As filed with the Securities and Exchange Commission 
on June 26, 1998
	Securities Act Registration No. 33 -43446
	Investment Company Act Registration No. 811-
6444
	

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 
1933
	Pre-Effective Amendment No.		[   ]
	Post-Effective Amendment No.    20     		[X]

and/or
REGISTRATION STATEMENT UNDER
	THE INVESTMENT COMPANY ACT OF 1940	[   ]
    AMENDMENT NO. 20     
	__________________			[   ]
Smith Barney Investment Trust
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street 
New York, New York  10013
(Address of Principal Executive Offices)
(212) 816-6474
(Registrants Telephone Number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Investment Trust
388 Greenwich Street
New York, New York  10013
(Name and Address of Agent for Service)
_____________________
Copies to:
   
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York  10019-6099
    
_______________

Approximate Date of Proposed Public Offering:  
Continuous.
It is proposed that this filing will become effective 
(check appropriate box):
[ ]	Immediately upon filing pursuant to [  ]
[X]	On June 30, 1998 pursuant to paragraph (b)
	of Rule 485
[  ]	60 days after filing pursuant to	[  ]
	On (date) pursuant to
	paragraph (a)(1)	paragraph (a)(1)
[  ]	75 days after filing pursuant to	[  ]
	On (date) pursuant to
	paragraph (a)(2)paragraph (a)(2) of 
rule 485
If appropriate, check the following box:
[  ]	This post-effective amendment designates 
a new effective date for a previously filed
	post effective amendment.

Title of Securities Being Registered:  Shares of 
Beneficial Interest

SMITH BARNEY INVESTMENT TRUST

FORM  N-1A


CONTENTS OF REGISTRATION STATEMENT

Front Cover

Contents Page

Cross Reference Sheet


Part A: 
PROSPECTUS  

Part B: 
STATEMENT OF ADDITIONAL INFORMATION

Part C:	Other Information

SMITH BARNEY INVESTMENT TRUST

FORM N-1A

CROSS-REFERENCE SHEET
PURSUANT TO RULE 495(b)

Part A Item No.

Prospectus Caption

1.  Cover Page
Cover Page

2.  Synopsis
Prospectus Summary

3.  Financial Highlights
Financial Highlights

4.  General Description of 
Registrant

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

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

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

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

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

9.  Pending Legal Proceedings
Not applicable

Part B Item No.
Statement of Additional 
Information Caption

10.  Cover Page
Cover Page

11.  Table of Contents
Table of Contents

12.  General Information and 
History
Distributor; Additional 
Information

13.  Investment Objective and 
Policies
Investment Objectives and 
Management Policies

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

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

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

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

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

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

20.  Tax Status
Taxes

21.  Underwriters
Distributor

22.  Calculation of Performance 
Data
Performance Data

23.  Financial Statements
Financial Statements


PART A
PROSPECTUS
<PAGE>
 
 
                                                                    SMITH BARNEY
                                                                         Mid Cap
                                                                           Blend
                                                                            Fund
                                                                   JUNE 30, 1998
 
                                                   PROSPECTUS BEGINS ON PAGE ONE
 
 


P R O S P E C T U S

LOGO Smith Barney Mutual Funds
     Investing for your future.
     Every day.

<PAGE>
 
PROSPECTUS                                                       JUNE 30, 1998
 
 
Smith Barney
Mid Cap Blend Fund
388 Greenwich Street
New York, New York 10013
1-800-451-2010
 
  Smith Barney Mid Cap Blend Fund (the "Fund") is a mutual fund that seeks
long-term growth of capital by investing, under normal market conditions, at
least 65% of its total assets in the equity securities of medium-sized compa-
nies with market capitalizations between $1 billion and $5 billion at the time
of investment.
 
  The Fund is one of a number of funds, each having distinct investment objec-
tives and policies making up the Smith Barney Investment Trust (the "Trust").
The Trust is an open-end management investment company commonly referred to as
a mutual fund.
   
  The initial subscription period for shares is scheduled to end on August 26,
1998, (the "Subscription Period"). After the expiration of the Subscription
Period or a limited continuous offering period, the Fund will suspend the
offering of shares to the public. A continuous offering of shares is expected
to commence on or about September 21, 1998. See "Purchase of Shares."     
 
  This Prospectus sets forth concisely certain information about the Fund,
including sales charges, distribution and service fees and expenses, that pro-
spective investors will find helpful in making an investment decision. Invest-
ors are encouraged to read this Prospectus carefully and retain it for future
reference.
 
  Shares of the other Funds offered by the Trust are described in separate pro-
spectuses that may be obtained by calling the Trust at 1-800-451-2010.
 
  Additional information about the Fund is contained in a Statement of Addi-
tional Information, (the "SAI") dated June 30, 1998, as amended or supplemented
from time to time, that is available upon request and without charge by calling
or writing the Fund at the telephone number or address set forth above or by
contacting a Smith Barney Financial Consultant. The SAI has been filed with the
Securities and Exchange Commission (the "SEC") and is incorporated by reference
into this Prospectus in its entirety.
 
SMITH BARNEY INC.
Distributor
 
MUTUAL MANAGEMENT CORP.
Investment Manager
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
 
                                                                               1
<PAGE>
 
TABLE OF CONTENTS
 
 
<TABLE>   
<S>                                           <C>
PROSPECTUS SUMMARY                              3
-------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES    9
-------------------------------------------------
VALUATION OF SHARES                            11
-------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES             11
-------------------------------------------------
PURCHASE OF SHARES                             13
-------------------------------------------------
EXCHANGE PRIVILEGE                             23
-------------------------------------------------
REDEMPTION OF SHARES                           26
-------------------------------------------------
MINIMUM ACCOUNT SIZE                           28
-------------------------------------------------
PERFORMANCE                                    29
-------------------------------------------------
MANAGEMENT OF THE TRUST AND THE FUND           29
-------------------------------------------------
DISTRIBUTOR                                    30
-------------------------------------------------
ADDITIONAL INFORMATION                         31
-------------------------------------------------
APPENDIX A                                    A-1
</TABLE>    
--------------------------------------------------------------------------------
 
  No person has been authorized to give any information or to make any repre-
sentations in connection with this offering other than those contained in this
Prospectus and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Fund or the distribu-
tor. This Prospectus does not constitute an offer by the Fund or the distribu-
tor to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
 
--------------------------------------------------------------------------------
 
2
<PAGE>
 
PROSPECTUS SUMMARY
 
  The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the SAI. Cross references in this
summary are to headings in this Prospectus. See "Table of Contents."
 
INVESTMENT OBJECTIVE The Fund is an open-end, diversified, management invest-
ment company whose investment objective is to seek long-term growth of capital
by investing, under normal market conditions, at least 65% of its total assets
in the equity securities of medium-sized companies with market capitalizations
of between $1 billion and $5 billion at the time of investment. See "Investment
Objective and Management Policies."
 
ALTERNATIVE PURCHASE ARRANGEMENTS The Fund offers several classes of shares
("Classes") to investors designed to provide them with the flexibility of
selecting an investment best suited to their needs. The general public is
offered three classes of shares: Class A shares, Class B shares and Class L
shares, which differ principally in terms of sales charges and rates of
expenses to which they are subject. A fourth Class of shares, Class Y shares,
is offered only to investors meeting an initial investment minimum of
$15,000,000. See "Purchase of Shares" and "Redemption of Shares."
 
  Class A Shares. Class A shares are sold at net asset value plus an initial
sales charge of up to 5.00% and are subject to an annual service fee of 0.25%
of the average daily net assets of the Class. The initial sales charge may be
reduced or waived for certain purchases. Purchases of Class A shares of
$500,000 or more will be made at net asset value with no initial sales charge,
but will be subject to a contingent deferred sales charge ("CDSC") of 1.00% on
redemptions made within 12 months of purchase. See "Prospectus Summary--Reduced
or No Initial Sales Charge."
 
  Class B Shares. Class B shares are offered at net asset value subject to a
maximum CDSC of 5.00% of redemption proceeds, declining by 1.00% each year
after the date of purchase to zero. This CDSC may be waived for certain redemp-
tions. Class B shares are subject to an annual service fee of 0.25% and an
annual distribution fee of 0.75% of the average daily net assets of the Class.
The Class B shares' distribution fee may cause that Class to have higher
expenses and pay lower dividends than Class A shares.
 
  Class B Shares Conversion Feature. Class B shares will convert automatically
to Class A shares, based on relative net asset value, eight years after the
date of the original purchase. Upon conversion, these shares will no longer be
subject to an annual distribution fee. In addition, a certain portion of Class
B shares that have been acquired through the reinvestment of dividends and dis-
tributions ("Class B Dividend Shares") will be converted at that time. See
"Purchase of Shares--Deferred Sales Charge Alternatives."
 
                                                                               3
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
  Class L Shares. Class L shares are sold at net asset value plus an initial
sales charge of 1.00%. They are subject to an annual service fee of 0.25% and
an annual distribution fee of 0.75% of the average daily net assets of the
Class, and investors pay a CDSC of 1.00% if they redeem Class L shares within
12 months of purchase. The CDSC may be waived for certain redemptions. The
Class L shares' distribution fee may cause that Class to have higher expenses
and pay lower dividends than Class A shares. Purchases of Fund shares, which
when combined with current holdings of Class L shares of the Fund equal or
exceed $500,000 in the aggregate, should be made in Class A shares at net
asset value with no sales charge, and will be subject to a CDSC of 1.00% on
redemptions made within 12 months of purchase.
 
  Class Y Shares. Class Y shares are available only to investors meeting an
initial investment minimum of $15,000,000. Class Y shares are sold at net
asset value with no initial sales charge or CDSC. They are not subject to any
service or distribution fees.
 
  In deciding which Class of Fund shares to purchase, investors should con-
sider the following factors, as well as any other relevant facts and circum-
stances:
   
  Intended Holding Period. The decision as to which Class of shares is more
beneficial to an investor depends on the amount and intended duration of his
or her investment. Shareholders who are planning to establish a program of
regular investment may wish to consider Class A shares; as the investment
accumulates, shareholders may qualify for reduced sales charges and the shares
are subject to lower ongoing expenses over the term of the investment. As an
alternative, Class B shares are sold without any initial sales charge so the
entire purchase price is immediately invested in the Fund. Any investment
return on these additional invested amounts may partially or wholly offset the
higher annual expenses of this Class. Because the Fund's future return cannot
be predicted, however, there can be no assurance that this would be the case.
Finally, Class L shares which have a lower upfront sales charge but are sub-
ject to higher distribution fees than Class A shares, are suitable for invest-
ors who are not investing or intending to invest an amount which would receive
a substantive sales charge discount and who have a short-term or undetermined
time frame.     
 
  Finally, investors should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of their own investment time
frame. For example, while Class L shares have a shorter CDSC period than Class
B shares, they do not have a conversion feature and therefore are subject to
an ongoing distribution fee. Thus, Class B shares may be more attractive than
Class L shares to investors with longer term investment outlooks.
 
  Reduced or No Initial Sales Charge. The initial sales charge on Class A
shares may be waived for certain eligible purchasers, and the entire purchase
price will be immediately invested in the Fund. In addition, Class A share
purchases of $500,000
 
4
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
or more will be made at net asset value with no initial sales charge, but will
be subject to a CDSC of 1.00% on redemptions made within 12 months of purchase.
The $500,000 investment may be met by adding the purchase to the net asset
value of all Class A shares offered with a sales charge held in funds sponsored
by Smith Barney Inc. ("Smith Barney") listed under "Exchange Privilege." Class
A share purchases may also be eligible for a reduced initial sales charge. See
"Purchase of Shares." Because the ongoing expenses of Class A shares may be
lower than those for Class B and Class L shares, purchasers eligible to pur-
chase Class A shares at net asset value or at a reduced sales charge should
consider doing so.
   
  Smith Barney Financial Consultants may receive different compensation for
selling different Classes of shares. Investors should understand that the pur-
pose of the CDSC on the Class B and Class L shares is the same as that of an
initial sales charge.     
 
  See "Purchase of Shares" and "Management of the Fund" for a complete descrip-
tion of the sales charges and service and distribution fees for each Class of
shares and "Valuation of Shares," "Dividends, Distributions and Taxes" and
"Exchange Privilege" for other differences between the Classes of shares.
 
SMITH BARNEY 401(K) AND EXECCHOICE(TM) PROGRAMS Investors may be eligible to
participate in the Smith Barney 401(k) Program, which is generally designed to
assist plan sponsors in the creation and operation of retirement plans under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
as well as other types of participant directed, tax-qualified employee benefit
plans. Other investors may be eligible to participate in the Smith Barney
ExecChoice(TM) Program. Class A and Class L shares are available as investment
alternatives under both of these programs. See "Purchase of Shares--Smith Bar-
ney 401(k) and ExecChoice(TM) Programs."
   
PURCHASE OF SHARES Shares may be purchased through a brokerage account main-
tained by Smith Barney during the Initial Subscription Period. During the con-
tinuous offering period, shares may also be purchased through a brokerage
account maintained with Smith Barney, a broker that clears securities transac-
tions through Smith Barney on a fully disclosed basis (an "Introducing Broker")
or an investment dealer in the selling group. In addition, certain investors,
including qualified retirement plans and certain institutional investors, may
purchase shares directly from the Fund through the Fund's transfer agent, First
Data Investors Services Group, Inc. ("First Data" or "Transfer Agent"). See
"Purchase of Shares." The initial subscription period for shares is scheduled
to end on August 26, 1998, (the "Subscription Period"). After the expiration of
the Subscription Period or a limited continuous offering period, the Fund will
suspend the offering of shares to the public. A continuous offering of shares
is expected to commence on or about September 21, 1998. See "Purchase of
Shares."     
 
