SMITH BARNEY NATURAL RESOURCES FUND INC, 485BPOS, 2000-02-11

SMITH BARNEY NATURAL RESOURCES FUND INC
485BPOS, 2000-02-11

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As filed with the Securities and Exchange
Commission on February 11, 2000
Registration No. 33 -7339
811-4757

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
[ ] Pre-Effective Amendment No.

[X] Post-Effective Amendment No. 26

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940, as amended

Amendment No. 27 [X]

Smith Barney Sector Series Inc.
(f/k/a Smith Barney Natural Resources Fund Inc.)
(a Maryland Corporation)
(Exact Name of Registrant as Specified in Charter)

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

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

Christina T. Sydor, Secretary
Smith Barney Sector Series Inc.
(f/k/a Smith Barney Natural Resources Fund Inc.)
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)

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

[ ] Immediately upon filing pursuant to paragraph
b
[X ] on February 14, 2000 pursuant to paragraph b
[ ] 60 days after filing pursuant to paragraph
(a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 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

Part A-Combined Prospectus for the Natural
Resources Fund, Financial Services Fund, Health
Sciences Fund and Technology Fund
<PAGE>

[LOGO] Smith Barney
Mutual Funds

P R O S P E C T U S

Natural Resources Fund

Financial Services Fund

Health Sciences Fund

Technology Fund

Class A, B, L and Y Shares
- -------------------------------------------------------------
February 14, 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.

<PAGE>

Contents

<TABLE>
<S> <C>
Investments, risks and performance.......................................... 2
Smith Barney Natural Resources Fund....................................... 2
Smith Barney Financial Services Fund...................................... 7
Smith Barney Health Sciences Fund......................................... 11
Smith Barney Technology Fund.............................................. 15
More on the funds' investments.............................................. 19
Management.................................................................. 20
Subscription offering period................................................ 22
Choosing a class of shares to buy........................................... 22
Comparing the fund's classes................................................ 24
Sales charges............................................................... 25
More about deferred sales charges........................................... 27
Buying shares............................................................... 28
Exchanging shares........................................................... 29
Redeeming shares............................................................ 31
Other things to know
about share transactions.................................................... 33
Smith Barney 401(k) and
ExecChoiceTM programs....................................................... 34
Dividends, distributions and taxes.......................................... 35
Share price................................................................. 36
Natural Resources Fund Financial Highlights................................. 37
</TABLE>

Each fund is a separate series of Smith Barney Sector Series Inc., a Maryland
corporation.

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

Smith Barney Mutual Funds

1
<PAGE>

Investments, risks and performance

Smith Barney Natural Resources Fund

Investment objective

Smith Barney Natural Resources Fund (the "Natural Resources Fund") seeks long-
term capital appreciation by investing primarily in equity and debt securities
of issuers in natural resources industries.

Principal Investment Strategies

Key investments The fund invests primarily in equity securities of U.S. and
foreign companies in natural resources industries. Natural resources include
gold and other precious metals, base metals, minerals, water, timberland and
forest products, agricultural commodities, oil, gas, coal and other energy
resources. A natural resources company derives at least 50% of its revenue
from:

.Owning, producing or processing natural resources or leases or rights to natu-
ral resources
.Exploring for, developing, transporting or distributing natural resources
.Providing services or supplies to a natural resources industry
.Developing energy efficient technologies
.Upgrading or processing raw commodities into intermediate products

Selection process The fund invests in a broad range of natural resources indus-
tries that have the potential for long-term capital appreciation. The manager
considers the risks associated with investing in the countries where these
industries are located.

In allocating assets among these industries, the manager considers:

.The likely impact of expected economic development on industry demand
.Expected changes in industry supply relative to demand
.The degree to which expected positive or negative industry developments are
reflected in the market price of industry securities
.Domestic or international political factors that may influence natural
resource companies

In selecting the securities of specific companies, the manager looks for:

.Consistently high return on capital
.Growth in cash flow and earnings
.A low stock price relative to private market valuation, or historical valua-
tion measures
.Experienced and effective management whose interests are aligned with those of
shareholders
.Events that cause a security to be temporarily undervalued

Sector Funds

2
<PAGE>

The fund may lend its securities to earn income for the fund.

The fund may, but is not required to, use various techniques, such as buying
and selling futures and options contracts, to increase or decrease its exposure
to changing security prices or other factors that affect security values. The
fund may engage in foreign currency transactions solely to manage its exposure
to foreign securities. If the fund's strategies do not work as intended, the
fund may not achieve its objective.

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, because:

.Stock markets are volatile and can decline significantly in response to
adverse issuer, political, regulatory, market or economic developments. Dif-
ferent parts of the market can react differently to these developments.

.Foreign markets can be more volatile than the U.S. market because of increased
risks of adverse issuer, political, regulatory, market or economic develop-
ments and can perform differently than the U.S. market. Currency fluctuations
may adversely impact the fund's investments.

.The natural resources industries can be significantly affected by events
relating to international, political and economic developments, energy con-
servation, the success of exploration projects, and tax and other government
regulations.

.The value of an individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than the mar-
ket as a whole. The value of smaller capitalized companies may involve
greater risks, such as limited product lines, markets and financial or mana-
gerial resources.

.The fund's investments are spread across the sector on which it focuses. How-
ever, because those investments are limited to a comparatively narrow segment
of the economy, the fund's investments are not as diversified as most mutual
funds, and far less diversified than the broad securities markets. This means
that the fund tends to be more volatile than other mutual funds, and the val-
ues of its portfolio investments tend to go up and down more rapidly. As a
result, the value of your investment in the fund may rise or fall rapidly.

.The manager's judgment about the attractiveness, growth prospects, value or
potential appreciation of a particular stock may prove to be incorrect.

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

.Are seeking to participate in the long-term growth potential of the natural
resources industry
.Are seeking capital appreciation and can tolerate significant short-term vola-
tility

Smith Barney Mutual Funds

3
<PAGE>

.Are seeking a hedge against inflation by investing in natural resources

.Are looking for an investment with potentially greater return but higher risk
than a fund investing primarily in fixed income companies

.Are comfortable with the risks of the stock market and the special risks of
foreign securities, including emerging market securities
.Currently have exposure to the stock market and can tolerate concentrated
investment in a single market sector

Risk return bar chart

The 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 neces-
sarily indicate how the fund will perform in the future. The bar chart shows
the performance of the fund's Class A shares for each of the past 10 calendar
years. Class B, L and Y shares 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.

Total Return for Class A Shares

[BAR GRAPH]

90 91 92 93 94 95 96 97 98 99
-- -- -- -- -- -- -- -- -- --
- -19.71% -3.85% -4.57% 65.35% -9.43% -10.77% 34.81% -9.87% -24.59% 35.95%

Sector Funds

4
<PAGE>

Quarterly returns (past 10 years):

Highest: 30.75% in 4th quarter 1993; Lowest: (18.09)% in 4th quarter 1997

Risk return table
The 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 MSCI
World Index, a broad-based unmanaged index of foreign stocks. This table
assumes imposition of the maximum sales charge applicable to the class, redemp-
tion of shares at the end of the period, and reinvestment of distributions and
dividends.

Average Annual Total Returns

Calendar Years Ended December 31, 1999
<TABLE>
<CAPTION>
Class 1 year 5 years 10 years Since Inception Inception Date
<S> <C> <C> <C> <C> <C>
A 29.13% 1.10% 1.54% 2.85% 11/24/86
B 30.45% 1.31% n/a 6.25% 11/06/92
L 33.23% 1.40% n/a (0.17)% 11/07/94
MSCI World Index 24.93% 19.76% 11.42% 13.13% *
</TABLE>

*Index comparison begins on November 30, 1986.

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

Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Management fee 0.75% 0.75% 0.75% 0.75%
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None
Other expenses** 0.73% 0.67% 0.58% 0.73%
----- ----- ----- -----
Total annual fund operating expenses 1.73% 2.42% 2.33% 1.48%
</TABLE>

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

** For Class Y Shares, "Other expenses" have been estimated based on expenses
incurred by Class A shares because no Class Y shares were outstanding for
the year ended October 31, 1999.

Smith Barney Mutual Funds

5
<PAGE>

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

.You invest $10,000 in the fund for the period shown

.You redeem all of your shares at the end of the period
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a sales charge
.The fund's operating expenses remain the same

Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A (with or without redemption) $667 $1,018 $1,392 $2,439
Class B (redemption at end of period) $745 $1,055 $1,391 $2,586
Class B (no redemption) $245 $ 755 $1,291 $2,586
Class L (redemption at end of period) $434 $ 820 $1,333 $2,739
Class L (no redemption) $334 $ 820 $1,333 $2,739
Class Y (with or without redemption) $151 $ 468 $ 808 $1,768
</TABLE>

Sector Funds

6
<PAGE>

Investments, risks and performance

Smith Barney Financial Services Fund

Investment objective

Smith Barney Financial Services Fund (the "Financial Services Fund") seeks
long-term capital appreciation by investing primarily in common stocks.

Principal Investment Strategies

Key investments The fund normally invests at least 80% of its assets in securi-
ties of companies principally engaged in providing financial services to con-
sumers and industry. These companies may include, for example, commercial
banks, savings and loan associations, broker-dealers, investment banks, invest-
ment advisers, insurance companies, real estate-related companies, leasing com-
panies, and consumer and industrial finance companies. The fund may invest its
assets in securities of foreign issuers in addition to securities of domestic
issuers. The fund invests primarily in companies with medium and large market
capitalizations. To a lesser extent, the fund also may invest in common stocks
of companies with small market capitalizations. Small and medium market capi-
talization companies are those companies with market capitalizations under $5
billion.

Selection process The fund normally invests at least 80% of its assets in com-
panies doing business in the financial services sector. The remainder of the
fund's assets are not required to be invested in that sector. To determine
whether a potential investment is principally doing business in the sector, a
company must meet at least one of the following tests:

.At least 50% of its gross income or its net sales must come from activities in
the sector;

.At least 50% of its assets must be devoted to producing revenues from the sec-
tor; or

.Based on other available information, the manager determines that the
company's primary business is within the sector.

In buying and selling securities, the fund relies on fundamental analysis of
each issuer and its potential for success in light of its current financial
condition and its industry position. Factors considered, among other things,
include long-term growth potential, earnings estimates and quality of manage-
ment.

The fund may lend its securities to earn income for the fund.

Smith Barney Mutual Funds

7
<PAGE>

Principal risks of investing in the fund

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

.The financial services industries are subject to extensive government regula-
tion and relatively rapid change because of increasingly blurred distinctions
between service segments, and can be significantly affected by availability
and cost of capital funds, changes in interest rates, and price competition.
The performance of the financial services sector may differ in direction and
degree from that of the overall stock market.

.The fund is "non-diversified," which means it may invest a larger percentage
of its assets in one issuer than a diversified fund. To the extent the fund
concentrates its assets in fewer issuers, the fund will be more susceptible
to negative events affecting those issuers. The fund's investments are spread
across the sector on which it focuses. However, because those investments are
limited to a comparatively narrow segment of the economy, the fund's invest-
ments are not as diversified as most mutual funds, and far less diversified
than the broad securities markets. This means that the fund tends to be more
volatile than other mutual funds, and the values of its portfolio investments
tend to increase and decrease more rapidly. As a result, the value of your
investment in the fund may rise or fall rapidly.

.The manager's judgment about the attractiveness, growth prospects, value or
potential appreciation of a particular stock may prove to be incorrect.

Sector Funds

8
<PAGE>

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

.Are seeking to participate in the long-term growth potential of the financial
services industry

.Are seeking capital appreciation and can tolerate short-term volatility.

.Are looking for an investment with potentially greater return but higher risk
than a fund investing primarily in fixed income securities

.Are comfortable with the risks of the stock market and the special risks of
foreign securities, including emerging market securities

.Currently have exposure to the stock market and can tolerate concentrated
investment in a single market sector

Performance

The fund is new and does not yet have the performance information which other
Smith Barney funds show in bar and table form in this part of the prospectus.

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

Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a % of offering price) 5.00% None 1.00% None
Maximum deferred sales charge (load) (as a %
of the lower of net asset value at purchase or
redemption) None* 5.00% 1.00% None
Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Management fee 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.25% 1.00% 1.00% None
Other expenses** 0.27% 0.27% 0.27% 0.27%
----- ----- ----- -----
Total annual fund operating expenses 1.32% 2.07% 2.07% 1.07%
</TABLE>

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

Smith Barney Mutual Funds

9
<PAGE>

** The fund is new and, therefore, has no historical expense data. The amounts
set forth in "Other expenses" have been estimated based on expenses the
fund expects to incur during its first full fiscal year.

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

.You redeem all of your shares at the end of the period
.Your investment has a 5% return each year

.You reinvest all distributions and dividends without a sales charge
.The fund's operating expenses remain the same

Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years
<S> <C> <C>
Class A $628 $897
Class B $710 $949
Class B (without redemption) $210 $649
Class L $408 $742
Class L (without redemption) $308 $742
Class Y $109 $340
</TABLE>

Sector Funds

10
<PAGE>

Investments, risks and performance

Smith Barney Health Sciences Fund

Investment objective

Smith Barney Health Sciences Fund (the "Health Sciences Fund") seeks long-term
capital appreciation by investing primarily in common stocks.

Principal Investment Strategies

Key investments The fund normally invests at least 80% of its assets in securi-
ties of companies principally engaged in the design, manufacture, or sale of
products or services used for or in connection with health care or medicine.
These companies may include, for example, pharmaceutical companies; companies
involved in biotechnology, medical diagnostic, biochemical or other health care
research and development; companies involved in the operation of health care
facilities; and other companies involved in the design, manufacture, or sale of
health care-related products or services such as medical, dental and optical
products, hardware, insurance or services. The fund may invest its assets in
securities of foreign issuers in addition to securities of domestic issuers.
The fund invests primarily in companies with medium and large market capital-
izations. To a lesser extent, the fund also may invest in common stocks of com-
panies with small market capitalizations. Small and medium market
capitalization companies are those companies with market capitalizations under
$5 billion.

Selection process The fund normally invests at least 80% of its assets in com-
panies doing business in the health sciences sector. The remainder of the
fund's assets are not required to be invested in that sector. To determine
whether a potential investment is principally doing business in the sector, a
company must meet at least one of the following tests:

.At least 50% of its gross income or its net sales must come from activities in
the sector;

.At least 50% of its assets must be devoted to producing revenues from the sec-
tor; or

.Based on other available information, the manager determines that the
company's primary business is within the sector.

In buying and selling securities, the fund relies on fundamental analysis
of each issuer and its potential for success in light of its current financial
condition and its industry position. Factors considered, among other things,
include long-term growth potential, earnings estimates and quality of manage-
ment.

The fund may lend its securities to earn income for the fund.

Smith Barney Mutual Funds

11
<PAGE>

The fund may, but is not required to, use various techniques, such as buying
and selling futures and options contracts, to increase or decrease the fund's
exposure to changing security prices or other factors that affect security val-
ues. The fund may engage in foreign currency transactions solely to manage its
exposure to foreign securities. If the fund's strategies do not work as intend-
ed, the fund may not achieve its objective.

Principal risks of investing in the fund

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

.The health science industries are subject to government regulation and govern-
ment approval of products and services, which could have a significant effect
on price and availability, and can be significantly affected by rapid obso-
lescence. Lawsuits or other legal proceedings against the issuer of a secu-
rity may adversely affect the issuer, the market value of the security or the
fund's performance. The performance of the health sciences sector may differ
in direction and degree from that of the overall stock market.

.The fund is "non-diversified," which means it may invest a larger percentage
of its assets in one issuer than a diversified fund. To the extent the fund
concentrates its assets in fewer issuers, the fund will be more susceptible
to events affecting those issuers. The fund's investments are spread across
the sector on which it focuses. However, because those investments are lim-
ited to a comparatively narrow segment of the economy, the fund's investments
are not as diversified as most mutual funds, and far less diversified than
the broad securities markets. This means that the fund tends to be more vola-
tile than other mutual funds, and the values of its portfolio investments
tend to go up and down more rapidly. As a result, the value of your invest-
ment in the fund may rise or fall rapidly.

Sector Funds

12
<PAGE>

.The manager's judgment about the attractiveness, growth prospects, value or
potential appreciation of a particular stock may prove to be incorrect.

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

.Are seeking to participate in the long-term growth potential of the health
sciences industry

.Are seeking capital appreciation and can tolerate significant short-term vola-
tility

.Are looking for an investment with potentially greater return but higher risk
than a fund investing primarily in fixed income securities

.Are comfortable with the risks of the stock market and the special risks of
foreign securities, including emerging market securities

.Currently have exposure to the stock market and can tolerate concentrated
investment in a single market sector

Performance

The fund is new and does not yet have the performance information which other
Smith Barney funds show in bar and table form in this part of the prospectus.

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

Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases
(as a % of offering price) 5.00% None 1.00% None
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at
purchase or redemption) None* 5.00% 1.00% None
Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Management fee 0.80% 0.80% 0.80% 0.80%
Distribution and service
(12b-1) fees 0.25% 1.00% 1.00% None
Other expenses** 0.27% 0.27% 0.27% 0.27%
----- ----- ----- -----
Total annual fund operating expenses 1.32% 2.07% 2.07% 1.07%
</TABLE>

Smith Barney Mutual Funds

13
<PAGE>

** The fund is new, and therefore, has no historical expense data. The amounts
set forth in "Other expenses" have been estimated based on expenses the
fund expects to incur during its first full fiscal year.

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

.You redeem all of your shares at the end of the period
.Your investment has a 5% return each year

.You reinvest all distributions and dividends without a sales charge
.The fund's operating expenses remain the same

Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years
<S> <C> <C>
Class A $628 $897

Class B $710 $949
Class B (without redemption) $210 $649

Class L $408 $742
Class L (without redemption) $308 $742

Class Y $109 $340

</TABLE>

Sector Funds

14
<PAGE>

Investments, risks and performance

Smith Barney Technology Fund

Investment objective

Smith Barney Technology Fund (the "Technology Fund") seeks long-term capital
appreciation by investing primarily in common stocks.

Principal Investment Strategies

Key investments The fund normally invests at least 80% of its assets in securi-
ties of companies principally engaged in offering, using or developing prod-
ucts, processes or services that will provide or will benefit significantly
from technological advances and improvements. These companies may include, for
example, companies that develop, produce or distribute products or services in
the computer, semi-conductor, software, electronics, media, communications,
health care, and biotechnology sectors. The fund may invest its assets in secu-
rities of foreign issuers in addition to securities of domestic issuers. The
fund invests primarily in companies with medium and large market capitaliza-
tions. To a lesser extent, the fund also may invest in common stocks of compa-
nies with small market capitalizations. Small and medium market capitalization
companies are those companies with market capitalizations under $5 billion.

Selection process The fund normally invests at least 80% of its assets in com-
panies doing business in the technology sector. The remainder of the fund's
assets are not required to be invested in that sector. To determine whether a
potential investment is principally doing business in the sector, a company
must meet at least one of the following tests:

.At least 50% of its gross income or its net sales must come from activities in
the sector;

.At least 50% of its assets must be devoted to producing revenues from the sec-
tor; or

.Based on other available information, the manager determines that the
company's primary business is within the sector.

The fund may lend its securities to earn income for the fund.

Smith Barney Mutual Funds

15
<PAGE>

Principal risks of investing in the fund

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

.Stock markets are volatile and can decline significantly in response to
adverse issuer, political, regulatory, market or economic develop-
ments. Different parts of the market can react differently to these
developments.

.Technology companies can be significantly affected by obsolescence of existing
technology, short product cycles, falling prices and profits, and competition
from new market entrants. The technology sector may be subject to greater
governmental regulation than many other areas, and changes in governmental
policies and the need for regulatory approvals may have a material adverse
effect on the sector. The performance of the technology sector may differ in
direction and degree from that of the overall stock market.

