Securities Act Registration No.  2-34576
Investment Company Act Registration No.  811-1940

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.          47                   X

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
      ACT OF 1940                                          X
Amendment No.      34                                       X


SMITH BARNEY APPRECIATION FUND INC.
(Exact name of Registrant as specified in Charter)

7 World Trade Center, 39th Floor, New York, New York 10048
(Address of principal executive offices) (Zip Code)
(212) 816-6474
(Registrant's telephone number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Appreciation Fund Inc.
7 World Trade Center (39th Floor)
New York, New York 10048
(Name and address of agent for service)

 _______________________________

Approximate Date of Proposed Public Offering: Continuous.
It is proposed that this filing will become effective:
(check appropriate box)
[    ]	immediately upon filing pursuant to paragraph (b) of Rule 485
[ X ]		on April 30, 2001 pursuant to paragraph (b) of Rule 485
[    ]	60 days after filing pursuant to paragraph (a)(i) of Rule 485
[    ]	on (date) pursuant to paragraph (a)(i) of Rule 485
[    ]	75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[    ]	on (date) pursuant to paragraph (a)(ii) of Rule 485.



If appropriate, check the following box:

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

PART A  - For the following:
	PROSPECTUS - A, B, L and Y shares dated April 30, 2001

<PAGE>

                                  PROSPECTUS



            -------------------------------------------------------
                                 SMITH BARNEY
                                 APPRECIATION
                                   FUND INC.

            -------------------------------------------------------
       Class A, B, L and Y Shares

       April 30, 2001



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


                              [LOGO] Smith Barney

       Mutual Funds

Your Serious Money. Professionally Managed./sm/

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

<PAGE>


Smith Barney Appreciation Fund Inc.

  Contents



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

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

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

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

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

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

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

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

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

Redeeming shares............................. 17

Other things to know about share transactions 19

Dividends, distributions and taxes........... 21

Share price.................................. 22

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



                                                                               1


                                                       Smith Barney Mutual Funds
<PAGE>

  Investments, risks and performance

Investment objective
The fund seeks long-term appreciation of shareholders' capital.

Principal investment strategies
Key investments The fund invests primarily in equity securities of U.S.
companies. The fund typically invests in medium and large capitalization
companies but may also invest in small capitalization companies. Equity
securities include exchange traded and over-the-counter common stocks and
preferred stocks, debt securities convertible into equity securities, and
warrants and rights relating to equity securities.

Selection process The manager's investment strategy consists of individual
company selection and management of cash reserves. The manager looks for
investments among a strong core of growth and value stocks, consisting
primarily of blue chip companies dominant in their industries. The fund may
also invest in companies with prospects for sustained earnings growth and/or a
cyclical earnings record.

In selecting individual companies for the fund's portfolio, the manager looks
for the following:

[_] Strong or rapidly improving balance sheets
[_] Recognized industry leadership
[_] Effective management teams that exhibit a desire to earn consistent returns
    for shareholders

In addition, the manager considers the following characteristics:

[_] Past growth records
[_] Future earnings prospects
[_] Technological innovation
[_] General market and economic factors
[_] Current yield or potential for dividend growth

Generally, companies in the fund's portfolio fall into one of the following
categories:


[_] Undervalued companies: companies with assets or earning power that are
    either unrecognized or undervalued. The manager generally looks for a
    catalyst that will unlock these values. The manager also looks for
    companies that are expected to have unusual earnings growth or whose stocks
    appear likely to go up in value because of market changes in the way they
    do business (for example, a corporate restructuring).


Smith Barney Appreciation Fund Inc.

2

<PAGE>



[_] Growth at a reasonable price: companies with superior demonstrated and
    expected growth characteristics whose stocks are available at a reasonable
    price. Typically, there is strong recurring demand for these companies'
    products.
[_] The manager adjusts the amount held in cash reserves depending on the
    manager's outlook for the stock market. The manager will increase the
    fund's allocation to cash when, in the manager's opinion, market valuation
    levels become excessive. The manager may sometimes hold a significant
    portion of the fund's assets in cash while waiting for buying opportunities
    or to provide a hedge against stock market declines.

Principal risks of investing in the fund
Investing in equity 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:

[_] The U.S. stock market declines
[_] Large and medium capitalization stocks or growth stocks are temporarily out
    of favor
[_] An adverse event depresses the value of a company's stock
[_] The manager's judgment about the attractiveness, value or potential
    appreciation of a particular stock or about the amount to hold in cash
    reserves proves to be incorrect

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

[_] Are seeking to participate in the long-term capital appreciation potential
    of the stock market
[_] Are willing to accept the risks of investing in the stock market

[_] Are planning for a long-term goal and can tolerate periods of market
    volatility

                                                                               3


                                                       Smith Barney Mutual Funds
<PAGE>

Risk return bar chart


This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future. The bar chart
shows the performance of the fund's Class A shares for each of the past 10
calendar years. Class B, L and Y shares have different performance because of
different expenses. The performance information in the chart does not reflect
sales charges, which would reduce your return.

                        Total Return for Class A Shares

                                    [CHART]

91 26.94%

92  6.29%

93  8.13%

94  (0.77)%

95  29.26%

96  19.25%

97  26.29%

98  20.45%

99 15.08%

00  0.73%
Quarterly returns:


Highest: 17.89% in 4th quarter 1998; Lowest: (9.45)% in 3rd quarter 1998

Risk return table


This table indicates the risks of investing in the fund by comparing the
average annual total return of each class for the periods shown with that of
the Standard & Poor's 500 Index (S&P 500 Index), a broad-based unmanaged index
of widely held stocks traded on the New York Stock Exchange. This table assumes
the imposition of the maximum sales charge applicable to the class, redemption
of shares at the end of the period, and the reinvestment of distributions and
dividends.

                         Average Annual Total Returns

                  Calendar Years Ended December 31, 2000
<TABLE>
<CAPTION>
     Class          1 year  5 years 10 years Since Inception Inception Date

     <S>           <C>      <C>     <C>      <C>             <C>
     A              (4.32)%  14.84%   14.09%          12.31%       03/10/70

     B              (4.74)%  14.99%      n/a          13.62%       11/06/92

     L              (1.99)%  14.88%      n/a          13.04%       02/04/93

     Y                1.07%     n/a      n/a          16.30%       01/30/96

     S&P 500 Index  (9.10)%  18.33%   17.44%          13.10%       *

</TABLE>
*Index comparison begins on 03/31/70.


Smith Barney Appreciation Fund Inc.

4

<PAGE>


Fee table

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

                               Shareholder fees

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

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

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

</TABLE>

                        Annual fund operating expenses

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

     <S>                                   <C>     <C>     <C>     <C>
     Management fees                         0.56%  0.56%   0.56%   0.56%

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

     Other expenses                          0.09%  0.13%   0.16%   0.02%

                                           ------- ------- ------- -------
     Total annual fund operating expenses    0.90%  1.69%   1.72%   0.58%

</TABLE>

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

Example

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

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

                      Number of years you own your shares

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

<S>                                   <C>    <C>     <C>     <C>
Class A (with or without redemption)    $587    $773  $  974   $1,552

Class B (redemption at end of period)   $672    $833  $1,018   $1,788

Class B (no redemption)                 $172    $533  $  918   $1,788

Class L (with or without redemption)    $373    $636  $1,024   $2,110

Class L (no redemption)                 $273    $636  $1,024   $2,110

Class Y (with or without redemption)    $ 59    $186  $  324   $  726

</TABLE>

                                                                               5


                                                       Smith Barney Mutual Funds
<PAGE>


  More on the fund's investments

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 these futures for any of the following purposes:

[_] To hedge against the economic impact of adverse changes in the market value
    of its securities, because of changes in stock market prices
[_] As a substitute for buying or selling securities
[_] As a cash flow management technique

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 fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when
stock prices are changing. The fund may not fully benefit from or may lose
money on derivatives if changes in their value do not correspond accurately to
changes in the value of the fund's holdings. The other parties to certain
derivative contracts present the same types of credit risk as issuers of fixed
income securities. Derivatives can also make the fund less liquid and harder to
value, especially in declining markets.

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

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


Smith Barney Appreciation Fund Inc.
<PAGE>


  Management


Manager The fund's investment adviser and administrator is Smith Barney Fund
Management LLC, an affiliate of Salomon Smith Barney Inc. (prior to April 4,
2001, known as SSB Citi Fund Management LLC). The manager's address is 7 World
Trade Center, New York, New York 10048. The manager selects the fund's
investments and oversees its operations. The manager and Salomon Smith Barney
are subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range
of financial services--asset management, banking and consumer finance, credit
and charge cards, insurance, investments, investment banking and trading--and
use diverse channels to make them available to consumer and corporate customers
around the world.


Harry D. Cohen, investment officer of the manager and managing director of
Salomon Smith Barney, has been responsible for the day-to-day management of the
fund's portfolio since 1979. Scott Glasser, investment officer of the manager
and managing director of Salomon Smith Barney, currently shares the
responsibility for the day-to-day management of the fund's portfolio. Mr.
Glasser has been involved in the management of the fund since 1995.

Management fees For its services, the manager received an advisory fee and an
administration fee during the fund's last fiscal year equal to 0.41% and 0.15%,
respectively, of the fund's average daily net assets.


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

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


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

                                                                               7


                                                       Smith Barney Mutual Funds
<PAGE>


  Choosing a class of shares to buy

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

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

You may buy shares from:



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

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


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

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

<TABLE>
<CAPTION>
                                                Initial           Additional

                                      Classes A, B, L   Class Y   All Classes

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

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

Qualified Retirement Plans*                       $25 $15 million         $25

Simple IRAs                                        $1     n/a              $1

Monthly Systematic Investment Plans               $25     n/a             $25

Quarterly Systematic Investment Plans             $50     n/a             $50

</TABLE>

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

8


Smith Barney Appreciation Fund Inc.
<PAGE>


  Comparing the fund's classes


Your Service Agent can help you decide which class meets your goals. They 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          .Initial sales   .No initial sales .The initial      .No initial or
features      charge           charge            sales charge is   deferred sales
             .You may qual-   .Deferred sales    lower than        charge
              ify for          charge            Class A          .Must invest at
              reduction or     declines over    .Deferred sales    least $15
              waiver of ini-   time              charge for        million
              tial sales      .Converts to       only 1 year      .Lower annual
              charge           Class A after 8  .Does not con-     expenses than
             .Lower annual     years             vert to Class A   the other
              expenses than   .Higher annual    .Higher annual     classes
              Class B and      expenses than     expenses than
              Class L          Class A           Class A

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

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

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

-----------------------------------------------------------------------------------
Exchange     Class A shares   Class B shares of Class L shares of Class Y shares of
privilege*   of most Smith    most Smith        most Smith        most Smith
             Barney funds     Barney funds      Barney funds      Barney funds

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


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


                                                                               9


                                                       Smith Barney Mutual Funds
<PAGE>

  Sales charges

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

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

<TABLE>
<CAPTION>
                                      Sales Charge as a % of
                                                             Broker/Dealer
                                      Offering  Net amount   commission
    Amount of purchase                price (%) invested (%) as a % of
                                                             offering price
    <S>                               <C>       <C>          <C>
    Less than $25,000                      5.00         5.26          4.50

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

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

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

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

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

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

</TABLE>
* A distributor pays up to 1.00% to a Service Agent.


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

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


Smith Barney Appreciation Fund Inc.

10

<PAGE>


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

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

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


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

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


[_] Employees of NASD members

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

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


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

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

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

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



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


                                                       Smith Barney Mutual Funds

                                                                              11

<PAGE>

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


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

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



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

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

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


Smith Barney Appreciation Fund Inc.

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 fund
[_] Shares representing reinvested distributions and dividends
[_] Shares no longer subject to the deferred sales charge

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


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


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

Deferred sales charge waivers

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

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


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


                                                       Smith Barney Mutual Funds

                                                                              13

<PAGE>

  Buying shares


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

                 If you do not provide the following information, your
                 order will be rejected:
                 [_]Class of shares being bought
                 [_]Dollar amount or number of shares being bought

                 Your Service Agent may charge an annual account
                 maintenance fee.

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

                 [_]Write the fund at the following
                    address:
                   Smith Barney Appreciation Fund Inc.
                   (Specify class of shares)
                   c/o PFPC Global Fund Services
                   P.O. Box 9699
                   Providence, RI 02940-9699
                 [_]Enclose a check to pay for the shares. For initial
                    purchases, complete and send an account
                    application.
                 [_]For more information, call as applicable, PFS
                    Shareholder Services at 1-800-544-5445 or PFPC
                    Global Fund Services at 1-800-451-2010.

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

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

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



Smith Barney Appreciation Fund Inc.

14

<PAGE>

  Exchanging shares


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

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


                                                       Smith Barney Mutual Funds

                                                                              15

<PAGE>

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

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

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



Smith Barney Appreciation Fund Inc.

16

<PAGE>

  Redeeming shares


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

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

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

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

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

       ------------------------------------------------------------------
         By mail For accounts held directly at the fund, send written
                 requests to the fund at the applicable address:

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

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

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

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




                                                       Smith Barney Mutual Funds

                                                                              17

<PAGE>


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

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

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

  ----------------------------------------------------------------------------
    Automatic cash You can arrange for the automatic redemption of a
  withdrawal plans portion of your shares on a monthly or quarterly basis.
                   To qualify you must own shares of the fund with a
                   value of at least $10,000 ($5,000 for retirement plan
                   accounts) and each automatic redemption must be at
                   least $50. If your shares are subject to a deferred sales
                   charge, the sales charge will be waived if your auto-
                   matic payments do not exceed 1% per month of the
                   value of your shares subject to a deferred sales charge.

                   The following conditions apply:

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

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



Smith Barney Appreciation Fund Inc.

18

<PAGE>

  Other things to know about share transactions

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

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


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

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


[_] Are redeeming over $50,000
[_] Are sending signed share certificates or stock powers to the applicable
    sub-transfer agent

[_] Instruct a sub-transfer agent to mail the check to an address different
    from the one on your account
[_] Changed your account registration
[_] Want the check paid to someone other than the account owner(s)
[_] Are transferring the redemption proceeds to an account with a different
    registration

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

The fund has the right to:

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


                                                       Smith Barney Mutual Funds

                                                                              19

<PAGE>

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


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


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

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

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



Smith Barney Appreciation Fund Inc.

20

<PAGE>

  Dividends, distributions and taxes


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

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


<CAPTION>
Transaction                           Federal tax status

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

Long-term capital gain distributions  Long-term capital gain

Short-term capital gain distributions Ordinary income

Dividends                             Ordinary income

</TABLE>

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

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


                                                       Smith Barney Mutual Funds

                                                                              21

<PAGE>

  Share price


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

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


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


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


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


Smith Barney Appreciation Fund Inc.

22

<PAGE>

  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
auditors, whose report, along with the fund's financial statements, is included
in the annual report (available upon request).

  For a Class A share of capital stock outstanding throughout each year ended
  December 31:

<TABLE>
<CAPTION>
                                         2000/(1)/ 1999/(1)/ 1998/(1)/  1997    1996

--------------------------------------------------------------------------------------
<S>                                      <C>       <C>       <C>       <C>     <C>
Net asset value, beginning of year        $15.73    $15.31    $13.92   $12.85  $11.90

--------------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income                      0.16      0.15      0.18     0.19    0.19
 Net realized and unrealized gain (loss)   (0.04)     2.08      2.62     3.17    2.09

--------------------------------------------------------------------------------------
Total income from operations                0.12      2.23      2.80     3.36    2.28

--------------------------------------------------------------------------------------
Less distributions from:
 Net investment income                     (0.15)    (0.14)    (0.18)   (0.20)  (0.19)
 Net realized gains                        (1.15)    (1.67)    (1.23)   (2.09)  (1.14)

--------------------------------------------------------------------------------------
Total distributions                        (1.30)    (1.81)    (1.41)   (2.29)  (1.33)

--------------------------------------------------------------------------------------
Net asset value, end of year              $14.55    $15.73    $15.31   $13.92  $12.85

--------------------------------------------------------------------------------------
Total return                                0.73%    15.08%    20.45%   26.29%  19.25%

--------------------------------------------------------------------------------------
Net assets, end of year (millions)        $3,212    $3,326    $2,959   $2,526  $2,100

--------------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses                                   0.90%     0.92%     0.95%    0.95%   1.00%
 Net investment income                      1.02      0.96      1.23     1.47    1.52

--------------------------------------------------------------------------------------
Portfolio turnover rate                       61%       71%       63%      57%     62%

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

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


                                                       Smith Barney Mutual Funds

                                                                              23

<PAGE>

  For a Class B share of capital stock outstanding throughout each year ended
  December 31:

<TABLE>
<CAPTION>
                                         2000/(1)/ 1999/(1)/ 1998/(1)/  1997    1996

--------------------------------------------------------------------------------------
<S>                                      <C>       <C>       <C>       <C>     <C>
Net asset value, beginning of year       $15.66    $15.26    $13.88    $12.81  $11.88

--------------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income                     0.03      0.03      0.06      0.07    0.08
 Net realized and unrealized gain (loss)  (0.04)     2.06      2.61      3.15    2.08

--------------------------------------------------------------------------------------
Total income (loss) from operations       (0.01)     2.09      2.67      3.22    2.16

--------------------------------------------------------------------------------------
Less distributions from:
 Net investment income                    (0.03)    (0.02)    (0.06)    (0.06)  (0.09)
 Net realized gains                       (1.15)    (1.67)    (1.23)    (2.09)  (1.14)

--------------------------------------------------------------------------------------
Total distributions                       (1.18)    (1.69)    (1.29)    (2.15)  (1.23)

--------------------------------------------------------------------------------------
Net asset value, end of year             $14.47    $15.66    $15.26    $13.88  $12.81

--------------------------------------------------------------------------------------
Total return                              (0.12)%   14.19%    19.52%    25.31%  18.29%

--------------------------------------------------------------------------------------
Net assets, end of year (millions)       $1,305    $1,755    $1,553    $1,410  $1,134

--------------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses                                  1.69%     1.70%     1.73%     1.73%   1.78%
 Net investment income                     0.23      0.17      0.44      0.68    0.74

--------------------------------------------------------------------------------------
Portfolio turnover rate                      61%       71%       63%       57%     62%

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

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


Smith Barney Appreciation Fund Inc.

24

<PAGE>

  For a Class L share of capital stock outstanding throughout each year ended
  December 31:

<TABLE>
<CAPTION>
                                   2000/(1)/  1999/(1)/ 1998/(1)(2)/   1997     1996

--------------------------------------------------------------------------------------
<S>                                <C>        <C>       <C>          <C>      <C>
Net asset value, beginning of year $  15.65   $  15.26     $ 13.88   $ 12.81  $ 11.88

--------------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income                 0.03       0.03        0.06      0.09     0.09
 Net realized and unrealized gain
  (loss)                              (0.03)      2.05        2.61      3.13     2.08

--------------------------------------------------------------------------------------
Total income from operations             --       2.08        2.67      3.22     2.17

--------------------------------------------------------------------------------------
Less distributions from:
 Net investment income                (0.03)     (0.02)      (0.06)    (0.06)   (0.10)
 Net realized gains                   (1.15)     (1.67)      (1.23)    (2.09)   (1.14)

--------------------------------------------------------------------------------------
Total distributions                   (1.18)     (1.69)      (1.29)    (2.15)   (1.24)

--------------------------------------------------------------------------------------
Net asset value, end of year       $  14.47   $  15.65     $ 15.26   $ 13.88  $ 12.81

--------------------------------------------------------------------------------------
Total return                          (0.07)%    14.12%      19.52%    25.31%   18.34%

--------------------------------------------------------------------------------------
Net assets, end of year (000)'s    $189,725   $161,491     $83,215   $47,872  $25,505

--------------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses                              1.72%      1.71%       1.73%     1.73%    1.77%
 Net investment income                 0.20       0.18        0.44      0.68     0.75

--------------------------------------------------------------------------------------
Portfolio turnover rate                  61%        71%         63%       57%      62%

--------------------------------------------------------------------------------------
</TABLE>
/(1)/ Per share amounts are calculated using the monthly average shares method.
/(2)/ On June 12, 1998, Class C shares were renamed Class L shares.


