CITIFUNDS TRUST II, 485APOS, 2000-06-16

CITIFUNDS TRUST II
485APOS, 2000-06-16

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<PAGE>

As filed with the Securities and Exchange Commission on June 16, 2000

File Nos. 2-90519
811-4007

SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 32

and

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
AMENDMENT NO. 33

CITIFUNDS TRUST II
(Exact Name of Registrant as Specified in Charter)

21 Milk Street, 5th Floor, Boston, Massachusetts 02109
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: 617-423-1679

Philip W. Coolidge, 21 Milk Street, 5th Floor, Boston, Massachusetts 02109
(Name and Address of Agent for Service)

Copy to:
Roger P. Joseph, Bingham Dana LLP, 150 Federal Street,
Boston, Massachusetts 02110

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

[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b).
[X] 60 days after filing pursuant to paragraph (a)(1).
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485.
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

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

The Premium Portfolios, on behalf of Large Cap Growth Portfolio and Small Cap
Growth Portfolio, have also executed this registration statement.

*This filing relates solely to shares of the Trust's series CitiFunds Small Cap
Growth Portfolio and CitiFunds Large Cap Growth Portfolio.
<PAGE>

Smith Barney
Mutual Funds

PROSPECTUS

RESEARCH LARGE CAP
GROWTH FUND

CLASS A, B, L AND Y SHARES

SEPTEMBER , 2000

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.

INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
<PAGE>

CONTENTS
Investments, risks and performance.....................................
More on the fund's investments.........................................
Management.............................................................
Choosing a class of shares to buy......................................
Comparing the fund's classes...........................................
Sales charges..........................................................
More about deferred sales charges......................................
Buying shares..........................................................
Exchanging shares......................................................
Redeeming shares.......................................................
Other things to know about share transactions..........................
Salomon Smith Barney retirement programs...............................
Dividends, distributions and taxes.....................................
Share price............................................................
Financial highlights...................................................
<PAGE>

INVESTMENTS, RISKS AND PERFORMANCE

INVESTMENT OBJECTIVE

The fund seeks long-term capital growth. Dividend income, if any, is incidental
to this goal.

PRINCIPAL INVESTMENT STRATEGIES

KEY INVESTMENTS The fund invests primarily in equity securities of U.S. large
cap issuers that, at the time the securities are purchased, have market
capitalizations within the top 1,000 stocks of the equity market. Under normal
circumstances, at least 65% of the fund's total assets is invested in equity
securities of these issuers. At _____________, 2000, issuers within the top
1,000 stocks had market capitalizations of at least [$___] billion. This number
will change with changes in the market. The fund may also invest in common
stocks and other securities issued by smaller companies.

The fund's equity securities consist primarily of common stocks. The fund may
also invest in other equity securities that the manager believes provide
opportunities for appreciation, such as preferred stock, warrants and securities
convertible into common stock.

SELECTION PROCESS In managing the fund, the manager uses a growth approach,
emphasizing well-established companies with superior management teams. The
manager looks principally for issuers with long histories of strong, relatively
predictable earnings growth rates and the products and strategies for continuing
above-average growth. The manager seeks issuers that build earnings by
increasing sales, productivity and market share rather than by cutting costs.
The manager also emphasizes issuers with stable financial characteristics and
low debt levels. The fund may continue to hold securities of issuers that become
mid cap or small cap issuers if, in the manager's judgment, these securities
remain good investments for the fund.

The manager generally uses a "bottom-up" approach when selecting securities for
the fund. This means that the manager looks primarily at individual companies
with consistent earnings growth against the context of broader market forces.
<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:

[] Key economic trends become materially unfavorable, such as rising interest
rates and levels of inflation or a slowdown of economic growth

[] Stock prices decline generally

[] Large capitalization companies fall out of favor with investors

[] An adverse company specific event, such as an unfavorable earnings report,
negatively affects the stock price of a company in which the fund invests

[] The manager's judgement about the attractiveness, growth prospects, or
potential appreciation of a particular stock proves to be incorrect

The fund's growth-oriented investment style may increase the risks of investing
in the fund. Growth securities typically are quite sensitive to market movements
because their market prices tend to reflect future expectations. When it appears
those expectations will not be met, the prices of growth securities typically
fall. Growth securities may also be more volatile than other investments because
they generally do not pay dividends. The fund may underperform certain other
stock funds (those emphasizing value stocks, for example) during periods when
growth stocks are out of favor.

Please remember that an investment in the fund is not a bank deposit and it is
not insured or guaranteed by the FDIC or any other government agency.

See page [] for more information about the risks of investing in the fund.

WHO MAY WANT TO INVEST The fund may be an appropriate investment if:

[] You want to direct a portion of your overall investment portfolio to stocks
of large cap issuers

[] You are seeking growth of principal and not current income but are concerned
about the high level of market volatility typically associated with more
aggressive growth funds

[] You are prepared to accept daily share price fluctuations and possible losses

[] Your investment horizon is longer term -- typically at least five years
<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. This bar chart
shows the performance of the fund's Class A shares for each of the calendar
years indicated. Class B, L and Y shares would have different performance
because of their different expenses. The performance information in the chart
does not reflect sales charges, which would reduce your return. The fund's
performance information does reflect certain fee waivers or reimbursements,
which if reduced or eliminated may cause the fund's performance to go down.

TOTAL RETURN FOR CLASS A SHARES*
1991 1992 1993 1994 1995 1996 1997 1998 1999
30.74% 7.60% 12.26% (0.41)% 27.55% 13.84% 31.38% 37.19% 17.18%
CALENDAR YEARS ENDED DECEMBER 31

QUARTERLY RETURNS (FOR THE YEARS COVERED BY THE BAR CHART):
Highest: 22.62% in 4th quarter 1998; Lowest: (7.71)% in 3rd quarter 1998.
Year to date: % through 6/30/00.

* The returns shown for Class A shares include returns for periods before the
creation of share classes on January 4, 1999.

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 S&P 500
Barra Growth Index. 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. The performance information also
reflects certain fee waivers or reimbursements, which if reduced or eliminated
may cause the fund's performance to go down.

AVERAGE ANNUAL TOTAL RETURNS:
CALENDAR YEARS ENDED DECEMBER 31, 1999

CLASS 1 YEAR 5 YEARS SINCE INCEPTION INCEPTION DATE
A* 11.32% 23.84% 18.65% 10/19/90
B 11.64% n/a n/a 1/04/99
L** n/a n/a n/a 9/__/00
Y** n/a n/a n/a 9/__/00
S&P 500 Barra Growth Index 27.98% 33.55% *** ***

* The returns for Class A shares in the table have been adjusted to reflect
the maximum front-end sales charge currently applicable to the Class A
shares.
** There were no Class L or Y shares outstanding for the calendar year ended
December 31, 1999.
*** Index comparison begins on 10/31/90.
<PAGE>

<TABLE>
FEE TABLE

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

SHAREHOLDER FEES
<CAPTION>

<S> <C> <C> <C> <C>
(fees paid directly from your investment) CLASS A CLASS B CLASS L CLASS Y
Maximum sales charge (load) imposed on purchases
(as a % of offering price) 5.00% None 1.00% None
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption) None(1) 5.00% 1.00% None

ANNUAL FUND OPERATING EXPENSES(2)
<CAPTION>

<S> <C> <C> <C> <C>
(expenses deducted from fund assets) CLASS A CLASS B CLASS L(3) CLASS Y(3)
Management fee 0.90% 0.90% 0.90% 0.90%
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None
Other expenses 0.12% 0.12% 0.12% 0.12%
----- ----- ------- -------

Total annual fund operating expenses (1) 1.27% 2.02% 2.02% 1.02%

* Because some of the fund's expenses were waived or reimbursed,
actual total operating expenses for the prior year were
(or in the case of Class L and Y shares would have been) 1.05% 1.80% 1.80% 0.80%

(1) You may buy Class A shares in amounts of $1,000,000 or more at net asset value (without an initial sales charge) but
if you redeem those shares within 12 months of their purchase, you will pay a deferred sales charge of 1.00%.
(2) The fund invests in securities through an underlying mutual fund. This table reflects the expenses of the fund and its
underlying mutual fund.
(3) For Class L and Y shares, "Other Expenses" have been estimated based on expenses incurred by Class A shares because no
Class L or Y shares were outstanding as of the fiscal year ended October 31, 1999. These fee waivers and
reimbursements may be reduced or terminated at any time.
</TABLE>

EXAMPLE

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

[] You invest $10,000 in the fund for the period shown
[] Your investment has a 5% return each year - the assumption of a 5% return is
required by the SEC for the purposes of this example and is not a prediction
of the fund's future performance.
[] You reinvest all distributions and dividends without a sales charge
[] The fund's operating expenses, without waivers, remain the same

<TABLE>
NUMBER OF YEARS YOU OWN YOUR SHARES

<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A (with or without redemption) $623 $883 $1,162 $1,957
Class B (redemption at end of period) $705 $934 $1,188 $2,153
Class B (no redemption) $205 $634 $1,088 $2,153
Class L (redemption at end of period) $403 $727 $1,177 $2,425
Class L (no redemption) $303 $727 $1,177 $2,425
Class Y (with or without redemption) $104 $325 $ 563 $1,248
</TABLE>
<PAGE>

MORE ON THE FUND'S INVESTMENTS

DERIVATIVES The fund may, but need not, use derivative contracts, such as
futures and forward currency contracts:

FOREIGN INVESTMENTS The fund may invest up to 25% of its assets (at the time of
investment) in foreign securities. The fund may invest directly in foreign
issuers or invest in depositary receipts.

The fund's investments in securities of foreign issuers involve greater risk
than investments in securities of U.S. issuers. These risks may include
expropriation of assets, confiscatory taxation, withholding taxes on dividends
and interest paid on fund investments, currency exchange controls and other
limitations on the use or transfer of fund assets and political or social
instability. In some foreign countries, less information is available about
foreign issuers and markets because of less rigorous accounting and regulatory
standards than in the U.S. Foreign markets may offer less protection to
investors. Enforcing legal rights may be difficult, costly and slow. There may
be special problems enforcing claims against foreign governments. Many foreign
countries the fund invests in have markets that are less liquid and more
volatile than markets in the U.S. In addition, there is the possibility of
governmental controls on currency exchanges or governmental intervention in
currency markets. Controls or intervention could limit or prevent the fund from
realizing value in U.S. dollars from its investment in foreign securities.
Economic and Monetary Union and the introduction of a single European currently,
which began on January 1, 1999, may increase uncertainties relating to
investment in European markets.

The risks of investing it foreign securities are greater for securities of
emerging market issuers because political or economic instability, lack of
market liquidity, and negative government actions like currency controls or
seizure of private businesses or property are more likely.

DEBT SECURITIES While the fund expects to invest mainly in equity securities,
the fund may also invest in other securities that the manager believes provide
opportunities for appreciation, such as fixed income securities. The fund's debt
securities must be investment grade when the fund purchases them. Generally, the
value of these debt securities will decline if interest rates rise, the credit
rating of the security is downgraded or the issuer defaults on its obligation to
pay principal or interest.

CONVERTIBLE SECURITIES Convertible securities, which are debt securities that
may be converted into stock, are subject to the market risks of stocks as well
as the risks of debt securities.

CASH MANAGEMENT The fund may hold cash pending investment, and may invest in
money market instruments, repurchase agreements and reverse repurchase
agreements for cash management purposes.

The fund's goals and strategies may be changed without shareholder approval.
<PAGE>

MANAGEMENT

MANAGER The fund draws on the strength and experience of Citibank N.A., the
investment manager of the Fund. Subject to policies set by the Fund's Trustees,
the manager makes investment decisions. Citibank has been managing money since
1822. With its affiliates, it currently manages more than $351 billion in assets
worldwide.

Citibank, with headquarters at 153 East 53rd Street, New York, New York, is a
wholly-owned subsidiary of Citigroup Inc. Citibank is an affiliate of Salomon
Smith Barney.

Marguerite Wagner and Stephen Rich are co-portfolio managers of the fund. From
January 1999 to March 2000, Ms. Wagner was the lead portfolio manager. Ms.
Wagner joined Citibank in 1985. Since 1995, she has had portfolio management and
research analyst responsibility for an internal mid-cap common trust fund and
private equity managed accounts. Mr. Rich joined Citibank in 1999 and began
co-managing the fund with Ms. Wagner in March 2000. Mr. Rich spent the previous
eight years at J.P. Morgan Investment Management in various investment
capacities. From 1997 to 1999 he was a co-portfolio manager for multiple styles
of small capitalization institutional products and mutual funds. Before that, he
worked in J.P. Morgan's Balanced & Structured Equity Group.

MANAGEMENT FEE For the fund's fiscal year ended October 31, 1999, Citibank
received management fees totaling 0.75% of the fund's average daily net assets,
after waivers.

DISTRIBUTOR The fund has entered into an agreement with CFBDS, Inc. to
distribute the fund's shares.

CHOOSING A CLASS OF SHARES TO BUY

You may buy shares from:

[] A broker-dealer, financial intermediary, or financial institution (called a
Service Agent) that has entered into a sales or service agreement with the
distributor concerning the fund
[] The fund, but only if you are investing through certain qualified plans or
certain [dealer representatives].

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

<TABLE>
<CAPTION>
INITIAL ADDITIONAL
------------------------------------- -----------
CLASSES A, B, L CLASS Y ALL CLASSES
<S> <C> <C> <C>
General $1,000 $15 million $50
IRA, Self Employed Retirement
Plans, Uniform Gift to Minor
Accounts $ 250 $15 million $50
Qualified Retirement Plans* $ 25 $15 million $25
Simple IRAs $ 1 n/a $ 1
Monthly Systematic Investment Plans $ 25 n/a $25
Quarterly Systematic Investment
Plans $ 50 n/a $50

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

<TABLE>
COMPARING THE FUND'S CLASSES

Your Service Agent can help you decide which class meets your goals. They may receive different compensation depending upon
which class you choose.
<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 lower deferred sales
[] You may qualify [] Deferred sales than Class A charge
for reduction or charge declines [] Deferred sales [] Must invest at
waiver of initial over time charge for only least $15 million
sales charge [] Converts to 1 year [] Lower annual
[] Lower annual Class A after 8 [] Does not expenses than the
expenses than years convert to Class A other classes
Class B and [] Higher annual [] Higher annual
Class L expenses than expenses than
Class A Class A
--------------------------------------------------------------------------------------------------------------------------
INITIAL SALES Up to 5.00%; reduced for None 1.00% None
CHARGE large purchases and
waived for certain
investors. No charge for
purchases of $1,000,000
or more
--------------------------------------------------------------------------------------------------------------------------
DEFERRED SALES 1.00% on purchases of Up to 5.00% charged when 1.00% if you redeem None
CHARGE $1,000,000 or more if you redeem shares. The within 1 year of purchase
you redeem within 1 year charge is reduced over
of purchase time and there is no
deferred sales charge
after 6 years
--------------------------------------------------------------------------------------------------------------------------
ANNUAL 0.25% of average daily 1.00% of average daily 1.00% of average daily None
DISTRIBUTION net assets net assets net assets
AND SERVICE FEES
--------------------------------------------------------------------------------------------------------------------------
EXCHANGEABLE Class A shares of most Class B shares of most Class L shares of most Class Y shares of most
INTO* Smith Barney funds Smith Barney funds Smith Barney funds Smith Barney funds
--------------------------------------------------------------------------------------------------------------------------

* Ask your Service Agent for the Smith Barney funds available for exchange.
</TABLE>
<PAGE>
SALES CHARGES

CLASS A SHARES

The table below shows the rate of sales charge that you pay, depending on the
amount that 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
that 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 that sell Class A shares will also receive the service fee payable on
Class A shares at an annual rate equal to 0.25% of the average daily net assets
represented by the Class A shares sold by them.

<TABLE>
<CAPTION>
BROKER/
SALES CHARGE AS A % OF DEALER
----------------------------- COMMISSION
OFFERING NET AMOUNT AS A % OF
AMOUNT OF PURCHASE PRICE (%) INVESTED (%) OFFERING PRICE
<S> <C> <C> <C>
Less than $25,000 5.00 5.26 4.50
$25,000 but less than $50,000 4.25 4.44 3.83
$50,000 but less than $100,000 3.75 3.90 3.38
$100,000 but less than $250,000 3.25 3.36 2.93
$250,000 but less than $500,000 2.75 2.83 2.48
$500,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 or more -0- -0- up to 1.00
</TABLE>

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

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

WAIVERS FOR CERTAIN CLASS A INVESTORS Class A initial sales charges are waived
for certain types of investors, including:

[] Employees of members of the NASD
[] Clients of financial consultants or registered representatives who recently
joined a broker-dealer affiliated with Citigroup that has a sales agreement
with the distributor concerning the fund, if certain conditions are met
[] Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if the investor's Service Agent is notified

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

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

<TABLE>
<CAPTION>
YEAR AFTER PURCHASE 1ST 2ND 3RD 4TH 5TH 6TH THROUGH 8TH
<S> <C> <C> <C> <C> <C> <C>
Deferred sales charge 5% 4% 3% 2% 1% 0%
</TABLE>

CLASS L SHARES

You buy Class L shares at the offering price, which is the net asset value plus
a sales charge of 1.00% (1.01% of the net amount invested). Service agents
selling Class L shares receive a commission of up to ___% of the price of the
Class L shares they sell. In addition, if you redeem your Class L shares within
one year of purchase, you will pay a deferred sales charge of 1.00%. If you held
Class C shares of any Smith Barney fund on June 12, 1998, you will not pay an
initial sales charge on Class L shares of the fund you may buy before June 22,
2001.

CLASS Y SHARES

MORE ABOUT DEFERRED SALES CHARGES

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

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

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.

Service Agents selling Class L shares receive a commission of up to ___% of the
purchase price of Class L shares that they sell.

DEFERRED SALES CHARGE WAIVERS

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

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

BUYING SHARES

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

If you do not provide the following information, your order will be rejected

[] Class of shares being bought
[] Dollar amount or number of shares being bought

You should pay for your shares through your brokerage account no later than the
third business day after you place your order. Your Service Agent may charge an
annual account maintenance fee.

Through the fund's sub-transfer agent
Qualified retirement plans and [certain other investors who are clients of
dealer representatives] are eligible to buy shares directly from the fund.

[] Write the sub-transfer agent at the following address:
SMITH BARNEY SMALL CAP GROWTH OPPORTUNITIES 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

For more information, contact your Service Agent or the transfer agent or
consult the SAI.
<PAGE>

EXCHANGING SHARES

Smith Barney offers a distinctive family of funds tailored to help meet the
varying needs of both large and small investors.

You should contact your Service Agent to exchange into other Smith Barney funds.
Be sure to read the prospectus of the Smith Barney fund you are exchanging into.
An exchange is a taxable transaction.

Waiver of additional sales charges
Your shares will not be subject to an initial sales charge at the time of the
exchange.

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

By mail
If you do not have a brokerage account, contact your Service Agent or write to
the transfer agent at the address on the opposite page.
<PAGE>

REDEEMING SHARES

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

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

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

SMITH BARNEY SMALL CAP GROWTH OPPORTUNITIES 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:

[] Your account number
[] The class of shares and the dollar amount or number of shares to be redeemed
[] Signatures of each owner exactly as the account is registered

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

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

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:

SALOMON SMITH BARNEY RETIREMENT PROGRAMS

For more information, call your Service Agent or the transfer agent, or consult
the SAI.
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS The fund pays substantially all of its net income (if any) from
dividends and interest to its shareholders of record as a dividend semi-annually
during the months of June and December.

Unless you choose to receive your dividends in cash, you will receive them as
full and fractional additional fund shares.

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

TRANSACTION FEDERAL TAX STATUS

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

Long-term capital gain distributions Long-term capital gain

Short-term capital gain distributions Ordinary income

Dividends Ordinary income

SHARE PRICE

Your Service Agent must transmit all orders to buy, exchange or redeem shares to
the fund's agent before the agent's close of business.
<PAGE>

<TABLE>
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the fund's financial performance for the fiscal periods
indicated. Certain information reflects financial results for a single Class A or Class B fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP whose report, along with the
fund's financial statements, is included in the annual report which is incorporated by reference into the Statement of
Additional Information and which is available upon request. No information is provided for Class L or Y fund shares because
these classes had no outstanding shares as of October 31, 1999. The fund was formerly known as CitiFunds Small Cap Growth
Portfolio.

<CAPTION>
FOR A CLASS A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR INDICATED:

JUNE 21, 1995
TEN MONTHS (COMMENCEMENT OF
ENDED YEAR ENDED OPERATIONS) TO
YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $16.96 $21.24 $18.21 $14.32 $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income (loss) (0.196)+ (0.193)+ (0.138)+ (0.016) 0.050
Net realized and
unrealized gain (loss)
on investments 4.676 (3.224) 3.236 5.407 4.420
Total from operations 4.480 (3.417) 3.098 5.391 4.470
------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
------------------------------------------------------------------------------------------------------------------------------------
Net investment income -- -- -- -- (0.050)
Net realized gain on
investments -- (0.863) (0.068) (1.501) (0.100)
------------------------------------------------------------------------------------------------------------------------------------

Total distributions -- (0.863) (0.068) (1.501) (0.150)
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of
period $21.44 $16.96 $21.24 $18.21 $14.32
------------------------------------------------------------------------------------------------------------------------------------

Total Return 26.42% (16.56)% 17.05%** 37.80% 44.78%**
------------------------------------------------------------------------------------------------------------------------------------

Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $23,794 $27,802 $25,799 $24,311 $5,148
Ratio of expenses to
average net assets (A) 1.35% 1.35% 1.35%* 0.88% 0.00%*
Ratio of net investment
income (loss) to
average net assets (1.03)% (0.98)% (0.87)%* (0.13)% 1.21%*
Portfolio turnover (B) 104% 51% 108% 89% 41%

Note: If agents of the fund and agents of Small Cap Growth Portfolio had not voluntarily waived a portion of their fees, assumed
fund expenses for the periods indicated and had expenses not been limited to that required by certain state securities laws for
the period ended December 31, 1995, the net investment income (loss) per share and the ratios would have been as follows:

Net investment loss per
share $(0.351)+ $(0.319)+ $(0.252)+ $(0.133) $(0.288)
Ratios:
Expenses to average net
assets (A) 2.16% 1.99% 2.06%* 1.83% 2.50%*
Net investment loss to
average net assets (1.84)% (1.62)% (1.58)%* (1.08)% (1.29)%*

* Annualized.
** Not annualized.
+ The per share amounts were computed using a monthly average number of shares outstanding during the period.
(A) Includes the fund's share of Small Cap Growth Portfolio allocated expenses for the periods indicated.
(B) Portfolio turnover represents the rate of portfolio activity of Small Cap Growth Portfolio, the underlying portfolio through
which the fund invests.
</TABLE>
<PAGE>

FOR A CLASS B SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
THE YEAR ENDED OCTOBER 31, 1999:

JANUARY 4, 1999
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31, 1999
Net Asset Value, beginning of period $18.95

Income From Operations:
Net investment loss (0.265)+
Net realized and unrealized gain 2.625

Total from operations 2.36

Less Distributions From:
Net investment income --
Net realized gain --

Total distributions --

Net Asset Value, end of period $21.31

Total return 12.45%**

Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $737,188
Ratio of expenses to average net assets (A) 2.10%*
Ratio of net investment loss to average net assets (1.77)%*
Portfolio turnover (B) 104%

Note: If agents of the fund and agents of Small Cap Growth Portfolio had not
voluntarily waived a portion of their fees, assumed fund expenses for the
periods indicated the net investment loss per share and the ratios would have
been as follows:

Net investment loss per share $(0.420)+
Ratios:
Expenses to average net assets (A) 2.91%*
Net investment loss to average net assets (2.58)%*

* Annualized.
** Not annualized.
(A) Includes the fund's share of Small Cap Growth Portfolio allocated expenses
for the periods indicated.
(B) Portfolio turnover represents the rate of portfolio activity of Small Cap
Growth Portfolio, the underlying portfolio through which the fund invests.
+ The per share amounts were computed using a monthly average number of shares
outstanding during the period.
<PAGE>

SMALL CAP GROWTH OPPORTUNITIES FUND

[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.]

