<PAGE>

                                  PROSPECTUS



            -------------------------------------------------------
                                 SMITH BARNEY
                                 MASSACHUSETTS

                             MUNICIPALS FUND

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

       March 30, 2001



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




                              [LOGO] Smith Barney

                                     Mutual Funds

                 Your Serious Money. Professionally Managed./sm/

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

<PAGE>


Smith Barney Massachusetts Municipals Fund

Contents



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

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

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


Choosing a class of shares to buy............  9

Comparing the fund's classes................. 10

Sales charges................................ 11

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

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

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

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

Other things to know about share transactions 19

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

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

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


                                                                               1


                                                       Smith Barney Mutual Funds
<PAGE>

  Investments, risks and performance

Investment objective

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

Principal investment strategies

Key investments The fund invests at least 80% of its net assets in
Massachusetts municipal securities. Massachusetts municipal securities include
securities issued by the Commonwealth of Massachusetts and certain other
municipal issuers, political subdivisions, agencies and public authorities that
pay interest which is exempt from Massachusetts personal income taxes. The fund
focuses primarily on intermediate-term and long-term municipal securities which
have remaining maturities at the time of purchase from three to more than
twenty years. The fund can invest up to 25% of its assets in below investment
grade bonds. Investment grade bonds are those rated by a national ratings
organization in any of the four highest long-term rating categories, or if
unrated, of comparable quality.

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

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

2



Smith Barney Massachusetts Municipals Fund

<PAGE>



Principal risks of investing in the fund

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

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

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

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

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

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

                                                                               3


                                                       Smith Barney Mutual Funds
<PAGE>

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

                        Total Return for Class A Shares


                                     [CHART]


                        Calendar years ended December 31



       "91"  "92"   "93"   "94"   "95"  "96"   "97"  "98"   "99"   "00"
      -----  ----  -----  -----  -----  ----  -----  ----  -----  -----
      13.29  9.09  12.73  -8.22  18.53  3.88  10.16  5.96  -6.24  12.27


Quarterly returns:
Highest: 7.79% in 1st quarter 1995; Lowest: (7.14)% in 1st quarter 1994

Risk return table

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

                         Average Annual Total Returns

                  Calendar Years Ended December 31, 2000

<TABLE>
<CAPTION>
                                                       Since   Inception
       Class                1 year  5 years 10 years inception   date

       <S>                  <C>     <C>     <C>      <C>       <C>
       A                     7.82%    4.15%    6.39%     6.97%  12/21/87
       B                     7.14%    4.28%     n/a      5.43%  11/30/92
       L                    (8.51)%   5.35%     n/a      5.91%  11/10/94
       Y**                    n/a      n/a      n/a       n/a     n/a
       Lehman Index         11.68%    5.84%    7.32%      n/a      *
       Lipper Funds Average 11.53%    4.74%    6.87%      n/a      *
</TABLE>

 * Index comparison begins on December 31, 1990.

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

4



Smith Barney Massachusetts Municipals Fund

<PAGE>


Fee table

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

                               Shareholder fees

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

   <S>                                       <C>     <C>     <C>     <C>
   Maximum sales charge (load)
   imposed on purchases
   (as a % of offering price)                 4.00%     None   1.00%    None

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

</TABLE>

<TABLE>
<CAPTION>
                        Annual fund operating expenses

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

    <S>                                   <C>     <C>     <C>     <C>
    Management fee                          0.50%   0.50%   0.50%     0.50%

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

    Other expenses                          0.22%   0.26%   0.26%     0.22%

                                          ------- ------- ------- ---------
    Total annual fund operating
    expenses                                0.87%   1.41%   1.46%     0.72%

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

**For Class Y shares, "Other Expenses" have been estimated based on expenses
incurred by Class A shares because no Class Y shares had been sold as of
November 30, 2000.

                                                                               5



                                                  Smith Barney Mutual Funds
<PAGE>



Example

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

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

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

                                           1 year 3 years 5 years 10 years

     <S>                                   <C>    <C>     <C>     <C>
     Class A (with or without redemption)    $485    $666    $863   $1,430

     Class B (redemption at end of period)   $594    $746    $871   $1,544

     Class B (no redemption)                 $144    $446    $777   $1,544

     Class L (redemption at end of period)   $347    $557    $889   $1,829

     Class L (no redemption)                 $247    $557    $889   $1,829

     Class Y (with or without redemption)    $ 74    $230    $401   $  894

</TABLE>

6


Smith Barney Massachusetts Municipals Fund
<PAGE>



  More on the fund's investments

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

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

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

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

                                                                               7



                                                  Smith Barney Mutual Funds
<PAGE>


  Management


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


Peter Coffey, an investment officer of the manager and a managing director of
Salomon Smith Barney, assumed responsibility for the day-to-day management of
the fund's portfolio on February 2, 1999. Mr. Coffey has over 31 years of
securities business experience.


Management fees During the fiscal year ended November 30, 2000, the manager
received an advisory fee and an administration fee equal to 0.30% and 0.20%,
respectively, of the fund's average daily net assets.


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



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


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

8


Smith Barney Massachusetts Municipals Fund
<PAGE>



  Choosing a class of shares to buy

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

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

You may buy shares from:

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


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


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

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

<TABLE>
<CAPTION>
                                                  Initial       Additional

                                            Classes                All
                                            A, B, L   Class Y    Classes

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

      Monthly Systematic Investment Plans    $   25     n/a            $25

      Quarterly Systematic Investment Plans  $   50     n/a            $50

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

</TABLE>

                                                                               9



                                                  Smith Barney Mutual Funds
<PAGE>


  Comparing the fund's classes


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

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

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

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

--------------------------------------------------------------------------------
Deferred sales   1.00% on        Up to 4.50%    1.00% if you    None
charge           purchases of    charged when   redeem within
                 $500,000 or     you redeem     1 year of
                 more if you     shares. The    purchase
                 redeem within   charge is
                 1 year of       reduced over
                 purchase        time and there
                                 is no deferred
                                 sales charge
                                 after 6 years

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

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

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


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


10


Smith Barney Massachusetts Municipals Fund
<PAGE>


  Sales charges

Class A shares

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


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

<TABLE>
<CAPTION>
                                Sales Charge as a % of

                                Offering   Net amount      Dealers'
Amount of purchase              price (%) invested (%) Reallowance as %
                                                       of Offering Price
<S>                             <C>       <C>          <C>
Less than $25,000                    4.00         4.17              3.60

$25,000 but less than $50,000        3.50         3.63              3.15

$50,000 but less than $100,000       3.00         3.09              2.70

$100,000 but less than $250,000      2.50         2.56              2.25

$250,000 but less than $500,000      1.50         1.52              1.35

$500,000 or more                      -0-          -0-               -0-

</TABLE>

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

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

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

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

                                                                              11



                                                  Smith Barney Mutual Funds
<PAGE>



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

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

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


[_] Employees of NASD members

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

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


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

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

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

<S>                   <C>  <C> <C> <C> <C> <C>
Deferred sales charge 4.5%  4%  3%  2%  1%              0%

</TABLE>


Service Agents selling Class B shares receive a commission of up to 4.00% of
the purchase price of the Class B shares they sell. Service Agents also receive
a service fee at an annual rate equal to 0.15% of the average daily net assets
represented by the Class B shares they are servicing.

12


Smith Barney Massachusetts Municipals Fund
<PAGE>



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

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

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

</TABLE>

Class L shares

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


Service Agents selling Class L shares receive a commission of up to 1.75% of
the purchase price of the Class L shares they sell. Starting in the thirteenth
month, Service Agents also receive an annual fee of up to 0.70% of the average
daily net assets represented by the Class L shares held by their clients.

Class Y shares

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

  More about deferred sales charges

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

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

[_] Shares exchanged for shares of another Smith Barney fund

                                                                              13



                                                  Smith Barney Mutual Funds
<PAGE>


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

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


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


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

Deferred sales charge waivers

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

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


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

  Buying shares

<TABLE>
<CAPTION>

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

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

                      Your Service Agent may charge an annual account
                      maintenance fee.

</TABLE>

14


Smith Barney Massachusetts Municipals Fund
<PAGE>

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

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

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

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

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

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

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

  Exchanging shares

<TABLE>
<CAPTION>

<C>                  <S>
        Smith Barney You should contact your Service Agent to exchange
offers a distinctive into other Smith Barney funds. Be sure to read the
     family of funds prospectus of the Smith Barney fund you are
    tailored to help exchanging into. An exchange is a taxable transaction.
    meet the varying
 needs of both large [_]You may exchange shares only for shares of the
           and small    same class of another Smith Barney fund. Not all
           investors    Smith Barney funds offer all classes
</TABLE>



                                                  Smith Barney Mutual Funds

                                                                              15

<PAGE>


<TABLE>
<C>               <S>
                  [_]Not all Smith Barney funds may be offered in your
                      state of residence. Contact your Service Agent or
                      the transfer agent for further information
                   [_]You must meet the minimum investment amount
                      for each fund (except for systematic investment
                      plan exchanges)
                   [_]If you hold share certificates, the sub-transfer agent
                      must receive the certificates endorsed for transfer or
                      with signed stock powers (documents transferring
                      ownership of certificates) before the exchange is
                      effective
                   [_]The fund may suspend or terminate your exchange
                      privilege if you engage in an excessive pattern of
                      exchanges

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

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

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

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

16


Smith Barney Massachusetts Municipals Fund
<PAGE>

  Redeeming shares

<TABLE>
<C>       <S>
Generally Contact your Service Agent to redeem shares of the
          fund.