                                                       Smith Barney Mutual Funds

                                                                              25

<PAGE>

  For a Class Y share of capital stock outstanding throughout each year ended
  December 31:

<TABLE>
<CAPTION>
                                   2000/(1)/ 1999/(1)/ 1998/(1)/ 1997/(1)/ 1996/(2)/

-------------------------------------------------------------------------------------
<S>                                <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of year $ 15.69   $ 15.28   $ 13.93   $ 12.86     $ 12.10

-------------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income                0.20      0.21      0.24      0.27        0.23
 Net realized and unrealized gain
  (loss)                             (0.02)     2.07      2.63      3.14        1.89

-------------------------------------------------------------------------------------
Total income from operations          0.18      2.28      2.87      3.41        2.12

-------------------------------------------------------------------------------------
Less distributions from:
 Net investment income               (0.20)    (0.20)    (0.29)    (0.25)      (0.22)
 Net realized gains                  (1.15)    (1.67)    (1.23)    (2.09)      (1.14)

-------------------------------------------------------------------------------------
Total distributions                  (1.35)    (1.87)    (1.52)    (2.34)      (1.36)

-------------------------------------------------------------------------------------
Net asset value, end of year       $ 14.52   $ 15.69   $ 15.28   $ 13.93     $ 12.86

-------------------------------------------------------------------------------------
Total return                          1.07%    15.40%    20.93%    26.70%    17.65%++

-------------------------------------------------------------------------------------
Net assets, end of year (000)'s    $88,870   $98,920   $87,041   $56,302     $73,196

-------------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses                             0.58%     0.57%     0.59%     0.59%      0.66%+
 Net investment income                1.34      1.30      1.59      1.79       2.06+

-------------------------------------------------------------------------------------
Portfolio turnover rate                 61%       71%       63%       57%         24%

-------------------------------------------------------------------------------------
</TABLE>
/(1)/ Per share amounts are calculated using the monthly average shares method.
/(2)/ For the period from January 30, 1996 (inception date) to December 31,
    1996.
++  Total return is not annualized, as it may not be representative of the
    total return for the year.
+ Annualized.


Smith Barney Appreciation Fund Inc.

26

<PAGE>


[LOGO] Smith Barney Mutual Funds

Your Serious Money. Professionally Managed./SM/


Smith Barney Appreciation Fund Inc.

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 during its last fiscal year or period.


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

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


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



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

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


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

(Investment Company Act
file no. 811-01940)

FD0202 04/01





	PROSPECTUS - Z shares dated April 30, 2001

<PAGE>

                                  PROSPECTUS



            -------------------------------------------------------
                                 SMITH BARNEY

                               APPRECIATION

                                FUND INC.

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

       Class Z Shares
       April 30, 2001



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





                               [LOGO] Smith Barney

                                      Mutual Funds

                 Your Serious Money. Professionally Managed./SM/

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

<PAGE>


Smith Barney Appreciation Fund Inc.

  Contents


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

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

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

Management.....................................  8

Buying, redeeming and exchanging Class Z shares  9

Dividends, distributions and taxes............. 10

Share price.................................... 11

Financial highlights........................... 12
</TABLE>
The Class Z shares described in this prospectus are offered exclusively for
sale to tax-exempt employee benefit and retirement plans of Salomon Smith
Barney Inc. or any of its affiliates.



                                                                               1


                                                       Smith Barney Mutual Funds
<PAGE>


  Investments, risks and performance

Investment objective

The fund seeks long-term appreciation for shareholders' capital.

Principal investment strategies

Key investments The fund invests primarily in equity securities of U.S.
companies. The fund typically invests in medium and large capitalization
companies but may also invest in small capitalization companies. Equity
securities include exchange traded and over-the-counter common stocks and
preferred stocks, debt securities convertible into equity securities, and
warrants and rights relating to equity securities.

Selection process The manager's investment strategy consists of individual
company selection and management of cash reserves. The manager looks for
investments among a strong core of growth and value stocks, consisting
primarily of blue chip companies dominant in their industries. The fund may
also invest in companies with prospects for sustained earnings growth and/or a
cyclical earnings record.

In selecting individual companies for the fund's portfolio, the manager looks
for the following:

[_] Strong or rapidly improving balance sheets
[_] Recognized industry leadership
[_] Effective management teams that exhibit a desire to earn consistent returns
    for shareholders

In addition, the manager considers the following characteristics:

[_] Past growth records
[_] Future earnings prospects
[_] Technological innovation
[_] General market and economic factors
[_] Current yield or potential for dividend growth

 2



Smith Barney Appreciation Fund Inc.
<PAGE>



Generally, companies in the fund's portfolio fall into one of the following
categories:

[_] Undervalued companies: companies with assets or earning power that are
    either unrecognized or undervalued. The manager generally looks for a
    catalyst that will unlock these values. The manager also looks for
    companies that are expected to have unusual earnings growth or whose stocks
    appear likely to go up in value because of marked changes in the way they
    do business (for example, a corporate restructuring).

[_] Growth at a reasonable price: companies with superior demonstrated and
    expected growth characteristics whose stocks are available at a reasonable
    price. Typically, there is strong recurring demand for these companies'
    products.

  The manager adjusts the amount held in cash reserves depending on the
  manager's outlook for the stock market. The manager will increase the fund's
  allocation to cash when, in the manager's opinion, market valuation levels
  become excessive. The manager may sometimes hold a significant portion of the
  fund's assets in cash while waiting for buying opportunities or to provide a
  hedge against stock market declines.

                                                                               3


                                                       Smith Barney Mutual Funds
<PAGE>



Principal risks of investing in the fund

Investing in equity 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:

[_] The U.S. stock market declines
[_] Large and medium capitalization stocks or growth stocks are temporarily out
    of favor
[_] An adverse event depresses the value of a company's stock
[_] The manager's judgment about the attractiveness, value or potential
    appreciation of a particular stock or about the amount to hold in cash
    reserves proves to be incorrect

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

[_] Are seeking to participate in the long-term capital appreciation potential
    of the stock market
[_] Are willing to accept the risks of investing in the stock market
[_] Are planning for a long term goal and can tolerate periods of market
    volatility

 4



Smith Barney Appreciation Fund Inc.
<PAGE>



Risk return bar chart


This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future. The bar chart
shows the performance of the fund's Class Z shares for each of the past 8
calendar years.

                      Total Return for Class Z -Shares--




                                    [CHART]





                            93         8.47%

                            94        (0.41)%

                            95        29.52%

                            96        19.66%

                            97        26.72%

                            98        20.91%

                            99        15.46%

                            00         1.07%



                        Calendar years ended December 31



Quarterly returns:

Highest: 18.05% in 4th quarter 1998; Lowest: (9.44)% in 3rd quarter 1998

Risk return table

This table indicates the risks of investing in the fund by comparing the
average annual total return of Class Z shares for the periods shown with that
of the Standard & Poor's 500 Index (S&P 500 Index), a broad-based unmanaged
index of widely held stocks traded on the New York Stock Exchange. This table
assumes the reinvestment of distributions and dividends.

                         Average Annual Total Returns

                  Calendar Years Ended December 31, 2000
<TABLE>
<CAPTION>
<S>           <C>     <C>     <C>      <C>       <C>

                                         Since   Inception
              1 year  5 years 10 years Inception   Date

Class Z         1.07%  16.43%      n/a  14.87%    11/06/92

S&P 500 Index (9.10)%  18.33%      n/a  17.52%       *

</TABLE>
* Index comparison begins on 11/30/92

                                                                               5


                                                       Smith Barney Mutual Funds
<PAGE>


Fee table


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

                        Annual fund operating expenses

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

<S>                                  <C>
Management fees                      0.56%

Other expenses                       0.02%
                                     -----
Total annual fund operating expenses 0.58%

                                     =====
</TABLE>

Example

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

                      Number of years you own your shares

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

<S>                                  <C>    <C>     <C>     <C>
Class Z (with or without redemption)    $59    $186    $324     $726

</TABLE>

 6



Smith Barney Appreciation Fund Inc.
<PAGE>

  More on the fund's investments

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 these futures for any of the following purposes:

[_] To hedge against the economic impact of adverse changes in the market value
    of its securities, because of changes in stock market prices
[_] As a substitute for buying or selling securities

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

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


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 any type 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.


                                                       Smith Barney Mutual Funds

                                                                               7

<PAGE>


  Management


Manager The fund's investment adviser and administrator is Smith Barney Fund
Management LLC (prior to April 4, 2001 known as SSB Citi Fund Management LLC)
an affiliate of Salomon Smith Barney Inc. The manager's address is 7 World
Trade Center, New York, New York 10048. The manager selects the fund's
investments and oversees its operations. The manager and Salomon Smith Barney
are subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range
of financial services--asset management, banking and consumer finance, credit
and charge cards, insurance, investments, investment banking and trading--and
use diverse channels to make them available to consumer and corporate customers
around the world.


Harry D. Cohen, investment officer of the manager and managing director of
Salomon Smith Barney, has been responsible for the day to day management of the
fund's portfolio since 1979. Scott Glasser, investment officer of the manager
and managing director of Salomon Smith Barney, currently shares the
responsibility for the day-to-day management of the fund's portfolio. Mr.
Glasser has been involved in the management of the fund since 1995.

Management fees For its services, the manager received an advisory fee and an
administration fee during the fund's last fiscal year equal to 0.41% and 0.15%,
respectively, of the fund's average daily net assets.


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

 8



Smith Barney Appreciation Fund Inc.
<PAGE>


  Buying, redeeming and exchanging Class Z shares

        Through a You may buy, redeem or exchange Class Z shares only
   qualified plan through a "qualified plan." A qualified plan is a tax-
                  exempt employee benefit or retirement plan of
                  Salomon Smith Barney, Inc. or one of its affiliates.

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

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

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

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

--------------------------------------------------------------------------
Other information The fund has the right to:
                  [_]Suspend the offering of shares
                  [_]Waive or change minimum and additional invest-
                     ment amounts
                  [_]Reject any purchase or exchange order
                  [_]Change, revoke or suspend the exchange privilege
                  [_]Suspend telephone transactions

                                                                               9


                                                       Smith Barney Mutual Funds
<PAGE>


  Dividends, distributions and taxes

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

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

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

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

10



Smith Barney Appreciation Fund Inc.
<PAGE>


  Share price


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

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


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

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

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


                                                                              11


                                                       Smith Barney Mutual Funds
<PAGE>


  Financial highlights


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

  For a Class Z share of capital stock outstanding throughout each year ended
  December 31:

<TABLE>
<CAPTION>
                                2000/(1)/ 1999/(1)/ 1998/(1)/   1997      1996

---------------------------------------------------------------------------------
<S>                             <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of
 year                           $  15.71  $  15.29  $  13.94  $  12.87  $  11.91

---------------------------------------------------------------------------------
Income from operations:
 Net investment income              0.20      0.21      0.24      0.24      0.24
 Net realized and unrealized
  gain (loss)                      (0.02)     2.08      2.63      3.18      2.09

---------------------------------------------------------------------------------
Total income from operations        0.18      2.29      2.87      3.42      2.33

---------------------------------------------------------------------------------
Less distributions from:
 Net investment (loss)             (0.20)    (0.20)    (0.29)    (0.26)    (0.23)
 Net realized (loss)               (1.15)    (1.67)    (1.23)    (2.09)    (1.14)

---------------------------------------------------------------------------------
Total distributions                (1.35)    (1.87)    (1.52)    (2.35)    (1.37)

---------------------------------------------------------------------------------
Net asset value, end of year    $  14.54  $  15.71  $  15.29  $  13.94  $  12.87

---------------------------------------------------------------------------------
Total return                        1.07%    15.46%    20.91%    26.72%    19.66%

---------------------------------------------------------------------------------
Net assets, end of year (000)'s $251,017  $267,640  $243,609  $194,070  $153,034

---------------------------------------------------------------------------------
Ratios to average net assets:
 Expenses                           0.58%     0.58%     0.59%     0.59%     0.64%
 Net investment income              1.34      1.30      1.59      1.82      1.88

---------------------------------------------------------------------------------
Portfolio turnover rate               61%       71%       63%       57%       62%

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

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

12



Smith Barney Appreciation Fund Inc.
<PAGE>




                              [LOGO] Smith Barney

                                     Mutual Funds

                Your Serious Money. Professionally Managed./SM/

Smith Barney Appreciation Fund Inc.

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


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

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


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


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


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

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


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

(Investment Company Act
file no. 811-01940)

FD0794 4/01





PART B - STATEMENT OF ADDITIONAL INFORMATION dated April 30, 2001


April 30, 2001

STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY APPRECIATION FUND INC.
7 World Trade Center
New York, New York  10048
(800) 451-2010

This Statement of Additional Information ("SAI") is
not a prospectus and is meant to be read in
conjunction with the prospectus of the Smith Barney
Appreciation Fund Inc. (the "fund") dated April 30,
2001, as amended or supplemented from time to time
(the "prospectus"), and is incorporated by reference
in its entirety into the prospectus. Additional
information about the fund's investments is available
in the fund's annual and semi-annual reports to
shareholders that are incorporated herein by
reference. The prospectus and copies of the reports
may be obtained free of charge by contacting a Salomon
Smith Barney Financial Consultant, a registered
representative of PFS Distributors, Inc., ("PFS"), a
broker/dealer, financial intermediary, financial
institution (each called a "Service Agent") or by
writing or calling Salomon Smith Barney Inc. at the
address or telephone number above.

TABLE OF CONTENTS

 Investment Objective and Management
Policies................................................	  2
 Investment Restrictions......	...............
  14
 Directors and Executive Officers of the
Fund...................................................   16
 Investment Management and Other
Services....................................................   20
 Portfolio Transactions....................   26
 Portfolio Turnover.........................   28
 Purchase of Shares ..................
	29
 Redemption of Shares..............
	40
 Valuation of Shares..............
	45
 Exchange Privilege..................	45
 Performance Data................	46
 Dividends, Distributions and
Taxes.............................	50
 Additional Information.............
	56
 Financial Statements 	..............
56
Other Information............. 57


INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The fund is an open-end, diversified, management
investment company.  The prospectus discusses the
fund's investment objective and the policies it
employs to achieve its objective.  This section
contains supplemental information concerning the types
of securities and other instruments in which the fund
may invest, the investment policies and portfolio
strategies the fund may utilize and certain risks
attendant to such investments, policies and
strategies.  Smith Barney Fund Management LLC (prior
to April 4, 2001, known as SSB Citi Fund Management
LLC)("SBFM" or the "manager") serves as investment
manager to the fund.

Common Stock.  The fund may invest in common stocks.
Common stocks are shares of a corporation or other
entity entitling the holder to a pro rata share of the
profits of the corporation, if any, without preference
over any other shareholder or class of shareholders,
including holders of the entity's preferred stock and
other senior equity.  Common stock usually carries
with it the right to vote and frequently an exclusive
right to do so.

Preferred Stock.  Preferred stocks, like debt
obligations, are generally fixed-income securities.
Shareholders of preferred stocks normally have the
right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, but do
not participate in other amounts available for
distribution by the issuing corporation. Preferred
stock dividends must be paid before common stock
dividends and, for that reason, preferred stocks
generally entail less risk than common stocks. Upon
liquidation, preferred stocks are entitled to a
specified liquidation preference, which is generally
the same as the par or stated value, and are senior in
right of payment to common stock. Preferred stocks
are, however, equity securities in the sense they do
not represent a liability of the issuer and,
therefore, do not offer as great a degree of
protection of capital or assurance of continued income
as investments in corporate debt securities.  In
addition, preferred stocks are subordinated in right
of payment to all debt obligations and creditors of
the issuer, and convertible preferred stocks may be
subordinated to other preferred stock of the same
issuer.

Warrants.  The fund may invest up to 5% of its assets
in warrants.  Warrants acquired entitle the fund to
buy common stock from the issuer at a specified price
and time.  Warrants are subject to the same market
risks as stocks, but may be more volatile in price.
The fund's investment in warrants will not entitle it
to receive dividends or exercise voting rights and
will become worthless if the warrants cannot be
profitably exercised before the expiration dates.

Convertible Securities. Convertible securities in
which the fund may invest, including both convertible
debt and convertible preferred stock, may be converted
at either a stated price or stated rate into
underlying shares of common stock.  Because of this
feature, convertible securities enable an investor to
benefit from increases in the market price of the
underlying common stock. Convertible securities
provide higher yields than the underlying equity
securities, but generally offer lower yields than
non-convertible securities of similar quality.  Like
bonds, the value of convertible securities fluctuates
in relation to changes in interest rates and, in
addition, also fluctuates in relation to the
underlying common stock.
Foreign Securities.  The fund may invest up to 10% of
its assets (at the time of investment) in foreign
securities.  The fund may invest directly in foreign
issuers or invest in depositary receipts. (securities
of foreign issuers in the form of American Depository
Receipts ("ADRs"), European Depository Receipts
("EDRs") or similar securities representing interests
in the common stock of foreign issuers). ADRs are
receipts, typically issued by a U.S. bank or trust
company, which evidence ownership of underlying
securities issued by a foreign corporation.  EDRs are
receipts issued in Europe which evidence a similar
ownership arrangement. Generally, ADRs, in registered
form, are designed for use in the U.S. securities
markets and EDRs are designed for use in European
securities markets.  The underlying securities are not
always denominated in the same currency as the ADRs or
EDRs. Although investment in the form of ADRs or EDRs
facilitates trading in foreign securities, it does not
mitigate the risks associated with investing in
foreign securities.

Investments in foreign securities incur higher costs
than investments in U.S. securities, including higher
costs in making securities transactions as well as
foreign government taxes which may reduce the
investment return of the fund.  In addition, foreign
investments may include additional risks associated
with currency exchange rates, less complete financial
information about individual companies, less market
liquidity and political instability.

Money Market Instruments. The fund may invest for
temporary defensive purposes in corporate and
government bonds and notes and money market
instruments.  Money market instruments include:
obligations issued or guaranteed by the United States
government, its agencies or instrumentalities ("U.S.
government securities"); certificates of deposit, time
deposits and bankers' acceptances issued by domestic
banks (including their branches located outside the
United States and subsidiaries located in Canada),
domestic branches of foreign banks, savings and loan
associations and similar institutions; high grade
commercial paper; and repurchase agreements with
respect to the foregoing types of instruments.
Certificates of deposit ("CDs") are short-term,
negotiable obligations of commercial banks.  Time
deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified
periods of time at stated interest rates.  Bankers'
acceptances are time drafts drawn on commercial banks
by borrowers, usually in connection with international
transactions. The fund may invest in cash and in
short-term instruments, and it may hold cash and
short-term instruments without limitation when the
manager determines that it is appropriate to maintain
a temporary defensive posture. Short-term instruments
in which the fund may invest include: (a) obligations
issued or guaranteed as to principal and interest by
the United States government, its agencies or
instrumentalities (including repurchase agreements
with respect to such securities); (b) bank obligations
(including certificates of deposit, time deposits and
bankers' acceptances of domestic or foreign banks,
domestic savings and loan associations and similar
institutions); (c) floating rate securities and other
instruments denominated in U.S. dollars issued by
international development agencies, banks and other
financial institutions, governments and their agencies
or instrumentalities and corporations located in
countries that are members of the Organization for
Foreign Cooperation and Development; and (d)
commercial paper rated no lower than A-2 by Standard &
Poor's Ratings Group ("S&P") or Prime-2 by Moody's
Investors Service, Inc. ("Moody's") or the equivalent
from another major rating service or, if unrated, of
an issuer having an outstanding, unsecured debt issue
then rated within the three highest rating categories.
INVESTMENT PRACTICES

In attempting to achieve its investment objective, the
fund may employ, among others, the following portfolio
strategies.

