Registration No. 33-11417
811-4994

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

	REGISTRATION STATEMENT UNDER THE
	SECURITIES ACT OF 1933	[X]

	Pre-Effective Amendment  No.	[   ]

	Post-Effective Amendment No.    18    	[X]

	REGISTRATION STATEMENT UNDER THE
	INVESTMENT COMPANY ACT OF 1940	[X]

	Amendment No.    19     	[X]

SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND 
(Exact name of Registrant as specified in Charter)

388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Offices) (Zip Code)
   
(212) 816-6474     
Registrant's Telephone Number, including area code

Christina T. Sydor, 388 Greenwich Street, New York, New York 10013
(Name and Address of Agent for Service)

Continuous
(Approximate Date of Proposed Public Offering)


It is proposed that this filing becomes effective (check appropriate 
box):

   
[  ]  Immediately upon filing pursuant to paragraph b	[  ]  on (date) 
pursuant to paragraph b

    
   
[  ]  60 days after filing pursuant to paragraph (a)(1)	[X]  on 
March 30, 1999 pursuant to 
paragraph (a)(1)
    
[  ]  75 days after filing pursuant to paragraph (a)(2)	[  ]  on 
(date) pursuant to paragraph (a)(2)


If appropriate, check the following box:

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

Part A-Prospectus

Part B-Statement of Additional Information

Part C-Other Information
Signature

Exhibits

Part A
<PAGE>
 
-------------------------------
[Logo]

Smith Barney Mutual 
Funds

Investing for your 
future.

Every day.

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



Prospectus                          Smith Barney
                                    Mutual Funds


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

March 30, 1999     Massachusetts Municipals Fund

                          Class A, B, L and Y Shares








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


                           Fund goal and strategies...........................4

                           Risks, performance and expenses....................5
Smith Barney Mutual
Funds offers a             More on the fund's investments.....................8
distinctive family of
fund choices tailored to   Management.........................................9
help meet the varying
needs of large and small   Choosing a class of shares to buy.................10
investors.  Currently,
Smith Barney Mutual        Comparing the fund's classes......................11
Funds offers more than
60 individual funds with   Sales charges.....................................12
assets of more than $xx
billion.                   More about deferred sales charges.................15

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

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

                           Redeeming shares..................................18

                           Other things to know about
                             share transactions..............................20

                           Dividends, distributions and
                             taxes...........................................22

                           Share price.......................................23

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

You should know:

An investment in the fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government agency.


Massachusetts Municipals Fund                                                  1
<PAGE>
 
-------------------------------------------------------------------------------
Fund goal and strategies
-------------------------------------------------------------------------------

Investment objective The fund seeks to provide Massachusetts investors with as
high a level of dividend income exempt from federal and Massachusetts personal
income taxes as is consistent with prudent investment management and the
preservation of capital.

Key investments 

The fund invests primarily in intermediate-term and long-term investment grade
Massachusetts municipal securities. These include securities issued by the
Commonwealth of Massachusetts and certain other municipal issuers, political
subdivisions, agencies and public authorities that pay interest which is exempt
from Massachusetts personal income taxes. Intermediate-term and long-term
municipal securities have remaining maturities at the time of purchase from
three to more than twenty years. The fund can invest up to 25% of its assets in
below investment grade bonds. Investment grade bonds are those rated by a
national ratings organization in any of the four highest long-term rating
categories, or if unrated, of comparable quality.

Selection process 

The manager selects individual securities that it believes are undervalued or
will benefit from changes in market conditions. The manager spreads the fund's
investments among various sectors, focusing more heavily on sectors it believes
are relatively undervalued. In selecting individual securities, the manager:

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

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

 .    Considers a security's maturity in light of the outlook for the issuer and
     its sector, and for interest rates

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

2
<PAGE>
 
-------------------------------------------------------------------------------
Risks, performance and expenses
-------------------------------------------------------------------------------

Principal risks of investing in the fund

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

 .    Interest rates rise, causing the value of the fund's portfolio to decline
 .    The issuer of a security owned by the fund defaults on its obligation to
     pay principal and/or interest or has its credit rating downgraded. This
     risk is higher for below investment grade bonds, which are considered
     speculative because they have a higher risk of issuer default, are subject
     to greater price volatility and may be illiquid
 .    Massachusetts municipal securities fall out of favor with investors .
 .    Unfavorable legislation affects the tax-exempt status of municipal bonds 
 .    The manager's judgment about the attractiveness, value or income potential
     of a particular security proves to be incorrect

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

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

Who may want to invest

The fund may be an appropriate investment if you:

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


Massachusetts Municipals Fund                                                  3
<PAGE>
 
Total return 

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future.

                             [BAR GRAPH GOES HERE]

                        % Total Return:  Class A Shares



                       Calendar years ended December 31

    88     89     90      91      92      93      94      95     96     97   98

  12.25%  8.43%  4.16%  11.57%  10.06%  11.74%  -9.03%  20.78%  5.00%  7.85% 

The bar chart shows the performance of the fund's Class A shares for each of the
past 10 years. Class B, L and Y shares would have different performance because
of their different expenses. The performance information in the chart does not
reflect sales charges, which would reduce your return.

Quarterly returns:  Highest:  xx% in ___ quarter 199X; 
Lowest:   xx% in ___ quarter 199X

Comparative performance

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

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------
       Average Annual Total Returns C Calendar Years Ended December 31, 1998
-------------------------------------------------------------------------------------
<S>            <C>            <C>         <C>        <C>         <C>
    Class      Inception date   1 year     5 years    10 years    Since inception
-------------------------------------------------------------------------------------

      A          [12/21/87]

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

      B           11/30/92                   n/a        n/a
-------------------------------------------------------------------------------------

      L           11/10/94                              n/a
-------------------------------------------------------------------------------------

      Y           xx/xx/xx                   n/a        n/a
-------------------------------------------------------------------------------------

Lehman Index        n/a

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

Lipper Funds        n/a
Average
-------------------------------------------------------------------------------------
</TABLE>

4                                                 
<PAGE>
 
Fees and expenses

This table sets forth the fees and  expenses  you will pay if you invest in fund
shares.
<TABLE>
---------------------------------------------------------------------------------------
Shareholder fees
(paid directly from your investment)              Class A  Class B   Class L   Class Y
---------------------------------------------------------------------------------------
<S>                                             <C>       <C>      <C>       <C> 
Maximum sales charge on purchases (as a % of       4.00%     None     1.00%      None
offering price)

Maximum deferred sales charge on redemptions       None*    4.50%     1.00%      None
(as a % of the lower of net asset value at
purchase or redemption)

Annual fund operating expenses (paid by the
fund as a % of fund net assets)

Management fee**                                   0.50%    0.50%     0.50%     0.50%

Distribution and service (12b-1) fee               0.15%    0.65%     0.70%      None

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


*You may buy Class A shares in amounts of  $500,000  or more at net asset  value
(without an initial  charge) but if you redeem those shares  within 12 months of
their purchase, you will pay a deferred sales charge of 1.00%.  
**Management fee rates shown above have not been reduced to reflect waivers
currently in effect. The actual management fee rate for the current fiscal
period was ___% of each class' average daily net assets, and the total annual
operating expenses for the fund were ___% for Class A, ___% for Class B and ___%
for Class L.

Example

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

--------------------------------------------------------------------------------
Number of years you own your shares      1 year    3 years   5 years   10 years
--------------------------------------------------------------------------------

Class A                                  $         $         $         $

Class B (redemption at end of period)    $         $         $         $

Class B (no redemption)                  $         $         $         $

Class L (redemption at end of period)    $         $         $         $

Class L (no redemption)                  $         $         $         $

Class Y                                  $         $         $         $
--------------------------------------------------------------------------------

Massachusetts Municipals Fund                                                  5

<PAGE>
 
--------------------------------------------------------------------------------
More on the fund's investments
--------------------------------------------------------------------------------

Massachusetts municipal securities. Massachusetts municipal securities are debt
obligations issued by the Commonwealth of Massachusetts and its political
subdivisions, agencies and public authorities (together with certain other
governmental issuers such as Puerto Rico, the Virgin Islands and Guam). The
interest on these bonds is exempt from federal income tax and Massachusetts
personal income tax. As a result, the interest rate on these bonds normally is
lower than it would be if the bonds were subject to taxation. The Massachusetts
municipal securities in which the fund invests include general obligation bonds,
revenue bonds and municipal leases.

Derivatives and hedging techniques. The fund may, but need not, use derivative
contracts, such as futures and options on securities and securities indices, and
options on futures, to hedge against adverse changes in the market value of its
securities or interest rates.

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

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

6
<PAGE>
 
-------------------------------------------------------------------------------
Management
-------------------------------------------------------------------------------

Manager. The fund's investment manager is SSBC Fund Management Inc., an
affiliate of Salomon Smith Barney Inc. The manager's address is 388 Greenwich
Street, New York, New York 10013. The manager selects the fund's investments and
oversees its operations. The manager and Salomon Smith Barney are subsidiaries
of Citigroup Inc. Citigroup businesses produce a broad range of financial
services -- asset management, banking and consumer finance, credit and charge
cards, insurance, investments, investment banking and trading -- and use diverse
channels to make them available to consumer and corporate customers around the
world. Among these businesses are Citibank, Commercial Credit, Primerica
Financial Services, Salomon Smith Barney, SSBC Asset Management, Travelers Life
& Annuity, and Travelers Property Casualty.

Lawrence T. McDermott, an investment officer of Mutual Management Corp. and a
managing director of Salomon Smith Barney, has been responsible for the day to
day management of the fund since its inception in 1987.

Management fees. During the fiscal year ended November 30, 1998, the manager
received an advisory fee and an administrative fee equal to ___% and ___%,
respectively, of the fund's average daily net assets.

Distributor. The fund has entered into an agreement with CFBDS, Inc. to
distribute the fund's shares. A selling group consisting of Salomon Smith Barney
and other broker dealers sell fund shares to the public.

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

Year 2000 issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the fund. The manager and Salomon Smith Barney are addressing
the Year 2000 issue for their systems. The fund has been informed by other
service providers that they are taking similar measures. Although the fund does
not expect the Year 2000 issue to adversely affect it, the fund cannot guarantee
the efforts of the fund (limited to requesting and receiving reports from its
service providers) or its service providers to correct the problem will be
successful.

Massachusetts Municipals Fund                                                 7
<PAGE>
 
------------------------------------------------------------------------------
Choosing a class of shares to buy
------------------------------------------------------------------------------

You can choose among four  classes of shares:  Classes A, B, L and Y. Each class
has different sales charges and expenses,  allowing you to choose the class that
best meets your needs.  Which class is more beneficial to an investor depends on
the amount and intended length of the  investment.  
 . If you establish a program of regular investment, you may wish to consider
Class A shares; as the investment accumulates, you may qualify for reduced sales
charges and the shares are subject to lower ongoing expenses.
 . Class B shares are sold without any initial sales charge so the entire price
is immediately invested in the fund, which may partially or wholly offset the
higher annual expenses of this class. Class L shares are sold with a lower
initial sales charge than Class A shares, which may also help to offset the
higher annual expenses of this class. Because the fund's future return cannot be
predicted, however, there can be no assurance that this would be the case for
either class.
 .  Consider the effect of the deferred sales charge period and any conversion
rights in the context of your investment time frame. For example, while Class L
shares have a shorter deferred sales charge 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 long-term investment outlooks.

You may buy shares from:
 .  A Salomon Smith Barney Financial Consultant
 .  An investment dealer in the selling group or a broker that clears through
   Salomon Smith Barney -- a dealer representative
 .  The fund, but only if you are investing  through certain qualified plans or
   certain dealer representatives

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

--------------------------------------------------------------------------------
                                                 Initial             Additional
                                      ---------------------------    ----------

                                      Classes A, B, L    Class Y     All Classes

General                                   $1,000       $15 million       $50

Monthly Systematic Investment Plans         $25            n/a           $25

Quarterly Systematic Investment Plans       $50            n/a           $50

Uniform Gift to Minor Accounts             $250        $15 million       $50
--------------------------------------------------------------------------------

8
<PAGE>
 
--------------------------------------------------------------------------------
Comparing the fund's classes
--------------------------------------------------------------------------------

Your Salomon Smith Barney Financial Consultant or dealer representative can help
you decide which class meets your goals. Your Salomon Smith Barney Financial
Consultant or dealer representative may receive different compensation depending
upon which class you choose.

<TABLE>
<CAPTION>

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

Initial        Up to 4.00%;       None              1.00%            None
sales charge   reduced or
               waived for large
               purchases and
               certain
               investors.  No
               charge for
               purchases of
               $500,000 or more
------------------------------------------------------------------------------------

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

Annual         0.15% of average   0.65% of          0.70% of         None
distribution   daily net assets   average daily     average daily
and service                       net assets        net assets
fees
------------------------------------------------------------------------------------

Exchange-able  Class A shares     Class B shares    Class L shares   Class Y shares of
into*          of most Smith      of most Smith     of most Smith    most Smith Barney
               Barney mutual      Barney mutual     Barney mutual    mutual funds
               funds              funds             funds
------------------------------------------------------------------------------------
</TABLE>

*Ask your Salomon Smith Barney Financial Consultant or dealer  representative or
visit the web site for the Smith Barney funds available for exchange.

Massachusetts Municipals Fund                                                 9
<PAGE>
 
------------------------------------------------------------------------------
Sales charge:  Class A shares
------------------------------------------------------------------------------

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

      -------------------------------------------------------------------------
                                               Sales Charge as a % of

                                           Offering           Net amount
      Amount of purchase                  price (%)          invested (%)
      -------------------------------------------------------------------------
      Less than $25,000                      4.00                4.17
      -------------------------------------------------------------------------
      $25,000 but less than $50,000          3.50                3.63
      -------------------------------------------------------------------------
      $50,000 but less than $100,000         3.00                3.09
      -------------------------------------------------------------------------
      $100,000 but less than $250,000        2.50                2.56
      -------------------------------------------------------------------------
      $250,000 but less than $500,000        1.50                1.52
      -------------------------------------------------------------------------
      $500,000 or more                       -0-                  -0-
      -------------------------------------------------------------------------

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

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

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

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

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

10
<PAGE>
 
Letter of intent - lets you purchase Class A shares of the fund and other Smith
Barney mutual funds over a 13-month period and pay the same sales charge, if
any, as if all shares had been purchased at once. You may include purchases on
which you paid a sales charge within 90 days before you sign the letter.

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

 . Employees of members of the NASD.

 . Clients of newly  employed  Salomon  Smith  Barney  Financial  Consultants  if
  certain conditions are met

 . Investors who redeemed Class A shares of a Smith Barney fund in the past 60
  days, if the investor's Salomon Smith Barney Financial Consultant or dealer
  representative is notified

If you want to learn more about the requirements for reductions or waivers of
Class A initial sales charges, contact your Salomon Smith Barney Financial
Consultant or dealer representative or consult the SAI.

Massachusetts Municipals Fund                                                 11
<PAGE>
 
------------------------------------------------------------------------------
Sales charge:  Class B shares
------------------------------------------------------------------------------

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

<TABLE>
<S>                              <C>      <C>      <C>     <C>      <C>     <C>
----------------------------------------------------------------------------------------
                                                                               6th and
  Year after purchase              1st      2nd      3rd     4th      5th       over
----------------------------------------------------------------------------------------

  Deferred sales charge           4.5%      4%       3%       2%      1%         0%
----------------------------------------------------------------------------------------
</TABLE>

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


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

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

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

--------------------------------------------------------------------------------
Sales charge:  Class L shares
--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------
Sales charge:  Class Y shares
--------------------------------------------------------------------------------

You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of the fund over a 6-month period. To qualify, you must
initially invest $5,000,000.

12
<PAGE>
 
--------------------------------------------------------------------------------
More about deferred sales charges
--------------------------------------------------------------------------------

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

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

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

If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund and be credited with the
amount of the deferred sales charge, if you notify your Salomon Smith Barney
Financial Consultant or dealer representative.

Salomon Smith Barney receives deferred sales charges as partial compensation for
its expenses in selling shares, including the payment of compensation to your
Salomon Smith Barney Financial Consultant or dealer representative.

Deferred sales charge waivers

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

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

If you want to learn more about additional waivers of deferred sales charges,
contact your Salomon Smith Barney Financial Consultant or dealer representative
or consult the SAI.

Massachusetts Municipals Fund                                                13
<PAGE>
 
-------------------------------------------------------------------------------
Buying shares
-------------------------------------------------------------------------------

<TABLE>
<S>             <C>    
-----------------------------------------------------------------------------------------

Through a You should contact your Salomon Smith Barney Financial Consultant or
Salomon Smith dealer representative to open a brokerage account and make Barney
arrangements to buy shares. Financial Consultant or If you do not provide the
following information, your order will be dealer rejected representative

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

                  You should pay for your shares through your brokerage account
                  no later than the third business day after you place your
                  order. Salomon Smith Barney or your dealer representative may
                  charge an annual account maintenance fee.
-----------------------------------------------------------------------------------------

Through the Qualified retirement plans and certain other investors who are
fund's transfer clients of the selling group are eligible to buy shares directly
from agent the fund.

                  .  Write the transfer agent at the following address:

                     Smith Barney Funds
                       Massachusetts Municipals Fund
                     (Specify class of shares)
                     c/o First Data Investor Services Group, Inc.
                     P.O. Box 5128
                     Westborough, Massachusetts 01581-5128

                  .  Enclose a check to pay for the shares. For initial
                  purchases, complete and send an account application.

                  .  For more information, call the transfer agent at 1-800-451-
                  2010
-----------------------------------------------------------------------------------------

Systematic You may authorize Salomon Smith Barney, the dealer representative or
investment plan the transfer agent to transfer funds automatically from a
regular
                  bank account,  cash held in a Salomon  Smith Barney  brokerage
                  account or Smith  Barney  money market fund to buy shares on a
                  regular basis.

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

                  .  If you do not have sufficient funds in your account on a transfer
                  date, Salomon Smith Barney, your dealer representative or the
                  transfer agent may charge you a fee

                  For more information, contact your Salomon Smith Barney Financial
                  Consultant,  dealer  representative  or the transfer  agent or
                  consult the SAI.
-----------------------------------------------------------------------------------------
</TABLE>

14                                                
<PAGE>
 
--------------------------------------------------------------------------------
Exchanging shares
--------------------------------------------------------------------------------

<TABLE>
<S>             <C>    
-----------------------------------------------------------------------------------------

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

                  .  You must meet the minimum investment amount for each fund

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

                  .  The fund may suspend or terminate your exchange privilege if you
                  engage in an excessive pattern of exchanges
-----------------------------------------------------------------------------------------

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

By telephone      If you do not have a brokerage account, you may be eligible to
                  exchange shares through the transfer agent.  You must complete an
                  authorization form to authorize telephone transfers.  If eligible,
                  you may make telephone exchanges on any day the New York Stock
                  Exchange is open.  Call the transfer agent at 1-800-451-2010 between
                  9:00 a.m. and 4:00 p.m. (Eastern time).  Requests received after the
                  close of regular trading on the Exchange are priced at the net asset
                  value next determined.

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

By                mail  If you do not  have a  Salomon  Smith  Barney  brokerage
                  account,  contact your dealer  representative  or write to the
                  transfer agent at the address on the opposite page.

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

Massachusetts Municipals Fund                                                 15
<PAGE>
 
--------------------------------------------------------------------------------
Redeeming shares
--------------------------------------------------------------------------------

<TABLE>
<S>             <C>   
--------------------------------------------------------------------------------

Generally         Contact your Salomon Smith Barney Financial Consultant or
                  dealer representative to redeem shares of the fund.

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

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

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

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

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

                     Smith Barney Funds
                        Massachusetts Municipals Fund
                     (Specify class of shares)
                     c/o First Data Investor Services Group, Inc.
                     P.O. Box 5128
                     Westborough, Massachusetts 01581-5128

                  Your written request must provide the following:

                  .  Your account number

                  .  The class of shares and the dollar amount or number of shares to
                  be redeemed

                  .  Signatures of each owner exactly as the account is registered
</TABLE> 

16
<PAGE>
 
<TABLE>
<S>             <C>   
By telephone      If you do not have a brokerage account, you may be eligible to
                  redeem shares in amounts up to $10,000 per day through the
                  transfer agent. You must complete an authorization form to
                  authorize telephone redemptions. If eligible, you may request
                  redemptions by telephone on any day the New York Stock
                  Exchange is open. Call the transfer agent at 1-800-451-2010
                  between 9:00 a.m. and 4:00 p.m. (Eastern time). Requests
                  received after the close of regular trading on the Exchange
                  are priced at the net asset value next determined.

                  Your redemption proceeds can be sent by check to your address
                  of record or by wire transfer to a bank account designated on
                  your authorization form. You may be charged a fee for wire
                  transfers. You must submit a new authorization form to change
                  the bank account designated to receive wire transfers and you
                  may be asked to provide certain other documents.

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

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

                  The following conditions apply:

                  .  Your shares must not be represented by certificates

                  .  All dividends and distributions must be reinvested

                  For  more  information,  contact  your  Salomon  Smith  Barney
                  Financial  Consultant or dealer  representative or consult the
                  SAI.
-----------------------------------------------------------------------------------------
</TABLE>

Massachusetts Municipals Fund                                               17
<PAGE>
 
--------------------------------------------------------------------------------
Other things to know about share transactions
--------------------------------------------------------------------------------

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

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

The transfer agent will try to confirm that any telephone exchange or redemption
request is genuine by recording calls, asking the caller to provide a personal
identification number for the account, sending you a written confirmation or
requiring other confirmation procedures from time to time.

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

 . Are redeeming (together with other requests submitted in the previous 10 days)
  over $10,000 of shares

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

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

 . Changed your account registration

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

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

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

18
<PAGE>
 
The fund has the right to:

 .  Suspend the offering of shares

 .  Waive or change minimum and additional investment amounts

 .  Reject any purchase or exchange order

 .  Change, revoke or suspend the exchange privilege

 .  Suspend telephone transactions

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

Small account balances. If your account falls below $500 because of a redemption
of fund shares, the fund may ask you to bring your account up to $500. If your
account is still below $500 after 60 days, the fund may close your account and
send you the redemption proceeds.