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

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

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

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

  By mail For accounts held directly at the fund, send written re-
          quests to the fund at the following address:
            Smith Barney Massachusetts Municipals Fund
            (Specify class of shares)
            c/o PFPC Global Fund Services
            P.O. Box 9699
            Providence, RI 02940-9699

          Your written request must provide the following:

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

</TABLE>



                                                  Smith Barney Mutual Funds

                                                                              17

<PAGE>


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

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

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

                   The following conditions apply:

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

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

</TABLE>


18


Smith Barney Massachusetts Municipals Fund
<PAGE>

  Other things to know about share transactions

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

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


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

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


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

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

The fund has the right to:

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



                                                  Smith Barney Mutual Funds

                                                                              19

<PAGE>


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


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

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

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

20


Smith Barney Massachusetts Municipals Fund
<PAGE>

  Dividends, distributions and taxes


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

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

<TABLE>
<CAPTION>
     Transaction        Federal tax status        Massachusetts tax status

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

     Long-term capital  Taxable gain              Taxable gain
     gain distributions

     Short-term capital Ordinary income           Ordinary income
     gain distributions


     Dividends          Excluded from gross       Exempt from Massachusetts
                        income if from interest   personal income taxes if
                        on tax-exempt securities, from interest on
                        otherwise ordinary        Massachusetts municipal
                        income                    securities, otherwise
                                                  ordinary income

</TABLE>


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

After the end of each year, the fund will provide you with information about
the distributions and dividends you received and any redemptions of



                                                  Smith Barney Mutual Funds

                                                                              21

<PAGE>


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

  Share price

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

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


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


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

22


Smith Barney Massachusetts Municipals Fund
<PAGE>

  Financial highlights


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

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

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

---------------------------------------------------------------------------------------------
<S>                                  <C>       <C>       <C>      <C>           <C>
 Net asset value, beginning of year  $ 12.09   $ 13.32   $ 13.18    $ 12.99       $ 12.96

---------------------------------------------------------------------------------------------
 Income (loss) from operations:
 Net investment income/(2)/             0.65      0.62      0.65       0.66          0.68
 Net realized and unrealized
  gain (loss)                           0.26     (1.23)     0.34       0.32          0.02

---------------------------------------------------------------------------------------------
Total income (loss) from
 operations                             0.91     (0.61)     0.99       0.98          0.70

---------------------------------------------------------------------------------------------
 Less distributions from:
 Net investment income                 (0.65)    (0.62)    (0.64)     (0.67)        (0.67)
 In excess of net investment
  income                                  --               (0.01)        --            --
 Net realized gains                       --        --     (0.20)     (0.12)           --

---------------------------------------------------------------------------------------------
 Total distributions                   (0.65)    (0.62)    (0.85)     (0.79)        (0.67)

---------------------------------------------------------------------------------------------
 Net asset value, end of year        $ 12.35   $ 12.09   $ 13.32    $ 13.18       $ 12.99

---------------------------------------------------------------------------------------------
 Total return                           7.79%    (4.73)%    7.66%      7.85%         5.65%

---------------------------------------------------------------------------------------------
 Net assets, end of year (000's)     $36,324   $35,386   $37,451    $32,736       $30,109

---------------------------------------------------------------------------------------------
 Ratios to average net assets:
 Expenses                               0.87%     0.85%     0.76%    0.80%/(2)/    0.80%/(2)/
 Net investment income                  5.42      4.84      4.84       5.07          5.32

---------------------------------------------------------------------------------------------
 Portfolio turnover rate                  50%       66%       51%        58%           23%

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


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

/(2)/ The manager waived all or part of its fees for the two years ended
    November 30, 1996 and 1997. If such fees had not been waived, the per share
    decrease in net investment income and the expense ratios would have been as
    follows:


<TABLE>
<CAPTION>
                         Per Share Decreases      Expense Ratios
                       In Net Investment Income Without Fee Waivers

                           1997        1996       1997      1996

             ------------------------------------------------------
             <S>       <C>          <C>         <C>       <C>
              Class A         $0.01       $0.01     0.88%     0.91%

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



                                                  Smith Barney Mutual Funds

                                                                              23

<PAGE>

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

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

-------------------------------------------------------------------------------------------
<S>                                <C>       <C>       <C>      <C>           <C>
Net asset value, beginning of year $ 12.08   $ 13.30   $ 13.17    $ 12.99       $ 12.96

-------------------------------------------------------------------------------------------
Income (loss) from operations:
Net investment income/(2)/            0.58      0.56      0.58       0.60          0.61
Net realized and unrealized gain
 (loss)                               0.27     (1.23)     0.33       0.31          0.03

-------------------------------------------------------------------------------------------
Total income (loss) from
 operations                           0.85     (0.67)     0.91       0.91          0.64

-------------------------------------------------------------------------------------------
Less distributions from:
Net investment income                (0.58)    (0.55)    (0.57)     (0.61)        (0.61)
In excess of net investment
 income                                 --        --     (0.01)        --            --
Net realized gains                      --        --     (0.20)     (0.12)           --

-------------------------------------------------------------------------------------------
Total distributions                  (0.58)    (0.55)    (0.78)     (0.73)        (0.61)

-------------------------------------------------------------------------------------------
Net asset value, end of year       $ 12.35   $ 12.08   $ 13.30    $ 13.17       $ 12.99

-------------------------------------------------------------------------------------------
Total return                          7.26%    (5.18)%    7.05%      7.25%         5.14%

-------------------------------------------------------------------------------------------
Net assets, end of year (000's)    $25,977   $27,332   $30,285    $27,589       $28,874

-------------------------------------------------------------------------------------------
Ratios to average net assets:
Expenses                              1.41%     1.36%     1.28%    1.31%/(2)/    1.31%/(2)/
Net investment income                 4.88      4.33      4.32       4.57          4.81

-------------------------------------------------------------------------------------------
Portfolio turnover rate                 50%       66%       51%        58%           23%

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


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

/(2) /The manager has waived all or part of its fees for the two years ended
    November 30, 1996 and 1997. If such fees had not been waived, the per share
    decrease in net investment income and the expense ratios would have been as
    follows:

<TABLE>
<CAPTION>
            Per Share Decreases      Expense Ratios
          In Net Investment Income Without Fee Waivers
              1997        1996       1997      1996

------------------------------------------------------
<S>       <C>          <C>         <C>       <C>
 Class B         $0.01       $0.01     1.39%     1.42%

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


24


Smith Barney Massachusetts Municipals Fund

<PAGE>

  For a Class L share of beneficial interest outstanding throughout each year
  ended November 30:

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

--------------------------------------------------------------------------------------
<S>                            <C>       <C>       <C>       <C>          <C>
 Net asset value, beginning of
  year                          $12.07   $13.30      $13.16    $12.98       $12.95

--------------------------------------------------------------------------------------
 Income (or loss) from
  operations:
 Net investment income/(3)/       0.58     0.56        0.58      0.59         0.60
 Net realized and unrealized
  gain (or loss)                  0.25    (1.24)       0.34      0.31         0.03

--------------------------------------------------------------------------------------
 Total income (or loss) from
  operations                      0.83    (0.68)       0.92      0.90         0.63

--------------------------------------------------------------------------------------
 Less distributions from:
 Net investment income           (0.57)   (0.55)      (0.57)    (0.60)       (0.60)
 In excess of net investment
  income                            --       --       (0.01)       --           --
 Net realized gains                 --       --       (0.20)    (0.12)          --

--------------------------------------------------------------------------------------
 Total distributions             (0.57)   (0.55)      (0.78)    (0.72)       (0.60)

--------------------------------------------------------------------------------------
 Net asset value, end of year   $12.33   $12.07      $13.30    $13.16       $12.98

--------------------------------------------------------------------------------------
 Total return                     7.14%   (5.28)%      7.11%     7.21%        5.09%

--------------------------------------------------------------------------------------
 Net assets, end of year
  (000's)                       $2,808   $2,867      $1,895    $  428       $  179

--------------------------------------------------------------------------------------
 Ratios to average net assets:
 Expenses                         1.46%    1.39%     1.31%//   1.34%/(3)/   1.34%/(3)/
 Net investment income            4.83     4.32        4.25      4.51         4.77

--------------------------------------------------------------------------------------
 Portfolio turnover rate            50%      66%         51%       58%          23%

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


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

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


/(3)/ The manager waived all or part of its fees for the two years ended
    November 30, 1996 and 1997. If such fees had not been waived, the per share
    decrease in net investment income and the ratios of expenses would have
    been as follows:

<TABLE>
<CAPTION>
                        Per Share Decreases      Expense Ratios
                      In Net Investment Income Without Fee Waivers

                          1997        1996       1997      1996

             -----------------------------------------------------
             <S>      <C>          <C>         <C>       <C>
              Class L        $0.01       $0.01     1.42%     1.44%

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

                                                                              25



                                                  Smith Barney Mutual Funds

<PAGE>


[LOGO]  Smith Barney

        Mutual Funds

        Your Serious Money. Professionally Managed./sm/


Smith Barney
Massachusetts
Municipals Fund


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


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

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


You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent, by calling the fund at 1-800-451-2010, or by writing to the fund at
Smith Barney Mutual Funds, 7 World Trade Center, 39th Floor, MF2, New York, New
York 10013. Visit our web site. Our web site is located at
www.smithbarney.com.



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

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



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

(Investment Company Act file
no. 811-04994)

FD0226 3/01




March 30, 2001


STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND

7 World Trade Center
New York, New York 10048
(800) 451-2010


This Statement of Additional Information ("SAI") is meant to be read
in conjunction with the prospectus of the Smith Barney Massachusetts
Municipals Fund (the "fund") dated March 30, 2001, as amended or
supplemented from time to time (the "prospectus"), and is
incorporated by reference in it entirety into the prospectus.
Additional information about the fund's investments is available in
the fund's annual and semi-annual reports to shareholders, which are
incorporated herein by reference.  The prospectus and copies of the
reports may be obtained free of charge by contacting a Salomon Smith
Barney Financial Consultant, a broker/dealer, financial
intermediary, financial institution (each called a "Service Agent")
or by writing or calling the fund at the address or telephone number
above.