                                                                               5
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
INVESTMENT MINIMUMS Investors in Class A, Class B and Class L shares may open
an account by making an initial investment of at least $1,000 for each
account, or $250 for an individual retirement account ("IRA") or a Self-
Employed Retirement Plan. Investors in Class Y shares may open an account for
an initial investment of $15,000,000. Subsequent investments of at least $50
may be made for all Classes. For participants in retirement plans qualified
under Section 403(b)(7) or Section 401(a) of the Code, the minimum initial
investment requirement for Class A, Class B and Class L shares and the subse-
quent investment requirement for all Classes of shares is $25. The minimum
investment requirements for purchases of Fund shares through the Systematic
Investment Plan are described below. See "Purchase of Shares."
 
SYSTEMATIC INVESTMENT PLAN During the continuous offering period, the Fund
offers shareholders a Systematic Investment Plan under which they may autho-
rize the automatic placement of a purchase order each month or quarter for
Fund shares. The minimum initial investment requirement for Class A, Class B
and Class L shares and the subsequent investment requirement for all Classes
for shareholders purchasing shares through the Systematic Investment Plan on a
monthly basis is $25 and on a quarterly basis is $50. See "Purchase of
Shares."
 
REDEMPTION OF SHARES Shares may be redeemed on each day the New York Stock
Exchange, Inc. ("NYSE") is open for business. See "Purchase of Shares" and
"Redemption of Shares."
 
MANAGEMENT OF THE FUND Mutual Management Corp. ("MMC" or the "Manager"),
formerly known as Smith Barney Mutual Funds Management Inc., serves as the
Fund's investment manager. The Manager is a wholly owned subsidiary of Salomon
Smith Barney Holdings Inc, ("Holdings") formerly known as Smith Barney
Holdings. Holdings is a wholly owned subsidiary of Travelers Group Inc.
("Travelers"), a diversified financial services holding company engaged,
through its subsidiaries, principally in four business segments: Investment
Services including Asset Management, Consumer Finance Services, Life Insurance
Services and Property & Casualty Insurance Services. See "Management of the
Trust and the Fund."
 
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for shares of the same
Class of certain other funds of the Smith Barney Mutual Funds at the respec-
tive net asset values next determined. See "Exchange Privilege."
 
VALUATION OF SHARES Net asset value of the Fund for the prior day generally is
quoted daily in the financial section of most newspapers and is also available
from Smith Barney Financial Consultants. See "Valuation of Shares."
 
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income and distribu-
tions of net realized capital gains, if any, are declared and paid annually.
See "Dividends, Distributions and Taxes."
 
6
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on shares of a
Class will be reinvested automatically, unless otherwise specified by an
investor, in additional shares of the same Class at current net asset value.
Shares acquired by dividend and distribution reinvestments will not be subject
to any sales charge or CDSC. Class B shares acquired through dividend and dis-
tribution reinvestments will become eligible for conversion to Class A shares
on a pro rata basis. See "Dividends, Distributions and Taxes."
 
RISK FACTORS AND SPECIAL CONSIDERATIONS There can be no assurance that the
Fund's investment objective will be achieved. The value of the Fund's invest-
ments, and thus the net asset value of the Fund's shares, will fluctuate in
response to changes in market and economic conditions, as well as the finan-
cial condition and prospects of issuers in which the Fund invests. The Fund
may invest in foreign securities, though management intends to limit such
investments to 10% of the Fund's assets. Foreign investments may include addi-
tional risks associated with currency exchange rates, less complete financial
information about individual companies, less market liquidity and political
instability. See "Investment Objective and Management Policies."
 
THE FUND'S EXPENSES The following expense table lists the costs and expenses
an investor will incur either directly or indirectly as a shareholder of the
Fund, based on the maximum sales charge or maximum CDSC that may be incurred
at the time of purchase or redemption and the Fund's estimated operating
expenses:
 
<TABLE>
<CAPTION>
  SMITH BARNEY
  MID CAP BLEND FUND                            CLASS A CLASS B CLASS L CLASS Y
-------------------------------------------------------------------------------
  <S>                                           <C>     <C>     <C>     <C>
  SHAREHOLDER TRANSACTION EXPENSES
    Maximum sales charge imposed on purchases
     (as a percentage of offering price)         5.00%   None    1.00%   None
    Maximum CDSC (as a percentage of original
     cost or redemption proceeds, whichever is
     lower)                                      None*   5.00%   1.00%   None
-------------------------------------------------------------------------------
  ANNUAL FUND OPERATING EXPENSES
    (as a percentage of average net assets)
    Management fees                              0.75%   0.75%   0.75%   0.75%
    12b-1 fees**                                 0.25    1.00    1.00    None
    Other expenses***                            0.15    0.15    0.15    0.07
-------------------------------------------------------------------------------
  TOTAL FUND OPERATING EXPENSES                  1.15%   1.90%   1.90%   0.82%
-------------------------------------------------------------------------------
</TABLE>
   * Purchases of Class A shares of $500,000 or more will be made at net asset
     value with no sales charge, but will be subject to a CDSC of 1.00% on
     redemptions made within 12 months of purchase.
   
  ** Upon conversion of Class B shares to Class A shares, such shares will no
     longer be subject to a distribution fee. Class L shares do not have a
     conversion feature and, therefore, are subject to an ongoing distribution
     fee. As a result, long-term shareholders of Class L shares may pay more
     than the economic equivalent of the maximum front-end sales charge
     permitted by the National Association of Securities Dealers ("NASD").
         
 *** "Other Expenses" have been estimated based on expenses the Fund expects
     to incur during its fiscal year ending November 30, 1998.
 
                                                                              7
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
  The sales charge and CDSC set forth in the above table are the maximum
charges imposed on purchases or redemptions of Fund shares and investors may
actually pay lower or no charges, depending on the amount purchased and, in the
case of Class B, Class L and certain Class A shares, the length of time the
shares are held and whether the shares are held through the Smith Barney 401(k)
and ExecChoice(TM) Programs. See "Purchase of Shares" and "Redemption of
Shares." Smith Barney receives an annual 12b-1 service fee of 0.25% of the
value of average daily net assets of Class A shares. For Class B and Class L
shares, Smith Barney receives an annual 12b-1 fee of 1.00% of the value of
average daily net assets of each respective Class, consisting of a 0.75% dis-
tribution fee and a 0.25% service fee. "Other expenses" in the above table
include fees for shareholder services, custodial fees, legal and accounting
fees, printing costs and registration fees.
 
 EXAMPLE
  The following example is intended to assist an investor in understanding the
various costs that an investor in the Fund will bear directly or indirectly.
The example assumes payment by the Fund of operating expenses at the levels set
forth in the table above. See "Purchase of Shares," "Redemption of Shares" and
"Management of the Trust and the Fund."
 
<TABLE>   
<CAPTION>
  SMITH BARNEY
  MID CAP BLEND FUND                                            1 YEAR 3 YEARS
------------------------------------------------------------------------------
  <S>                                                           <C>    <C>
  An investor would pay the following expenses on a $1,000
  investment, assuming (1) 5.00% annual return and (2) redemp-
  tion at the end of each time period:
    Class A....................................................  $61     $85
    Class B....................................................   69      90
    Class L....................................................   39      60
    Class Y....................................................    8      26
  An investor would pay the following expenses on the same
  investment, assuming the same annual return and no redemp-
  tion:
    Class A....................................................  $61     $85
    Class B....................................................   19      60
    Class L....................................................   29      60
    Class Y....................................................    8      26
------------------------------------------------------------------------------
</TABLE>    
 
  The example also provides a means for the investor to compare expense levels
of funds with different fee structures over varying investment periods. To
facilitate such comparison, all funds are required to utilize a 5.00% annual
return assumption. However, the Fund's actual return will vary and may be
greater or less than 5.00%. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTA-
TION OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
 
 
8
<PAGE>
 
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
 
  The Fund's investment objective is long-term growth of capital. This invest-
ment objective may not be changed without the approval of the holders of a
majority of the Fund's outstanding shares. There can be no assurance that the
Fund's investment objective will be achieved.
 
  The Fund attempts to achieve its investment objective by investing, under
normal market conditions, substantially all of its assets in equity securities
and at least 65% of its total assets in equity securities of medium-sized com-
panies with market capitalizations of between $1 billion and $5 billion at the
time of investment. Companies whose capitalization falls outside this range
after purchase continue to be considered medium-sized companies for purposes of
the 65% policy. Investing in medium-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.
 
  In selecting the Fund's equity investments, the Manager seeks to identify
companies that exhibit growth and/or value attributes. When selecting stocks
with growth potential, the Manager will evaluate the specific financial charac-
teristics of the issuer such as historical and forecasted earnings growth,
sales growth, profitability and return on equity. When selecting stocks with
value characteristics, the Manager will typically be looking at companies that
are perhaps growing more slowly but whose valuation may be below average rela-
tive to earnings and/or assets. In addition, the Manager will utilize an active
quantitative investment strategy for a portion of the Fund. This portion will
provide added diversification and, in addition, will select securities using a
proprietary technique that are believed to have a high probability of
outperforming their respective industry or sector. In identifying these securi-
ties, the Fund's portfolio manager is supported by a quantitatively oriented
investment team.
 
  The Fund will normally invest in all types of equity securities, including
common stocks, preferred stocks, securities that are convertible into common or
preferred stocks, such as warrants and convertible bonds, and depository
receipts for those securities. The Fund may maintain a portion of its assets,
which will usually not exceed 10%, in U.S. Government securities, money market
obligations, and in cash to provide for payment of the 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, pre-
vailing market or economic
conditions warrant.
 
  Consistent with its investment objective and policies described above, the
Fund may invest up to 25% of its total assets in foreign securities, including
both
 
                                                                               9
<PAGE>
 
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
 
direct investments and investments made through depository receipts. The Fund
may also invest in real estate investment trusts; purchase or sell securities
on a when-issued or delayed-delivery basis; enter into forward commitments to
purchase securities; lend portfolio securities; purchase and sell put and call
options; and enter into interest rate futures contracts, stock index futures
contracts and related options.
 
  The different types of securities and investment techniques used by the Fund
all involve risks of varying degrees. For example, with respect to common
stock, there can be no assurance of capital appreciation, and there is a risk
of market decline. With respect to debt securities, including money market
instruments, there is the risk that the issuer of a security may not be able to
meet its obligation to make scheduled interest or principal payments. See
Appendix A for a more complete discussion of certain of these securities and
investment techniques and the associated risks.
 
 PORTFOLIO TRANSACTIONS AND TURNOVER
 
  Transactions on behalf of the Fund are allocated to various brokers and deal-
ers by the Manager in its best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, brokers and dealers, including Smith Barney, may be
selected for research, statistical or other services to enable the Manager to
supplement its own research and analysis with the views and information of
other securities firms.
 
  The Fund cannot accurately predict its portfolio turnover rate, but antici-
pates that its annual turnover will not exceed 100%. An annual turnover rate of
100% would occur if all of the securities held by the Fund were replaced once
during a period of one year. The Manager will not consider turnover rate a lim-
iting factor in making investment decisions consistent with the Fund's invest-
ment objective and policies.
 
  Year 2000. The investment management services provided to the Fund by the
Manager and the services provided to shareholders by Smith Barney, the Fund's
Distributor, depend on the smooth functioning of their computer systems. Many
computer software systems in use today cannot recognize the year 2000, but
revert to 1900 or some other date, due to the manner in which dates were
encoded and calculated. That failure could have a negative impact on the Fund's
operations, including the handling of securities trades, pricing and account
services. The Manager and Smith Barney have advised the Fund that they have
been reviewing all of their computer systems and actively working on necessary
changes to their systems to prepare for the year 2000 and expect that their
systems will be compliant before that date. In addition, the Manager has been
advised by the Fund's custodian, transfer agent and accounting service agent
that they are also in the process of modify-
 
10
<PAGE>
 
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
 
ing their systems with the same goal. There can, however, be no assurance that
the Manager, Smith Barney or any other service provider will be successful, or
that interaction with other non-complying computer systems will not impair
Fund services at that time.
 
VALUATION OF SHARES
 
 
  The Fund's net asset value per share is determined as of the close of regu-
lar trading on the NYSE on each day that the NYSE is open, by dividing the
value of the Fund's net assets attributable to each Class by the total number
of shares of the Class outstanding.
 
  Generally, the Fund's investments are valued at market value or, in the
absence of a market value with respect to any securities, at fair value as
determined by or under the direction of the Trust's Board of Trustees. Short-
term investments that mature in 60 days or less are valued at amortized cost.
Amortized cost involves valuing an investment at its cost initially and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. Further information regarding the Fund's valuation
policies is contained in the SAI.
 