(Investment Company Act file no. 811-4007)
<PAGE>

Statement of
Additional Information
September [--] 2000

SMITH BARNEY(SM) RESEARCH LARGE CAP GROWTH FUND
SMITH BARNEY(SM) SMALL CAP GROWTH OPPORTUNITIES FUND

(Members of the Smith Barney(SM) Family of Funds)

Smith Barney Research Large Cap Growth Fund and Smith Barney Small Cap
Growth Opportunities Fund (the "funds") are series of CitiFunds Trust II (the
"trust"). The trust is an open-end management investment company which was
organized as a business trust under the laws of the Commonwealth of
Massachusetts on April 13, 1984. The address and telephone number of the trust
are 21 Milk Street, Boston, Massachusetts 02109 (617) 423-1679. Each fund is
permitted to invest all or a portion of its assets in one or more other
investment companies. Currently, Smith Barney Research Large Cap Growth Fund
invests all of its investable assets in Large Cap Growth Portfolio, and Smith
Barney Small Cap Growth Opportunities Fund invests all of its investable
assets in Small Cap Growth Portfolio. Large Cap Growth Portfolio and Small Cap
Growth Portfolio are series of The Premium Portfolios. The address of The
Premium Portfolios is Elizabethan Square, George Town, Grand Cayman, British
West Indies. Large Cap Growth Portfolio and Small Cap Growth Portfolio, are
referred to as the "portfolios." The Premium Portfolios is referred to as the
"portfolio trust."

FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
CITIBANK, N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

TABLE OF CONTENTS PAGE
----------------- ----

1. The Trust ............................................................ 2
2. Investment Objectives and Policies ................................... 2
3. Description of Permitted Investments and Investment Practices ........ 3
4. Investment Restrictions .............................................. 18
5. Performance Information and Advertising .............................. 19
6. Determination of Net Asset Value; Valuation of Securities ............ 22
7. Additional Information on the Purchase and Sale of Fund Shares and
Shareholder Programs ................................................. 23
8. Management ........................................................... 32
9. Portfolio Transactions ............................................... 38
10. Description of Shares, Voting Rights and Liabilities ................. 39
11. Tax Matters .......................................................... 41
12. Financial Statements ................................................. 43

This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the
funds' separate Prospectuses, dated September [--], 2000, by which shares of
the funds are offered. This Statement of Additional Information should be read
in conjunction with the applicable Prospectus. This Statement of Additional
Information incorporates by reference the financial statements described on
page [--] hereof. These financial statements can be found in each fund's
Annual Report to Shareholders. An investor may obtain copies of each fund's
Prospectus and Annual Report without charge by calling [1-800-625-4554.]

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
<PAGE>

1. THE TRUST

CitiFunds Trust II is an open-end management investment company organized
as a business trust under the laws of the Commonwealth of Massachusetts on
April 13, 1984. The trust was called Landmark Funds II until its name was
changed effective January 7, 1998. This Statement of Additional Information
describes shares of Smith Barney Research Large Cap Growth Fund (the "Large
Cap Growth Fund"), Smith Barney Small Cap Growth Opportunities Fund (the
"Small Cap Growth Fund"), each of which is a separate series of the trust.
Prior to September [--], 2000, Large Cap Growth Fund was called CitiFunds
Large Cap Growth Portfolio, and Small Cap Growth Fund was called CitiFunds
Small Cap Growth Portfolio. Prior to March 2, 1998, the Large Cap Growth Fund
was called Landmark Equity Fund, and the Small Cap Growth Fund was called
Landmark Small Cap Equity Fund. References in this Statement of Additional
Information to the "Prospectus" of a fund are to the applicable fund's
Prospectus, dated , 2000.

Each fund is a diversified fund. Each fund is permitted to seek its
investment objective by investing all or a portion of its assets in one or
more investment companies to the extent not prohibited by the Investment
Company Act of 1940, as amended (the "1940 Act"), the rules and regulations
thereunder, and exemptive orders granted under such Act. Currently, each of
the Large Cap Growth Fund and the Small Cap Growth Fund invests its assets in
Large Cap Growth Portfolio and Small Cap Growth Portfolio, respectively (each,
a "portfolio"). Prior to November 1, 1997, Large Cap Growth Portfolio was
called Equity Portfolio and Small Cap Growth Portfolio was called Small Cap
Equity Portfolio. Large Cap Growth Portfolio and Small Cap Growth Portfolio
are series of The Premium Portfolios (the "portfolio trust"). The Premium
Portfolios is an open-end, diversified management investment companies
organized as a New York trust. Under the 1940 Act, a diversified management
investment company must invest at least 75% of its assets in cash and cash
items, U.S. Government securities, investment company securities and other
securities limited as to any one issuer to not more than 5% of the total
assets of the investment company and not more than 10% of the voting
securities of the issuer.

Each portfolio has the same investment objective and policies as the fund
that invests in it. Because each fund invests through its corresponding
portfolio, all references in this Statement of Additional Information to a
fund include such fund's corresponding portfolio, except as otherwise noted.
In addition, references to the trust include the portfolio trust, except as
otherwise noted.

Citibank, N.A. ("Citibank" or the "manager") is the manager of each fund
and each portfolio. The manager manages the investments of the portfolios from
day to day in accordance with each portfolio's investment objective and
policies. The selection of investments for the portfolios and the way they are
managed depend on the conditions and trends in the economy and the financial
marketplaces.

The boards of trustees of the trust and the portfolio trust provide broad
supervision over the affairs of the funds and the portfolios, respectively.
Shares of the funds are continuously sold by CFBDS, Inc., the funds'
distributor ("CFBDS" or the "Distributor").

2. INVESTMENT OBJECTIVE AND POLICIES

The investment objective of each of the Large Cap Growth Fund and the
Small Cap Growth Fund is long-term capital growth. Dividend income, if any, is
incidental to each of these investment objectives.

Each fund's Prospectus contains a discussion of the principal investment
strategies of the fund and the principal risks of investing in the fund. The
following supplements the information contained in each fund's Prospectus
concerning the investment policies and techniques of each fund.

The policies described herein and those described below under "Description
of Permitted Investments and Investment Practices" are not fundamental and may
be changed without shareholder approval.

As noted above, a fund does not invest directly in securities, but instead
invests all of its investable assets in a corresponding portfolio. The
portfolio, in turn, buys, holds and sells securities in accordance with this
objective and these policies. Of course, there can be no assurance that a fund
or a portfolio will achieve its objective. The trustees of the trust believe
that the aggregate per share expenses of each fund and the corresponding
portfolio will be less than or approximately equal to the expenses that the
fund would incur if the assets of the fund were invested directly in the types
of securities held by the portfolio.

The trust may withdraw the investment of a fund from the corresponding
portfolio at any time if the board of trustees of the trust determines that it
is in the best interests of the fund to do so. Upon any such withdrawal, the
fund's assets would continue to be invested in accordance with the investment
objective and policies described herein, either directly in securities or in
another mutual fund or pooled investment vehicle having the same investment
objective and policies. If the fund were to withdraw, the fund could receive
securities from the portfolio instead of cash, causing the fund to incur
brokerage, tax and other charges or leaving it with securities which may or
may not be readily marketable or widely diversified.

A portfolio may change its investment objective and certain of its
investment policies and restrictions without approval by its investors, but
the portfolio will notify the corresponding fund (which in turn will notify
its shareholders) and its other investors at least 30 days before implementing
any change in its investment objective. A change in investment objective,
policies or restrictions may cause the fund to withdraw its investment in the
portfolio.

Certain investment restrictions of the portfolios described below under
"Investment Restrictions" are fundamental and cannot be changed with respect
to a portfolio without approval by the investors in the portfolio. When a fund
is asked to vote on certain matters concerning a portfolio, the fund will
either hold a shareholder meeting and vote in accordance with shareholder
instructions or otherwise vote in accordance with applicable rules and
regulations. Of course, the fund could be outvoted, or otherwise adversely
affected by other investors in the portfolio.

A portfolio may sell interests to investors in addition to the
corresponding fund. These investors may be mutual funds which offer shares to
their shareholders with different costs and expenses than the fund. Therefore,
the investment return for all investors in funds investing in a portfolio may
not be the same. These differences in returns are also present in other mutual
fund structures. Information about other holders of interests in the
portfolios is available from the funds' distributor, CFBDS.

3. DESCRIPTION OF PERMITTED INVESTMENTS
AND INVESTMENT PRACTICES

A fund may, but need not, invest in all of the investments and utilize all
of the investment techniques described below and in the fund's Prospectus. The
selection of investments and the utilization of investment techniques depend
on, among other things, the manager's investment strategies for the funds,
conditions and trends in the economy and financial markets and investments
being available on terms that, in the managers' opinion, make economic sense.

OPTIONS

The funds may write covered call and put options and purchase call and put
options on securities for hedging and non-hedging purposes. Call and put
options written by a fund may be covered in the manner set forth below, or a
fund will segregate cash or liquid securities equal to the value of the
securities underlying the option.

A call option written by a fund is "covered" if the fund owns the security
underlying the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account) upon conversion or exchange of
other securities held in its portfolio. A call option is also covered if the
fund holds a call on the same security and in the same principal amount as the
call written where the exercise price of the call held (a) is equal to or less
than the exercise price of the call written or (b) is greater than the
exercise price of the call written if the difference is maintained by the fund
in cash or liquid securities in a segregated account. A put option written by
a fund is "covered" if the fund maintains cash or liquid securities with a
value equal to the exercise price in a segregated account, or else holds a put
on the same security and in the same principal amount as the put written where
the exercise price of the put held is equal to or greater than the exercise
price of the put written or where the exercise price of the put held is less
than the exercise price of the put written if the difference is maintained by
the fund in cash or liquid securities in a segregated account. Put and call
options written by a fund may also be covered in such other manner as may be
in accordance with the requirements of the exchange on which, or the
counterparty with which, the option is traded, and applicable laws and
regulations. Even if the fund's obligation is covered, it is subject to the
risk of the full change in value of the underlying security from the time the
option is written until exercise. Covering an option does not protect the fund
from risk of loss.

When a fund writes a call option, the fund, in return for a fee, or
"premium", agrees to sell a security at the exercise price, if the holder
exercises the right to purchase prior to the expiration date of the call
option. If the fund holds the security in question, the fund gives up some or
all of the opportunity to profit from the increase in the market price of the
security during the life of the option. The fund retains the risk of loss
should the price of the security decline. If the option expires unexercised,
the fund realizes a gain equal to the premium, which may be offset by a
decline in price of the underlying security. If the option is exercised, the
fund realizes a gain or loss equal to the difference between the fund's cost
for the underlying security and the proceeds of sale (exercise price minus
commissions) plus the amount of the premium.

A fund may terminate a call option it has written before it expires by
entering into a closing purchase transaction. A fund may enter into closing
purchase transactions in order to free itself to sell the underlying security
or to write another call on the security, realize a profit on a previously
written call option, or protect a security from being called in an unexpected
market rise. Any profits from closing a purchase transaction may be offset by
a decline in the value of the underlying security. Conversely, because
increases in the market price of a call option will generally reflect
increases in the market price of the underlying security, if the fund holds
the underlying security any loss resulting from a closing purchase transaction
is likely to be offset in whole or in part by unrealized appreciation of the
underlying security. If the fund does not hold the underlying security, the
fund's loss could be unlimited.

A fund may write put options in an attempt to enhance its current return.
Such option transactions may also be used as a limited form of hedging against
an increase in the price of securities that a fund plans to purchase. A put
option written by the fund gives the holder the right to sell, and, in return
for a premium, obligates the fund to buy, a security at the exercise price at
any time before the expiration date.

In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, a fund may also
receive a return on the cash and debt securities maintained to cover the
exercise price of the option. By writing a put option, the fund assumes the
risk that it may be required to purchase the underlying security for an
exercise price higher than its then current market value, resulting in a loss
to the fund, unless the security later appreciates in value. A fund may
terminate a put option it has written before it expires by a closing purchase
transaction. Any loss from this transaction may be partially or entirely
offset by the premium received on the terminated option.

Each fund may purchase options for hedging purposes or to increase the
fund's return. When put options are purchased as a hedge against a decline in
the value of portfolio securities, the put options may be purchased at or
about the same time that the fund purchases the underlying security or at a
later time. If such decline occurs, the put options will permit a fund to sell
the securities at the exercise price, or to close out the options at a profit.
By using put options in this way, the fund will reduce any profit it might
otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs. Similarly, when put
options are used for non-hedging purposes, the fund may make a profit when the
price of the underlying security or instrument falls below the strike price.
If the price of the underlying security or instrument does not fall
sufficiently, the options may expire unexercised and the fund would lose the
premiums it paid for the option. If the price of the underlying security or
instrument falls sufficiently and the option is exercised, the amount of any
resulting profit will be offset by the amount of premium paid.

Each fund may purchase call options to hedge against an increase in the
price of securities that the fund anticipates purchasing in the future. If
such increase occurs, the call option will permit the fund to purchase the
securities at the exercise price, or to close out the options at a profit. The
premium paid for the call option plus any transaction costs will reduce the
benefit, if any, realized by the fund upon exercise of the option, and, unless
the price of the underlying security rises sufficiently, the option may expire
worthless to the fund and the premium would be lost.

Call options may also be purchased in order to increase a fund's return at
a time when the call is expected to increase in value due to anticipated
appreciation of the underlying security. Prior to its expiration, a call
option may be sold by a fund in closing sale transactions, which are sales by
the fund, prior to the exercise of options that it has purchased, of options
of the same series. Profit or loss from the sale will depend upon whether the
amount received is more or less than the premium paid for the option plus the
related transaction costs. The purchase of call options on securities that a
fund owns, when a fund is substantially fully invested, is a form of leverage,
up to the amount of the premium and related transaction costs, and involves
risks of loss and of increased volatility.

Each fund may write (sell) call and put options and purchase call and put
options on securities indices. The delivery requirements of options on
securities indices differ from options on securities. Unlike a securities
option, which contemplates the right to take or make delivery of securities at
a specified price, an option on a securities index gives the holder the right
to receive a cash "exercise settlement amount" equal to (1) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the
underlying index on the date of exercise, multiplied by (2) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the securities index upon which the option is based being greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
option. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. The writer may offset its position
in securities index options prior to expiration by entering into a closing
transaction on an exchange or it may allow the option to expire unexercised.

Each fund may cover call options on securities indices by owning
securities whose price changes, in the opinion of the manager or a subadviser,
are expected to be similar to those of the underlying index, or by having an
absolute and immediate right to acquire such securities without additional
cash consideration (or for additional cash consideration held in a segregated
account by its custodian) upon conversion or exchange of other securities in
its portfolio. Where a fund covers a call option on a securities index through
ownership of securities, such securities may not match the composition of the
index and, in that event, the fund will not be fully covered and could be
subject to risk of loss in the event of adverse changes in the value of the
index. A fund may also cover call options on securities indices by holding a
call on the same index and in the same principal amount as the call written
where the exercise price of the call held (a) is equal to or less than the
exercise price of the call written or (b) is greater than the exercise price
of the call written if the difference is maintained by the fund in cash or
liquid securities in a segregated account. A fund may cover put options on
securities indices by maintaining cash or liquid securities with a value equal
to the exercise price in a segregated account or by holding a put on the same
securities index and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price
of the put written or where the exercise price of the put held is less than
the exercise price of the put written if the difference is maintained by the
fund in cash or liquid securities in a segregated account. Put and call
options on securities indices may also be covered in such other manner as may
be in accordance with the rules of the exchange on which, or the counterparty
with which, the option is traded, and applicable laws and regulations.
Investors should be aware that although a fund will only write call or put
options on securities indices that are covered, covering an option does not
protect the fund from risk of loss.

A fund will receive a premium from writing a put or call option, which
increases the fund's gross income in the event the option expires unexercised
or is closed out at a profit. If the value of an index on which a fund has
written a call option falls or remains the same, the fund will realize a
profit in the form of the premium received (less transaction costs) that could
offset all or a portion of any decline in the value of the securities it owns.
If the value of the index rises, however, the fund will realize a loss in its
call option position, which will reduce the benefit of any unrealized
appreciation in the fund's stock investments. By writing a put option, a fund
assumes the risk of a decline in the index. To the extent that the price
changes of securities owned by a fund correlate with changes in the value of
the index, writing covered put options on indices will increase the fund's
losses in the event of a market decline, although such losses will be offset
in part by the premium received for writing the option.

Each fund may purchase put options on securities indices when the
portfolio managers believe that there may be a decline in the prices of the
securities covered by the index. The fund will realize a gain if the put
option appreciates in excess of the premium paid for the option. If the option
does not increase in value, the fund's loss will be limited to the premium
paid for the option plus related transaction costs.

A fund may purchase call options on securities indices to take advantage
of an anticipated broad market advance, or an advance in an industry or market
segment. A fund will bear the risk of losing all or a portion of the premium
paid if the value of the index does not rise. The purchase of call options on
securities indices when a fund is substantially fully invested is a form of
leverage, up to the amount of the premium and related transaction costs, and
involves risks of loss and of increased volatility.

Securities index options are subject to position and exercise limits and
other regulations imposed by the exchange on which they are traded. The
ability of a fund to engage in closing purchase transactions with respect to
securities index options depends on the existence of a liquid secondary
market. However, no such secondary market may exist, or the market may cease
to exist at some future date, for some options. No assurance can be given that
a closing purchase transaction can be effected when the portfolio managers
desire that a fund engage in such a transaction.

Because the value of an index option depends upon movements in the level
of the index rather than the price of a particular security, whether a fund
realizes a gain or loss from purchasing or writing options on an index depends
upon movements in the level of prices in the market generally or, in the case
of certain indices, in an industry or market segment, rather than movements in
the price of a particular security. As a result, successful use by a fund of
options on securities indices is subject to the portfolio managers' ability to
predict correctly movements in the direction of the market generally or of a
particular industry. This ability contemplates different skills and techniques
from those used in predicting changes in the price of individual securities.
When a fund purchases or writes securities index options as a hedging
technique, the fund's success will depend upon the extent to which price
movements in the portion of a securities portfolio being hedged correlate with
price movements of the securities index selected.

A fund's purchase or sale of securities index options in an attempt to
enhance performance involves speculation and may be very risky and cause
losses, which, in the case of call options written, are potentially unlimited.

The funds may purchase over-the-counter ("OTC") or dealer options or sell
covered OTC options. Unlike exchange-listed options where an intermediary or
clearing corporation assures that all transactions are properly executed, the
responsibility for performing all transactions with respect to OTC options
rests solely with the writer and the holder of those options. A listed call
option writer, for example, is obligated to deliver the underlying stock to
the clearing organization if the option is exercised, and the clearing
organization is then obligated to pay the writer the exercise price of the
option. If a fund were to purchase a dealer option, however, it would rely on
the dealer from whom it purchased the option to perform if the option were
exercised. If the dealer fails to honor the exercise of the option by the
fund, the fund would lose the premium it paid for the option and the expected
benefit of the transaction.

Listed options may have a liquid market while dealer options have none.
Consequently, a fund will generally be able to realize the value of a dealer
option it has purchased only by exercising it or reselling it to the dealer
who issued it. Similarly, when a fund writes a dealer option, it generally
will be able to close out the option prior to the expiration only by entering
into a closing purchase transaction with the dealer to which the fund
originally sold the option. Although the funds will seek to enter into dealer
options only with dealers who will agree to and that are expected to be
capable of entering into closing transactions with the funds, there can be no
assurance that a fund will be able to liquidate a dealer option at a favorable
price at any time prior to expiration. The inability to enter into a closing
transaction may result in material losses to a fund. Until a fund, as an OTC
call option writer, is able to effect a closing purchase transaction, it will
not be able to liquidate securities (or other assets) used to cover the
written option until the option expires or is exercised. This requirement may
impair a fund's ability to sell portfolio securities or, with respect to
currency options, currencies at a time when such sale might be advantageous.
In the event of insolvency of the other party, the fund may be unable to
liquidate a dealer option.

Each fund may purchase and write options on foreign currencies as more
fully described in "Foreign Currency Exchange Transactions" below. Each of the
funds may also purchase or write call options on futures contracts as more
fully described in "Options on Futures Contracts" below.

The use of options by the funds may involve leveraging. Leveraging adds
increased risks to a fund, because the fund's losses may be out of proportion
to the amount invested in the instrument--a relatively small investment may
lead to much greater losses.

FUTURES CONTRACTS

Each fund may enter into stock index futures contracts for hedging
purposes and for nonhedging purposes.

A futures contract is an agreement between two parties for the purchase or
sale for future delivery of securities or for the payment or acceptance of a
cash settlement based upon changes in the value of the securities or of an
index of securities. A "sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by the contract at
a specified price, or to make or accept the cash settlement called for by the
contract, on a specified date. A "purchase" of a futures contract means the
acquisition of a contractual obligation to acquire the securities called for
by the contract at a specified price, or to make or accept the cash settlement
called for by the contract, on a specified date. Futures contracts in the
United States have been designed by exchanges which have been designated
"contract markets" by the Commodity Futures Trading Commission ("CFTC") and
must be executed through a futures commission merchant, or brokerage firm,
which is a member of the relevant contract market. Futures contracts trade on
these markets, and the exchanges, through their clearing organizations,
guarantee that the contracts will be performed as between the clearing members
of the exchange. Futures contracts may also be traded on markets outside the
U.S.

