
government. Most federal taxes, except those such as
social security taxes that are imposed by mutual
consent, are not levied in Puerto Rico. Section 936
of the Code has provided a tax credit for certain
qualified U.S. corporations electing "possessions
corporation" status. However, in 1993, Section 936
was amended to provide for two alternative
limitations on the Section 936 credit attributable to
certain active business income. The first limitation
was based on the economic activity of the Section 936
possessions corporation. The second limited the
credit to a specified percentage of the credit
allowed under prior law. In 1996, Section 936 credit
was repealed except that the credit attributable to
possessions source business income with respect to
certain existing credit claimants was subjected to a
phase out over a ten year period (subject to
additional caps).

Also in 1996, a new Section 30A was added to the
Code. Section 30A permits a "qualifying domestic
corporation" that meets certain gross income tests to
claim a credit against the federal income tax in an
amount equal to the portion of the tax which is
attributable to the taxable income from sources
outside of the United States, from the active conduct
of a trade or business in Puerto Rico or from the
sale of substantially all the assets used in such a
trade or business. Section 30A will be phased out by
January 1, 2006. The Governor of Puerto Rico has
proposed that Congress permanently extend Section 30A
until the Puerto Rican economy achieves certain
economic improvements. Similarly, President Clinton
has proposed permanent extension of the Section 30A.
To date, however, no action has been taken.

The eventual elimination of tax benefits to those
U.S. companies with operations in Puerto Rico may
lead to slower growth in the future. There can be no
assurance that this will not lead to a weakened
economy, a lower rating on Puerto Rico's debt or
lower prices for Puerto Rican bonds that may be held
by the Portfolio in the long-term. The government of
Puerto Rico has enacted its own tax incentive
programs for both industrial and tourist activities.

Puerto Ricans have periodically considered conversion
to statehood and such a vote is likely again in the
future. The statehood proposal was defeated in
December 1998. Puerto Rico is rated Baa1 by Moody's
and A by S&P.

The U.S. Virgin Islands. The United States Virgin
Islands ("USVI") is heavily reliant on the tourism
industry, with roughly 43% of non-agricultural
employment in tourist-related trade and services. The
tourism industry is economically sensitive and would
likely be adversely affected by a recession in either
the United States or Europe.

An important component of the USVI revenue base is
the federal excise tax on rum exports. Tax revenues
rebated by the federal government to the USVI provide
the primary security of many outstanding USVI bonds.
Since more than 90% of the rum distilled in the USVI
is distilled at one plant, any interruption in its
operations (as occurred after Hurricane Hugo in 1989)
would adversely affect these revenues. The last major
hurricane to impact the USVI was Hurricane Marilyn on
September 15, 1995. Consequently, there can be no
assurance that rum exports to the United States and
the rebate of tax revenues to the USVI will continue
at their present levels. The preferential tariff
treatment the USVI rum industry currently enjoys
could be reduced under NAFTA. Increased competition
from Mexican rum producers could reduce USVI rum
imported to the U.S., decreasing excise tax revenues
generated. The USVI is periodically hit by
hurricanes. Several hurricanes have caused extensive
damage, which has had a negative impact on revenue
collections. There is currently no rated, unenhanced
Virgin Islands debt outstanding (although there is
unrated debt outstanding). In addition, eventual
elimination of the Section 936 tax credit for those
companies with operations in USVI may lead to slower
growth in the future.

Guam. The U.S. territory of Guam derives a
substantial portion of its economic base from
Japanese tourism. With a reduced U.S. military
presence on the island, Guam has relied more heavily
on tourism in the past few years. During its 1997
fiscal year, the government was able to make
noticeable progress on its traditional budgetary
problems operating with a balanced budget for that
fiscal year. However, during 1998, the Japanese
recession combined with the impact of typhoon Paka
resulted in a budget deficit of $21 million. With
hotels alone accounting for 8.5% of Guam's employment
and Japanese tourists comprising 86% of total visitor
arrivals, the Japanese recession and depreciation of
the yen versus the dollar earlier this year have had
a negative impact on the island's economy. Based on
these factors, S&P downgraded Guam's rating to BBB-
from BBB with a negative outlook on May 26, 1999.
There does seem to be some recent improvement in the
Japanese economy. According to the Guam Visitors
Bureau, visitor arrivals increased in April 2000 by
11.8% over April 1999. Visits from Japan, Korea and
the U.S. mainland increased 14.2%, 120.5% and 9.7%,
respectively.

PORTFOLIO TRANSACTIONS

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

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

No fund will purchase U.S. government securities or
Municipal Obligations during the existence of any
underwriting or selling group relating to the
securities, of which the Adviser is a member, except
to the extent permitted by the SEC. Under certain
circumstances, a fund may be at a disadvantage
because of this limitation in comparison with other
funds that have similar investment objectives but
that are not subject to a similar limitation.

The trust has paid no brokerage commissions for
portfolio transactions since its commencement of
operations.  Portfolio securities transactions on
behalf of the fund are placed by the manager with a
number of brokers and dealers, including Salomon
Smith Barney.  Salomon Smith Barney has advised the
fund that in transactions with the fund, Salomon
Smith Barney charges a commission rate at least as
favorable as the rate that Salomon Smith Barney
charges its comparable unaffiliated customers in
similar transactions.

PORTFOLIO TURNOVER

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

The portfolio turnover rates are as follows:


Fund

Year Ended
11/30/00

Year Ended
11/30/99

California Fund

8%
29%
New York Fund

10%
23%






INVESTMENT RESTRICTIONS

The investment restrictions numbered 1 through 6
below have been adopted by the trust as fundamental
policies of the funds.  Under the 1940 Act, a
fundamental policy may not be changed with respect to
a fund without the vote of a majority of the
outstanding voting securities of the fund.  Majority
is defined in the 1940 Act as the lesser of (a) 67%
or more of the shares present at a fund meeting, if
the holders of more than 50% of the outstanding
shares of the fund are present or represented by
proxy, or (b) more than 50% of outstanding shares.
The remaining restrictions may be changed by a vote
of a majority of the trust's board of trustees at any
time.

Under the investment restrictions adopted by the
trust with respect to the funds: No fund will

1.	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.

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), is derived
from such transactions.

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

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

5.	Purchase or sell real estate, real estate
mortgages, commodities or commodity contracts, but
this restriction shall not prevent the fund from
(a) investing in securities of issuers engaged in
the real estate business or the business of
investing in real estate (including interests in
limited partnerships owning or otherwise engaging
in the real estate business or the business of
investing in real estate) and securities which are
secured by real estate or interests therein; (b)
holding or selling real estate received in
connection with securities it holds or held; (c)
trading in futures contracts and options on
futures contracts (including options on currencies
to the extent consistent with the 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.	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.	No fund will invest in oil, gas or other mineral
leases or exploration or development programs.

9.	No fund may write or sell puts, calls, straddles,
spreads or combinations of those transactions,
except as permitted under the fund's investment
objective and policies.

10.	No fund will 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.

11. No fund may make investments for the purpose of
exercising control of management.

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

TRUSTEES OF THE TRUST AND EXECUTIVE OFFICERS OF THE
FUND

Overall responsibility for management and supervision
of the fund rests with the trust's board of trustees.
The trustees approve all significant agreements
between the fund and the companies that furnish
services to the fund, including agreements with the
fund's distributor, investment manager, custodian and
transfer agent. The day-to-day operations of the fund
are delegated to the fund's investment adviser and
administrator, CFM.

The trustees of the trust and executive officers of
the fund, together with information as to their
principal business occupations during the past five
years, are shown below. The executive officers of the
fund are employees of organizations that provide
services to the fund. Each trustee who is an
"interested person" of the fund, as defined in the
1940 Act, is indicated by an asterisk.  The address
of the "non-interested" trustees and executive
officers of the fund is 7 World Trade Center, New
York, New York 10048, unless otherwise indicated.
Herbert Barg, Trustee (Age 77).  Private Investor.
His address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004.  Director/Trustee of sixteen
investment companies associated with Citigroup, Inc.
("Citigroup")

*Alfred J. Bianchetti Trustee (Age 78).  Retired;
formerly Senior Consultant to Dean Witter Reynolds
Inc.  His address is 19 Circle End Drive, Ramsey, New
Jersey 07466.  Director/Trustee of eleven investment
companies associated with Citigroup.

Martin Brody Trustee (Age 79).  Consultant, HMK
Associates; Retired Vice Chairman of the Board of
Restaurant Associates Corp.  His address is c/o HMK
Associates, 30 Columbia Turnpike, Florham Park, New
Jersey 07932.  Director/Trustee of twenty investment
companies associated with Citigroup.

Dwight B. Crane Trustee (Age 63).  Professor, Harvard
Business School.  His address is c/o Harvard Business
School, Soldiers Field Road, Boston, Massachusetts
02163.  Director/Trustee of twenty-three investment
companies associated with Citigroup.

Burt N. Dorsett Trustee (Age 70).  Managing Partner
of Dorsett McCabe Management. Inc., an investment
counseling firm; Director of Research Corporation
Technologies, Inc., a nonprofit patent clearing and
licensing firm.  His address is 201 East 62nd Street,
New York, New York 10021.  Director/Trustee of eleven
investment companies associated with Citigroup.

Elliot S. Jaffe Trustee (Age 74).  Chairman of the
Board and President of The Dress Barn, Inc.  His
address is 30 Dunnigan Drive, Suffern, New York
10901.  Director/Trustee of eleven investment
companies associated with Citigroup.

Stephen E. Kaufman Trustee (Age 69).  Attorney.  His
address is 277 Park Avenue, New York, New York 10172.
Director/Trustee of thirteen investment companies
associated with Citigroup.

Joseph J. McCann Trustee (Age 70).  Financial
Consultant; Retired Financial Executive, Ryan Homes,
Inc.  His address is 200 Oak Park Place, Pittsburgh,
Pennsylvania 15243.  Director/Trustee of eleven
investment companies associated with Citigroup.

*Heath B. McLendon Trustee (Age 67). Chairman of the
Board, President and Chief Executive Officer;
Managing Director of Salomon Smith Barney; President
of the manager and Travelers Investment Adviser, Inc.
("TIA"); Chairman or Co-Chairman of the Board of
seventy-seven investment companies associated with
Salomon Smith Barney. His address is 7 World Trade
Center, New York, New York 10048.

Cornelius C. Rose, Jr. Trustee (Age 67).  President,
Cornelius C. Rose Associates, Inc., financial
consultants, and Chairman and Director of Performance
Learning Systems, an educational consultant.  His
address is Meadowbrook Village, Building 4, Apt 6,
West Lebanon, New Hampshire 03784.  Director/Trustee
of eleven investment companies associated with
Citigroup.

Lewis E. Daidone (Age 43).  Managing Director of
Salomon Smith Barney; Chief Financial Officer of the
Smith Barney Mutual funds; Director and Senior Vice
President of the manager and TIA.  Senior Vice
President or Executive Vice President and Treasurer
of eighty-three investment companies associated with
Citigroup.  His address is 125 Broad Street, New
York, New York 10004

Joseph P. Deane (Age 52) Vice President and
Investment Officer
Investment Officer of the manager; Managing Director
of Salomon Smith Barney; Investment Officer of ten
investment companies associated with Citigroup. His
address is 7 World Trade Center, New York, New York
10048.

David T. Fare (Age 38) Vice President and Investment
Officer
Investment Officer of the manager; Vice President of
Salomon Smith Barney. Investment Officer of three
investment companies associated with Citigroup. His
address is 7 World Trade Center, New York, New York
10048.

Paul Brook (Age 47). Controller; Director of Salomon
Smith Barney; from 1997-1998 Managing Director of AMT
Capital Services Inc.; prior to 1997, Partner with
Ernst & Young LLP. Controller or Assistant Treasurer
of sixty investment companies associated with
Citigroup. His address is 125 Broad Street, New York,
New York 10004.

Christina T. Sydor (Age 50).  Secretary; Managing
Director of Salomon Smith Barney; General Counsel and
Secretary of the manager and TIA. Secretary of sixty
investment companies associated with Citigroup. Her
address is 7 World Trade Center, New York, New York
10048.

As of March 2, 2001, the trustees and officers owned,
in the aggregate, less than 1% of the outstanding
shares of each of the funds. No officer, director or
employee of Salomon Smith Barney or any of its
affiliates receives any compensation from the trust
for serving as an officer of the funds or trustee of
the trust. The trust pays each trustee who is not an
officer, director or employee of Salomon Smith Barney
or any of its affiliates a fee of $12,000 per annum
plus $1000 per in-person meeting and $100 per
telephonic meeting. Each trustee emeritus who is not
an officer, director or employee of Salomon Smith
Barney or its affiliates receives a fee of $5,000 per
annum plus $500 per in-person meeting and $50 per
telephonic meeting.  All trustees are reimbursed for
travel and out-of-pocket expenses incurred to attend
such meetings and for the last fiscal year the
aggregate reimbursement was $9,737.


THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.








For the fiscal year ended November 30, 2000, the
trustees of the trust were paid the following
compensation:




Name of Person



Aggregate
Compensat
ion
From
Trust


Total
Pension or
Retirement
Benefits
Accrued
as part of
Trust
Expenses


Compensati
on
From Trust
And Fund
Complex
Paid to
Trustees


Number of
Funds for
Which
Trustees
Serves
Within
Fund
Complex
Herbert Barg**
$15,114
$0
$116,075
16
Alfred
Bianchetti*
  15,034
  0
    58,900
11
Martin Brody**
  12,942
  0
 132,950
20
Dwight B.
Crane**
  15,114
  0
 153,175
23
Burt N.
Dorsett**
  15,114
  0
   59,500
11
Elliot S.
Jaffe**
  14,976
  0
  58,700
11
Stephen E.
Kaufman**
  15,114
  0
 114,000
13
Joseph J.
McCann**
  15,114
  0
  59,500
11
Heath B.
McLendon *
-
-
-
77
Cornelius C.
Rose, Jr.**
  15,114
  0
  59,500
11

*	Designates an "interested" trustee.
**	Designates member of Audit Committee.

Upon attainment of age 80, fund trustees are required
to change to emeritus status.  Trustees Emeritus are
entitled to serve in emeritus status for a maximum of
10 years. Trustees Emeritus may attend meetings but
have no voting rights.

The following table contains a list of shareholders
of record or who beneficially owned at least 5% of
the outstanding shares of a particular class of
shares of a fund of the Company as of  March 2, 2001.

INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
CLASS L PERCENTAGE OF SHARES

Monty Finefrock and
Paula Finefrock JTWROS
8 Skyline Drive
Woodside, CA  94062
Owned 59,910.798 shares (9.01%)

Donald B. McCaw and
Camilla B. McCaw
Camilla B McCaw Rev Trust
DTD 6/23/93
42 Forbes Avenue
San Anselino, , CA  94960
Owned 40,00.488 shares (6.02%)

Donald B. McCaw and
Camilla B. McCaw
Camilla B McCaw Rev Trust
DTD 6/23/93
42 Forbes Avenue
San Anselino, , CA  94960
Owned 38,635.159 shares (5.81%)

INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment Adviser and Administrator - CFM (Manager)

CFM serves as investment adviser to each fund
pursuant to an investment advisory agreement (the
"Investment Advisory Agreement") with the trust which
was approved by the board of trustees, including a
majority of trustees who are not "interested persons"
of the trust or the manager.  The manager is a wholly
owned subsidiary of Salomon Smith Barney Holdings
Inc. ("Holdings"), which in turn, is a wholly owned
subsidiary of Citigroup. Subject to the supervision
and direction of the trust's board of trustees, the
manager manages each fund's portfolio in accordance
with the fund's stated investment objective and
policies, makes investment decisions for the fund,
places orders to purchase and sell securities, and
employs professional portfolio managers and
securities analysts who provide research services to
the fund. The manager pays the salary of any officer
and employee who is employed by both it and the
Trust. The manager bears all expenses in connection
with the performance of its services.

As compensation for investment advisory services,
each fund pays the manager a fee computed daily and
paid monthly at the annual rate of 0.30% of the
fund's average daily net assets.

The funds paid the manager investment advisory fees,
and the investment manager waived fees and reimbursed
expenses as follows:


For the fiscal year ended






November 30, 1998

November 30, 1999

November 30, 2000



Fund


Fees
Paid
Fees
Waived and
Expenses
Reimbursed


Fees
Paid
Fees
Waived
and
Expenses
Reimburse
d
Fees
Paid
Fees
Waived and
Expenses
Reimbursed
California
Fund
$
47,759
$
46,438
$
63,168
$
46,738
$109,2
91
$   43,717
New York
Fund
98,264
 63,179

132,335
56,912

176,41
9

49,397

CFM also serves as administrator to the New York and
California Funds pursuant to a written agreement (the
"Administration Agreement"), which was approved by
the trustees of the trust, including a majority of
trustees who are not "interested persons" of the
trust or the administrator. The administrator pays
the salary of any officer and employee who is
employed by both it and the trust and bears all
expenses in connection with the performance of its
services.

As administrator CFM: (a) assists in supervising all
aspects of the funds' operations except those
performed by the funds' investment manager under its
investment advisory agreement; (b) supplies the fund
with office facilities (which may be in CFM's own
offices), statistical and research data, data
processing services, clerical, accounting and
bookkeeping services, including, but not limited to,
the calculation of (i) the net asset value of shares
of the fund, (ii) applicable contingent deferred
sales charges ("deferred sales charge") and similar
fees and charges and (iii) distribution fees,
internal auditing and legal services, internal
executive and administrative services, and stationary
and office supplies; and (c) prepares reports to
shareholders of the fund, tax returns and reports to
and filings with the Securities and Exchange
Commission ("SEC") and state blue sky authorities.

As compensation for administrative services rendered
to each fund, the administrator receives a fee
computed daily and paid monthly at the annual rate of
0.20% of each fund's average daily net assets. The
funds paid the administrator administration fees and
the administrator waived fees and reimbursed expenses
as follows:


For the fiscal year ended






November 30, 1998

November 30, 1999

November 30, 2000



Fund


Fees
Paid
Fees
Waived
and
Expenses
Reimburse
d


Fees
Paid
Fees
Waived and
Expenses
Reimbursed
Fees
Paid
Fees Waived
and
Expenses
Reimbursed
California
Fund
$
31,840
$
30,958
$
42,112
$   31,159
$72,8
61
$  29,144
New York Fund
65,508
42,120
88,224

37,941
117,6
13
    32,932

The trust bears expenses incurred in its operation,
including: taxes, interest, brokerage fees and
commissions, if any; fees of trustees who are not
officers, directors, shareholders or employees of
Salomon Smith Barney or CFM, SEC fees and state blue
sky qualification fees; charges of custodians;
transfer and dividend disbursing agent fees; certain
insurance premiums; outside auditing and legal
expenses; costs of maintaining corporate existence;
costs of investor services (including allocated
telephone and personnel expenses); costs of preparing
and printing prospectuses for regulatory purposes and
for distribution to existing shareholders; costs of
shareholders' reports and shareholder meetings; and
meetings of the officers or board of trustees of the
trust.

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New
York, New York 10017, has been selected as the fund's
independent auditor to examine and report on the
fund's financial statements for the fiscal year
ending November 30, 2001.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to the fund.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York, 10038, serves as counsel to the
directors who are not "interested persons" of the
fund.

Custodian, Transfer Agent and Sub-Transfer Agent

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

Citi Fiduciary Trust Company (the "transfer agent"),
located at 125 Broad Street, New York, New York
10004, serves as the fund's transfer and dividend-
paying agent.  Under the transfer agency agreement,
the transfer agent maintains the shareholder account
records for the fund, handles certain communications
between shareholders and the fund, distributes
dividends and distributions payable by the fund and
produces statements with respect to account activity
for the fund and its shareholders.  For these
services, the transfer agent receives fees from the
fund computed on the basis of the number of
shareholder accounts that the transfer agent
maintains for the fund during the month and is
reimbursed for out-of-pocket expenses.

PFPC Global Fund Services ("PFPC" or "sub-transfer
agent"), located at Exchange Place, Boston,
Massachusetts 02109, serves as the trust's sub-
transfer agent.  Under the transfer agency agreement,
the sub-transfer agent maintains the shareholder
account records for the trust, handles certain
communications between shareholders and the trust and
distributes dividends and distributions payable by
the trust.  For these services, the sub-transfer
agent receives a monthly fee computed on the basis of
the number of shareholder accounts it maintains for
the trust during the month, and is reimbursed for
out-of-pocket expenses.

Code of Ethics. Pursuant to Rule 17j-1 of the 1940
Act, the fund, its investment adviser and principal
underwriter has adopted a code of ethics that permits
personnel to invest in securities for their own
accounts, including securities that may be purchased
or held by the fund.  All personnel must place the
interests of clients first and avoid activities,
interests and relationships that might interfere with
the duty to make decisions in the best interests of
the clients.  All personal securities transactions by
employees must adhere to the requirements of the code
and must be conducted in such a manner as to avoid
any actual or potential conflict of interest, the
appearance of such a conflict, or the abuse of an
employee's position of trust and responsibility.  A
copy of the fund's Code of Ethics is on file with the
SEC.

Distributor

Effective June 5, 2000, Salomon Smith Barney, Inc.,
located at 388 Greenwich Street, New York, New York
10013 serves as the fund's distributor pursuant to a
written agreement dated June 5, 2000 (the
"Distribution Agreement") which was approved by the
fund's board of trustees, including a majority of the
independent trustees, on April 17, 2000 and July 12,
2000. Prior to and up to June 5, 2000, CFBDS, Inc.
("CFBDS") served as the fund's Distributor.





Commissions on Class A Shares.   For the period
October 8, 1998 through November 30, 1998, and fiscal
years ended November 30, 1999 and 200, the aggregate
dollar amounts of commissions on Class A shares, are
as follows:

Class A

Name of Fund
10/08/98
through
11/30/98*
Fiscal year
ended
11/30/99**
Fiscal year
ended
11/30/00***

California Fund
$ 65,000
$  76,500
$  32,000
New York Fund
  59,000
   107,100
    42,000

* The following amounts were paid to Salomon Smith
Barney:  $58,500 and $53,100 with regard to the
California Fund and the New York Fund, respectively.
**The following amounts were paid to Salomon Smith
Barney: $68,860 and $96,390 with regard to the
California Fund and the New York
Fund, respectively.
 ***The following amounts were paid to Salomon Smith
Barney: $28,800 and $37,800 with regard to the
California Fund and the New York
Fund, respectively, of which a portion was paid to
CFBDS.

Commissions on Class L Shares.  For the period
October 8, 1998 through November 30, 1998 and for the
fiscal years ended November 30, 1999 and 2000, the
aggregate dollar amounts of commission on Class L
shares are as follows:

Class L
(On June 12, 1998, Class C shares were
renamed Class L Shares)*

Name of Fund
10/08/98
through
11/30/98*
Fiscal year
ended
11/30/99**
Fiscal year
ended
11/30/00***
California Fund
$ 65,000
$   8,000
$    3,000
New York Fund
   59,000
    16,000
    15,000


* The following amounts were paid to Salomon Smith
Barney:  $58,500 and $53,100 with regard to the
California Fund and the New York Fund, respectively.
**The following amounts were paid to Salomon Smith
Barney:  $7,200 and $14,400 with regard to the
California Fund and the New York
Fund, respectively.
***The following amounts were paid to Salomon Smith
Barney:  $2,700 and $13,500 with regard to the
California Fund and the New York
Fund, respectively, of which a portion was paid to
CFBDS.

Deferred Sales Charges on Class A and L Shares.  For
the 1998, 1999 and 2000 fiscal years, the following
deferred sales charges were paid to Salomon Smith
Barney on redemptions of the funds' shares:

Class A

Name of Fund
Fiscal Year
Ended
11/30/98
Fiscal Year
Ended 11/30/99
Fiscal Year
Ended 11/30/00
California Fund
$0
$0
$0
New York Fund
3,000
 0
0



Class L
(On June 12, 1998, Class C shares were
renamed Class L Shares)

Name of Fund
Fiscal Year
Ended
11/30/98
Fiscal Year
Ended 11/30/99
Fiscal Year
Ended 11/30/00
California Fund
$1,000
$  2,000
$0
New York Fund
 4,000
    3,000
  0

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

California Fund

For the fiscal year ended November 30, 2000, Salomon
Smith Barney incurred distribution expenses totaling
$18,035 consisting of $1,188 for advertising, $75 for
printing of prospectuses, $7,762 for support
services, $8,897 to Salomon Smith Barney Financial
Consultants, and $113 in accruals for interest on the
excess of Salomon Smith Barney expenses incurred in
distribution of the funds' shares over the sum of the
distribution fees and deferred sales charge received
by Salomon Smith Barney from the fund.

New York Fund

For the fiscal year ended November 30, 2000, Salomon
Smith Barney incurred distribution expenses totaling
approximately $31,751 consisting of $2,131 for
advertising, $65 for printing of prospectuses,
$14,407 for support services, $14,884 to Salomon
Smith Barney Financial Consultants, and $264 in
accruals for interest on the excess of Salomon Smith
Barney expenses incurred in distribution of the
funds' shares over the sum of the distribution fees
and deferred sales charge received by Salomon Smith
Barney from the fund.

Distribution Arrangements for the New York and
California Fund

To compensate Salomon Smith Barney for the services
it provides and for the expense it bears, the trust
has adopted a services and distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act.
Under the Plan, both the New York and California Fund
pays Salomon Smith Barney a service fee, accrued
daily and paid monthly, calculated at the annual rate
of 0.15% of the value of the fund's average daily net
assets attributable to the fund's Class A and Class L
shares.  In addition, each fund pays Salomon Smith
Barney a distribution fee with respect to the Class L
shares primarily intended to compensate Smith Barney
for its initial expense of paying its Financial
Consultants a commission upon sales of those shares.
The Class L distribution fee is calculated at the
annual rate of 0.20% of the value of each fund's
average net assets attributable to the shares of the
Class.  The following service and distribution fees
were incurred during the periods indicated:

DISTRIBUTION  PLAN FEES




California Fund:

Year Ended
11/30/00

Year Ended
11/30/99

Year Ended
11/30/98

Class A
$46,4
62
$46,319
$39,97
3
Class L
17,9
78
19,055
15,564
New York Fund:



Class A
81,3
41
86,840
76,471
Class L
16,0
28
18,162
9,917

PURCHASE OF SHARES
Sales Charge Alternatives

The following classes of shares are available for
purchase.  See the prospectus for a discussion of
factors to consider in selecting which Class of
shares to purchase.

Class A Shares.  Class A shares are sold to investors
at the public offering price, which is the net asset
value plus an initial sales charge as follows:




Amount of
Investment

Sales Charge as
a %
Of Transaction

Sales Charge as
a %
Of Amount
Invested
Dealers'
Reallowance as %
Of Offering Price
Less than
$500,000
   2.00%
   2.04%
   1.80%
$500,000 and over
*
*
*

*  Purchases of Class A shares of $500,000 or more
will be made at net asset value without any initial
sales charge, but will be subject to a deferred
sales charge of 1.00% on redemptions made within 12
months of purchase. The deferred sales charge on
Class A shares is payable to Salomon Smith Barney,
which compensates Salomon Smith Barney Financial
Consultants and other dealers whose clients make
purchases of $500,000 or more. The deferred sales
charge is waived in the same circumstances in which
the deferred sales charge applicable to Class L
shares is waived. See "Purchase of Shares-Deferred
Sales Charge Provisions" and "Purchase of Shares-
Waivers of Deferred Sales Charge."

Members of the selling group may receive up to 90% of
the sales charge and may be deemed to be underwriters
of the fund as defined in the Securities Act of 1933,
as amended (the "1933 Act").  The reduced sales
charges shown above apply to the aggregate of
purchases of Class A shares of the fund made at one
time by "any person," which includes an individual
and his or her immediate family, or a trustee or
other fiduciary of a single trust estate or single
fiduciary account.

Class L Shares.  Class L shares are sold with an
initial sales charge of 1.00% (which is equal to
1.01% of the amount invested) and are subject to a
deferred sales charge payable upon certain
redemptions.  See "Deferred Sales Charge Provisions"
on page 52.  Until June 22, 2001 purchases of Class L
shares by investors who were holders of Class C
shares of the fund on June 12, 1998 will not be
subject to the 1% initial sales charge.

Class Y Shares.  Class Y shares are sold without an
initial sales charge or deferred sales charge and are
available only to investors investing a minimum of
$15,000,000 (except purchases of Class Y shares by
Smith Barney Allocation Series Inc., for which there
is no minimum purchase amount).

General

Investors may purchase shares from a Service Agent.
In addition, certain investors may purchase shares
directly from the fund.  When purchasing shares of
the fund, investors must specify whether the purchase
is for Class A, Class L or Class Y shares.  Your
Service Agent may charge their customers an annual
account maintenance fee in connection with a
brokerage account through which an investor purchases
or holds shares.  Accounts held directly at the sub-
transfer agent are not subject to a maintenance fee.

Investors in Class A and Class L shares may open an
account in the fund by making an initial investment
of at least $1,000 for each account, in the fund.
Investors in Class Y shares may open an account by
making an initial investment of $15,000,000.
Subsequent investments of at least $50 may be made
for all Classes. For shareholders purchasing shares
of the fund through the Systematic Investment Plan on
a monthly basis, the minimum initial investment
requirement for Class A and Class L shares and
subsequent investment requirement for all Classes is
$25. For shareholders purchasing shares of the fund
through the Systematic Investment Plan on a quarterly
basis, the minimum initial investment required for
Class A and Class L shares and the subsequent
investment requirement for all Classes is $50.  There
are no minimum investment requirements for Class A
shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney,
unitholders who invest distributions from a Unit
Investment Trust ("UIT") sponsored by Salomon Smith
Barney, and Directors/Trustees of any of the Smith
Barney mutual funds, and their spouses and children.
The fund reserves the right to waive or change
minimums, to decline any order to purchase its shares
and to suspend the offering of shares from time to
time. Shares purchased will be held in the
shareholder's account by the sub-transfer agent.
Share certificates are issued only upon a
shareholder's written request to the sub-transfer
agent. It is not recommended that the fund be used as
a vehicle for Keogh, IRA or other qualified
retirement plans.

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

Systematic Investment Plan.  Shareholders may make
additions to their accounts at any time by purchasing
shares through a service known as the Systematic
Investment Plan.  Under the Systematic Investment
Plan, Salomon Smith Barney or the sub-transfer agent
is authorized through preauthorized transfers of at
least $25 on a monthly basis or at least $50 on a
quarterly basis to charge the shareholder's account
held with a bank or other financial institution on a
monthly or quarterly basis as indicated by the
shareholder, to provide for systematic additions to
the shareholder's fund account. A shareholder who has
insufficient funds to complete the transfer will be
charged a fee of up to $25 by Salomon Smith Barney or
the sub-transfer agent.  The Systematic Investment
Plan also authorizes Salomon Smith Barney to apply
cash held in the shareholder's Salomon Smith Barney
brokerage account or redeem the shareholder's shares
of a Smith Barney money market fund to make additions
to the account. Additional information is available
from the fund or a Service Agent.
Sales Charge Waivers and Reductions

Initial Sales Charge Waivers.  Purchases of Class A
shares may be made at net asset value without a sales
charge in the following circumstances: (a) sales to
(i) Board Members and employees of Citigroup and its
subsidiaries and any Citigroup affiliated funds
including the Smith Barney mutual funds (including
retired Board Members and employees); the immediate
families of such persons (including the surviving
spouse of a deceased Board Member or employee); and
to a pension, profit-sharing or other benefit plan
for such persons and (ii) employees of members of the
National Association of Securities Dealers, Inc.,
provided such sales are made upon the assurance of
the purchaser that the purchase is made for
investment purposes and that the securities will not
be resold except through redemption or repurchase;
(b) offers of Class A shares to any other investment
company to effect the combination of such company
with the fund by merger, acquisition of assets or
otherwise; (c) purchases of Class A shares by any
client of a newly employed Service Agent (for a
period up to 90 days from the commencement of the
Financial Consultant's employment with Salomon Smith
Barney), on the condition the purchase of Class A
shares is made with the proceeds of the redemption of
shares of a mutual fund which (i) was sponsored by
the Financial Consultant's prior employer, (ii) was
sold to the client by the Financial Consultant and
(iii) was subject to a sales charge; (d) purchases by
shareholders who have redeemed Class A shares in the
fund (or Class A shares of another Smith Barney
mutual fund that is offered with a sales charge) and
who wish to reinvest their redemption proceeds in the
m, provided the reinvestment is made within 60
calendar days of the redemption; (e) purchases by
accounts managed by registered investment advisory
subsidiaries of Citigroup; (f) investments of
distributions from or proceeds from a sale of a UIT
sponsored by Salomon Smith Barney; and (g) purchases
by investors participating in a Salomon Smith Barney
fee-based arrangement. In order to obtain such
discounts, the purchaser must provide sufficient
information at the time of purchase to permit
verification that the purchase would qualify for the
elimination of the sales charge.

Right of Accumulation.  Class A shares of the fund
may be purchased by ''any person'' (as defined above)
at a reduced sales charge or at net asset value
determined by aggregating the dollar amount of the
new purchase and the total net asset value of all
Class A shares of the fund and of other Smith Barney
mutual funds that are offered with a sales charge as
currently listed under ''Exchange Privilege'' then
held by such person and applying the sales charge
applicable to such aggregate.  In order to obtain
such discount, the purchaser must provide sufficient
information at the time of purchase to permit
verification that the purchase qualifies for the
reduced sales charge.  The right of accumulation is
subject to modification or discontinuance at any time
with respect to all shares purchased thereafter.

Letter of Intent - Class A Shares.  A Letter of
Intent for an amount of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales
charge by aggregating investments over a 13 month
period, provided that the investor refers to such
Letter when placing orders.  For purposes of a Letter
of Intent, the ''Amount of Investment'' as referred
to in the preceding sales charge table includes
(i) all Class A shares of the fund and other Smith
Barney mutual funds offered with a sales charge
acquired during the term of the letter plus (ii) the
value of all Class A shares previously purchased and
still owned.  Each investment made during the period
receives the reduced sales charge applicable to the
total amount of the investment goal.  If the goal is
not achieved within the period, the investor must pay
the difference between the sales charges applicable
to the purchases made and the charges previously
paid, or an appropriate number of escrowed shares
will be redeemed.  The term of the Letter will
commence upon the date the Letter is signed, or at
the options of the investor, up to 90 days before
such date.  Please contact a Service Agent or the
transfer agent to obtain a Letter of Intent
application.

Letter of Intent - Class Y Shares.  A Letter of
Intent may also be used as a way for investors to
meet the minimum investment requirement for Class Y
shares (except purchases of Class Y shares by Smith
Barney Allocation Series Inc., for which there is no
minimum purchase amount).  Such investors must make
an initial minimum purchase of $5,000,000 in Class Y
shares of the fund and agree to purchase a total of
$15,000,000 of Class Y shares of the fund within 13
months from the date of the Letter. If a total
investment of $15,000,000 is not made within the 13-
month period, all Class Y shares purchased to date
will be transferred to Class A shares, where they
will be subject to all fees (including a service fee
of 0.15%) and expenses applicable to the fund's Class
A shares, which may include a deferred sales charge
of 1.00%. Please contact a Service Agent or the
transfer agent for further information.

Deferred Sales Charge Provisions

''Deferred Sales Charge Shares'' are: (a) Class L
shares; and (b) Class A shares that were purchased
without an initial sales charge but are subject to a
deferred sales charge.  A deferred sales charge may
be imposed on certain redemptions of these shares.

Any applicable deferred sales charge will be assessed
on an amount equal to the lesser of the original cost
of the shares being redeemed or their net asset value
at the time of redemption. Deferred Sales Charge
Shares that are redeemed will not be subject to a
deferred sales charge to the extent the value of such
shares represents: (a) capital appreciation of fund
assets; (b) reinvestment of dividends or capital gain
distributions; (c) with respect to Class L shares and
Class A shares that are Deferred Sales Charge Shares,
shares redeemed more than 12 months after their
purchase.