.The value of an individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than the mar-
ket as a whole. The value of smaller capitalized companies may involve
greater risks such as limited product lines, markets and financial or manage-
rial resources.

.The fund is "non-diversified," which means it may invest a larger percentage
of its assets in one issuer than a diversified fund. To the extent the fund
concentrates its assets in fewer issuers, the fund will be more susceptible
to negative events affecting those issuers. The fund's investments are spread
across the sector on which it focuses. However, because those investments are
limited to a comparatively narrow segment of the economy, the fund's invest-
ments are not as diversified as most mutual funds, and far less diversified
than the broad securities markets. This means that the fund tends to be more
volatile than other mutual funds, and the values of its portfolio investments
tend to go up and down more rapidly. As a result, the value of your invest-
ment in the fund may rise or fall rapidly.

Sector Funds

16
<PAGE>

.The manager's judgment about the attractiveness, growth prospects, value or
potential appreciation of a particular stock may prove to be incorrect.

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

.Are seeking to participate in the long-term growth potential of the technology
industry

.Are seeking capital appreciation and can tolerate significant short-term vola-
tility

.Are looking for an investment with potentially greater return but higher risk
than a fund investing primarily in fixed income securities

.Are comfortable with the risks of the stock market and the special risks of
foreign securities, including emerging market securities

.Currently have exposure to the stock market and can tolerate concentrated
investment in a single market sector.

Performance

The fund is new and does not yet have the performance information which other
Smith Barney funds show in bar and table form in this part of the prospectus.

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

Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases
(as a % of offering price) 5.00% None 1.00% None
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at
purchase or redemption) None* 5.00% 1.00% None
Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Management fee 0.95% 0.95% 0.95% 0.95%
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None
Other expenses** 0.23% 0.23% 0.23% 0.23%
----- ----- ----- -----
Total annual fund operating expenses 1.43% 2.18% 2.18% 1.18%
</TABLE>

Smith Barney Mutual Funds

17
<PAGE>

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

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

.You redeem all of your shares at the end of the period
.Your investment has a 5% return each year

.You reinvest all distributions and dividends without a sales charge
.The fund's operating expenses remain the same

Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years
<S> <C> <C>
Class A $638 $930

Class B $721 $982
Class B (without redemption) $221 $682
Class L $419 $775
Class L (without redemption) $319 $775

Class Y $120 $375
</TABLE>

Sector Funds

18
<PAGE>

More on the funds' investments

Foreign investments Each fund's investments in securities of foreign issuers
involves greater risk than investments in securities of U.S. issuers. Many for-
eign countries the funds may invest in have markets that are less liquid and
more volatile than markets in the U.S. In some foreign countries, less informa-
tion is available about foreign issuers and markets because of less rigorous
accounting and regulatory standards than in the U.S. Currency fluctuations
could erase investment gains or add to investment losses. The risks of invest-
ing in foreign securities are greater for securities of emerging market issuers
because political or economic instability, lack of market liquidity, and nega-
tive government actions like currency controls or seizure of private businesses
or property are more likely.

Derivatives and hedging techniques Each fund may, but need not, use derivate
contracts, such as futures and options on securities, securities indices or
currencies; options on these futures; forward currency contracts; and interest
rate or currency swaps for any of the following purposes:

. To hedge against the economic impact of adverse changes in the market value
of its securities, because of changes in stock market prices, currency
exchange rates or interest rates

. Settle transactions in securities quoted in foreign currencies

. As a substitute for buying or selling securities

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

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

Smith Barney Mutual Funds

19
<PAGE>

Other investments The Natural Resources Fund may invest up to 35% of its assets
in securities of U.S. and foreign issuers not engaged in natural resources
industries, as well as in gold bullion and gold coins.

Debt securities The Natural Resources Fund may invest in debt securities of
U.S. and foreign corporate and governmental issuers rated as low as B by the
major rating agencies or, if unrated, of comparable quality. The value of debt
securities will go down if interest rates go up, or the credit rating of the
security is downgraded or the issuer defaults on its obligation to pay princi-
pal or interest. Debt securities rated below BBB and their unrated equivalents
are commonly referred to in the U.S. as "junk bonds." These securities may be
speculative, are subject to greater price volatility, are less liquid, and
involve high risk of loss.

Master/feeder option Each of the Financial Services Fund, Health Sciences Fund
and Technology Fund may in the future seek to achieve its investment objective
by investing all of its net assets in another investment company having the
same investment objective and substantially the same investment policies and
restrictions as those applicable to the fund.

Management

Manager Each fund's investment manager is SSB Citi Fund Management LLC, an
affiliate of Salomon Smith Barney Inc. The manager's address is 388 Greenwich
Street, New York, New York 10013. The manager oversees the selection of the
fund's investments and its general operations. The manager and Salomon Smith
Barney are subsidiaries of Citigroup Inc. Citigroup businesses offer a broad
range of financial services--asset management, banking and consumer finance,
credit and charge cards, insurance, investments, investment banking and trad-
ing--and use diverse channels to make them available to consumer and corporate
customers around the world.

Pursuant to a written agreement, State Street Bank and Trust Company provides
certain fund accounting services and calculates the daily net asset value for
each of the Financial Services Fund, Health Sciences Fund and Technology Fund.
The principal business address of State Street is 225 Franklin Street, Boston,
Massachusetts 02110.

John G. Goode has been responsible for the day-to-day management of the Natural
Resources Fund's portfolio since November 1995. Mr. Goode is an investment
officer of the manager and chairman and chief investment officer of Davis
Skaggs Investment Management, a division of the manager and a managing director
of Salomon Smith Barney.

Sector Funds

20
<PAGE>

Subadviser Citibank, N.A., through its Citibank Global Asset Management divi-
sion, an affiliate of the manager located at 100 First Stamford Place, Stam-
ford, Connecticut 06902, serves as subadviser to each of the Financial Services
Fund, Health Sciences Fund and Technology Fund. The manager, and not the funds,
pays the subadviser for its services out of its management fee. The subadviser,
utilizing a portfolio management team approach, manages the fund's investment
portfolio, subject to the supervision of the manager. The subadviser provides
investment management and advisory services to other mutual funds and, with its
affiliates, currently manages over $351 billion in assets worldwide.

Management fees For services provided to the funds, each fund pays the manager
the annual investment management fee described below (based on a percentage of
the fund's average daily net assets):

Natural Resources Fund: 0.75%

Financial Services Fund: 0.80%

Health Sciences Fund:0.80%

Technology Fund:0.95%

Sub-Advisory fees For services provided to the funds, the manager pays the
subadviser the annual subadvisory fee described below (based on a percentage of
the fund's average daily net assets):

Financial Services Fund: 0.50%

Health Sciences Fund:0.50%

Technology Fund:0.65%

Distributor Each fund has entered into an agreement with CFBDS, Inc. to dis-
tribute the fund's shares. A selling group consisting of Salomon Smith Barney
and other broker-dealers sells fund shares to the public.

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

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

Year 2000 Issue As the year 2000 began, there were few problems caused by the
inability of computer systems to tell the difference between the year 2000 and
the year 1900 (commonly known as the "Year 2000" issue). It is still possible
that some computer systems could malfunction in the future because of the Year
2000 issue or as a result of actions taken to address the Year 2000 issue. Fund
management does not anticipate that its services or

Smith Barney Mutual Funds

21
<PAGE>

those of the fund's other service providers will be adversely affected, but
fund management will continue to monitor the situation. If malfunctions related
to the Year 2000 issue do arise, the fund and its investments could be nega-
tively affected.

Subscription offering period

Salomon Smith Barney and investment dealers in the selling group will solicit
subscriptions for shares of the Financial Services Fund, Health Sciences Fund
and Technology Fund during the subscription offering period, which is scheduled
to end on February 23, 2000. On the third business day after the end of the
subscription offering period, subscriptions for the shares will be payable,
exchanges into the fund will be permitted, shares will be issued and the fund
will commence investment operations.

The fund will suspend the offering of shares to new investors on February 29,
2000. This suspension, which is expected to last two weeks, may be lengthened
or shortened at the fund's discretion. During the suspension, existing share-
holders of the fund may still purchase, redeem or exchange fund shares. After
the suspension, the fund will commence a continuous offering of shares to the
public.

For more information on how to subscribe for fund shares during the subscrip-
tion offering period, please contact a Salomon Smith Barney Financial Consul-
tant.

Choosing a class of shares to buy

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

.If you plan to invest regularly or in large amounts, buying Class A shares may
help you reduce sales charges and ongoing expenses.

.For Class B shares, all of your purchase amount and, for Class L shares, more
of your purchase amount (compared to Class A shares) will be immediately
invested. This may help offset the higher expenses of Class B and Class L
shares, but only if the fund performs well.

.Class L shares have a shorter deferred sales charge period than Class B
shares. However, because Class B shares convert to Class A shares, and
Class L shares do not, Class B shares may be more attractive to long-term
investors.

Sector Funds

22
<PAGE>

You may buy shares from:

.A Salomon Smith Barney Financial Consultant

.An investment dealer in the selling group or a broker that clears through Sal-
omon Smith Barney--a dealer representative

.The fund, but only if you are investing through certain qualified plans or
certain dealer representatives.

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

<TABLE>
<CAPTION>
Initial Additional
Classes A, B, L Class Y All Classes
<S> <C> <C> <C>
General $1,000 $15 million $50
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts $ 250 $15 million $50
Qualified Retirement Plans* $ 25 $15 million $25
Simple IRAs $ 1 n/a $ 1
Monthly Systematic Investment Plans $ 25 n/a $25
Quarterly Systematic Investment Plans $ 50 n/a $50
</TABLE>

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

Smith Barney Mutual Funds

23
<PAGE>

Comparing the fund's classes

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

<TABLE>
<CAPTION>
Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Key features .Initial .No initial .The ini- .No initial
sales sales tial sales or
charge charge charge is deferred
.You may .Deferred lower than sales
qualify sales Class A charge
for reduc- charge .Deferred .Must
tion or declines sales invest at
waiver of over time charge for least $15
initial .Converts only 1 million
sales to Class A year .Lower
charge after 8 .Does not annual
.Lower years convert to expenses
annual .Higher Class A than the
expenses annual .Higher other
than Class expenses annual classes
B and than Class expenses
Class L A than Class
A
- ------------------------------------------------------------------------
Initial sales charge Up to None 1.00% None
5.00%;
reduced for
large pur-
chases and
waived for
certain
investors;
no charge
for pur-
chases of
$500,000 or
more
- ------------------------------------------------------------------------
Deferred sales charge 1% on pur- Up to 5% 1% if you None
chases of charged redeem
$500,000 or when you within 1
more if you redeem year of
redeem shares. The purchase
within 1 charge is
year of reduced
purchase over time
and there
is no
deferred
sales
charge
after 6
years
- ------------------------------------------------------------------------
Annual distribution and 0.25% of 1% of aver- 1% of aver- None
service fees average age daily age daily
daily net net assets net assets
assets
- ------------------------------------------------------------------------
Exchange privilege* Class A Class B Class L Class Y
shares of shares of shares of shares of
most Smith most Smith most Smith most Smith
Barney Barney Barney Barney
funds funds funds funds
- ------------------------------------------------------------------------
</TABLE>
* Ask your Salomon Smith Barney Financial Consultant or dealer representative
or visit the web site for the Smith Barney funds available for exchange.

Sector Funds

24
<PAGE>

Sales charges

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

<TABLE>
<CAPTION>
Sales Charge as a % of
Offering Net amount
Amount of purchase price (%) invested (%)
<S> <C> <C>
Less than $25,000 5.00 5.26
$25,000 but less than $50,000 4.00 4.17
$50,000 but less than $100,000 3.50 3.63
$100,000 but less than $250,000 3.00 3.09
$250,000 but less than $500,000 2.00 2.04
$500,000 or more 0.00 0.00
</TABLE>

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

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

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

.by you, or

.by members of your immediate family,

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

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

Smith Barney Mutual Funds

25
<PAGE>

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
.403(b) or 401(k) retirement plans, if certain conditions are met
.Clients of newly employed Salomon Smith Barney Financial Consultants, if cer-
tain conditions are met
.Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if the investor's Salomon Smith Barney Financial Consultant or dealer
representative is notified

If you want to learn about additional waivers of Class A initial sales charges,
contact your Salomon Smith Barney Financial Consultant or dealer representative
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 pur-
chase, 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 B conversion After 8 years, Class B shares automatically convert into
Class A shares. This helps you because Class A shares have lower annual
expenses. Your Class B shares will convert to Class A shares as follows:

<TABLE>
<CAPTION>
Shares issued: Shares issued:
On reinvestment of Upon exchange from
Shares issued: dividends and another Smith Barney
At initial purchase distributions fund
<S> <C> <C>
Eight years after the date In same proportion On the date the
of purchase as the number of shares originally
Class B shares acquired would
converting is to have converted
total Class B into Class A
shares you own shares
(excluding shares
issued as a divi-
dend)
</TABLE>

Class L shares

You buy Class L shares at the offering price, which is the net asset value plus
a sales charge of 1% (1.01% of the net amount invested). In addition, if you
redeem your Class L shares within one year of purchase, you will pay a deferred
sales charge of 1%. If you held Class C shares of any other Smith

Sector Funds

26
<PAGE>

Barney mutual funds on June 12, 1998, you will not pay an initial sales charge
on Class L shares you buy before June 22, 2001.

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

More about deferred sales charges

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

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

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

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

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

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

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

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

Smith Barney Mutual Funds

27
<PAGE>

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

Buying shares

Through a You should contact your Salomon Smith Barney Financial Con-
Salomon Smith sultant or dealer representative to open a brokerage account
Barney and make arrangements to buy shares. If you do not provide
Financial the following information, your order will be rejected:
Consultant or
dealer .Class of shares being bought
representative .Dollar amount or number of shares being bought

You should pay for your shares through your brokerage account
no later than the third business day after you place your
order. Salomon Smith Barney or your dealer representative may
charge an annual account maintenance fee.
- --------------------------------------------------------------------------------
Qualified retirement plans and certain other investors who
Through the are clients of a selling group member are eligible to buy
fund's sub- shares directly from the fund.
transfer
agent
.Write the sub-transfer agent at the following address:

Smith Barney Sector Series Inc.
(Specify fund and class of shares)

c/o PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699

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

- --------------------------------------------------------------------------------
Through a
systematic You may authorize Salomon Smith Barney, your dealer represen-
investment tative or the sub-transfer agent to transfer funds automati-
plan cally from a regular bank account, cash held in a Salomon
Smith Barney brokerage account or Smith Barney money market
fund to buy shares on a regular basis.

Sector Funds

28
<PAGE>

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

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

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

Exchanging shares

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

.You must meet the minimum investment amount for each fund.

.If you hold share certificates, the sub-transfer agent must
receive the certificates endorsed for transfer or with
signed stock powers (documents transferring ownership of
certificates) before the exchange is effective.

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

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

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

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

Smith Barney Mutual Funds

29
<PAGE>

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

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

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

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

Sector Funds

30
<PAGE>

Redeeming shares

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

If you hold share certificates, the sub-transfer agent must
receive the certificates endorsed for transfer or with signed
stock powers (documents transferring ownership of certifi-
cates) before the redemption is effective.

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

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

If you have a Salomon Smith Barney brokerage account, your
redemption proceeds will be placed in your account and not
reinvested without your specific instruction. In other cases,
unless you direct otherwise, your redemption proceeds will be
paid by check mailed to your address of record.
- --------------------------------------------------------------------------------
By mail
For accounts held directly at the fund, send written requests
to the sub-transfer agent at the following address:

Smith Barney Sector Series Inc.
(Specify fund and class of shares)

c/o PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699

Your written request must provide the following:

.The 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 regis-
tered

Smith Barney Mutual Funds

31
<PAGE>

- --------------------------------------------------------------------------------
By telephone
If you do not have a brokerage account, you may be eligible
to redeem shares (except those held in retirement plans) in
amounts up to $10,000 per day through the transfer agent. You
must complete an authorization form to authorize telephone
redemptions. If eligible, you may request redemptions by tel-
ephone on any day the New York Stock Exchange is open. Call
the transfer agent at 1-800-451-2010 between 9:00 a.m. and
4:00 p.m. (Eastern time).

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

- --------------------------------------------------------------------------------
Automatic You can arrange for the automatic redemption of a portion of
cash your shares on a monthly or quarterly basis. To qualify you
withdrawal must own shares of the fund with a value of at least $10,000
plans ($5,000 for retirement plan accounts) and each automatic
redemption must be at least $50.

The following conditions apply:

.Your shares must not be represented by certificates
.All dividends and distributions must be reinvested

For more information, contact your Salomon Smith Barney
Financial Consultant or dealer representative or consult the
SAI.

Sector Funds

32
<PAGE>

Other things to know about share transactions

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

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

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

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

.Are redeeming over $10,000 of shares

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

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

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.

Each fund has the right to:

.Suspend the offering of shares
.Waive or change minimum and additional investment amounts
.Reject any purchase or exchange order
.Change, revoke or suspend the exchange privilege
.Suspend telephone transactions
.Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the Securi-
ties and Exchange Commission

Smith Barney Mutual Funds

33
<PAGE>

.Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities

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

Excessive exchange transactions The manager may determine that a pattern of
frequent exchanges is detrimental to a fund's performance and other sharehold-
ers. Each fund may limit additional purchases and/or exchanges by a sharehold-
er.

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

Smith Barney 401(k) and ExecChoiceTM programs

You may be eligible to participate in the Smith Barney 401(k) program or the
Smith Barney ExecChoice(TM) program. Each fund offers Class A and Class L
shares to participating plans as investment alternatives under the programs.
You can meet minimum investment and exchange amounts by combining the plan's
investments in any of the Smith Barney 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. Once a class
of shares is chosen, all additional purchases must be of the same class.

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

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

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

If the account was opened before June 21, 1996 and the total of $500,000
is invested in Smith Barney Funds, and Class L shares (other

Sector Funds

34
<PAGE>

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 Salomon Smith Barney Financial Consultant or
transfer agent, or consult the SAI.

Dividends, distributions and taxes

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

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

<TABLE>
<CAPTION>
Transaction Federal tax status
<S> <C>
Redemption or exchange of shares Usually capital gain or loss;
long-term only if shares owned
more than one year
Long-term capital gain distributions Long-term capital gain
Short-term capital gain distributions Ordinary income
Dividends Ordinary income
</TABLE>

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

After the end of each year, each fund will provide you with information about
the distributions and dividends you received and any redemptions of shares dur-
ing the previous year. If you do not provide the fund with your correct tax-
payer identification number and any required certifications, you

Smith Barney Mutual Funds

35
<PAGE>

may be subject to back-up withholding of 31% of your distributions, dividends,
and redemption proceeds. Because each shareholder's circumstances are different
and special tax rules may apply, you should consult your tax adviser about your
investment in the fund.

Share price

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

Each fund's currency conversions are done when the London stock exchange
closes, which is 12 noon Eastern time. When reliable market prices or quota-
tions are not readily available, or when the value of a security has been mate-
rially affected by events occurring after a foreign exchange closes, a fund may
price those securities at fair value. Fair value is determined in accordance
with procedures approved by the fund's board. Each fund that uses fair value to
price securities may value those securities higher or lower than another fund
using market quotations to price the same securities.

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

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

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

Sector Funds

36
<PAGE>

Natural Resources Fund financial highlights

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

No information is presented for Class Y shares since no Class Y shares were
outstanding for the periods shown.

