As filed with the Securities and Exchange Commission on December 
23, 1998
Securities Act Registration No. 33-75644
Investment Company Act Registration No. 811-8372
	
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.  
Post-Effective Amendment No. 10

and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940	
 
__________________			

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

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

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

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


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

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

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


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

<PAGE>
--------------------------------------------------------------------------------

                           TRAVELERS SERIES FUND INC.


                                   PROSPECTUS

                               February 26, 1999





Smith Barney Pacific Basin Portfolio

Smith Barney International Equity Portfolio

Smith Barney Large Cap Value Portfolio

Smith Barney Large Capitalization Growth Portfolio               EQUITY FUNDS

Alliance Growth Portfolio

AIM Capital Appreciation Portfolio

Van Kampen American Capital Enterprise Portfolio

MFS Total Return Portfolio



 
                                         GT Global Strategic Income Portfolio
 
                                         Travelers Managed Income Portfolio

          FIXED INCOME FUNDS             Putnam Diversified Income Portfolio

                                         Smith Barney High Income Portfolio

                                         Smith Barney Money Market Portfolio



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

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

--------------------------------------------------------------------------------
<PAGE>
 
--------------------------------------------------------------------------------
                                   Contents

<TABLE> 
<CAPTION> 
                                       Fund goal and strategies                                          Page
<S>                                    <C>                                                               <C> 
Travelers Series Fund                  *    Smith Barney Pacific Basin Portfolio                            1
Inc. consists of 13                                                                                          
separate investment funds,             *    Smith Barney International Equity Portfolio                     3
each with its own                                                                                            
investment objective and               *    Smith Barney Large Cap Value Portfolio                          5
policies.  Each fund                                                                                         
offers different levels                *    Smith Barney Large Capitalization Growth Portfolio              7
of potential return and                                                                                      
involves different                     *    Alliance Growth Portfolio                                       8
levels of risk.                                                                                              
                                       *    AIM Capital Appreciation Portfolio                             10
                                                                                                             
                                       *    Van Kampen American Capital Enterprise Portfolio               12
                                                                                                             
                                       *    MFS Total Return Portfolio                                     14
                                                                                                             
                                       *    GT Global Strategic Income Portfolio                           15
                                                                                                             
                                       *    Travelers Managed Income Portfolio                             18
                                                                                                             
                                       *    Putnam Diversified Income Portfolio                            20
                                                                                                             
                                       *    Smith Barney High Income Portfolio                             22
                                                                                                             
                                       *    Smith Barney Money Market Portfolio                            24
                                                                                                             
                                       More on the funds' investments                                      26
                                                                                                             
                                       Management                                                          31
                                                                                                             
                                       Share transactions                                                  36
                                                                                                             
                                       Share price                                                         36
                                                                                                             
                                       Dividends, distributions and taxes                                  37
                                                                                                             
                                       Financial highlights                                                38 
</TABLE> 

The managers:

Mutual Management Corp. (MMC), Travelers Investment Adviser Inc. (TIA) or
Travelers Asset Management International Corporation (TAMIC) is each fund's
manager. MMC, TIA and TAMIC are affiliates of Salomon Smith Barney Inc. and
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 an corporate customers
around the world. Among these businesses are Citibank, Commercial Credit,
Primerica Financial Services, Salomon Smith Barney, SSBC Asset Management,
Travelers Life & Annuity, and Travelers Property Casualty. MMC and TAMIC select
investments for the funds for which they serve as managers. TIA has engaged
subadvisers to select investments for funds for which TIA serves as manager.

You should know:

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

                           Travelers Series Fund - i
--------------------------------------------------------------------------------

<PAGE>
 

The Fund's Goal and Investments             Smith Barney Pacific Basin Portfolio
--------------------------------------------------------------------------------

-------------------
Manager                 Investment goal         Long-term capital appreciation.
MMC is the manager
                        --------------------------------------------------------
Portfolio Managers      Key investments
David S. Ishibashi
Scott Kalb              The fund invests primarily in equity securities of
                        companies in the Asia Pacific region. Equity securities
                        include exchange traded and over-the-counter common
                        stocks, preferred shares, debt securities convertible
                        into equity securities, depository receipts and warrants
                        and rights relating to equity securities.
--------------------------------------------------------------------------------
Selection process

The manager emphasizes individual security selection while allocating the fund's
investments among companies in the Asia Pacific region. Companies in which the
fund invests may have large, mid or small size market capitalizations and may
operate in any market sector. Depending on the manager's assessment of long-term
growth potential, the fund's emphasis among Asia Pacific region markets and
issuers may vary.
                                                                          
In selecting individual companies for investment, the manager looks for:
                                                                          
 .   Above average earnings growth                                         
 .   High relative return on invested capital
 .   Experienced and effective management
 .   Competitive advantages, such as high market share or special licenses and
    patents
 .   Strong financial condition

The economic and political factors that the manager evaluates include:
                                                       
                                                       
 .  Economic stability and favorable prospects for economic growth
 .  Inflationary trends which create a favorable environment for securities
   markets
 .  Government policies toward business affecting economic growth and securities
   markets
 .  Currency stability                            
 .  Monetary and fiscal trends                     

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

Fund performance

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the MSCI All Country Asia Pacific Index ("MSCI Index"). Past performance does
not necessarily indicate how the fund will perform in the future. Performance
figures do not reflect expenses incurred from investing through a Separate
Account. Please refer to the Separate Account prospectus for more information on
expenses.

                            [GRAPH APPEARS HERE]
              
The bar chart shows the performance of the fund's shares since its inception on
June 16, 1994.


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


                         Average Annual Total Returns
                   (for the periods ended December 31, 1998)
            ------------------------------------------------
                        One        Five          Since
                       year       years        inception
            ------------------------------------------------
            Fund
            MSCI Index
            ------------------------------------------------

                           Travelers Series Fund - 1
<PAGE>
 
Principal risks of investing in the fund

While investing in Asia Pacific region securities can bring added benefits, it
may also involve risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:

[_]     Stock prices of securities in the Asia Pacific region decline

[_]     Economic, political or social instabilities significantly disrupt the
        principal financial markets in the Asia Pacific region

[_]     Factors creating volatility in one Asia Pacific region country
        negatively impact values or trading in other countries in the region

[_]     Currency fluctuations negatively impact the fund's portfolio

[_]     The government of one or more countries in the region imposes
        restrictions on currency conversion or trading

[_]     The economies in the Asia Pacific region grow at a slow rate or
        experience a downturn or recession

[_]     In changing markets the fund may not be able to sell securities in
        desired amounts at prices it considers reasonable

[_]     The manager's judgment about the attractiveness, value or potential
        appreciation of a particular stock proves to be incorrect

Many Asia Pacific region countries in which the fund invests have markets that
are less liquid and more volatile than markets in the U.S. In some Asia Pacific
countries, there is also less information available about issuers and markets
because of less rigorous accounting and regulatory standards than in the U.S.
These risks are considered greater in the case of those Asia Pacific countries
that are emerging markets. To the extent the fund concentrates its investments
in one or more countries due to their large market capitalization in the Asia
Pacific region, such as Japan, the fund will be subject to greater risks than if
its assets were not so concentrated.


                           Travelers Series Fund - 2
<PAGE>
 
The Fund's Goal and Investments       Smith Barney International Equity 
                                      Portfolio
--------------------------------------------------------------------------------

--------------------
Manager                 Investment goal
MMC is the manager
                        Total return on its assets from growth of capital and
                        income.
                        --------------------------------------------------------
Portfolio Managers      Key investments
James Conheady
Jeffrey Russell         The fund invests primarily in equity securities of
                        foreign companies. Equity securities include exchange
                        traded and over-the-counter common stocks and preferred
                        shares, debt securities convertible into equity
                        securities, and warrants and rights.
--------------------------------------------------------------------------------

Selection process

The manager emphasizes individual security selection while diversifying the
fund's investments across regions and countries which can help to reduce risk.
While the manager selects investments primarily for their capital appreciation
potential, some investments have an income component as well. Companies in which
the fund invests may have large, mid or small size market capitalizations and
may operate in any market sector. Market conditions around the world change
constantly as does the location of potential investment opportunities. Depending
on the manager's assessment of overseas potential for long-term growth, the
fund's emphasis among foreign markets and types of issuers may vary.


In selecting individual companies for investment, the manager looks for the
following:
                                                                           
 .   Above average earnings growth                                          
 .   High relative return on invested capital                               
 .   Experienced and effective management                                   
 .   Effective research, product development and marketing
 .   Competitive advantages                                                 
 .   Strong financial condition or stable or improving credit quality
 .   The range of individual investment opportunities
                                                                           
By spreading the fund's investments across many international markets, the
manager seeks to reduce volatility compared to an investment in a single region.
Unlike global mutual funds which may allocate a substantial portion of assets to
the U.S. markets, the fund invests substantially all of its assets in countries
outside of the U.S. In allocating assets among countries and regions, the
economic and political factors that the manager evaluates include:

 .   Low or decelerating inflation which creates a favorable environment for
    securities markets
 .   Stable government with policies that encourage economic growth, equity
    investment and development of securities markets
 .   Currency stability                


                           Travelers Series Fund - 3
<PAGE>
 
Fund performance

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the MSCI EAFE-GDP Weighted Index ("MSCI Index"). Past performance does not
necessarily indicate how the fund will perform in the future. Performance
figures do not reflect expenses incurred from investing through a Separate
Account. Please refer to the Separate Account prospectus for more information on
expenses.

                            [GRAPH APPEARS HERE]

The bar chart show the performance of the fund's shares since its inception on
June 16, 1994.

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


                         Average Annual Total Returns
                   (for the periods ended December 31, 1998)
               -------------------------------------------------
                         One        Five      Since
                         year       years    inception
               -------------------------------------------------
               Fund
               MSCI Index
               -------------------------------------------------
                                                        
Principal risks of investing in the fund

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

[_]    Foreign stock prices decline

[_]    Adverse governmental action or political, economic or market instability
       occurs in a foreign country

[_]    The currency in which a security is priced declines in value relative to
       the U.S. dollar

[_]    The manager's judgment about the attractiveness, value or potential
       appreciation of a particular stock proves to be incorrect

Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some foreign countries,
there is also less information available about foreign issuers and markets
because of less rigorous accounting and regulatory standards than in the U.S.
Currency fluctuations could erase investment gains or add to investment losses.
The risk of investing in foreign securities is greater in the case of emerging
markets.

In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency is scheduled to begin on January 1, 1999. There are significant
political and economic risks associated with EMU, which may increase the
volatility of European markets and present valuation problems for the fund.


                           Travelers Series Fund - 4
<PAGE>
 
The Fund's Goal and Investments               Smith Barney Large Cap Value
                                              Portfolio
--------------------------------------------------------------------------------

--------------------
Manager                  Investment goals
MMC is the manager
                         Current income and long-term growth of income and
                         capital.
                         -------------------------------------------------------
Portfolio Manager        Key investments
Ellen Cardozo
Sonsino                  The fund invests primarily in common stocks of U.S.
                         companies having market capitalizations of at least $5
                         billion at the time of investment.
--------------------------------------------------------------------------------

Selection process

The manager employs a two-step selection process.  First, the manager uses
proprietary models and fundamental research to try to find stocks that are
underpriced in the market relative to their fundamental value. Next, the manager
looks for a positive catalyst in the company's near term outlook which the
manager believes would accelerate earnings.

In selecting individual companies for investment, the manager looks for the
following:

 .   Low market valuations measured by the manager's valuation models
 .   Above average dividend yields and established dividend records
 .   Positive changes in earnings prospects because of

    -   New management
    -   Effective research, product development and marketing
    -   A business strategy not yet recognized by the marketplace
    -   Regulatory changes favoring the company

 .   High return on invested capital and strong cash flow
 .   Liquidity
--------------------------------------------------------------------------------

Fund performance

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index ("S&P 500 Index"). Past performance does not necessarily
indicate how the fund will perform in the future. Performance figures do not
reflect expenses incurred from investing through a Separate Account. Please
refer to the Separate Account prospectus for more information on expenses.
--------------------------------------------------------------------------------

                              [GRAPH APPEARS HERE]

The bar chart shows the performance of the fund's shares since its inception on
June 16, 1994.


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


                         Average Annual Total Returns
                   (for the periods ended December 31, 1998)
         -------------------------------------------------------
                           One      Five       Since
                           year     years     inception
         -------------------------------------------------------
         Fund
         S&P 500 Index
         -------------------------------------------------------


                           Travelers Series Fund - 5
<PAGE>
 

Principal risks of investing in the fund

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

[_]    The U.S. stock market goes down.

[_]    Value stocks or larger capitalization stocks are temporarily out of
       favor.

[_]    The manager's judgment about the attractiveness, value or potential
       appreciation of a particular stock proves to be incorrect.

[_]    An adverse event, such as negative press reports about a company in the
       fund, depresses the value of the company's stock.


                           Travelers Series Fund - 6
<PAGE>
 
The Fund's Goal and Investments         Smith Barney Large Capitalization Growth
                                        Portfolio
--------------------------------------------------------------------------------

--------------------
Manager                 Investment goal       Long-term growth of capital.
MMC is the manager
                        --------------------------------------------------------
Portfolio Manager       Key investments
Alan Blake
                        The fund invests primarily in equity securities of U.S.
                        companies having market capitalization of at least $5
                        billion at the time of investment.
--------------------------------------------------------------------------------

Selection process

The manager emphasizes individual security selection while diversifying the
fund's investments across industries which may help to reduce risk. The manager
attempts to identify established large capitalization companies with the highest
growth potential. The manager then analyzes each company in detail, ranking its
management, strategy and competitive market position. Finally, the manager
attempts to identify the best values available among the growth companies
identified.

In selecting individual companies for investment, the manager looks for:

 .  Favorable earnings prospects
 .  Technological innovation
 .  Industry dominance
 .  Competitive products and services
 .  Global scope
 .  Long term history of performance
 .  Consistent and sustainable long-term growth in dividends and earnings per
   share
 .  Strong cash flow
 .  High return on equity
 .  Strong financial condition
 .  Experienced and effective management
--------------------------------------------------------------------------------

Fund performance

As the fund has not been in operation for a full calendar year, no performance
information is included in this prospectus.

Principal risks of investing in the fund

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

[_]   The U.S. stock market goes down.

[_]   Growth stocks or large capitalization stocks are temporarily out of favor.

[_]   The manager's judgment about the attractiveness, value or potential
      appreciation of a particular stock proves to be incorrect.

[_]   An adverse event, such as negative press reports about a company in the
      fund, depresses the value of the company's stock.


                           Travelers Series Fund - 7
<PAGE>
 
The Fund's Goal and Investments                     Alliance Growth Portfolio
--------------------------------------------------------------------------------

----------------------------
Manager and subadviser        Investment goal       Long-term growth of capital.
TIA is the manager
                              --------------------------------------------------
Alliance Capital              Key investments
Management is
the subadviser.               The fund invests primarily in equity securities of
                              U.S. companies. Equity securities include exchange
Alliance is a global          traded and over-the-counter common stocks and
investment adviser            preferred stock, debt securities convertible 
providing diversified         into equity securities, and warrants and rights 
services to institutions      relating to equity securities.
and individuals through          
a broad line of               The fund may also invest in fixed income 
investments including         securities for capital appreciation, including 
more than ___ mutual          lower quality fixed income securities.
funds.
Alliance manages over ___
billion in assets.

  Portfolio Manager
  Tyler Smith
--------------------------------------------------------------------------------
 Selection process

 The subadviser emphasizes individual security selection while spreading
 investments among many industries and sectors. The subadviser identifies
 individual companies that it believes offer exceptionally high prospects for
 growth and uses qualitative analysis to control risk. The subadviser also over-
 and underweights particular industry sectors depending on the subadviser's
 outlook for each sector. In selecting individual companies and sectors for
 investment the subadviser looks for the following:

 .  Favorable earnings outlook                 
 .  Above average growth rates at reasonable market valuations
 .  Experienced and effective management       
 .  High relative return on invested capital                         
 .  Strong financial condition      
 .  Effective research, product development and marketing

--------------------------------------------------------------------------------
 Fund performance

 This bar chart indicates the risks of investing in the fund by showing changes
 in the fund's performance from year to year. The table shows how the fund's
 average annual returns for different calendar periods compare to the return of
 the Russell 1000 Index. Past performance does not necessarily indicate how the
 fund will perform in the future. Performance figures do not reflect expenses
 incurred from investing through a Separate Account. Please refer to the
 Separate Account prospectus for more information on expenses.

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

                             [GRAPH APPEARS HERE]

 The bar chart shows the performance of the fund's shares since its inception on
 June 16, 1994.

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


                         Average Annual Total Returns
                   (for the periods ended December 31, 1998)
            --------------------------------------------------
                           One       Five         Since
                           year      years      inception
            --------------------------------------------------
            Fund
            Russell 1000
            Index
            --------------------------------------------------

                           Travelers Series Fund - 8
<PAGE>
 
Principal risks of investing in the fund

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

[_]  Stock markets decline.

[_]  Growth stocks are temporarily out of favor.
  
[_]  An adverse event, such as negative press reports about a company in the
     fund, depresses the value of the company's stock.

[_]  The subadviser's judgment about the attractiveness, value or potential
     appreciation of a particular stock proves to be incorrect.


                           Travelers Series Fund - 9
<PAGE>
 
The Fund's Goal and Investments           AIM Capital Appreciation Portfolio
-------------------------------------------------------------------------------
------------------------
Manager and subadviser                Investment Goal     Capital Appreciation.
TIA is the manager
                                      -----------------------------------------
A I M Capital Management,             Key Investments 
Inc. is the subadviser.                                                      

                                      The fund invests primarily in common
                                      stocks of U.S. companies with an emphasis
                                      on medium-sized and smaller growth
                                      companies.
                                      ----------------------------------------- 
A I M is an indirect subsidiary       Selection Process 
of AMVESCAP PLC, an              
independent investment                The subadviser emphasizes individual     
management firm engaged in            security selection while diversifying the
institutional investment              fund's investments across industries,    
management and retail mutual          which may help to reduce risk. The       
fund businesses in the U.S.,          subadviser seeks to identify companies   
Europe and the Pacific Region.        having a consistent record of long-term  
A I M manages over $__                above average growth in earnings as well 
billion in assets.                    as companies that are only beginning to  
                                      experience significant and sustainable   
                                      earnings growth.                          
                                      
                                      In selecting individual companies for
                                      investment, the subadviser looks for the
                                      following:

Portfolio Managers                    .    New or innovative products, services
Kenneth A. Zschappel                       or processes that should enhance 
Charles D. Scavone                         future earnings  
David P. Barnard                      .    Increasing market share
Robert M. Kippes                      .    Experienced and effective management
                                      .    Competitive advantages

                                      The subadviser then employs a disciplined
                                      review process to identify and remove from
                                      the fund's portfolio any investments that
                                      are not achieving their expected growth
                                      potential.
--------------------------------------------------------------------------------

Fund Performance

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Lipper Midcap Index. Past performance does not necessarily indicate how the
fund will perform in the future. Performance figures do not reflect expenses
incurred from investing through a Separate Account. Please refer to the Separate
Account prospectus for more information on expenses.

                             [GRAPH APPEARS HERE]
  
This bar chart shows the performance of the fund's shares since its inception 
on October 10, 1995.                                                           


                             Quarterly Returns:
                             Highest:  xx% in ___ quarter 199X
                             Lowest:   xx% in ___ quarter 199X


                         Average Annual Total Returns
                   (for the periods ended December 31, 1998)
              ------------------------------------------------- 
                                    One               Since    
                                    year             inception 
              ------------------------------------------------  
              Fund
              Lipper Midcap Index
              ------------------------------------------------  
                             

                           Travelers Series Fund - 10
<PAGE>
 

Principal risks of investing in the fund

While investing in smaller growth securities can bring added benefits, it may
also involve risks. Investors could lose money on their investment in the fund,
or the fund may not perform as well as other investments, if any of the
following occurs:

[_]    The U.S. stock market declines.

[_]    Midcap and smallcap growth stocks are temporarily out of favor.

[_]    An adverse event, such as negative press reports about a company in the
       fund's portfolio, depresses the value of the company's stock.

[_]    The subadviser's judgment about the attractiveness, value or potential
       appreciation of a particular stock proves to be incorrect.

The fund may invest in relatively new or unseasoned companies that are in their
early stages of development. Smaller, unseasoned companies present greater risks
than securities of larger, more established companies because:

[_]     They may be dependent on a small number of products or services for
        their revenues  

[_]     They may lack substantial capital reserves to make needed capital
        investments or absorb losses   

[_]     They may have less experienced management

[_]     Their securities may be less widely traded, less liquid and more
        volatile

[_]     Recession or adverse economic trends are more likely to sharply and
        negatively affect their earnings and financial condition
  

                          Travelers Series Fund - 11

<PAGE>
 
The Fund's Goal and Investments         Van Kampen American Capital Enterprise 
                                        Portfolio 
--------------------------------------------------------------------------------

----------------------------
Manager and Subadviser                 Investment Goal     Capital appreciation.
MMC is the manager
                                       -----------------------------------------
Van Kampen Asset                       Key Investments
Management, Inc. is the
subadviser.                            The fund invests primarily in common 
                                       stocks of U.S. growth companies. 

Van Kampen is a diversified 
asset management company with 
more than _____ billion
under management.

Portfolio Manager
Jeff New

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

Selection Process

The subadviser emphasizes individual security selection while diversifying the
fund's investments across industries, which can help reduce risk. The subadviser
seeks promising growth opportunities by investing primarily in large and mid-
capitalization companies. The subadviser emphasizes growth companies but may
also invest in companies in cyclical industries during periods when their
securities appear attractive to the subadviser for capital appreciation.

The subadviser looks for companies with a combination of positive future
fundamentals and an attractive current valuation. The subadviser frequently
meets with company managements to help assess individual companies for potential
investment. The subadviser looks for companies exhibiting one or more of the
following:

 .  Accelerating earnings growth
 .  Consistent earnings growth
 .  Better than expected earnings, often related to new products, processes or
   services or cost reductions
 .  Positive changes in a company or its industry or regulatory environment

The subadviser also employs an active sell discipline and will generally sell
stock if it determines:

 .  the company's future fundamentals have deteriorated 
 .  the company's stock has reached full or excessive valuation levels


                          Travelers Series Fund - 12

<PAGE>
 
Fund Performance

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index and the Lipper Growth Average Index ("Lipper Index"). Past
performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. Please refer to the Separate Account prospectus for
more information on expenses.

                             [GRAPH APPEARS HERE]
  
The bar chart shows the performance of the fund's shares since its inception on
June 16, 1994.
                                                                    
                    Quarterly Returns:                
                    Highest:  xx% in ___ quarter 199X 
                    Lowest:   xx% in ___ quarter 199X  
                                                                      
                              
                              Average Annual Total Returns
                         (for the periods ended December 31, 1998)
                 ---------------------------------------------------           
                                   One        Five          Since   
                                   year       years       inception 
                 ---------------------------------------------------           
                 Fund
                 S&P 500 Index
                 Lipper Index
                 ---------------------------------------------------           


Principal risks of investing in the fund

While investing in securities of large and medium capitalization companies can
bring added benefits, it may also involve risks. Investors could lose money on
their investment in the fund, or the fund may not perform as well as other
investments, if any of the following occurs:

[_]   The U.S. stock market declines.

[_]   Large and medium capitalization stocks or growth stocks are temporarily
      out of favor.

[_]   An adverse event, such as negative press reports about a company in the
      fund's portfolio, depresses the value of the company's stock or industry.

[_]   The subadviser's judgment about the attractiveness, value or potential
      appreciation of a particular stock or industry proves to be incorrect.

                          Travelers Series Fund - 13
<PAGE>
 
  The Fund's Goal and Investments           MFS Total Return Portfolio
--------------------------------------------------------------------------------

---------------------------------
Manager and subadviser                 Investment Goals
TIA is the manager
                                       Primary: Above average income (compared
Massachusetts Financial                to a portfolio invested entirely in
Services Company is the                equity securities) consistent with the  
Fund's subadviser.                     prudent employment of capital. Secondary:
                                       Growth of capital and income.            
                                                                                
                                       -----------------------------------------
MFS and its predecessor                Key Investments
organizations have a history of    
money management dating                The fund invests in a broad range of
from 1924.  The MFS                    equity and fixed income securities of
organization manages                   both U.S. and foreign issuers.
approximately $___ billion on      
behalf of __ million investor          The fund's equity securities include
accounts.                              common and preferred stock; bonds,
                                       warrants or rights convertible into stock
Portfolio Managers                     and depositary receipts for those
David M. Calabro                       securities.
Geoffrey L. Kurinsky               
Constantinos Mokas                     The fund's fixed income securities
Lisa B. Nurme                          include corporate debt obligations of any
Maura A. Shaughnessy                   maturity, Brady bonds, U.S. Government
                                       securities, mortgage-backed securities,
                                       zero-coupon bonds, deferred interest
                                       bonds and payment in kind bonds.
                                     