Class L shares and Class A shares that are Deferred
Sales Charge Shares are subject to a 1.00% deferred
sales charge if redeemed within 12 months of
purchase. In circumstances in which the deferred
sales charge is imposed on Class B shares, the amount
of the charge will depend on the number of years
since the shareholder made the purchase payment from
which the amount is being redeemed.  Solely for
purposes of determining the number of years since a
purchase payment, all purchase payments made during a
month will be aggregated and deemed to have been made
on the last day of the preceding Salomon Smith Barney
statement month.

In determining the applicability of any deferred
sales charge, it will be assumed that a redemption is
made first of shares representing capital
appreciation, next of shares representing the
reinvestment of dividends and capital gain
distributions and finally of other shares held by the
shareholder for the longest period of time.  The
length of time that Deferred Sales Charge Shares
acquired through an exchange have been held will be
calculated from the date the shares exchanged were
initially acquired in one of the other Smith Barney
mutual funds, and fund shares being redeemed will be
considered to represent, as applicable, capital
appreciation or dividend and capital gain
distribution reinvestments in such other funds. For
Federal income tax purposes, the amount of the
deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount
realized on redemption. The amount of any deferred
sales charge will be paid to Salomon Smith Barney. To
provide an example, assume an investor purchased 100
Class B shares of the fund at $10 per share for a
cost of $1,000.  Subsequently, the investor acquired
5 additional shares of the fund through dividend
reinvestment.  During the fifteenth month after the
purchase, the investor decided to redeem $500 of his
or her investment.  Assuming at the time of the
redemption the net asset value had appreciated to $12
per share, the value of the investor's shares would
be $1,260 (105 shares at $12 per share). The deferred
sales charge would not be applied to the amount which
represents appreciation ($200) and the value of the
reinvested dividend shares ($60).  Therefore, $240 of
the $500 redemption proceeds ($500 minus $260) would
be charged at a rate of 4.00% (the applicable rate
for Class B shares) for a total deferred sales charge
of $9.60.

Waivers of Deferred Sales Charge

The deferred sales charge will be waived on: (a)
exchanges (see ''Exchange Privilege''); (b) automatic
cash withdrawals in amounts equal to or less than
1.00% per month of the value of the shareholder's
shares at the time the withdrawal plan commences (see
''Automatic Cash Withdrawal Plan'') (however,
automatic cash withdrawals in amounts equal to or
less than 2.00% per month of the value of the
shareholder's shares will be permitted for withdrawal
plans established prior to November 7, 1994); (c)
redemptions of shares within 12 months following the
death or disability of the shareholder; (d)
involuntary redemptions; and (e) redemptions of
shares to effect a combination of the fund with any
investment company by merger, acquisition of assets
or otherwise. In addition, a shareholder who has
redeemed shares from other Smith Barney mutual funds
may, under certain circumstances, reinvest all or
part of the redemption proceeds within 60 days and
receive pro rata credit for any deferred sales charge
imposed on the prior redemption.

Deferred sales charge waivers will be granted subject
to confirmation (by Salomon Smith Barney in the case
of shareholders who are also Salomon Smith Barney
clients or by the transfer agent in the case of all
other shareholders) of the shareholder's status or
holdings, as the case may be.

Volume Discounts

The schedule of sales charges on Class A shares
described in the prospectus applies to purchases made
by any "purchaser," which is defined to include the
following: (a) an individual; (b) an individual's
spouse and his or her children purchasing shares for
their own account; (c) a trustee or other fiduciary
purchasing shares for a single trust estate or single
fiduciary account; and (d) a trustee or other
professional fiduciary (including a bank, or an
investment adviser registered with the SEC under the
Investment Advisers Act of 1940, as amended)
purchasing shares of the fund for one or more trust
estates or fiduciary accounts.  Purchasers who wish
to combine purchase orders to take advantage of
volume discounts on Class A shares should contact a
Service Agent.



Determination of Public Offering Price

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

REDEMPTION OF SHARES

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

If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed
for transfer (or be accompanied by an endorsed stock
power) and must be submitted to the sub-transfer
agent together with the redemption request.  Any
signature appearing on a share certificate, stock
power or written redemption request in excess of
$10,000 must be guaranteed by an eligible guarantor
institution such as a domestic bank, savings and loan
institution, domestic credit union, member bank of
the Federal Reserve System or member firm of a
national securities exchange.  Written redemption
requests of $10,000 or less do not require a
signature guarantee unless more than one such
redemption request is made in any 10-day period or
the redemption proceeds are to be sent to an address
other than the address of record.  Unless otherwise
directed, redemption proceeds will be mailed to an
investor's address of record.  The transfer agent may
require additional supporting documents for
redemptions made by corporations, executors,
administrators, trustees or guardians.  A redemption
request will not be deemed properly received until
the transfer agent  receives all required documents
in proper form.

If a shareholder holds shares in more than one Class,
any request for redemption must specify the Class
being redeemed.  In the event of a failure to specify
which Class, or if the investor owns fewer shares of
the Class than specified, the redemption request will
be delayed until the transfer agent receives further
instructions from Salomon Smith Barney, or if the
shareholder's account is not with Salomon Smith
Barney, from the shareholder directly.  The
redemption proceeds will be remitted on or before the
third business day following receipt of proper
tender, except on any days on which the NYSE is
closed or as permitted under the 1940 Act, in
extraordinary circumstances.  Generally, if the
redemption proceeds are remitted to a Salomon Smith
Barney brokerage account, these funds will not be
invested for the shareholder's benefit without
specific instruction and Salomon Smith Barney will
benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check,
other than a certified or official bank check, will
be remitted upon clearance of the check, which may
take up to fifteen days or more.

Distribution in Kind

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

Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the "Withdrawal
Plan") is available to shareholders of any fund who
own shares of the fund with a value of at least
$10,000 and who wish to receive specific amounts of
cash monthly or quarterly.  Withdrawals of at least
$50 may be made under the Withdrawal Plan by
redeeming as many shares of the fund as may be
necessary to cover the stipulated withdrawal payment.
Any applicable deferred sales charge will not be
waived on amounts withdrawn by shareholders that
exceed 1.00% per month of the value of a
shareholder's shares at the time the Withdrawal Plan
commences.  (With respect to Withdrawal Plans in
effect prior to November 7, 1994, any applicable
deferred sales charge will be waived on amounts
withdrawn that do not exceed 2.00% per month of the
value of a shareholder's shares at the time the
Withdrawal Plan commences). To the extent that
withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in a fund,
continued withdrawal payments will reduce the
shareholder's investment, and may ultimately exhaust
it.  Withdrawal payments should not be considered as
income from investment in a fund.  Furthermore, as it
generally would not be advantageous to a shareholder
to make additional investments in the fund at the
same time he or she is participating in the
Withdrawal Plan in amounts of less than $5,000
ordinarily will not be permitted.

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

VALUATION OF SHARES

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

In carrying out valuation policies adopted by the
trust's board of trustees for the New York Fund and
California Fund, the administrator, may consult with
an independent pricing service (the "Pricing
Service") retained by the trust.  Debt securities of
domestic issuers (other than U.S. government
securities and short-term investments), including
Municipal Obligations, are valued by the manager
after consultation with the Pricing Service.  U.S.
government securities will be valued at the mean
between the closing bid and asked prices on each day,
or, if market quotations for those securities are not
readily available, at fair value, as determined in
good faith by the trust's board of trustees.  With
respect to other securities held by the fund, when,
in the judgment of the Pricing Service, quoted bid
prices for investments are readily available and are
representative of the bid side of the market, these
investments are valued at the mean between the quoted
bid prices and asked prices.  Investments for which
no readily obtainable market quotations are
available, in the judgment of the Pricing Service,
are carried at fair value as determined by the
Pricing Service.  The procedures of the Pricing
Service are reviewed periodically by the officers of
the trust under the general supervision and
responsibility of the board of trustees.

EXCHANGE PRIVILEGE

Except as noted below, shareholders of any of the
Smith Barney mutual funds may exchange all or part of
their shares for shares of the same Class of other
Smith Barney mutual funds, on the basis of relative
net asset value per share at the time of exchange as
follows:

A.	Class A shares of the fund may be
exchanged without a sales charge for Class A
shares of any of the Smith Barney mutual funds.

B.	Class L shares of any fund may be
exchanged without a sales charge.  For purposes
of deferred sales charge applicability, Class L
shares of the fund exchanged for Class L shares
of another Smith Barney mutual fund will be
deemed to have been owned since the date the
shares being exchanged were deemed to be
purchased.

The exchange privilege enables shareholders in any
Smith Barney mutual fund to acquire shares of the
same Class in a fund with different investment
objectives when they believe a shift between funds is
an appropriate investment decision.  This privilege
is available to shareholders residing in any state in
which the fund shares being acquired may legally be
sold.  Prior to any exchange, the shareholder should
obtain and review a copy of the current prospectus of
each fund into which an exchange is being considered.
Prospectuses may be obtained from a Service Agent.

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

Additional Information Regarding the Exchange
Privilege.  Although the exchange privilege is an
important benefit, excessive exchange transactions
can be detrimental to either the fund's performance
or its shareholders.  The manager may determine that
a pattern of frequent exchanges is excessive and
contrary to the best interests of the fund's other
shareholders.  In this event, each fund may, at its
discretion, decide to limit additional purchases
and/or exchanges by a shareholder.  Upon such a
determination, the fund will provide notice in
writing or by telephone to the shareholder at least
15 days prior to suspending the exchange privilege
and during the 15 day period the shareholder will be
required to (a) redeem his or her shares in the fund
or (b) remain invested in the fund or exchange into
any of the funds of the Smith Barney mutual funds
ordinarily available, which position the shareholder
would be expected to maintain for a significant
period of time.  All relevant factors will be
considered in determining what constitutes an abusive
pattern of exchanges.

Additional Information Regarding Telephone Redemption
and Exchange Program.

Neither the funds nor their agents will be liable for
following instructions communicated by telephone that
are reasonably believed to be genuine.  The funds nor
their agents will employ procedures designed to
verify the identity of the caller and legitimacy of
instructions (for example, a shareholder's name and
account number will be required and phone calls may
be recorded).  Each fund reserves the right to
suspend, modify or discontinue the telephone
redemption and exchange program or to impose a charge
for this service at any time following at least seven
days prior notice to shareholders.

PERFORMANCE DATA

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





Yield and Equivalent Taxable Yield

A fund's 30-day yield described in the Prospectuses
is calculated according to a formula prescribed by
the SEC, expressed as follows:

					Yield = 2[(A - B + 1)6 -
1]

Where:	a  =	Dividends and
interest earned during the period
			b  =	Expenses accrued for
the period (net of
reimbursements)
				c  =	The average daily
number of shares
outstanding during the
period that were
entitled to receive
dividends
				d  =	The maximum offering
price per share on the
last day of the period
For the purpose of determining the interest earned
(variable "a" in the formula) on debt obligations
that were purchased by a fund at a discount or
premium, the formula generally calls for amortization
of the discount or premium; the amortization schedule
will be adjusted monthly to reflect changes in the
market values of the debt obligations.
A fund's "equivalent taxable 30-day yield" for a
Class is computed by dividing that portion of the
Class' 30-day yield which is tax-exempt by one minus
a stated income tax rate and adding the product to
that portion, if any, of the Class' yield that is not
tax-exempt.
The yield on municipal securities is dependent upon a
variety of factors, including general economic and
monetary conditions, conditions of the municipal
securities market, size of a particular offering,
maturity of the obligation offered and rating of the
issue.  Investors should recognize that, in periods
of declining interest rates, a fund's yield for each
Class of shares will tend to be somewhat higher than
prevailing market rates, and in periods of rising
interest rates a fund's yield for each Class of
shares will tend to be somewhat lower.  In addition,
when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its
shares will likely be invested in portfolio
instruments producing lower yields than the balance
of the fund's portfolio, thereby reducing the current
yield of the fund.  In periods of rising interest
rates, the opposite can be expected to occur.
The New York Fund's yield for Class A and Class L
shares for the 30-day period ended November 30, 2000
was 4.15% and 4.01%, respectively.  The equivalent
taxable yield for Class A and Class L shares for that
same period was 8.45% and 8.16%, respectively,
assuming the payment of Federal income taxes at a
rate of 39.6% and New York taxes at a rate of 11.31%.

The California Fund's yield for Class A, Class L and
Class Y shares for the 30-day period ended November
30, 2000 was 4.04%, 3.94% and 4.22%, respectively.
The equivalent taxable yield for Class A, Class L and
Class Y shares for that same period was 7.90%, 7.71%
and 8.25%, respectively, assuming the payment of
Federal income taxes at a rate of 39.6% and
California taxes at a rate of 9.3%.

Average Annual Total Return

A fund's "average annual total return," as described
below, is computed according to a formula prescribed
by the SEC.  The formula can be expressed as follows:

P(1 + T)n = ERV

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

			T	= 	average annual
total return.

			n	= 	number of years.

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

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

California Fund
Average Annual Total Return for
the fiscal year eneded November
30, 2000



Class of Shares

1-Year

5-Year

10-
Year
Since
Incept
ion1
Class A2

4.53%
 4.33%
N/A
 5.48%
Class L3
 4.29%
 4.34%
N/A
 6.01%
Class Y4
 6.82%
 4.95%
N/A
 5.30%
___________________

1       Class A commenced operations on December
31, 1991, Class L commenced operations on November
8, 1994, and
                Class Y commenced operations on
September 8, 1995.
	2	The average annual total return figure assumes
that the maximum 2.00% sales charge has been
deducted from the investment at the time of
purchase.  If the maximum sales charge had not
been deducted, the average annual total return
for Class A shares for the same period would
have been 6.64%, 4.74% and 5.72% for one year,
five years and since inception of the fund,
respectively.
	3	The average annual total return figure assumes
that the maximum applicable initial and
deferred sales charges have been deducted from
the investment at the time of redemption.  If
the maximum initial and deferred sales charge
had not been deducted, the average annual total
return for Class L shares for the same period
would have been 6.42%, 4.55% and 6.18% for one
year, five years and since inception of the
fund, respectively.
4      Class Y shares do not incur initial sales
charges nor deferred sales charges.




New York Fund 1
Average Annual Total Return for
the fiscal year ended November
30, 2000



Class of Shares

1-Year

5-Year

10-
Year
Since
incept
ion2
Class A3
 4.89%
4.33%
N/A
 5.53%
Class L4
 4.95%
4.31%
N/A
 5.72%
___________________

	1	There is no information for Class Y shares
because no Class Y shares were outstanding for
the periods shown.
	2	Class A commenced operations on December 31,
1991.  Class L commenced operations on December
5, 1994.
	3	The average annual total return figure assumes
that the maximum 2.00% sales charge has been
deducted from the investment at the time of
purchase.  If the maximum sales charge had not
been deducted, the average annual total return
for Class A shares for the same period would
have been 7.04%, 4.74% and 5.77% for one year,
five years and since inception of the fund,
respectively.
4 The average annual total return figure assumes
that the maximum applicable initial and
deferred sales charges have been deducted from
the investment at the time of redemption.  If
the maximum initial and deferred sales charges
had not been deducted, the average annual total
return for Class L shares for the same period
would have been 6.97%, 4.53% and 5.90% for one
year, five years and since inception of the
fund, respectively.


Aggregate Total Return

The fund's "aggregate total return," as described
below, represents the cumulative change in the value
of an investment in the fund for the specified period
and is computed by the following formula:
ERV - P
P

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

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

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.

California Fund

Aggregate Annual Total Return for
the fiscal year ended November 30,
2000



Class of Shares
1-Year
5-Year
10-
Year
Since
incepti
on1
Class A2
 4.53%
23.61%
N/A
60.94%
Class L3
 4.29%
23.64%
N/A
42.44%
Class Y4
 6.82%
27.32%
N/A
31.04%
_______________________
1	Class A commenced operations on December 31,
1991, Class L commenced operations on November
8, 1994, and  Class Y commenced operations on
September 8, 1995.
	2	The average annual total return figure assumes
that the maximum 2.00% sales charge has been
deducted from the investment at the time of
purchase.  If the maximum sales charge had not
been deducted, the average annual total return
for Class A shares for the same period would
have been 6.64%, 26.07% and 64.20% for one
year, five years and since inception of the
fund, respectively.
	3	The average annual total return figure assumes
that the maximum applicable initial and
deferred sales charges have been deducted from
the investment at the time of redemption.  If
the maximum initial and deferred sales charges
had not been deducted, the average annual total
return for Class L shares for the same period
would have been 6.42%, 24.94% and 43.91% for
one year, five years and since inception of the
fund, respectively.
	4	Class Y shares do not incur initial sales
charges nor deferred sales charges.

New York Fund 1

Aggregate Annual Total Return for
the fiscal year ended November 30,
2000



Class of Shares

1-Year

5-Year

10-
Year
Since
inceptio
n2
Class A3
4.89%
23.59%
N/A
61.68%
Class L4
4.95%
23.51%
N/A
39.64%
Class Y
N/A
N/A
N/A
N/A
_______________________

	1	There is no information for Class Y shares
because no Class  Y shares were outstanding for
the periods shown.
	2	Class A commenced operations on December 31,
1991.  Class L commenced operations on December
5, 1994.
	3	The average annual total return figure assumes
that the maximum 2.00% sales charge has been
deducted from the investment at the time of
purchase.  If the maximum sales charge had not
been deducted, the average annual total return
for Class A shares for the same period would
have been 7.04%, 26.07% and 64.95% for one
year, five years and since inception of the
fund, respectively.
	4	The average annual total return figure assumes
that the maximum applicable initial and
deferred sales charges have been deducted from
the investment at the time of redemption.  If
the maximum initial and deferred sales charges
had not been deducted, the average annual total
return for Class L shares for the same period
would have been 6.97%, 24.82% and 41.06% for
one year, five years and since inception of the
fund, respectively.


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

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions.  Each fund's policy is
to declare and pay exempt-interest dividends monthly.
Dividends from net realized capital gains, if any,
will be distributed annually.  Each fund may also pay
additional dividends shortly before December 31 from
certain amounts of undistributed ordinary income and
capital gains in order to avoid a federal excise tax
liability.  If a shareholder does not otherwise
instruct, exempt-interest dividends and capital gain
distributions will be reinvested automatically in
additional shares of the same Class at net asset
value, with no additional sales charge or deferred
sales charge.  A shareholder may change the option at
any time by notifying his Service Agent.

The per-share amounts of the exempt-interest
dividends on Class L shares may be lower than on
Class A and Class Y shares, mainly as a result of the
distribution fees applicable to Class L shares.
Similarly, the per-share amounts of exempt-interest
dividends on Class A shares may be lower than on
Class A shares, as a result of the service fee
attributable to Class A shares.  Capital gain
distributions, if any, will be the same for all
Classes of a fund's shares (A, L and Y).

Taxes

The following is a summary of the material United
States federal income tax considerations regarding
the purchase, ownership and disposition of shares of
a fund.  Each prospective shareholder is urged to
consult his or her tax adviser with respect to the
specific federal, state and local consequences of
investing in each fund.  The summary is based on the
laws in effect on the date of this SAI and existing
judicial and administrative interpretations thereof,
both of which are subject to change.

The Funds and Their Investments

As described in the each fund's Prospectus, each fund
is designed to provide shareholders with current
income that is excluded from gross income for federal
income tax purposes and is exempt from California or
New York State and New York City personal income
taxes, as applicable.  Neither fund is intended to
constitute a balanced investment program and and
neither fund is designed for investors seeking
capital gains or maximum tax-exempt income
irrespective of fluctuations in principal.
Investment in each fund would not be suitable for
tax-exempt institutions, qualified retirement plans,
H.R. 10 plans and individual retirement accounts
because such investors would not gain any additional
tax benefit from the receipt of tax-exempt income.

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

As a regulated investment company, each fund will not
be subject to United States federal income tax on its
net investment income (i.e., taxabale income other
than its net realized long-term and short-term
capital gains) and on its net realized long-term and
short-term capital gains, if any, that it distributes
to its shareholders, provided that an amount equal to
at least 90% of its investment company taxable income
(i.e., 90% of the sum of its taxable income minus the
excess, if any, of its net realized long-term capital
gains over its net realized short-term capital losses
(including any capital loss carryovers), plus or
minus certain other adjustments as specified in the
Code) and its net tax-exempt income for the taxable
year is distributed to its shareholders in compliance
with the Code's timing and other requirements but
will be subject to tax at regular corporate rates on
any taxable income or gain that it does not
distribute.


On November 30, 2000, the unused capital loss
carryovers, of the funds were approximately as
follows:  California Fund, $1,427,000 and New York
Fund $2,052,000.  For federal income tax purposes,
these amounts are available to be applied against
future capital gains of the fund that has the
carryovers, if any, that are realized prior to the
expiration of the applicable carryover.  The
carryovers expire as follows:

FUND
November
30,



(in thousands)
2002
2003
2004
2005
2006
2007
2008
California
$657
$269
--
--
--
$216
$285
New York

856

337
76
--
--
 454
 329

The Code imposes a 4% nondeductible excise tax on
each fund to the extent it does not distribute by the
end of any calendar year at least 98% of its income
for that year and at least 98% of its net capital
gains (both long-term and short-term) for the one-
year period ending, as a general rule, on October 31
of that year.  For this purpose, however, any
ordinary income or net capital gains retained by a
fund that is subject to corporate income tax will be
considered to have been distributed by year-end.  In
addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will
be increased or decreased to reflect any
underdistribution or overdistribution, as the case
may be, from the previous year.  Each fund
anticipates that it will pay such dividends and will
make such distributions as are necessary in order to
avoid the application of this excise tax.

If, in any taxable year, a fund fails to qualify as a
regulated investment company under the Code or fails
to meet the distribution requirement, it would be
taxed in the same manner as an ordinary corporation
and distributions to its shareholders would not be
deductible by each fund in computing its taxable
income.  In addition, in the event of a failure to
qualify, a fund's distributions, to the extent
derived from the fund's current or accumulated
earnings and profits would constitute dividends
(eligible for the corporate dividends-received
deduction) which are taxable to shareholders as
ordinary income, even though those distributions
might otherwise (at least in part) have been treated
in the shareholders' hands as tax-exempt interest.
If a fund fails to qualify as a regulated investment
company in any year, it must pay out its earnings and
profits accumulated in that year in order to qualify
again as a regulated investment company.  In
addition, a fund may be required to recognize any net
built-in gains with respect to certain of its assets
(i.e. the excess of the aggregate gains, including
items of income, over aggregate losses that would
have been realized with respect to such assets if the
fund had been liquidated) in order to qualify as a
regulated investment company in a subsequent year.

Each fund's transactions in municipal bond index and
interest rate futures contracts and options on these
futures contracts (collectively "section 1256
contracts") will be subject to special provisions of
the Code (including provisions relating to "hedging
transactions" and "straddles") that, among other
things, may affect the character of gains and losses
realized by each fund (i.e., may affect whether gains
or losses are ordinary or capital), accelerate
recognition of income to each fund and defer fund
losses.  These rules could therefore affect the
character, amount and timing of distributions to
shareholders.  These provisions also (a) will require
each fund to mark-to-market certain types of the
positions in its portfolio (i.e., treat them as if
they were closed out) and (b) may cause each fund to
recognize income without receiving cash with which to
pay dividends or make distributions in amounts
necessary to satisfy the distribution requirements
for avoiding income and excise taxes.  Each fund will
monitor its transactions, will make the appropriate
tax elections and will make the appropriate entries
in its books and records when it engages in these
transactions in order to mitigate the effect of these
rules and prevent disqualification of a fund as a
regulated investment company.

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

Taxation of Shareholders

Because each fund will distribute exempt-interest
dividends, interest on indebtedness incurred by a
shareholder to purchase or carry fund shares is not
deductible for federal income tax purposes. In
addition, the interest on any such indebtedness is
not deductible by a shareholder of the California
Fund for California personal income tax purposes, nor
by a New York Fund shareholder for New York State,
New York City and the City of Yonkers personal income
tax purposes. If a shareholder receives exempt-
interest dividends with respect to any share and if
such share is held by the shareholder for six months
or less, then, for federal income tax purposes, any
loss on the sale or exchange of such share may, to
the extent of exempt-interest dividends, be
disallowed.  In addition, the Code may require a
shareholder, if he or she receives exempt-interest
dividends, to treat as federal taxable income a
portion of certain otherwise non-taxable social
security and railroad retirement benefit payments.
Furthermore, that portion of any exempt-interest
dividend paid by each fund which represents income
derived from "private activity bonds" held by such
fund may not retain its federal tax-exempt status in
the hands of a shareholder who is a "substantial
user" of a facility financed by such bonds or a
"related person" thereof.  Moreover, some or all of
each fund's dividends may be a specific preference
item, or a component of an adjustment item, for
purposes of the federal individual and corporate
alternative minimum taxes.  In addition, the receipt
of each fund's dividends and distributions may affect
a foreign corporate shareholder's federal "branch
profits" tax liability and the federal or California
"excess net passive income" tax liability of a
shareholder of a Subchapter S corporation.
Shareholders should consult their own tax advisors to
determine whether they are (a) substantial users with
respect to a facility or related to such users within
the meaning of the Code or (b) subject to a federal
alternative minimum tax, the federal branch profits
tax or the federal "excess net passive income" tax.

Neither of the funds does expect to realize a
significant amount of capital gains.  Net realized
short-term capital gains are taxable to a United
States shareholder as ordinary income, whether paid
in cash or in shares.  Distributions of net-long-term
capital gains, if any, that a fund designates as
capital gains dividends are taxable as long-term
capital gains, whether paid in cash or in shares and
regardless of how long a shareholder has held shares
of that fund.

Shareholders receiving dividends or distributions in
the form of additional shares should have a cost
basis in the shares received equal to the amount of
money that the shareholders receiving cash dividends
or distributions will receive.

Upon the sale or exchange of his shares, a
shareholder will realize a taxable gain or loss equal
to the difference between the amount realized and his
basis in his shares.  Such gain or loss will be
treated as capital gain or loss if the shares are
capital assets in the shareholder's hands, and will
be long-term capital gain or loss if the shares are
held for more than one year and short-term capital
gain or loss if the shares are held for one year or
less.  Any loss realized on a sale or exchange will
be disallowed to the extent the shares disposed of
are replaced, including replacement through the
reinvesting of dividends and capital gains
distributions in the fund, within a 61-day period
beginning 30 days before and ending 30 days after the
disposition of the shares.  In such a case, the basis
of the shares acquired will be increased to reflect
the disallowed loss.  Any loss realized by a
shareholder on the sale of a fund share held by the
shareholder for six months or less (to the extent not
disallowed pursuant to the six-month rule described
above relating to exempt-interest dividends) will be
treated for United States federal income tax purposes
as a long-term capital loss to the extent of any
distributions or deemed distributions of long-term
capital gains received by the shareholder with
respect to such share.

If a shareholder incurs a sales charge in acquiring
shares of a fund, disposes of those shares within 90
days and then acquires shares in a mutual fund for
which the otherwise applicable sales charge is
reduced by reason of a reinvestment right (e.g., an
exchange privilege), the original sales charge will
not be taken into account in computing gain or loss
on the original shares to the extent the subsequent
sales charge is reduced.  Instead, the disregarded
portion of the original sales charge will be added to
the tax basis in the newly acquired shares.
Furthermore, the same rule also applies to a
disposition of the newly acquired shares made within
90 days of the second acquisition.  This provision
prevents a shareholder from immediately deducting the
sales charge by shifting his or her investment in a
family of mutual funds.

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

Notices.  Shareholders will be notified annually by
the fund as to the United States federal income tax
and California or New York State and New York City
personal income tax status of the dividends and
distributions made by the fund to its shareholders.
These statements also will designate the amount of
exempt-interest dividends that is a preference item
for purposes of the federal individual and corporate
alternative minimum taxes.  The dollar amount of
dividends excluded or exempt from federal income
taxation and California or New York State and New
York City personal income taxation and the dollar
amount of dividends subject to federal income
taxation and California or New York State and New
York City personal income taxation, if any, will vary
for each shareholder depending upon the size and
duration of such shareholder's investment in a fund.
To the extent each fund earns taxable net investment
income, it intends to designate as taxable dividends
the same percentage of each day's dividend as its
taxable net investment income bears to its total net
investment income earned on that day.

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

ADDITIONAL INFORMATION

The trust was organized on October 17, 1991 under the
laws of the Commonwealth of Massachusetts and is a
business entity commonly known as a "Massachusetts
business trust."  The trust offers shares of
beneficial interest of seven separate funds with a
par value of $.001 per share.  The funds may offer
shares of beneficial interest currently classified
into five Classes - A, B, L ,Y and Z.  Each Class of
the fund represents an identical interest in the
fund's investment portfolio.  As a result, the
Classes have the same rights, privileges and
preferences, except with respect to:  (a) the
designation of each Class; (b) the effect of the
respective sales charges; if any, for each class;
(c) the distribution and/or service fees borne by
each Class pursuant to the Plan; (d) the expenses
allocable exclusively to each Class; (e) voting
rights on matters exclusively affecting a single
Class; (f) the exchange privilege of each Class; and
(g) the conversion feature of the Class B shares.
The trust's board of trustees does not anticipate
that there will be any conflicts among the interests
of the holders of the different Classes. The
trustees, on an ongoing basis, will consider whether
any such conflict exists and, if so, take appropriate
action.

Under Massachusetts's law, shareholders could, under
certain circumstances, be held personally liable for
the obligations of each fund.  The Master Trust
Agreement disclaims shareholder liability for acts or
obligations of the fund, however, and requires that
notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by
each fund or a trustee.  The Master Trust Agreement
provides for indemnification from fund property for
all losses and expenses of any shareholder held
personally liable for the obligations of each fund.
Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is limited
to circumstances in which each fund itself would be
unable to meet its obligations, a possibility which
management of the fund believes is remote.  Upon
payment of any liability incurred by each fund, a
shareholder paying such liability will be entitled to
reimbursement from the general assets of each fund.
The trustees intend to conduct the operation of each
fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for
liabilities of each fund.

The Master Trust Agreement of the funds permits the
trustees of the funds to issue an unlimited number of
full and fractional shares of a single class and to
divide or combine the shares into a greater or lesser
number of shares without thereby changing the
proportionate beneficial interests in the fund.  Each
share in each of the funds represents an equal
proportional interest in each respective fund with
each other share.  Shareholders of each fund are
entitled upon its liquidation to share pro rata in
its net assets available for distribution.  No
shareholder of each fund has any preemptive or
conversion rights. Shares of each fund are fully paid
and non-assessable.

Pursuant to the Master Trust Agreement, each fund's
trustees may authorize the creation of additional
series of shares (the proceeds of which would be
invested in separate, independently managed
portfolios) 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).

Each fund does not hold annual shareholder meetings.
There normally will be no meetings of shareholders
for the purpose of electing trustees unless and until
such time as less than a majority of the trustees
holding office have been elected by shareholders, at
which time the trustees then in office will call a
shareholders' meeting for the election of trustees.
Shareholders of record of no less than two-thirds of
the outstanding shares of the trust may remove a
trustee through a declaration in writing or by vote
cast in person or by proxy at a meeting called for
that purpose.  The trustees will call a meeting for
any purpose upon written request of shareholders
holding at least 10% of the trust's outstanding
shares and the trust will assist shareholders in
calling such a meeting as required by the 1940 Act.

When matters are submitted for shareholder vote,
shareholders of each Class will have one vote for
each full share owned and a proportionate, fractional
vote for any fractional share held of that Class.
Generally, shares of each fund will be voted on a
fund-wide basis on all matters except matters
affecting only the interests of one Class, in which
case only shares of the affected Class would be
entitled to vote.

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

Annual and Semi-Annual Reports.  Each fund sends its
shareholders a semi-annual report and an audited
annual report, which include listings of investment
securities held by each fund at the end of the period
covered. In an effort to reduce the funds' printing
and mailing costs, each fund consolidates the mailing
of its semi-annual and annual reports by household.
This consolidation means that a household having
multiple accounts with the identical address of
record will receive a single copy of each report. In
addition, each fund also consolidates the mailing of
its prospectus so that a shareholder having multiple
accounts will receive a single Prospectus annually.
Shareholders who do not want this consolidation to
apply to their accounts should contact their Service
Agent or the transfer agent.

FINANCIAL STATEMENTS

Each fund's annual report for the fiscal year ended
November 30, 2000 is incorporated herein by reference
in its entirety.  The annual report was filed on
February 9, 2001, Accession Number 50130-01-704.

OTHER INFORMATION

In an industry where the average portfolio manager
has seven years of experience (source: ICI, 1998),
the portfolio managers of Smith Barney mutual funds
average 21 years in the industry and 15 years with
the firm.

Smith Barney mutual funds offers more than 60 mutual
funds.  We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.

That's why we offer four "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.

Style Pure Series - Our Style Pure Series funds stay
fully invested within their asset class and
investment style, enabling investors to make asset
allocation decisions in conjunction with their
Service Agent.

Classic Investor Series - Our Classic Investor Series
funds offer a range of equity and fixed income
strategies that seek to capture opportunities across
asset classes and investment styles using disciplined
investment approaches.

The Smith Barney Allocation Series - As a fund of
funds, investors can select a Smith Barney Allocation
Series Portfolio that may help their investment
needs.  As needs change, investors can easily choose
another long-term, diversified investment from our
Allocation Series family.

Special Discipline Series - Our Special Discipline
Series funds are designed for investors who are
looking beyond more traditional market categories:
from natural resources to a roster of state-specific
municipal funds.

APPENDIX

RATINGS ON DEBT OBLIGATIONS

BOND (AND NOTES) RATINGS

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.

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.







SMITH BARNEY
INVESTMENT TRUST




Intermediate Maturity
California Municipal Fund

Intermediate Maturity
New York Municipal Fund















March 30, 2001



SMITH BARNEY INVESTMENT TRUST
7 World Trade Center
New York, NY 10048

								SALOMON SMITH
BARNEY
								A Member of
Citigroup





47







March 30, 2001


STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY INVESTMENT TRUST

Smith Barney Large Capitalization Growth Fund

7 World Trade Center
New York, New York 10048
(800) 451-2010


This Statement of Additional Information ("SAI") is meant
to be read in conjunction with the prospectus of the Smith
Barney Large Capitalization Growth Fund (the "fund") dated
March 30, 2001, as amended or supplemented from time to
time (the "prospectus"), and is incorporated by reference
in its entirety into the prospectus. Additional information
about the fund's investments is available in the fund's
annual and semi-annual reports to shareholders which are
incorporated herein by reference. The prospectus and copies
of the reports may be obtained free of charge by contacting
a Salomon Smith Barney Financial Consultant, a PFS
Investment Registered Representative, a broker-dealer,
financial intermediary, financial institution or a
distributor's financial consultants (each called a "Service
Agent"), or by writing or calling Salomon Smith Barney Inc.
("Salomon Smith Barney") at the address or telephone number
above.  The fund is a separate investment series of Smith
Barney Investment Trust (the "trust").

TABLE OF CONTENTS

 Investment Objective and Management Policies	 2
 Investment  Restrictions......	.......13
 Trustees of the Trust and Executive Officers of the Fund	13
 Investment Management and Other Services	18
 Portfolio Transactions...	...................23
 Portfolio Turnover...................25
 Purchase of Shares 	.............................................26
 Redemption of Shares	36
 Valuation of Shares	39
 Exchange Privilege	40
 Performance Data	....................41
 Dividends, Distributions and Taxes	45
 Additional Information	51
 Financial Statements 	.......................52
 Other Information ......................   52

</R

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES



The prospectus discusses the fund's investment objective
and policies. This section contains supplemental
information concerning the types of securities and other
instruments in which the fund may invest, the investment
policies and portfolio strategies the fund may utilize and
certain risks associated with these investments, policies
and strategies. Citigroup Fund Management LLC (prior to
March 30, 2001, known as SSB Citi Fund Management
LLC)("CFM" or the "manager") serves as investment manager
to the fund.