DIVIDENDS, DISTRIBUTIONS AND TAXES
 
 
 DIVIDENDS AND DISTRIBUTIONS
   
  The Fund's policy is to distribute dividends from 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 income and capital gains realized, in order to avoid a Federal excise
tax liability. If a shareholder does not otherwise instruct, dividends and
capital gain distributions will be reinvested automatically in additional
shares of the same Class at net asset value, with no additional sales charge
or CDSC. A shareholder may change the option at any time by notifying his or
her Smith Barney Financial Consultant or their financial consultant, Introduc-
ing Broker or dealer in the selling group. Shareholders whose accounts are
held directly by First Data should notify First Data in writing, requesting a
change to this reinvest option.     
 
  The per share amounts of dividends from net investment income on Classes B
and L may be lower than that of Classes A and Y, mainly as a result of the
distribution fees applicable to Class B and L shares. Similarly, the per share
amounts of dividends from net investment income on Class A shares may be lower
than that of Class Y, as a result of the service fee attributable to Class A
shares. Capital gain distributions, if any, will be the same amount across all
Classes of Fund shares (A, B, L and Y).
 
                                                                             11
<PAGE>
 
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
 
 
 TAXES
  The following is a summary of the material federal tax considerations affect-
ing the Fund and Fund shareholders. Please refer to the SAI for further discus-
sion. In addition to the considerations described below and in the SAI, there
may be other federal, state, local, and/or foreign tax implications to consid-
er. Because taxes are a complex matter, prospective shareholders are urged to
consult their tax advisors for more detailed information with respect to the
tax consequences of any investment.
 
  The Fund intends to qualify, so long as such qualification is in the best
interests of its shareholders, under Subchapter M of the Internal Revenue Code
(the "Code") for tax treatment as a regulated investment company. The Fund will
be treated as a separate entity of the Trust for Federal Income Tax purposes.
The Fund intends to qualify under Subchapter M of the Internal Revenue Code
(the "Code") for tax treatment as a regulated investment company. In each tax-
able year that the Fund qualifies, the Fund will pay no federal income tax on
its net investment company taxable income and long-term capital gain that is
distributed to shareholders.
 
  Dividends paid from net investment income and net realized short-term securi-
ties gain, are subject to federal income tax as ordinary income. Distributions,
if any, from net realized long-term securities gains, derived from the sale of
securities held by the Fund for more than one year, are taxable as long-term
capital gains, regardless of the length of time a shareholder has owned Fund
shares.
 
  Shareholders are required to pay tax on all taxable distributions, even if
those distributions are automatically reinvested in additional Fund shares. A
portion of the dividends paid by the Fund may qualify for the corporate divi-
dends received deduction. Dividends consisting of interest from U.S. government
securities may be exempt from state and local income taxes. The Fund will
inform shareholders of the source and tax status of all distributions promptly
after the close of each calendar year.
 
  A shareholder's gain or loss on the disposition of Fund shares (whether by
redemption, sale or exchange), generally will be a long-term or short-term gain
or loss depending on the length of time the shares had been owned at disposi-
tion. Losses realized by a shareholder on the disposition of Fund shares owned
for six months or less will be treated as a long-term capital loss to the
extent a capital gain dividend had been distributed on such shares.
 
  The Fund is required to withhold ("backup withholding") 31% of all taxable
dividends, capital gain distributions, and the proceeds of any redemption,
regardless of whether gain or loss is realized upon the redemption, for share-
holders who do not provide the Fund with a correct taxpayer identification num-
ber (social security
 
12
<PAGE>
 
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
 
or employer identification number). Withholding from taxable dividends and cap-
ital gain distributions also is required for shareholders who otherwise are
subject to backup withholding. Any tax withheld as a result of backup withhold-
ing does not constitute an additional tax, and may be claimed as a credit on
the shareholder's federal income tax return.
 
PURCHASE OF SHARES
 
 
 GENERAL
  The Fund currently offers four Classes of shares. Class A shares are sold to
investors with an initial sales charge and Class B shares are sold without an
initial sales charge but are subject to a CDSC payable upon certain redemp-
tions. Class L shares are sold to investors with an initial sales charge and
are subject to a CDSC payable upon certain redemptions. Class Y shares are sold
without an initial sales charge or CDSC and are available only to investors
investing a minimum of $15,000,000 (except, for purchases of Class Y shares by
Smith Barney Concert Allocation Series, Inc. for which there is no minimum pur-
chase amount). See "Prospectus Summary--Alternative Purchase Arrangements" for
a discussion of factors to consider in selecting which Class of shares to pur-
chase.
 
 INITIAL SUBSCRIPTION PERIOD
   
  Smith Barney, the Fund's distributor, will solicit subscriptions for shares
of the Fund during the Subscription Period. Subscriptions for shares must be
made through a brokerage account maintained with Smith Barney or an Introducing
Broker. Shares of the Fund subscribed for during the Subscription Period for
which Smith Barney accepts purchase orders will be issued and sold by the Fund
on the third business day after the end of the Subscription Period (the "Pur-
chase Date"). Also on the Purchase Date, shareholders of other funds of the
Smith Barney Mutual Funds will be able to exchange shares of such funds for
shares of the Fund. On the Purchase Date, Smith Barney will notify the Fund of
the aggregate number of shares for which it has received and accepted
subscriptions, and the Fund will issue shares for such subscriptions and com-
mence operations.     
   
  The Fund is offering its Class A shares to the public at a maximum purchase
price per share of $12.00, which equals the Class A share initial net asset
value per share of $11.40 plus the maximum sales charge set forth below under
"Continuous Offerings". The Fund is offering its Class B, Class L and Class Y
shares to the public at each Class' respective initial net asset value per
share of $11.40.     
 
  The Fund and Smith Barney may in their discretion determine to withdraw the
offering without notice for any reason before the end of the Subscription Peri-
od. The Fund also reserves the right to refuse any order in whole or in part.
 
 
                                                                              13
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 CONTINUOUS OFFERINGS
 
  Smith Barney will suspend the offering of shares to the public immediately
after the expiration of the Subscription Period or within three weeks thereaf-
ter. During the three-week period, Smith Barney will commence a limited con-
tinuous offering of shares to the public. Once Smith Barney suspends the
offering of shares to the public (the "Closing Period"), it is expected to do
so for 30 days. This period may be lengthened or shortened in the absolute
discretion of Smith Barney. During the Closing Period, the Fund will invest
the proceeds from its Subscription Period and its continuous offering, if any,
and existing shareholders of the Fund may request redemptions, purchase addi-
tional shares and exchange shares of the Fund for shares of certain other
funds of the Smith Barney Mutual Funds. See "Exchange Privilege." Immediately
after the expiration of the Closing Period, Smith Barney expects to commence a
continuous offering of shares of the Fund.
 
  During the continuous offering, shares may be purchased through a brokerage
account maintained with Smith Barney. Shares may also be purchased through an
Introducing Broker or an investment dealer in the selling group. In addition,
certain investors, including qualified retirement plans and certain other
institutional investors, may purchase shares directly from the Fund through
First Data. When purchasing shares of the Fund, investors must specify whether
the purchase is for Class A, Class B, Class L or Class Y shares. Smith Barney
and other broker/dealers may charge their customers an annual account mainte-
nance fee in connection with a brokerage account through which an investor
purchases or holds shares. Accounts held directly at First Data are not sub-
ject to a maintenance fee.
 
  Investors in Class A, Class B and Class L shares may open an account by mak-
ing an initial investment of at least $1,000 for each account, or $250 for an
IRA or a Self-Employed Retirement Plan, in the Fund. Investors in Class Y
shares may 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 par-
ticipants in retirement plans qualified under Section 403(b)(7) or Section
401(a) of the Code, the minimum initial investment requirement for Class A,
Class B and Class L shares and the subsequent investment requirement for all
Classes in the Fund is $25. For shareholders purchasing shares of the Fund
through the Systematic Investment Plan on a monthly basis, the minimum initial
investment requirement for Class A, Class B and Class L shares and the subse-
quent investment requirement for all Classes is $25. For shareholders purchas-
ing shares of the Fund through the Systematic Investment Plan on a quarterly
basis, the minimum initial investment requirement for Class A, Class B and
Class L shares and the subsequent investment requirement for all Classes is
$50. There are no minimum investment requirements for Class A shares purchased
by employees of Travelers and its subsidiaries, including Smith Barney, Direc-
tors or Trustees of any of the Smith Barney Mutual Funds, and their
 
14
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
immediate family. 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 Fund's transfer agent. Share certificates are issued only upon a share-
holder's written request to the Transfer Agent.
 
  Purchase orders received by the Fund or Smith Barney prior to the close of
regular trading on the NYSE on any day the Fund calculates its net asset value
are priced according to the net asset value determined on that day (the "trade
date"). Orders received by dealers or Introducing Brokers prior to the close of
regular trading on the NYSE on any day the Fund calculates its net asset value,
are priced according to the net asset value determined on that day, provided
the order is received by the Fund or Smith Barney prior to Smith Barney's close
of business. For shares purchased through Smith Barney or Introducing Brokers
purchasing through Smith Barney, payment for Fund shares is due on the third
business day (the "settlement date") after the trade date. In all other cases,
payments must be made with the purchase order.
 
 SYSTEMATIC INVESTMENT PLAN
  Shareholders may make additions to their accounts at any time by purchasing
shares through a service known as the Systematic Investment Plan. Under the
Systematic Investment Plan, Smith Barney or the Transfer Agent is authorized,
through preauthorized transfers of at least $25 on a monthly basis or at least
$50 on a quarterly basis to charge the regular bank account or other financial
institution indicated by the shareholder to provide systematic additions to the
shareholder's Fund account. A shareholder who has insufficient funds to com-
plete the transfer will be charged a fee of up to $25 by Smith Barney or the
Transfer Agent. The Systematic Investment Plan also authorizes Smith Barney to
apply cash held in the shareholder's 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 Smith
Barney Financial Consultant.
 
                                                                              15
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
 INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
  The sales charges applicable to purchases of Class A shares of the Fund are
as follows:
 
<TABLE>
<CAPTION>
                                  SALES CHARGE
                         ------------------------------      DEALERS'
                              % OF           % OF       REALLOWANCE AS % OF
  AMOUNT OF INVESTMENT   OFFERING PRICE AMOUNT INVESTED   OFFERING PRICE
---------------------------------------------------------------------------
  <S>                    <C>            <C>             <C>
  Less than $ 25,000          5.00%          5.26%             4.50%
  $ 25,000 -  49,999          4.00           4.17              3.60
    50,000 -  99,999          3.50           3.63              3.15
   100,000 - 249,999          3.00           3.09              2.70
   250,000 - 499,999          2.00           2.04              1.80
   500,000   and over          *               *                 *
---------------------------------------------------------------------------
</TABLE>
* Purchases of Class A shares of $500,000 or more will be made at net asset
  value without any initial sales charge but will be subject to a CDSC of 1.00%
  on redemptions made within 12 months of purchase. The CDSC on Class A shares
  is payable to Smith Barney, which compensates Smith Barney Financial
  Consultants and other dealers whose clients make purchases of $500,000 or
  more. The CDSC is waived in the same circumstances in which the CDSC
  applicable to Class B and Class L shares is waived. See "Deferred Sales
  Charge Alternatives" and "Waivers of CDSC."
 
  Members of the selling group may receive up to 90% of the sales charge and
may be deemed to be underwriters of the Fund as defined in the Securities Act
of 1933, as amended.
 
  The reduced sales charges shown above apply to the aggregate of purchases of
Class A shares of the Fund made at one time by "any person," which includes an
individual and his or her immediate family, or a trustee or other fiduciary of
a single trust estate or single fiduciary account.
 
 INITIAL SALES CHARGE WAIVERS
  Purchases of Class A shares may be made at net asset value without a sales
charge in the following circumstances: (a) sales to (i) Board members and
employees of Travelers and its subsidiaries and of any of the Smith Barney
Mutual Funds (including retired Board members and employees); the immediate
families of such persons (including the surviving spouse of a deceased Board
Member or employee); and to a pension, profit-sharing or other benefit plan for
such persons and (ii) employees of members of the NASD, provided such sales are
made upon the assurance of the purchaser that the purchase is made for invest-
ment purposes and that the securities will not be resold except through redemp-
tion or repurchase; (b) offers of Class A shares to any other investment com-
pany to effect the combination of such company with the Fund by merger, acqui-
sition of assets or otherwise; (c) purchases of Class A shares by any client of
a newly employed Smith Barney Financial Consultant (for a period up to 90 days
from the commencement of the Financial Consultant's employment with Smith Bar-
ney), on the condition the pur-
 
16
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
chase 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 fund of the Smith Bar-
ney Mutual Funds that are offered with a sales charge, and who wish to reinvest
their redemption proceeds in the Fund, provided the reinvestment is made within
60 calendar days of the redemption; (e) purchases by accounts managed by regis-
tered investment advisory subsidiaries of Travelers; (f) direct rollovers by
plan participants of distributions from a 401(k) plan offered to employees of
Travelers or its subsidiaries or a 401(k) plan enrolled in the Smith Barney
401(k) Program (Note: subsequent investments will be subject to the applicable
sales charge); (g) purchases by separate accounts used to fund certain unregis-
tered variable annuity contracts; and (h) purchases by investors participating
in a Smith Barney fee-based arrangement. In order to obtain such discounts, the
purchaser must provide sufficient information at the time of purchase to permit
verification that the purchase would qualify for the 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 aggregat-
ing the dollar amount of the new purchase and the total net asset value of all
Class A shares of the Fund and of funds sponsored by Smith Barney which are
offered with a sales charge listed under "Exchange Privilege" then held by such
person and applying the sales charge applicable to such aggregate. In order to
obtain such discount, the purchaser must provide sufficient information at the
time of purchase to permit verification that the purchase qualifies for the
reduced sales charge. The right of accumulation is subject to modification or
discontinuance at any time with respect to all shares purchased thereafter.
 