                                       Credit quality: The fund's assets may
                                       consist of both investment grade and
                                       lower quality securities. The fund may
                                       invest up to 20% of the fund's assets in
                                       nonconvertible fixed income securities
                                       rated below investment grade or unrated
                                       securities of equivalent quality.
--------------------------------------------------------------------------------
Selection process

Under normal market conditions and depending on the subadviser's view of
economic and money market conditions, fiscal and monetary policy and security
values, the fund's assets will be allocated among fixed income and equity
investments within the following ranges:

 .   between 40% and 75% in equity securities  .  at least 25% in non-convertible
                                                 fixed income securities

Equity investments

The subadviser uses a "bottom up" investment approach in selecting securities
based on its fundamental analysis of an individual security's value. In
selecting individual equity securities for investment, the subadviser seeks
companies:

 .   that are undervalued in the market relative to their long term potential
    because the market has overlooked them or because they are temporarily out
    of favor in the market due to market declines, poor economic conditions or
    adverse regulatory or other changes
 .   that generally have low price to book, price to sales and/or price to
    earnings ratios 
 .   with relatively large market capitalizations (i.e., market capitalizations
    of $5 billion or more).

The subadviser also invests in convertible securities that generally provide a
fixed income stream and an opportunity to participate in an increase in the
market price of the underlying common stock.

Fixed income investments

The subadviser periodically assesses the three month outlook for inflation rate
changes, economic growth and other fiscal measures and their effect on U.S.
treasury interest rates. Using that assessment, the subadviser determines a
probable difference between yields on U.S. treasury securities and on other
types of fixed income securities and selects those securities the subadviser
believes will deliver favorable returns.

In selecting individual fixed income investments for the fund, the subadviser
looks for: 

 .   favorable yield, maturity and credit quality characteristics 
 .   strong financial condition

                          
                          Travelers Series Fund - 14

<PAGE>
 
FUND PERFORMANCE

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index and the Lehman Brothers Government Corporate Bond Index
("Lehman Brothers Index"). Past performance does not necessarily indicate how
the fund will perform in the future. Performance figures do not reflect
expenses incurred from investing through a Separate Account. Please refer to
the Separate Account prospectus for more information on expenses.


                            [GRAPH APPEARS HERE]  

The bar chart shows the performance of the fund's shares since its inception
on June 16, 1994.

                               QUARTERLY RETURNS:
                               Highest:  xx% in ___ quarter 199X
                               Lowest:   xx% in ___ quarter 199X


                       AVERAGE ANNUAL TOTAL RETURNS
                   (for the periods ended December 31, 1998)
               ------------------------------------------------------
                                        One       Five       Since
                                        year      years     inception
               ------------------------------------------------------
               Fund
               S&P 500 Index
               Lehman Brothers Index
               ------------------------------------------------------

PRINCIPAL RISKS OF INVESTING IN THE FUND

While investing in a mix of equity and debt securities can bring added
benefits, it may also involve additional risks. Investors could lose money in
the fund or the fund's performance could fall below other possible investments
if any of the following occurs:

[_]  The subadviser's allocation of investments between equity and fixed income
     securities could cause the fund to miss attractive investment opportunities
     by underweighting markets that generate significant returns or cause the
     fund to incur losses by overweighting markets that experience significant
     declines.
[_]  The subadviser's judgment about the attractiveness, value or potential
     appreciation of a particular security proves to be incorrect.
[_]  Equity investments lose their value due to a decline in the U.S. stock
     market.
[_]  Value or large capitalization stocks are temporarily out of favor.
[_]  An adverse event, such as negative press reports about a company in the
     fund's portfolio, depresses the value of the company's stock.
[_]  Fixed income investments lose their value due to an increase in interest
     rates.
[_]  The issuer of a debt security in the fund defaults on its obligation to pay
     principal or interest, has its credit rating downgraded by a rating
     organization or is perceived by the market to be less creditworthy.
[_]  Mortgage and asset backed securities are subject to the same default risks
     of other fixed income securities, but it may be more difficult to enforce
     rights against the assets underlying these securities in case of default.
[_]  As a result of declining interest rates, the issuer of a security exercises
     its right to prepay principal earlier than scheduled, forcing the fund to
     reinvest in lower yielding securities. This is known as call risk.
[_]  As a result of rising interest rates, the issuer of a security exercises
     its right to pay principal later than scheduled, which will lock in a 
     below-market interest rate and reduce the value of the security. This is
     known as extension risk.
[_]  Securities with longer maturities are more sensitive to interest rate
     changes and may be more volatile.

The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely
to lead issuers of these securities to have a weakened capacity to make
principal and interest payments.
  
Many foreign countries in which the fund invests have less liquid and more
volatile markets than in the U.S. In some of the foreign countries in which
the fund invests, there is also less information available about foreign
issuers and markets because of less rigorous accounting and regulatory
standards than in the U.S. Currency fluctuations could erase investment gains
or add to investment losses. The risk of investing in foreign securities is
greater in the case of less developed countries.

                          Travelers Series Fund - 15
<PAGE>
 
THE FUND'S GOAL AND INVESTMENTS       GT GLOBAL STRATEGIC INCOME PORTFOLIO
--------------------------------------------------------------------------------

--------------------------------
MANAGER AND SUBADVISER             INVESTMENT GOALS
TIA is the Manager.
                                   Primary:  High current   Secondary: Capital 
                                             income                 appreciation
                                   ---------------------------------------------

INVESCO (NY), Inc. is the          KEY INVESTMENTS
subadviser.
                                   The fund invests primarily in debt 
INVESCO and its affiliates         securities of U.S. and foreign companies,
manage approximately               banks and governments, including those in 
$____ billion of assets.           emerging markets.
                                    
PORTFOLIO MANAGERS                 CREDIT QUALITY: At least 50% of the fund's
Cheng-Hock Lau                     assets consist of debt securities that are
David Hughes                       investment grade at the time of purchase.  
Craig Munro                        The remainder may consist of lower-quality
                                   bonds whose credit quality is considered 
                                   the equivalent of U.S. corporate debt
                                   securities commonly known as "junk bonds." 

                                   DURATION: The fund's average duration will 
                                   generally vary from 3 to 7 years depending 
                                   on the subadviser's outlook for interest 
                                   rates. Individual securities may be of any 
                                   maturity.
--------------------------------------------------------------------------------

SELECTION PROCESS

The subadviser uses a combination of a "top-down" approach and quantitative
models to create an optimal risk/return allocation of the fund's assets among
debt securities of issuers in three separate investment areas: (1) the United
States, (2) developed foreign countries, and (3) emerging markets. The
subadviser then selects individual debt securities within each area on the
basis of its views as to the values available in the marketplace.

In allocating investments among countries and asset classes, the Subadviser
evaluates the following:

 .  Currency, inflation and interest rate trends      .  Growth rate forecasts
 .  Proprietary risk measures                         .  Fiscal policies        
 .  Balance of payments status                        .  Political outlook  

In selecting individual debt securities, the subadviser evaluates the
following:

 .  Yield                                             .  Issue classification 
 .  Maturity                                          .  Credit quality        
 .  Call or prepayment risk     
                         
                         
--------------------------------------------------------------------------------

FUND PERFORMANCE

This bar chart indicates the risks of investing in the fund by showing
changes in the fund's performance from year to year. The table shows how the
fund's average annual returns for different calendar periods compare to the
return of the J.P. Morgan Global Bond Index ("Morgan Index"). Past
performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. Please refer to the Separate Account prospectus
for more information on expenses.

                             [GRAPH APPEARS HERE]

The bar chart shows the performance of the fund's shares since its inception
on June 16, 1994.

                                    QUARTERLY RETURNS:
                                    Highest:  xx% in ___ quarter 199X
                                    Lowest:   xx% in ___ quarter 199X



                         AVERAGE ANNUAL TOTAL RETURNS
                   (for the periods ended December 31, 1998)
               --------------------------------------------------
                                 One         Five       Since
                                 year        years      inception
               --------------------------------------------------
               Fund
               Morgan Index
               --------------------------------------------------


                          Travelers Series Fund - 16
<PAGE>
 
PRINCIPAL RISKS OF INVESTING IN THE FUND

While investing in global debt securities can bring added benefits, it may
also involve risks. Investors could lose money in the fund or the fund's
performance could fall below other possible investments if any of the
following occurs:

[_]  Debt securities lose their value due to an increase in market interest
     rates in one or more regions, a decline in an issuer's credit rating or
     financial condition or a default by an issuer.

[_]  As a result of declining interest rates, the issuer of a security exercises
     its right to prepay principal earlier than scheduled, forcing the fund to
     reinvest in lower yielding securities. This is known as call or prepayment
     risk.

[_]  As a result of rising interest rates, the issuer of a security exercises
     its right to pay principal later than scheduled, which will lock in a 
     below-market interest rate and reduce the value of the security. This is
     known as extension risk.

[_]  The manager's judgment about the attractiveness, value or potential
     appreciation of a particular security proves to be incorrect.

[_]  An unhedged currency in which a security is priced declines in value
     relative to the U.S. dollar

[_]  The subadviser's judgment about the attractiveness, relative yield, value
     or potential appreciation of a particular security, or the stability of a
     particular government proves to be incorrect.

The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have a
higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments. 

Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.

In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency are scheduled to begin on January 1, 1999. There are significant
political and economic risks associated with EMU, which may increase the
volatility of European markets and present valuation problems for the fund.

The fund is NOT diversified, which means that it can invest a higher percentage
of its assets in any one issuer than a diversified fund. Being non-diversified
may magnify the fund's losses from adverse events affecting a particular issuer.

                          Travelers Series Fund - 17
<PAGE>
 

THE FUND'S GOAL AND INVESTMENTS         TRAVELERS MANAGED INCOME PORTFOLIO
--------------------------------------------------------------------------------

----------------------------
MANAGER                            INVESTMENT GOAL
TAMIC is the Manager.   
                                   High current income consistent with prudent
                                   risk of capital.
                                   ---------------------------------------------
PORTFOLIO MANAGER                  KEY INVESTMENTS
F. Denney Voss          
                                   The fund invests primarily in U.S. corporate
                                   debt obligations and U.S. government
                                   securities, including mortgage and asset
                                   backed securities, but may also invest to a
                                   limited extent in foreign issuers.

                                   CREDIT QUALITY: The fund invests primarily in
                                   investment grade obligations. Up to 35% of
                                   the fund's assets may be invested in below
                                   investment grade obligations with no minimum
                                   rating.

                                   DURATION: At least 65% of the fund's assets
                                   are invested in securities having durations
                                   of 10 years or less. The fund's average
                                   portfolio duration will vary between 2 to 5
                                   years depending on the manager's outlook for
                                   interest rates.
------------------------------------------------------------------------------- 

SELECTION PROCESS

The manager uses a three step "top down" investment approach to selecting
investments for the fund by identifying undervalued sectors and individual
securities. Specifically, the manager:

 .  Determines appropriate sector and maturity weightings based on the manager's
   intermediate and long-term assessments of broad economic and interest rate
   trends
   
 .  Uses fundamental research methods to identify undervalued sectors of the
   government and corporate debt markets and adjusts portfolio positions to take
   advantage of new information
   
 .  Analyzes yield maturity, issue classification and quality characteristics to
   identify individual securities that present what the manager consider the
   optimal balance of potential return and manageable risk
--------------------------------------------------------------------------------

FUND PERFORMANCE

This bar chart indicates the risks of investing in the fund by showing
changes in the fund's performance from year to year. The table shows how the
fund's average annual returns for different calendar periods compare to the
return of the Lehman Brothers Intermediate Government/Corporate Index
("Lehman Brothers Index"). Past performance does not necessarily indicate how
the fund will perform in the future. Performance figures do not reflect
expenses incurred from investing through a Separate Account. Please refer to
the Separate Account prospectus for more information on expenses.

                             [GRAPH APPEARS HERE]

The bar chart shows the performance of the fund's shares since its inception
on June 16, 1994.

                                     QUARTERLY RETURNS:
                                     Highest:  xx% in ___ quarter 199X
                                     Lowest:   xx% in ___ quarter 199X

   
                               AVERAGE ANNUAL TOTAL RETURNS
                        (for the periods ended December 31, 1998)
                 ---------------------------------------------------------
                                         One      Five          Since
                                         year     years        inception
                 ---------------------------------------------------------
                 Fund
                 Lehman Brothers Index
                 ---------------------------------------------------------

                          Travelers Series Fund - 18
<PAGE>
 
PRINCIPAL RISKS OF INVESTING IN THE FUND

While investing in debt securities can bring added benefits, it may also
involve risks. Investors could lose money in the fund or the fund's
performance could fall below other possible investments if any of the
following occurs:

[_]  The issuer of a debt security in the fund defaults on its obligation to pay
     principal or interest, has its credit rating downgraded by a rating
     organization or is perceived by the market to be less creditworthy.
     
[_]  Interest rates go up, causing the prices of debt securities in the fund to
     fall.
     
[_]  As a result of declining interest rates, the issuer of a security exercises
     its right to prepay principal earlier than scheduled, forcing the fund to
     reinvest in lower yielding securities. This is known as call or prepayment
     risk.
     
[_]  As a result of rising interest rates, the issuer of a security exercises
     its right to pay principal later than scheduled, which will lock in a 
     below-market interest rate and reduce the value of the security. This is
     known as extension risk.
     
[_]  The manager's judgment about the attractiveness, value or potential
     appreciation of a particular security proves to be incorrect.

The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities
have a higher risk of default, tend to be less liquid, and may be more
difficult to value. Changes in economic conditions or other circumstances are
more likely to lead issuers of these securities to have a weakened capacity
to make principal and interest payments.

Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in
foreign securities is greater in the case of less developed countries.

In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency are scheduled to begin on January 1, 1999. There are significant
political and economic risks associated with EMU, which may increase the
volatility of European markets and present valuation problems for the fund.

                          Travelers Series Fund - 19
<PAGE>
 
The Fund's Goal and Investments             Putnam Diversified Income Portfolio
--------------------------------------------------------------------------------

------------------------------
Manager and Subadviser               Investment Goal
MMC is the manager.
                                     High current income consistent with
                                     preservation of capital.
                                     -------------------------------------------
Putnam Investment                    Key Investments
Management, Inc. is the
subadviser.                          The fund invests primarily in debt
                                     securities of U.S. and foreign governments
                                     and corporations.
Putnam has managed mutual
funds since 1937.  Putnam            CREDIT QUALITY:  The fund may invest in 
and its affiliates manage over       securities with a wide range of credit
$___ billion in assets.              qualities depending on the particular 
                                     sector of the fixed income securities 
                                     market in which the manager invests.

Portfolio Manager                    Duration:  The Fund's Duration will 
A team of fixed income               generally vary from 3 to 7 years depending
specialists coordinated by           on market conditions and the subadviser's
Jennifer Evans Leichter              outlook for interest rates.  Individual
                                     securities may be of any duration.
--------------------------------------------------------------------------------
Selection Process

The subadviser combines "top down" and "bottom up" investment styles, with an
emphasis on active sector strategies. The subadviser believes that actively
allocating the fund's investments among sectors of the fixed income securities
markets, as opposed to investing in any one sector, will better enable the fund
to control risk while pursuing its objective of high current income.

The subadviser allocates its investment among the following three sectors of the
fixed income securities market:

   .  A U.S. Government Sector, consisting primarily of securities of the U.S.
      government, its agencies and instrumentalities and related options,
      futures and repurchase agreements. The subadviser allocates at least 20%
      of the fund to the U.S. Government Sector;
   .  A High Yield Sector, consisting primarily of high yielding, lower-rated,
      high risk U.S. and foreign corporate fixed-income securities commonly
      called "junk bonds"; and
   .  An International Sector, consisting primarily of obligations of foreign
      governments, their agencies and instrumentalities, supranational entities,
      and foreign corporations, including issuers in emerging markets, and
      related options and futures.

The subadviser over- and underweights investments in each sector depending on
the subadviser's views on economic, interest rate and political trends. The
subadviser utilizes proprietary techniques to organize and rank opportunities
presented by the various sectors. In making sector allocations, the subadviser
evaluates:

   .  Capital flows                             .  Default trends
   .  Political trends                          .  Interest rate forecasts

Specialists managing each sector then select individual securities within each
sector that represent risk/return opportunities believed optimal. In selecting
securities for investment, the subadviser looks for favorable yield, maturity,
issue classification and quality characteristics.


                          Travelers Series Fund - 20
<PAGE>
 
FUND PERFORMANCE

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Lehman Brothers Aggregate Bond Index and the Salomon Brothers Non-U.S. World
Government Bond Index. Past performance does not necessarily indicate how the
fund will perform in the future. Performance figures do not reflect expenses
incurred from investing through a Separate Account. Please refer to the Separate
Account prospectus for more information on expenses.

                             [GRAPH APPEARS HERE]

   The bar chart shows the performance of the fund's shares since June 16, 1994.
                             
                                 QUARTERLY RETURNS:
                                 Highest:  xx% in ___ quarter 199X
                                 Lowest:   xx% in ___ quarter 199X

                              AVERAGE ANNUAL TOTAL RETURNS
                       (for the periods ended December 31, 1998)
              -----------------------------------------------------------
                                      One          Five          Since
                                      year         years        inception
              -----------------------------------------------------------
              Fund
              Lehman Brothers Index
              Salomon Brothers Index
              -----------------------------------------------------------

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

PRINCIPAL RISKS OF INVESTING IN THE FUND

While investing in fixed income securities can bring added benefits, it may also
involve additional risks. Investors could lose money in the fund or the fund's
performance could fall below other possible investments if any of the following
occurs:

[_]   Fixed income securities lose their value due to an increase in market
      interest rates in one or more regions, a decline in an issuer's credit
      rating or financial condition or a default by an issuer.

[_]   As a result of declining interest rates, the issuer of a security
      exercises its right to prepay principal earlier than scheduled, forcing
      the fund to reinvest in lower yielding securities. This is known as call
      or prepayment risk.

[_]   As a result of rising interest rates, the issuer of a security exercises
      its right to pay principal later than scheduled, which will lock in a
      below-market interest rate and reduce the value of the security. This is
      known as extension risk.

[_]   An unhedged currency in which a security is priced declines in value
      relative to the U.S. dollar

[_]   The subadviser's judgment about the attractiveness, relative yield, value
      or potential appreciation of a particular security, or the stability of a
      particular government proves to be incorrect.

The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have a
higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.

Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.

                          Travelers Series Fund - 21
<PAGE>
 
The Fund's Goal and Investments             Smith Barney High Income Portfolio
--------------------------------------------------------------------------------

------------------
Manager                Investment Goal
MMC is the
manager                Primary:  High current income     Secondary:  Capital 
                                                                    appreciation

                       ---------------------------------------------------------
Portfolio Manager      Key Investments
John C. Bianchi
                       The fund invests primarily in high yielding, corporate
                       debt obligations and preferred stock of U.S. and foreign
                       issuers, but may also invest in foreign issuers.

                       CREDIT QUALITY: The fund invests primarily in below
                       investment grade securities, but may not invest more than
                       10% in securities rated lower than B or unrated
                       securities of comparable quality. Below investment grade
                       securities are commonly known as "junk bonds."

                       MATURITY: Although the fund may invest in securities of
                       any maturity, under current market conditions, the fund
                       intends to have an average remaining maturity of between
                       five and ten years.
--------------------------------------------------------------------------------
Selection Process

In selecting securities, the manager considers and compares the relative yields
of various types of obligations. The manager seeks to maximize current income by
generally purchasing securities of lower credit quality, but offering higher
current yield. In selecting securities for the fund, the manager employs a
forward looking strategy seeking to identify companies that exhibit favorable
earnings prospects or demonstrate a potential for higher ratings over time. The
manager looks for:

[_]   "Fallen angels" or companies that are repositioning in the marketplace
      which the manager believes are temporarily undervalued, and

[_]   Younger companies with smaller capitalization that have exhibited
      improving financial strength or improving credit ratings over time

The manager selects individual debt securities by comparing yield, maturity,
issue classification and quality characteristics. Investments in these companies
may increase the fund's potential for capital appreciation and reduce the fund's
credit risk exposure.

The manager also employs an active sell strategy to dispose of securities that
no longer meet the manager's investment criteria to harvest gains for
reinvestment in new securities exhibiting characteristics as described above.


                          Travelers Series Fund - 22
<PAGE>
 
FUND PERFORMANCE

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Salomon Brothers Intermediate High Yield Index ("Salomon Index") and the
Bear Stearns High Yield Index ("Bear Stearns Index"). Past performance does not
necessarily indicate how the fund will perform in the future. Performance
figures do not reflect expenses incurred from investing through a Separate
Account. Please refer to the Separate Account prospectus for more information on
expenses.

                             [GRAPH APPEARS HERE]

The bar chart shows the performance of the fund's shares since its inception on
June 16, 1994.

                                    QUARTERLY RETURNS:
                                    Highest:  xx% in ___ quarter 199X
                                    Lowest:   xx% in ___ quarter 199X



                              AVERAGE ANNUAL TOTAL RETURNS
                       (for the periods ended December 31, 1998)
                   -------------------------------------------------
                                      One        Five       Since
                                      year       years     inception
                   -------------------------------------------------
                   Fund
                   Salomon Index
                   Bear Stearns Index
                   -------------------------------------------------

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

PRINCIPAL RISKS OF INVESTING IN THE FUND

While investing in high yield securities can bring added benefits, it may also
involve additional risks. Investors could lose money in the fund or the fund's
performance could fall below other possible investments if any of the following
occurs:

[_]   The issuer of a debt security in the fund defaults on its obligation to
      pay principal or interest, has its credit rating downgraded by a rating
      organization or is perceived by the market to be less creditworthy.

[_]   Interest rates go up, causing the prices of debt securities in the fund
      to fall.

[_]   As a result of declining interest rates, the issuer of a security
      exercises its right to prepay principal earlier than scheduled, forcing
      the fund to reinvest in lower yielding securities. This is known as call
      or prepayment risk.

[_]   As a result of rising interest rates, the issuer of a security
      exercises its right to pay principal later than scheduled, which will
      lock in a below-market interest rate and reduce the value of the
      security. This is known as extension risk.

[_]   The manager's judgment about the attractiveness, value or potential
      appreciation of a particular security proves to be incorrect.

The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have a
higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.

Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in
foreign securities is greater in the case of less developed countries.

                          Travelers Series Fund - 23
<PAGE>
 
THE FUND'S GOAL AND INVESTMENTS        SMITH BARNEY MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------

-----------------------------
MANAGER                         INVESTMENT GOAL
MMC is the manager
                                   Maximize current income consistent with
                                   preservation of capital. The fund seeks to
                                   maintain a stable $1 share price.

                                 -----------------------------------------------
PORTFOLIO MANAGER                KEY INVESTMENTS
Martin Hanley
                                   The fund invests exclusively in high quality
                                   U.S. dollar denominated short term debt
                                   securities. These include commercial paper,
                                   corporate and municipal obligations,
                                   obligations of U.S. and foreign banks,
                                   securities of the U.S. Government, its
                                   agencies or instrumentalities and related
                                   repurchase agreements.

                                   CREDIT QUALITY: The fund invests exclusively
                                   in securities rated by a nationally
                                   recognized rating organization in the two
                                   highest short term rating categories, or if
                                   unrated, of equivalent quality.

                                   EFFECTIVE MATURITY: The fund invests
                                   exclusively in securities having remaining
                                   effective maturities of 397 days or less, and
                                   maintains a dollar-weighted portfolio
                                   maturity of 90 days or less.
-------------------------------------------------------------------------------
SELECTION PROCESS

In selecting investments for the fund, the manager looks for:

[_]    The best relative values based on an analysis of interest rate
       sensitivity, yield and price.

[_]    Issuers offering minimal credit risk.

[_]    Maturities consistent with the manager's outlook for interest rates.
--------------------------------------------------------------------------------

FUND PERFORMANCE

This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the 90-day Treasury bill. Past performance does not necessarily indicate how the
fund will perform in the future. Performance figures do not reflect expenses
incurred from investing through a Separate Account. Please refer to the Separate
Account prospectus for more information on expenses.

                             [GRAPH APPEARS HERE]

The bar chart shows the performance of the Fund's shares since its inception on 
June 16, 1994.


                                         QUARTERLY RETURNS:
                                         Highest:  xx% in ___ quarter 199X
                                         Lowest:   xx% in ___ quarter 199X


                         AVERAGE ANNUAL TOTAL RETURNS
                   (for the periods ended December 31, 1998)
               -------------------------------------------------
                                One        Five           Since
                                year      years        inception
               -------------------------------------------------
               Fund
               Treasury bill
               -------------------------------------------------

The fund's 7-day yield as of ________ was ____%. Call 1-800-xxx-xxxx for the
fund's current 7-day yield.

                          Travelers Series Fund - 24

<PAGE>
 
PRINCIPAL RISKS OF INVESTING IN THE FUND

Although the fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund, or the fund could
underperform other short term debt instruments or money market funds if any of
the following occurs:

[_]  Interest rates rise sharply.
[_]  An issuer of the fund's securities defaults, or has its credit rating
     downgraded.
[_]  Sectors or issuers the fund has emphasized fail to perform as expected.
[_]  The manager's judgment about the attractiveness, value or potential
     appreciation of a particular security proves to be incorrect.

The value of the fund's foreign securities may go down because of unfavorable
government actions, political instability or the more limited availability of
accurate information about foreign issuers.

                          Travelers Series Fund - 25
<PAGE>

MORE ON THE FUNDS' INVESTMENTS

ADDITIONAL INVESTMENTS AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------

Each fund describes its             SMITH BARNEY PACIFIC BASIN PORTFOLIO
investment objective and its        Although the fund intends to be fully 
principal investment strategies     invested in equity securities, it may 
and risks under "Fund Goals         invest up to 20% of its assets in 
and Strategies."                    investment grade debt securities.