The fund normally invests at least 65% of its total assets
in equity securities of large capitalization companies that
are dominant in their industries, global in scope and have
a long- term history of performance.  The fund does have
the flexibility, however, to invest the balance in
companies with other market capitalizations. The fund
defines large market capitalization companies as those with
market capitalization of $5 billion or more at the time of
the fund's investment.  Companies whose capitalizations
falls below this level after purchase will continue to be
considered large capitalization companies for purposes of
the 65% policy.

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

Equity Securities.  The fund will normally invest at least
65% of its assets in equity securities, including primarily
common stocks and, to a lesser extent, securities
convertible into common stock and rights to subscribe for
common stock. Common stocks represent an equity (ownership)
interest in a corporation.  Although equity securities have
a history of long-term growth in value, their prices
fluctuate based on changes in a company's financial
condition and on overall market and economic conditions.

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

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

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

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



Money Market Instruments. The fund may invest for temporary
defensive purposes in corporate and government bonds and
notes and money market instruments.  Money market
instruments include: obligations issued or guaranteed by
the United States government, its agencies or
instrumentalities ("U.S. government securities");
certificates of deposit, time deposits and bankers'
acceptances issued by domestic banks (including their
branches located outside the United States and subsidiaries
located in Canada), domestic branches of foreign banks,
savings and loan associations and similar institutions;
high grade commercial paper; and repurchase agreements with
respect to the foregoing types of instruments.
Certificates of deposit ("CDs") are short-term, negotiable
obligations of commercial banks.  Time deposits ("TDs") are
non-negotiable deposits maintained in banking institutions
for specified periods of time at stated interest rates.
Bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with
international transactions.

Repurchase Agreements.  The fund may agree to purchase
securities from a bank or recognized securities dealer and
simultaneously commit to resell the securities to the bank
or dealer at an agreed-upon date and price reflecting a
market rate of interest unrelated to the coupon rate or
maturity of the purchased securities ("repurchase
agreements"). The fund would maintain custody of the
underlying securities prior to their repurchase; thus, the
obligation of the bank or dealer to pay the repurchase
price on the date agreed to would be, in effect, secured by
such securities.  If the value of such securities were less
than the repurchase price, plus interest, the other party
to the agreement would be required to provide additional
collateral so that at all times the collateral is at least
102% of the repurchase price plus accrued interest.
Default by or bankruptcy of a seller would expose the fund
to possible loss because of adverse market action, expenses
and/or delays in connection with the disposition of the
underlying obligations.  The financial institutions with
which the fund may enter into repurchase agreements will be
banks and non-bank dealers of U.S. Government securities on
the Federal Reserve Bank of New York's list of reporting
dealers, if such banks and non-bank dealers are deemed
creditworthy by the fund's manager. The manager will
continue to monitor creditworthiness of the seller under a
repurchase agreement, and will require the seller to
maintain during the term of the agreement the value of the
securities subject to the agreement to equal at least 102%
of the repurchase price (including accrued interest).  In
addition, the manager will require that the value of this
collateral, after transaction costs (including loss of
interest) reasonably expected to be incurred on a default,
be equal to 102% or greater than the repurchase price
(including accrued premium) provided in the repurchase
agreement or the daily amortization of the difference
between the purchase price and the repurchase price
specified in the repurchase agreement. The manager will
mark-to-market daily the value of the securities.
Repurchase agreements are considered to be loans by the
fund under the Investment Company Act of 1940, as amended
(the "1940 Act").
Lending of Portfolio Securities.  Consistent with
applicable regulatory requirements, the fund may lend
portfolio securities to brokers, dealers and other
financial organizations that meet capital and other credit
requirements or other criteria established by the Board.
The fund will not lend portfolio securities to affiliates
of the manager unless they have applied for and received
specific authority to do so from the Securities and
Exchange Commission ("SEC").  Loans of portfolio securities
will be collateralized by cash, letters of credit or U.S.
government securities, which are maintained at all times in
an amount equal to at least 102% of the current market
value of the loaned securities.  Any gain or loss in the
market price of the securities loaned that might occur
during the term of the loan would be for the account of the
fund.  From time to time, the fund may return a part of the
interest earned from the investment of collateral received
for securities loaned to the borrower and/or a third party
that is unaffiliated with the fund and that is acting as a
"finder."
By lending its securities, the fund can increase its income
by continuing to receive interest and any dividends on the
loaned securities as well as by either investing the
collateral received for securities loaned in short-term
instruments or obtaining yield in the form of interest paid
by the borrower when U.S. government securities are used as
collateral.  Although the generation of income is not the
primary investment goal of the fund, income received could
be used to pay the fund's expenses and would increase an
investor's total return. The fund will adhere to the
following conditions whenever its portfolio securities are
loaned: (i) the fund must receive at least 102% cash
collateral or equivalent securities of the type discussed
in the preceding paragraph from the borrower; (ii) the
borrower must increase such collateral whenever the market
value of the securities rises above the level of such
collateral; (iii) the fund must be able to terminate the
loan at any time; (iv) the fund must receive reasonable
interest on the loan, as well as any dividends, interest or
other distributions on the loaned securities and any
increase in market value; (v) the fund may pay only
reasonable custodian fees in connection with the loan; and
(vi) voting rights on the loaned securities may pass to the
borrower, provided, however, that if a material event
adversely affecting the investment occurs, the Board must
terminate the loan and regain the right to vote the
securities.  Loan agreements involve certain risks in the
event of default or insolvency of the other party including
possible delays or restrictions upon a Fund's ability to
recover the loaned securities or dispose of the collateral
for the loan.
Illiquid Securities.  The fund may invest up to an
aggregate amount of 10% of its net assets in illiquid
securities, which term includes securities subject to
contractual or other restrictions on resale and other
instruments that lack readily available markets.

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

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

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

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

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

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

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

Options on Securities.  As discussed more generally above,
the fund may engage in writing covered call options. The
fund may also purchase put options and enter into closing
transactions. The principal reason for writing covered call
options on securities is to attempt to realize, through the
receipt of premiums, a greater return than would be
realized on the securities alone. In return for a premium,
the writer of a covered call option forgoes the right to
any appreciation in the value of the underlying security
above the strike price for the life of the option (or until
a closing purchase transaction can be effected).
Nevertheless, the call writer retains the risk of a decline
in the price of the underlying security. Similarly, the
principal reason for writing covered put options is to
realize income in the form of premiums. The writer of a
covered put option accepts the risk of a decline in the
price of the underlying security. The size of the premiums
the fund may receive may be adversely affected as new or
existing institutions, including other investment
companies, engage in or increase their option-writing
activities.

Options written by the fund will normally have expiration
dates between one and six months from the date written. The
exercise price of the options may be below, equal to, or
above the current market values of the underlying
securities when the options are written. In the case of
call options, these exercise prices are referred to as "in-
the-money," "at-the-money" and "out-of-the-money,"
respectively.

The fund may write (a) in-the-money call options when the
manager expects the price of the underlying security to
remain flat or decline moderately during the option period,
(b) at-the-money call options when the manager expects the
price of the underlying security to remain flat or advance
moderately during the option period and (c) out-of-the-
money call options when the manager expects that the price
of the security may increase but not above a price equal to
the sum of the exercise price plus the premiums received
from writing the call option. In any of the preceding
situations, if the market price of the underlying security
declines and the security is sold at this lower price, the
amount of any realized loss will be offset wholly or in
part by the premium received. Out-of-the-money, at-the-
money and in-the-money put options (the reverse of call
options as to the relation of exercise price to market
price) may be utilized in the same market environments as
such call options are used in equivalent transactions.

So long as the obligation of the fund as the writer of an
option continues, the fund may be assigned an exercise
notice by the broker-dealer through which the option was
sold, requiring it to deliver, in the case of a call, or
take delivery of, in the case of a put, the underlying
security against payment of the exercise price. This
obligation terminates when the option expires or the fund
effects a closing purchase transaction. The fund can no
longer effect a closing purchase transaction with respect
to an option once it has been assigned an exercise notice.
To secure its obligation to deliver the underlying security
when it writes a call option, or to pay for the underlying
security when it writes a put option, the fund will be
required to deposit in escrow the underlying security or
other assets in accordance with the rules of the Options
Clearing Corporation ("Clearing Corporation") or similar
clearing corporation and the securities exchange on which
the option is written.

An option position may be closed out only where there
exists a secondary market for an option of the same series
on a recognized securities exchange or in the over-the-
counter market.  The fund expects to write options only on
national securities exchanges or in the over-the-counter
market.  The fund may purchase put options issued by the
Clearing Corporation or in the over-the-counter market.

The fund may realize a profit or loss upon entering into a
closing transaction. In cases in which the fund has written
an option, it will realize a profit if the cost of the
closing purchase transaction is less than the premium
received upon writing the original option and will incur a
loss if the cost of the closing purchase transaction
exceeds the premium received upon writing the original
option. Similarly, when the fund has purchased an option
and engages in a closing sale transaction, whether it
recognizes a profit or loss will depend upon whether the
amount received in the closing sale transaction is more or
less than the premium the fund initially paid for the
original option plus the related transaction costs.

Although the fund generally will purchase or write only
those options for which the manager believes there is an
active secondary market so as to facilitate closing
transactions, there is no assurance that sufficient trading
interest to create a liquid secondary market on a
securities exchange will exist for any particular option or
at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an
option may cease to exist for a variety of reasons. In the
past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, have at times
rendered certain of the facilities of the Clearing
Corporation and national securities exchanges inadequate
and resulted in the institution of special procedures, such
as trading rotations, restrictions on certain types of
orders or trading halts or suspensions in one or more
options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely
execution of customers' orders, will not recur. In such
event, it might not be possible to effect closing
transactions in particular options. If, as a covered call
option writer, the fund is unable to effect a closing
purchase transaction in a secondary market, it will not be
able to sell the underlying security until the option
expires or it delivers the underlying security upon
exercise.

Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each
class which may be held or written, or exercised within
certain periods, by an investor or group of investors
acting in concert (regardless of whether the options are
written on the same or different securities exchanges or
are held, written or exercised in one or more accounts or
through one or more brokers).  It is possible that the fund
and other clients of the manager and certain of their
affiliates may be considered to be such a group.  A
securities exchange may order the liquidation of positions
found to be in violation of these limits, and it may impose
certain other sanctions.

In the case of options written by the fund that are deemed
covered by virtue of the fund's holding convertible or
exchangeable preferred stock or debt securities, the time
required to convert or exchange and obtain physical
delivery of the underlying common stocks with respect to
which the fund has written options may exceed the time
within which the fund must make delivery in accordance with
an exercise notice. In these instances, the fund may
purchase or temporarily borrow the underlying securities
for purposes of physical delivery. By so doing, the fund
will not bear any market risk because the fund will have
the absolute right to receive from the issuer of the
underlying security an equal number of shares to replace
the borrowed stock, but the fund may incur additional
transaction costs or interest expenses in connection with
any such purchase or borrowing.

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

Stock Index Options.  As described generally above, the
fund may purchase put and call options and write call
options on domestic stock indexes listed on domestic
exchanges in order to realize its investment objective of
capital appreciation or for the purpose of hedging its
portfolio. A stock index fluctuates with changes in the
market values of the stocks included in the index. Some
stock index options are based on a broad market index such
as the New York Stock Exchange Composite Index or the
Canadian Market Portfolio Index, or a narrower market index
such as the Standard & Poor's 100. Indexes also are based
on an industry or market segment such as the American Stock
Exchange Oil and Gas Index or the Computer and Business
Equipment Index.

Options on stock indexes are generally similar to options
on stock except that the delivery requirements are
different. Instead of giving the right to take or make
delivery of stock at a specified price, an option on a
stock index gives the holder the right to receive a cash
"exercise settlement amount" equal to (a) the amount, if
any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case
of a call) the closing value of the underlying index on the
date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon
the closing level of the stock index upon which the option
is based being greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the
option. The amount of cash received will be equal to such
difference between the closing price of the index and the
exercise price of the option expressed in dollars or a
foreign currency, as the case may be, times a specified
multiple. The writer of the option is obligated, in return
for the premium received, to make delivery of this amount.
The writer may offset its position in stock index options
prior to expiration by entering into a closing transaction
on an exchange or it may let the option expire unexercised.

The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the extent
to which price movements in the portion of the securities
portfolio of the fund correlate with price movements of the
stock index selected. Because the value of an index option
depends upon movements in the level of the index rather
than the price of a particular stock, whether the fund will
realize a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of
stock prices in the stock market generally or, in the case
of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock.
Accordingly, successful use by the fund of options on stock
indexes will be subject to the manager's ability to predict
correctly movements in the direction of the stock market
generally or of a particular industry. This requires
different skills and techniques than predicting changes in
the price of individual stocks.

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

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

No consideration will be paid or received by the fund upon
the purchase or sale of a futures contract. Initially, the
fund will be required to deposit with the broker an amount
of cash or cash equivalents equal to approximately 1% to
10% of the contract amount (this amount is subject to
change by the exchange or board of trade on which the
contract is traded and brokers or members of such board of
trade may charge a higher amount). This amount is known as
"initial margin" and is in the nature of a performance bond
or good faith deposit on the contract which is returned to
the fund, upon termination of the futures contract,
assuming all contractual obligations have been satisfied.
Subsequent payments, known as "variation margin," to and
from the broker, will be made daily as the price of the
index or securities underlying the futures contract
fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as
"marking-to-market." In addition, when the fund enters into
a long position in a futures contract or an option on a
futures contract, it must deposit into a segregated account
with the fund's custodian an amount of cash or cash
equivalents equal to the total market value of the
underlying futures contract, less amounts held in the
fund's commodity brokerage account at its broker. At any
time prior to the expiration of a futures contract, the
fund may elect to close the position by taking an opposite
position, which will operate to terminate the fund's
existing position in the contract.

There are several risks in connection with the use of
futures contracts as a hedging device. Successful use of
futures contracts by the fund is subject to the ability of
the manager to predict correctly movements in the stock
market or in the direction of interest rates. These
predictions involve skills and techniques that may be
different from those involved in the management of
investments in securities. In addition, there can be no
assurance that there will be a perfect correlation between
movements in the price of the securities underlying the
futures contract and movements in the price of the
securities that are the subject of the hedge. A decision of
whether, when and how to hedge involves the exercise of
skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of market behavior or
unexpected trends in market behavior or interest rates.

Positions in futures contracts may be closed out only on
the exchange on which they were entered into (or through a
linked exchange) and no secondary market exists for those
contracts. In addition, although the fund intends to enter
into futures contracts only if there is an active market
for the contracts, there is no assurance that an active
market will exist for the contracts at any particular time.
Most futures exchanges and boards of trade limit the amount
of fluctuation permitted in futures contract prices during
a single trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that day at
a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In
such event, and in the event of adverse price movements,
the fund would be required to make daily cash payments of
variation margin; in such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any,
may partially or completely offset losses on the futures
contract. As described above, however, no assurance can be
given that the price of the securities being hedged will
correlate with the price movements in a futures contract
and thus provide an offset to losses on the futures
contract.

Index-Related Securities ("Equity Equivalents"). The fund
may invest in certain types of securities that enable
investors to purchase or sell shares in a portfolio of
securities that seeks to track the performance of an
underlying index or a portion of an index.  Such Equity
Equivalents include among others DIAMONDS (interests in a
portfolio of securities that seeks to track the performance
of the Dow Jones Industrial Average), SPDRs or Standard &
Poor's Depositary Receipts (interests in a portfolio of
securities that seeks to track the performance of the S&P
500 Index), WEBS or World Equity Benchmark Shares
(interests in a portfolio of securities that seeks to track
the performance of a benchmark index of a particular
foreign country's stocks), and the Nasdaq-100 Trust
(interests in a portfolio of securities of the largest and
most actively traded non-financial companies listed on the
Nasdaq Stock Market).  Such securities are similar to index
mutual funds, but they are traded on various stock
exchanges or secondary markets.  The value of these
securities is dependent upon the performance of the
underlying index on which they are based.  Thus, these
securities are subject to the same risks as their
underlying indexes as well as the securities that make up
those indexes. For example, if the securities comprising an
index that an index-related security seeks to track perform
poorly, the index-related security will lose value.

Equity Equivalents may be used for several purposes,
including, to simulate full investment in the underlying
index while retaining a cash balance for fund management
purposes, to facilitate trading, to reduce transaction
costs or to seek higher investment returns where an Equity
Equivalent is priced more attractively than securities in
the underlying index. Because the expense associated with
an investment in Equity Equivalents may be substantially
lower than the expense of small investments directly in the
securities comprising the indices they seek to track,
investments in Equity Equivalents may provide a cost-
effective means of diversifying a Fund's assets across a
broad range of equity securities.
To the extent the fund invests in securities of other
investment companies, fund shareholders would indirectly
pay a portion of the operating costs of such companies in
addition to the expenses of its own operation.  These costs
include management, brokerage, shareholder servicing and
other operational expenses.  Indirectly, then, shareholders
of the fund that invests in Equity Equivalents may pay
higher operational costs than if they owned the underlying
investment companies directly. Additionally, the fund's
investments in such investment companies are subject to
limitations under the 1940 Act and market availability.
The prices of Equity Equivalents are derived and based upon
the securities held by the particular investment company.
Accordingly, the level of risk involved in the purchase or
sale of an Equity Equivalent is similar to the risk
involved in the purchase or sale of traditional common
stock, with the exception that the pricing mechanism for
such instruments is based on a basket of stocks.  The
market prices of Equity Equivalents are expected to
fluctuate in accordance with both changes in the net asset
values of their underlying indices and the supply and
demand for the instruments on the exchanges on which they
are traded.  Substantial market or other disruptions
affecting an Equity Equivalent could adversely affect the
liquidity and value of the shares of the Fund investing in
such instruments.

THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.







INVESTMENT RESTRICTIONS

The investment restrictions numbered 1 through 7 below and
the fund's investment objective have been adopted by the
trust as fundamental policies of the fund.  Under the 1940
Act, a fundamental policy may not be changed with respect
to a fund without the vote of a majority of the outstanding
voting securities of the fund.  Majority is defined in the
1940 Act, as the lesser of (a) 67% or more of the shares
present at a fund meeting, if the holders of more than 50%
of the outstanding shares of the fund are present or
represented by proxy, or (b) more than 50% of outstanding
shares.  The remaining restrictions may be changed by a
vote of a majority of the trust's board of trustees at any
time.

Under the investment restrictions adopted by the trust with
respect to the fund: the fund will not

1.  	Invest in a manner that would cause it to fail to be
a "diversified company" under the 1940 Act and the rules,
regulations and orders thereunder.

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

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 331/3% of the
value of its total assets (including the amount borrowed),
valued at the lesser of cost or market, less liabilities
(not including the amount borrowed), is derived from such
transactions.

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

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

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

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

11.  	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.

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

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

TRUSTEES OF THE TRUST AND EXECUTIVE OFFICERS OF THE FUND

The names of the trustees of the trust and executive
officers of the fund, together with information as to their
principal business occupations, are set forth below.  The
executive officers of the fund are employees of
organizations that provide services to the fund.  Each
trustee who is an "interested person" of the trust, as
defined in the 1940 Act, is indicated by an asterisk. The
address of the "non-interested" trustees and the executive
officers of the fund is 7 World Trade Center, New York, New
York 10048, unless otherwise indicated.

Herbert Barg, Trustee (Age 77).  Private Investor.  His
address is 273 Montgomery Avenue, Bala Cynwyd, Pennsylvania
19004.  Director/Trustee of sixteen investment companies
associated with Citigroup, Inc. ("Citigroup")

*Alfred J. Bianchetti Trustee (Age 78).  Retired; formerly
Senior Consultant to Dean Witter Reynolds Inc.  His address
is 19 Circle End Drive, Ramsey, New Jersey 07466.
Director/Trustee of eleven investment companies associated
with Citigroup.

Martin Brody Trustee (Age 79).  Consultant, HMK Associates;
Retired Vice Chairman of the Board of Restaurant Associates
Corp.  His address is c/o HMK Associates, 30 Columbia
Turnpike, Florham Park, New Jersey 07932.  Director/Trustee
of twenty investment companies associated with Citigroup.

Dwight B. Crane Trustee (Age 63).  Professor, Harvard
Business School.  His address is c/o Harvard Business
School, Soldiers Field Road, Boston, Massachusetts 02163.
Director/Trustee of twenty-three investment companies
associated with Citigroup.

Burt N. Dorsett Trustee (Age 70).  Managing Partner of
Dorsett McCabe Management. Inc., an investment counseling
firm; Director of Research Corporation Technologies, Inc.,
a nonprofit patent clearing and licensing firm.  His
address is 201 East 62nd Street, New York, New York 10021.
Director/Trustee of eleven investment companies associated
with Citigroup.

Elliot S. Jaffe Trustee (Age 74).  Chairman of the Board
and President of The Dress Barn, Inc.  His address is 30
Dunnigan Drive, Suffern, New York 10901.  Director/Trustee
of eleven investment companies associated with Citigroup.

Stephen E. Kaufman Trustee (Age 69).  Attorney.  His
address is 277 Park Avenue, New York, New York 10172.
Director/Trustee of thirteen investment companies
associated with Citigroup.

Joseph J. McCann Trustee (Age 70).  Financial Consultant;
Retired Financial Executive, Ryan Homes, Inc.  His address
is 200 Oak Park Place, Pittsburgh, Pennsylvania 15243.
Director/Trustee of eleven investment companies associated
with Citigroup.

*Heath B. McLendon Trustee (Age 67). Chairman of the Board,
President and Chief Executive Officer; Managing Director of
Salomon Smith Barney; President of the manager and
Travelers Investment Adviser, Inc. ("TIA"); Chairman or Co-
Chairman of the Board of seventy-seven  investment
companies associated with Salomon Smith Barney. His address
is 7 World Trade Center, New York, New York 10048.

Cornelius C. Rose, Jr. Trustee (Age 67).  President,
Cornelius C. Rose Associates, Inc., financial consultants,
and Chairman and Director of Performance Learning Systems,
an educational consultant.  His address is Meadowbrook
Village, Building 4, Apt 6, West Lebanon, New Hampshire
03784.  Director/Trustee of eleven investment companies
associated with Citigroup.

Lewis E. Daidone (Age 43).  Senior Vice President and
Treasurer; Managing Director of Salomon Smith Barney; Chief
Financial Officer of the Smith Barney mutual funds;
Treasurer and Senior Vice President or Executive Vice
President of eighty-three investment companies associated
with Citigroup; Director and Senior Vice President of the
manager and TIA.  His address is 125 Broad Street, New
York, New York  10004.

Alan Blake (Age 51). Vice President and Investment Officer;
Managing Director of Salomon Smith Barney; Investment
Officer of two investment companies associated with
Citigroup; Investment Officer of the manager.   His address
is 7 World Trade Center, New York, New York  10048

Paul Brook (Age 47). Controller; Director of Salomon Smith
Barney; Controller or Assistant Treasurer of sixty
investment companies associated with Citigroup; from 1997-
1998 Managing Director of AMT Capital Services Inc.; prior
to 1997 Partner with Ernst & Young LLP.  His address is 125
Broad Street, New York, New York  10004

Christina T. Sydor (Age 50) Secretary; Managing Director of
Salomon Smith Barney; Secretary of sixty investment
companies associated with Citigroup; General Counsel and
Secretary of the manager and TIA.  Her address is 7 World
Trade Center, New York, New York  10048.

As of March 2, 2001, the trustees and officers owned, in
the aggregate, less than 1% of the outstanding shares of
the fund. No officer, director or employee of Salomon Smith
Barney or any of its affiliates receives any compensation
from the trust for serving as an officer of the funds or
trustee of the trust.  The trust pays each trustee who is
not an officer, director or employee of Salomon Smith
Barney or any of its affiliates a fee of $12,000 per annum
plus $1000 per in-person meeting and $100 per telephonic
meeting.  Each trustee emeritus who is not an officer,
director or employee of Salomon Smith Barney or its
affiliates receives a fee of $5,000 per annum plus $500 per
in-person meeting and $50 per telephonic meeting.  All
trustees are reimbursed for travel and out-of-pocket
expenses incurred to attend such meetings, and for the most
recent calendar year the aggregate reimbursement was
$9,737.

For the fiscal year ended November 30, 2000, the Trustees
of the trust were paid the following compensation:




Name of Person



Aggregate
Compensat
ion
From
Trust

Total
Pension or
Retirement
Benefits
Accrued
As part of
Trust
Expenses

Compensation
From Trust
and Fund
Complex
Paid to
Trustees+

Number of
Funds for
Which Trustee
Serves
Within
Fund Complex


Herbert Barg**
Alfred
Bianchetti*
Martin Brody**
Dwight B.
Crane**
Burt N.
Dorsett**
Elliot S.
Jaffe**
Stephen E.
Kaufman**
Joseph J.
McCann**
Heath B.
McLendon*
Cornelius C.
Rose, Jr.**

$ 15,114
  15,034
   12,942
   15,114
   15,114
   14,976
   15,114
   15,114
-----
   15,114

$0
0
0
0
0
0
0
0
0
0

$116,075
    58,900
  132,950
  153,175
   59,500
   58,700
  114,000
   59,500
------
  59,500

16
11
20
23
11
11
13
11
87
11

+	For calendar year ended December 31, 2000.
* 	Designated an "interested" trustee.
**	Designates member of Audit Committee.

	Upon attainment of age 80, fund trustees are required
to change to emeritus status. Trustees emeritus are
entitled to serve in emeritus status for a maximum of
10 years. A trustee emeritus may attend meetings but
has no voting rights.



The following table contains a list of shareholders of
record or who beneficially owned at least 5% of the
outstanding shares of a particular class of shares of the
fund as of March 2, 2001.

CLASS Y - PERCENTAGE OF SHARES

Smith Barney Allocation Series, Inc.
Allocation High Growth Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3 Fl., Suite 200
Philadelphia, PA 19153-3111
Owned 3,567,912.448 shares (41.16%)

Smith Barney Allocation Series, Inc.
Allocation Growth Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3 Fl., Suite 200
Philadelphia, PA 19153-3111
Owned 1,969,425,539 shares (22.72%)

Smith Barney Illinois College Program
Equity
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3 Fl., Suite 200
Philadelphia, PA 19153-3111
Owned 755,792,588 shares (8.71%)

Smith Barney Allocation Series, Inc.
Select High Growth Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3 Fl., Suite 200
Philadelphia, PA 19153-3111
Owned 753,442.944 shares (8.69%)

Smith Barney Allocation Series, Inc.
Select Growth Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3 Fl., Suite 200
Philadelphia, PA 19153-3111
Owned 562,292.328 shares (6.48%)

CLASS Z - PERCENTAGE OF SHARES

State Street Bank & Trust CUST
The Travelers Group 401(k)
Savings Plan
Attn: Rick Vest
225 Franklin Street
Boston, MA 02101
Owned 4,918,913.923 shares (88.12%)

Savings Incentive Plan for Citibank NA
State Street Bank & Trust Co.
As Subtrustee U/A/D 10/97
106 Rosemont Rd.
Westwood, MA  02090
Owned 637,338.679 shares (11.41%)


INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment Manager - CFM

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

As compensation for investment management services, the
fund pays the manager a fee computed daily and paid monthly
at the annual rate of 0.75% of the fund's average daily net
assets.  The management fees paid by the fund in fiscal
years ended November 30, 2000, November 30, 1999 and
November 30, 1998 were $30,508,726, $18,933,051, and
$5,558,989, respectively.

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New York,
New York 10017, has been selected as the fund's independent
auditor to examine and report on the fund's financial
statements for the fiscal year ending November 30, 2001.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New
York 10019, serves as counsel to the fund.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York,
New York 10038, serves as counsel to the directors who are
not "interested persons" of the fund.

Custodian, Transfer Agent and Sub-Transfer Agents

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

Citi Fiduciary Trust Company (the "transfer agent"),
located at 125 Broad Street, New York, New York 10004,
serves as the fund's transfer and dividend-paying agent.
Under the transfer agency agreement, the transfer agent
maintains the shareholder account records for the fund,
handles certain communications between shareholders and the
fund, distributes dividends and distributions payable by
the fund and produces statements with respect to account
activity for the fund and its shareholders.  For these
services, the transfer agent receives fees from the fund
computed on the basis of the number of shareholder accounts
that the transfer agent maintains for the fund during the
month and is reimbursed for out-of-pocket expenses.

PFPC Global Fund Services ("PFPC" or "sub-transfer agent"),
located at Exchange Place, Boston, Massachusetts 02109,
serves as a sub-transfer agent.  Under the transfer agency
agreement, the sub-transfer agent maintains the shareholder
account records for the trust, handles certain
communications between shareholders and the trust and
distributes dividends and distributions payable by the
trust.  For these services, the sub-transfer agent receives
a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the trust during the
month, and is reimbursed for out-of-pocket expenses.

The fund has engaged the services of PFS Shareholder
Services, located at 3100 Breckinridge Blvd., Bldg 200,
Duluth, Georgia 30099-0062, as the sub-transfer agent for
PFS Accounts.

Code of Ethics. Pursuant to Rule 17j-1 of the 1940 Act, the
fund, its manager and principal underwriter have adopted a
code of ethics that permits personnel to invest in
securities for their own accounts, including securities
that may be purchased or held by the fund.  All personnel
must place the interests of clients first and avoid
activities, interests and relationships that might
interfere with the duty to make decisions in the best
interests of the clients.  All personal securities
transactions by employees must adhere to the requirements
of the code and must be conducted in such a manner as to
avoid any actual or potential conflict of interest, the
appearance of such a conflict, or the abuse of an
employee's position of trust and responsibility.  A copy of
the fund's Code of Ethics is on file with the SEC.

Distributor

Effective June 5, 2000, Salomon Smith Barney, Inc., located
at 388 Greenwich Street, New York, New York 10013 and PFS
serve as the fund's co-distributors pursuant to a written
agreement dated June 5, 2000 (the "Distribution Agreement")
which was approved by the fund's board of trustees,
including a majority of the independent trustees, on April
17, 2000.   Prior to and up to June 5, 2000, CFBDS, Inc.
served as the fund's distributor.
The distributor may be deemed to be an underwriter for
purposes of the Securities Act of 1933 (the "1933 Act").
From time to time, the distributor, or PFS or its
affiliates may also pay for certain non-cash sales
incentives provided to PFS Investments Registered
Representatives. Such incentives do not have any effect on
the net amount invested. In addition to the reallowances
from the applicable public offering price described above,
PFS may, from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash
or other compensation to PFS Investments Registered
Representatives that sell shares of the fund.
The distributor has entered into a selling agreement with
PFS and PFS has entered into an agreement with PFSI giving
PFSI the right to sell shares of each portfolio of the fund
on behalf of the distributor.  The distributor's obligation
is an agency or "best efforts" arrangement under which the
distributor is required to take and pay only for such
shares of each portfolio as may be sold to the public.  The
distributor is not obligated to sell any stated number of
shares.  The distribution agreement is renewable from year
to year if approved (a) by the directors or by a vote of a
majority of the fund's outstanding voting securities, and
(b) by the affirmative vote of a majority of directors who
are not parties to the distribution agreement or interested
persons of any party by votes cast in person at a meeting
called for such purpose.  The distribution agreement
provides that it will terminate if assigned, and that it
may be terminated without penalty by either party on
60 days' written notice.

For the period December 1, 1997 through October 7, 1998 the
aggregate dollar amount of commissions on Class A shares
was $319,000, all of which was paid to Salomon Smith
Barney.  For the period October 8, 1998 through November
30, 1998 the aggregate dollar amount of commissions on
Class A shares was $2,596,000,  $2,336,400 of which was
paid to Salomon Smith Barney. For the fiscal year ended
November 30, 1999, the aggregate dollar amount of
commissions on Class A shares was $5,565,000, $5,008,500 of
which was paid to Salomon Smith Barney and $556,500 was
paid to CFBDS, Inc.   For the fiscal year ended November
30, 2000, the aggregate dollar amount of commissions on
Class A shares was $4,715,000, of which a portion was paid
to Salomon Smith Barney and CFBDS.

For the period June 12, 1998 through October 7, 1998 the
aggregate dollar amount of commissions on Class L shares
was $161,000, all of which was paid to Salomon Smith
Barney. For the period October 8, 1998 through November 30,
1998 the aggregate dollar amount of commissions on Class L
shares was $664,000, $597,600 of which was paid to Salomon
Smith Barney. For the fiscal year ended November 30, 1999,
the aggregate dollar amount of commissions on Class L
shares was $3,693,000, $3,323,700 of which was paid to
Salomon Smith Barney and $369,300 was paid to CFBDS, Inc.
For the fiscal year ended November 30, 2000, the aggregate
dollar amount of commissions on Class L shares was
$3,878,000, of which a portion was paid to Salomon Smith
Barney and CFBDS.

For the fiscal years ended November 30, 1998, 1999 and
2000, Salomon Smith Barney or its predecessor received from
shareholders $23,000, $6,000 and $32,000, respectively, in
deferred sales charges on the redemption of Class A shares.

For the fiscal years ended November 30, 1998, 1999 and
2000, Salomon Smith Barney or its predecessor received from
shareholders $547,000, $1,827,000 and $3,153,000,
respectively, in deferred sales charges on the redemption
of Class B shares.

For the fiscal years ended November 30, 1998, 1999 and
2000, Salomon Smith Barney or its predecessor received from
shareholders $45,000, $201,000 and $291,000,  respectively,
in deferred sales charges on the redemption of Class L
shares.

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

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














The following service and distribution fees were incurred
pursuant to a distribution plan during the fiscal years
indicated:




Distribution Plan Fees





Fiscal Year
Ended
11/30/00

Fiscal Year
Ended
11/30/99

Fiscal Year
Ended
11/30/98

Class A

$  2,298,870

$  1,463,411

$   489,693

Class B

$19,610,637

$12,650,700

$3,522,540

Class L*

$  8,806,675

$  4,624,888

$   842,963

* Class L shares were called Class C shares until
June 12, 1998.

For the fiscal year ended November 30, 2000, the
distributor incurred distribution expenses totaling
$4,876,230, consisting of  $115,013 for advertising,
$44,583 for printing and mailing of prospectuses,
$2,141,254 for support services, $2,149,112 to Salomon
Smith Barney Financial Consultants, and $426,268 in
accruals for interest on the excess of Salomon Smith Barney
expenses incurred in distribution of the fund shares over
the sum of the distribution fees and deferred sales charge
received by Salomon Smith Barney from the fund.  For the
fiscal year ended November 30, 2000, Salomon Smith Barney
received $30,716,182 in distribution fees in the aggregate
from the Plan.

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

The only classes of shares being offered for sale through
PFS Distributors are Class A shares and Class B shares.
Pursuant to the Plan (described above), PFS Distributors is
paid an annual service fee with respect to Class A and
Class B shares of the fund sold through PFS Distributors at
the annual rate of 0.25% of the average daily net assets of
the respective class.  PFS Distributors is also paid an
annual distribution fee with respect to Class B shares at
the annual rate of 0.75% of the average daily net assets
attributable to that Class.  Class B shares that
automatically convert to Class A shares eight years after
the date of original purchase will no longer be subject to
a distribution fee. The fees are paid to PFS Distributors,
which in turn, pays PFS Investments Inc. ("PFS
Investments") to pay its PFS Investments Registered
Representatives for servicing shareholder accounts and, in
the case of Class B shares, to cover expenses primarily
intended to result in the sale of those shares.  These
expenses include: advertising expenses; the cost of
printing and mailing prospectuses to potential investors;
payments to and expenses of PFS Investments Registered
Representatives and other persons who provide support
services in connection with the distribution of shares;
interest and/or carrying charges; and indirect and overhead
costs of PFS Investments associated with the sale of fund
shares, including lease, utility, communications and sales
promotion expenses.