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

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

Massachusetts Municipals Fund                                               19
<PAGE>
 
------------------------------------------------------------------------------
Dividends, distributions and taxes
------------------------------------------------------------------------------

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

Taxes. In general, redeeming shares, exchanging shares and receiving
distributions (whether in cash or additional shares) are all taxable events.
<TABLE>
<S>                    <C>                              <C>  
-----------------------------------------------------------------------------------------

Transaction              Federal tax status               Massachusetts tax status

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

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

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

Long-term capital gain   Taxable gain                     Taxable gain
distributions
-----------------------------------------------------------------------------------------

Short-term capital gain  Ordinary income                  Ordinary income
distributions

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

Dividends                Exempt if from interest on       Exempt if from interest on
                         tax-exempt securities,           Mass. municipal securities,
                         otherwise ordinary income        otherwise ordinary income
-----------------------------------------------------------------------------------------
</TABLE>

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

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


20
<PAGE>
 
--------------------------------------------------------------------------------
Share price
--------------------------------------------------------------------------------

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

The fund generally values its fund securities based on market prices or
quotations. Fair value is determined in accordance with procedures approved by
the fund's board. A fund that uses fair value to price securities may value
those securities higher or lower than another fund using market quotations to
price the same securities.

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

Salomon Smith Barney or members of the selling group must transmit all orders to
buy, exchange or redeem shares to the fund's agent before the agent's close of
business.

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

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


Massachusetts Municipals Fund                                               21
<PAGE>
 
For a Class A share of  beneficial  interest  outstanding  throughout  each year
ended November 30:
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------
                                         1998      1997       1996      1995      1994
---------------------------------------------------------------------------------------
<S>                                     <C>      <C>      <C>       <C>      <C>   
Net asset value, beginning of year                $12.99    $12.96    $11.35     $13.26
---------------------------------------------------------------------------------------

Income (loss) from operations:
    Net investment income(1)                        0.66      0.68      0.69       0.70
    Net realized and unrealized                                              
    gains (loss)                                    0.32      0.02      1.61      (1.85)
---------------------------------------------------------------------------------------
Total income (loss) from operations                 0.98      0.70      2.30      (1.15)
---------------------------------------------------------------------------------------
Less distributions from:
    Net investment income                          (0.67)    (0.67)    (0.69)     (0.70)
    Net realized gains                             (0.12)       --        --      (0.06)
    In excess of net investment income                             --        --        --         --
---------------------------------------------------------------------------------------
Total distributions                                (0.79)    (0.67)    (0.69)     (0.76)
---------------------------------------------------------------------------------------
Net asset value, end of year                      $13.18    $12.99    $12.96     $11.35
---------------------------------------------------------------------------------------
Total return (2)                                    7.85%     5.65%    20.73%     (9.07)%
---------------------------------------------------------------------------------------
Net assets, end of year (millions)                   $33       $30       $29        $28
---------------------------------------------------------------------------------------
Ratios to average net assets:
    Expenses(1)                                     0.80%     0.80%     0.83%      0.81%
    Net investment income                           5.07      5.32      5.42       5.55
---------------------------------------------------------------------------------------
Portfolio turnover rate                               58%       23%       10%        37%
---------------------------------------------------------------------------------------
</TABLE>

(1)  The  adviser  waived  all or part of its  fees  for the  four  years  ended
     November 30, 1997. If such fees had not been waived, the per share decrease
     in net investment income and the expense ratios would have been as follows:

<TABLE>
<CAPTION>

                  Per Share Decreases                      Expense Ratios
               In Net Investment Income                 Without Fee Waivers
-----------------------------------------------------------------------------------
           1997      1996     1995     1994       1977      1996     1995     1994
           ----      ----     ----     ----       ----      ----     ----     -----
-----------------------------------------------------------------------------------
<S>      <C>       <C>      <C>      <C>         <C>       <C>     <C>       <C> 
Class A   $ 0.01     $0.01   $0.03     $0.04      0.88%     0.91%    1.07%    1.09%
</TABLE>


(2)  Total return does not reflect any  applicable  sales load or deferred sales
     charge.

22
<PAGE>
 
For a Class B share of  beneficial  interest  outstanding  throughout  each year
ended November 30:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                 1998       1997        1996        1995        1994
--------------------------------------------------------------------------------------
<S>                            <C>        <C>         <C>         <C>         <C>  
Net asset value,  beginning               $ 12.99     $12.96      $11.35       $13.26
of year
--------------------------------------------------------------------------------------
Income (loss) from
operations:
    Net investment income(1)                 0.60       0.61        0.63         0.63
    Net realized and                         0.31       0.03        1.61        (1.84)
      unrealized gains (loss)
--------------------------------------------------------------------------------------
Total income (loss) from                     0.91       0.64        2.24        (1.21)
   operations
--------------------------------------------------------------------------------------
Less distributions from:
    Net investment income                   (0.61)     (0.61)      (0.63)       (0.64)
    Net realized gains                      (0.12)         --         --        (0.06)
-------------------------------------------------------------------------------------
Total distributions                         (0.73)     (0.16)       (0.63)      (0.70)
--------------------------------------------------------------------------------------
Net asset value, end of year               $13.17     $12.99       $12.96      $11.35
--------------------------------------------------------------------------------------
Total return (2)                             7.25%      5.14%       20.15%      (9.50)%
--------------------------------------------------------------------------------------
Net  assets,  end  of  year                   $28        $29          $29         $23
(millions)
--------------------------------------------------------------------------------------
Ratios   to   average   net
assets:
    Expenses(1)                              1.31%      1.31%        1.35%       1.32%
    Net investment income                    4.57       4.81         4.94        5.04
--------------------------------------------------------------------------------------
Portfolio turnover rate                        58%        23%          10%         37%
--------------------------------------------------------------------------------------
</TABLE>

(1) The  adviser  has waived  all or part of its fees for the four  years  ended
    November 30, 1997. If such fees had not been waived,  the per share decrease
    in net investment income and the expense ratios would have been as follows:


                Per Share Decreases                   Expense Ratios
              In Net Investment Income             Without Fee Waivers
           ------------------------------    -----------------------------------
           1997    1996    1995     1994     1997     1996     1995     1994
           ----    ----    ----     -----    ----     ----     ----     ----
--------------------------------------------------------------------------------

Class B   $ 0.01   $0.01  $0.04    $0.03     1.39%    1.42%    1.59%    1.60%
--------------------------------------------------------------------------------

(2) Total return does not reflect any  applicable  sales load or deferred  sales
    charge.

Massachusetts Municipals Fund                                               23
<PAGE>
 
For a Class L share of  beneficial  interest  outstanding  throughout  each year
ended November 30:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                        1998     1997       1996       1995    1994(1)
--------------------------------------------------------------------------------------
<S>                                  <C>     <C>        <C>         <C>     <C>  
--------------------------------------------------------------------------------------
Net asset value, beginning of year               $12.98     $12.95    $ 11.35 $  11.34
--------------------------------------------------------------------------------------
Income from operations:
    Net investment income(2)                       0.59       0.60       0.63     0.05
    Net realized and unrealized gain               0.31       0.03       1.60       --
--------------------------------------------------------------------------------------
Total income from operations                       0.90       0.63       2.23     0.05
--------------------------------------------------------------------------------------
Less distributions from:
    Net investment income                         (0.60)     (0.60)     (0.63)   (0.04)
--------------------------------------------------------------------------------------
    Net realized gains                            (0.12)         --         --      --
--------------------------------------------------------------------------------------
Total distributions                               (0.72)     (0.60)     (0.63)   (0.04)
--------------------------------------------------------------------------------------
Net asset value, end of year                     $13.16     $12.98    $ 12.95  $ 11.35
--------------------------------------------------------------------------------------
Total return (3)                                   7.21%      5.09%     20.04%    0.40%(4)
--------------------------------------------------------------------------------------
Net assets, end of year (millions)                 $428       $179       $146      $75
--------------------------------------------------------------------------------------
Ratios to average net assets:
    Expenses(2)                                    1.34%      1.34%      1.35%    1.36%(5)
--------------------------------------------------------------------------------------
    Net investment income                          4.51       4.77       4.65     5.00(5)
--------------------------------------------------------------------------------------
Portfolio turnover rate                              58%        23%        10%      37%
--------------------------------------------------------------------------------------
</TABLE>

(1) For the period from November 10, 1994 (inception date) to November 30, 1994.
(2) The investment adviser waived all or part of its fees for the three years
    ended November 30, 1997 and the period ended November 30, 1994. If such fees
    had not been waived, the per share decrease in net investment income and the
    ratios of expenses would have been as follows:

<TABLE>
<CAPTION>

                    Per Share Decreases                    Expense Ratios
                  In Net Investment Income              Without Fee Waivers
               -------------------------------    -----------------------------
               1997     1996     1995    1994     1997    1996     1995    1994
               ----     ----     ----    -----    ----    ----     ----    -----
-------------------------------------------------------------------------------------
<S>           <C>      <C>     <C>    <C>       <C>      <C>      <C>     <C>
    Class L    $0.01    $0.01   $0.04  $0.00(6)  1.42%    1.44%    1.58%   1.63%(5)
</TABLE> 

(3) Total return does not reflect any  applicable  sales load or deferred  sales
    charge.
(4) Not annualized. (5) Annualized.
(6) Amount represents less than $0.01 per share.

24
<PAGE>
 
Salomon Smith Barney/SM/
a member of citigroup [Symbol]

Massachusetts Municipals Fund

Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.

The fund sends only one report to a household if more than one account has the
same address. Contact your Salomon Smith Barney Financial Consultant, dealer
representative or the transfer agent if you do not want this policy to apply to
you.

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

You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Salomon
Smith Barney Financial Consultant or dealer representative, by calling the fund
at 1-800-451-2010, or by writing to the fund at Smith Barney Mutual Funds, 388
Greenwich Street, MF2, New York, New York 10013.

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

You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. The Commission charges a fee for this
service. Information about the public reference room may be obtained by calling
1-800-SEC-0330. You can get the same information free from the Commission's
Internet web site at http:www.sec.gov

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

K Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.

(Investment Company Act file no. 811-06290)

Part B

Smith Barney								
Massachusetts Municipals Fund
388 Greenwich Street
New York, New York 10013
(800) 451-2010


Statement of Additional 
Information

March 30, 1999

This Statement of Additional Information ("SAI") is meant to be read in 
conjunction with the Prospectus of the Smith Barney Massachusetts 
Municipals Fund (the "fund") dated March 30, 1999, as amended or 
supplemented from time to time (the "Prospectus"), and is incorporated 
by reference in it entirety into the Prospectus.  Additional information 
about the fund's investments is available in the fund's annual and semi-
annual reports to shareholders which are incorporated herein by reference. 
 The prospectus and copies of the reports may be obtained free of charge 
by contacting a Salomon Smith Barney Financial Consultant, or by writing 
or calling Salomon Smith Barney at the address or telephone number above.

TABLE OF CONTENTS

Investment Objective and Management Policies	2
Management of the Fund	19
Purchase of Shares	24
Redemption of Shares	30
Distributor. .	33
Valuation of Shares	34
Exchange Privilege	35
Performance Information	36
Dividends, Distributions and Taxes	39
Additional Information	43
Appendix A	45
Appendix B..................................................................50



INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The Prospectus discusses the fund's investment objective and the policies 
it employs to achieve that objective. The following discussion supplements 
the description of the fund's investment policies in the Prospectus.  For 
purposes of this SAI, obligations of non-Massachusetts municipal issuers 
that pay interest which is excluded from gross income for Federal income 
tax purposes ("Non-Massachusetts Municipal Securities") and obligations of 
The Commonwealth of Massachusetts and its political subdivisions, agencies 
and public authorities (together with certain other municipal issuers such 
as Puerto Rico, the Virgin Islands and Guam) that pay interest which is 
excluded from gross income for Federal income tax purposes and exempt from 
Massachusetts personal income taxes ("Massachusetts Municipal 
Securities"), are collectively referred to as "Exempt Obligations."  Under 
normal market conditions, the fund will invest at least 80% of its net 
assets in Massachusetts Municipal Securities.  The Fund may invest up to 
20% of its net assets in non-Massachusetts Municipal Securities.  SSBC 
Fund Management Inc. ("SSBC" or the "manager") serves as investment 
adviser and administrator to the fund.  

Non-Diversified Classification.  The fund is classified as a non-
diversified fund under the Investment Company Act of 1940, as amended (the 
"1940 Act") which means that the fund is not limited by the Act in the 
proportion of its assets that it may invest in the obligations of a single 
issuer.  The fund intends to conduct its operations, however, so as to 
qualify as a "regulated investment company" for purposes of the Internal 
Revenue Code of 1986, as amended (the "Code"), which will relieve the 
fund of any liability for the Federal income tax  and Massachusetts 
franchise tax, as applicable, to the extent that its earnings are 
distributed to shareholders.  To qualify as a regulated investment 
company, the fund will, among other things, limit its investments so that, 
at the close of each quarter of the taxable year (a) not more than 25% of 
the market value of the fund's total assets will be invested in the 
securities of a single issuer and (b) with respect to 50% of the market 
value of its total assets, not more than 5% of the market value of its 
total assets will be invested in the securities of a single issuer and the 
fund will not own more than 10% of the outstanding voting securities of a 
single issuer.

As a result of the fund's non-diversified status, an investment in the 
fund may present greater risks to investors than an investment in a 
diversified fund.  The investment return on a non-diversified fund 
typically is dependent upon the performance of a smaller number of 
securities relative to the number of securities held in a diversified 
fund.  The fund's assumption of large positions in the obligations of a 
small number of issuers will affect the value of its portfolio to a 
greater extent than that of a diversified fund in the event of changes in 
the financial condition, or in the market's assessment, of the issuers.

The identification of the issuer of Exempt Obligations generally depends 
upon the terms and conditions of the security.  When the assets and 
revenues of an agency, authority, instrumentality or other political 
subdivision are separate from those of the government creating the issuing 
entity and the security is backed only by the assets and revenues of such 
entity, such entity would be deemed to be the sole issuer.  Similarly, in 
the case of a private activity bond, if that bond is backed only by the 
assets and revenues of the nongovernmental user, then such nongovernmental 
user is deemed to be the sole issuer.  If in either case, however, the 
creating government or some other entity guarantees a security, such a 
guarantee would be considered a separate security and would be treated as 
an issue of such government or other entity.




Use of Ratings as Investment Criteria

In general, the ratings of Moody's Investors Service, Inc. ("Moody's'') 
and Standard & Poor's Ratings Group ("S&P") represent the opinions of 
those agencies as to the quality of the Exempt Obligations and short-term 
investments which they rate.  It should be emphasized, however, that such 
ratings are relative and subjective, are not absolute standards of quality 
and do not evaluate the market risk of securities.  These ratings will be 
used by the fund as initial criteria for the selection of portfolio 
securities, but the fund also will rely upon the independent advice of the 
manager to evaluate potential investments.  Among the factors that will be 
considered are the long-term ability of the issuer to pay principal and 
interest and general economic trends.  To the extent the fund invests in 
lower-rated and comparable unrated securities, the fund's achievement of 
its investment objective may be more dependent on the manager's credit 
analysis of such securities than would be the case for a portfolio 
consisting entirely of higher-rated securities.  The Appendix contains 
information concerning the ratings of Moody's and S&P and their 
significance.

Subsequent to its purchase by the fund, an issue of Exempt Obligations may 
cease to be rated or its rating may be reduced below the rating given at 
the time the securities were acquired by the fund.  Neither event will 
require the sale of such Exempt Obligations by the fund, but the manager 
will consider such event in its determination of whether the fund should 
continue to hold the Exempt Obligations.  To the extent the ratings change 
as a result of changes in such organizations or their rating systems or 
due to a corporate restructuring of Moody's or S&P, the fund will attempt 
to use comparable ratings as standards for its investments in accordance 
with its investment objective and policies.

The Fund may invest up to 25% of its total assets in securities rated 
below investment grade (i.e., lower than Baa, MIG 3 or Prime-1 by Moody's 
or BBB, SP-2 or A-1 by S&P), or in unrated securities of comparable 
quality.  These securities, commonly referred to as "junk bonds," (a) will 
likely have some quality and protective characteristics that, in the 
judgment of the rating organization, are outweighed by large uncertainties 
or major risk exposures to adverse conditions and (b) are predominantly 
speculative with respect to the issuer's capacity to pay interest and 
repay principal in accordance with the terms of the obligation.  
Securities rated as low as C by Moody's or D by S&P are extremely 
speculative and may be in actual default of interest and/or principal 
payments.  

While the market values of low-rated and comparable unrated securities 
tend to react less to fluctuations in interest rate levels than the market 
values of higher-rated securities, the market values of certain low-rated 
and comparable unrated municipal securities also tend to be more sensitive 
than higher-rated securities to short-term corporate and industry 
developments and changes in economic conditions (including recession) in 
specific regions or localities or among specific types of issuers.  In 
addition, low-rated securities and comparable unrated securities generally 
present a higher degree of credit risk.  During an economic downturn or a 
prolonged period of rising interest rates, the ability of issuers of low-
rated and comparable unrated securities to service their payment 
obligations, meet projected goals or obtain additional financing may be 
impaired.  The risk of loss due to default by such issuers is 
significantly greater because low-rated and comparable unrated securities 
generally are unsecured and frequently are subordinated to the prior 
payment of senior indebtedness.  The Fund may incur additional expenses to 
the extent it is required to seek recovery upon a default in the payment 
of principal or interest on its portfolio holdings.

While the market for municipal securities is considered generally to be 
adequate, the existence of limited markets for particular low-rated and 
comparable unrated securities may diminish the fund's ability to (a) 
obtain accurate market quotations for purposes of valuing such securities 
and calculating its net asset value and (b) sell the securities at fair 
value either to meet redemption requests or to respond to changes in the 
economy or in the financial markets.  The market for certain low-rated and 
comparable unrated securities has not fully weathered a major economic 
recession.  Any such economic downturn would adversely affect the value of 
such securities and the ability of the issuers of these securities to 
repay principal and pay interest thereon.
Fixed-income securities, including low-rated securities and comparable 
unrated securities, frequently have call or buy-back features that permit 
their issuers to call or repurchase the securities from their holders, 
such as the fund.  If an issuer exercises these rights during periods of 
declining interest rates, the fund may have to replace the security with 
a lower yielding security, thus resulting in a decreased return to the 
fund.

Because many issuers of Massachusetts Municipal Securities may choose not 
to have their obligations rated, it is possible that a large portion of 
the fund's portfolio may consist of unrated obligations.  Unrated 
obligations are not necessarily of lower quality than rated obligations, 
but to the extent the fund invests in unrated obligations, the fund will 
be more reliant on the Adviser's judgment, analysis and experience than 
would be the case if the fund invested only in rated obligations.  

Maturity of Obligations Held By The Fund.  The Fund's average weighted 
maturity will vary from time to time based on the judgment of the manager. 
 The Fund intends to focus on intermediate and long-term obligations, 
generally with maturities at the time of purchase from [three to in excess 
of twenty] years.  

Exempt Obligations.  Exempt Obligations are classified as general 
obligation bonds, revenue bonds and notes. General obligation bonds are 
secured by the issuer's pledge of its full faith, credit and taxing power 
for the payment of principal and interest.  Revenue bonds are payable from 
the revenue derived from a particular facility or class of facilities or, 
in some cases, from the proceeds of a special excise or other specific 
revenue source, but not from the general taxing power.  Notes are short-
term obligations of issuing municipalities or agencies and are sold in 
anticipation of a bond sale, collection of taxes or receipt of other 
revenues.  Exempt Obligations bear fixed, floating and variable rates of 
interest, and variations exist in the security of Exempt Obligations, both 
within a particular classification and between classifications.

The yields on, and values of, Exempt Obligations depend on a variety of 
factors, including general economic and monetary conditions, conditions in 
the Exempt Obligation markets, size of a particular offering, maturity of 
the obligation and rating of the issue.  Consequently, Exempt Obligations 
with the same maturity, coupon and rating may have different yields or 
values.

Issuers of Exempt Obligations may be subject to the provisions of 
bankruptcy, insolvency and other laws, such as the Federal Bankruptcy 
Reform Act of 1978, affecting the rights and remedies of creditors.  In 
addition, the obligations of those issuers may become subject to laws 
enacted in the future by Congress, state legislatures or referenda 
extending the time for payment of principal and/or interest, or imposing 
other constraints upon enforcement of the obligations or upon the ability 
of municipalities to levy taxes.  The possibility also exists that, as a 
result of litigation or other conditions, the power or ability of any 
issuer to pay, when due, the principal of, and interest on, its 
obligations may be materially affected.

Private Activity Bonds.  The fund may invest without limit in Exempt 
Obligations that are "private activity bonds," as defined in the Internal 
Revenue Code of 1986, as amended (the "Code"), which are in most cases 
revenue bonds.  Private activity bonds generally do not carry the pledge 
of the credit of the issuing municipality, but are guaranteed by or 
payable from funds provided by the corporate entity on whose behalf they 
are issued.  Interest income on certain types of private activity bonds 
issued after August 7, 1986 to finance non-governmental activities is a 
specific tax preference item for purposes of the federal individual and 
corporate alternative minimum taxes.  Individual and corporate 
shareholders may be subject to a federal alternative minimum tax to the 
extent the fund's dividends are derived from interest on these bonds.  
Dividends derived from interest income on Exempt Obligations are a 
"current earnings" adjustment item for purposes of the federal corporate 
alternative minimum tax.  See "Taxes."  Private activity bonds held by the 
fund will be included in the term Exempt Obligations for purposes of 
determining compliance with the fund's policy of investing at least 80% of 
its total assets in Exempt Obligations.

Related Instruments.  The fund may invest without limit in Exempt 
Obligations that are repayable out of revenues generated from economically 
related projects or facilities or debt obligations whose issuers are 
located in the same state.  Sizable investments in these obligations could 
involve an increased risk to the fund should any of the related projects 
or facilities experience financial difficulties.