 GROUP PURCHASES
  Upon completion of certain automated systems, a reduced sales charge or pur-
chase at net asset value will also be available to employees (and partners) of
the same employer purchasing as a group, provided each participant makes the
minimum initial investment required. The sales charge applicable to purchases
by each member of such a group will be determined by the table set forth above
under "Initial Sales Charge Alternative--Class A Shares," and will be based
upon the aggregate sales of Class A shares of the Smith Barney Mutual Funds
offered with a sales charge to, and share holdings of, all members of the
group. To be eligible for such reduced sales charges or to purchase at net
asset value, all purchases must be pursuant to an employer- or partnership-
sanctioned plan meeting certain requirements. One such requirement is that the
plan must be open to specified partners or
 
                                                                              17
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
employees of the employer and its subsidiaries, if any. Such plan may, but is
not required to, provide for payroll deductions, IRAs or investments pursuant
to retirement plans under Sections 401 or 408 of the Code. Smith Barney may
also offer a reduced sales charge or net asset value purchase for aggregating
related fiduciary accounts under such conditions that Smith Barney will realize
economies of sales efforts and sales related expenses. An individual who is a
member of a qualified group may also purchase Class A shares at the reduced
sales charge applicable to the group as a whole. The sales charge is based upon
the aggregate dollar value of Class A shares offered with a sales charge that
have been previously purchased and are still owned by the group, plus the
amount of the current purchase. A "qualified group" is one which (a) has been
in existence for more than six months, (b) has a purpose other than acquiring
Fund shares at a discount and (c) satisfies uniform criteria which enable Smith
Barney to realize economies of scale in its costs of distributing shares. A
qualified group must have more than 10 members, must be available to arrange
for group meetings between representatives of the Fund and the members, and
must agree to include sales and other materials related to the Fund in its pub-
lications and mailings to members at no cost to Smith Barney. In order to
obtain such reduced sales charge or to purchase at net asset value, the pur-
chaser must provide sufficient information at the time of purchase to permit
verification that the purchase qualifies for the reduced sales charge. Approval
of group purchase reduced sales charge plans is subject to the discretion of
Smith Barney.
 
 LETTER OF INTENT
  Class A Shares. A Letter of Intent for amounts of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales charge by aggregating
investments over a 13 month period, provided that the investor refers to such
Letter when placing orders. For purposes of a Letter of Intent, the "Amount of
Investment" as referred to in the preceding sales charge table includes pur-
chases of all Class A shares of the Fund and other Smith Barney Mutual Funds
offered with a sales charge over the 13 month period based on the total amount
of intended purchases plus the value of all Class A shares previously purchased
and still owned. An alternative is to compute the 13 month period starting up
to 90 days before the date of execution of a Letter of Intent. Each investment
made during the period receives the reduced sales charge applicable to the
total amount of the investment goal. If the goal is not achieved within the
period, the investor must pay the difference between the sales charges applica-
ble to the purchases made and the charges previously paid, or an appropriate
number of escrowed shares will be redeemed. Please contact a Smith Barney
Financial Consultant or First Data to obtain a Letter of Intent application.
 
  Class Y Shares. A Letter of Intent may also be used as a way for investors to
meet the minimum investment requirement for Class Y shares. Such investors must
 
18
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
make an initial minimum purchase of $5,000,000 in Class Y shares of the Fund
and agree to purchase a total of $15,000,000 of Class Y shares of the Fund
within thirteen (13) months from the date of the Letter. If a total investment
of $15,000,000 is not made within the thirteen-month period, all Class Y shares
purchased to date will be transferred to Class A shares, where they will be
subject to all fees (including a service fee of 0.25%) and expenses applicable
to the Fund's Class A shares, which may include a CDSC of 1.00%. The Fund
expects that such transfer will not be subject to Federal income taxes. Please
contact a Smith Barney Financial Consultant or First Data for further informa-
tion.
 
 DEFERRED SALES CHARGE ALTERNATIVES
  "CDSC Shares" are sold at the net asset value next determined without an ini-
tial sales charge so that the full amount of an investor's purchase payment may
be immediately invested in the Fund. A CDSC, however, may be imposed on certain
redemptions of these shares. CDSC Shares are: (a) Class B shares; (b) Class L
shares; and (c) Class A shares that were purchased without an initial sales
charge but subject to a CDSC.
 
  Any applicable CDSC will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the time of
redemption. CDSC Shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (a) capital appreciation of
Fund assets; (b) reinvestment of dividends or capital gain distributions; (c)
with respect to Class B shares, shares redeemed more than five years after
their purchase; or (d) with respect to Class L shares and Class A shares that
are CDSC Shares, shares redeemed more than 12 months after their purchase.
 
  Class L shares and Class A shares that are CDSC Shares are subject to a 1.00%
CDSC if redeemed within 12 months of purchase. In circumstances in which the
CDSC is imposed on Class B shares, the amount of the charge will depend on the
number of years since the shareholder made the purchase payment from which the
amount is being redeemed. Solely for purposes of determining the number of
years since a purchase payment, all purchase payments made during a month will
be aggregated and deemed to have been made on the last day of the preceding
Smith Barney statement month. The following table sets forth the rates of the
charge for redemptions of Class B shares by shareholders, except in the case of
Class B shares held under the Smith Barney 401(k) Program, as described below.
See "Purchase of Shares--Smith Barney 401(k) and ExecChoice(TM) Programs."
 
                                                                              19
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
<TABLE>
<CAPTION>
      YEAR SINCE PURCHASE
      PAYMENT WAS MADE      CDSC
---------------------------------
      <S>                   <C>
      First                 5.00%
      Second                4.00
      Third                 3.00
      Fourth                2.00
      Fifth                 1.00
      Sixth and thereafter  0.00
---------------------------------
</TABLE>
 
  Class B shares will convert automatically to Class A shares eight years
after the date on which they were purchased and thereafter will no longer be
subject to any distribution fees. There also will be converted at that time
such proportion of Class B Dividend Shares owned by the shareholder as the
total number of his or her Class B shares converting at the time bears to the
total number of outstanding Class B shares (other than Class B Dividend
Shares) owned by the shareholder. See "Prospectus Summary--Alternative Pur-
chase Arrangements--Class B Shares Conversion Feature." The length of time
that CDSC Shares acquired through an exchange have been held will be calcu-
lated from the date that the shares exchanged were initially acquired in one
of the other applicable Smith Barney Mutual Funds, and Fund shares being
redeemed will be considered to represent, as applicable, capital appreciation
or dividend and capital gain distribution reinvestments in such other funds.
For Federal income tax purposes, the amount of the CDSC will reduce the gain
or increase the loss, as the case may be, on the amount realized on redemp-
tion. The amount of any CDSC will be paid to Smith Barney.
 
  To provide an example, assume an investor purchased 100 Class B shares at
$10 per share for a cost of $1,000. Subsequently, the investor acquired 5
additional shares through dividend reinvestment. During the fifteenth month
after the purchase, the investor decided to redeem $500 of his or her invest-
ment. Assuming at the time of the redemption the net asset value had appreci-
ated to $12 per share, the value of the investor's shares would be $1,260 (105
shares at $12 per share). The CDSC would not be applied to the amount which
represents appreciation ($200) and the value of the reinvested dividend shares
($60). Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would
be charged at a rate of 4.00% (the applicable rate for Class B shares) for a
total deferred sales charge of $9.60.
 
 WAIVERS OF CDSC
  The CDSC will be waived on: (a) exchanges (see "Exchange Privilege"); (b)
automatic cash withdrawals in amounts equal to or less than 1.00% per month of
the value of the shareholder's shares at the time the withdrawal plan com-
mences (see "Automatic Cash Withdrawal Plan") (provided, however, that auto-
matic 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
 
20
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
the death or disability of the shareholder; (d) redemptions of shares made in
connection with qualified distributions from retirement plans or IRAs upon the
attainment of age 59 1/2; (e) involuntary redemptions; and (f) redemptions of
shares to effect a combination of the Fund with any investment company by
merger, acquisition of assets or otherwise. In addition, a shareholder who has
redeemed shares from other Smith Barney Mutual Funds may, under certain cir-
cumstances, reinvest all or part of the redemption proceeds within 60 days and
receive pro rata credit for any CDSC imposed on the prior redemption.
 
  CDSC waivers will be granted subject to confirmation (by Smith Barney in the
case of shareholders who are also Smith Barney clients or by the Transfer
Agent in the case of all other shareholders) of the shareholder's status or
holdings, as the case may be.
 
 SMITH BARNEY 401(K) PROGRAM AND EXECCHOICE(TM) PROGRAMS
  Investors may be eligible to participate in the Smith Barney 401(k) Program
or the Smith Barney ExecChoice(TM) Program. To the extent applicable, the same
terms and conditions, which are outlined below, are offered to all plans par-
ticipating ("Participating Plans") in these programs.
 
  Each Fund offers to Participating Plans Class A and Class L shares as
investment alternatives under the Smith Barney 401(k) and ExecChoice(TM) Pro-
grams. Class A and Class L shares acquired through the Participating Plans are
subject to the same service and/or distribution fees as the Class A and Class
L shares acquired by other investors; however, they are not subject to any
initial sales charge or CDSC. Once a Participating Plan has made an initial
investment in a Fund, all of its subsequent investments in the Fund must be in
the same Class of shares, except as otherwise described below.
 
  Class A Shares. Class A shares of a Fund are offered without any sales
charge or CDSC to any Participating Plan that purchases $1,000,000 or more of
Class A shares of one or more funds of the Smith Barney Mutual Funds.
 
  Class L Shares. Class L shares of a Fund are offered without any sales
charge or CDSC to any Participating Plan that purchases less than $1,000,000
of Class L shares of one or more funds of the Smith Barney Mutual Funds.
 
  401(k) and ExecChoice(TM) Plans Opened On or After June 21, 1996. At the end
of the fifth year after the date the Participating Plan enrolled in the Smith
Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program, if its total
Class L holdings in all non-money market Smith Barney Mutual Funds equal at
least $1,000,000, it will be offered the opportunity to exchange all of its
Class L shares for Class A shares of a Fund. (For Participating Plans that
were originally established through a Smith Barney retail brokerage account,
the five year period will be
 
                                                                             21
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
calculated from the date the retail brokerage account was opened.) Such Partic-
ipating 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.
 
  401(k) Plans Opened Prior to June 21, 1996. In any year after the date a Par-
ticipating Plan enrolled in the Smith Barney 401(k) Program, if its total Class
L holdings in all non-money market Smith Barney Mutual Funds equal at least
$500,000 as of the calendar year-end, the Participating Plan will be offered
the opportunity to exchange all of its Class L shares for Class A shares of a
Fund. Such Plans will be notified in writing within 30 days after the last
business day of the calendar year and, unless the exchange offer has been
rejected in writing, the exchange will occur on or about the last business day
of the following March.
 
  Any Participating Plan in the Smith Barney 401(k) Program that has not previ-
ously qualified for an exchange into Class A shares will be offered the oppor-
tunity to exchange all of its Class L shares for Class A shares of a Fund,
regardless of asset size, at the end of the eighth year after the date the Par-
ticipating Plan enrolled in the Smith Barney 401(k) Program. Such Plans will be
notified of the pending exchange in writing approximately 60 days before the
eighth anniversary of the enrollment date and, unless the exchange has been
rejected in writing, the exchange will occur on or about the eighth anniversary
date. Once an exchange has occurred, a Participating Plan will not be eligible
to acquire additional Class L shares of the Fund but instead may acquire Class
A shares of the Fund. Any Class L shares not converted will continue to be sub-
ject to the distribution fee.
 
  Participating Plans wishing to acquire shares of a Fund through the Smith
Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program must purchase
such shares directly from the Transfer Agent. For further information regarding
these Programs, investors should contact a Smith Barney Financial Consultant.
       
       
22
<PAGE>
 
EXCHANGE PRIVILEGE
 
  Except as otherwise noted below, shares of each Class may be exchanged at the
net asset value next determined for shares of the same Class in the following
Smith Barney Mutual Funds, to the extent shares are offered for sale in the
shareholder's state of residence. Exchanges of Class A, Class B and Class L
shares are subject to minimum investment requirements and all shares are sub-
ject to the other requirements of the fund into which exchanges are made.
 
 FUND NAME
  Growth Funds
       
    Concert Peachtree Growth Fund     
       
    Concert Social Awareness Fund     
       
    Smith Barney Aggressive Growth Fund Inc.     
       
    Smith Barney Appreciation Fund Inc.     
       
    Smith Barney Balanced Fund     
       
    Smith Barney Contrarian Fund     
       
    Smith Barney Convertible Fund     
       
    Smith Barney Fundamental Value Fund Inc.     
       
    Smith Barney Funds, Inc.--Large Cap Value Fund     
       
    Smith Barney Large Cap Blend Fund     
       
    Smith Barney Large Capitalization Growth Fund     
       
    Smith Barney Natural Resources Fund Inc.     
       