The payments to PFS Investments Registered Representatives
for selling shares of a class include a commission or fee
paid by the investor or PFS at the time of sale and, with
respect to Class A and Class B shares, a continuing fee for
servicing shareholder accounts for as long as a shareholder
remains a holder of that class.  PFS Investments Registered
Representatives may receive different levels of
compensation for selling different classes of shares.

PFS Investments may be deemed to be an underwriter for
purposes of the Securities Act of 1933. From time to time,
PFS or its affiliates may also pay for certain non-cash
sales incentives provided to PFS Investments Registered
Representatives.  Such incentives do not have any effect on
the net amount invested.  In addition to the reallowances
from the applicable public offering price described above,
PFS may from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash
or other compensation to PFS Investments Registered
Representatives who sell shares of the fund.

PORTFOLIO TRANSACTIONS

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

Decisions to buy and sell securities for the fund are made
by the manager, subject to the overall supervision and
review of the trust's board of trustees. Portfolio
securities transactions for the fund are effected by or
under the supervision of the manager.

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

In executing portfolio transactions and selecting brokers
or dealers, it is the fund's policy to seek the best
overall terms available. The manager, in seeking the most
favorable price and execution, considers all factors it
deems relevant, including, for example, the price, the size
of the transaction, the reputation, experience and
financial stability of the broker-dealer involved and the
quality of service rendered by the broker-dealer in other
transactions. The manager receives research, statistical
and quotation services from several broker-dealers with
which it places the fund's portfolio transactions. It is
possible that certain of the services received primarily
will benefit one or more other accounts for which the
manager exercises investment discretion. Conversely, the
fund may be the primary beneficiary of services received as
a result of portfolio transactions effected for other
accounts. The manager's fee under the management agreement
is not reduced by reason of its receiving such brokerage
and research services. The trust's board of trustees, in
its discretion, may authorize the manager to cause the fund
to pay a broker that provides brokerage and research
services to the manager a commission in excess of that
which another qualified broker would have charged for
effecting the same transaction. Salomon Smith Barney will
not participate in commissions from brokerage given by the
fund to other brokers or dealers and will not receive any
reciprocal brokerage business resulting therefrom. For the
fiscal years ended November 30, 1999 and 2000, the fund
directed brokerage transactions totaling approximately
$5,847,600 and $1,717,142, respectively, to brokers because
of research services provided.  The amount of brokerage
commissions paid on such transactions totaled approximately
$7,975 and  $122,925, respectively.

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

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

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

The fund has paid the following in brokerage commissions
for portfolio transactions:

					Fiscal
	Fiscal			Fiscal
					Year			Year
	Period
					Ended			Ended
	Ended
					11/30/00		11/30/99
	11/30/98


Total Brokerage Commissions		$1,066,652
	$1,578,155		$543,185

Total Brokerage Commissions
paid to Salomon Smith Barney	$     91,025		  $
84,525		  $25,080

% of Total Brokerage Commissions
paid to Salomon Smith Barney	         8.53%
	         5.36%	    	       4.62%

% of Total Transactions involving
Commissions paid to Salomon
Smith Barney				        4.57%
	          4.67%	              	        2.90%


During the fiscal years ended November 30, 1998, 1999, and
2000 the total amount of commissionable transactions was
$804,800,759, $1,674,083,239 and $871,691,299,
respectively.

Portfolio securities transactions on behalf of the fund are
placed by the manager with a number of brokers and dealers,
including Salomon Smith Barney.  Salomon Smith Barney has
advised the fund that in transactions with the fund,
Salomon Smith Barney charges a commission rate at least as
favorable as the rate that Salomon Smith Barney charges its
comparable unaffiliated customers in similar transactions.

PORTFOLIO TURNOVER

The fund's portfolio turnover rate (the lesser of purchases
or sales of portfolio securities during the year, excluding
purchases or sales of short-term securities, divided by the
monthly average value of portfolio securities) is generally
not expected to exceed 100%.  The rate of turnover will not
be a limiting factor, however, when the fund deems it
desirable to sell or purchase securities.  This policy
should not result in higher brokerage commissions to the
fund, as purchases and sales of portfolio securities are
usually effected as principal transactions.  Securities may
be sold in anticipation of a rise in interest rates (market
decline) or purchased in anticipation of a decline in
interest rates (market rise) and later sold.  In addition,
a security may be sold and another security of comparable
quality purchased at approximately the same time to take
advantage of what the fund believes to be a temporary
disparity in the normal yield relationship between the two
securities.  These yield disparities may occur for reasons
not directly related to the investment quality of
particular issues or the general movement of interest
rates, such as changes in the overall demand for, or supply
of, various types of tax-exempt securities. The portfolio
turnover rates were 8% and 9% for the fiscal years ended
November 30, 2000 and 1999, respectively.

PURCHASE OF SHARES

Sales Charge Alternatives

The following classes of shares are available for purchase.
See the prospectus for a discussion of factors to consider
in selecting which Class of shares to purchase.

Class A Shares.  Class A shares are sold to investors at
the public offering price, which is the net asset value
plus an initial sales charge as follows:



Amount
of
Investme
nt

Sales Charge
as a %
of
Transaction

Sales
Charge as a
%
of Amount
Invested

Dealers'
Reallowance as
%
Of Offering
Price
Less than
$25,000
5.00%
5.26%
4.50%
$  25,000 -
49,999
4.25
4.44
3.83
    50,000 -
99,999
3.75
3.63
3.38
    100,000 -
249,999
3.25
3.09
2.48
    250,000 -
499,999
2.75
2.04
1.80
    500,000 -
999,000
 1,000,000 or
more
2.00
0
2.04
0
1.80
up to 1.00

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

Members of the selling group may receive up to 90% of the
sales charge and may be deemed to be underwriters of the
fund as defined in the 1933 Act.  The reduced sales charges
shown above apply to the aggregate of purchases of Class A
shares of the fund made at one time by "any person," which
includes an individual and his or her immediate family, or
a trustee or other fiduciary of a single trust estate or
single fiduciary account.

Class B Shares.  Class B shares are sold without an initial
sales charge but are subject to a deferred sales charge
payable upon certain redemptions.  See "Deferred Sales
Charge Provisions".

Class L Shares.  Class L shares are sold with an initial
sales charge of 1.00% (which is equal to 1.01% of the
amount invested) and are subject to a deferred sales charge
payable upon certain redemptions.  See "Deferred Sales
Charge Provisions".  Until June 22, 2001 purchases of Class
L shares by investors who were holders of Class C shares of
the fund and/or other Smith Barney mutual funds on June 12,
1998 will not be subject to the 1% initial sales charge.

Class Y Shares.  Class Y shares are sold without an initial
sales charge or deferred sales charge and are available
only to investors investing a minimum of $15,000,000
(except purchases of Class Y shares by Smith Barney
Allocation Series Inc., for which there is no minimum
purchase amount).

Class Z Shares.  Class Z Shares are sold without an initial
sales charge or deferred sales charge
and are currently offered exclusively for sale to tax-
exempt employee benefit and retirement plans of Salomon
Smith Barney or any of its affiliates ("Qualified Plans")
and to certain unit investment trusts ("UIT) sponsored by
Salomon Smith Barney or any of its affiliates.

PFS Investments Accounts. The fund offers two Classes of
shares to investors purchasing through PFS Investments:
Class A shares and Class B shares.

Initial purchases of shares of the fund must be made
through a PFS Investments Registered Representative by
completing the appropriate application found in this
Prospectus. The completed application should be forwarded
to PFS Shareholder Services, P.O. Box 105033, Atlanta,
Georgia 30348. Checks drawn on foreign banks must be
payable in U.S. dollars and have the routing number of the
U.S. bank encoded on the check. Subsequent investments may
be sent directly to PFS Shareholder Services.  In
processing applications and investments, the PFS
Shareholder Services acts as agent for the investor and for
PFS Investments and also as agent for the distributor, in
accordance with the terms of the prospectus.  If Citi
Fiduciary Trust Company  (the "transfer agent") ceases to
act as such, a successor company named by the fund will act
in the same capacity so long as the account remains open.

Shares purchased will be held in the shareholder's account
by PFS Shareholder Services. Share certificates are issued
only upon a shareholder's written request to PFS
Shareholder Services. A shareholder who has insufficient
funds to complete any purchase, will be charged a fee of
$30 per returned purchase by PFS Shareholder Services.

Investors in Class A and Class B shares may open an account
by making an initial investment of at least $1,000 for each
account in each Class (except for Systematic Investment
Plan accounts), or $250 for an IRA or a Self-Employed
Retirement Plan in the fund. Subsequent investments of at
least $50 may be made for each Class. For participants in
retirement plans qualified under Section 403(b)(7) or
Section 401(a) of the Code, the minimum initial investment
requirement for Class A and Class B shares and the
subsequent investment requirement for each Class in the
fund is $25. There are no minimum investment requirements
in Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, Directors or
Trustees of any of the Smith Barney Mutual Funds, and their
spouses and children. The fund reserves the right to waive
or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to
time.  Purchase orders received by the transfer agent or
PFS Shareholder Services prior to the close of regular
trading on the New York Stock Exchange ("NYSE"), on any day
the fund calculates its net asset value, are priced
according to the net asset value determined on that day.

Upon completion of certain automated systems, initial
purchases of fund shares may be made by wire.  The minimum
investment that can be made by wire is $10,000. Before
sending the wire, the PFS Investments Registered
Representative must contact PFS Shareholder Services at
(800) 665-8677 to obtain proper wire instructions.  Once an
account is open, a shareholder may make additional
investments by wire.  The shareholder should contact PFS
Shareholder Services at (800) 544-5445 to obtain proper
wire instructions.

Upon completion of certain automated systems, shareholders
who establish telephone transaction authority on their
account and supply bank account information will be able to
make additions to their accounts at any time.  Shareholders
should contact PFS Shareholder Services at (800) 544-5445
between 8:00 a.m. and 8:00 p.m. eastern time any day that
the NYSE is open.  If a shareholder does not wish to allow
telephone subsequent investments by any person in his
account, he should decline the telephone transaction option
on the account application.  The minimum telephone
subsequent investment is $250 and can be up to a maximum of
$10,000.  By requesting a subsequent purchase by telephone,
you authorize PFS Shareholder Services to transfer funds
from the bank account provided for the amount of the
purchase.  A shareholder that has insufficient funds to
complete the transfer will be charged a fee of up to $30 by
PFS Shareholder Services.  A shareholder who places a stop
payment on a transfer or the transfer is returned because
the account has been closed, will also be charged a fee of
up to $30 by PFS Shareholder Services. Subsequent
investments by telephone may not be available if the
shareholder cannot reach PFS Shareholder Services whether
because all telephone lines are busy or for any other
reason; in such case, a shareholder would have to use the
fund's regular subsequent investment procedure described
above.

PFS may pay its Registered Representatives an amount equal
to 0.40% of the amount invested if the purchase represents
redemption proceeds from an investment company distributed
by an entity other than PFS Investments. In order to obtain
such discounts, the purchaser must provide sufficient
information at the time of purchase to permit verification
that the purchase would qualify for the elimination of the
sales charge.

In addition, Class A shares of the fund may be purchased at
net asset value by the PFS Primerica Corporation Savings
and Retirement Plan (the ''Primerica Plan'') for its
participants, subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended
(''ERISA''). Class A shares so purchased are purchased for
investment purposes and may not be resold except by
redemption or repurchase by or on behalf of the Primerica
Plan. Class A shares are also offered at net asset value to
accounts opened for shareholders by PFS Investments
Registered Representatives where the amounts invested
represent the redemption proceeds from investment companies
distributed by an entity other than PFS, if such redemption
has occurred no more than 60 days prior to the purchase of
shares of the trust, and the shareholder paid an initial
sales charge and was not subject to a deferred sales charge
on the redeemed account. Class A shares are offered at net
asset value to such persons because of anticipated
economies in sales efforts and sales related expenses. The
fund may terminate, or amend the terms of, offering shares
of the fund at net asset value to such persons at any time.
PFS may pay PFS Investments Registered Representatives,
through whom purchases are made at net asset value, an
amount equal to 0.40% of the amount invested if the
purchase represents redemption proceeds from an investment
company distributed by an entity other than PFS. Contact
PFS Shareholder Services at (800) 544-5445 for further
information and appropriate forms.

An account transcript is available at a shareholder's
request, which identifies every financial transaction in an
account since it has opened.  To defray administrative
expenses involved with providing multiple years worth of
information, there is a $15 charge for each Account
Transcript requested.  Additional copies of tax forms are
available at the shareholder's request.  A $10 fee for each
tax form will be assessed.

Additional information regarding PFS Shareholder Services
may be obtained by contacting the Client Services
Department at (800) 544-5445.

General

Investors may purchase shares from a Service Agent.  In
addition, certain investors, including qualified retirement
plans purchasing through certain Service Agents, may
purchase shares directly from the fund.  When purchasing
shares of the fund, investors must specify whether the
purchase is for Class A, Class B, Class L or Class Y
shares. Service Agents may charge their customers an annual
account maintenance fee in connection with a brokerage
account through which an investor purchases or holds
shares.  Accounts held directly at a sub-transfer agent are
not subject to a maintenance fee.

Purchases of the fund's Class Z shares must be made in
accordance with the terms of a Qualified Plan or a Salomon
Smith Barney UIT.  There are no minimum investment
requirements for Class Z shares; however the fund reserves
the right to vary this policy at any time.  Shareholders
acquiring Class Z shares through a Qualified Plan or a
Salomon Smith Barney UIT should consult the terms of their
respective plans for redemption provisions.

Investors in Class A, Class B and Class L shares may open
an account in the fund by making an initial investment of
at least $1,000 for each account, or $250 for an IRA or a
Self-Employed Retirement Plan, in the fund. Investors in
Class Y shares may open an account by making an initial
investment of $15,000,000. Subsequent investments of at
least $50 may be made for all Classes. For participants in
retirement plans qualified under Section 403(b)(7) or
Section 401(c) of the Code, the minimum initial investment
required for Class A, Class B and Class L shares and the
subsequent investment requirement for all Classes in the
fund is $25.  For shareholders purchasing shares of the
fund through the Systematic Investment Plan on a monthly
basis, the minimum initial investment requirement for Class
A, Class B and Class L shares and subsequent investment
requirement for all Classes is $25.  For shareholders
purchasing shares of the fund through the Systematic
Investment Plan on a quarterly basis, the minimum initial
investment required for Class A, Class B and Class L shares
and the subsequent investment requirement for all Classes
is $50.  There are no minimum investment requirements for
Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, unitholders
who invest distributions from a unit investment trust
("UIT") sponsored by Salomon Smith Barney, and
Directors/Trustees of any of the Smith Barney mutual funds,
and their spouses and children. The fund reserves the right
to waive or change minimums, to decline any order to
purchase its shares and to suspend the offering of shares
from time to time. Shares purchased will be held in the
shareholder's account by a sub-transfer agent. Share
certificates are issued only upon a shareholder's written
request to a sub-transfer agent.

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

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

Sales Charge Waivers and Reductions

Initial Sales Charge Waivers.  Purchases of Class A shares
may be made at net asset value without a sales charge in
the following circumstances: (a) sales to (i) Board Members
and employees of Citigroup and its subsidiaries and any
Citigroup affiliated funds including the Smith Barney
mutual funds (including retired Board Members and
employees); the immediate families of such persons
(including the surviving spouse of a deceased Board Member
or employee); and to a pension, profit-sharing or other
benefit plan for such persons and (ii) employees of members
of the National Association of Securities Dealers, Inc.,
provided such sales are made upon the assurance of the
purchaser that the purchase is made for investment purposes
and that the securities will not be resold except through
redemption or repurchase; (b) offers of Class A shares to
any other investment company to effect the combination of
such company with the fund by merger, acquisition of assets
or otherwise; (c) purchases of Class A shares by any client
of a newly employed Salomon Smith Barney Financial
Consultant (for a period up to 90 days from the
commencement of the Financial Consultant's employment with
Salomon Smith Barney), on the condition the purchase of
Class A shares is made with the proceeds of the redemption
of shares of a mutual fund which (i) was sponsored by the
Financial Consultant's prior employer, (ii) was sold to the
client by the Financial Consultant and (iii) was subject to
a sales charge; (d) purchases by shareholders who have
redeemed Class A shares in the fund (or Class A shares of
another Smith Barney mutual fund that is offered with a
sales charge) and who wish to reinvest their redemption
proceeds in the fund, provided the reinvestment is made
within 60 calendar days of the redemption; (e) purchases by
accounts managed by registered investment advisory
subsidiaries of Citigroup; (f) direct rollovers by plan
participants of distributions from a 401(k) plan offered to
employees of Citigroup or its subsidiaries or a 401(k) plan
enrolled in the Smith Barney 401(k) Program (Note:
subsequent investments will be subject to the applicable
sales charge); (g) purchases by a separate account used to
fund certain unregistered variable annuity contracts; (h)
investments of distributions from or proceeds from a sale
of a UIT sponsored by Salomon Smith Barney; (i) purchases
by investors participating in a Salomon Smith Barney fee-
based arrangement;  and (j)  purchases of Class A shares by
Section 403(b) or Section 401(a) or (k) accounts associated
with Citistreet Retirement Programs. In order to obtain
such discounts, the purchaser must provide sufficient
information at the time of purchase to permit verification
that the purchase would qualify for the elimination of the
sales charge.

Right of Accumulation.  Class A shares of the fund may be
purchased by ''any person'' (as defined above) at a reduced
sales charge or at net asset value determined by
aggregating the dollar amount of the new purchase and the
total net asset value of all Class A shares of the fund and
of other Smith Barney mutual funds that are offered with a
sales charge as currently listed under ''Exchange
Privilege'' then held by such person and applying the sales
charge applicable to such aggregate.  In order to obtain
such discount, the purchaser must provide sufficient
information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales charge.
The right of accumulation is subject to modification or
discontinuance at any time with respect to all shares
purchased thereafter.

Letter of Intent - Class A Shares.  A Letter of Intent for
an amount of $50,000 or more provides an opportunity for an
investor to obtain a reduced sales charge by aggregating
investments over a 13 month period, provided that the
investor refers to such Letter when placing orders.  For
purposes of a Letter of Intent, the ''Amount of
Investment'' as referred to in the preceding sales charge
table includes (i) all Class A shares of the fund and other
Smith Barney mutual funds offered with a sales charge
acquired during the term of the letter plus (ii) the value
of all Class A shares previously purchased and still owned.
Each investment made during the period receives the reduced
sales charge applicable to the total amount of the
investment goal.  If the goal is not achieved within the
period, the investor must pay the difference between the
sales charges applicable to the purchases made and the
charges previously paid, or an appropriate number of
escrowed shares will be redeemed.  The term of the Letter
will commence upon the date the Letter is signed, or at the
options of the investor, up to 90 days before such date.
Please contact a Service Agent or the transfer agent to
obtain a Letter of Intent application.

Letter of Intent - Class Y Shares.  A Letter of Intent may
also be used as a way for investors to meet the minimum
investment requirement for Class Y shares (except purchases
of Class Y shares by Smith Barney Allocation Series Inc.,
for which there is no minimum purchase amount).  Such
investors must make an initial minimum purchase of
$5,000,000 in Class Y shares of the fund and agree to
purchase a total of $15,000,000 of Class Y shares of the
fund within 13 months from the date of the Letter. If a
total investment of $15,000,000 is not made within the 13-
month period, all Class Y shares purchased to date will be
transferred to Class A shares, where they will be subject
to all fees (including a service fee of 0.25%) and expenses
applicable to the fund's Class A shares, which may include
a deferred sales charge of 1.00%. Please contact a Service
Agent or the transfer agent for further information.

Deferred Sales Charge Provisions

"Deferred Sales Charge Shares" are: (a) Class B shares; (b)
Class L shares; and (c) Class A shares that were purchased
without an initial sales charge but are subject to a
deferred sales charge.  A deferred sales charge may be
imposed on certain redemptions of these shares.

Any applicable deferred sales charge will be assessed on an
amount equal to the lesser of the original cost of the
shares being redeemed or their net asset value at the tims
charge to the extent that the value of such shares
represents: (a) capital appreciation of fund assets; (b)
reinvestment of dividends or capital gain distributions;
(c) with respect to Class B shares, shares redeemed more
than five years after their purchase; or (d) with respect
to Class L shares and Class A shares that are deferred
sales charge shares, shares redeemed more than 12 months
after their purchase.

Class L shares and Class A shares that are deferred sales
charge shares are subject to a 1.00% deferred sales charge
if redeemed within 12 months of purchase. In circumstances
in which the deferred sales charge is imposed on Class B
shares, the amount of the charge will depend on the number
of years since the shareholder made the purchase payment
from which the amount is being redeemed.  Solely for
purposes of determining the number of years since a
purchase payment, all purchase payments made during a month
will be aggregated and deemed to have been made on the last
day of the preceding Salomon Smith Barney statement month.
The following table sets forth the rates of the charge for
redemptions of Class B shares by shareholders, except in
the case of Class B shares held under the Smith Barney
401(k) Program, as described below. See ''Purchase of
Shares-Smith Barney 401(k) and ExecChoiceTM Programs.''


Year Since Purchase Payment Was
Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

0.00

Class B shares will convert automatically to Class A shares
eight years after the date on which they were purchased and
thereafter will no longer be subject to any distribution
fees. There will also be converted at that time such
proportion of Class B Dividend Shares owned by the
shareholders as the total number of his or her Class B
shares converting at the time bears to the total number of
outstanding Class B shares (other than Class B Dividend
Shares) owned by the shareholder.

In determining the applicability of any deferred sales
charge, it will be assumed that a redemption is made first
of shares representing capital appreciation, next of shares
representing the reinvestment of dividends and capital gain
distributions and finally of other shares held by the
shareholder for the longest period of time.  The length of
time that deferred sales charge shares acquired through an
exchange have been held will be calculated from the date
that the shares exchanged were initially acquired in one of
the other Smith Barney mutual funds, and fund shares being
redeemed will be considered to represent, as applicable,
capital appreciation or dividend and capital gain
distribution reinvestments in such other funds. For Federal
income tax purposes, the amount of the deferred sales
charge will reduce the gain or increase the loss, as the
case may be, on the amount realized on redemption. The
amount of any deferred sales charge will be paid to Salomon
Smith Barney.

To provide an example, assume an investor purchased 100
Class B shares of the fund at $10 per share for a cost of
$1,000.  Subsequently, the investor acquired 5 additional
shares of the fund through dividend reinvestment.  During
the fifteenth month after the purchase, the investor
decided to redeem $500 of his or her investment.  Assuming
at the time of the redemption the net asset value had
appreciated to $12 per share, the value of the investor's
shares would be $1,260 (105 shares at $12 per share). The
deferred sales charge would not be applied to the amount
which represents appreciation ($200) and the value of the
reinvested dividend shares ($60).  Therefore, $240 of the
$500 redemption proceeds ($500 minus $260) would be charged
at a rate of 4.00% (the applicable rate for Class B shares)
for a total deferred sales charge of $9.60.

Waivers of Deferred Sales Charge

The deferred sales charge will be waived on: (a) exchanges
(see "Exchange Privilege"); (b) automatic cash withdrawals
in amounts equal to or less than 1.00% per month of the
value of the shareholder's shares at the time the
withdrawal plan commences (see "Automatic Cash Withdrawal
Plan") (provided, however, that automatic cash withdrawals
in amounts equal to or less than 2.00% per month of the
value of the shareholder's shares will be permitted for
withdrawal plans that were established prior to November 7,
1994); (c) redemptions of shares within 12 months following
the death or disability of the shareholder; (d) redemptions
of shares made in connection with qualified distributions
from retirement plans or IRAs upon the attainment of age
591/2; (e) involuntary redemptions; and (f) redemptions of
shares to effect a combination of the fund with any
investment company by merger, acquisition of assets or
otherwise. In addition, a shareholder who has redeemed
shares from other Smith Barney mutual funds may, under
certain circumstances, reinvest all or part of the
redemption proceeds within 60 days and receive pro rata
credit for any deferred sales charge imposed on the prior
redemption.

Deferred sales charge waivers will be granted subject to
confirmation (by Salomon Smith Barney in the case of
shareholders who are also Salomon Smith Barney clients or
by the transfer agent in the case of all other
shareholders) of the shareholder's status or holdings, as
the case may be.

Smith Barney Retirement Programs

You may be eligible to participate in a retirement program
sponsored by Salomon Smith Barney or one of its affiliates.
The fund offers Class A and Class L shares at net asset
value to participating plans under the programs. You can
meet minimum investment and exchange amounts, if any by
combining the plan's investments in any of the Smith Barney
mutual funds.

There are no sales charges when you buy or sell shares and
the class of shares you may purchase depends on the amount
of your initial investment and/or the date your account is
opened.  Once a class of shares is chosen, all additional
purchases must be of the same class.

For plans opened on or after March 1, 2000 that are not
plans for which Paychex Inc. or an affiliate provides
administrative services (a "Paychex Plan") offering, Class
A shares may be purchased regardless of the amount
invested.

For plans opened prior to March 1, 2000 and for Paychex
plans, the class of shares you may purchase depends on the
amount of your initial investment:

Class A Shares.  Class A shares may be purchased by plans
investing at least $1million.

Class L Shares.  Class L shares may be purchased by plans
investing less than $1 million.  Class L shares are
eligible to exchange into Class A shares not later than 8
years after the plan joined the program.  They are eligible
for exchange in the following circumstances:

If the plan was opened on or after June 21, 1996 and a
total of $1 million is invested in Smith Barney Funds Class
L shares (other than money market funds), all Class L
shares are eligible for exchange after the plan is in the
program for 5 years.

If the plan was opened before June 21, 1996 and a total of
$500,000 is invested in Smith Barney Funds Class L shares
(other than money market funds) on December 31 in any year,
all Class L shares are eligible for exchange on or about
March 31 of the following year.

For more information, call your Salomon Smith Barney
Financial Consultant or the transfer agent.

Retirement Programs Opened On or After June 21, 1996.  If,
at the end of the fifth year after the date the
participating plan enrolled in the Smith Barney 401(k)
Program or the ExecChoiceTM Program, a participating plan's
total Class L holdings in all non-money market Smith Barney
mutual funds equal at least $1,000,000, the participating
plan will be offered the opportunity to exchange all of its
Class L shares for Class A shares of the fund. (For
participating plans that were originally established
through a Salomon Smith Barney retail brokerage account,
the five-year period will be calculated from the date the
retail brokerage account was opened.) Such participating
plans will be notified of the pending exchange in writing
within 30 days after the fifth anniversary of the
enrollment date and, unless the exchange offer has been
rejected in writing, the exchange will occur on or about
the 90th day after the fifth anniversary date. If the
participating plan does not qualify for the five-year
exchange to Class A shares, a review of the participating
plan's holdings will be performed each quarter until either
the participating plan qualifies or the end of the eighth
year.

Retirement Programs Opened Prior to June 21, 1996.  In any
year after the date a participating plan enrolled in the
Smith Barney 401(k) Program, if a participating plan's
total Class L holdings in all non-money market Smith Barney
mutual funds equal at least $500,000 as of the calendar
year-end, the participating plan will be offered the
opportunity to exchange all of its Class L shares for Class
A shares of the fund. Such Plans will be notified in
writing within 30 days after the last business day of the
calendar year and, unless the exchange offer has been
rejected in writing, the exchange will occur on or about
the last business day of the following March.

Any participating plan in the Smith Barney 401(k) or the
ExecChoiceTM Program, whether opened before or after June
21, 1996, that has not previously qualified for an exchange
into Class A shares will be offered the opportunity to
exchange all of its Class L shares for Class A shares of
the fund, regardless of asset size, at the end of the
eighth year after the date the participating plan enrolled
in the Smith Barney 401(k) Program or ExecChoiceTM Program.
Such plans will be notified of the pending exchange in
writing approximately 60 days before the eighth anniversary
of the enrollment date and, unless the exchange has been
rejected in writing, the exchange will occur on or about
the eighth anniversary date. Once an exchange has occurred,
a participating plan will not be eligible to acquire
additional Class L shares, but instead may acquire Class A
shares of the same fund. Any Class L shares not converted
will continue to be subject to the distribution fee.

Participating plans wishing to acquire shares of the fund
through the Smith Barney 401(k) Program or the Smith Barney
ExecChoiceTM Program must purchase such shares directly from
the transfer agent. For further information regarding these
Programs, investors should contact a Salomon Smith Barney
Financial Consultant.

Retirement Programs Investing in Class B Shares:  Class B
shares of a fund are not available for purchase by
participating plans opened on or after June 21, 1996, but
may continue to be purchased by any participating plan in
the Smith Barney 401 (k) Program opened prior to such date
and originally investing in such Class.  Class B shares
acquired are subject to a deferred sales charge of 3.00% of
redemption proceeds if the participating plan terminates
within 8 years of the date the participating plan first
enrolled in the Smith Barney 401 (k) Program.

At the end of the eighth year after the date the
participating plan enrolled in the Smith Barney 401 (k)
Program, the participating plan will be offered the
opportunity to exchange all of its Class B shares for Class
A shares of the same fund.  Such participating plan will be
notified of the pending exchange in writing approximately
60 days before the eighth anniversary of the enrollment
date and, unless the exchange has been rejected in writing,
the exchange will occur on or about the eighth anniversary
date.  Once the exchange has occurred, a participating plan
will not be eligible to acquire additional Class B shares,
but instead may acquire Class A shares of the same fund.
If the participating plan elects not to exchange all of its
Class B shares at that time, each Class B share held by the
participating plan will have the same conversion feature as
Class B shares held by other investors.  See "Purchase of
Shares-Deferred Sales Charge Alternatives."

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

The deferred sales charge will be waived on redemptions of
Class B shares in connection with lump-sum or other
distributions made by a participating plan; as a result of
(a) the retirement of an employee in the participating
plan; (b) the termination of employment of an employee in
the participating plan; (c) the death or disability of an
employee in the participating plan; (d) the attainment of
age 59 1/2 by an employee in the participating plan; (e)
hardship of an employee in the participating plan to the
extent permitted under Section 401(k) of the Code; or (f)
redemptions of shares in connection with a loan made by the
participating plan to an employee.

Determination of Public Offering Price

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

REDEMPTION OF SHARES

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

If the shares to be redeemed were issued in certificate
form, the certificates must be endorsed for transfer (or be
accompanied by an endorsed stock power) and must be
submitted to a sub-transfer agent together with the
redemption request.  Any signature appearing on a share
certificate, stock power or written redemption request in
excess of $50,000 must be guaranteed by an eligible
guarantor institution such as a domestic bank, savings and
loan institution, domestic credit union, member bank of the
Federal Reserve System or member firm of a national
securities exchange.  Written redemption requests of
$50,000 or less do not require a signature guarantee unless
more than one such redemption request is made in any 10-day
period or the redemption proceeds are to be sent to an
address other than the address of record.  Unless otherwise
directed, redemption proceeds will be mailed to an
investor's address of record.  The transfer agent may
require additional supporting documents for redemptions
made by corporations, executors, administrators, trustees
or guardians. A redemption request will not be deemed
properly received until the transfer agent receives all
required documents in proper form.

If a shareholder holds shares in more than one Class, any
request for redemption must specify the Class being
redeemed.  In the event of a failure to specify which
Class, or if the investor owns fewer shares of the Class
than specified, the redemption request will be delayed
until the transfer agent receives further instructions from
Salomon Smith Barney, or if the shareholder's account is
not with Salomon Smith Barney, from the shareholder
directly.  The redemption proceeds will be remitted on or
before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or
as permitted under the 1940 Act, in extraordinary
circumstances.  Generally, if the redemption proceeds are
remitted to a Salomon Smith Barney brokerage account, these
funds will not be invested for the shareholder's benefit
without specific instruction and Salomon Smith Barney will
benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check, other
than a certified or official bank check, will be remitted
upon clearance of the check, which may take up to fifteen
days or more.

Distribution in Kind

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

PFS Investments Accounts

Shareholders may redeem for cash some or all of their
shares of the fund at any time by sending a written request
in proper form directly to a sub-transfer agent, PFS
Shareholder Services, at P.O. Box 105033, Atlanta, Georgia
30348-5033. If you should have any questions concerning how
to redeem your account after reviewing the information
below, please contact PFS Shareholder Services at (800)
544-5445, Spanish-speaking representatives (800) 544-7278
or TDD Line for the Hearing Impaired (800) 824-1721.
The request for redemption must be signed by all persons in
whose names the shares are registered. Signatures must
conform exactly to the account registration. If the
proceeds of the redemption exceed $50,000, or if the
proceeds are not paid to the record owner(s) at the record
address, if the shareholder(s) has had an address change
within 45 days or less of the shareholder's redemption
request, or if the shareholder(s) is a corporation, sole
proprietor, partnership, trust or fiduciary, signature(s)
must be guaranteed by one of the following: a bank or trust
company; a broker-dealer; a credit union; a national
securities exchange, registered securities association or
clearing agency; a savings and loan association; or a
federal savings bank.

Generally, a properly completed redemption form with any
required signature guarantee is all that is required for a
redemption. In some cases, however, other documents may be
necessary. For example, in the case of shareholders holding
certificates, the certificates for shares being redeemed
must accompany the redemption request. Additional
documentary evidence of authority is also required by PFS
Shareholder Services in the event redemption is requested
by a corporation, partnership, trust, fiduciary, executor
or administrator. Additionally, if a shareholder requests a
redemption from a Retirement Plan account (IRA or SEP),
such request must state whether or not federal income tax
is to be withheld from the proceeds of the redemption
check. Redemption from a 403(b)(7) account requires
completion of a special form.  Please call PFS Shareholder
Services at (800) 544-5445 between 8:00 a.m. and 8:00 p.m.
eastern standard time to obtain the proper forms.

A shareholder may utilize PFS Shareholder Services
Telephone Redemption service to redeem his or her account
as long as they have authorized the telephone redemption
option.  If a shareholder does not wish to allow telephone
redemptions by any person in his account, he should decline
the telephone transaction option on the account
application.  The telephone redemption option can be used
only if: (a) the redemption proceeds are to be mailed to
the address of record and there has been no change of
address of record within the preceding 45 days; (b) the
shares to be redeemed are not in certificate form; (c); the
person requesting the redemption can provide proper
identification information; and (d) the proceeds of the
redemption do not exceed $50,000.  403(b)(7) accounts and
accounts not registered in the name of an individual(s) are
not eligible for the telephone redemption option.
Telephone redemption requests can be made by contacting PFS
Shareholder Services at (800) 544-5445 between 9:00 a.m.
and 6:00 p.m. Eastern time any day that the NYSE is open.
Telephone redemption may not be available if the
shareholder cannot reach PFS Shareholder Services whether
because all telephone lines are busy or for any other
reason; in such case, a shareholder would have to use the
fund's regular redemption procedure described above.

A shareholder may utilize PFS Shareholder Services FAX to
redeem the shareholder's account as long as a signature
guarantee or other documentary evidence is not required.
Redemption requests should be properly signed by all owners
of the account and faxed to PFS Shareholder Services at
(800) 554-2374. Facsimile redemptions may not be available
if the shareholder cannot reach PFS Shareholder Services by
FAX, whether because all telephone lines are busy or for
any other reason; in such case, a shareholder would have to
use the fund's regular redemption procedure described
above. Facsimile redemptions received by PFS Shareholder
Services  prior to 4:00 p.m. Eastern time on a regular
business day will be processed at the net asset value per
share determined that day.