Although futures on individual equity securities are not available in
United States markets, futures contracts on individual equity securities may
be available in foreign markets, and may be purchased or sold by the funds.

Each fund may buy and sell stock index futures contracts to attempt to
increase investment return, to gain stock market exposure while holding cash
available for investments and redemptions, or to protect against a decline in
the stock market.

A stock index futures contract is a contract to buy or sell units of a
stock index at a specified future date at the price agreed upon when the
contract is made. A unit is the current value of the stock index.

The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index (the "S&P 100
Index") is composed of 100 selected common stocks, most of which are listed on
the New York Stock Exchange. The S&P 100 Index assigns relative weightings to
the common stocks included in the Index, and the Index fluctuates with changes
in the market values of those common stocks. In the case of the S&P 100 Index,
contracts are to buy or sell 100 units. Thus, if the value of the S&P 100
Index were $180, one contract would be worth $18,000 (100 units x $180). The
stock index futures contract specifies that no delivery of the actual stocks
making up the index will take place. Instead, settlement in cash must occur
upon the termination of the contract, with the settlement being the difference
between the contract price and the actual level of the stock index at the
expiration of the contract. For example, if a fund enters into a futures
contract to buy 100 units of the S&P 100 Index at a specified future date at a
contract price of $180 and the S&P 100 Index is at $184 on that future date,
the fund will gain $400 (100 units x gain of $4) reduced by transaction costs.
If the fund enters into a futures contract to sell 100 units of the stock
index at a specified future date at a contract price of $180 and the S&P 100
Index is at $182 on that future date, the fund will lose $200 (100 units x
loss of $2) increased by transaction costs.

Positions in index futures may be closed out only on an exchange or board
of trade which provides a secondary market for such futures.

The ordinary spreads between prices in the cash and futures markets, due
to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial deposit
and variation margin requirements. Rather than meeting additional variation
margin requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship between
the cash and futures markets. Second, there is the potential that the
liquidity of the futures market may be lacking. Prior to expiration, a futures
contract may be terminated only by entering into a closing purchase or sale
transaction, which requires a secondary market on the contract market on which
the futures contract was originally entered into. There can be no assurance
that a liquid secondary market will exist for any particular futures contract
at any specific time. In that event, it may not be possible to close out a
position held by the fund, which could require the fund to purchase or sell
the instrument underlying the futures contract or to meet ongoing variation
margin requirements. The inability to close out futures positions also could
have an adverse impact on the ability effectively to use futures transactions
for hedging or other purposes.

The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by the exchanges,
which limit the amount of fluctuation in the price of a futures contract
during a single trading day and prohibit trading beyond such limits once they
have been reached. Each contract market on which futures contracts are traded
has established a number of limitations governing the maximum number of
positions which may be held by a trader, whether acting alone or in concert
with others. The trading of futures contracts also is subject to the risk of
trading halts, suspensions, exchange or clearing house equipment failures,
government intervention, insolvency of a brokerage firm or clearing house or
other disruptions of normal trading activity, which could at times make it
difficult or impossible to liquidate existing positions or to recover excess
variation margin payments.

Investments in futures contracts also entail the risk that if the
portfolio managers' investment judgment about the general direction of
interest rates, equity markets, or other economic factors is incorrect, the
fund's overall performance may be poorer than if any such contract had not
been entered into. For example, if a fund entered into a stock index futures
contract in the belief that the prices of the stocks comprising the index
would increase, and prices decreased instead, the fund would have both losses
in its portfolio securities as well as in its futures positions.

CFTC regulations require compliance with certain limitations in order to
assure that a fund is not deemed to be a "commodity pool" under such
regulations. In particular, CFTC regulations prohibit a fund from purchasing
or selling futures contracts (other than for bona fide hedging transactions)
if, immediately thereafter, the sum of the amount of initial margin required
to establish that fund's non-hedging futures positions would exceed 5% of that
fund's net assets. These limitations apply only to instruments regulated by
the CFTC, and may not apply to all of the funds' transactions in futures
contracts.

Each fund will comply with this CFTC requirement, if applicable. In
addition, an amount of cash or liquid securities will be maintained by the
fund in a segregated account so that the amount so segregated, plus the
applicable margin held on deposit, will be approximately equal to the amount
necessary to satisfy the fund's obligations under the futures contract, or the
fund will otherwise "cover" its positions in accordance with applicable
policies and regulations.

The use of futures contracts potentially exposes a fund to the effects of
"leveraging," which occurs when futures are used so that the fund's exposure
to the market is greater than it would have been if the fund had invested
directly in the underlying securities. "Leveraging" increases a fund's
potential for both gain and loss.

OPTIONS ON FUTURES CONTRACTS

The funds may purchase and write options to buy or sell futures contracts
in which the funds may invest. These investment strategies may be used for
hedging purposes and for non-hedging purposes, subject to applicable law.

An option on a futures contract provides the holder with the right to
enter into a "long" position in the underlying futures contract, in the case
of a call option, or a "short" position in the underlying futures contract, in
the case of a put option, at a fixed exercise price up to a stated expiration
date or, in the case of certain options, on such date. Upon exercise of the
option by the holder, the contract market clearinghouse establishes a
corresponding short position for the writer of the option, in the case of a
call option, or a corresponding long position in the case of a put option. In
the event that an option is exercised, the parties will be subject to all the
risks associated with the trading of futures contracts, such as payment of
initial and variation margin deposits. In addition, the writer of an option on
a futures contract, unlike the holder, is subject to initial and variation
margin requirements on the option position.

A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or
sale transaction, subject to the availability of a liquid secondary market,
which is the purchase or sale of an option of the same series (i.e., the same
exercise price and expiration date) as the option previously purchased or
sold. The difference between the premiums paid and received represents the
trader's profits or loss on the transaction.

Options on futures contracts that are written or purchased by a fund on
U.S. exchanges are traded on the same contract market as the underlying
futures contract, and, like futures contracts, are subject to regulation by
the CFTC and the performance guarantee of the exchange clearinghouse. In
addition, options on futures contracts may be traded on foreign exchanges.

A fund may cover the writing of call options on futures contracts (a)
through purchases of the underlying futures contract, (b) through ownership of
the instrument, or instruments included in the index underlying the futures
contract, or (c) through the holding of a call on the same futures contract
and in the same principal amount as the call written where the exercise price
of the call held (i) is equal to or less than the exercise price of the call
written or (ii) is greater than the exercise price of the call written if the
difference is maintained by the funds in cash or securities in a segregated
account. A fund may cover the writing of put options on futures contracts (a)
through sales of the underlying futures contract, (b) through segregation of
cash or liquid securities in an amount equal to the value of the security or
index underlying the futures contract, (c) through the holding of a put on the
same futures contract and in the same principal amount as the put written
where the exercise price of the put held is equal to or greater than the
exercise price of the put written or where the exercise price of the put held
is less than the exercise price of the put written if the difference is
maintained by the funds in cash or liquid securities in a segregated account.
Put and call options on futures contracts may also be covered in such other
manner as may be in accordance with the rules of the exchange on which the
option is traded and applicable laws and regulations. Upon the exercise of a
call option on a futures contract written by a fund, the fund will be required
to sell the underlying futures contract which, if the fund has covered its
obligation through the purchase of such contract, will serve to liquidate its
futures position. Similarly, where a put option on a futures contract written
by a fund is exercised, the fund will be required to purchase the underlying
futures contract which, if the fund has covered its obligation through the
sale of such contract, will close out its futures position.

The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities deliverable on exercise of
the futures contract. A fund will receive an option premium when it writes the
call, and, if the price of the futures contract at expiration of the option is
below the option exercise price, the fund will retain the full amount of this
option premium, which provides a partial hedge against any decline that may
have occurred in the fund's security holdings. Similarly, the writing of a put
option on a futures contract constitutes a partial hedge against increasing
prices of the securities deliverable upon exercise of the futures contract. If
a fund writes an option on a futures contract and that option is exercised,
the fund may incur a loss, which loss will be reduced by the amount of the
option premium received, less related transaction costs. A fund's ability to
hedge effectively through transactions in options on futures contracts depends
on, among other factors, the degree of correlation between changes in the
value of securities held by the fund and changes in the value of its futures
positions. This correlation cannot be expected to be exact, and a fund bears a
risk that the value of the futures contract being hedged will not move in the
same amount, or even in the same direction, as the hedging instrument. Thus it
may be possible for a fund to incur a loss on both the hedging instrument and
the futures contract being hedged.

The funds may purchase options on futures contracts for hedging purposes
instead of purchasing or selling the underlying futures contracts. For
example, where a decrease in the value of portfolio securities is anticipated
as a result of a projected market-wide decline or changes in interest or
exchange rates, the fund could, in lieu of selling futures contracts, purchase
put options thereon. In the event that such decrease occurs, it may be offset,
in whole or part, by a profit on the option. Conversely, where it is projected
that the value of securities to be acquired by a fund will increase prior to
acquisition, due to a market advance or changes in interest or exchange rates,
the fund could purchase call options on futures contracts, rather than
purchasing the underlying futures contracts.

The funds may also purchase options on futures contracts for non-hedging
purposes, in order to take advantage of projected market advances or declines
or changes in interest rates or exchange rates. For example, a fund can buy a
call option on a futures contract when the portfolio managers believe that the
underlying futures contract will rise. If prices do rise, the fund could
exercise the option and acquire the underlying futures contract at the strike
price or the fund could offset the long call position with a sale and realize
a profit. Or, a fund can sell a call option if the portfolio managers believe
that futures prices will decline. If prices decline, the call will likely not
be exercised and the fund would profit. However, if the underlying futures
contract should rise, the buyer of the option would likely exercise the call
against the fund and acquire the underlying futures position at the strike
price; the fund's loss in this case could be unlimited.

The funds' use of options on futures contracts may involve leveraging.
Leveraging adds increased risks to a fund, because the fund's losses may be
out of proportion to the amount invested in the instrument -- a relatively
small investment may lead to much greater losses.

REPURCHASE AGREEMENTS

Each fund may invest in repurchase agreements collateralized by securities
in which that fund may otherwise invest. Repurchase agreements are agreements
by which a fund purchases a security and simultaneously commits to resell that
security to the seller (which is usually a member bank of the U.S. Federal
Reserve System or a member firm of the New York Stock Exchange (or a
subsidiary thereof)) at an agreed-upon date within a number of days
(frequently overnight and usually not more than seven days) from the date of
purchase. The resale price reflects the purchase price plus an agreed-upon
market rate of interest which is unrelated to the coupon rate or maturity of
the purchased security. A repurchase agreement involves the obligation of the
seller to pay the agreed upon price, which obligation is in effect secured by
the value of the underlying security, usually U.S. Government or Government
agency issues. Under the 1940 Act, repurchase agreements may be considered to
be loans by the buyer. A fund's risk is limited to the ability of the seller
to pay the agreed-upon amount on the delivery date. If the seller defaults,
the underlying security constitutes collateral for the seller's obligation to
pay although a fund may incur certain costs in liquidating this collateral and
in certain cases may not be permitted to liquidate this collateral. All
repurchase agreements entered into by a fund are fully collateralized, with
such collateral being marked to market daily. In the event of the bankruptcy
of the other party to a repurchase agreement, a fund could experience delays
in recovering the resale price. To the extent that, in the meantime, the value
of the securities purchased has decreased, the fund could experience a loss.

REVERSE REPURCHASE AGREEMENTS

Each fund may enter into reverse repurchase agreements. Reverse repurchase
agreements involve the sale of securities held by the fund and the agreement
by the fund to repurchase the securities at an agreed-upon price, date and
interest payment. When a fund enters into reverse repurchase transactions,
securities of a dollar amount equal in value to the securities subject to the
agreement will be segregated. The segregation of assets could impair the
fund's ability to meet its current obligations or impede investment management
if a large portion of the fund's assets are involved. Reverse repurchase
agreements are considered to be a form of borrowing by the fund. In the event
of the bankruptcy of the other party to a reverse repurchase agreement, a fund
could experience delays in recovering the securities sold. To the extent that,
in the meantime, the value of the securities sold has increased, the fund
could experience a loss.

SECURITIES OF NON-U.S. ISSUERS

Each fund may invest in securities of non-U.S. issuers. Investing in
securities issued by foreign governments or by companies whose principal
business activities are outside the United States may involve significant
risks not present in U.S. investments. For example, the value of such
securities fluctuates based on the relative strength of the U.S. dollar. In
addition, there is generally less publicly available information about non-
U.S. issuers, particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Non-U.S. issuers are generally not
bound by uniform accounting, auditing and financial reporting requirements
comparable to those applicable to U.S. issuers. Investments in securities of
non-U.S. issuers also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of a fund,
political or financial instability or diplomatic and other developments which
would affect such investments. Further, economies of other countries or areas
of the world may differ favorably or unfavorably from the economy of the U.S.

It is anticipated that in most cases the best available market for
securities of non-U.S. issuers would be on exchanges or in over-the-counter
markets located outside the U.S. Non-U.S. securities markets, while growing in
volume and sophistication, are generally not as developed as those in the
U.S., and securities of some non-U.S. issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. Non-U.S. securities trading practices, including
those involving securities settlement where a fund's assets may be released
prior to receipt of payments, may expose the funds to increased risk in the
event of a failed trade or the insolvency of a non-U.S. broker-dealer. In
addition, non-U.S. brokerage commissions are generally higher than commissions
on securities traded in the U.S. and may be non-negotiable. In general, there
is less overall governmental supervision and regulation of non-U.S. securities
exchanges, brokers and listed companies than in the U.S.

Investments in closed-end investment companies which primarily hold
securities of non-U.S. issuers may entail the risk that the market value of
such investments may be substantially less than their net asset value and that
there would be duplication of investment management and other fees and
expenses.

American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), Global Depositary Receipts ("GDRs") and other forms of depositary
receipts for securities of non-U.S. issuers provide an alternative method for
the funds to make non-U.S. investments. These securities are not usually
denominated in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs and GDRs, in bearer form, are designed for use in
European and global securities markets. ADRs are receipts typically issued by
a U.S. bank or trust company evidencing ownership of the underlying
securities. EDRs and GDRs are European and global receipts, respectively,
evidencing a similar arrangement.

ADRs, EDRs, and GDRs may be issued pursuant to sponsored or unsponsored
programs. In sponsored programs, an issuer has made arrangements to have its
securities traded in the form of depositary receipts. In unsponsored programs,
the issuer may not be directly involved in the creation of the program.
Although regulatory requirements with respect to sponsored and unsponsored
programs are generally similar, in some cases it may be easier to obtain
financial information from an issuer that has participated in the creation of
a sponsored program. Accordingly, there may be less information available
regarding issuers of securities underlying unsponsored programs and there may
not be a correlation between such information and the market value of the
depositary receipts.

The funds may invest in securities of non-U.S. issuers that impose
restrictions on transfer within the U.S. or to U.S. persons. Although
securities subject to such transfer restrictions may be marketable abroad,
they may be less liquid than securities of non-U.S. issuers of the same class
that are not subject to such restrictions.

The risks described above, including the risks of nationalization or
expropriation of assets, are typically increased to the extent that a fund
invests in issuers located in less developed and developing nations, whose
securities markets are sometimes referred to as "emerging securities markets."
Investments in securities located in such countries are speculative and
subject to certain special risks. Political and economic structures in many of
these countries may be in their infancy and developing rapidly, and such
countries may lack the social, political and economic stability characteristic
of more developed countries. Certain of these countries have in the past
failed to recognize private property rights and have at times nationalized and
expropriated the assets of private companies.

In addition, unanticipated political or social developments may affect the
value of a fund's investments in these countries and the availability to the
fund of additional investments in these countries. The small size, limited
trading volume and relative inexperience of the securities markets in these
countries may make the fund's investment in such countries illiquid and more
volatile than investments in more developed countries, and the fund may be
required to establish special custodial or other arrangements before making
investments in these countries. There may be little financial or accounting
information available with respect to issuers located in these countries, and
it may be difficult as a result to assess the value or prospects of an
investment in such issuers.

EURO CONVERSION

The funds may invest in securities of issuers in European countries.
Certain European countries have joined the European Economic and Monetary
Union (EMU). Each EMU participant's currency began a conversion into a single
European currency, called the euro, on January 1, 1999, to be completed by
July 1, 2002. The consequences of the euro conversion for foreign exchange
rates, interest rates and the value of European securities held by the funds
are presently unclear. European financial markets, and therefore, the funds,
could be adversely affected if the euro conversion does not continue as
planned or if a participating country chooses to withdraw from the EMU. The
funds could also be adversely affected if the computing, accounting and
trading systems used by its service providers are not capable of processing
transactions related to the euro. These issues may negatively affect the
operations of the companies in which the funds invest as well.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

Because each fund may buy and sell securities denominated in currencies
other than the U.S. dollar, and receive interest, dividends and sale proceeds
in currencies other than the U.S. dollar, the funds may engage in foreign
currency exchange transactions as an attempt to protect against uncertainty in
the level of future foreign currency exchange rates or as an attempt to
enhance performance.

The funds may enter into foreign currency exchange transactions to convert
U.S. currency to non-U.S. currency and non-U.S. currency to U.S. currency, as
well as convert one non-U.S. currency to another non-U.S. currency. A fund
either enters into these transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the currency exchange markets, or uses forward contracts to
purchase or sell non-U.S. currencies.

The funds may convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although
currency exchange dealers do not charge a fee for conversion, they do realize
a profit based on the difference (the "spread") between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a currency at one rate, while offering a lesser rate of exchange should a
fund desire to resell that currency to the dealer.

A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
fees or commissions are charged at any stage for trades. A fund may enter into
forward contracts for hedging and non-hedging purposes, including transactions
entered into for the purposes of profiting from anticipated changes in foreign
currency exchange rates.

Forward contracts are traded over-the-counter and not on organized
commodities or securities exchanges. As a result, such contracts operate in a
manner distinct from exchange-traded instruments, and their use involves
certain risks beyond those associated with transactions in the futures and
options contracts described herein.

When a fund enters into a contract for the purchase or sale of a security
denominated in a non-U.S. currency, it may desire to "lock in" the U.S. dollar
price of the security. By entering into a forward contract for the purchase or
sale, for a fixed amount of U.S. dollars, of the amount of non-U.S. currency
involved in the underlying security transaction, the fund may be able to
protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the non-U.S. currency during the
period between the date the security is purchased or sold and the date on
which payment is made or received.

When the portfolio managers believe that the currency of a particular
country may suffer a substantial decline against the U.S. dollar, a fund may
enter into a forward contract to sell the non-U.S. currency, for a fixed
amount of U.S. dollars. If a fund owns securities in that currency, the
portfolio managers may enter into a contract to sell the non-U.S. currency in
an amount approximating the value of some or all of the fund's securities
denominated in such non-U.S. currency. The precise matching of the forward
contract amounts and the value of the securities involved is not generally
possible since the future value of such securities in non-U.S. currencies
changes as a consequence of market movements in the value of those securities
between the date the forward contract is entered into and the date it matures.

At the maturity of a forward contract, a fund will either deliver the non-
U.S. currency, or terminate its contractual obligation to deliver the non-U.S.
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
non-U.S. currency. If a fund engages in an offsetting transaction, the fund
will incur a gain or a loss (as described below) to the extent that there has
been movement in forward contract prices. If a fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
non-U.S. currency. Should forward prices decline during the period between the
date a fund enters into a forward contract for the sale of the non-U.S.
currency and the date it enters into an offsetting contract for the purchase
of such currency, the fund will realize a gain to the extent the selling price
of the currency exceeds the purchase price of the currency. Should forward
prices increase, the fund will suffer a loss to the extent that the purchase
price of the currency exceeds the selling price of the currency.

Where a fund enters into a forward contract with respect to securities it
holds denominated in the non-U.S. currency, it is impossible to forecast with
precision the market value of a fund's securities at the expiration of a
forward contract. Accordingly, it may be necessary for a fund to purchase
additional non-U.S. currency on the spot market if the market value of the
security is less than the amount of non-U.S. currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of
such currency. Conversely, it may be necessary to sell on the spot market some
of the non-U.S. currency received upon the sale of the security if its market
value exceeds the amount of such currency the fund is obligated to deliver.

When a fund enters into a forward contract for non-hedging purposes, there
is a greater potential for profit but also a greater potential for loss. For
example, a fund may purchase a given foreign currency through a forward
contract if the value of such currency is expected to rise relative to the
U.S. dollar or another foreign currency. Conversely, a fund may sell the
currency through a forward contract if the value of the currency is expected
to decline against the dollar or another foreign currency. The fund will
profit if the anticipated movements in foreign currency exchange rates occur,
which will increase gross income. Where exchange rates do not move in the
direction or the extent anticipated, however, the fund may sustain losses
which will reduce its gross income. Such transactions should be considered
speculative and could involve significant risk of loss.

Each fund has established procedures consistent with policies of the SEC
concerning forward contracts. Those policies currently require that an amount
of a fund's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment or that the fund otherwise
covers its position in accordance with applicable regulations and policies.

Each fund may purchase put options on a currency in an attempt to protect
against currency rate fluctuations or to seek to enhance gains. When a fund
purchases a put option on a currency, the fund will have the right to sell the
currency for a fixed amount in U.S. dollars, or other currency. Conversely,
where a rise in the value of one currency is projected against another, the
fund may purchase call options on the currency, giving it the right to
purchase the currency for a fixed amount of U.S. dollars or another currency.
Each fund may purchase put or call options on currencies, even if the fund
does not currently hold or intend to purchase securities denominated in such
currencies.

The benefit to the fund from purchases of currency options will be reduced
by the amount of the premium and related transaction costs. In addition, where
currency exchange rates do not move in the direction or to the extent
anticipated, the fund could sustain losses on transactions in foreign currency
options.

The funds may write options on currencies for hedging purposes or
otherwise in an attempt to achieve their investment objectives. For example,
where a fund anticipates a decline in the value of the U.S. dollar value of a
foreign security due to adverse fluctuations in exchange rates it could,
instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised, and the diminution in value of the security held by the fund may be
offset by the amount of the premium received. If the expected decline does not
occur, the fund may be required to sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. A fund could also write call options
on a currency, even if it does not own any securities denominated in that
currency, in an attempt to enhance gains. In that case, if the expected
decline does not occur, the fund would be required to purchase the currency
and sell it at a loss, which may not be offset by the premium received. The
losses in this case could be unlimited.

Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the cost of a foreign security to be acquired because
of an increase in the U.S. dollar value of the currency in which the
underlying security is primarily traded, a fund could write a put option on
the relevant currency which, if rates move in the manner projected, will
expire unexercised and allow the fund to hedge such increased cost up to the
amount of the premium. However, the writing of a currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may
be exercised and the fund would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium.
Through the writing of options on currencies, a fund also may be required to
forgo all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates. A fund could also write
put options on a currency, even if it does not own, or intend to purchase, any
securities denominated in that currency. In that case, if the expected
increase does not occur, the fund would be required to purchase the currency
at a price that is greater than the current exchange rate for the currency,
and the losses in this case could exceed the amount of premium received for
writing the options, and could be unlimited.

Options on foreign currencies are traded on U.S. or foreign exchanges or
in the over-the-counter market. Each fund may enter into transactions in
options on foreign currencies that are traded in the over-the-counter market.
These transactions are not afforded the protections provided to traders on
organized exchanges or those regulated by the CFTC. In particular, over-the-
counter options are not cleared and guaranteed by a clearing corporation,
thereby increasing the risk of counterparty default. In addition, there may
not be a liquid market on these options, which may prevent a fund from
liquidating open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market conditions.

The purchase and sale of foreign currency options are subject to the risks
of the availability of a liquid secondary market and counterparty risk, as
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible interventions by governmental authorities and the effects of other
political and economic events. In addition, the value of a fund's positions in
foreign currency options could be adversely affected by (1) other complex
foreign political and economic factors, (2) lesser availability of data on
which to make trading decisions than in the United States, (3) delays in the
fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, and (4) imposition of different
exercise and settlement terms and procedures and margin requirements than in
the United States.

In addition, because foreign currency transactions occurring in the
interbank market generally involve substantially larger amounts than those
that may be involved in the use of foreign currency options, the funds may be
disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.

There is no systematic reporting of last-sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively
smaller transactions (less than $1 million) where rates may be less favorable.
The interbank market in foreign currencies is a global, around-the-clock
market. To the extent that the U.S. options markets, or other markets used by
the funds are closed while the markets for the underlying currencies remain
open, significant price and rate movements may take place in the underlying
markets that may not be reflected in the U.S. or other markets used by the
funds.

Put and call options on non-U.S. currencies written by a fund will be
covered by segregation of cash and liquid securities in an amount sufficient
to discharge the fund's obligations with respect to the option, by acquisition
of the non-U.S. currency or of a right to acquire such currency (in the case
of a call option) or the acquisition of a right to dispose of the currency (in
the case of a put option), or in such other manner as may be in accordance
with the requirements of any exchange on which, or the counterparty with
which, the option is traded and applicable laws and regulations.

Each fund may engage in proxy hedges and cross hedges. For example, in a
proxy hedge, a fund, having purchased a security, would sell a currency whose
value is believed to be closely linked to the currency in which the security
is denominated. Interest rates prevailing in the country whose currency was
sold might be expected to be closer to those in the U.S. and lower than those
of securities denominated in the currency of the original holding. This type
of hedging entails greater risk than a direct hedge because it is dependent on
a stable relationship between the two currencies paired as proxies and the
relationships can be very unstable at times. A fund may enter into a cross
hedge if a particular currency is expected to decrease against another
currency. For example, the fund would sell the currency expected to decrease
and purchase a currency which is expected to increase against the currency
sold in an attempt to protect against declines in value of the fund's holdings
denominated in the currency sold.

Investing in ADRs and other depositary receipts presents many of the same
risks regarding currency exchange rates as investing directly in securities
traded in currencies other than the U.S. dollar. Because the securities
underlying ADRs are traded primarily in non-U.S. currencies, changes in
currency exchange rates will affect the value of these receipts. For example,
a decline in the U.S. dollar value of another currency in which securities are
primarily traded will reduce the U.S. dollar value of such securities, even if
their value in the other non-U.S. currency remains constant, and thus will
reduce the value of the receipts covering such securities. A fund may employ
any of the above described foreign currency hedging techniques to protect the
value of its assets invested in depositary receipts.

Of course, a fund is not required to enter into the transactions described
above and does not do so unless deemed appropriate by the portfolio managers.
It should be realized that under certain circumstances, the funds may not be
able to hedge against a decline in the value of a currency, even if the
portfolio managers deem it appropriate to try to do so, because doing so would
be too costly. Transactions entered into to protect the value of a fund's
securities against a decline in the value of a currency (even when successful)
do not eliminate fluctuations in the underlying prices of the securities.
Additionally, although hedging transactions may tend to minimize the risk of
loss due to a decline in the value of the hedged currency, they also tend to
limit any potential gain which might result should the value of such currency
increase.

Investors should also be aware of the increased risk to a fund and its
investors when it enters into foreign currency exchange transactions for non-
hedging purposes. Non-hedging transactions in such instruments involve greater
risks and may result in losses which are not offset by increases in the value
of a fund's other assets. Although a fund is required to segregate assets or
otherwise cover certain types of transactions, this does not protect the fund
against risk of loss. Furthermore, the funds' use of foreign currency exchange
transactions may involve leveraging. Leveraging adds increased risks to a
fund, because the fund's losses may be out of proportion to the amount
invested in the instrument--a relatively small investment may lead to much
greater losses.

LENDING OF SECURITIES

Consistent with applicable regulatory requirements and in order to
generate income, each fund may lend its securities to broker-dealers and other
institutional borrowers. Such loans will usually be made only to member banks
of the U.S. Federal Reserve System and to member firms of the New York Stock
Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested
in high quality short-term instruments. Either party has the right to
terminate a loan at any time on customary industry settlement notice (which
will not usually exceed three business days). During the existence of a loan,
a fund would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and with respect to cash
collateral would also receive compensation based on investment of the
collateral (subject to a rebate payable to the borrower). Where the borrower
provides a fund with collateral consisting of U.S. Treasury obligations, the
borrower is also obligated to pay the fund a fee for use of the borrowed
securities. The fund would not, however, have the right to vote any securities
having voting rights during the existence of the loan, but would call the loan
in anticipation of an important vote to be taken among holders of the
securities or of the giving or withholding of their consent on a material
matter affecting the investment. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower fail financially. However, the loans would be made only to entities
deemed by the portfolio managers to be of good standing, and when, in the
judgment of the portfolio managers, the consideration which can be earned
currently from loans of this type justifies the attendant risk. In addition, a
fund could suffer loss if the borrower terminates the loan and the fund is
forced to liquidate investments in order to return the cash collateral to the
buyer. The portfolio managers will make loans only when, in the judgment of
the portfolio managers, the consideration which can be earned currently from
loans of this type justifies the attendant risk. If the portfolio managers
determine to make loans, it is not intended that the value of the securities
loaned by a fund would exceed 30% of the market value of its total assets.

WHEN-ISSUED SECURITIES

Each fund may purchase securities on a "when-issued" or on a "forward
delivery" basis, meaning that delivery of the securities will occur beyond
customary settlement time. It is expected that, under normal circumstances,
the applicable fund would take delivery of such securities, but the fund may
sell them before the settlement date. In general, the fund does not pay for
the securities until received and does not start earning interest until the
contractual settlement date. When a fund commits to purchase a security on a
"when-issued" or on a "forward delivery" basis, it sets up procedures
consistent with SEC policies. Since those policies currently require that an
amount of a fund's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, each fund expects always to
have cash or liquid securities sufficient to cover any commitments or to limit
any potential risk. However, even though the funds intend to adhere to the
provisions of SEC policies, purchases of securities on such bases may involve
more risk than other types of purchases. The when-issued securities are
subject to market fluctuation, and no interest accrues on the security to the
purchaser during this period. The payment obligation and the interest rate
that will be received on the securities are each fixed at the time the
purchaser enters into the commitment. Purchasing obligations on a when-issued
basis is a form of leveraging and can involve a risk that the yields available
in the market when the delivery takes place may actually be higher than those
obtained in the transaction itself. In that case, there could be an unrealized
loss at the time of delivery. An increase in the percentage of a fund's assets
committed to the purchase of securities on a "when-issued" basis may increase
the volatility of its net asset value.

CONVERTIBLE SECURITIES

The funds may invest in convertible securities. A convertible security is
a fixed-income security (a bond or preferred stock) which may be converted at
a stated price within a specified period of time into a certain quantity of
common stock or other equity securities of the same or a different issuer.
Convertible securities rank senior to common stock in a corporation's capital
structure but are usually subordinated to similar non-convertible securities.
While providing a fixed-income stream (generally higher in yield than the
income derivable from common stock but lower than that afforded by a similar
non-convertible security), a convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation attendant upon a market price advance in the convertible
security's underlying common stock.

In general, the market value of a convertible security is at least the
higher of its "investment value" (i.e., its value as a fixed-income security)
or its "conversion value" (i.e., its value upon conversion into its underlying
stock). As a fixed-income security, a convertible security tends to increase
in market value when interest rates decline and tends to decrease in value
when interest rates rise. However, the price of a convertible security is also
influenced by the market value of the security's underlying common stock. The
price of a convertible security tends to increase as the market value of the
underlying stock rises, whereas it tends to decrease as the market value of
the underlying stock declines. While no securities investment is without some
risk, investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.

RULE 144A SECURITIES

Consistent with applicable investment restrictions, each fund may purchase
securities that are not registered under the Securities Act of 1933, as
amended (the "Securities Act"), but can be offered and sold to "qualified
institutional buyers" under Rule 144A under the Securities Act ("Rule 144A
securities"). However, neither fund will invest more than 15% of its net
assets (taken at market value) in illiquid investments, which includes
securities for which there is no readily available market, securities subject
to contractual restrictions on resale and Rule 144A securities, unless, in the
case of Rule 144A securities, the board of trustees of the trust determines,
based on the trading markets for the specific Rule 144A security, that it is
liquid. The trustees have adopted guidelines and, subject to oversight by the
trustees, have delegated to the manager or to a subadviser the daily function
of determining and monitoring liquidity of Rule 144A securities.

PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS

Each fund may invest up to 15% of its net assets in securities for which
there is no readily available market. These illiquid securities may include
privately placed restricted securities for which no institutional market
exists. The absence of a trading market can make it difficult to ascertain a
market value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be difficult
or impossible for a fund to sell them promptly at an acceptable price.

BANK OBLIGATIONS

The funds may invest in bank obligations, i.e., certificates of deposit,
time deposits including Eurodollar time deposits, and bankers' acceptances and
other short-term debt obligations issued by domestic banks, foreign
subsidiaries or foreign branches of domestic banks, domestic and foreign
branches of foreign banks, domestic savings and loan associations and other
banking institutions. A bankers' acceptance is a bill of exchange or time
draft drawn on and accepted by a commercial bank. It is used by corporations
to finance the shipment and storage of goods and to furnish dollar exchange.
Maturities are generally six months or less. A certificate of deposit is a
negotiable interest-bearing instrument with a specific maturity. Certificates
of deposit are issued by banks and savings and loan institutions in exchange
for the deposit of funds and normally can be traded in the secondary market
prior to maturity. A time deposit is a non-negotiable receipt issued by a bank
in exchange for the deposit of funds. Like a certificate of deposit, it earns
a specified rate of interest over a definite period of time; however, it
cannot be traded in the secondary market. Time deposits with a withdrawal
penalty are considered to be illiquid securities.

COMMERCIAL PAPER

Each fund may invest in commercial paper, which is unsecured debt of
corporations usually maturing in 270 days or less from its date of issuance.

OTHER INVESTMENT COMPANIES

Subject to applicable statutory and regulatory limitations, assets of each
fund may be invested in shares of other investment companies. Each fund may
invest up to 5% of its assets in closed-end investment companies as permitted
by applicable law.

SECURITIES RATED BAA OR BBB

Each fund may purchase securities rated Baa by Moody's or BBB by S&P and
securities of comparable quality, which may have poor protection of payment of
principal and interest. These securities are often considered to be
speculative and involve greater risk of default or price changes than
securities assigned a higher quality rating. The market prices of these
securities may fluctuate more than higher-rated securities and may decline
significantly in periods of general economic difficulty which may follow
periods of rising interest rates.

ADDITIONAL DISCLOSURE REGARDING DERIVATIVES

Transactions in options may be entered into on U.S. exchanges regulated by
the SEC, in the over-the-counter market and on foreign exchanges, while
forward contracts may be entered into only in the over-the-counter market.
Futures contracts and options on futures contracts may be entered into on U.S.
exchanges regulated by the CFTC and on foreign exchanges. The securities
underlying options and futures contracts traded by a fund may include domestic
as well as foreign securities. Investors should recognize that transactions
involving foreign securities or foreign currencies, and transactions entered
into in foreign countries, may involve considerations and risks not typically
associated with investing in U.S. markets.

Transactions in options, futures contracts, options on futures contracts
and forward contracts entered into for non-hedging purposes involve greater
risk and could result in losses which are not offset by gains on other
portfolio assets. For example, a fund may sell futures contracts on an index
of securities in order to profit from any anticipated decline in the value of
the securities comprising the underlying index. In such instances, any losses
on the futures transactions will not be offset by gains on any portfolio
securities comprising such index, as might occur in connection with a hedging
transaction.

The use of certain derivatives, such as futures, forward contracts, and
written options may involve leverage for the funds because they create an
obligation, or indebtedness, to someone other than the funds' investors and
enable a fund to participate in gains and losses on an amount that exceeds its
initial investment. If a fund writes a stock put option, for example, it makes
no initial investment, but instead receives a premium in an amount equal to a
fraction of the price of the underlying stock. In return, the fund is
obligated to purchase the underlying stock at a fixed price, thereby being
subject to losses on the full stock price.

Likewise, if a fund purchases a futures contract, it makes an initial
margin payment that is typically a small percentage of the contract's price.
However, because of the purchase, the fund will participate in gains or losses
on the full contract price.

Other types of derivatives provide the economic equivalent of leverage
because they display heightened price sensitivity to market fluctuations, such
as changes in stock prices or interest rates. These derivatives magnify a
fund's gain or loss from an investment in much the same way that incurring
indebtedness does. For example, if a fund purchases a stock call option, the
fund pays a premium in an amount equal to a fraction of the stock price, and
in return, the fund participates in gains on the full stock price. If there
were no gains, the fund generally would lose the entire initial premium.

Options, futures contracts, options on futures contracts, forward
contracts and swaps may be used alone or in combinations in order to create
synthetic exposure to securities in which a fund otherwise invests.

The use of derivatives may increase the amount of taxable income of a fund
and may affect the amount, timing and character of a fund's income for tax
purposes, as more fully discussed herein in the section entitled "Tax
Matters."

ADDITIONAL INFORMATION

At times, a substantial portion of a fund's assets may be invested in
securities as to which the fund, by itself or together with other funds and
accounts managed by the manager and its affiliates, holds all or a major
portion. Although the manager generally considers such securities to be liquid
because of the availability of an institutional market for such securities, it
is possible that, under adverse market or economic conditions or in the event
of adverse changes in the financial condition of the issuer, the fund could
find it more difficult to sell these securities when it believes it advisable
to do so or may be able to sell the securities only at prices lower than if
they were more widely held. Under these circumstances, it may also be more
difficult to determine the fair value of such securities for purposes of
computing the fund's net asset value. In order to enforce its rights in the
event of a default under such securities, the fund may be required to
participate in various legal proceedings or take possession of and manage
assets securing the issuer's obligations on such securities. This could
increase the fund's operating expenses and adversely affect the fund's net
asset value. In addition, the fund's intention to qualify as a "regulated
investment company" under the Internal Revenue Code may limit the extent to
which the fund may exercise its rights by taking possession of such assets.

DEFENSIVE STRATEGIES

Each fund may, from time to time, take temporary defensive positions that
are inconsistent with the fund's principal investment strategies in attempting
to respond to adverse market, political or other conditions. When doing so,
the funds may invest without limit in high quality money market and other
short-term instruments, and may not be pursuing their investment goals.

4. INVESTMENT RESTRICTIONS

The trust, on behalf of the funds, and the portfolio trust, on behalf of
the portfolios, have each adopted the following policies which may not be
changed with respect to any fund or portfolio without approval by holders of a
majority of the outstanding voting securities of that fund or portfolio, which
as used in this Statement of Additional Information means the vote of the
lesser of (i) 67% or more of the outstanding voting securities of the fund or
portfolio present at a meeting at which the holders of more than 50% of the
outstanding voting securities of the fund or portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding voting
securities of the fund or portfolio. The term "voting securities" as used in
this paragraph has the same meaning as in the 1940 Act.

None of the funds or portfolios may:

(1) Borrow money, except that as a temporary measure for extraordinary
or emergency purposes it may borrow in an amount not to exceed 1/3 of the
current value of its net assets, including the amount borrowed; or
purchase any securities at any time at which borrowings exceed 5% of the
total assets of the fund or portfolio, taken at market value. It is
intended that a fund or portfolio would borrow money only from banks and
only to accommodate requests for the repurchase of shares of the fund or
beneficial interests in the portfolio while effecting an orderly
liquidation of portfolio securities.

(2) Make loans to other persons except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 30% of
the fund's or portfolio's total assets (taken at market value), (b)
through the use of repurchase agreements or fixed time deposits or the
purchase of short-term obligations or (c) by purchasing all or a portion
of an issue of debt securities of types commonly distributed privately to
financial institutions. The purchase of short-term commercial paper or a
portion of an issue of debt securities which is part of an issue to the
public shall not be considered the making of a loan.

(3) Purchase securities of any issuer if such purchase at the time
thereof would cause with respect to 75% of the total assets of the fund or
portfolio more than 10% of the voting securities of such issuer to be held
by the fund or portfolio; provided that, for purposes of this restriction,
the issuer of an option or futures contract shall not be deemed to be the
issuer of the security or securities underlying such contract; and
provided further that each fund and portfolio may invest all or any
portion of its assets in one or more investment companies, to the extent
not prohibited by the 1940 Act, the rules and regulations thereunder, and
exemptive orders granted under such Act.

(4) Purchase securities of any issuer if such purchase at the time
thereof would cause as to 75% of the fund's or portfolio's total assets
more than 5% of the fund's or portfolio's assets (taken at market value)
to be invested in the securities of such issuer (other than securities or
obligations issued or guaranteed by the United States, any state or
political subdivision thereof, or any political subdivision of any such
state, or any agency or instrumentality of the United States or of any
state or of any political subdivision of any state); provided that, for
purposes of this restriction, the issuer of an option or futures contract
shall not be deemed to be the issuer of the security or securities
underlying such contract; and provided further that each fund and
portfolio may invest all or any portion of its assets in one or more
investment companies, to the extent not prohibited by the 1940 Act, the
rules and regulations thereunder, and exemptive orders granted under such
Act.

(5) Concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of the fund's or portfolio's
investment objective, up to 25% of its assets, at market value at the time
of each investment, may be invested in any one industry, except that
positions in futures contracts shall not be subject to this restriction.

(6) Underwrite securities issued by other persons, except that all or
any portion of the assets of the fund or portfolio may be invested in one
or more investment companies, to the extent not prohibited by the 1940
Act, the rules and regulations thereunder, and exemptive orders granted
under such Act, and except insofar as the fund or portfolio may
technically be deemed an underwriter under the Securities Act in selling a
security.

(7) Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business (the foregoing
shall not be deemed to preclude the fund or portfolio from purchasing or
selling futures contracts or options thereon, and each fund and portfolio
reserves the freedom of action to hold and to sell real estate acquired as
a result of the ownership of securities by the fund or portfolio).

(8) Issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the
rules and regulations promulgated thereunder.

For purposes of restriction (1) above, covered mortgage dollar rolls and
arrangements with respect to securities lending are not treated as borrowing.

If a percentage or rating restriction on investment or utilization of
assets set forth above or referred to in the applicable Prospectus is adhered
to at the time an investment is made or assets are so utilized, a later change
in percentage resulting from changes in the value of the securities or a later
change in the rating of the securities held for a fund or portfolio will not
be considered a violation of policy.

5. PERFORMANCE INFORMATION AND ADVERTISING

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

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

AVERAGE ANNUAL TOTAL RETURN

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

P(1 + T)n = ERV

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

T = average annual total return.

n = number of years.

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

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

In computing total rates of return and yield quotations, all fund expenses
are included. However, fees that may be charged directly to a shareholder by
that shareholder's broker dealer, Service Agent or other financial
intermediaries are not included. Of course, any such fees will reduce the
shareholder's net return on investment.

Set forth below is the average annual total rate of return information for
the shares of each fund for the periods indicated, assuming that dividends and
capital gains distributions, if any, were reinvested. All outstanding shares
were designated Class A shares on January 4, 1999. Prior to January 4, 1999
there were no sales charges on the purchase or sale of the funds' shares. The
Class A performance for past periods has therefore been adjusted to reflect
the maximum sales charge currently in effect. The funds offered Class B shares
beginning January 4, 1999 and Class L and Y shares beginning September [--],
2000. For periods prior to those dates, Class B share performance includes the
performance of the fund's Class A shares, adjusted to take into account the
deduction of the different sales charges, applicable to each such Class,
rather than the initial sales charge applicable to Class A shares. This
blended performance has been adjusted to take into account differences in
class specific operating expenses.

Performance results include any applicable fee waivers or expense
subsidies in place during the time period, which may cause the results to be
more favorable than they would otherwise have been. There were no Class L or Y
shares outstanding on October 31, 1999.

AVERAGE
ANNUAL
TOTAL RATE
OF RETURN
---------

LARGE CAP GROWTH FUND
---------------------

CLASS A
October 19, 1990 (Commencement of Operations) to October 31, 1999 . 17.76%
Five Years Ended October 31, 1999 ................................. 21.01%
One Year Ended October 31, 1999 ................................... 17.42%

CLASS B
January 4, 1999 (Commencement of Operations) to October 31, 1999 .. 1.48%
Five Years Ended October 31, 1999 ................................. 20.36%
One Year Ended October 31, 1999 ................................... 17.74%

SMALL CAP GROWTH FUND
---------------------

CLASS A
June 21, 1995 (Commencement of Operations) to October 31, 1999 .... 21.51%
One Year Ended October 31, 1999 ................................... 20.09%

CLASS B
January 4, 1999 (Commencement of Operations) to October 31, 1999 .. 6.83%
One Year Ended October 31, 1999 ................................... 20.92%

For advertising and sales purposes, the funds will generally use the
performance of Class A shares. All outstanding fund shares were designated
Class A shares on January 4, 1999. Performance prior to that date will be
adjusted to include the sales charges currently in effect. Class A shares are
sold at net asset value plus a current maximum sales charge of 5.00%.
Performance will typically include this maximum sales charge for the purposes
of calculating performance figures. If the performance of Class B, L or Y
shares is used for advertising and sales purposes, performance after class
inception will be actual performance, while performance prior to that date
will be Class A performance, adjusted to reflect the differences in sales
charges (but may not reflect the differences in fees and expenses) between the
classes. For these purposes, it will be assumed that the maximum contingent
deferred sales charge applicable to the Class B and L shares is deducted at
the times, in the amount, and under the terms stated in the Prospectus. Class
B, L and Y share performance generally would have been different than Class A
performance, had the Class B, L and Y shares been offered for the entire
period, because the expenses attributable to Class B, L and Y shares are
different than the expenses attributable to the Class A shares. Fund
performance may also be presented in advertising and sales literature without
the inclusion of sales charges.