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 at all times the collateral is at least
102% of the repurchase price plus accrued interest.
Default by or bankruptcy of a seller would expose the
fund to possible loss because of adverse market
action, expenses and/or delays in connection with the
disposition of the underlying obligations.  The
financial institutions with which the fund may enter
into repurchase agreements will be banks and non-bank
dealers of U.S. government securities on the Federal
Reserve Bank of New York's list of reporting dealers,
if such banks and non-bank dealers are deemed
creditworthy by the fund's manager.  The manager will
continue to monitor creditworthiness of the seller
under a repurchase agreement, and will require the
seller to maintain during the term of the agreement
the value of the securities subject to the agreement
to equal at least 102% of the repurchase price
(including accrued interest).  In addition, the
manager will require the value of this collateral,
after transaction costs (including loss of interest)
reasonably expected to be incurred on a default, to be
equal to 102% or greater than the repurchase price
(including accrued premium) provided in the repurchase
agreement or the daily amortization of the difference
between the purchase price and the repurchase price
specified in the repurchase agreement.  The manager
will mark-to-market daily the value of the securities.
 Repurchase agreements are considered to be loans by
the fund under the Investment Company Act of 1940, as
amended (the "1940 Act").
Lending of Portfolio Securities.  Consistent with
applicable regulatory requirements, the fund may lend
portfolio securities to brokers, dealers and other
financial organizations meeting capital and other
credit requirements or other criteria established by
the board.  The fund will not lend portfolio
securities to affiliates of the manager unless they
have applied for and received specific authority to do
so from the Securities Exchange Commission.  Loans of
portfolio securities will be collateralized by cash,
letters of credit or U.S. government securities, which
are maintained at all times in an amount equal to at
least 102% of the current market value of the loaned
securities.  Any gain or loss in the market price of
the securities loaned occurring during the term of the
loan would be for the account of the fund.  From time
to time, the fund may return a part of the interest
earned from the investment of collateral received for
securities loaned to the borrower and/or a third party
unaffiliated with the fund and acting as a "finder."
By lending its securities, the fund can increase its
income by continuing to receive interest and any
dividends on the loaned securities as well as by
either investing the collateral received for
securities loaned in short-term instruments or
obtaining yield in the form of interest paid by the
borrower when U.S. government securities are used as
collateral.  Although the generation of income is not
the primary investment goal of the fund, income
received could be used to pay the fund's expenses and
would increase an investor's total return.  The fund
will adhere to the following conditions whenever its
portfolio securities are loaned:  (i) the fund must
receive at least 102% cash collateral or equivalent
securities of the type discussed in the preceding
paragraph from the borrower; (ii) the borrower must
increase such collateral whenever the market value of
the securities rises above the level of such
collateral; (iii) the fund must be able to terminate
the loan at any time; (iv) the fund must receive
reasonable interest on the loan, as well as any
dividends, interest or other distributions on the
loaned securities and any increase in market value;
(v) the fund may pay only reasonable custodian fees in
connection with the loan; and (vi) voting rights on
the loaned securities may pass to the borrower,
provided, however, that if a material event adversely
affecting the investment occurs, the board must
terminate the loan and regain the right to vote the
securities.  Loan agreements involve certain risks in
the event of default or insolvency of the other party
including possible delays or restrictions upon a
fund's ability to recover the loaned securities or
dispose of the collateral for the loan.
DERIVATIVES TRANSACTIONS

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

The fund may purchase put and call options in
anticipation of declines in the value of portfolio
securities or increases in the value of securities to
be acquired.  If the expected changes occur, the fund
may be able to offset the resulting adverse effect on
its portfolio, in whole or in part, through the
options purchased.  The risk assumed by the fund in
connection with such transactions is limited to the
amount of the premium and related transaction costs
associated with the option, although the fund may lose
such amounts in the event the prices of securities
underlying the options do not move in the direction or
to the extent anticipated.  The fund can invest up to
5% of its total assets in put and call options on
securities.

Stock Index Options.  As described generally above,
the fund may purchase put and call options and write
call options on domestic stock indexes listed on
domestic exchanges in order to realize its investment
objective of capital appreciation or for the purpose
of hedging its portfolio. A stock index fluctuates
with changes in the market values of the stocks
included in the index. Some stock index options are
based on a broad market index such as the New York
Stock Exchange Composite Index or the Canadian Market
Portfolio Index, or a narrower market index such as
the Standard & Poor's 100. Indexes also are based on
an industry or market segment such as the American
Stock Exchange Oil and Gas Index or the Computer and
Business Equipment Index.

Options on stock indexes are generally similar to
options on stock except that the delivery requirements
are different. Instead of giving the right to take or
make delivery of stock at a specified price, an option
on a stock index gives the holder the right to receive
a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the
underlying index on the date of exercise, multiplied
by (b) a fixed "index multiplier." Receipt of this
cash amount will depend upon the closing level of the
stock index upon which the option is based being
greater than, in the case of a call, or less than, in
the case of a put, the exercise price of the option.
The amount of cash received will be equal to such
difference between the closing price of the index and
the exercise price of the option expressed in dollars
or a foreign currency, as the case may be, times a
specified multiple. The writer of the option is
obligated, in return for the premium received, to make
delivery of this amount. The writer may offset its
position in stock index options prior to expiration by
entering into a closing transaction on an exchange or
it may let the option expire unexercised.

The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the
extent to which price movements in the portion of the
securities portfolio of the fund correlate with price
movements of the stock index selected. Because the
value of an index option depends upon movements in the
level of the index rather than the price of a
particular stock, whether the fund will realize a gain
or loss from the purchase or writing of options on an
index depends upon movements in the level of stock
prices in the stock market generally or, in the case
of certain indexes, in an industry or market segment,
rather than movements in the price of a particular
stock. Accordingly, successful use by the fund of
options on stock indexes will be subject to the
manager's ability to predict correctly movements in
the direction of the stock market generally or of a
particular industry. This requires different skills
and techniques than predicting changes in the price of
individual stocks.

The fund will engage in stock index options
transactions only when determined by the manager to be
consistent with the fund's efforts to control risk.
There can be no assurance that such judgment will be
accurate or that the use of these portfolio strategies
will be successful.  The fund can invest up to 5% of
its total assets in put and call options on domestic
and foreign stock indexes.

Options, Futures and Currency Strategies.  The fund
may use forward currency contracts and certain options
and futures strategies to attempt to hedge its
portfolio, i.e., reduce the overall level of
investment risk normally associated with the fund.
There can be no assurance that such efforts will
succeed.

In order to assure that the fund will not be deemed to
be a "commodity pool" for purposes of the Commodity
Exchange Act, regulations of the Commodity Futures
Trading Commission ("CFTC") require that the fund
enter into transactions in futures contracts and
options on futures only (i) for bona fide hedging
purposes (as defined in CFTC regulations), or (ii) for
non-hedging purposes, provided the aggregate initial
margin and premiums on such non-hedging positions do
not exceed 5% of the liquidation value of the fund's
assets.  To attempt to hedge against adverse movements
in exchange rates between currencies, the fund may
enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future
date.  Such contracts may involve the purchase or sale
of a foreign currency against the U.S. dollar or may
involve two foreign currencies. The fund may enter
into forward currency contracts either with respect to
specific transactions or with respect to its portfolio
positions.  For example, when the manager anticipates
making a purchase or sale of a security, it may enter
into a forward currency contract in order to set the
rate (either relative to the U.S. dollar or another
currency) at which the currency exchange transaction
related to the purchase or sale will be made
("transaction hedging").  Further, when the manager
believes that a particular currency may decline
compared to the U.S. dollar or another currency, the
fund may enter into a forward contract to sell the
currency the manager expects to decline in an amount
approximating the value of some or all of the fund's
securities denominated in that currency, or when the
manager believes that one currency may decline against
a currency in which some or all of the portfolio
securities held by the fund are denominated, it may
enter into a forward contract to buy the currency
expected to decline for a fixed amount ("position
hedging"). In this situation, the fund may, in the
alternative, enter into a forward contract to sell a
different currency for a fixed amount of the currency
expected to decline where the investment manager
believes that the value of the currency to be sold
pursuant to the forward contract will fall whenever
there is a decline in the value of the currency in
which portfolio securities of the fund are denominated
("cross hedging"). The fund will maintain on it's
books (i) cash, (ii) U.S. government securities or
(iii) equity securities or debt securities (of any
grade) in certain currencies provided such assets are
liquid, unencumbered and marked to market daily, or
other high-quality debt securities denominated in
certain currencies in a separate account of the fund
having a value equal to the aggregate account of the
fund's commitments under forward contracts entered
into with respect to position hedges and cross-hedges.
If the value of the securities placed in a separate
account declines, additional cash or securities are
placed in the account on a daily basis so that the
value of the account will equal the amount of the
fund's commitments with respect to such contracts.

For hedging purposes, the fund may write covered call
options and purchase put and call options on
currencies to hedge against movements in exchange
rates and on debt securities to hedge against the risk
of fluctuations in the prices of securities held by
the fund or which the manager intends to include in
its portfolio.  The fund also may use interest rate
futures contracts and options thereon to hedge against
changes in the general level in interest rates.

The fund may write call options on securities and
currencies only if they are covered, and such options
must remain covered so long as the fund is obligated
as a writer.  A call option written by the fund is
"covered" if the fund owns the securities or currency
underlying the option or has an absolute and immediate
right to acquire that security or currency without
additional cash consideration (or for additional cash
consideration held in a segregated account on the
fund's books) upon conversion or exchange of other
securities or currencies held in its portfolio.  A
call option is also covered if the fund holds on a
share-for-share basis a call on the same security or
holds a call on the same currency as the call written
where the exercise price of the call held is equal to
or less than the exercise price of the call written or
greater than the exercise price of the call written if
the difference is maintained by the fund in cash,
Treasury bills or other high-grade, short-term
obligations in a segregated account on the fund's
books.

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

Although the portfolio might not employ the use of
forward currency contracts, options and futures, the
use of any of these strategies would involve certain
investment risks and transaction costs to which it
might not otherwise be subject.  These risks include:
dependence on the manager's ability to predict
movements in the prices of individual debt securities,
fluctuations in the general fixed-income markets and
movements in interest rates and currency markets,
imperfect correlation between movements in the price
of currency, options, futures contracts or options
thereon and movements in the price of the currency or
security hedged or used for cover; the fact that
skills and techniques needed to trade options, futures
contracts and options thereon or to use forward
currency contracts are different from those needed to
select the securities in which the fund invests; and
lack of assurance that a liquid market will exist for
any particular option, futures contract or options
thereon at any particular time.

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

Options on Securities.  As discussed more generally
above, the fund may engage in the writing of covered
call options. The fund may also purchase put options
and enter into closing transactions.

The principal reason for writing covered call options
on securities is to attempt to realize, through the
receipt of premiums, a greater return than would be
realized on the securities alone. In return for a
premium, the writer of a covered call option foregoes
the right to any appreciation in the value of the
underlying security above the strike price for the
life of the option (or until a closing purchase
transaction can be effected). Nevertheless, the call
writer retains the risk of a decline in the price of
the underlying security. Similarly, the principal
reason for writing covered put options is to realize
income in the form of premiums. The writer of a
covered put option accepts the risk of a decline in
the price of the underlying security. The size of the
premiums the fund may receive may be adversely
affected as new or existing institutions, including
other investment companies, engage in or increase
their option-writing activities.

Options written by the fund will normally have
expiration dates between one and six months from the
date written. The exercise price of the options may be
below, equal to or above the current market values of
the underlying securities when the options are
written. In the case of call options, these exercise
prices are referred to as "in-the-money," "at-the-
money" and "out-of-the-money," respectively.

The fund may write (a) in-the-money call options when
the manager expects the price of the underlying
security to remain flat or decline moderately during
the option period, (b) at-the-money call options when
the manager expects the price of the underlying
security to remain flat or advance moderately during
the option period and (c) out-of-the-money call
options when the manager expects that the price of the
security may increase but not above a price equal to
the sum of the exercise price plus the premiums
received from writing the call option. In any of the
preceding situations, if the market price of the
underlying security declines and the security is sold
at this lower price, the amount of any realized loss
will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-
money put options (the reverse of call options as to
the relation of exercise price to market price) may be
utilized in the same market environments as such call
options are used in equivalent transactions.

So long as the obligation of the fund as the writer of
an option continues, the fund may be assigned an
exercise notice by the broker/dealer through which the
option was sold, requiring it to deliver, in the case
of a call, or take delivery of, in the case of a put,
the underlying security against payment of the
exercise price. This obligation terminates when the
option expires or the fund effects a closing purchase
transaction. The fund can no longer effect a closing
purchase transaction with respect to an option once it
has been assigned an exercise notice. To secure its
obligation to deliver the underlying security when it
writes a call option, or to pay for the underlying
security when it writes a put option, the fund will be
required to deposit in escrow the underlying security
or other assets in accordance with the rules of the
Options Clearing Corporation ("Clearing Corporation")
or similar clearing corporation and the securities
exchange on which the option is written.

An option position may be closed out only where there
exists a secondary market for an option of the same
series on a recognized securities exchange or in the
over-the-counter market.  The fund expects to write
options only on national securities exchanges or in
the over-the-counter market.  The fund may purchase
put options issued by the Clearing Corporation or in
the over-the-counter market.
The fund may realize a profit or loss upon entering
into a closing transaction. In cases in which the fund
has written an option, it will realize a profit if the
cost of the closing purchase transaction is less than
the premium received upon writing the option and will
incur a loss if the cost of the closing purchase
transaction exceeds the premium received upon writing
the option. Similarly, when the fund has purchased an
option and engages in a closing sale transaction,
whether it recognizes a profit or loss will depend
upon whether the amount received in the closing sale
transaction is more or less than the premium the fund
initially paid for the original option plus the
related transaction costs.

Although the fund generally will purchase or write
only those options for which the manager believes
there is an active secondary market so as to
facilitate closing transactions, there is no assurance
that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist
for any particular option or at any particular time,
and for some options no such secondary market may
exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past,
for example, higher than anticipated trading activity
or order flow, or other unforeseen events, have at
times rendered certain of the facilities of the
Clearing Corporation and national securities exchanges
inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on
certain types of orders or trading halts or
suspensions in one or more options. There can be no
assurance that similar events, or events that may
otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it
might not be possible to effect closing transactions
in particular options. If, as a covered call option
writer, the fund is unable to effect a closing
purchase transaction in a secondary market, it will
not be able to sell the underlying security until the
option expires or it delivers the underlying security
upon exercise.

Securities exchanges generally have established
limitations governing the maximum number of calls and
puts of each class which may be held or written, or
exercised within certain periods, by an investor or
group of investors acting in concert (regardless of
whether the options are written on the same or
different securities exchanges or are held, written or
exercised in one or more accounts or through one or
more brokers).  It is possible that the fund and other
clients of the manager and certain of their affiliates
may be considered to be such a group.  A securities
exchange may order the liquidation of positions found
to be in violation of these limits, and it may impose
certain other sanctions.

In the case of options written by the fund that are
deemed covered by virtue of the fund's holding
convertible or exchangeable preferred stock or debt
securities, the time required to convert or exchange
and obtain physical delivery of the underlying common
stocks with respect to which the fund has written
options may exceed the time within which the fund must
make delivery in accordance with an exercise notice.
In these instances, the fund may purchase or
temporarily borrow the underlying securities for
purposes of physical delivery. By so doing, the fund
will not bear any market risk because the fund will
have the absolute right to receive from the issuer of
the underlying security an equal number of shares to
replace the borrowed stock, but the fund may incur
additional transaction costs or interest expenses in
connection with any such purchase or borrowing.

Although the manager will attempt to take appropriate
measures to minimize the risks relating to the fund's
writing of call options and purchasing of put and call
options, there can be no assurance the fund will
succeed in its option-writing program.

Futures Contracts and Options on Futures Contracts.
As described generally above, the fund may enter into
futures contracts and purchase and write (sell)
options on these contracts, including but not limited
to interest rate, securities index and foreign
currency contracts and put and call options on these
futures contracts. Futures contracts provide for the
future sale by one party and purchase by another party
of a specified amount of a specific security at a
specified future time and at a specified price.  The
primary purpose of entering into a futures contract by
the fund is to protect the fund from fluctuations in
the value of securities without actually buying or
selling the securities.  The fund may enter into
futures contracts and options on futures to seek
higher investment returns when a futures contract is
priced more attractively than stocks comprising a
benchmark index, to facilitate trading or to reduce
transaction costs.  The fund will only enter into
futures contracts and options on futures contracts
that are traded on a domestic exchange and board of
trade.  Assets committed to futures contracts will be
segregated on the fund's books to the extent required
by law.

The purpose of entering into a futures contract by the
fund is to protect the fund from fluctuations in the
value of securities without actually buying or selling
the securities. For example, in the case of stock
index futures contracts, if the fund anticipates an
increase in the price of stocks it intends to purchase
at a later time, the fund could enter into contracts
to purchase the stock index (known as taking a "long"
position) as a temporary substitute for the purchase
of stocks. If an increase in the market influences the
stock index as anticipated, the value of the futures
contracts increases and thereby serves as a hedge
against the fund's not participating in a market
advance. The fund then may close out the futures
contracts by entering into offsetting futures
contracts to sell the stock index (known as taking a
"short" position) as it purchases individual stocks.
The fund can accomplish similar results by buying
securities with long maturities and selling securities
with short maturities. But by using futures contracts
as an investment tool to reduce risk, given the
greater liquidity in the futures market, it may be
possible to accomplish the same result more easily and
more quickly.

No consideration will be paid or received by the fund
upon the purchase or sale of a futures contract.
Initially, the fund will be required to deposit with
the broker an amount of cash or cash equivalents equal
to approximately 1% to 10% of the contract amount
(this amount is subject to change by the exchange or
board of trade on which the contract is traded and
brokers or members of such board of trade may charge a
higher amount). This amount is known as "initial
margin" and is in the nature of a performance bond or
good faith deposit on the contract which is returned
to the fund, upon termination of the futures contract,
assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation
margin," to and from the broker, will be made daily as
the price of the index or securities underlying the
futures contract fluctuates, making the long and short
positions in the futures contract more or less
valuable, a process known as "marking-to-market." In
addition, when the fund enters into a long position in
a futures contract or an option on a futures contract,
it must deposit into a segregated account on the
fund's books an amount of cash or cash equivalents
equal to the total market value of the underlying
futures contract, less amounts held in the fund's
commodity brokerage account at its broker. At any time
prior to the expiration of a futures contract, the
fund may elect to close the position by taking an
opposite position, which will operate to terminate the
fund's existing position in the contract.

The fund will not enter into futures contracts and
related options for which the aggregate initial margin
and premiums exceed 5% of the fair market value of the
fund's assets after taking into account unrealized
profits and unrealized losses on any contracts it has
entered into.  All futures and options on futures
positions will be covered by owning the underlying
security or segregation of assets.  With respect to
long positions in a futures contract or option (e.g.,
futures contracts to purchase the underlying
instrument and call options purchased or put options
written on these futures contracts or instruments),
the underlying value of the futures contract at all
times will not exceed the sum of cash, short-term U.S.
debt obligations or other high quality obligations set
aside for this purpose.