Redemption proceeds can be sent by check to the address of
record, by wire transfer to a bank account designated on
the application or to a bank account designated on the
application via the Automated Clearinghouse (ACH).  A
shareholder will be charged a $25 service fee for wire
transfers and a nominal service fee for transfers made
directly to the shareholder's bank by the ACH. PFS
Shareholder Services will process and mail a shareholder's
redemption check usually within two to three business days
after receiving the redemption request in good order.  The
shareholder may request the proceeds to be mailed by two-
day air express for an $8 fee that will be deducted from
the shareholder's account or by one-day air express for a
$15 fee that will be deducted from the shareholder's
account.




Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the "Withdrawal Plan")
is available to shareholders of the fund who own shares of
the fund with a value of at least $10,000 and who wish to
receive specific amounts of cash monthly or quarterly.
Withdrawals of at least $50 may be made under the
Withdrawal Plan by redeeming as many shares of the fund as
may be necessary to cover the stipulated withdrawal
payment.  Any applicable deferred sales charge will not be
waived on amounts withdrawn by shareholders that exceed
1.00% per month of the value of a shareholder's shares at
the time the Withdrawal Plan commences.  (With respect to
Withdrawal Plans in effect prior to November 7, 1994, any
applicable deferred sales charge will be waived on amounts
withdrawn that do not exceed 2.00% per month of the value
of a shareholder's shares at the time the Withdrawal Plan
commences). To the extent that withdrawals exceed
dividends, distributions and appreciation of a
shareholder's investment in a fund, continued withdrawal
payments will reduce the shareholder's investment, and may
ultimately exhaust it. Withdrawal payments should not be
considered as income from investment in a fund.
Furthermore, as it generally would not be advantageous to a
shareholder to make additional investments in the fund at
the same time he or she is participating in the Withdrawal
Plan, purchases by such shareholders in amounts of less
than $5,000 ordinarily will not be permitted.

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

Additional Information Regarding Telephone Redemption And
Exchange Program

Neither the fund nor its agents will be liable for
following instructions communicated by telephone that are
reasonably believed to be genuine.  The fund and its agents
will employ procedures designed to verify the identity of
the caller and legitimacy of instructions (for example, a
shareholder's name and account number will be required and
phone calls may be recorded).  The fund reserves the right
to suspend, modify or discontinue the telephone redemption
and exchange program or to impose a charge for this service
at any time following at least seven (7) day's prior notice
to shareholders.

VALUATION OF SHARES

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

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

EXCHANGE PRIVILEGE

Except as noted below, shareholders of any of the Smith
Barney mutual funds may exchange all or part of their
shares for shares of the same Class of other Smith Barney
mutual funds, on the basis of relative net asset value per
share at the time of exchange as follows:

A.  Class A and Class Y shares of the fund may be
exchanged without a sales charge for the respective
shares of any of the Smith Barney mutual funds.

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

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

D. Holders of Class Z shares should consult their
Qualified Plans for information about available
exchange options.

The exchange privilege enables shareholders in any Smith
Barney mutual fund to acquire shares of the same Class in a
fund with different investment objectives when they believe
a shift between funds is an appropriate investment
decision.  This privilege is available to shareholders
residing in any state in which the fund shares being
acquired may legally be sold.  Prior to any exchange, the
shareholder should obtain and review a copy of the current
prospectus of each fund into which an exchange is being
considered.  Prospectuses may be obtained from a Service
Agent.

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

Additional Information Regarding the Exchange Privilege.
Although the exchange privilege is an important benefit,
excessive exchange transactions can be detrimental to the
fund's performance and its shareholders.  The manager may
determine that a pattern of frequent exchanges is excessive
and contrary to the best interests of the fund's other
shareholders.  In this event, the fund may, at its
discretion, decide to limit additional purchases and/or
exchanges by a shareholder.  Upon such a determination, the
fund will provide notice in writing or by telephone to the
shareholder at least 15 days prior to suspending the
exchange privilege and during the 15 day period the
shareholder will be required to (a) redeem his or her
shares in the fund or (b) remain invested in the fund or
exchange into any of the funds of the Smith Barney mutual
funds ordinarily available, which position the shareholder
would be expected to maintain for a significant period of
time. All relevant factors will be considered in
determining what constitutes an abusive pattern of
exchanges.

PERFORMANCE DATA

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

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



Average Annual Total Return

A fund's "average annual total return," as described below,
is computed according to a formula prescribed by the SEC.
The formula can be expressed as follows:

P(1 + T)n = ERV

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

			T	= 	average annual total
return.

			n	= 	number of years.

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

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


Average Annual Total Return for the
fiscal year ended November 30, 2000



Class of Shares
1-Year
5-Year
10-Year
Since
Inceptio
n1
Class A2
(11.34)%
N/A
N/A
20.10%
Class B3
(12.04)%
N/A
N/A
20.71%
Class L4
  (9.27)%
N/A
N/A
20.73%
Class Y5
  (6.37)%
N/A
N/A
20.98%
Class Z5
  (6.36)%
N/A
N/A
  8.64%
_______________________
	1	Class A, B and L shares commenced operations on
August 29, 1997.  Class Y and Class Z commenced
operations on October 15, 1997 and January 4, 1999,
respectively.
	2	The average annual total return figure assumes that
the maximum 5.00% sales charge has been deducted from
the investment at the time of purchase.  If the
maximum sales charge had not been deducted, the
average annual total return for Class A shares for
the same period would have been (6.67)% and 22.02%
for one year and since inception of the fund,
respectively.
	3	The average annual total return figure assumes that
the maximum applicable deferred sales charge has been
deducted from the investment at the time of
redemption.  If the maximum deferred sales charge had
not been deducted, the average annual total return
for Class B shares for the same period would have
been (7.42)% and 21.11% for one year and since
inception of the fund, respectively.
	4	The average annual total return figure assumes that
the maximum applicable initial and deferred sales
charges have been deducted from the investment at the
time of redemption.  If the maximum initial and
deferred sales charges have not been deducted, the
average annual total return for Class L shares for
the same period would have been (7.42)% and 21.11%
for one year and since inception of the fund,
respectively.
	5	Class Y shares and Class Z shares do not incur
initial sales charges nor deferred sales charges.


Aggregate Total Return

The fund's "aggregate total return," as described below,
represents the cumulative change in the value of an
investment in the fund for the specified period and is
computed by the following formula:


ERV - P
P

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

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

The ERV assumes complete redemption of the hypothetical
investment at the end of the measuring period.



Aggregate Annual Total Return for the
fiscal year ended November 30, 2000



Class of Shares
1-Year
5-Year
10-Year
Since
Inceptio
n1
Class A2
(11.34)%
N/A
N/A
81.61%
Class B3
(12.04)%
N/A
N/A
84.61%
Class L4

(9.27)%
N/A
N/A
84.74%
Class Y5

(6.37)%
N/A
N/A
81.48%
Class Z5

(6.36)%
N/A
N/A
17.13%
_______________________
	1	Classes A, B and L shares commenced operations on
August 29, 1997.  Class Y and Class Z shares
commenced operations on October 15, 1997 and January
4, 1999, respectively.
	2	The average annual total return figure assumes that
the maximum 5.00% sales charge has been deducted from
the investment at the time of purchase.  If the
maximum sales charge had not been deducted, the
average annual total return for Class A shares for
the same period would have been (6.67)% and 91.24%
for one year and since inception of the fund,
respectively.
	3	The average annual total return figure assumes that
the maximum applicable deferred sales charge has been
deducted from the investment at the time of
redemption.  If the maximum deferred sales charge had
not been deducted, the average annual total return
for Class B shares for the same period would have
been (7.42)% and 86.61% for one year and since
inception of the fund, respectively.
	4	The average annual total return figure assumes that
the maximum applicable initial and deferred sales
charges have been deducted from the investment at the
time of redemption.  If the maximum initial and
deferred sales charges had not been deducted, the
average annual total return for Class L shares for
the same period would have been (7.42)% and 86.61%
for one year and since inception of the fund,
respectively.
	5	Class Y shares and Class Z shares do not incur
initial sales charges nor deferred sales charges.

Performance will vary from time to time depending upon
market conditions, the composition of the fund's portfolio
and operating expenses and the expenses exclusively
attributable to the Class. Consequently, any given
performance quotation should not be considered
representative of the Class's performance for any specified
period in the future.  Because performance will vary, it
may not provide a basis for comparing an investment in the
Class with certain bank deposits or other investments that
pay a fixed yield for a stated period of time. Investors
comparing a Class's performance with that of other mutual
funds should give consideration to the quality and maturity
of the respective investment companies' portfolio
securities.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

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

If a shareholder does not otherwise instruct, dividends and
capital gains distributions will be reinvested
automatically in additional shares of the same Class at net
asset value, with no additional sales charge or deferred
sales charge.  A shareholder may change the option at any
time by notifying his Service Agent.  Shareholders whose
accounts are held directly at a sub-transfer agent should
notify a sub-transfer agent in writing, requesting a change
to this reinvest option.

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

Taxes

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

The Fund and Its Investments

The fund intends to continue to qualify to be treated as a
regulated investment company during each taxable year under
the Internal Revenue Code of 1986, as amended (the "Code").
To so qualify, the fund must, among other things: (a)
derive at least 90% of its gross income in each taxable
year from dividends, interest, payments with respect to
securities loans and gains from the sale or other
disposition of stock or securities, foreign currencies, or
other income (including, but not limited to, gains from
options, futures or forward contracts) derived with respect
to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the
end of each quarter of the fund's taxable year, (i) at
least 50% of the market value of the fund's assets is
represented by cash, securities of other regulated
investment companies, United States government securities
and other securities, with such other securities limited,
in respect of any one issuer, to an amount not greater than
5% of the fund's assets and not greater than 10% of the
outstanding voting securities of such issuer and (ii) not
more than 25% of the value of its assets is invested in the
securities (other than United States government securities
or securities of other regulated investment companies) of
any one issuer or any two or more issuers that the fund
controls and which are determined to be engaged in the same
or similar trades or businesses or related trades or
businesses.

As a regulated investment company, the fund will not be
subject to United States federal income tax on its net
investment income (i.e., income other than its net realized
long-term and short-term capital gains) and its net
realized long-term and short-term capital gains, if any,
that it distributes to its shareholders, provided an amount
equal to at least 90% of its investment company taxable
income (i.e., 90% of its taxable income minus the excess,
if any, of its net realized long-term capital gains over
its net realized short-term capital losses (including any
capital loss carryovers), plus or minus certain other
adjustments as specified in the Code) and its net tax-
exempt income for the taxable year is distributed to its
shareholders in compliance with the Code's timing and other
requirements, but will be subject to tax at regular
corporate rates on any taxable income or gain it does not
distribute.

The Code imposes a 4% nondeductible excise tax on the fund
to the extent it does not distribute by the end of any
calendar year at least 98% of its ordinary income for that
year and at least 98% of its net of its capital gains (both
long-term and short-term) for the one-year period ending,
as a general rule, on October 31 of that year.  For this
purpose, however, any ordinary income or net capital gains
retained by the fund that is subject to corporate income
tax will be considered to have been distributed by year-
end.  In addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will be
increased or decreased to reflect any underdistribution or
overdistribution, as the case may be, from the previous
year.  The fund anticipates that it will pay such dividends
and will make such distributions as are necessary in order
to avoid the application of this excise tax.

If, in any taxable year, the fund fails to qualify as a
regulated investment company under the Code or fails to
meet the distribution requirement, it would be taxed in the
same manner as an ordinary corporation and distributions to
its shareholders would not be deductible by the fund in
computing its taxable income.  In addition, in the event of
a failure to qualify, the fund's distributions, to the
extent derived from the fund's current or accumulated
earnings and profits would constitute dividends (eligible
for the corporate dividends-received deduction) which are
taxable to shareholders as ordinary income, even though
those distributions might otherwise (at least in part) have
been treated in the shareholders' hands as long-term
capital gains.  Moreover, if the fund fails to qualify as a
regulated investment company in any year, it must pay out
its earnings and profits accumulated in that year in order
to qualify again as a regulated investment company.  In
addition, the fund may be required to recognize any net
built-in gains with respect to certain of its assets (i.e.
the excess of the aggregate gains, including items of
income, over aggregate losses that would have been realized
with respect to such assets if the fund had been
liquidated) in order to qualify as a regulated investment
company in a subsequent year.

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

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

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

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

Alternatively, the fund may make a mark-to-market election
that will result in the fund being treated as if it had
sold and repurchased all of the PFIC stock at the end of
each year.  In such case, the fund would report any such
gains as ordinary income and would deduct any such losses
as ordinary losses to the extent of previously recognized
gains. The election, once made, would be effective for all
subsequent taxable years of the fund, unless revoked with
the consent of the Internal Revenue Service (the "IRS").
By making the election, the fund could potentially
ameliorate the adverse tax consequences with respect to its
ownership of shares in a PFIC, but in any particular year
may be required to recognize income in excess of the
distributions it receives from PFICs and its proceeds from
dispositions of PFIC stock.  The fund may have to
distribute this "phantom" income and gain to satisfy the
90% distribution requirement and to avoid imposition of the
4% excise tax.  The fund will make the appropriate tax
elections, if possible, and take any additional steps that
are necessary to mitigate the effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions.  Any dividend declared by the
fund in October, November or December of any calendar year
and payable to shareholders of record on a specified date
in such a month shall be deemed to have been received by
each shareholder on December 31 of such calendar year and
to have been paid by the fund not later than such December
31, provided such dividend is actually paid by the fund
during January of the following calendar year.  The fund
intends to distribute annually to its shareholders
substantially all of its investment company taxable income,
and any net realized long-term capital gains in excess of
net realized short-term capital losses (including any
capital loss carryovers).  The fund currently expects to
distribute any such excess annually to its shareholders.
However, if the fund retains for investment an amount equal
to all or a portion of its net long-term capital gains in
excess of its net short-term capital losses and capital
loss carryovers, it will be subject to a corporate tax
(currently at a rate of 35%) on the amount retained.  In
that event, the fund will designate such retained amounts
as undistributed capital gains in a notice to its
shareholders who (a) will be required to include in income
for United Stares federal income tax purposes, as long-term
capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit their
proportionate shares of the 35% tax paid by the fund on the
undistributed amount against their United States federal
income tax liabilities, if any, and to claim refunds to the
extent their credits exceed their liabilities, if any, and
(c) will be entitled to increase their tax basis, for
United States federal income tax purposes, in their shares
by an amount equal to 65% of the amount of undistributed
capital gains included in the shareholder's income.
Organizations or persons not subject to federal income tax
on such capital gains will be entitled to a refund of their
pro rata share of such taxes paid by the fund upon filing
appropriate returns or claims for refund with the IRS.
Dividends of net investment income and distributions of net
realized short-term capital gains are taxable to a United
States shareholder as ordinary income, whether paid in cash
or in shares.  Distributions of net realized-long-term
capital gains, if any, that the fund designates as capital
gains dividends are taxable as long-term capital gains,
whether paid in cash or in shares and regardless of how
long a shareholder has held shares of the fund.  Dividends
and distributions paid by the fund attributable to
dividends on stock of U.S. corporations received by the
fund, with respect to which the fund meets certain holding
period requirements, will be eligible for the deduction for
dividends received by corporations. Distributions in excess
of the fund's current and accumulated earnings and profits
will, as to each shareholder, be treated as a tax-free
return of capital to the extent of a shareholder's basis in
his shares of the fund, and as a capital gain thereafter
(if the shareholder holds his shares of the fund as capital
assets).  Shareholders receiving dividends or distributions
in the form of additional shares should be treated for
United States federal income tax purposes as receiving a
distribution in an amount equal to the amount of money that
the shareholders receiving cash dividends or distributions
will receive, and should have a cost basis in the shares
received equal to such amount.

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

Sales of Shares.  Upon the sale or exchange of his shares,
a shareholder will realize a taxable gain or loss equal to
the difference between the amount realized and his basis in
his shares.  Such gain or loss will be treated as capital
gain or loss if the shares are capital assets in the
shareholder's hands, and will be long-term capital gain or
loss if the shares are held for more than one year and
short-term capital gain or loss if the shares are held for
one year or less.  Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed of are
replaced, including replacement through the reinvesting of
dividends and capital gains distributions in the fund,
within a 61-day period beginning 30 days before and ending
30 days after the disposition of the shares.  In such a
case, the basis of the shares acquired will be increased to
reflect the disallowed loss.  Any loss realized by a
shareholder on the sale of a fund share held by the
shareholder for six months or less will be treated for
United States federal income tax purposes as a long-term
capital loss to the extent of any distributions or deemed
distributions of long-term capital gains received by the
shareholder with respect to such share during such six-
month period.  If a shareholder incurs a sales charge in
acquiring shares of the fund, disposes of those shares
within 90 days and then acquires shares in a mutual fund
for which the otherwise applicable sales charge is reduced
by reason of a reinvestment right (e.g., an exchange
privilege), the original sales charge will not be taken
into account in computing gain/loss on the original shares
to the extent the subsequent sales charge is reduced.
Instead, the disregarded portion of the original sales
charge will be added to the tax basis of the newly acquired
shares.  Furthermore, the same rule also applies to a
disposition of the newly acquired shares made within 90
days of the second acquisition.  This provision prevents a
shareholder from immediately deducting the sales charge by
shifting his or her investment in a family of mutual funds.

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

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

Class Z

Qualified plan participants should consult their plan
document or tax advisors about the tax consequences of
participating in a Qualified Plan. In addition to the
considerations described below, there may be other federal,
state, local, and/or foreign tax applications to consider.
Provided that a Qualified Plan has not borrowed to finance
its investment in the fund, it will not be taxable on the
receipt of dividends and distributions from the fund.
Qualified plan participants should consult their plan
document or tax advisors about the tax consequences of
participating in a Qualified Plan.

Other Taxation

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

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


ADDITIONAL INFORMATION

The trust was organized on October 17, 1991 under the laws
of the Commonwealth of Massachusetts and is a business
entity commonly known as a "Massachusetts business trust."
The trust offers shares of beneficial interest of seven
separate funds with a par value of $.001 per share.  The
fund offers shares of beneficial interest currently
classified into five Classes - A, B, L, Y and Z.  Each
Class of the fund represents an identical interest in the
fund's investment portfolio.  As a result, the Classes have
the same rights, privileges and preferences, except with
respect to:  (a) the designation of each Class; (b) the
effect of the respective sales charges; if any, for each
Class; (c) the distribution and/or service fees borne by
each Class pursuant to the Plan; (d) the expenses allocable
exclusively to each Class; (e) voting rights on matters
exclusively affecting a single Class; (f) the exchange
privilege of each Class; and (g) the conversion feature of
the Class B shares.  The trust's board of trustees does not
anticipate that there will be any conflicts among the
interests of the holders of the different Classes. The
trustees, on an ongoing basis, will consider whether any
such conflict exists and, if so, take appropriate action.

Under Massachusetts's law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of the fund.  The Master Trust Agreement
disclaims shareholder liability for acts or obligations of
the fund, however, and requires that notice of such
disclaimer be given in each agreement, obligation or
instrument entered into or executed by the fund or a
trustee.  The Master Trust Agreement provides for
indemnification from fund property for all losses and
expenses of any shareholder held personally liable for the
obligations of the fund.  Thus, the risk of a shareholder's
incurring financial loss on account of shareholder
liability is limited to circumstances in which the fund
itself would be unable to meet its obligations, a
possibility which management of the fund believes is
remote.  Upon payment of any liability incurred by the
fund, a shareholder paying such liability will be entitled
to reimbursement from the general assets of the fund.  The
trustees intend to conduct the operation of the fund in
such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the fund.

The Master Trust Agreement of the fund permits the trustees
of the fund to issue an unlimited number of full and
fractional shares of a single class and to divide or
combine the shares into a greater or lesser number of
shares without thereby changing the proportionate
beneficial interests in the fund.  Each share in the fund
represents an equal proportional interest in the fund with
each other share.  Shareholders of the fund are entitled
upon its liquidation to share pro rata in its net assets
available for distribution.  No shareholder of the fund has
any preemptive or conversion rights. Shares of the fund are
fully paid and non-assessable.

Pursuant to the Master Trust Agreement, the fund's trustees
may authorize the creation of additional series of shares
(the proceeds of which would be invested in separate,
independently managed portfolios) 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 fund does not hold annual shareholder meetings. There
normally will be no meetings of shareholders for the
purpose of electing trustees unless and until such time as
less than a majority of the trustees holding office have
been elected by shareholders, at which time the trustees
then in office will call a shareholders' meeting for the
election of trustees.  Shareholders of record of no less
than two-thirds of the outstanding shares of the trust may
remove a trustee through a declaration in writing or by
vote cast in person or by proxy at a meeting called for
that purpose.  The trustees will call a meeting for any
purpose upon written request of shareholders holding at
least 10% of the trust's outstanding shares and the trust
will assist shareholders in calling such a meeting as
required by the 1940 Act.

When matters are submitted for shareholder vote,
shareholders of each Class will have one vote for each full
share owned and a proportionate, fractional vote for any
fractional share held of that Class.  Generally, shares of
the fund will be voted on a fund-wide basis on all matters
except matters affecting only the interests of one Class,
in which case only shares of the affected Class would be
entitled to vote.

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

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

FINANCIAL STATEMENTS

The fund's annual report for the fiscal year ended November
30, 2000 was filed on February 9, 2001, Accession Number
50130-01-704.

OTHER INFORMATION

In an industry where the average portfolio manager has
seven years of experience (source: ICI, 1998), the
portfolio managers of Smith Barney mutual funds average 21
years in the industry and 15 years with the firm.

Smith Barney mutual funds offers more than 60 mutual funds.
We understand that many investors prefer an active role in
allocating the mix of funds in their portfolio, while
others want the asset allocation decisions to be made by
experienced managers.

That's why we offer four "styles" of fund management that
can be tailored to suit each investor's unique financial
goals.

Style Pure Series - Our Style Pure Series funds stay fully
invested within their asset class and investment style,
enabling investors to make asset allocation decisions in
conjunction with their Salomon Smith Barney Financial
Consultant.

Classic Investor Series - Our Classic Investor Series funds
offer a range of equity and fixed income strategies that
seek to capture opportunities across asset classes and
investment styles using disciplined investment approaches.

The Smith Barney Allocation Series - As a fund of funds,
investors can select a Smith Barney Allocation Series
Portfolio that may help their investment needs.  As needs
change, investors can easily choose another long-term,
diversified investment from our Allocation Series family.

Special Discipline Series - Our Special Discipline Series
funds are designed for investors who are looking beyond
more traditional market categories: from natural resources
to a roster of state-specific municipal funds.






























SMITH BARNEY
INVESTMENT TRUST



Large Capitalization
Growth
Fund















March 30, 2001


SMITH BARNEY INVESTMENT TRUST
7 World Trade Center
New York, NY 10048

								SALOMON SMITH BARNEY
								A Member of
Citigroup [Symbol]






1





March 30, 2001

STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY INVESTMENT TRUST

Smith Barney Mid Cap Core Fund

7 World Trade Center
New York, New York 10048
(800) 451-2010

This Statement of Additional Information ("SAI") is meant
to be read in conjunction with the prospectus of the Smith
Barney Mid Cap Core Fund (the "fund") dated March 30, 2001,
as amended or supplemented from time to time (the
"prospectus"), and is incorporated by reference in it
entirety into the prospectus. Additional information about
the fund's investments is available in the fund's annual
and semi-annual reports to shareholders which are
incorporated herein by reference.  The prospectus and
copies of the reports may be obtained free of charge by
contacting a Salomon Smith Barney Financial Consultant, a
registered representative of PFS Distributors, Inc.,
("PFS"), a broker/dealer, financial intermediary, financial
institution (each called a "Service Agent") or by writing
or calling Salomon Smith Barney Inc. at the address or
telephone number above. The fund is a separate investment
series of Smith Barney Investment Trust (the "trust").

TABLE OF CONTENTS

Investment Objective and Management Policies	2
Investment  Restrictions......	............15
Trustees of the Trust and Executive Officers of the Fund	16
Investment Management and Other Services	20
Portfolio Transactions...	................25
Portfolio Turnover...............28
Purchase of Shares 	.............................................28
Redemption of Shares	38
Valuation of Shares	41
Exchange Privilege	42
Performance Data	43
Dividends, Distributions and Taxes	46
Additional Information	51
Financial Statements 	...................................................53
Other Information........................   53


INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The prospectus discusses the fund's investment objective
and policies. This section contains supplemental
information concerning the types of securities and other
instruments in which the fund may invest, the investment
policies and portfolio strategies the fund may utilize and
certain risks associated with these investments, policies
and strategies.  Citigroup Fund Management LLC (prior to
March 30, 2001, known as SSB Citi Fund Management LLC)
("CFM" or the "manager") serves as investment manager to
the fund.

The fund is an open-end, diversified, management investment
company whose investment objective is to seek long-term
growth of capital by investing, under normal market
conditions, at least 65% of its total assets in equity
securities of medium-sized companies. Medium sized
companies are those whose market capitalization is within
the market capitalization range of companies in the S&P Mid
Cap Index ("Index") at the time of investment.  The size of
the companies in the Index changes with market conditions
and the composition of the Index.  As of February 28, 2001,
the largest market capitalization of a company in the Index
was $10 billion and the smallest market capitalization was
$108 million. Investing in medium-capitalization stocks may
involve greater risk than investing in large capitalization
stocks since they can be subject to more abrupt or erratic
movements.  However, they tend to involve less risk than
stocks of small capitalization companies.

The fund normally invests in all types of equity
securities, including common stocks, preferred stocks,
securities that are convertible into common or preferred
stocks, such as warrants and convertible bonds, and
depository receipts for those securities.  The fund may
maintain a portion of its assets, which will usually not
exceed 10%, in U.S. Government securities, money market
obligations, and in cash to provide for payment of the
fund's expenses and to meet redemption requests.  It is the
policy of the fund to be as fully invested in equity
securities as practicable at all times.  The fund reserves
the right, as a defensive measure, to hold money market
securities, including repurchase agreements or cash, in
such proportions as, in the opinion of management,
prevailing market or economic conditions warrant.

Equity Securities.  The fund will normally invest at least
65% of its assets in equity securities, including primarily
common stocks and, to a lesser extent, securities
convertible into common stock and rights to subscribe for
common stock. Common stocks represent an equity (ownership)
interest in a corporation.  Although equity securities have
a history of long-term growth in value, their prices
fluctuate based on changes in a company's financial
condition and on overall market and economic conditions.

Real Estate Investment Trusts ("REITS"). The fund may
invest in REITS, which are pooled investment vehicles that
invest primarily in either real estate or real estate
related loans. The value of a REIT is affected by changes
in the value of the properties owned by the REIT or
securing mortgage loans held by the REIT. REITs are
dependent upon cash flow from their investments to repay
financing costs and the ability of the REIT's manager.
REITs are also subject to risks generally associated with
investments in real estate. The fund will indirectly bear
its proportionate share of any expenses, including
management fees, paid by a REIT in which it invests.

Convertible Securities.  Convertible securities in which
the fund may invest, including both convertible debt and
convertible preferred stock, may be converted at either a
stated price or stated rate into underlying shares of
common stock.  Because of this feature, convertible
securities enable an investor to benefit from increases in
the market price of the underlying common stock.
Convertible securities provide higher yields than the
underlying equity securities, but generally offer lower
yields than non-convertible securities of similar quality.
Like bonds, the value of convertible securities fluctuates
in relation to changes in interest rates and, in addition,
also fluctuates in relation to the underlying common stock.
When-Issued, Delayed-Delivery and Forward Commitment
Transactions.  The fund may purchase securities on a
"when-issued" basis, for delayed delivery (i.e., payment or
delivery occur beyond the normal settlement date at a
stated price and yield) or on a forward commitment basis.
The fund does not intend to engage in these transactions
for speculative purposes, but only in furtherance of its
investment goal.  These transactions occur when securities
are purchased or sold by the fund with payment and delivery
taking place in the future to secure what is considered an
advantageous yield and price to the fund at the time of
entering into the transaction. The payment obligation and
the interest rate that will be received on when-issued
securities are fixed at the time the buyer enters into the
commitment.  Because of fluctuations in the value of
securities purchased or sold on a when-issued,
delayed-delivery basis or forward commitment basis, the
prices obtained on such securities may be higher or lower
than the prices available in the market on the dates when
the investments are actually delivered to the buyers.
When the fund agrees to purchase when-issued or delayed-
delivery securities, its fund will set aside cash or liquid
securities equal to the amount of the commitment in a
segregated account on the fund's books.  Normally, the fund
will set aside portfolio securities to satisfy a purchase
commitment, and in such a case the fund may be required
subsequently to place additional assets in the segregated
account in order to ensure that the value of the account
remains equal to the amount of the fund's commitment.  The
assets contained in the segregated account will be marked-
to-market daily.  It may be expected that the fund's net
assets will fluctuate to a greater degree when it sets
aside portfolio securities to cover such purchase
commitments than when it sets aside cash.  When the fund
engages in when-issued or delayed-delivery  transactions,
it relies on the other party to consummate the trade.
Failure of the seller to do so may result in the fund's
incurring a loss or missing an opportunity to obtain a
price considered to be advantageous.

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

There are certain risks involved in investing in securities
of companies and governments of foreign nations that are in
addition to the usual risks inherent in domestic
investments.  These risks include those resulting from
revaluation of currencies, future adverse political and
economic developments and the possible imposition of
currency exchange blockages or other foreign governmental
laws or restrictions, reduced availability of public
information concerning issuers and the lack of uniform
accounting, auditing and financial reporting standards or
of other regulatory practices and requirements comparable
to those applicable to domestic companies.  The yield of
the fund may be adversely affected by fluctuations in value
of one or more foreign currencies relative to the U.S.
dollar.  Moreover, securities of many foreign companies and
their markets may be less liquid and their prices more
volatile than those of securities of comparable domestic
companies.  In addition, with respect to certain foreign
countries, there is the possibility of expropriation,
nationalization, confiscatory taxation and limitations on
the use or removal of funds or other assets of the fund,
including the withholding of dividends.  Foreign securities
may be subject to foreign government taxes that could
reduce the yield on such securities.  Because the fund may
invest in securities denominated or quoted in currencies
other than the U.S. dollar, changes in foreign currency
exchange rates may adversely affect the value of portfolio
securities and the appreciation or depreciation of
investments.  Investment in foreign securities also may
result in higher expenses due to the cost of converting
foreign currency to U.S. dollars, the payment of fixed
brokerage commissions on foreign exchanges, which generally
are higher than commissions on domestic exchanges, the
expense of maintaining securities with foreign custodians,
and the imposition of transfer taxes or transaction charges
associated with foreign exchanges.  Moreover, individual
foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross
domestic product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payment positions.
The fund may invest in securities of foreign governments
(or agencies or subdivisions thereof), and therefore many,
if not all, of the foregoing considerations apply to such
investments as well.  These securities may not necessarily
be denominated in the same currency as the securities into
which they may be converted.  In addition, the fund may
invest in securities into which they may be converted.  The
fund also may invest in securities denominated in European
Currency Units (ECUs).  An ECU is a "basket" of a specified
amount of currencies of certain member states of the
European Community.  In addition, the fund may invest in
securities denominated in other currency "baskets."

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

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

Money Market Instruments.  The fund may invest for
temporary defensive purposes in short-term instruments
including corporate and government bonds and notes and
money market instruments.  Short-term instruments in which
the fund may invest include obligations of banks having at
least $1 billion in assets (including certificates of
deposit, time deposits and bankers' acceptances of domestic
or foreign banks, domestic savings and loan associations
and similar institutions); commercial paper rated no lower
than A-2 by Standard & Poor's Ratings Group or Prime-2 by
Moody's Investors Service, Inc. or the equivalent from
another nationally recognized statistical rating
organization or, if unrated, of an issuer having an
outstanding, unsecured debt issue then rated within the two
highest rating categories; and repurchase agreements with
respect to any of the foregoing entered into with banks and
non-bank dealers approved by the trust's board of trustees.
Certificates of deposit ("CDs") are short-term, negotiable
obligations of commercial banks. Time deposits ("TDs") are
non-negotiable deposits maintained in banking institutions
for specified periods of time at stated interest rates.
Bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with
international transactions.

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

Repurchase Agreements.  The fund may agree to purchase
securities from a bank or recognized securities dealer and
simultaneously commit to resell the securities to the bank
or dealer at an agreed-upon date and price reflecting a
market rate of interest unrelated to the coupon rate or
maturity of the purchased securities ("repurchase
agreements"). The fund would maintain custody of the
underlying securities prior to their repurchase; thus, the
obligation of the bank or dealer to pay the repurchase
price on the date agreed to would be, in effect, secured by
such securities.  If the value of such securities were less
than the repurchase price, plus interest, the other party
to the agreement would be required to provide additional
collateral so that at all times the collateral is at least
102% of the repurchase price plus accrued interest. Default
by or bankruptcy of a seller would expose the fund to
possible loss because of adverse market action, expenses
and/or delays in connection with the disposition of the
underlying obligations. The financial institutions with
which the fund may enter into repurchase agreements will be
banks and non-bank dealers of U.S. Government securities
that are on the Federal Reserve Bank of New York's list of
reporting dealers, if such banks and non-bank dealers are
deemed creditworthy by the fund's manager.  The manager
will continue to monitor creditworthiness of the seller
under a repurchase agreement, and will require the seller
to maintain during the term of the agreement the value of
the securities subject to the agreement to equal at least
102% of the repurchase price (including accrued interest).
In addition, the manager will require that the value of
this collateral, after transaction costs (including loss of
interest) reasonably expected to be incurred on a default,
be equal to 102% or greater than the repurchase price
(including accrued premium) provided in the repurchase
agreement or the daily amortization of the difference
between the purchase price and the repurchase price
specified in the repurchase agreement.  The manager will
mark-to-market daily the value of the securities.
Repurchase agreements are considered to be loans by the
fund under the 1940 Act.
Reverse Repurchase Agreements.  The fund may enter into
reverse repurchase agreements with the same parties with
whom it may enter into repurchase agreements.  Reverse
repurchase agreements involve the sale of securities held
by the fund pursuant to its agreement to repurchase them at
a mutually agreed upon date, price and rate of interest.
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 having a value not less than the
repurchase price (including accrued interest).  The assets
contained in the segregated account will be
marked-to-market daily and additional assets will be placed
in such account on any day in which the assets fall below
the repurchase price (plus accrued interest).  The fund's
liquidity and ability to manage its assets might be
affected when it sets aside cash or portfolio securities to
cover such commitments.  Reverse repurchase agreements
involve the risk that the market value of the securities
retained in lieu of sale may decline below the price of the
securities the fund has sold but is obligated to
repurchase.  If 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 agreement may effectively be restricted pending
such decision.  The fund currently intends to invest not
more than 33% of its net assets in reverse repurchase
agreements.