TABLE OF CONTENTS

Investment Objective and Management Policies	2
Risk Factors.................................................14
Investing in Massachusetts Municipal Obligations Factors	15
Puerto Rico, The U.S. Virgin Islands and Guam	20
Portfolio Transactions.........................................23
Portfolio Turnover.................................................23
Investment Restrictions............................................24
Trustees and Executive Officers of the Fund	26
Purchase of Shares.................................................29
Determination of Net Asset Value..................................34
Valuation of Shares	35
Redemption of Shares	36
Investment Management and Other Services	39
Exchange Privilege	43
Performance Information	45
Dividends, Distributions and Taxes	48
Additional Information	52
Financial Statements..............................................54
Other Information...............................................55
Appendix A	56

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The prospectus discusses the fund's investment objective and the
policies it employs to achieve that objective. The following
discussion supplements the description of the fund's investment
policies in the prospectus. For purposes of this SAI, obligations of
non-Massachusetts municipal issuers that pay interest which is
excluded from gross income for Federal income tax purposes ("Non-
Massachusetts Municipal Securities") and obligations of The
Commonwealth of Massachusetts and its political subdivisions,
agencies and public authorities (together with certain other
municipal issuers such as Puerto Rico, the Virgin Islands and Guam)
that pay interest which is excluded from gross income for Federal
income tax purposes and exempt from Massachusetts personal income
taxes ("Massachusetts Municipal Securities"), are collectively
referred to as "Exempt Obligations." Under normal market conditions,
the fund will invest at least 80% of its net assets in Massachusetts
Municipal Securities. The fund may invest up to 20% of its net
assets in non Massachusetts Municipal Securities. Citigroup Fund
Management LLC ("CFM" or the "manager") serves as investment adviser
and administrator to the fund.  Prior to March 30, 2001, the name of
the manager was known as SSB Citi Fund Management LLC.

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

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

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

Use of Ratings as Investment Criteria

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

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

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

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

While the market for municipal securities is considered generally to
be adequate, the existence of limited markets for particular low-
rated and comparable unrated securities may diminish the fund's
ability to (a) obtain accurate market quotations for purposes of
valuing such securities and calculating its net asset value and (b)
sell the securities at fair value either to meet redemption requests
or to respond to changes in the economy or in the financial markets.
 The market for certain low-rated and comparable unrated securities
has not fully weathered a major economic recession. Any such
economic downturn would adversely affect the value of such
securities and the ability of the issuers of these securities to
repay principal and pay interest thereon.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Investment Techniques

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

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

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

Unlike the purchase or sale of a Municipal Bond, no consideration is
paid or received by the fund upon the purchase or sale of a futures
contract.  Initially, the fund will be required to deposit in the
name of the futures commission merchant effecting the transaction an
amount of cash or cash equivalents equal to approximately 10% of the
contract amount (this amount is subject to change by the board of
trade on which the contract is traded and members of the board of
trade may charge a higher amount).  This amount is known as initial
margin and is in the nature of a performance bond or good faith
deposit on the contract that is returned to the fund upon
termination of the futures contract, assuming that all contractual
obligations have been satisfied. Subsequent payments, known as
variation margin, to and from the futures commission merchant will
be made on a daily basis as the price of the index or securities
underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a
process known as marking-to-market. At any time prior to the
expiration of the contract, the fund may elect to close the position
by taking an opposite position, which will operate to terminate the
fund's existing position in the futures contract.

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

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

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

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

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

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

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

There are several risks relating to options on futures contracts.
 The ability to establish and close out positions on such options
will be subject to the existence of a liquid market.  In addition,
the fund's purchase of put or call options will be based upon
predictions as to anticipated interest rate trends by the manager,
which could prove to be inaccurate.  Even if the manager's
expectations are correct, there may be an imperfect correlation
between the change in the value of the options and of the fund's
portfolio securities.

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

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

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

RISK FACTORS

The following summaries are included for the purpose of providing
certain information regarding the economic climate and financial
condition of the Commonwealth of Massachusetts and Puerto Rico, and
are based primarily on information from official statements made
available in connection with the issuance of certain securities and
other documents and sources and does not purport to be complete.
The trust has not undertaken to verify independently such
information and the trust assumes no responsibility for the accuracy
of such information.  These summaries do not provide information
regarding most securities in which the fund is permitted to invest
and in particular do not provide specific information on the issuers
or types of municipal securities in which the fund invests or the
private business entities whose obligations support the payments on
AMT-Subject bonds in which the fund will invest. Therefore, the
general risk factors as to the credit of the state or its political
subdivisions discussed herein may not be relevant to the fund.
Although revenue obligations of a state or its political
subdivisions may be payable from a specific project or source, there
can be no assurance that future economic difficulties and the
resulting impact on state and local government finances will not
adversely affect the market value of the fund or the ability of the
respective obligors to make timely payments of principal and
interest on such obligations.  In addition, a number of factors may
adversely affect the ability of the issuers of municipal securities
to repay their borrowings that are unrelated to the financial or
economic condition of a state, and that, in some cases, are beyond
their control. Furthermore, issuers of municipal securities are
generally not required to provide ongoing information about their
finances and operations to holders of their debt obligations,
although a number of cities, counties and other issuers prepare
annual reports.


INVESTING IN MASSACHUSETTS MUNICIPAL OBLIGATIONS

Following is a summary of select state factors affecting the fund.
It does not represent a complete analysis of every material fact
effecting the state's debt obligations. The summary is based on a
sampling of offering statements for the debt of the state's issuers,
data from independent rating agencies, and/or data reported in other
public sources. The fund has not independently verified this
information, and will not update it during the year.

The fund invests primarily in obligations of the Commonwealth of
Massachusetts ("Massachusetts" or the "Commonwealth") and its local
governments, including counties, cities, townships, special
districts, agencies, and authorities. As a result of this investment
focus, events in Massachusetts are likely to affect the Fund's
investment performance. These events may include: -- Public policy
changes. -- Economic and tax base erosion. -- Limits on tax
increases. -- Budget deficits and other financial difficulties. --
Changes in ratings assigned to municipal issuers.

The Commonwealth and certain of its cities, towns, counties and
other political subdivisions have at certain times in the past
experienced serious financial difficulties which have adversely
affected their credit standing. The recurrence of such financial
difficulties could adversely affect the market values and
marketability of, or result in default in payment on, outstanding
obligations issued by the Commonwealth or its public authorities or
municipalities. In addition, recent developments regarding the
Massachusetts statutes which limit the taxing authority of certain
Massachusetts governmental entities may impair the ability of the
issuers of some Massachusetts Municipal Obligations to maintain debt
service on their obligations.

Economic Climate.  Massachusetts is a densely populated urban state
with a well-educated population, comparatively high income levels,
low rates of unemployment and a relatively diversified economy.
While the total population of Massachusetts has remained fairly
stable in the last twenty years, significant changes have occurred
in the age distribution of the population: dramatic growth in
residents between the ages of 20 and 44 since 1980 is expected to
lead to a population distributed more heavily in the 65 and over-age
group in 2015 and 2025. Just as the working-age population has
increased, income levels in Massachusetts since 1980 have grown
significantly more than the national average, and a variety of
measures of income show that Massachusetts residents have
significantly higher rates of annual income than the national
average. These high levels of income have been accompanied by a
significantly lower poverty rate and, with the exception of the
recession of the early 1990s, considerably lower unemployment rate
in Massachusetts than in the United States since 1980. While
economic growth in Massachusetts slowed considerably during the
recession of 1990-1991, indicators such as retail sales, housing
permits, construction, and employment levels suggest a strong and
continued economic recovery. Per capita personal income for
Massachusetts residents was $35,551 in 1999, as compared to the
national average of $28,542. While per capita personal income is, on
a relative scale, higher in Massachusetts than in the United States
as a whole, this is offset to some extent by the higher cost of
living in Massachusetts. The Massachusetts services sector, with
36.0 percent of the non-agricultural work force in December 1999, is
the largest sector in the Massachusetts economy. Government
employment represents 12.8 percent of total non-agricultural
employment in Massachusetts. While total employment in construction,
manufacturing, trade, government, services, finance, insurance and
real estate declined between 1988 and 1992, the economic recovery
that began in 1993 has been accompanied by increased employment
levels. Since 1994, total employment levels in Massachusetts have
increased at yearly rates of approximately 2.0 15 percent. Total
non-agricultural employment in Massachusetts grew at a rate of 1.9
percent in 1999. While the Massachusetts Unemployment rate was
significantly lower than the National average between 1979 and 1989,
economic recession of the early 1990s caused unemployment rates in
Massachusetts to rise significantly above the national average.
However, the economic recovery that began in 1993 has caused
unemployment rates in Massachusetts to decline faster than the
national average. As a result, since 1994 the unemployment rate in
Massachusetts has been below the national average. The unemployment
rate in Massachusetts during 1999 was 3.2 percent, compared to 4.2
percent for the nation. Between 1982 and 1988, the economies of
Massachusetts and New England were among the strongest performers in
the nation, with growth rates considerably higher than those for the
national economy as a whole. Between 1989 and 1992, however, both
Massachusetts and New England experienced growth rates significantly
below the national average. Since then, the growth rates in
Massachusetts and New England have improved relative to the nation.
In 1995 and 1996, the economies of both Massachusetts and New
England grew at a faster pace than the nation as a whole. For 1997,
Massachusetts Gross State Product increased by 4.4 percent compared
to 4.3 percent for the nation as a whole.