    Smith Barney Premium Total Return Fund     
       
    Smith Barney Small Cap Blend Fund     
       
    Smith Barney Special Equities Fund     
           
  Taxable Fixed-Income Funds
    **Smith Barney Adjustable Rate Government Income Fund
    Smith Barney Diversified Strategic Income Fund
    +++Smith Barney Funds, Inc.--Short-Term U.S. Treasury Securities Fund
    Smith Barney Funds, Inc.--U.S. Government Securities Fund
    Smith Barney Government Securities Fund
    Smith Barney High Income Fund
    Smith Barney Investment Grade Bond Fund
    Smith Barney Managed Governments Fund Inc.
    Smith Barney Total Return Bond Fund
 
  Tax-Exempt Funds
    Smith Barney Arizona Municipals Fund Inc.
    Smith Barney California Municipals Fund Inc.
    *Smith Barney Intermediate Maturity California Municipals Fund
    *Smith Barney Intermediate Maturity New York Municipals Fund
    Smith Barney Managed Municipals Fund Inc.
    Smith Barney Massachusetts Municipals Fund
       
    Smith Barney Municipal High Income Fund     
 
                                                                              23
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
 
    Smith Barney Muni Funds--Florida Portfolio
    Smith Barney Muni Funds--Georgia Portfolio
    *Smith Barney Muni Funds--Limited Term Portfolio
    Smith Barney Muni Funds--National Portfolio
    Smith Barney Muni Funds--New York Portfolio
    Smith Barney Muni Funds--Pennsylvania Portfolio
           
    Smith Barney New Jersey Municipals Fund Inc.
    Smith Barney Oregon Municipals Fund
           
  Global-International Funds
    Smith Barney Hansberger Global Small Cap Value Fund
    Smith Barney Hansberger Global Value Fund
    Smith Barney World Funds, Inc.--Emerging Markets Portfolio
    Smith Barney World Funds, Inc.--European Portfolio
    Smith Barney World Funds, Inc.--Global Government Bond Portfolio
    Smith Barney World Funds, Inc.--International Balanced Portfolio
    Smith Barney World Funds, Inc.--International Equity Portfolio
    Smith Barney World Funds, Inc.--Pacific Portfolio
 
  Smith Barney Concert Allocation Series Inc.
    Smith Barney Concert Allocation Series Inc.--Balanced Portfolio
    Smith Barney Concert Allocation Series Inc.--Conservative Portfolio
    Smith Barney Concert Allocation Series Inc.--Global Portfolio
    Smith Barney Concert Allocation Series Inc.--Growth Portfolio
    Smith Barney Concert Allocation Series Inc.--High Growth Portfolio
    Smith Barney Concert Allocation Series Inc.--Income Portfolio
 
  Money Market Funds
    +Smith Barney Exchange Reserve Fund
    ++Smith Barney Money Funds, Inc.--Cash Portfolio
    ++Smith Barney Money Funds, Inc.--Government Portfolio
    ***Smith Barney Money Funds, Inc.--Retirement Portfolio
    +++Smith Barney Municipal Money Market Fund, Inc.
    +++Smith Barney Muni Funds--California Money Market Portfolio
    +++Smith Barney Muni Funds--New York Money Market Portfolio
--------------------------------------------------------------------------------
  * Available for exchange with Class A, Class L and Class Y shares of the
    Fund.
   
 ** Available for exchange with Class A and Class B shares of the Fund.     
***Available for exchange with Class A shares of the Fund.
   
  + Available for exchange with Class B and Class L shares of the Fund.     
 ++ Available for exchange with Class A and Class Y shares of the Fund. In
    addition, shareholders who own Class L shares of the Fund through the Smith
    Barney 401(k) and ExecChoice(TM) Programs may exchange those shares for
    Class L shares of this Fund.
+++Available for exchange with Class A and Class Y shares of the Fund.
 
24
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
 
 
  Class B Exchanges. In the event a Class B shareholder wishes to exchange all
or a portion of his or her shares in any of the funds imposing a CDSC higher
than that imposed by the Fund, the exchanged Class B shares will be subject to
the higher applicable CDSC. Upon an exchange, the new Class B shares will be
deemed to have been purchased on the same date as the Class B shares of the
fund that have been exchanged.
 
  Class L Exchanges. Upon an exchange, the new Class L shares will be deemed
to have been purchased on the same date as the Class L shares of the Fund that
have been exchanged.
 
  Class A and Class Y Exchanges. Class A and Class Y shareholders of the Fund
who wish to exchange all or a portion of their shares for shares of the
respective Class in any of the funds identified above may do so without impo-
sition of any charge.
 
  Additional Information Regarding the Exchange Privilege. Although the
exchange privilege is an important benefit, excessive exchange transactions
can be detrimental to the 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.
 
  Certain shareholders may be able to exchange shares by telephone. See "Re-
demption of Shares--Telephone Redemption and Exchange Program." Exchanges will
be processed at the net asset value next determined. Redemption procedures
discussed below are also applicable for exchanging shares, and exchanges will
be made upon receipt of all supporting documents in proper form. If the
account registration of the shares of the fund being acquired is identical to
the registration of the shares of the fund exchanged, no signature guarantee
is required.
 
  A capital gain or loss for tax purposes will be realized upon the exchange,
depending upon the cost or other basis of shares redeemed. Before exchanging
shares, investors should read the current prospectus describing the shares to
be acquired. The Fund reserves the right to modify or discontinue exchange
privileges upon 60 days' prior notice to shareholders.
 
                                                                             25
<PAGE>
 
REDEMPTION OF SHARES
 
  The Fund is required to redeem shares tendered to it, as described below, at
a redemption price equal to their net asset value per share next determined
after receipt of a written request in proper form at no charge other than any
applicable CDSC. Redemption requests received after the close of regular trad-
ing on the NYSE are priced at the net asset value next determined.
 
  If a shareholder holds shares in more than one Class, any request for redemp-
tion must specify the Class being redeemed. In the event of a failure to spec-
ify which Class, or if the investor owns fewer shares of the Class than speci-
fied, the redemption request will be delayed until the Transfer Agent receives
further instructions from Smith Barney, or if the shareholder's account is not
with Smith Barney, from the shareholder directly. The redemption proceeds will
be remitted on or before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or as permitted under
the Investment Company Act of 1940, as amended (the "1940 Act"), in extraordi-
nary circumstances. Generally, if the redemption proceeds are remitted to a
Smith Barney brokerage account, these funds will not be invested for the share-
holder's benefit without specific instruction and Smith Barney will benefit
from the use of temporarily uninvested funds. Redemption proceeds for shares
purchased by check, other than a certified or official bank check, will be
remitted upon clearance of the check, which may take up to ten days or more.
 
  Shares held by Smith Barney as custodian must be redeemed by submitting a
written request to a Smith Barney Financial Consultant. Shares other than those
held by Smith Barney as custodian may be redeemed through an investor's Finan-
cial Consultant, Introducing Broker or dealer in the selling group or by sub-
mitting a written request for redemption to:
 
  Smith Barney Mid Cap Blend Fund
  Class A, B, L or Y (please specify)
  c/o First Data Investor Services Group, Inc.
  P.O. Box 5128
  Westborough, Massachusetts 01581-5128
 
  A written redemption request must (a) state the Class and number or dollar
amount of shares to be redeemed, (b) identify the shareholder's account number
and (c) be signed by each registered owner exactly as the shares are regis-
tered. If the shares to be redeemed were issued in certificate form, the cer-
tificates must be endorsed for transfer (or be accompanied by an endorsed stock
power) and must be submitted to First Data together with the redemption
request. Any signature appearing on a share certificate, stock power or written
redemption request in excess of $10,000 must be guaranteed by an eligible guar-
antor institution such as a domestic bank, savings and loan institution, domes-
tic credit union, member bank of the Fed-
 
26
<PAGE>
 
REDEMPTION OF SHARES (CONTINUED)
 
eral Reserve System or member firm of a national securities exchange. Written
redemption requests of $10,000 or less do not require a signature guarantee
unless more than one such redemption request is made in any 10-day period or
the redemption proceeds are to be sent to an address other than the address of
record. Unless otherwise directed, redemption proceeds will be mailed to an
investor's address of record. First Data may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees or guardians. A redemption request will not be deemed properly
received until First Data receives all required documents in proper form.
 
 TELEPHONE REDEMPTION AND EXCHANGE PROGRAM
  Shareholders who do not have a Smith Barney brokerage account may be eligi-
ble to redeem and exchange Fund shares by telephone. To determine if a share-
holder is entitled to participate in this program, he or she should contact
First Data at 1-800-451-2010. Once eligibility is confirmed, the shareholder
must complete and return a Telephone/Wire Authorization Form, including a sig-
nature guarantee, that will be provided by First Data upon request. (Alterna-
tively, an investor may authorize telephone redemptions on the new account
application with a signature guarantee when making his/her initial investment
in the Fund.)
 
  Redemptions. Redemption requests of up to $10,000 of any class or classes of
the Fund's shares may be made by eligible shareholders by calling First Data
at 1-800-451-2010. Such requests may be made between 9:00 a.m. and 4:00 p.m.
(New York City time) on any day the NYSE is open. Redemption requests received
after the close of regular trading on the NYSE are priced at the net asset
value next determined. Redemptions of shares (i) by retirement plans or (ii)
for which certificates have been issued are not permitted under this program.
 
  A shareholder will have the option of having the redemption proceeds mailed
to his/her address of record or wired to a bank account predesignated by the
shareholder. Generally, redemption proceeds will be mailed or wired, as the
case may be, on the next business day following the redemption request. In
order to use the wire procedures, the bank receiving the proceeds must be a
member of the Federal Reserve System or have a correspondent relationship with
a member bank. The Fund reserves the right to charge shareholders a nominal
fee for each wire redemption. Such charges, if any, will be assessed against
the shareholder's account from which shares were redeemed. In order to change
the bank account designated to receive redemption proceeds, a shareholder must
complete a new Telephone/Wire Authorization Form and, for the protection of
the shareholder's assets, will be required to provide a signature guarantee
and certain other documentation.
 
  Exchanges. Eligible shareholders may make exchanges by telephone if the
account registration of the shares of the fund being acquired is identical to
the
 
                                                                             27
<PAGE>
 
REDEMPTION OF SHARES (CONTINUED)
 
registration of the shares of the fund exchanged. Such exchange requests may
be made by calling First Data at 1-800-451-2010 between 9:00 a.m. and 4:00
p.m. (New York City time) on any day the NYSE is open. Exchange requests
received after the close of regular trading on the NYSE are priced at the net
asset value next determined.
 
  Additional Information Regarding Telephone Redemption and Exchange
Program. Neither the Fund nor its agents will be liable for following instruc-
tions communicated by telephone that are reasonably believed to be genuine.
The Fund and its agents will employ procedures designed to verify the identity
of the caller and legitimacy of instructions (for example, a 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.
 
 AUTOMATIC CASH WITHDRAWAL PLAN
   
  The Fund offers shareholders an automatic cash withdrawal plan, under which
shareholders who own shares with a value of at least $10,000 may elect to
receive cash payments of at least $50 monthly or quarterly. Retirement plan
accounts are eligible for automatic cash withdrawal plans only where the
shareholder is eligible to receive qualified distributions and has an account
value of at least $5,000. The withdrawal plan will be carried over on
exchanges between funds or Classes of the Fund. Any applicable CDSC will not
be waived on amounts withdrawn by a shareholder that exceed 1.00% per month of
the value of the shareholder's shares subject to the CDSC at the time the
withdrawal plan commences. (With respect to withdrawal plans in effect prior
to November 7, 1994, any applicable CDSC will be waived on amounts withdrawn
that do not exceed 2.00% per month of the shareholder's shares subject to the
CDSC.) For further information regarding the automatic cash withdrawal plan,
shareholders should contact a Smith Barney Financial Consultant or their
financial consultant, Introducing Broker or dealer in the selling group.     
 
MINIMUM ACCOUNT SIZE
 
 
  The Fund reserves the right to involuntarily liquidate any shareholder's
account in the Fund if the aggregate net asset value of the shares held in the
Fund account is less than $500. (If a shareholder has more than one account in
the Fund, each account must satisfy the minimum account size.) The Fund, how-
ever, will not redeem shares based solely on market reductions in net asset
value. Before the Fund exercises such right, shareholders will receive written
notice and will be permitted 60 days to bring accounts up to the minimum to
avoid involuntary liquidation.
 
28
<PAGE>
 
PERFORMANCE
 
 
  From time to time the Fund may advertise its total return and average annual
total return in advertisements and/or other types of sales literature. These
figures are computed separately for Class A, Class B, Class L and Class Y
shares of the Fund. These figures are based on historical earnings and are not
intended to indicate future performance. Total return is computed for a speci-
fied period of time assuming deduction of the maximum sales charge, if any,
from the initial amount invested and reinvestment of all income dividends and
capital gain distributions on the reinvestment dates at prices calculated as
stated in this Prospectus, then dividing the value of the investment at the end
of the period so calculated by the initial amount invested and subtracting
100%. The standard average annual total return, as prescribed by the SEC is
derived from this total return, which provides the ending redeemable value.
Such standard total return information may also be accompanied with nonstandard
total return information for differing periods computed in the same manner but
without annualizing the total return or taking sales charges into account. The
Fund may also include comparative performance information in advertising or
marketing its shares. Such performance information may include data from Lipper
Analytical Services, Inc. and other financial publications.
 