Lending of Portfolio Securities.  Consistent with
applicable regulatory requirements, the fund may lend
portfolio securities to brokers, dealers and other
financial organizations that meet capital and other credit
requirements or other criteria established by the Board.
The fund will not lend portfolio securities to affiliates
of the manager unless they have applied for and received
specific authority to do so from the Securities and
Exchange Commission ("SEC"). Loans of portfolio securities
will be collateralized by cash, letters of credit or U.S.
government securities, which are maintained at all times in
an amount equal to at least 102% of the current market
value of the loaned securities.  Any gain or loss in the
market price of the securities loaned that might occur
during the term of the loan would be for the account of the
fund.  From time to time, the fund may return a part of the
interest earned from the investment of collateral received
for securities loaned to the borrower and/or a third party
that is unaffiliated with the fund and that is acting as a
"finder."
By lending its securities, the fund can increase its income
by continuing to receive interest and any dividends on the
loaned securities as well as by either investing the
collateral received for securities loaned in short-term
instruments or obtaining yield in the form of interest paid
by the borrower when U.S. government securities are used as
collateral.  Although the generation of income is not the
primary investment goal of the fund, income received could
be used to pay the fund's expenses and would increase an
investor's total return. The fund will adhere to the
following conditions whenever its portfolio securities are
loaned:  (i) the fund must receive at least 102% cash
collateral or equivalent securities of the type discussed
in the preceding paragraph from the borrower; (ii) the
borrower must increase such collateral whenever the market
value of the securities rises above the level of such
collateral; (iii) the fund must be able to terminate the
loan at any time; (iv) the fund must receive reasonable
interest on the loan, as well as any dividends, interest or
other distributions on the loaned securities and any
increase in market value; (v) the fund may pay only
reasonable custodian fees in connection with the loan; and
(vi) voting rights on the loaned securities may pass to the
borrower, provided, however, that if a material event
adversely affecting the investment occurs, the Board must
terminate the loan and regain the right to vote the
securities.  Loan agreements involve certain risks in the
event of default or insolvency of the other party including
possible delays or restrictions upon a fund's ability to
recover the loaned securities or dispose of the collateral
for the loan.
Illiquid Securities.  The fund may invest up to an
aggregate amount equal to 15% of its net assets in illiquid
securities, which term includes securities subject to
contractual or other restrictions on resale and other
instruments that lack readily available markets.

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

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

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

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

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

Although the fund might not employ the use of forward
currency contracts, options and futures, the use of any of
these strategies would involve certain investment risks and
transaction costs to which it might not otherwise be
subject. These risks include: dependence on the manager's
ability to predict movements in the prices of individual
debt securities, fluctuations in the general fixed-income
markets and movements in interest rates and currency
markets, imperfect correlation between movements in the
price of currency, options, futures contracts or options
thereon and movements in the price of the currency or
security hedged or used for cover; the fact that skills and
techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are
different from those needed to select the securities in
which the fund invests; lack of assurance that a liquid
market will exist for any particular option, futures
contract or options thereon at any particular time and
possible need to defer or accelerate closing out certain
options, futures contracts and options thereon in order to
continue to qualify for the beneficial tax treatment
afforded "regulated investment companies" under the
Internal Revenue Code of 1986, as amended (the "Code").

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

Options on Securities.  As discussed more generally above,
the fund may engage in the writing of covered call options.
The fund may also purchase put options and enter into
closing transactions.

The principal reason for writing covered call options on
securities is to attempt to realize, through the receipt of
premiums, a greater return than would be realized on the
securities alone. In return for a premium, the writer of a
covered call option forfeits the right to any appreciation
in the value of the underlying security above the strike
price for the life of the option (or until a closing
purchase transaction can be effected). Nevertheless, the
call writer retains the risk of a decline in the price of
the underlying security. Similarly, the principal reason
for writing covered put options is to realize income in the
form of premiums. The writer of a covered put option
accepts the risk of a decline in the price of the
underlying security. The size of the premiums the fund may
receive may be adversely affected as new or existing
institutions, including other investment companies, engage
in or increase their option-writing activities.

Options written by the fund will normally have expiration
dates between one and six months from the date written. The
exercise price of the options may be below, equal to or
above the current market values of the underlying
securities at the times the options are written. In the
case of call options, these exercise prices are referred to
as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively.

The fund may write (a) in-the-money call options when CFM
expects the price of the underlying security to remain flat
or decline moderately during the option period, (b) at-the-
money call options when CFM expects the price of the
underlying security to remain flat or advance moderately
during the option period and (c) out-of-the-money call
options when CFM expects that the price of the security may
increase but not above a price equal to the sum of the
exercise price plus the premiums received from writing the
call option. In any of the preceding situations, if the
market price of the underlying security declines and the
security is sold at this lower price, the amount of any
realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-
the-money put options (the reverse of call options as to
the relation of exercise price to market price) may be
utilized in the same market environments as such call
options are used in equivalent transactions.

So long as the obligation of the fund as the writer of an
option continues, the fund may be assigned an exercise
notice by the broker-dealer through which the option was
sold, requiring it to deliver, in the case of a call, or
take delivery of, in the case of a put, the underlying
security against payment of the exercise price. This
obligation terminates when the option expires or the fund
effects a closing purchase transaction. The fund can no
longer effect a closing purchase transaction with respect
to an option once it has been assigned an exercise notice.
To secure its obligation to deliver the underlying security
when it writes a call option, or to pay for the underlying
security when it writes a put option, the fund will be
required to deposit in escrow the underlying security or
other assets in accordance with the rules of the Options
Clearing Corporation ("Clearing Corporation") or similar
clearing corporation and the securities exchange on which
the option is written.

An option position may be closed out only where there
exists a secondary market for an option of the same series
on a recognized securities exchange or in the over-the-
counter market.  The fund expects to write options only on
national securities exchanges or in the over-the-counter
market.  The fund may purchase put options issued by the
Clearing Corporation or in the over-the-counter market.

The fund may realize a profit or loss upon entering into a
closing transaction. In cases in which the fund has written
an option, it will realize a profit if the cost of the
closing purchase transaction is less than the premium
received upon writing the original option and will incur a
loss if the cost of the closing purchase transaction
exceeds the premium received upon writing the original
option. Similarly, when the fund has purchased an option
and engages in a closing sale transaction, whether it
recognizes a profit or loss will depend upon whether the
amount received in the closing sale transaction is more or
less than the premium the fund initially paid for the
original option plus the related transaction costs.

Although the fund generally will purchase or write only
those options for which CFM believes there is an active
secondary market so as to facilitate closing transactions,
there is no assurance that sufficient trading interest to
create a liquid secondary market on a securities exchange
will exist for any particular option or at any particular
time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to
exist for a variety of reasons. In the past, for example,
higher than anticipated trading activity or order flow, or
other unforeseen events, have at times rendered certain of
the facilities of the Clearing Corporation and national
securities exchanges inadequate and resulted in the
institution of special procedures, such as trading
rotations, restrictions on certain types of orders or
trading halts or suspensions in one or more options. There
can be no assurance that similar events, or events that may
otherwise interfere with the timely execution of customers'
orders, will not recur. In such event, it might not be
possible to effect closing transactions in particular
options. If, as a covered call option writer, the fund is
unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the
underlying security until the option expires or it delivers
the underlying security upon exercise.

Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each
class which may be held or written, or exercised within
certain periods, by an investor or group of investors
acting in concert (regardless of whether the options are
written on the same or different securities exchanges or
are held, written or exercised in one or more accounts or
through one or more brokers).  It is possible that the fund
and other clients of the manager and certain of their
affiliates may be considered to be such a group.  A
securities exchange may order the liquidation of positions
found to be in violation of these limits, and it may impose
certain other sanctions.

In the case of options written by the fund that are deemed
covered by virtue of the fund's holding convertible or
exchangeable preferred stock or debt securities, the time
required to convert or exchange and obtain physical
delivery of the underlying common stocks with respect to
which the fund has written options may exceed the time
within which the fund must make delivery in accordance with
an exercise notice. In these instances, the fund may
purchase or temporarily borrow the underlying securities
for purposes of physical delivery. By so doing, the fund
will not bear any market risk because the fund will have
the absolute right to receive from the issuer of the
underlying security an equal number of shares to replace
the borrowed stock, but the fund may incur additional
transaction costs or interest expenses in connection with
any such purchase or borrowing.

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

Stock Index Options.  As described generally above, the
fund may purchase put and call options and write call
options on domestic stock indexes listed on domestic
exchanges in order to realize its investment objective of
capital appreciation or for the purpose of hedging its
portfolio. A stock index fluctuates with changes in the
market values of the stocks included in the index. Some
stock index options are based on a broad market index such
as the New York Stock Exchange Composite Index or the
Canadian Market Portfolio Index, or a narrower market index
such as the Standard & Poor's 100. Indexes also are based
on an industry or market segment such as the American Stock
Exchange Oil and Gas Index or the Computer and Business
Equipment Index.

Options on stock indexes are generally similar to options
on stock except that the delivery requirements are
different. Instead of giving the right to take or make
delivery of stock at a specified price, an option on a
stock index gives the holder the right to receive a cash
"exercise settlement amount" equal to (a) the amount, if
any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case
of a call) the closing value of the underlying index on the
date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon
the closing level of the stock index upon which the option
is based being greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the
option. The amount of cash received will be equal to such
difference between the closing price of the index and the
exercise price of the option expressed in dollars or a
foreign currency, as the case may be, times a specified
multiple. The writer of the option is obligated, in return
for the premium received, to make delivery of this amount.
The writer may offset its position in stock index options
prior to expiration by entering into a closing transaction
on an exchange or it may let the option expire unexercised.

The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the extent
to which price movements in the portion of the securities
portfolio of the fund correlate with price movements of the
stock index selected. Because the value of an index option
depends upon movements in the level of the index rather
than the price of a particular stock, whether the fund will
realize a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of
stock prices in the stock market generally or, in the case
of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock.
Accordingly, successful use by the fund of options on stock
indexes will be subject to the manager's ability to predict
correctly movements in the direction of the stock market
generally or of a particular industry. This requires
different skills and techniques than predicting changes in
the price of individual stocks.

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

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

No consideration will be paid or received by the fund upon
the purchase or sale of a futures contract. Initially, the
fund will be required to deposit with the broker an amount
of cash or cash equivalents equal to approximately 1% to
10% of the contract amount (this amount is subject to
change by the exchange or board of trade on which the
contract is traded and brokers or members of such board of
trade may charge a higher amount). This amount is known as
"initial margin" and is in the nature of a performance bond
or good faith deposit on the contract which is returned to
the fund, upon termination of the futures contract,
assuming all contractual obligations have been satisfied.
Subsequent payments, known as "variation margin," to and
from the broker, will be made daily as the price of the
index or securities underlying the futures contract
fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as
"marking-to-market." In addition, when the fund enters into
a long position in a futures contract or an option on a
futures contract, it must deposit into a segregated account
on the fund's books an amount of cash or cash equivalents
equal to the total market value of the underlying futures
contract, less amounts held in the fund's commodity
brokerage account at its broker. At any time prior to the
expiration of a futures contract, the fund may elect to
close the position by taking an opposite position, which
will operate to terminate the fund's existing position in
the contract.

There are several risks in connection with the use of
futures contracts as a hedging device. Successful use of
futures contracts by the fund is subject to the ability of
the manager to predict correctly movements in the stock
market or in the direction of interest rates. These
predictions involve skills and techniques that may be
different from those involved in the management of
investments in securities. In addition, there can be no
assurance that there will be a perfect correlation between
movements in the price of the securities underlying the
futures contract and movements in the price of the
securities that are the subject of the hedge. A decision of
whether, when and how to hedge involves the exercise of
skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of market behavior or
unexpected trends in market behavior or interest rates.

Positions in futures contracts may be closed out only on
the exchange on which they were entered into (or through a
linked exchange) and no secondary market exists for those
contracts. In addition, although the fund intends to enter
into futures contracts only if there is an active market
for the contracts, there is no assurance that an active
market will exist for the contracts at any particular time.
Most futures exchanges and boards of trade limit the amount
of fluctuation permitted in futures contract prices during
a single trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that day at
a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In
such event, and in the event of adverse price movements,
the fund would be required to make daily cash payments of
variation margin; in such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any,
may partially or completely offset losses on the futures
contract. As described above, however, no assurance can be
given that the price of the securities being hedged will
correlate with the price movements in a futures contract
and thus provide an offset to losses on the futures
contract.

Index-Related Securities ("Equity Equivalents"). The fund
may invest in certain types of securities that enable
investors to purchase or sell shares in a portfolio of
securities that seeks to track the performance of an
underlying index or a portion of an index.  Such Equity
Equivalents include among others DIAMONDS (interests in a
portfolio of securities that seeks to track the performance
of the Dow Jones Industrial Average), SPDRs or Standard &
Poor's Depositary Receipts (interests in a portfolio of
securities that seeks to track the performance of the S&P
500 Index), WEBS or World Equity Benchmark Shares
(interests in a portfolio of securities that seeks to track
the performance of a benchmark index of a particular
foreign country's stocks), and the Nasdaq-100 Trust
(interests in a portfolio of securities of the largest and
most actively traded non-financial companies listed on the
Nasdaq Stock Market Index).  Such securities are similar to
index mutual funds, but they are traded on various stock
exchanges or secondary markets.  The value of these
securities is dependent upon the performance of the
underlying index on which they are based.  Thus, these
securities are subject to the same risks as their
underlying indexes as well as the securities that make up
those indexes. For example, if the securities comprising an
index perform poorly, the index-related security that an
index-related security seeks to track will lose value.

Equity Equivalents may be used for several purposes,
including, to simulate full investment in the underlying
index while retaining a cash balance for fund management
purposes, to facilitate trading, to reduce transaction
costs or to seek higher investment returns where an Equity
Equivalent is priced more attractively than securities in
the underlying index. Because the expense associated with
an investment in Equity Equivalents may be substantially
lower than the expense of small investments directly in the
securities comprising the indexes they seek to track,
investments in Equity Equivalents may provide a cost-
effective means of diversifying the fund's assets across a
broad range of equity securities.
To the extent the fund invests in securities of other
investment companies, fund shareholders would indirectly
pay a portion of the operating costs of such companies in
addition to the expenses of its own operation.  These costs
include management, brokerage, shareholder servicing and
other operational expenses.  Indirectly, then, shareholders
invest in Equity Equivalents may pay higher operational
costs than if they owned the underlying investment
companies directly.  Additionally, the fund's investments
in such investment companies are subject to limitations
under the 1940 Act and market availability.
The prices of Equity Equivalents are derived and based upon
the securities held by the particular investment company.
Accordingly, the level of risk involved in the purchase or
sale of an Equity Equivalent is similar to the risk
involved in the purchase or sale of traditional common
stock, with the exception that the pricing mechanism for
such instruments is based on a basket of stocks.  The
market prices of Equity Equivalents are expected to
fluctuate in accordance with both changes in the net asset
values of their underlying indices and the supply and
demand for the instruments on the exchanges on which they
are traded.  Substantial market or other disruptions
affecting an Equity Equivalent could adversely affect the
liquidity and value of the shares of the Fund investing in
such instruments.

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


INVESTMENT RESTRICTIONS

The investment restrictions numbered 1 through 7 below and
the fund's investment objective have been adopted by the
trust as fundamental policies of the fund.  Under the 1940
Act, a fundamental policy may not be changed with respect
to a fund without the vote of a majority of the outstanding
voting securities of the fund.  Majority is defined in the
1940 Act as the lesser of (a) 67% or more of the shares
present at a fund meeting, if the holders of more than 50%
of the outstanding shares of the fund are present or
represented by proxy, or (b) more than 50% of outstanding
shares.  The remaining restrictions may be changed by a
vote of a majority of the trust's board of trustees at any
time.

Under the investment restrictions adopted by the trust with
respect to the fund:  The fund will not

	1.	Invest in a manner that would cause it to fail
to be a "diversified company" under the 1940 Act and the
rules, regulations and orders thereunder.

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

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

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

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

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

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

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

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

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

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

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

TRUSTEES OF THE TRUST AND EXECUTIVE OFFICERS OF THE FUND

The names of the trustees of the trust and executive
officers of the fund, together with information as to their
principal business occupations, are set forth below.  The
executive officers of the fund are employees of
organizations that provide services to the fund.  Each
trustee who is an "interested person" of the trust, as
defined in the 1940 Act, is indicated by an asterisk. The
address of the "non-interested" trustees and the executive
officers of the fund is 7 World Trade Center, New York, New
York 10048, unless otherwise indicated.

Herbert Barg, Trustee (Age 77).  Private Investor.  His
address is 273 Montgomery Avenue, Bala Cynwyd, Pennsylvania
19004.  Director/Trustee of sixteen investment companies
associated with Citigroup, Inc. ("Citigroup")

*Alfred J. Bianchetti Trustee (Age 78).  Retired; formerly
Senior Consultant to Dean Witter Reynolds Inc.  His address
is 19 Circle End Drive, Ramsey, New Jersey 07466.
Director/Trustee of eleven investment companies associated
with Citigroup.

Martin Brody Trustee (Age 79).  Consultant, HMK Associates;
Retired Vice Chairman of the Board of Restaurant Associates
Corp.  His address is c/o HMK Associates, 30 Columbia
Turnpike, Florham Park, New Jersey 07932.  Director/Trustee
of twenty investment companies associated with Citigroup.

Dwight B. Crane Trustee (Age 63).  Professor, Harvard
Business School.  His address is c/o Harvard Business
School, Soldiers Field Road, Boston, Massachusetts 02163.
Director/Trustee of twenty-three investment companies
associated with Citigroup.

Burt N. Dorsett Trustee (Age 70).  Managing Partner of
Dorsett McCabe Management. Inc., an investment counseling
firm; Director of Research Corporation Technologies, Inc.,
a nonprofit patent clearing and licensing firm.  His
address is 201 East 62nd Street, New York, New York 10021.
Director/Trustee of eleven investment companies associated
with Citigroup.

Elliot S. Jaffe Trustee (Age 74).  Chairman of the Board
and President of The Dress Barn, Inc.  His address is 30
Dunnigan Drive, Suffern, New York 10901.  Director/Trustee
of eleven investment companies associated with Citigroup.

Stephen E. Kaufman Trustee (Age 69).  Attorney.  His
address is 277 Park Avenue, New York, New York 10172.
Director/Trustee of thirteen investment companies
associated with Citigroup.

Joseph J. McCann Trustee (Age 70).  Financial Consultant;
Retired Financial Executive, Ryan Homes, Inc.  His address
is 200 Oak Park Place, Pittsburgh, Pennsylvania 15243.
Director/Trustee of eleven investment companies associated
with Citigroup.

*Heath B. McLendon Trustee (Age 67). Chairman of the Board,
President and Chief Executive Officer; Managing Director of
Salomon Smith Barney; President of the manager and
Travelers Investment Adviser, Inc. ("TIA"); Chairman or Co-
Chairman of the Board of seventy-seven investment companies
associated with Salomon Smith Barney. His address is 7
World Trade Center, New York, New York 10048.

Cornelius C. Rose, Jr. Trustee (Age 67).  President,
Cornelius C. Rose Associates, Inc., financial consultants,
and Chairman and Director of Performance Learning Systems,
an educational consultant.  His address is Meadowbrook
Village, Building 4, Apt 6, West Lebanon, New Hampshire
03784.  Director/Trustee of eleven investment companies
associated with Citigroup.

Lewis E. Daidone (Age 43).  Managing Director of Salomon
Smith Barney; Chief Financial Officer of the Smith Barney
Mutual funds; Director and Senior Vice President of the
manager and TIA.  Senior Vice President or Executive Vice
President and Treasurer of eighty-three investment
companies associated with Citigroup.  His address is 125
Broad Street, New York, New York 10004.

Lawrence Weissman (Age 40).  Vice President and Investment
Officer; Managing Director of Salomon Smith Barney;
Investment Officer of the manager; prior to 1998, portfolio
manager at Neuberger & Berman, LLC.; prior to that he was a
portfolio manager at TIAA-CREFF. His address is 7 World
Trade Center, New York, New York 10048.

Susan Kempler (Age 41).  Vice President and Investment
Officer; Managing Director of  Salomon Smith Barney;
Investment Officer of the manager; prior to 1997, portfolio
manager at U.S. Trust; prior to that she was an analyst at
Morgan Stanley.  Her address is 7 World Trade Center, New
York, New York  10048.

Paul Brook (Age 47). Controller; Director of Salomon Smith
Barney; from 1997-1998 Managing Director of AMT Capital
Services Inc.; prior to 1997, Partner with Ernst & Young
LLP. Controller or Assistant Treasurer of sixty investment
companies associated with Citigroup. His address is 125
Broad Street, New York, New York 10004.

Christina T. Sydor (Age 50).  Secretary; Managing Director
of Salomon Smith Barney; General Counsel and Secretary of
the manager and TIA. Secretary of sixty investment
companies associated with Citigroup. Her address is 7 World
Trade Center, New York, New York  10048.

As of March 2, 2001, the trustees and officers owned, in
the aggregate, less than 1% of the outstanding shares of
the fund. No officer, director or employee of Salomon Smith
Barney or any of its affiliates receives any compensation
from the trust for serving as an officer of the funds or
trustee of the trust.  The trust pays each trustee who is
not an officer, director or employee of Salomon Smith
Barney or any of its affiliates a fee of $12,000 per annum
plus $1000 per in-person meeting and $100 per telephonic
meeting.  Each trustee emeritus who is not an officer,
director or employee of Salomon Smith Barney or its
affiliates receives a fee of $5,000 per annum plus $500 per
in-person meeting and $50 per telephonic meeting.  All
trustees are reimbursed for travel and out-of-pocket
expenses incurred to attend such meetings and for the most
recent calendar year it was $9,737.

For the fiscal year ended November 30, 2000, the trustees
of the fund were paid the following compensation:




Name of Person



Aggregate
Compensat
ion
From
Trust

Total
Pension or
Retirement
Benefits
Accrued
As part of
Trust
Expenses

Compensation
From Trust
and Fund
Complex
Paid to
Trustees

Number of
Funds for
Which Trustee
Serves Within
Fund Complex

Herbert Barg**
Alfred
Bianchetti*
Martin Brody**
Dwight B.
Crane**
Burt N.
Dorsett**
Elliot S.
Jaffe**
Stephen E.
Kaufman**
Joseph J.
McCann**
Heath B.
McLendon*
Cornelius C.
Rose, Jr.**

$ 15,114
  15,034
   12,942
   15,114
   15,114
   14,976
   15,114
   15,114
-----
   15,114

$0
0
0
0
0
0
0
0
0
0

$116,075
    58,900
  132,950
  153,175
   59,500
   58,700
  114,000
   59,500
------
  59,500

16
11
20
23
11
11
13
11
87
11

* 	Designated an "interested" trustee.
**	Designates member of Audit Committee

Upon attainment of age 80, fund trustees are required to
change to emeritus status. Trustees emeritus are entitled
to serve in emeritus status for a maximum of 10 years.  A
trustee emeritus may attend meetings but has no voting
rights.

The following table contains a list of shareholders of
record that beneficially owned at least 5% of the
outstanding shares of a particular class of shares of the
fund as of March 2, 2001.

CLASS A - PERCENTAGE OF SHARES

PFS Shareholder Services (A)
Attn:  Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA  30199
Owned 2,013,127.030 shares (13.06%)

CLASS B - PERCENTAGE OF SHARES

PFS Shareholder Services (B)
Attn:  Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA  30199
Owned 2,280,532.872 shares (9.28%)

CLASS Y - PERCENTAGE OF SHARES

Smith Barney Allocation Series, Inc.
Allocation Growth Portfolio
PNC Bank NA
Attn:  Sheila Heacock
8800 Tinicum Blvd. 3 Fl., Ste 200
Philadelphia,  PA 19153-3111
Owned 2,605,068.430 shares (43.99%)
Smith Barney Allocation Series, Inc.
Allocation High Growth Portfolio
PNC Bank NA
Attn:  Sheila Heacock
8800 Tinicum Blvd. 3 Fl., Ste 200
Philadelphia,  PA 19153-3111
Owned 2,198,761.916 shares (37.13%)

Smith Barney Allocation Series, Inc.
Select Growth Portfolio
PNC Bank NA
Attn:  Sheila Heacock
8800 Tinicum Blvd. 3 Fl., Ste 200
Philadelphia,  PA 19153-3111
Owned 624,581.524 shares (10.54%)

Smith Barney Allocation Series, Inc.
Select High Growth Portfolio
PNC Bank NA
Attn:  Sheila Heacock
8800 Tinicum Blvd. 3 Fl., Ste 200
Philadelphia,  PA 19153-3111
Owned 415,975.119 shares (7.02%)


INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment Manager - CFM

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

As compensation for investment management services, the
fund pays the manager a fee computed daily and paid monthly
at the annual rate of 0.75% of the fund's average daily net
assets.  The management fee paid by the fund was $202,181,
$3,544,958 and $7,444,361 in fiscal years ended November
30, 1998, 1999 and 2000, respectively.

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New York,
New York 10017, has been selected as the fund's independent
auditor to examine and report on the fund's financial
statements for the fiscal year ending November 30, 2001.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New
York 10019, serves as counsel to the fund.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York,
New York 10038, serves as counsel to the directors who are
not "interested persons" of the fund.

Custodian, Transfer Agent and Sub-Transfer Agent

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

Citi Fiduciary Trust Company (the "transfer agent"),
located at 125 Broad Street, New York, New York 10004,
serves as the fund's transfer and dividend-paying agent.
Under the transfer agency agreement, the transfer agent
maintains the shareholder account records for the fund,
handles certain communications between shareholders and the
fund, distributes dividends and distributions payable by
the fund and produces statements with respect to account
activity for the fund and its shareholders.  For these
services, the transfer agent receives fees from the fund
computed on the basis of the number of shareholder accounts
that the transfer agent maintains for the fund during the
month and is reimbursed for out-of-pocket expenses.

PFPC Global Fund Services ("PFPC" or "sub-transfer agent"),
located at Exchange Place, Boston, Massachusetts 02109,
serves as the trust's sub-transfer agent.  Under the
transfer agency agreement, the sub-transfer agent maintains
the shareholder account records for the trust, handles
certain communications between shareholders and the trust
and distributes dividends and distributions payable by the
trust.  For these services, the sub-transfer agent receives
a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the trust during the
month, and is reimbursed for out-of-pocket expenses.
The trust on behalf of the fund has also engaged the
services of PFS Shareholder Services as a sub-transfer
agent for PFS Accounts ( "PFS" or "sub-transfer agent").
PFS is located at 3100 Breckinridge Blvd, Bldg 200, Duluth,
Georgia 30099-0062.

Code of Ethics. Pursuant to Rule 17j-1 of the 1940 Act, the
fund, the manager and principal underwriter has adopted a
code of ethics that permits personnel to invest in
securities for their own accounts, including securities
that may be purchased or held by the fund.  All personnel
must place the interests of clients first and avoid
activities, interests and relationships that might
interfere with the duty to make decisions in the best
interests of the clients. All personal securities
transactions by employees must adhere to the requirements
of the code and must be conducted in such a manner as to
avoid any actual or potential conflict of interest, the
appearance of such a conflict, or the abuse of an
employee's position of trust and responsibility. A copy of
the fund's Code of Ethics is on file with the SEC.

Distributor

Effective June 5, 2000, Salomon Smith Barney, Inc., located
at 388 Greenwich Street, New York, New York 10013 and PFS
serve as the fund's co-distributors pursuant to a written
agreement dated June 5, 2000 (the "Distribution Agreement")
which was approved by the fund's board of trustees,
including a majority of the independent trustees, on April
17, 2000.   Prior to and up to June 5, 2000, CFBDS, Inc.
served as the fund's distributor.
The distributor may be deemed to be an underwriter for
purposes of the Securities Act of 1933 (the "1933 Act")
From time to time, the distributor, or PFS or its
affiliates may also pay for certain non-cash sales
incentives provided to PFS Investments Registered
Representatives. Such incentives do not have any effect on
the net amount invested. In addition to the reallowances
from the applicable public offering price described above,
PFS may, from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash
or other compensation to PFS Investments Registered
Representatives that sell shares of each portfolio.
The distributor has entered into a selling agreement with
PFS and PFS has entered into an agreement with PFSI giving
PFSI the right to sell shares of the fund on behalf of the
distributor.  The distributor's obligation is an agency or
"best efforts" arrangement under which the distributor is
required to take and pay only for such shares of each
portfolio as may be sold to the public.  The distributor is
not obligated to sell any stated number of shares.  The
Distribution Agreement is renewable from year to year if
approved (a) by the directors or by a vote of a majority of
the fund's outstanding voting securities, and (b) by the
affirmative vote of a majority of directors who are not
parties to the Distribution Agreement or interested persons
of any party by votes cast in person at a meeting called
for such purpose.  The Distribution Agreement provides that
it will terminate if assigned, and that it may be
terminated without penalty by either party on 60 days'
written notice.

For the period September 1, 1998 through October 7, 1998
the aggregate dollar amount of commissions on Class A
shares was $104,000 all of which was paid to Salomon Smith
Barney.  For the period October 8, 1998 through November
30, 1998 the aggregate dollar amount of commissions on
Class A shares was $592,000, $532,800 of which was paid to
Salomon Smith Barney.  For the fiscal year ended November
30, 1999 the aggregate dollar amount of commissions on
Class A shares was $1,421,000 of which $1278,900 was paid
to Salomon Smith Barney.  For the fiscal year ended
November 30, 2000 the aggregate dollar amount of
commissions on Class A shares was $3,176,000 of which a
portion was paid to Salomon Smith Barney and CFBDS.

For the period September 1, 1998 through October 7, 1998
the aggregate dollar amount of commissions on Class L
shares was $58,000, all of which was paid to Salomon Smith
Barney. For the period October 8, 1998 through November 30,
1998 the aggregate dollar amount of commissions on Class L
shares was $270,000, $243,000 of which was paid to Salomon
Smith Barney.  For the fiscal year ended November 30, 1999
the aggregate dollar amount of commissions on Class L
shares was $919,000, of which $827,000 was paid to Salomon
Smith Barney. For the fiscal year ended November 30, 2000
the aggregate dollar amount of commissions on Class L
shares was $1,233,000 of which a portion was paid to
Salomon Smith Barney and CFBDS.

For the fiscal period ended November 30, 1998, Salomon
Smith Barney received from shareholders $10,000 and $2,000,
in deferred sales charges on the redemption of Class B and
Class L shares, respectively.  For the fiscal year ended
November 30, 1999 Salomon Smith Barney received from
shareholders $6,000, $318,000 and $44,000 in deferred sales
charges on the redemption of Class A, Class B, and Class L
shares respectively.  For the fiscal year ended November
30, 2000 Salomon Smith Barney received from shareholders
$7,000, $537,000 and $62,000 in deferred sales charges on
the redemption of Class A, Class B and Class L shares,
respectively.

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

Distribution Arrangements.  To compensate Salomon Smith
Barney and PFSI for the service it provides and for the
expense it bears, the fund has adopted a services and
distribution plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act.  The only classes of shares being offered for
sale through PFSI are Class1 shares, Class A shares and
Class B shares.  Under the Plan, the fund pays Salomon
Smith Barney or PFSI (which pays it registered
representative) a service fee, accrued daily and paid
monthly, calculated at the annual rate of 0.25% of the
value of the fund's average daily net assets attributable
to the Class A, and Class B shares.  In addition, the fund
pays Salomon Smith Barney a distribution fee with respect
to Class B and Class L shares primarily intended to
compensate Salomon Smith Barney for its initial expense of
paying Financial Consultants a commission upon sales of
those shares.  The Class B and Class L distribution fee is
calculated at the annual rate of 0.75% of the value of the
fund's average net assets attributable to the shares of the
respective Class.




The following service and distribution fees were incurred
pursuant to a Distribution Plan during the fiscal years
indicated:



Distribution Plan Fees





Fiscal Year
Ended
11/30/00

Fiscal Year
Ended 11/30/99

Fiscal Year
Ended
11/30/98

Class A

$
546,598

$
231,993

$
16,625

Class B

$3,721,7
15

$1,695,0
42

$
121,874

Class L

$2,601,0
50

$1,130,2
46

$
81,200


For the fiscal year ended November 30, 2000, the
distributor incurred distribution expenses totaling
$5,145,529, consisting of $137,922 for advertising, $10,480
for printing and mailing of prospectuses, $962,437 for
support services, $3,735,628 to Salomon Smith Barney
Financial Consultants, and $299,062 in accruals for
interest on the excess of Salomon Smith Barney expenses
incurred in distribution of the funds' shares over the sum
of the distribution fees and deferred sales charge received
by Salomon Smith Barney from the fund.  For the fiscal year
ended November 30, 2000, the distributor, received
$6,869,363 in the aggregate from the Plan.

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

The only classes of shares being offered for sale through
PFS Distributors is Class A shares and Class B shares.
Pursuant to the Plan (described above), PFS Distributors is
paid an annual service fee with respect to Class A and
Class B shares of the fund sold through PFS Distributors at
the annual rate of 0.25% of the average daily net assets of
the respective class.  PFS Distributors is also paid an
annual distribution fee with respect to Class B shares at
the annual rate of 0.75% of the average daily net assets
attributable to that Class.  Class B shares that
automatically convert to Class A shares eight years after
the date of original purchase will no longer be subject to
a distribution fee. The fees are paid to PFS Distributors,
which in turn, pays PFS Investments Inc. ("PFS
Investments") to pay its PFS Investments Registered
Representatives for servicing shareholder accounts and, in
the case of Class B shares, to cover expenses primarily
intended to result in the sale of those shares.  These
expenses include: advertising expenses; the cost of
printing and mailing prospectuses to potential investors;
payments to and expenses of PFS Investments Registered
Representatives and other persons who provide support
services in connection with the distribution of shares;
interest and/or carrying charges; and indirect and overhead
costs of PFS Investments associated with the sale of fund
shares, including lease, utility, communications and sales
promotion expenses.

The payments to PFS Investments Registered Representatives
for selling shares of a class include a commission or fee
paid by the investor or PFS at the time of sale and, with
respect to Class A and Class B shares, a continuing fee for
servicing shareholder accounts for as long as a shareholder
remains a holder of that class.  PFS Investments Registered
Representatives may receive different levels of
compensation for selling different classes of shares.

PFS Investments may be deemed to be an underwriter for
purposes of the 1933 Act. From time to time, PFS or its
affiliates may also pay for certain non-cash sales
incentives provided to PFS Investments Registered
Representatives.  Such incentives do not have any effect on
the net amount invested.  In addition to the reallowances
from the applicable public offering price described above,
PFS may from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash
or other compensation to PFS Investments Registered
Representatives who sell shares of the fund.

PORTFOLIO TRANSACTIONS

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

Decisions to buy and sell securities for the fund are made
by the manager, subject to the overall supervision and
review of the trust's board of trustees. Portfolio
securities transactions for the fund are effected by or
under the supervision of the manager.

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

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

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

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

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







The fund has paid the following in brokerage commissions
for portfolio transactions :


					Fiscal Year		Fiscal Year
		Fiscal Period
Ended 			Ended
		Ended
					11/30/00
	11/30/99			11/30/98


Total Brokerage Commissions		$929,941
	$496,811		$133,876


Total Brokerage Commissions
paid to Salomon Smith Barney		$  21,932		$
10,200		$      0

% of Total Brokerage Commissions	     2.36%
2.05%		        0%
paid to Salomon Smith Barney

% of Total Transactions involving	      1.16%
2.04%		        0%
Commissions paid to Salomon
Smith Barney

During the fiscal years ended November 30, 1998, 1999 and
2000 the total amount of commissionable transactions was
$133,217,263, $426,679,434 and $740,411,765, respectively.

Portfolio securities transactions on behalf of the fund are
placed by the manager with a number of brokers and dealers,
including Salomon Smith Barney.  Salomon Smith Barney has
advised the fund that in transactions with the fund,
Salomon Smith Barney charges a commission rate at least as
favorable as the rate that Salomon Smith Barney charges its
comparable unaffiliated customers in similar transactions.

PORTFOLIO TURNOVER

The fund's portfolio turnover rate (the lesser of purchases
or sales of portfolio securities during the year, excluding
purchases or sales of short-term securities, divided by the
monthly average value of portfolio securities) is generally
not expected to exceed 100%.  The rate of turnover will not
be a limiting factor, however, when the fund deems it
desirable to sell or purchase securities.  This policy
should not result in higher brokerage commissions to the
fund, as purchases and sales of portfolio securities are
usually effected as principal transactions.  Securities may
be sold in anticipation of a rise in interest rates (market
decline) or purchased in anticipation of a decline in
interest rates (market rise) and later sold.  In addition,
a security may be sold and another security of comparable
quality purchased at approximately the same time to take
advantage of what the fund believes to be a temporary
disparity in the normal yield relationship between the two
securities.  These yield disparities may occur for reasons
not directly related to the investment quality of
particular issues or the general movement of interest
rates, such as changes in the overall demand for, or supply
of, various types of tax-exempt securities. The fund's
portfolio turnover rate for the fiscal years ended November
30, 1999 and 2000 was 61% and 69%, respectively.