The economy of Massachusetts remains diversified among several
industrial and non-industrial sectors. In 1997, private services
producing industries (transportation and public utilities; wholesale
and retain trade; finance, insurance and real estate; and
"services") contributed 72.3 percent of the total Massachusetts
Gross State Product. The risk for Massachusetts include a continued
shortage of skilled labor, low net population growth, which will
further constrain job creation, and the prominence of the financial
services industry in the economy coupled with a relatively high
proportion of non-wage income, both of which are sensitive to the
performance of the financial markets. Financial Condition Under its
constitution, the Commonwealth may borrow money (a) for defense or
in anticipation of receipts from taxes or other sources, any such
loan to be paid out of the revenue of the year in which the loan is
made, or (b) by a two-thirds vote of the members of each house of
the Legislature present and voting thereon.

The Commonwealth is authorized to issue three types of debt: general
obligation debt, special obligation debt and federal grant
anticipation notes. General obligation debt is secured by a pledge
of the full faith and credit of the Commonwealth. Special obligation
debt may be secured either with a pledge of receipts credited to the
Highway Fund or with a pledge of receipts credited to the Boston
Convention and Exhibition Center Fund. Federal grant anticipation
notes are secured by a pledge of federal highway construction
reimbursements. Certain independent authorities and agencies within
the Commonwealth are statutorily authorized to issue bonds and notes
for which the Commonwealth is either directly, in whole or in part,
or indirectly liable.

The Commonwealth's liabilities with respect to these bonds and notes
are classified as either (a) Commonwealth-supported debt, (b)
Commonwealth-guaranteed debt or (c) indirect obligations. Debt
service expenditures for Fiscal Year 1995, Fiscal Year 1996, Fiscal
Year 1997, Fiscal Year 1998 and Fiscal Year 1999 were $953.0
million, $905.1 million, $997.6 million, $1.079.3 million and
$1,173.8 million, respectively, and are projected to be $1,196.7
million for Fiscal Year 2000. In January 1990, legislation was
enacted which imposes a 10 percent limit on the total appropriations
in any fiscal year that may be expended for payment of interest on
general obligation debt (excluding Fiscal Recovery Bonds) of
Massachusetts. Fiscal 2001 On April 14, 2000 the House of
Representatives approved its version of the fiscal 2001 budget. The
House budget provided for total appropriations of approximately
$21.8 billion and was based on a tax revenue estimate of $15.928
billion, including $645 million of sales tax receipts dedicated to
the Massachusetts Bay Transportation Authority as a result of
forward funding legislation. The House budget included a provision
that would have reduced the personal income tax rate starting in tax
year 2003 under conditions of continuing growth in the state
economy. The House budget also included, with some modifications,
the Governor's proposal to revamp the school building assistance
program. On May 25, 2000 the Senate approved its version of the
fiscal 2001 budget, which provided for total spending of
approximately $21.549 billion and was based on a tax revenue
estimate of approximately $15.849 billion, essentially equivalent to
the House estimate after adjusting for proposed tax cuts in the
Senate budget. The Senate budget provided for a personal income tax
deduction for charitable contributions. The Senate 17 budget also
provided for pay-as-you-go capital spending during fiscal years 2001
through 2005. Based on tax revenue through April, the Secretary of
Administration and Finance did not agree with the Legislature's
proposed tax revenue estimate, and consensus was not reached by May
15, 2000 as required by state finance law.

On June 12, 2000 the Secretary of Administration and Finance
informed the chairmen of the House and Senate Committees on Ways and
Means that the administration accepted the legislative consensus tax
revenue estimate for fiscal 2001 ($15.928 billion before any tax
cuts), based on higher-than-expected tax collections in May, 2000.
According to estimates by the Executive Office for Administration
and Finance, total spending in the House budget was approximately
$370 million more than the Governor's recommendations, as adjusted
upward by newly identified appropriation needs of approximately $70
million since the Governor's budget was filed in January. Total
spending in the Senate budget was approximately $210 million more
than the Governor's adjusted recommendations. On July 17, 2000 the
legislative conference committee charged with reconciling the
differences between the House and Senate versions of the fiscal 2001
budget released its report, and the compromise budget was enacted by
both houses of the Legislature on July 18, 2000. The Governor
approved the budget on July 28, 2000 after vetoing approximately
$175 million of appropriations. On July 31, 2000 the Legislature
restored approximately $88.2 million of appropriations by overriding
the Governor's vetoes. Taking into account the vetoes and overrides,
the fiscal 2001 budget provides for total spending of approximately
$21.464 billion. It provides for charitable contributions to be
deductible from personal income taxes, but does not reduce personal
income tax rates. Fiscal 2000.

In late April, 1999 both houses of the Legislature agreed on a
consensus revenue estimate for fiscal 2000 of $14,850 billion. On
May 8, 1999 the House of Representatives approved its version of the
fiscal 2000 budget, and on June 10, 1999 the Senate approved its
version. The House and Senate budgets incorporate a variety of tax
cuts, which differ in type and amount in the two versions. The House
budget provides for total expenditures of approximately $20.725
billion, and the Senate budget provides for total expenditure of
approximately $20.829 billion. Both budgets appropriate $910 million
for pensions, as recommended by the Governor. The House budget also
includes "forwarding funding" legislation that would substantially
modify 18 the state's funding mechanisms for the Massachusetts Bay
Transportation Authority; the Senate's budget does not address the
issue of MBTA funding. The House budget does not fund any fiscal
2000 expenditures with moneys expected to be received from the
litigation settlement with the tobacco industry and instead proposes
the establishment of a trust fund to receive such moneys which only
investment earnings, and not the amounts received, could be spent to
fund certain health-related services and programs. The Senate budget
would fund approximately $75 million of fiscal 2000 expenditures
with moneys expected to be received from the tobacco litigation
settlement, contingent upon the receipt of such moneys. Although
fiscal 2000 began on July 1, 1999, the legislative conference
committee appointed to reconcile the House and Senate versions of
the fiscal 2000 budget has not yet completed its work.

On June 30, 1999, Governor Cellucci approved an interim budget to
provide for the operations of state government for the month of
July. A second interim budget was approved by the Governor on July
30, 1999, authorizing expenditures for the operations of state
government through August. On August 26, 1999, the Governor approved
a third interim budget to provide for the operations of state
government through the month of September and the quarterly funding
of local aid payments to cities, towns and school districts. On June
28, 1999, the Executive Office for Administration and Finance issued
an administrative bulletin to state agencies outlining conduct under
interim budgets. The bulletin advises agencies to continue basic
levels of services and operations in effect at the close of the
prior fiscal year during an interim budget and to minimize
discretionary obligations, including the expansion of new programs
and hiring of personnel.

Preliminary figures indicate that August, 1999 tax revenues were
approximately $1.046 billion, an increase of approximately $26.2
million, or 2.6 percent over August, 1998. The benchmark range
through August forecast by the Department of Revenue was $1.833
billion to $2.068 billion. Preliminary figures indicate that year-
to-date collections through August totaled $1.982 billion, an
increase of $62.1 million, or 3.2 percent, over the comparable
period in fiscal 1999. Corporate taxes are down $32 million, or 60
percent, compared to fiscal 1999. Fiscal 1999 Acting Governor
Cellucci approved the fiscal 1999 budget on July 30, 1998. The
Governor vetoed or reduced appropriations totaling approximately
$100.9 million. On July 31, 1998, the Legislature overrode several
of those vetoes, restoring approximately $63.1 million in spending.
After accounting for 19 the value of vetoes and subsequent
overrides, the budget provided for total appropriations of
approximately $19.5 billion. Governor Cellucci has approved four
fiscal 1999 supplemental appropriation bills totaling approximately
$51 million, $41.1 million of which have funded collective
bargaining costs. On July 27, 1999, Governor Cellucci filed a
supplemental budget totaling approximately $190.1 million. The
supplemental recommendation includes approximately $22.8 million for
ongoing operations and programs and approximately $167.3 million for
one- time expenditures, including $50 million for local road and
bridge work and $15 million for Year 2000 compliance. The Executive
Office for Administration and Finance projects total fiscal 1999
spending of $21.151 billion, a 6.0 percent increase over total
fiscal 1998 spending. The fiscal 1999 appropriation for pension
funding is approximately $965.3 million. This amount is consistent
with the amount requested by the Acting Governor, but is
approximately $93.9 million less than the amount required by the
initial 20- year pension funding schedule developed at the time the
fiscal 1998 budget was enacted. The fiscal 1999 budget is based on
a consensus tax revenue forecast of $14.4 billion, as agreed by both
houses of the Legislature and the Secretary of Administration and
Finance in May, 1998.

The tax cuts incorporated into the budget, valued by the Department
of Revenue at $990 million in fiscal 1999 had the effect of reducing
the consensus forecast of $13.41 billion. Tax collections in January
1999 totaled $1.565 billion, an increase of $144.1 million, or 10.1
percent, over January 1, 1998. Year-to-date tax collections through
January, 1999 totaled $8.251 billion, an increase of $685.9 million,
or 9.1 percent, over the same period in fiscal 1998. On August 19,
1998 the Executive Office for Administration and Finance raised the
fiscal 1999 tax estimate by $200 million to $13.61 billion. The
year- to-date benchmark range through January, based on the $13.61
annual estimate, was $7.969 billion to $8.146 billion. The fiscal
1999 tax estimate was raised again, to $14.0 billion, in the
Governor's budget submission filed on January 27, 1999. Medicaid The
Medicaid program provides health care to low-income children and
families, the disabled, and the elderly. The program, which is
administered by the Division of Medical Assistance (an agency within
the Executive Office of Health and Human Services), is 50 percent
funded by federal reimbursements.