                                    SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
This section provides additional    The fund may invest up to 20% of its assets
information about the funds'        in debt securities of any credit quality or 
investments and certain             maturity of foreign corporate and 
portfolio management                governmental issuers, as well as U.S.
techniques the funds may use.       government securities and money market 
More information about the          obligations of U.S. and foreign corporate 
funds' investments and              issuers.  
portfolio management                
techniques, some of which           SMITH BARNEY LARGE CAPITALIZATION GROWTH
entail risks, is included in the    PORTFOLIO
statement of additional             Although the fund intends to be fully
information (SAI).                  invested in equity securities of growth
                                    companies, it may invest up to 35% of its
                                    total assets in money market instruments for
                                    cash management purposes.
                                
                                    ALLIANCE GROWTH PORTFOLIO
                                    Although the fund invests primarily in U.S. 
                                    equity securities, it may also invest up to 
                                    25% of its assets in high yield securities
                                    with no minimum credit quality restriction, 
                                    and may also invest up to 15% in foreign 
                                    securities.

                                    MFS TOTAL RETURN PORTFOLIO 
                                    The fund may invest without limit in ADRs
                                    and up to 20% of its total assets in foreign
                                    securities.

                                    TRAVELERS MANAGED INCOME PORTFOLIO 
                                    The fund may invest up to 35% of its total
                                    assets in non-investment grade debt
                                    obligations, commonly known as "junk bonds."
                                    The fund may also invest up to 35% of its
                                    total assets in fixed-income obligations
                                    having durations longer than 10 years. The
                                    fund may also invest up to 25% of its assets
                                    in asset-backed and mortgage-backed
                                    securities, including CMOs.

                                    SMITH BARNEY HIGH INCOME PORTFOLIO 
                                    Although the fund invests primarily in high
                                    yield securities, the fund may also invest
                                    up to 35% of its assets in common stock and
                                    common stock equivalents, including
                                    convertible securities, options, warrants
                                    and rights. The fund may invest up to 20% of
                                    its assets in foreign currency denominated
                                    securities and without limit in U.S. dollar
                                    denominated securities of foreign issuers.


                          Travelers Series Fund - 26
<PAGE>
 

EQUITY INVESTMENTS                  Subject to its particular investment 
                                    policies, each of these funds may invest in 
Each equity fund, MFS Total         all types of equity securities.  Equity 
Return Portfolio and Smith Barney   securities include exchange-traded and 
High Income Portfolio               over-the-counter (OTC) common and preferred
                                    stocks, warrants, rights, investment grade
                                    convertible securities, receipts and shares,
                                    trust certificates, limited partnership
                                    interests, shares of other investment
                                    companies, real estate investment trusts and
                                    equity participations.

--------------------------------------------------------------------------------
FIXED INCOME INVESTMENTS            Subject to its particular investment
                                    policies, each fund may invest in fixed
Each fixed income fund and, to a    income securities. Fixed income investments
limited extent, each equity fund    include bonds, notes (including structured
                                    notes), mortgage-related securities, asset-
                                    backed securities, convertible securities,
                                    Eurodollar and Yankee dollar instruments,
                                    preferred stocks and money market
                                    instruments. Fixed income securities may be
                                    issued by U.S. and foreign corporations or
                                    entities; U.S. and foreign banks; the U.S.
                                    government, its agencies, authorities,
                                    instrumentalities or sponsored enterprises;
                                    state and municipal governments;
                                    supranational organizations; and foreign
                                    governments and their political
                                    subdivisions.

                                    Fixed income securities may have all types
                                    of interest rate payment and reset terms,
                                    including fixed rate, adjustable rate, zero
                                    coupon, contingent, deferred, payment in
                                    kind and auction rate features.

                                    Each of these funds may invest in mortgage-
MFS Total Return, Travelers         backed and asset-backed securities. 
Managed Income, Putnam              Mortgage-related securities may be issued by
Diversified Income and Smith        private companies or by agencies of the U.S.
Barney High Income Portfolios       government and represent direct or indirect
                                    participations in, or are collateralized by
                                    and payable from, mortgage loans secured by
                                    real property. Asset-backed securities
                                    represent participations in, or are secured
                                    by and payable from, assets such as
                                    installment sales or loan contracts, leases,
                                    credit card receivables and other categories
                                    of receivables.

--------------------------------------------------------------------------------
                                    CREDIT QUALITY

                                    If a security receives different ratings, a
                                    fund will treat the securities as being
                                    rated in the highest rating category. A fund
                                    may choose not to sell securities that are
                                    downgraded after their purchase below the
                                    fund's minimum acceptable credit rating.
                                    Each fund's credit standards also apply to
                                    counterparties to OTC derivatives contracts.

                                    INVESTMENT GRADE SECURITIES

                                    Securities are investment grade if:

                                    [_]     They are rated, respectively, in one
                                            of the top four long-term rating
                                            categories of a nationally
                                            recognized statistical rating
                                            organization.
                                    [_]     They have received a comparable
                                            short-term or other rating.
                                    [_]     They are unrated securities that the
                                            manager believes are of comparable
                                            quality to investment grade
                                            securities.


                          Travelers Series Fund - 27
<PAGE>
 
                                      HIGH YIELD, LOWER QUALITY SECURITIES

Alliance Growth, MFS Total            Each of these funds may invest in fixed
Return, Travelers Managed             income securities that are high yield,
Income, Putnam Diversified            lower quality securities rated by a rating
Income, Gt Global Strategic           organization below its top four long term
Income And Smith Barney High          rating categories or unrated securities
Income Portfolios Only                determined by the manager or Subadviser to
                                      be of equivalent quality. The issuers of
                                      lower quality bonds may be highly
                                      leveraged and have difficulty servicing
                                      their debt, especially during prolonged
                                      economic recessions or periods of rising
Alliance Growth Portfolio may         interest rates. The prices of lower 
invest in these securities primarily  quality securities are volatile and may
for their capital growth potential    go down due to market perceptions of 
                                      deteriorating issuer credit-worthiness 
                                      or economic conditions. Lower quality 
                                      securities may become illiquid and hard 
                                      to value in down markets. 
                                               
--------------------------------------------------------------------------------
FOREIGN AND EMERGING MARKET           Each fund may invest in foreign
INVESTMENTS                           securities, although the foreign
                                      investments of Smith Barney Money Market
                                      Portfolio are limited to U.S. dollar
                                      denominated investments issued by foreign
                                      branches of U.S. banks and by U.S. and
                                      foreign branches of foreign banks.

                                      Investments in securities of foreign
                                      entities and securities quoted or
                                      denominated in foreign currencies involve
                                      special risks. These include possible
                                      political and economic instability and the
                                      possible imposition of exchange controls
                                      or other restrictions on investments. If a
                                      fund invests in securities denominated or
                                      quoted in currencies other than the U.S.
                                      dollar, changes in foreign currency rates
                                      relative to the U.S. dollar will affect
                                      the U.S. dollar value of the fund's
                                      assets.

Smith Barney Pacific Basin, Smith     Emerging market investments offer the
Barney International Equity, MFS      potential of significant gains but also
Total Return Putnam Diversified       involve greater risks than investing in
Income and GT Global Strategic        More developed countries. Political or
Income Portfolios only                economic instability, lack of market
                                      liquidity and government actions such as
                                      currency controls or seizure of private
                                      business or property may be more likely in
                                      emerging markets.


                          Travelers Series Fund - 28
<PAGE>
 
                                     SOVEREIGN GOVERNMENT AND SUPRANATIONAL DEBT

MFS Total Return, Travelers          These funds may invest in all types of
Managed Income, Putnam               fixed income securities of governmental
Diversified Income and GT Global     issuers in all countries, including
Strategic Income Portfolios only     emerging markets. These sovereign debt
                                     securities may include:
  
                                     [_]     Fixed income securities issued or
                                             guaranteed by governments,
                                             governmental agencies or
                                             instrumentalities and political
                                             subdivisions located in emerging
                                             market countries.
                                     [_]     Participations in loans between
                                             emerging market governments and
                                             financial institutions.
                                     [_]     Fixed income securities issued by
                                             government owned, controlled or
                                             sponsored entities located in
                                             emerging market countries.
                                     [_]     Interests in entities organized and
                                             operated for the purpose of
                                             restructuring the investment
                                             characteristics of instruments
                                             issued by any of the above issuers.
                                     [_]     Brady Bonds.
                                     [_]     Fixed income securities issued by
                                             corporate issuers, banks and
                                             finance companies located in
                                             emerging market countries.
                                     [_]     Fixed income securities issued by
                                             supranational entities such as the
                                             World Bank or the European Economic
                                             Community (A supranational entity
                                             is a bank, commission or company
                                             established or financially
                                             supported by the national
                                             governments of one or more
                                             countries to promote reconstruction
                                             or development.)

--------------------------------------------------------------------------------
DERIVATIVES AND HEDGING              Each fund may, but need not, use derivative
TECHNIQUES                           contracts, such as futures and options on
                                     securities, securities indices or
                                     currencies; options on these futures;
                                     forward currency contracts; and interest
All funds except Smith Barney        rate or currency swaps for any of the
Money Market Portfolio               following purposes:
                              
                                     .       To hedge against the economic
                                             impact of adverse changes in the
                                             market value of its securities, due
                                             to changes in stock market prices,
                                             currency exchange rates or interest
                                             rates
                                     .       As a substitute for buying or
                                             selling securities
                                     .       To enhance the fund's return

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


                          Travelers Series Fund - 29
<PAGE>
 
  SECURITIES LENDING                 Each fund, except Van Kampen Capital
                                     Enterprise Portfolio, may engage in
                                     securities lending to increase its net
                                     investment income. Each fund will only lend
                                     securities if the loans are callable by the
                                     fund at any time and the loans are
                                     continuously secured by cash or liquid
                                     securities equal to no less than the market
                                     value, determined daily, of the securities
                                     loaned. The risks in lending securities
                                     consist of possible delay in receiving
                                     additional collateral, delay in recovery of
                                     securities when the loan is called or
                                     possible loss of collateral should the
                                     borrower fail financially.

--------------------------------------------------------------------------------
  DEFENSIVE INVESTING                Each 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 a fund takes
                                     a temporary defensive position, it may be
                                     unable to achieve its investment goal.

--------------------------------------------------------------------------------
  PORTFOLIO TURNOVER                 Each fund may engage in active and frequent
                                     trading to achieve its principal investment
                                     strategies. Frequent trading also increases
                                     transaction costs, which could detract from
                                     a fund's performance.

                          Travelers Series Fund - 30
<PAGE>
 
MANAGEMENT


THE MANAGERS

MUTUAL MANAGEMENT CORP.

Mutual Management Corp. is a wholly owned subsidiary of Citigroup, a financial
services holding company engaged, through its subsidiaries, principally in four
business segments: Investment Services including Asset Management, Consumer
Finance Services, Life Insurance Services and Property & Casualty Insurance
Services. MMC is located at 388 Greenwich Street, New York, New York 10013. MMC
acts as investment manager to investment companies having aggregate assets as of
the date of this prospectus of approximately $94 billion.

MMC manages the investment operations of the following funds (Smith Barney
funds) and receives from each fund for these services the fee indicated:

<TABLE>
<CAPTION>
                                                                       Actual management fee
                                                                     paid for the fiscal year                    Contractual
                                                                      ended October 31, 1998                   management fee
                                                                         (as a percentage                     (as a percentage
                                                                           of the fund's                        of the fund's
Fund                                                                 average daily net assets)            average daily net assets)
----                                                                 -------------------------            -------------------------
<S>                                                                  <C>                                  <C>
Smith Barney Pacific Basin Portfolio                                          ___%                                0.90%

Smith Barney International Equity Portfolio                                   ___%                                0.90%
               
Smith Barney Large Cap Value Portfolio                                        ___%                                0.65%

Smith Barney Large Capitalization Growth Portfolio                            ___%                                0.75%
               
Smith Barney High Income Portfolio                                            ___%                                0.60%

Smith Barney Money Market Portfolio                                           ___%                                0.50%*
</TABLE> 

* Prior to March 11, 1998, the annual management fee paid to MMC was 0.60% of
the average daily net assets of the fund.


                          Travelers Series Fund - 31 
<PAGE>
 
TRAVELERS INVESTMENT ADVISER INC.

Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation (Plaza), which is an indirect wholly owned subsidiary of
Citigroup, an affiliate of MMC. TIA is located at 388 Greenwich Street, New
York, New York 10013. TIA acts as investment manager to investment companies
having aggregate assets as of the date of this prospectus of approximately
$______ billion.

TIA manages the investment operations of the following funds (TIA funds) and
receives for these services from each fund the fee indicated:

<TABLE>
<CAPTION>
                                                                Actual management fee
                                                               paid for the fiscal year             Contractual management
                                                                ended October 31, 1998                     fee paid
                                                                  (as a percentage                    (as a percentage
                                                                   of the fund's                        of the fund's
Fund                                                          average daily net assets)            average daily net assets)
----                                                          -------------------------            -------------------------
<S>                                                           <C>                                  <C> 
Alliance Growth Portfolio                                                ___%                                0.80%

AIM Capital Appreciation Portfolio                                       ___%                                0.80%

Van Kampen American Capital Enterprise Portfolio                         ___%                                0.70%
                             
MFS Total Return Portfolio                                               ___%                                0.80%

GT Global Strategic Income Portfolio                                     ___%                                0.80%

Putnam Diversified Income Portfolio                                      ___%                                0.75%
</TABLE> 

Travelers Asset Management International Corporation

Travelers Asset Management International Corporation (TAMIC) is a wholly owned
subsidiary of Citigroup and an affiliate of MMC. TAMIC is located at One Tower
Square - 10PB, Hartford, Connecticut 06183-2030. TAMIC also acts as investment
adviser or subadviser for other investment companies used to fund variable
products, as well as for individual and pooled pension and profit-sharing
accounts, and for affiliated domestic insurance companies.

TAMIC manages the investment operations of the following funds (TAMIC funds)
and receives for these services from each fund the fee indicated:

<TABLE>
<CAPTION>
                                                                 Actual management fee
                                                               paid for the fiscal year             Contractual management
                                                                ended October 31, 1998                     fee paid
                                                                   (as a percentage                    (as a percentage
                                                                    of the fund's                       of the fund's
Fund                                                         average daily net assets)           average daily net assets)
----                                                         -------------------------           -------------------------
<S>                                                          <C>                                 <C> 
Travelers Managed Income Portfolio                                     ___%                                0.65%
</TABLE> 

                          Travelers Series Fund - 32
<PAGE>
 
THE SUBADVISERS AND                         The MMC funds are managed solely by
PORTFOLIO MANAGERS                          MMC. The TAMIC funds are managed
                                            solely by TAMIC. Each of the TIA
                                            funds' investments are selected by a
                                            subadviser which is supervised by
                                            TIA. The table below sets forth the
                                            name and business experience of each
                                            fund's portfolio manager, including
                                            where applicable, the portfolio
                                            manager employed by the subadviser.


<TABLE>
<CAPTION>
               FUND                        PORTFOLIO MANAGER AND SUBADVISER                          BUSINESS EXPERIENCE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                               <C> 
SMITH BARNEY PACIFIC                DAVID S. ISHIBASHI (since 1996)                   Investment Officer, MMC; Vice President,
BASIN PORTFOLIO                     MMC                                               Salomon Smith Barney.
                                    388 Greenwich Street
                                    New York, New York  10013

                                    SCOTT KALB (since 1996)                           Investment Officer, MMC; Managing
                                    MMC                                               Director, Salomon Smith Barney.
-----------------------------------------------------------------------------------------------------------------------------------
SMITH BARNEY                        JAMES CONHEADY (since inception)                  Investment Officer, MMC; Vice President,
INTERNATIONAL EQUITY                MMC                                               Travelers Series Fund; Managing Director,
PORTFOLIO                           388 Greenwich Street                              Salomon Smith Barney.
                                    New York, New York 10013

                                    JEFFREY RUSSELL (since inception)                 Investment Officer, MMC; Vice President,
                                    MMC                                               Travelers Series Fund; Managing Director,
                                                                                      Salomon Smith Barney.
-----------------------------------------------------------------------------------------------------------------------------------
SMITH BARNEY LARGE                  ELLEN CARDOZO SONSINO (since 1998)                Investment Officer, MMC; Managing
CAP VALUE PORTFOLIO                 MMC                                               Director and Senior Equity Portfolio
                                    388 Greenwich Street,                             Manager, Salomon Smith Barney.
                                    New York, New York 10013
-----------------------------------------------------------------------------------------------------------------------------------
SMITH BARNEY LARGE                  ALAN BLAKE (since inception)                      Investment Officer, MMC; Managing
CAPITALIZATION GROWTH               MMC                                               Director, Salomon Smith Barney.
PORTFOLIO                           388 Greenwich Street
                                    New York, New York 10013
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH                     TYLER SMITH (since inception)                     Senior Vice President, Alliance Capital.
PORTFOLIO                           Alliance Capital Management L.P.
                                    1345 Avenue of the Americas
                                    New York, New York 10105
-----------------------------------------------------------------------------------------------------------------------------------
AIM CAPITAL                         KENNETH A. ZSCHAPPEL (since                       Vice President, A I M Capital.
APPRECIATION PORTFOLIO              inception)
                                    A I M Capital Management, Inc. 11 Greenway
                                    Plaza, Suite 100 Houston, TX 77046

                                    CHARLES D. SCAVONE (since inception)              Vice President, A I M Capital.  Associate
                                    A I M Capital Management                          Portfolio Manager, Van Kampen Capital
                                                                                      Asset Management, Inc. from 1994 to
                                                                                      1996.  Prior to that, Equity Research
                                                                                      Analyst/ Assistant Portfolio Manager,
                                                                                      Texas Commerce Investment Management
                                                                                      Company from 1991 to 1994.
</TABLE> 

                          Travelers Series Fund - 33
<PAGE>
 
<TABLE>
<CAPTION>
               FUND                        PORTFOLIO MANAGER AND SUBADVISER                          BUSINESS EXPERIENCE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                               <C> 
                                    DAVID P. BARNARD (since inception)                Vice President, A I M Capital.
                                    A I M Capital Management

                                    ROBERT M. KIPPES (since inception)                Vice President, A I M Capital. 
                                    A I M Capital Management
------------------------------------------------------------------------------------------------------------------------------------
  VAN KAMPEN CAPITAL                JEFF NEW (since July 1994)                        Senior Vice President, Van Kampen Asset
  ENTERPRISE PORTFOLIO              Van Kampen Asset Management, Inc.                 Management; Senior Vice President, Van
                                    One Parkview Plaza                                Kampen Investment Advisory, Inc.
                                    Oakbrook Terrace, IL  60181
-----------------------------------------------------------------------------------------------------------------------------------
  MFS TOTAL RETURN                  DAVID M. CALABRO (since inception)                Senior Vice President, MFS.
  PORTFOLIO                         Massachusetts Financial Services
                                    Company
                                    500 Boylston Street
                                    Boston, MA  02116

                                    GEOFFREY L. KURINSKY (since inception)            Senior Vice President, MFS.
                                    MFS

                                    CONSTANTINOS MOKAS (since 1998)                   Vice President, MFS.
                                    MFS

                                    LISA B. NURME (since inception)                   Senior Vice President, MFS.
                                    MFS

                                    MAURA A. SHAUGHNESSY (since                       Senior Vice President, MFS.
                                    inception)
                                    MFS
-----------------------------------------------------------------------------------------------------------------------------------
  GT GLOBAL STRATEGIC               CHENG-HOCK LAU (since 1996)                       Chief Investment Officer, Fixed Income,
  INCOME PORTFOLIO                  INVESCO (NY), Inc.                                INVESCO since 1996.  Senior Portfolio
                                    1166 Avenue of the Americas                       Manager for Global/International Fixed
                                    New York, NY 10036                                Income, Chancellor LGT from 1995 to 1996.
                                                                                      Prior to that, Senior Vice President and
                                                                                      Senior Portfolio Manager, Fiduciary Trust
                                                                                      Company International from 1993 to 1995. Prior

                                                                                      to that, Vice President, Bankers Trust Company

                                                                                      from 1991 to 1993.

                                    DAVID HUGHES (since 1998)                         Head of Global Fixed Income, North
                                    INVESCO (NY), Inc.                                America, INVESCO since 1997. Senior Portfolio
                                                                                      Manager, Global/International Fixed Income,
                                                                                      INVESCO from July 1995 to December 1997. Prior

                                                                                      to that, Mr. Hughes was employed by Chancellor

                                                                                      Capital from July 1995 to October 1996. Prior
                                                                                      to that, Assistant Vice President, Fiduciary
                                                                                      Trust Company International from 1994 to 1995.


                                    CRAIG MUNRO (since 1998)                          Portfolio Manager, INVESCO since
                                    INVESCO (NY), Inc.                                August 1997.  Prior thereto, Vice President
                                                                                      and Senior Analyst, Emerging Markets
                                                                                      Group,  Global Fixed Income Division,
                                                                                      Merrill Lynch Asset Management from
                                                                                      1993 to August 1997.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                          Travelers Series Fund - 34
<PAGE>
 
<TABLE>
<CAPTION>
               FUND                        PORTFOLIO MANAGER AND SUBADVISER                          BUSINESS EXPERIENCE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                               <C> 
  TRAVELERS MANAGED                 F. DENNEY VOSS (since 1998)                       Executive Vice President, Salomon Smith
  INCOME PORTFOLIO                  TAMIC                                             Barney.
                                    One Tower Square - 10PB
                                    Hartford, Connecticut 06183-2030
-----------------------------------------------------------------------------------------------------------------------------------
  PUTNAM DIVERSIFIED                JENNIFER EVANS LEICHTER (since 1998)              Managing Director and Chief Investment
  INCOME PORTFOLIO                  Putnam Investment                                 Officer, Corporate Credit Group, Putnam
                                    Management, Inc.                                  Management.
                                    One Post Office Square
                                    Boston, MA  02109
-----------------------------------------------------------------------------------------------------------------------------------
  SMITH BARNEY HIGH                 JOHN C. BIANCHI (since inception)                 Investment Officer, MMC; Managing
  INCOME PORTFOLIO                  MMC                                               Director, Salomon Smith Barney.
                                    388 Greenwich Street
                                    New York, New York 10013
-----------------------------------------------------------------------------------------------------------------------------------
  MONEY MARKET PORTFOLIO            MARTIN HANLEY (since inception)                   Investment Officer, MMC; Vice President,
                                    MMC                                               Salomon Smith Barney.
                                    388 Greenwich Street
                                    New York, New York 10013
----------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

  YEAR 2000 ISSUE. Information technology experts are concerned about computer
  systems' ability to process date-related information on and after January 1,
  2000. This situation, commonly known as the "Year 2000" issue, could have an
  adverse impact on the funds. The managers are addressing the Year 2000 issue
  for their systems. The funds have been informed by their other service
  providers that they are taking similar measures. Although the funds do not
  expect the Year 2000 issue to adversely affect them, the funds cannot
  guarantee that their efforts or the efforts of their service providers to
  correct the problem will be successful.

                          Travelers Series Fund - 35
<PAGE>
 
SHARE TRANSACTIONS


AVAILABILITY OF THE FUNDS

Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through their
separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.

The interests of different variable insurance products investing in a fund could
conflict due to differences of tax treatment and other considerations. The Fund
currently does not foresee any disadvantages to investors arising from the fact
that each fund may offer its shares to different insurance company separate
accounts that serve as the investment medium for their variable annuity and
variable life products. Nevertheless, the Board of Trustees intends to monitor
events to identify any material irreconcilable conflicts which may arise, and to
determine what action, if any, should be taken in response to these conflicts.
If a conflict were to occur, one or more insurance companies' separate accounts
might be required to withdraw their investments in one or more funds and shares
of another fund may be substituted. In addition, the sale of shares may be
suspended or terminated if required by law or regulatory authority or is in the
best interests of the funds' shareholders.

REDEMPTION OF SHARES

The redemption price of the shares of each fund will be the net asset value next
determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted to
a separate account on or before the third day following receipt of the request
in good order, except on a day on which the New York Stock Exchange is closed or
as permitted by the SEC in extraordinary circumstances.

SHARE PRICE

Each fund's net asset value is the value of its assets minus its liabilities.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes early,
each fund accelerates the calculation of its net asset value to the actual
closing time.

Each fund generally values its fund securities based on market prices or
quotations. To the extent a fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock exchange
closes, which is 12 noon Eastern time. When market prices are not available, or
when the manager believes that they are unreliable or that the value of a
security has been materially affected by events occurring after a foreign
exchange closes, the funds may price those securities at fair value. Fair value
is determined in accordance with procedures approved by the fund's board. A fund
that uses fair value to price securities may value those securities higher or
lower than another fund that uses market quotations to price the same
securities.

International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.

Unless there are extraordinary or unusual circumstances, Smith Barney Money
Market Portfolio uses the amortized cost method of valuing its money market
securities. Under the amortized cost method, assets are valued by constantly
amortizing over the remaining life of an instrument the difference between the
principal amount due at maturity and the cost of the instrument to the fund.

                          Travelers Series Fund - 36
<PAGE>
 
DIVIDENDS, DISTRIBUTIONS AND TAXES

Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company, each
fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
separate accounts and to holders of the contracts.

Each fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment. An
alternative diversification test may be satisfied under certain circumstances.
If a fund should fail to comply with these regulations or fails to qualify for
the special tax treatment afforded regulated investment companies under the
Code, Contracts invested in that fund would not be treated as annuity, endowment
or life insurance contracts under the Code.