PURCHASE OF SHARES

Sales Charge Alternatives

The following classes of shares are available for purchase.
See the prospectus for a discussion of factors to consider
in selecting which Class of shares to purchase.

Class A Shares.  Class A shares are sold to investors at
the public offering price, which is the net asset value
plus an initial sales charge as follows:


Amount
of
Investme
nt

Sales Charge
as a %
of
Transaction

Sales
Charge as a
%
of Amount
Invested

Dealers'
Reallowance as
%
Of Offering
Price
Less than
$25,000
5.00%
5.26%
4.50%
$  25,000 -
49,999
4.25
4.44
3.83
    50,000 -
99,999
3.75
3.63
3.38
    100,000 -
249,999
3.25
3.09
2.48
    250,000 -
499,999
2.75
2.04
1.80
    500,000 -
999,000
 1,000,000 or
more
2.00
0
2.04
0
1.80
up to 1.00


Purchases of Class A shares of $1,000,000 or more will be
made at net asset value without any initial sales charge,
but will be subject to a deferred sales charge of 1.00% on
redemptions made within 12 months of purchase. The deferred
sales charge on Class A shares is payable to Salomon Smith
Barney, which compensates Salomon Smith Barney Financial
Consultants, PFS or Service Agents whose clients make
purchases of $1,000,000 or more. The deferred sales charge
is waived in the same circumstances in which the deferred
sales charge applicable to Class B and Class L shares is
waived. See "Deferred Sales Charge Provisions" and "Waivers
of Deferred Sales Charge."
Members of the selling group may receive up to 90% of the
sales charge and may be deemed to be underwriters of the
fund as defined in the 1933 Act.  The reduced sales charges
shown above apply to the aggregate of purchases of Class A
shares of the fund made at one time by "any person," which
includes an individual and his or her immediate family, or
a trustee or other fiduciary of a single trust estate or
single fiduciary account.

Class B Shares.  Class B shares are sold without an initial
sales charge but are subject to a Deferred Sales Charge
payable upon certain redemptions. See "Deferred Sales
Charge Provisions."

Class L Shares.  Class L shares are sold with an initial
sales charge of 1.00% (which is equal to 1.01% of the
amount invested) and are subject to a deferred sales charge
payable upon certain redemptions.  See "Deferred Sales
Charge Provisions".  Until June 22, 2001 purchases of Class
L shares by investors who were holders of Class C shares of
other Smith Barney mutual funds on June 12, 1998 will not
be subject to the 1% initial sales charge.

Class Y Shares.  Class Y shares are sold without an initial
sales charge or deferred sales charge and are available
only to investors investing a minimum of $15,000,000
(except purchases of Class Y shares by Smith Barney
Allocation Series Inc., for which there is no minimum
purchase amount).

Class 1 Shares.  Class 1 shares are offered only through
PFS Accounts, and only to Eligible Class 1 Purchasers, at
the next determined net asset value plus a sales charge, as
set forth below.




Size of Investment

As % of
Net Amount
Invested


As % of
Offering
Price
Reallowed to
PFS
(as a % of
Offering
Price)*
Less than $10,000
9.29%
8.50%
7.00%
$     10,000 but less than
$    25,000
8.40%
7.75%
6.25%
$     25,000 but less than
$    50,000
6.38%
6.00%
5.00%
$     50,000 but less than
$  100,000
4.71%
4.50%
3.75%
$   100,000 but less than
$   250,000
3.63%
3.50%
3.00%
$   250,000 but less than
$   400,000
2.56%
2.50%
2.00%
$   400,000 but less than
$   600,000
2.04%
2.00%
1.60%
$   600,000 but less than
$5,000,000
1.01%
1.00%
0.75%
$5,000,000 or more
0.25%
0.25%
0.20%


Class 1 shares may be purchased at net asset value by the
Primerica Plan for eligible Class 1 Purchasers
participating in the Primerica Plan, subject to the
provisions of ERISA. Shares so purchased are purchased for
investment purposes and may not be resold except by
redemption or repurchase by or on behalf of the Primerica
Plan. Class 1 Shares are also offered at net asset value to
accounts opened for shareholders by PFS Investments
Registered Representatives where the amounts invested
represent the redemption proceeds from investment companies
distributed by an entity other than the distributor, if
such redemption has occurred no more than 60 days prior to
the purchase of shares of the Company and the shareholder
paid an initial sales charge and was not subject to a
deferred sales charge on the redeemed account. Shares are
offered at net asset value to such persons because of
anticipated economies in sales efforts and sales related
expenses. The Company may terminate, or amend the terms of,
offering shares of the Company at net asset value to such
persons at any time. PFS may pay PFS Investment Registered
Representatives through whom purchases are made at net
asset value an amount equal to 0.40% of the amount invested
if the purchase represents redemption proceeds from an
investment company distributed by an entity other than the
distributor. Contact the sub-transfer agent at (800) 544-
5445 for further information and appropriate forms.

PFS Investments Accounts. The fund offers two Classes of
shares to investors purchasing shares through PFS
Investments: Class A shares, Class B shares and Class 1
shares.

Initial purchases of shares of the fund must be made
through a PFS Investments Registered Representative by
completing the appropriate application found in this
Prospectus. The completed application should be forwarded
to PFS Shareholder Services, P.O. Box 105033, Atlanta,
Georgia 30348. Checks drawn on foreign banks must be
payable in U.S. dollars and have the routing number of the
U.S. bank encoded on the check. Subsequent investments may
be sent directly to PFS Shareholder Services.  In
processing applications and investments, the PFS
Shareholder Services acts as agent for the investor and for
PFS Investments and also as agent for the distributor, in
accordance with the terms of the prospectus.  If Citi
Fiduciary Trust Company  ceases to act as such, a successor
company named by the fund will act in the same capacity so
long as the account remains open.

Shares purchased will be held in the shareholder's account
by PFS Shareholder Services. Share certificates are issued
only upon a shareholder's written request to PFS
Shareholder Services. A shareholder who has insufficient
funds to complete any purchase, will be charged a fee of
$30 per returned purchase by PFS Shareholder Services.

Investors in Class A and Class B shares may open an account
by making an initial investment of at least $1,000 for each
account in each Class (except for Systematic Investment
Plan accounts), or $250 for an IRA or a Self-Employed
Retirement Plan in the fund. Subsequent investments of at
least $50 may be made for each Class. For participants in
retirement plans qualified under Section 403(b)(7) or
Section 401(a) of the Code, the minimum initial investment
requirement for Class A and Class B shares and the
subsequent investment requirement for each Class in the
fund is $25. There are no minimum investment requirements
in Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, Directors or
Trustees of any of the Smith Barney mutual funds, and their
spouses and children. The fund reserves the right to waive
or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to
time.  Purchase orders received by the Transfer Agent or
PFS Shareholder Services prior to the close of regular
trading on the NYSE, on any day the fund calculates its net
asset value, are priced according to the net asset value
determined on that day.

Upon completion of certain automated systems, initial
purchases of fund shares may be made by wire.  The minimum
investment that can be made by wire is $10,000. Before
sending the wire, the PFS Investments Registered
Representative must contact PFS Shareholder Services at
(800) 665-8677 to obtain proper wire instructions.  Once an
account is open, a shareholder may make additional
investments by wire.  The shareholder should contact PFS
Shareholder Services at (800) 544-5445 to obtain proper
wire instructions.

Upon completion of certain automated systems, shareholders
who establish telephone transaction authority on their
account and supply bank account information will be able to
make additions to their accounts at any time.  Shareholders
should contact PFS Shareholder Services at (800) 544-5445
between 8:00 a.m. and 8:00 p.m. eastern time any day that
the NYSE is open.  If a shareholder does not wish to allow
telephone subsequent investments by any person in his
account, he should decline the telephone transaction option
on the account application.  The minimum telephone
subsequent investment is $250 and can be up to a maximum of
$10,000.  By requesting a subsequent purchase by telephone,
you authorize PFS Shareholder Services  to transfer funds
from the bank account provided for the amount of the
purchase.  A shareholder who has insufficient funds to
complete the transfer will be charged a fee of up to $30 by
PFS Shareholder Services.  A shareholder who places a stop
payment on a transfer or the transfer is returned because
the account has been closed, will also be charged a fee of
up to $30 by PFS Shareholder Services.  Subsequent
investments by telephone may not be available if the
shareholder cannot reach PFS Shareholder Services whether
because all telephone lines are busy or for any other
reason; in such case, a shareholder would have to use the
fund's regular subsequent investment procedure described
above.

PFS may pay its Registered Representatives an amount equal
to 0.40% of the amount invested if the purchase represents
redemption proceeds from an investment company distributed
by an entity other than PFS Investments. In order to obtain
such discounts, the purchaser must provide sufficient
information at the time of purchase to permit verification
that the purchase would qualify for the elimination of the
sales charge.

In addition, Class A shares of the fund may be purchased at
net asset value by the PFS Primerica Corporation Savings
and Retirement Plan (the ''Primerica Plan'') for its
participants, subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended
(''ERISA''). Class A shares so purchased are purchased for
investment purposes and may not be resold except by
redemption or repurchase by or on behalf of the Primerica
Plan. Class A shares are also offered at net asset value to
accounts opened for shareholders by PFS Investments
Registered Representatives where the amounts invested
represent the redemption proceeds from investment companies
distributed by an entity other than PFS, if such redemption
has occurred no more than 60 days prior to the purchase of
shares of the trust, and the shareholder paid an initial
sales charge and was not subject to a deferred sales charge
on the redeemed account. Class A shares are offered at net
asset value to such persons because of anticipated
economies in sales efforts and sales related expenses. The
fund may terminate, or amend the terms of, offering shares
of the fund at net asset value to such persons at any time.
PFS may pay PFS Investments Registered Representatives,
through whom purchases are made at net asset value, an
amount equal to 0.40% of the amount invested if the
purchase represents redemption proceeds from an investment
company distributed by an entity other than PFS. Contact
PFS Shareholder Services at (800) 544-5445 for further
information and appropriate forms.

An account transcript is available at a shareholder's
request, which identifies every financial transaction in an
account since it has opened.  To defray administrative
expenses involved with providing multiple years worth of
information, there is a $15 charge for each Account
Transcript requested.  Additional copies of tax forms are
available at the shareholder's request.  A $10 fee for each
tax form will be assessed.

Additional information regarding PFS Shareholder Services
may be obtained by contacting the Client Services
Department at (800) 544-5445.

General

Investors may purchase shares from a Service Agent. In
addition, certain investors, including qualified retirement
plans purchasing through certain Service Agents, may
purchase shares directly from the fund. When purchasing
shares of the fund, investors must specify whether the
purchase is for Class A, Class B, Class L or Class Y
shares.  Service Agents may charge their customers an
annual account maintenance fee in connection with a
brokerage account through which an investor purchases or
holds shares.  Accounts held directly at sub-transfer agent
are not subject to a maintenance fee.

Investors in Class A, Class B and Class L shares may open
an account in the fund by making an initial investment of
at least $1,000 for each account, or $250 for an IRA or a
Self-Employed Retirement Plan, in the fund. Investors in
Class Y shares may open an account by making an initial
investment of $15,000,000. Subsequent investments of at
least $50 may be made for all Classes. For participants in
retirement plans qualified under Section 403(b)(7) or
Section 401(c) of the Code, the minimum initial investment
required for Class A, Class B and Class L shares and the
subsequent investment requirement for all Classes in the
fund is $25.  For shareholders purchasing shares of the
fund through the Systematic Investment Plan on a monthly
basis, the minimum initial investment requirement for Class
A, Class B and Class L shares and subsequent investment
requirement for all Classes is $25.  For shareholders
purchasing shares of the fund through the Systematic
Investment Plan on a quarterly basis, the minimum initial
investment required for Class A, Class B and Class L shares
and the subsequent investment requirement for all Classes
is $50. There are no minimum investment requirements for
Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, unitholders
who invest distributions from a unit investment trust
("UIT") sponsored by Salomon Smith Barney, and
Directors/Trustees of any of the Smith Barney mutual funds,
and their spouses and children. The fund reserves the right
to waive or change minimums, to decline any order to
purchase its shares and to suspend the offering of shares
from time to time. Shares purchased will be held in the
shareholder's account by the sub-transfer agent. Share
certificates are issued only upon a shareholder's written
request to the sub-transfer agent.

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

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




Sales Charge Waivers and Reductions

Initial Sales Charge Waivers.  Purchases of Class A shares
may be made at net asset value without a sales charge in
the following circumstances: (a) sales to (i) Board Members
and employees of Citigroup and its subsidiaries and any
Citigroup affiliated funds including the Smith Barney
mutual funds (including retired Board Members and
employees); the immediate families of such persons
(including the surviving spouse of a deceased Board Member
or employee); and to a pension, profit-sharing or other
benefit plan for such persons and (ii) employees of members
of the National Association of Securities Dealers, Inc.,
provided such sales are made upon the assurance of the
purchaser that the purchase is made for investment purposes
and that the securities will not be resold except through
redemption or repurchase; (b) offers of Class A shares to
any other investment company to effect the combination of
such company with the fund by merger, acquisition of assets
or otherwise; (c) purchases of Class A shares by any client
of a newly employed Salomon Smith Barney Financial
Consultant (for a period up to 90 days from the
commencement of the Financial Consultant's employment with
Salomon Smith Barney), on the condition the purchase of
Class A shares is made with the proceeds of the redemption
of shares of a mutual fund which (i) was sponsored by the
Financial Consultant's prior employer, (ii) was sold to the
client by the Financial Consultant and (iii) was subject to
a sales charge; (d) purchases by shareholders who have
redeemed Class A shares in the fund (or Class A shares of
another Smith Barney mutual fund that is offered with a
sales charge) and who wish to reinvest their redemption
proceeds in the fund, provided the reinvestment is made
within 60 calendar days of the redemption; (e) purchases by
accounts managed by registered investment advisory
subsidiaries of Citigroup; (f) direct rollovers by plan
participants of distributions from a 401(k) plan offered to
employees of Citigroup or its subsidiaries or a 401(k) plan
enrolled in the Smith Barney 401(k) Program (Note:
subsequent investments will be subject to the applicable
sales charge); (g) purchases by a separate account used to
fund certain unregistered variable annuity contracts; (h)
investments of distributions from or proceeds from a sale
of a UIT sponsored by Salomon Smith Barney; (i) purchases
by investors participating in a Salomon Smith Barney fee-
based arrangement;  and (j)  purchases of Class A shares by
Section 403(b) or Section 401(a) or (k) accounts associated
with Copeland Retirement Programs. In order to obtain such
discounts, the purchaser must provide sufficient
information at the time of purchase to permit verification
that the purchase would qualify for the elimination of the
sales charge.

Right of Accumulation.  Class A shares of the fund may be
purchased by ''any person'' (as defined above) at a reduced
sales charge or at net asset value determined by
aggregating the dollar amount of the new purchase and the
total net asset value of all Class A shares of the fund and
of other Smith Barney mutual funds that are offered with a
sales charge as currently listed under ''Exchange
Privilege'' then held by such person and applying the sales
charge applicable to such aggregate.  In order to obtain
such discount, the purchaser must provide sufficient
information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales charge.
The right of accumulation is subject to modification or
discontinuance at any time with respect to all shares
purchased thereafter.

Letter of Intent - Class A Shares.  A Letter of Intent for
an amount of $50,000 or more provides an opportunity for an
investor to obtain a reduced sales charge by aggregating
investments over a 13 month period, provided that the
investor refers to such Letter when placing orders.  For
purposes of a Letter of Intent, the ''Amount of
Investment'' as referred to in the preceding sales charge
table includes (i) all Class A shares of the fund and other
Smith Barney mutual funds offered with a sales charge
acquired during the term of the letter plus (ii) the value
of all Class A shares previously purchased and still owned.
Each investment made during the period receives the reduced
sales charge applicable to the total amount of the
investment goal.  If the goal is not achieved within the
period, the investor must pay the difference between the
sales charges applicable to the purchases made and the
charges previously paid, or an appropriate number of
escrowed shares will be redeemed.  The term of the Letter
will commence upon the date the Letter is signed, or at the
options of the investor, up to 90 days before such date.
Please contact a Service Agent or the Transfer Agent to
obtain a Letter of Intent application.

Letter of Intent - Class Y Shares.  A Letter of Intent may
also be used as a way for investors to meet the minimum
investment requirement for Class Y shares (except purchases
of Class Y shares by Smith Barney Allocation Series Inc.,
for which there is no minimum purchase amount).  Such
investors must make an initial minimum purchase of
$5,000,000 in Class Y shares of the fund and agree to
purchase a total of $15,000,000 of Class Y shares of the
fund within 13 months from the date of the Letter. If a
total investment of $15,000,000 is not made within the 13-
month period, all Class Y shares purchased to date will be
transferred to Class A shares, where they will be subject
to all fees (including a service fee of 0.25%) and expenses
applicable to the fund's Class A shares, which may include
a deferred sales charge of 1.00%. Please contact a Service
Agent or the Transfer Agent for further information.

Deferred Sales Charge Provisions

''Deferred Sales Charge Shares'' are: (a) Class B shares;
(b) Class L shares; and (c) Class A shares that were
purchased without an initial sales charge but are subject
to a deferred sales charge.  A deferred sales charge may be
imposed on certain redemptions of these shares.

Any applicable deferred sales charge will be assessed on an
amount equal to the lesser of the original cost of the
shares being redeemed or their net asset value at the time
of redemption. Deferred Sales Charge Shares that are
redeemed will not be subject to a deferred sales charge to
the extent that the value of such shares represents: (a)
capital appreciation of fund assets; (b) reinvestment of
dividends or capital gain distributions; (c) with respect
to Class B shares, shares redeemed more than five years
after their purchase; or (d) with respect to Class L shares
and Class A shares that are Deferred Sales Charge Shares,
shares redeemed more than 12 months after their purchase.

Class L shares and Class A shares that are Deferred Sales
Charge Shares are subject to a 1.00% deferred sales charge
if redeemed within 12 months of purchase. In circumstances
in which the deferred sales charge is imposed on Class B
shares, the amount of the charge will depend on the number
of years since the shareholder made the purchase payment
from which the amount is being redeemed. Solely for
purposes of determining the number of years since a
purchase payment, all purchase payments made during a month
will be aggregated and deemed to have been made on the last
day of the preceding Salomon Smith Barney statement month.
The following table sets forth the rates of the charge for
redemptions of Class B shares by shareholders, except in
the case of Class B shares held under the Smith Barney
401(k) Program, as described below. See ''Purchase of
Shares-Smith Barney 401(k) and ExecChoiceTM Programs.''




Year Since Purchase Payment Was
Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

0.00

Class B shares will convert automatically to Class A shares
eight years after the date on which they were purchased and
thereafter will no longer be subject to any distribution
fees. There will also be converted at that time such
proportion of Class B Dividend Shares owned by the
shareholders as the total number of his or her Class B
shares converting at the time bears to the total number of
outstanding Class B shares (other than Class B Dividend
Shares) owned by the shareholder.

In determining the applicability of any deferred sales
charge, it will be assumed that a redemption is made first
of shares representing capital appreciation, next of shares
representing the reinvestment of dividends and capital gain
distributions and finally of other shares held by the
shareholder for the longest period of time.  The length of
time that deferred sales charge shares acquired through an
exchange have been held will be calculated from the date
that the shares exchanged were initially acquired in one of
the other Smith Barney mutual funds, and fund shares being
redeemed will be considered to represent, as applicable,
capital appreciation or dividend and capital gain
distribution reinvestments in such other funds. For Federal
income tax purposes, the amount of the deferred sales
charge will reduce the gain or increase the loss, as the
case may be, on the amount realized on redemption. The
amount of any deferred sales charge will be paid to Salomon
Smith Barney.

To provide an example, assume an investor purchased 100
Class B shares of the fund at $10 per share for a cost of
$1,000.  Subsequently, the investor acquired 5 additional
shares of the fund through dividend reinvestment.  During
the fifteenth month after the purchase, the investor
decided to redeem $500 of his or her investment.  Assuming
at the time of the redemption the net asset value had
appreciated to $12 per share, the value of the investor's
shares would be $1,260 (105 shares at $12 per share). The
deferred sales charge would not be applied to the amount
which represents appreciation ($200) and the value of the
reinvested dividend shares ($60).  Therefore, $240 of the
$500 redemption proceeds ($500 minus $260) would be charged
at a rate of 4.00% (the applicable rate for Class B shares)
for a total deferred sales charge of $9.60.




Waivers of Deferred Sales Charge

The deferred sales charge will be waived on: (a) exchanges
(see ''Exchange Privilege''); (b) automatic cash
withdrawals in amounts equal to or less than 1.00% per
month of the value of the shareholder's shares at the time
the withdrawal plan commences (see ''Automatic Cash
Withdrawal Plan'') (provided, however, that automatic cash
withdrawals in amounts equal to or less than 2.00% per
month of the value of the shareholder's shares will be
permitted for withdrawal plans that were established prior
to November 7, 1994); (c) redemptions of shares within 12
months following the death or disability of the
shareholder; (d) redemptions of shares made in connection
with qualified distributions from retirement plans or IRAs
upon the attainment of age 591/2; (e) involuntary
redemptions; and (f) redemptions of shares to effect a
combination of the fund with any investment company by
merger, acquisition of assets or otherwise. In addition, a
shareholder who has redeemed shares from other Smith Barney
mutual funds may, under certain circumstances, reinvest all
or part of the redemption proceeds within 60 days and
receive pro rata credit for any deferred sales charge
imposed on the prior redemption.

Deferred sales charge waivers will be granted subject to
confirmation (by Salomon Smith Barney in the case of
shareholders who are also Salomon Smith Barney clients or
by the Transfer Agent in the case of all other
shareholders) of the shareholder's status or holdings, as
the case may be.

Smith Barney Retirement Programs

You may be eligible to participate in a retirement program
sponsored by Salomon Smith Barney or one of its affiliates.
The fund offers Class A and Class L shares at net asset
value to participating plans under the programs. You can
meet minimum investment and exchange amounts, if any by
combining the plan's investments in any of the Smith Barney
mutual funds.

There are no sales charges when you buy or sell shares and
the class of shares you may purchase depends on the amount
of your initial investment and/or the date your account is
opened. Once a class of shares is chosen, all additional
purchases must be of the same class.

For plans opened on or after March 1, 2000 that are not
part of the Paychex offering, Class A shares may be
purchased regardless of the amount invested.

For plans opened prior to March 1, 2000 and for plans that
are part of the Paychex offering, the class of shares you
may purchase depends on the amount of your initial
investment:

Class A Shares.  Class A shares may be purchased by plans
investing at least $1 million.

Class L Shares.  Class L shares may be purchased by plans
investing less than $1 million. Class L shares are eligible
to exchange into Class A shares not later than 8 years
after the plan joined the program.  They are eligible for
exchange in the following circumstances:

If the plan was opened on or after June 21, 1996 and a
total of $1 million is invested in Smith Barney funds Class
L shares (other than money market funds), all Class L
shares are eligible for exchange after the plan is in the
program for 5 years.

If the plan was opened before June 21, 1996 and a total of
$500,000 is invested in Smith Barney funds Class L shares
(other than money market funds) on December 31 in any year,
all Class L shares are eligible for exchange on or about
March 31 of the following year.

For more information, call your Service Agent or the
transfer agent.

Retirement Programs Opened On or After June 21, 1996.  If,
at the end of the fifth year after the date the
participating plan enrolled in the Smith Barney 401(k)
Program or the ExecChoiceTM Program, a participating plan's
total Class L holdings in all non-money market Smith Barney
mutual funds equal at least $1,000,000, the participating
plan will be offered the opportunity to exchange all of its
Class L shares for Class A shares of the fund. (For
participating plans that were originally established
through a Salomon Smith Barney retail brokerage account,
the five-year period will be calculated from the date the
retail brokerage account was opened.) Such participating
plans will be notified of the pending exchange in writing
within 30 days after the fifth anniversary of the
enrollment date and, unless the exchange offer has been
rejected in writing, the exchange will occur on or about
the 90th day after the fifth anniversary date. If the
participating plan does not qualify for the five-year
exchange to Class A shares, a review of the participating
plan's holdings will be performed each quarter until either
the participating plan qualifies or the end of the eighth
year.

Retirement Programs Opened Prior to June 21, 1996.  In any
year after the date a participating plan enrolled in the
Smith Barney 401(k) Program, if a participating plan's
total Class L holdings in all non-money market Smith Barney
mutual funds equal at least $500,000 as of the calendar
year-end, the participating plan will be offered the
opportunity to exchange all of its Class L shares for Class
A shares of the fund. Such Plans will be notified in
writing within 30 days after the last business day of the
calendar year and, unless the exchange offer has been
rejected in writing, the exchange will occur on or about
the last business day of the following March.

Any participating plan in the Smith Barney 401(k) or the
ExecChoiceTM Program, whether opened before or after June
21, 1996, that has not previously qualified for an exchange
into Class A shares will be offered the opportunity to
exchange all of its Class L shares for Class A shares of
the fund, regardless of asset size, at the end of the
eighth year after the date the participating plan enrolled
in the Smith Barney 401(k) Program or ExecChoiceTM Program.
Such plans will be notified of the pending exchange in
writing approximately 60 days before the eighth anniversary
of the enrollment date and, unless the exchange has been
rejected in writing, the exchange will occur on or about
the eighth anniversary date. Once an exchange has occurred,
a participating plan will not be eligible to acquire
additional Class L shares, but instead may acquire Class A
shares of the same fund. Any Class L shares not converted
will continue to be subject to the distribution fee.

Participating plans wishing to acquire shares of the fund
through the Smith Barney 401(k) Program or the Smith Barney
ExecChoiceTM Program must purchase such shares directly from
the transfer agent. For further information regarding these
Programs, investors should contact a Service Agent.

Retirement Programs Investing in Class B Shares:  Class B
shares of a fund are not available for purchase by
participating plans opened on or after June 21, 1996, but
may continue to be purchased by any participating plan in
the Smith Barney 401 (k) Program opened prior to such date
and originally investing in such Class.  Class B shares
acquired are subject to a deferred sales charge of 3.00% of
redemption proceeds if the participating plan terminates
within 8 years of the date the participating plan first
enrolled in the Smith Barney 401 (k) Program.

At the end of the eighth year after the date the
participating plan enrolled in the Smith Barney 401 (k)
Program, the participating plan will be offered the
opportunity to exchange all of its Class B shares for Class
A shares of the same fund.  Such participating plan will be
notified of the pending exchange in writing approximately
60 days before the eighth anniversary of the enrollment
date and, unless the exchange has been rejected in writing,
the exchange will occur on or about the eighth anniversary
date.  Once the exchange has occurred, a participating plan
will not be eligible to acquire additional Class B shares,
but instead may acquire Class A shares of the same fund.
If the participating plan elects not to exchange all of its
Class B shares at that time, each Class B share held by the
participating plan will have the same conversion feature as
Class B shares held by other investors.  See "Purchase of
Shares-Deferred Sales Charge Alternatives."

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

The deferred sales charge will be waived on redemptions of
Class B shares in connection with lump-sum or other
distributions made by a participating plan; as a result of
(a) the retirement of an employee in the participating
plan; (b) the termination of employment of an employee in
the participating plan; (c) the death or disability of an
employee in the participating plan; (d) the attainment of
age 59 1/2 by an employee in the participating plan; (e)
hardship of an employee in the participating plan to the
extent permitted under Section 401(k) of the Code; or (f)
redemptions of shares in connection with a loan made by the
participating plan to an employee.

Determination of Public Offering Price

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

REDEMPTION OF SHARES

The right of redemption of shares of the fund may be
suspended or the date of payment postponed (a) for any
periods during which the NYSE is closed (other than for
customary weekend and holiday closings), (b) when trading
in the markets the fund normally utilizes is restricted, or
an emergency exists, as determined by the SEC, so that
disposal of the fund's investments or determination of its
net asset value is not reasonably practicable or (c) for
any other periods as the SEC by order may permit for the
protection of the fund's shareholders.
If the shares to be redeemed were issued in certificate
form, the certificates must be endorsed for transfer (or be
accompanied by an endorsed stock power) and must be
submitted to the sub-transfer agent together with the
redemption request.  Any signature appearing on a share
certificate, stock power or written redemption request in
excess of $10,000 must be guaranteed by an eligible
guarantor institution such as a domestic bank, savings and
loan institution, domestic credit union, member bank of the
Federal Reserve System or member firm of a national
securities exchange.  Written redemption requests of
$10,000 or less do not require a signature guarantee unless
more than one such redemption request is made in any 10-day
period or the redemption proceeds are to be sent to an
address other than the address of record.  Unless otherwise
directed, redemption proceeds will be mailed to an
investor's address of record.  The Transfer Agent may
require additional supporting documents for redemptions
made by corporations, executors, administrators, trustees
or guardians.  A redemption request will not be deemed
properly received until the Transfer Agent receives all
required documents in proper form.

If a shareholder holds shares in more than one Class, any
request for redemption must specify the Class being
redeemed.  In the event of a failure to specify which
Class, or if the investor owns fewer shares of the Class
than specified, the redemption request will be delayed
until the Transfer Agent receives further instructions from
Salomon Smith Barney, or if the shareholder's account is
not with Salomon Smith Barney, from the shareholder
directly.  The redemption proceeds will be remitted on or
before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or
as permitted under the 1940 Act, in extraordinary
circumstances.  Generally, if the redemption proceeds are
remitted to a Salomon Smith Barney brokerage account, these
funds will not be invested for the shareholder's benefit
without specific instruction and Salomon Smith Barney will
benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check, other
than a certified or official bank check, will be remitted
upon clearance of the check, which may take up to fifteen
days or more.

Distribution in Kind

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

PFS Investments Accounts

Shareholders may redeem for cash some or all of their
shares of the fund at any time by sending a written request
in proper form directly to a sub-transfer agent, PFS
Shareholder Services, at P.O. Box 105033, Atlanta, Georgia
30348-5033. If you should have any questions concerning how
to redeem your account after reviewing the information
below, please contact PFS Shareholder Services at (800)
544-5445, Spanish-speaking representatives (800) 544-7278
or TDD Line for the Hearing Impaired (800) 824-1721.
The request for redemption must be signed by all persons in
whose names the shares are registered. Signatures must
conform exactly to the account registration. If the
proceeds of the redemption exceed $50,000, or if the
proceeds are not paid to the record owner(s) at the record
address, if the shareholder(s) has had an address change
within 45 days or less of the shareholder's redemption
request, or if the shareholder(s) is a corporation, sole
proprietor, partnership, trust or fiduciary, signature(s)
must be guaranteed by one of the following: a bank or trust
company; a broker-dealer; a credit union; a national
securities exchange, registered securities association or
clearing agency; a savings and loan association; or a
federal savings bank.

Generally, a properly completed redemption form with any
required signature guarantee is all that is required for a
redemption. In some cases, however, other documents may be
necessary. For example, in the case of shareholders holding
certificates, the certificates for shares being redeemed
must accompany the redemption request. Additional
documentary evidence of authority is also required by PFS
Shareholder Services in the event redemption is requested
by a corporation, partnership, trust, fiduciary, executor
or administrator. Additionally, if a shareholder requests a
redemption from a Retirement Plan account (IRA or SEP),
such request must state whether or not federal income tax
is to be withheld from the proceeds of the redemption
check. Redemption from a 403(b)(7) account requires
completion of a special form.  Please call PFS Shareholder
Services at (800) 544-5445 between 8:00 a.m. and 8:00 p.m.
eastern standard time to obtain the proper forms.

A shareholder may utilize PFS Shareholder Services
Telephone Redemption service to redeem his or her account
as long as they have authorized the telephone redemption
option.  If a shareholder does not wish to allow telephone
redemptions by any person in his account, he should decline
the telephone transaction option on the account
application.  The telephone redemption option can be used
only if: (a) the redemption proceeds are to be mailed to
the address of record and there has been no change of
address of record within the preceding 45 days; (b) the
shares to be redeemed are not in certificate form; (c); the
person requesting the redemption can provide proper
identification information; and (d) the proceeds of the
redemption do not exceed $50,000.  403(b)(7) accounts and
accounts not registered in the name of an individual(s) are
not eligible for the telephone redemption option.
Telephone redemption requests can be made by contacting PFS
Shareholder Services at (800) 544-5445 between 9:00 a.m.
and 6:00 p.m. Eastern time any day that the NYSE is open.
Telephone redemption may not be available if the
shareholder cannot reach PFS Shareholder Services whether
because all telephone lines are busy or for any other
reason; in such case, a shareholder would have to use the
fund's regular redemption procedure described above.

A shareholder may utilize PFS Shareholder Services FAX to
redeem the shareholder's account as long as a signature
guarantee or other documentary evidence is not required.
Redemption requests should be properly signed by all owners
of the account and faxed to PFS Shareholder Services at
(800) 554-2374. Facsimile redemptions may not be available
if the shareholder cannot reach PFS Shareholder Services by
FAX, whether because all telephone lines are busy or for
any other reason; in such case, a shareholder would have to
use the fund's regular redemption procedure described
above. Facsimile redemptions received by PFS Shareholder
Services  prior to 4:00 p.m. Eastern time on a regular
business day will be processed at the net asset value per
share determined that day.

Redemption proceeds can be sent by check to the address of
record, by wire transfer to a bank account designated on
the application or to a bank account designated on the
application via the Automated Clearinghouse (ACH).  A
shareholder will be charged a $25 service fee for wire
transfers and a nominal service fee for transfers made
directly to the shareholder's bank by the ACH. PFS
Shareholder Services will process and mail a shareholder's
redemption check usually within two to three business days
after receiving the redemption request in good order.  The
shareholder may request the proceeds to be mailed by two-
day air express for an $8 fee that will be deducted from
the shareholder's account or by one-day air express for a
$15 fee that will be deducted from the shareholder's
account.

Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the "Withdrawal Plan")
is available to shareholders of the fund who own shares of
the fund with a value of at least $10,000 and who wish to
receive specific amounts of cash monthly or quarterly.
Withdrawals of at least $50 may be made under the
Withdrawal Plan by redeeming as many shares of the fund as
may be necessary to cover the stipulated withdrawal
payment.  Any applicable deferred sales charge will not be
waived on amounts withdrawn by shareholders that exceed
1.00% per month of the value of a shareholder's shares at
the time the Withdrawal Plan commences.  (With respect to
Withdrawal Plans in effect prior to November 7, 1994, any
applicable deferred sales charge will be waived on amounts
withdrawn that do not exceed 2.00% per month of the value
of a shareholder's shares at the time the Withdrawal Plan
commences).  To the extent that withdrawals exceed
dividends, distributions and appreciation of a
shareholder's investment in a fund, continued withdrawal
payments will reduce the shareholder's investment, and may
ultimately exhaust it.  Withdrawal payments should not be
considered as income from investment in a fund.
Furthermore, as it generally would not be advantageous to a
shareholder to make additional investments in the fund at
the same time he or she is participating in the Withdrawal
Plan, purchases by such shareholders in amounts of less
than $5,000 ordinarily will not be permitted.