Beginning in fiscal 1999, payments for some children's benefits are
65 percent federally reimbursable under the federal Children's
Health Insurance Program (CHIP) for states. 20 During fiscal years
1995, 1996, 1998 and 1999, Medicaid expenditures were $3.398
billion, $3.416 billion, $3.456 billion, $3.666 billion and $3.856
billion, respectively. The average annual growth rate from fiscal
1995 to fiscal 1999 was 3.3 percent. The Executive Office for
Administration and Finance projects fiscal 2000 expenditures to be
$4.092 billion, an increase of 6.1 percent over fiscal 1999. The
Division of Medical Assistance has implemented a number of savings
and cost control initiatives including managed care, utilization
review, and the identification of third party liabilities. In spite
of increasing caseloads, Massachusetts has managed to keep annual
growth in per capita expenditures low. From fiscal 1995 through
fiscal 1999, per capita costs have decreased an average of 2.0
percent annually over the five-year period. In fiscal 1999, the
state expanded eligibility for the Medicaid program, resulting in a
total of 943,395 members at the end of fiscal 1999 or a 19.4 percent
increase over the average caseload of fiscal 1998.

On June 15, 2000 the federal Health Care Financing Administration
(HCFA) sent a letter to nine states, including Massachusetts,
indicating that portions of their Medicaid program might be funded
with impermissible taxes on health care providers, jeopardizing
federal reimbursements collected on any Medicaid program
expenditures funded with such taxes. In the case of Massachusetts,
the letter related to the portion of the Commonwealth's Medicaid
program funded by the uncompensated care pool. (The Medicaid program
is 50% funded by federal reimbursements). HCFA promulgated
regulations in 1993 regarding the collection of taxes imposed on
health care providers and establishing a process for waiver approval
of state taxes subject to the regulations. The state Division of
Medical Assistance (DMA), which administers the Medicaid program in
the Commonwealth, filed a waiver request in February, 1993 relating
to the permissibility of the Commonwealth's assessment on acute care
hospitals to fund the uncompensated care pool in Massachusetts. The
waiver request has been resubmitted three times since 1993, with DMA
providing additional information each time as requested by HCFA. DMA
believes that its pending waiver request addresses the concerns that
have been articulated by HCFA and that the Commonwealth's
implementation of the uncompensated care pool assessment is within
the federal law pertaining to provider taxes. Officials from DMA
continue to meet with the Massachusetts Congressional delegation and
officials from HCFA to discuss ways of resolving this issue.
Clarification of the law surrounding permissible provider taxes is
a national issue and resolution could take several years.

Local Aid. In November 1980, voters in the Commonwealth approved a
state-wide tax limitation initiative petition, commonly known as
Proposition 2 1/2, to constrain levels of property taxation and to
limit the charges and fees imposed on cities and towns by certain
government entities, including county governments. The law is not a
constitutional provision and accordingly is subject to amendment or
repeal by the legislature. Proposition 2 1/2 limits the property
taxes that a Massachusetts city or town may assess in any fiscal
year to the lesser of (i) 2.5 percent of the full and fair cash
value of real estate and personal property therein and (ii) 2.5
percent over the previous fiscal year's levy limit plus any growth
in the base from certain new construction and parcel subdivisions.
In addition, Proposition 2 1/2 limits any increase in the charges
and fees assessed by certain governmental entities, including county
governments, on cities and towns to the sum of (i) 2.5 percent of
the total charges and fees imposed in the preceding fiscal year, and
(ii) any increase in charges for services customarily provided
locally or services obtained by the city or town.

The law contains certain override provisions and, in addition,
permits certain debt servicings and expenditures for identified
capital projects to be excluded from the limits by a majority vote,
in a general or special election. During the 1980's, Massachusetts
increased payments to its cities, towns and regional school
districts ("Local Aid") to mitigate the impact of Proposition 2 1/2
on local programs and services. In fiscal year 2000, approximately
21.7 percent of Massachusetts' budget is estimated to be allocated
to Local Aid. Local Aid payments to cities, towns and regional
school districts take the form of both direct and indirect
assistance. Direct Local Aid consists of general revenue sharing
funds and specific program funds sent directly to local governments
and regional school districts as reported on the so-called "cherry
sheet" prepared by the Department of Revenue, excluding certain
person funds and nonappropriated funds. Litigation There are pending
in courts within the Commonwealth various suits in which the
Commonwealth is a party. In the opinion of the Attorney General, no
litigation was pending or, to his knowledge, threatened which is
likely to result, either individually or in the aggregate, in final
judgments against the Commonwealth that would affect materially its
financial condition.

PUERTO RICO, THE U.S. VIRGIN ISLANDS AND GUAM

Puerto Rico. Puerto Rico has a diversified economy dominated by the
manufacturing and service sectors. The North American Free Trade
Agreement ("NAFTA"), which became effective January 1, 1994, has led
to loss of lower wage jobs such as textiles, but economic growth in
other areas, particularly tourism, construction and the high
technology areas have compensated for that loss. Puerto Rico's
economy has expanded in the 1990's in step with the U.S. economy. In
1999 Puerto Rico's GNP grew at 4.2%, the highest annual rate this
decade.

The Commonwealth of Puerto Rico differs from the states in its
relationship with the federal government. Most federal taxes, except
those such as social security taxes that are imposed by mutual
consent, are not levied in Puerto Rico. Section 936 of the Code has
provided a tax credit for certain qualified U.S. corporations
electing "possessions corporation" status. However, in 1993, Section
936 was amended to provide for two alternative limitations on the
Section 936 credit attributable to certain active business income.
The first limitation was based on the economic activity of the
Section 936 possessions corporation. The second limited the credit
to a specified percentage of the credit allowed under prior law. In
1996, Section 936 credit was repealed except that the credit
attributable to possessions source business income with respect to
certain existing credit claimants was subjected to a phase out over
a ten year period (subject to additional caps).

Also in 1996, a new Section 30A was added to the Code. Section 30A
permits a "qualifying domestic corporation" that meets certain gross
income tests to claim a credit against the federal income tax in an
amount equal to the portion of the tax which is attributable to the
taxable income from sources outside of the United States, from the
active conduct of a trade or business in Puerto Rico or from the
sale of substantially all the assets used in such a trade or
business. Section 30A will be phased out by January 1, 2006. The
Governor of Puerto Rico has proposed that Congress permanently
extend Section 30A until the Puerto Rican economy achieves certain
economic improvements. Similarly, President Clinton has proposed
permanent extension of the Section 30A. To date, however, no action
has been taken.

The eventual elimination of tax benefits to those U.S. companies
with operations in Puerto Rico may lead to slower growth in the
future. There can be no assurance that this will not lead to a
weakened economy, a lower rating on Puerto Rico's debt or lower
prices for Puerto Rican bonds that may be held by the Portfolio in
the long-term. The government of Puerto Rico has enacted its own tax
incentive programs for both industrial and tourist activities.

Puerto Ricans have periodically considered conversion to statehood
and such a vote is likely again in the future. The statehood
proposal was defeated in December 1998. Puerto Rico is rated Baa1 by
Moody's and A by S&P.

The U.S. Virgin Islands. The United States Virgin Islands ("USVI")
is heavily reliant on the tourism industry, with roughly 43% of non-
agricultural employment in tourist-related trade and services. The
tourism industry is economically sensitive and would likely be
adversely affected by a recession in either the United States or
Europe.

An important component of the USVI revenue base is the federal
excise tax on rum exports. Tax revenues rebated by the federal
government to the USVI provide the primary security of many
outstanding USVI bonds. Since more than 90% of the rum distilled in
the USVI is distilled at one plant, any interruption in its
operations (as occurred after Hurricane Hugo in 1989) would
adversely affect these revenues. The last major hurricane to impact
the USVI was Hurricane Marilyn on September 15, 1995. Consequently,
there can be no assurance that rum exports to the United States and
the rebate of tax revenues to the USVI will continue at their
present levels. The preferential tariff treatment the USVI rum
industry currently enjoys could be reduced under NAFTA. Increased
competition from Mexican rum producers could reduce USVI rum
imported to the U.S., decreasing excise tax revenues generated. The
USVI is periodically hit by hurricanes. Several hurricanes have
caused extensive damage, which has had a negative impact on revenue
collections. There is currently no rated, unenhanced Virgin Islands
debt outstanding (although there is unrated debt outstanding). In
addition, eventual elimination of the Section 936 tax credit for
those companies with operations in USVI may lead to slower growth in
the future.

Guam. The U.S. territory of Guam derives a substantial portion of
its economic base from Japanese tourism. With a reduced U.S.
military presence on the island, Guam has relied more heavily on
tourism in the past few years. During its 1997 fiscal year, the
government was able to make noticeable progress on its traditional
budgetary problems operating with a balanced budget for that fiscal
year. However, during 1998, the Japanese recession combined with the
impact of typhoon Paka resulted in a budget deficit of $21 million.
With hotels alone accounting for 8.5% of Guam's employment and
Japanese tourists comprising 86% of total visitor arrivals, the
Japanese recession and depreciation of the yen versus the dollar
earlier this year have had a negative impact on the island's
economy. Based on these factors, S&P downgraded Guam's rating to
BBB- from BBB with a negative outlook on May 26, 1999. There does
seem to be some recent improvement in the Japanese economy.
According to the Guam Visitors Bureau, visitor arrivals increased in
April 2000 by 11.8% over April 1999. Visits from Japan, Korea and
the U.S. mainland increased 14.2%, 120.5% and 9.7%, respectively.




PORTFOLIO TRANSACTIONS

Newly issued securities normally are purchased directly from the
issuer or from an underwriter acting as principal.  Other purchases
and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained; those
dealers may be acting as either agents or principals.  The purchase
price paid by the fund to underwriters of newly issued securities
usually includes a concession paid by the issuer to the underwriter,
and purchases of after-market securities from dealers normally are
executed at a price between the bid and asked prices. For the 1998,
1999 and 2000 fiscal years, the fund has paid no brokerage
commissions.