For a Class A share of capital stock outstanding throughout each year ended
October 31:
<TABLE>
<CAPTION>
1999(/1/) 1998(/1/) 1997 1996(/1/) 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.56 $23.23 $22.95 $16.50 $21.44
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income
(loss) 0.05 (0.01) (0.12) 0.08 (0.23)(/2/)
Net realized and
unrealized gain (loss) 2.24 (6.50) 0.73 6.37 (4.71)
- --------------------------------------------------------------------------------
Total income (loss) from
operations 2.29 (6.51) 0.61 6.45 (4.94)
- --------------------------------------------------------------------------------
Less distributions from:
Net investment
income(/3/) -- -- (0.33) -- --
Net realized gains -- (0.16) -- -- --
- --------------------------------------------------------------------------------
Total distributions -- (0.16) (0.33) -- --
- --------------------------------------------------------------------------------
Net asset value, end of
year $18.85 $16.56 $23.23 $22.95 $16.50
- --------------------------------------------------------------------------------
Total return(/4/) 13.83% (28.13)% 2.67% 39.09% (23.04)%
- --------------------------------------------------------------------------------
Net assets, end of year
(000)'s $21,069 $27,147 $45,488 $50,521 $27,884
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 1.73% 1.57% 1.51% 1.62% 1.99%
Net investment income
(loss) 0.27 (0.05) (0.32) 0.15 (1.46)
- --------------------------------------------------------------------------------
Portfolio turnover rate 133% 151% 101% 120% 40%
- --------------------------------------------------------------------------------
</TABLE>
(/1/) Per share amounts calculated using the monthly average shares method.
(/2/) Includes realized gains and losses from foreign currency transactions.
(/3/) Distributions from net investment income include short-term capital
gains, if any, for federal income tax purposes.
(/4/) Total return does not reflect any applicable sales loads or deferred
sales charges.

Smith Barney Mutual Funds

37
<PAGE>

For a Class B share of capital stock outstanding throughout each year ended
October 31:
<TABLE>
<CAPTION>
1999(/1/) 1998(/1/) 1997 1996(/1/) 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.00 $22.60 $22.32 $16.15 $21.14
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment loss (0.03) (0.13) (0.27) (0.09) (0.22)(/2/)
Net realized and
unrealized gain (loss) 2.18 (6.31) 0.70 6.26 (4.77)
- --------------------------------------------------------------------------------
Total income (loss) from
operations 2.15 (6.44) 0.43 6.17 (4.99)
- --------------------------------------------------------------------------------
Less distributions from:
Net investment
income(/3/) -- -- (0.15) -- --
Net realized gains -- (0.16) -- -- --
- --------------------------------------------------------------------------------
Total distributions -- (0.16) (0.15) -- --
- --------------------------------------------------------------------------------
Net asset value, end of
year $18.15 $16.00 $22.60 $22.32 $16.15
- --------------------------------------------------------------------------------
Total return(/4/) 13.44% (28.61)% 1.95% 38.20% (23.60)%
- --------------------------------------------------------------------------------
Net assets, end of year
(000)'s $23,937 $29,309 $66,819 $73,969 $25,747
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 2.42% 2.23% 2.18% 2.29% 2.62%
Net investment loss (0.17) (0.71) (0.99) (0.83) (2.11)
- --------------------------------------------------------------------------------
Portfolio turnover rate 133% 151% 101% 120% 40%
- --------------------------------------------------------------------------------
</TABLE>
(/1/) Per share amounts calculated using the monthly average shares method.
(/2/) Includes realized gains and losses from foreign currency transactions.
(/3/) Distributions from net investment income include short-term capital
gains, if any, for federal income tax purposes.
(/4/) Total return does not reflect any applicable sales loads or deferred
sales charges.

Sector Funds

38
<PAGE>

For a Class L share of capital stock outstanding throughout each year ended
October 31:
<TABLE>
<CAPTION>
1999(/2/) 1998(/1/)(/2/) 1997 1996(/2/) 1995(/3/)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.03 $22.62 $22.32 $16.16 $20.63
- ----------------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income
(loss) (0.02) (0.12) (0.23) 0.05(/4/) (0.29)(/4/)
Net realized and
unrealized gain (loss) 2.19 (6.31) 0.68 6.11 (4.18)
- ----------------------------------------------------------------------------------------
Total income (loss) from
operations 2.17 (6.43) 0.45 6.16 (4.47)
- ----------------------------------------------------------------------------------------
Less distributions from:
Net investment
income(/5/) -- -- (0.15) -- --
Net realized gains -- (0.16) -- -- --
- ----------------------------------------------------------------------------------------
Total distributions -- (0.16) (0.15) -- --
- ----------------------------------------------------------------------------------------
Net asset value, end of
year $18.20 $16.03 $22.62 $22.32 $16.16
- ----------------------------------------------------------------------------------------
Total return(/6/) 13.54% (28.54)% 2.04% 38.12% (21.67)%(/7/)
- ----------------------------------------------------------------------------------------
Net assets, end of year
(000)'s $2,981 $3,096 $6,393 $7,602 $572
- ----------------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 2.33% 2.17% 2.12% 2.25% 2.69%(/8/)
Net investment loss (0.09) (0.63) (0.92) (0.21) (1.97)(/8/)
- ----------------------------------------------------------------------------------------
Portfolio turnover rate 133% 151% 101% 120% 40%
- ----------------------------------------------------------------------------------------
</TABLE>
(/1/) Prior to June 12, 1998, Class L shares were called Class C shares.
(/2/) Per share amounts calculated using the monthly average shares method.
(/3/) For the period from November 7, 1994 (inception date) to October 31,
1995.
(/4/) Includes realized gains and losses from foreign currency transactions.
(/5/) Distributions from net investment income include short-term capital
gains, if any, for federal income tax purposes.
(/6/) Total return does not reflect any applicable sales loads or deferred
sales charges.
(/7/) Not annualized.
(/8/) Annualized.

Smith Barney Mutual Funds

39
<PAGE>

(This page is intentionally left blank.)
<PAGE>

SalomonSmithBarney
----------------------------
A member of citigroup [LOGO]

Natural Resources Fund

Financial Services

Fund

Health Sciences Fund

Technology Fund

Each an investment portfolio of Smith Barney Sector Series Inc.

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

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

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

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

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

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

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

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

(Investment Company Act

file no. 811-04757)

FD 01756 2/00

Part B-Statement of Additional Information for the
Natural Resources Fund
February 14, 2000
STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY SECTOR SERIES INC.
NATURAL RESOURCES FUND
388 Greenwich Street
New York, New York 10013
(800) 451-2010

This Statement of Additional Information ("SAI") is
meant to be read in conjunction with the Prospectus
of the Smith Barney Natural Resources Fund (the
"fund") dated February 14, 2000, as amended or
supplemented from time to time (the "Prospectus"),
and is incorporated by reference in it entirety into
the Prospectus. The fund is a series of the Smith
Barney Sector Series Inc. (the "Company") which also
offers three other series: Smith Barney Financial
Services Fund, Smith Barney Health Sciences Fund and
Smith Barney Technology Fund. Additional information
about the fund's investments is available in the
fund's annual and semi-annual reports to shareholders
which are incorporated herein by reference. The
Prospectus and copies of the reports may be obtained
free of charge by contacting a Salomon Smith Barney
Financial Consultant, or by writing or calling
Salomon Smith Barney at the address or telephone
number above.

This SAI is not a prospectus. It is intended to
provide more detailed information about the fund as
well as matters already discussed in the Prospectus
and therefore should be read in conjunction with the
Prospectus dated February 14, 2000, which may be
obtained from the fund or your Salomon Smith Barney
Financial Consultant.

CONTENTS

Directors and Executive Officers of the Company 2
Investment Objective and Management Policies 5
Risk Factors 17
Investment Restrictions 19
Portfolio Turnover 22
Portfolio Transactions 22
Purchase of Shares 24
Exchange Privilege 31
Redemption of Shares 32
Dividends, Distributions and Taxes 35
Performance Information 41
Determination of Net Asset Value 44
Investment Management and Other Services 45
Other Information About the Company 48
Financial Statements 50
Other Information 50
Appendix A - Ratings of Debt Obligations 51

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Overall responsibility for management and supervision
of the fund rests with the Company's Board of
Directors. The Directors approve all significant
agreements between the fund and the companies that
furnish services to the fund, including agreements
with the fund's distributor, investment manager,
custodian and transfer agent. The day-to-day
operations of the fund are delegated to the fund's
investment manager SSB Citi Fund Management LLC ("SSB
Citi" or the "manager").

The Directors and executive officers of the Company,
together with information as to their principal
business occupations during the past five years, are
shown below. The executive officers of the Company
are employees of organizations that provide services
to the fund. Each Director who is an "interested
person" of the Company, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), is
indicated by an asterisk. The address of the "non-
interested" Directors and executive officers of the
fund is 388 Greenwich Street, New York, New York
10013.

Herbert Barg (Age 76). Director
Private Investor; Director or trustee of 18
investment companies associated with Citigroup Inc.
("Citigroup"). His address is 273 Montgomery Avenue,
Bala Cynwyd, Pennsylvania, 19004.

*Alfred J. Bianchetti (Age 77). Director
Retired; formerly Senior Consultant to Dean Witter
Reynolds Inc.; Director or trustee of 13 investment
companies associated with Citigroup. His address is
19 Circle End Drive, Ramsey, New Jersey 07446.

Martin Brody (Age 78). Director
Consultant, HMK Associates; Retired Vice Chairman of
the Board of Restaurant Associates Corp.; Director or
trustee of 22 investment companies associated with
Citigroup. His address is c/o HMK Associates, 30
Columbia Turnpike, Florham Park, New Jersey 07932.

Dwight B. Crane (Age 62). Director
Professor, Harvard Business School; Director or
trustee of 25 investment companies associated with
Citigroup. His address is c/o Harvard Business
School, Soldiers Field Road, Boston, Massachusetts
02163.

Burt N. Dorsett (Age 69). Director
Managing Partner of Dorsett McCabe Management, Inc.,
an investment counseling firm; Director of Research
Corporation Technologies, Inc., a nonprofit patent
clearing and licensing firm; Director or trustee of
13 investment companies associated with Citigroup.
His address is 201 East 62nd Street, New York, New
York 10021.

Elliot S. Jaffe (Age 73). Director
Chairman of the Board and President of The Dress
Barn, Inc.; Director or trustee of 13 investment
companies associated with Citigroup. His address is
30 Dunnigan Drive, Suffern, New York 10901.

Stephen E. Kaufman (Age 67). Director
Attorney; Director or trustee of 15 investment
companies associated with Citigroup. His address is
277 Park Avenue, New York, New York 10172.

Joseph J. McCann (Age 69). Director
Financial Consultant; Retired Financial Executive,
Ryan Homes, Inc.; Director or trustee of 13
investment companies associated with Citigroup. His
address is 200 Oak Park Place, Pittsburgh,
Pennsylvania 15243.

*Heath B. McLendon (Age 66). Chairman of the Board,
President and Chief Executive Officer. Managing
Director of Salomon Smith Barney Inc. ("Salomon Smith
Barney"); President of SSB Citi and Travelers
Investment Adviser, Inc. ("TIA"); Chairman or Co-
Chairman of the Board and director or trustee of 71
investment companies associated with Citigroup. His
address is 7 World Trade Center, New York, New York
10048.

Cornelius C. Rose, Jr. (Age 67). Director
President, Cornelius C. Rose Associates, Inc.,
financial consultants; Chairman and Director of
Performance Learning Systems, an educational
consultant; Director or trustee of 13 investment
companies associated with Citigroup. His address is
Meadowbrook Village, Building 4, Apt. 6, West
Lebanon, New Hampshire 03784.

Lewis E. Daidone (Age 42). Senior Vice President and
Treasurer
Managing Director of Salomon Smith Barney; Chief
Financial Officer of the Smith Barney Mutual funds;
Director and Senior Vice President of SSB Citi and
TIA; Senior Vice President and Treasurer of 61
investment companies associated with Citigroup.

John G. Goode (Age 54). Vice President and
Investment Officer
Chairman and Chief Investment Officer of Davis Skaggs
Investment Management ("Davis Skaggs"), a division of
SSB Citi; Managing Director of Salomon Smith Barney.
His address is 1 Sansome Street, 36th Floor, San
Francisco, California 94104.

Paul Brook (Age 46). Controller
Director of Salomon Smith Barney; from 1997-1998
Managing Director of AMT Capital Services Inc.; prior
to 1997 Partner with Ernst & Young LLP; Controller or
Assistant Treasurer of 43 investment companies
associated with Citigroup.

Christina T. Sydor (Age 48). Secretary
Managing Director of Salomon Smith Barney; General
Counsel and Secretary of SSB Citi and TIA; Secretary
of 61 investment companies associated with Citigroup.

As of January 12, 2000, the Directors and officers of
the fund, as a group, owned less than 1% of the
outstanding shares of beneficial interest of the
fund. As of January 12, 2000, to the knowledge of
the fund and the Board no single shareholder or
"group" (as that term is used in Section 13 (d) of
the Securities Act of 1934) beneficially owned more
than 5% of the outstanding shares of the fund.

No officer, Director or employee of Salomon Smith
Barney or any of its affiliates receives any
compensation from the Company for serving as an
officer or director of the Company. The Company pays
each Director who is not an officer, director or
employee of Salomon Smith Barney or any of its
affiliates a fee of $2,000 per annum plus $250 per
in-person meeting and $100 per telephonic meeting.
Each Director emeritus who is not an officer,
Director or employee of Salomon Smith Barney or its
affiliates receives a fee of $1,000 per annum plus
$125 per in-person meeting and $50 per telephonic
meeting. All Directors are reimbursed for travel and
out-of-pocket expenses incurred to attend such
meetings. For the calendar year ended December 31,
1999, such expenses totaled $14,438.

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

Name of Person

Aggregate
Compensat
ion
from Fund
FYE
10/31/99

Total
Pension or
Retirement
Benefits
Accrued
as part of
Fund
Expenses

Compensation
from Fund
and Fund
Complex
Paid to
Directors
Calendar Year
12/31/99

Number of
Funds for
Which
Director
Serves
Within
Fund Complex

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

$3,250.00
$3,000.00
$2,750.00
$3,250.00
$3,250.00
$2,500.00
$3,250.00
$3,250.00
$
0.00
$3,000.00

$0
0
0
0
0
0
0
0
0
0

$114,288.00
$
53,900.00
$138,600.00
$155,363.00
$
57,950.00
$
45,100.00
$110,650.00
$
58,050.00
$
0.00
$
53,500.00

18
13
22
25
13
13
15
13
71
13

* Designates an "interested" Director.
** Designates member of Audit Committee.

Upon attainment of age 80, fund Directors are
required to change to emeritus status. Directors
Emeritus are entitled to serve in emeritus status
for a maximum of 10 years, during which time they
are paid 50% of the annual retainer fee and meeting
fees otherwise applicable to fund Directors,
together with reasonable out-of-pocket expenses for
each meeting attended. Directors Emeritus may
attend meetings but have no voting rights. During
the fund's last fiscal year, aggregate compensation
paid by the fund to Directors Emeritus was
$1,500.00.

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

General. The prospectus discusses the fund's
investment objective and the policies it employs to
achieve its objective. The fund is a series of the
Company, which is an open-end, diversified management
investment company under the Investment Company Act
of 1940 (the "1940 Act"). The fund's investment
manager is SSB Citi. The investment objective of the
fund is to seek long-term capital appreciation by
investing primarily in issuers in natural resources
industries. Under normal market conditions, the fund
will invest at least 65% of its assets in issuers in
natural resources industries. Generating current
income is not a primary part of the fund's investment
objective. No assurance can be given that the fund
will achieve its investment objective.

The fund's investment objective may be changed only
by the ''vote of a majority of the outstanding voting
securities'' as defined in the 1940 Act. However,
the fund's investment policies are non-fundamental,
and thus may be changed by the Board of Directors,
provided the change is not prohibited by the fund's
fundamental investment restrictions (described under
Investment Restrictions) or applicable law. Any such
change will first be disclosed in the then current
prospectus.

Up to 35% of the fund's assets may be invested in
companies not in natural resources industries,
corporate debt securities, U.S. government securities
and, for cash management purposes, money market
instruments. For temporary defensive purposes, the
fund may invest in excess of 35% of its assets in
money market instruments.

The fund may utilize up to 10% of its assets to
purchase put options on securities owned by the fund
and up to an additional 10% of its assets to purchase
call options on securities the fund may acquire in
the future. The fund may purchase only put options
that are traded on a regulated exchange. The fund may
purchase and write put and call options on domestic
and foreign stock indexes to hedge against risks of
market-wide movements affecting that portion of its
assets invested in the country whose stocks are
subject to the hedges.

Equity Securities

Common Stocks. The fund invests primarily in common
stocks. Common stocks are shares of a corporation or
other entity that entitle the holder to a pro rata
share of the profits of the corporation, if any,
without preference over any other shareholder or
class of shareholders, including holders of the
entity's preferred stock and other senior equity.
Common stock usually carries with it the right to
vote and frequently an exclusive right to do so. The
fund may invest up to 5% of its assets in the
securities of issuers which directly or through a
parent or affiliated company have been in continuous
operation for less than three years.

Preferred Stocks and Convertible Securities. The
fund may invest in convertible debt and preferred
stocks. Convertible debt securities and preferred
stock entitle the holder to acquire the issuer's
stock by exchange or purchase at a predetermined
rate. Convertible securities are subject both to the
credit and interest rate risks associated with fixed
income securities and to the stock market risk
associated with equity securities.

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

Illiquid and Restricted Securities. Up to 15% of the
assets of the fund may be invested in securities with
contractual or other restrictions on resale and other
instruments that are not readily marketable,
including (a) repurchase agreements with maturities
greater than seven days, (b) time deposits maturing
in more than seven calendar days and (c) new and
early stage companies whose securities are not
publicly traded.

Fixed Income Securities

U.S. Government Securities. U.S. government
securities in which the fund may invest include:
direct obligations of the United States Treasury,
obligations issued by U.S. government agencies and
instrumentalities ("U.S. government securities"),
including instruments that are supported by the full
faith and credit of the United States; instruments
that are supported by the right of the issuer to
borrow from the United States Treasury; and
instruments that are supported solely by the credit
of the instrumentality.

U.S. government securities include not only direct
obligations of the United States Treasury, but also
include securities issued or guaranteed by the
Federal Housing Administration, Federal Financing
Bank, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage
Association, General Services Administration, Federal
Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal National Mortgage Association,
Maritime Administration, Tennessee Valley Authority,
Resolution Trust Corporation, District of Columbia
Armory Board, Student Loan Marketing Association and
various institutions that previously were or
currently are part of the Farm Credit System (which
has been undergoing a reorganization since 1987).
Because the United States government is not obligated
by law to provide support to an instrumentality it
sponsors, the fund will invest in obligations issued
by such an instrumentality only if the manager
determines that the credit risk with respect to the
instrumentality does not make its securities
unsuitable for investment by the fund.

Short-Term Investments. The fund may hold up to 20%
of the value of its assets in cash and in short-term
instruments, and it may hold cash and short-term
instruments without limitation when the manager
determines that it is appropriate to maintain a
temporary defensive posture. Short-term instruments
in which the fund may invest include: (a) obligations
issued or guaranteed as to principal and interest by
the United States government, its agencies or
instrumentalities (including repurchase agreements
with respect to such securities); (b) bank
obligations (including certificates of deposit, time
deposits and bankers' acceptances of domestic or
foreign banks, domestic savings and loan associations
and similar institutions); (c) floating rate
securities and other instruments denominated in U.S.
dollars issued by international development agencies,
banks and other financial institutions, governments
and their agencies or instrumentalities and
corporations located in countries that are members of
the Organization for Foreign Cooperation and
Development; and (d) commercial paper rated no lower
than A-2 by Standard & Poor's Ratings Group ("S&P")
or Prime-2 by Moody's Investors Service, Inc.
("Moody's") or the equivalent from another major
rating service or, if unrated, of an issuer having an
outstanding, unsecured debt issue then rated within
the three highest rating categories.

Derivative Contracts

Writing Options. The fund may from time to time write
covered put and call options on securities in its
portfolio. The fund will realize a fee (referred to
as a "premium") when it writes an option. The fund
will write only covered put and call options, which
means that for so long as the fund remains obligated
as the writer of the option it will, in the case of
a call option, continue to own the underlying
security and, in the case of a put option, maintain
an amount of cash or permissible securities in a
segregated account equal to the exercise price of the
option. Thus, the purchaser of a put option has the
right to compel the fund to purchase from it the
underlying security at the agreed-upon price for a
specified time period, while the purchaser of a call
option has the right to purchase from the fund the
underlying security owned by the fund at the agreed-
upon price for a specified time period.