MANAGEMENT OF THE TRUST AND THE FUND
 
 
 BOARD OF TRUSTEES
  Overall responsibility for the management and supervision of the Trust rests
with the Trust's Board of Trustees. The Trustees approve all significant agree-
ments between the Trust and the persons and companies that furnish services to
the Fund, including agreements with the Fund's distributor, investment manager,
custodian and transfer agent. The day-to-day operations of the Fund are dele-
gated to the Fund's investment manager. The SAI contains background information
regarding each Trustee of the Trust and executive officers of the Fund.
 
 INVESTMENT MANAGER--MMC
          
  The Fund's investment manager, MMC, is a registered investment adviser whose
principal executive offices are located at 388 Greenwich Street, New York, New
York 10013. MMC was incorporated in March, 1968 under the laws of Delaware and
renders investment advice to a wide variety of individual, institutional and
investment company clients that had aggregate assets under management as of May
31, 1998 in excess of $98 billion.     
 
  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
invest-
ment objective and policies, makes investment decisions for the Fund, places
orders to purchase and sell securities, and employs professional portfolio man-
agers and
 
                                                                              29
<PAGE>
 
MANAGEMENT OF THE TRUST AND THE FUND (CONTINUED)
 
securities analysts who provide research services to the Fund. For investment
management services rendered, the Fund pays the Manager a monthly fee at the
annual rate of 0.75% of the value of the Fund's average daily net assets.
 
 PORTFOLIO MANAGEMENT
  Lawrence Weissman, Vice President and Investment Officer of the Fund, is the
portfolio manager and manages the day-to-day operations of the Fund, including
making all investment decisions.
 
  On April 6, 1998, Travelers announced that it had entered into a Merger
Agreement with Citicorp. The transaction, which is expected to be completed
during the third quarter of 1998, is subject to various regulatory approvals,
including approval by the Federal Reserve Board. The transaction is also sub-
ject to approval by the stockholders of each of Travelers and Citicorp. Upon
consummation of the merger, the surviving corporation would be a bank holding
company subject to regulation under the Bank Holding Company Act of 1956 (the
"BHCA"), the requirements of the Glass-Steagall Act and certain other laws and
regulations. Although the effects of the merger of Travelers and Citicorp and
compliance with the requirements of BHCA and the Class-Steagall Act are still
under review, the Manager does not believe that its compliance with applicable
laws following the merger of Travelers and Citicorp will have a material
adverse effect on its ability to continue to provide the Fund with the same
level of investment advisory services that it currently receives.
 
DISTRIBUTOR
 
 
  Smith Barney distributes shares of the Fund as principal underwriter and as
such conducts a continuous offering pursuant to a "best efforts" arrangement
requiring Smith Barney to take and pay for only such securities as may be sold
to the public. Pursuant to a plan of distribution adopted by the Fund under
Rule 12b-1 under the 1940 Act (the "Plan"), Smith Barney is paid an annual
service fee with respect to Class A, Class B and Class L shares of the Fund at
the annual rate of 0.25% of the average daily net assets of the respective
Class. Smith Barney is also paid an annual distribution fee with respect to
Class B and Class L shares at the annual rate of 0.75% of the average daily net
assets attributable to those Classes. Class B shares which automatically con-
vert to Class A shares eight years after the date of original purchase will no
longer be subject to distribution fees. The fees are used by Smith Barney to
pay its Financial Consultants for servicing shareholder accounts and, in the
case of Class B and Class L shares, to cover expenses primarily intended to
result in the sale of those shares. These expenses include: advertising; the
cost of printing and mailing prospectuses to potential investors; payments to
and expenses of Smith Barney Financial Consultants and other persons who pro-
 
30
<PAGE>
 
DISTRIBUTOR (CONTINUED)
 
vide support services in connection with the distribution of shares; interest
and/or carrying charges; and indirect and overhead costs of Smith Barney asso-
ciated with the sale of Fund shares, including lease, utility, communications
and sales promotion expenses.
  The payments to Smith Barney Financial Consultants for selling shares of a
Class include a commission or fee paid by the investor or Smith Barney at the
time of sale and, with respect to Class A, Class B and Class L shares, a con-
tinuing fee for servicing shareholder accounts for as long as a shareholder
remains a holder of that Class. Smith Barney Financial Consultants may receive
different levels of compensation for selling different Classes of shares.
 
  Payments under the Plan are not tied exclusively to the distribution and
shareholder service expenses actually incurred by Smith Barney and the payments
may exceed distribution expenses actually incurred. The Fund's Board of Direc-
tors will evaluate the appropriateness of the Plan and its payment terms on a
continuing basis and in so doing will consider all relevant factors, including
expenses borne by Smith Barney, amounts received under the Plan and proceeds of
the CDSC.
 
ADDITIONAL INFORMATION
   
  The Trust was organized on October 17, 1991 under the laws of the Common-
wealth of Massachusetts and is a business entity commonly known as a "Massachu-
setts business trust." The Trust offers shares of beneficial interest of sepa-
rate funds with a par value of $.001 per share. The Fund offers shares of bene-
ficial interest currently classified into five Classes--A, B, L, Y and Z. Each
Class of the Fund represents an identical interest in the Fund's investment
portfolio. As a result, the Classes have the same rights, privileges and pref-
erences, except with respect to: (a) the designation of each Class; (b) the
effect of the respective sales charges if any, for each Class; (c) the distri-
bution and/or service fees borne by each Class pursuant to the Plan; (d) the
expenses allocable exclusively to each Class; (e) voting rights on matters
exclusively affecting a single Class; (f) the exchange privilege of each Class;
and (g) the conversion feature of the Class B shares. The Trust's Board of
Trustees does not anticipate that there will be any conflicts among the inter-
ests of the holders of the different Classes. The Trustees, on an ongoing
basis, will consider whether any such conflict exists and, if so, take appro-
priate action.     
 
  The Fund does not hold annual shareholder meetings. There normally will be no
meetings of shareholders for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Shareholders of record of
no less than two-
 
                                                                              31
<PAGE>
 
ADDITIONAL INFORMATION (CONTINUED)
 
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.
 
  PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the Fund's investments.
 
  First Data, located at Exchange Place, Boston, Massachusetts 02109, serves as
the Fund's transfer agent.
 
  The Fund sends its shareholders a semi-annual report and an audited annual
report, which include listings of the investment securities held by the Fund at
the end of the reporting period. In an effort to reduce the Fund's printing and
mailing costs, the Fund plans to consolidate the mailing of its semi-annual and
annual reports by household. This consolidation means that a household having
multiple accounts with the identical address of record will receive a single
copy of each report. Shareholders who do not want this consolidation to apply
to their accounts should contact their Smith Barney Financial Consultant or the
Fund's Transfer Agent.
 
32
<PAGE>
 
APPENDIX A
 
  Convertible Securities. Convertible securities are generally preferred secu-
rities or fixed-income securities that are convertible into common stock at
either a stated price or stated rate. The price of the convertible security
will normally vary in some proportion to changes in the price of the underlying
common stock because of this conversion feature. A convertible security will
normally also provide a fixed income stream. For this reason, the convertible
security may not decline in price as rapidly as the underlying common stock.
Convertible securities rank senior to common stocks in an issuer's capital
structure and consequently entail less risk than the issuer's common stock. The
Manager will select convertible securities to be purchased by the Fund based
primarily upon its evaluation of the fundamental investment characteristics and
growth prospects of the issuer of the security. As a fixed income security, a
convertible security tends to increase in market value when interest rates
decline and decrease in value when interest rates rise. While convertible secu-
rities generally offer lower interest or dividend yields than non-convertible
fixed income securities of similar quality, their value tends to increase as
the market value of the underlying stock increases and to decrease when the
value of the underlying stock decreases.
 
  Foreign Securities. In addition to direct investment in securities of foreign
issuers, the Fund may also invest in securities of foreign issuers in the form
of sponsored and unsponsored American Depositary Receipts (ADRs), European
Depositary Receipts (EDRs), Global Depositary Receipts (GDRs) or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the 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" consisting of a speci-
fied amount of currencies of certain of the twelve member states of the Euro-
pean Community. In addition, the Fund may invest in securities denominated in
other currency "baskets."
 
  There are certain risks involved in investing in securities of companies and
governments of foreign nations that are in addition to the usual risks inherent
in domestic investments. These risks include those resulting from revaluation
of currencies, future adverse political and economic developments and the pos-
sible 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 mar-
kets may be less liquid and their prices more volatile than those of securities
of comparable domestic companies. In addition, with
 
                                                                             A-1
<PAGE>
 
APPENDIX A (CONTINUED)
 
respect to certain foreign countries, there is the possibility of expropria-
tion, nationalization, confiscatory taxation and limitations on the use or
removal of funds or other assets of the Fund, including the withholding of div-
idends. Foreign securities may be subject to foreign government taxes that
could reduce the yield on such securities. Because the Fund may invest in secu-
rities denominated or quoted in currencies other than the U.S. dollar, changes
in foreign currency exchange rates may adversely affect the value of portfolio
securities and the appreciation or depreciation of investments. Investment in
foreign securities also may result in higher expenses due to the cost of con-
verting foreign currency to U.S. dollars, the payment of fixed brokerage com-
missions on foreign exchanges, which generally are higher than commissions on
domestic exchanges, and the expense of maintaining securities with foreign cus-
todians, and the imposition of transfer taxes or transaction charges associated
with foreign exchanges.
 
  Real Estate Investment Trusts ("REITS"). The Fund may invest in REITS, which
are pooled investment vehicles that invest primarily in either real estate or
real estate related loans. The value of a REIT is affected by changes in the
value of the properties owned by the REIT or securing mortgage loans held by
the REIT. REITs are dependent upon cash flow from their investments to repay
financing costs and the ability of the 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.
 
  Debt Securities. Debt securities in which the Fund may invest include notes,
bills, commercial paper, obligations issued or guaranteed by the government or
any of its political subdivisions, agencies or instrumentalities, and
certificates of deposit. Debt securities represent money borrowed that
obligates the issuer (e.g., a corporation, municipality, government, government
agency) to repay the borrowed amount at maturity (when the obligation is due
and payable) and usually to pay the holder interest at 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 securi-
ties will change as the general levels of interest rates fluctuate. During
periods of falling interest rates, the value of the Fund's debt securities will
generally rise. Conversely, during periods of rising interest rates, the value
of the Fund's debt securities will generally decline. Credit risk relates to
the ability of the issuer to make payments of principal and interest. The Fund
has no restrictions with respect to the maturities or duration of the debt
securities it holds. The Fund's investments in fixed income securities with
longer terms to maturity or greater duration are subject to greater volatility
than the Fund's shorter-term securities.
 
A-2
<PAGE>
 
APPENDIX A (CONTINUED)
 
 
  Money Market Instruments. Short-term instruments in which the Fund may invest
include obligations of banks having at least $1 billion in assets (including
certificates of deposit, time deposits and bankers' acceptances of domestic or
foreign banks, domestic savings and loan associations and similar institu-
tions); commercial paper rated no lower than A-2 by Standard & 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.
 
  U.S. Government Securities. The Fund may invest in U.S. Government securi-
ties. Generally, these securities include U.S. Treasury obligations and obliga-
tions issued or guaranteed by U.S. Government agencies, instrumentalities or
sponsored enterprises. U.S. Government securities also include Treasury
receipts and other stripped U.S. Government securities, where the interest and
principal components of stripped U.S. Government securities are traded indepen-
dently. The Fund may also invest in zero coupon U.S. Treasury securities and in
zero coupon securities issued by financial institutions, which represent a pro-
portionate interest in underlying U.S. Treasury securities. A zero coupon secu-
rity pays no interest to its holder during its life and its value consists of
the difference between its face value at maturity and its cost. The market val-
ues of zero coupon securities generally are more volatile than the market
prices of securities that pay interest periodically.
 
  Repurchase Agreements. The Fund may enter into repurchase agreements in order
to earn income on available cash or as a temporary defensive measure. Under a
repurchase agreement, the Fund acquires securities subject to the seller's
agreement to repurchase at a specified time and price. If the seller becomes
subject to a proceeding under the bankruptcy laws or its assets are otherwise
subject to a stay order, the Fund's right to liquidate the securities may be
restricted (during which time the value of the securities could decline). As
discussed in the SAI, the Fund has adopted certain procedures intended to mini-
mize the risks of investing in repurchase agreements.
 
  Reverse Repurchase Agreements. In order to generate additional income, the
Fund may engage in reverse repurchase agreement transactions with banks, bro-
ker-dealers and other financial intermediaries. Reverse repurchase agreements
are the same as repurchase agreements except that, in this instance, the Fund
would assume the role of seller/borrower in the transaction. The Fund will
maintain a segregated account consisting of assets determined to be liquid by
the Manager that at all times have a value equal to its obligations under
reverse repurchase agreements. The Fund will invest the proceeds in other money
market instruments or repurchase agreements maturing not later than the expira-
tion of the reverse repur-
 
                                                                             A-3
<PAGE>
 
APPENDIX A (CONTINUED)
 
chase agreement. Reverse repurchase agreements involve the risk that the mar-
ket value of the securities sold by the Fund may decline below the repurchase
price of the securities.
 