U.S. Government Securities.  The fund may invest in debt obligations of 
varying maturities issued or guaranteed by the United States government, 
its agencies or instrumentalities ("U.S. Government Securities"). Direct 
obligations of the U.S. Treasury include a variety of securities that 
differ in their interest rates, maturities and dates of issuance.  U.S. 
Government Securities also include securities issued or guaranteed by the 
Federal Housing Administration, Farmers Home Loan Administration, 
Export-Import Bank of the United States, Small Business Administration, 
Government National Mortgage Association ("GNMA"), General Services 
Administration, Central Bank for Cooperatives, Federal Farm Credit Banks, 
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation ("FHLMC"), 
Federal Intermediate Credit Banks, Federal Land Banks, Federal National 
Mortgage Association ("FNMA"), Maritime Administration, Tennessee Valley 
Authority, District of Columbia Armory Board and Student Loan Marketing 
Association.  The fund may also invest in instruments that are supported 
by the right of the issuer to borrow from the U.S. Treasury and 
instruments that are supported by the credit of the instrumentality.  
Because the U.S. government is not obligated by law to provide support to 
an instrumentality it sponsors, a fund will invest in obligations issued 
by such an instrumentality only if the manager determines that the credit 
risk with respect to the instrumentality does not make its securities 
unsuitable for investment by the fund.
Municipal Obligations.  The fund invests principally in debt obligations, 
issued by, or on behalf of, states, territories and possessions of the 
United States and the District of Columbia and their political 
subdivisions, agencies and instrumentalities or multistate agencies or 
authorities, the interest from which debt obligations is, in the opinion 
of bond counsel to the issuer, excluded from gross income for Federal 
income tax purposes ("Municipal Obligations"). Municipal Obligations 
generally are understood to include debt obligations issued to obtain 
funds for various public purposes, including construction of a wide range 
of public facilities, refunding of outstanding obligations, payment of 
general operating expenses and extensions of loans to public institutions 
and facilities. Private activity bonds issued by or on behalf of public 
authorities to finance privately operated facilities are considered to be 
Municipal Obligations if the interest paid on them qualifies as excluded 
from gross income (but not necessarily from alternative minimum taxable 
income) for Federal income tax purposes in the opinion of bond counsel to 
the issuer.  Municipal Obligations may be issued to finance life care 
facilities, which are an alternative form of long-term housing for the 
elderly that offer residents the independence of a condominium life-style 
and, if needed, the comprehensive care of nursing home services. Bonds to 
finance these facilities have been issued by various state industrial 
development authorities. Because the bonds are secured only by the 
revenues of each facility and not by state or local government tax 
payments, they are subject to a wide variety of risks, including a drop in 
occupancy levels, the difficulty of maintaining adequate financial 
reserves to secure estimated actuarial liabilities, the possibility of 
regulatory cost restrictions applied to health care delivery and 
competition from alternative health care or conventional housing 
facilities.

Municipal Leases.  The fund may invest without limit in "municipal 
leases."  Municipal leases may take the form of a lease or an installment 
purchase contract issued by state or local government authorities to 
obtain funds to acquire a wide variety of equipment and facilities such as 
fire and sanitation vehicles, computer equipment and other capital assets. 
 Interest payments on qualifying municipal leases are exempt from Federal 
income taxes and state income taxes within the state of issuance.  
Although lease obligations do not constitute general obligations of the 
municipality for which the municipality's taxing power is pledged, a lease 
obligation is ordinarily backed by the municipality's covenant to budget 
for, appropriate and make the payments due under the lease obligation.  
However, certain lease obligations contain "non-appropriation" clauses 
which provide that the municipality has no obligation to make lease or 
installment purchase payments in future years unless money is appropriated 
for such purpose on a yearly basis.  In addition to the "non-
appropriation" risk, these securities represent a relatively new type of 
financing that has not yet developed the depth of marketability associated 
with more conventional bonds.  Although "non-appropriation" lease 
obligations are often secured by the underlying property, disposition of 
the property in the event of foreclosure might prove difficult.  The fund 
may invest in municipal leases without non-appropriation clauses only when 
the municipality is required to continue the lease under all circumstances 
except bankruptcy.  There is no limitation on the percentage of the fund's 
assets that may be invested in municipal lease obligations.  In evaluating 
municipal lease obligations, the manager will consider such factors as it 
deems appropriate, which my include:  (a) whether the lease can be 
canceled; (b) the ability of the lease obligee to direct the sale of the 
underlying assets; (c) the general creditworthiness of the lease obligor; 
(d) the likelihood that the municipality will discontinue appropriating 
funding for the leased property in the event such property is no longer 
considered essential by the municipality; (e) the legal recourse of the 
lease obligee in the event of such a failure to appropriate funding; (f) 
whether the security is backed by a credit enhancement such as insurance; 
and (g) any limitations which are imposed on the lease obligor's ability 
to utilize substitute property or services other than those covered by the 
lease obligation.

Municipal leases that the fund may acquire will be both rated and unrated. 
 Rated leases include those rated investment grade at the time of 
investment or those issued by issuers whose senior debt is rated 
investment grade at the time of investment.  The fund may acquire unrated 
issues that the manager deems to be comparable in quality to rated issues 
in which the fund is authorized to invest.  A determination that an 
unrated lease obligation is comparable in quality to a rated lease 
obligation will be subject to oversight and approval by the trust's board 
of trustees.

Municipal leases held by the fund will be considered illiquid securities 
unless the trust's bard of trustees determines on an ongoing basis that 
the leases are readily marketable. An unrated municipal lease with a non-
appropriation risk that is backed by an irrevocable bank letter of credit 
or an insurance policy issued by a bank or insurer deemed by the manager 
to be of high quality and minimal credit risk, will not be deemed to be 
illiquid solely because the underlying municipal lease is unrated, if the 
manager determines that the lease is readily marketable because it is 
backed by the letter of credit or insurance policy.

Zero Coupon Securities.  The fund may invest in zero coupon Exempt 
Obligations.  Zero coupon Exempt Obligations are generally divided into 
two categories: pure zero obligations, which are those that pay no 
interest for their entire life and zero/fixed obligations, which pay no 
interest for some initial period and thereafter pay interest currently. In 
the case of a pure zero obligation, the failure to pay interest currently 
may result from the obligation's having no stated interest rate, in which 
case the obligation pays only principal at maturity and is issued at a 
discount from its stated principal amount.  A pure zero obligation may, in 
the alternative, carry a stated interest rate, but provide that no 
interest is payable until maturity. The value to the investor of a zero 
coupon Exempt Obligation consists of the economic accretion either of the 
difference between the purchase price and the nominal principal amount (if 
no interest is stated to accrue) or of accrued, unpaid interest during the 
Exempt Obligation's life or payment deferral period.

Custodial Receipts.  The fund may acquire custodial receipts or 
certificates under-written by securities dealers or banks that evidence 
ownership of future interest payments, principal payments, or both, on 
certain Exempt Obligations.  The underwriter of these certificates or 
receipts typically purchases Exempt Obligations and deposits the 
obligations in an irrevocable trust or custodial account with a custodian 
bank, which then issues receipts or certificates evidencing ownership of 
the periodic unmatured coupon payments and the final principal payment on 
the obligations.  Custodial receipts evidencing specific coupon or 
principal payments have the same general attributes as zero coupon Exempt 
Obligations described above.  Although under the terms of a custodial 
receipt the fund would typically be authorized to assert its rights 
directly against the issuer of the underlying obligations, the fund could 
be required to assert through the custodian bank those rights as may exist 
against the underlying issuer.  Thus, if the underlying issuer fails to 
pay principal and/or interest when due, the fund may be subject to delays, 
expenses and risks that are greater than those that would have been 
involved if the fund had purchased a direct obligation of the issuer.  In 
addition, if the trust or custodial account in which the underlying 
security has been deposited is determined to be an association taxable as 
a corporation, instead of a non-taxable entity, the yield on the 
underlying security would be reduced in recognition of any taxes paid.

Exempt Obligation Components.  The fund may invest in Exempt Obligations, 
the interest rate on which has been divided by the issuer into two 
different and variable components, which together result in a fixed 
interest rate.  Typically, the first of the components (the "Auction 
Component") pays an interest rate that is reset periodically through an 
auction process; whereas the second of the components (the "Residual 
Component") pays a residual interest rate based on the difference between 
the total interest paid by the issuer on the Exempt Obligation and the 
auction rate paid on the Auction Component.  The fund may purchase both 
Auction and Residual Components.

Because the interest rate paid to holders of Residual Components is 
generally determined by subtracting from a fixed amount the interest rate 
paid to the holders of Auction Components, the interest rate paid to 
Residual Component holders will decrease as the Auction Component's rate 
increases and increase as the Auction Component's rate decreases.  
Moreover, the magnitude of the increases and decreases in market value of 
Residual Components may be larger than comparable changes in the market 
value of an equal principal amount of a fixed rate Exempt Obligation 
having similar credit quality, redemption provisions and maturity.

Floating and Variable Rate Instruments.  The fund may purchase floating 
and variable rate demand notes and bonds, which are Exempt Obligations 
normally having a stated maturity in excess of one year, but which permit 
their holder to demand payment of principal at any time, or at specified 
intervals.  The maturity of a floating or variable rate demand note or 
bond will be deemed shortened by virtue of a demand feature.

The issuer of floating and variable rate demand obligations normally has 
a corresponding right, after a given period, to prepay at its discretion 
the outstanding principal amount of the obligations plus accrued interest 
upon a specified number of days' notice to the holders of these 
obligations. The interest rate on a floating rate demand obligation is 
based on a known lending rate, such as a bank's prime rate, and is 
adjusted automatically each time that rate is adjusted. The interest rate 
on a variable rate demand obligation is adjusted automatically at 
specified intervals. Frequently, floating and variable rate obligations 
are secured by letters of credit or other credit support arrangements 
provided by banks.  Use of letters of credit or other credit support 
arrangements will not adversely affect the tax-exempt status of these 
obligations.  Because they are direct lending arrangements between the 
lender and borrower, floating and variable rate obligations generally will 
not be traded.  In addition, generally no secondary market exists for 
these obligations, although their holders may demand payment at face 
value.  For these reasons, when floating and variable rate obligations 
held by the fund are not secured by letters of credit or other credit 
support arrangements, the fund's rights to demand payment is dependent on 
the ability of the borrower to pay principal and interest on demand.  The 
manager, on behalf of the fund, will consider on an ongoing basis the 
creditworthiness of the issuers of floating and variable rate demand 
obligations held by the fund.

Participation Interests.  The fund may purchase from financial 
institutions tax-exempt participation interests in Exempt Obligations.  A 
participation interest gives the fund an undivided interest in the Exempt 
Obligation in the proportion that the fund's participation interest bears 
to the total amount of the Exempt Obligation.  These instruments may have 
floating or variable rates of interest.  If the participation interest is 
unrated, it will be backed by an irrevocable letter of credit or guarantee 
of a bank that the trust's board of trustees has determined meets certain 
quality standards, or the payment obligation otherwise will be 
collateralized by U.S. government securities.  The fund will have the 
right, with respect to certain participation interests, to demand payment, 
on a specified number of days' notice, for all or any part of the fund's 
interest in the Exempt Obligation, plus accrued interest.  The fund 
intends to exercise its right with respect to these instruments to demand 
payment only upon a default under the terms of the Exempt Obligation or to 
maintain or improve the quality of its investment portfolio.

Taxable Investments.  Under normal conditions, the fund may hold up to 20% 
of its total assets in cash or money market instruments, including taxable 
money market instruments (collectively, "Taxable Investments").  In 
addition, when the manager believes that if market conditions warrant, the 
fund may take a temporary defensive posture and invest without limitation 
in short-term Exempt Obligations and Taxable Investments.  To the extent 
the fund holds Taxable Investments and, under certain market conditions, 
certain floating and variable rate demand obligations or Auction 
Components, the fund may not achieve its investment objective.

Temporary Investments.  When the fund is maintaining a defensive position, 
it may invest in short-term investments ("Temporary Investments") 
consisting of: (a) the following tax-exempt securities - notes of 
municipal issuers having, at the time of purchase, a rating within the 
three highest grades of Moody's or S&P or, if not rated, having an issue 
of outstanding Exempt Obligations rated within the three highest grades by 
Moody's or S&P; and (b) the following taxable securities: U.S.  government 
securities, including repurchase agreements with respect to such 
securities; other debt securities rated within the three highest grades by 
Moody's and S&P; commercial paper rated in the highest grade by either of 
such rating services; and certificates of deposit of domestic banks with 
assets of $1 billion or more.  The fund may invest in Temporary 
Investments for defensive reasons in anticipation of a market decline.  At 
no time will more than 20% of the fund's total assets be invested in 
Temporary Investments unless the fund has adopted a defensive investment 
policy.  The fund intends, however, to purchase tax-exempt Temporary 
Investments pending the investment of the proceeds of the sale of 
portfolio securities or of the fund's shares of beneficial interest, or in 
order to have highly liquid securities available to meet anticipated 
redemptions.




INVESTMENT TECHNIQUES

The fund may employ, among others, the investment techniques described 
below, which may give rise to taxable income or gain:  

Municipal Bond Index and Interest Rate Futures Contracts.  The purpose of 
entering into a municipal bond index or interest rate futures contract by 
the fund, as the holder of long-term Exempt Obligations is to protect the 
fund from fluctuations in interest rates on tax-exempt securities without 
buying or selling the Exempt Obligations.  If the fund owns long-term 
Exempt Obligations and interest rates are expected to increase, for 
example, the fund might enter into futures contracts to sell a municipal 
bond index or the debt security underlying the interest rate future.  Such 
a transaction would have much the same effect as selling some of the long-
term Exempt Obligations in the fund's portfolio.  If interest rates 
increase as anticipated, the value of certain long-term Exempt Obligations 
in the fund's portfolio would decline, but the value of the fund's futures 
contracts would increase at approximately the same rate, thereby keeping 
the net asset value of the fund from declining as much as it otherwise 
would have.  Of course, because the value of the Exempt Obligations in the 
fund's portfolio will far exceed the value of the futures contracts 
entered into by the fund, an increase in the value of the futures 
contracts could only mitigate -- but not totally offset -- the decline in 
the value of the portfolio.

When interest rates are expected to decline, futures contracts to purchase 
a municipal bond index or debt security, could be entered into to hedge 
against the fund's anticipated purchases of long-term Exempt Obligations 
at higher prices.  Because the rate of fluctuation in the value of the 
futures contracts should be similar to that of long-term Exempt 
Obligations, the fund could enter into futures contracts at lower prices. 
 At the time the fund deems it appropriate to purchase the Exempt 
Obligations, the futures contracts could be liquidated and the fund's cash 
could then be used to buy long-term Exempt Obligations.  The fund could 
accomplish similar results by selling Exempt Obligations with long 
maturities and investing in Exempt Obligations with short maturities when 
interest rates are expected to increase or by buying Exempt Obligations 
with long maturities and selling Exempt Obligations with short maturities 
when interest rates are expected to decline.  When the market for Exempt 
Obligations may not be as liquid as that for the futures contracts, 
however, the ability to enter into such contracts could enable the fund to 
react more quickly to anticipated changes in market conditions or interest 
rates.

Unlike the purchase or sale of a Municipal Bond, no consideration is paid 
or received by the fund upon the purchase or sale of a futures contract. 
 Initially, the fund will be required to deposit in the name of the 
futures commission merchant effecting the transaction an amount of cash or 
cash equivalents equal to approximately 10% of the contract amount (this 
amount is subject to change by the board of trade on which the contract is 
traded and members of the board of trade may charge a higher amount).  
This amount is known as initial margin and is in the nature of a 
performance bond or good faith deposit on the contract that is returned to 
the fund upon termination of the futures contract, assuming that all 
contractual obligations have been satisfied.  Subsequent payments, known 
as variation margin, to and from the futures commission merchant will be 
made on a daily basis 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. At any time prior to the expiration of the 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 futures contract.

There are several risks in connection with the use of municipal bond index 
and interest rate futures contracts as hedging devices.  Successful use of 
these futures contracts by the fund is subject to the manager's ability to 
predict correctly movements in the direction of interest rates.  Such 
predictions involve skills and techniques which may be different from 
those involved in the management of a long-term municipal bond portfolio. 
 In addition, there can be no assurance that there will be a correlation 
between movements in the price of the municipal bond index or the debt 
security underlying the futures contract and movements in the price of the 
Exempt Obligations which are the subject of the hedge.  The degree of 
imperfection of correlation depends upon various circumstances, such as 
variations in speculative market demand for futures contracts and Exempt 
Obligations and technical influences on futures trading.  The degree of 
imperfection of correlation may be increased with respect to the fund, 
which will hold primarily Massachusetts Municipal Securities rather than 
a selection of the bonds constituting any index.  The fund's Exempt 
Obligations and the bonds in the index also may differ in such respects as 
interest rate levels, maturities and creditworthiness of issuers.  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 interest rates.

Although the fund intends to enter into futures contracts only if an 
active market exists for the contracts, there can be no assurance that an 
active market will exist for the contracts at any particular time.  Most 
domestic futures exchanges and boards of trade limit the amount of 
fluctuation permitted in futures contract prices during a single trading 
day.  The daily limit establishes the maximum amount that the price of a 
futures contract may vary either up or down from the previous day's 
settlement price at the end of a trading session. Once the daily limit has 
been reached in a particular contract, no trades may be made that day at 
a price beyond that limit.  The daily limit governs only price movement 
during a particular trading day and therefore does not limit potential 
losses because the limit may prevent the liquidation of unfavorable 
positions.  Futures contract prices may 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, it might not be 
possible to close a futures position and, in the event of adverse price 
movements, the fund would be required to make daily cash payments of 
variation margin.  In such circumstances, an increase in the value of the 
portion of the portfolio being hedged, if any, may partially or completely 
offset losses on the futures contract.  As described above, however, no 
assurance can be given that the price of Exempt Obligations will, in fact, 
correlate with the price movements in the municipal bond index or interest 
rate futures contract and thus provide an offset to losses on a futures 
contract.

If the fund has hedged against the possibility of an increase in interest 
rates adversely affecting the value of Exempt Obligations held in its 
portfolio and rates decrease instead, the fund will lose part or all of 
the benefit of the increased value of the Exempt Obligations it has hedged 
because it will have offsetting losses in its futures positions.  In 
addition, in such situations, if the fund has insufficient cash, it may 
have to sell securities to meet daily variation margin requirements.  Such 
sales of securities may, but will not necessarily, be at increased prices 
which reflect the decline in interest rates.  The fund may have to sell 
securities at a time when it may be disadvantageous to do so.

Options on Municipal Bond Index and Interest Rate Futures Contracts.  
Options on futures contracts are similar to options on securities, which 
give the purchaser the right, in return for the premium paid, to purchase 
securities.  A call option gives the purchaser of such option the right to 
assume a long position in a specified underlying futures contract, and a 
put option gives the purchaser the right to assume a short position in a 
specified underlying futures contract, at a stated exercise price at any 
time prior to the expiration date of the option.  Upon exercise of an 
option, the delivery of the futures position by the writer of the option 
to the holder of the option will be accompanied by delivery of the 
accumulated balance in the writer's futures margin account, which 
represents the amount by which the market price of the futures contract 
exceeds, in the case of a call, or is less than, in the case of a put, the 
exercise price of the option on the futures contract.  The potential loss 
related to the purchase of an option on a futures contract is limited to 
the premium paid for the option (plus transaction costs).  Because the 
value of the option is fixed at the point of sale, no daily cash payments 
are made to reflect changes in the value of the underlying contract; 
however, the value of the option does change daily and that change would 
be reflected in the net asset value of the fund.

The fund will purchase put and call options on municipal bond index and 
interest rate futures contracts which are traded on a United States 
exchange or board of trade as a hedge against changes in interest rates, 
and will enter into closing transactions with respect to such options to 
terminate existing positions.  The fund may purchase put options on 
interest rate or municipal bond index futures contracts if the manager 
anticipates a rise in interest rates.  The purchase of put options on 
these futures contracts is analogous to the purchase of put options on 
debt securities so as to hedge a portfolio of debt securities against the 
risk of rising interest rates.  Because the value of a municipal bond 
index or interest rate futures contract moves inversely in relation to 
changes in interest rates, as is the case with Exempt Obligations, a put 
option on such a contract becomes more valuable as interest rates rise. 
 By purchasing put options on these futures contracts at a time when the 
manager expects interest rates to rise, the fund would seek to realize a 
profit to offset the loss in value of its portfolio securities without the 
need to sell such securities.

The fund may purchase call options on municipal bond index or interest 
rate futures contracts if the manager anticipates a decline in interest 
rates.  The purchase of a call option on a municipal bond index or 
interest rate futures contract represents a means of obtaining temporary 
exposure to market appreciation at limited risk.  It is analogous to the 
purchase of a call option on an individual debt security, which can be 
used as a substitute for a position in the debt security itself.  
Depending upon the pricing of the option compared to either the futures 
contract upon which it is based, or upon the price of the underlying debt 
securities, it may or may not be less risky than ownership of the futures 
contract or underlying debt securities.  The fund would purchase a call 
option on a futures contract to hedge against a market advance when the 
fund was holding cash in anticipation of purchasing Exempt Obligations. 
 The fund could take advantage of the anticipated rise in the value of 
long-term securities without actually buying them until the market had 
stabilized.  At that time, the options could be liquidated and the fund's 
cash could be used to buy Exempt Obligations.

The fund would sell put and call options on futures contracts only as part 
of closing transactions to terminate its options positions.  No assurance 
can be given that such closing transactions can be effected.

There are several risks relating to options on futures contracts.  The 
ability to establish and close out positions on such options will be 
subject to the existence of a liquid market.  In addition, the fund's 
purchase of put or call options will be based upon predictions as to 
anticipated interest rate trends by the manager, which could prove to be 
inaccurate.  Even if the manager's expectations are correct, there may be 
an imperfect correlation between the change in the value of the options 
and of the fund's portfolio securities.  The fund's ability to purchase 
and sell options on futures contracts and to trade in these contracts may 
be limited to some extent by the requirements of the Internal Revenue Code 
of 1986, as amended (the "Code"), applicable to a regulated investment 
company.  See "Taxes" below.