Upon the exercise of a put option, the fund may
suffer a loss equal to the difference between the
price at which the fund is required to purchase the
underlying security and its market value at the time
of the option exercise, less the premium received for
writing the option. Upon the exercise of a call
option, the fund may suffer a loss equal to the
excess of the security's market value at the time of
the option exercise over the fund's acquisition cost
of the security, less the premium received for
writing the option.

In order to realize a profit, to prevent an
underlying security from being called or to unfreeze
an underlying security (thereby permitting its sale
or the writing of a new option on the security prior
to the option's expiration), the fund may engage in
a closing purchase transaction. The fund will incur
a loss if the cost of the closing purchase
transaction, plus transaction costs, exceeds the
premium received upon writing the original option. To
effect a closing purchase transaction, the fund would
purchase, prior to the exercise of an option it has
written, an option of the same series as that on
which it desires to terminate its obligation. There
can be no assurance that the fund will be able to
effect a closing purchase transaction when it wishes
to do so. The obligation of the fund to purchase or
deliver securities, upon the exercise of a covered
put or call option respectively, which it has written
terminates upon the effectuation of a closing
purchase transaction.

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

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

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

The fund may realize a profit or loss upon entering
into a closing transaction. An option position may
be closed out only where there exists a secondary
market for an option of the same series on a
recognized securities exchange or in the over-the-
counter market. In light of this fact and current
trading conditions, the fund expects to purchase not
only call or put options issued by the Clearing
Corporation, but also options in the domestic and
foreign over-the-counter markets. The fund expects
to write options only on U.S. securities exchanges,
except that it may write options on U.S. government
securities in the over-the-counter market.

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

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

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

Purchasing Put and Call Options on Securities. The
fund may utilize up to 10% of its assets to purchase
put options on securities owned by the fund and up to
an additional 10% of its assets to purchase call
options on securities which the fund may acquire in
the future. The fund may purchase only put options
that are traded on a regulated exchange. By buying a
put, the fund limits its risk of loss from a decline
in the market value of the security until the put
expires. Any appreciation in the value of the
underlying security, however, will be partially
offset by the amount of the premium paid for the put
option and any related transaction costs. The fund
may purchase call options on a security it intends to
purchase in the future to avoid the additional cost
that would result from a substantial increase in the
market price of the security. Prior to their
expiration, put and call options may be sold in
closing sale transactions (sales by the fund, prior
to the exercise of options it has purchased, of
options of the same series), and profit or loss from
the sale will depend on whether the amount received
is more or less than the premium paid for the option
plus the related transaction costs.

Stock Index Futures. The fund may enter into futures
contracts on domestic and foreign stock indexes. A
stock index measures the movement of a certain group
of stocks by assigning relative values to the stocks
included in the index. Examples of domestic stock
indexes are the Standard & Poor's 500 Stock Index and
the New York Stock Exchange Composite Index, and
examples of foreign stock indexes are the Canadian
Market Portfolio Index (Montreal Stock Exchange), the
Financial Times-Stock Exchange 100 (International
Stock Exchange) and the Toronto Stock Exchange
Composite 300 (Toronto Stock Exchange). The fund will
not enter into stock index futures contracts for
speculation and will only enter into futures
contracts traded on exchanges designated by the
Commodity Futures Trading Commission ("CFTC") or,
consistent with CFTC regulations, on foreign
exchanges.

When the fund enters into a futures contract to
purchase, an amount of cash, or other permissible
liquid securities, equal to the market value of the
contract, will be deposited in a segregated account
on the fund's books to collateralize the position,
thereby insuring that the use of the contract is
unleveraged.

The fund may lose the expected benefit of these
futures transactions and may incur losses if the
prices of the underlying commodities move in an
unanticipated manner. In addition, changes in the
value of the fund's futures positions may not prove
to be perfectly or even highly correlated with
changes in the value of its portfolio securities.
Successful use of futures is subject to the manager's
ability to predict correctly movements in the
direction of the securities markets generally, which
ability may require different skills and techniques
than predicting changes in the prices of individual
securities. Moreover, futures contracts may only be
closed out by entering into offsetting transactions
on the exchange where the position was entered into
(or a linked exchange), and as a result of daily
price fluctuation limits there can be no assurance
that an offsetting transaction could be entered into
at an advantageous price at any particular time.
Consequently, the fund may not be able to close a
futures position without incurring a loss in the
event of adverse price movements.

Stock Index Options. The fund may purchase and write
put and call options on domestic and foreign stock
indexes to hedge against risks of market-wide price
movements affecting that portion of its assets
invested in the country whose stocks are subject to
the hedge. A stock index fluctuates with changes in
the market values of the stocks included in the
index. Some stock index options are based on a broad
market index such as the NYSE Composite Index or the
Canadian Market Portfolio Index, or a narrower market
index such as the Standard & Poor's 100. Indexes
also are based on an industry or market segment such
as the AMEX Oil and Gas Index or the Computer and
Business Equipment Index.

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

Options on foreign stock indexes are similar to
options on domestic stock indexes. Like domestic
stock index options, foreign stock index options are
subject to position and exercise limits and other
regulations imposed by the exchange on which they are
traded. Unlike domestic stock index options, foreign
stock index options carry risks associated with
investing in foreign securities, as described above.
The advisability of using stock index options to
hedge against the risk of market-wide movements will
depend on the extent of diversification of the fund's
stock investments and the sensitivity of its stock
investments to factors influencing the underlying
index. The effectiveness of purchasing or writing
stock index options as a hedging technique will
depend upon the extent to which price movements in
the fund's securities investments correlate with
price movements in the stock index selected. In
addition, successful use by the fund of options will
be subject to the ability of the manager to predict
correctly movements in the direction of the
underlying index.

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

The fund will engage in stock index options
transactions only when determined by the manager to
be consistent with the fund's effort to control risk.
There can be no assurance that the use of these
portfolio strategies will be successful. When the
fund writes an option on a stock index, it will set
aside in a segregated account on the fund's books
cash or other permissible liquid assets in an amount
equal to the market value of the option, and will
maintain the account while the option is open.

Gold Futures Contracts and Related Options. The
fund's purpose in entering into a gold futures
contract or a related option is to mitigate the
effects of fluctuations in the price of gold without
necessarily buying gold or other portfolio assets.
For example, if the fund expects gold prices to
increase, the fund might purchase gold futures
contracts in anticipation of the future purchase of
gold or gold-related securities. Such a purchase
would have much the same effect as the fund's buying
gold. If gold prices increase as anticipated, the
value of the gold futures contracts would increase at
approximately the same rate. If the manager
determines it would be advantageous to do so, the
fund may, for hedging purposes, utilize its assets as
initial margin and premiums on futures contracts and
options on those contracts. The fund may enter into
futures contracts for the purchase and sale of gold,
purchase put and call options on those futures
contracts and write call options on those futures
contracts. Use of these strategies may provide a
defense against a decline in the value of the fund's
assets in a period of anticipated price weakness. The
fund will enter into futures contracts only if traded
on a regulated domestic or foreign commodities
exchange and will purchase or write options on gold
futures only on a regulated domestic or foreign
exchange approved for such purpose by the CFTC.
Currently, gold futures and options thereon are
traded primarily on the Commodity Exchange of New
York ("COMEX"), the Chicago Mercantile Exchange and
the Chicago Board of Trade; the fund expects to trade
futures and related options primarily on COMEX. When
the fund enters into long futures and options
positions (futures contracts to purchase gold and
call options purchased or put options written by the
fund), an amount of cash or other permissible liquid
assets equal to the underlying commodities value of
the contracts will be set aside in a segregated
account on the fund's books to collateralize the
positions, thereby insuring that the use of the
contract is unleveraged.

No consideration is paid or received by the fund upon
the purchase of a gold futures contract. Initially,
the fund will be required to deposit with a broker an
amount of cash or cash equivalents or other liquid
securities. This amount, known as initial margin, is
subject to change by the exchange on which the
contract is traded and brokers may charge a higher
amount. Initial margin is in the nature of a
performance bond or good faith deposit on the
contract and is returned to the fund upon termination
of the gold futures contract, assuming that all
contractual obligations have been satisfied.
Subsequent payments, known as maintenance margin, to
and from broker, will be made daily as the price of
the gold bullion underlying the futures contract
fluctuates, making the positions in the futures
contract more or less valuable, a process known as
"marking-to-market." Because the value of an option
on a futures contract is fixed at the point of sale,
there are no daily cash payments by the purchaser to
reflect changes in the value of the underlying
contract; however, the value of the option does
change daily and that change would be reflected in
the net asset value of the fund.

A gold futures contract provides for the future sale
by one party and the purchase by the other party of
a certain amount of gold at a specified price, date,
time and place. The fund may enter into futures
contracts to sell gold when the manager believes the
value of its gold and gold-related securities will
decrease. The fund may enter into futures contracts
to purchase gold when the manager anticipates
purchasing gold or gold-related securities and
believes that prices will rise before the purchases
will be made. At any time prior to the expiration of
a gold futures contract or an option on a gold
futures contract, the fund may elect to close the
position by taking an opposite position, which will
operate to terminate the fund's existing position in
the contract. Positions in futures contracts and
options on futures contracts may be closed out only
on the exchange on which they were entered into (or
through a linked exchange).

The use of gold futures contracts as a hedging device
involves several risks. Losses incurred in hedging
transactions and the costs of these transactions will
affect the fund's performance. There are several
risks in connection with the use of gold futures
contracts and related options as hedging devices.
Successful use of gold futures contracts and related
options by the fund is subject to the ability of the
manager to predict correctly movements in the price
of gold and other factors affecting markets for gold.
These predictions involve skills and techniques that
are different from those generally involved in the
management of the fund. In addition, there can be no
assurance that there will be a correlation between
movements in the price of gold futures contracts or
an option on a gold futures contract and movements in
the price of the hedged assets. A decision of
whether, when and how to hedge involves the exercise
of skill and judgment, and even a well conceived
hedge may be unsuccessful to some degree because of
market behavior or unexpected trends in the price of
gold or the hedged securities.

Although the fund intends to purchase gold futures
contracts and related options only if there is an
active market for the contracts, there is no
assurance that an active market will exist for the
contracts or options at any particular time. Most
futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single
trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that
day at a price beyond that limit. It is possible
that gold futures contract prices could move to the
daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt
liquidation of gold futures positions and subjecting
the fund to substantial losses. In such event, and
in the event of adverse price movements, the fund
would be required to make daily cash payments of
maintenance margin, and an increase, if any, in the
value of the portion of the portfolio being hedged
may partially or completely offset losses on the
futures contract. As described above, however, there
is no guarantee that the price of the assets being
hedged will, in fact, correlate with the price
movements in a gold futures contract or an option
thereon and thus provide an offset to losses on the
futures contract or option.

If the fund has hedged against the possibility of a
change in the price of gold adversely affecting the
value of its assets and prices move in a direction
opposite to that which was anticipated, the fund will
probably lose part or all of the benefit of the
increased value of the assets hedged because of
offsetting losses in its futures positions. In
addition, in such a situation, if the fund has
insufficient cash, it might have to sell assets to
meet daily maintenance margin requirements at a time
when it would be disadvantageous to do so. These
sales of assets could, but will not necessarily, be
at increased prices which reflect the change in the
value of gold.

An option on a gold futures contract, as contrasted
with the direct investment in such a contract, gives
the purchaser the right, in return for the premium
paid, to assume a position in a gold futures contract
at a specified exercise price at any time prior to
the expiration date of the option. Upon exercise of
an option, the delivery of the futures position by
the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which
represents the amount by which the market price of
the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise
price of the option on the futures contract. The
potential loss related to the purchase of an option
on futures contracts is limited to the premium paid
for the option (plus transactions costs), and there
are no daily cash payments to reflect changes in the
value of the underlying contract. The value of the
option, however, does change daily and that change
would be reflected in the net asset value of the
fund.

Currency Transactions. The fund may engage in
currency exchange transactions to protect against
uncertainty in the level of future exchange rates.
The fund will conduct its currency exchange
transactions either on a spot (i.e., cash) basis at
the rate prevailing in the currency exchange market,
or through entering into forward contracts to
purchase or sell currencies. The fund's transactions
in forward currency exchange contracts will be
limited to hedging involving either specific
transactions or portfolio positions.

Transaction hedging is the purchase or sale of
forward currency with respect to specific receivables
or payables of the fund generally arising in
connection with the purchase or sale of its portfolio
securities. Position hedging is the sale of forward
currency with respect to portfolio securities
positions denominated or quoted in the currency. In
hedging specific portfolio positions, the fund may
enter into a forward currency contract with respect
to either the currency in which the positions are
denominated or another currency deemed appropriate by
the manager. A forward currency 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 entered into in the interbank
market conducted directly between currency traders
(usually large commercial banks) and their customers.
Although such transactions are intended to minimize
the risk of loss because of a decline in the value of
the hedged currency, at the same time they tend to
limit any potential gain, which might result should
the value of such currency increase. To assure that
the fund's forward currency contracts are not used to
achieve investment leverage, the fund will set aside
in a segregated account on the fund's books cash or
other permissible liquid assets in an amount at all
times equal to or exceeding the fund's commitment
with respect to these contracts. The fund may not
position hedge with respect to a particular currency
to an extent greater than the aggregate market value
at any time of the securities held in its portfolio
denominated or quoted in or currently convertible
(such as through exercise of an option or
consummation of a forward contract) into that
particular currency.

If the fund enters into a transaction hedging or
position hedging transaction, it will cover the
transaction through one or more of the following
methods: (a) ownership of the underlying currency or
an option to purchase such currency; (b) ownership of
an option to enter into an offsetting forward
contract; (c) entering into a forward contract to
purchase currency being sold or to sell currency
being purchased, provided such covering contract is
itself covered by one of these methods unless the
covering contract closes out the first contract; or
(d) depositing into a segregated account on the
fund's books cash or other permissible liquid assets
in an amount equal to the value of the fund's total
assets committed to the consummation of the forward
contract and not otherwise covered. In the case of
transaction hedging, any securities placed in the
account must be liquid securities. In any case, if
the value of the securities placed in the segregated
account declines, additional cash or securities will
be placed in the account so that the value of the
account will equal the above amount. Hedging
transactions may be made from any foreign currency
into U.S. dollars or into other appropriate
currencies.

At or before the maturity of a forward contract, the
fund may either sell a portfolio security and make
delivery of the currency, or retain the security and
offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to
which the fund will obtain, on the same maturity
date, the amount of the currency it is obligated to
deliver. If the fund retains the portfolio security
and engages in an offsetting transaction, the fund,
at the time of execution of the offsetting
transaction, will incur a gain or a loss to the
extent movement has occurred in forward contract
prices. Should forward prices decline during the
period between the fund's entering into a forward
currency contract for the sale of a currency and the
date it enters into an offsetting contract for the
purchase of the currency, the fund will realize a
gain to the extent the price of the currency it has
agreed to sell exceeds the price of the currency it
has agreed to purchase. Should forward prices
increase, the fund will suffer a loss to the extent
the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to
sell.

The cost to the fund of engaging in currency
transactions varies with factors such as the currency
involved, the length of the contract period and the
market conditions then prevailing. Because
transactions in currency exchange usually are
conducted on a principal basis, no fees or
commissions are involved. The use of forward
currency contracts does not eliminate fluctuations in
the underlying prices of the securities, but it does
establish a rate of exchange that can be achieved in
the future. In addition, although forward currency
contracts limit the risk of loss because of a decline
in the value of the hedged currency, at the same time
they limit any potential gain that might result
should the value of the currency increase.

If a devaluation of a currency is generally
anticipated, the fund may not be able to contract to
sell the currency at a price above the devaluation
level it anticipates. The fund will not enter into
a currency transaction if, as a result, it will fail
to qualify as a regulated investment company under
the Internal Revenue Code of 1986, as amended
("Code") for a given year.

Other Practices

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

Repurchase Agreements. The fund may enter into
repurchase agreements with banks which are the
issuers of instruments acceptable for purchase by the
fund and with certain dealers on the Federal Reserve
Bank of New York's list of reporting dealers. Under
the terms of a typical repurchase agreement, the fund
would acquire an underlying debt obligation for a
relatively short period (usually not more than one
week), subject to an obligation of the seller to
repurchase, and the fund to resell, the obligation at
an agreed-upon price and time, thereby determining
the yield during the fund's holding period. This
arrangement results in a fixed rate of return that is
not subject to market fluctuations during the fund's
holding period. The value of the underlying
securities will be monitored on an ongoing basis by
the manager to ensure that the value is at least
equal at all times to the total amount of the
repurchase obligation, including interest. Repurchase
agreements could involve certain risks in the event
of default or insolvency of the other party,
including possible delays in or restrictions upon the
fund's ability to dispose of the underlying
securities, the risk of a possible decline in the
value of the underlying securities during the period
in which the fund seeks to assert its rights to them,
the risk of incurring expenses associated with
asserting those rights and the risk of losing all or
part of the income from the agreement. The manager
reviews the value of the collateral and the
creditworthiness of those banks and dealers with
which the fund enters into repurchase agreements in
order to evaluate potential risks.

Lending of Portfolio Securities. Consistent with
applicable regulatory requirements, the fund has the
ability to lend securities from its portfolio to
brokers, dealers and other financial organizations.
The fund may not lend its portfolio securities to
Salomon Smith Barney or its affiliates unless it has
applied for and received specific authority from the
Securities and Exchange Commission ("SEC"). Loans of
portfolio securities by the fund will be
collateralized by cash, letters of credit or U.S.
government securities which will be maintained at all
times in an amount equal to at least 100% of the
current market value (determined by marking to market
daily) of the loaned securities. From time to time,
the fund may return a part of the interest earned
from the investment of collateral received for
securities loaned to the borrower and/or a third
party, which is unaffiliated with the fund or with
Salomon Smith Barney, and which is acting as a
"finder." In lending its securities, the fund can
increase its income by continuing to receive interest
on the loaned securities as well as by either
investing the cash collateral in short-term
instruments or obtaining yield in the form of
interest paid by the borrower when U.S. government
securities are used as collateral. The following
conditions must be met whenever the fund's portfolio
securities are loaned: (a) the fund must receive at
least 100% cash collateral or equivalent securities
or letters of credit from the borrower; (b) the
borrower must increase such collateral whenever the
market value of the securities rises above the level
of such collateral; (c) the fund must be able to
terminate the loan at any time; (d) the fund must
receive reasonable interest on the loan, as well as
an amount equal to any dividends, interest or other
distributions on the loaned securities, and any
increase in market value; (e) the fund may pay only
reasonable custodian fees in connection with the
loan; and (f) voting rights on the loaned securities
may pass to the borrower; however, if a material
event adversely affecting the investment occurs, the
fund's Board of Directors must terminate the loan and
regain the right to vote the securities. The risks in
lending portfolio securities, as with other
extensions of secured credit, consist of possible
delay in receiving additional collateral or in the
recovery of the securities or possible loss of rights
in the collateral should the borrower fail
financially. Loans will be made to firms deemed by
the manager to be of good standing and will not be
made unless, in the judgment of the manager, the
consideration to be gained from such loans would
justify the risk.

Short Sales Against the Box. The fund may make short
sales of common stock if, at all times when a short
position is open, the fund owns the stock or owns
preferred stock or debt securities convertible or
exchangeable, without payment of further
consideration, into the shares of common stock sold
short. Short sales of this kind are referred to as
short sales "against the box." The broker-dealer that
executes a short sale generally invests cash proceeds
of the sale until they are paid to the fund.
Arrangements may be made with the broker-dealer to
obtain a portion of the interest earned by the broker
on the investment of short sale proceeds. The fund
will segregate the common stock or convertible or
exchangeable preferred stock or debt securities in a
special account with its custodian; not more than 10%
of the fund's net assets (taken at current value) may
be held as collateral for such sales at any one time.