Index-Related Securities ("Equity Equivalents") The
fund may invest up to 10% of the fund's assets in
certain types of securities that enable investors to
purchase or sell shares in a portfolio of securities
that seeks to track the performance of an underlying
index or a portion of an Index.  Such Equity
Equivalents include among others DIAMONDS (interests
in a portfolio of securities that seeks to track the
performance of the Dow Jones Industrial Average),
SPDRs or Standard & Poor's Depositary Receipts
(interests in a portfolio of securities that seeks to
track the performance of the S&P 500 Index), WEBS or
World Equity Benchmark Shares (interests in a
portfolio of securities that seeks to track the
performance of a benchmark index of a particular
foreign country's stocks), and the Nasdaq-100 Trust
(interests in a portfolio of securities of the largest
and most actively traded non-financial companies
listed on the Nasdaq Stock Market).  Such securities
are similar to index mutual funds, but they are traded
on various stock exchanges or secondary markets.  The
value of these securities is dependent upon the
performance of the underlying index on which they are
based.  Thus, these securities are subject to the same
risks as their underlying indexes as well as the
securities that make up those indexes. For example, if
the securities comprising an index that an index-
related security seeks to track perform poorly, the
index-related security will lose value.

Equity Equivalents may be used for several purposes,
including, to simulate full investment in the
underlying index while retaining a cash balance for
fund management purposes, to facilitate trading, to
reduce transaction costs or to seek higher investment
returns where an Equity Equivalent is priced more
attractively than securities in the underlying index.
Because the expense associated with an investment in
Equity Equivalents may be substantially lower than the
expense of small investments directly in the
securities comprising the indices they seek to track,
investments in Equity Equivalents may provide a cost-
effective means of diversifying the fund's assets
across a broad range of equity securities.

The prices of Equity Equivalents are derived and based
upon the securities held by the particular investment
company.  Accordingly, the level of risk involved in
the purchase or sale of an Equity Equivalent is
similar to the risk involved in the purchase or sale
of traditional common stock, with the exception that
the pricing mechanism for such instruments is based on
a basket of stocks.  The market prices of Equity
Equivalents are expected to fluctuate in accordance
with both changes in the net asset values of their
underlying indices and the supply and demand for the
instruments on the exchanges on which they are traded.
 Substantial market or other disruptions affecting an
Equity Equivalent could adversely affect the liquidity
and value of the shares of the fund investing in such
instruments.

Securities of Other Investment Companies  The
portfolio may invest in securities of other investment
companies to the extent permitted under the 1940 Act.
 Presently, under the 1940 Act, the fund may hold
securities of another investment company in amounts
which (i) do not exceed 3% of the total outstanding
voting stock of such company, (ii) do not exceed 5% of
the value of the fund's total assets and (iii) when
added to all other investment company securities held
by the fund, do not exceed 10% of the value of the
fund's total assets.
To the extent the fund invests in securities of other
investment companies, fund shareholders would
indirectly pay a portion of the operating costs of
such companies in addition to the expenses of its own
operation.  These costs include management, brokerage,
shareholder servicing and other operational expenses.
 Indirectly, then, if the fund invests in Equity
Equivalents it's shareholders may pay higher
operational costs than if they owned the underlying
investment companies directly. Additionally, the
fund's investments in such investment companies are
subject to limitations under the 1940 Act and market
availability.

RISK FACTORS

General.  There can be no assurance that the fund's
investment objective will be achieved.  The value of
the fund's investments will fluctuate in response to
changes in market and economic conditions, as well as
the financial condition and prospects of issuers in
which the fund invests.

Foreign Investments.  Investments in foreign
securities incur higher costs than investments in U.S.
securities, including higher costs in making
securities transactions as well as foreign government
taxes which may reduce the investment return of the
fund.  In addition, foreign investments may include
additional risks associated with currency exchange
rates, less complete financial information about
individual companies, less market liquidity and
political instability.

Economic and Monetary Union (EMU).  As part of EMU, on
January 1, 1999, 11 European countries adopted a
single common currency -- the Euro; however, budgetary
decisions remain in the hands of each participating
country, but are subject to each country's commitment
to avoid "excessive deficits" and other more specific
budgetary criteria.  A European Central Bank is
responsible for setting the official interest rate
within the Euro zone.  EMU may create new economic
opportunities for investors, such as easier cross-
border mergers, acquisitions and similar
restructurings, more efficient distribution and
product packaging and greater competition.  However,
EMU and the introduction of the Euro present unique
risks and uncertainties for investors in EMU-
participating countries, including:  (i) monetary and
economic union on this scale has never before been
attempted; (ii) there is uncertainty whether
participating countries will remain committed to EMU
in the face of changing economic conditions; (iii)
instability within EMU may increase the volatility of
European markets and may adversely affect the prices
of securities of European issuers in the funds'
portfolios; (iv) there is uncertainty concerning the
fluctuation of the Euro relative to non-Euro
currencies; and (v) there is no assurance that
interest rate, tax and labor regimes of EMU-
participating countries will converge over time.
These and other factors may cause market disruption
and could adversely affect European securities and
currencies held by the fund.

Futures Contracts and Related Options. There are
several risks in connection with the use of futures
contracts as a hedging device. Successful use of
futures contracts by the fund is subject to the
ability of the manager to predict correctly movements
in the stock market or in the direction of interest
rates. These predictions involve skills and techniques
that may be different from those involved in the
management of investments in securities. In addition,
there can be no assurance that there will be a perfect
correlation between movements in the price of the
securities underlying the futures contract and
movements in the price of the securities that are the
subject of the hedge. A decision of whether, when and
how to hedge involves the exercise of skill and
judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of market behavior
or unexpected trends in market behavior or interest
rates.

Positions in futures contracts may be closed out only
on the exchange on which they were entered into (or
through a linked exchange) and no secondary market
exists for those contracts. In addition, although the
fund intends to enter into futures contracts only if
there is an active market for the contracts, there is
no assurance that an active market will exist for the
contracts at any particular time. Most futures
exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices
during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may
be made that day at a price beyond that limit. It is
possible that futures contract prices could move to
the daily limit for several consecutive trading days
with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some
futures traders to substantial losses. In such event,
and in the event of adverse price movements, the fund
would be required to make daily cash payments of
variation margin; in such circumstances, an increase
in the value of the portion of the portfolio being
hedged, if any, may partially or completely offset
losses on the futures contract. As described above,
however, no assurance can be given that the price of
the securities being hedged will correlate with the
price movements in a futures contract and thus provide
an offset to losses on the futures contract.

INVESTMENT RESTRICTIONS

The fund has adopted the following fundamental
investment restrictions for the protection of
shareholders.  These restrictions cannot be changed
without approval by the holders of a majority of the
outstanding shares of the fund, defined as the lesser
of (a) 67% or more of the fund's shares present at a
meeting, if the holders of more than 50% of the
outstanding shares are present in person or by proxy
or (b) more than 50% of the fund's outstanding shares.
 In accordance with these restrictions, the fund will
not:

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

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

3.	Invest more than 25% of its total assets in
securities, the issuers of which 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.

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

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

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

7.	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.

While the fund is authorized to borrow money for
purposes of investment (leveraging) and to invest in
securities of foreign issuers, it has no current
intention of engaging in these investment activities
and will do so only when the fund's board of directors
determines that either or both of these activities are
in the best interests of shareholders.

The fund has also adopted certain nonfundamental
investment restrictions that may be changed by the
fund's board of directors at any time.  Accordingly,
the fund may not:

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

2.	Invest more than 5% of the value of its net
assets in warrants. Included within that amount,
but not to exceed 2% of the value of the fund's
net assets, may be warrants that are not listed
on the New York Stock Exchange, Inc. (the
"NYSE") or the American Stock Exchange.
Warrants acquired by the fund in units or
attached to securities may be deemed to be
without value.

3.	Invest in mineral-type programs or leases.

4.	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.

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

6.	Purchase securities of any company with a record
of less than three years' continuous operation
if such purchase would cause its investments in
such companies to exceed 5% of the value of its
total assets.  (For purposes of this limitation,
issuers include predecessors, sponsors,
controlling persons, general partners,
guarantors and originators of underlying
assets.)

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

DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND

Overall responsibility for management and supervision
of the fund rests with the fund's board of directors.
The directors approve all significant agreements
between the fund and the companies that furnish
services to the fund, including agreements with the
fund's distributor, investment adviser, custodian,
transfer agent and sub-transfer agent. The day-to-day
operations of the fund are delegated to the fund's
investment adviser and administrator, SBFM.

The directors and executive officers of the fund,
together with information as to their principal
business occupations during the past five years, are
shown below. The executive officers of the fund are
employees of organizations that provide services to
the fund.  Each director who is an "interested person"
of the fund, as defined in the 1940 Act, is indicated
by an asterisk.  The address of the "non-interested"
directors and executive officers of the fund is 7
World Trade Center, New York, New York 10048, unless
otherwise indicated.

Herbert Barg, Director (Age 77).  Private Investor.
His address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004.  Director/Trustee of sixteen
investment companies associated with Citigroup, Inc.
("Citigroup").

*Alfred J. Bianchetti Director (Age 78).  Retired;
formerly Senior Consultant to Dean Witter Reynolds
Inc.  His address is 19 Circle End Drive, Ramsey, New
Jersey 07466.  Director/Trustee of eleven investment
companies associated with Citigroup.

Martin Brody Director (Age 79).  Consultant, HMK
Associates; Retired Vice Chairman of the Board of
Restaurant Associates Corp.  His address is c/o HMK
Associates, 30 Columbia Turnpike, Florham Park, New
Jersey 07932.  Director/Trustee of twenty-one
investment companies associated with Citigroup.

Dwight B. Crane Director (Age 63).  Professor, Harvard
Business School.  His address is c/o Harvard Business
School, Soldiers Field Road, Boston, Massachusetts
02163.  Director/Trustee of twenty-three investment
companies associated with Citigroup.

Burt N. Dorsett Director (Age 70).  Managing Partner
of Dorsett McCabe Management. Inc., an investment
counseling firm; Director of Research Corporation
Technologies, Inc., a nonprofit patent clearing and
licensing firm.  His address is 201 East 62nd Street,
New York, New York 10021.  Director/Trustee of eleven
investment companies associated with Citigroup.

Elliot S. Jaffe Director (Age 74).  Chairman of the
Board and President of The Dress Barn, Inc.  His
address is 30 Dunnigan Drive, Suffern, New York 10901.
 Director/Trustee of eleven investment companies
associated with Citigroup.

Stephen E. Kaufman Director (Age 70).  Attorney.  His
address is 277 Park Avenue, New York, New York 10172.
 Director/Trustee of thirteen investment companies
associated with Citigroup.

Joseph J. McCann Director (Age 70).  Financial
Consultant; Retired Financial Executive, Ryan Homes,
Inc.  His address is 200 Oak Park Place, Pittsburgh,
Pennsylvania 15243.  Director/Trustee of eleven
investment companies associated with Citigroup.

*Heath B. McLendon Director (Age 67). Chairman of the
Board, President and Chief Executive Officer; Managing
Director of Salomon Smith Barney; President of SBFM
and Travelers Investment Adviser, Inc. ("TIA");
Chairman or Co-Chairman of the Board of 71 investment
companies associated with Salomon Smith Barney. His
address is 7 World Trade Center, New York, New York
10048.

Cornelius C. Rose, Jr. Director (Age 67).  President,
Cornelius C. Rose Associates, Inc., financial
consultants, and Chairman and Director of Performance
Learning Systems, an educational consultant.  His
address is Meadowbrook Village, Building 4, Apt 6,
West Lebanon, New Hampshire 03784.  Director/Trustee
of eleven investment companies associated with
Citigroup.

Lewis E. Daidone (Age 43).  Managing Director of
Salomon Smith Barney; Chief Financial Officer of the
Smith Barney Mutual funds; Director and Senior Vice
President of the manager and TIA.  Senior Vice
President or Executive Vice President and Treasurer of
eighty-three investment companies associated with
Citigroup.  His address is 125 Broad Street, New York,
New York 10004.

Harry D. Cohen (Age 60).  Vice President and
Investment Officer ; Managing Director of Salomon
Smith Barney; Investment Officer of SBFM, Vice
President of 2 investment companies associated with
Citigroup.  His address is 7 World Trade Center, New
York, New York  10048.

Scott Glasser (Age 35).  Vice President and Investment
Officer; Director of Salomon Smith Barney; Investment
Officer of SBFM, Vice President of 2 investment
companies associated with Citigroup. His address is 7
World Trade Center, New York, New York 10048.

Paul Brook (Age 47). Controller; Director of Salomon
Smith Barney; from 1997-1998 Managing Director of AMT
Capital Services Inc.; prior to 1997, Partner with
Ernst & Young LLP. Controller or Assistant Treasurer
of sixty investment companies associated with
Citigroup. His address is 125 Broad Street, New York,
New York 10004.

Christina T. Sydor (Age 50).  Secretary; Managing
Director of Salomon Smith Barney; General Counsel and
Secretary of the manager and TIA. Secretary of sixty
investment companies associated with Citigroup. Her
address is 7 World Trade Center, New York, New York
10048.

The following table shows the compensation paid by the
fund and other Smith Barney mutual funds to each
director during the fund's last fiscal year.  None of
the officers of the fund received any compensation
from the fund for such period.  The fund does not pay
retirement benefits to its directors and officers.
Officers and interested directors of the fund are
compensated by Salomon Smith Barney.


(THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT
BLANK.)












For the calendar year ended December 31, 2000, the
directors of the fund were paid the following
compensation.





Name of Person



Aggregate
Compensat
ion
from
Fund+

Total Pension
or
Retirement
Benefits
Accrued
As part of
Fund Expenses

Compensation
from Fund
and Fund
Complex
Paid to
Directors

Number of
Funds for
Which Director
Serves Within
Fund Complex


Herbert Barg**
Alfred
Bianchetti* **

Martin Brody**
Dwight B.
Crane**
Burt N.
Dorsett**
Elliot S.
Jaffe**
Stephen E.
Kaufman**
Joseph J.
McCann**
Heath B.
McLendon*
Cornelius C.
Rose, Jr.**

$7,100
  7,009
  5,600
  7,109
  7,109
  7,000
  7,109
  7,109
0
  7,109


  $0
0
0
0
0
0
0
0
0
0


$116,075
    58,900
  132,950
  155,175
    59,500
    58,700
  114,000
    59,500
0
 59,500


16
11
20
23
11
11
13
11
87
11


*	Designates an "interested" director.
**	Designates member of Audit Committee.
+	Upon attainment of age 80, fund directors are
required to change to emeritus status.
Directors emeritus are entitled to serve in
emeritus status for a maximum of 10 years.
Directors emeritus may attend meetings but have
no voting rights.  During the fund's last fiscal
year, aggregate compensation paid by the fund to
directors emeritus was [$1,875].


As of April 9, 2001, the directors and officers of the
fund, as a group, owned less than 1% of the
outstanding shares of beneficial interest of the fund.


To the best knowledge of the directors, as of April 9,
2001, 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:

Shareholder

Class

Shares Held

PFS Shareholder Services (B)
Attn: Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA  30199

Class B

Owned 159,246,262.14
14.52% of shares

Smith Barney Allocation Series Inc.
Balanced Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicun Blvd. - 3 rd Floor, Suite
200
Philadelphia, PA  19153-3111


Class Y

Owned 3,204,014.509
51.85% of shares






Smith Barney Allocation Series Inc.
Select Balanced Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicun Blvd. - 3 rd Floor, Suite
200
Philadelphia, PA  19153-3111







Class Y






Owned 1,551,378.000
25.10% of shares

Smith Barney Allocation Series Inc.
Conservative Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicun Blvd. - 3 rd Floor, Suite
200
Philadelphia, PA  19153-3111



Class Y


Owned 796,249.913
12.88% of shares

Smith Barney Allocation Series Inc.
Select Conservative Portfolio
PNC Bank NA
Attn: Sheila Heacock
8800 Tinicun Blvd. - 3 rd Floor, Suite
200
Philadelphia, PA  19153-3111



Class Y


Owned 373,746.581
6.04% of shares

State Street Bank & Trust Cust
The Travelers Group 401(k) Savings Plan
Attn: Rick Vest
225 Franklin Street
Boston, MA  02101




Class Z


Owned 16,961,681.915
97.06% of shares

INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment Adviser and Administrator

SBFM serves as investment adviser to the fund pursuant
to a written agreement (the "Investment Advisory
Agreement"), which was approved by the fund's board of
directors, including a majority of the directors who
are not interested persons of the fund or Smith Barney
(the "independent directors"). Subject to the
supervision and direction of the fund's board of
directors, the manager manages the fund's portfolio in
accordance with the fund's stated investment objective
and policies, makes investment decisions for the fund,
places orders to purchase and sell securities, and
employs professional portfolio managers and securities
analysts who provide research services to the fund.
The manager pays the salary of any officer and
employee who is employed by both it and the fund. The
manager bears all expenses in connection with the
performance of its services.  SBFM is a wholly owned
subsidiary of Salomon Smith Barney Holdings Inc.
("Holdings"), which in turn is a wholly owned
subsidiary of Citigroup.  SBFM (through predecessor
entities) has been in the investment counseling
business since 1968 and renders investment advice to a
wide variety of individual, institutional and
investment company clients that had aggregate assets
under management as of March 31, 2001 in excess of
$133 billion.

As compensation for SBFM's investment advisory
services rendered to the fund, the fund pays a fee
computed daily and paid monthly at the following
annual rates of the fund's average daily net assets:
0.55%, up to $250 million; 0.513% of the next $250
million; 0.476% of the next $500 million; 0.439% of
the next $1 billion, 0.402% of the next $l billion;
and 0.365% of the average daily net assets in excess
of $3 billion.  For the fiscal years ended December
31, 2000, 1999, and 1998, the fund paid  $21,551, 330,
$21,761,582 and $18,906,581, respectively, in
investment advisory fees.

SBFM also serves as administrator to the fund pursuant
to a written agreement (the "Administration
Agreement"), which was most recently approved by the
fund's board of directors, including a majority of the
independent directors of the fund. SBFM pays the
salary of any officer and employee who is employed by
both it and the fund and bears all expenses in
connection with the performance of its services.

As administrator, SBFM will: (a) assist in supervising
all aspects of the fund's operations; b) supply the
fund with office facilities (which may be in the
manager's own offices), statistical and research data,
data processing services, clerical, accounting and
bookkeeping services, including, but not limited to,
the calculation of (i) the net asset value of shares
of the fund, (ii) applicable contingent deferred sales
charges ("deferred sales charge") and similar fees and
charges and (iii) distribution fees, internal auditing
and legal services, internal executive and
administrative services, and stationary and office
supplies; and (c) prepare reports to shareholders of
the fund, tax returns and reports to and filings with
the Securities and Exchange Commission ("SEC") and
state blue sky authorities.

As compensation for administrative services rendered
to the fund, SBFM receives a fee computed daily and
paid monthly at the following annual rates: 0.20%, of
the value of the fund's average daily net assets up to
$250 million; 0.187% of the next $250 million; 0.174%
of the next $500 million; 0.161% of the next $1
billion; 0.148% of the next $1 billion and 0.135% of
the net assets in excess of $3 billion.  For the
fiscal years ended December 31, 2000, 1999 and 1998,
the fund paid $7,925,045, $8,002,567 and $6,946,684,
respectively, in administration fees.

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

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New
York, New York 10017, has been selected as the fund's
independent auditor to examine and report on the
fund's financial statements for the fiscal year ending
December 31, 2001.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to the fund.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York 10038, serves as counsel to the
directors who are not "interested persons" of the
fund.