                          Travelers Series Fund - 37
<PAGE>
 
FINANCIAL HIGHLIGHTS
================================================================================
The financial highlights tables are intended to help you understand the
performance of each fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
Peat Marwick LLP, independent accountants, whose report, along with each fund's
financial statements, are included in the annual report (available upon
request). Certain information reflects financial results for a single share.
Total returns represent the rate that a shareholder would have earned (or lost)
on a share of a fund assuming reinvestment of all dividends and distributions.

For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                                   SMITH BARNEY PACIFIC BASIN
                                             -------------------------------------------------------------------------------
                                                   1998            1997             1996         1995             1994(1)
----------------------------------------------------------------------------------------------------------------------------
  <S>                                        <C>                   <C>              <C>          <C>             <C> 
  Net asset value, beginning of year                               $9.75            $8.95        $10.10          $10.00
----------------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (loss) (2)                                (0.01)            0.08         (0.04)(3)       (0.04)
   Net realized and unrealized                                     (1.64)            0.75         (1.11)           0.14
   gain (loss)
----------------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                         (1.65)            0.83         (1.15)           0.10
  operations
----------------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                           (0.06)           (0.03)          ---             ---
   Net realized gains                                                ---              ---           ---             ---
----------------------------------------------------------------------------------------------------------------------------
  Total distributions                                              (0.06)           (0.03)          ---             ---
----------------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                                     $8.04            $9.75         $8.95          $10.10
----------------------------------------------------------------------------------------------------------------------------
  Total return                                                    (17.02)%           9.26%       (11.39)%          1.00%(4)
----------------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                                $18,225          $16,657        $7,122          $4,238
----------------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (2)                                                     1.38%            1.34%         1.83%           1.26%(5)
   Net investment income (loss)                                    (0.08)            0.47         (0.51)          (0.93)(5)
----------------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                            156%              59%           28%            ---
============================================================================================================================
</TABLE> 

(1)  For the period from June 16, 1994 (commencement of operations) to October 
     31, 1994.
(2)  Mutual Management Corp. (the "Manager") waived all or part of its fees for
     the years ended October 31, 1996, October 31, 1995 and the period ended
     October 31, 1994. In addition, the Manager reimbursed the fund $9,778 in
     expenses for the period ended October 31, 1994. If such fees were not
     waived and expenses not reimbursed, the per share increase in net
     investment loss and the ratios of expenses to average net assets for the
     fund would have been as follows:

<TABLE> 
<CAPTION> 
                                                                                       1996       1995            1994
----------------------------------------------------------------------------------------------------------------------------
  <S>                                                                                  <C>        <C>             <C> 
  Per Share Decreases in Net Investment Income                                         $0.02      $0.03           $0.06 
----------------------------------------------------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement                                  1.58%      2.23%           2.82%(5)
----------------------------------------------------------------------------------------------------------------------------
</TABLE> 

     In addition, during the years ended October 31, 1995 and 1996, the fund
     earned credits from the custodian, which reduces service fees incurred. If
     the credits are taken into consideration the expense ratios for these
     periods were 1.17% and 1.30%, respectively. Figures before October 31, 1995
     have not been restated to reflect these adjustments.
(3)  Includes realized gains and losses from foreign currency transactions. 
(4)  Not annualized.
(5)  Annualized.

                          Travelers Series Fund - 38
<PAGE>

For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                              SMITH BARNEY INTERNATIONAL EQUITY
                                              --------------------------------------------------------------------------------
                                                    1998          1997             1996            1995            1994(1)
------------------------------------------------------------------------------------------------------------------------------
  <S>                                         <C>                <C>              <C>             <C>            <C> 
  Net asset value, beginning of year                             $12.18           $10.48          $10.55         $10.00
------------------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income                                           0.01             0.02            0.03(3)       (0.03)
  (loss)(2)                                                        1.05             1.69           (0.10)          0.58
   Net realized and unrealized
   gain (loss)
------------------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                         1.06             1.71           (0.07)          0.55
  operations
------------------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                          (0.01)            0.01)            ---            ---
   Net realized gains                                               ---              ---             ---            ---
------------------------------------------------------------------------------------------------------------------------------
  Total distributions                                             (0.01)           (0.01)            ---            ---
------------------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                                   $13.23           $12.18          $10.48         $10.55
------------------------------------------------------------------------------------------------------------------------------
  Total return                                                     8.73%           16.36%          (0.66)%         5.50%(4)
------------------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                              $219,037         $143,323         $53,538        $13,811
------------------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (2)                                                    1.01%            1.10%           1.44%          1.20%(5)
   Net investment income (loss)                                    0.09             0.23            0.25          (0.73)(5)
------------------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                            38%              41%             29%           ---
==============================================================================================================================
</TABLE> 

(1)  For the period from June 16, 1994 (commencement of operations) to October
     31, 1994.
(2)  Mutual Management Corp. (the "Manager") waived all or a part of its fees
     for the period ended October 31, 1994 for the fund. If such fees were not
     waived the effect of the per share increase in net investment loss for the
     fund would have been $0.03 and the ratio of expenses to average net assets
     would have been 2.00%(5).

     In addition, during the years ended October 31, 1995 and 1996, the fund
     earned credits from the custodian, which reduces service fees incurred. If
     the credits are taken into consideration the expense ratios for these
     periods were 1.21% and 1.05%, respectively. Figures before October 31, 1995
     have not been restated to reflect these adjustments.

(3)  Includes realized gains and losses from foreign currency transactions.
(4)  Not annualized.
(5)  Annualized.

                          Travelers Series Fund - 39
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31. 

<TABLE> 
<CAPTION> 
                                                                               SMITH BARNEY LARGE CAP VALUE (1)                
                                               --------------------------------------------------------------------------------
                                                    1998           1997             1996             1995            1994(2)   
     --------------------------------------------------------------------------------------------------------------------------
     <S>                                       <C>                 <C>              <C>              <C>             <C>       
       Net asset value, beginning of year                        $  14.84         $  12.12          $ 10.14           $10.00    
     --------------------------------------------------------------------------------------------------------------------------
       Income from operations:                                                                                                 
        Net investment income (3)                                    0.25             0.32             0.28             0.11   
        Net realized and unrealized                                  3.16             2.62             1.76             0.03   
        gain                                                                                                                   
     --------------------------------------------------------------------------------------------------------------------------
       Total income from operations                                  3.41             2.94             2.04             0.14   
     --------------------------------------------------------------------------------------------------------------------------
       Less distributions from:                                                                                                
        Net investment income                                       (0.18)           (0.17)           (0.06)            ---    
        Net realized gains                                          (0.17)           (0.05)            ---              ---    
     --------------------------------------------------------------------------------------------------------------------------
       Total distributions                                          (0.35)           (0.22)           (0.06)            ---    
     --------------------------------------------------------------------------------------------------------------------------
       Net asset value, end of year                              $  17.90         $  14.84          $ 12.12           $10.14   
     --------------------------------------------------------------------------------------------------------------------------
       Total return                                                 23.38%           24.55%           20.21%            1.40%(4)
     --------------------------------------------------------------------------------------------------------------------------
       Net assets, end of year (000's)                           $287,333         $138,712          $39,364           $6,377   
     --------------------------------------------------------------------------------------------------------------------------
       Ratios to average net assets:                                                                                           
        Expenses (3)                                                 0.69%            0.73%            0.73%            0.73%(5)
        Net investment income                                        2.01             2.35             2.70             2.82(5)
     --------------------------------------------------------------------------------------------------------------------------
       Portfolio turnover rate                                         46%              32%              38%               2%  
     ========================================================================================================================== 
</TABLE> 

(1)    Formerly known as Smith Barney Income and Growth Portfolio.
(2)    For the period from June 16, 1994 (commencement of operations) to October
       31, 1994.
(3)    Mutual Management Corp. ("MMC"), formerly known as Smith Barney Mutual
       Funds Management Inc. (the "Manager") waived all or part of its fees for
       the year ended October 31, 1995 and the period ended October 31, 1994. In
       addition, the Manager reimbursed the fund for $13,120 in expenses for the
       period ended October 31, 1994. If such fees were not waived and expenses
       not reimbursed, the per share decreases in net investment income and the
       ratios of expenses to average net assets for the fund would have been as
       follows:

<TABLE> 
<CAPTION> 
                                                                                                   1995            1994
     ---------------------------------------------------------------------------------------------------------------------    
     <S>                                                                                            <C>             <C>       
       Per Share Decreases in Net Investment Income                                                 $0.02           $0.05     
     ---------------------------------------------------------------------------------------------------------------------    
       Expense Ratios Without Fee Waivers and Reimbursement                                          0.94%           2.08%(5) 
     ---------------------------------------------------------------------------------------------------------------------     
</TABLE> 

(4)    Not annualized.
(5)    Annualized.

                          Travelers Series Fund - 40
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31. 



                                               SMITH BARNEY LARGE CAP GROWTH    
                                         ------------------------------------
                                                           1998(1)        
     ------------------------------------------------------------------------
       Net asset value, beginning of year                                    
     ------------------------------------------------------------------------
       Income from operations:                                               
        Net investment income (3)                                            
        Net realized and unrealized                                          
        gain                                                                 
     ------------------------------------------------------------------------
       Total income from operations                                          
     ------------------------------------------------------------------------
       Less distributions from:                                              
        Net investment income                                                
        Net realized gains                                                   
     ------------------------------------------------------------------------
       Total distributions                                                   
     ------------------------------------------------------------------------
       Net asset value, end of year                                          
     ------------------------------------------------------------------------
       Total return                                                   (3)  
     ------------------------------------------------------------------------
       Net assets, end of year (000's)                                       
     ------------------------------------------------------------------------
       Ratios to average net assets:                                  (4)  
        Expenses (2)                                                         
        Net investment income                                                
     ------------------------------------------------------------------------
       Portfolio turnover rate                                               
     ========================================================================

(1)  For the period from May 1, 1998 (commencement of operations) to October
     31, 1998.
(2)  Mutual Management Corp. ("MMC"), formerly known as Smith Barney Mutual
     Funds Management Inc. (the "Manager") waived all or part of its fees for
     the period ended October 31, 1998. In addition, the Manager reimbursed the
     fund for $_______ in expenses for the period ended October 31, 1998. If
     such fees were not waived and expenses not reimbursed, the per share
     decreases in net investment income and the ratios of expenses to average
     net assets for the fund would have been $_____ and _____% respectively.
(3)  Not annualized.
(4)  Annualized.

                          Travelers Series Fund - 41
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                                                ALLIANCE GROWTH                                
                                               --------------------------------------------------------------------------------
                                                    1998           1997           1996             1995            1994(1)     
     --------------------------------------------------------------------------------------------------------------------------
     <S>                                       <C>              <C>             <C>              <C>                <C>      
       Net asset value, beginning of year                       $  16.30        $  13.28         $  10.65           $  10.00   
     --------------------------------------------------------------------------------------------------------------------------
       Income from operations:                                                                                                 
        Net investment income (2)                                   0.05            0.04             0.14               0.06   
        Net realized and unrealized                                 5.11            3.39             2.61               0.59   
        gain                                                                                                                   
     --------------------------------------------------------------------------------------------------------------------------
       Total income from operations                                 5.16            3.43             2.75               0.65   
     --------------------------------------------------------------------------------------------------------------------------
       Less distributions from:                                    (0.02)                                                      
        Net investment income                                      (0.62)          (0.09)           (0.02)               ---   
        Net realized gains                                                         (0.32)           (0.10)               ---       
     --------------------------------------------------------------------------------------------------------------------------
       Total distributions                                         (0.64)          (0.41)           (0.12)               ---   
     --------------------------------------------------------------------------------------------------------------------------
       Net asset value, end of year                             $  20.82        $  16.30         $  13.28            $ 10.65   
     --------------------------------------------------------------------------------------------------------------------------
       Total return                                                32.59%          26.55%           26.18%              6.50%(3)
     --------------------------------------------------------------------------------------------------------------------------
       Net assets, end of year (000's)                          $544,526        $294,596         $111,573            $17,086   
     --------------------------------------------------------------------------------------------------------------------------
       Ratios to average net assets:                                                                                           
        Expenses (2)                                                0.82%           0.87%            0.90%              0.88%(4)
        Net investment income                                       0.32            0.39             1.24               1.47(4)
     --------------------------------------------------------------------------------------------------------------------------
       Portfolio turnover rate                                       66%             88%               78%                37%  
     ========================================================================================================================== 
</TABLE> 

 (1)  For the period from June 16, 1994 (commencement of operations) to October
      31, 1994.
 (2)  Travelers Investment Adviser, Inc. (the "Manager") waived all or part of
      its fees for the year ended October 31, 1995 and the period ended October
      31, 1994. In addition, the Manager reimbursed the fund for $3,500 in
      expenses for the year ended October 31, 1994. If such fees were not waived
      and expenses not reimbursed, the per share decreases in net investment
      income and the ratios of expenses to average net assets for the fund would
      have been as follows:

<TABLE> 
<CAPTION> 
                                                                                            1995            1994
     ---------------------------------------------------------------------------------------------------------------------
     <S>                                                                                   <C>             <C>     
       Per Share Decreases in Net Investment Income                                        $0.01           $0.03    
     ---------------------------------------------------------------------------------------------------------------------
       Expense Ratios Without Fee Waivers and Reimbursement                                 0.97%           1.76%(4)   
     --------------------------------------------------------------------------------------------------------------------- 
</TABLE> 

 (3)  Not Annualized.
 (4)  Annualized.


                          Travelers Series Fund - 42
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                            AIM CAPITAL APPRECIATION
                                          -------------------------------------------------------------
                                               1998          1997            1996(1)       1995(1)(2)
-------------------------------------------------------------------------------------------------------
  <S>                                                    <C>             <C>        <C> 
  Net asset value, beginning of year                     $10.76      $10.00     $10.00
-------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (loss) (3)                           0.02            0.02           0.02
   Net realized and unrealized                                1.91            0.75          (0.02)
   gain (loss)
-------------------------------------------------------------------------------------------------------
  Total income (loss) from                                    1.93            0.77             --
  operations
-------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                     (0.01)          (0.01)            --
-------------------------------------------------------------------------------------------------------
  Total distributions                                        (0.01)          (0.01)            --   
-------------------------------------------------------------------------------------------------------
  Net asset value, end of year                            $  12.68        $  10.76         $10.00
-------------------------------------------------------------------------------------------------------
  Total return                                               17.96%           7.71%          0.00%
-------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                         $202,846        $112,905         $8,083
-------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (3)                                               0.85%           0.96%          1.00%(4)
   Net investment income                                      0.20            0.22           4.07(4)
-------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                       56%             44%             6%
=======================================================================================================
</TABLE> 

(1) Per share amounts calculated using the monthly average shares method. 
(2) For the period from October 10, 1995 (commencement of operations) to October
    31, 1995.
(3) Travelers Investment Adviser, Inc. (the "Manager") waived all or part of its
    fees with respect to the fund for the years ended October 31, 1996 and the
    period ended October 31, 1995. In addition, the Manager reimbursed the fund 
    for $13,456 in expenses for the period ended October 31, 1995. If such fees 
    were not waived and expenses not reimbursed, the per share decreases in net 
    investment income and the ratios of expenses to average net assets for the 
    fund would have been:


<TABLE> 
<CAPTION> 
                                                              1995         
--------------------------------------------------------------------------------------------------------------------
  <S>                                                          <C>        
  Per Share Decreases in Net Investment Income                $0.03        
--------------------------------------------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement        5.95%  
--------------------------------------------------------------------------------------------------------------------
</TABLE> 

(4) Annualized.

                          Travelers Series Fund - 43
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.


<TABLE> 
<CAPTION> 
                                                               VAN KAMPEN AMERICAN CAPITAL ENTERPRISE
                                          -------------------------------------------------------------------------
                                              1998           1997            1996            1995          1994(1)
-------------------------------------------------------------------------------------------------------------------
  <S>                                         <C>        <C>             <C>              <C>            <C>   
  Net asset value, beginning of year                     $  15.37        $  12.89         $ 10.38        $10.00
-------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (loss) (2)                          0.06            0.05            0.03          0.03
   Net realized and unrealized gain                          4.51            2.87            2.53          0.35
         (loss)
-------------------------------------------------------------------------------------------------------------------
  Total income (loss) from operations                        4.57            2.92            2.56          0.38
-------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                    (0.05)          (0.04)          (0.02)           --
   Net realized gains                                          --           (0.40)          (0.03)           --
-------------------------------------------------------------------------------------------------------------------
  Total distributions                                       (0.05)          (0.44)          (0.05)           --
-------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                           $  19.89        $  15.37         $ 12.89        $10.38
-------------------------------------------------------------------------------------------------------------------
  Total return                                              29.81%          23.35%          24.74%         3.80%(3)
-------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                        $196,583        $103,691         $32,447        $5,734
-------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (2)                                              0.74%           0.83%           0.88%         0.84%(4)
   Net investment income                                     0.41            0.53            0.65          0.79(4)
-------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                      75%            112%            180%           55%
===================================================================================================================
</TABLE> 

(1) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
(2) Travelers Investment Adviser, Inc. (the "Manager") waived all or part of its
    fees for the year ended October 31, 1995 and the period ended October 31,
    1994 for the fund. In addition, the Manager reimbursed the fund for $19,007
    in expenses for the period ended October 31, 1994. If such fees were not
    waived and expenses not reimbursed, the per share decreases in net
    investment income and the ratios of expenses to average net assets for the
    fund would have been as follows:


<TABLE> 
<CAPTION> 
                                                                                        1995            1994
---------------------------------------------------------------------------------------------------------------
  <S>                                                                                   <C>            <C> 
  Per Share Decreases in Net Investment Income                                          $0.06          $0.07
---------------------------------------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement                                   1.26%          2.66(4)
---------------------------------------------------------------------------------------------------------------
</TABLE> 

(3) Not annualized. 
(4) Annualized.


                          Travelers Series Fund - 44
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.


<TABLE> 
<CAPTION> 
                                                                   GT GLOBAL STRATEGIC INCOME
                                          -------------------------------------------------------------------------
                                              1998         1997(1)           1996           1995          1994(2)
-------------------------------------------------------------------------------------------------------------------
  <S>                                         <C>       <C>               <C>             <C>           <C> 
  Net asset value, beginning of year                    $ 12.45           $ 10.77         $ 9.95        $10.00
-------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (3)                               0.75              0.74           0.64(4)       0.17
   Net realized and unrealized                             0.36              1.36           0.28         (0.22)
   gain (loss)
-------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                 1.11              2.10           0.92         (0.05)
  operations
-------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                  (0.46)            (0.42)         (0.10)           --
   Net realized gains                                     (0.58)               --             --            --
-------------------------------------------------------------------------------------------------------------------
  Total distributions                                     (1.04)            (0.42)         (0.10)           --
-------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                          $ 12.52           $ 12.45         $10.77        $ 9.95
-------------------------------------------------------------------------------------------------------------------
  Total return                                             9.32%            20.07%          9.37%        (0.50)%(5)
-------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                       $29,232           $19,152         $8,397        $2,624
-------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (3)                                            1.07%             1.23%          1.47%         1.07%(6)
   Net investment income                                   6.05              6.87           6.44          4.58(6)
-------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                   161%              192%           295%           56%
===================================================================================================================
</TABLE> 

(1) Per share amounts calculated using the monthly average shares method. 
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
(3) Travelers Investment Adviser, Inc. (the "Manager") waived all or part of its
    fees for the years ended October 31, 1996, October 31, 1995 and the period
    ended October 31, 1994. In addition, the Manager reimbursed the fund for
    $18,556 in expenses for the period ended October 31, 1994. If such fees were
    not waived and expenses not reimbursed, the per share decreases in net
    investment income and the ratios of expenses to average net assets for the
    fund would have been as follows:


<TABLE> 
<CAPTION> 
                                                                          1996            1995           1994
------------------------------------------------------------------------------------------------------------------
  <S>                                                                     <S>            <C>             <C>        
  Per Share Decreases in Net Investment Income                            $0.02          $0.04           $0.13
------------------------------------------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement                     1.38%          1.93%           4.53%(6)
------------------------------------------------------------------------------------------------------------------
</TABLE> 

    In addition, during the years ended October 31, 1996 and 1995, the fund
    earned credits from the custodian which reduce service fees incurred. If the
    credits are taken into consideration the expense ratios for these periods
    were 1.11% and 1.11%, respectively. Figures before October 31, 1995 have not
    been restated to reflect these credits.

(4) Includes realized gains and losses from foreign currency transactions.
(5) Not annualized.
(6) Annualized.

                          Travelers Series Fund - 45
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.


<TABLE> 
<CAPTION> 
                                                                    TRAVELERS MANAGED INCOME
                                          ------------------------------------------------------------------------
                                              1998         1997(1)          1996(1)         1995          1994(2)
------------------------------------------------------------------------------------------------------------------
                                                        <S>              <C>             <C>            <C>  
  Net asset value, beginning of year                    $ 11.06          $ 11.16         $ 10.04        $10.00
------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (3)                               0.70             0.65            0.61          0.21
   Net realized and unrealized                             0.28            (0.14)           0.64         (0.17)
   gain (loss)
------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                 0.98             0.51            1.25          0.04
  operations
------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                  (0.49)           (0.46)          (0.13)           --
   Net realized gains                                        --            (0.15)             --            --
------------------------------------------------------------------------------------------------------------------
  Total distributions                                     (0.49)           (0.61)          (0.13)           --
------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                          $ 11.55          $ 11.06         $ 11.16        $10.04
------------------------------------------------------------------------------------------------------------------
  Total return                                             9.19%            4.61%          12.68%         0.40%(4)
------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                       $31,799          $23,532         $11,279        $3,840
------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (3)                                            0.87%            0.92%           0.92%         0.87%(5)
   Net investment income                                   6.48             6.19            6.13          5.67(5)
------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                   259%             255%            170%           42%
==================================================================================================================
</TABLE> 

(1) Per share amounts calculated using the monthly average shares method. 
(2) For the period from June 16, 1994 (commencement of operations) to October
    31, 1994.
(3) Travelers Investment Adviser, Inc. (the "Manager") waived all or part of its
    fees for the years ended October 31, 1995 and the period ended October 31, 
    1994. In addition, the Manager reimbursed the fund for $15,557 in expenses 
    for the period ended October 31, 1994. If such fees were not waived and 
    expenses not reimbursed, the per share decreases in net investment income 
    and the ratios of expenses to average net assets for the fund would have 
    been as follows:


<TABLE> 
<CAPTION> 
                                                                                        1995            1994
----------------------------------------------------------------------------------------------------------------
  <S>                                                                                  <C>             <C> 
  Per Share Decreases in Net Investment Income                                         $0.04           $0.07
----------------------------------------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement                                  1.29%           2.91%(5)
----------------------------------------------------------------------------------------------------------------
</TABLE> 

(4) Not annualized.
(5) Annualized.

                          Travelers Series Fund - 46
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                                   PUTNAM DIVERSIFIED INCOME
                                          --------------------------------------------------------------------------
                                              1998          1997            1996(1)         1995          1994(2)
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>        <C>               <C>           <C>              <C> 
  Net asset value, beginning of year                     $  11.99          $ 11.46       $ 10.18          $10.00
--------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (3)                                 0.67             0.78          0.79            0.23
   Net realized and unrealized                               0.30             0.27          0.58           (0.05)
   gain (loss)
--------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                   0.97             1.05          1.37            0.18
  operations
--------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                    (0.56)           (0.39)        (0.09)            ---
   Net realized gains                                       (0.09)           (0.13)          ---             ---
--------------------------------------------------------------------------------------------------------------------
  Total distributions                                       (0.65)           (0.52)        (0.09)            ---
------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                           $  12.31          $ 11.99       $ 11.46          $10.18
--------------------------------------------------------------------------------------------------------------------
  Total return                                               8.44%            9.43%        13.55%           1.80%(4)
--------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                        $121,601          $81,076       $31,514          $6,763
--------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (3)                                              0.88%            0.96%         0.97%           0.98%(5)
   Net investment income                                     6.99             7.57          7.53            6.14(5)
--------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                     253%            2.55%          276%             20%
====================================================================================================================
</TABLE> 

(1)  Per share amounts calculated using the monthly average shares method. 
(2)  For the period from June 16, 1994 (commencement of operations) to October
     31, 1994.
(3)  Travelers Investment Adviser, Inc. (the "Manager") waived all or part of
     its fees for the year ended, October 31, 1995 and the period ended October
     31, 1994. In addition, the Manager reimbursed the fund for $19,028 in 
     expenses for the period ended October 31, 1994. If such fees were 
     not waived and expenses not reimbursed, the per share decreases in net
     investment income and the ratios of expenses to average net assets of the
     fund would have been as follows:


                                                           1995      1994
------------------------------------------------------------------------------
  Per Share Decreases in Net Investment Income             $0.04     $0.07
------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement      1.31%     2.92%(5)
------------------------------------------------------------------------------

(4)  Not annualized.
(5)  Annualized.