When-Issued Securities and Delayed-Delivery Transactions.  The fund may 
purchase securities on a "when-issued" basis or for delayed delivery 
(i.e., payment or delivery occur beyond the normal settlement date at a 
stated price and yield). The fund does not intend to engage in these 
transactions for speculative purposes, but only in furtherance of its 
investment goal.  These transactions occur when securities are purchased 
or sold by the fund with payment and delivery taking place in the future 
to secure what is considered an advantageous yield and price to the fund 
at the time of entering into the transaction.  The payment obligation and 
the interest rate that will be received on when-issued securities are 
fixed at the time the buyer enters into the commitment.  Due to 
fluctuations in the value of securities purchased or sold on a when-issued 
or delayed-delivery basis, the prices obtained on such securities may be 
higher or lower than the prices available in the market on the dates when 
the investments are actually delivered to the buyers.
When a fund agrees to purchase when-issued or delayed-delivery securities, 
its custodian will set aside cash or liquid securities equal to the amount 
of the commitment in a segregated account.  Normally, the custodian will 
set aside portfolio securities to satisfy a purchase commitment, and in 
such a case a fund may be required subsequently to place additional assets 
in the segregated account in order to ensure that the value of the account 
remains equal to the amount of the fund's commitment.  The assets 
contained in the segregated account will be marked-to-market daily.  It 
may be expected that a fund's net assets will fluctuate to a greater 
degree when it sets aside portfolio securities to cover such purchase 
commitments than when it sets aside cash.  When a fund engages in 
when-issued or delayed-delivery transactions, it relies on the other party 
to consummate the trade.  Failure of the seller to do so may result in the 
fund's incurring a loss or missing an opportunity to obtain a price 
considered to be advantageous.
Stand-by Commitments.  The fund may acquire "stand-by commitments" with 
respect to Exempt Obligations held in its portfolio.  Under a stand-by 
commitment, a broker, dealer or bank is obligated to repurchase at the 
fund's option specified securities at a specified price and, in this way, 
stand-by commitment, therefore, is subject to the ability of the seller to 
make payment on demand.  The fund will acquire stand-by commitments solely 
to facilitate portfolio liquidity and does not intend to exercise the 
rights afforded by the commitments for trading purposes.  The fund 
anticipates that stand-by commitments will be available from brokers, 
dealers and banks without the payment of any direct or indirect 
consideration.  The fund may pay for stand-by commitments if payment is 
deemed necessary, thus increasing to a degree the cost of the underlying 
Exempt Obligations and similarly decreasing the security's yield to the 
funds.

Illiquid Securities.  The fund may invest up to 15% of its net assets in 
illiquid securities, which term includes securities subject to contractual 
or other restrictions on resale and other instruments that lack readily 
available markets.  In addition, up to 5% of the value of each fund's 
assets may be invested in securities of entities that have been in 
continuous operation for fewer than three years. Notwithstanding the 
foregoing, the fund will not invest more than 10% of its assets (excluding 
those subject to Rule 144A under the Securities Act of 1933, as amended) 
that are restricted.  The fund also is authorized to borrow up to 10% of 
its total assets (including the amount borrowed) valued at market less 
liabilities (not including the amount borrowed) in order to meet 
anticipated redemptions and to pledge its assets to the same extent in 
connection with the borrowings.  

Repurchase Agreements.  The fund may agree to purchase securities from a 
bank or recognized securities dealer and simultaneously commit to resell 
the securities to the bank or dealer at an agreed-upon date and price 
reflecting a market rate of interest unrelated to the coupon rate or 
maturity of the purchased securities ("repurchase agreements").  The fund 
would maintain custody of the underlying securities prior to their 
repurchase; thus, the obligation of the bank or dealer to pay the 
repurchase price on the date agreed to would be, in effect, secured by 
such securities.  If the value of such securities were less than the 
repurchase price, plus interest, the other party to the agreement would be 
required to provide additional collateral so that at all times the 
collateral is at least 102% of the repurchase price plus accrued interest. 
 Default by or bankruptcy of a seller would expose the fund to possible 
loss because of adverse market action, expenses and/or delays in 
connection with the disposition of the underlying obligations.  The 
financial institutions with which a fund may enter into repurchase 
agreements will be banks and non-bank dealers of U.S. Government 
securities that are listed on the Federal Reserve Bank of New York's list 
of reporting dealers, if such banks and non-bank dealers are deemed 
creditworthy by the fund's manager.  The manager will continue to monitor 
creditworthiness of the seller under a repurchase agreement, and will 
require the seller to maintain during the term of the agreement the value 
of the securities subject to the agreement to equal at least 102% of the 
repurchase price (including accrued interest).  In addition, the manager 
will require that the value of this collateral, after transaction costs 
(including loss of interest) reasonably expected to be incurred on a 
default, be equal to 102% or greater than the repurchase price (including 
accrued premium) provided in the repurchase agreement or the daily 
amortization of the difference between the purchase price and the 
repurchase price specified in the repurchase agreement.  The manager will 
mark-to-market daily the value of the securities.  Repurchase agreements 
are considered to be loans by a Fund under the 1940 Act.

Special Considerations Relating to Massachusetts Municipal Securities

The Commonwealth of Massachusetts and certain of its cities and towns have 
at certain times in the recent past undergone serious financial 
difficulties which have adversely affected their credit standing.  The 
prolonged effects of such financial difficulties could adversely affect 
the market value of the Massachusetts Municipal Securities held by the 
fund.  The information summarized below describes some of the more 
significant factors that could affect the fund or the ability of the 
obligors to pay debt service on certain of these securities.  The sources 
of such information are the official statements of issuers located in the 
Commonwealth of Massachusetts, as well as other publicly available 
documents, and statements of public officials.  The Fund has not 
independently verified any of the information contained in such statements 
and documents, but the fund is not aware of facts which would render such 
information inaccurate.

Fiscal Matters

The Commonwealth's operating fund structure satisfies the requirements of 
state finance law and is in accordance with generally accepted accounting 
principles ("GAAP"), as defined by the Government Accounting Standards 
Board.  The General Fund and those special revenue funds which are 
appropriated in the annual state budget receive most of the non-bond and 
non-Federal grant revenues of the Commonwealth.  These funds are referred 
to herein as the "budgeted operating funds" of the Commonwealth.  They do 
not include the capital projects funds of the Commonwealth, into which the 
proceeds of Commonwealth bonds are deposited.  The three principal 
budgeted operating funds are the General Fund, the Highway Fund and the 
Local Aid Fund.  Expenditures from these three funds generally account for 
approximately 96% of total expenditures of the budgeted operating funds.

The Commonwealth's budgeted operating funds for fiscal 1993, 1994, 1995 
and 1996 showed an excess of revenues and other sources over expenditures 
and other uses of $13.1 million, $26.8 million, $137 million and $446 
million and positive fund balances of $562.5 million, $589.3 million, $726 
million and $1.172 billion, respectively.  Over the same period, budgeted 
expenditures were approximately $14.696 billion for fiscal year 1993, 
$15.523 billion for fiscal 1994, $16.251 billion for fiscal 1995 and 
$16.881 billion for fiscal 1996.  The Commonwealth is in the process of 
closing its records for fiscal 1997.  Based upon the preliminary financial 
report  of the Commonwealth, budgeted revenues and other sources collected 
in fiscal 1997 were approximately $17.386 billion, and budgeted 
expenditures and other uses of funds in fiscal 1997 were approximately 
$17.702 billion.  The Commonwealth's fiscal 1998 budget is based on 
numerous spending and revenue estimates, the achievement of which cannot 
be assumed.

Limitations on Tax Revenues

In Massachusetts, efforts to limit and reduce levels of taxation have been 
underway for several years.  Limits were established on state tax revenues 
by legislation enacted on October 25, 1986 and by an initiative petition 
approved by the voters on November 4, 1986.  The two measures are 
inconsistent in several respects.

Chapter 62F, which was added to the General Laws by initiative petition in 
November 1986, establishes a state tax revenue growth limit for each 
fiscal year equal to the average positive rate of growth in total wages 
and salaries in the Commonwealth, as reported by the Federal government, 
during the three calendar years immediately preceding the end of such 
fiscal year.  Chapter 62F also requires that allowable state tax revenues 
be reduced by the aggregate amount received by local governmental units 
from any newly authorized or increased local option taxes or excises.  Any 
excess in state tax revenue collections for a given fiscal year over the 
prescribed limit, as determined by the State Auditor, is to be applied as 
a credit against the then-current personal income tax liability of all 
taxpayers in the Commonwealth in proportion to the personal income tax 
liability of all taxpayers in the Commonwealth for the immediately 
preceding tax year. Unlike Chapter 29B, as described below, the initiative 
petition did not exclude principal and interest payments on Commonwealth 
debt obligations from the scope of its tax limit.  However, the preamble 
contained in Chapter 62F provides that "although not specifically required 
by anything contained in this chapter, it is assumed that from allowable 
state tax revenues as defined herein the Commonwealth will give priority 
attention to the funding of state financial assistance to local 
governmental units, obligations under the state governmental pension 
systems, and payment of principal and interest on debt and other 
obligations of the Commonwealth."

The legislation enacted in October 1986, which added Chapter 29B to the 
General Laws, also establishes an allowable state revenue growth factor by 
reference to total wages and salaries in the Commonwealth.  However, 
rather than utilizing a three-year average wage and salary growth rate as 
used by Chapter 62F, Chapter 29B utilizes an allowable state revenue 
growth factor equal to one-third of the positive percentage gain in 
Massachusetts wages and salaries, as reported by the Federal government, 
during the three calendar years immediately preceding the end of a given 
fiscal year.  Additionally, unlike Chapter 62F, Chapter 29B allows for an 
increase in maximum state tax revenues to fund an increase in local aid 
and excludes from its definition of state tax revenues (i) income derived 
from local option taxes and excises, and (ii) revenues needed to fund debt 
service costs.  Tax revenues in fiscal 1992 through fiscal 1996 were lower 
than the limit set by either Chapter 62F or Chapter 29B, and the Executive 
Office for Administration and Finance currently estimates that state tax 
revenues in fiscal 1997 will not reach the limit imposed by either of 
these statues.

Local Aid

Proposition 2 1/2.  In November 1980, voters in the Commonwealth approved 
a statewide tax limitation initiative petition, commonly known as 
Proposition 2 1/2, to constrain levels of property taxation and to limit 
the charges and fees imposed on cities and towns by certain governmental 
entities, including county governments.  Proposition 2 1/2 is not a 
provision of the state constitution and accordingly is subject to 
amendment or repeal by the Legislature.  Proposition 2 1/2, as amended to 
date, limits the property taxes that may be levied by any city or town in 
any fiscal year to the lesser of (i) 2.5% of the full and fair cash 
valuation of the real estate and personal property therein and (ii) 2.5% 
over the previous year's levy limit plus any growth in the tax base from 
certain new construction and parcel subdivisions.  Proposition 2 1/2 also 
limits any increase in the charges and fees assessed by certain 
governmental entities, including county governments, on cities and towns 
to the sum of (i) 2.5% of the total charges and fees imposed in the 
preceding fiscal year and (ii) any increase in charges for services 
customarily provided locally or services obtained by the city or town at 
its option.  The law contains certain override provisions and, in 
addition, permits debt service on specific bonds and notices and 
expenditures for identified capital projects to be excluded from the 
limits by a majority vote at a general or special election.  At the time 
Proposition 2 1/2 was enacted, many cities and towns had property tax 
levels in excess of the limit and were therefore required to roll back 
property taxes with a concurrent lost of revenues.  Between fiscal 1981 
and fiscal 1996, the aggregate property tax levy grew from $3.347 billion 
to $5.924 billion, representing an increase of approximately 77%.  By 
contrast, according to Federal Bureau of Labor Statistics, the consumer 
price index for all urban consumers in Boston grew during the same period 
by approximately 92%.

Many communities have responded to the limitation imposed by Proposition 
2 1/2 through statutorily permitted overrides and exclusions.  Override 
activity steadily increased throughout the 1980's before peaking in fiscal 
1991 and decreasing thereafter.  In fiscal 1992, 65 communities approved 
one of the three types of referenda questions (override of levy limit, 
exclusion of debt service, or exclusion of capital expenditures) adding 
$31.0 million to their levy limits.  In fiscal 1993, 59 communities added 
$16.3 million through override votes and in fiscal 1994, only 48 
communities had successful override referenda which added $8.4 million to 
their levy limits.  In fiscal 1995, 32 communities added $8.8 million.  In 
fiscal 1996, 30 communities added $5.8 million to their levy limits.  
Although Proposition 2 1/2 will continue to constrain local property tax 
revenues, significant capacity exists for overrides in nearly all cities 
and towns.

In addition to overrides, Proposition 2 1/2 allows a community, through 
voter approval, to assess taxes in excess of its levy limit for the 
payment of certain capital projects (capital outlay expenditure 
exclusions) and for the payment of specified debt service costs (debt 
exclusions).  Capital exclusions were passed by 19 communities in fiscal 
1996 and totaled $1.5 million.  In fiscal 1996, the impact of successful 
debt exclusion votes going back as far as fiscal 1983, was to raise the 
levy limits of 229 communities by $125.8 million.

Commonwealth Financial Support for Local Governments.  During the 1980s, 
the Commonwealth increased payments to its cities, towns and regional 
school districts ("Local Aid") to mitigate the impact of Proposition 2 1/2 
on local programs and services.  In fiscal 1997, approximately 19.9% of 
the Commonwealth's budget is estimated to be allocated to direct Local 
Aid.  Local Aid payments to cities, towns and regional school districts 
take the form of both direct and indirect assistance.  Direct Local Aid 
consists of general revenue sharing funds and specific program funds sent 
directly to local governments and regional school districts as reported on 
the so-called "cherry sheet" prepared by the Department of Revenue, 
excluding certain pension funds and nonappropriated funds.

As a result of comprehensive education reform legislation enacted in June 
1993, a large portion of general revenue sharing funds are earmarked for 
public education and are distributed through a formula designed to provide 
more aid to the Commonwealth's poorer communities.  The legislation 
established a fiscal 1993 state spending base of approximately $1.288 
billion for local education purposes and required annual increases in 
state expenditures for such purposes above that base, subject to 
appropriation, estimated to be approximately $175 million in fiscal 1994, 
approximately $396 million in fiscal 1995, approximately $629 million in 
fiscal 1996 and approximately $881 million in fiscal 1997, with additional 
annual increases anticipated in later years.  The fiscal 1994, 1995, 1996 
and 197 budgets have fully funded the requirements imposed by this 
legislation.

Another component of general revenue sharing, the Lottery and Additional 
Assistance programs, provides unrestricted funds for municipal use.  There 
are also several specific programs funded through direct Local Aid, such 
as highway construction, school building construction and police education 
incentives.

In addition to direct Local Aid, the Commonwealth has provided substantial 
indirect aid to local governments, including, for example, payments for 
the Massachusetts Bay Transportation Authority ("MBTA") assistance and 
debt service, pensions for teachers, pension cost-of-living allowances for 
municipal retirees, housing subsidies and the cost of courts and district 
attorneys that formerly had been paid by the counties.

Direct Local Aid decreased from $2.359 billion in fiscal 1992 to $2.547 
billion in fiscal 1993 and to $2.727 billion in fiscal 1994.  Fiscal 1995 
expenditures for direct Local Aid were $2.976 billion, which is an 
increase of approximately 9.1% above the fiscal 1994 level.  Fiscal 1996 
expenditures for direct Local Aid were $3.246 billion, an increase of 
approximately 9.1% above the fiscal 1995 level.  It is estimated that 
fiscal 1997 expenditures for direct Local Aid will be $3.538 billion, 
which is an increase of approximately 9.0% above the fiscal 1996 level.

Initiative Law.  A statute adopted by voter initiative petition to the 
November 1990 statewide election regulates the distribution of Local Aid 
to cities and towns.  This statute requires that, subject to annual 
appropriation, no less than 40% of collections from personal income taxes, 
sales and use taxes, corporate excise taxes and lottery fund proceeds be 
distributed to cities and towns.  Under the law, the Local Aid 
distribution to each city or town would equal no less than 100% of the 
total Local Aid received for fiscal 1989.  Distributions in excess of 
fiscal 1989 levels would be based on new formulas that would replace the 
current Local Aid distribution formulas.  By its terms, the new formula 
would have called for a substantial increase in direct Local Aid in fiscal 
1992 and subsequent years.  However, Local Aid payments expressly remain 
subject to annual appropriation, and fiscal 1992, 1993, 1994, 1995 and 
1996 appropriations for Local Aid did not meet, and fiscal 1997 
appropriations for Local Aid do not meet, the levels set forth in the 
initiative law.

Commonwealth Expenditures

Fiscal 1993 budgeted expenditures were $14.696 billion, an increase of 
9.6% from fiscal 1992.  Fiscal 1994 budgeted expenditures were $15.523 
billion, an increase of 5.6% from fiscal 1993.  Fiscal 1995 budgeted 
expenditures were $16.251 billion, an increase of 4.7% from fiscal 1994. 
 Fiscal 1996 budgeted expenditures were $16.881 billion, an increase of 
3.9% from fiscal 1995.  It is estimated that fiscal 1997 budgeted 
expenditures will be $17.704 billion, an increase of 4.9% over fiscal 1996 
levels.

Commonwealth expenditures since 1992 largely reflect significant growth in 
several programs and services provided by the Commonwealth, principally 
direct Local Aid, Medicaid, group health insurance, debt service, 
pensions, higher education and assistance to the MBTA and regional transit 
authorities. 

The Commonwealth is responsible for the payment of pension benefits for 
state employees and for school teachers throughout the state, and for the 
cost-of-living increases payable to local government retirees.  In 1988, 
the Commonwealth adopted a funding schedule under which it is required to 
fund future pension liabilities currently and to amortize the accumulated 
unfunded liabilities over 40 years.  Since the adoption of this schedule, 
the amount of unfunded liability has been reduced significantly.  Total 
pension expenditures increased at an average annual rate of 7.6% per year, 
rising from $751.5 million in fiscal 1992 to $1.005 billion in fiscal 
1996.  Total pension expenses include the costs associated with an early 
retirement program for elementary and secondary school teachers mandated 
by the 1993 education reform legislation.  In fiscal 1997, the anticipated 
pension expenditure is $1.067 billion, an increase of 6.2% new fiscal 1996 
costs.  In fiscal 1996, a number of reform measures affecting pensions 
were enacted into law.  Among the most notable were a measure 
consolidating the assets of the state employees' and teachers' retirement 
systems into a single investment fund and another that will reform the 
disability pension system.

Other Factors

Many factors affect the financial condition of the Commonwealth, including 
many social, environmental, and economic conditions, which are beyond the 
control of the Commonwealth.  As with most urban states, the continuation 
of many of the Commonwealth's programs, particularly its human service 
programs, is in significant part dependent upon continuing Federal 
reimbursements which have been declining.

Investment Restrictions

The fund has adopted the following investment restrictions for the 
protection of shareholders.  Restrictions 1 through 6 below cannot be 
changed without the approval of the holders of a majority of the 
outstanding shares of the fund, defined as the lesser of (a) 67% 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 fund's Board of Trustees at any time.

The fund will not:

1. 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.

2. Invest more than 25% of its total assets in securities, the 
issuers of which are in the same industry.  For purposes of 
this limitation, U.S. government securities and securities of 
state or municipal governments and their political 
subdivisions are not considered to be issued by members of any 
industry.

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

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

5. 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.

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

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

8. 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.

9. Purchase or sell oil and gas interests.

10. Invest more than 5% of the value of its total assets in the 
securities of issuers having a record, including predecessors, 
of less than three years of continuous operation, except U.S. 
government securities.  (For purposes of this limitation, 
issuers include predecessors, sponsors, controlling persons, 
general partners, guarantors and originators of underlying 
assets.)

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

12. Invest in securities of other investment companies, except as 
they may be acquired as part of a merger, consolidation or 
acquisition of assets and except to the extent permitted by 
Section 12 of the 1940 Act (currently, up to 5% of the total 
assets of the fund and no more than 3% of the total 
outstanding voting stock of any one investment company).

13. Engage in the purchase or sale of put, call, straddle or 
spread options or in the writing of such options, except that 
the fund may make margin deposits in connection with municipal 
bond index and interest rate futures contracts and may 
purchase and sell options on municipal bond index and interest 
rate futures contracts.

Certain restrictions listed above permit the fund to engage in investment 
practices that the fund does not currently pursue.  The fund has no 
present intention of altering its current investment practices as 
otherwise described in the Prospectus and this SAI and any future change 
in those practices would require Board approval and appropriate notice to 
shareholders.  If a percentage restriction is complied with at the time of 
an investment, a later increase or decrease in the percentage of assets 
resulting from a change in the values of portfolio securities or in the 
amount of the fund's assets will not constitute a violation of such 
restriction.

MANAGEMENT OF THE FUND

Trustees and Executive Officers of the Fund

The names of the trustees of the trust and executive officers of the fund, 
together with information as to their principal business occupations, are 
set forth below.  The executive officers of the fund are employees of 
organizations that provide services to the fund.  Each Trustee who is an 
"interested person" of the trust, as defined in the 1940 Act, is indicated 
by an asterisk.  

Herbert Barg (Age 75).  Private Investor.  His address is 273 Montgomery 
Avenue, Bala Cynwyd, Pennsylvania 19004.

Alfred J. Bianchetti (Age 76).  Retired; formerly Senior Consultant to 
Dean Witter Reynolds Inc.  His address is 19 Circle End Drive, Ramsey, New 
Jersey 07466.

Martin Brody (Age 77).  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 (Age 61).  Professor, Harvard Business School.  His 
address is c/o Harvard Business School, Soldiers Field Road, Boston, 
Massachusetts 02163.

Burt N. Dorsett (Age 68).  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 (Age 72).  Chairman of the Board and President of The 
Dress Barn, Inc.  His address is 30 Dunnigan Drive, Suffern, New York 
10901.

Stephen E. Kaufman (Age 67).  Attorney.  His address is 277 Park Avenue, 
New York, New York 10172.

Joseph J. McCann (Age 68).  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 65). 
 Managing Director of Salomon Smith Barney, Inc., Chairman of the Board of 
Smith Barney Strategy Advisers Inc. and President of SSBC and Travelers 
Investment Adviser, Inc. ("TIA"); Chairman or Co-Chariman of the Board of 
59 investment companies associated with Salomon Smith Barney. His address 
is 388 Greenwich Street, New York, New York 10013.

Cornelius C. Rose, Jr. (Age 65).  President, Cornelius C. Rose Associates, 
Inc., financial consultants, and Chairman and Director of Performance 
Learning Systems, an educational consultant.  His address is Meadowbrook 
Village, Building 4, Apt 6, West Lebanon, New Hampshire 03784.

*Lewis E. Daidone, Senior Vice President and Treasurer (Age 41).  Managing 
Director of Salomon Smith Barney, Chief Financial Officer of the Smith 
Barney Mutual funds; Director and Senior Vice President of SSBC and TIA. 