  When-Issued, Delayed-Delivery and Forward Commitment Transactions. The Fund
may purchase securities on a when-issued basis, may purchase and sell securi-
ties for delayed delivery and may make contracts to purchase securities for a
fixed price at a future date beyond normal settlement time (forward commit-
ments). When-issued transactions, delayed delivery purchases and forward com-
mitments involve a risk of loss if the value of the securities declines prior
to the settlement date, which risk is in addition to the risk of decline in
the value of the Fund's other assets. Typically, no income accrues on securi-
ties the Fund has committed to purchase prior to the time delivery of the
securities is made, although the Fund may earn income on securities it has
deposited in a segregated account.
 
  Lending of Securities. Consistent with applicable regulatory requirements,
the Fund may seek to increase its income by lending portfolio securities to
entities deemed creditworthy by the Manager. Such loans will usually be made
to brokers, dealers and other financial organizations, and would be required
to be secured continuously by collateral in cash, letters of credit or U.S.
government securities, which are maintained at all times in an amount equal to
the current market value of the loaned securities. Any 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. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail finan-
cially. Loans will be made to firms deemed by the Manager to be of good stand-
ing and will not be made unless, in the judgment of Manager the consideration
to be earned from such loans would justify the risk.
 
  Options on Securities, Securities Indexes and Currencies. The Fund may write
(sell) covered put and call options on securities, securities indexes and cur-
rencies ("Options") and purchase put and call Options that are traded on for-
eign or U.S. securities exchanges and over the counter. The Fund will write
such Options for the purpose of increasing its return and/or protecting the
value of its portfolio. In particular, where the Fund writes an Option that
expires unexercised or is closed out by the Fund at a profit, it will retain
the premium paid for the Option, which will increase its gross income and will
offset in part the reduced value of a portfolio security in connection with
which the Option may have been written or the increased cost of portfolio
securities to be acquired. However, the writing of Options constitutes only a
partial hedge, up to the amount of the premium, less any transaction costs. In
contrast, if the price of the security underlying the Option
 
A-4
<PAGE>
 
APPENDIX A (CONTINUED)
 
moves adversely to the Fund's position, the Option may be exercised and the
Fund will be required to purchase or sell the security at a disadvantageous
price, resulting in losses that may only be partially offset by the amount of
the premium. The Fund may also write combinations of put and call Options on
the same security, known as "straddles." Such transactions generate additional
premium income but also present increased risk.
 
  The Fund may purchase put and call Options in anticipation of declines in the
value of portfolio securities or increases in the value of securities to be
acquired. In the event that the expected changes occur, the Fund may be able to
offset the resulting adverse effect on its portfolio, in whole or in part,
through the Options purchased. The risk assumed by the Fund in connection with
such transactions is limited to the amount of the premium and related transac-
tion costs associated with the Option, although the Fund may be required to
forfeit such amounts in the event that the prices of securities underlying the
Options do not move in the direction or to the extent anticipated.
 
  Over-the-counter options in which the Fund may invest differ from traded
options in that they are two-party contracts, with price and other terms nego-
tiated between buyer and seller, and generally do not have as much market
liquidity as exchange-traded options. The Fund may be required to treat as
illiquid over-the-counter options purchased and securities being used to cover
certain written over-the-counter options.
 
  Futures Contracts and Options on Futures Contracts. The Fund may enter into
transactions in futures contracts and options on futures only (i) for bona fide
hedging purposes (as defined in Commodities Futures Trading Commission regula-
tions), 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 liq-
uidation value of the Fund's assets.
 
  Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified
future time and at a specified price. The primary purpose of entering into a
futures contract by the Fund is to protect the Fund from fluctuations in the
value of securities without actually buying or selling the securities. The Fund
may enter into futures contracts and options on futures to seek higher invest-
ment returns when a futures contract is priced more attractively than stocks
comprising a benchmark index, to facilitate trading or to reduce transaction
costs. The Fund will only enter into futures contracts and options on futures
contracts that are traded on a domestic exchange and board of trade. Assets
committed to futures contracts will be segregated at the Fund's custodian to
the extent required by law.
 
 
                                                                             A-5
<PAGE>
 
APPENDIX A (CONTINUED)
 
  Among the several risks accompanying the utilization of futures contracts and
options on futures contracts are: First, the successful use of futures and
options is dependent upon the ability of the Manager to predict correctly move-
ments in the stock market or in the direction of interest rates. These predic-
tions involve skills and techniques that may be different from those involved
in the management of investments in securities. If the prices of the underlying
commodities move in an unanticipated manner, the Fund may lose the expected
benefit of these futures or options transactions and may incur losses. Second,
positions in futures contracts and options on futures contracts may only be
closed out by entering into offsetting transactions on the exchange where the
position was entered into (or through a linked exchange), and as a result of
daily price fluctuations limits there can be no assurance the offsetting trans-
action could be entered into at an advantageous price at a particular time.
Consequently, the Fund may realize a loss on a futures contract or option that
is not offset by an increase in the value of its portfolio securities that are
being hedged or the Fund may not be able to close a futures or options position
without incurring a loss in the event of adverse price movements.
 
A-6
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<PAGE>
 
 
                                               SMITH BARNEY
                                               -------------------------------
                                               A Member of Travelers Group LOGO
 
 
 

                                                                        
                                                                    SMITH BARNEY
                                                                         MID CAP
                                                                           BLEND
                                                                       FUND INC.
                                                                            

                                                            388 Greenwich Street
                                                        New York, New York 10013
 

                                                                   FD       6/98





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



Statement of Additional Information
June 30, 1998

This Statement of Additional Information ("SAI") expands upon and supplements
 the information contained in the current Prospectus of Smith
 Barney Mid Cap Blend Fund (the "Fund") dated June 30, 1998,
 as amended or supplemented from time to time, and should be read
 in conjunction with the Fund's Prospectus. The Fund is a sub-trust of
 Smith Barney Investment Trust (the "Trust"). The Fund's Prospectus may be
 obtained from a Smith Barney Financial Consultant or by writing or
 calling the Fund at the address or te
CONTENTS

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

Management of the Fund 
Investment Objective and Management Policies 
Purchase of Shares  
Redemption of Shares 
Distributor 
Valuation of Shares 
Performance Data (See in the Prospectus "Performance") 
Taxes (See in the Prospectus "Dividends, Distributions and Taxes") 
Additional Information 


MANAGEMENT OF THE FUND

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

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

Transfer Agent


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


Trustees and Executive Officers of the Fund

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*      Designates an "interested" Trustee.
#   Upon attainment of age 80, Fund Trustees are required to change
 to emeritus status.  Trustees Emeritus are entitled to serve in emeritus
 status for a maximum of 10 years, during which time they are paid 50% of
 the annual retainer fee and meeting fees otherwise applicable to Fund
 Trustees, together with reasonable out-of-pocket expenses for each meeting
 attended.. During the Fund's last fiscal year,  aggregate
 compensation paid by the Fund to Trustees achieving emeritus status
 totaled $11,423
					


Investment Manager - MMC

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

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

Counsel and Auditors

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

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

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

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

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

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


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

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

Reverse Repurchase Agreements

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

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

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

When-Issued Securities and Delayed Delivery Transactions

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

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

The Fund will at times maintain in a segregated 

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

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

Certificates of deposit ("CDs") are short-term negotiable obligations
 of commercial banks. Time deposits ("TDs") are non-negotiable deposits
 maintained in banking institutions for specified periods of time at
 stated interest rates. Bankers' acceptances are time drafts drawn on
 commercial banks by borrowers usually in connection with international
 transactions.
 
Domestic commercial banks organized under Federal law are supervised
 and examined by the Comptroller of the Currency and are required to be
 members of the Federal Reserve System and to be insured by the Federal
 Deposit Insurance Corporation (the "FDIC"). Domestic banks organized
 under state law are supervised and examined by state banking authorities
 but are members of the Federal Reserve System only if they elect to join. 
Most state banks are insured by the FDIC (although such insurance may not
 be of mater
 depending upon the principal amounts of CDs of each bank held by the Fund)
 and are subject to Federal examination and to a
 substantial body of Federal law and regulation. As a result of
 governmental regulations, domestic branches of domestic banks are
 generally required to, among other things, maintain specified levels
 of reserves, and are subject to other supervision and regulation
 designed to promote financial soundness.
 
Obligations of foreign branches of domestic banks, such as CDs and TDs,
 may be general obligations of the parent bank in addition
 to the issuing branch, or may be limited by the terms
 of a specific obligation and government regulation.
 Such obligations are subject to different risks than are
 those of domestic banks or domestic branches of foreign banks. 
These risks include foreign economic and political developments,
 foreign governmental restrictions that may adversely
 affect payment of principal and intere
oreign exchange controls and foreign withholding and other taxes on 
interest income. Foreign branches of domestic banks are not necessarily
 subject to the same or similar regulatory requirements that apply to 
domestic banks, such as mandatory reserve requirements, loan limitations,
 and accounting, auditing and financial recordkeeping requirements. 
In addition, less information may be publicly available about a
 foreign branch of a domestic bank than about a domestic bank.
 CDs issued by wholly owned Canadian 
 
Obligations of domestic branches of foreign banks may be genera
l obligations of the parent bank in addition to the issuing branch,
 or may be limited by the terms of a specific obligation and 
by governmental regulation as well as governmental action in
 the country in which the foreign bank has its head office.
 A domestic branch of a foreign bank with assets 
in excess of $1 billion may or may not be subject to reserve
 requirements imposed by the Federal Reserve System or by the state 
in which the branch is lo
icensed in that state. In addition, branches licensed by the Comptroller of
 the Currency and branches licensed by certain states ("State Branches")
 may or may not be required to: (a) pledge to the regulator by depositing
 assets with a designated bank within the state, an amount of 
its assets equal to 5% of its total liabilities; and (b) maintain assets 
within the state in an amount equal to a specified percentage of the
 aggregate amount of liabilities of the foreign bank payable at or
 through all of its age
 
In view of the foregoing factors associated with the purchase 
of CDs and TDs issued by foreign branches of domestic banks or by
 domestic branches of foreign banks, MMC will carefully evaluate 
such investments on a case-by-case basis.
 
Savings and loan associations whose CDs may be purchased by the Fund
 are supervised by the Office of Thrift Supervision and are insured
 by the Savings Association Insurance Fund, which is administered by
 the FDIC and is backed by the full faith and credit of the U.S.
 government. As a result, such savings and loan associations are
 subject to regulation and examination.
 
Options, 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 
o 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 involv
e 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 inv
se or sale will be made ("transaction hedging").
  Further, when the investment adviser believes that a
 particular currency may decline compared to the U.S.
 dollar or another currency, the Fund may enter into a
 forward contract to sell the currency the investment adviser 
expects to decline in an amount approximating the value of some or all
 of the Fund's securities denominated in that currency,
 or when the investment adviser believes that one currency
 may decline against a currency in which some or all of th
 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's custodian places (i) cash, (ii) U.S. Government securities
 or (iii) equity securities or debt securities (of any grade)
 in certain currencies provided such asset
red 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 investment adviser 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
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 with its custodian.
 
Although the portfolio might not employ the use of forward currency
 contracts, options and futures, the use of any of these strategies
 would involve certain investment risks and transaction costs to which
 it might not otherwise be subject.  These risks include: dependence on the
 investment
 adviser'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 move
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 t
  See "Dividends, Distributions and Taxes." 

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 cov
ered call option forfeits the right to any appreciation in the value o
f 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 pric
rity. Similarly, the principal reason for writing covered put options 
is to realize income in the form of premiums. The writer of a covered
 put option accepts the risk of a decline in the price of the underlying
 security. The size of the premiums the Fund may receive may be adversely
 affected as new or existing institutions, including other investment
 companies, engage in or increase their option-writing activities.
 
Options written by the Fund will normally have expiration dates between
  one and six months from the date written. The exercise price of the
 options may be below, equal to, or above the current market values of
 the underlying securities at the times the options are written. In the
 case of call options, these exercise prices are referred to as
 "in-the-money," "at-the-money" and "out-of-the-money," respectively.
 
The Fund may write (a) in-the-money call options when MMC expects the price
 of the underlying security to remain flat or decline moderately during
 the option period, (b) at-the-money call options when MMC expects the price
 of the underlying security to remain flat or advance moderately during
 the option period and (c) out-of-the-money call options when MMC expects
 that the price of the security may increase but not above a price equal to
 the sum of the exercise price plus the premiums received from writing 
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
 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 recogn
ll depend upon whether the amount received in the closing sale transaction 
is more or less than the premium the Fund initially paid for the original
 option plus the related transaction costs.
 
Although the Fund generally will purchase or write only those options for 
which MMC believes there is an active secondary market so as to facilitate
 closing transactions, there is no assurance that sufficient trading
 interest to create a liquid secondary market on a securities exchange
 will exist for any particular option or at any particular time, and for
 some options no such secondary market may exist. A liquid secondary market
 in an option may cease to exist for a variety of reasons. In the past,
 for exa
pated 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 rec
il the option expires or it delivers the underlying security upon exercise.
 