Borrowing. The fund also may borrow for temporary or
emergency purposes, but not for leveraging purposes,
in an amount up to 10% of its total assets, and may
pledge its assets in connection with such borrowings.
Whenever these borrowings exceed 5% of the value of
the fund's total assets the fund will not make any
additional investments.

RISK FACTORS

General. The fund's investments may be subject to
greater risk and market fluctuation than a fund
investing in securities representing a broader range
of investment alternatives. The composition of the
fund's portfolio will vary depending on the
determination of the manager of how best to achieve
long-term capital appreciation. The fund may invest
in debt securities when the manager believes they
will enhance the fund's ability to achieve long-term
capital appreciation. Because the securities in
which the fund invests may involve risks not
associated with more traditional investments, an
investment in the fund, by itself, should not be
considered a balanced investment program. Investors
should realize that risk of loss is inherent in the
ownership of any securities and that the fund's net
asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions.

The fund intends to invest at least 65% of its assets
in natural resource investments as defined in the
Prospectus. As a result of this concentration
policy, which is a fundamental policy of the fund,
the fund's investments may be subject to greater risk
and market fluctuation than a fund that invests in
securities representing a broader range of investment
alternatives. Historically, stock prices of companies
involved in natural resource-related industries have
been volatile.

Foreign Securities. The fund's policy of investing in
securities of foreign issuers presents certain risks
not present in domestic investments. These risks
include those resulting from fluctuations in currency
exchange rates, revaluation of currencies, political
and economic developments and the possible imposition
of currency exchange blockages or other foreign
governmental laws or restrictions, reduced
availability of public information concerning
issuers, and the fact that foreign companies are not
generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory
practices and requirements comparable to those
applicable to domestic companies. Economic, political
and social conditions prevailing in these countries
may have a significant effect on the success of the
fund. Moreover, securities of many foreign companies
may be less liquid and their prices more volatile
that those of securities of comparable domestic
companies. In addition, the possibility exists in
certain foreign countries of expropriation,
nationalization, confiscatory taxation and
limitations on the use or removal of funds or other
assets of the fund, including the withholding of
dividends. Investment in foreign securities also may
result in higher expenses due to the cost of
converting foreign currency to U.S. dollars, expenses
relating to foreign custody, the payment of fixed
brokerage commissions on foreign exchanges, which
generally are higher than commissions on domestic
exchanges, and the imposition of transfer taxes or
transaction charges associated with foreign
exchanges.

Because the fund may invest in securities denominated
or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates will
affect the value of securities in the fund and the
unrealized appreciation or depreciation of
investments. To protect against uncertainty
concerning changes in exchange rates, the fund may
enter into forward currency exchange transactions.
Foreign securities may be subject to foreign
government taxes that could reduce the yield on such
securities.

Securities of Developing Countries. A developing
country is generally considered to be a country that
is in the initial stages of its industrialization
cycle. Investing in the equity and fixed-income
markets of developing countries involves exposure to
economic structures that are generally less diverse
and mature, and to political systems that can be
expected to have less stability, than those of
developed countries. Historical experience indicates
that the markets of developing countries have been
more volatile than the markets of the more mature
economies of developed countries; however, such
markets often have provided higher rates of return to
investors.

Lower-Rated Securities. The fund may invest in
medium- or low-rated securities and unrated
securities of comparable quality (sometimes referred
to as junk bonds). Generally, these securities offer
a higher current yield than the yield offered by
higher-rated securities but involve greater
volatility of price and risk of loss of income and
principal, including the probability of default by or
bankruptcy of the issuers of such securities. Medium-
and low-rated and comparable unrated securities (a)
will likely have some quality and protective
characteristics that, in the judgment of the rating
organization, are outweighed by large uncertainties
or major risk exposures to adverse conditions and (b)
are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal
in accordance with the terms of the obligation.
Accordingly, it is possible that these types of
factors could, in certain instances, reduce the value
of securities held by the fund, with a commensurate
effect on the value of the fund's shares. Therefore,
an investment in the fund should not be considered as
a complete investment program and may not be
appropriate for all investors.

While the market values of medium- and lower-rated
securities and comparable unrated securities tend to
react less to fluctuations in interest rate levels
than do those of higher-rated securities, the market
values of certain of these securities also tend to be
more sensitive to individual corporate developments
and changes in economic conditions than higher-rated
securities. In addition, medium- and lower-rated
securities and comparable unrated securities
generally present a higher degree of credit risk.
Issuers of medium- and lower-rated securities and
comparable unrated securities are often highly
leveraged and may not have more traditional methods
of financing available to them so that their ability
to service their debt obligations during an economic
downturn or during sustained periods of rising
interest rates may be impaired. The risk of loss due
to default by such issuers is significantly greater
because medium- and lower-rated securities and
comparable unrated securities generally are unsecured
and frequently are subordinated to the prior payment
of senior indebtedness. The fund may incur additional
expenses to the extent it is required to seek
recovery upon a default in the payment of principal
or interest on its portfolio holdings. In addition,
the markets in which medium- and lower-rated or
comparable unrated securities are traded generally
are more limited than those in which higher-rated
securities are traded. The existence of limited
markets for these securities may restrict the
availability of securities for the fund to purchase
and also may have the effect of limiting the ability
of the fund to (a) obtain accurate market quotations
for purposes of valuing securities and calculating
net asset value and (b) sell securities at their fair
value either to meet redemption requests or to
respond to changes in the economy or the financial
markets. The market for some medium- and lower-rated
and comparable unrated securities is relatively new
and has not fully weathered a major economic
recession. Any such economic downturn could adversely
affect the ability of the issuers of such securities
to repay principal and pay interest thereon.

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

Securities which are rated Ba by Moody's or BB by S&P
have speculative characteristics with respect to
capacity to pay interest and repay principal.
Securities which are rated B generally lack
characteristics of the desirable investment and
assurance of interest and principal payments over any
long period of time may be small.

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

INVESTMENT RESTRICTIONS

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

The investment restrictions and policies
adopted by the fund prohibit it from:

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

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

3. Investing more than 25% of its total assets
in securities, the issuers of which are in the
same industry (other than in Natural Resource
Investments as defined in the Prospectus). For
purposes of this limitation, U.S. government
securities are not considered to be issued by
members of any industry.

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

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

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

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

In addition to the investment restrictions and
policies mentioned above, the fund has voluntarily
adopted the following policies and restrictions.
They differ from fundamental investment policies
because they may be changed or amended by the Board
of Directors without prior notice to or approval of
shareholders. Accordingly, the fund is prohibited
from:

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

b. Purchasing restricted securities, illiquid
securities or other securities which are not
readily marketable if more than 15% of the
total assets of the fund would be invested in
such securities. For purposes of this
limitation, (i) repurchase agreements providing
for settlement in more than seven days after
notice by the fund and (ii) time deposits
maturing in more than seven calendar days shall
be considered illiquid securities.

c. Purchasing any security if as a result the
fund would then have more than 5% of its total
assets (taken at current value) invested in
securities of issuers which directly or through
a parent or affiliated company have had ongoing
operations for fewer than three years. For
purposes of this restriction, issuers include
predecessors, sponsors, controlling persons,
general partners, guarantors and originators of
underlying assets.

d. Making investments for the purpose of
exercising control or management.

e. Investing in warrants (other than warrants
acquired by the fund as part of a unit or
attached to securities at the time of purchase)
if, as a result, the investments (valued at the
lower of cost or market) would exceed 5% of the
value of the fund's net assets, of which not
more than 2% of the fund's net assets may be
invested in warrants not listed on a recognized
domestic or foreign stock exchange to the
extent permitted by applicable state securities
laws.

f. Engaging in the purchase or sale of put,
call, straddle or spread options or in the
writing of such options other than (i)
purchasing and writing put and call options on
securities and stock indexes, (ii) entering
into closing purchase transactions with respect
to such options, (iii) purchasing put and call
options on gold, purchasing gold futures
contracts and writing covered call options on
gold, or (iv) upon 60 days' notice given to its
shareholders, (1) writing put and other call
options on gold or (2) entering into other
hedging transactions involving futures
contracts and related options, including gold
futures contracts.

Certain restrictions listed above permit the fund
without shareholder approval to engage in investment
practices that the fund does not currently pursue.
The fund has no present intention of altering its
current investment practices as otherwise described
in the Prospectus and this SAI and any future change
in those practices would require Board approval and
appropriate disclosure to investors. If any
percentage limitation is complied with at the time of
an investment, a later increase or decrease resulting
from a change in values or assets will not constitute
a violation of that limitation.

PORTFOLIO TURNOVER

While the fund does not intend to trade in securities
for short-term profits, securities may be sold
without regard to the length of time they have been
held by the fund when warranted by the circumstances.
The fund cannot accurately predict its annual rate
of portfolio turnover (that is, the lesser of
purchases or sales of portfolio securities for the
year divided by the monthly average value of
portfolio securities for the year); however, it is
anticipated that the annual turnover rate generally
will not exceed 100%. Under certain market
conditions, the fund may experience increased
portfolio turnover as a result of its options
activities. For instance, the exercise of a
substantial number of options on stock indexes
written by the fund (because of appreciation of the
underlying index in the case of call options or
depreciation of the underlying index in the case of
put options) could result in a turnover rate in
excess of 100%. A portfolio turnover rate of 100%
would occur, for example, if all the securities in
the fund's portfolio were replaced once during a
period of one year. Securities with remaining
maturities of one year or less on the date of
acquisition are excluded from the calculation. The
portfolio turnover rates for the 1997, 1998 and 1999
fiscal years were 101%, 151% and 133% respectively.

PORTFOLIO TRANSACTIONS

Most of the purchases and sales of securities for the
fund, whether transacted on a securities exchange or
over-the-counter, will be effected in the primary
trading market for the securities. The primary
trading market for a given security generally is
located in the country in which the issuer has its
principal office. Decisions to buy and sell
securities for the fund are made by the manager,
which also is responsible for placing these
transactions, subject to the overall review of the
Board of Directors. Although investment decisions
for the fund are made independently from those of the
other accounts managed by the manager, investments of
the type the fund may make also may be made by those
other accounts. When the fund and one or more other
accounts managed by the manager are prepared to
invest in, or desire to dispose of, the same
security, available investments or opportunities for
sales will be allocated in a manner believed by the
manager to be equitable to each. In some cases, this
procedure may adversely affect the price paid or
received by the fund or the size of the position
obtained or disposed of by the fund.

Transactions on domestic stock exchanges and some
foreign stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on
which commissions are negotiated, the cost of
transactions may vary among different brokers. On
many foreign exchanges, commissions generally are
fixed. There is generally no stated commission in
the case of securities traded on domestic or foreign
over-the-counter markets, but the prices of those
securities include undisclosed commissions or mark-
ups. The cost of securities purchased from
underwriters includes an underwriting commission or
concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's
mark-up or mark-down. For the 1997, 1998 and 1999
fiscal years, the fund paid $702,508, $618,393 and
$409,635, respectively, in brokerage commissions.

In selecting brokers or dealers to execute portfolio
transactions on behalf of the fund, the manager seeks
the best overall terms available. In assessing the
best overall terms available for any transaction, the
manager will consider the factors it deems relevant,
including the breadth of the market in the security,
the price of the security, the financial condition
and execution capability of the broker or dealer and
the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In
addition, the Investment Management Agreement
authorizes the manager in selecting brokers or
dealers to execute a particular transaction and in
evaluating the best overall terms available, to
consider the brokerage and research services (as
those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the fund
and/or other accounts over which the manager or its
affiliates exercise investment discretion.

The fund's Board of Directors periodically will
review the commissions paid by the fund to determine
if the commissions paid over representative periods
of time were reasonable in relation to the benefits
inuring to the fund. It is possible that certain of
the services received will primarily benefit one or
more accounts for which the manager or its affiliates
exercise investment discretion. Conversely, the fund
may be the primary beneficiary of services received
as a result of portfolio transactions effected for
other accounts. The fee under the Investment
Management Agreement is not reduced by reason of the
receipt by the manager of such brokerage and research
services.

The fund's Board of Directors has determined that any
portfolio transactions for the fund may be executed
through Salomon Smith Barney or an affiliate of
Salomon Smith Barney if, in the judgment of the
manager, the use of Salomon Smith Barney is likely to
result in price and execution at least as favorable
as those of other qualified brokers, and if, in the
transaction, Salomon Smith Barney charges the fund a
commission rate consistent with those charged by
Salomon Smith Barney to comparable unaffiliated
customers in similar transactions. Similarly, the
fund may execute portfolio transactions in gold
futures through an affiliated broker if comparable
conditions are satisfied, including that the fund is
charged commissions consistent with those charged for
comparable transactions in comparable accounts of the
broker's most favored unaffiliated clients. In
addition, under rules adopted by the SEC, Salomon
Smith Barney may directly execute such transactions
for the fund on the floor of any national securities
exchange, provided (a) the Board of Directors has
expressly authorized Salomon Smith Barney to effect
such transactions and (b) Salomon Smith Barney
annually advises the fund of the aggregate
compensation it earned on such transactions. Salomon
Smith Barney will not participate in commissions from
brokerage given by the fund to other brokers or
dealers and will not receive any reciprocal brokerage
business resulting therefrom. Over-the-counter
purchases and sales are transacted directly with
principal market makers except in those cases in
which better prices and executions may be obtained
elsewhere. For the 1997, 1998 and 1999 fiscal years,
the fund paid $9,000, $14,131 and $23,658,
respectively, in brokerage commissions to Salomon
Smith Barney.

The fund will not purchase any security, including
U.S. government securities, during the existence of
any underwriting or selling group relating thereto of
which Salomon Smith Barney is a member, except to the
extent permitted by regulations adopted by the SEC.

PURCHASE OF SHARES

Sales Charge Alternatives

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

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

Amount of
Investment

Sales Charge
as a %
of
Transaction

Sales Charge
as a %
of Amount
Invested
Dealers'
Reallowance
as %
Of Offering
Price
Less than
$25,000
5.00
5.26
4.50
$ 25,000 -
49,999
4.00
4.17
3.60
50,000 - 99,999
3.50
3.63
3.15
100,000 -
249,999
3.00
3.09
2.70
250,000 -
499,999
2.00
2.04
1.80
500,000 and
over
*
*
*

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

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

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

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

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

General

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

Investors in Class A, Class B and Class L shares may
open an account in the fund by making an initial
investment of at least $1,000 for each account, or
$250 for an IRA or a Self-Employed Retirement Plan,
in the fund. Investors in Class Y shares may open an
account by making an initial investment of
$15,000,000. Subsequent investments of at least $50
may be made for all Classes. For participants in
retirement plans qualified under Section 403(b)(7) or
Section 401(c) of the 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 Inc. ("Citigroup") and its
subsidiaries, including Salomon Smith Barney,
unitholders who invest distributions from a Unit
Investment Trust ("UIT") sponsored by Salomon Smith
Barney, and Directors/Trustees of any of the Smith
Barney Mutual Funds, and their spouses and children.
The fund reserves the right to waive or change
minimums, to decline any order to purchase its shares
and to suspend the offering of shares from time to
time. Shares purchased will be held in the
shareholder's account by the sub-transfer agent.
Share certificates are issued only upon a
shareholder's written request to the sub-transfer
agent.

Purchase orders received by the fund or a Salomon
Smith Barney Financial Consultant 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 the fund is due
on the third business day after the trade date. In
all other cases, payment must be made with the
purchase order.

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

Sales Charge Waivers and Reductions

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

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

Letter of Intent - Class A Shares. A Letter of
Intent for an amount of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales
charge by aggregating investments over a 13 month
period, provided that the investor refers to such
Letter when placing orders. For purposes of a Letter
of Intent, the ''Amount of Investment'' as referred
to in the preceding sales charge table includes (i)
all Class A shares of the fund and other Smith Barney
Mutual Funds offered with a sales charge acquired
during the term of the letter plus (ii) the value of
all Class A shares previously purchased and still
owned. Each investment made during the period
receives the reduced sales charge applicable to the
total amount of the investment goal. If the goal is
not achieved within the period, the investor must pay
the difference between the sales charges applicable
to the purchases made and the charges previously
paid, or an appropriate number of escrowed shares
will be redeemed. The term of the Letter will
commence upon the date the Letter is signed, or at
the options of the investor, up to 90 days before
such date. Please contact a Salomon Smith Barney
Financial Consultant or 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 the fund's
Class A shares, which may include a deferred sales
charge of 1.00%. Please contact a Salomon Smith
Barney Financial Consultant or 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.''

Year Since Purchase Payment Was Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

0.00

Class B shares will convert automatically to Class A
shares eight years after the date on which they were
purchased and thereafter will no longer be subject to
any distribution fees. There will also be converted
at that time such proportion of Class B Dividend
Shares (Class B shares that were acquired through the
reinvestment of dividends and distributions) owned by
the shareholder 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
591/2; (e) involuntary redemptions; and (f) redemptions
of shares to effect a combination of the fund with
any investment company by merger, acquisition of
assets or otherwise. In addition, a shareholder who
has redeemed shares from other Smith Barney Mutual
Funds may, under certain circumstances, reinvest all
or part of the redemption proceeds within 60 days and
receive pro rata credit for any deferred sales charge
imposed on the prior redemption.

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

Smith Barney 401(k) and ExecChoiceTM Programs

Investors may be eligible to participate in the Smith
Barney 401(k) Program or the Smith Barney ExecChoiceTM
Program. To the extent applicable, the same terms and
conditions, which are outlined below, are offered to
all plans participating (''Participating Plans'') in
these programs.

The fund offers to Participating Plans Class A and
Class L shares as investment alternatives under the
Smith Barney 401(k) and ExecChoiceTM Programs. Class
A and Class L shares acquired through the
Participating Plans are subject to the same service
and/or distribution fees as the Class A and Class L
shares acquired by other investors; however, they are
not subject to any initial sales charge or deferred
sales charge. Once a Participating Plan has made an
initial investment in the fund, all of its subsequent
investments in the fund must be in the same Class of
shares, except as otherwise described below.

Class A Shares. Class A shares of the fund are
offered without any sales charge or deferred sales
charge to any Participating Plan that purchases
$1,000,000 or more of Class A shares of one or more
funds of the Smith Barney Mutual Funds.

Class L Shares. Class L shares of the fund are
offered without any sales charge or deferred sales
charge to any Participating Plan that purchases less
than $1,000,000 of Class L shares of one or more
funds of the Smith Barney Mutual Funds.

401(k) and ExecChoiceTM Plans 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 Smith Barney ExecChoiceTM
Program, a Participating Plan's total Class L and
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 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.

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

Any Participating Plan in the Smith Barney 401(k) or
the Smith Barney ExecChoiceTM Programs, whether opened
before or after June 21, 1996, that has not
previously qualified for an exchange into Class A
shares will be offered the opportunity to exchange
all of its Class L shares for Class A shares of the
fund, regardless of asset size, at the end of the
eighth year after the date the Participating Plan
enrolled in the Smith Barney 401(k) Program. 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 of the fund, but instead may acquire Class A
shares of the fund. Any Class L shares not converted
will continue to be subject to the distribution fee.

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

EXCHANGE PRIVILEGE

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

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

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

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

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

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

REDEMPTION OF SHARES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

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

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

Taxes

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

The following is a summary of selected Federal income
tax considerations that may affect the fund and its
shareholders. In addition to the considerations
described below, there may be other federal, state,
local or foreign tax applications to consider. The
summary is not intended as a substitute for
individual tax advice and investors are urged to
consult their own tax advisors as to the tax
consequences of an investment in the fund.