Lawrence T. McDermott, Vice President and Investment Officer (Age 49).  
Investment Officer of SSBC; Managing Director of Salomon Smith Barney. 

*Christina T. Sydor, Secretary (Age 47), Managing Director of Salomon 
Smith Barney. General Counsel and Secretary of SSBC and TIA.  
		
*  Designates an "interested person" as defined in the Investment 
Company Act of 1940, as amended (the "1940 Act") whose business address 
is 388 Greenwich Street, New York, New York 10013.  Such person is not 
separately compensated for services as a fund officer or Trustee. 

As of January 22, 1999, the Trustees and officers of the funds, as a group, 
owned less than 1% of the outstanding shares of beneficial interest of the 
fund.

To the best knowledge of the Trustees, as of January 22, 1999, the 
following shareholders or "groups" (as such term is defined in Section  
13(d) of the Securities Exchange Act of 1934, as amended) owned 
beneficially or of record more than 5% of the shares of the following 
classes:

Class A						Percentage
East West Enterprises Inc.			6.6179
Attn: Reverend Raymond C. Lee
675 Massachusetts Ave.
Cambridge, MA 02139-3309

Class L
Phillip J. Cade					16.0557
Margaret P. Cade
JTWROS
24 Ginn Rd.
Winchester, MA 01890-2607

Lilla M. Pond TTEE				14.3706
Lilla M. Pond Trust
U/A/D 5/13/93
80 Lincoln Street
Norwood, MA 02062-1352

Helen D9Alelio and				10.8941
Ralph D9Alelio JTWROS
9 Stillings Rd.
Saugus, MA 01906-1928

Myron Pulier					9.2237
Anita Pulier JTWROS
c/o Salzman & Salzman
32 Court Street
Brooklyn, NY 11201-4404

No officer, trustee or employee of Salomon Smith Barney or any of its 
affiliates receives any compensation from the trust for serving as an 
officer of the funds or trustee of the trust.  The trust pays each trustee 
who is not an officer, trustee or employee of Salomon Smith Barney or any 
of its affiliates a fee of $8,000 per annum plus $500 per in-person 
meeting and $100 per telephonic meeting.  Each trustee emeritus who is not 
an officer, director or employee of Salomon Smith Barney or its affiliates 
receives a fee of $4,000 per annum plus $250 per in-person meeting and $50 
per telephonic meeting.  All trustees are reimbursed for travel and out-
of-pocket expenses incurred to attend such meetings.

For the fiscal year ended November 30, 1998, the trustees of the trust 
were paid the following compensation: 






Name of Person




Aggregate
Compensat
ion
from 
Californi
a Fund #



Aggregate 
Compensat
ion from 
New York 
Fund #

Total
Pension or
Retirement
Benefits 
Accrued
as part of
Fund 
Expenses


Compensatio
n
from Funds
and Fund
Complex
Paid to 
Trustees


Number of
Funds for
Which 
Trustees
Serves 
Within
Fund 
Complex

Herbert Barg **


$0

18
Alfred 
Bianchetti * **


  0

13
Martin Brody **


  0

21
Dwight B. Crane 
**


  0

24
Burt N. Dorsett 
**


  0

13
Elliot S. Jaffe 
**


  0

13
Stephen E. 
Kaufman **


  0

15
Joseph J. 
McCann **


  0

13
Heath B. 
McLendon *


-

59
Cornelius C. 
Rose, Jr. **


  0

13
	

*	Designates an "interested" trustee.
**	Designates member of Audit Committee.
	Upon attainment of age 80, fund trustees are required to change to 
emeritus status. Trustees Emeritus are entitled to serve in emeritus 
status for a maximum of 10 years, 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.  A Trustee Emeritus may attend 
meetings but has no voting rights. During the fund's last fiscal 
year, aggregate compensation paid by the fund to trustees achieving 
emeritus status totaled $_______.


Investment Adviser and Administrator - SSBC 

SSBC (formerly known as Mutual Management Corp.) serves as investment 
adviser to each fund pursuant to an investment advisory agreement (the 
"Investment Advisory Agreement") with the trust which was approved by the 
board of trustees, including a majority of trustees who are not 
"interested persons" of the trust or the manager.  The manager is a wholly 
owned subsidiary of Salomon Smith Barney Holdings Inc. ("Holdings"), which 
in turn, is a wholly owned subsidiary of Citigroup Inc. ("Citigroup").  
Subject to the supervision and direction of the trust's board of trustees, 
the manager manages each fund's portfolio in accordance with the fund's 
stated investment objective and policies, makes investment decisions for 
the fund, places order to purchase an sell securities, and employs 
professional portfolio managers and securities analysts who provide 
research services to the fund.  The manager pays the salary of any officer 
and employee who is employed by both it and the Trust.  The manager bears 
all expenses in connection with the performance of its services.

As compensation for investment advisory services, the fund pays the 
manager a fee computed daily and payable monthly at 0.30% of the value of 
the fund's average daily net assets.  For the fiscal years ended November 
30, 1996, 1997 and 1998, the fund paid the manager net of fee waivers and 
expense reimbursements, $170,838, $202,259 and $___________, respectively, 
in investment advisory fees.  For the fiscal years ended November 30, 
1996, 1997 and 1998, the manager voluntarily waived investment advisory 
fees of $36,129, $26,561 and $___________, respectively.

The manager also serves as administrator to the fund pursuant to a written 
agreement (the "Administration Agreement").  The services provided by the 
manager under the Administration Agreement are described in the Prospectus 
under "Management.'' The manager pays the salary of all officers and 
employees who are employed by both it and the fund and bears all expenses 
in connection with the performance of its services.

As compensation for administrative services rendered to the fund, the 
manager receives a fee computed daily and payable monthly at the following 
annual rates of average daily net assets: 0.20% up to $500 million; and 
0.18% in excess of $500 million.  For the fiscal year ended November 30, 
1996, the fund paid $113,892 (net of fee waivers amounting to $24,086) in 
administration fees.  For the fiscal year ended November 30, 1997, the 
fund paid the manager $117,518 (net of fee waivers amounting to $17,707) 
in administration fees.  For the fiscal year ended November 30, 1998, the 
fund paid the manager $_______ (net of fee waivers amounting to $______) 
in administration fees.

The fund bears expenses incurred in its operations including: taxes, 
interest, brokerage fees and commissions, if any; fees of Trustees of the 
fund who are not officers, directors, shareholders or employees of Salomon 
Smith Barney or the manager; Securities and Exchange Commission (the 
"SEC") fees and state Blue Sky notice fees; charges of custodians; 
transfer and dividend disbursing agent's fees; certain insurance premiums; 
outside auditing and legal expenses; costs of maintaining corporate 
existence; costs of investor services (including allocated telephone and 
personnel expenses); costs of preparing and printing of prospectuses for 
regulatory purposes and for distribution to existing shareholders; costs 
of shareholders' reports and shareholder meetings; and meetings of the 
officers or Board of Trustees of the fund.

Year 2000 - The investment management services provided to the fund by the 
manager and the services provided to shareholders by Salomon Smith Barney 
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 Salomon 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 modifying their systems with the same goal. There can, however, 
be no assurance that the manager, Salomon 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.
 
In addition, the ability of issuers to make timely payments of interest 
and principal or to continue their operations or services may be impaired 
by the inadequate preparation of their computer systems for the year 2000. 
This may adversely affect the market values of securities of specific 
issuers or of securities generally if the inadequacy of preparation is 
perceived as widespread or as affecting trading markets.

Counsel and Auditors

Willkie Farr & Gallagher serves as legal counsel to the fund.  The 
Independent Trustees of the fund have selected Stroock & Stroock & Lavan 
LLP as their legal counsel.

KPMG LLP, independent auditors, 345 Park Avenue, New York, New York 10154, 
serve as auditors of the fund and have rendered an opinion on the fund's 
financial statements for the fiscal year ended November 30, 1999.

Portfolio Transactions

Newly issued securities normally are purchased directly from the issuer or 
from an underwriter acting as principal.  Other purchases and sales 
usually are placed with those dealers from which it appears that the best 
price or execution will be obtained; those dealers may be acting as either 
agents or principals.  The purchase price paid by the fund to underwriters 
of newly issued securities usually includes a concession paid by the 
issuer to the underwriter, and purchases of after-market securities from 
dealers normally are executed at a price between the bid and asked prices. 
(The fund has paid no brokerage commissions since its commencement of 
operations.)

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

The fund will not purchase Exempt Obligations during the existence of any 
underwriting or selling group relating thereto of which Salomon Smith 
Barney is a member, except to the extent permitted by the Securities 
Exchange Commission ("SEC").  Under certain circumstances, the fund may 
be at a disadvantage because of this limitation in comparison with other 
investment companies which have a similar investment objective but which 
are not subject to such limitation.  The fund also may execute portfolio 
transactions through Salomon Smith Barney and its affiliates in accordance 
with rules promulgated by the SEC.

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

Portfolio Turnover

The Fund's portfolio turnover rate (the lesser of purchases or sales of 
portfolio securities during the year, excluding purchases or sales of 
short-term securities, divided by the monthly average value of portfolio 
securities) generally is not expected to exceed 100%, but the portfolio 
turnover rate will not be a limiting factor whenever the fund deems it 
desirable to sell or purchase securities. 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 may be purchased at approximately the same time in order to take 
advantage of what the fund believes to be a temporary disparity in the 
normal yield relationship between the two securities.  These yield 
disparities may occur for reasons not directly related to the investment 
quality of particular issues or the general movement of interest rates, 
such as changes in the overall demand for or supply of various types of 
tax-exempt securities.  For the 1996, 1997 and 1998 fiscal years, the 
fund's portfolio turnover rates were 23%, 58% and ___%, respectively.

PURCHASE OF SHARES

Sales Charge Alternatives

The following classes of shares are available for purchase.  See the 
Prospectus for a discussion of factors to consider in selecting which 
Class of shares to purchase. 

Class A Shares.  Class A shares are sold to investors at the public 
offering price, which is the net asset value plus an initial sales charge 
as follows: 






Amount of 
Investment

Sales Charge 
as a % 
of 
Transaction

Sales Charge 
as a % 
of Amount 
Invested
Dealers' 
Reallowance 
as % 
of Offering 
Price
Less than 
$25,000
4.00%
4.17%
3.60%
$ 25,000 - 
49,999
3.50    
3.63    
3.15    
50,000 - 
99,999
3.00    
3.09    
2.70    
100,000 - 
249,999
2.50    
2.56    
2.25    
250,000 - 
499,999
1.50    
1.52    
1.35    
500,000 and 
over
*
*
*

*	Purchases of Class A shares of $500,000 or more will be made at net 
asset value without any initial sales charge, but will be subject to 
a deferred sales charge of 1.00% on redemptions made within 12 
months of purchase. The deferred sales charge on Class A shares is 
payable to Salomon Smith Barney, which compensates Salomon Smith 
Barney Financial Consultants and other dealers whose clients make 
purchases of $500,000 or more. The deferred sales charge is waived 
in the same circumstances in which the deferred sales charge 
applicable to Class B and Class L shares is waived. See "Deferred 
Sales Charge Alternatives" and "Waivers of Deferred Sales Charge." 

Members of the selling group may receive up to 90% of the sales charge and 
may be deemed to be underwriters of the fund as defined in the 1933 Act. 
 The reduced sales charges shown above apply to the aggregate of purchases 
of Class A shares of the fund made at one time by "any person," which 
includes an individual and his or her immediate family, or a trustee or 
other fiduciary of a single trust estate or single fiduciary account.

Class B Shares.  Class B shares are sold without an initial sales charge 
but are subject to a deferred sales charge payable upon certain 
redemptions.  See "Deferred Sales Charge Provisions" below.

Class L Shares.  Class L shares are sold with an initial sales charge of 
1.00% (which is equal to 1.01% of the amount invested) and are subject to 
a deferred sales charge payable upon certain redemptions.  See "Deferred 
Sales Charge Provisions" below.  Until June 22, 2001 purchases of Class L 
shares by investors who were holders of Class C shares of the fund on June 
12, 1998 will not be subject to the 1% initial sales charge.

Class Y Shares.  Class Y shares are sold without an initial sales charge 
or deferred sales charge and are available only to investors investing a 
minimum of $15,000,000 (except purchases of Class Y shares by Smith Barney 
Concert Allocation Series Inc., for which there is no minimum purchase 
amount).  

General 

Investors may purchase shares from a Salomon Smith Barney Financial 
Consultant or a Dealer Representative.  In addition, certain investors, 
including qualified retirement plans purchasing through certain Dealer 
Representatives, may purchase shares directly from the fund.  When 
purchasing shares of the fund, investors must specify whether the purchase 
is for Class A, Class B, Class L or Class Y shares.  Salomon Smith Barney 
and Dealer Representatives may charge their customers an annual account 
maintenance fee in connection with a brokerage account through which an 
investor purchases or holds shares.  Accounts held directly at First Data 
Investor Services Group, Inc. ("First Data" or "transfer agent") are not 
subject to a maintenance fee.

Investors in Class A, Class B and Class L shares may open an account in 
the fund by making an initial investment of at least $1,000 for each 
account, or $250 for an IRA or a Self-Employed Retirement Plan, in the 
fund. Investors in Class Y shares may open an account by making an initial 
investment of $15,000,000. Subsequent investments of at least $50 may be 
made for all Classes. For participants in retirement plans qualified under 
Section 403(b)(7) or Section 401(c) of the Code, the minimum initial 
investment required for Class A, Class B and Class L shares and the 
subsequent investment requirement for all Classes in the fund is $25.  For 
shareholders purchasing shares of the fund through the Systematic 
Investment Plan on a monthly basis, the minimum initial investment 
requirement for Class A, Class B and Class L shares and subsequent 
investment requirement for all Classes is $25.  For shareholders 
purchasing shares of the fund through the Systematic Investment Plan on a 
quarterly basis, the minimum initial investment required for Class A, 
Class B and Class L shares and the subsequent investment requirement for 
all Classes is $50.  There are no minimum investment requirements for 
Class A shares for employees of Citigroup and its subsidiaries, including 
Salomon Smith Barney, unitholders who invest distributions from a Unit 
Investment Trust ("UIT") sponsored by Salomon Smith Barney, and 
Directors/Trustees of any of the Smith Barney Mutual Funds, and their 
spouses and children. The fund reserves the right to waive or change 
minimums, to decline any order to purchase its shares and to suspend the 
offering of shares from time to time. Shares purchased will be held in the 
shareholder's account by First Data. Share certificates are issued only 
upon a shareholder's written request to First Data. 

Purchase orders received by the fund or a Salomon Smith Barney Financial 
Consultant prior to the close of regular trading on the NYSE, on any day 
the fund calculates its net asset value, are priced according to the net 
asset value determined on that day (the ''trade date'').  Orders received 
by a Dealer Representative prior to the close of regular trading on the 
NYSE on any day the fund calculates its net asset value, are priced 
according to the net asset value determined on that day, provided the 
order is received by the fund or the fund's agent prior to its close of 
business. For shares purchased through Salomon Smith Barney or a Dealer 
Representative purchasing through Salomon Smith Barney, payment for shares 
of the fund is due on the third business day after the trade date. In all 
other cases, payment must be made with the purchase order. 

Systematic Investment Plan.  Shareholders may make additions to their 
accounts at any time by purchasing shares through a service known as the 
Systematic Investment Plan.  Under the Systematic Investment Plan, Salomon 
Smith Barney or First Data is authorized through preauthorized transfers 
of at least $25 on a monthly basis or at least $50 on a quarterly basis to 
charge the shareholder's account held with a bank or other financial 
institution on a monthly or quarterly basis as indicated by the 
shareholder, to provide for systematic additions to the shareholder's fund 
account.  A shareholder who has insufficient funds to complete the 
transfer will be charged a fee of up to $25 by Salomon Smith Barney or 
First Data.  The Systematic Investment Plan also authorizes Salomon Smith 
Barney to apply cash held in the shareholder's Salomon Smith Barney 
brokerage account or redeem the shareholder's shares of a Smith Barney 
money market fund to make additions to the account. Additional information 
is available from the fund or a Salomon Smith Barney Financial Consultant 
or a Dealer Representative. 

Sales Charge Waivers and Reductions

Initial Sales Charge Waivers.  Purchases of Class A shares may be made at 
net asset value without a sales charge in the following circumstances: (a) 
sales to (i) Board Members and employees of Citigroup and its subsidiaries 
and any Citigroup affiliated funds including the Smith Barney Mutual Funds 
(including retired Board Members and employees); the immediate families of 
such persons (including the surviving spouse of a deceased Board Member or 
employee); and to a pension, profit-sharing or other benefit plan for such 
persons and (ii) employees of members of the National Association of 
Securities Dealers, Inc., provided such sales are made upon the assurance 
of the purchaser that the purchase is made for investment purposes and 
that the securities will not be resold except through redemption or 
repurchase; (b) offers of Class A shares to any other investment company 
to effect the combination of such company with the fund by merger, 
acquisition of assets or otherwise; (c) purchases of Class A shares by any 
client of a newly employed Salomon Smith Barney Financial Consultant (for 
a period up to 90 days from the commencement of the Financial Consultant's 
employment with Salomon Smith Barney), on the condition the purchase of 
Class A shares is made with the proceeds of the redemption of shares of a 
mutual fund which (i) was sponsored by the Financial Consultant's prior 
employer, (ii) was sold to the client by the Financial Consultant and 
(iii) was subject to a sales charge; (d) purchases by shareholders who 
have redeemed Class A shares in the fund (or Class A shares of another 
Smith Barney Mutual Fund that is offered with a sales charge) and who wish 
to reinvest their redemption proceeds in the fund, provided the 
reinvestment is made within 60 calendar days of the redemption; (e) 
purchases by accounts managed by registered investment advisory 
subsidiaries of Citigroup; (f) purchases by a separate account used to 
fund certain unregistered variable annuity contracts; (g) investments of 
distributions from a UIT sponsored by Salomon Smith Barney; and 
(h) purchases by investors participating in a Salomon Smith Barney fee-
based arrangement. In order to obtain such discounts, the purchaser must 
provide sufficient information at the time of purchase to permit 
verification that the purchase would qualify for the elimination of the 
sales charge. 

Right of Accumulation.  Class A shares of the fund may be purchased by 
''any person'' (as defined above) at a reduced sales charge or at net 
asset value determined by aggregating the dollar amount of the new 
purchase and the total net asset value of all Class A shares of the fund 
and of other Smith Barney Mutual Funds that are offered with a sales 
charge as currently listed under ''Exchange Privilege'' then held by such 
person and applying the sales charge applicable to such aggregate.  In 
order to obtain such discount, the purchaser must provide sufficient 
information at the time of purchase to permit verification that the 
purchase qualifies for the reduced sales charge.  The right of 
accumulation is subject to modification or discontinuance at any time with 
respect to all shares purchased thereafter. 

Letter of Intent - Class A Shares.  A Letter of Intent for an amount of 
$50,000 or more provides an opportunity for an investor to obtain a 
reduced sales charge by aggregating investments over a 13 month period, 
provided that the investor refers to such Letter when placing orders.  For 
purposes of a Letter of Intent, the ''Amount of Investment'' as referred 
to in the preceding sales charge table includes (i) all Class A shares of 
the fund and other Smith Barney Mutual Funds offered with a sales charge 
acquired during the term of the letter plus (ii) the value of all Class A 
shares previously purchased and still owned.  Each investment made during 
the period receives the reduced sales charge applicable to the total 
amount of the investment goal.  If the goal is not achieved within the 
period, the investor must pay the difference between the sales charges 
applicable to the purchases made and the charges previously paid, or an 
appropriate number of escrowed shares will be redeemed.  The term of the 
Letter will commence upon the date the Letter is signed, or at the options 
of the investor, up to 90 days before such date.  Please contact a Salomon 
Smith Barney Financial Consultant or First Data to obtain a Letter of 
Intent application. 

Letter of Intent - Class Y Shares.  A Letter of Intent may also be used as 
a way for investors to meet the minimum investment requirement for Class 
Y shares (except purchases of Class Y shares by Smith Barney Concert 
Allocation Series Inc., for which there is no minimum purchase amount). 
 Such investors must make an initial minimum purchase of $5,000,000 in 
Class Y shares of the fund and agree to purchase a total of $15,000,000 of 
Class Y shares of the fund within 13 months from the date of the Letter. 
If a total investment of $15,000,000 is not made within the 13-month 
period, all Class Y shares purchased to date will be transferred to Class 
A shares, where they will be subject to all fees (including a service fee 
of 0.25%) and expenses applicable to the fund's Class A shares, which may 
include a deferred sales charge of 1.00%. Please contact a Salomon Smith 
Barney Financial Consultant or First Data for further information. 


Deferred Sales Charge Provisions

''Deferred Sales Charge Shares'' are: (a) Class B shares; (b) Class L 
shares; and (c) Class A shares that were purchased without an initial 
sales charge but are subject to a deferred sales charge.  A deferred sales 
charge may be imposed on certain redemptions of these shares.

Any applicable deferred sales charge will be assessed on an amount equal 
to the lesser of the original cost of the shares being redeemed or their 
net asset value at the time of redemption. Deferred Sales Charge Shares 
that are redeemed will not be subject to a deferred sales charge to the 
extent that the value of such shares represents: (a) capital appreciation 
of fund assets; (b) reinvestment of dividends or capital gain 
distributions; (c) with respect to Class B shares, shares redeemed more 
than five years after their purchase; or (d) with respect to Class L 
shares and Class A shares that are Deferred Sales Charge Shares, shares 
redeemed more than 12 months after their purchase. 

Class L shares and Class A shares that are Deferred Sales Charge Shares 
are subject to a 1.00% deferred sales charge if redeemed within 12 months 
of purchase. In circumstances in which the deferred sales charge is 
imposed on Class B shares, the amount of the charge will depend on the 
number of years since the shareholder made the purchase payment from which 
the amount is being redeemed.  Solely for purposes of determining the 
number of years since a purchase payment, all purchase payments made 
during a month will be aggregated and deemed to have been made on the last 
day of the preceding Salomon Smith Barney statement month. The following 
table sets forth the rates of the charge for redemptions of Class B shares 
by shareholders.