AGGREGATE TOTAL RETURN

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

ERV - P

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

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

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

LARGE CAP GROWTH FUND
AGGREGATE ANNUAL TOTAL RETURN

SINCE
CLASS OF SHARES 1 YEAR 5 YEAR 10 YEAR INCEPTION(1)

Class A(2) [--]% [--] N/A [--]
Class B(3) [--]% N/A N/A N/A

------------
(1) All outstanding shares were designated Class A on January 4, 1999. Class B
shares commenced operations on January 4, 1999. Classes L and Y shares
commenced operations on September 1, 2000.
(2) The average annual total return figure assumes that the maximum 5.00%
sales charge has been deducted from the investment at the time of
purchase. If the maximum sales charge had not been deducted, the average
annual total return for Class A shares for the same period would have been
% and % for one year and since inception of the fund,
respectively.
(3) The average annual total return figure assumes that the maximum applicable
Deferred Sales Charge has been deducted from the investment at the time of
redemption. If the maximum Deferred Sales Charge had not been deducted,
the average annual total return for Class B shares for the same period
would have been
% and % for one year and since inception of the fund,
respectively.

SMALL CAP GROWTH FUND
AGGREGATE ANNUAL TOTAL RETURN

SINCE
CLASS OF SHARES 1 YEAR 5 YEAR 10 YEAR INCEPTION(1)

Class A(2) [--]% N/A N/A [--]%
Class B(3) [--]% N/A N/A N/A

------------
(1) All outstanding shares were designated Class A on January 4, 1999. Class B
shares commenced operations on January 4, 1999. Classes L and Y shares
commenced operations on September [--], 2000.
(2) The average annual total return figure assumes that the maximum 5.00%
sales charge has been deducted from the investment at the time of
purchase. If the maximum sales charge had not been deducted, the average
annual total return for Class A shares for the same period would have been
% and % for one year and since inception of the fund,
respectively.
(3) The average annual total return figure assumes that the maximum applicable
Deferred Sales Charge has been deducted from the investment at the time of
redemption. If the maximum Deferred Sales Charge had not been deducted,
the average annual total return for Class B shares for the same period
would have been % and % for one year and since inception of the
fund, respectively.

*There were no Class L or Y shares outstanding on October 31, 1999.

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

6. DETERMINATION OF NET ASSET VALUE; VALUATION OF SECURITIES

The net asset value per share of each fund is determined for each class on
each day during which the New York Stock Exchange is open for trading
("Business Day"). As of the date of this Statement of Additional Information,
the Exchange is open for trading every weekday except for the following
holidays (or the days on which they are observed): New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. This determination is made
once each day as of the close of regular trading on the Exchange (normally
4:00 p.m. Eastern time) by adding the market value of all securities and other
assets attributable to the class (including its interest in its corresponding
portfolio), then subtracting the liabilities attributable to the class, and
then dividing the result by the number of outstanding shares of the class. The
net asset value per share is effective for orders received and accepted by the
Transfer Agent prior to its calculation.

The value of each portfolio's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable
or accrued) is determined at the same time and on the same days as the net
asset value per share of its corresponding fund is determined. The net asset
value of each fund's investment in the portfolio in which it invests is equal
to the fund's pro rata share of the net assets of the portfolio.

For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in non-U.S. currencies will be converted into
U.S. dollars at the prevailing market rates or if there are no market rates,
at fair value, at the time of valuation. Equity securities are valued at the
last sale price on the exchange on which they are primarily traded or on the
NASDAQ system for unlisted national market issues, or at the last quoted bid
price for securities in which there were no sales during the day or for
unlisted securities not reported on the NASDAQ system. Securities listed on a
non-U.S. exchange are valued at the last quoted sale price available before
the time when net assets are valued. Bonds and other fixed income securities
(other than short-term obligations) are valued on the basis of valuations
furnished by a pricing service, use of which has been approved by the board of
trustees of the trust. In making such valuations, the pricing service utilizes
both dealer-supplied valuations and electronic data processing techniques that
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data, without exclusive
reliance upon quoted prices or exchange or over-the- counter prices, since
such valuations are believed to reflect more accurately the fair value of such
securities. Short-term obligations (maturing in 60 days or less) are valued at
amortized cost, which constitutes fair value as determined by the board of
trustees of the trust. Futures contracts are normally valued at the settlement
price on the exchange on which they are traded. Securities for which there are
no such valuations are valued at fair value as determined in good faith by or
at the direction of the board of trustees of the trust.

Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of regular trading on the New
York Stock Exchange. Trading may also take place on days on which the Exchange
is closed and on which it is not possible to purchase or redeem shares of the
funds. If events materially affecting the value of non-U.S. securities occur
between the time when the exchange on which they are traded closes and the
time when a fund's net asset value is calculated, such securities may be
valued at fair value in accordance with procedures established by and under
the general supervision of the board of trustees of the trust.

Interest income on long-term obligations held for a fund is determined on
the basis of interest accrued plus amortization of "original issue discount"
(generally, the difference between issue price and stated redemption price at
maturity) and premiums (generally, the excess of purchase price over stated
redemption price at maturity). Interest income on short-term obligations is
determined on the basis of interest accrued less amortization of any premiums.

7. ADDITIONAL INFORMATION ON THE PURCHASE AND SALE OF
FUND SHARES AND SHAREHOLDER PROGRAMS

As described in the Prospectus, the funds provide you with alternative
ways of purchasing shares based upon your individual investment needs.

Each class of shares of a fund represents an interest in the same
portfolio of investments. Each class is identical in all respects except that
each class bears its own class expenses, including distribution and service
fees, and each class has exclusive voting rights with respect to any
distribution or service plan applicable to its shares. As a result of the
differences in the expenses borne by each class of shares, net income per
share, dividends per share and net asset value per share will vary for each
class of shares. There are no conversion, preemptive or other subscription
rights, except that Class B shares automatically convert to Class A shares in
eight years as more fully described below.

Shareholders of each class will share expenses proportionately for
services that are received equally by all shareholders. A particular class of
shares will bear only those expenses that are directly attributable to that
class, where the type or amount of services received by a class varies from
one class to another. The expenses that may be borne by specific classes of
shares may include (i) transfer agency fees attributable to a specific class
of shares, (ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxy
statements to current shareholders of a specific class of shares, (iii)
Securities and Exchange Commission ("SEC") and state securities registration
fees incurred by a specific class, (iv) the expense of administrative
personnel and services required to support the shareholders of a specific
class of shares, (v) litigation or other legal expenses relating to a specific
class of shares, (vi) accounting expenses relating to a specific class of
shares and (vii) any additional incremental expenses subsequently identified
and determined to be properly allocated to one or more classes of shares.

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:

Each fund receives the entire net asset value of all Class A shares that
are sold. The Distributor retains the full applicable sales charge from which
it pays the uniform reallowances shown in the table below.

<TABLE>
<CAPTION>
BROKER/DEALER
SALES CHARGE SALES CHARGE COMMISSION
AMOUNT OF AS A % OF AS A % OF AS A % OF
YOUR INVESTMENT OFFERING PRICE YOUR INVESTMENT OFFERING PRICE
--------------- -------------- --------------- --------------

<S> <C> <C> <C>
Less than $25,000 ................................ 5.00% 5.26% 4.50%
$25,000 to less than $50,000 ..................... 4.25% 4.44% 3.83%
$50,000 to less than $100,000 .................... 3.75% 3.90% 3.38%
$100,000 to less than $250,000 ................... 3.25% 3.36% 2.93%
$250,000 to less than $500,000 ................... 2.75% 2.83% 2.48%
$500,000 or more but less than $1,000,000 ........ 2.00% 2.04% 1.80%
$1,000,000 or more ............................... none* none* up to 1.00%

----------
* Purchases of Class A shares of $1,000,000 or more will be made at net asset value without any initial sales charge, but
will be subject to a Deferred Sales Charge of 1.00% on redemptions made within 12 months of purchase. The deferred sales
charge on Class A shares is payable to [Salomon Smith Barney,] which compensates brokers, dealers and other institutions
(called "Service Agents") whose clients make purchases of $1,000,000 or more. The deferred sales charge is waived in the
same circumstances in which the Deferred Sales Charge applicable to Class B and Class L shares is waived. See "Deferred
Sales Charge Provisions" and "Waivers of Deferred Sales Charge."
</TABLE>

Service Agents may receive up to 90% of the sales charge and may be deemed
to be underwriters of each 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 B shares pay distribution/service fees of up to 1.00% of the average
daily net assets of a fund represented by the Class B shares. Commissions will
be paid to Service Agents that sell Class B shares in the amount of 4.50% of
the purchase price of Class B shares sold by these entities. These commissions
are not paid on exchanges from other Smith Barney mutual funds or on sales of
Class B shares to investors exempt from the CDSC. Entities that sell Class B
shares will also receive a portion of the service fee payable under the Class
B Service Plan at an annual rate equal to 0.25% of the average daily net
assets represented by the Class B shares sold by them.

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. Service Agents selling Class L shares
receive a commission of up to [__%] of the purchase price of the Class L shares
they sell. 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
another Smith Barney mutual fund on June 12, 1998 will not be subject to the 1%
initial sales charge.

CLASS Y SHARES

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

From time to time, the funds' distributor or the manager, at its expense,
may provide additional commissions, compensation or promotional incentives
("concessions") to dealers that sell or arrange for the sale of shares of the
funds. Such concessions provided by the funds' distributor or the manager may
include financial assistance to dealers in connection with pre-approved
conferences or seminars, sales or training programs for invited registered
representatives and other employees, payment for travel expenses, including
lodging, incurred by registered representatives and other employees for such
seminars or training programs, seminars for the public, advertising and sales
campaigns regarding the funds, and/or other dealer-sponsored events. From time
to time, the funds' distributor or the manager may make expense reimbursements
for special training of a dealer's registered representatives and other
employees in group meetings or to help pay the expenses of sales contests.
Other concessions may be offered to the extent not prohibited by state laws or
any self-regulatory agency, such as the NASD.

GENERAL

Investors may purchase shares from a financial consultant or financial
institution (called a "Service Agent") that has entered into a sales or
service agreement with the distributor concerning the fund. In addition,
certain investors, including qualified retirement plans purchasing through
certain brokers that clear through Salomon Smith Barney ("Dealer
Representatives"), may purchase shares directly from the fund. When purchasing
shares of a fund, investors must specify the fund's name and whether the
purchase is for Class A, Class B, Class L or Class Y shares. Service Agents
and Dealer Representatives may charge their customers an annual account
maintenance fee in connection with a brokerage account through which an
investor purchases or holds shares. Accounts held directly at 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 a
fund by making an initial investment of at least $1,000 for each account, or
$250 for an IRA or a Self- Employed Retirement Plan, in a fund. Investors in
Class Y shares may open an account by making an initial investment of
$15,000,000. Subsequent investments of at least $50 may be made for all
Classes. For participants in retirement plans qualified under Section 403(b)
(7) or Section 401(c) of the Code, the minimum initial investment required for
Class A, Class B and Class L shares and the subsequent investment requirement
for all Classes in the fund is $25. For shareholders purchasing shares of the
fund through the Systematic Investment Plan on a monthly basis, the minimum
initial investment requirement for Class A, Class B and Class L shares and
subsequent investment requirement for all Classes is $25. For shareholders
purchasing shares of the fund through the Systematic Investment Plan on a
quarterly basis, the minimum initial investment required for Class A, Class B
and Class L shares and the subsequent investment requirement for all Classes
is $50. There are no minimum investment requirements for Class A shares for
employees of Citigroup and its subsidiaries, including Salomon Smith Barney,
unitholders who invest distributions from a unit investment trust ("UIT")
sponsored by Salomon Smith Barney, and directors/trustees of any of the Smith
Barney mutual funds, and their spouses and children. Each 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.

Purchase orders received by a fund or 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 (the "trade date"). Orders received by a
[Dealer Representative] prior to the close of regular trading on the NYSE on
any day the fund calculates its net asset value, are priced according to the
net asset value determined on that day, provided the order is received by the
fund or the fund's agent prior to its close of business. [For shares purchased
through Salomon Smith Barney or a Dealer Representative purchasing through
Salomon Smith Barney, payment for shares of a 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, a Service Agent 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 its Service Agent or the sub-transfer agent. The Systematic Investment Plan
also authorizes a Service Agent to apply cash held in the shareholder's
brokerage account opened with the Service Agent or redeem the shareholder's
shares of certain money market funds to make additions to the account.
Additional information is available from the funds or the investor's Service
Agent or a Dealer Representative.

SALES CHARGE WAIVERS AND REDUCTIONS

INITIAL SALES CHARGE WAIVERS

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

RIGHT OF ACCUMULATION

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

LETTER OF INTENT -- CLASS A SHARES

A Letter of Intent for an amount of $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 your Service Agent or the transfer
agent to obtain a Letter of Intent application.

LETTER OF INTENT -- CLASS Y SHARES

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

DEFERRED SALES CHARGE PROVISIONS

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

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

Class L shares and Class A shares that are deferred sales charge
shares are subject to a 1.00% 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, except in the case of Class B shares held under the Smith
Barney 401(k) Program, as described below. See "Purchase of Shares --
Smith Barney 401(k) and ExecChoiceTM Programs."

SALE DURING CDSC ON SHARES BEING SOLD
----------- -------------------------

1st year since purchase 5%
2nd year since purchase 4%
3rd year since purchase 3%
4th year since purchase 2%
5th year since purchase 1%
6th year (or later) since purchase None

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 that the shares exchanged were initially
acquired in one of the other Smith Barney mutual funds, and fund shares
being redeemed will be considered to represent, as applicable, capital
appreciation or dividend and capital gain distribution reinvestments in
such other funds. For Federal income tax purposes, the amount of the
Deferred Sales Charge will reduce the gain or increase the loss, as the
case may be, on the amount realized on redemption. The amount of any
deferred sales charge will be paid to Salomon Smith Barney. To provide an
example, assume an investor purchased 100 Class B shares of the fund at
$10 per share for a cost of $1,000. Subsequently, the investor acquired 5
additional shares of the fund through dividend reinvestment. During the
fifteenth month after the purchase, the investor decided to redeem $500 of
his or her investment. Assuming at the time of the redemption the net
asset value had appreciated to $12 per share, the value of the investor's
shares would be $1,260 (105 shares at $12 per share). The Deferred Sales
Charge would not be applied to the amount which represents appreciation
($200) and the value of the reinvested dividend shares ($60). Therefore,
$240 of the $500 redemption proceeds ($500 minus $260) would be charged at
a rate of 4.00% (the applicable rate for Class B shares) for a total
deferred sales charge of $9.60.

WAIVERS OF DEFERRED SALES CHARGE

The Deferred Sales Charge will be waived on: (a) exchanges (see
"Exchange Privilege"); (b) automatic cash withdrawals in amounts equal to
or less than 1.00% per month of the value of the shareholder's shares at
the time the withdrawal plan commences (see "Automatic Cash Withdrawal
Plan") (provided, however, that automatic cash withdrawals in amounts
equal to or less than 2.00% per month of the value of the shareholder's
shares will be permitted for withdrawal plans that were established prior
to November 7, 1994); (c) redemptions of shares within 12 months following
the death or disability of the shareholder; (d) redemptions of shares made
in connection with qualified distributions from retirement plans or IRAs
upon the attainment of age 59 1/2; (e) involuntary redemptions; and (f)
redemptions of shares to effect a combination of the fund with any
investment company by merger, acquisition of assets or otherwise. In
addition, a shareholder who has redeemed shares from other Smith Barney
mutual funds may, under certain 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 Service Agents in the case of shareholders who are also clients of
Service Agents or by the transfer agent in the case of all other
shareholders) of the shareholder's status or holdings, as the case may be.

SMITH BARNEY RETIREMENT PROGRAMS

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

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

For plans opened on or after March 1, 2000 that are not part of the
Paychex offering, Class A shares may be purchased regardless of the amount
invested.

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

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

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

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

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

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

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

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

Retirement Programs Investing in Class B Shares: Class B shares of a fund
are not available for purchase by participating plans opened on or after June
21, 1996.

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

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

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

AUTOMATIC CASH WITHDRAWAL PLAN

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

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

EXCHANGE PRIVILEGE

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

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

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

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

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

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

ADDITIONAL INFORMATION REGARDING THE EXCHANGE PRIVILEGE

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

This exchange privilege may be modified or terminated at any time, and is
available only in those jurisdictions where such exchanges legally may be
made. Before making any exchange, shareholders should contact the Transfer
Agent or, if they hold Fund shares through Service Agents, their Service
Agents to obtain more information and prospectuses of the funds to be acquired
through the exchange. An exchange is treated as a sale of the shares exchanged
and could result in taxable gain or loss to the shareholder making the
exchange.

DETERMINATION OF PUBLIC OFFERING PRICE

The funds offer their shares to the public on a continuous basis. The
public offering price for a Class A and Class Y share of a fund is equal to
the net asset value per share at the time of purchase, plus for Class A shares
an initial sales charge based on the aggregate amount of the investment. The
public offering price for a Class L share (and Class A share purchases,
including applicable rights of accumulation, equaling or exceeding $1,000,000)
is equal to the net asset value per share at the time of purchase and no sales
charge is imposed at the time of purchase. A deferred sales charge, however,
is imposed on certain redemptions of Class L shares, and Class A shares when
purchased in amounts exceeding $1,000,000. The method of computation of the
public offering price is shown in each fund's financial statements,
incorporated by reference in their entirety into this SAI.

ADDITIONAL PURCHASE AND SALE INFORMATION

REDEMPTION OF SHARES

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

Any signature appearing on a 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 or the redemption proceeds are to be sent to an address
other than the address of record. Unless otherwise directed, redemption
proceeds will be mailed to an investor's address of record. The transfer agent
may require additional supporting documents for redemptions made by
corporations, executors, administrators, trustees or guardians. A redemption
request will not be deemed properly received until the transfer agent receives
all required documents in proper form.

If a shareholder holds shares in more than one Class, any request for
redemption must specify the Class being redeemed. In the event of a failure to
specify which Class, or if the investor owns fewer shares of the Class than
specified, the redemption request will be delayed until the transfer agent
receives further instructions from the investor's Service Agent, or if the
shareholder's account is not with a Service Agent, 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
brokerage account, these funds will not be invested for the shareholder's
benefit without specific instruction and the investor's Service Agent will
benefit from the use of temporarily uninvested funds. Redemption proceeds for
shares purchased by check, other than a certified or official bank check, will
be remitted upon clearance of the check, which may take up to fifteen days or
more.

If the board of trustees of the trust determines that it would be
detrimental to the best interests of the remaining shareholders to make a
redemption payment wholly in cash, a 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 that 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.

Neither fund nor any fund agent will be liable for following instructions
communicated by telephone that are reasonably believed to be genuine. Each
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). Each
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.

8. MANAGEMENT

Each fund is supervised by the board of trustees of the trust. Each
portfolio is supervised by the board of trustees of The Premium Portfolios. In
each case, a majority of the trustees are not affiliated with the manager.

The trustees and officers of the trust and the portfolio trust, their ages
and their principal occupations during the past five years are set forth
below. Their titles may have varied during that period. Asterisks indicate
that those trustees and officers are "interested persons" (as defined in the
1940 Act) of the trust or the portfolio trust. Unless otherwise indicated
below, the address of each trustee and officer is 21 Milk Street, Boston,
Massachusetts. The address of the portfolio trust is Elizabethan Square,
George Town, Grand Cayman, British West Indies.

TRUSTEES OF THE TRUST

PHILIP W. COOLIDGE*; 48 -- President of the Trust and the Portfolio Trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.

RILEY C. GILLEY; 73 -- Vice President and General Counsel, Corporate Property
Investors (November 1988 to December 1991); Partner, Breed, Abbott & Morgan
(Attorneys) (retired, December 1987). His address is 4041 Gulf Shore Boulevard
North, Naples, Florida.

DIANA R. HARRINGTON; 58 -- Professor, Babson College (since 1994); Trustee,
The Highland Family of Funds (March 1997 to March 1998). Her address is 120
Goulding Street, Holliston, Massachusetts.

SUSAN B. KERLEY; 48 -- President, Global Research Associates, Inc. (Investment
Research) (since September 1990); Trustee, Mainstay Institutional Funds (since
December 1990). Her address is P.O. Box 9572, New Haven, Connecticut.

HEATH B. MCLENDON*; 66 -- Chairman, President, and Chief Executive Officer of
SSB Citi Fund Management LLC (formerly known as SSBC Fund Management Inc.)
(since March 1996); Managing Director of Salomon Smith Barney (since August
1993); and Chairman, President and Chief Executive Officer of fifty-eight
investment companies sponsored by Salomon Smith Barney. His address is 388
Greenwich Street, New York, New York.

C. OSCAR MORONG, JR.; 64 -- Chairman of the board of trustees of the trust and
the portfolio trusts; Managing Director, Morong Capital Management (since
February 1993); Director, Indonesia fund (since 1990); Trustee, MAS Funds
(since 1993). His address is 1385 Outlook Drive West, Mountainside, New
Jersey.

E. KIRBY WARREN; 65 -- Professor of Management, Graduate School of Business,
Columbia University (since 1987). His address is Columbia University, Graduate
School of Business, 725 Uris Hall, New York, New York.

TRUSTEES OF THE PORTFOLIO TRUST

ELLIOTT J. BERV; 56 -- President and Chief Executive Officer, Catalyst, Inc.
(Management Consultants) (since June 1992); President and Director, Elliott J.
Berv & Associates (Management Consultants) (since May 1984). His address is 24
Atlantic Drive, Scarborough, Maine.

PHILIP W. COOLIDGE*; 48 -- President of the trust and the portfolio trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.