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

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

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

PORTFOLIO TURNOVER

The fund's portfolio turnover rate (the lesser of purchases or sales
of portfolio securities during the year, excluding purchases or
sales of short-term securities, divided by the monthly average value
of portfolio securities) generally is not expected to exceed 100%,
but the portfolio turnover rate will not be a limiting factor
whenever the fund deems it desirable to sell or purchase securities.
Securities may be sold in anticipation of a rise in interest rates
(market decline) or purchased in anticipation of a decline in
interest rates (market rise) and later sold.  In addition, a
security may be sold and another security of comparable quality may
be purchased at approximately the same time in order to take
advantage of what the fund believes to be a temporary disparity in
the normal yield relationship between the two securities.  These
yield disparities may occur for reasons not directly related to the
investment quality of particular issues or the general movement of
interest rates, such as changes in the overall demand for or supply
of various types of tax-exempt securities.  For the 1999 and 2000
fiscal years, the fund's portfolio turnover rates were 66% and 50%,
respectively.

INVESTMENT RESTRICTIONS

The fund has adopted the following investment restrictions for the
protection of shareholders. Restrictions 1 through 6 below cannot be
changed without the approval of the holders of a majority of the
outstanding shares of the fund, defined as the lesser of (a) 67% of
the fund's shares present at a meeting, if the holders of more than
50% of the outstanding shares are present in person or by proxy, or
(b) more than 50% of the fund's outstanding shares.  The remaining
restrictions may be changed by the fund's board of trustees at any
time.

The fund will not:

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

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

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

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

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

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

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

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

9. Purchase or sell oil and gas interests.

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

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

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

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

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

TRUSTEES AND EXECUTIVE OFFICERS OF THE FUND

The names of the trustees of the trust and executive officers of the
fund, together with information as to their principal business
occupations, are set forth below.  The executive officers of the
fund are employees of organizations that provide services to the
fund.  Each trustee who is an "interested person" of the trust, as
defined in the Investment Company Act of 1940, as amended (the "1940
Act") is indicated by an asterisk. The address of the executive
officers of the fund, except Lewis E. Daidone and Anthony Pace , is
7 World Trade Center, New York, New York 10048.

Herbert Barg (Age 76).  Private Investor.  His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.

*Alfred J. Bianchetti (Age 77).  Retired; formerly Senior Consultant
to Dean Witter Reynolds Inc.  His address is 19 Circle End Drive,
Ramsey, New Jersey 07466.

Martin Brody (Age 78).  Consultant, HMK Associates; Retired Vice
Chairman of the Board of Restaurant Associates Corp.  His address is
c/o HMK Associates, 30 Columbia Turnpike, Florham Park, New Jersey
07932.

Dwight B. Crane (Age 63).  Professor, Harvard Business School.  His
address is c/o Harvard Business School, Soldiers Field Road, Boston,
Massachusetts 02163.

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

Elliot S. Jaffe (Age 74).  Chairman of the Board and President of
The Dress Barn, Inc.  His address is 30 Dunnigan Drive, Suffern, New
York 10901.

Stephen E. Kaufman (Age 69).  Attorney.  His address is 277 Park
Avenue, New York, New York 10172.

Joseph J. McCann (Age 70).  Financial Consultant; Retired Financial
Executive, Ryan Homes, Inc. His address is 200 Oak Park Place,
Pittsburgh, Pennsylvania 15243.

*Heath B. McLendon (Age 67).  Chairman of the Board and Investment
Officer; Managing Director of Salomon Smith Barney Inc.; President
of Citigroup Fund Management LLC ("CFM" or the "manager") and
Travelers Investment Adviser, Inc. ("TIA"); Chairman or Co-Chairman
of the Board of 71 investment companies managed by affiliates of
Salomon Smith Barney.

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

Lewis E. Daidone (Age 43).  Managing Director of Salomon Smith
Barney; Chief Financial Officer of the Smith Barney mutual funds;
Director and Senior Vice President of the manager and TIA; Senior
Vice President or Executive Vice President and Treasurer of 83
investment companies associated with Citigroup.  His address is 125
Broad Street, New York, New York 10004

Peter Coffey (Age 56). Vice President and Investment Officer;
Managing Director of Salomon Smith Barney; Vice President and
Investment Officer and of 5 investment companies associated with
Salomon Smith Barney.

Anthony Pace (Age 35). Controller; Director of Salomon Smith Barney;
Controller or Assistant Treasurer of 61 investment companies
associated with Citigroup.

Christina T. Sydor (Age 50). Secretary; Managing Director of Salomon
Smith Barney; General Counsel and Secretary of the manager and TIA;
Secretary of 61 investment companies associated with Citigroup.


No officer, trustee or employee of Salomon Smith Barney or any of
its affiliates receives any compensation from the trust for serving
as an officer of the funds or trustee of the trust.  The trust pays
each trustee who is not an officer, trustee or employee of Salomon
Smith Barney or any of its affiliates a fee of $1,000 per annum plus
$100 per in-person meeting or telephonic meeting.  Each trustee
emeritus who is not an officer, director or employee of Salomon
Smith Barney or its affiliates receives a fee of $500 per annum plus
$50 per in-person meeting or telephonic meeting.  All trustees are
reimbursed for travel and out-of-pocket expenses incurred to attend
such meetings.  For the most recent calendar year, the total
aggregate reimbursement was $7,348.


For the fiscal year ended November 30, 2000, the trustees of the
trust were paid the following compensation:







Name of Person



Aggregate
Compensati
on
from Fund
FYE
11/30/00

Total
Pension or
Retirement
Benefits
Accrued
as part of
Fund
Expenses


Aggregate
Compensation
From Fund And
Fund
Complex Paid
to Trustees
Calendar Year
Ended 12/31/00

Number of
Funds for
Which
Trustees
Serves
Within
Fund
Complex

Herbert Barg **
$1,500
$0
$116,075
16
Alfred
Bianchetti *
 1,500
  0
   58,900
11
Martin Brody **
 1,100
  0
 132,950
21
Dwight B. Crane
**
 1,400
  0
 153,175
24
Burt N. Dorsett
**
 1,500
  0
   59,500
11
Elliot S. Jaffe
**
 1,500
  0
   58,700
11
Stephen E.
Kaufman **
 1,500
  0
  114,000
13
Joseph J. McCann
**
 1,500
  0
   59,500
11
Heath B.
McLendon *
0
-
0
71
Cornelius C.
Rose, Jr. **
 1,500
  0
   59,500
11

*	Designates an "interested" trustee.
**	Designates member of Audit Committee.
Upon attainment of age 80, fund trustees are required to change to
emeritus status. Trustees emeritus are entitled to serve in emeritus
status for a maximum of 10 years.  A trustee emeritus may attend
meetings but has no voting rights. During the fund's last fiscal
year, aggregate compensation paid by the fund to trustees achieving
emeritus status totaled $700.

As of March 16, 2001, the trustees and officers of the funds, as a
group, owned less than 1% of the outstanding shares of beneficial
interest of the fund.


To the best knowledge of the trustees, as of March 16, 2001, the
following shareholders or "groups" (as such term is defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended)
owned beneficially or of record more than 5% of the shares of the
following classes:

Class A						Percentage

Prudential Securities Inc FBO			6.8974%
East West Enterprises Inc.
Attn. Reverend Raymond C. Lee
675 Massachusetts Ave.
Cambridge, MA 02139-3309

Class L

Phillip J. Cade					18.8655%
Margaret P. Cade
JTWROS
24 Ginn Road
Winchester, MA 01890-2607

Lilla M. Pond TTEE				18.7287%
Lilla M. Pond TRUST
U/A/D 5/13/93
80 Lincoln Street
Norwood, MA 02062-1352

Myron Pulier					6.8862%
Anita Pulier JTWROS
c/o Salzman & Salzman
32 Court Street
Brooklyn, NY 11201-4404


PURCHASE OF SHARES

Sales Charge Alternatives

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

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



Amount of
Investment

Sales Charge
as a %
Of
Transaction

Sales Charge as
a %
of Amount
Invested


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

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

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

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

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

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

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

Investors in Class A, Class B and Class L shares may open an account
in the fund by making an initial investment of at least $1,000 for
each account, in the fund. Investors in Class Y shares may open an
account by making an initial investment of $15,000,000. Subsequent
investments of at least $50 may be made for all Classes. For
shareholders purchasing shares of the fund through the Systematic
Investment Plan on a monthly basis, the minimum initial investment
requirement for Class A, Class B and Class L shares and subsequent
investment requirement for all Classes is $25. For shareholders
purchasing shares of the fund through the Systematic Investment Plan
on a quarterly basis, the minimum initial investment required for
Class A, Class B and Class L shares and the subsequent investment
requirement for all Classes is $50.  There are no minimum investment
requirements for Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, unitholders who invest
distributions from a Unit Investment Trust ("UIT") sponsored by
Salomon Smith Barney, and Directors/Trustees of any of the Smith
Barney mutual funds, and their spouses and children. The fund
reserves the right to waive or change minimums, to decline any order
to purchase its shares and to suspend the offering of shares from
time to time. Shares purchased will be held in the shareholder's
account by the sub-transfer agent. Share certificates are issued
only upon a shareholder's written request to the sub-transfer agent.
It is not recommended that the fund be used as a vehicle for Keogh,
IRA or other qualified retirement plans.

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

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

Sales Charge Waivers and Reductions

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

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

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

Letter of Intent - Class Y Shares.  A Letter of Intent may also be
used as a way for investors to meet the minimum investment
requirement for Class Y shares (except purchases of Class Y shares
by Smith Barney Allocation Series Inc., for which there is no
minimum purchase amount).  Such investors must make an initial
minimum purchase of $5,000,000 in Class Y shares of the fund and
agree to purchase a total of $15,000,000 of Class Y shares of the
fund within 13 months from the date of the Letter. If a total
investment of $15,000,000 is not made within the 13-month period,
all Class Y shares purchased to date will be transferred to Class A
shares, where they will be subject to all fees (including a service
fee of 0.15%) and expenses applicable to the fund's Class A shares,
which may include a deferred sales charge of 1.00%. Please contact
a Service Agent or the Transfer Agent for further information.