                          Travelers Series Fund - 47
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                                SMITH BARNEY HIGH INCOME
                                          --------------------------------------------------------------------------
                                              1998          1997             1996           1995          1994(1)
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>        <C>               <C>            <C>              <C> 
  Net asset value, beginning of year                     $  12.09          $ 11.26        $ 10.07          $10.00
--------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (loss) (2)                          0.88             1.14           0.93            0.29
   Net realized and unrealized                               1.00             0.19           0.48           (0.22)
   gain (loss)
--------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                   1.88             1.33           1.41            0.07
  operations
--------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                    (0.66)           (0.50)         (0.22)            ---
   Net realized gains                                       (0.06)             ---            ---             ---
--------------------------------------------------------------------------------------------------------------------
  Total distributions                                       (0.72)           (0.50)         (0.22)            ---
--------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                           $  13.25          $ 12.09        $ 11.26          $10.07
--------------------------------------------------------------------------------------------------------------------
  Total return                                              16.24%           12.17%         14.30%           0.70%(3)
--------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                        $123,726          $65,955        $20,450         $ 3,395
--------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (2)                                              0.70%            0.84%          0.70%           0.69%(4)
   Net investment income                                     9.36             9.79           9.54            7.55(4)
--------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                      89%             104%            57%             15%
====================================================================================================================
</TABLE> 

(1)  For the period from June 16, 1994 (commencement of operations) to October
     31, 1994.
(2)  Mutual Management Corp. (the "Manager") waived all or part of its fees for
     the year ended October 31, 1995 and the period ended October 31, 1994. In
     addition, the Manager reimbursed the fund for $17,664 in expenses for the
     period ended October 31, 1994. If such fees were not waived and expenses
     not reimbursed, the per share decreases in net investment income and the
     ratios of expenses to average net assets for the fund would have been as
     follows:

                                                          1995       1994
-------------------------------------------------------------------------------
  Per Share Decreases in Net Investment Income            $0.04      $0.07
-------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement     1.07%      2.60%(4)
-------------------------------------------------------------------------------

(3)  Not annualized.
(4)  Annualized.


                          Travelers Series Fund - 48

<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                                        MFS TOTAL RETURN
                                          --------------------------------------------------------------------------
                                              1998          1997             1996           1995          1994(1)
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>              <C>             <C>           <C> 
  Net asset value, beginning of year                      $  13.13         $  11.53        $  9.98       $ 10.00
--------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (loss) (2)                           0.38             0.33           0.45          0.13
   Net realized and unrealized                                2.27             1.62           1.15         (0.15)
   gain (loss)
--------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                    2.65             1.95           1.60         (0.02)
  operations
--------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                     (0.29)           (0.27)         (0.05)          ---
   Net realized gains                                        (0.18)           (0.08)           ---           ---
--------------------------------------------------------------------------------------------------------------------
  Total distributions                                        (0.47)           (0.35)         (0.05)          ---
--------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                            $  15.31         $  13.13        $ 11.53       $  9.98
--------------------------------------------------------------------------------------------------------------------
  Total return                                               20.64%           17.16%         16.12%        (0.20)%(3)
--------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                         $263,585         $134,529        $49,363       $ 8,504
--------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (2)                                               0.86%            0.91%          0.95%         0.93%(4)
   Net investment income                                      3.54             3.82           4.40          3.51(4)
--------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                       99%             139%           104%           18%
====================================================================================================================
</TABLE> 

(1)  For the period from June 16, 1994 (commencement of operations) to October
     31, 1994.
(2)  Travelers Investment Adviser, Inc. (the "Manager") waived all or part of
     its fees for the year ended October 31, 1995 and the period ended October
     31, 1994. In addition, the Manager reimbursed the fund for $13,857 in
     expenses for the period ended October 31, 1994. If such fees were not
     waived and expenses not reimbursed, the per share decreases in net
     investment income and the ratios of expenses to average net assets for the
     fund would have been as follows:

                                                             1995      1994
-------------------------------------------------------------------------------
  Per Share Decreases in Net Investment Income              $0.01     $0.06
-------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and Reimbursement       1.06%     2.51%(4)
-------------------------------------------------------------------------------

(3)  Not annualized.
(4)  Annualized.

                          Travelers Series Fund - 49
<PAGE>
 
For a share of capital stock outstanding throughout each year ended October 31.

<TABLE> 
<CAPTION> 
                                                                   SMITH BARNEY MONEY MARKET
                                          --------------------------------------------------------------------------
                                              1998          1997             1996           1995          1994(1)
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>               <C>            <C>            <C> 
  Net asset value, beginning of year                      $   1.00          $  1.00        $  1.00        $  1.00
--------------------------------------------------------------------------------------------------------------------
  Income (loss) from operations:
   Net investment income (2)                                 0.049            0.049          0.052          0.014
   Net realized and unrealized                                ---              ---            ---            ---
   gain (loss)
--------------------------------------------------------------------------------------------------------------------
  Total income (loss) from                                   0.049            0.049          0.052          0.014
  operations
--------------------------------------------------------------------------------------------------------------------
  Less distributions from:
   Net investment income                                    (0.049)          (0.049)        (0.052)        (0.014)
   Net realized gains
--------------------------------------------------------------------------------------------------------------------
  Total distributions                                       (0.049)          (0.049)        (0.052)        (0.014)
--------------------------------------------------------------------------------------------------------------------
  Net asset value, end of year                            $   1.00          $  1.00        $  1.00        $  1.00
--------------------------------------------------------------------------------------------------------------------
  Total return                                                5.05%            5.05%          5.35%          1.46%(3)
--------------------------------------------------------------------------------------------------------------------
  Net assets, end of year (000's)                         $111,168          $99,150        $37,487        $ 5,278
--------------------------------------------------------------------------------------------------------------------
  Ratios to average net assets:
   Expenses (2)                                               0.65%            0.65%          0.65%          0.66%(4)
   Net investment income                                      4.94             4.86           5.26           3.83(4)
--------------------------------------------------------------------------------------------------------------------
  Portfolio turnover rate                                     n/a              n/a            n/a             n/a
====================================================================================================================
</TABLE> 

(1)   For the period from June 16, 1994 (commencement of operations) to October
      31, 1994.
(2)   Mutual Management Corp. (the "Manager") waived all or part of its fees
      with respect to the fund for the years ended October 31, 1997, 1996,
      1995 and the period ended October 31, 1994. In addition, the Manager
      reimbursed the fund for $15,423 in expenses for the period ended October
      31, 1994. If such fees were not waived and expenses not reimbursed, the
      per share decreases in net investment income and the ratios of expense to
      average net assets of the fund would have been as follows:

<TABLE> 

                                                          1997            1996            1995          1994
------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>             <C>            <C> 
  Per Share Decreases in Net Investment Income          $0.000(5)        $0.001          $0.003         $0.005
------------------------------------------------------------------------------------------------------------------
  Expense Ratios Without Fee Waivers and                  0.67%            0.74%           0.94%          2.11%(4)
  Reimbursement
------------------------------------------------------------------------------------------------------------------
</TABLE> 

(3)  Not annualized
(4)  Annualized.
(5)  Amount represents less than $0.001.


                          Travelers Series Fund - 50
<PAGE>
 
                          TRAVELERS SERIES FUND INC.



ADDITIONAL INFORMATION

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

The fund sends one report to a household if more than one account has the same
address. Contact your [_________________] if you do not want this policy to
apply to you.

Statement of additional information. The statement of additional information
provides more detailed information about the fund. It is incorporated by
reference into this prospectus.

You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-xxx-xxxx
or writing to Travelers Series Fund, ______________.

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

If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.

                     Smith Barney Pacific Basin Portfolio
                     Smith Barney International Equity Portfolio
                     Smith Barney Large Cap Value Portfolio
                     Smith Barney Large Capitalization Growth Portfolio
                     Alliance Growth Portfolio
                     AIM Capital Appreciation Portfolio
                     Van Kampen American Capital Enterprise Portfolio
                     MFS Total Return Portfolio
                     GT Global Strategic Income Portfolio
                     Travelers Managed Income Portfolio
                     Putnam Diversified Income Portfolio
                     Smith Barney High Income Portfolio
                     Smith Barney Money Market Portfolio


PART B
Statement of Additional Information

February 26, 1999

STATEMENT OF ADDITIONAL INFORMATION

TRAVELERS SERIES FUND INC.
388 Greenwich Street
New York, New York  10013

[insert phone number - must be toll-free or collect]


This Statement of Additional Information (the "SAI") is not a 
Prospectus. It is intended to provide more detailed information 
about Travelers Series Fund Inc. as well as matters already 
discussed in the Prospectus and therefore should be read in 
conjunction with the February 26, 1999 Prospectus which may be 
obtained, without charge, from the Company or your Salomon Smith 
Barney Financial Consultant. Shares of the Company may only be 
purchased by insurance company separate accounts.

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

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

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

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

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

The Alliance Growth Portfolio seeks long-term growth of capital. 
Current income is only an incidental consideration.

The AIM Capital Appreciation Portfolio seeks to provide growth of 
capital by investing primarily in the common stocks of small and 
medium-sized growth companies.

The Van Kampen American Capital Enterprise Portfolio seeks capital 
appreciation by investing primarily in common stocks of companies 
which have above average potential for capital appreciation.

The MFS Total Return Portfolio seeks above-average income 
(compared to a fund invested entirely in equity securities) 
consistent with prudent employment of capital. While current 
income is the primary objective, the fund believes that there 
should be a reasonable opportunity for growth of capital and 
income. 

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

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

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

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

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

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

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

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

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


CONTENTS

Directors and Officers	3
Investment Objectives and Management Policies	5
Investment Practices	18
Risk Factors	39
Investment Restrictions	49
Portfolio Turnover	64
Performance Information	64
Determination of Net Asset Value	65
Availability of the Funds	66
Redemption of Shares	66
Management Agreement	66
Other Information about the Company	72
Financial Statements	74
Appendix - Ratings of Debt Obligations	A-1



DIRECTORS AND OFFICERS

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

VICTOR K. ATKINS, Director
Retired; 120 Montgomery Street, San Francisco, CA. Former 
President of Lips Propellers, Inc., a ship propeller repair 
company. Director of two investment companies associated with 
Salomon Smith Barney; 76. 

ABRAHAM E. COHEN, Director
Consultant to MeesPierson, Inc., a Dutch investment bank; 
Consultant to and Board Member, Chugai Pharmaceutical Co. Ltd.; 
Director of Agouron Pharmaceuticals, Inc., Akzo Nobel NV, 
Vasomedical, Inc., Teva Pharmaceutical Ind., Ltd., Neurobiological 
Technologies Inc., Vion Pharmaceuticals, Inc., BlueStone Capital 
Partners, LP. and The Population Council, an international public 
interest organization; 61. 

ROBERT A. FRANKEL, Director
Managing Partner of Robert A. Frankel Managing Consultants, 102 
Grand Street, Croton-on-Hudson, NY. Director of seven investment 
companies associated with Salomon Smith Barney. Former Vice 
President of The Readers Digest Association, Inc.; 70. 

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

SUSAN M. HEILBRON, Director
Attorney; Lacey & Heilbron, 3 East 54th Street, New York, NY. 
Prior to November 1990, Vice President and General Counsel of 
MacMillan, Inc. and Executive Vice President of The Trump 
Organization. Director of two investment companies associated with 
Salomon Smith Barney; 53. 

*HEATH B. McLENDON, Chairman of the Board, President and Chief 
Executive Officer 
Managing Director of Salomon Smith Barney; Director of forty-two 
investment companies associated with Salomon Smith Barney; 
Director and President of Mutual Management Corp. (the ''MMC'') 
and Travelers Investment Adviser, Inc. ("TIA"); Chairman of Smith 
Barney Strategy Advisers Inc.; prior to July 1993, Senior 
Executive Vice President of Shearson Lehman Brothers, Inc., Vice 
Chairman of Shearson Asset Management, Director of PanAgora Asset 
Management, Inc. and PanAgora Asset Management Limited; 64.

JAMES M. SHUART, Director 
President, Hofstra University, 101 Hofstra University, Hempstead, 
New York, 11550. Director of European American Bank; Director of 
Long Island Tourism and Convention Commission; and Director of 
Association of Colleges and Universities of the State of New York. 
Director of two investment companies associated with Salomon Smith 
Barney; 67.

*LEWIS E. DAIDONE, Senior Vice President and Treasurer 
Managing Director of Salomon Smith Barney, and Senior Vice 
President and Treasurer of forty-two investment companies 
associated with Salomon Smith Barney; and Director and Senior Vice 
President of the Manager and TIA; 40

*JAMES B. CONHEADY, Vice President and Investment Officer
Managing Director of Salomon Smith Barney. Formerly First Vice 
President of Drexel Burnham Lambert Incorporated; 62. 

*JEFFREY RUSSELL, Vice President and Investment Officer
Managing Director of Salomon Smith Barney. Formerly Vice President 
of Drexel Burnham Lambert Incorporated; 40. 

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

*MARTIN HANLEY, Vice President and Investment Officer
Vice President of _______ other investment companies associated 
with Salomon Smith Barney; 32.

*DAVID S. ISHIBASHI, Vice President and Investment Officer
Vice President of Salomon Smith Barney; formerly Head of Japanese 
equities desk at SG Warburg; 42

*SCOTT KALB, Vice President and Investment Officer
Managing Director of Salomon Smith Barney. Formerly Vice President 
of Drexel Burnham Lambert Incorporated; 42

*PHYLLIS M. ZAHORODNY, Vice President and Investment Officer
Managing Director of Salomon Smith Barney; Vice President of 
_______ other investment companies associated with Salomon Smith 
Barney; 40.

*IRVING DAVID, Controller
Director of Salomon Smith Barney. Formerly Assistant Treasurer of 
First Investment Management Company; 37. 

*CHRISTINA T. SYDOR, Secretary
Managing Director of Salomon Smith Barney and Secretary of forty-
two investment companies associated with Salomon Smith Barney; 
Secretary and General Counsel of the Manager and TIA; 47. 
___________________
*	Designates "interested persons" as defined in the Investment 
Company Act of 1940, as amended (the "1940 Act"), whose 
business address is 388 Greenwich Street, New York, New York 
10013 unless otherwise noted. Such persons are not separately 
compensated for their services as Company officers or 
directors.

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

The following table shows the compensation paid by the Company to 
each director during the Company's last fiscal year. None of the 
officers of the Company received any compensation from the Company 
for such period. Officers and interested directors of the Company 
are compensated by Salomon Smith Barney.




Director


Aggregate 
Compensation from the 
Company
Total 
Compensation
from Company and
Complex Paid to
Director

Number of Funds 
for
Which Director 
Serves
Within Fund 
Complex
Victor K. Atkins


2
Abraham E. Cohen


2
Robert A. 
Frankel


8
Rainer Greeven


2
Susan M. 
Heilbron


2
Heath B. 
McLendon


59
James M. Shuart


2



INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

Each fund's investment objectives and certain investment 
restrictions may be changed only by the ''vote of a majority of 
the outstanding voting securities'' as defined in the 1940 Act. 
However, each fund's investment policies are nonfundamental, and 
thus may be changed by the Board of Directors, provided such 
change is not prohibited by the fund's fundamental investment 
restrictions (described under INVESTMENT RESTRICTIONS) or 
applicable law, and any such change will first be disclosed in the 
then current prospectus. Refer to the "INVESTMENT PRACTICES" and 
"RISK FACTORS" for further information on the funds' investments.

Smith Barney Pacific Basin Portfolio

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

The fund will normally invest at least 80% of its total assets in 
equity securities of companies in the Asia Pacific region.  Equity 
securities include exchange traded and over-the-counter common 
stocks, preferred shares, debt securities convertible into equity 
securities, depository receipts and warrants and rights relating 
to equity securities. The fund may also invest up to 20% of its 
total assets in debt securities and other types of investments.  
Concentration of the fund's assets in one or a few of the 
countries in the Asia Pacific Region and Asia Pacific currencies 
will subject the fund to greater risks than if the fund's assets 
were not geographically concentrated. 

It is expected that portfolio securities will ordinarily be traded 
on a stock exchange or other market in the country in which the 
issuer is principally based, but may also be traded on markets in 
other countries including, in many cases, the United States 
securities exchanges and over-the-counter markets. Debt securities 
in which the fund may invest will generally be rated at the time 
of purchase at least Baa by Moody's Investors Services ("Moody's") 
or BBB by Standard and Poor's ("S&P"). Debt securities rated Baa 
or BBB may have speculative characteristics and changes in 
economic conditions or other circumstances are more likely to lead 
to a weakened capacity of their issuers to pay interest and repay 
principal than is the case with higher rated securities. 

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

Smith Barney International Equity Portfolio

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

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


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

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

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

Smith Barney Large Cap Value Portfolio

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

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

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

Smith Barney Large Capitalization Growth Portfolio

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

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

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


Alliance Growth Portfolio

The fund invests primarily in equity securities. The fund may also 
invest a portion of its assets in developing countries or 
countries with new or developing capital markets.

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

The fund may invest in securities that are not publicly traded, 
including securities sold pursuant to Rule 144A under the 
Securities Act of 1933 ("Rule 144A Securities"). Investment in 
non-publicly traded securities is restricted to 5% of the fund's 
total assets (not including Rule 144A Securities, to the extent 
permitted by applicable law) and is also subject to the fund's 
restriction against investing more than 15% of net assets in 
"illiquid securities." To the extent permitted by applicable law, 
Rule 144A Securities will not be treated as illiquid for purposes 
of the foregoing restriction so long as such securities meet 
liquidity guidelines established by the fund's Board of Directors.

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

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

AIM Capital Appreciation Portfolio

The fund invests principally in common stocks, with emphasis on 
medium-sized and smaller emerging growth companies.  Management of 
the fund will be particularly interested in companies that are 
likely to benefit from new or innovative products, services or 
processes that should enhance such companies' prospects for future 
growth in earnings.  As a result of this policy, the market prices 
of many of the securities purchased and held by the fund may 
fluctuate widely.

Special Situations. Although the fund does not currently intend to 
do so, it may invest in "special situations."  A special situation 
arises when, in the opinion of management, the securities of a 
particular company will, within a reasonably estimable period of 
time, be accorded market recognition at an appreciated value 
solely by reason of a development applicable to that company, and 
regardless of general business conditions or movements of the 
market as a whole. Developments creating special situations might 
include, among others:  liquidations, reorganizations, 
recapitalizations, mergers, material litigation, technical 
breakthroughs and new management or management policies. Although 
large and well known companies may be involved, special situations 
more often involve comparatively small or unseasoned companies. 
Investments in unseasoned companies and special situations often 
involve much greater risk than is inherent in ordinary investments 
securities. The fund will not, however, purchase securities of any 
company with a record of less than three year's continuous 
operation (including that of predecessors) if such purchase cause 
the fund's investment in all such companies, taken at cost, to 
exceed 5% of the value of its total assets.


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

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

Van Kampen American Capital Enterprise Portfolio

In addition to common stocks of companies, the fund may invest in 
warrants and preferred stocks, and in other investment companies. 
 The fund may also invest up to 15% of the value of its total 
assets in securities of  foreign issuers.

The fund generally holds a portion of its assets in investment 
grade short-term debt securities in order to provide liquidity. 
The fund may also hold investment grade corporate or government 
bonds. The market prices of such bonds can be expected to vary 
inversely with changes in prevailing interest rates.

The fund expects to utilize options, futures contracts and options 
thereon in several different ways, depending upon the status of 
its portfolio and the subadviser's expectations concerning the 
securities markets. In times of stable or rising stock prices, the 
fund generally seeks to obtain maximum exposure to the stock 
market, i.e., to be "fully invested." Nevertheless, even when the 
fund is fully invested, prudent management requires that at least 
a small portion of assets be available as cash to honor redemption 
requests and for other short term needs. The fund may also have 
cash on hand that has not yet been invested. The portion of the 
fund's assets that is invested in cash equivalents does not 
fluctuate with stock market prices, so that, in times of rising 
market prices, the fund may underperform the market in proportion 
to the amount of cash equivalents in its portfolio. By purchasing 
stock index futures contracts, however, the fund can compensate 
for the cash portion of its assets and obtain performance 
equivalent to investing 100% of its assets in equity securities.

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

As an alternative to selling futures contracts, the fund can 
purchase puts (or futures puts) to hedge the fund's risk in a 
declining market. Since the value of a put increases as the 
underlying security declines below a specified level, the fund's 
value is protected against a market decline to the degree the 
performance of the put correlates with the performance of its 
investment portfolio. If the market remains stable or advances, 
the fund can refrain from exercising the put and its portfolio 
will participate in the advance, having incurred only the premium 
cost for the put.

MFS Total Return Portfolio

The fund's policy is to invest in a broad list of securities, 
including short-term obligations. The list may be diversified not 
only by companies and industries, but also by type of security. 
Fixed income securities and equity securities may be held by the 
fund. Some fixed income securities may also have a call on common 
stock by means of a conversion privilege or attached warrants. The 
fund may vary the percentage of assets invested in any one type of 
security in accordance with the subadviser's interpretation of 
economic and money market conditions, fiscal and monetary policy 
and underlying security values. The fund's debt investments may 
consist of both "investment grade" securities (rated Baa or better 
by Moody's or BBB or better by S&P or Fitch IBCA, Inc. (formerly 
Fitch Investors Service, Inc.) ("Fitch")) and securities that are 
unrated or are in the lower rating categories (rated Ba or lower 
by Moody's or BB or lower by S&P or Fitch) (commonly known as 
"junk bonds") including up to 20% of its net assets in 
nonconvertible fixed income securities that are in these lower 
rating categories and comparable unrated securities. Generally, 
most of the fund's long-term debt investments will consist of 
"investment grade" securities. See Appendix A for a description of 
these ratings. It is not the fund's policy to rely exclusively on 
ratings issued by established credit rating agencies but rather to 
supplement such ratings with the subadviser's own independent and 
ongoing review of credit quality.

As noted above, the fund invests in lower-rated and unrated 
corporate debt securities, commonly known as "junk bonds." 
Investments of this type are subject to a greater risk of loss of 
principal and interest. Purchasers should carefully assess the 
risks associated with an investment in this fund. See "Risk 
Factors." 

The fund may also invest in emerging market securities, Brady 
Bonds, U.S. Government securities, mortgage pass-through 
securities, corporate asset-backed securities, zero-coupon bonds, 
deferred interest bonds and payment-in-kind bonds. In addition, 
the fund may enter into repurchase agreements and mortgage dollar 
roll transactions, may lend its portfolio securities, purchase 
securities on a when-issued or forward delivery basis, enter into 
swap transactions and invest in indexed securities and loan 
participations and other direct indebtedness. The fund may invest 
up to 15% of its net assets in illiquid securities and may also 
invest in restricted securities, including Rule 144A Securities. 
Finally, the fund may engage in various options and futures 
transactions including options on securities, options on stock 
indexes, options on foreign currencies, stock indices and foreign 
currency futures contracts, options on futures contracts, forward 
foreign currency exchange contracts and yield curve options.

The fund will be managed actively with respect to the fund's fixed 
income securities and the asset allocations modified as the 
subadviser deems necessary. Although the fund does not intend to 
seek short-term profits, fixed income securities will be sold 
whenever the sub-adviser believes it is appropriate to do so 
without regard to the length of time the particular asset may have 
been held. With respect to its equity securities the fund does not 
intend to trade in securities for short-term profits and 
anticipates that portfolio securities ordinarily will be held for 
one year or longer. However, the fund will effect trades whenever 
it believes that changes in its portfolio securities are 
appropriate.

GT Global Strategic Income Portfolio

Debt securities in which the fund may invest include bonds, notes, 
debentures, and other similar instruments. The fund normally 
invests at least 50% of its net assets in U.S. and foreign debt 
and other fixed income securities that, at the time of purchase, 
are rated at least investment grade by Moody's or S&P or, if 
unrated, determined by the subadviser to be of comparable quality. 
No more than 50% of the fund's total assets may be invested in 
securities rated below investment grade. Such securities involve a 
high degree of risk and are predominantly speculative. The fund 
may also invest in securities that are in default as to payment of 
principal and/or interest. See "Risk Factors."

For purposes of the fund's operations, "emerging markets" will 
consist of all countries determined by the subadviser to have 
developing or emerging economies and markets. These countries 
generally include every country in the world except the United 
States, Canada, Japan, Australia, New Zealand and most countries 
located in Western Europe. The fund will consider investment in, 
but not be limited to, the following emerging markets: Algeria, 
Argentina, Bolivia, Botswana, Brazil, Bulgaria, Chile, China, 
Colombia, Costa Rica, Cyprus, Czech Republic, Dominican Republic, 
Ecuador, Egypt, El Salvador, Finland, Greece, Ghana, Hong Kong, 
Hungary, India, Indonesia, Israel, Ivory Coast, Jamaica, Jordan, 
Kazakhstan, Kenya, Lebanon, Malaysia, Mauritius, Mexico, Morocco, 
Nicaragua, Nigeria, Oman, Pakistan, Panama, Paraguay, Peru, 
Philippines, Poland, Portugal, Republic of Slovakia, Russia, 
Singapore, Slovenia, South Africa, South Korea, Sri Lanka, 
Swaziland, Taiwan, Thailand, Turkey, Ukraine, Uruguay, Venezuela, 
Zambia and Zimbabwe. 

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

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

The fund's investments in emerging market securities may consist 
substantially of Brady Bonds and other sovereign debt securities 
issued by emerging market governments that are traded in the 
markets of developed countries or groups of developed countries. 
The subadviser may invest in debt securities of emerging market 
issuers that it determines to be suitable investments for the fund 
without regard to ratings. Currently, the substantial majority of 
emerging market debt securities are considered to have a credit 
quality below investment grade.