Securities exchanges generally have established limitations governing the
 maximum number of calls and puts of each class which may be held or written,
 or exercised within certain periods, by an investor or group of investors
 acting in concert (regardless of whether the options are written on the same
 or different securities exchanges or are held, written or exercised in 
one or more accounts or through one or more brokers).   It is possible 
that the Fund and other clients of MMC and certain of their affiliat
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 pu
ery. By so doing, the Fund will not bear any market risk because the 
Fund will have the absolute right to receive from the issuer of the
 underlying security an equal number of shares to replace the borrowed
 stock, but the Fund may incur additional transaction costs or interest
 expenses in connection with any such purchase or borrowing.
 
Although MMC will attempt to take appropriate measures to minimize the
 risks relating to the 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, 
ex 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 o
he 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 
 
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 p
rice 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 
 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 MMC'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.

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 th
e 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 i
 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 fu
vestment 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 performan
posit 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
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 MMC to predict correctly movements in th
e 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
lying 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 p
ading 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 adver
se price movements, the Fund would be required to make daily cash payments
 of va
being hedged will correlate with the price movements in a futures
 contract and thus provide an offset to losses on the futures contract.

INVESTMENT RESTRICTIONS

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

1.	Invest in a manner that would cause it to fail to be a
 "diversified company" under the 1940 Act and the rules, 
regulations and orders thereunder. 

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

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

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

5.    Make loans.  This restriction does not apply to: (a) the purchase o
f 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 
ction with securities it holds or held; (c) trading in futures
 contracts and options on futures contracts (including options
 on currencies to the extent consistent with the Funds' investment
 objective and policies); or (d) investing in real estate investment
 trust securities.

8.   Purchase any securities on margin (except for such short-term
 credits as are necessary for the clearance of purchases and sales
 of portfolio securities) or sell any securities short (except "against 
the box"). For purposes of this restriction, the deposit or payment by
 the Fund of underlying securities and other assets in escrow and
 collateral agreements with respect to initial or maintenance margin
 in connection with futures contracts and related options and options
 on securities, indexes or similar i
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.

Portfolio Turnover

While 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%,
 it has in the past exceeded 100%.  The rate of turnover will not be a
 limiting factor, however, when the Fund deems it desirable to sell or
 purchase securities.  This policy should not result in higher brokerage
 commissions to the Fund, 
f 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
or reasons not directly related to the investment quality of particular
 issues or the general movement of interest rates, such as changes 
in the overall demand for, or supply of, various types of tax-exempt
 securities.

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

Allocation of transactions on behalf of the Fund, including their frequency,
 to various dealers is determined by the Manager in its best judgment
 and in a manner deemed fair and reasonable to the Fund's 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 i
nvestment research and stat
s to the Manager may receive orders for portfolio transactions by the Fund.
  Information so received is in addition to, and not in lieu of,
 services required to be performed by the Manager, and the fees of the 
Manager are not reduced as a consequence of their receipt of the
 supplemental information.  The information may be useful to the 
Manager in serving both the Fund and other clients, and conversely, 
supplemental information obtained by the placement of business of 
other clients may be useful to the Mana
obligations to the Fund.

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

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

PURCHASE OF SHARES

Volume Discounts

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

Combined Right of Accumulation

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

Determination of Public Offering Price

The Fund offers its shares to the public on a continuous basis.
  The public offering price for a Class A and Class Y share of a
 Fund is equal to the net asset value per share at the time of purchase,
 plus for Class A shares an initial sales charge based on the aggregate
 amount of the investment.  The public offering price for a Class C share
 (and Class A share purchases, including applicable rights of accumulation,
 equaling or exceeding $500,000) is equal to the net asset value per share at
 the time of purc
 is imposed at the time of purchase.  A contingent deferred sales 
charge ("CDSC"), however, is imposed on certain redemptions of Class C
 shares, and Class A shares when purchased in amounts exceeding $500,000.
  The method of computation of the public offering price is shown in each
 Fund's financial statements, incorporated by reference in their entirety
 into this SAI.

REDEMPTION OF SHARES

Detailed information on how to redeem shares of the Fund is included in
 the Prospectus.  The right of redemption of shares of the Fund may be 
suspended or the date of payment postponed (a) for any periods during 
which the New York Stock Exchange, Inc.  (the "NYSE") is closed
 (other than for customary weekend and holiday closings), (b) when trading in
 the markets the Fund normally utilizes is restricted, or an emergency
 exists, as determined by the SEC, so that disposal of the Fund's 
investments or determina
lue 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.

Distributions in Kind

If the Board of Trustees of the Trust determines that it would be detrimental
 to the best interests of the remaining shareholders to make a redemption
 payment wholly in cash, the Fund may pay, in accordance with SEC rules,
 any portion of a redemption in excess of the lesser of $250,000 or 1.00% of
 the 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 secur

Automatic Cash Withdrawal Plan

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

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

DISTRIBUTOR

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

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

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
y the Trustees including all of the Independent Trustees in the
 manner described above.  The Plan may be terminated with respect to a
 Class at any time, without penalty, by vote of a majority of the
 Independent Trustees or, with respect to any Fund, by vote of
 a majority of the outstanding voting securities of a Fund
 (as defined in the 1940 Act).  Pursuant to the Plan, Smith Barney 
will provide the Board of Trustees with periodic reports of amounts
 expended under the Plan and the purpose for which such expe

Distribution Arrangements

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


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 
 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 m
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 and in the Prospectus, shareholders of any of the
 Smith Barney Mutual Funds may exchange all or part of their shares for 
shares of the same class of other Smith Barney Mutual Funds, to the extent
 such shares are offered for sale in the shareholder's state of residence,
 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 repsective shares of any of the Smith Barney
 Mutual Funds.

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

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

PERFORMANCE DATA

From time to time, the Trust may quote a 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 include the following industry and financial publications- Barron's,
 Business Week, CDA Investment Technologies, Inc., Changing Times, Forbes,
 Fortune, Institutional Investor, Investors Daily, Money, Morningstar
 Mutual Fund Valu
USA Today and The Wall Street Journal.  To the extent any advertisement or
 sales literature of a Fund describes the expenses or
 performance of any Class it will also disclose such information for 
the other Classes.

Average Annual Total Return

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

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

T
=
average annual total return.

n
=
number of years.

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

Aggregate Total Return

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

ERV-P
    P

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

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


Performance will vary from time to time depending on market conditions,
 the composition of the Fund's portfolio and operating expenses.
  Consequently, any given performance quotation should not be
 considered representative of the Fund'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 Fund with certain
 bank deposits or other investments that pay a fixed yield for a
 stated period of time.


TAXES

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

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

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

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


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

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

Any net long-term capital gains realized by the Fund will be distributed
 annually as described in the Prospectus. Such distributions ("capital gain
 dividends") will be taxable to shareholders as long-term capital gains,
 regardless of how long a shareholder has held Fund shares, and will be
 designated as capital gain dividends in a written notice mailed by th
e Fund to shareholders after the close of the Fund's prior taxable year.
 If a shareholder receives a capital gain dividend with respect to any
 share and

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

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

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

ADDITIONAL INFORMATION

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

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

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



					


					Smith Barney

					Mid Cap Blend Fund
						


Statement of

Additional Information















June 30, 1998




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




33
u:\legal\boards\wed\1997\misc\MCBSAI98doc


PART  C
OTHER INFORMATION


Item 24.	Financial Statements and Exhibits

(a)  Financial Statements

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


	Included in Part C:

   	Consent of Independent Accountants is filed herein.    

(b)	Exhibits

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

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

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

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

	(d) Amended and Restated Master Trust Agreement 
dated February 28, 1998 is incorporated by reference 
to Post Effective Amendment No. 18 to the Registration
Statement filed on March 30, 1998 (Post-
Effective Amendment No, 18)
	
   	(e) Amendment to the First Amended and Restated 
Master Trust Agreement dated June 1, 1998 is filed herein.    

(2)  Registrants by-laws are incorporated by 
reference to the Registration Statement.

	(3)  Not Applicable.

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

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

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

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

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

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

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

	(e)  Form of Investment Management Agreement 
between the Registrant on behalf of Smith Barney 
Large Capitalization Growth Fund and Mutual 
Management Corp.("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) 

(f)  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)


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

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

	(7)  Not Applicable.

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

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

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

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

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

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

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

   	(11)  Consent of Independent Accountants is filed 
 		herein     

	(12)  Not Applicable.

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

	(14)  Not Applicable.

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

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

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

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

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

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

   	(17)  Financial Data Schedule is filed herein.     

	(18)(a) 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.

   
(b)Rule 18f-3(d) Multiple Class Plan of the Registrant
is filed herein.     

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

		None

   
Item 26.	Number of Holders of Securities

		(1)				(2)
	Title of Class					
	Beneficial Interest par value
	Number of Record Holders 
	$0.001 per share	as of 
    
    June 24, 1998     
   
	Intermediate Maturity California 	Class A 455
	Municipals Fund		      	Class L  79
						      Class Y   3 
	
	Intermediate Maturity New York	Class A 1068
	Municipals Fund			      Class L   75 
      
Smith Barney S&P 500			Class A 1546
	Index Fund		      		Class D    1 

	Large Capitalization Growth Fund 	Class A 13,492
						      Class B 30,590
					      	Class L  6,895 
						      Class Y      6
	    

Item 27.	Indemnification

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

Item 28(a).	Business and Other Connections of 
Investment Adviser
   
Investment Adviser and Administrator - Mutual 
Management Corp.("MMC") (f/k/a Smith Barney Mutual Funds 
Management Inc.), was incorporated in December 1968 
under the laws of the State of Delaware. MMC is a 
wholly owned subsidiary of Salomon Smith Barney Holdings Inc. 
("Holdings"),(formerly known as Smith Barney Holdings 
Inc.), which in turn is a wholly owned subsidiary of 
Travelers Group Inc. ("Travelers").  MMC is 
registered as an investment adviser under the 
Investment Advisers Act of 1940 (the Advisers Act) 
and has, through its predecessors, been in the 
investment counseling business since 1934.  MMC 
serves as the Investment Adviser and Administrator 
for Smith Barney Intermediate Maturity California 
Fund and Smith Barney Intermediate Maturity New York 
Fund and Investment Manager for Smith Barney Large 
Capitalization Growth Fund and Smith Barney Mid Cap Blend Fund.
    
The list required by this Item 28 of the officers and 
directors of MMC 
together with information as to any other business, 
profession, vocation or employment of a substantial 
nature engaged in by such officer and directors 
during the past two fiscal years, is incorporated by 
reference to Schedules A and D of FORM ADV filed by 
MMC pursuant to the Advisers Act (SEC File No. 801-
8314). 

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

 The list required by this Item 28 of the officers 
and directors of TIMCO together with information as 
to any other business, profession, vocation or 
employment of a substantial nature engaged in by such 
officers and directors during the past two fiscal 
years, is incorporated by reference to Schedules A 
and D of FORM ADV filed by SBA pursuant to the 
Advisers Act (SEC File No.801-07212. 

Item 29.	Principal Underwriters

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

Smith Barney is wholly owned subsidiary of Holdings.

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

Item 30.	Location of Accounts and Records

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

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


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

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

Item 31.	Management Services

		Not Applicable

Item 32.	Undertakings
   
	(a) Not applicable
	(b) Not applicable
(c) 	The Registrant hereby undertakes to 
furnish to each person to whom a prospectus of the
Registrant is delivered, a copy of the Registrants
latest report to shareholders upon request and 
without charge.     

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


SIGNATURES

	Pursuant to the requirements of the Securities 
Act of 1933, and the Investment Company Act of 1940, 
the Registrant, SMITH BARNEY INVESTMENT TRUST, has 
duly caused this registration statement to be signed 
on its behalf by the undersigned, thereto duly 
authorized in the City of New York, in the State of 
New York on the     30th day of June, 1998.     

				SMITH BARNEY INVESTMENT TRUST

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

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

Signature			Title					Date
/s/Heath B. McLendon	Chairman of the Board		   6/26/98     
Heath B. McLendon		(Chief Executive Officer)
				

/s/Lewis E. Daidone	Treasurer			      6/26/98     
Lewis E. Daidone		(Chief Financial and
			Accounting Officer)

/s/Herbert Barg*			Trustee		      6/26/98     
Herbert Barg

/s/Alfred J. Bianchetti*	Trustee		      6/26/98     	
Alfred J. Bianchetti

/s/Martin Brody*			Trustee		       6/26/98     
Martin Brody

/s/Dwight B. Crane*		Trustee		       6/26/98     
Dwight B. Crane

/s/Burt N. Dorsett*		Trustee		       6/26/98     
Burt N. Dorsett

/s/Elliot S. Jaffe*		Trustee		      6/26/98     
Elliot S. Jaffe

/s/Stephen E. Kaufman*		Trustee		      6/26/98     
Stephen E. Kaufman

/s/Joseph J. McCann*		Trustee		      6/26/98     
Joseph J. McCann

/s/Cornelius C. Rose, Jr.*	Trustee		      6/26/98     
Cornelius C. Rose, Jr.

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

/s/ Heath B. McLendon
Heath B. McLendon



Exhibit Index

Exhibit 1 (e) Amendment to the First Amended and
              Restated Master Trust Agreement

Exhibit 11 Independent Auditors Consent

Exhibit 18 Rule 18f-3(d) Multiple Class Plan

Exhibit 27 Financial Data Schedule