Custodian, Transfer Agent and Sub-Transfer Agent

PFPC Trust Company ("custodian") located at 8800
Tinicum Boulevard, Philadelphia, Pennsylvania, 19153,
serves as the custodian of the fund.  Under its
custody agreement with the fund, the custodian holds
the fund's securities and keeps all necessary accounts
and records.  For its services, the custodian receives
a monthly fee based upon the month-end market value of
securities held in custody and also receives
securities transactions charges. The assets of the
fund are held under bank custodianship in compliance
with the 1940 Act.

Citi Fiduciary Trust Company (the "transfer agent"),
located at 125 Broad Street, New York, New York 10004,
serves as the fund's transfer and dividend-paying
agent.  Under the transfer agency agreement, the
transfer agent maintains the shareholder account
records for the fund, handles certain communications
between shareholders and the fund, distributes
dividends and distributions payable by the fund and
produces statements with respect to account activity
for the fund and its shareholders.  For these
services, the transfer agent receives fees from the
fund computed on the basis of the number of
shareholder accounts that the transfer agent maintains
for the fund during the month and is reimbursed for
out-of-pocket expenses.

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

The fund has also engaged the services of PFS
Shareholder Services as a sub-transfer agent for PFS
Accounts ("PFS" or "sub-transfer agent").  PFS is
located at 3100 Breckinridge Blvd, Bldg 200, Duluth,
Georgia 30099-0062.

Code of Ethics  Pursuant to Rule 17j-1 of the 1940
Act, the fund, its investment adviser and principal
underwriter has adopted a code of ethics that permits
personnel to invest in securities for their own
accounts, including securities that may be purchased
or held by the fund.  All personnel must place the
interests of clients first and avoid activities,
interests and relationships that might interfere with
the duty to make decisions in the best interests of
the clients.  All personal securities transactions by
employees must adhere to the requirements of the code
and must be conducted in such a manner as to avoid any
actual or potential conflict of interest, the
appearance of such a conflict, or the abuse of an
employee's position of trust and responsibility.  A
copy of the fund's Code of Ethics is on file with the
SEC.

DISTRIBUTOR

Salomon Smith Barney, Inc., located at 388 Greenwich
Street, New York, New York  10013 and PFS serve as the
fund's co-distributors, each  pursuant to a written
agreement dated June 5, 2000, (the "Distribution
Agreement") which was approved by the fund's board of
directors, including a majority of the independent
directors on April 17, 2000.  Prior to and up to June
5, 2000, CFBDS, Inc. served as the fund's distributor.

Each distributor may be deemed to be an underwriter
for purposes of the Securities Act of 1933 (the "1933
Act").   From time to time, each distributor, or its
affiliates may also pay for certain non-cash sales
incentives provided to PFS Investments Registered
Representatives. Such incentives do not have any
effect on the net amount invested. In addition to the
reallowances from the applicable public offering price
described above, PFS may, from time to time, pay or
allow additional reallowances or promotional
incentives, in the form of cash or other compensation
to PFS Investments Registered Representatives that
sell shares of the fund.

The distributor has entered into a selling agreement
with PFS and PFS has entered into an agreement with
PFSI giving PFSI the right to sell shares of the fund
on behalf of the distributor.  The distributor's
obligation is an agency or "best efforts" arrangement
under which the distributor is required to take and
pay only for such shares of each portfolio as may be
sold to the public.  The distributor is not obligated
to sell any stated number of shares.  The Distribution
Agreement is renewable from year to year if approved
(a) by the directors or by a vote of a majority of the
fund's outstanding voting securities, and (b) by the
affirmative vote of a majority of directors who are
not parties to the Distribution Agreement or
interested persons of any party by votes cast in
person at a meeting called for such purpose.  The
Distribution Agreement provides that it will terminate
if assigned, and that it may be terminated without
penalty by either party on 60 days' written notice.

For the period January 1, 1998 through October 7, 1998
the aggregate dollar amount of commissions on Class A
shares was $1,754,000, all of which was paid to
Salomon Smith Barney.  For the period October 8, 1998
through December 31, 1998 the aggregate dollar amount
of commissions on Class A shares was $261,000,
$234,900 of which was paid to Salomon Smith Barney.
For the fiscal year ended December 31, 1999 the
aggregate dollar amount of commissions on Class A
shares was $2,256,000, of which $2,030,400 was paid to
Salomon Smith Barney.  For the fiscal year ended
December 31, 2000 the aggregate dollar amount of
commissions on Class A shares was $2,183,000, a
portion of which was paid to Salomon Smith Barney and
CFBDS.  For the period ended December 31, 2000, the
aggregate dollar amount of commission paid to PFS was
$2,104, 177.

For the period June 12, 1998 through October 7, 1998
the aggregate dollar amount of commissions on Class L
shares was $126,000, all of which was paid to Salomon
Smith Barney. For the period October 8, 1998 through
December 31, 1998 the aggregate dollar amount of
commissions on Class L shares was $48,000, $43,200 of
which was paid to Salomon Smith Barney. For the fiscal
year ended December 31, 1999 the aggregate dollar
amount of commissions on Class L shares was $641,000,
of which $576,900 was paid to Salomon Smith Barney.
For the fiscal year ended December 31, 2000 the
aggregate dollar amount of commissions on Class L
shares was $561,000, a portion of which was paid to
Salomon Smith Barney and CFBDS.

For the years ended December 31, 1998, 1999 and 2000,
Salomon Smith Barney or its predecessor received from
shareholders $16,000, $6,000 and $27,000,
respectively, in deferred sales charges on the
redemption of Class A shares.

For the years ended December 31, 1998, 1999 and 2000,
Salomon Smith Barney or its predecessor received from
shareholders $1,091,000,  $1,155,000 and $1,408,000,
respectively, in deferred sales charges on the
redemption of Class B shares.

For the years ended December 31, 1998, 1999 and 2000,
Salomon Smith Barney or its predecessor received from
shareholders  $9,000, $44,000 and $55,000,
respectively, in deferred sales charges on the
redemption of Class L shares.

When payment is made by the investor before the
settlement date, unless otherwise noted by the
investor, the funds will be held as a free credit
balance in the investor's brokerage account and
Salomon Smith Barney may benefit from the temporary
use of the funds.  The fund's board of directors 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 Advisory and Distribution Agreements
for continuance.

Distribution Arrangements.  To compensate Salomon
Smith Barney for the services 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 the 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 daily net assets attributable to
the shares of the respective class.

The only classes of shares being offered for sale
through PFS Distributors is Class A shares and Class B
shares. Pursuant to the Plan (described above), PFS
Distributors is paid an annual service fee with
respect to Class A and Class B shares of the fund sold
through PFS Distributors at the annual rate of 0.25%
of the average daily net assets of the respective
class.  PFS Distributors is also paid an annual
distribution fee with respect to Class B shares at the
annual rate of 0.75% of the average daily net assets
attributable to that Class.  Class B shares that
automatically convert to Class A shares eight years
after the date of original purchase will no longer be
subject to a distribution fee. The fees are paid to
PFS Distributors, which in turn, pays PFS Investments
Inc. ("PFS Investments") to pay its PFS Investments
Registered Representatives for servicing shareholder
accounts and, in the case of Class B shares, to cover
expenses primarily intended to result in the sale of
those shares.  These expenses include: advertising
expenses; the cost of printing and mailing
prospectuses to potential investors; payments to and
expenses of PFS Investments Registered Representatives
and other persons who provide support services in
connection with the distribution of shares; interest
and/or carrying charges; and indirect and overhead
costs of PFS Investments associated with the sale of
fund shares, including lease, utility, communications
and sales promotion expenses.

The payments to PFS Investments Registered
Representatives for selling shares of a class include
a commission or fee paid by the investor or PFS at the
time of sale and, with respect to Class A and Class B
shares, a continuing fee for servicing shareholder
accounts for as long as a shareholder remains a holder
of that class.  PFS Investments Registered
Representatives may receive different levels of
compensation for selling different classes of shares.

PFS Investments may be deemed to be an underwriter for
purposes of the Securities Act of 1933. From time to
time, PFS or its affiliates may also pay for certain
non-cash sales incentives provided to PFS Investments
Registered Representatives.  Such incentives do not
have any effect on the net amount invested.  In
addition to the reallowances from the applicable
public offering price described above, PFS may from
time to time, pay or allow additional reallowances or
promotional incentives, in the form of cash or other
compensation to PFS Investments Registered
Representatives who sell shares of the fund.

The following service and distribution fees were
incurred during the years indicated:




	DISTRIBUTION PLAN FEES





Year
Ended 12/31/00

Year
Ended 12/31/99

Year
Ended 12/31/98

Class A

$  8,061,004

$  7,794,943

$   6,774,230

Class B

  14,809,610

  16,816,917

   14,393,673

Class L

    1,725,203

    1,229,475

        604,868

For the year ended December 31, 2000, Salomon Smith
Barney and/or PFS Distributors incurred distribution
expenses totaling $23,934,930, consisting of $757,927
for advertising, $100,156 for printing and mailing of
prospectuses, $8,430,199 for support services,
$14,388,856 for total compensation to Salomon Smith
Barney Financial Consultants, and $257,792 in accruals
for interest on the excess of Salomon Smith Barney
expenses incurred in distribution of the fund's shares
over the sum of the distribution fees and deferred
sales charges received by Salomon Smith Barney and/or
PFS Distributors from the fund.

Under its terms, the Plan continues from year to year,
provided such continuance is approved annually by vote
of the fund's board of directors, including a majority
of the independent directors. The Plan may not be
amended to increase the amount of the service and
distribution fees without shareholder approval, and
all amendments of the Plan also must be approved by
the directors and independent directors 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
directors or by vote of a majority (as defined in the
1940 Act) of the outstanding voting securities of the
class. Pursuant to the Plan, Salomon Smith Barney and
PFS Distributors will provide the fund's board of
directors with periodic reports of amounts expended
under the Plan and the purpose for which such
expenditures were made.

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the fund are
made by the manager, subject to the overall review of
the fund's board of directors. Although 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.

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

In selecting brokers or dealers to execute securities
transactions on behalf of the fund, the manager seeks
the best overall terms available.  In assessing the
best overall terms available for any transaction, the
manager will consider the factors the adviser deems
relevant, including the breadth of the market in the
security, the price of the security, the financial
condition and execution capability of the broker or
dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing
basis.  In addition, the Investment Advisory Agreement
 authorizes the manager, in selecting brokers or
dealers to execute a particular transaction and in
evaluating the best overall terms available, to
consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the fund, the other
portfolios and/or other accounts over which the
manager or its affiliates exercise investment
discretion.  The fees under the Investment Advisory
Agreement and/or administration agreements between the
fund and the manager and/or administrator,
respectively, are not reduced by reason of their
receiving such brokerage and research services.  The
fund's board of directors, in its discretion, may
authorize the manager to cause the fund to pay a
broker that provides such brokerage and research
services a brokerage commission in excess of that
which another broker might have charged for effecting
the same transaction, in recognition of the value of
such brokerage and research services.  The fund's
board of directors periodically will review the
commissions paid by the portfolios to determine if the
commissions paid over representative periods of time
were reasonable in relation to the benefits inuring to
the fund.

For the fiscal year ended December 31, 2000, the
following table sets forth certain information
regarding the fund's payment of brokerage commissions
and brokerage transactions to brokers because of
research services provided:


Amount of Transactions

Total Brokerage
Involving Commissions



Commissions Paid
Paid to Brokers

$857,302
 $591,596,412

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


(THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT
BLANK.)







The fund has paid the following in brokerage
commissions for portfolio transactions:

					Fiscal Year
	Fiscal Year 		Fiscal Year
					Ended	12/31/00	Ended
	12/31/99	Ended 12/31/98


Total Brokerage Commissions		$6,002,963
	$6,282,169		$4,113,439

Total Brokerage Commissions		$   328,961
	$    289,442		$   334,520
paid to Salomon Smith Barney
and its affiliates

% of Total Brokerage Commissions  	         5.48%
	          4.61%		         6.98%
paid to Salomon Smith Barney
and its affiliates

% of Total Transactions involving	         4.99%
	          3.67%		         6.47%
Commissions paid to Salomon
Smith Barney and its affiliates

Portfolio securities transactions on behalf of the
fund are placed by the manager with a number of
brokers and dealers, including Salomon Smith Barney.
Salomon Smith Barney has advised the fund that in
transactions with the fund, Salomon Smith Barney
charges a commission rate at least as favorable as the
rate Salomon Smith Barney charges its comparable
unaffiliated customers in similar transactions.

PORTFOLIO TURNOVER

The fund generally does not engage in short-term
trading but intends to purchase securities for
long-term capital appreciation.  The portfolio
turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the
year by the monthly average value of portfolio
securities.  Securities with remaining maturities of
one year or less at the date of acquisition are
excluded from the calculation.  For the fiscal years
ended December 31, 2000 and 1999, the fund's portfolio
turnover rate was 61% and 71%, respectively.

Future portfolio turnover rates may vary greatly from
year to year as well as within a particular year and
may be affected by cash requirements for redemptions
of the fund's shares.  Portfolio turnover rates will
largely depend on the level of purchases and
redemptions of fund shares.  Higher portfolio turnover
rates can result in corresponding increases in
brokerage commissions.  In addition, to the extent the
fund realizes net short-term capital gains as the
result of more portfolio transactions, distributions
of such gains would be taxable to shareholders as
ordinary income.




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
5.00
5.26
4.50
$  25,000 - 49,999
4.25
4.44
3.83
    50,000 -
99,999
3.75
3.90
3.38
  100,000 -
249,999
3.25
3.36
2.93
  250,000 -
499,999
2.75
2.83
2.48
  500,000 -
999,000
1,000,000 or more


2.00
0
2.04
0
1.80
up to 1.00

Purchases of Class A shares of $1,000,000 or more will
be made at net asset value without any initial sales
charge, but will be subject to a deferred sales charge
of 1.00% on redemptions made within 12 months of
purchase. The deferred sales charge on Class A shares
is payable to Salomon Smith Barney, which compensates
Salomon Smith Barney Financial Consultants and other
dealers whose clients make purchases of $1,000,000 or
more. The deferred sales charge is waived in the same
circumstances in which the deferred sales charge
applicable to Class B and Class L shares is waived.
See "Deferred Sales Charge Provisions" and "Waivers of
Deferred Sales Charge."

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

Class B Shares.  Class B shares are sold without an
initial sales charge but are subject to a deferred
sales charge payable upon certain redemptions.  See
"Deferred Sales Charge Provisions" on page 33.

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 Allocation Series Inc., for which there
is no minimum purchase amount).
Class Z Shares.  Class Z Shares are sold without an
initial sales charge or deferred sales charge and are
currently offered exclusively for sale to tax-exempt
employee benefit and retirement plans of Salomon Smith
Barney or any of its affiliates ("Qualified Plans")
and to certain unit investment trusts ("UIT")
sponsored by Salomon Smith Barney or any of its
affiliates.

PFS Investments Accounts. The fund offers two Classes
of shares to investors purchasing shares through PFS
Investments: Class A shares and Class B shares.

Initial purchases of shares of the fund must be made
through a PFS Investments Registered Representative by
completing the appropriate application. The completed
application should be forwarded to PFS Shareholder
Services, P.O. Box 105033, Atlanta, Georgia 30348.
Checks drawn on foreign banks must be payable in U.S.
dollars and have the routing number of the U.S. bank
encoded on the check. Subsequent investments may be
sent directly to PFS Shareholder Services. In
processing applications and investments, the PFS
Shareholder Services acts as agent for the investor
and for PFS Investments and also as agent for the
distributor, in accordance with the terms of the
prospectus.  If PFS Shareholder Services ceases to act
as such, a successor company named by the fund will
act in the same capacity so long as the account
remains open.

Shares purchased will be held in the shareholder's
account by PFS Shareholder Services. Share
certificates are issued only upon a shareholder's
written request to PFS Shareholder Services. A
shareholder who has insufficient funds to complete any
purchase, will be charged a fee of $30 per returned
purchase by PFS Shareholder Services.

Investors in Class A and Class B shares may open an
account by making an initial investment of at least
$1,000 for each account in each Class (except for
Systematic Investment Plan accounts), or $250 for an
IRA or a Self-Employed Retirement Plan in the fund.
Subsequent investments of at least $50 may be made for
each Class. For participants in retirement plans
qualified under Section 403(b)(7) or Section 401(a) of
the Code, the minimum initial investment requirement
for Class A and Class B shares and the subsequent
investment requirement for each Class in the fund is
$25. There are no minimum investment requirements in
Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney,
Directors or Trustees of any of the Smith Barney
mutual funds, and their spouses and children. The fund
reserves the right to waive or change minimums, to
decline any order to purchase its shares and to
suspend the offering of shares from time to time.
Purchase orders received by the Transfer Agent or PFS
Shareholder Services prior to the close of regular
trading on the NYSE, on any day the fund calculates
its net asset value, are priced according to the net
asset value determined on that day.

Upon completion of certain automated systems, initial
purchases of fund shares may be made by wire.  The
minimum investment that can be made by wire is
$10,000. Before sending the wire, the PFS Investments
Registered Representative must contact PFS Shareholder
Services at (800) 665-8677 to obtain proper wire
instructions.  Once an account is open, a shareholder
may make additional investments by wire.  The
shareholder should contact PFS Shareholder Services at
(800) 544-5445 to obtain proper wire instructions.

Upon completion of certain automated systems,
shareholders who establish telephone transaction
authority on their account and supply bank account
information will be able to make additions to their
accounts at any time.  Shareholders should contact PFS
Shareholder Services at (800) 544-5445 between 8:00
a.m. and 8:00 p.m. Eastern Standard Time any day that
the NYSE is open.  If a shareholder does not wish to
allow telephone subsequent investments by any person
in his account, he should decline the telephone
transaction option on the account application.  The
minimum telephone subsequent investment is $250 and
can be up to a maximum of $10,000.  By requesting a
subsequent purchase by telephone, you authorize PFS
Shareholder Services  to transfer funds from the bank
account provided for the amount of the purchase.  A
shareholder who has insufficient funds to complete the
transfer will be charged a fee of up to $30 by PFS
Shareholder Services.  A shareholder who places a stop
payment on a transfer or the transfer is returned
because the account has been closed, will also be
charged a fee of up to $30 by PFS Shareholder
Services.  Subsequent investments by telephone may not
be available if the shareholder cannot reach PFS
Shareholder Services whether because all telephone
lines are busy or for any other reason; in such case,
a shareholder would have to use the fund's regular
subsequent investment procedure described above.

PFS may pay its Registered Representatives an amount
equal to 0.40% of the amount invested if the purchase
represents redemption proceeds from an investment
company distributed by an entity other than PFS
Investments. In order to obtain such discounts, the
purchaser must provide sufficient information at the
time of purchase to permit verification that the
purchase would qualify for the elimination of the
sales charge.

In addition, Class A shares of the fund may be
purchased at net asset value by the PFS Primerica
Corporation Savings and Retirement Plan (the
''Primerica Plan'') for its participants, subject to
the provisions of the Employee Retirement Income
Security Act of 1974, as amended (''ERISA''). Class A
shares so purchased are purchased for investment
purposes and may not be resold except by redemption or
repurchase by or on behalf of the Primerica Plan.
Class A shares are also offered at net asset value to
accounts opened for shareholders by PFS Investments
Registered Representatives where the amounts invested
represent the redemption proceeds from investment
companies distributed by an entity other than PFS, if
such redemption has occurred no more than 60 days
prior to the purchase of shares of the trust, and the
shareholder paid an initial sales charge and was not
subject to a deferred sales charge on the redeemed
account. Class A shares are offered at net asset value
to such persons because of anticipated economies in
sales efforts and sales related expenses. The fund may
terminate, or amend the terms of, offering shares of
the fund at net asset value to such persons at any
time. PFS may pay PFS Investments Registered
Representatives, through whom purchases are made at
net asset value, an amount equal to 0.40% of the
amount invested if the purchase represents redemption
proceeds from an investment company distributed by an
entity other than PFS. Contact PFS Shareholder
Services at (800) 544-5445 for further information and
appropriate forms.