Year Since Purchase Payment Was Made

Deferred sales charge

First

4.50%

Second

4.00   

Third

3.00   

Fourth

2.00   

Fifth

1.00   

Sixth and thereafter

0.00   

Class B shares will convert automatically to Class A shares eight years 
after the date on which they were purchased and thereafter will no longer 
be subject to any distribution fees. There will also be converted at that 
time such proportion of Class B Dividend Shares owned by the shareholders 
as the total number of his or her Class B shares converting at the time 
bears to the total number of outstanding Class B shares (other than Class 
B Dividend Shares) owned by the shareholder. 

The length of time that Deferred Sales Charge Shares acquired through an 
exchange have been held will be calculated from the date that the shares 
exchanged were initially acquired in one of the other Smith Barney Mutual 
Funds, and fund shares being redeemed will be considered to represent, as 
applicable, capital appreciation or dividend and capital gain distribution 
reinvestments in such other funds. For Federal income tax purposes, the 
amount of the deferred sales charge will reduce the gain or increase the 
loss, as the case may be, on the amount realized on redemption. The amount 
of any deferred sales charge will be paid to Salomon Smith Barney. 

To provide an example, assume an investor purchased 100 Class B shares of 
the fund at $10 per share for a cost of $1,000.  Subsequently, the 
investor acquired 5 additional shares of the fund through dividend 
reinvestment.  During the fifteenth month after the purchase, the investor 
decided to redeem $500 of his or her investment.  Assuming at the time of 
the redemption the net asset value had appreciated to $12 per share, the 
value of the investor's shares would be $1,260 (105 shares at $12 per 
share). The deferred sales charge would not be applied to the amount which 
represents appreciation ($200) and the value of the reinvested dividend 
shares ($60).  Therefore, $240 of the $500 redemption proceeds ($500 minus 
$260) would be charged at a rate of 4.00% (the applicable rate for Class 
B shares) for a total deferred sales charge of $9.60. 

Waivers of Deferred Sales Charge  

The deferred sales charge will be waived on: (a) exchanges (see ''Exchange 
Privilege''); (b) automatic cash withdrawals in amounts equal to or less 
than 1.00% per month of the value of the shareholder's shares at the time 
the withdrawal plan commences (see ''Automatic Cash Withdrawal Plan'') 
(provided, however, that automatic cash withdrawals in amounts equal to or 
less than 2.00% per month of the value of the shareholder's shares will be 
permitted for withdrawal plans that were established prior to November 7, 
1994); (c) redemptions of shares within 12 months following the death or 
disability of the shareholder; (d) redemptions of shares made in 
connection with qualified distributions from retirement plans or IRAs upon 
the attainment of age 591/2; (e) involuntary redemptions; and 
(f) redemptions of shares to effect a combination of the fund with any 
investment company by merger, acquisition of assets or otherwise. In 
addition, a shareholder who has redeemed shares from other Smith Barney 
Mutual Funds may, under certain circumstances, reinvest all or part of the 
redemption proceeds within 60 days and receive pro rata credit for any 
deferred sales charge imposed on the prior redemption. 

Deferred sales charge waivers will be granted subject to confirmation (by 
Salomon Smith Barney in the case of shareholders who are also Salomon 
Smith Barney clients or by First Data in the case of all other 
shareholders) of the shareholder's status or holdings, as the case may be. 

Volume Discounts

The schedule of sales charges on Class A shares described in the 
Prospectus applies to purchases made by any "purchaser," which is defined 
to include the following: (a) an individual; (b) an individual's spouse 
and his or her children purchasing shares for their own account; (c) a 
trustee or other fiduciary purchasing shares for a single trust estate or 
single fiduciary account; and (d) a trustee or other professional 
fiduciary (including a bank, or an investment adviser registered with the 
SEC under the Investment Advisers Act of 1940, as amended) purchasing 
shares of the fund for one or more trust estates or fiduciary accounts. 
 Purchasers who wish to combine purchase orders to take advantage of 
volume discounts on Class A shares should contact a Salomon  Smith Barney 
Financial Consultant.

DETERMINATION OF NET ASSET VALUE

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

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 Board of Trustees. A security 
that is primarily traded on a domestic or foreign exchange is valued at 
the last sale price on that exchange or, if there were no sales during the 
day, at the mean between the bid and asked price. Portfolio securities 
that are primarily traded on foreign exchanges are generally valued at the 
preceding closing values of such securities on their respective exchanges, 
except that when an occurrence subsequent to the time a value was so 
established is likely to have changed the value, then the fair value of 
those securities will be determined by consideration of other factors by 
or under the direction of the Board of Trustees or its delegates. 

Over-the-counter securities and securities listed or traded on certain 
foreign exchanges whose operations are similar to the United States over-
the-counter market for which no sale was reported on that date are valued 
at the mean between the bid and asked price.  If market quotations for 
those securities are not readily available, they are valued at fair value, 
as determined in good faith by the fund's Board of Trustees.  An option 
is generally valued at the last sale price or, in the absence of a last 
sale price, the last offer price.  

U.S. government securities will be valued at the mean between the closing 
bid and asked prices on each day, or, if market quotations for those 
securities are not readily available, at fair value, as determined in good 
faith by the fund's Board of Trustees.  

Short-term investments maturing in 60 days or less are valued at amortized 
cost whenever the Board of Trustees determines that amortized cost 
reflects fair value of those investments. Amortized cost valuation 
involves valuing an instrument at its cost initially 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.  

Determination of Public Offering Price

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

REDEMPTION OF SHARES

The fund is required to redeem the shares of the fund tendered to it, as 
described below, at a redemption price equal to their net asset value per 
share next determined after receipt of a written request in proper form at 
no charge other than any applicable deferred sales charge. Redemption 
requests received after the close of regular trading on the NYSE are 
priced at the net asset value next determined. 

If a shareholder holds shares in more than one Class, any request for 
redemption must specify the Class being redeemed.  In the event of a 
failure to specify which Class, or if the investor owns fewer shares of 
the Class than specified, the redemption request will be delayed until the 
transfer agent receives further instructions from Salomon Smith Barney, or 
if the shareholder's account is not with Salomon Smith Barney, from the 
shareholder directly.  The redemption proceeds will be remitted on or 
before the third business day following receipt of proper tender, except 
on any days on which the NYSE is closed or as permitted under the 1940 Act 
in extraordinary circumstances. Generally, if the redemption proceeds are 
remitted to a Salomon Smith Barney brokerage account, these funds will not 
be invested for the shareholder's benefit without specific instruction and 
Salomon Smith Barney will benefit from the use of temporarily uninvested 
funds. Redemption proceeds for shares purchased by check, other than a 
certified or official bank check, will be remitted upon clearance of the 
check, which may take up to ten days or more. 

Shares held by Salomon Smith Barney as custodian must be redeemed by 
submitting a written request to a Salomon Smith Barney Financial 
Consultant. Shares other than those held by Salomon Smith Barney as 
custodian may be redeemed through an investor's Financial Consultant, 
Dealer Representative or by submitting a written request for redemption 
to: 

Smith Barney Massachusetts Municipals 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 registered. If the shares to be redeemed were issued in certificate 
form, the certificates must be endorsed for transfer (or be accompanied by 
an endorsed stock power) and must be submitted to the transfer agent 
together with the redemption request. Any signature appearing on a share 
certificate, stock power or written redemption request in excess of 
$10,000 must be guaranteed by an eligible guarantor institution, such as 
a domestic bank, savings and loan institution, domestic credit union, 
member bank of the Federal Reserve System or member firm of a national 
securities exchange. Written redemption requests of $10,000 or less do not 
require a signature guarantee unless more than one such redemption request 
is made in any 10-day period. Redemption proceeds will be mailed to an 
investor's address of record. The transfer agent may require additional 
supporting documents for redemptions made by corporations, executors, 
administrators, trustees or guardians. A redemption request will not be 
deemed properly received until the transfer agent receives all required 
documents in proper form. 

Automatic Cash Withdrawal Plan.  The fund offers shareholders an automatic 
cash withdrawal plan, under which shareholders who own shares with a value 
of at least $10,000 may elect to receive cash payments of at least $50 
monthly or quarterly.  Retirement plan accounts are eligible for automatic 
cash withdrawal plans only where the shareholder is eligible to receive 
qualified distributions and has an account value of at least $5,000.  The 
withdrawal plan will be carried over on exchanges between Classes of a 
fund.  Any applicable deferred sales charge will not be waived on amounts 
withdrawn by a shareholder that exceed 1.00% per month of the value of the 
shareholder's shares subject to the deferred sales charge at the time the 
withdrawal plan commences.  (With respect to withdrawal plans in effect 
prior to November 7, 1994, any applicable deferred sales charge will be 
waived on amounts withdrawn that do not exceed 2.00% per month of the 
value of the shareholder's shares subject to the deferred sales charge.) 
 For further information regarding the automatic cash withdrawal plan, 
shareholders should contact a Salomon Smith Barney Financial Consultant. 

Telephone Redemption and Exchange Program.  Shareholders who do not have 
a brokerage account may be eligible to redeem and exchange shares by 
telephone. To determine if a shareholder is entitled to participate in 
this program, he or she should contact the transfer agent at 1-800-451-
2010.  Once eligibility is confirmed, the shareholder must complete and 
return a Telephone/Wire Authorization Form, along with a signature 
guarantee, that will be provided by the transfer agent upon request.  
(Alternatively, an investor may authorize telephone redemptions on the new 
account application with the applicant's signature guarantee when making 
his/her initial investment in a fund.) 

Redemptions.   Redemption requests of up to $10,000 of any class or 
classes of shares of a fund may be made by eligible shareholders by 
calling the transfer agent at 1-800-451-2010. Such requests may be made 
between 9:00 a.m. and 4:00 p.m. (Eastern time) on any day the NYSE is 
open.  Redemptions of shares (i) by retirement plans or (ii) for which 
certificates have been issued are not permitted under this program. 

A shareholder will have the option of having the redemption proceeds 
mailed to his/her address of record or wired to a bank account 
predesignated by the shareholder.  Generally, redemption proceeds will be 
mailed or wired, as the case may be, on the 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 registration of the shares of the fund exchanged.  Such exchange 
requests may be made by calling the transfer agent at 1-800-451-2010 
between 9:00 a.m. and 4:00 p.m. (Eastern time) on any day on which the 
NYSE is open. 

Additional Information Regarding Telephone Redemption and Exchange 
Program.   Neither the fund  nor its agents will be liable for following 
instructions communicated by telephone that are reasonably believed to be 
genuine.  The fund and its agents will employ procedures designed to 
verify the identity of the caller and legitimacy of instructions (for 
example, a shareholder's name and account number will be required and 
phone calls may be recorded).  The fund reserves the right to suspend, 
modify or discontinue the telephone redemption and exchange program or to 
impose a charge for this service at any time following at least seven (7) 
days prior notice to shareholders.

Redemptions in Kind.  In conformity with applicable rules of the SEC, 
redemptions may be paid in portfolio securities, in cash or any 
combination of both, as the Board of Trustees may deem advisable; 
however, payments shall be made wholly in cash unless the Board of 
Trustees believes economic conditions exist that would make such a 
practice detrimental to the best interests of the fund and its remaining 
shareholders.  If a redemption is paid in portfolio securities, such 
securities will be valued in accordance with the procedures described 
under "Determination of Net Asset Value" in the Prospectus and a 
shareholder would incur brokerage expenses if these securities were then 
converted to cash. 

Distributions in Kind

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

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 and who wish 
to receive specific amounts of cash monthly or quarterly. Withdrawals of 
at least $50 may be made under the Withdrawal Plan by redeeming as many 
shares of the fund as may be necessary to cover the stipulated withdrawal 
payment. Any applicable deferred sales charge will not be waived on 
amounts withdrawn by shareholders that exceed 1.00% per month of the value 
of a shareholder's shares at the time the Withdrawal Plan commences. (With 
respect to Withdrawal Plans in effect prior to November 7, 1994, any 
applicable deferred sales charge will be waived on amounts withdrawn that 
do not exceed 2.00% per month of the value of a shareholder's shares at 
the time the Withdrawal Plan commences.) To the extent withdrawals exceed 
dividends, distributions and appreciation of a shareholder's investment in 
the fund, there will be a reduction in the value of the shareholder's 
investment, and continued withdrawal payments will reduce the 
shareholder's investment and may ultimately exhaust it. Withdrawal 
payments should not be considered as income from investment in 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 shareholder in 
amounts of less than $5,000 ordinarily will not be permitted.

Shareholders who wish to participate in the Withdrawal Plan and who hold 
their shares in certificate form must deposit their share certificates 
with the Transfer Agent as agent for Withdrawal Plan members. All 
dividends and distributions on shares in the Withdrawal Plan are 
reinvested automatically at net asset value in additional shares of the 
fund. For additional information, shareholders should contact a Smith 
Barney Financial Consultant. Effective November 7, 1994, Withdrawal Plans 
should be set up with a Smith Barney Financial Consultant. A shareholder 
who purchases shares directly through the Transfer Agent may continue to 
do so and applications for participation in the Withdrawal Plan must be 
received by the Transfer Agent no later than the eighth day of the month 
to be eligible for participation beginning with that month's withdrawals. 
 For additional information, shareholders should contact a Smith Barney 
Financial Consultant.

Distributor.  CFBDS, Inc. serves as the fund's distributor pursuant to a 
written agreement dated October 8, 1998 (the "Distribution Agreement") 
which was approved by the fund's Board of Trustees, including a majority 
of the Independent Directors on July 15, 1998.  Prior to the merger of 
Travelers Group, Inc. and Citicorp Inc. on October 8, 1998, Salomon Smith 
Barney served as the fund's distributor.  For the 1996, 1997 and 1998 
fiscal years, Salomon Smith Barney, received $45,000, $68,000 and 
__________, respectively, in sales charges from the sale of Class A 
shares, and did not reallow any portion thereof to dealers.  For the 
fiscal years ended November 30, 1996, 1997 and 1998, Salomon Smith Barney 
or its predecessor received from shareholders $57,000, $48,000 and 
$_________, respectively, in deferred sales charge on the redemption of 
Class B and Class L shares.

When payment is made by the investor before the settlement date, unless 
otherwise noted by the investor, the funds will be held as a free credit 
balance in the investor's brokerage account and Salomon Smith Barney may 
benefit from the temporary use of the funds.  The fund's Board of 
Trustees has been advised of the benefits to Salomon Smith Barney 
resulting from these settlement procedures and will take such benefits 
into consideration when reviewing the Investment Management and 
Distribution Agreements for continuance.

For the fiscal year ended November 30, 1998, Salomon Smith Barney incurred 
distribution expenses totaling approximately $____ consisting of 
approximately $___ for advertising, $____ for printing and mailing of 
prospectuses, $____ for support services, $____ to Salomon Smith 
Barney Financial Consultants, and $____ in accruals for interest on the 
excess of Salomon Smith Barney expenses incurred in distributing the 
fund's shares over the sum of the distribution fees and deferred sales 
charge received by Salomon Smith Barney from the fund.

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

The following service and distribution fees were incurred pursuant to a 
Distribution Plan during the periods indicated:




Distribution Plan Fees





Fiscal Year 
Ended 
11/30/98

Fiscal Year
Ended 11/30/97

Fiscal Year 
Ended 
11/30/96

Class A

$  

$

$

Class B

$

$

$

Class L*

$

$

$

* Class L shares were called Class C shares until June 12, 1998.

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 Independent Trustees.  The Plan may not be 
amended to increase the amount of the service and distribution fees 
without shareholder approval, and all material amendments of the Plan also 
must be approved by the Trustees and Independent Trustees in the manner 
described above.  The Plan may be terminated with respect to a Class of 
the fund at any time, without penalty, by vote of a majority of the 
Independent Trustees or by a vote of a majority of the outstanding voting 
securities of the Class (as defined in the 1940 Act).  Pursuant to the 
Plan, Salomon Smith Barney will provide the fund's Board of Trustees with 
periodic reports of amounts expended under the Plan and the purpose for 
which such expenditures were made.


VALUATION OF SHARES

The Fund's net asset value per share is determined as of close of regular 
trading on the NYSE, on each day that the NYSE is open, by dividing value 
of the fund's net assets attributable to each Class by the total number of 
shares of that Class outstanding.

When, in judgement of the pricing service, quoted bid prices for 
investments are readily available and are representative of the bid side 
of the market, these investments are valued at the mean between the quoted 
bid and asked prices.  Investments for which, in the judgement of the 
pricing service, there is no readily obtainable market quotation (which 
may contribute a majority of the portfolio securities) are carried at fair 
value of securities of similar type, yield maturity.  Pricing services 
generally determine value by reference to transactions in municipal 
obligations, quotations from municipal bond dealers, market transaction in 
comparable securities and various relationships between securities.  
Short-term investments that mature in 60 days or less are valued at 
amortized cost whenever the Board of Trustees determines that amortized 
cost is fair value.  Amortized cost valuation involves valuing an 
instrument at its cost is fair value.  Amortized cost valuation involves 
valuing an instrument 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.  Securities and other assets that are not available will be 
valued in good faith at fair value by or under the direction of the fund's 
Board of Trustees.

EXCHANGE PRIVILEGE

Except as otherwise noted below, shares of each Class of the fund may be 
exchanged for shares of the same Class of certain Smith Barney Mutual 
Funds, to the extent shares are offered for sale in the shareholder's 
state of residence.  Exchanges of Class A, Class B and Class L shares are 
subject to minimum investment requirements and all shares are subject to 
the other requirements of the fund into which exchanges are made.

Class B Exchanges.  If a Class B shareholder wishes to exchange all or a 
portion of his or her shares in any of the funds imposing a higher 
deferred sales charge than that imposed by the fund, the exchanged Class 
B shares will be subject to the higher applicable deferred sales charge. 
Upon an exchange, the new Class B shares will be deemed to have been 
purchased on the same date as the Class B shares of the fund that have 
been exchanged. 

Class L Exchanges.  Upon an exchange, the new Class L shares will be 
deemed to have been purchased on the same date as the Class L shares of 
the fund that have been exchanged. 

Class A and Class Y Exchanges.  Class A and Class Y shareholders of the 
fund who wish to exchange all or a portion of their shares for shares of 
the respective Class in any of the funds identified above may do so 
without imposition of any charge. 

Additional Information Regarding the Exchange Privilege.  Although the 
exchange privilege is an important benefit, excessive exchange 
transactions can be detrimental to the fund's performance and its 
shareholders. The Manager may determine that a pattern of frequent 
exchanges is excessive and contrary to the best interests of the fund's 
other shareholders. In this event, the fund may, at its discretion, decide 
to limit additional purchases and/or exchanges by the shareholder. Upon 
such a determination, the fund will provide notice in writing or by 
telephone to the shareholder at least 15 days prior to suspending the 
exchange privilege and during the 15 day period the shareholder will be 
required to (a) redeem his or her shares in the fund or (b) remain 
invested in the fund or exchange into any of the funds of the Smith Barney 
Mutual Funds ordinarily available, which position the shareholder would be 
expected to maintain for a significant period of time. All relevant 
factors will be considered in determining what constitutes an abusive 
pattern of exchanges. 

Certain shareholders may be able to exchange shares by telephone. See 
''Redemption of Shares-Telephone Redemptions and Exchange Program.'' 
Exchanges will be processed at the net asset value next determined.  
Redemption procedures discussed below are also applicable for exchanging 
shares, and exchanges will be made upon receipt of all supporting 
documents in proper form.  If the account registration of the shares of 
the fund being acquired is identical to the registration of the shares of 
the fund exchanged, no signature guarantee is required.  An exchange 
involves a taxable redemption of shares, subject to the tax treatment 
described in "ADDITIONAL TAX INFORMATION" above, followed by a purchase of 
shares of a different fund.  Before exchanging shares, investors should 
read the current prospectus describing the shares to be acquired.  The 
fund reserves the right to modify or discontinue exchange privileges upon 
60 days' prior notice to shareholders. 

ADDITIONAL INFORMATION REGARDING TELEPHONE REDEMPTION AND EXCHANGE 
PROGRAM.

Neither the fund nor its agents will be liable for instructions 
communicated by telephone that are reasonably believed to be genuine.  The 
fund or 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.

PERFORMANCE INFORMATION

From time to time, the fund may quote total return of a class in 
advertisements or in reports and other communications to shareholders.  
The fund may include comparative performance information in advertising or 
marketing the fund's shares.  Such performance information may include 
data from 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 Values, The New York Times, USA Today and The Wall Street 
Journal.


Average Annual Total Return 

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

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

T = 	average annual total return.

N =	number of years.

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

The Fund's average annual total return for Class A shares assuming the 
maximum applicable sales charge was as follows for the periods indicated 
(reflecting the waiver of the fund's investment advisory and 
administration fees and reimbursement of expenses):

 ____% for the one-year period from December 1, 1997 through 
November 30, 1998.

 ____% for the five-year period from December 1, 1993 through 
November 30, 1998.

 ____% per annum during the period from the fund's commencement 
of operations on December 21, 1987 through November 30, 1998.

A Class' average annual total return assumes that the maximum applicable 
sales charge or deferred sales charge assessed by the fund has been 
deducted from the hypothetical investment.  Had the maximum 4.00% sales 
charge had not been deducted, Class A's average annual total return would 
have been ____%, ____% and ____%, respectively, for those same periods.

The Fund's average annual total return for Class B shares assuming the 
maximum applicable deferred sales charge was as follows for the periods 
indicated (reflecting the waiver of the fund's investment advisory and 
administration fees and reimbursement of expenses):

 ____% for the one-year period from December 1, 1997 through 
November 30, 1998.

 ____% for the five-year period from December 1, 1993 through 
November 30, 1998.

 ____% per annum during the period from the fund's commencement 
of operations on November 6, 1992 through November 30, 1998.

Had the maximum applicable deferred sales charge had not been deducted at 
the time of redemption, Class B's average annual total return would have 
been ____%, ____% and ____%, respectively, for the same periods.

The Fund's average annual total return for Class L shares assuming the 
maximum applicable deferred sales charge was as follows for the periods 
indicated (reflecting the waiver of the fund's investment advisory and 
administration fees and reimbursement of expenses):

 ____% for the one-year period from December 1, 1997 through 
November 30, 1998.

 ____% per annum during the period from the fund's commencement 
of operations on November 10, 1994 through November 30, 1998.