MARK T. FINN; 56 -- President and Director, Delta Financial, Inc. (since June
1983); Chairman of the Board and part Owner, FX 500 Ltd. (Commodity Trading
Advisory Firm) (April 1990 to February 1996); General Partner and Shareholder,
Greenwich Ventures LLC (Investment Partnership) (since January 1996);
President, Secretary and Owner, Phoenix Trading Co. (Commodity Trading
Advisory Firm) (since March 1997); Chairman and Owner, Vantage Consulting
Group, Inc. (since October 1988). His address is 3500 Pacific Avenue, P.O. Box
539, Virginia Beach, Virginia.

C. OSCAR MORONG, JR.; 64 -- Chairman of the board of trustees of the trust and
the portfolio trust; Managing Director, Morong Capital Management (since
February 1993); Director, Indonesia fund (since 1990); Trustee, MAS Funds
(since 1993). His address is 1385 Outlook Drive West, Mountainside, New
Jersey.

WALTER E. ROBB, III; 73 -- President, Benchmark Consulting Group, Inc. (since
1991); Principal, Robb Associates (Corporate Financial Advisors) (since 1978);
President and Treasurer, Benchmark Advisors, Inc. (Corporate Financial
Advisors) (since 1989); Trustee of certain registered investment companies in
the MFS Family of Funds (since 1985). His address is 35 Farm Road, Sherborn,
Massachusetts.

OFFICERS OF THE TRUST AND THE PORTFOLIO TRUST

PHILIP W. COOLIDGE*; 48 -- President of the trust and the portfolio trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.

CHRISTINE D. DORSEY*; 29 -- Assistant Secretary and Assistant Treasurer of the
trust and the portfolio trust; Vice President, Signature Financial Group, Inc.
(since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996).

LINWOOD C. DOWNS; 38* -- Treasurer of the trust and the portfolio trust; Chief
Financial Officer and Senior Vice President, Signature Financial Group, Inc.;
Treasurer, CFBDS.

TAMIE EBANKS-CUNNINGHAM*; 27 -- Assistant Secretary of the trust and the
portfolio trust; Office Manager, Signature Financial Group (Cayman) Ltd.
(since April 1995); Administrator, Cayman Islands Primary School (prior to
April 1995). Her address is P.O. Box 2494, Elizabethan Square, George Town,
Grand Cayman, Cayman Islands, B.W.I.

LINDA T. GIBSON*; 34 -- Secretary of the trust and the portfolio trust; Senior
Vice President, Signature Financial Group, Inc.; Secretary, CFBDS.

SUSAN JAKUBOSKI*; 35 -- Vice President, Assistant Treasurer and Assistant
Secretary of the trust and the portfolio trust; Vice President, Signature
Financial Group (Cayman) Ltd.

MOLLY S. MUGLER*; 48 -- Assistant Secretary and Assistant Treasurer of the
trust and the portfolio trust; Vice President, Signature Financial Group,
Inc.; Assistant Secretary, CFBDS.

JULIE J. WYETZNER*; 40 -- Vice President, Assistant Secretary and Assistant
Treasurer of the trust and the portfolio trust; Vice President, Signature
Financial Group, Inc.

The following table shows trustee compensation for the fiscal year ended
October 31, 1999:

<TABLE>
<CAPTION>
TOTAL
PENSION OR ESTIMATED COMPENSATION
RETIREMENT ANNUAL FROM TRUST AND
AGGREGATE BENEFITS BENEFITS FUND COMPLEX
COMPENSATION ACCRUED AS PART UPON PAID TO
TRUSTEE FROM REGISTRANT OF FUND EXPENSES RETIREMENT TRUSTEES(1)
------- --------------- ---------------- ---------- -----------

<S> <C> <C> <C> <C>
Philip W. Coolidge ................... $ 0 None None $ 0
Riley C. Gilley ...................... $5,485 None None $5,485
Diana R. Harrington .................. $7,013 None None $7,013
Susan B. Kerley ...................... $6,930 None None $6,930
Heath B. McLendon (2) ................ $ 0 None None $ 0
C. Oscar Morong, Jr. ................. $8,148 None None $8,148
E. Kirby Warren ...................... $6,226 None None $6,226
William S. Woods, Jr. (3) ............ $8,123 None None $8,123

------------
(1) Prior to [September --], 2000, the funds were part of the CitiFunds(SM) Fund Complex. The total compensation
Messrs. Coolidge, Gilley, McLendon, Morong, Warren and Woods, and Mses. Harrington and Kerley earned total
compensation from the trust and the CitiFunds Fund Complex of $0, $65,250, $0, $92,000, $62,750, $66,000,
$71,250 and $69,750 respectively for the fiscal year ended 10/31/99. Messrs. Coolidge, Gilley, McLendon, Morong
and Warren, and Mses. Harrington and Kerley are trustees of 48, 35, 23, 39, 39, 30 and 30 funds and portfolios,
respectively, in the family of open- end registered investment companies advised or managed by the manager.
(2) Mr. McLendon was appointed as trustee in February, 1999.
(3) Effective December 31, 1999, Mr. Woods became a Trustee Emeritus of the trust. Per the terms of the trust's
Trustee Emeritus Plan, Mr. Woods serves the board of trustees in an advisory capacity. As a Trustee Emeritus,
Mr. Woods is paid 50% of the annual retainer fee and meeting fees otherwise applicable to trustees, together
with reasonable out-of- pocket expenses for each meeting attended.
</TABLE>

As of [ ], 2000, all trustees and officers as a group owned less
than 1% of the outstanding shares of each fund. As of the same date, more than
[95%] of the outstanding shares of each fund were held of record by Citibank,
N.A. or its affiliates as Service Agents of the fund for the accounts of their
respective clients.

The Declaration of each of the trust and the portfolio trust provides that
the trust or the portfolio trust, as the case may be, will indemnify its
trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with
the trust or a portfolio trust, as the case may be, unless, as to liability to
the trust, such portfolio trust or their respective investors, it is finally
adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices, or
unless with respect to any other matter it is finally adjudicated that they
did not act in good faith in the reasonable belief that their actions were in
the best interests of the trust or such portfolio trust, as the case may be.
In the case of settlement, such indemnification will not be provided unless it
has been determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested trustees of the trust
or such portfolio trust, or in a written opinion of independent counsel, that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties.

CODE OF ETHICS

The trust, the portfolio trust, the manager and the Distributor each have
adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company
Act of 1940, as amended. Each code of ethics permits personnel subject to such
code to invest in securities, including securities that may be purchased or
held by a fund. However, the Codes of Ethics contain provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of the funds. Of
course, there can be no assurance that the Codes of Ethics will be effective
in identifying and addressing all conflicts of interests relating to personal
securities transactions.

MANAGER

The manager manages the assets of each fund and each portfolio and
provides certain administrative services to the funds and the portfolios
pursuant to separate management agreements (the "Management Agreements").
Subject to such policies as the board of trustees of the portfolio trust may
determine, the manager manages the securities of each portfolio and makes
investment decisions for each portfolio. The manager furnishes at its own
expense all services, facilities and personnel necessary in connection with
managing each portfolio's investments and effecting securities transactions
for each portfolio. The Management Agreements with the portfolio trust provide
that the manager may delegate the daily management of the securities of each
portfolio to one or more subadvisers.

Unless otherwise terminated, the Management Agreement with the trust
relating to the Large Cap Growth Fund and the Small Cap Growth Fund will
continue in effect indefinitely as long as such continuance is specifically
approved at least annually by the board of trustees of the trust or by a vote
of a majority of the outstanding voting securities of the fund, and, by a
majority of the trustees of the trust who are not parties to the Management
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Management Agreement.

Unless otherwise terminated, the Management Agreements with The Premium
Portfolios relating to the Large Cap Growth Portfolio and the Small Cap Growth
Portfolio will each continue in effect indefinitely as long as such
continuance is specifically approved at least annually by the board of
trustees of The Premium Portfolios or by a vote of a majority of the
outstanding voting securities of the portfolio, and, in either case, by a
majority of the trustees of The Premium Portfolios who are not parties to the
Management Agreement or interested persons of any such party, at a meeting
called for the purpose of voting on the Management Agreement.

The manager provides the funds and the portfolios with general office
facilities and supervises the overall administration of the funds and the
portfolios, including, among other responsibilities, the negotiation of
contracts and fees with, and the monitoring of performance and billings of,
the funds' or the portfolios' independent contractors and agents; the
preparation and filing of all documents required for compliance by the funds
and the portfolios with applicable laws and regulations; and arranging for the
maintenance of books and records of the funds or the portfolios. Trustees,
officers, and investors in the trust and the portfolio trust are or may be or
may become interested in the manager, as directors, officers, employees, or
otherwise and directors, officers and employees of the manager are or may
become similarly interested in the trust and the portfolio trust.

Each Management Agreement provides that the manager may render services to
others. Each Management Agreement is terminable without penalty on not more
than 60 days' nor less than 30 days' written notice by the portfolio trust or
the trust, as the case may be, when authorized either by a vote of a majority
of the outstanding voting securities of the applicable portfolio or fund or by
a vote of a majority of the Board of trustees of the portfolio trust or the
trust, or by the manager on not more than 60 days' nor less than 30 days'
written notice, and will automatically terminate in the event of its
assignment. The Management Agreement with the portfolio trust provides that
neither the manager nor its personnel shall be liable for any error of
judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in the execution of security transactions for the
applicable portfolio, except for willful misfeasance, bad faith or gross
negligence or reckless disregard of its or their obligations and duties under
the Management Agreement with the portfolio trust. The Management Agreement
with the trust provides that neither the manager nor its personnel shall be
liable for any error of judgment or mistake of law or for any omission in the
administration or management of the trust or the performance of its duties
under the Management Agreement, except for willful misfeasance, bad faith or
gross negligence or reckless disregard of its or their obligations and duties
under the Management Agreement with the trust.

The Prospectus for each fund contains a description of the fees payable to
the manager for services under each of the Management Agreements. These fees
are higher than the management fees paid by most mutual funds. The manager may
reimburse any fund or portfolio or waive all or a portion of its management
fees.

For the fiscal year ended December 31, 1996, the fee paid to the manager
under a prior investment advisory agreement with respect to Large Cap Growth
Portfolio was $1,387,227. For the period from January 1, 1997 to October 31,
1997, the fees paid to the manager under its investment advisory agreement
with respect to Large Cap Growth Fund and Large Cap Growth Portfolio were
$1,312,700. For the fiscal years ended October 31, 1998 and 1999, the fees
paid to the manager under its Management Agreements with respect to Large Cap
Growth Fund were $84,677 and $329,700, respectively, and with respect to Large
Cap Growth Portfolio were $3,167,841 and $4,351,046, respectively.

For the fiscal year ended December 31, 1996 the fee payable to the manager
under a prior investment advisory agreement with respect to Small Cap Growth
Portfolio was $147,259 (of which $100,088 was voluntarily waived). For the
period from January 1, 1997 to October 31, 1997, the fees paid to the manager
under its investment advisory agreements with respect to Small Cap Growth Fund
and Small Cap Growth Portfolio were $284,285 (of which $57,125 was voluntarily
waived). For the fiscal years ended October 31, 1998 and 1999, the fees paid
to Citibank under its Management Agreements with respect to Small Cap Growth
Fund were $0 and $94,556 (all of which was voluntarily waived), respectively,
and with respect to Small Cap Growth Portfolio were $1,673,322 and $1,112,230,
respectively.

For the fiscal year ended December 31, 1996 and for the period from
January 1, 1997 to October 31, 1997, the fees payable by the Large Cap Growth
Fund to CFBDS under a prior administrative services agreement with respect to
the Large Cap Growth Fund were $561,584 (of which $449,267 was voluntarily
waived) and $508,746 (of which $406,939 was voluntarily waived), respectively.
For the fiscal year ended December 31, 1996 and for the period from January 1,
1997 to October 31, 1997, the fees payable by the Small Cap Growth Fund to
CFBDS under a prior administrative services agreement were $39,957 (all of
which was voluntarily waived) and $52,561 (all of which was voluntarily
waived). For the fiscal year ended December 31, 1996 and for the period from
January 1, 1997 to October 31, 1997, The Premium Portfolios paid Signature
Financial Group (Cayman) Ltd. ("SFG") under a prior administrative services
agreement $138,723 and $131,270, respectively, with respect to the Large Cap
Growth Portfolio. For the fiscal year ended December 31, 1996 and for the
period from January 1, 1997 to October 31, 1997, The Premium Portfolios was
obligated to pay SFG under a prior administrative services agreement $9,817
(all of which was voluntarily waived) and $18,952 (of which $13,008 was
voluntarily waived), respectively, with respect to the Small Cap Growth
Portfolio.

Pursuant to separate sub-administrative services agreements with the
manager, CFBDS and SFG perform such sub-administrative duties for the trust
and the portfolio trust, respectively, as from time to time are agreed upon by
the manager, CFBDS and SFG, as appropriate. For performing such sub-
administrative services, CFBDS and SFG receive compensation as from time to
time is agreed upon by Citibank, not in excess of the amount paid to the
manager for its services under the Management Agreements with the trust and
the portfolio trust, respectively. All such compensation is paid by the
manager.

DISTRIBUTOR

CFBDS, 21 Milk Street, Boston, MA 02109, serves as the distributor of each
fund's shares pursuant to Distribution Agreements with the trust with respect
to each class of shares of the funds (each, a "Distribution Agreement"). In
those states where CFBDS is not a registered broker-dealer, shares of the
funds are sold through Signature Broker-Dealer Services, Inc., as dealer.
Under the Distribution Agreements, CFBDS is obligated to use its best efforts
to sell shares of each class of the funds.

Either party may terminate a Distribution Agreement on not less than
thirty days' nor more than sixty days' written notice to the other party.
Unless otherwise terminated each Distribution Agreement will continue from
year to year upon annual approval by the trust's board of trustees and by the
vote of a majority of the outstanding voting securities of the particular fund
and by the vote of a majority of the board of trustees of the trust who are
not parties to the Distribution Agreement or interested persons of any party
to the Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. Each Distribution Agreement will terminate
in the event of its assignment, as defined in the 1940 Act.

Class A, B and L shares of each fund has a Service Plan (each, a "Service
Plan") adopted in accordance with Rule 12b-1 under the 1940 Act. Under the
Plans, a fund may pay monthly fees at an annual rate not to exceed 0.25% of
the average daily net assets of the fund attributable to that class in the
case of the Plans relating to Class A shares, and not to exceed 1.00% of the
average daily net assets of the fund attributable to that class in the case of
the plans relating to Class B shares and Class L Shares. Such fees may be used
to make payments to the distributor for distribution services, to securities
dealers and other industry professionals (called Service Agents) that have
entered into service agreements with the distributor and others in respect of
the sale of shares of the funds, and to other parties in respect of the sale
of shares of the funds, and to make payments for advertising, marketing or
other promotional activity, and payments for preparation, printing, and
distribution of prospectuses, statements of additional information and reports
for recipients other than regulators and existing shareholders. The funds also
may make payments to the distributor, Service Agents and others for providing
personal service or the maintenance of shareholder accounts. The amounts paid
by the distributor to each recipient may vary based upon certain factors,
including, among other things, the levels of sales of fund shares and/or
shareholder services provided. Recipients may receive different compensation
for sales for Class A and Class B shares.

The Service Plans with respect to Class A and L shares also provides that
the distributor, broker-dealers, banks and other financial intermediaries may
receive the sales charge paid by Class A and L investors, respectively, as
partial compensation for their services in connection with the sale of shares.
The Service Plan with respect to Class B and L shares provides that the
distributor, dealers, and others may receive all or a portion of the deferred
sales charges paid by Class B and L investors, respectively.

The Service Plans permit the funds to pay fees to the distributor, Service
Agents and others as compensation for their services, not as reimbursement for
specific expenses incurred. Thus, even if their expenses exceed the fees
provided for by the applicable Plan, the fund will not be obligated to pay
more than those fees and, if their expenses are less than the fees paid to
them, they will realize a profit. Each fund will pay the fees to the
distributor and others until the applicable Plan or Distribution Agreement is
terminated or not renewed. In that event, the distributor's or other
recipient's expenses in excess of fees received or accrued through the
termination date will be the distributor's or other recipient's sole
responsibility and not obligations of the fund. In their annual consideration
of the continuation of the Service Plans for each fund, the trustees will
review the Service Plans and the expenses for each fund separately.

Each Service Plan continues in effect if such continuance is specifically
approved at least annually by a vote of both a majority of the trust's
trustees and a majority of the trust's trustees who are not "interested
persons" of the trust and who have no direct or indirect financial interest in
the operation of the Service Plan or in any agreement related to the Plan (for
purposes of this paragraph "qualified trustees"). Each Service Plan requires
that the trust and the distributor provide to the board of trustees, and the
board of trustees review, at least quarterly, a written report of the amounts
expended (and the purposes therefor) under the Service Plan. Each Service Plan
further provides that the selection and nomination of the qualified trustees
is committed to the discretion of such qualified trustees then in office. A
Service Plan may be terminated with respect to any class of a fund at any time
by a vote of a majority of the trust's qualified trustees or by a vote of a
majority of the outstanding voting securities of that class. A Service Plan
may not be amended to increase materially the amount of a class's permitted
expenses thereunder without the approval of a majority of the outstanding
securities of that class and may not be materially amended in any case without
a vote of a majority of both the trustees and qualified trustees. The
distributor will preserve copies of any plan, agreement or report made
pursuant to the Service Plans for a period of not less than six years, and for
the first two years the distributor will preserve such copies in an easily
accessible place.

As contemplated by the Service Plans, CFBDS acts as the agent of the trust
in connection with the offering of shares of the funds pursuant to the
Distribution Agreements. The Prospectus contains a description of fees payable
to the distributor under the Distribution Agreements. For the fiscal year
ended December 31, 1996, the fees payable to CFBDS under a prior distribution
agreement with respect to Large Cap Growth Fund were $336,950 (of which
$224,633 was voluntarily waived). For the period from January 1, 1997 to
October 31, 1997, the fees payable to CFBDS under a prior distribution
agreement with respect to Large Cap Growth Fund were $101,807. For the fiscal
years ended October 31, 1998 and 1999, the fees payable to CFBDS under the
current Distribution Agreement with respect to Class A shares of Large Cap
Growth Fund were $763,085 and $1,249,253, respectively. For the period from
January 4, 1999 to October 31, 1999, the fees payable to CFBDS under the
current Distribution Agreement with respect to Class B shares of Large Cap
Growth Fund were $175,091. For the fiscal year ended December 31, 1996, the
fees payable to CFBDS under a prior distribution agreement with respect to
Small Cap Growth Fund were $23,974 (all of which was voluntarily waived). For
the period from January 1, 1997 to October 31, 1997, the fees payable to CFBDS
under a prior distribution agreement with respect to Small Cap Growth Fund
were $31,537 (all of which was voluntarily waived). For the fiscal years ended
October 31, 1998 and 1999, the fees payable to CFBDS under the current
Distribution Agreement with respect to Class A shares of Small Cap Growth Fund
were $67,515 and $66,445, respectively. For the period from January 4, 1999 to
October 31, 1999, the fees payable to CFBDS under the current Distribution
Agreement with respect to Class B shares of Small Cap Growth Fund were $4,379.

The distributor may enter into agreements with Service Agents and may pay
compensation to such Service Agents for accounts for which the Service Agents
are holders of record. The distributor may make payments for distribution and/
or shareholder servicing activities out of its past profits and other
available sources. The distributor may also make payments for marketing,
promotional or related expenses to dealers. The amount of these payments are
determined by the Distributor and may vary. The manager may make similar
payments under similar arrangements.

EXPENSES

In addition to amounts payable under the Management Agreements and the
Service Plans, each fund is responsible for its own expenses, including, among
other things, the costs of securities transactions, the compensation of
trustees that are not affiliated with the manager or the fund's distributor,
government fees, taxes, accounting and legal fees, expenses of communication
with shareholders, interest expense, and insurance premiums. The Prospectus
for each fund contains more information about the expenses of each fund.

TRANSFER AGENT

The trust has entered into a Transfer Agency and Services Agreement
pursuant to which Citi Fiduciary Trust Company, an affiliate of Salomon Smith
Barney ("Citi"), acts as transfer agent for each fund. PFPC Global Fund
Services ("PFPC"), acts as sub-transfer agent pursuant to an agreement with
Citi.

The principal place of business of Citi is 388 Greenwich Street, New York,
New York 10013. The principal place of business of PFPC is P.O. Box 9699,
Providence, Rhode Island 02940-9699.

CUSTODIAN

The trust also has entered into a Custodian Agreement and a fund
Accounting Agreement with State Street, pursuant to which custodial and fund
accounting services, respectively, are provided for each fund. Among other
things, State Street calculates the daily net asset value for the funds.
Securities may be held by a sub-custodian bank approved by the trustees.

The portfolio trust, on behalf of the portfolios, has entered into
Custodian Agreements with State Street pursuant to which State Street acts as
custodian for each portfolio. The portfolio trust, on behalf of the
portfolios, also has entered into a fund Accounting Agreement with State
Street Cayman Trust Company, Ltd. ("State Street Cayman") pursuant to which
State Street Cayman provides fund accounting services for each portfolio.
State Street Cayman also provides transfer agency services to each portfolio
trust.

The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110. The principal business address of State Street
Cayman is P.O. Box 2508 GT, Grand Cayman, British West Indies.

AUDITORS

PricewaterhouseCoopers LLP are the independent accountants for the trust,
providing audit services and assistance and consultation with respect to the
preparation of filings with the SEC. The address of PricewaterhouseCoopers LLP
is 160 Federal Street, Boston, Massachusetts 02110. PricewaterhouseCoopers LLP
(Canada) are the chartered accountants for each portfolio trust. The address
of PricewaterhouseCoopers LLP (Canada) is Suite 3000, Box 82, Royal Trust
Towers, Toronto Dominion Center, Toronto, Ontario, Canada M5K 1G8.

COUNSEL

Bingham Dana LLP, 150 Federal Street, Boston, MA 02110, acts as counsel
for the funds.

9. PORTFOLIO TRANSACTIONS

The manager trades securities for a fund if it believes that a transaction
net of costs (including custodian charges) will help achieve the fund's
investment objective. Changes in the fund's investments are made without
regard to the length of time a security has been held, or whether a sale would
result in the recognition of a profit or loss. Therefore, the rate of turnover
is not a limiting factor when changes are appropriate. Specific decisions to
purchase or sell securities for each fund are made by a portfolio manager who
is an employee of the manager and who is appointed and supervised by its
senior officers. The portfolio manager may serve other clients of the manager
in a similar capacity.