The fund also may consider making investments in below-investment 
grade debt securities of corporate issuers in the United States 
and in developed foreign countries, subject to the overall 50% 
limitation. The fund also may invest in bank loan participations 
and assignments, which are fixed and floating rate loans arranged 
through private negotiations between foreign entities. The fund 
may invest up to 15% of its net assets in illiquid securities. The 
fund also may borrow for investment purposes up to 33 1/3% of its 
total assets. The fund may also use instruments (including forward 
currency contracts) often referred to as "derivatives."

Pending investment of proceeds from new sales of fund shares or to 
meet ordinary daily cash needs, the fund may hold cash (U.S. 
dollars, foreign currencies or multinational currency units) and 
may invest its assets in high quality foreign or domestic money 
market instruments.

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

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

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

The subadviser generally evaluates currencies on the basis of 
fundamental economic criteria (e.g., relative inflation and 
interest rate levels and trends, growth rate forecasts, balance of 
payments status and economic policies) as well as technical and 
political data. If the currency in which a security is denominated 
appreciates against the U.S. dollar, the dollar value of the 
security will increase. Conversely, if the exchange rate of the 
foreign currency declines, the dollar value of the security will 
decrease. However, the fund may seek to protect itself against 
such negative currency movements through the use of sophisticated 
investment techniques that include currency, options and futures 
transactions.

Selection of Debt Investments. In determining the appropriate 
distribution of investments among various countries and geographic 
regions for the fund, management ordinarily considers the 
following factors:  prospects for relative economic growth among 
the different countries in which the fund may invest; expected 
levels of inflation; government policies influencing business 
conditions; the outlook for currency relationships; and the range 
of the individual investment opportunities available to 
international investors. 

Although the fund values assets daily in terms of U.S. dollars, 
the fund does not intend to convert holdings of foreign currencies 
into U.S. dollars on a daily basis. The fund will do so from time 
to time, and investors should be aware of the costs of currency 
conversion. Although foreign exchange dealers do not charge a fee 
for conversion, they do realize a profit based on the difference 
("spread") between the prices at which they are buying and selling 
various currencies. Thus, a dealer may offer to sell a foreign 
currency to the fund at one rate, while offering a lesser rate of 
exchange should the fund desire to sell that currency to the 
dealer. 

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

According to the subadviser, more than 50% of the value of all 
outstanding government debt obligations throughout the world is 
represented by obligations denominated in currencies other than 
the U.S. dollar. Moreover, from time to time, the debt securities 
of issuers located outside the United States have substantially 
outperformed the debt obligations of U.S. issuers. Accordingly, 
the subadviser believes that the fund's policy of investing in 
debt securities throughout the world may enable the achievement of 
results superior to those produced by mutual funds with similar 
objectives to those of the fund that invest solely in debt 
securities of U.S. issuers. The fund may also purchase securities 
on a "when-issued basis" and may purchase or sell securities on a 
"forward commitment" basis in order to hedge against anticipated 
changes in interest rates and prices. 

The fund may invest up to 15% of its net assets in illiquid 
securities and is authorized to borrow money from banks in an 
amount up to 33 1/3% of its total assets (including the amount 
borrowed), less all liabilities and indebtedness other than the 
borrowings and may use the proceeds for investment purposes. The 
fund will borrow for investment purposes only when the subadviser 
believes that such borrowings will benefit the fund, after taking 
into account considerations such as the cost of the borrowing and 
the likely investment returns on the securities purchased with the 
borrowed monies. In addition, the fund may borrow money for 
temporary or emergency purposes or payments in an amount not 
exceeding 5% of the value of its total assets (not including the 
amount borrowed) provided that the total amount borrowed by the 
fund for any purpose does not exceed 33 1/3% of its total assets. 
The fund may also enter into repurchase agreements, reverse 
repurchase agreements and dollar roll transactions and may make 
loans of its portfolio securities, invest in zero-coupon and other 
deep discount securities, invest in commercial paper that is 
indexed to certain specific foreign currency exchange rates, enter 
into interest rate, currency and index swaps and may purchase or 
sell related caps, floors and collars and other derivative 
instruments.  The fund may enter into reverse repurchase 
agreements with up to 33 1/3% of its total assets, so long as the 
total amount of the fund's borrowings do not exceed 33 1/3% of its 
total assets.

Nondiversification. As a "non-diversified" company under the 1940 
Act, the fund will have the ability to invest more than 5% of its 
assets in the securities of any issuer. However, the fund intends 
to comply with Subchapter M of the Internal Revenue Code of 1986, 
as amended (the "Code"), which requires (among other things) that 
at least 50% of the fund's assets consist of U.S. Government 
securities, cash and cash items, securities of other regulated 
investment companies, and other securities, with such other 
securities limited in respect of any one issuer to not more than 
5% of the value of the fund's total assets and not more than 10% 
of the outstanding voting securities of such issuer.  Also, 
holdings of a single issuer (with the same exceptions) may not 
exceed 25% of the fund's total assets.  These limits are measured 
at the end of each quarter of the fund's taxable year.  Under the 
Subchapter M limits, "non-diversification" allows up to 50% of a 
fund's total assets to be invested in as few as two single 
issuers. In the event of decline of creditworthiness or default 
upon the obligations of one or more such issuers exceeding 5%, an 
investment in the fund will entail greater risk than in a 
portfolio having a policy of "diversification" because a high 
percentage of the fund's assets may be invested in securities of 
one or two issuers. Furthermore, a high percentage of investments 
among few issuers may result in a greater degree of fluctuation in 
the market value of the assets of the fund, and consequently a 
greater degree of fluctuation of the fund's net asset value, 
because the fund will be more susceptible to economic, political 
or regulatory developments affecting these securities than would 
be the case with a portfolio composed of varied obligations of 
more issuers.  The fund also intends to satisfy the 
diversification requirements of Section 817(h) of the Code, as 
described generally in the prospectus.

Travelers Managed Income Portfolio

Under normal market conditions, (1) at least 65% of the fund's 
total assets will be invested in U.S. government securities and in 
investment-grade corporate debt obligations rated within the four 
highest ratings of Moody's or S&P or in unrated obligations of 
comparable quality; and (2) at least 65% of the fund's total 
assets will be invested in debt obligations having durations of 10 
years or less. The fund may only invest in U.S. government 
securities that are issued or guaranteed as to both principal and 
interest by the U.S. government or backed by the full faith and 
credit of the U.S. government or its agencies or 
instrumentalities.

Obligations rated in the lowest of the top four ratings (Baa by 
Moody's or BBB by S&P) are considered to have some speculative 
characteristics. Unrated securities will be considered of 
investment-grade if deemed by the subadviser to be comparable in 
quality to instruments so rated, or if other outstanding 
obligations of the issuers of such securities are rated Baa/BBB or 
better. For a description of the ratings referred to above, see 
Appendix A.

The fund may invest up to 35% of its total assets in obligations 
rated below the four highest ratings of Moody's or S&P, with no 
minimum rating required. Such securities, which are considered to 
have speculative characteristics, include securities rated in the 
lowest rating categories of Moody's or S&P (commonly referred to 
as "junk bonds"), which are extremely speculative and may be in 
default with respect to payment of principal or interest.

The fund may also invest up to 35% of its total assets in fixed-
income obligations having durations longer than 10 years, up to 
25% of its total assets in convertible debt obligations and 
preferred stocks, and up to 20% of its total assets in securities 
of foreign issuers, including foreign governments. The fund will 
not invest in common stocks, and any common stocks received 
through conversion of convertible debt obligations will be sold in 
an orderly manner. Changes in interest rates will affect the value 
of the fund's portfolio investments.

Bank certificates of deposit and bankers' acceptances in which the 
fund may invest are limited to U.S. dollar-denominated instruments 
of domestic banks, including their branches located outside the 
United States, and of domestic branches of foreign banks. In 
addition, the fund may invest in U.S. dollar-denominated, non-
negotiable time deposits issued by foreign branches of domestic 
banks and London branches of foreign banks; and negotiable 
certificates of deposit issued by London branches of foreign 
banks. The foregoing investments may be made provided that the 
bank has capital, surplus and undivided profits (as of the date of 
its most recently published annual financial statements) in excess 
of $100 million as of the date of investment. Investments in 
obligations of foreign branches of domestic banks, foreign banks, 
and domestic branches of foreign banks involve risks that are 
different from investments in securities of domestic banks, and 
are discussed in more detail under "Risk Factors."

The fund is permitted to enter into repurchase agreements with 
respect to U.S. government securities, to purchase portfolio 
securities on a when-issued basis, to purchase or sell portfolio 
securities for delayed-delivery, and to lend its portfolio 
securities. In addition, the fund may invest up to 25% of its 
total assets in securities representing interests in pools of 
assets such as mortgage loans, motor vehicle installment purchase 
obligations and credit card receivables ("asset backed 
securities"), which include classes of obligations collateralized 
by mortgage loans or mortgage-pass through certificates ("CMOs"). 
The fund is authorized to borrow money for temporary 
administrative purposes and to pledge its assets in connection 
with such borrowings. Finally, the fund may invest up to 15% of 
its net assets in illiquid securities (excluding Rule 144A 
Securities).

Putnam Diversified Income Portfolio

The subadviser believes that diversifying the fund's investments 
among the U.S. Government Sector, The High Yield Sector and the 
International Sector, as opposed to investing in any one sector, 
will better enable the fund to preserve capital while pursuing its 
investment objective. Historically, the markets for U.S. 
government securities, lower-rated, high yielding U.S. corporate 
fixed-income securities, and debt securities of foreign issuers 
have tended to behave independently and have at times moved in 
opposite directions. For example, U.S. government securities have 
generally been affected negatively by inflationary concerns 
resulting from increased economic activity. High yield U.S. 
corporate fixed-income securities, on the other hand, have 
generally benefitted from increased economic activity due to 
improvement in the credit quality of corporate issuers. The 
reverse has generally been true during periods of economic 
decline. Similarly, U.S. government securities have often been 
negatively affected by a decline in the value of the dollar 
against foreign currencies, while the bonds of foreign issuers 
held by U.S. investors have generally benefitted from such 
decline. The subadviser believes that, when financial markets 
exhibit such a lack of correlation, a pooling of investments among 
these markets may produce greater preservation of capital and 
lower volatility over the long term than would be obtained by 
investing exclusively in any one of the markets.

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

U.S. Government Sector. The fund will invest assets allocated to 
the U.S. Government Sector primarily in U.S. government securities 
and may engage in options, futures, and repurchase transactions 
with respect to such securities. The fund may also enter into 
forward commitments for the purchase of U.S. government securities 
and make secured loans of its portfolio securities with respect to 
U.S. government securities. In purchasing securities for the U.S. 
Government Sector, the subadviser may take full advantage of the 
entire range of maturities of U.S. government securities and may 
adjust the average maturity of the investments held in the 
portfolio from time to time, depending on its assessment of 
relative yields of securities of different maturities and its 
expectations of future changes in interest rates. Under normal 
market conditions, the fund will invest at least 20% of its net 
assets in U.S. government securities. The fund may also invest 
assets allocated to the U.S. Government Sector in a variety of 
debt securities, including asset-backed and mortgage-backed 
securities, such as CMOs, that are issued by private U.S. issuers. 
With respect to the U.S. Government Sector, the fund will only 
invest in privately issued debt securities that are rated at the 
time of purchase at least Baa by Moody's, or BBB by S&P or the 
equivalent by any other nationally recognized statistical rating 
agency, or in unrated securities that the subadviser determines 
are of comparable quality. Securities rated Baa or BBB are 
considered to have some speculative characteristics. The rating 
services' descriptions of these rating categories are included in 
Appendix A. The fund will not necessarily dispose of a security if 
its rating is reduced below these levels, although the subadviser 
will monitor the investment to determine whether continued 
investment in the security will assist in meeting the fund's 
investment objective.

High Yield Sector. The fund will invest assets allocated to the 
High Yield Sector primarily in high yielding, lower-rated higher 
risk U.S. and foreign corporate fixed-income securities, including 
debt securities, convertible securities and preferred stocks. 
Subject to the foregoing sentence, the fund may also purchase 
equity securities. As described below, however, the fund may 
invest all or any part of the High Yield Sector portfolio in 
higher-rated and unrated fixed-income securities. The fund will 
not necessarily invest in the highest yielding securities 
available if in the subadviser's opinion the differences in yield 
are not sufficient to justify the higher risks involved. In 
addition, the fund may invest up to 15% of its net assets in 
securities that are not publicly traded and for which market 
quotations are not readily available. The fund may also invest in 
zero-coupon bonds and payment-in-kind bonds. 

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

The High Yield Sector may invest in any security which is rated, 
at the time of purchase, at least Caa as determined by Moody's or 
CCC as determined by S&P's (or, the equivalent by another, 
nationally recognized statistical rating agency) or in any unrated 
security which the subadviser determines is at least of comparable 
quality, although up to 5% of the net assets of the fund (whether 
they are allocated to the High Yield Sector or the International 
Sector) may be invested in securities rated below such quality, or 
in unrated securities that the subadviser determines are of 
comparable quality. Securities rated below Caa by Moody's or CCC 
by S&P's are of poor standing and may be in default. The rating 
services' descriptions of these rating categories, including the 
speculative characteristics of the lower categories, are included 
in Appendix A.

International Sector. The fund will invest the assets allocated to 
the International Sector in debt obligations and other fixed-
income securities denominated in any currency including the U.S. 
dollar. These securities include:

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

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

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

In the past, yields available from securities denominated in 
foreign currencies have often been higher than those of securities 
denominated in U.S. dollars. The subadviser will consider expected 
changes in foreign currency exchange rates in determining the 
anticipated returns of securities denominated in foreign 
currencies. 

The obligations of foreign governmental entities, including 
supranational issuers, have various kinds of government support. 
Obligations of foreign governmental entities include obligations 
issued or guaranteed by national, provincial, state or other 
governments with taxing power or by their agencies. These 
obligations may or may not be supported by the full faith and 
credit of a foreign government.

Supranational entities include international organizations 
designated or supported by governmental entities to promote 
economic reconstruction or development and international banking 
institutions and related government agencies. Examples include the 
International Bank for Reconstruction and Development (the World 
Bank), the European Steel and Coal Community, the Asian 
Development Bank, and the Inter-American Development Bank. The 
governmental members or "stockholders" usually make initial 
capital contributions to the supranational entity and in many 
cases are committed to make additional capital contributions if 
the supranational entity is unable to repay its borrowing. Each 
supranational entity's leading activities are limited to a 
percentage of its total capital (including "callable capital" 
contributed by members at the entity's call), reserves, and net 
income.

Defensive Strategies. At times, the subadviser may judge that 
conditions in the securities market make pursuing the fund's basic 
investment strategy inconsistent with the best interests of its 
shareholders. At such times, the subadviser may temporarily use 
alternative strategies, primarily designed to reduce fluctuations 
in the value of the fund's assets. In implementing these 
"defensive" strategies, depending on the circumstances, the fund 
may temporarily reduce or suspend its option writing activities, 
shift its portfolio emphasis to higher-rated securities in the 
High Yield Sector, hedge currency risks in the International 
Sector, or generally reduce the average maturity of its holdings 
in any or all of the Sectors.

The fund may also purchase securities of issuers located in 
emerging markets, invest in sovereign debt, Brady Bonds, loan 
participations and assignments and enter into dollar roll 
transactions. It may also engage in the writing of covered call 
and put options with respect to foreign fixed-income securities, 
foreign currencies, and related futures in order to supplement the 
fund's portfolio income.

Smith Barney High Income Portfolio

The fund seeks to achieve its investment objectives by investing, 
under normal circumstances, at least 65% of its assets in high-
yielding corporate debt obligations and preferred stock. The 
fund's manager may adjust the fund's average maturity when, based 
on interest rate trends and other market conditions, it deems it 
appropriate to do so. Up to 35% of the fund's assets may be 
invested in common stock or common stock equivalents, including 
convertible securities, options, warrants and rights. The fund's 
equity investments may be made in securities of companies of any 
size depending on the relative attractiveness of the company and 
the economic sector in which it operates. Fixed income securities 
purchased by the fund will generally be rated in the lower rating 
categories of nationally recognized securities rating 
organizations, as low as C by Moody's or D by S&P, or in non-rated 
income securities that the fund's manager determines to be of 
comparable quality. The fund will not purchase securities rated 
lower than B by both Moody's and S&P, if, immediately after such 
purchase, more than 10% of the fund's total assets are invested in 
such securities. 
The fund's investments in lower rated and unrated corporate debt 
securities, commonly known as "junk bonds", are subject to a 
greater risk of loss of principal and interest. Purchasers should 
carefully assess the risks associated with an investment in this 
fund. See "Risk Factors."

The fund may invest in securities rated higher than Ba by Moody's 
and BB by S&P without limitation when the difference in yields 
between quality classifications is relatively narrow.

The fund may lend portfolio securities equal in value to not more 
than 20% of its total assets and purchase or sell securities on a 
when-issued or delayed-delivery basis. The fund may hedge against 
possible declines in the value of its investments by entering into 
interest rate futures contracts and related options, swaps and 
other financial instruments.

In connection with the investment objectives and policies 
described above, the fund may, but is not required to, utilize 
various investment techniques to earn income, facilitate portfolio 
management and mitigate risk. These investment techniques utilize 
interest rate and currency futures contracts, put and call options 
on such futures contracts, currency exchange transactions, 
illiquid securities, mortgage-backed and asset-backed securities, 
securities of unseasoned issuers and securities of foreign 
governments and corporations including those of developing 
countries. Any or all of such investment techniques available to 
the fund's subadviser may be used at any time and there is no 
particular strategy that dictates the use of one technique rather 
than another, since the use of any investment technique is a 
function of numerous variables including market conditions.

Smith Barney Money Market Portfolio

In order to minimize fluctuations in market price the fund will 
not purchase a security with a remaining maturity of greater than 
13 months (or that is deemed to have a remaining maturity of 
greater than 13 months) or maintain a dollar-weighted average 
portfolio maturity in excess of 90 days (securities used as 
collateral for repurchase agreements are not subject to these 
restrictions). 

The fund's investments are limited to dollar denominated 
instruments the Board of Directors determines present minimal 
credit risks and which are Eligible Securities at the time 
acquired by the fund.  The term Eligible Securities includes 
securities rated by the "Requisite NRSROs" in one of the two 
highest short-term rating categories, securities of issuers that 
have received such ratings with respect to other short-term debt 
securities and comparable unrated securities. "Requisite NRSROs" 
means (a) any two nationally recognized statistical rating 
organizations ("NRSROs") that have issued a rating with respect to 
a security or class of debt obligations of an issuer, or (b) one 
NRSRO, if only one NRSRO has issued such a rating at the time that 
the Portfolio acquires the security.  The NRSROs currently 
designated as such by the Securities and Exchange Commission (the 
"SEC") are S&P, Moody's, Fitch IBCA, Inc., Duff and Phelps Inc., 
and Thomson BankWatch. See Appendix A for a discussion of the 
ratings categories of the NRSROs.

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

The following are also permitted investments for the fund:

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

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

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

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

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

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

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

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

INVESTMENT PRACTICES

Each of the following investment practices is subject to the 
limitations set forth under "Investment Restrictions." 

EQUITY SECURITIES

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

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

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

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

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

Unlike a convertible security, which is a single security, a 
synthetic convertible security is comprised of distinct securities 
that together resemble convertible securities in certain respects. 
Synthetic convertible securities are typically created by 
combining non-convertible bonds or preferred stocks with warrants 
or stock call options. The options that will form elements of 
synthetic convertible securities may be listed on a securities 
exchange or on the National Association of Securities Dealers 
Automated Quotation System or may be privately traded. The 
components of a synthetic convertible security generally are not 
offered as a unit and may be purchased and sold by the fund at 
different times. Synthetic convertible securities differ from 
convertible securities in certain respects, including that each 
component of a synthetic convertible security has a separate 
market value and responds differently to market fluctuations. 

Illiquid and Restricted Securities. Each fund may purchase 
securities that are not registered ("restricted securities") under 
the Securities Act of 1933, as amended (the "1933 Act"), but can 
be offered and sold to "qualified institutional buyers" under Rule 
144A. Each fund may also invest a portion of its assets in 
illiquid investments, which include repurchase agreements maturing 
in more than seven days and restricted securities. The Board of 
Directors may determine, based upon a continuing review of the 
trading markets for the specific restricted security, that such 
restricted securities are liquid. The Board of Directors has 
adopted guidelines and delegated to management the daily function 
of determining and monitoring liquidity of restricted securities 
available pursuant to Rule 144A. The Board, however, retains 
sufficient oversight and is ultimately responsible for the 
determinations. Since it is not possible to predict with assurance 
exactly how the market for Rule 144A restricted securities will 
develop, the Board will carefully monitor each fund's investments 
in these securities, focusing on such important factors, among 
others, as valuation, liquidity and availability of information. 
Investments in restricted securities could have the effect of 
increasing the level of illiquidity in a fund to the extent that 
qualified institutional buyers become for a time uninterested in 
purchasing these restricted securities. The funds may also 
purchase restricted securities that are not registered under Rule 
144A.

Warrants or Rights (AIM Capital Appreciation, Smith Barney Large 
Capitalization Growth and GT Global Strategic Income Portfolios). 
Warrants or rights may be acquired by each fund in connection with 
other securities or separately and provide the fund with the right 
to purchase at a later date other securities of the issuer. Each 
fund has undertaken that its investment in warrants or rights, 
valued at the lower of cost or market, will not exceed 5% of the 
value of its net assets and not more than 2% of such assets will 
be invested in warrants and rights which are not listed on the 
American or New York Stock Exchange. Warrants or rights acquired 
by a fund in units or attached to securities will be deemed to be 
without value for purposes of this restriction.

Investments in Other Investment Companies (GT Global Strategic 
Income Portfolio). With respect to certain countries, investments 
by the fund presently may be made only by acquiring shares of 
other investment companies with local governmental approval to 
invest in those countries. The fund may invest in the securities 
of closed-end investment companies within the limits of the 1940 
Act. These limitations currently provide that, in general, the 
fund may purchase shares of a closed-end investment company unless 
(a) such a purchase would cause the fund to own in the aggregate 
more than 3 percent of the total outstanding voting securities of 
the investment company or (b) such a purchase would cause the fund 
to have more than 5 percent of its total assets invested in the 
investment company or more than 10 percent of its aggregate assets 
invested in an aggregate of all such investment companies. 
Investment in such investment companies may also involve the 
payment of substantial premiums above the value of such companies' 
portfolio securities. The fund does not intend to invest in such 
vehicles or funds unless, in the judgment of management, the 
potential benefits of such investments justify the payment of any 
applicable premiums. The yield of such securities will be reduced 
by operating expenses of such companies including payments to the 
investment managers of those investment companies. At such time as 
direct investment in these countries is allowed, the fund will 
anticipate investing directly in these markets. 

Real Estate Investment Trusts ("REITs") (Alliance Growth and Smith 
Barney High Income Portfolios). The fund may invest without 
limitations in shares of REITs. REITs are pooled investment 
vehicles which invest primarily in income producing real estate or 
real estate related loans or interests. REITs are generally 
classified as equity REITs,  mortgage REITs or a combination of 
equity and mortgage REITs. Equity REITs invest the majority of 
their assets directly in real property and derive income primarily 
from the collection or rents. Equity REITs may also include 
operating or finance companies. Equity REITs can also realize 
capital gains by selling properties that have appreciated in 
value. Mortgage REITs invest the majority of their assets in real 
estate mortgages and derive income from the collection of interest 
payments. REITs are not taxed on income distributed to 
shareholders provided they comply with several requirements of the 
Internal Revenue Code of 1986, as amended (the "Code"). A mortgage 
trust can make construction, development or long-term mortgage 
loans, which are sensitive to the credit quality of the borrower. 
Mortgage trusts derive their income from interest payments. Hybrid 
trusts combine the characteristics of both equity and mortgage 
trusts, generally by holding both ownership interests and mortgage 
interests in real estate. 

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

EDRs, which sometimes are referred to as Continental Depositary 
Receipts ("CDRs") are receipts issued in Europe typically by 
foreign banks and trust companies that evidence ownership of 
either foreign or domestic securities. Generally, ADRs, in 
registered form, are designed for use in the United States 
securities markets, and GDRs, EDRs, and CDRs in bearer form, are 
designed for use in European securities markets.

FIXED INCOME SECURITIES

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

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

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

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

Synthetic Security Positions (GT Global Strategic Income and 
Putnam Diversified Income Portfolios). A fund may utilize 
combinations of futures on bonds and forward currency contracts to 
create investment positions that have substantially the same 
characteristics as bonds of the same type on which the futures 
contracts are written. Investment positions of this type are 
generally referred to as "synthetic securities."

For example, in order to establish a synthetic security position 
for the fund that is comparable to owning a Japanese government 
bond, the relevant subadviser might purchase futures contracts on 
Japanese government bonds in the desired principal amount and 
purchase forward currency contracts for Japanese Yen in an amount 
equal to the then current purchase price for such bonds in the 
Japanese cash market, with each contract having approximately the 
same delivery date.

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

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

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

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


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

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

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

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

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

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


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

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

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

Foreign Investments

Emerging Markets 

Sovereign Debt Obligations. (Putnam Diversified Income, MFS Total 
Return and GT Global Strategic Income Portfolios). A fund may 
purchase sovereign debt instruments issued or guaranteed by 
foreign governments or their agencies, including debt of 
developing countries.  Sovereign debt may be in the form of 
conventional securities or other types of debt instruments such as 
loans or loan participations.  Sovereign debt of developing 
countries may involve a high degree of risk, and may be in default 
or present the risk of default.  Governmental entities responsible 
for repayment of the debt may be unable or unwilling to repay 
principal and interest when due, and may require renegotiation or 
rescheduling of debt payments.  In addition, prospects for 
repayment of principal and interest may depend on political as 
well as economic factors.  Although some sovereign debt, such as 
Brady Bonds, is collateralized by U.S. Government securities, 
repayment of principal interest is not guaranteed by the U.S. 
Government.