Deferred Sales Charge Provisions

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

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

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


Year Since Purchase Payment Was Made

Deferred sales charge

First

4.50%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

0.00

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

In determining the applicability of any Deferred Sales Charge, it
will be assumed that a redemption is made first of shares
representing capital appreciation, next of shares representing the
reinvestment of dividends and capital gain distributions and finally
of other shares held by the shareholder for the longest period of
time.  The length of time that Deferred Sales Charge Shares acquired
through an exchange have been held will be calculated from the date
the shares exchanged were initially acquired in one of the other
Smith Barney mutual funds, and fund shares being redeemed will be
considered to represent, as applicable, capital appreciation or
dividend and capital gain distribution reinvestments in such other
funds. For Federal income tax purposes, the amount of the deferred
sales charge will reduce the gain or increase the loss, as the case
may be, on the amount realized on redemption. The amount of any
deferred sales charge will be paid to Salomon Smith Barney.

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

Waivers of Deferred Sales Charge

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

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

Volume Discounts

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

DETERMINATION OF NET ASSET VALUE

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

Generally, the fund's investments are valued at market value or, in
the absence of a market value with respect to any securities, at
fair value as determined by or under the direction of the board of
trustees. A security that is primarily traded on a domestic or
foreign exchange is valued at the last sale price on that exchange
or, if there were no sales during the day, at the mean between the
bid and asked price. Over-the-counter securities are valued at the
mean between the bid and asked price.  If market quotations for
those securities are not readily available, they are valued at fair
value, as determined in good faith by the fund's board of trustees.
 An option is generally valued at the last sale price or, in the
absence of a last sale price, the last offer price.

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

Short-term investments maturing in 60 days or less are valued at
amortized cost whenever the board of trustees determines that
amortized cost reflects fair value of those investments. Amortized
cost valuation involves valuing an instrument at its cost initially
and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the effect of fluctuating
interest rates on the market value of the instrument.

All other securities and other assets of the fund will be valued at
fair value as determined in good faith by the fund's board of
trustees.

Determination of Public Offering Price

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

VALUATION OF SHARES

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

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

REDEMPTION OF SHARES

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

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

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

Smith Barney Massachusetts Municipals Fund
Class A, B, L or Y (please specify)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699

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

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

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

A shareholder will have the option of having the redemption proceeds
mailed to his/her address of record or wired to a bank account
predesignated by the shareholder.  Generally, redemption proceeds
will be mailed or wired, as the case may be, on the next business
day following the redemption request.  In order to use the wire
procedures, the bank receiving the proceeds must be a member of the
Federal Reserve System or have a correspondent relationship with a
member bank.  The fund reserves the right to charge shareholders a
nominal fee for each wire redemption.  Such charges, if any, will be
assessed against the shareholder's account from which shares were
redeemed.  In order to change the bank account designated to receive
redemption proceeds, a shareholder must complete a new
Telephone/Wire Authorization Form and, for the protection of the
shareholder's assets, will be required to provide a signature
guarantee and certain other documentation.

Exchanges.  Eligible shareholders may make exchanges by telephone if
the account registration of the shares of the fund being acquired is
identical to the registration of the shares of the fund exchanged.
 Such exchange requests may be made by calling the Transfer Agent at
1-800-451-2010 between 9:00 a.m. and 4:00 p.m. (Eastern time) on any
day on which the NYSE is open.

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

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

Distributions in Kind

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

Automatic Cash Withdrawal Plan

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

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

INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment Adviser and Administrator  Citigroup Fund Management LLC

CFM serves as investment adviser to the fund pursuant to an
investment advisory agreement (the "Investment Advisory Agreement")
with the trust which was approved by the board of trustees,
including a majority of trustees who are not "interested persons" of
the trust or the manager.  The manager is a wholly owned subsidiary
of Salomon Smith Barney Holdings Inc. ("Holdings"), which in turn,
is a wholly owned subsidiary of Citigroup Inc. ("Citigroup").
Subject to the supervision and direction of the trust's board of
trustees, the manager manages the fund's portfolio in accordance
with the fund's stated investment objective and policies, makes
investment decisions for the fund, places orders to purchase and
sell securities, and employs professional portfolio managers and
securities analysts who provide research services to the fund. The
manager pays the salary of any officer and employee who is employed
by both it and the trust. The manager bears all expenses in
connection with the performance of its services.  The manager
(through its predecessor entities) has been in the investment
counseling business since 1968 and renders investment advice to a
wide variety of individual, institutional and investment company
clients that had aggregate assets under management as of January 31,
2001 in excess of $146 billion.

As compensation for investment advisory services, the fund pays the
manager a fee computed daily and payable monthly at 0.30% of the
value of the fund's average daily net assets.  For the fiscal years
ended November 30, 1998, 1999 and 2000, the fund paid  $189,712,
$212,123 and $191,918 respectively, in investment advisory fees.

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

As administrator the manager: (a) assists in supervising all aspects
of the fund's operations except those performed by the fund's
investment manager under its investment advisory agreement; b)
supplies the fund with office facilities (which may be in the
manager's own offices), statistical and research data, data
processing services, clerical, accounting and bookkeeping services,
including, but not limited to, the calculation of (i) the net asset
value of shares of the fund, (ii) applicable contingent deferred
sales charges and similar fees and charges and (iii) distribution
fees, internal auditing and legal services, internal executive and
administrative services, and stationary and office supplies; and (c)
prepares reports to shareholders of the fund, tax returns and
reports to and filings with the SEC and state blue sky authorities.

As compensation for administrative services rendered to the fund,
the manager receives a fee computed daily and payable monthly at the
following annual rates of average daily net assets: 0.20% up to $500
million; and 0.18% in excess of $500 million.  For the fiscal years
ended November 30, 1998, 1999 and 2000, the fund paid the manager
$126,474, $141,415 and $127,946 in administration fees,
respectively.

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

Code of Ethics

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

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New York, New York
10017, has been selected as the fund's independent auditor to
examine and report on the fund's financial statements for the fiscal
year ended November 30, 2001.


Custodian, Transfer Agent and Sub-Transfer Agent

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

Citi Fiduciary Trust Company located at 125 Broad Street, New York,
New York 10004, serves as the Transfer Agent and shareholder
services agent of the fund.

PFPC Global Fund Services ("PFPC" or the "sub-transfer agent")
located at P.O. Box 9699, Providence, Rhode Island 02940-9699,
serves as the fund's sub-transfer agent to render certain
shareholder record-keeping and accounting services functions.

Distributor

Salomon Smith Barney, Inc., located at 388 Greenwich Street, New
York, New York 10013 serves as the fund's distributor pursuant to a
written agreement dated June 5, 2000 (the "Distribution Agreement")
which was approved by the fund's board of trustees, including a
majority of the independent directors, on April 17, 2000 and July
12, 2000. Prior to and up to June 5, 2000, CFBDS, Inc. ("CFBDS")
served as the fund's Distributor.

For the period December 1, 1997 through October 7, 1998 the
aggregate dollar amount of sales charges on Class A shares was
$55,400 all of which was paid to Salomon Smith Barney..  For the
fiscal year ended November 30, 2000, Salomon Smith Barney and CFBDS
received $37,000 in sales charges from the sale of Class A shares.

For the period June 12, 1998 through October 7, 1998 the aggregate
dollar amount of sales charges on Class L shares was $1,000, all of
which was paid to Salomon Smith Barney. For the period October 8,
1998 through November 30, 1998 the aggregate dollar amount of sales
charges on Class L shares was $2,000, $1,800 of which was paid to
Salomon Smith Barney.  For the fiscal year ended November 30, 1999,
Salomon Smith Barney received $14,000 in sales charges from the sale
of Class L shares.  For the fiscal year ended November 30, 1999,
Salomon Smith Barney or its predecessor received from shareholders
$5,000 in deferred sales charges on the redemption of Class A
shares. For the fiscal year ended November 30, 2000, Salomon Smith
Barney received $2,000 in sales charges from the sale of Class L
shares.

For the fiscal years ended November 30, 1998, 1999 and 2000, Salomon
Smith Barney or its predecessor received from shareholders $39,000,
$30,000 and $65,000[      ], respectively, in deferred sales charges
on the redemption of Class B shares.  For the fiscal years ended
November 30, 1998, 1999 and 2000, Salomon Smith Barney or its
predecessor received from $0, $1,000 and $2,000, respectively, in
deferred sales charges on redemption of Class L shares.

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

Distribution Arrangements.  To compensate Salomon Smith Barney for
the service it provides and for the expense it bears, the fund has
adopted a services and distribution plan (the "Plan") pursuant to
Rule 12b 1 under the 1940 Act.  Under the Plan, the fund pays
Salomon Smith Barney a service fee, accrued daily and paid monthly,
calculated at the annual rate of 0.15% of the value of the fund's
average daily net assets attributable to the Class A, Class B and
Class L shares.  In addition, the fund pays Salomon Smith Barney a
distribution fee with respect to Class B and Class L shares
primarily intended to compensate Salomon Smith Barney for its
initial expense of paying Financial Consultants a commission upon
sales of those shares.  The Class B and Class L distribution fee is
calculated at the annual rate of 0.50% and 0.55%, respectively, of
the value of the fund's average net assets attributable to the
shares of each Class.

For the fiscal year ended November 30, 2000, Salomon Smith Barney
incurred distribution expenses totaling $122,791 consisting of
approximately $3,819 for advertising, $431 for printing and mailing
of prospectuses, $30,738 for support services, $82,423 to Salomon
Smith Barney Financial Consultants, and $5,380 in accruals for
interest on the excess of Salomon Smith Barney expenses incurred in
distributing the fund's shares over the sum of the distribution fees
and deferred sales charge received by Salomon Smith Barney from the
fund.