General. The fund has qualified and intends to
continue to qualify each year as a regulated
investment company under the Code. Provided that the
fund (a) is a regulated investment company and (b)
distributes at least 90% of its net investment income
(including for this purpose, any excess of its net
short-term capital gain over its net long-term
capital loss ) for a taxable year, the fund will not
be liable for Federal income taxes to the extent its
net investment income and its net realized long- and
short-term capital gains, if any, are distributed to
its shareholders in compliance with the Code's timing
and other requirements. One of several requirements
for qualification is that the fund receives at least
90% of its gross income for each taxable year from
dividends, interest, payments with respect to
securities loans, gains from the sale or other
disposition of stocks or securities or foreign
currencies, or certain other income (including but
not limited to gains from options, futures and
forward contracts) derived with respect to the fund's
investments in stock, securities and foreign
currencies. Income from investments in gold bullion,
gold coins and possibly futures or options contracts
related to gold will not qualify as permitted gross
income for purposes of the 90% test. Therefore, the
fund intends to restrict its investment in gold
bullion, gold coins and possibly futures or options
contracts related to gold to the extent necessary to
meet the 90% test. Gains from foreign currencies or
related forward contracts, if any, that are not
directly related to the fund's principal business of
investing in stock or securities (or options or
futures with respect to stock or securities) might be
excluded by regulations from permitted gross income
for purposes of the 90% test.

Taxation of the Fund's Investments. Gain or loss on
the sale of securities by the fund generally will be
long-term capital gain or loss if the fund has held
the securities for more than one year, except for
certain currency gains or losses, as described below.
Gain or loss on sales of securities held for not
more than one year will be short-term. If the fund
acquires a debt security at a substantial market
discount, a portion of any gain upon the sale or
redemption will be taxed as ordinary income, rather
than capital gain, to the extent it reflects accrued
market discount not previously included in the fund's
income.

Dividends or other income (including, in some cases,
capital gains) received by the fund from sources
within foreign countries may be subject to
withholding and other taxes imposed by such foreign
countries. Tax conventions between certain countries
and the United States may reduce or eliminate such
taxes.

Under the Code, gains or losses attributable to
foreign currency forward contracts, or to
fluctuations in exchange rates between the time the
fund accrues income or receivables or expenses or
other liabilities denominated in a foreign currency
and the time the fund actually collects such income
or pays such liabilities, are treated as ordinary
income or ordinary loss. Similarly, gains or losses
on the disposition of debt securities denominated in
foreign currency, to the extent attributable to
fluctuations in exchange rates between the
acquisition and disposition dates, are also treated
as ordinary income or loss.

If the fund purchases shares in certain foreign
investment entities, referred to as "passive foreign
investment companies," the fund itself may be subject
to U.S. federal income tax and an additional charge
in the nature of interest on a portion of any "excess
distribution" from such company or gain from the
disposition of such shares, even if the distribution
or gain is distributed by the fund to its
shareholders in a manner that satisfies the
requirements described above. If the fund were able
and elected to treat a passive foreign investment
company as a "qualified electing fund," in lieu of
the treatment described above, the fund would be
required each year to include in income, and
distribute to shareholders in accordance with the
distribution requirements described above, the fund's
pro rata share of the ordinary earnings and net
capital gains of the company, whether or not actually
received by the fund. The fund generally should be
able to make an alternative election to mark these
investments to market annually, resulting in the
recognition of ordinary income (rather than capital
gain) or ordinary loss, subject to limitations on the
ability to use any such loss.

The fund may be required to treat amounts as taxable
income or gain, subject to the distribution
requirements referred to above, even though no
corresponding amounts of cash are received
concurrently, as a result of (1) mark to market,
constructive sale or other rules applicable to
passive foreign investment companies or partnerships
in which the fund invests or to certain options,
futures, forward contracts, or "appreciated financial
positions" or (2) the inability to obtain cash
distributions or other amounts because of currency
controls or restrictions on repatriation imposed by
a foreign country with respect to the fund's
investments in issuers in such country or (3) tax
rules applicable to debt obligations acquired with
"original issue discount," including zero-coupon or
deferred payment bonds and pay-in-kind debt
obligations, or to market discount if an election is
made with respect to such market discount. The fund
may therefore be required to obtain cash to be used
to satisfy these distribution requirements by selling
portfolio securities at times that it might not
otherwise be desirable to do so or borrowing the
necessary cash, thereby incurring interest expenses.

Options, Futures and Currency Forward Transactions.
The tax consequences of options, futures and forward
transactions entered into by the fund will vary
depending on the nature of the underlying security or
currency and whether the "straddle" rules, discussed
separately below, apply to the transaction.

If the fund purchases a put or call option on an
equity security, convertible debt security or gold
(provided that the option on gold is not a "Section
1256 contract", as described below) and such a put or
call option expires unexercised, the fund will
realize a capital loss equal to the cost of the
option. If the fund enters into a closing sale
transaction with respect to the option, it will
realize a capital gain or loss (depending on whether
the proceeds from the closing transaction are greater
or less than the cost of the option). The gain or
loss will be short-term or long-term depending on the
fund's holding period for the option. If the fund
exercises such a put option, it will realize a short-
term capital gain or loss (long-term if the fund
holds the underlying security or gold for more than
one year before it purchases the put) from the sale
of the underlying security or gold measured by the
sales proceeds decreased by the premium paid and the
fund's tax basis in the underlying security or gold.
No gain or loss will be recognized by the fund if it
exercises a call option.

The fund may write a covered call option on the
securities and gold described above. If the option
expires unexercised, or if the fund enters into a
closing purchase transaction, the fund will realize
a gain or loss without regard to any unrealized gain
or loss on the underlying security or gold.
Generally, any such gain or loss will be short-term
capital gain or loss. If a call option written by
the fund is exercised, the fund will treat the
premium received for writing such call option as
additional sales proceeds and will recognize a
capital gain or loss from the sale of the underlying
security or gold. Whether the gain or loss will be
long-term or short-term will depend on the fund's
holding period for the underlying security or gold.

The Code imposes a special "mark-to-market" system
for taxing "section 1256 contracts" including certain
listed options on nonconvertible debt securities
(including U.S. government securities or other listed
nonequity options), options on certain stock indexes,
regulated futures contracts and certain foreign
currency contracts. In general, gain or loss on
section 1256 contracts will be taken into account for
tax purposes when actually realized (by a closing
transaction, by exercise, by taking or making
delivery or by other termination). In addition, any
section 1256 contracts held at the end of a taxable
year will be treated as sold at their year-end fair
market value (that is, marked to the market), and the
resulting gain or loss will be recognized for tax
purposes. Provided section 1256 contracts are held
as capital assets and are not part of a straddle,
both the realized and mark-to-market year-end gain or
loss from these investment positions (including
premiums on listed, nonequity options that expire
unexercised) will be treated as 60% long-term and 40%
short-term capital gain or loss, regardless of the
period of time particular positions are actually held
by the fund (except that gain or loss with respect to
foreign currency forward contracts will generally be
treated as ordinary income or loss). Constructive
sale rules may also require the recognition of gains
(but not losses) if the fund engages in short sales
or certain other transactions.

Straddles. While the mark-to-market system is
limited to section 1256 contracts, the Code contains
other rules applicable to transactions which create
positions which offset positions in section 1256 or
other investment contracts or securities
("straddles"). Straddles are defined to include
"offsetting positions" in actively traded personal
property. In general, investment positions may be
"offsetting" if there is a substantial diminution in
the risk of loss from holding one position by reason
of holding one or more other positions. Under
current law, it is not clear under certain
circumstances whether one investment made by the
fund, such as an option contract, would be treated as
offsetting another investment also held by the fund,
and, therefore, whether the fund would be treated as
having entered into a straddle. Also, options,
futures, forward currency contracts and other
positions entered into by the fund may result in the
creation of straddles for Federal income tax
purposes.

If two (or more) positions constitute a straddle, a
realized loss from one position (including a mark-to-
market loss) must be deferred to the extent of
unrecognized gain in an offsetting position. Also,
the holding period rules described above may be
modified to recharacterize long-term gain as short-
term gain, or to recharacterize short-term loss as
long-term loss, in connection with certain straddle
transactions. Furthermore, interest and other
carrying charges allocable to personal property that
is part of a straddle must be capitalized. In
addition, "wash sale" rules apply to straddle
transactions to prevent the recognition of loss from
the sale of a position at a loss where a new
offsetting position is or has been acquired within a
prescribed period.

If the fund chooses to identify particular offsetting
positions as being components of a straddle, a
realized loss will be recognized, but only upon the
liquidation of all of the components of the
identified straddle. Special rules apply to the
treatment of "mixed" straddles (that is, straddles
consisting of a section 1256 contract and an
offsetting position that is not a section 1256
contract). If the fund makes certain elections, the
section 1256 contract components of such straddles
will not be subject to the "60/40%" and/or mark-to-
market rules. If any such election is made, the
amount, the nature (as long or short-term) and the
timing of the recognition of the fund's gains or
losses from the affected straddle positions will be
determined under rules that will vary according to
the type of election made. The effect of the
straddle rules and the other rules described above
may be to change the amount, timing and character of
the fund's income, gains and losses and, therefore,
its distributions.

Statements as to the tax status of each shareholder's
dividends and distributions are mailed annually. Each
shareholder will also receive, if appropriate,
various written notices after the close of the fund's
taxable year as to the Federal income tax status of
his or her dividends and distributions which were
received from the fund during the fund's taxable
year. Shareholders should consult their tax advisors
regarding specific questions as to the Federal and
local tax consequences of investing in the fund.

Taxation of Shareholders. Dividends paid from net
investment income and distributions of net short-term
capital gains are taxable to shareholders as ordinary
income, regardless of how long shareholders have held
their fund shares and whether such dividends and
distributions are received in cash or reinvested in
additional fund shares. Distributions of net long-
term capital gains are taxable to shareholders as
long-term capital gains, regardless of how long
shareholders have held fund shares and whether such
distributions are received in cash or reinvested in
additional fund shares. Some of the fund's dividends
declared from net investment income and attributable
to qualifying dividends received by the fund from
domestic corporations may qualify for the Federal
dividends-received deduction for corporations.

The portion of the dividends received from the fund
which qualifies for the dividends-received deduction
for corporations will be reduced to the extent the
fund holds dividend-paying stock for less than 46
days (91 days for certain preferred stocks). The
fund's holding period requirement must be satisfied
separately for each dividend during a prescribed
period before and after the ex-dividend date and will
not include any period during which the fund has
reduced its risk of loss from holding the stock by
purchasing an option to sell, granting an option to
buy, or entering into a short sale of substantially
identical stock or securities, such as securities
convertible into the stock. The holding period for
stock may also be reduced if the fund diminishes its
risk of loss by holding one or more positions in
substantially similar or related properties.
Dividends-received deductions will be allowed only
with respect to shares for which a corporate
shareholder satisfies the same holding period rules
applicable to the fund. Receipt of dividends that
qualify for the dividends received deduction may
increase a corporate shareholder's liability, if any,
for the alternative minimum tax. Such a shareholder
should also consult its tax adviser regarding the
possibility that its federal tax basis in its fund
shares may be reduced by the receipt of
"extraordinary dividends" from the fund and, to the
extent such basis would be reduced below zero,
current recognition of income would be required.

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

If a shareholder (a) incurs a sales charge in
acquiring shares of the fund, (b) disposes of those
shares within 90 days and (c) acquires shares in a
mutual fund for which the otherwise applicable sales
charge is reduced by reason of a reinvestment right
(e.g., an exchange privilege), the original sales
charge increases the shareholder's tax basis in the
original shares only to the extent the otherwise
applicable sales charge for the second acquisition is
not reduced. The portion of the original sales
charge that does not increase the shareholder's tax
basis in the original shares would be treated as
incurred with respect to the second acquisition and,
as a general rule, would increase the shareholder's
tax basis in the newly acquired shares. Furthermore,
the same rule would apply to a disposition of the
newly acquired shares made within 90 days of the
second acquisition. This provision prevents a
shareholder from immediately deducting the sales
charge by shifting his or her investment in a family
of mutual funds.

Investors considering buying shares of the fund on or
just prior to a record date for a taxable-dividend or
capital gain distribution should be aware that any
such payment will be a taxable dividend or
distribution payment even though it may represent in
large part a return of invested capital.

Share Redemptions. As a general rule, a shareholder
who is not a dealer in securities and who redeems or
exchanges his or her shares will recognize long-term
capital gain or loss if the shares have been held for
more than one year, and will recognize short-term
capital gain or loss if the shares have been held for
one year or less, provided in each case that the
transaction is properly treated as a sale rather than
a dividend for tax purposes. However, if a
shareholder receives a distribution taxable as long-
term capital gain with respect to shares of the fund,
and redeems or exchanges the shares before he or she
has held them for more than six months, any loss on
the redemption or exchange will be treated as a long-
term capital loss to the extent of the distribution.

Additionally, any loss realized on a redemption or
exchange of fund shares will be disallowed to the
extent the shares disposed of are replaced with other
shares of the fund within a period of 61 days
beginning 30 days before and ending 30 days after
such disposition, such as pursuant to reinvestment of
dividends in fund shares.

Backup Withholding. If a shareholder fails to
furnish a correct taxpayer identification number,
fails to fully report dividend or interest income or
fails to certify that he or she has provided a
correct taxpayer identification number and that he or
she is not subject to such withholding, then the
shareholder may be subject to a 31% "backup
withholding tax" with respect to (a) dividends and
distributions and (b) any proceeds of any redemption
of fund shares. An individual's taxpayer
identification number is his or her social security
number. The backup withholding tax is not an
additional tax and may be credited against a
shareholder's Federal income tax liability.
Distributions to nonresident aliens and foreign
entities may also be subject to other withholding
taxes.

PERFORMANCE INFORMATION

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

From time to time, the Company may quote a fund's
yield or total return in advertisements or in reports
and other communications to shareholders. The
Company may include comparative performance
information in advertising or marketing the fund's
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 fund describes the
expenses or performance of any Class it will also
disclose such information for the other Classes.

Average Annual Total Return. "Average annual total
return" figures, as described below, are 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 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.

Class A's average annual total return was as follows
for the periods indicated:

13.83% for the one-year period ended October
31, 1999.
(2.11)% per annum during the five-year period
ended October 31, 1999.
1.54% per annum during the ten-year period
ended October 31, 1999.
2.40% per annum for the period from
commencement of operations (November 24, 1986)
through October 31, 1999.

Class B's average annual total return was as follows
for the periods indicated:

13.44% for the one-year period ended October
31, 1999.
(2.71)% per annum during the five-year period
ended October 31, 1999.
4.72% per annum for the period from
commencement of operations (November 6, 1992)
through October 31, 1999.

Class L's average annual total return was as follows
for the periods indicated:

13.54% for the one-year period ended October
31, 1999.
(2.19)% per annum for the period from
commencement of operations (November 7, 1994)
through October 31, 1999.

Average annual total return figures calculated in
accordance with the above formula assume that the
maximum 5.00% sales charge or maximum applicable
deferred sales charge, as the case may be, has been
deducted from the hypothetical investment. If the
maximum 5.00% sales charge had not been deducted at
the time of purchase, Class A's average annual total
return for the same periods would have been 8.15%,
(3.11)%, 1.02% and 1.99%, respectively. If the
maximum deferred sales charge had not been deducted
at the time of purchase, Class B's average annual
total return for the same periods would have been
8.44%, (2.90)% and 4.72%, respectively. If the
maximum deferred sales charge had not been deducted
at the time of purchase, Class L's average annual
total return for the same periods would have been
11.42% and (2.38)%, respectively.

Aggregate Total Return. Aggregate total return
figures represent the cumulative change in the value
of an investment in the fund for the specified period
and are computed by the following formula:

ERV-P
P

Where: P = a
hypothetical initial payment of $10,000.
ERV = Ending
Redeemable Value
of a
hypothetical
$10,000
investment made
at the beginning
of 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.

Class A's aggregate total return was as follows for
the periods indicated:

8.15% for the one-year period ended
October 31, 1999.
(14.60)% for the five-year period ended October
31, 1999.
10.68% for the ten-year period ended October
31, 1999.
29.08% for the period from commencement of
operations (November 24, 1986) through
October 31, 1999.

Class B's aggregate total return was as follows for
the periods indicated:

8.44% for the one-year period ended
October 31,1999.
(13.69)% for the five-year period ended October
31, 1999.
38.04% per annum from commencement of
operations (November 6, 1992) through
October 31,1999.

Class L's aggregate total return was as follows for
the period indicated:

11.42% for the one-year period ended October
31,1999.
(11.33)% for the period from commencement of
operations (November 7, 1994) through
October 31,1999.

Class A aggregate total return figures assume the
maximum 5.00% sales charge has not been deducted from
the investment at the time of purchase. If the
maximum 5.00% sales charge had been deducted at the
time of purchase, Class A's aggregate total return
for the same periods would have been 13.83%,
(10.10)%, 16.49% and 35.87%, respectively.

Class B aggregate total return figures assume the
maximum applicable deferred sales charge has not been
deducted from the investment at the time of purchase.
If the maximum 5.00% deferred sales charge had been
deducted at the time of purchase, Class B's aggregate
total return for the same periods would have been
13.44%, (12.83)% and 38.04%, respectively.

Class L aggregate total return figures assume the
maximum applicable deferred sales charge has not been
deducted from the investment at the time of purchase.
If the maximum 1% deferred sales charge had been
deducted at the time of purchase, Class L's aggregate
total return for the same periods would have been
13.54% and (10.43)%, respectively.

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' 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 the Class' performance with that of other
mutual funds should give consideration to the quality
and maturity of the portfolio securities.

It is important to note that the total return figures
set forth above are based on historical earnings and
are not intended to indicate future performance.

DETERMINATION OF NET ASSET VALUE

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

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

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

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

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

All other securities and other assets of the fund
will be valued at fair value as determined in good
faith by the Board of Directors.

INVESTMENT MANAGEMENT AND OTHER SERVICES

Manager. SSB Citi (formerly known as SSBC Fund
Management Inc.) serves as investment manager to the
fund pursuant to an investment management agreement
(the "Investment Management Agreement") with the fund
which was approved by the board of directors,
including a majority of directors who are not
"interested persons" of the fund or the manager. The
manager is a wholly owned subsidiary of Salomon Smith
Barney Holdings Inc. ("Holdings"), which in turn, is
a wholly owned subsidiary of Citigroup. Subject to
the supervision and direction of the fund's board of
directors, the manager manages the fund's portfolio
in accordance with the fund's stated investment
objective and policies, makes investment decisions
for the fund, places orders to purchase and sell
securities, and employs professional portfolio
managers and securities analysts who provide research
services to the fund. The manager pays the salary of
any officer and employee who is employed by both it
and the fund. The manager bears all expenses in
connection with the performance of its services. SSB
Citi (through its predecessor entities) has been in
the investment counseling business since 1968 and
renders investment advice to a wide variety of
individual, institutional and investment company
clients that had aggregate assets under management as
of December 31, 1999 in excess of $183 billion.

Subject to the supervision and direction of the
fund's Board of Directors, the manager manages the
fund's portfolio in accordance with the fund's stated
investment objective and policies, makes investment
decisions for the fund, places orders to purchase and
sell securities, employs professional portfolio
managers and securities analysts who provide research
services to the fund and oversees all aspects of the
fund's administration.

As compensation for investment advisory services
provided pursuant the Investment Management
Agreement, the fund pays the manager a fee computed
daily and paid monthly at the annual rate of 0.75% of
the value of the fund's average daily net assets.
For the fiscal years ended October 31, 1997, 1998 and
1999, the fund paid the manager $1,012,447, $607,349,
and $400,065 respectively, in investment advisory
fees.