Brady Bonds (Putnam Diversified Income, MFS Total Return and GT 
Global Strategic Income Portfolios). A fund may invest in Brady 
Bonds which are debt restructurings that provide for the exchange 
of cash and loans for newly issued bonds. Brady Bonds have been 
issued by the governments of Albania, Argentina, Brazil, Bulgaria, 
Costa Rica, Croatia, Dominican Republic, Ecuador, Ivory Coast, 
Jordan, Mexico, Morocco, Nigeria, Panama, Peru, Philippines, 
Poland, Slovenia, Uruguay, Venezuela and Vietnam and are expected 
to be issued by other emerging market countries.  Investors should 
recognize that Brady Bonds do not have a long payment history. In 
addition, Brady Bonds are often rated below investment grade.  
Brady Bonds may be collateralized or uncollateralized, are issued 
in various currencies (primarily the U.S. dollar) and are actively 
traded in the secondary market for Latin American debt. The 
Salomon Brothers Brady Bond Index provides a benchmark that can be 
used to compare returns of emerging market Brady Bonds with 
returns in other bond markets, e.g., the U.S. bond market.

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

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

Loan Participations, Assignments and Other Direct Indebtedness 
(Putnam Diversified Income, GT Global Strategic Income and MFS 
Total Return Portfolios). A fund may invest a portion of its 
assets in loan participations ("Participations") and other direct 
claims against a borrower. By purchasing a Participation, a fund 
acquires some or all of the interest of a bank or other lending 
institution in a loan to a corporate or government borrower. The 
Participations typically will result in the fund having a 
contractual relationship only with the lender not the borrower. A 
fund will have the right to receive payments of principal, 
interest and any fees to which it is entitled only from the lender 
selling the Participation and only upon receipt by the lender of 
the payments from the borrower. Many such loans are secured, 
although some may be unsecured. Such loans may be in default at 
the time of purchase. Loans that are fully secured offer a fund 
more protection than an unsecured loan in the event of non-payment 
of scheduled interest or principal. However, there is no assurance 
that the liquidation of collateral from a secured loan would 
satisfy the corporate borrower's obligation, or that the 
collateral can be liquidated.

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

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

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


MONEY MARKET SECURITIES

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

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

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

Other Investment Strategies


Repurchase Agreements (each fund). Each fund may enter into 
repurchase agreements, wherein the seller agrees to repurchase a 
security from the fund at an agreed-upon future date, normally the 
next business day. The resale price is greater than the purchase 
price, which reflects the agreed-upon rate of return for the 
period the fund holds the security and which is not related to the 
coupon rate on the purchased security. Each fund requires 
continual maintenance of the market value of the collateral in 
amounts at least equal to the repurchase price plus accrued 
interest, thus risk is limited to the ability of the seller to pay 
the agreed-upon amount on the delivery date; however, if the 
seller defaults, realization upon the collateral by the fund may 
be delayed or limited or the fund might incur a loss if the value 
of the collateral securing the repurchase agreement declines and 
might incur disposition costs in connection with liquidating the 
collateral. A fund will only enter into repurchase agreements with 
broker/dealers or other financial institutions that are deemed 
creditworthy by the Manager under guidelines approved by the Board 
of Directors. It is the policy of each fund (except the Smith 
Barney Money Market Portfolio) not to invest in repurchase 
agreements that do not mature within seven days if any such 
investment together with any other illiquid assets held by a fund 
amount to more than 15% of that fund's net assets. The Smith 
Barney Money Market Portfolio may not invest in such securities 
if, together with any other illiquid assets held by it amount to 
more than 10% of its total assets.

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

At the time the fund enters into a reverse repurchase agreement, 
it will establish and maintain a segregated account with an 
approved custodian containing cash or liquid securities that have 
a value no less than the repurchase price, including accrued 
interest. Reverse repurchase agreements will be treated as 
borrowings and will be considered in the fund's overall borrowing 
limitation.

"Dollar Roll" Transactions (MFS Total Return, GT Global Strategic 
Income, Travelers Managed Income and Putnam Diversified Income 
Portfolios). A fund may enter into "dollar roll" transactions 
pursuant to which the fund sells fixed income securities for 
delivery in the current month and simultaneously contracts to 
repurchase substantially similar (i.e., same type, coupon and 
maturity) securities on a specified future date. The MFS Total 
Return Portfolio may enter in similar transactions pursuant to 
which the fund sells mortgage-backed securities for delivery in 
the future and simultaneously contracts to repurchase 
substantially similar securities on a specified future date 
(generally within 30 days). During the roll period, a fund forgoes 
principal and interest paid on the securities. The fund is 
compensated for the lost interest by the difference between the 
current sales price and the lower price for the future purchase 
(often referred to as the "drop") as well as by the interest 
earned on the cash proceeds of the initial sale. A fund may also 
be compensated by receipt of a commitment fee.

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


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

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



Fund

Limit as a %
of Total Assets

Smith Barney Pacific Basin 
Portfolio

15%

Smith Barney International Equity 
Portfolio

15%

Smith Barney Large Cap Value 
Portfolio

20%

Alliance Growth Portfolio

25%

AIM Capital Appreciation Portfolio

33 1/3%

MFS Total Return Portfolio

30%

GT Global Strategic Income 
Portfolio 

30%

Travelers Managed Income Portfolio

33 1/3%

Putnam Diversified Income 
Portfolio

25%

Smith Barney High Income Portfolio

20%

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

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


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

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

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

DERIVATIVE CONTRACTS

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

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


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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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


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

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

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

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


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

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

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

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

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

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

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


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

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

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

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

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

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

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


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

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

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

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

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

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


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

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

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

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

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

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

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

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

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


RISK FACTORS

General. Investors should realize that risk of loss is inherent in 
the ownership of any securities and that the fund's net asset 
value will fluctuate, reflecting the fluctuations in the market 
value of its portfolio positions.

Fixed Income Securities.  Investments in fixed income securities 
may subject the funds to risks, including the following.  

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

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

Call Risk and Extension Risk.  Fixed income securities may 
be subject to both call risk and extension risk.  Call risk exists 
when the issuer may exercise its right to pay principal on an 
obligation earlier than scheduled, which would cause cash flows to 
be returned earlier than expected.  This typically results when 
interest rates have declined and a fund will suffer from having to 
reinvest in lower yielding securities.  Extension risk exists when 
the issuer may exercise its right to pay principal on an 
obligation later than scheduled, which would cause cash flows to 
be returned later than expected.  This typically results when 
interest rates have increased, and a fund will suffer from the 
inability to invest in higher yield securities.

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


Emerging Markets Securities. Because of the special risks 
associated with investing in emerging markets, an investment in 
the Smith Barney International Equity, Smith Barney Pacific Basin, 
Putnam Diversified Income, GT Global Strategic Income, Smith 
Barney High Income or MFS Total Return Portfolios, may be 
considered speculative. Investors are strongly advised to consider 
carefully the special risks involved in emerging markets, which 
are in addition to the usual risks of investing in developed 
foreign markets around the world.

Emerging market countries include any country determined by the 
manager or subadviser, as the case may be, to have an emerging 
market economy, taking into account a number of factors, including 
the country's foreign currency debt rating, its political and 
economic stability and the development of its financial and 
capital markets. The manager or subadviser determines an issuer's 
principal trading market for its securities and the source of its 
revenues and assets. The issuer's principal activities generally 
are deemed to be located in a particular country if: (a) the 
security is issued or guaranteed by the government of that country 
or any of its agencies, authorities or instrumentalities; (b) the 
issuer is organized under the laws of, and maintains a principal 
office in, that country; (c) the issuer has its principal 
securities trading market in that country; or (d) the issuer has 
50% or more of its assets in that country.

Investing in securities in emerging countries may entail greater 
risks than investing in debt securities in developed countries. 
These risks include: (i) less social, political and economic 
stability; (ii) the small current size of the markets for such 
securities and the currently low or nonexistent volume of trading, 
which result in a lack of liquidity and in greater price 
volatility; (iii) certain national policies which may restrict the 
fund's investment opportunities, including restrictions on 
investment in issuers or industries deemed sensitive to national 
interests; (iv) foreign taxation; and (v) the absence of developed 
structures governing private or foreign investment or allowing for 
judicial redress for injury to private property. 

Investors should note that upon the accession to power of 
authoritarian regimes, the governments of a number of emerging 
market countries previously expropriated large quantities of real 
and personal property similar to the property which maybe 
represented by the securities purchased by the funds. The claims 
of property owners against those governments were never finally 
settled. There can be no assurance that any property represented 
by securities purchased by funds will not also be expropriated, 
nationalized, or otherwise confiscated. If such confiscation were 
to occur, the funds could lose a substantial portion of their 
investments in such countries. Each fund's investments would 
similarly be adversely affected by exchange control regulation in 
any of those countries. 

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

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

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


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

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

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

The risk also exists that an emergency situation may arise in one 
or more emerging markets as a result of which trading of 
securities may cease or may be substantially curtailed and prices 
for the portfolio securities in such markets may not be readily 
available. Section 22(e) of the 1940 Act permits a registered 
investment company to suspend redemption of its shares for any 
period during which an emergency exists, as determined by the SEC. 
Accordingly, if a fund believes that appropriate circumstances 
warrant, it will promptly apply to the SEC for a determination 
that an emergency exists within the meaning of Section 22(a) of 
the 1940 Act. During the period commencing from a fund's 
identification of such conditions until the date of SEC action, 
the portfolio securities in the affected markets will be valued at 
fair value as determined in good faith by or under the direction 
of the Board of Directors.

Sovereign Debt. Investments in such securities involve special 
risks. The issuer of the debt or the governmental authorities that 
control the repayment of the debt may be unable or unwilling to 
repay principal or interest when due in accordance with the terms 
of such debt. Periods of economic uncertainty may result in the 
volatility of market prices of sovereign debt obligations, and in 
turn a fund's net asset value, to a greater extent than the 
volatility inherent in domestic fixed income securities.

A sovereign debtor's willingness or ability to repay principal and 
pay interest in a timely manner may be affected by, among other 
factors, its cash flow situation, the extent of its foreign 
reserves, the availability of sufficient foreign exchange on the 
date a payment is due, the relative size of the debt service 
burden to the economy as a whole, the sovereign debtor's policy 
toward principal international lenders and the political 
constraints to which a sovereign debtor may be subject. Emerging 
market governments could default on their sovereign debt. Such 
sovereign debtors also may be dependent on expected disbursements 
from foreign governments, multilateral agencies and other entities 
abroad to reduce principal and interest arrearages on their debt. 
The commitment on the part of these governments, agencies and 
others to make such disbursements may be conditioned on a 
sovereign debtor's implementation of economic reforms and/or 
economic performance and the timely service of such debtor's 
obligations. Failure to implement such reforms, achieve such 
levels of economic performance or repay principal or interest when 
due, may result in the cancellation of such third parties' 
commitments to lend funds to the sovereign debtor, which may 
further impair such debtor's ability or willingness to timely 
service its debts.


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

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

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

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

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


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

Zero Coupon, Pay-In-Kind and Delayed Interest Securities.  The 
values of these securities may be highly volatile as interest 
rates rise or fall.  In addition, the fund's investments in zero 
coupon, pay-in-kind and delayed interest securities will result in 
special tax consequences.  Although zero coupon securities do not 
make interest payments, for tax purposes a portion of the 
difference between a zero coupon security's maturity value and its 
purchase price is taxable income of the fund each year.  The value 
of zero-coupon bonds is subject to greater fluctuation in market 
value in response to changes in market interest rates than bonds 
of comparable maturity which pay interest currently. Both zero-
coupon and payment-in-kind bonds allow an issuer to avoid the need 
to generate cash to meet current interest payments. Accordingly, 
such bonds may involve greater credit risks than bonds that pay 
interest currently. Even though such bonds do not pay current 
interest in cash, the fund is nonetheless required to accrue 
interest income on such investments and to distribute such amounts 
at least annually to shareholders. Accordingly, for a fund to 
continue to qualify for tax treatment as a regulated investment 
company and to avoid income and possibly excise tax, the fund may 
be required to distribute as a dividend an amount that is greater 
than the total amount of cash it actually receives. These 
distributions must be made from the fund's cash assets or, if 
necessary, from the proceeds of sales of portfolio securities. The 
fund will not be able to purchase additional income-producing 
securities with cash used to make such distributions and its 
current income ultimately may be reduced as a result.

Lower-Quality and Non-Rated Securities (Alliance Growth, Travelers 
Managed Income, Putnam Diversified Income, GT Global Strategic 
Income, Smith Barney High Income and MFS Total Return Portfolios). 
A fund may invest in lower-quality securities. Investments in 
lower-rated securities are subject to special risks, including a 
greater risk of loss of principal and non-payment of interest. An 
investor should carefully consider the following factors before 
investing in these funds.

Generally, lower-quality securities offer a higher return 
potential than higher-rated securities but involve greater 
volatility of price and greater risk of loss of income and 
principal, including the possibility of default or bankruptcy of 
the issuers of such securities. Lower-quality securities and 
comparable non-rated securities will likely have large 
uncertainties or major risk exposure to adverse conditions and are 
predominantly speculative with respect to the issuer's capacity to 
pay interest and repay principal in accordance with the terms of 
the obligation. The occurrence of adverse conditions and 
uncertainties would likely reduce the value of securities held by 
a fund, with a commensurate effect on the value of the fund's 
shares.

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


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

Fixed-income securities, including lower-quality securities and 
comparable non-rated securities, frequently have call and buy-back 
features that permit their issuers to call or repurchase the 
securities from their holders, such as the funds. If an issuer 
exercises these rights during periods of declining interest rates, 
a fund may have to replace the security with a lower yielding 
security, resulting in a decreased return to the fund.

In general, the ratings of nationally recognized statistical 
rating organizations represent the opinions of these agencies as 
to the quality of securities that they rate. Such ratings, 
however, are relative and subjective, and are not absolute 
standards of quality and do not evaluate the market value risk of 
the securities. It is possible that an agency might not change its 
rating of a particular issue to reflect subsequent events. These 
ratings will be used by each Portfolio as initial criteria for the 
selection of portfolio securities, but each fund also will rely 
upon the independent advice of the Manager or the subadviser, as 
the case may be, to evaluate potential investments.

In light of these risks, management will take various factors into 
consideration in evaluating the creditworthiness of an issue, 
whether rated or non-rated. These factors may include, among 
others, the issuer's financial resources, its sensitivity to 
economic conditions and trends, the operating history of and the 
community support for the facility financed by the issue, the 
ability of the issuer's management and regulatory matters.

Securities of Unseasoned Issuers. Securities in which Smith Barney 
High Income Portfolio may invest may lack a significant operating 
history and be dependent on products or services without an 
established market share.

Borrowing and Leverage. Each fund may borrow from banks, on a 
secured or unsecured basis. If the fund borrows and uses the 
proceeds to make additional investments, income and appreciation 
from such investments will improve its performance if they exceed 
the associated borrowing costs but impair its performance if they 
are less than such borrowing costs. This speculative factor is 
known as "leverage." Only  Smith Barney Pacific Basin, Smith 
Barney International Equity, and GT Global Strategic Income 
Portfolios will utilize leverage. In addition, AIM Capital 
Appreciation Portfolio may, but has no current intention to, 
engage in leverage. Should any fund engage in leverage, 
immediately after such borrowing the value of its assets, 
including the amount borrowed, less liabilities, must be equal to 
at least 300% of the amount borrowed, plus all outstanding 
borrowings.

Leverage creates an opportunity for increased returns to 
shareholders of a fund but, at the same time, creates special risk 
considerations. For example, leverage may exaggerate changes in 
the net asset value of a fund's shares and in the fund's yield. 
Although the principal or stated value of such borrowings will be 
fixed, the portfolio assets may change in value during the time 
the borrowing is outstanding. By leveraging the fund, changes in 
net asset values, higher or lower, may be greater in degree than 
if leverage was not employed. Leverage will create interest or 
dividend expenses for a fund which can exceed the income from the 
assets retained. To the extent the income or other gain derived 
from securities purchased with borrowed funds exceeds the interest 
and other charges the fund will have to pay in respect thereof, 
the fund's net income or other gain will be greater than if 
leverage had not been used. Conversely, if the income or other 
gain from the incremental assets is not sufficient to cover the 
cost of leverage, the net income or other gain of the fund will be 
less than if leverage had not been used. If the amount of income 
from the incremental securities is insufficient to cover the cost 
of borrowing, securities might have to be liquidated to obtain 
required funds. Depending on market or other conditions, such 
liquidations could be disadvantageous to a fund.


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

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

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

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


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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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


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

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

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

INVESTMENT RESTRICTIONS tc \l1 "INVESTMENT RESTRICTIONS 

The funds have adopted the following restrictions and fundamental 
policies that cannot be changed unless Sections 8(b)(1) and 13(a) 
of the 1940 Act or any SEC or SEC staff interpretations thereof 
are amended or modified or unless approved by a "vote of a 
majority of the outstanding voting securities" of each fund 
affected by the change as defined in the 1940 Act and Rule 18f-2 
thereunder (see "Voting"). If a fund adheres to a percentage 
restriction at the time of investment, a later increase or 
decrease in percentage resulting from a change in values of 
portfolio securities or amount of total or net assets will not be 
considered a violation of any of the following policies.

Each of the Smith Barney Pacific Basin, Smith Barney International 
Equity and Smith Barney Large Cap Value Portfolios may not:

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

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


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

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

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

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

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

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

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

In addition, the following policies have also been adopted by 
Smith Barney Pacific Basin Portfolio, Smith Barney International 
Equity Portfolio and Smith Barney Large Cap Value Portfolio but 
are not fundamental and accordingly may be changed by approval of 
the Board of Directors. The funds may not:

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

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


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

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

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

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

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

The Smith Barney Large Capitalization Growth Portfolio may not:

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

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

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

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

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

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

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

In addition, the following policies have also been adopted by 
Smith Barney Large Capitalization Growth Portfolio, but are not 
fundamental and accordingly may be changed by approval of the 
Board of Directors. The fund may not:

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

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

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

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

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

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

The Alliance Growth Portfolio may not:

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

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


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

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

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

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

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

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

In addition, the following policies have also been adopted by 
Alliance Growth Portfolio, but are not fundamental and accordingly 
may be changed by approval of the Board of Directors. The fund may 
not:

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

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

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

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

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

The AIM Capital Appreciation Portfolio may not:

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


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

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

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

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

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

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

In addition, the following policies have also been adopted by AIM 
Capital Appreciation Portfolio, but are not fundamental and 
accordingly may be changed by approval of the Board of Directors. 
The fund may not:

1.	Purchase warrants, valued at the lower of cost or 
market, in excess of 5% of the value of the Fund's net assets, and 
no more than 2% of such value may be warrants which are not listed 
on the New York or American Stock Exchanges. 

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

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

The Van Kampen American Capital Enterprise Portfolio may not:

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


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

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

4.	Invest in a manner that would cause it to fail to be a 
"diversified company" under the 1940 Act and the rules, 
regulations and orders thereunder taking into account any rule or 
order of the SEC exempting the fund from the limitation imposed by 
Section 12(d)(1) of the 1940 Act.

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

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

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

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

In addition, the following policies have also been adopted by Van 
Kampen American Capital Enterprise Portfolio, but are not 
fundamental and accordingly may be changed by approval of the 
Board of Directors. The fund may not:

1.	Invest more than 5% of the value of its total assets 
in securities of companies which (including predecessor companies 
or operations) have been in business less than three years, 
provided, however, that this limitation excludes shares of other 
open-end investment companies owned by the fund but includes the 
fund's pro rata portion of the securities and other assets owned 
by any such company.

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


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

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

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

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

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

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

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

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

The MFS Total Return Portfolio may not:

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

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

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


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

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

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

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

In addition, the following policies have also been adopted by MFS 
Total Return Portfolio, but are not fundamental and accordingly 
may be changed by approval of the Board of Directors. The fund may 
not:

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

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

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

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

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

The GT Global Strategic Income Portfolio may not:

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


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

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

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

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

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

For purposes of GT Global Strategic Income Portfolio's 
concentration policy contained in limitation (1) above, the fund 
intends to comply with the SEC staff positions that securities 
issued or guaranteed as to principal and interest by any single 
foreign government or any supranational organizations in the 
aggregate are considered to be securities of issuers in the same 
industry. 

In addition, the following investment policies are not fundamental 
investment policies and may be changed by the approval of the 
Company's Board of Directors without shareholder approval. The 
fund may not:

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

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

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

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


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

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

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

The Travelers Managed Income Portfolio may not:

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

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

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

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

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

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

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

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

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

In addition, the following policies have also been adopted by 
Travelers Managed Income Portfolio, but are not fundamental and 
accordingly may be changed by approval of the Board of Directors. 
The fund may not:

1.	Purchase securities of any other investment company 
except as part of a plan of merger or consolidation.

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

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

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

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

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

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

The Putnam Diversified Income Portfolio may not:

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

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

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

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

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

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

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

In addition, the following policy has also been adopted by the 
Putnam Diversified Income Portfolio, but is not fundamental and 
accordingly may be changed by approval of the Board of Directors. 
The fund may not:

1.	Invest in securities of other registered open-end 
investment companies except as they may be acquired as part of a 
merger or consolidation or acquisition of assets.

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

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

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

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

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

The Smith Barney High Income Portfolio may not:

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

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

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

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


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

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

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

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

In addition, the following policies have also been adopted by the 
Smith Barney High Income Portfolio, but are not fundamental and 
accordingly may be changed by the approval of the Board of 
Directors. The fund may not:

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

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

The Smith Barney Money Market Portfolio may not:

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

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


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

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

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

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

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

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

In addition, the following policies have also been adopted by 
Smith Barney Money Market Portfolio but are not fundamental and 
accordingly may be changed by approval of the Board of Directors. 
The fund may not:

1.	Acquire securities subject to restrictions on 
disposition or securities for which there is no readily available 
market, enter into repurchase agreements or purchase time deposits 
or variable amount master demand notes, if any of the foregoing 
have a term or demand feature of more than seven days if, 
immediately after and as a result, the value of such securities 
would exceed, in the aggregate, 10% of the fund's total assets. 
Subject to this limitation, the fund's Board of Directors has 
authorized the fund to invest in restricted securities if such 
investment is consistent with the fund's investment objective and 
has authorized such securities to be considered to be liquid to 
the extent the Manager determines on a daily basis that there is a 
liquid institutional market for such securities. The Board of 
Directors retains ultimate ongoing responsibility for the 
determination that a restricted security is liquid.

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

3.	Write or purchase put or call options.

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

5.	Purchase or sell oil and gas interests.

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


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


	PORTFOLIO TURNOVER 

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


PERFORMANCE INFORMATION

From time to time the Company may include a fund's total return, 
average annual total return, yield and current distribution return 
in advertisements and/or other types of sales literature. These 
figures are based on historical earnings and are not intended to 
indicate future performance. In addition, these figures will not 
reflect the deduction of the charges that are imposed on the 
Contracts by the Separate Account (see Contract prospectus) which, 
if reflected, would reduce the performance quoted. 

Total Return. Total return is computed for a specified period of 
time assuming reinvestment of all income dividends and capital 
gains distributions at net asset value on the ex-dividend dates at 
prices calculated as stated in the Prospectus, then dividing the 
value of the investment at the end of the period so calculated by 
the initial amount invested and subtracting 100%. The standard 
average annual total return, as prescribed by the SEC, is derived 
from this total return, which provides the ending redeemable 
value. Such standard total return information may also be 
accompanied with nonstandard total return information over 
different periods of time by means of aggregate, average, year-by-
year, or other types of total return figures. The standard total 
return shows what an investment in the fund would have earned over 
a specified period of time (one, five or ten years) assuming that 
all distributions and dividends by the fund were invested on the 
reinvestment dates during the period less all recurring fees. 

Yield. The yield of a fund refers to the net investment income 
earned by investments in the fund over a thirty-day period. Each 
fund's yield is computed by dividing the net investment income per 
share earned during a specified thirty day period by the net asset 
value per share on the last day of such period and annualizing the 
result. For purposes of the yield calculation, interest income is 
determined based on a yield to maturity percentage for each long-
term fixed income obligation in the portfolio; income on short-
term obligations is based on current payment rate. This net 
investment income is then annualized, i.e., the amount of income 
earned by the investments during that thirty-day period is assumed 
to be earned each 30-day period for twelve periods and is 
expressed as a percentage of the investments. The yield quotation 
is calculated according to a formula prescribed by the SEC to 
facilitate comparison with yields quoted by other investment 
companies. 

Current Distribution Return. The Company calculates current 
distribution return for each fund by dividing the distributions 
from gross investment income declared during the most recent 
period by the net asset value per share on the last day of the 
period for which current distribution return is presented. A 
fund's current distribution return may vary from time to time 
depending on market conditions, the composition of its investment 
portfolio and operating expenses. These factors and possible 
differences in the methods used in calculating current 
distribution return, and the charges that are imposed on the 
Contracts by the Separate Account, should be considered when 
comparing the fund's current distribution return to yields 
published for other investment companies and other investment 
vehicles. From time to time, a fund may include its current 
distribution return in information furnished to present or 
prospective shareowners.