An account transcript is available at a shareholder's
request, which identifies every financial transaction
in an account since it has opened.  To defray
administrative expenses involved with providing
multiple years worth of information, there is a $15
charge for each Account Transcript requested.
Additional copies of tax forms are available at the
shareholder's request.  A $10 fee for each tax form
will be assessed.

Additional information regarding PFS Shareholder
Services may be obtained by contacting the Client
Services Department at (800) 544-5445.

General

Investors may purchase shares from a Service Agent.
In addition, certain investors, including qualified
retirement plans purchasing through certain Service
Agents, may purchase shares directly from the fund.
When purchasing shares of the fund, investors must
specify whether the purchase is for Class A, Class B,
Class L or Class Y shares.  Service Agents may charge
their customers an annual account maintenance fee in
connection with a brokerage account through which an
investor purchases or holds shares.  Accounts held
directly at the sub-transfer agent are not subject to
a maintenance fee.

Investors in Class A, Class B and Class L shares may
open an account in the fund by making an initial
investment of at least $1,000 for each account, or
$250 for an IRA or a Self-Employed Retirement Plan, in
the fund. Investors in Class Y shares may open an
account by making an initial investment of
$15,000,000. Subsequent investments of at least $50
may be made for all Classes. For participants in
retirement plans qualified under Section 403(b)(7) or
Section 401(c) of the Internal Revenue Code of 1986,
as amended (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 UIT sponsored by Salomon Smith
Barney, and directors/trustees of any of the Smith
Barney mutual funds, and their spouses and children.
The fund reserves the right to waive or change
minimums, to decline any order to purchase its shares
and to suspend the offering of shares from time to
time. Shares purchased will be held in the
shareholder's account by the sub-transfer agent. Share
certificates are issued only upon a shareholder's
written request to the sub-transfer agent.

Purchases of the fund's Class Z shares must be made in
accordance with the terms of a Qualified Plan or a
Salomon Smith Barney UIT.  There are no minimum
investment requirements for Class Z shares; however
the fund reserves the right to vary this policy at any
time.  Shareholders acquiring Class Z shares through a
Qualified Plan or a Salomon Smith Barney UIT should
consult the terms of their respective plans for
redemption provisions.

Minimum Account Size.  The fund reserves the right to
liquidate involuntarily any shareholder's account in
the fund if the aggregate net asset value of the
shares held in the fund account is less than $500. (If
a shareholder has more than one account in the fund,
each account must satisfy the minimum account size.)
The fund, however, will not redeem shares based solely
on market reductions in net asset value. Before the
fund exercises such right, shareholders will receive
written notice and will be permitted 60 days to bring
accounts up to the minimum to avoid involuntary
liquidation.

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

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

Sales Charge Waivers and Reductions

Initial Sales Charge Waivers.  Purchases of Class A
shares may be made at net asset value without a sales
charge in the following circumstances: (a) sales to
(i) board members and employees of Citigroup and its
subsidiaries and any Citigroup affiliated funds
including the Smith Barney mutual funds (including
retired board members and employees); the immediate
families of such persons (including the surviving
spouse of a deceased board member or employee); and to
a pension, profit-sharing or other benefit plan for
such persons and (ii) employees of members of the
National Association of Securities Dealers, Inc.,
provided such sales are made upon the assurance of the
purchaser that the purchase is made for investment
purposes and that the securities will not be resold
except through redemption or repurchase; (b) offers of
Class A shares to any other investment company to
effect the combination of such company with the fund
by merger, acquisition of assets or otherwise;
(c) purchases of Class A shares by any client of a
newly employed Service Agent (for a period up to 90
days from the commencement of the Service Agent'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 Service Agent's
prior employer, (ii) was sold to the client by the
Service Agent and (iii) was subject to a sales charge;
(d) purchases by shareholders who have redeemed Class
A shares in the fund (or Class A shares of another
Smith Barney mutual fund that is offered with a sales
charge) and who wish to reinvest their redemption
proceeds in the fund, provided the reinvestment is
made within 60 calendar days of the redemption; (e)
purchases by accounts managed by registered investment
advisory subsidiaries of Citigroup; (f) direct
rollovers by plan participants of distributions from a
401(k) plan offered to employees of Citigroup or its
subsidiaries or a 401(k) plan enrolled in the Smith
Barney 401(k) Program (Note: subsequent investments
will be subject to the applicable sales charge); (g)
purchases by a separate account used to fund certain
unregistered variable annuity contracts; (h)
investments of distributions from or proceeds from a
sale of a UIT sponsored by Salomon Smith Barney;
(i) purchases by investors participating in a Salomon
Smith Barney fee-based arrangement; and (j)  purchases
of Class A shares by Section 403(b) or Section 401(a)
or (k) accounts associated with Copeland Retirement
Programs. In order to obtain such discounts, the
purchaser must provide sufficient information at the
time of purchase to permit verification that the
purchase would qualify for the elimination of the
sales charge.

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

Letter of Intent - Class A Shares.  A Letter of Intent
for an amount of $25,000 or more provides an
opportunity for an investor to obtain a reduced sales
charge by aggregating investments over a 13 month
period, provided the investor refers to such Letter
when placing orders.  For purposes of a Letter of
Intent, the ''Amount of Investment'' as referred to in
the preceding sales charge table includes (i) all
Class A shares of the fund and other Smith Barney
mutual funds offered with a sales charge acquired
during the term of the letter plus (ii) the value of
all Class A shares previously purchased and still
owned.  Each investment made during the period
receives the reduced sales charge applicable to the
total amount of the investment goal.  If the goal is
not achieved within the period, the investor must pay
the difference between the sales charges applicable to
the purchases made and the charges previously paid, or
an appropriate number of escrowed shares will be
redeemed.  The term of the Letter will commence upon
the date the Letter is signed, or at the options of
the investor, up to 90 days before such date.  Please
contact a Service Agent or the transfer agent to
obtain a Letter of Intent application.

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

Deferred Sales Charge Provisions

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

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

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





Year Since Purchase Payment Was
Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth through eighth

0.00

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

In determining the applicability of any deferred sales
charge, it will be assumed that a redemption is made
first of shares representing capital appreciation,
next of shares representing the reinvestment of
dividends and capital gain distributions and finally
of other shares held by the shareholder for the
longest period of time.  The length of time that
deferred sales charge shares acquired through an
exchange have been held will be calculated from the
date 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'') (but, automatic
cash withdrawals in amounts equal to or less than
2.00% per month of the value of the shareholder's
shares will be permitted for withdrawal plans
established prior to November 7, 1994); (c)
redemptions of shares within 12 months following the
death or disability of the shareholder; (d)
redemptions of shares made in connection with
qualified distributions from retirement plans or IRAs
upon the attainment of age 591/2; (e) involuntary
redemptions; and (f) redemptions of shares to effect a
combination of the fund with any investment company by
merger, acquisition of assets or otherwise. In
addition, a shareholder who has redeemed shares from
other Smith Barney mutual funds may, under certain
circumstances, reinvest all or part of the redemption
proceeds within 60 days and receive pro rata credit
for any deferred sales charge imposed on the prior
redemption.

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

Salomon Smith Barney Retirement Programs

You may be eligible to participate in a retirement
program sponsored by Salomon Smith Barney or one of
its affiliates.  The fund offers Class A and Class L
shares at net asset value to participating plans under
the programs. You can meet minimum investment and
exchange amounts, if any, by combining the plan's
investments in any of the Smith Barney mutual funds.

There are no sales charges when you buy or sell shares
and the class of shares you may purchase depends on
the amount of your initial investment and/or the date
your account is opened.  Once a class of shares is
chosen, all additional purchases must be of the same
class.

For plans opened on or after March 1, 2000 that are
not plans for which Paychex Inc. or an affiliate
provides administrative services (a "Paychex Plan"),
Class A shares may be purchased regardless of the
amount invested.

For plans opened prior to March 1, 2000 and for
Paychex Plans, the class of shares you may purchase
depends on the amount of your initial investment:

Class A Shares.  Class A shares may be purchased by
plans investing at least $1 million.

Class L Shares.  Class L shares may be purchased by
plans investing less than $1 million.  Class L shares
are eligible to exchange into Class A shares not later
than 8 years after the plan joined the program.  They
are eligible for exchange in the following
circumstances:

If the plan was opened on or after June 21, 1996 and a
total of $1 million is invested in Smith Barney Funds
Class L shares (other than money market funds), all
Class L shares are eligible for exchange after the
plan is in the program for 5 years.

If the plan was opened before June 21, 1996 and a
total of $500,000 is invested in Smith Barney Funds
Class L shares (other than money market funds) on
December 31 in any year, all Class L shares are
eligible for exchange on or about March 31 of the
following year.

For more information, call your Service Agent or the
transfer agent.

Retirement Programs Opened On or After June 21, 1996.
 If, at the end of the fifth year after the date the
participating plan enrolled in the Smith Barney 401(k)
Program or the ExecChoiceTM Program, a participating
plan's total Class L holdings in all non-money market
Smith Barney mutual funds equal at least $1,000,000,
the participating plan will be offered the opportunity
to exchange all of its Class L shares for Class A
shares of the fund. (For participating plans that were
originally established through a Salomon Smith Barney
retail brokerage account, the five-year period will be
calculated from the date the retail brokerage account
was opened.) Such participating plans will be notified
of the pending exchange in writing within 30 days
after the fifth anniversary of the enrollment date
and, unless the exchange offer has been rejected in
writing, the exchange will occur on or about the 90th
day after the fifth anniversary date. If the
participating plan does not qualify for the five-year
exchange to Class A shares, a review of the
participating plan's holdings will be performed each
quarter until either the participating plan qualifies
or the end of the eighth year.

Retirement Programs Opened Prior to June 21, 1996.  In
any year after the date a participating plan enrolled
in the Smith Barney 401(k) Program, if a participating
plan's total Class L holdings in all non-money market
Smith Barney mutual funds equal at least $500,000 as
of the calendar year-end, the participating plan will
be offered the opportunity to exchange all of its
Class L shares for Class A shares of the fund. Such
Plans will be notified in writing within 30 days after
the last business day of the calendar year and, unless
the exchange offer has been rejected in writing, the
exchange will occur on or about the last business day
of the following March.

Any participating plan in the Smith Barney 401(k) or
the ExecChoiceTM Program, whether opened before or
after June 21, 1996, that has not previously qualified
for an exchange into Class A shares will be offered
the opportunity to exchange all of its Class L shares
for Class A shares of the fund, regardless of asset
size, at the end of the eighth year after the date the
participating plan enrolled in the Smith Barney 401(k)
Program or ExecChoiceTM Program.  Such plans will be
notified of the pending exchange in writing
approximately 60 days before the eighth anniversary of
the enrollment date and, unless the exchange has been
rejected in writing, the exchange will occur on or
about the eighth anniversary date. Once an exchange
has occurred, a participating plan will not be
eligible to acquire additional Class L shares, but
instead may acquire Class A shares of the same fund.
Any Class L shares not converted will continue to be
subject to the distribution fee.

Participating plans wishing to acquire shares of the
fund through the Smith Barney 401(k) Program or the
Smith Barney ExecChoiceTM Program must purchase such
shares directly from the transfer agent. For further
information regarding these Programs, investors should
contact a Service Agent.

Retirement Programs Investing in Class B Shares:
Class B shares of a fund are not available for
purchase by participating plans opened on or after
June 21, 1996, but may continue to be purchased by any
participating plan in the Smith Barney 401 (k) Program
opened prior to such date and originally investing in
such Class.  Class B shares acquired are subject to a
deferred sales charge of 3.00% of redemption proceeds
if the participating plan terminates within eight
years of the date the participating plan first
enrolled in the Smith Barney 401 (k) Program.

At the end of the eighth year after the date the
participating plan enrolled in the Smith Barney 401
(k) Program, the participating plan will be offered
the opportunity to exchange all of its Class B shares
for Class A shares of the same fund.  Such
participating plan will be notified of the pending
exchange in writing approximately 60 days before the
eighth anniversary of the enrollment date and, unless
the exchange has been rejected in writing, the
exchange will occur on or about the eighth anniversary
date.  Once the exchange has occurred, a participating
plan will not be eligible to acquire additional Class
B shares, but instead may acquire Class A shares of
the same fund.  If the participating plan elects not
to exchange all of its Class B shares at that time,
each Class B share held by the participating plan will
have the same conversion feature as Class B shares
held by other investors.  See "Purchase of Shares-
deferred sales charge Alternatives."

No deferred sales charge is imposed on redemptions of
Class B shares to the extent that the net asset value
of the shares redeemed does not exceed the current net
asset value of the shares purchased through
reinvestment of dividends or capital gain
distributions, plus the current net asset value of
Class B shares purchased more than eight years prior
to the redemption, plus increases in the net asset
value of the shareholder's Class B shares above the
purchase payments made during the preceding eight
years.  Whether or not the deferred sales charge
applies to the redemption by a participating plan
depends on the number of years since the participating
plan first became enrolled in the Salomon Smith Barney
401(k) Program, unlike the applicability of the
deferred sales charge to redemptions by other
shareholders, which depends on the number of years
since those shareholders made the purchase payment
from which the amount is being redeemed.

The deferred sales charge will be waived on
redemptions of Class B shares in connection with lump-
sum or other distributions made by a participating
plan as a result of (a) the retirement of an employee
in the participating plan; (b) the termination of
employment of an employee in the participating plan;
(c) the death or disability of an employee in the
participating plan; (d) the attainment of age 59 1/2 by
an employee in the participating plan; (e) hardship of
an employee in the participating plan to the extent
permitted under Section 401(k) of the Code; or (f)
redemptions of shares in connection with a loan made
by the participating plan to an employee.

Determination of Public Offering Price

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

REDEMPTION OF SHARES

The right of redemption of shares of the fund may be
suspended or the date of payment postponed (a) for any
periods during which the NYSE is closed (other than
for customary weekend and holiday closings), (b) when
trading in the markets the fund normally utilizes is
restricted, or an emergency exists, as determined by
the SEC, so that disposal of the fund's investments or
determination of its net asset value is not reasonably
practicable or (c) for any other periods as the SEC by
order may permit for the protection of the fund's
shareholders.

If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed
for transfer (or be accompanied by an endorsed stock
power) and must be submitted to the sub-transfer agent
together with the redemption request.  Any signature
appearing on a share certificate, stock power or
written redemption request in excess of $10,000 must
be guaranteed by an eligible guarantor institution
such as a domestic bank, savings and loan institution,
domestic credit union, member bank of the Federal
Reserve System or member firm of a national securities
exchange.  Written redemption requests of $10,000 or
less do not require a signature guarantee unless more
than one such redemption request is made in any 15-day
period or the redemption proceeds are to be sent to an
address other than the address of record.  Unless
otherwise directed, redemption proceeds will be mailed
to an investor's address of record.  The transfer
agent may require additional supporting documents for
redemptions made by corporations, executors,
administrators, directors or guardians. A redemption
request will not be deemed properly received until the
transfer agent receives all required documents in
proper form.

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

Qualified Plans may redeem Class Z shares on any day
the fund calculates its net asset value.


Distribution in Kind

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

PFS Investments Accounts

Shareholders may redeem for cash some or all of their
shares of the fund at any time by sending a written
request in proper form directly to the sub-transfer
agent, PFS Shareholder Services, at P.O. Box 105033,
Atlanta, Georgia 30348-5033. If you should have any
questions concerning how to redeem your account after
reviewing the information below, please contact PFS
Shareholder Services at (800) 544-5445, Spanish-
speaking representatives (800) 544-7278 or TDD Line
for the Hearing Impaired (800) 824-1721.

The request for redemption must be signed by all
persons in whose names the shares are registered.
Signatures must conform exactly to the account
registration. If the proceeds of the redemption exceed
$50,000, or if the proceeds are not paid to the record
owner(s) at the record address, if the shareholder(s)
has had an address change within 45 days or less of
the shareholder's redemption request, or if the
shareholder(s) is a corporation, sole proprietor,
partnership, trust or fiduciary, signature(s) must be
guaranteed by one of the following: a bank or trust
company; a broker/dealer; a credit union; a national
securities exchange, registered securities association
or clearing agency; a savings and loan association; or
a federal savings bank.

Generally, a properly completed redemption form with
any required signature guarantee is all that is
required for a redemption. In some cases, however,
other documents may be necessary. For example, in the
case of shareholders holding certificates, the
certificates for shares being redeemed must accompany
the redemption request. Additional documentary
evidence of authority is also required by PFS
Shareholder Services in the event redemption is
requested by a corporation, partnership, trust,
fiduciary, executor or administrator. Additionally, if
a shareholder requests a redemption from a Retirement
Plan account (IRA or SEP), such request must state
whether or not federal income tax is to be withheld
from the proceeds of the redemption check. Redemption
from a 403(b)(7) account requires completion of a
special form.  Please call PFS Shareholder Services at
(800) 544-5445 between 8:00 a.m. and 8:00 p.m. Eastern
Standard Time to obtain the proper forms.

A shareholder may utilize PFS Shareholder Services
Telephone Redemption service to redeem his or her
account as long as they have authorized the telephone
redemption option.  If a shareholder does not wish to
allow telephone redemptions by any person in his
account, he should decline the telephone transaction
option on the account application.  The telephone
redemption option can be used only if: (a) the
redemption proceeds are to be mailed to the address of
record and there has been no change of address of
record within the preceding 45 days; (b) the shares to
be redeemed are not in certificate form; (c); the
person requesting the redemption can provide proper
identification information; and (d) the proceeds of
the redemption do not exceed $50,000.  403(b)(7)
accounts and accounts not registered in the name of an
individual(s) are not eligible for the telephone
redemption option.  Telephone redemption requests can
be made by contacting PFS Shareholder Services at
(800) 544-5445 between 8:00 a.m. and 8:00 p.m. Eastern
Standard Time any day that the NYSE is open.
Telephone redemption may not be available if the
shareholder cannot reach PFS Shareholder Services
whether because all telephone lines are busy or for
any other reason; in such case, a shareholder would
have to use the fund's regular redemption procedure
described above.

Redemption proceeds can be sent by check to the
address of record, by wire transfer to a bank account
designated on the application or to a bank account
designated on the application via the Automated
Clearinghouse (ACH).  A shareholder will be charged a
$25 service fee for wire transfers and a nominal
service fee for transfers made directly to the
shareholder's bank by the ACH. PFS Shareholder
Services will process and mail a shareholder's
redemption check usually within two to three business
days after receiving the redemption request in good
order.  The shareholder may request the proceeds to be
mailed by two-day air express for an $8 fee that will
be deducted from the shareholder's account or by one-
day air express for a $15 fee that will be deducted
from the shareholder's account.

Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the "Withdrawal
Plan") is available to shareholders of the fund who
own shares of the fund with a value of at least
$10,000 and who wish to receive specific amounts of
cash monthly or quarterly.  Withdrawals of at least
$50 may be made under the Withdrawal Plan by redeeming
as many shares of the fund as may be necessary to
cover the stipulated withdrawal payment.  Any
applicable deferred sales charge will not be waived on
amounts withdrawn by shareholders that exceed 1.00%
per month of the value of a shareholder's shares at
the time the Withdrawal Plan commences.  (With respect
to Withdrawal Plans in effect prior to November 7,
1994, any applicable deferred sales charge will be
waived on amounts withdrawn that do not exceed 2.00%
per month of the value of a shareholder's shares at
the time the Withdrawal Plan commences).  To the
extent withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in a fund,
continued withdrawal payments will reduce the
shareholder's investment, and may ultimately exhaust
it.  Withdrawal payments should not be considered as
income from investment in a fund.  Furthermore, as it
generally would not be advantageous to a shareholder
to make additional investments in the fund at the same
time he or she is participating in the Withdrawal
Plan, purchases by such shareholders in amounts of
less than $5,000 ordinarily will not be permitted.