Had the maximum applicable deferred sales charge had not been deducted at 
the time of redemption, Class L's average annual total return for the one-
year period from December 1, 1997 through November 30, 1998 would have 
been ____%.

Aggregate Total Return

"Aggregate total return" represents the cumulative change in the value of 
an investment in the Class 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 a 1-, 5-, or 10-year period (or 
fractional portion thereof), assuming reinvestment of 
all dividends and distributions.

The Fund's aggregate total return for Class A shares was as follows for 
the periods indicated (reflecting the waiver of the fund's investment 
advisory and administration fees and reimbursement of expenses):

 ____% for the one-year period from December 1, 1997 through 
November 30, 1998.

 ____% for the five-year period from December 1, 1993 through 
November 30, 1998.

 ____% for the period from the fund's commencement of 
operations on December 21, 1987 through November 30, 1998.

A Class' aggregate total return assumes that the maximum applicable sales 
charge or maximum applicable deferred sales charge has been deducted from 
the investment.  If the maximum sales charge had not been deducted at the 
time of purchase, Class A's aggregate total return for the same periods 
would have been ____%,____% and ____%, respectively.

The Fund's aggregate total return for Class B shares was as follows for 
the periods indicated (reflecting the waiver of the fund's investment 
advisory and administration fees and reimbursement of expenses):

 ____% for the one-year period from December 1, 1997 through 
November 30, 1998.

 ____% for the five-year period from December 1, 1993 through 
November 30, 1998.

 ____% for the period from commencement of operations on 
November 6, 1992 through November 30, 1998.

If the maximum applicable deferred sales charge had not been deducted at 
the time of redemption, Class B's aggregate total return for the same 
periods would have been ____%,____% and ____%, respectively.

The Fund's aggregate total return for Class L shares was as follows for 
the period indicated (reflecting the waiver of the fund's investment 
advisory and administration fees and reimbursement of expenses):

 ____% for the one-year period from December 1, 1997 through 
November 30, 1998.

 ____% for the period from commencement of operations on 
November 10, 1994 through November 30, 1998.

Performance will vary from time to time depending on market conditions, 
the composition of the fund's portfolio and operating expenses and the 
expenses exclusively attributable to the Class.  Consequently, any given 
performance quotation should not be considered as representative of the 
Class' performance for any specified period in the future.  Because 
performance will vary, it may not provide a basis for comparing an 
investment in the Class with certain bank deposits or other investments 
that pay a fixed yield for a stated period of time.  Investors comparing 
a Class' performance with that of other mutual funds should give 
consideration to the quality and maturity of the respective investment 
companies' portfolio securities.

It is important to note that the total return figures set forth above are 
based on historical earnings and are not intended to indicate future 
performance.  Each Class' net investment income changes in response to 
fluctuations in interest rates and the expenses of the fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions.  The fund's policy is to distribute its net 
investment income (that is, its income other than its net realized capital 
gains) and net realized capital gains, if any, once a year, normally at 
the end of the year in which earned or at the beginning of the next year. 

If a shareholder does not otherwise instruct, dividends and capital gains 
distributions will be reinvested automatically in additional shares of the 
same Class at net asset value, subject to no sales charge or deferred 
sales charge.  In order to avoid the application of a federal 4% 
nondeductible excise tax on certain undistributed amounts of ordinary 
income and capital gains, the fund may make an additional distribution 
shortly before or shortly after December 31 in each year of any 
undistributed ordinary income or capital gains and expects to pay any 
additional dividends and distributions necessary to avoid the application 
of this tax. For federal income tax purposes, dividends declared by the 
fund in October, November or December as of a record date in such a month 
and which are actually paid in January of the following year will be 
treated as if they were paid on December 31.  These dividends will be 
taxable to shareholders as if actually received on December 31 rather than 
in the year in which shareholders actually receive the dividends.

The per share dividends on Class B and Class L shares of the fund may be 
lower than the per share dividends on Class A and Class Y shares 
principally as a result of the distribution fee applicable with respect to 
Class B and Class L shares. The per share dividends on Class A shares of 
the fund may be lower than the per share dividends on Class Y shares 
principally as a result of the service fee applicable to Class A shares. 
Distributions of capital gains, if any, will be in the same amount for 
Class A, Class B, Class L and Class Y shares. 

The following is a summary of selected Federal income tax considerations 
that may affect the fund and its shareholders.  In addition to the 
considerations described below, there may be other federal, state, local 
or foreign tax applications to consider.  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.

Taxes. The following is a summary of the material United States federal 
income tax considerations regarding the purchase, ownership and 
disposition of shares of the fund.  Each prospective shareholder is urged 
to consult his own tax adviser with respect to the specific federal, state 
and local consequences of investing in the fund.  The summary is based on 
the laws in effect on the date of this Statement of Additional 
Information, which are subject to change.

The Fund and Its Investments

As described in the fund's Prospectus, the fund is designed to provide 
shareholders with current income which is excluded from gross income for 
federal income tax purposes and which is exempt from Massachusetts 
personal income taxes.  The fund is not intended to constitute a balanced 
investment program and is not designed for investors seeking capital gains 
or maximum tax-exempt income irrespective of fluctuations in principal. 
 Investment in the fund would not be suitable for tax-exempt institutions, 
qualified retirement plans, H.R. 10 plans and individual retirement 
accounts because such investors would not gain any additional tax benefit 
from the receipt of tax-exempt income.  

The fund intends to continue to qualify to be treated as a regulated 
investment company each taxable year under the Internal Revenue Code of 
1986, as amended (the "Code").  To so qualify, the fund must, among other 
things: (a) derive at least 90% of its gross income in each taxable year 
from dividends, interest, payments with respect to securities loans, and 
gains from the sale or other disposition of stock or securities or foreign 
currencies, or other income (including, but not limited to, gains from 
options, futures or forward contracts) derived with respect to its 
business of investing in such stock, securities or currencies; and (b) 
diversify its holdings so that, at the end of each quarter of the fund's 
taxable year, (i) at least 50% of the market value of the fund's assets is 
represented by cash, securities of other regulated investment companies, 
United States government securities and other securities, with such other 
securities limited, in respect of any one issuer, to an amount not greater 
than 5% of the fund's assets and not greater than 10% of the outstanding 
voting securities of such issuer and (ii) not more than 25% of the value 
of its assets is invested in the securities (other than United States 
government securities or securities of other regulated investment 
companies) of any one issuer or any two or more issuers that the fund 
controls and are determined to be engaged in the same or similar trades or 
businesses or related trades or businesses.

As a regulated investment company, the fund will not be subject to United 
States federal income tax on its net investment income (i.e., income other 
than its net realized long- and short-term capital gains) and its net 
realized long- and short-term capital gains, if any, that it distributes 
to its shareholders, provided that an amount equal to at least 90% of the 
sum of its investment company taxable income (i.e., 90% of its taxable 
income minus the excess, if any, of its net realized long-term capital 
gains over its net realized short-term capital losses (including any 
capital loss carryovers), plus or minus certain other adjustments as 
specified in the Code) and its net tax-exempt income for the taxable year 
is distributed in compliance with the Code's timing and other requirements 
but will be subject to tax at regular corporate rates on any taxable 
income or gains that it does not distribute.  Furthermore, the fund will 
be subject to a United States corporate income tax with respect to such 
distributed amounts in any year that it fails to qualify as a regulated 
investment company or fails to meet this distribution requirement.

The Code imposes a 4% nondeductible excise tax on the fund to the extent 
it does not distribute by the end of any calendar year at least 98% of its 
net investment income for that year and 98% of the net amount of its 
capital gains (both long-and short-term) for the one-year period ending, 
as a general rule, on October 31 of that year.  For this purpose, however, 
any income or gain retained by the fund that is subject to corporate 
income tax will be considered to have been distributed by year-end.  In 
addition, the minimum amounts that must be distributed in any year to 
avoid the excise tax will be increased or decreased to reflect any 
underdistribution or overdistribution, as the case may be, from the 
previous year.  The fund anticipates that it will pay such dividends and 
will make such distributions as are necessary in order to avoid the 
application of this tax.

If, in any taxable year, the fund fails to qualify as a regulated 
investment company under the Code or fails to meet the distribution 
requirement, it would be taxed in the same manner as an ordinary 
corporation and distributions to its shareholders would not be deductible 
by the fund in computing its taxable income.  In addition, in the event of 
a failure to qualify, the fund's distributions, to the extent derived from 
the fund's current or accumulated earnings and profits would constitute 
dividends (eligible for the corporate dividends-received deduction) which 
are taxable to shareholders as ordinary income, even though those 
distributions might otherwise (at least in part) have been treated in the 
shareholders' hands as tax-exempt interest.  If the fund fails to qualify 
as a regulated investment company in any year, it must pay out its 
earnings and profits accumulated in that year in order to qualify again as 
a regulated investment company.  In addition, if the fund failed to 
qualify as a regulated investment company for a period greater than one 
taxable year, the fund may be required to recognize any net built-in gains 
(the excess of the aggregate gains, including items of income, over 
aggregate losses that would have been realized if it had been liquidated) 
in order to qualify as a regulated investment company in a subsequent 
year.

The fund's transactions in municipal bond index and interest rate futures 
contracts and options on these futures contracts (collectively "section 
1256 contracts") will be subject to special provisions of the Code 
(including provisions relating to "hedging transactions" and "straddles") 
that, among other things, may affect the character of gains and losses 
realized by the fund (i.e., may affect whether gains or losses are 
ordinary or capital), accelerate recognition of income to the fund and 
defer fund losses.  These rules could therefore affect the character, 
amount and timing of distributions to shareholders.  These provisions also 
(a) will require the fund to mark-to-market certain types of the positions 
in its portfolio (i.e., treat them as if they were closed out) and (b) may 
cause the fund to recognize income without receiving cash with which to 
pay dividends or make distributions in amounts necessary to satisfy the 
distribution requirements for avoiding income and excise taxes.  The fund 
will monitor its transactions, will make the appropriate tax elections and 
will make the appropriate entries in its books and records when it engages 
in these transactions in order to mitigate the effect of these rules and 
prevent disqualification of the fund as a regulated investment company.

All section 1256 contracts held by the fund at the end of its taxable year 
are required to be marked to their market value, and any unrealized gain 
or loss on those positions will be included in the fund's income as if 
each position had been sold for its fair market value at the end of the 
taxable year.  The resulting gain or loss will be combined with any gain 
or loss realized by the fund from positions in section 1256 contracts 
closed during the taxable year.  Provided such positions were held as 
capital assets and were not part of a "hedging transaction" nor part of a 
"straddle," 60% of the resulting net gain or loss will be treated as long-
term capital gain or loss, and 40% of such net gain or loss will be 
treated as short-term capital gain or loss, regardless of the period of 
time the positions were actually held by the fund.

Taxation of Shareholders

Because the fund will distribute exempt-interest dividends, interest on 
indebtedness incurred by a shareholder to purchase or carry fund shares is 
not deductible for Federal income tax purposes and Massachusetts personal 
income tax purposes.  If a shareholder receives exempt-interest dividends 
with respect to any share and if such share is held by the shareholder for 
six months or less, then, for Federal income tax purposes, any loss on the 
sale or exchange of such share may, to the extent of exempt-interest 
dividends, be disallowed.  In addition, the Code may require a 
shareholder, if he or she receives exempt-interest dividends, to treat as 
Federal taxable income a portion of certain otherwise non-taxable social 
security and railroad retirement benefit payments.  Furthermore, that 
portion of any exempt-interest dividend paid by the fund which represents 
income derived from private activity bonds held by the fund may not retain 
its Federal tax-exempt status in the hands of a shareholder who is a 
"substantial user" of a facility financed by such bonds or a "related 
person" thereof.  Moreover, some or all of the fund's dividends may be a 
specific preference item, or a component of an adjustment item, for 
purposes of the Federal individual and corporate alternative minimum 
taxes.  In addition, the receipt of the fund's dividends and distributions 
may affect a foreign corporate shareholder's Federal "branch profits" tax 
liability and Federal "excess net passive income" tax liability of a 
shareholder of a Subchapter S corporation.  Shareholders should consult 
their own tax advisors to determine whether they are (a) substantial users 
with respect to a facility or related to such users within the meaning of 
the Code or (b) subject tot a federal alternative minimum tax, the Federal 
branch profits tax or the Federal "excess net passive income" tax. 

The fund does not expect to realize a significant amount of capital gains. 
 Net realized short-term capital gains are taxable to a United States 
shareholder as ordinary income, whether paid in cash or in shares.  
Distributions of net-long-term capital gains, if any, that the fund 
designates as capital gains dividends are taxable as long-term capital 
gains, whether paid in cash or in shares and regardless of how long a 
shareholder has held shares of the fund.

Shareholders receiving dividends or distributions in the form of 
additional shares should have a cost basis in the shares received equal to 
the amount of money that the shareholders receiving cash dividends or 
distributions will receive.

Upon the sale or exchange of his shares, a shareholder will realize a 
taxable gain or loss equal to the difference between the amount realized 
and his basis in his shares.  Such gain or loss will be treated as capital 
gain or loss, if the shares are capital assets in the shareholder's hands, 
and will be long-term capital gain or loss if the shares are held for more 
than one year and short-term capital gain or loss if the shares are held 
for one year or less.  Any loss realized on a sale or exchange will be 
disallowed to the extent the shares disposed of are replaced, including 
replacement through the reinvesting of dividends and capital gains 
distributions in the fund, within a 61-day period beginning 30 days before 
and ending 30 days after the disposition of the shares.  In such a case, 
the basis of the shares acquired will be increased to reflect the 
disallowed loss.  Any loss realized by a shareholder on the sale of a fund 
share held by the shareholder for six months or less(to the extent not 
disallowed pursuant to the six-month rule described above relating to 
exempt-interest dividends) will be treated for United States federal 
income tax purposes as a long-term capital loss to the extent of any 
distributions or deemed distributions of long-term capital gains received 
by the shareholder with respect to such share.

If a shareholder incurs a sales charge in acquiring shares of the fund, 
disposes of those shares within 90 days and then acquires shares in a 
mutual fund for which the otherwise applicable sales charge is reduced by 
reason of a reinvestment right (e.g., an exchange privilege), the original 
sales charge will not be taken into account in computing gain or loss on 
the original shares to the extent the subsequent sales charge is reduced. 
 Instead, the disregarded portion of the original sales charge will be 
added to the tax basis in the newly acquired shares.  Furthermore, the 
same rule also applies to a disposition of the newly acquired shares made 
within 90 days of the second acquisition.  This provision prevents a 
shareholder from immediately deducting the sales charge by shifting his or 
her investment in a family of mutual funds. 

Backup Withholding.  The fund may be required to withhold, for United 
States federal income tax purposes, 31% of (a) taxable dividends and 
distributions and (b) redemption proceeds payable to shareholders who fail 
to provide the fund with their correct taxpayer identification number or 
to make required certifications, or who have been notified by the IRS that 
they are subject to backup withholding.  Certain shareholders are exempt 
from backup withholding.  Backup withholding is not an additional tax and 
any amount withheld may be credited against a shareholder's United States 
federal income tax liabilities.

Notices.  Shareholders will be notified annually by the fund as to the 
United States federal income tax and Massachusetts personal income tax 
status of the dividends and distributions made by the fund to its 
shareholders.  These statements also will designate the amount of exempt-
interest dividends that is a preference item for purposes of the Federal 
individual and corporate alternative minimum taxes.  The dollar amount of 
dividends excluded or exempt from Federal income taxation and 
Massachusetts personal income taxation and the dollar amount of dividends 
subject to Federal income taxation and Massachusetts personal income 
taxation, if any, will vary for each shareholder depending upon the size 
and duration of each shareholder's investment in the fund.  To the extent 
the fund earns taxable net investment income, it intends to designate as 
taxable dividends the same percentage of each day's dividend as its 
taxable net investment income bears to its total net investment income 
earned on that day.  

Massachusetts Taxation

Individual shareholders who are otherwise subject to Massachusetts 
personal income tax will not be subject to Massachusetts personal income 
tax on exempt-interest dividends received from the fund to the extent the 
dividends are attributable to interest on obligations of the Commonwealth 
of Massachusetts and its political subdivisions, agencies and public 
authorities (or on obligations of certain other governmental issuers such 
as Puerto Rico, the Virgin Islands and Guam) that pay interest which is 
excluded from gross income for Federal income tax purposes and exempt from 
Massachusetts personal income taxes.  Other distributions from the fund, 
including those related to long-and short-term capital gains, other than 
certain gains from certain Massachusetts Municipal Securities identified 
by the Massachusetts Department of revenue, generally will not be exempt 
from Massachusetts personal income tax.  Businesses should note that the 
fund's distributions derived from Massachusetts Municipal Securities are 
not exempt from Massachusetts corporate excise tax.  

The foregoing is only a summary of certain material tax consequences 
affecting the fund and its shareholders.  Shareholders are advised to 
consult their own tax advisers with respect to the particular tax 
consequences to them of an investment in the fund.

ADDITIONAL INFORMATION

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

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

The fund is a Massachusetts business trust established under the laws of 
the Commonwealth of Massachusetts pursuant to a Master Trust Agreement 
dated January 13, 1987, as amended from time to time. The Fund commenced 
operations on December 21, 1987, under the name Shearson Lehman 
Massachusetts Municipals.  On July 30, 1993 and October 14, 1994, the fund 
changed its name to Smith Barney Shearson Massachusetts Municipals Fund 
and Smith Barney Massachusetts Municipals Fund, respectively.

Under Massachusetts law, shareholders could, under certain circumstances, 
be held personally liable for the obligations of the fund.  The Master 
Trust Agreement disclaims shareholder liability for acts or obligations of 
the fund, however, and requires that notice of such disclaimer be given in 
each agreement, obligation or instrument entered into or executed by the 
fund or a Trustee.  The Master Trust Agreement provides for 
indemnification from Fund property for all losses and expenses of any 
shareholder held personally liable for the obligations of the fund.  Thus, 
the risk of a shareholder's incurring financial loss on account of 
shareholder liability is limited to circumstances in which the fund itself 
would be unable to meet its obligations, a possibility which management of 
the fund believes is remote.  Upon payment of any liability incurred by 
the fund, a shareholder paying such liability will be entitled to 
reimbursement from the general assets of the fund.  The Trustees intend to 
conduct the operation of the fund in such a way so as to avoid, as far as 
possible, ultimate liability of the shareholders for liabilities of the 
fund.

Description of Shares

The Master Trust Agreement of the fund permits the Trustees of the fund to 
issue an unlimited number of full and fractional shares of a single class 
and to divide or combine the shares into a greater or lesser number of 
shares without thereby changing the proportionate beneficial interests in 
the fund.  Each share in the fund represents an equal proportional 
interest in the fund with each other share.  Shareholders of the fund are 
entitled upon its liquidation to share pro rata in its net assets 
available for distribution.  No shareholder of the fund has any preemptive 
or conversion rights.  Shares of the fund are fully paid and non-
assessable.

Pursuant to the Master Trust Agreement, the fund's Trustees may authorize 
the creation of additional series of shares (the proceeds of which would 
be invested in separate, independently managed portfolios) and additional 
classes of shares within any series (which would be used to distinguish 
among the rights of different categories of shareholders, as might be 
required by future regulations or other unforeseen circumstances).

Voting Rights

The shareholders of the fund are entitled to a full vote for each full 
share held (and a fractional vote for any fractional share held).  The 
Trustees of the fund have the power to alter the number and the terms of 
office of the Trustees, and have terms of unlimited duration (subject to 
certain removal procedures) and may appoint their own successors, provided 
at least a majority of the Trustees at all times have been elected by the 
shareholders of the fund.  The voting rights of the shareholders of the 
fund are not cumulative, so that the holders of more than 50% of the 
shares can, if they choose, elect all of the Trustees of the fund; the 
holders of the remaining shares of the fund would be unable to elect any 
of the Trustees.



APPENDIX A

Description of S&P and Moody's ratings:

S&P Ratings for Municipal Bonds

S&P's Municipal Bond ratings cover obligations of states and political 
subdivisions.  Ratings are assigned to general obligation and revenue 
bonds.  General obligation bonds are usually secured by all resources 
available to the municipality and the factors outlined in the rating 
definitions below are weighed in determining the rating.  Because revenue 
bonds in general are payable from specifically pledged revenues, the 
essential element in the security for a revenue bond is the quantity and 
quality of the pledged revenues available to pay debt service.

Although an appraisal of most of the same factors that bear on the quality 
of general obligation bond credit is usually appropriate in the rating 
analysis of a revenue bond, other factors are important, including 
particularly the competitive position of the municipal enterprise under 
review and the basic security covenants.  Although a rating reflects S&P's 
judgment as to the issuer's capacity for the timely payment of debt 
service, in certain instances it may also reflect a mechanism or procedure 
for an assured and prompt cure of a default, should one occur, i.e., an 
insurance program, Federal or state guarantee or the automatic withholding 
and use of state aid to pay the defaulted debt service.

	AAA

Prime - These are obligations of the highest quality.  They have the 
strongest capacity for timely payment of debt service.

General Obligation Bonds - In a period of economic stress, the issuers 
will suffer the smallest declines in income and will be least susceptible 
to autonomous decline.  Debt burden is moderate.  A strong revenue 
structure appears more than adequate to meet future expenditure 
requirements.  Quality of management appears superior.

Revenue Bonds - Debt service coverage has been, and is expected to remain, 
substantial.  Stability of the pledged revenues is also exceptionally 
strong, due to the competitive position of the municipal enterprise or to 
the nature of the revenues.  Basic security provisions (including rate 
covenant, earnings test for issuance of additional bonds, and debt service 
reserve requirements) are rigorous.  There is evidence of superior 
management.

	AA

High Grade - The investment characteristics of general obligation and 
revenue bonds in this group are only slightly less marked than those of 
the prime quality issues.  Bonds rated "AA'' have the second strongest 
capacity for payment of debt service.




	A

Good Grade - Principal and interest payments on bonds in this category are 
regarded as safe.  This rating describes the third strongest capacity for 
payment of debt service.  It differs from the two higher ratings because:

General Obligation Bonds - There is some weakness, either in the local 
economic base, in debt burden, in the balance between revenues and 
expenditures, or in quality of management.  Under certain adverse 
circumstances, any one such weakness might impair the ability of the 
issuer to meet debt obligations at some future date.