Current distribution return should also be considered relative to 
changes in the value of the fund's shares and to the risks 
associated with the fund's investment objective and policies. For 
example, in comparing current distribution returns with those 
offered by Certificates of Deposit ("CDs"), it should be noted 
that CDs are insured (up to $100,000) and offer a fixed rate of 
return. 

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


DETERMINATION OF NET ASSET VALUE tc \l1 "DETERMINATION OF NET 
ASSET VALUE 

The net asset value of each fund's share will be determined on any 
day that the New York Stock Exchange is open. The New York Stock 
Exchange is closed on the following holidays: New Year's Day, 
President's Day, Martin Luther King, Jr., Good Friday, Memorial 
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas 
Day.

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

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



	AVAILABILITY OF THE FUNDS

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


REDEMPTION OF SHARES tc \l1 "REDEMPTION OF SHARES 

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


	MANAGEMENT tc \l1 "MANAGEMENT 

The Investment Managers. 

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

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


TIA. Travelers Investment Adviser, Inc. ("TIA" or the "Manager"), 
an affiliate of MMC, manages the investment operations of Alliance 
Growth Portfolio, AIM Capital Appreciation Portfolio, Putnam 
Diversified Income Portfolio, MFS Total Return Portfolio, GT 
Global Strategic Income Portfolio and Van Kampen American Capital 
Enterprise Portfolio (each, a "TIA Portfolio") pursuant to 
management agreements entered into by the Company on behalf of 
each TIA Portfolio. 

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

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

Subject to the provisions of any applicable subadvisory agreement, 
the Manager will also manage the investment operations of each 
fund and will be responsible for furnishing or causing to be 
furnished to each fund advice and assistance with respect to the 
purchase, retention and disposition of investments, in accordance 
with each fund's investment objectives, policies and restrictions 
as stated in the Prospectus and SAI.

TAMIC.  Travelers Asset Management International Corporation, an 
affiliate of MMC, manages the investment operations of Travelers 
Managed Income Portfolio pursuant to a management agreement 
entered into by the Company on behalf of Travelers Managed Income 
Portfolio.  Under the agreement,. TAMIC furnishes investment 
information and advice and makes recommendations with respect to 
the purchase and sale of investments based upon the fund's 
investment policies.  TAMIC has responsibility for the investment 
decisions of the fund, subject to the supervision, direction and 
approval of the Board of Directors.  

Under each management agreement MMC, TIA or TAMIC, as the case may 
be, will administer the Company's corporate affairs, and, in 
connection therewith, is responsible for furnishing or causing to 
be furnished to each applicable fund advice and assistance with 
respect to the acquisition, holding or disposal of investments and 
recommendations with respect to other aspects and affairs of the 
fund, bookkeeping, accounting and administrative services, office 
space and equipment, and the services of the officers and 
employees of the Company. Each fund receives discretionary 
advisory services provided by the Manager or by a subadviser 
(pursuant to a Subadvisory Agreement) who is identified, retained, 
supervised and compensated by the Manager. 

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


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

Each Management Agreement shall continue for an initial two-year 
term and shall be continued thereafter from year to year if 
specifically approved at least annually as required by the 1940 
Act. Each Management Agreement further provides that it shall 
terminate automatically in the event of its assignment (as defined 
in the 1940 Act) and that it may be terminated without penalty by 
either party on not less than 60 days' written notice.

Management Fees. The Manager has agreed to waive its fee to the 
extent that the aggregate expenses of any of Smith Barney Large 
Cap Value Portfolio, Alliance Growth Portfolio, AIM Capital 
Appreciation Portfolio, Van Kampen American Capital Enterprise 
Portfolio, Travelers Managed Income Portfolio, Putnam Diversified 
Income Portfolio, Smith Barney High Income Portfolio, MFS Total 
Return Portfolio and Smith Barney Money Market Portfolio, 
exclusive of taxes, brokerage, interest and extraordinary 
expenses, such as litigation and indemnification expenses, exceed 
1.25% of the average daily net assets for any fiscal year of each 
such fund. The Manager has agreed to waive its fee to the extent 
that the aggregate expenses of each of Smith Barney International 
Equity Portfolio, Smith Barney Pacific Basin Portfolio and GT 
Global Strategic Income Portfolio exclusive of taxes, brokerage, 
interest and extraordinary expenses, exceed 1.50% of the average 
daily net assets for any fiscal year of each such fund. Each of 
these voluntary expense limitations shall be in effect until it is 
terminated by notice to shareowners and by supplement to the then 
current Prospectus and SAI. 

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

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





Fund

Fiscal Year
Ended
October 31,
1996

Fiscal Year
Ended
October 31,
1997

Fiscal 
Year
Ended
October 31
, 1998

Smith Barney Pacific Basin 
Portfolio+

$117,581

$175,112



Smith Barney International 
Equity Portfolio

887,397

1,692,179



Smith Barney Large Cap Value 
Portfolio

564,232

1,399,650



Smith Barney Large 
Capitalization Growth Portfolio

n/a

n/a



Alliance Growth Portfolio

1,624,602

3,268,019



AIM Capital Appreciation 
Portfolio

503,898

1,294,096



Van Kampen American Capital 
Enterprise Portfolio

482,803

1,045,925



MFS Total Return Portfolio

744,834

1,556,167



GT Global Strategic Income 
Portfolio++

109,949

201,225



Travelers Managed Income 
Portfolio

123,774

176,499



Putnam Diversified Income 
Portfolio

428,803

753,736



Smith Barney High Income 
Portfolio

262,657

558,996



Smith Barney Money Market 
Portfolio+++

425,361

650,916




+	The Manager waived $30,849 in 1996 of the management fees 
shown.
++	The Manager waived $20,036 in 1996 of the management fees 
shown.
+++	The Manager waived $60,833 in 1996 and $24,546 in 1997 of 
the management fees shown.

The Subadvisers.

Alliance Growth Portfolio is advised by Alliance Capital 
Management L.P. ("Alliance Capital"). Alliance Capital is a 
Delaware limited partnership with principal offices at 1345 Avenue 
of the Americas, New York, New York 10105. For the services 
provided by Alliance Capital, the Manager pays Alliance Capital an 
annual fee calculated at a rate of 0.375% of the fund's average 
daily net assets, paid monthly.

Alliance Capital is a leading international investment manager 
supervising client accounts with assets as of September 30, 1998 
of more than $241.9 billion (of which approximately $99.5 billion 
representing the assets of investment companies). Alliance Capital 
clients are primarily major corporate employee benefit funds, 
public employee retirement systems, investment companies, 
foundations and endowment funds and include employee benefit 
plans, as of September 30, 1998, 34 of the Fortune 100 Companies. 
As of that date, Alliance Capital and its subsidiaries employed 
more than 1,700 employees who operated out of six domestic offices 
and the overseas offices of subsidiaries in Chennai, Istanbul, 
London, Mumbai, New Delhi, Paris, Sydney, Tokyo, Toronto, Bahrain, 
Luxembourg and Singapore as well as affiliate offices in 
Bangalore, Cairo, Johannesburg, Vienna, Warsaw, Hong Kong, Sao 
Paulo, Seoul and Moscow. The 58 registered investment companies 
comprising more than 70 separate investment portfolios managed by 
Alliance Capital currently having over more than three million 
shareholders. 

Alliance Capital Management Corporation ("ACMC"), is the general 
partner of Alliance Capital and conducts no active business.  
Alliance Capital, is an indirect wholly owned subsidiary of The 
Equitable Life Assurance Society of the United States 
("Equitable"), one of the largest life insurance companies in the 
United States and a wholly owned subsidiary of The Equitable 
Companies Incorporated ("ECI"), a holding company controlled by 
AXA, a French insurance holding company which at September 30, 
1998, beneficially owned approximately 58.5% of the outstanding 
voting shares of ECI. As of September 30, 1998, ACMC and Equitable 
Capital Management Corporation, each a wholly owned direct or 
indirect subsidiary of Equitable, together with Equitable, owned 
in the aggregate approximately 56.8% of the issued and outstanding 
units representing assignments of beneficial ownership of limited 
partnership interests in Alliance Capital ("Units").

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

Van Kampen American Capital Enterprise Portfolio is advised by Van 
Kampen American Capital Asset Management, Inc. ("VKAC"). VKAC is 
located at One Parkview Plaza, Oakbrook Terrace, IL 60181 and is a 
wholly owned subsidiary of Van Kampen American Capital, Inc., 
which is a wholly owned subsidiary of VK/AC Holding, Inc. VC/AC 
Holding, Inc., is a wholly owned subsidiary of MSAM Holdings II, 
Inc. which in turn, is a wholly owned subsidiary of Morgan 
Stanley, Dean Witter Discover & Co. For the services provided by 
VKAC, the Manager pays to VKAC an annual fee calculated at the 
rate of 0.325% of the fund's average daily net assets, paid 
monthly.

Putnam Diversified Income Portfolio is advised by Putnam 
Investment Management, Inc. ("Putnam Management"). Putnam 
Management is located at One Post Office Square, Boston, 
Massachusetts 02109. Putnam Management is a subsidiary of Putnam 
Investments, Inc., which, other than shares held by employees, is 
a wholly owned subsidiary of Marsh & McLennan Companies, Inc. For 
the services provided by Putnam Management, the Manager pays 
Putnam Management an annual fee calculated at the rate of 0.35% of 
the fund's average daily net assets, paid monthly. 

GT Global Strategic Income Portfolio is advised by AMVESCAP PLC 
("AMVESCAP").  AMVESCAP is a holding company formed in 1997 by the 
merger of INVESCO PLC and AIM Management Group, Inc.

For the services provided by AMVESCAP, the Manager pays to 
AMVESCAP an annual fee calculated at the rate of 0.375% of the 
fund's average daily net assets, paid monthly.

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

Portfolio Transactions and Distribution

CFBDS, Inc., located at 21 Milk Street, Boston MA 02109-5408 (the 
"Distributor"), distributes shares of the Funds as their principal 
underwriter. The Company's Board of Directors has determined that 
transactions for the Company may be executed through Salomon Smith 
Barney or any broker-dealer affiliate of Salomon Smith Barney 
(each, an "Affiliated Broker") if, in the judgment of management, 
the use of an Affiliated Broker is likely to result in price and 
execution at least as favorable to the Company as those obtainable 
through other qualified broker-dealers, and if, in the 
transaction, the Affiliated Broker charges the Company a fair and 
reasonable rate consistent with that charged to comparable 
unaffiliated customers in similar transactions. The Company will 
not deal with Salomon Smith Barney in any transactions in which 
Salomon Smith Barney acts as principal. In addition, the Alliance 
Growth Portfolio will not deal with Donaldson, Lufkin & Jenrette 
("DLJ") (an affiliate of Alliance Capital) in any transactions in 
which DLJ acts as principal. In addition, the Van Kampen American 
Capital Enterprise Portfolio may not deal with Morgan Stanley & 
Co., Inc. ("Morgan Stanley") (an affiliate of VK/AC Holding, Inc.) 
in any transaction in which Morgan Stanley acts as principal.

Shown below are the total brokerage fees paid by the Company for 
the fiscal years ended October 31, 1996, October 31, 1997 and 
October 31, 1998 on behalf of the funds, the portion paid to 
Salomon Smith Barney and the portion paid to other brokers for the 
execution of orders allocated in consideration of research and 
statistical services or solely for their ability to execute the 
order. During the fiscal year ended October 31, 1996 the total 
amount of commissionable transactions was $948,677,922, 
$86,585,294 (9.13%) of which was directed to Salomon Smith Barney 
and executed by unaffiliated brokers and $862,093,228 (90.87%) of 
which was directed to other brokers. During the fiscal year ended 
October 31, 1997 the total amount of commissionable transactions 
was $1,618,030,296, $115,051,655 (7.11%) of which was directed to 
Salomon Smith Barney and executed by unaffiliated brokers and 
$1,502,978,641 (92.89%) of which was directed to other brokers. 
During the fiscal year ended October 31, 1998 the total amount of 
commissionable transactions was $_______________, 
$________________ (____%) of which was directed to Salomon Smith 
Barney and executed by unaffiliated brokers and $___________ 
(____%) of which was directed to other brokers. 


Commissions:



Fiscal Year 
Ended


Total

To Salomon
Smith Barney



To Others (for execution 
only)


October 31, 1996

$1,862,443

$142,038

(7.63%
)

$1,720,405

(92.37
%)

October 31, 1997

2,325,295

163,142

(7.02%

2,162,153

(92.98
%)

October 31, 1998











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

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

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


OTHER INFORMATION ABOUT THE COMPANY

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


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

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

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

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

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

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

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


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

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

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

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

	FINANCIAL STATEMENTS tc \l1 "FINANCIAL STATEMENTS 

The financial information contained under the following headings is 
hereby incorporated by reference to the Company's 1998 Annual 
Reports to Shareholders: 


Annual Report of:

Pages(s)in:





Smith Barney Pacific Basin Portfolio



Smith Barney International Equity Portfolio



Smith Barney Large Cap Value Portfolio



Smith Barney Large Capitalization Growth Portfolio



Alliance Growth Portfolio



AIM Capital Appreciation Portfolio



Schedule of Investments	



Statements of Assets and Liabilities	



Statements of Operations	



Statements of Changes in Net Assets	 



Notes to Financial Statements	



Financial Highlights (for a share of capital stock
of each series outstanding through each year)	



Independent Auditors' Report	







Van Kampen American Capital Enterprise Portfolio



Schedule of Investments 	



Statements of Assets and Liabilities	



Statements of Operations	



Statements of Changes in Net Assets	



Notes to Financial Statements	



Financial Highlights (for a share of capital stock
of each series outstanding through each year)	



Independent Auditors' Report	







MFS Total Return Portfolio



GT Global Strategic Income Portfolio



Schedule of Investments	



Statements of Assets and Liabilities	



Statements of Operations		



Statements of Changes in Net Assets	



Notes to Financial Statements	



Financial Highlights (for a share of capital stock of
each series outstanding through each year)	



Independent Auditors' Report	







Travelers Managed Income Portfolio



Putnam Diversified Income Portfolio



Schedule of Investments	



Statements of Assets and Liabilities	



Statements of Operations	



Statements of Changes in Net Assets	



Notes to Financial Statements	



Financial Highlights (for a share of capital stock
of each series outstanding through each year)	



Independent Auditors' Report	







Smith Barney High Income Portfolio



Smith Barney Money Market Portfolio



Schedule of Investments	



Statements of Assets and Liabilities	



Statements of Operations	



Statements of Changes in Net Assets	



Notes to Financial Statements	



Financial Highlights (for a share of capital stock of
each series outstanding through each year)	



Independent Auditors' Report	








APPENDIX A

RATINGS ON DEBT OBLIGATIONS BOND (AND NOTES) RATINGS

Moody's Investors Service, Inc.

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

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

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

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

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

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

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

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

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

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

Standard & Poor's

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


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

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

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

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

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

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

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

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

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

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

Fitch IBCA, Inc. 

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

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

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


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

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

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

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

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

COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

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

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

Standard & Poor's

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

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

Fitch IBCA, Inc.

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

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

Fitch's short-term ratings are as follows:

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

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

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

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

Duff & Phelps Inc.

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

Duff 1 - Indicates a high certainty of timely payment.

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

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

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






U:\legal\funds\$sts\1998\secdocs\PEA10SAI

-12-


A-4



PART C.  Other Information

Item 23. Exhibits


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

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

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

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

c.	Not applicable

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

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

d.3	Management Agreement between Registrant on behalf of 
the Van Kampen American Capital Enterprise Portfolio 
and MMC is incorporated by reference to Exhibit 5(c) 
to Pre-Effective Amendment No. 1 on June 10, 1994.  
Transfer and Assumption of Management Agreement to 
TIA.

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

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

d.6	Management Agreement between Registrant on behalf of 
the TBC Managed Income Portfolio and MMC is 
incorporated by reference to Exhibit 5(f) to Pre-
Effective Amendment No. 1 on June 10, 1994 to TIA. 
Transfer and Assumption of Management Agreement to 
TIA.


d.7	Management Agreement between Registrant on behalf of 
the Putnam Diversified Income Portfolio and MMC is 
incorporated by reference to Exhibit 5(g) to Pre-
Effective Amendment No. 1 on June 10, 1994. Transfer 
and Assumption of Management Agreement to TIA.

d.8	Management Agreement between Registrant on behalf of 
the GT Global Strategic Income Portfolio and MMC is 
incorporated by reference to Exhibit 5(h) to Pre-
Effective Amendment No. 1 on June 10, 1994. Transfer 
and Assumption of Management Agreement to TIA.

d.9	Management Agreement between Registrant on behalf of 
the Smith Barney High Income Portfolio and MMC is 
incorporated by reference to Exhibit 5(i) to Pre-
Effective Amendment No. 1 on June 10, 1994.

d.10	Management Agreement between Registrant on behalf of 
the MFS Total Return Portfolio and MMC is 
incorporated by reference to Exhibit 5(j) to Pre-
Effective Amendment No. 1 on June 10, 1994. Transfer 
and Assumption of Management Agreement to TIA.

d.11	Management Agreement between Registrant on behalf of 
the Smith Barney Money Market Portfolio and MMC is 
incorporated by reference to Exhibit 5(k) to Pre-
Effective Amendment No. 1 on June 10, 1994.

d.12	Subadvisory Agreement among Registrant, MMC and 
Alliance Capital Management L.P. is incorporated by 
reference to Exhibit 5(l) to Pre-Effective Amendment 
No. 1 on June 10, 1994. Transfer and Assumption of 
Subadvisory Agreement to TIA.

d.13	Subadvisory Agreement among Registrant, MMC and 
American Capital Asset Management, Inc. is 
incorporated by reference to Exhibit 5(m) to Pre-
Effective Amendment No. 1 on June 10, 1994.  Transfer 
and Assumption of Subadvisory Agreement to TIA.

d.14	Subadvisory Agreement among Registrant, MMC and The 
Boston Company Asset Management, Inc. is incorporated 
by reference to Exhibit 5(n) to Pre-Effective 
Amendment No. 1 on June 10, 1994.  Transfer and 
Assumption of Subadvisory Agreement to TIA.

d.15	Subadvisory Agreement among Registrant, MMC and 
Putnam Investment Management, Inc. is incorporated by 
reference to Exhibit 5(o) to Pre-Effective Amendment 
No. 1 on June 10, 1994.  Transfer and Assumption of 
Subadvisory Agreement to TIA.

d.16	Subadvisory Agreement among Registrant, MMC and G.T. 
Capital Management, Inc. is incorporated by reference 
to Exhibit 5(p) to Pre-Effective Amendment No. 1 on 
June 10, 1994.  Transfer and Assumption of 
Subadvisory Agreement to TIA.

d.17	Subadvisory Agreement among Registrant, MMC and 
Massachusetts Financial Services Company is 
incorporated by reference to Exhibit 5(q) to Pre-
Effective Amendment No. 1 on June 10, 1994.  Transfer 
and Assumption of Subadvisory Agreement to TIA.

d.18	Subadvisory Agreement between MMC and Smith Barney 
Inc. is incorporated by reference to Exhibit 5(r) to 
Pre-Effective Amendment No. 1 on June 10, 1994. 
Transfer and Assumption of Subadvisory Agreement to 
TIA.

d.19	Management Agreement among Registrant, MMC and AIM 
Capital Management, Inc. is incorporated by reference 
to Post-Effective Amendment No. 4 filed on February 
28, 1996. Transfer and Assumption of Subadvisory 
Agreement to TIA.

d.20	Subadvisory Agreement among Registrant, MMC and AIM 
Capital Management, Inc. is incorporated by reference 
to Post-Effective Amendment No. 4 filed on February 
28, 1996.

d.21	Form of Management Agreement between Registrant on 
behalf of its Smith Barney Large Capitalization 
Growth Portfolio and MMC is incorporated by reference 
to Exhibit 5(u) to Post-Effective Amendment No. 9 
filed on February 27, 1998..
 
d.22	Form of Management Agreement between Registrant on 
behalf of Travelers Managed Income Portfolio and 
Travelers Asset Management International Corporation 
files herewith.

e.	Distribution Agreement between Registrant and Smith 
Barney Inc. is incorporated by reference to Exhibit 6 
to Pre-Effective Amendment No. 1.

f.	Not applicable.

g.1	Custodian Agreement between Registrant and PNC Bank, 
National Association.**

g.2		Global Custody Agreement between Barclays Bank PLC 
and PNC Bank.**

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

g.4		Global Custody Agreement between The Chase Manhattan 
Bank and the Customer.
 
h.1	Transfer Agency Agreement between Registrant and 
First Data Investor Services Group, Inc., (formerly 
The Shareholder Services Group Inc.) is incorporated 
by reference to Exhibit (9) to Post-Effective 
Amendment No. 4 filed on February 28, 1996.

h.2	Transfer Agency Agreement between Travelers Series 
Fund Inc. and First Data Investor Services Group, 
Inc. 

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

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

l.	Subscription Agreement between Registrant and The 
Travelers, Inc.**

m.1	Form of Distribution Agreement between the Registrant 
and CFBDS, Inc dated October 8, 1998 filed herewith.

m.2	not applicable

n. Financial Data Schedule.**

o.	not applicable

_________________________
** To be filed by Amendment.

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

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

 Item 25.  Indemnification.

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

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

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

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

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

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

Information as to the Directors and Officers of The Boston 
Company Asset Management Inc. is included in its Form ADV 
(File No. 801-6829), filed with the Commission, which is 
incorporated herein by reference thereto.

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

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

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

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

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

Item 27.		Principal Underwriters


(a) CFBDS, Inc. the Registrant's Distributor, is also
the distributor for
CitiFundsSM International Growth & Income Portfolio, 
CitiFundsSM International Equity Portfolio, 
CitiFundsSM Large Cap Growth Portfolio, 
CitiFundsSM Intermediate Income Portfolio, 
CitiFundsSM Short-Term U.S. Government Income 
Portfolio, 
CitiFundsSM Emerging Asian Markets Equity Portfolio, 
CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash 
Reserves, 
CitiFundsSM Premium U.S. Treasury Reserves, 
CitiFundsSM Premium Liquid Reserves, CitiFundsSM 
Institutional U.S. 
Treasury Reserves, CitiFundsSM Institutional Liquid 
Reserves,
SM Institutional Cash Reserves, CitiFundsSM Tax Free 
Reserves, 
CitiFundsSM Institutional Tax Free Reserves, 
CitiFundsSM California Tax Free Reserves, 
CitiFundsSM Connecticut Tax Free Reserves, 
CitiFundsSM New York Tax Free Reserves, CitiFundsSM 
Balanced Portfolio, 
CitiFundsSM Small Cap Value Portfolio, CitiFundsSM 
Growth & Income 
Portfolio, 
CitiFundsSM Small Cap Growth Portfolio, CitiFundsSM 
National 
Tax Free Income Portfolio, CitiFundsSM New York Tax 
Free Income 
Portfolio, 
CitiSelect VIP Folio 200, Citiselect VIP Folio 300,
CitiSelect VIP Folio 400, CitiSelect VIP Folio 500, 
CitiFundsSM Small Cap Growth VIP Portfolio, 
CitiSelect Folio 200, 
CitiSelect Folio 300, CitiSelect Folio 400, and 
CitiSelect Folio 500.  

CFBDS is also the placement agent for Large Cap Value 
Portfolio, 
International Portfolio, Foreign Bond Portfolio, 
Intermediate Income Portfolio, Short-Term Portfolio, 
Growth & Income Portfolio, Large Cap Growth 
Portfolio, 
Small Cap Growth Portfolio, International Equity 
Portfolio, 
Balanced Portfolio, Government Income Portfolio, 
Emerging
Asian Markets Equity Portfolio, Tax Free Reserves 
Portfolio, 
Cash Reserves Portfolio and U.S. Treasury Reserves 
Portfolio. 

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

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

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

(c)	Not applicable.


Item 28.  Location of Accounts and Records.

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

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

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

Item 29.  Management Services.

Not Applicable.

Item 30.  Undertakings.

	Not Applicable.


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and 
the Investment Company Act of 1940, 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 23rd of December, 1998.
 

TRAVELERS SERIES FUND INC.

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

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



/s/Heath B. 
McLendon 
(Heath B. 
McLendon)
Chairman of the 
Board, President and 
Chief Executive 
Officer
December 23, 1998



/s/ Abraham E. 
Cohen
Director 
December 23, 1998
(Abraham E. Cohen





/s/ Victor K. 
Atkins* 
Director
December 23, 1998
(Victor K. 
Atkins)





/s/ Robert A. 
Frankel* 
Director
December 23, 1998
(Robert A. 
Frankel)





/s/ Rainer 
Greeven* 
Director
December 23, 1998
(Rainer Greeven)





/s/ Susan M. 
Heilbron* 
Director
December 23, 1998
(Susan M. 
Heilbron)





/s/Lewis E. 
Daidone
Treasurer
December 23, 1998
(Lewis E. 
Daidone)
(Principal Financial 
and Accounting 
Officer)


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

By:	/s/Lewis E. Daidone      				December 23, 1998
Lewis E. Daidone


EXHIBIT INDEX

d.22	Management Agreement between Registrant and Travelers 
Managed Income Portfolio and Travelers Asset Management 
International Corporation.

j.	Auditors' Consent

m.1	Form of Distribution Agreement between the Registrant and 
CFBDS, Inc dated October 8, 1998.

n. 	Financial Data Schedules*

*  To be filed by further amendment