In connection with the selection of brokers or dealers and the placing of
portfolio securities transactions, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to a fund and/or the other
accounts over which the manager or its affiliates exercise investment
discretion. The manager is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for a fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
manager determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services provided by
such broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the manager
or its affiliates have with respect to accounts over which they exercise
investment discretion. The trustees of the trust periodically review the
commissions paid by a fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
a fund.

The management fees that a fund pays to the manager will not be reduced as
a consequence of the manager's receipt of brokerage and research services.
While such services are not expected to reduce the expenses of the manager,
the manager would, through the use of the services, avoid the additional
expenses which would be incurred if it should attempt to develop comparable
information through its own staff or obtain such services independently.

In certain instances there may be securities that are suitable as an
investment for a fund as well as for one or more of the manager's other
clients. Investment decisions for a fund and other clients are made with a
view to achieving their respective investment objectives. It may develop that
a particular security is bought or sold for only one client even though it
might be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling the same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives
of more than one client. When two or more clients are simultaneously engaged
in the purchase or sale of the same security, the securities are allocated
among clients in a manner believed to be equitable to each. It is recognized
that in some cases this system could adversely affect the price of or the size
of the position obtainable in a security for a fund. When purchases or sales
of the same security for a fund and for other portfolios managed by the
manager occur contemporaneously, the purchase or sale orders may be aggregated
in order to obtain any price advantages available to large volume purchases or
sales.

For the fiscal year ended December 31, 1996, for the period from January
1, 1997 to October 31, 1997 and for the fiscal years ended October 31, 1998
and 1999, the Large Cap Growth Portfolio paid brokerage commissions of
$586,248, $643,728, $855,648 and $1,463,273, respectively. For the fiscal year
ended December 31, 1996, for the period from January 1, 1997 to October 31,
1997 and for the fiscal years ended October 31, 1998 and 1999, the Small Cap
Growth Portfolio paid brokerage commissions in the amount of $84,320, $77,226,
$214,401 and $372,100, respectively.

10. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES

The trust's Declaration of Trust permits the trustees to issue an
unlimited number of full and fractional shares of beneficial interest (without
par value) of each series and to divide or combine the shares of any series
into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interests in that series and to divide
such series into classes. The trust has reserved the right to create and issue
additional series and classes of shares. Each share of each class represents
an equal proportionate interest in the fund with each other share of that
class. Shares of each series of the trust participate equally in the earnings,
dividends and distribution of net assets of the particular series upon
liquidation or dissolution (except for any differences between classes of
shares of a series). Shares of each series are entitled to vote separately to
approve advisory agreements or changes in investment policy, and shares of a
class are entitled to vote separately to approve any distribution or service
agreements relating to that class, but shares of all series may vote together
in the election or selection of trustees and accountants for the trust. In
matters affecting only a particular series or class, only shares of that
particular series or class are entitled to vote.

Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the trust may elect all of the trustees of the trust if
they choose to do so and in such event the other shareholders in the trust
would not be able to elect any trustee. The trust is not required and has no
present intention of holding, annual meetings of shareholders but the trust
will hold special meetings of a fund's shareholders when in the judgment of
the trust's trustees it is necessary or desirable to submit matters for a
shareholder vote. Shareholders have, under certain circumstances (e.g., upon
the application and submission of certain specified documents to the trustees
by a specified number of shareholders), the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more trustees. Shareholders also have under certain
circumstances the right to remove one or more trustees without a meeting by a
declaration in writing by a specified number of shareholders. No material
amendment may be made to the trust's Declaration of Trust without the
affirmative vote of the holders of a majority of the outstanding shares of
each series affected by the amendment. (See "Investment Restrictions.")

At any meeting of shareholders of any fund, a Service Agent may vote any
shares of which it is the holder of record and for which it does not receive
voting instructions proportionately in accordance with the instructions it
receives for all other shares of which that Service Agent is the holder of
record.

The trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the trust), if approved by a vote of the holders of
two-thirds of the trust's outstanding shares, voting as a single class, or of
the affected series of the trust, as the case may be, except that if the
trustees of the trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the trust's or the
affected series' outstanding shares would be sufficient. The trust or any
series of the trust, as the case may be, may be terminated (i) by a vote of a
majority of the outstanding voting securities of the trust or the affected
series or (ii) by the trustees by written notice to the shareholders of the
trust or the affected series. If not so terminated, the trust will continue
indefinitely.

The fund's Transfer Agent maintains a share register for shareholders of
record. Share certificates are not issued.

The trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business
trust may, under certain circumstances, be held personally liable as partners
for its obligations and liabilities. However, the Declaration of Trust of the
trust contains an express disclaimer of shareholder liability for acts or
obligations of the trust and provides for indemnification and reimbursement of
expenses out of trust property for any shareholder held personally liable for
the obligations of the trust. The Declaration of Trust also provides that the
trust may maintain appropriate insurance (e.g., fidelity bonding and errors
and omissions insurance) for the protection of the trust, its shareholders,
trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the trust itself was unable to meet its
obligations.

The trust's Declaration of Trust further provides that obligations of the
trust are not binding upon the trustees individually but only upon the
property of the trust and that the trustees will not be liable for any action
or failure to act, but nothing in the Declaration of Trust protects a trustee
against any liability to which he or she would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office.

Large Cap Growth Portfolio and Small Cap Growth Portfolio are series of
The Premium Portfolios. The portfolio trust is organized as a trust under the
laws of the State of New York. Each investor in a portfolio, including the
applicable fund, may add to or withdraw from its investment in the applicable
portfolio on each Business Day. As of the close of regular trading on each
Business Day, the value of each investor's beneficial interest in each
portfolio is determined by multiplying the net asset value of the portfolio by
the percentage, effective for that day, that represents that investor's share
of the aggregate beneficial interests in the portfolio. Any additions or
withdrawals that are to be effected on that day are then effected. The
investor's percentage of the aggregate beneficial interests in the portfolio
is then re-computed as the percentage equal to the fraction (i) the numerator
of which is the value of such investor's investment in the portfolio as of the
close of regular trading on such day plus or minus, as the case may be, the
amount of any additions to or withdrawals from the investor's investment in
the portfolio effected on such day, and (ii) the denominator of which is the
aggregate net asset value of the portfolio as of the close of regular trading
on such day plus or minus, as the case may be, the amount of the net additions
to or withdrawals from the aggregate investments in the portfolio by all
investors in the portfolio. The percentage so determined is then applied to
determine the value of the investor's interest in the portfolio as of the
close of regular trading on the next following Business Day.

11. TAX MATTERS

TAXATION OF THE FUNDS AND THE PORTFOLIO TRUST

FEDERAL TAXES. Each fund has elected to be treated, and intends to qualify
each year, as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), by meeting all
applicable requirements of Subchapter M, including requirements as to the
nature of the fund's gross income, the amount of fund distributions, and the
composition of the fund's portfolio assets. Provided all such requirements are
met, no U.S. federal or excise taxes generally will be required to be paid by
a fund. If any fund should fail to qualify as a "regulated investment company"
for any year, the fund would incur a regular corporate federal income tax upon
its taxable income and fund distributions would generally be taxable as
ordinary income to shareholders. The portfolio trust believes its portfolios
also will not be required to pay any U.S. federal income or excise taxes on
their income.

FOREIGN TAXES. Investment income and gains received by a fund from non-
U.S. securities may be subject to non-U.S. taxes. The U.S. has entered into
tax treaties with many other countries that may entitle a fund to a reduced
rate of tax or an exemption from tax on such income. Each fund intends to
qualify for treaty reduced rates where applicable. It is not possible,
however, to determine a fund's effective rate of non-U.S. tax in advance since
the amount of the fund's assets to be invested within various countries is not
known.

If a fund holds more than 50% of its assets in foreign stock and
securities at the close of its taxable year, the fund may elect to "pass
through" to the fund's shareholders foreign income taxes paid. If a fund so
elects, shareholders will be required to treat their pro rata portion of the
foreign income taxes paid by the fund as part of the amounts distributed to
them by the fund and thus includable in their gross income for federal income
tax purposes. Shareholders who itemize deductions would then be allowed to
claim a deduction or credit (but not both) on their federal income tax returns
for such amounts, subject to certain limitations. Shareholders who do not
itemize deductions would (subject to such limitations) be able to claim a
credit but not a deduction. No deduction for such amounts will be permitted to
individuals in computing their alternative minimum tax liability. If a fund
does not qualify or elect to "pass through" to its shareholders foreign income
taxes paid by it, shareholders will not be able to claim any deduction or
credit for any part of the foreign taxes paid by the fund.

TAXATION OF SHAREHOLDERS

TAXATION OF DISTRIBUTIONS. Shareholders of a fund will generally have to
pay federal income taxes and any state or local taxes on the dividends and
capital gain distributions they receive from the fund. Dividends from ordinary
income and any distributions from net short-term capital gains are taxable to
shareholders as ordinary income for federal income tax purposes, whether the
distributions are made in cash or in additional shares. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net short-
term capital losses), whether made in cash or in additional shares, are
taxable to shareholders as long-term capital gains without regard to the
length of time the shareholders have held their shares. Any fund dividend that
is declared in October, November, or December of any calendar year, that is
payable to shareholders of record in such a month, and that is paid the
following January, will be treated as if received by the shareholders on
December 31 of the year in which the dividend is declared.

Any fund distribution will have the effect of reducing the per share net
asset value of shares in the fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.

DIVIDENDS-RECEIVED DEDUCTION. The portion of each fund's ordinary income
dividends attributable to dividends received in respect to equity securities
of U.S. issuers is normally eligible for the dividends received deduction for
corporations subject to U.S. federal income taxes. Availability of the
deduction for particular shareholders is subject to certain limitations, and
deducted amounts may be subject to the alternative minimum tax and result in
certain basis adjustments.

SPECIAL CONSIDERATIONS FOR NON-U.S. PERSONS. Each fund will withhold tax
payments at a rate of 30% (or any lower applicable tax treaty rate) on taxable
dividends and other payments subject to withholding taxes that are made to
persons who are not citizens or residents of the U.S. Distributions received
from a fund by non-U.S. persons also may be subject to tax under the laws of
their own jurisdiction.

BACKUP WITHHOLDING. The account application asks each new shareholder to
certify that the shareholder's Social Security or taxpayer identification
number is correct and that the shareholder is not subject to 31% backup
withholding for failing to report income to the IRS. Each fund may be required
to withhold (and pay over to the IRS for the shareholder's credit) tax at the
rate of 31% on certain distributions and redemption proceeds paid to
shareholders who fail to provide this information or who otherwise violate IRS
regulations.

DISPOSITION OF SHARES. In general, any gain or loss realized upon a
taxable disposition of shares of a fund by a shareholder that holds such
shares as a capital asset will be treated as a long-term capital gain or loss
if the shares have been held for more than twelve months and otherwise as a
short-term capital gain or loss. However, any loss realized upon a disposition
of shares in a fund held for six months or less will be treated as a long-term
capital loss to the extent of any distributions of net capital gain made with
respect to those shares. Any loss realized upon a disposition of shares may
also be disallowed under rules relating to wash sales. Gain may be increased
(or loss reduced) upon a redemption of Class A fund shares held for 90 days or
less followed by any purchase of shares of a fund or another of the Smith
Barney mutual funds, including purchases by exchange or by reinvestment,
without payment of a sales charge which would otherwise apply because of any
sales charge paid on the original purchase of the Class A fund shares.

EFFECTS OF CERTAIN INVESTMENTS AND TRANSACTIONS

CERTAIN DEBT INVESTMENTS. Any investment by a fund in zero coupon bonds,
deferred interest bonds, payment-in-kind bonds, certain stripped securities,
and certain securities purchased at a market discount will cause the fund to
recognize income prior to the receipt of cash payments with respect to those
securities. In order to distribute this income and avoid a tax on the fund, a
fund may be required to liquidate portfolio securities that it might otherwise
have continued to hold, potentially resulting in additional taxable gain or
loss to the fund. An investment by a fund in residual interests of a CMO that
has elected to be treated as a real estate mortgage investment conduit, or
"REMIC," can create complex tax problems, especially if the fund has state or
local governments or other tax-exempt organizations as shareholders.

OPTIONS, ETC. Each fund's transactions in options, futures contracts and
forward contracts will be subject to special tax rules that may affect the
amount, timing and character of fund income and distributions to shareholders.
For example, certain positions held by each fund on the last business day of
each taxable year will be marked to market (i.e., treated as if closed out) on
that day, and any gain or loss associated with the positions will be treated
as 60% long-term and 40% short-term capital gain or loss. Certain positions
held by a fund that substantially diminish its risk of loss with respect to
other positions in its portfolio may constitute "straddles," and may be
subject to special tax rules that would cause deferral of fund losses,
adjustments in the holding periods of fund securities, and conversion of
short-term into long-term capital losses. Certain tax elections exist for
straddles that may alter the effects of these rules. Each fund will limit its
activities in options, futures contracts and forward contracts to the extent
necessary to meet the requirements of Subchapter M of the Code.

FOREIGN INVESTMENTS. The funds may make non-U.S. investments. Special tax
considerations apply with respect to such investments. Foreign exchange gains
and losses realized by a fund will generally be treated as ordinary income and
loss. Use of non-U.S. currencies for non-hedging purposes and investment by a
fund in certain "passive foreign investment companies" may have to be limited
in order to avoid a tax on a fund. A fund may elect to mark to market any
investments in "passive foreign investment companies" on the last day of each
taxable year. This election may cause the fund to recognize ordinary income
prior to the receipt of cash payments with respect to those investments; in
order to distribute this income and avoid a tax on the fund, the fund may be
required to liquidate portfolio securities that it might otherwise have
continued to hold potentially resulting in additional taxable gain or loss to
the fund.

12. FINANCIAL STATEMENTS

The audited Statements of Assets and Liabilities as of October 31, 1999
for Large Cap Growth Fund and Small Cap Growth Fund, and each of their
respective Statements of Operations for the year ended October 31, 1999, and
each of their respective Statements of Changes in Net Assets and Financial
Highlights for the periods presented in the 1999 Annual Reports to
Shareholders of the funds, the Notes to Financial Statements of each fund and
Independent Auditors' Reports for each fund, each of which is included in the
Annual Report to Shareholders of the funds, are incorporated by reference into
this Statement of Additional Information. These financial statements and notes
thereto have been so incorporated in reliance upon the reports of
PricewaterhouseCoopers LLP, independent accountants, on behalf of each funds.

The audited Statements of Assets and Liabilities, including its Portfolio
of Investments, as of October 31, 1999 for Large Cap Growth Portfolio and
Small Cap Growth Portfolio, and each of their repsective Statements of
Operations for the year ended October 31, 1999, and each of their respective
Statements of Changes in Net Assets and Financial Highlights for the periods
presented in the 1999 Annual Reports to Shareholders fund, the Notes to
Financial Statements of each fund and Independent Auditors' Reports for each
fund, are incorporated by reference into this Statement of Additional
Information. These financial statements have been so incorporated in reliance
upon the reports of PricewaterhouseCoopers LLP, on behalf of each portfolio.

Copies of the above referenced Annual Reports for the funds and portfolios
accompany this Statement of Additional Information.
<PAGE>

APPENDIX I

SECURITIES RATINGS

THE FOLLOWING RATING SERVICES DESCRIBE RATED SECURITIES AS FOLLOWS:

MOODY'S INVESTORS SERVICE, INC.

BONDS

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

Aa -- Bonds which 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 risk appear somewhat larger than the Aaa
securities.

A -- Bonds which 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 some time in the
future.

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

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

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

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

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

STANDARD & POOR'S RATINGS GROUP

BONDS

AAA -- An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA -- An obligation rated AA differs from the highest rated obligations only
in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.

A -- An obligation rated A is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB -- An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

BB -- An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

B -- An obligation rated B is more vulnerable to nonpayment than obligations
rated BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet
its financial commitment on the obligation.

CCC -- An obligation rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.

CC -- An obligation rated CC is currently highly vulnerable to nonpayment.

C -- The C rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this
obligation are being continued. C is also used for a preferred stock that is
in arrears (as well as for junior debt of issuers rated CCC- and CC).

D -- Bonds rated D are in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
debt service payments are jeopardized, upon the completion of a tender or
exchange offer whereby some or all of an issue is either repurchased for an
amount of cash or replaced with other securities having a total value that is
clearly less than par value, and, in the case of preferred stock of
deferrable-payment securities, upon nonpayment of the dividend or deferral of
the interest payment.

DUFF & PHELPS CREDIT RATING CO.

LONG-TERM DEBT

AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- -- High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.

A+, A, A- -- Protection factors are average but adequate. However, risk
factors are more variable in periods of greater economic stress.

BBB+, BBB, BBB- -- Below-average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

BB+, BB, BB- -- Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.

B+, B, B- -- Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or
into a higher or lower rating grade.

CCC -- Well below investment-grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable economic/
industry conditions, and/or with unfavorable company developments.

DD -- Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.

FITCH IBCA, INC.

AAA -- Highest credit quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.

AA -- Very high credit quality. "AA" ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.

A -- High credit quality. "A" ratings denote a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered strong.
This capacity may, nevertheless, be more vulnerable to changes in
circumstances or in economic conditions than is the case for higher ratings.

BBB -- Good credit quality. "BBB" ratings indicate that there is currently a
low expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and
in economic conditions are more likely to impair this capacity. This is the
lowest investment-grade category.

BB -- Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time; however, business or financial alternatives may be available to allow
financial commitments to be met. Securities rated in this category are not
investment grade.

B -- Highly speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent
upon a sustained favorable business and economic environment.

CCC, CC and C -- High default risk. Default is a real possibility. Capacity
for meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of
some kind appears probable. "C" ratings signal imminent default.

DDD, DD, and D -- Default. Securities are not meeting current obligations and
are extremely speculative. "DDD" designates the highest potential for recovery
of amounts outstanding on any securities involved. For U.S. corporates, for
example, "DD" indicates expected recovery of 50% - 90% of such outstandings,
and "D" the lowest recovery potential, i.e., below 50%.
<PAGE>

SMITH BARNEY RESEARCH LARGE CAP GROWTH FUND
SMITH BARNEY SMALL CAP GROWTH OPPORTUNITIES FUND

INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043

DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, Boston, MA 02109 (617) 423-1679

TRANSFER AGENT
Citi Fiduciary Trust Company
388 Greenwich Street
New York, NY 10013

SUB TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699

CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110

AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street, Boston, MA 02110

LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
PART C

Item 23. Exhibits.

* a(1) Amended and Restated Declaration of Trust of the
Registrant
******, a(2) Amendments to Amended and Restated Declaration of Trust
and filed of the Registrant
herewith
a(3) Form of Amended and Restated Designation of Classes of
the Registrant
**** b(1) Amended and Restated By-Laws of the Registrant
**** b(2) Amendments to Amended and Restated By-Laws of the
Registrant
*** d(1) Management Agreement between the Registrant and
Citibank, N.A., as manager to CitiFunds Small Cap Growth
Portfolio
****** d(2) Management Agreement between the Registrant and
Citibank, N.A., as manager to CitiFunds Small Cap Value
Portfolio
*** d(3) Management Agreement between the Registrant and
Citibank, N.A., as manager to CitiFunds Large Cap Growth
Portfolio
****** d(4) Management Agreement between the Registrant and
Citibank, N.A., as manager to CitiFunds Growth & Income
Portfolio
******* e(1) Amended and Restated Distribution Agreement between the
Registrant and CFBDS, Inc. ("CFBDS"), as distributor
with respect to Class A shares
******* e(2) Distribution Agreement between the Registrant and
CFBDS, as distributor with respect to Class B shares
** g(1) Custodian Contract between the Registrant and State
Street Bank and Trust Company ("State Street"), as
custodian
****** g(2) Letter Agreement adding CitiFunds Small Cap Value
Portfolio and CitiFunds Growth & Income Portfolio to the
Custodian Contract between the Registrant and State
Street
******** h(1) Services Agreement between Citibank, N.A. and CFBDS
**** h(2) Transfer Agency and Services Agreement between the
Registrant with respect to its series CitiFunds Small
Cap Value Portfolio and CitiFunds Growth & Income
Portfolio and State Street, as transfer agent
****** h(3) Letter Agreement adding CitiFunds Small Cap Value
Portfolio and CitiFunds Growth & Income Portfolio to the
Transfer Agency and Service Agreement between the
Registrant and State Street
** h(4) Accounting Services Agreement between the Registrant
and State Street, as fund accounting agent
***** h(5) Letter Agreement adding CitiFunds Small Cap Value
Portfolio and CitiFunds Growth & Income Portfolio to the
Accounting Services Agreement between the Registrant and
State Street
h(6) Transfer Agency and Services Agreement between
Registrant on behalf of its series Smith Barney Small
Cap Growth Opportunities Fund and Research Large Cap
Growth Fund and Citi Fiduciary Trust Company, as
transfer agent
h(7) Sub-Transfer Agency and Services Agreement between the
Registrant and PFPC Global Fund Services with respect to
its Series Smith Barney Small Cap Growth Opportunities
Fund and Smith Barney Research Large Cap Growth Fund
***** i Opinion and consent of counsel
j Independent Auditors' Consent
******* m(1) Amended and Restated Service Plan of the Registrant
for Class A shares
******* m(2) Service Plan of the Registrant for Class B shares
******* o Multiple Class Plan of the Registrant
****, ******** p(1) Powers of Attorney for the Registrant
*****, ******** p(2) Powers of Attorney for Asset Allocation Portfolios
********* p(3) Powers of Attorney for The Premium Portfolios
q(1) Code of Ethics of Registrant
q(2) Code of Ethics of CFBDS
q(3) Code of Ethics of The Manager

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

* Incorporated herein by reference to Post-Effective Amendment No. 17 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on
February 28, 1997.
** Incorporated herein by reference to Post-Effective Amendment No. 19 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on
October 24, 1997.
*** Incorporated herein by reference to Post-Effective Amendment No. 20 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on
November 3, 1997.
**** Incorporated herein by reference to Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on June
29, 1998.
***** Incorporated herein by reference to Post-Effective Amendment No. 27 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on
December 16, 1998.
****** Incorporated herein by reference to Post-Effective Amendment No. 28 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on
December 21, 1998.
******* Incorporated herein by reference to Post-Effective Amendment No. 29 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on March
1, 1999.
******** Incorporated herein by reference to Post-Effective Amendment No. 30 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on
December 29, 1999.
********* Incorporated herein by reference to Post-Effective Amendment No. 31 to
the Registrant's Registration Statement on Form N-1A (File No.
2-90519) as filed with the Securities and Exchange Commission on
February 28, 2000.

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

Not applicable.