Shareholders of a fund who wish to participate in the
Withdrawal Plan and who hold their shares of the fund
in certificate form must deposit their share
certificates with the sub-transfer agent as agent for
Withdrawal Plan members.  All dividends and
distributions on shares in the Withdrawal Plan are
reinvested automatically at net asset value in
additional shares of the fund involved.  A shareholder
who purchases shares directly through the sub-transfer
agent may continue to do so and applications for
participation in the Withdrawal Plan must be received
by the sub-transfer agent no later than the eighth day
of the month to be eligible for participation
beginning with that month's withdrawal.  For
additional information, shareholders should contact a
Service Agent.

Waivers of Deferred Sales Charge

The deferred sales charge will be waived on: (a)
exchanges (see "Exchange Privilege" in the
prospectus); (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"
in the prospectus) (but, automatic cash withdrawals in
amounts equal to or less than 2.00% per month of the
value of the shareholder's shares will be permitted
for withdrawal plans established prior to November 7,
1994); (c) redemptions of shares within 12 months
following the death or disability of the shareholder;
(d) redemptions of shares made in connection with
qualified distributions from retirement plans or IRAs
upon the attainment of age 591/2 ; (e) involuntary
redemptions; and (f) redemptions of shares to effect a
combination of the fund with any investment company by
merger, acquisition of assets or otherwise.  In
addition, a shareholder who has redeemed shares from
other Smith Barney mutual funds may, under certain
circumstances, reinvest all or part of the redemption
proceeds within 60 days and receive pro rata credit
for any deferred sales charge imposed on the prior
redemption.  deferred sales charge waivers will be
granted subject to confirmation (by Salomon Smith
Barney in the case of shareholders who are also
Salomon Smith Barney clients or by the transfer agent
in the case of all other shareholders) of the
shareholder's status or holdings, as the case may be.

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.

PFS ACCOUNTS

Initial purchase of shares of the fund must be made
through a PFS Investments Registered Representative by
completing the appropriate application. The completed
application should be forwarded to PFS Shareholder
Services, the sub-transfer agent, with regard to PFS
Accounts, P.O. Box 105033, Atlanta, Georgia 30348-
5033. Checks drawn on foreign banks must be payable in
U.S. dollars and have the routing number of the U.S.
bank encoded on the check. Subsequent investments may
be sent directly to the sub-transfer agent.  In
processing applications and investments, the transfer
agent acts as agent for the investor and for PFS
Investments and also as agent for the distributor, in
accordance with the terms of the prospectus.  If the
transfer agent ceases to act as such, a successor
company named by the fund will act in the same
capacity so long as the account remains open.

Shares purchased will be held in the shareholder's
account by the sub-transfer agent. Share certificates
are issued only upon a shareholder's written request
to the sub-transfer agent. A shareholder that has
insufficient funds to complete any purchase will be
charged a fee of $30 per returned purchase by PFS.

A shareholder, enrolled in the Systematic Investment
Plan, who has insufficient funds to complete a
transfer will be charged a fee of up to $30.00.

Investors in Class A and Class B shares may open an
account by making an initial investment of at least
$1,000 for each account in each Class (except for
Systematic Investment Plan accounts), or $250 for an
IRA or a Self-Employed Retirement Plan in a fund.
Subsequent investments of at least $50 may be made for
each Class. For participants in retirement plans
qualified under Section 403(b)(7) or Section 401(a) of
the Code, the minimum initial investment requirement
for Class A and Class B shares and the subsequent
investment requirement for each Class in the fund is
$25. For the fund's Systematic Investment Plan, the
minimum initial investment requirement for Class A and
Class B shares and the subsequent investment
requirement for each Class is $25. There are no
minimum investment requirements in Class A shares for
employees of Citigroup and its subsidiaries, including
Salomon Smith Barney, directors or trustees of any of
the Smith Barney mutual funds, and their spouses and
children. The fund reserves the right to waive or
change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time
to time.  Purchase orders received by the transfer
agent or sub-transfer agent prior to the close of
regular trading on the NYSE, on any day the fund
calculates its net asset value, are priced according
to the net asset value determined on that day.

Upon completion of certain automated systems,
shareholders who establish telephone transaction
authority on their account and supply bank account
information may make additions to their accounts at
any time.  Initial purchases of fund shares may also
be made by wire.  The minimum investment that can be
made by wire is $10,000.  Once an account is open, a
shareholder may make additional investments by wire.
Prior to sending a wire, shareholders should contact
the sub-transfer agent at (800) 544-5445 between 8:00
a.m. and 8:00 p.m. Eastern Standard Time any day that
the NYSE is open.  If a shareholder does not wish to
allow telephone subsequent investments by any person
in his account, he should decline the telephone
transaction option on the account application.  The
minimum telephone subsequent investment is $250 and
can be up to a maximum of $10,000.  By requesting a
subsequent purchase by telephone, you authorize the
sub-transfer agent to transfer funds from the bank
account provided for the amount of the purchase.  A
shareholder that has insufficient funds to complete
the transfer will be charged a fee of up to $30 by PFS
or the sub-transfer agent.  A shareholder who places a
stop payment on a transfer or the transfer is returned
because the account has been closed, will also be
charged a fee of up to $30 by PFS or the sub-transfer
agent.  Subsequent investments by telephone may not be
available if the shareholder cannot reach the sub-
transfer agent whether because all telephone lines are
busy or for any other reason; in such case, a
shareholder would have to use the fund's regular
subsequent investment procedure described above.

VALUATION OF SHARES

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

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

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

Generally, the fund's investments are valued at market
value or, in the absence of a market value with
respect to any securities, at fair value as determined
by or under the direction of the fund's board of
directors.  Short-term investments that mature in 60
days or less are valued at amortized cost whenever the
fund's board of directors determines that amortized
cost is the fair value of those instruments.

EXCHANGE PRIVILEGE

Shareholders of any of the Smith Barney mutual funds
may exchange all or part of their shares for shares of
the same Class of other Smith Barney mutual funds, on
the basis of relative net asset value per share at the
time of exchange as follows:

A.  Class A and Class Y shares of the fund may be
exchanged without a sales charge for the
respective shares of any of the Smith Barney
mutual funds.

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

C. Class L shares of any fund may be exchanged
without a sales charge.  For purposes of
deferred sales charge applicability, Class L
shares of the fund exchanged for Class C shares
of another Smith Barney Mutual fund will be
deemed to have been owned since the date the
shares being exchanged were deemed to be
purchased.

D. Holders of Class Z shares should consult
their Qualified Plans for information about
available exchange options.

The exchange privilege enables shareholders in any
Smith Barney mutual fund to acquire shares of the same
Class in a fund with different investment objectives
when they believe a shift between funds is an
appropriate investment decision.  This privilege is
available to shareholders residing in any state in
which the fund shares being acquired may legally be
sold.  Prior to any exchange, the shareholder should
obtain and review a copy of the current prospectus of
each fund into which an exchange is being considered.
 Prospectuses may be obtained from a Service Agent.

Upon receipt of proper instructions and all necessary
supporting documents, shares submitted for exchange
are redeemed at the then-current net asset value and,
subject to any applicable deferred sales charge, the
proceeds are immediately invested, at a price as
described above, in shares of the fund being acquired.
 Salomon Smith Barney reserves the right to reject any
exchange request.  The exchange privilege may be
modified or terminated at any time after written
notice to shareholders.

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

PERFORMANCE DATA

From time to time the fund may advertise its total
return and average annual total return in
advertisements and/or other types of sales literature.
 These figures are computed separately for Class A,
Class B, Class L, Class Y and Class Z shares of the
fund.  These figures are based on historical earnings
and are not intended to indicate future performance.
Total return is computed for a specified period of
time assuming deduction of the maximum sales charge,
if any, from the initial amount invested and
reinvestment of all income dividends and capital gain
distributions on the reinvestment dates at prices
calculated as stated in the prospectus, then dividing
the value of the investment at the end of the period
so calculated by the initial amount invested and
subtracting 100%.  The standard average annual total
return, as prescribed by the SEC is derived from this
total return, which provides the ending redeemable
value.  Such standard total return information may
also be accompanied with nonstandard total return
information for differing periods computed in the same
manner but without annualizing the total return or
taking sales charges into account.  The fund may also
include comparative performance information in
advertising or marketing its shares.  Such performance
information may include data from Lipper Analytical
Services, Inc. and other financial publications.

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


(THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT
BLANK.


Average Annual Total Return

A fund's "average annual total return," as described
below, is computed according to a formula prescribed
by the SEC.  The formula can be expressed as follows:

P(1 + T)n = ERV

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

			T	= 	average annual
total return.

			n	= 	number of years.

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

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.  A fund's net investment income changes in
response to fluctuations in interest rates and the
expenses of the fund.

Average Annual Total Return for the
fiscal year ended December 31, 2000



Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
(4.32)
%
14.84%
14.09%
12.31%
Class B3
(4.74)
%
14.99%
N/A
13.62%
Class L4
(1.99)
%
14.88%
N/A
13.04%
Class Y5
1.07%
N/A
N/A
16.30%
Class Z6
1.07%
16.43%
N/A
14.87%
_______________________
	1	Class A, B,  L, Y and Z commenced operations on
 March10, 1970, November 6, 1992,  February 4,
1993, January 30, 1996 and November 6, 1992,
respectively.
2 The average annual total return figure assumes
that the maximum 5.00% sales charge has been
deducted from the investment at the time of
purchase.  If the maximum sales charge had not
been deducted, the average annual total return
for Class A shares for the same periods would
have been 0.73%, 16.03%, 14.68% and 12.49% for
one year, five year and ten year and since
inception of the fund, respectively.
	3	The average annual total return figure assumes
that the maximum applicable deferred sales
charge has been deducted from the investment at
the time of redemption.  If the maximum deferred
sales charge had not been deducted, the average
annual total return for Class B shares for the
same periods would have been (0.12)%, 15.10% and
13.62%, for the one year, five year and since
inception of the fund, respectively.
	4	The average annual total return figure assumes
that the maximum applicable initial and deferred
sales charges have been deducted from the
investment at the time of redemption.  If the
maximum initial and deferred sales charges had
not been deducted, the average annual total
return for Class L shares for the same periods
would have been (0.07)%, 15.11% and 13.18% for
one year, five year and since inception of the
fund, respectively.
5	Class Y shares do not incur initial sales
charges nor deferred sales charges.
6      Class Z shares to not incur initial sales
charges nor deferred sales charges.


Aggregate Total Return

The fund's "aggregate total return," as described
below, represents the cumulative change in the value
of an investment in the fund for the specified period
and is computed by the following formula:

ERV - P
P

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

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

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.


Aggregate Annual Total Return for
the fiscal year ended December 31,
2000



Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
(4.32)
%
99.70%
273.67
%

3,472.50
%
Class B3
(4.74)
%
101.05%
N/A

183.08%
Class L4
(1.99)
%
100.10
N/A

163.46%
Class Y5
1.07%
N/A
N/A

41.04%
Class Z6
1.07%
113.95%
N/A

209.48%
_______________________
	1	Class A, B, L, Y and Z commenced operations on
March 10, 1970,  November 6, 1992, February 4,
1993, January 30, 1996 and November 6, 1992,
respectively.
2      The average annual total return figure
assumes that the maximum 5.00% sales charge has
been deducted from the investment        at the
time of purchase.  If the maximum sales charge had
not been deducted, the average annual total return
for Class A        shares for the same period would
have been 0.73%, 110.27% , 293.487% and 3,659.55%,
for the one year, five year, ten        year  and
since inception of the fund, respectively.
	3	The average annual total return figure assumes
that the maximum applicable deferred sales
charge has been deducted from the investment at
the time of redemption.  If the maximum deferred
sales charge had not been deducted, the average
annual total return for Class B shares for the
same periods would have been (0.12)%, 102.05%
and 183.08%, for the one year, five year and
since inception of the fund, respectively.
	4	The average annual total return figure assumes
that the maximum applicable initial and deferred
sales charges have been deducted from the
investment at the time of redemption.  If the
maximum initial and deferred sales charges had
not been deducted, the average annual total
return for Class L shares for the same periods
would have been (0.07)%, 102.12% and 166.09% for
one year, five year and since inception of the
fund, respectively.
5	Class Y shares do not incur initial sales
charges nor deferred sales charges.
6      Class Z shares to not incur initial sales
charges nor deferred sales charges.


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

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

The fund's policy is to distribute its net investment
income and net realized capital gains, if any,
annually.  The fund may also pay additional dividends
shortly before December 31 from certain amounts of
undistributed ordinary and capital gains realized, in
order to avoid a Federal excise tax liability.

If a shareholder does not otherwise instruct,
dividends and capital gains distributions will be
reinvested automatically in additional shares of the
same Class at net asset value, subject to no sales
charge or deferred sales charge.   A shareholder may
change the option at any time by notifying his/her
Service Agent.  Shareholders whose accounts are held
directly at PFPC should notify PFPC in writing,
requesting a change to this reinvest option.

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

Taxes

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

The Fund and Its Investments

The fund intends to continue to qualify to be treated
as a regulated investment company 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 which are
determined to be engaged in the same or similar trades
or businesses or related trades or businesses.  The
fund expects that all of its foreign currency gains
will be directly related to its principal business of
investing in stocks and securities.

As a regulated investment company, the fund will not
be subject to United States federal income tax on its
investment company taxable income (i.e., income other
any excess of its net realized long-term capital gains
over its net realized short-term capital losses ("net
realized capital gains") or on its net realized
capital gains, if any, it distributes to its
shareholders, provided an amount equal to at least 90%
of its investment company taxable income, plus or
minus certain other adjustments as specified in the
Code and 90% of 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 it does not distribute.

The Code imposes a 4% nondeductible excise tax on the
fund to the extent it does not distribute by the end
of any calendar year at least 98% of its net
investment income for that year and 98% of the net
amount of its capital gains (both long-term and short-
term) for the one-year period ending, as a general
rule, on October 31 of that year.  For this purpose,
however, any 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 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 long-term capital gains.  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) with respect to certain of its assets in
order to qualify as a regulated investment company in
a subsequent year.

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

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

Foreign Investments.  Dividends or other income
(including, in some cases, capital gains) received by
the fund from investments in foreign securities may be
 subject to withholding and other taxes imposed by
foreign countries.  Tax conventions between certain
countries and the United States may reduce or
eliminate such taxes in some cases.  The fund will not
be eligible to elect to treat any foreign taxes paid
by it as paid by its shareholders, who therefore will
not be entitled to credits for such taxes on their own
tax returns.  Foreign taxes paid by the fund will
reduce the return from the fund's investments.

Passive Foreign Investment Companies.  If the fund
purchases shares in certain foreign investment
entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United
States federal income tax on a portion of any "excess
distribution" or gain from the disposition of such
shares even if such income is distributed as a taxable
dividend by the fund to its shareholders. Additional
charges in the nature of interest may be imposed on
the fund in respect of deferred taxes arising from
such distributions or gains.  If the fund were to
invest in a PFIC and elected to treat the PFIC as a
"qualified electing fund" under the Code, in lieu of
the foregoing requirements, the fund might be required
to include in income each year a portion of the
ordinary earnings and net capital gains of the
qualified electing fund, even if not distributed to
the fund, and such amounts would be subject to the 90%
and excise tax distribution requirements described
above.  In order to make this election, the fund would
be required to obtain certain annual information from
the PFICs in which it invests, which may be difficult
or not possible to obtain.

Alternatively, the fund may make a mark-to-market
election for its PFIC stock.  This election would
result in the fund being treated as if it had sold and
repurchased all of the PFIC stock at the end of each
year.  In this case, the fund would report gains as
ordinary income and would deduct losses as ordinary
losses to the extent of previously recognized gains.
The election, once made, would be effective for all
subsequent taxable years of the fund, unless revoked
with the consent of the Internal Revenue Service
("IRS"). By making the election, the fund could
potentially ameliorate the adverse tax consequences
with respect to its ownership of shares in a PFIC, but
in any particular year may be required to recognize
income in excess of the distributions it receives from
PFICs and its proceeds from dispositions of PFIC
stock.  The fund may have to distribute this "phantom"
income and gain to satisfy its distribution
requirement and to avoid imposition of the 4% excise
tax.  The fund will make the appropriate tax
elections, if possible, and take any additional steps
necessary to mitigate the effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions.  Any dividend declared by
the fund in October, November or December of any
calendar year and payable to shareholders of record on
a specified date in such a month shall be deemed to
have been received by each shareholder on December 31
of such calendar year and to have been paid by the
fund not later than such December 31, provided such
dividend is actually paid by the fund during January
of the following calendar year.  The fund intends to
distribute annually to its shareholders substantially
all of its investment company taxable income, and any
net realized capital gains.  The fund currently
expects to distribute any such excess annually to its
shareholders.  However, if the fund retains for
investment an amount equal to all or a portion of its
net realized capital gains, it will be subject to a
corporate tax (currently at a rate of 35%) on the
amount retained. In that event, the fund will
designate such retained amounts as undistributed
capital gains in a notice to its shareholders who (a)
will be required to include in income for United
States federal income tax purposes, as long-term
capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit
their proportionate shares of the 35% tax paid by the
fund on the undistributed amount against their United
States federal income tax liabilities, if any, and to
claim refunds to the extent their credits exceed their
liabilities, if any, and (c) will be entitled to
increase their tax basis, for United States federal
income tax purposes, in their shares by an amount
equal to 65% of the amount of undistributed capital
gains included in the shareholder's income.
Organizations or persons not subject to federal income
tax on such capital gains will be entitled to a refund
of their pro rata share of such taxes paid by the fund
upon filing appropriate returns or claims for refund
with the IRS.

Dividends of net investment income and distributions
of net realized short-term capital gains are taxable
to a United States shareholder as ordinary income,
whether paid in cash or in shares.  Distributions of
net-long-term capital gains, if any, that the fund
designates as capital gains dividends are taxable as
long-term capital gains, whether paid in cash or in
shares and regardless of how long a shareholder has
held shares of the fund.  Dividends and distributions
paid by the fund attributable to dividends on stock of
U.S. corporations received by the fund, with respect
to which the fund meets certain holding period
requirements, will be eligible for the deduction for
dividends received by corporations.  Distributions in
excess of the fund's current and accumulated earnings
and profits will, as to each shareholder, be treated
as a tax-free return of capital to the extent of a
shareholder's basis in his shares of the fund, and as
a capital gain thereafter (if the shareholder holds
his shares of the fund as capital assets).

Shareholders receiving dividends or distributions in
the form of additional shares should be treated for
United States federal income tax purposes as receiving
a distribution in the amount equal to the amount of
money that the shareholders receiving cash dividends
or distributions will receive, and should have a cost
basis in the shares received equal to such amount.

Investors considering buying shares just prior to a
dividend or capital gain distribution should be aware
that, although the price of shares just purchased at
that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may
nevertheless be taxable to them.

If the fund is the holder of record of any stock on
the record date for any dividends payable with respect
to such stock, such dividends are included in the
fund's gross income not as of the date received but as
of the later of (a) the date such stock became ex-
dividend with respect to such dividends (i.e., the
date on which a buyer of the stock would not be
entitled to receive the declared, but unpaid,
dividends) or (b) the date the fund acquired such
stock.  Accordingly, in order to satisfy its income
distribution requirements, the fund may be required to
pay dividends based on anticipated earnings, and
shareholders may receive dividends in an earlier year
than would otherwise be the case.