The manager pays the salary of any officer and
employee who is employed by both it and the fund. The
services provided by the manager under the Investment
Management Agreement are described in the prospectus
under "Management." The manager bears all expenses in
connection with the performance of its services. The
fund bears expenses incurred in its operation,
including: taxes, interest, brokerage fees and
commissions, if any; fees of Directors who are not
officers, Directors, shareholders or employees of
Salomon Smith Barney or the manager; SEC fees and
state Blue Sky qualification fees; charges of
custodians; transfer and dividend disbursing agent's
fees; certain insurance premiums; outside auditing
and legal expenses; and costs of preparation and
printing of prospectuses for regulatory purposes and
for distribution to existing shareholders, cost of
shareholders' reports and shareholder meetings and
meetings of the officers or Board of Directors of the
fund.

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

Auditors. KPMG LLP, independent auditors, 345 Park
Avenue, New York, New York 10154, serve as auditors
of the fund and render an opinion on the fund's
financial statements annually.

Custodian. The Chase Manhattan Bank, N.A. ("Chase"
or "Custodian"), located at 4 Chase MetroTech Center,
Brooklyn, New York 11245, serves as the fund's
custodian. Under its agreement with the fund, Chase
holds the fund's portfolio securities and keeps all
necessary accounts and records. For its services,
Chase receives a monthly fee based upon the month-end
market value of securities held in custody and also
receives securities transaction charges. The assets
of the fund are held under bank custodianship in
compliance with the 1940 Act. Chase is authorized to
establish separate accounts in foreign securities
owned by the fund to be held with foreign branches of
other domestic banks as well as with certain foreign
banks and securities depositories.

Transfer Agent. Smith Barney Private Trust Company,
located at 388 Greenwich Street, New York, NY 10013
serves as the transfer agent and shareholder services
agent of the Fund.

Sub-Transfer Agent. PFPC Global Fund Services,
located at P.O. Box 9699, Providence, RI 02940-9699,
serves as the Fund's sub-transfer agent to render
certain shareholder record keeping and accounting
services functions.

Distributor. CFBDS, Inc., located at 20 Milk Street,
Boston, Massachusetts 02109-5408 serves as the fund's
distributor pursuant to a written agreement dated
October 8, 1998 (the "Distribution Agreement") which
was approved by the fund's Board of Directors,
including a majority of the Independent Directors on
July 15, 1998. Prior to the merger of Travelers
Group, Inc. and Citicorp Inc. on October 8, 1998,
Salomon Smith Barney served as the fund's
distributor. For the fiscal year ended October 31,
1997, Salomon Smith Barney, received $115,000 in
sales charges from the sale of Class A shares, and
did not reallow any portion thereof to dealers. For
the period November 1, 1997 through October 8, 1998
the aggregate dollar amount of commission on Class A
shares was $26,000, all of which was paid to Salomon
Smith Barney. For the period October 8, 1998 through
October 31, 1998 the aggregate dollar amount of
commission on Class A shares was $1,000, $900 of
which was paid to Salomon Smith Barney. For the
fiscal year ended October 31, 1999, Salomon Smith
Barney received $47,000 in sales charges from the
sale of Class A shares. For the period June 12, 1998
through October 7, 1998 the aggregate dollar amount
of commissions on Class L shares was $2,000, all of
which was paid to Salomon Smith Barney. For the
period October 8, 1998 through October 31, 1998 the
aggregate dollar amount of commissions on Class L
shares was $0. For the fiscal year ended October 31,
1999, Salomon Smith Barney received $2,000 in sales
chareges from the sale of Class L shares. For the
fiscal year ended October 31, 1999, Salomon Smith
Barney or its predecessor received from shareholders
$1,000 in deferred sales charges on the redemption of
Class A shares. For the fiscal years ended October
31, 1997, 1998 and 1999, Salomon Smith Barney or its
predecessor received from shareholders $193,000,
$242,000 and $86,000, respectively, in deferred sales
charges on the redemption of Class B shares. For the
fiscal years ended October 31, 1997, 1998 and 1999,
Salomon Smith Barney or its predecessor received from
shareholders $8,000, $1,000 and $0, respectively, in
deferred sales charges on the redemption of Class L
shares.

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

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

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

Distribution Plan Fees

Fiscal Year
Ended
10/31/99

Fiscal Year
Ended 10/31/98

Fiscal Year
Ended
10/31/97

Class A

$ 59,530

$ 82,238

$131,379

Class B

$264,691

$438,557

$750,082

Class L*

$ 30,613

$ 42,290

$ 75,921

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

For the fiscal year ended October 31, 1999, Salomon
Smith Barney incurred distribution expenses totaling
$46,285 consisting of $1,864 for advertising, $588
for printing and mailing of prospectuses, $25,695 for
support services, $17,017 to Salomon Smith Barney
Financial Consultants, and $ 1,121 in accruals for
interest on the excess of Salomon Smith Barney
expenses incurred in distributing the fund's shares
over the sum of the distribution fees and deferred
sales charge received by Salomon Smith Barney from
the fund.

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

OTHER INFORMATION ABOUT THE COMPANY

General. The Company was incorporated under the laws
of the State of Maryland on July 16, 1986 under the
name Shearson Lehman Precious Metals and Minerals
Fund Inc. As the name of its sponsor has changed,
the Company's name has been changed, December 19,
1995, to Smith Barney Precious Metals and Minerals
Fund Inc. and Smith Barney Natural Resources Fund
Inc., respectively. On November 29, 1999, the Board
of Directors voted to amend the Charter of the
Company to change its name to Smith Barney Sector
Series Inc., with Natural Resources Fund, Financial
Services Fund, Health Sciences Fund and Technology
Fund each classified as a series of the Company. The
Company is registered with the SEC as a diversified,
open-end management investment company.

The fund offers shares of common stock currently
classified into four Classes, A, B, L and Y, with a
par value of $.001 per share. Each Class of shares
has the same rights, privileges and preferences,
except with respect to: (a) the designation of each
Class; (b) the effect of the respective sales charges
for each Class; (c) the distribution and/or service
fees borne by each Class; (d) the expenses allocable
exclusively to each Class; (e) voting rights on
matters exclusively affecting a single Class; (f) the
exchange privilege of each Class; and (g) the
conversion feature of the Class B shares. The
Company's Board of Directors does not anticipate that
there will be any conflicts among the interests of
the holders of the different Classes. The Directors,
on an ongoing basis, will consider whether any such
conflict exists and, if it does, take appropriate
action.

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

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

Annual and Semi-annual Reports. The fund sends its
shareholders a semi-annual report and an audited
annual report, which include listings of investment
securities held by the fund at the end of the period
covered. In an effort to reduce the fund's printing
and mailing costs, the fund consolidates the mailing
of its semi-annual and annual reports by household.
This consolidation means that a household having
multiple accounts with the identical address of
record will receive a single copy of each report. In
addition, the fund also consolidates the mailing of
its prospectus so that a shareholder having multiple
accounts (that is, individual, IRA and/or Self-
Employed Retirement Plan accounts) will receive a
single Prospectus annually. Shareholders who do not
want this consolidation to apply to their accounts
should contact their Salomon Smith Barney Financial
Consultant or the Transfer Agent.

FINANCIAL STATEMENTS

The fund's annual report for the fiscal year ended
October 31, 1999 is incorporated herein by reference
in its entirety. The annual report was filed on
January 5, 2000, Accession Number 0000091155-00-
000011.

OTHER INFORMATION

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

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

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

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

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

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

APPENDIX A- RATINGS OF DEBT OBLIGATIONS

BOND (AND NOTE) RATINGS

Moody's

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

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

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

Baa - Bonds 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 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 rated B generally lack
characteristics of desirable investments. 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 rated Caa are of poor standing.
These issues may be in default or present elements of
danger may exist with respect to principal or
interest.

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

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

Moody's applies the numerical modifiers 1, 2
and 3 in each generic rating classification from Aa
through B. The modifier 1 indicates the security
ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates the issue ranks
in the lower end of its generic rating category.

S & P

AAA - Debt rated "AAA" has the highest rating
assigned by S & P. Capacity to pay interest and
repay principal is extremely strong.

AA - Debt rated "AA" has a very strong capacity
to pay interest and repay principal and differs from
the highest rated issues only in small degree.

A - Debt rated "A" has a strong capacity to pay
interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in
higher rated categories.

BBB - Debt rated "BBB" is regarded as having an
adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal
for debt in this category than in higher rated
categories.

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

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

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

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

COMMERCIAL PAPER RATINGS

Moody's

Issuers rated "Prime-1" (or related supporting
institutions) have a superior capacity for repayment
of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the
following characteristics: leading market positions
in well-established industries; high rates of return
on funds employed; conservative capitalization
structures with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage
of fixed financial charges and high internal cash
generation; well-established access to a range of
financial markets and assured sources of alternate
liquidity.

Issuers rated "Prime-2" (or related supporting
institutions) have a strong capacity for repayment of
short-term promissory obligations. This will
normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more
subject to variation. Capitalization
characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate
liquidity is maintained.

S & P

A-1 - This designation indicates that the
degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined
to possess overwhelming safety characteristics will
be denoted with a plus (+) sign designation.

A-2 - Capacity for timely payment on issues
with this designation is strong. However, the
relative degree of safety is not as high as for
issues designated A-1.

g:\fundaccounting\legal\funds\natr\2000\secdocs\sai2000
69

Statement of Additional Information for the
Financial Services Fund, Health Sciences Fund and
Technology Fund
February 14, 2000

STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY SECTOR SERIES INC.

Smith Barney Financial Services Fund
Smith Barney Health Sciences Fund
Smith Barney Technology Fund

388 Greenwich Street
New York, New York 10013
(800) 451-2010

This Statement of Additional Information ("SAI") is
meant to be read in conjunction with the combined
prospectus of Smith Barney Financial Services Fund
("Financial Services Fund"), Smith Barney Health
Sciences Fund ("Health Sciences Fund") and Smith
Barney Technology Fund ("Technology Fund") (each, a
"Fund") dated February 14, 2000, as amended or
supplemented from time to time (the "prospectus"), and
is incorporated by reference in its entirety into the
prospectus. Each Fund is a series of the Smith Barney
Sector Series Inc. (the "Company") which also offers
one other series: Smith Barney Natural Resources Fund.
The prospectus and copies of other information on the
funds may be obtained free of charge by contacting a
Salomon Smith Barney Financial Consultant, or by
writing or calling Salomon Smith Barney at the address
or telephone number above.

TABLE OF CONTENTS

Investment Objective and Management Policies 2
Risk Factors 7
Investment Restrictions 17
Directors and Executive Officers of the Company 19
Investment Management and Other Services 21
Portfolio Transactions 24
Portfolio Turnover 26
Purchase of Shares 26
Redemption of Shares 33
Valuation of Shares 34
Exchange Privilege 35
Performance Information 36
Dividends, Distributions and Taxes 38
Other Information About the Company 43
Financial Statements 44
Other Information 44

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The prospectus discusses each Fund's investment
objective and policies. This section contains
supplemental information concerning the types of
securities and other instruments in which each Fund
may invest, the investment policies and portfolio
strategies each Fund may utilize and certain risks
associated with these investments, policies and
strategies. SSB Citi Fund Management LLC ("SSB Citi"
or the "Manager") serves as Investment Manager to each
Fund. Citibank, N.A., through its Citibank Global
Asset Management division ("CGAM" or the "Sub-
Adviser"), an affiliate of the Manager, serves as the
sub-adviser to each Fund.

Financial Services Fund

Financial Services Fund seeks long-term capital
appreciation by investing primarily in common stocks.
The Fund invests at least 80% of its assets in
securities of companies principally engaged in
providing financial services to consumers and
industry. These companies may include, for example,
commercial banks, savings and loan associations,
brokerage companies, insurance companies, real estate-
related companies, leasing companies, and consumer and
industrial finance companies.

Health Sciences Fund

Health Sciences Fund seeks long-term capital
appreciation by investing primarily in common stocks.
The Fund invests at least 80% of its assets in
securities of companies principally engaged in the
design, manufacture, or sale of products or services
used for or in connection with health care or
medicine. These companies may include, for example,
pharmaceutical companies; companies involved in
biotechnology, medical diagnostic, biochemical or
other health care research and development; companies
involved in the operation of health care facilities;
and other companies involved in the design,
manufacture, or sale of health care-related products
or services such as medical, dental and optical
products, hardware, insurance or services.

Technology Fund

Technology Fund seeks long-term capital appreciation
by investing its assets primarily in common stocks.
The Fund normally invests at least 80% of its assets
in securities of companies principally engaged in
offering, using or developing products, processes or
services that will provide or will benefit
significantly from technological advances and
improvements. These companies may include, for
example, companies that develop, produce or distribute
products or services in the computer, semi-conductor,
software, electronics, media, communications, health
care, and biotechnology sectors.

Each Fund

Each fund may invest its assets in securities of
foreign issuers in addition to securities of domestic
issuers. Because each Fund is considered non-
diversified, the Fund may invest a significant
percentage of its assets in a single issuer.

In buying and selling securities for each fund, the
CGAM relies on fundamental analysis of each issuer and
its potential for success in light of its current
financial condition and its industry position. Factors
considered include long-term growth potential,
earnings estimates and quality of management.

CGAM may lend each Fund's securities to broker-dealers
or other institutions to earn income for the Fund.
CGAM may, but is not required to, use various
techniques, such as buying and selling futures and
options contracts, to increase or decrease a Fund's
exposure to changing security prices or other factors
that affect security values. If CGAM's strategies do
not work as intended, a Fund may not achieve its
objective.

Under normal market conditions, the majority of a
Fund's portfolio will consist of common stock, but it
also may contain money market instruments for cash
management purposes. Each Fund reserves the right, as
a defensive measure, to hold money market securities,
including repurchase agreements or cash, in such
proportions as, in the opinion of management,
prevailing market or economic conditions warrant. If a
Fund takes a temporary defensive position, it may be
unable to achieve its investment goal.

Equity Securities. Each Fund will normally invest at
least 80% of its assets in equity securities,
including primarily common stocks and, to a lesser
extent, securities convertible into common stock and
rights to subscribe for common stock. Common stocks
represent an equity (ownership) interest in a
corporation. Although equity securities have a
history of long-term growth in value, their prices
fluctuate based on changes in a company's financial
condition and on overall market and economic
conditions.

When-Issued Securities and Delayed-Delivery
Transactions. Each Fund may purchase securities on a
"when-issued" basis, for delayed delivery (i.e.,
payment or delivery occur beyond the normal settlement
date at a stated price and yield) or on a forward
commitment basis. A Fund does not intend to engage in
these transactions for speculative purposes, but only
in furtherance of its investment goal. These
transactions occur when securities are purchased or
sold by a Fund with payment and delivery taking place
in the future to secure what is considered an
advantageous yield and price to a Fund at the time of
entering into the transaction. The payment obligation
and the interest rate that will be received on
when-issued securities are fixed at the time the buyer
enters into the commitment. Because of fluctuations
in the value of securities purchased or sold on a
when-issued, delayed-delivery basis or forward
commitment basis, the prices obtained on such
securities may be higher or lower than the prices
available in the market on the dates when the
investments are actually delivered to the buyers.

When the Fund agrees to purchase when-issued or
delayed-delivery securities, the Fund will set aside
cash or liquid securities equal to the amount of the
commitment in a segregated account on the Fund's
books. Normally, the custodian will set aside
portfolio securities to satisfy a purchase commitment,
and in such a case the Fund may be required
subsequently to place additional assets in the
segregated account in order to ensure that the value
of the account remains equal to the amount of the
Fund's commitment. The assets contained in the
segregated account will be marked-to-market daily. It
may be expected that the Fund's net assets will
fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase
commitments than when it sets aside cash. When the
Fund engages in when-issued or delayed-delivery
transactions, it relies on the other party to
consummate the trade. Failure of the seller to do so
may result in the Fund's incurring a loss or missing
an opportunity to obtain a price considered to be
advantageous.

Foreign Securities. Each Fund may invest in
securities of foreign issuers. Such investments
involve certain risks not ordinarily associated with
investments in securities of domestic issuers. Such
risks include currency exchange control regulations
and costs, the possibility of expropriation, seizure,
or nationalization of foreign deposits, less liquidity
and volume and more volatility in foreign securities
markets and the impact of political, social, economic
or diplomatic developments or the adoption of other
foreign government restrictions that might adversely
affect the payment of principal and interest on or
market value of securities. If it should become
necessary, the Fund might encounter greater
difficulties in invoking legal processes abroad than
would be the case in the United States. In addition,
there may be less publicly available information about
a non-U.S. company, and non-U.S. companies are not
generally subject to uniform accounting and financial
reporting standards, practices and requirements
comparable to those applicable to U.S. companies.
Furthermore, some of these securities may be subject
to foreign brokerage and withholding taxes.

Each Fund may also invest in securities of foreign
issuers in the form of American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs") or
similar securities representing interests in the
common stock of foreign issuers. ADRs are receipts,
typically issued by a U.S. bank or trust company,
which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts
issued in Europe which evidence a similar ownership
arrangement. Generally, ADRs, in registered form, are
designed for use in the U.S. securities markets and
EDRs are designed for use in European securities
markets. The underlying securities are not always
denominated in the same currency as the ADRs or EDRs.
Although investment in the form of ADRs or EDRs
facilitates trading in foreign securities, it does not
mitigate the risks associated with investing in
foreign securities. However, by investing in ADRs or
EDRs rather than directly in foreign issuers' stock,
the Portfolio can avoid currency risks during the
settlement period for either purchases or sales. In
general, there is a large, liquid market in the United
States for many ADRs and EDRs. The information
available for ADRs and EDRs is subject to the
accounting, auditing and financial reporting standards
of the domestic market or exchange on which they are
traded, which standards are more uniform and more
exacting than those to which many foreign issuers may
be subject.

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

Currency Risks. The U.S. dollar value of securities
denominated in a foreign currency will vary with
changes in currency exchange rates, which can be
volatile. Accordingly, changes in the value of the
currency in which a fund's investments are denominated
relative to the U.S. dollar will affect the fund's net
asset value. Exchange rates are generally affected by
the forces of supply and demand in the international
currency markets, the relative merits of investing in
different countries and the intervention or failure to
intervene of U.S. or foreign governments and central
banks. However, currency exchange rates may fluctuate
based on factors intrinsic to a country's economy.
Some emerging market countries also may have managed
currencies, which are not free floating against the
U.S. dollar. In addition, emerging markets are
subject to the risk of restrictions upon the free
conversion of their currencies into other currencies.
Any devaluations relative to the U.S. dollar in the
currencies in which a fund's securities are quoted
would reduce the fund's net asset value per share.

Securities of Developing/Emerging Markets Countries.
A developing or emerging markets country generally is
considered to be a country that is in the initial
stages of its industrialization cycle. Investing in
the equity markets of developing countries involves
exposure to economic structures that are generally
less diverse and mature, and to political systems that
can be expected to have less stability, than those of
developed countries. Historical experience indicates
that the markets of developing countries have been
more volatile than the markets of the more mature
economies of developed countries; however, such
markets often have provided higher rates of return to
investors.

One or more of the risks discussed above could affect
adversely the economy of a developing market or a
fund's investments in such a market. The claims of
many property owners against those of governments may
remain unsettled. There can be no assurance that any
investments that a fund might make in such emerging
markets would not be expropriated, nationalized or
otherwise confiscated at some time in the future. In
such an event, the fund could lose its entire
investment in the market involved. Moreover, changes
in the leadership or policies of such markets could
halt the expansion or reverse the liberalization of
foreign investment policies now occurring in certain
of these markets and adversely affect existing
investment opportunities.

Money Market Instruments. Each Fund may invest for
temporary defensive purposes in short-term corporate
and government bonds and notes and money market
instruments. Money market instruments include:
obligations issued or guaranteed by the United States
government, its agencies or instrumentalities ("U.S.
government securities"); certificates of deposit, time
deposits and bankers' acceptances issued by domestic
banks (including their branches located outside the
United States and subsidiaries located in Canada),
domestic branches of foreign banks, savings and loan
associations and similar institutions; high grade
commercial paper; and repurchase agreements with
respect to the foregoing types of instruments.
Certificates of deposit ("CDs") are short-term,
negotiable obligations of commercial banks. Time
deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified
periods of time at stated interest rates. Bankers'
acceptances are time drafts drawn on commercial banks
by borrowers, usually in connection with international
transactions.