Revenue Bonds - Debt service coverage is good, but not exceptional.  
Stability of the pledged revenues could show some variations because of 
increased competition or economic influences on revenues.  Basic security 
provisions, while satisfactory, are less stringent.  Management 
performance appears adequate.

	BBB

Medium Grade - Of the investment grade ratings, this is the lowest.

General Obligation Bonds - Under certain adverse conditions, several of 
the above factors could contribute to a lesser capacity for payment of 
debt service.  The difference between "A'' and "BBB" ratings is that the 
latter shows more than one fundamental weakness, or one very substantial 
fundamental weakness, whereas the former shows only one deficiency among 
the factors considered.

Revenue Bonds - Debt coverage is only fair.  Stability of the pledged 
revenues could show substantial variations, with the revenue flow possibly 
being subject to erosion over time.  Basic security provisions are no more 
than adequate.  Management performance could be stronger.

	BB, B, CCC and CC

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

	C

The rating C is reserved for income bonds on which no interest is being 
paid.

	D

Bonds rated D are in default, and payment of interest and/or repayment of 
principal is in arrears.

S&P's letter ratings may be modified by the addition of a plus or a minus 
sign, which is used to show relative standing within the major rating 
categories, except in the AAA-Prime Grade category.

S&P Ratings for Municipal Notes

Municipal notes with maturities of three years or less are usually given 
note ratings (designated SP-1, -2 or -3) by S&P to distinguish more 
clearly the credit quality of notes as compared to bonds.  Notes rated SP-
1 have a very strong or strong capacity to pay principal and interest.  
Those issues determined to possess overwhelming safety characteristics are 
given the designation of SP-1+.  Notes rated SP-2 have a satisfactory 
capacity to pay principal and interest.

Moody's Ratings for Municipal Bonds

	Aaa

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

	Aa

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

	A

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

	Baa

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

	Ba

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



	B

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

	Caa

Bonds that are rated Caa are of poor standing.  These issues may be in 
default or present elements of danger may exist with respect to principal 
or interest.

	Ca

Bonds that are rated Ca represent obligations that are speculative in a 
high degree.  These issues are often in default or have other marked 
short-comings.

	C

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

Moody's Ratings for Municipal Notes

Moody's ratings for state and municipal notes and other short-term loans 
are designated Moody's Investment Grade (MIG) and for variable rate demand 
obligations are designated Variable Moody's Investment Grade (VMIG).  This 
distinction is in recognition of the differences between short- and long-
term credit risk.  Loans bearing the designation MIG 1 or VMIG 1 are of 
the best quality, enjoying strong protection by established cash flows of 
funds for their servicing, from established and broad-based access to the 
market for refinancing, or both.  Loans bearing the designation MIG 2 or 
VMIG 2 are of high quality, with margins of protection ample although not 
as large as the preceding group.  Loans bearing the designation MIG 3 or 
VMIG 3 are of favorable quality, with all security elements accounted for 
but lacking the undeniable strength of the preceding grades.  Liquidity 
and cash flow may be narrow and market access for refinancing is likely to 
be less well established.

Description of S&P A-1+ and A-1 Commercial Paper Rating

The rating A-1+ is the highest, and A-1 the second highest, commercial 
paper rating assigned by S&P.  Paper rated A-1+ must have either the 
direct credit support of an issuer or guarantor that possesses excellent 
long-term operating and financial strengths combined with strong liquidity 
characteristics (typically, such issuers or guarantors would display 
credit quality characteristics which would warrant a senior bond rating of 
"AA-'' or higher), or the direct credit support of an issuer or guarantor 
that possesses above-average long-term fundamental operating and financing 
capabilities combined with ongoing excellent liquidity characteristics. 
 Paper rated A-1 by S&P has the following characteristics: liquidity 
ratios are adequate to meet cash requirements; long-term senior debt is 
rated "A'' or better; the issuer has access to at least two additional 
channels of borrowing; basic earnings and cash flow have an upward trend 
with allowance made for unusual circumstances; typically, the issuer's 
industry is well established and the issuer has a strong position within 
the industry; and the reliability and quality of management are 
unquestioned.

Description of Moody's Prime-1 Commercial Paper Rating

The rating Prime-1 is the highest commercial paper rating assigned by 
Moody's.  Among the factors considered by Moody's in assigning ratings are 
the following: (1) evaluation of the management of the issuer; (2) 
economic evaluation of the issuer's industry or industries and an 
appraisal of speculative-type risks which may be inherent in certain 
areas; (3) evaluation of the issuer's products in relation to competition 
and customer acceptance; (4) liquidity; (5) amount and quality of long-
term debt; (6) trend of earnings over a period of ten years; (7) financial 
strength of a parent company and the relationships which exist with the 
issuer; and (8) recognition by the management of obligations which may be 
present or may arise as a result of public interest questions and 
preparations to meet such obligations.


APPENDIX B 


The Smith Barney Mutual Fund Family encompasses more than 60 mutual 
funds, representing approximately $87 billion of shareholder assets 
under management as of September 30, 1998.  This places us among the 
largest mutual fund companies in the United States.  Our portfolio 
managers average approximately 25 years of experience in the financial 
field - of which, on average, 18 have been with Smith Barney.

By building a core portfolio of mutual funds with complementary 
investment styles, individuals can work toward specific goals of capital 
appreciation, regular income and preservation of investment principal.  
Your Salomon Smith Barney Financial Consultant can recommend and provide 
a prospectus for one or more mutual funds designed to help you meet your 
individual goals for education funding, retirement and changing 
lifestyle needs.  

Smith Barney Mutual Funds provide a broad selection of funds to suit 
every investment goal, from capital appreciation to preservation of 
investment principal.  Our Family is divided into these main categories:

? Growth:  For individuals seeking long-term capital appreciation 
through investments in common stocks.  Some of our growth funds 
also give equal emphasis to income.

? Taxable Fixed Income:  For individuals seeking current income.

? Tax-Exempt Fixed Income:  For individuals seeking a tax-exempt 
investment that allows them to keep more of what they earn for 
current spending or future investment.

? Global/International:  For individuals seeking to diversify their 
portfolio to include long-term capital appreciation or income from 
investments in markets around the world.

? Concert Allocation Series:  

We understand that investors can be ________ in how they wish to reach 
their financial goals.  That's why we offer four different Series of 
funds.  Some investors, guided by their Financial Consultant, prefer to 
take an active role in allocating their investment portfolio.  For these 
investors we offer the Style Pure Series.  Others prefer to rely on the 
asset allocation decisions of experienced portfolio managers, and may 
fund solutions to their investment needs in our Classic Series.  For 
investors who want to explore opportunities using a narrower focus, we 
offer the Specialty Series.  The Concert Allocation Series allows 
investors to invest in a diversified "fund of funds."

Style Pure Series  Smith Barney mutual funds designated as "Style Pure" 
are the basic building blocks of asset allocation.  Other than 
maintaining minimal cash, or under extraordinary market conditions, each 
of these funds is 100% invested, 1005 of the time within its designated 
asset classes and designated investment style.  The Style Pure Series 
enables you and your Smith Barney Financial Consultant to control your 
asset allocation decisions using funds managed by experienced portfolio 
managers.


Global/International Funds

Taxable Fixed Income Funds

Emerging Markets Portfolio

Adjustable Rate Government 
Income Fund

European Portfolio

Government Securities Fund

Pacific Portfolio

High Income Fund



Investment Grade Bond Fund

Growth Funds

Managed Governments Fund

Large Cap Blend Fund

Short-Term High Grade Bond Fund

Large Capitalization Growth 
Fund

U.S. Government Securities Fund

Large Cap Value Fund



Mid Cap Blend Fund

Tax-Exempt Fixed Income Funds

Small Cap Blend Fund

Limited Term Portfolio



Municipal High Income Fund

Classic Series  The "Classic Series" lets you participate in mutual 
funds whose investment decisions are determined by experienced portfolio 
managers, based on each fund's investment objectives and guidelines.  
Funds in the Smith Barney Classic Series invest across asset classes and 
sectors, utilizing a range of strategies in order to achieve their 
objectives.


Global/International Funds

Taxable Fixed Income Funds

Global Government Bond Fund

Diversified Strategic Income 
Fund

Hansberger Global Small Cap 
Value Fund

Total Return Bond Fund

Hansberger Global Value Fund



International Balanced 
Portfolio

Tax-Exempt Fixed Income Funds

International Equity Portfolio

Managed Municipals Fund





Growth Funds



Aggressive Growth Fund



Appreciation Fund



Balanced Fund



Concert Peachtree Growth Fund



Contrarian Fund



Fundamental Value Fund



Premium Total Return Fund



Special Equities Fund



Specialty Series  Mutual funds included in Smith Barney's "Specialty 
Series" explore opportunities in a narrower sector of the market or by 
using a narrower investment focus.


Growth Funds

State-Specific, Intermediate-
Term Tax-Exempt Fixed Income 
Funds

Concert Social Awareness Fund

Intermediate Maturity 
California Municipals Fund

Convertible Fund

Intermediate Maturity New York 
Municipals Fund

Natural Resources Fund



S&P 500 Index Fund









State-Specific, Tax-Exempt 
Fixed Income Funds



Arizona		New Jersey



California		New York



Florida			Oregon



Georgia		Pennsylvania



Massachusetts



Concert Allocation Series  These "funds of funds" are designed to 
provide you with targeted objectives, but at diversification levels that 
are significantly greater than an investment in a single fund can 
provide.  Currently, available options include Global, High Growth, 
Growth, Balanced, Conservative and Income Portfolios.  These Portfolios' 
objectives are achieved through stock and bond fund allocations that 
range from 100% stocks to 10% stocks/90% bonds, allowing you to match 
"funds of funds" in the Concert Allocation Series with your changing 
financial goals and risk tolerance.

The Global Portfolio						The Balanced 
Portfolio
The High Growth Portfolio					The Conservative 
Portfolio
The Growth Portfolio						The Income 
Portfolio

Help Along the Way

A professionally trained Salomon Smith Barney Financial Consultant is 
ready, willing and able to serve as a reliable financial guide 
throughout your financial journey.  Talk with your Financial Consultant 
before you invest in order to help prioritize your goals.  Once you've 
set your sights on clear objectives, rely on the expertise of this 
dedicated professional to help you determine which investment mix may be 
suited to your unique circumstances.

Your Financial Consultant knows from experience that allocating assets 
is a key part of determining the long-term success of investment 
strategies.  As your circumstances and life style change, your Financial 
Consultant will suggest adjustments to your strategy in order to keep 
you on the right road and on track for achieving your financial goals.

International Investing
Whether you're a conservative or aggressive investor, just starting to 
save or nearing retirement, chances are you could benefit from investing 
a portion of your overall portfolio in international stocks and bonds.  
Smith Barney offers a variety of international mutual funds designed to 
help you gain access to:

Expanded horizons
Today, approximately 55% of the world's stock and bond opportunities are 
found beyond U.S. boundaries.  And non-U.S. markets represent some of 
the fastest-growing economies in the world.

Potential for higher return
Taken as a whole, foreign markets have outperformed their domestic 
counterparts on a long-term basis.  Foreign markets do not outperform 
the U.S. every quarter of every year, but they have delivered superior 
returns over time.

Enhanced diversification
One of the most significant benefits of investing abroad is the 
potential for reducing risk.  Intentionally diversified portfolios tend 
to experience less overall price volatility than portfolios invested in 
single markets.  Since world markets do not necessarily move in tandem 
with those of the U.S., many international markets may be on the rise 
when U.S. markets are down.  The net result may be lower overall 
portfolio volatility and potentially higher investment returns over 
time.  In addition, global/international mutual funds offer convenient 
access to attractive opportunities not always available to U.S. 
investors.

Growth Investing
A growth mutual fund can offer you the benefits of professional 
management, lower volatility as a result of diversification, and 
affordability in terms of both initial and subsequent investments.  If 
you are a long-term investor, you may be best served by having a 
significant portion of your assets invested in growth funds, although 
past performance is not a guarantee of future results and principal 
value will fluctuate with changes in the market.  For younger investors, 
growth funds may be one of the best ways to grow your assets and help 
you reach your financial goals.  Yet investing for growth is also 
important for older investors, who should not underestimate the 
importance of offsetting the effects of inflation and continuing to 
build financial resources for future needs.

Different types of investments have different rewards and risks 
associated with them.  For example, funds that invest in bonds as well 
as stocks may be less volatile than funds investing solely in stocks.  
You may reduce overall investment risk by owning funds that span 
different market capitalizations and investment styles.

Tax-Exempt Investing:  Helping You to Keep More of What You Earn
Tax-exempt fixed income funds, also known as "municipal bond mutual 
funds," seek to provide tax-exempt income by investing in portfolios of 
selected municipal bonds.  Cities, states and municipalities issue 
municipal bonds to finance ongoing operations and public projects.  
These tax-exempt funds have remained tax-free and offer the potential to 
provide shareholders with income and capital growth at levels that may 
equal or exceed total returns from taxable investments on an after-tax 
basis.

Maturity and credit quality can be important factors in determining the 
potential risks and rewards of a municipal bond investment.  Longer-term 
bond funds generally offer higher yields but your principal will be more 
affected by interest rate changes, and therefore, are more risky.  
Municipal bonds that are of lower credit quality tend to be riskier 
because they are subject to credit risk; however, they generally offer 
higher yields.  Tax-exempt funds may be appropriate for investors in 
high tax brackets.  If you are risk-averse, or have shorter-term goals, 
an intermediate or shorter-term investment may be more appropriate.  
Investors with longer time horizons or a greater tolerance for risk may 
benefit from the higher yields offered by longer-term municipal funds.


Smith Barney
Massachusetts
Municipals Fund

Statement of
Additional 
Information



March 30, 1999




Smith Barney
Massachusetts Municipals Fund
388 Greenwich Street
New York, NY  10013
									SALOMON SMITH BARNEY
									A Member of Citigroup 
[Symbol]


Part C. Other Information
   
Item 23. Exhibits

	Unless otherwise noted, all references are to the 
Registrant's Registration Statement on Form N-1A (the 
"Registration Statement") as filed with the SEC on 
January 26, 1987 (File Nos. 33-11417 and 811-4994).

(a) (1)	First Amended and Restated Master Trust Agreement, dated 
November 5, 1992, is incorporated by reference to Post-
Effective Amendment No. 12 filed on November 26, 1994 
("Post-Effective Amendment No. 12"). 

(a) (2)	Amendment No. 1 to the Registrant's Amended and Restated 
Master Trust Agreement is incorporated by reference to 
Post-Effective Amendment No. 12.

(a) (3)	Amendment No. 2 to the Registrant's Amended and Restated 
Master Trust Agreement is incorporated by reference to 
Post-Effective Amendment No. 15 filed on January 26, 1995 
("Post-Effective Amendment No. 15").

(a) (4)	Articles of Amendment dated June 1, 1998 to the Articles 
of Incorporation are filed herein.

(b)		Registrant's by-laws are incorporated by reference to the 
Registration Statement.

(c)	Registrant's form of stock certificate is incorporated by 
reference to Post-Effective Amendment No. 9 filed on 
October 23, 1992 ("Post-Effective Amendment No. 9").

(d) (1) 		Investment Advisory Agreement dated July 30, 1993 
between the Registrant and 			Greenwich Street Advisors 
is incorporated by reference to Post-Effective Amendment
		No. 12.

(d) (2)	Form of Transfer and Assumption of Investment Advisory 
Agreement between the Registrant, Mutual Management Corp. 
and Smith Barney Mutual Funds Management Inc. is 
incorporated by reference to Post-Effective Amendment No. 
16.	

(e) (1)		Distribution Agreement dated July 30, 1993, between 
the Registrant and Smith Barney 			Shearson Inc. is 
incorporated by reference to Post-Effective Amendment No. 12.

(e) (2)		Form of Distribution Agreement between Registrant 
and CFBDS, Inc. is filed herein.

(f)		Not applicable.

(g)	Form of Custodian Agreement between the Registrant and 
PNC Bank, National Association is incorporated by 
reference to Post-Effective Amendment No. 16.

(h) (1)	Administration Agreement between the Registrant and 
Smith, Barney Advisers, Inc., dated April 20, 1994 is 
incorporated by reference to Post-Effective Amendment No. 
15.	 

(h) (2)	Transfer Agency Agreement between the Registrant and The 
Shareholder Services Group, Inc., dated August 2, 1993, 
is incorporated by reference to Post-Effective Amendment 
No. 13 filed on January 28, 1994.	
	
(i)	Opinion of Counsel regarding legality of shares being 
registered is incorporated by reference to the 
Registration Statement filed on January 26, 1987..

(j)		Consent of Independent Accountants is filed herein.

(k)		Not applicable.

(l)	Purchase Agreement between the Registrant and Shearson 
Lehman Brothers is incorporated by reference to the 
Registration Statement dated January 26, 1987.

(m) (1)		Amended Service and Distribution Plan dated as of 
November 7, 1994 pursuant to Rule
	12b-1 between the Registrant and Smith Barney Inc. is 
incorporated by reference to Post-Effective Amendment No. 
15.
(m) (2)	Form of Amended Service and Distribution Plan pursuant to 
Rule 12b-1 between the Registrant and Salomon Smith 
Barney Inc. is filed herein.

(n)		Financial Data Schedule to be filed by amendment.

(o) (1)		Form of Rule 18f-3(d) Multiple Class Plan of the 
Registrant is incorporated by reference 			to Post-
Effective Amendment No. 16.

(o) (2)		Form of Rule 18f-3(d) Multiple Class Plan of the 
Registrant is filed herein.
    
Item 24.		Persons Controlled by or Under Common Control with 
Registrant

		None.

   
Item 25.		Indemnification.

The response to this item is incorporated by reference to the 
Registration Statement.

Item 26.		Business and Other Connections of Investment 
Adviser


    
   
Investment Adviser - - Mutual Management Corp.

Mutual Management Corp.("MMC") 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. (formerly known as 
Smith Barney Holdings Inc.), which in turn is a wholly owned 
subsidiary of Citigroup Inc.  ("Citigroup").  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.

The list required by this Item 26 of the officer 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).
    

Item 27.		Principal Underwriters
   
(a) 
    
    CFBDS, Inc., ("CFBDS") the Registrant's Distributor, is also 
the distributor for the following Smith Barney funds: Concert 
Investment Series, Consulting Group Capital Markets Funds, 
Greenwich Street Series Fund, Smith Barney Adjustable Rate 
Government Income Fund, Smith Barney Aggressive Growth Fund Inc., 
Smith Barney Appreciation Fund Inc., Smith Barney Arizona 
Municipals Fund Inc., Smith Barney California Municipals Fund 
Inc., Smith Barney Concert Allocation Series Inc., Smith Barney 
Equity Funds, Smith Barney Fundamental Value Fund Inc., Smith 
Barney Funds, Inc., Smith Barney Income Funds, Smith Barney 
Institutional Cash Management Fund, Inc., Smith Barney Investment 
Funds Inc., Smith Barney Investment Trust, Smith Barney Managed 
Governments Fund Inc., Smith Barney Managed Municipals Fund Inc., 
Smith Barney Massachusetts Municipals Fund, Smith Barney Money 
Funds, Inc., Smith Barney Muni Funds, Smith Barney Municipal Money 
Market Fund, Inc., Smith Barney 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., Travelers Series Fund Inc., and 
various series of unit investment trusts.

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

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

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

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

(b)	The information required by this Item 27 with respect to each 
director and officer of CFBDS is incorporated by reference to 
Schedule A of Form BD filed by CFBDS pursuant to the Securities and 
Exchange Act of 1934 (File No. 8-32417).
    
(c)	Not applicable.

Item 28.		Location of Accountants and Records

(1)		Smith Barney Massachusetts Municipals Fund 
		388 Greenwich Street 
		New York, New York 10013

   
(2)		Mutual Management Corp.
		388 Greenwich Street
		New York, New York 10013
    

(3)		PNC Bank, National Association
		17th and Chestnut Streets 
		Philadelphia, Pennsylvania  19103

(4)		First Data Investor Services Group, Inc.
		One Exchange Place
		Boston, Massachusetts 02109
   
(5) CFBDS, Inc.
21 Milk Street
Boston, MA 02109
    
Item 29.		Management Services

		Not Applicable.

Item 30.		Undertakings

		None.

Exhibit Index
   
Exhibit No. 	Exhibit

(a) (4)		Articles of Amendment filed June 1, 1998

(e) (2)		Form of Distribution Agreement

(j) Consent of Independent Accountants

(m) (2)		Form of Rule 12b-1 Plan

(n) Financial Data Schedule +

(o) 18f-3 Plan

+ To be filed by further amendment
    



SIGNATURES
   
	Pursuant to the requirements of the Securities Act of 1933 and 
the Investment Company Act of 1940, the Registrant, SMITH BARNEY 
MASSACHUSETTS MUNICIPALS FUND, has duly caused this registration 
statement to be signed on its behalf by the undersigned, thereto duly 
authorized in the City of New York, and  State of New York as of the 
29th day of January, 1999.


				SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND

				/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.


/s/Heath B. McLendon
Heath B. McLendon			Chairman of the Board		January 
29, 1999
					(Chief Executive Officer)

/s/Lewis E. Daidone *
Lewis E. Daidone			Treasurer			January 29, 
1999
					(Chief Financial and
					 Accounting Officer)

/s/Herbert Barg *
Herbert Barg				Trustee			
	January 29, 1999
			

/s/Alfred Bianchetti *
Alfred J. Bianchetti			Trustee			
	January 29, 1999


/s/Martin Brody *
Martin Brody				Trustee			
	January 29, 1999


/s/Dwight B. Crane *
Dwight B. Crane				Trustee			
	January 29, 1999


/s/Burt N. Dorsett *
Burt N. Dorsett				Trustee			
	January 29, 1999


/s/Elliot S. Jaffe *
Elliot S. Jaffe				Trustee			
	January 29, 1999


/s/Stephen E. Kaufman *
Stephen E. Kaufman			Trustee			
	January 29, 1999


/s/Joseph J. McCann *
Joseph J. McCann			Trustee				January 
29, 1999


/s/Cornelius C. Rose, Jr. *
Cornelius C. Rose, Jr.			Trustee			
	January 29, 1999	 


Signed by Heath B. McLendon, their duly authorized attorney-in-fact, 
pursuant to the power of attorney.

/s/Heath B. McLendon
Heath B. McLendon