Item 25. Indemnification.

Reference is hereby made to (a) Article V of the Registrant's
Declaration of Trust, filed as an Exhibit to Post-Effective Amendment No. 17 to
its Registration Statement on Form N-1A; (b) Section 6 of the Distribution
Agreements between the Registrant and CFBDS, filed as Exhibits to Post-Effective
Amendment No. 29 to its Registration Statement on Form N-1A; and (c) the
undertaking of the Registrant regarding indemnification set forth in its
Registration Statement on Form N-1A.

The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.

Item 26. Business and Other Connections of Investment Adviser.

Citibank, N.A. ("Citibank") is a commercial bank offering a wide range
of banking and investment services to customers across the United States and
around the world. Citibank is a wholly-owned subsidiary of Citicorp, which is,
in turn, a wholly-owned subsidiary of Citigroup Inc. Citibank also serves as
investment adviser to the following registered investment companies (or series
thereof): Asset Allocation Portfolios (Large Cap Value Portfolio, Small Cap
Value Portfolio, International Portfolio, Foreign Bond Portfolio), The Premium
Portfolios (U.S. Fixed Income Portfolio, Balanced Portfolio, Large Cap Growth
Portfolio, International Equity Portfolio, Government Income Portfolio, Small
Cap Growth Portfolio and High Yield Portfolio), Tax Free Reserves Portfolio,
U.S. Treasury Reserves Portfolio, Cash Reserves Portfolio, CitiFunds(SM) Tax
Free Income Trust (CitiFunds(SM) New York Tax Free Income Portfolio,
CitiFunds(SM) National Tax Free Income Portfolio and CitiFunds(SM) California
Tax Free Income Portfolio), CitiFunds(SM) Multi-State Tax Free Trust
(CitiFunds(SM) California Tax Free Reserves, CitiFunds(SM) New York Tax Free
Reserves and CitiFunds(SM) Connecticut Tax Free Reserves), CitiFunds(SM)
Institutional Trust (CitiFunds(SM) Institutional Cash Reserves) and Variable
Annuity Portfolios (CitiSelect(R) VIP Folio 200 Conservative, CitiSelect(R) VIP
Folio 300 Balanced, CitiSelect(R) VIP Folio 400 Growth, CitiSelect(R) VIP Folio
500 Growth Plus and CitiFunds(SM) Small Cap Growth VIP Portfolio). Citibank and
its affiliates manage assets in excess of $351 billion worldwide. The principal
place of business of Citibank is located at 399 Park Avenue, New York, New York
10043.

John S. Reed is the Chairman and a Director of Citibank. Victor J.
Menezes is the President and a Director of Citibank. William R. Rhodes and H.
Onno Ruding are Vice Chairmen and Directors of Citibank. The other Directors of
Citibank are Paul J. Collins, Vice Chairman of Citigroup Inc. and Robert I.
Lipp, Chairman and Chief Executive Officer of The Travelers Insurance Group Inc.
and of Travelers Property Casualty Corp.

Each of the individuals named above is also a Director of Citigroup
Inc. In addition, the following persons have the affiliations indicated:

Paul J. Collins Director, Kimberly-Clark Corporation

Robert I. Lipp Chairman, Chief Executive Officer and President, Travelers
Property Casualty Corp.

John S. Reed Director, Monsanto Company
Director, Philip Morris Companies Incorporated
Stockholder, Tampa Tank & Welding, Inc.

William R. Rhodes Director, Private Export Funding Corporation

H. Onno Ruding Supervisory Director, Amsterdamsch Trustees Cantoor B.V.
Director, Pechiney S.A.
Advisory Director, Unilever NV and Unilever PLC
Director, Corning Incorporated

Franklin Advisory Services LLC (formerly, Franklin Advisory Services,
Inc.) ("Franklin"), a sub-adviser with respect to the small cap value securities
of Small Cap Value Portfolio, a series of Asset Allocation Portfolios, maintains
its principal office at One Parker Plaza, 9th Floor, Fort Lee, New Jersey 07024.
Franklin, a Delaware corporation incorporated in 1996, is a registered
investment adviser under the Investment Advisers Act of 1940 and is a
wholly-owned subsidiary of Franklin Resources, Inc., a publicly owned holding
company. Franklin is an investment adviser to various open-end and closed-end
investment companies.

William J. Lippman is the President and Director of Franklin Advisory
Services LLC. Mr. Lippman holds a master of business administration degree from
New York University and a bachelor of business administration degree from City
College of New York. Mr. Lippman also serves as Senior Vice President of
Franklin Resources, Inc. and Franklin Management, Inc. and has been with the
Franklin Templeton Group since 1988. Prior to joining Franklin Advisers LLC, Mr.
Lippman was president of L.F. Rothschild Fund Management, Inc. and has been in
the securities industry for over 30 years.

Each of the individuals named below is an officer and/or Director of
Franklin and has the affiliations indicated:

<TABLE>
<CAPTION>
Name: Affiliations:
<S> <C>

William J. Lippman Senior Vice President, Franklin Resources, Inc.
President and Director Senior Vice President, Franklin Advisers LLC
Senior Vice President, Franklin Templeton Distributors, Inc.
Senior Vice President, Franklin Management, Inc.

Mr. Lippman also serves as officer and/or director or trustee of
eight of the investment companies in the Franklin Group of Funds.

Charles B. Johnson President, Chief Executive Officer and Director, Franklin
Chairman of the Board and Resources, Inc.
Director Chairman of the Board and Director, Franklin Advisers LLC
Chairman of the Board and Director, Franklin Investment Advisory
Services, Inc.
Chairman of the Board and Director, Franklin Templeton
Distributors, Inc.

Director, Franklin/Templeton Investor Services, Inc.
Director, Franklin Templeton Services, Inc.
Director, General Host Corporation

Mr. Johnson also serves as officer and/or director or trustee, as
the case may be, of most of the other subsidiaries of Franklin
Resources, Inc. and of 54 of the investment companies in the
Franklin Templeton Group of Funds.

Rupert H. Johnson, Jr. Executive Vice President and Director, Franklin Resources, Inc.
Senior Vice President and Executive Vice President and Director, Franklin Templeton
Director Distributors, Inc.
President and Director, Franklin Advisers LLC
Senior Vice President and Director, Franklin Investment
Advisory Services, Inc.
Director, Franklin/Templeton Investor Services, Inc.

Mr. Johnson also serves as officer and/or director, trustee or
managing general partner, as the case may be, of most other
subsidiaries of Franklin Resources, Inc. and of 60 of the
investment companies in the Franklin Templeton Group of Funds.

Deborah R. Gatzek Senior Vice President and General Counsel, Franklin Resources,
Vice President and Assistant Inc.
Secretary Senior Vice President, Franklin Templeton Distributors, Inc.
Vice President, Franklin Advisers LLC
Vice President, Franklin Investment Advisory Services, Inc.

Ms. Gatzek also serves as officer of 60 of the investment companies
in the Franklin Templeton Group of Funds.

Martin L. Flanagan Senior Vice President, Chief Financial Officer and Treasurer,
Treasurer Franklin Resources, Inc.
Executive Vice President, Templeton Worldwide, Inc.
Senior Vice President and Treasurer, Franklin Advisers LLC
Senior Vice President and Treasurer, Franklin Templeton
Distributors, Inc.
Senior Vice President, Franklin/Templeton Investor Services, Inc.
Treasurer, Franklin Investment Advisory Services, Inc.

Mr. Flanagan also serves as officer of most other subsidiaries of
Franklin Resources, Inc. and officer, director and/or trustee of 60
of the investment companies in the Franklin Templeton Group of
Funds.

Leslie M. Kratter Vice President, Franklin Resources, Inc.
Secretary Vice President, Franklin Institutional Services Corporation
President and Director, Franklin/Templeton Travel, Inc.
</TABLE>

For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and directors of SSB Citi Fund
Management LLC ("SSB Citi"), a subadviser of Large Cap Value Portfolio, a series
of the Asset Allocation Portfolios, reference is made to SSB Citi's current Form
ADV (File No. 801-8314) filed under the Advisers Act, incorporated herein by
reference.

Item 27. Principal Underwriters.

(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFunds(SM) International Growth & Income Portfolio, CitiFunds(SM)
International Growth Portfolio, CitiFunds(SM) U.S. Treasury Reserves,
CitiFunds(SM) Cash Reserves, CitiFunds(SM) Premium U.S. Treasury Reserves,
CitiFunds(SM) Premium Liquid Reserves, CitiFunds(SM) Institutional U.S. Treasury
Reserves, CitiFunds(SM) Institutional Liquid Reserves, CitiFunds(SM)
Institutional Cash Reserves, CitiFunds(SM) Tax Free Reserves, CitiFunds(SM)
Institutional Tax Free Reserves, CitiFunds(SM) California Tax Free Reserves,
CitiFunds(SM) Connecticut Tax Free Reserves, CitiFunds(SM) New York Tax Free
Reserves, CitiFunds(SM) Intermediate Income Portfolio, CitiFunds(SM) Short-Term
U.S. Government Income Portfolio, CitiFunds(SM) New York Tax Free Income
Portfolio, CitiFunds(SM) National Tax Free Income Portfolio, CitiFunds(SM)
California Tax Free Income Portfolio, CitiFunds(SM) Small Cap Value Portfolio,
CitiFunds(SM) Growth & Income Portfolio, CitiFunds(SM) Large Cap Growth
Portfolio, CitiFunds(SM) Small Cap Growth Portfolio, CitiFunds(SM) Balanced
Portfolio, CitiSelect(R) VIP Folio 200 Conservative, CitiSelect(R) VIP Folio 300
Balanced, CitiSelect(R) VIP Folio 400 Growth, CitiSelect(R) VIP Folio 500 Growth
Plus and CitiFunds(SM) Small Cap Growth VIP Portfolio. CFBDS is also the
placement agent for Large Cap Value Portfolio, Small Cap Value Portfolio,
International Portfolio, Foreign Bond Portfolio, Intermediate Income Portfolio,
Short-Term Portfolio, Growth & Income Portfolio, U.S. Fixed Income Portfolio,
Large Cap Growth Portfolio, Small Cap Growth Portfolio, International Equity
Portfolio, Balanced Portfolio, Government Income Portfolio, Tax Free Reserves
Portfolio, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio. CFBDS
also serves as the distributor for the following funds: The Travelers Fund U for
Variable Annuities, The Travelers Fund VA for Variable Annuities, The Travelers
Fund BD for Variable Annuities, The Travelers Fund BD II for Variable Annuities,
The Travelers Fund BD III for Variable Annuities, The Travelers Fund BD IV for
Variable Annuities, The Travelers Fund ABD for Variable Annuities, The Travelers
Fund ABD II for Variable Annuities, The Travelers Separate Account PF for
Variable Annuities, The Travelers Separate Account PF II for Variable Annuities,
The Travelers Separate Account QP for Variable Annuities, The Travelers Separate
Account TM for Variable Annuities, The Travelers Separate Account TM II for
Variable Annuities, The Travelers Separate Account Five for Variable Annuities,
The Travelers Separate Account Six for Variable Annuities, The Travelers
Separate Account Seven for Variable Annuities, The Travelers Separate Account
Eight for Variable Annuities, The Travelers Fund UL for Variable Annuities, The
Travelers Fund UL II for Variable Annuities, The Travelers Variable Life
Insurance Separate Account One, The Travelers Variable Life Insurance Separate
Account Two, The Travelers Variable Life Insurance Separate Account Three, The
Travelers Variable Life Insurance Separate Account Four, The Travelers Separate
Account MGA, The Travelers Separate Account MGA II, The Travelers Growth and
Income Stock Account for Variable Annuities, The Travelers Quality Bond Account
for Variable Annuities, The Travelers Money Market Account for Variable
Annuities, The Travelers Timed Growth and Income Stock Account for Variable
Annuities, The Travelers Timed Short-Term Bond Account for Variable Annuities,
The Travelers Timed Aggressive Stock Account for Variable Annuities, The
Travelers Timed Bond Account for Variable Annuities, Small Cap Fund, Government
Fund, Growth Fund, Growth and Income Fund, International Equity Fund, Mid Cap
Fund, Municipal Bond Fund, Select Small Cap Portfolio, Select Government
Portfolio, Select Growth Portfolio, Select Growth and Income Portfolio, Select
Mid Cap Portfolio, Balanced Investments, Emerging Markets Equity Investments,
Government Money Investments, High Yield Investments, Intermediate Fixed Income
Investments, International Equity Investments, International Fixed Income
Investments, Large Capitalization Growth Investments, Large Capitalization Value
Equity Investments, Long-Term Bond Investments, Mortgage Backed Investments,
Municipal Bond Investments, S&P Index Investments, Small Capitalization Growth
Investments, Small Capitalization Value Equity Investments, Multi-Sector Fixed
Income Investments, Multi-Strategy Market Neutral Investments, Appreciation
Portfolio, Diversified Strategic Income Portfolio, Emerging Growth Portfolio,
Equity Income Portfolio, Equity Index Portfolio, Growth & Income Portfolio,
Intermediate High Grade Portfolio, International Equity Portfolio, Money Market
Portfolio, Total Return Portfolio, Smith Barney Adjustable Rate Government
Income Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney Appreciation
Fund Inc., Smith Barney Arizona Municipals Fund Inc., Smith Barney California
Municipals Fund Inc., Balanced Portfolio, Conservative Portfolio, Growth
Portfolio, High Growth Portfolio, Income Portfolio, Global Portfolio, Select
Balanced Portfolio, Select Conservative Portfolio, Select Growth Portfolio,
Select High Growth Portfolio, Select Income Portfolio, Concert Social Awareness
Fund, Smith Barney Large Cap Blend Fund, Smith Barney Fundamental Value Fund
Inc., Large Cap Value Fund, Short-Term High Grade Bond Fund, U.S. Government
Securities Fund, Smith Barney Balanced Fund, Smith Barney Convertible Fund,
Smith Barney Diversified Strategic Income Fund, Smith Barney Exchange Reserve
Fund, Smith Barney High Income Fund, Smith Barney Municipal High Income Fund,
Smith Barney Premium Total Return Fund, Smith Barney Total Return Bond Fund,
Cash Portfolio, Government Portfolio, Municipal Portfolio, Concert Peachtree
Growth Fund, Smith Barney Contrarian Fund, Smith Barney Government Securities
Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith Barney
Hansberger Global Value Fund, Smith Barney Investment Grade Bond Fund, Smith
Barney Premier Selections Fund, Smith Barney Small Cap Value Fund, Smith Barney
Small Cap Growth Fund, Smith Barney Intermediate Maturity California Municipals
Fund, Smith Barney Intermediate Maturity New York Municipals Fund, Smith Barney
Large Capitalization Growth Fund, Smith Barney S&P 500 Index Fund, Smith Barney
Mid Cap Blend Fund, Smith Barney EAFE Index Fund, Smith Barney US 5000 Index
Fund, Smith Barney Managed Governments Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney Massachusetts Municipals Fund, Cash
Portfolio, Government Portfolio, Retirement Portfolio, California Money Market
Portfolio, Florida Portfolio, Georgia Portfolio, Limited Term Portfolio,
National Portfolio, Massachusetts Money Market Portfolio, New York Money Market
Portfolio, New York Portfolio, Pennsylvania Portfolio, Smith Barney Municipal
Money Market Fund, Inc., Smith Barney Natural Resources Fund Inc., Smith Barney
Financial Services Fund, Smith Barney Health Sciences Fund, Smith Barney
Technology Fund, Smith Barney New Jersey Municipals Fund Inc., Smith Barney
Oregon Municipals Fund, Zeros Plus Emerging Growth Series 2000, Smith Barney
Security and Growth Fund, Smith Barney Small Cap Blend Fund, Inc., Smith Barney
Telecommunications Income Fund, Income and Growth Portfolio, Reserve Account
Portfolio, U.S. Government/High Quality Securities Portfolio, Emerging Markets
Portfolio, European Portfolio, Global Government Bond Portfolio, International
Equity Portfolio, Pacific Portfolio, AIM Capital Appreciation Portfolio, Smith
Aggressive Growth Portfolio, Smith Mid Cap Portfolio, Alliance Growth Portfolio,
INVESCO Global Strategic Income Portfolio, MFS Total Return Portfolio, Putnam
Diversified Income Portfolio, Smith Barney High Income Portfolio, Smith Barney
Large Cap Value Portfolio, Smith Barney International Equity Portfolio, Smith
Barney Large Capitalization Growth Portfolio, Smith Barney Money Market
Portfolio, Smith Barney Pacific Basin Portfolio, Travelers Managed Income
Portfolio, Van Kampen Enterprise Portfolio, Centurion U.S. Equity Fund,
Centurion International Equity Fund, Centurion U.S. Contra Fund, Centurion
International Contra Fund, Global High-Yield Bond Fund, International Equity
Fund, Emerging Opportunities Fund, Core Equity Fund, Long-Term Bond Fund, Global
Dimensions Fund L.P., Citicorp Private Equity L.P., AIM V.I. Capital
Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth Fund, AIM
V.I. International Equity Fund, AIM V.I. Value Fund, Fidelity VIP Growth
Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Equity Income
Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund
Portfolio, Fidelity VIP II Index 500 Portfolio, MFS World Government Series, MFS
Money Market Series, MFS Bond Series, MFS Total Return Series, MFS Research
Series, MFS Emerging Growth Series, Salomon Brothers Institutional Money Market
Fund, Salomon Brothers Cash Management Fund, Salomon Brothers New York Municipal
Money Market Fund, Salomon Brothers National Intermediate Municipal Fund,
Salomon Brothers U.S. Government Income Fund, Salomon Brothers High Yield Bond
Fund, Salomon Brothers International Equity Fund, Salomon Brothers Strategic
Bond Fund, Salomon Brothers Large Cap Growth Fund, Salomon Brothers Balanced
Fund, Salomon Brothers Asia Growth Fund, Salomon Brothers Capital Fund Inc,
Salomon Brothers Investors Value Fund Inc, Salomon Brothers Opportunity Fund
Inc, Salomon Brothers Institutional High Yield Bond Fund, Salomon Brothers
Institutional Emerging Markets Debt Fund, Salomon Brothers Variable Investors
Fund, Salomon Brothers Variable Capital Fund, Salomon Brothers Variable Total
Return Fund, Salomon Brothers Variable High Yield Bond Fund, Salomon Brothers
Variable Strategic Bond Fund, Salomon Brothers Variable U.S. Government Income
Fund, Salomon Brothers Variable Asia Growth Fund, and Salomon Brothers Variable
Small Cap Fund.

(b) The information required by this Item 27 with respect to each
director and officer of CFBDS is incorporated by reference to Schedule A of Form
BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File
No.8-32417).

Item 28. Location of Accounts and Records.

The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:

NAME ADDRESS

CFBDS, Inc. 21 Milk Street, 5th Floor
(subadministrator and distributor) Boston, MA 02109

State Street Bank and Trust Company 1776 Heritage Drive
(transfer agent, custodian and fund North Quincy, MA 02171
accounting agent)

Citibank, N.A. 153 East 53rd Street
(manager) New York, NY 10043

Item 29. Management Services.

Not applicable.

Item 30. Undertakings.

Not applicable.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and Commonwealth of
Massachusetts on the 16th day of June, 2000.

CITIFUNDS TRUST II,
on behalf of Small Cap
Growth Portfolio and
Large Cap Growth Portfolio

By: Philip W. Coolidge
----------------------
Philip W. Coolidge
President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated below on June 16, 2000.

Signature Title
--------- -----

Philip W. Coolidge President, Principal Executive
---------------------- Officer and Trustee
Philip W. Coolidge

Linwood C. Downs Principal Financial Officer and Principal
---------------------- Accounting Officer
Linwood C. Downs

Riley C. Gilley* Trustee
----------------------
Riley C. Gilley

Diana R. Harrington* Trustee
----------------------
Diana R. Harrington

Susan B. Kerley* Trustee
----------------------
Susan B. Kerley

Heath B. McLendon* Trustee
----------------------
Heath B. McLendon

C. Oscar Morong, Jr.* Trustee
----------------------
C. Oscar Morong, Jr.

E. Kirby Warren* Trustee
----------------------
E. Kirby Warren

*By: Philip W. Coolidge
----------------------
Philip W. Coolidge
Executed by Philip W. Coolidge
on behalf of those indicated
pursuant to
Powers of Attorney.
<PAGE>
SIGNATURES

The Premium Portfolios has duly caused this Post-Effective Amendment to
the Registration Statement on Form N-1A of CitiFunds Trust II to be signed on
its behalf by the undersigned, thereunto duly authorized, in Grand Cayman,
Cayman Islands, on the 16th day of June, 2000.

THE PREMIUM PORTFOLIOS
on behalf of Large Cap Growth Portfolio and
Small Cap Growth Portfolio

By: Susan Jakuboski
---------------------------
Susan Jakuboski,
Assistant Secretary of
The Premium Portfolios

This Post-Effective Amendment to the Registration Statement on Form
N-1A of CitiFunds Trust II has been signed by the following persons in the
capacities indicated on June 16, 2000.

Signature Title
--------- -----

Philip W. Coolidge* President, Principal Executive
---------------------- Officer and Trustee
Philip W. Coolidge

Linwood C. Downs* Principal Financial Officer and Principal
---------------------- Accounting Officer
Linwood C. Downs

Elliott J. Berv* Trustee
----------------------
Elliott J. Berv

Mark T. Finn* Trustee
----------------------
Mark T. Finn

C. Oscar Morong, Jr.* Trustee
----------------------
C. Oscar Morong, Jr.

Walter E. Robb, III* Trustee
----------------------
Walter E. Robb, III

E. Kirby Warren* Trustee
----------------------
E. Kirby Warren

*By: Susan Jakuboski
--------------------------
Susan Jakuboski
Executed by Susan Jakuboski
on behalf of those indicated as
attorney in fact.
<PAGE>

EXHIBIT INDEX

a(2) Form of Amended and Restated Establishment and Designation of
Series of the Registrant

a(3) Form of Amended and Restated Designation of Classes of the
Registrant

h(6) Transfer Agency and Services Agreement between the Registrant
with respect to its series Smith Barney Small Cap Growth
Opportunities Fund and Smith Barney Research Large Cap Growth
Fund and Citi Fiduciary Trust Company

h(7) Sub-Transfer Agency and Services Agreement between the
Registrant with respect to its series Smith Barney Small Cap
Growth Opportunities Fund and Smith Barney Research Large Cap
Growth Fund and PFPC Global Fund Services

j Independent Auditors' Consent

q(1) Code of Ethics of the Registrant

q(2) Code of Ethics of CFBDS

q(3) Code of Ethics of the Manager