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




Distribution Plan Fees





Fiscal Year
Ended
11/30/00

Fiscal Year
Ended 11/30/99

Fiscal Year
Ended
11/30/98

Class A

$  53,091

$  57,668

$  50,498

Class B

$ 170,362

$ 192,362

$ 186,823

Class L*

$   20,069

$   18,678

$    7,934

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

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

EXCHANGE PRIVILEGE

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

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

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

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

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

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

Additional Information Regarding Telephone Redemption and Exchange
Program

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

PERFORMANCE INFORMATION

From time to time, the fund may quote total return of a class in
advertisements or in reports and other communications to
shareholders.  The fund may include comparative performance
information in advertising or marketing the fund's shares.  Such
performance information may be included in the following industry
and financial publications: - Barron's, Business Week, CDA
Investment Technologies, Inc., Changing Times, Forbes, Fortune,
Institutional Investor, Investor's Business Daily, Money,
Morningstar Mutual Fund Values, The New York Times, USA Today and
The Wall Street Journal.

Yield and Equivalent Taxable Yield

A Class' 30-day yield figure described below is calculated according
to a formula prescribed by the SEC. The formula can be expressed as
follows:

YIELD =2 [(a-b +1)6-1]
						 cd

Where:	 a = dividends and interest earned during the period.
		 b = expenses accrued for the period (net of
reimbursement).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
	 d = the maximum offering price per share on the last
day of the period.

For the purpose of determining the interest earned (variable "a'' in
the formula) on debt obligations that were purchased by the fund at
a discount or premium, the formula generally calls for amortization
of the discount or premium. The amortization schedule will be
adjusted monthly to reflect changes in the market values of the debt
obligations.

The fund's equivalent taxable 30-day yield for a Class of shares is
computed by dividing that portion of the Class' 30-day yield which
is tax-exempt by one minus a stated income tax rate and adding the
product to that portion, if any, of the Class' yield that is not
tax-exempt.

The yields on municipal securities are dependent upon a variety of
factors, including general economic and monetary conditions,
conditions of the municipal securities market, size of a particular
offering, maturity of the obligation offered and rating of the
issue. Investors should recognize that in periods of declining
interest rates the fund's yield for each Class of shares will tend
to be somewhat higher than prevailing market rates, and in periods
of rising interest rates the fund's yield for each Class of shares
will tend to be somewhat lower. Also, when interest rates are
falling, the inflow of net new money to the fund from the continuous
sale of its shares will likely be invested in portfolio instruments
producing lower yields than the balance of the fund's portfolio,
thereby reducing the current yield of the fund. In periods of rising
interest rates, the opposite can be expected to occur.

The fund's yield for Class A, Class B and Class L shares for the 30-
day period ended November 30, 2000 was 5.34%, 4.70% and 4.36%,
respectively.  The equivalent taxable yield for Class A, Class B and
Class L shares for that same period was 9.31%, 8.26% and 7.67%
[9.31%, ]respectively, assuming the payment of Federal income taxes
at a rate of 39.6% and Massachusetts taxes at a rate of 12%.

Average Annual Total Return

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

	P (1+T)n = ERV

Where:		 	P = 	a hypothetical initial payment of
$1,000.
T = 	average annual total return.
N =	number of years.
ERV =	Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of
a 1-, 5-, or 10-year period at the end of a
1-, 5-, or 10-year period (or fractional
portion thereof), assuming reinvestment of
all dividends and distributions.

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


Average Annual Total Return for the
fiscal year ended November 30, 2000



Class of Shares
1-Year
5-Year
10-Year
Since
Inceptio
n1
Class A2
3.51%
3.87%
6.18%
6.81%
Class B3
2.76%
4.03%
N/A
5.17%
Class L4
5.1009%
3.93%
N/A
6.47%

 	1	Class A, B and L shares commenced operations on December 21,
1987, November 6, 1992 and November 10, 1994, respectively.
	2	The average annual total return figure assumes that the
maximum 4.00% sales charge has been deducted from the
investment at the time of purchase.  If the maximum sales
charge had not been deducted, the average annual total return
for Class A shares for the same period would have been 7.79%,
4.73% 6.61% and 7.15% for those same periods.
	3	The average annual total return figure assumes that the
maximum applicable deferred sales charge has been deducted
from the investment at the time of redemption.  If the maximum
deferred sales charge had not been deducted, the average
annual total return for Class B shares for the same period
would have been 7.26%, 4.19% and 5.17%, for those same
periods.
	4	The average annual total return figure assumes that the
maximum applicable initial and deferred sales charges have
been deducted from the investment at the time of redemption.
 If the maximum initial and deferred sales charges have not
been deducted, the average annual total return for Class L
shares for the same period would have been 7.14%, 4.14% and
6.64%.for those same periods.

Aggregate Total Return

"Aggregate total return" represents the cumulative change in the
value of an investment in the Class for the specified period and is
computed by the following formula:

	ERV-P
	P

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

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



Aggregate Annual Total Return for the
fiscal year ended November 30, 2000



Class of Shares
1-Year
5-Year
10-Year
Since
Inceptio
n1
Class A2
3.51%
20.93%
82.18%
134.67%
Class B3
2.76%
21.82%
N/A
  50.21%
Class L4
5.0910%
21.26%
N/A
  46.20%
_______________________
	1	Classes A, B and L shares commenced operations on December 21,
1987, November 6, 1992, November 10, 1994  respectively.
	2	The average annual total return figure assumes that the
maximum 4.00% sales charge has been deducted from the
investment at the time of purchase.  If the maximum sales
charge had not been deducted, the average annual total return
for Class A shares for the same period would have been 7.79%,
25.97%, 89.74% and 144.55%, for the same periods.
	3	The average annual total return figure assumes that the
maximum applicable deferred sales charge has been deducted
from the investment at the time of redemption.  If the maximum
deferred sales charge had not been deducted, the average
annual total return for Class B shares for the same period
would have been 7.26%, 22.77% and 50.21% for the same periods.
	4	The average annual total return figure assumes that the
maximum applicable initial and deferred sales charges have
been deducted from the investment at the time of redemption.
 If the maximum initial and deferred sales charges had not
been deducted, the average annual total return for Class L
shares for the same period would have been 7.14%, 22.48% and
47.62% for the same periods.

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

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions.  The fund's policy is to declare and
pay exempt-interest dividends monthly.  Dividends from net realized
capital gains, if any, will be distributed annually.  The fund may
also pay additional dividends shortly before December 31 from
certain amounts of undistributed ordinary income and capital gains,
in order to avoid a Federal excise tax liability.  If a shareholder
does not otherwise instruct, exempt-interest dividends and capital
gain distributions will be reinvested automatically in additional
shares of the same Class at net asset value, with no additional
sales charge or deferred sales charge.

The per share amounts of the exempt-interest dividends on Class B
and Class L shares may be lower than on Class A and Class Y shares,
mainly as a result of the distribution fees applicable to Class B
and Class L shares.  Similarly, the per share amounts of exempt-
interest dividends on Class A shares may be lower than on Class Y
shares, as a result of the service fee attributable to Class A
shares. Capital gain distributions, if any, will be the same across
all Classes of fund shares (A, B, L and Y).

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

The fund and its investments

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

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

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

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

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

On November 30, 2000, the unused capital loss carryovers by the fund
were approximately $1,361,500.  For Federal income tax purposes,
this amount is available to be applied against future capital gains
of the fund that has the carryovers, if any, that is realized prior
to the expiration of the applicable carryover.  The amount and year
of expiration for each carryforward loss is indicated below.
Expiration occurs on November 30 of the years indicated below.

					2007			2008

Carryforward Amounts	        $382,500	 	        $979,000


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

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

Taxation of Shareholders

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

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

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

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

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

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

Massachusetts Taxation

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

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



ADDITIONAL INFORMATION

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

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

Description of Shares

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

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

Voting Rights

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

FINANCIAL STATEMENTS

The fund's annual report for the fiscal year ended November 30,
2000 is incorporated herein by reference in its entirety.  The
annual report was filed on February 1, 2001, Accession Number
0000091155-01-500030.


OTHER INFORMATION

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

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

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

	Style Pure Series
Our Style Pure Series funds stay fully invested within their
asset class and investment style, enabling investors to make
asset allocation decisions in conjunction with their Salomon
Smith Barney Financial Consultant.

	Classic Investor Series
Our Classic Investor Series funds offer a range of equity and
fixed income strategies that seek to capture opportunities
across asset classes and investment styles using disciplined
investment approaches.

	The Concert Allocation Series
As a fund of funds, investors can select a Concert Portfolio
that may help their investment needs.  As needs change,
investors can easily choose another long-term, diversified
investment from our Concert family.

	Special Discipline Series
	Our Special Discipline Series funds are designed for investors
who are looking beyond more traditional market categories:
from natural resources to a roster of state-specific municipal
funds.




APPENDIX A

Description of S&P and Moody's ratings:

S&P Ratings for Municipal Bonds

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

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

	AAA

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

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

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

	AA

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


	A

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

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

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

	BBB

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

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

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

	BB, B, CCC and CC

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

	C

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





	D

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

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

S&P Ratings for Municipal Notes

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

Moody's Ratings for Municipal Bonds

	Aaa

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

	Aa

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

	A

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

	Baa

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

	Ba

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

	B

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

	Caa

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

	Ca

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

	C

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

Moody's Ratings for Municipal Notes

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

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

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

Description of Moody's Prime-1 Commercial Paper Rating

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


SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND



Statement of


Additional
Information























March 30, 2001




Smith Barney Massachusetts Municipals Fund
7 World Trade Center
New York, NY  10048
									SALOMON SMITH BARNEY
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