Shareholders of a fund who wish to participate in the
Withdrawal Plan and who hold their shares of the fund in
certificate form must deposit their share certificates with
the sub-transfer agent as agent for Withdrawal Plan
members.  All dividends and distributions on shares in the
Withdrawal Plan are reinvested automatically at net asset
value in additional shares of the fund involved.  A
shareholder who purchases shares directly through the sub-
transfer agent may continue to do so and applications for
participation in the Withdrawal Plan must be received by
the sub-transfer agent no later than the eighth day of the
month to be eligible for participation beginning with that
month's withdrawal.  For additional information,
shareholders should contact a Service Agent.

Additional Information Regarding Telephone Redemption And
Exchange Program

Neither the fund nor its agents will be liable for
following instructions communicated by telephone that are
reasonably believed to be genuine.  The fund and its agents
will employ procedures designed to verify the identity of
the caller and legitimacy of instructions (for example, a
shareholder's name and account number will be required and
phone calls may be recorded).  The fund reserves the right
to suspend, modify or discontinue the telephone redemption
and exchange program or to impose a charge for this service
at any time following at least seven (7) days prior notice
to shareholders.

VALUATION OF SHARES

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

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

EXCHANGE PRIVILEGE

Shareholders of any of the Smith Barney mutual funds may
exchange all or part of their shares for shares of the same
Class of other Smith Barney mutual funds, on the basis of
relative net asset value per share at the time of exchange
as follows:

A.  Class A and Class Y shares of the fund may be
exchanged without a sales charge for the respective
shares of any of the Smith Barney mutual funds.

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

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

The exchange privilege enables shareholders in any Smith
Barney mutual fund to acquire shares of the same Class in a
fund with different investment objectives when they believe
a shift between funds is an appropriate investment
decision.  This privilege is available to shareholders
residing in any state in which the fund shares being
acquired may legally be sold.  Prior to any exchange, the
shareholder should obtain and review a copy of the current
prospectus of each fund into which an exchange is being
considered.  Prospectuses may be obtained from a Service
Agent.

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

Additional Information Regarding the Exchange Privilege.
Although the exchange privilege is an important benefit,
excessive exchange transactions can be detrimental to the
fund's performance and its shareholders.  The manager may
determine that a pattern of frequent exchanges is excessive
and contrary to the best interests of the fund's other
shareholders.  In this event, the fund may, at its
discretion, decide to limit additional purchases and/or
exchanges by a shareholder.  Upon such a determination, the
fund will provide notice in writing or by telephone to the
shareholder at least 15 days prior to suspending the
exchange privilege and during the 15 day period the
shareholder will be required to (a) redeem his or her
shares in the fund or (b) remain invested in the fund or
exchange into any of the funds of the Smith Barney mutual
funds ordinarily available, which position the shareholder
would be expected to maintain for a significant period of
time.  All relevant factors will be considered in
determining what constitutes an abusive pattern of
exchanges.

PERFORMANCE DATA

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

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

Average Annual Total Return

A fund's "average annual total return," as described below,
is computed according to a formula prescribed by the SEC.
The formula can be expressed as follows:

P(1 + T)n = ERV

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

			T	= 	average annual total
return.

			n	= 	number of years.

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

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


Average Annual Total Return for the
fiscal year ended November 30, 2000



Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
13.63%
N/A
N/A
30.66%
Class B3
13.68%
N/A
N/A
31.74%
Class L4
16.54%
N/A
N/A
32.07%
Class Y5
20.06%
N/A
N/A
27.15%
_______________________
	1	Class A, B and  L  commenced operations on September
1, 1998 and Class Y on December 3, 1998.
	2	The average annual total return figure assumes that
the maximum 5.00% sales charge has been deducted from
the investment at the time of purchase.  If the
maximum sales charge had not been deducted, the
average annual total return for Class A shares for
the same period would have been 19.59% and 33.68% for
one year and since inception of the fund,
respectively.
	3	The average annual total return figure assumes that
the maximum applicable deferred sales charge has been
deducted from the investment at the time of
redemption.  If the maximum deferred sales charge had
not been deducted, the average annual total return
for Class B shares for the same period would have
been 18.68% and 32.68% for one year and since
inception of the fund, respectively.
	4	The average annual total return figure assumes that
the maximum applicable initial and deferred sales
charges have been deducted from the investment at the
time of redemption.  If the maximum initial and
deferred sales charges had not been deducted, the
average annual total return for Class L shares for
the same period would have been 18.75% and 32.68% for
one year and since inception of the fund,
respectively.
	5	Class Y shares do not incur initial sales charges nor
deferred sales charges.




Aggregate Total Return

The fund's "aggregate total return," as described below,
represents the cumulative change in the value of an
investment in the fund for the specified period and is
computed by the following formula:

ERV - P
P

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

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

The ERV assumes complete redemption of the hypothetical
investment at the end of the measuring period.


Aggregate Annual Total Return for
the fiscal year ended on November
30, 2000



Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
13.63%
N/A
N/A
82.51%
Class B3
13.68%
N/A
N/A
85.91%
Class L4
16.54%
N/A
N/A
86.94%
Class Y5
20.06%
N/A
N/A
61.46%
_______________________
	1	Classes A, B and L commenced operations on September
1, 1998 and Class Y on December 3, 1998.
	2	The average annual total return figure assumes that
the maximum 5.00% sales charge has been deducted from
the investment at the time of purchase.  If the
maximum sales charge had not been deducted, the
average annual total return for Class A shares for
the same period would have been 19.59% and 92.11% for
one year and since inception of the fund,
respectively.
	3	The average annual total return figure assumes that
the maximum applicable deferred sales charge has been
deducted from the investment at the time of
redemption.  If the maximum deferred sales charge had
not been deducted, the average annual total return
for Class B shares for the same period would have
been 18.68% and 88.91% for one year and since
inception of the fund, respectively.
	4	The average annual total return figure assumes that
the maximum applicable initial and deferred sales
charges have been deducted from the investment at the
time of redemption.  If the maximum initial and
deferred sales charges had not been deducted, the
average annual total return for Class L shares for
the same period would have been 18.75% and 88.91% for
one year and since inception of the fund,
respectively.
	5	Class Y shares do not incur initial sales charges nor
deferred sales charges.

Performance will vary from time to time depending upon
market conditions, the composition of the fund's portfolio
and operating expenses and the expenses exclusively
attributable to the Class. Consequently, any given
performance quotation should not be considered
representative of the Class's performance for any specified
period in the future.  Because performance will vary, it
may not provide a basis for comparing an investment in the
Class with certain bank deposits or other investments that
pay a fixed yield for a stated period of time. Investors
comparing a Class's performance with that of other mutual
funds should give consideration to the quality and maturity
of the respective investment companies' portfolio
securities.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

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

If a shareholder does not otherwise instruct, dividends and
capital gains distributions will be reinvested
automatically in additional shares of the same Class at net
asset value, with no additional sales charge or deferred
sales charge. A shareholder may change the option at any
time by notifying his Service Agent. Shareholders whose
accounts are held directly at PFPC should notify PFPC in
writing, requesting a change to this reinvestment option.

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

Taxes

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

The Fund and Its Investments

The fund intends to continue to qualify to be treated as a
regulated investment company during each taxable year under
the Internal Revenue Code of 1986, as amended (the "Code").
To so qualify, the fund must, among other things: (a)
derive at least 90% of its gross income in each taxable
year from dividends, interest, payments with respect to
securities loans and gains from the sale or other
disposition of stock or securities, foreign currencies, or
other income (including, but not limited to, gains from
options, futures or forward contracts) derived with respect
to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the
end of each quarter of the fund's taxable year, (i) at
least 50% of the market value of the fund's assets is
represented by cash, securities of other regulated
investment companies, United States government securities
and other securities, with such other securities limited,
in respect of any one issuer, to an amount not greater than
5% of the fund's assets and not greater than 10% of the
outstanding voting securities of such issuer and (ii) not
more than 25% of the value of its assets is invested in the
securities (other than United States government securities
or securities of other regulated investment companies) of
any one issuer or any two or more issuers that the fund
controls and which are determined to be engaged in the same
or similar trades or businesses or related trades or
businesses.

As a regulated investment company, the fund will not be
subject to United States federal income tax on its net
investment income (i.e., income other than its net realized
long-term and short-term capital gains) and its net
realized long-term and short-term capital gains, if any,
that it distributes to its shareholders, provided an amount
equal to at least 90% of its investment company taxable
income (i.e., 90% of its taxable income minus the excess,
if any, of its net realized long-term capital gains over
its net realized short-term capital losses (including any
capital loss carryovers), plus or minus certain other
adjustments as specified in the Code) and its net tax-
exempt income for the taxable year is distributed to its
shareholders in compliance with the Code's timing and other
requirements, but will be subject to tax at regular
corporate rates on any taxable income or gain it does not
distribute.

The Code imposes a 4% nondeductible excise tax on the fund
to the extent it does not distribute by the end of any
calendar year at least 98% of its ordinary income for that
year and at least 98% of its net capital gains (both long-
term and short-term) for the one-year period ending, as a
general rule, on October 31 of that year.  For this
purpose, however, any ordinary income or net capital gains
retained by the fund that is subject to corporate income
tax will be considered to have been distributed by year-
end.  In addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will be
increased or decreased to reflect any underdistribution or
overdistribution, as the case may be, from the previous
year.  The fund anticipates that it will pay such dividends
and will make such distributions as are necessary in order
to avoid the application of this excise tax.

If, in any taxable year, the fund fails to qualify as a
regulated investment company under the Code or fails to
meet the distribution requirement, it would be taxed in the
same manner as an ordinary corporation and distributions to
its shareholders would not be deductible by the fund in
computing its taxable income.  In addition, in the event of
a failure to qualify, the fund's distributions, to the
extent derived from the fund's current or accumulated
earnings and profits, would constitute dividends (eligible
for the corporate dividends-received deduction) which are
taxable to shareholders as ordinary income, even though
those distributions might otherwise (at least in part) have
been treated in the shareholders' hands as long-term
capital gains.  Moreover, if the fund fails to qualify as a
regulated investment company in any year, it must pay out
its earnings and profits accumulated in that year in order
to qualify again as a regulated investment company.  In
addition, the fund may be required to recognize any net
built-in gains with respect to certain of its assets (i.e.
the excess of the aggregate gains, including items of
income, over aggregate losses that would have been realized
with respect to such assets if the fund had been
liquidated) in order to qualify as a regulated investment
company in a subsequent year.

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

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

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

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

Alternatively, the fund may make a mark-to-market election
that will result in the fund being treated as if it had
sold and repurchased all of the PFIC stock at the end of
each year.  In such case, the fund would report any such
gains as ordinary income and would deduct any such losses
as ordinary losses to the extent of previously recognized
gains. The election, once made, would be effective for all
subsequent taxable years of the fund, unless revoked with
the consent of the Internal Revenue Service ("IRS"). By
making the election, the fund could potentially ameliorate
the adverse tax consequences with respect to its ownership
of shares in a PFIC, but in any particular year may be
required to recognize income in excess of the distributions
it receives from PFICs and its proceeds from dispositions
of PFIC stock.  The fund may have to distribute this
"phantom" income and gain to satisfy the 90% distribution
requirement and to avoid imposition of the 4% excise tax.
The fund will make the appropriate tax elections, if
possible, and take any additional steps that are necessary
to mitigate the effect of these rules.

Taxation of United States Shareholders

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

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

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

Sales of Shares.  Upon the sale or exchange of his shares,
a shareholder will realize a taxable gain or loss equal to
the difference between the amount realized and his basis in
his shares.  Such gain or loss will be treated as capital
gain or loss if the shares are capital assets in the
shareholder's hands, and will be long-term capital gain or
loss if the shares are held for more than one year and
short-term capital gain or loss if the shares are held for
one year or less.  Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed of are
replaced, including replacement through the reinvesting of
dividends and capital gains distributions in the fund,
within a 61-day period beginning 30 days before and ending
30 days after the disposition of the shares.  In such a
case, the basis of the shares acquired will be increased to
reflect the disallowed loss.  Any loss realized by a
shareholder on the sale of a fund share held by the
shareholder for six months or less will be treated for
United States federal income tax purposes as a long-term
capital loss to the extent of any distributions or deemed
distributions of long-term capital gains received by the
shareholder with respect to such share during such six-
month period. If a shareholder incurs a sales charge in
acquiring shares of the fund, disposes of those shares
within 90 days and then acquires shares in a mutual fund
for which the otherwise applicable sales charge is reduced
by reason of a reinvestment right (e.g., an exchange
privilege), the original sales charge will not be taken
into account in computing gain/loss on the original shares
to the extent the subsequent sales charge is reduced.
Instead, the disregarded portion of the original sales
charge will be added to the tax basis of the newly acquired
shares.  Furthermore, the same rule also applies to a
disposition of the newly acquired shares made within 90
days of the second acquisition.  This provision prevents a
shareholder from immediately deducting the sales charge by
shifting his or her investment in a family of mutual funds.

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

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

Other Taxation

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

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

ADDITIONAL INFORMATION

The trust was organized on October 17, 1991 under the laws
of the Commonwealth of Massachusetts and is a business
entity commonly known as a "Massachusetts business trust."
The trust offers shares of beneficial interest of seven
separate funds with a par value of $.001 per share.  The
fund offers shares of beneficial interest currently
classified into five Classes - A, B, L, Y and 1.  Each
Class of the fund represents an identical interest in the
fund's investment portfolio.  As a result, the Classes have
the same rights, privileges and preferences, except with
respect to:  (a) the designation of each Class; (b) the
effect of the respective sales charges; if any, for each
Class; (c) the distribution and/or service fees borne by
each Class pursuant to the Plan; (d) the expenses allocable
exclusively to each Class; (e) voting rights on matters
exclusively affecting a single Class; (f) the exchange
privilege of each Class; and (g) the conversion feature of
the Class B shares.  The trust's board of trustees does not
anticipate that there will be any conflicts among the
interests of the holders of the different Classes. The
trustees, on an ongoing basis, will consider whether any
such conflict exists and, if so, take appropriate action.

Under Massachusetts's law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of the fund.  The Master Trust Agreement
disclaims shareholder liability for acts or obligations of
the fund, however, and requires that notice of such
disclaimer be given in each agreement, obligation or
instrument entered into or executed by the fund or a
trustee.  The Master Trust Agreement provides for
indemnification from fund property for all losses and
expenses of any shareholder held personally liable for the
obligations of the fund.  Thus, the risk of a shareholder's
incurring financial loss on account of shareholder
liability is limited to circumstances in which the fund
itself would be unable to meet its obligations, a
possibility which management of the fund believes is
remote.  Upon payment of any liability incurred by the
fund, a shareholder paying such liability will be entitled
to reimbursement from the general assets of the fund.  The
trustees intend to conduct the operation of the fund in
such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the fund.

The Master Trust Agreement of the fund permits the trustees
of the fund to issue an unlimited number of full and
fractional shares of a single class and to divide or
combine the shares into a greater or lesser number of
shares without thereby changing the proportionate
beneficial interests in the fund.  Each share in the fund
represents an equal proportional interest in the fund with
each other share.  Shareholders of the fund are entitled
upon its liquidation to share pro rata in its net assets
available for distribution.  No shareholder of the fund has
any preemptive or conversion rights. Shares of the fund are
fully paid and non-assessable.

Pursuant to the Master Trust Agreement, the fund's trustees
may authorize the creation of additional series of shares
(the proceeds of which would be invested in separate,
independently managed portfolios) 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 fund does not hold annual shareholder meetings. There
normally will be no meetings of shareholders for the
purpose of electing trustees unless and until such time as
less than a majority of the trustees holding office have
been elected by shareholders, at which time the trustees
then in office will call a shareholders' meeting for the
election of trustees.  Shareholders of record of no less
than two-thirds of the outstanding shares of the trust may
remove a trustee through a declaration in writing or by
vote cast in person or by proxy at a meeting called for
that purpose.  The trustees will call a meeting for any
purpose upon written request of shareholders holding at
least 10% of the trust's outstanding shares and the trust
will assist shareholders in calling such a meeting as
required by the 1940 Act.

When matters are submitted for shareholder vote,
shareholders of each Class will have one vote for each full
share owned and a proportionate, fractional vote for any
fractional share held of that Class.  Generally, shares of
the fund will be voted on a fund-wide basis on all matters
except matters affecting only the interests of one Class,
in which case only shares of the affected Class would be
entitled to vote.

The trust was organized as an unincorporated Massachusetts
business trust on October 17, 1991 under the name Shearson
Lehman Brothers Intermediate-Term Trust.  On October 14,
1994 and August 16, 1995, the trust's name was changed to
Smith Barney Income Trust and Smith Barney Investment
Trust, respectively.  On August 16, 2000, the name of the
Smith Barney Mid Cap Blend Fund changed to Smith Barney Mid
Cap Core Fund.

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

FINANCIAL STATEMENTS

The fund's annual report for the fiscal year ended November
30, 2000 was filed on February 9, 2001, Accession Number
50130-01-704.

OTHER INFORMATION

In an industry where the average portfolio manager has
seven years of experience (source: ICI, 1998), the
portfolio managers of Smith Barney mutual funds average 21
years in the industry and 15 years with the firm.

Smith Barney mutual funds offers more than 60 mutual funds.
We understand that many investors prefer an active role in
allocating the mix of funds in their portfolio, while
others want the asset allocation decisions to be made by
experienced managers.

That's why we offer four "styles" of fund management that
can be tailored to suit each investor's unique financial
goals.

Style Pure Series - Our Style Pure Series funds stay fully
invested within their asset class and investment style,
enabling investors to make asset allocation decisions in
conjunction with their Salomon Smith Barney Financial
Consultant.

Classic Investor Series - Our Classic Investor Series funds
offer a range of equity and fixed income strategies that
seek to capture opportunities across asset classes and
investment styles using disciplined investment approaches.

The Smith Barney Allocation Series - As a fund of funds,
investors can select a Smith Barney Allocation Series
Portfolio that may help their investment needs.  As needs
change, investors can easily choose another long-term,
diversified investment from our Allocation Series family.

Special Discipline Series - Our Special Discipline Series
funds are designed for investors who are looking beyond
more traditional market categories: from natural resources
to a roster of state-specific municipal funds.































SMITH BARNEY
INVESTMENT TRUST



Mid Cap Core Fund















March 30, 2001



SMITH BARNEY INVESTMENT TRUST
7 World Trade Center
New York, NY 10048

								SALOMON SMITH BARNEY
								A Member of
Citigroup [Symbol]





1

68



PART C - OTHER INFORMATION

Item 23. Exhibits

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

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

	(a)(2)  Amendments to the Master Trust Agreement
dated October 14, 1994 and November 7, 1994,
respectively, are incorporated by reference to the
Registration Statement filed on Form N-14 on January
6, 1995 (the N-14).

	(a)(3)  Amendments to the Master Trust Agreement
dated July 20, 1995 and August 10, 1995 are
incorporated by reference to Post-Effective Amendment
No. 9 to the Registration Statement filed on August
29, 1995 (Post-Effective Amendment No. 9).

	(a)(4) Amended and Restated Master Trust Agreement
dated February 28, 1998 is incorporated by reference
to Post Effective Amendment No. 18 to the Registration
Statement filed on March 30, 1998 (Post-
Effective Amendment No, 18)

	(a)(5) Amendment No. 1 to the First Amended and
Restated
Master Trust Agreement dated June 1, 1998
is incorporated by reference to Post-Effective Amendment
No.20 to the
Registration Statement filed on June 26, 1998.

	(a)(6) Amendment No. 2 to the First Amended and
Restated Master
Trust Agreement dated October 16, 1998 is incorporated by
reference
to Post-Effective Amendment No.21 to the Registration
Statement
filed on November 12, 1998.

	(a)(7) Amendment No.3 to the First Amended and
Restated Master Trust Agreement dated February 28, 1998
is incorporated by reference to Post-Effective Amendment
No. 29 to the Registration Statement filed on April 25,
2000 (Post-Effective Amendment No. 29).

(a)(8) Amendment No.4 to the First Amended and
Restated Master Trust Agreement dated February 28, 1998
is incorporated by reference to Post-Effective Amendment
No. 30 to the Registration Statement filed on
August 16, 2000 (Post-Effective Amendment No. 30).

(a)(9) Amendment No.5 to the First Amended and
Restated Master Trust Agreement dated February 28, 1998
is incorporated by reference to Post-Effective
Amendment No. 30.

	(a)(10)  Amendment No. 6 to the First Amended and
Restated Master Trust Agreement dated February 28, 1998
is incorporated by reference to Post Effective Amendment
No. 31 to the Registration Statement filed on December 1,
2000.


(b)  Registrant's by-laws are incorporated by
reference to the Registration Statement.

	(c)(1) Registrant's form of stock certificate
for Smith Barney S&P 500 Index Fund is incorporated by
reference to Post-Effective Amendment No. 16 to the
Registration Statement filed on December 29, 1997.

	(c)(2) Registrant's form of stock certificate
for Smith Barney Large Capitalization Growth Fund is
incorporated by reference to Post-Effective Amendment
No.17 to the Registration Statement filed on
February 20, 1998 (Post-Effective Amendment No. 17).

 	(c)(3) Registrant's form of stock certificate for
Smith Barney Mid Cap Blend Fund is incorporated by
reference to Post-Effective Amendment No. 22 to the
Registration Statement filed on January 28, 1999
(Post-Effective Amendment No. 22).

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

	(d)(2)  Transfer of Investment Advisory Agreement
dated November 7, 1994 between the Registrant on
behalf of Smith Barney Intermediate Maturity
California Municipals Fund, Greenwich Street Advisors
and Mutual Management Corp. is incorporated by
reference to the N-14.

	(d)(3)  Form of Transfer of Investment Advisory
Agreement for Smith Barney Limited Maturity
Municipals Fund, Smith Barney Intermediate Maturity
New York Municipals Fund and Smith Barney Limited
Maturity Treasury Fund is incorporated by reference
to Post-Effective Amendment No. 6 to the Registration
Statement filed on January 27, 1995 (Post-Effective
Amendment No. 6).

	(d)(4)  Form of Investment Advisory Agreement
between the Registrant on behalf of Smith Barney S&P
500 Index Fund and Travelers Investment
Management Company dated December 11, 1997 is
incorporated by reference to Post Effective Amendment
No. 15 to the Registration Statement
filed on December 12, 1997.

	(d)(5)  Form of Investment Management Agreement
between the Registrant on behalf of Smith Barney
Large Capitalization Growth Fund and Mutual
Management Corp.("MMC") (f/k/a Smith Barney Mutual Funds
Management Inc.) is incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement filed on February 20,1998 (Post-Effective
Amendment No. 17)

(d)(6) Form of Investment Management Agreement
between Smith Barney Mid Cap Blend Fund and MMC
is incorporated by reference to Post-Effective Amendment
No. 17 to the Registration Statement filed on February
20,1998
(Post-Effective Amendment No. 17)

	(e)(1)  Distribution Agreement between the
Registrant and Smith Barney Shearson Inc. dated July
30, 1993 is incorporated by reference to Post-
Effective Amendment No. 3.

	(e)(2)  Form of Distribution Agreement between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund and PFS Distributors is incorporated by
reference to Post-Effective Amendment No. 10.

	(e)(3) Distribution Agreement between the
Registrant
and CFBDS, Inc. dated October 8, 1998 is incorporated by
reference
to Post-Effective Amendment No.21 to the Registration
Statement
Filed on November 12, 1998.

	(e)(4) Selling Group Agreement between CFBDS Inc.
and
Salomon Smith Barney is incorporated by reference to
Post-Effective
Amendment No. 24 to the Registration Statement filed on
March 30, 1999
(Post-Effective Amendment No.24).


	(e)(5) Form of Third Party Feeder Agreement between
the
Registrant, CFBDS Inc. and Barclays Global Fund Advisors
on
behalf of the Smith Barney U.S. 5000 Index Fund and EAFE
Index Fund
is incorporated by reference to Post-Effective Amendment
No. 29.

	(e)(6)	Form of Distribution Agreement with Salomon
Smith Barney Inc. is incorporated by reference to
Post-Effective Amendment No. 30.

	(e)(7)	Form of Distribution Agreement with PFS
Distributors, Inc. is incorporated by reference to
Post-Effective Amendment No. 30.

	(e)(8)Form of Third Party Feeder Agreement between
the Registrant, Salomon Smith Barney Inc. and Master
Investment
Portfolio on behalf of the Smith Barney U.S. 5000 Index
Fund,
and EAFE Index Fund is incorporated by reference to Post-
Effective
Amendment No. 30.

	(f)  Not Applicable.

	(g)(1)  Form of Custody Agreement with PNC Bank,
National Association, is incorporated by reference to
Post-Effective Amendment No. 9.

	(g)(2)  Form of Custodian Agreement with Investors
Bank & Trust Company is incorporated by reference to
Post-Effective Amendment No. 29.


	(h)(1)  Administration Agreement between the
Registrant on behalf of Smith Barney Intermediate
Maturity California Municipals Fund and Smith Barney
Advisers, Inc. (SBA) is incorporated by reference to
the N-14.

	(h)(2)  Form of Administration Agreement between
the Registrant on behalf of Smith Barney Limited
Maturity Municipals Fund and Smith Barney
Intermediate Maturity New York Municipals Fund and
SBA is incorporated by reference to Post-Effective
Amendment No. 6.

	(h)(3)  Form of Administration Agreement between
the Registrant on behalf of Smith Barney S&P 500
Index Fund and MMC is incorporated by reference
to Post Effective Amendment No. 15.

	(h)(4)  Transfer Agency Agreement with First Data
Investor Services Group, Inc. is incorporated by
reference
to Post-Effective Amendment No. 3.

	(h)(5)  Form of Sub-Transfer Agency Agreement
between the Registrant on behalf of Smith Barney S&P
500 Index Fund and PFS Shareholder Services is
incorporated by reference to Post-Effective Amendment
No. 10.

	(h)(6)  Form of Administration Agreement between
the Registrant on behalf of Smith Barney U.S. 5000 Index
Fund ("U.S. 5000 Index Fund") and SSB Citi Fund
Management LLC ("SSB Citi") is incorporated by reference
to
Post-Effective Amendment No. 26 to the Registration
Statement
filed on October 13, 1999 (Post-Effective Amendment No.
26).

	(h)(7)  Form of Administration Agreement between
the Registrant on behalf of Smith Barney EAFE Index Fund
("EAFE Index Fund") and SSB Citi is incorporated by
reference
to Post-Effective Amendment No. 26.

(h)(8) Transfer Agency Agreement dated October 1,
1999
between the Registrant and Citi Fiduciary Trust Company
f/k/a Smith Barney Private Trust Company) is incorporated
by reference to Post-Effective Amendment No. 30.


(h)(9) Sub-Transfer Agency Agreement dated October 1,
1999
between Citi Fiduciary Trust Company ( f/k/a Smith Barney
Private Trust Company) and First Data Investor Services
Group,
Inc. is incorporated by reference to Post-Effective
Amendment No. 30.

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

	(i)(2)  Legal Counsel's consent is incorporated by
reference to Post-Effective Amendment No. 24.


(j)	Auditor's consent is filed herein.

	(k)  Not Applicable.

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

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

	(m)(2) Form of Amended Service and Distribution
Plan pursuant to Rule 12b-1 between the Registrant on
behalf of Smith Barney Limited Maturity Municipals
Fund and Smith Barney Intermediate Maturity New York
Municipals Fund and Smith Barney Inc. is incorporated
by reference to Post-Effective Amendment No. 6.

	(m)(3)  Form of Shareholder Services and
Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund is incorporated by reference to Post Effective
Amendment No. 15.

	(m)(4) Form of Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on behalf
of the Fund and Smith Barney Large Capitalization Growth
Fund is incorporated by reference to Post
Effective Amendment No. 17 to the Registration
Statement filed on February 20, 1998 (Post-Effective
Amendment
No. 17).

	(m)(5) Form of Amended and Restated
Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on behalf
of the Funds is incorporated by
reference to Post-Effective Amendment No. 22.

	(m)(6) Form of Shareholder Services Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of the U.S. 5000 Index Fund and Salomon
Smith Barney Inc. is incorporated by reference to
Post-Effective Amendment No. 26.

	(m)(7) Form of Shareholder Services Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of the EAFE Index Fund and Salomon
Smith Barney Inc. is incorporated by reference
to Post-Effective Amendment No. 26.

(m)(8) Form of Amended and Restated Shareholder
Services and Distribution Plan pursuant to
Rule 12b-1 of Registrant is incorporated by reference
to Post-Effective Amendment No. 30.

(n) Not Applicable.


	(o)(1) Plan adopted pursuant to Rule 18f-3(d) of
the Investment Company Act of 1940, as amended, is
incorporated by reference to Post-Effective Amendment
No. 10.

(o)(2) Rule 18f-3(d) Multiple Class Plan of the
Registrant
is incorporated by reference to Post-Effective Amendment
No. 22.

(p) Code of Ethics is incorporated by reference to
Post-Effective
Amendment No. 27 to the Registration Statement filed on
March 27, 2000 (Post-Effective Amendment No. 27).

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

		None

Item 25.	Indemnification

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

Item 26(a).	Business and Other Connections of Investment
Adviser

Investment Adviser - Citigroup Fund Management LLC
(prior to March 30, 2001, known as SSB Citi Fund
Management LLC) ("CFM")was incorporated in
March 1968 under the laws of the State of Delaware.

On September 21, 1999, CFM was converted into a
Delaware Limited
Liability Company. CFM is a wholly owned subsidiary
of Salomon
Smith Barney Holdings Inc., which in turn is
a wholly
owned subsidiary of Citigroup Inc. CFM is registered as an
investment
adviser under the
Investment Advisers Act of 1940 (the "Advisers Act") and
has, through its
predecessors, been in the investment counseling business
since 1968.

CFM serves as the Investment Adviser and
Administrator
for Smith Barney Intermediate Maturity California
Fund and Smith Barney Intermediate Maturity New York
Fund and Investment Manager for Smith Barney Large
Capitalization Growth Fund and Smith Barney Mid Cap Core
Fund.
CFM also serves as the administrator to the Smith
Barney S&P 500
Index Fund, the Smith Barney U.S. 5000 Index Fund and the
Smith Barney International Index Fund (formerly known
as Smith Barney EAFE Index Fund).

The list required by this Item 26 of officers and
directors of CFM
together with information as to any other business,
profession,
vocation or employment of a substantial nature engaged in
by such
officers and directors during the past two fiscal years,
is incorporated
by reference to Schedules A and D of FORM ADV filed by
CFM
pursuant to the Advisers Act (SEC File No. 801-8314).

Investment Adviser - Travelers Investment Management
Company. (TIMCO).  TIMCO serves as the investment
adviser for Smith Barney S&P 500 Index Fund pursuant to a
written
agreement (the Advisory Agreement). TIMCO was
incorporated on August 31, 1967 under the laws of the
State of Connecticut.  TIMCO is a wholly owned
subsidiary of Holdings, which in turn is a wholly owned
subsidiary of Citigroup.

TIMCO is registered as an investment adviser under
the Investment Advisers Act of 1940 (the Advisers
Act) since 1971 and has, through its predecessors,
been in the investment counseling business since
1967.

The list required by this Item 26 of the officers
and directors of TIMCO together with information as
to any other business, profession, vocation or
employment of a substantial nature engaged in by such
officers and directors during the past two fiscal
years, is incorporated by reference to Schedules A
and D of FORM ADV filed by SSBC pursuant to the
Advisers Act (SEC File No.801-07212).


Item 27.	Principal Underwriters

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

In addition, Salomon Smith Barney is also the distributor
for the Centurion Funds, Inc.


PFS Distributors, Inc., ("PFS Distributors"),
a Distributor of the Registrant, is also a distributor for
the
following Smith Barney funds:

Smith Barney Investment Series,
Smith Barney Aggressive Growth Fund Inc.,
Smith Barney Appreciation Fund Inc.,
Smith Barney Allocation Series Inc.,
Smith Barney Equity Funds,
Smith Barney Fundamental Value Fund Inc.
Smith Barney Income Funds,
Smith Barney Investment Funds Inc.,
Smith Barney Managed Municipals Fund Inc.,
Smith Barney Money Funds, Inc.
Smith Barney Sector Series Inc.

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

The information required by this Item 27 with respect
to each director, officer and partner of PFS Distributors
is incorporated by reference to Schedule A of Form BD
filed by PFS Distributors  pursuant to the Securities
Exchange Act of 1934 (SEC File No. 8-37352).


(c)	Not applicable.


Item 28.  Location of Accounts and Records

(1) 	Smith Barney Investment Trust
	7 World Trade Center, 39th Floor
	New York, New York 10048

(2) With respect to the Registrant's Manager and
Administrator:
CFM Fund Management LLC
	7 World Trade Center, 39th Floor
	New York, New York  10048

(3)	With respect to the Registrant's Investment
Adviser:
Travelers Investment Management Company
	One Tower Square
	Hartford, CT 06183
	(For Smith Barney S&P 500 Index Fund)


(4)	With respect to the Registrant's Custodian:

(a)	PFPC Trust Company
(successor by assignment from
PNC Bank, National Association)
	8800 Tinicum Boulevard
	Philadelphia, Pennsylvania 19153

	(Custodian for Smith Barney Intermediate Maturity
	California Municipals Fund, Smith Barney
Intermediate
	Maturity New York Municipals Fund, Smith Barney
Large Capitalization Growth Fund and Smith Barney
Mid Cap Core Fund and Smith Barney S&P 500
Index Fund)

(b)	Investors Bank and Trust Company
	200 Clarendon Street
	Boston, Massachusetts  02117-9130

	(Custodian for Smith Barney U.S. 5000 Index Fund
and	Smith Barney International Index Fund)

(5)	With respect to the Registrant's Sub-Transfer
Agent:
PFPC Global Fund Services
	P.O. Box 9699
Providence, Rhode Island  02940-9699

With respect to the Registrant's Sub-Transfer Agent
only in connection with Smith Barney Mid Cap Core Fund:

PFS Shareholder Services
3100 Breckinridge Boulevard, Building 200
Duluth, Georgia 30099-0062


(6) 	With respect to the Registrant's Co-Distributors:
Salomon Smith Barney Inc.
7 World Trade Center
New York, New York  10048

PFS Distributors, Inc.
3100 Breckinridge Boulevard, Building 200
Duluth, Georgia 30099-0062

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 Fund certifies that it meets all of the requirements
for effectiveness
of this registration statement under rule 485(b) under
the Securities
Act and has duly caused this registration statement to be
signed
on its behalf by the undersigned, thereto duly
authorized in the City of New York, in the State of
New York on the    26th day of March, 2001.

SMITH BARNEY INVESTMENT TRUST

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

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


Signature			Title
	Date
/s/Heath B. McLendon	Chairman of the Board
	   3/26/01
Heath B. McLendon		(Chief Executive Officer)
				and President

/s/Lewis E. Daidone	Treasurer
	   3/26/01
Lewis E. Daidone		(Chief Financial and
				Accounting Officer)

/s/Herbert Barg*			Trustee
	   3/26/01
Herbert Barg

/s/Alfred J. Bianchetti*		Trustee
		   3/26/01
Alfred J. Bianchetti

/s/Martin Brody*			Trustee
	    3/26/01
Martin Brody

/s/Dwight B. Crane*			Trustee
		   3/26/01
Dwight B. Crane

/s/Burt N. Dorsett*			Trustee
		   3/26/01
Burt N. Dorsett


/s/Elliot S. Jaffe*			Trustee
		   3/26/01
Elliot S. Jaffe

/s/Stephen E. Kaufman*		Trustee
	   3/26/01
Stephen E. Kaufman

/s/Joseph J. McCann*			Trustee
		   3/26/01
Joseph J. McCann

/s/Cornelius C. Rose, Jr.*		Trustee
		   3/26/01
Cornelius C. Rose, Jr.
_________________________________________________________
____________
* Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant to power
of attorney dated July 16, 2000.

/s/ Heath B. McLendon
Heath B. McLendon



EXHIBIT INDEX




Exhibit No.		Exhibit


(j)			Consent of Auditor's