Sales of Shares.  Upon the sale or exchange of his
shares, a shareholder will realize a taxable gain or
loss equal to the difference between the amount
realized and his basis in his shares.  Such gain or
loss will be treated as capital gain or loss, if the
shares are capital assets in the shareholder's hands,
and will be long-term capital gain or loss if the
shares are held for more than one year and short-term
capital gain or loss if the shares are held for one
year or less.  Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed
of are replaced, including replacement through the
reinvesting of dividends and capital gains
distributions in the fund, within a 61-day period
beginning 30 days before and ending 30 days after the
disposition of the shares.  In such a case, the basis
of the shares acquired will be increased to reflect
the disallowed loss.  Any loss realized by a
shareholder on the sale of a fund share held by the
shareholder for six months or less will be treated for
United States federal income tax purposes as a long-
term capital loss to the extent of any distributions
or deemed distributions of long-term capital gains
received by the shareholder with respect to such
share.

If a shareholder incurs a sales charge in acquiring
shares of the fund, disposes of those shares within 90
days and then acquires shares in a mutual fund for
which the otherwise applicable sales charge is reduced
by reason of a reinvestment right (e.g., an exchange
privilege), the original sales charge will not be
taken into account in computing gain/loss on the
original shares to the extent the subsequent sales
charge is reduced.  Instead, the disregarded portion
of the original sales charge will be added to the tax
basis 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 the dividends, distributions and
redemption proceeds payable to shareholders who fail
to provide the fund with their correct taxpayer
identification number or to make required
certifications, or who have been notified by the IRS
that they are subject to backup withholding.  Certain
shareholders are exempt from backup withholding.
Backup withholding is not an additional tax and any
amount withheld may be credited against a
shareholder's United States federal income tax
liabilities.

Notices.  Shareholders will be notified annually by
the fund as to the United States federal income tax
status of the dividends, distributions and deemed
distributions attributable to undistributed capital
gains (discussed above in "Dividends and
Distributions") made by the fund to its shareholders.
 Furthermore, shareholders will also receive, if
appropriate, various written notices after the close
of the fund's taxable year regarding the United States
federal income tax status of certain dividends,
distributions and deemed distributions that were paid
(or that are treated as having been paid) by the fund
to its shareholders during the preceding taxable year.

Class Z

In addition to the considerations described above,
there may be other federal, state, local, and/or
foreign tax applications to consider.  Provided a
Qualified Plan has not borrowed to finance its
investment in the fund, it will not be taxable on the
receipt of dividends and distributions from the fund.
 Qualified plan participants should consult their plan
document or tax advisors about the tax consequences of
participating in a Qualified Plan.

Other Taxation

Distributions also may be subject to additional state,
local and foreign taxes depending on each
shareholder's particular situation.

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

ADDITIONAL INFORMATION

Fund History.  The fund was incorporated on September
2, 1969 under the name The Shearson Appreciation Fund,
Inc.  On October 14, 1994, and November 5, 1995, the
fund changed its name to Shearson Lehman Brothers
Appreciation Fund Inc. and Smith Barney Appreciation
Fund Inc., respectively.

Voting rights.  The fund does not hold annual
shareholder meetings. There normally will be no
meeting of shareholders for the purpose of electing
directors unless and until such time as less than a
majority of the directors holding office have been
elected by shareholders. The directors will call a
meeting for any purpose upon written request of
shareholders holding at least 10% of the fund's
outstanding shares and the fund will assist
shareholders in calling such a meeting as required by
the 1940 Act. When matters are submitted for
shareholder vote, shareholders of each class will have
one vote for each full share owned and a proportionate
fractional vote for any fractional share held of that
class. Generally, shares of the fund will be voted on
a fund-wide basis on all matters except matters
affecting only the interests of one or more of the
classes.

Annual and semi-annual reports.  The fund sends its
shareholders a semi-annual report and an audited
annual report, which include listings of the
investment securities held by the fund at the end of
the period covered. In an effort to reduce the fund's
printing and mailing costs, the fund plans to
consolidate the mailing of its semi-annual and annual
reports by household. This consolidation means that a
household having multiple accounts with the identical
address of record will receive a single copy of each
report. Shareholders who do not want this
consolidation to apply to their accounts should
contact their Service Agent or the transfer agent.

FINANCIAL STATEMENTS

The fund's annual report for the fiscal year ended
December 31, 2000 is incorporated herein by reference
in its entirety.  The annual report was filed on
March 9, 2001, Accession Number 50130-
01-213.

OTHER INFORMATION

In an industry where the average portfolio manager has
seven years of experience (source: ICI, 1998), the
portfolio managers of Smith Barney mutual funds
average 21 years in the industry and 15 years with the
firm.

Smith Barney mutual funds offers more than 60 mutual
funds.  We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.

That's why we offer five "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.

Classic Investor Series - our portfolio manager driven
funds
The Classic Series lets investors participate in
mutual funds whose investment decisions are determined
by experienced portfolio managers, based on each
fund's investment objectives and guidelines.  Classic
Series funds invest across asset classes and sectors,
utilizing a range of strategies in order to achieve
their objectives.

Index Series - funds that track the market
Our Index funds are designed to provide investment
results that track, as closely as possible, the
performance of a stock or bond market index.  This
strategy distinguishes an index fund from an "actively
managed" mutual fund.  Instead of trying to outperform
a market or segment, a portfolio manager looks to an
index to determine which securities the fund should
own.

Premier Selections Series - our best ideas,
concentrated funds
We offer a series of Premier Selections funds managed
by several of our most experienced and proven
managers.  This series of funds is built on a unique
strategy of combining complementary investment
management styles to create broader, multiclass and
multicap products that are distinguished by a highly
concentrated focus.

Research Series - driven by exhaustive fundamental
securities analysis
Built on a foundation of substantial buy-side research
under the direction of our Citibank Global Asset
Management (CGAM) colleagues, our Research funds focus
on well-defined industries, sectors and trends.

Style Pure Series - our solution to funds that stray
Our Style Pure Series funds are the building blocks of
asset allocation.  The funds stay fully invested
within their asset class and investment style,
enabling you to make asset allocation decisions in
conjuction with your financial professional.
































SMITH BARNEY
APPRECIATION
FUND INC.




















April 30, 2001

SMITH BARNEYAPPRECIATION FUND INC.
7 World Trade Center
New York, NY 10048


						SALOMON SMITH BARNEY
						A Member of Citigroup
[Symbol]





-1-






PART C - OTHER INFORMATION

Information required to be included in Part C is set forth under the appropriate
item, so numbered in Part C of this Registration Statement.

Another version of the Prospectus will be created from this Registration
Statement.  The distribution system for the version of the Prospectus
is different.  The Prospectus will be filed Pursuant to Rule 497.

Item 23.  Exhibits

         Unless otherwise noted, all   references  are
         to  the   Registrant's Registration   Statement
         on   Form   N-8B-1   (the "Registration Statement")
         as filed with the Securities and Exchange
        Commission (SEC) on September  9, 1969
         and Form N-1A (File  Nos.  2-34576 and 811-1940)

(a)(1)   Registrant's   Articles   of   Incorporation,
           Articles  of  Amendment and Articles  Supplementary
           dated  August  25,  1969, May 9, 1983, August  26,
           1987,  July  20, 1989, November 2, 1992, and  July
           30, 1993, respectively, is incorporated by
           reference to Post-Effective Amendment No. 34  filed
           on December  29,  1993 ("Post-Effective  Amendment
           No. 34").

(a)(2) Registrant's  Articles  of  Amendment   dated
         October  14,  1994, Form of Articles  Supplementary
         dated  November  7, 1994 and Form  of  Articles  of
         Amendment  dated November 7, 1993 s  incorporated
         by  reference  to Post-Effective Amendment  No.  37
         filed   on   November   7,  1994   ("Post-Effective
         Amendment No. 37").

(a)(3) Registrant's  Articles  of  Amendment   dated
         June 1, 1998 is incorporated by reference to Post-Effective
         Amendment No. 44 on February 24, 1999 ("Post-Effective
         Amendment No. 44").

(b)(1)   Registrant's  By-Laws  are  incorporated   by
            reference to the Registration Statement.

(b)(2)   Amendment   to   Registrant's   By-Laws   is
            incorporated   by   reference   to   Post-Effective
           Amendment No. 24 filed on February 29, 1988.

(b)(3)   Amendment   to  Registrant's  By-Laws   dated
            January   24,  1987 and October  21, 1987 is
            incorporated   by   reference   to   Post-Effective
         Amendment No. 26.

(b)(4) Amendment to Registrant's By-Laws dated  July  20,
         1994 is incorporated by reference to Post-Effective
         Amendment No. 41 filed on March 1, 1996.

(c)(1)   Registrant's  form  of  stock  certificate  is
         incorporated   by   reference   to   Post-Effective
         Amendment No. 31 filed on November 6, 1992  ("Post-
         Effective Amendment No. 31").

(d)      Investment  Advisory  Agreement  between  the
         Registrant   and   Smith  Barney   Shearson   Asset
         Management,  dated July 30, 1993,  is  incorporated
         by reference to Post-Effective Amendment No. 34.

(e)(1)   Distribution Agreement between the  Registrant
         and  Smith  Barney Shearson Inc.,  dated  July  30,
         1993,   is  incorporated  by  reference  to   Post-
         Effective Amendment No. 34.

(e)(2)   Form  of  Distribution Agreement  between  the
         Registrant and PFS Distributors is incorporated  by
         reference to Post-Effective Amendment No. 39  filed
         on  July  3,  1995 ("Post-Effective  Amendment  No.
         39").

(e)(3)   Distribution Agreement between the Registrant and CFBDS,
            Inc. incorporated by reference to Post-Effective
            Amendment No. 44.


(e)(4)	Form of Broker Dealer Contract is filed herein.

(e)(5)	Form of Distribution Agreement with Salomon Smith
		Barney Inc. is filed herein.

(e)(6)	Form of Distribution Agreement between the Registrant
		and PFS Distributors 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. 39.

(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. 35 filed  on  July  1,
            1994 ("Post-Effective Amendment No. 35").

(h)(2)   Transfer   Agency   Agreement   between   the
            Registrant  and  The  Shareholder  Services  Group,
            Inc.,  dated  April  20, 1993, is  incorporated  by
            reference to Post-Effective Amendment No. 35.

(h)(3)   Form  of Sub-Transfer Agency Agreement between
            the  Registrant  and  PFS Shareholder  Services  is
            incorporated   by   reference   to   Post-Effective
           Amendment No. 39.

(h)(4) 	Transfer Agency Agreement dated October 1, 1999
		between the Registrant and Citi Fiduciary Trust
		Company f/k/a Smith Barney Private Trust Company) is filed herein.

(h)(5) 	Sub-Transfer Agency Agreement dated October 1, 1999 between
		Citi Fiduciary Trust Company ( f/k/a Smith Barney Private Trust 			Company)
 and PFPC Global Fund Services (f/k/a First Data Investor 		Services Group,
 Inc.) is filed herein.

(h)(6)	Form of Sub-Transfer Agency Agreement between the Registrant
		and PFS Shareholder Services is filed herein.


(i)       Opinion  of  Counsel  regarding  legality  of
           shares   being   registered  is   incorporated   by
           reference to Post-Effective Amendment No. 38  filed
           on  February  28,  1995 ("Post-Effective  Amendment
           No. 38").

(j)       Auditor's Consent is filed herein.

(k)      Not Applicable.

(l)       Not Applicable.

(m)(1)   Form of Amended and Restated  Services   and  Distribution
         Plan pursuant  to Rule 12b-1 between the Registrant  and
         Salomon Smith  Barney  Inc., is incorporated by reference
         to Post-Effective Amendment No. 44.

(m)(2)   Form of Amended and Restated Shareholder Services and Distribution
	   Plan pursuant to Rule 12b-1 with Salomon Smith Barney and PFS
   Distributors Inc. is filed herein.

(n)     Not Applicable.

(o)(1)   Form  of Rule 18f-3(d) Multiple Class Plan  of
            the  Registrant  is incorporated  by  reference  to
            Post-Effective Amendment No. 40 filed on
            December 22, 1995.

(o)(2)   Rule 18F-3(d) Multiple Class Plan of the Registrant is
            incorporated by reference to Post-Effective
           Amendment No. 44.

(p) Code of Ethics is incorporated by reference to Post-Effective
Amendment No. 46 to the Registration Statement filed on
April 28, 2000.

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

         None

Item 25. Indemnification

          Response to this item is incorporated by reference
to Post-Effective Amendment No. 38.


Item 26.	Business and Other Connections of Investment Adviser




Investment Adviser -Smith Barney Fund Management LLC (formerly known
as SSB Citi Fund Management LLC) ("SBFM").  SBFM was incorporated
in December 1968 under the laws of the State of Delaware and converted
to a Delaware limited liability company on September 21, 1999.  SBFM
is a wholly owned subsidiary of Salomon Smith Barney Holdings Inc.,
which in turn is a wholly owned subsidiary of Citigroup Inc.

SBFM is registered as an investment adviser under the Investment
Advisers Act of 1940.  The list required by this item 26 of officers
and directors of SBFM together with information as to any other business,
 profession, vocation or employment of a substantial nature engaged in
by such officers and directors during the past two years, is incorporated
by reference to Schedules A and D of Form ADV filed by SBFM pursuant to
the Investment Advisers Act of 1940
SEC File No. 801-8314).



Item 27.  Principal Underwriters

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

PFS Distributors, Inc., ("PFS Distributors"),
a Distributor of the Registrant, is also a distributor for the following
Smith Barney funds:

Smith Barney Investment Series,
Smith Barney Aggressive Growth Fund Inc.,
Smith Barney Appreciation Fund Inc.,
Smith Barney Allocation Series Inc.,
Smith Barney Equity Funds,
Smith Barney Fundamental Value Fund Inc.,
Smith Barney Income Funds,
Smith Barney Investment Funds Inc.,
Smith Barney Investment Trust,
Smith Barney Managed Municipals Fund Inc.,
Smith Barney Money Funds, Inc.
Smith Barney Sector Series Inc.

In addition, Salomon Smith Barney 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 Salomon Smith Barney is incorporated by reference to
Schedule A of Form BD filed by Salomon Smith Barney pursuant to the Securities
and
Exchange Act of 1934 (SEC File No. 812-8510).

The information required by this Item 27 with respect
to each director, officer and partner of PFS Distributors
is incorporated by reference to Schedule A of Form BD
filed by PFS Distributors  pursuant to the Securities
Exchange Act of 1934 (SEC File No. 8-37352).


(c)	Not applicable.



Item 28.	Location of Accounts and Records

	(1)	With respect to the Registrant,
		Investment Adviser and Administrator:
		c/o Smith Barney Fund Management LLC
		7 World Trade Center, 39th Floor
		New York, New York  10048

	(2)	With respect to the Registrant's Custodian:
		PFPC Trust Company (successor by assignment
		from PNC Bank, National Association)
		8800 Tinicum Boulevard
		Philadelphia, Pennsylvania 19153

	(3)	With respect to the Registrant's Transfer Agent:
		Citi Fiduciary Trust Company
		125 Broad Street
		New York, New York  10004

	(4)	With respect to the Registrant's Sub-Transfer Agent:
		PFPC Global Fund Services
		P.O. Box 9699
		Providence, Rhode Island  02940-9699

	(5)	PFS Shareholder Services
		3100 Breckinridge Blvd.
		Bldg. 200
		Duluth, Georgia  30099-0062

	(6)	Salomon Smith Barney Inc.
		388 Greenwich Street
		New York, New York  10013



Item 29. Management Services

         Not Applicable

Item 30. Undertakings

         None



                           SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant
has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned,
and where applicable, the true and lawful attorney-in-fact, thereto duly
authorized, in the City of New York and State of New York on
the 20th day of April, 2001.

   SMITH BARNEY APPRECIATION FUND INC.

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

    Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration
Statement has been signed
below by the following persons in the capacities and on the
dates indicated.

Signature               		Title                         				       Date

/s/ Heath B. McLendon        Director, Chairman of the Board

   4/20/01
Heath B. McLendon

/s/ Lewis E. Daidone         Senior Vice President and    		   4/20/01
Lewis E. Daidone             Treasurer (Chief Financial
                   		      and Accounting Officer)

/s/ Alfred J. Bianchetti*          Director            	   4/20/01
Alfred J. Bianchetti

/s/ Herbert Barg*                  Director            	   4/20/01
Herbert Barg

/s/ Martin Brody *                 Director               4/20/01
Martin Brody


/s/ Burt N. Dorsett*               Director                 4/20/01
Burt N. Dorsett


/s/ Dwight B. Crane*               Director                  4/20/01
Dwight B. Crane


/s/ Elliott S. Jaffe*              Director                	   4/20/01
Elliott S. Jaffe

/s/ Stephen E. Kaufman*       Director                    				   4/20/01
Stephen E. Kaufman

/s/ Joseph J. McCann*              Director              			   4/20/01
Joseph J. McCann


/s/ Cornelius C. Rose, Jr.*        Director               	   4/20/01
Cornelius C. Rose

* Signed by Heath B. McLendon, their duly authorized attorney-in-fact,
pursuant to power of attorney dated July 12, 2000.

/s/ Heath B. McLendon
Heath B. McLendon







We, the undersigned, hereby severally constitute and appoint Heath
B. McLendon, Christina T. Sydor, Lewis E. Daidone and Michael
Kocur and each of them individually, our true and lawful
attorneys, with full power to them and each of them to sign for
us, and in our hands and in the capacities indicated below, any
and all Registration Statements on behalf of the Smith Barney
Appreciation Fund Inc. including any and all Amendments
thereto and to file the same, with all exhibits thereto, and other
documents therewith, with the Securities and Exchange Commission,
granting unto said attorneys and each of them, acting alone, full
authority and power to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to all
intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys or any of them
may lawfully do or cause to be done by virtue thereof.

	WITNESS our hands on the date set forth below.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Power of Attorney has been signed below by the
following persons in the capacities and as of the dates indicated.


Signature:



Title:

Date:
/s/ Heath B. McLendon
Heath B. McLendon

Chairman of the
Board
(Chief Executive
Officer)

July 12, 2000



/s/ Lewis E. Daidone
Lewis E. Daidone

Senior Vice
President and
Treasurer (Chief
Financial and Accounting
Officer)

July 12, 2000

Signature:



Title:

Date:
/s/ Herbert Barg
Herbert Barg

Director

July 12, 2000


/s/ Alfred J.
Bianchetti
Alfred J. Bianchetti

Director

July 12, 2000


/s/ Martin Brody
Martin Brody

Director

July 12, 2000


/s/ Dwight B. Crane
Dwight B. Crane

Director

July 12, 2000


/s/ Burt N. Dorsett
Burt N. Dorsett

Director

July 12, 2000


/s/ Elliot S. Jaffe
Elliot S. Jaffe

Director

July 12, 2000


/s/ Stephen E.
Kaufman
Stephen E. Kaufman

Director

July 12, 2000


/s/ Joseph J. McCann
Joseph J. McCann

Director

July 12, 2000


/s/ Cornelius C.
Rose, Jr.
Cornelius C. Rose,
Jr.

Director

July 12, 2000






EXHIBIT INDEX

Exhibit No.		Exhibit


(e)(4)		Form of Broker Dealer Contract

(e)(5)		Form of Distribution Agreement with Salomon Smith Barney Inc.

(e)(6) 		Form of Distribution Agreement with PFS Distributors Inc.

(h)(4)		Transfer Agency Agreement with Citi Fiduciary Trust Company

(h)(5)		Sub-Transfer Agency Agreement with PFPC Global Fund Services

(h)(6)		Sub-Transfer Agency Agreement with PFS Shareholder Services

(j)     		Auditor's Consent

(m)(2) 		Form of Amended and Restated Shareholder Services and
				Distribution
 Plan pursuant to Rule 12b-1 with Salomon Smith
			Barney and PFS Distributors Inc.


			Cover