Repurchase Agreements. Each Fund may agree to
purchase securities from a bank or recognized
securities dealer and simultaneously commit to resell
the securities to the bank or dealer at an agreed-upon
date and price reflecting a market rate of interest
unrelated to the coupon rate or maturity of the
purchased securities ("repurchase agreements"). The
Fund would maintain custody of the underlying
securities prior to their repurchase; thus, the
obligation of the bank or dealer to pay the repurchase
price on the date agreed to would be, in effect,
secured by such securities. If the value of such
securities were less than the repurchase price, plus
interest, the other party to the agreement would be
required to provide additional collateral so that at
all times the collateral is at least 102% of the
repurchase price plus accrued interest. Default by or
bankruptcy of a seller would expose the Fund to
possible loss because of adverse market action,
expenses and/or delays in connection with the
disposition of the underlying obligations. The
financial institutions with which the Fund may enter
into repurchase agreements will be banks and non-bank
dealers of U.S. Government securities on the Federal
Reserve Bank of New York's list of reporting dealers,
if such banks and non-bank dealers are deemed
creditworthy by the Fund's Manager. The Manager will
continue to monitor creditworthiness of the seller
under a repurchase agreement, and will require the
seller to maintain during the term of the agreement
the value of the securities subject to the agreement
to equal at least 102% of the repurchase price
(including accrued interest). In addition, the
Manager will require that the value of this
collateral, after transaction costs (including loss of
interest) reasonably expected to be incurred on a
default, be equal to 102% or greater than the
repurchase price (including accrued premium) provided
in the repurchase agreement or the daily amortization
of the difference between the purchase price and the
repurchase price specified in the repurchase
agreement. The Manager will mark-to-market daily the
value of the securities. Repurchase agreements are
considered to be loans by the Fund under the
Investment Company Act of 1940, as amended (the "1940
Act").
Reverse Repurchase Agreements. Each Fund may enter
into reverse repurchase agreements which involve the
sale of Fund securities with an agreement to
repurchase the securities at an agreed-upon price,
date and interest payment and have the characteristics
of borrowing. Since the proceeds of borrowings under
reverse repurchase agreements are invested, this would
introduce the speculative factor known as "leverage."
The securities purchased with the funds obtained from
the agreement and securities collateralizing the
agreement will have maturity dates no later than the
repayment date. Generally the effect of such a
transaction is that the Fund can recover all or most
of the cash invested in the portfolio securities
involved during the term of the reverse repurchase
agreement, while in many cases it will be able to keep
some of the interest income associated with those
securities. Such transactions are only advantageous
if the Fund has an opportunity to earn a greater rate
of interest on the cash derived from the transaction
than the interest cost of obtaining that cash.
Opportunities to realize earnings from the use of the
proceeds equal to or greater than the interest
required to be paid may not always be available, and
the Fund intends to use the reverse repurchase
technique only when CGAM believes it will be
advantageous to the Fund. The use of reverse
repurchase agreements may exaggerate any interim
increase or decrease in the value of the Fund's
assets. The Fund's custodian bank will maintain a
separate account for the Fund with securities having a
value equal to or greater than such commitments.
Lending of Portfolio Securities. Consistent with
applicable regulatory requirements, each Fund may lend
portfolio securities to brokers, dealers and other
financial organizations that meet capital and other
credit requirements or other criteria established by
the Board. The Fund will not lend portfolio
securities to affiliates of the Manager unless they
have applied for and received specific authority to do
so from the Securities and Exchange Commission
("SEC"). Loans of portfolio securities will be
collateralized by cash, letters of credit or U.S.
Government Securities, which are maintained at all
times in an amount equal to at least 102% of the
current market value of the loaned securities. Any
gain or loss in the market price of the securities
loaned that might occur during the term of the loan
would be for the account of the Fund. From time to
time, the Fund may return a part of the interest
earned from the investment of collateral received for
securities loaned to the borrower and/or a third party
that is unaffiliated with the Fund and that is acting
as a "finder."
By lending its securities, the Fund can increase its
income by continuing to receive interest and any
dividends on the loaned securities as well as by
either investing the collateral received for
securities loaned in short-term instruments or
obtaining yield in the form of interest paid by the
borrower when U.S. Government Securities are used as
collateral. Although the generation of income is not
the primary investment goal of the Fund, income
received could be used to pay the Fund's expenses and
would increase an investor's total return. The Fund
will adhere to the following conditions whenever its
portfolio securities are loaned: (i) the Fund must
receive at least 102% cash collateral or equivalent
securities of the type discussed in the preceding
paragraph from the borrower; (ii) the borrower must
increase such collateral whenever the market value of
the securities rises above the level of such
collateral; (iii) the Fund must be able to terminate
the loan at any time; (iv) the Fund must receive
reasonable interest on the loan, as well as any
dividends, interest or other distributions on the
loaned securities and any increase in market value;
(v) the Fund may pay only reasonable custodian fees in
connection with the loan; and (vi) voting rights on
the loaned securities may pass to the borrower,
provided, however, that if a material event adversely
affecting the investment occurs, the Board must
terminate the loan and regain the right to vote the
securities. Loan agreements involve certain risks in
the event of default or insolvency of the other party
including possible delays or restrictions upon a
Fund's ability to recover the loaned securities or
dispose of the collateral for the loan.
Borrowing. Each Fund also may borrow for temporary or
emergency purposes, but not for leveraging purposes,
in an amount up to 331/3% of its total assets, and may
pledge its assets in connection with such borrowings.
If a fund borrows money, its share price may be
subject to greater fluctuation until the borrowing is
paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a
form of leverage.

Illiquid Securities. Each Fund may invest up to an
aggregate amount of 15% of its net assets in illiquid
securities, which term includes securities subject to
contractual or other restrictions on resale and other
instruments that lack readily available markets.

RISK FACTORS

Financial Services Fund

This sector generally is subject to extensive
governmental regulation, which may change frequently.
In addition, the profitability of businesses in
financial services depends heavily upon the
availability and cost of money, and may fluctuate
significantly in response to changes in interest
rates, as well as changes in general economic
conditions. From time to time, severe competition may
also affect the profitability of financial services
companies.

Most financial services companies are subject to
extensive governmental regulation which limits their
activities and may (as with insurance rate regulation)
affect the ability to earn a profit from a given line
of business. Certain financial services businesses are
subject to intense competitive pressures, including
market share and price competition. The removal of
regulatory barriers to participation in certain
segments of the financial services sector may also
increase competitive pressures on different types of
firms. The availability and cost of funds to financial
services firms is crucial to their profitability.
Consequently, volatile interest rates and general
economic conditions can adversely affect their
financial performance.

Financial services companies in foreign countries are
subject to similar regulatory and interest rate
concerns. In particular, government regulation in
certain foreign countries may include controls on
interest rates, credit availability, prices and
currency movements. In some cases, foreign governments
have taken steps to nationalize the operations of
banks and other financial services companies.

CGAM believes that the deregulation of many segments
of the financial services sector provides new
opportunities for issuers in this sector. As new
segments of the financial services sector are opened
to certain larger financial services firms formerly
prohibited from doing business in these segments (such
as national and money center banks); certain
established companies in these market segments (such
as regional banks or securities firms) may become
attractive acquisition candidates for the larger firm
seeking entrance into the segment. Typically,
acquisitions accelerate the capital appreciation of
the shares of the company to be acquired.

CGAM will seek to invest in those financial services
companies that it believes are well positioned to take
advantage of the ongoing changes in the financial
services sector. A financial services company may be
well positioned for a number of reasons. It may be an
attractive acquisition for another company wishing to
strengthen its presence in a line of business or a
geographic region or to expand into new lines of
business or geographic regions, or it may be planning
a merger to strengthen its position in a line of
business or a geographic area. The financial services
company may be engaged in a line or lines of business
experiencing or likely to experience strong economic
growth; it may be linked to a geographic region
experiencing or likely to experience strong economic
growth and may be actively seeking to participate in
such growth; or it may be expanding into financial
services or geographic regions previously unavailable
to it (because of an easing of regulatory constraints)
in order to take advantage of new market
opportunities.

Health Sciences Fund

Many faster-growing health care companies have limited
operating histories and their potential profitability
may be dependent on regulatory approval of their
products, which increases the volatility of these
companies' security prices. Many of these activities
are funded or subsidized by governments; withdrawal or
curtailment of this support could lower the
profitability and market prices of such companies.
Changes in government regulation could also have an
adverse impact. Continuing technological advances may
mean rapid obsolescence of products and services.

Technology Fund

Many technological products and services are subject
to rapid obsolescence, which may lower the market
value of the securities of the companies in this
sector. Also, the portfolio consists of faster-
growing, more volatile technology companies that CGAM
believes to be emerging leaders in their fields. The
market prices of these companies tend to rise and fall
more rapidly than those of larger, more established
companies.

Technology and Health Science Areas. CGAM believes
that because of rapid advances in technology and
science, an investment in companies with business
operations in these areas will offer substantial
opportunities for long-term capital appreciation. Of
course, prices of common stocks of even the best
managed, most profitable corporations are subject to
market risk, which means their stock prices can
decline. In addition, swings in investor psychology or
significant trading by large institutional investors
can result in price fluctuations. Industries likely to
be represented in the portfolio include computers,
networking and internetworking software, computer
aided design, telecommunications, media and
information services, medical devices and
biotechnology. The Fund may also invest in the stocks
of companies that should benefit from the
commercialization of technological advances, although
they may not be directly involved in research and
development.
The technology and science areas have exhibited and
continue to exhibit rapid growth, both through
increasing demand for existing products and services
and the broadening of the technology market. In
general, the stocks of large capitalized companies
that are well established in the technology market can
be expected to grow with the market and will
frequently be found in the Fund's portfolio. The
expansion of technology and its related industries,
however, also provides a favorable environment for
investment in small to medium capitalized companies.
The Fund's investment policy is not limited to any
minimum capitalization requirement and the Fund may
hold securities without regard to the capitalization
of the issuer. CGAM's overall stock selection for the
Fund is not based on the capitalization or size of the
company but rather on an assessment of the company's
fundamental prospects.

Companies in the rapidly changing fields of technology
and science face special risks. For example, their
products or services may not prove commercially
successful or may become obsolete quickly. The value
of the Fund's shares may be susceptible to factors
affecting the technology and science areas and to
greater risk and market fluctuation than an investment
in a fund that invests in a broader range of portfolio
securities not concentrated in any particular
industry. As such, the Fund is not an appropriate
investment for individuals who are not long-term
investors and who, as their primary objective, require
safety of principal or stable income from their
investments. The technology and science areas may be
subject to greater governmental regulation than many
other areas and changes in governmental policies and
the need for regulatory approvals may have a material
adverse effect on these areas. Additionally, companies
in these areas may be subject to risks of developing
technologies, competitive pressures and other factors
and are dependent upon consumer and business
acceptance as new technologies evolve.

Risks Associated with Particular Investments

Market Risk. Equity stock prices vary and may fall,
thus reducing the value of your Fund's investment.
Certain stocks selected for any Fund's portfolio may
decline in value more than the overall stock market.

Foreign Securities. Investments in foreign and
emerging markets carry special risks, including
currency, political, regulatory and diplomatic risks.
Each Fund has the ability to invest more than 25% of
their respective assets in the securities of non-U.S.
issuers.

Currency Risk. A change in the exchange rate between
U.S. dollars and a foreign currency may reduce the
value of a Fund's investment in a security valued in
the foreign currency, or based on that currency value.

Political Risk. Political actions, events or
instability may result in unfavorable changes in the
value of a security.

Regulatory Risk. Government regulations may affect
the value of a security. In foreign countries,
securities markets that are less regulated than those
in the U.S. may permit trading practices that are not
allowed in the U.S.

Diplomatic Risk. A change in diplomatic relations
between the U.S. and a foreign country could affect
the value or liquidity of investments.

Liquidity Risk. A Fund's portfolio is liquid if the
Fund is able to sell the securities it owns at a fair
price within a reasonable time. Liquidity is generally
related to the market trading volume for a particular
security. Investments in smaller companies or in
foreign companies or companies in emerging markets are
subject to a variety of risks, including potential
lack of liquidity.

Smaller Capitalized Companies. The Manager believes
that smaller capitalized companies generally have
greater earnings and sales growth potential than
larger capitalized companies. The level of risk will
be increased to the extent each Fund has significant
exposure to smaller capitalized or unseasoned
companies (those with less than a three-year operating
history). Investments in smaller capitalized companies
may involve greater risks, such as limited product
lines, markets and financial or managerial resources.
In addition, less frequently traded securities may be
subject to more abrupt price movements than securities
of larger capitalized companies.

Derivatives Risk. A Fund's use of options, futures
and options on futures ("derivatives") involves
additional risks and transaction costs, such as, (i)
adverse changes in the value of these instruments,
(ii) imperfect corrrelation between the price of
derivatives and movements in the price of the
underlying securities, index or futures contracts,
(iii) the fact that use of derivatives requires
different skill than those needed to select portfolio
securities, and (iv) the possible absence of a liquid
secondary market for a particular derivative at any
moment in time.

Counterparty Risk. This is a risk associated
primarily with repurchase agreements and some
derivatives transactions. It is the risk that the
other party in such a transaction will not fulfill its
contractual obligation to complete a transaction with
a Fund.

Lack of Timely Information Risk. Timely information
about a security or its issuer may be unavailable,
incomplete or inaccurate. This risk is more common to
smaller company securities issued by foreign companies
and companies in emerging markets than it is to the
securities of U.S.-based companies.

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

Master/feeder fund structure. The Board of Directors
has the discretion to retain the current distribution
arrangement for the Funds while investing their assets
in a master fund in a master/feeder fund structure. A
master/feeder fund structure is one in which a fund (a
"feeder fund"), instead of investing directly in a
portfolio of securities, invests most or all of its
investment assets in a separate registered investment
company (the "master fund") with substantially the
same investment objective and policies as the feeder
fund. Such a structure permits the pooling of assets
of two or more feeder funds, preserving separate
identities or distribution channels at the feeder fund
level. Based on the premise that certain of the
expenses of operating an investment portfolio are
relatively fixed, a larger investment portfolio may
eventually achieve a lower ratio of operating expenses
to average net assets. An existing investment company
is able to convert to a feeder fund by selling all of
its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or
loss, or by contributing its assets to the master fund
and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable
gain or loss.

Options, Futures and Currency Strategies. Each Fund
may, but is not required to, use forward currency
contracts and certain options and futures strategies
to seek to increase total return or hedge its
portfolio, i.e., reduce the overall level of
investment risk normally associated with the Fund.
There can be no assurance that such efforts will
succeed.

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

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

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

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

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

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

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

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

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

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

An option position may be closed out only where there
exists a secondary market for an option of the same
series on a recognized securities exchange or in the
over-the-counter market. The Fund expects to write
options only on national securities exchanges or in
the over-the-counter market. The Fund may purchase
put options issued by the Clearing Corporation or in
the over-the-counter market.

The Fund may realize a profit or loss upon entering
into a closing transaction. In cases in which the Fund
has written an option, it will realize a profit if the
cost of the closing purchase transaction is less than
the premium received upon writing the original option
and will incur a loss if the cost of the closing
purchase transaction exceeds the premium received upon
writing the original option. Similarly, when the Fund
has purchased an option and engages in a closing sale
transaction, whether it recognizes a profit or loss
will depend upon whether the amount received in the
closing sale transaction is more or less than the
premium the Fund initially paid for the original
option plus the related transaction costs.

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

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

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

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

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

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

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

Futures Contracts and Options on Futures Contracts.
As described generally above, each Fund may invest in
stock index futures contracts and options on futures
contracts traded on a domestic exchange or board of
trade. Futures contracts provide for the future sale
by one party and purchase by another party of a
specified amount of a specific security at a specified
future time and at a specified price. The primary
purpose of entering into a futures contract by the
Fund is to protect the Fund from fluctuations in the
value of securities without actually buying or selling
the securities. The Fund may enter into futures
contracts and options on futures to seek higher
investment returns when a futures contract is priced
more attractively than stocks comprising a benchmark
index, to facilitate trading or to reduce transaction
costs. The Fund will enter into futures contracts and
options only on futures contracts that are traded on a
domestic exchange and board of trade. Assets
committed to futures contracts will be segregated on
the Fund's books to the extent required by law.

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

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

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

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

INVESTMENT RESTRICTIONS

The investment restrictions numbered 1 through 7 below
and each Fund's investment objective have been adopted
by the Company as fundamental policies of each Fund.
Under the 1940 Act, a fundamental policy may not be
changed with respect to a fund without the vote of a
majority of the outstanding voting securities of the
Fund. Majority is defined in the 1940 Act as the
lesser of (a) 67% or more of the shares present at a
fund meeting, if the holders of more than 50% of the
outstanding shares of the fund are present or
represented by proxy, or (b) more than 50% of
outstanding shares. The remaining restrictions may be
changed by a vote of a majority of the Company's Board
of Directors at any time.

Under the investment restrictions adopted by the
Company with respect to each Fund, each Fund will not:
1. Purchase or sell the securities of any issuer,
if, as a result of such purchase or sale, less than
25% of the assets of the Fund would be invested in the
securities of issuers principally engaged in the
business activities having the specific
characteristics denoted by the Fund.

2. Borrow money, except that (a) the Fund may
borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of
redemption requests which might otherwise require the
untimely disposition of securities, and (b) the Fund
may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements,
forward roll transactions and similar investment
strategies and techniques. To the extent that it
engages in transactions described in (a) and (b), the
Fund will be limited so that no more than 331/3% of
the value of its total assets (including the amount
borrowed), valued at the lesser of cost or market,
less liabilities (not including the amount borrowed)
valued at the time the borrowing is made, is derived
from such transactions.

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

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

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

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

7. Purchase or otherwise acquire any illiquid
security except as permitted under the 1940 Act for
open-end investment companies, which currently permits
up to 15% of the Fund's net assets to be invested in
illiquid securities.

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

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The Directors and executive officers of the Company,
together with information as to their principal
business occupations during the past five years, are
shown below. Each Director who is an "interested
person" of each Fund, as defined in the 1940 Act, is
indicated by an asterisk.

HERBERT BARG (Age 76). Private Investor. Director or
trustee of 18 investment companies associated with
Citigroup Inc. ("Citigroup") His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania, 19004.

*ALFRED J. BIANCHETTI (Age 77). Retired; formerly
Senior Consultant to Dean Witter Reynolds Inc.
Director or trustee of 13 investment companies
associated with Citigroup. His address is 19 Circle
End Drive, Ramsey, New Jersey 07466.

MARTIN BRODY (Age 78). Consultant, HMK Associates.
Retired Vice Chairman of the Board of Restaurant
Associates Corp. Director or trustee of 22 investment
companies associated with Citigroup. His address is
c/o HMK Associates, 30 Columbia Turnpike, Florham
Park, New Jersey 07932.

DWIGHT B. CRANE (Age 62). Professor, Harvard Business
School. Director or trustee of 25 investment
companies associated with Citigroup. His address is
c/o Harvard Business School, Soldiers Field Road,
Boston, Massachusetts 02163.

BURT N. DORSETT (Age 69). Managing Partner of the
investment counseling firm Dorsett McCabe Management,
Inc. Director of Research Corporation Technologies,
Inc., a nonprofit patent clearing and licensing firm.
Director or trustee of 13 investment companies
associated with Citigroup. His address is 201 East
62nd Street, New York, New York 10021.

ELLIOT S. JAFFE (Age 73). Chairman of the Board and
President of The Dress Barn, Inc. Director or trustee
of 13 investment companies associated with Citigroup.
His address is 30 Dunnigan Drive, Suffern, New York
10021.

STEPHEN E. KAUFMAN (Age 67). Attorney. Director or
trustee of 15 investment companies associated with
Citigroup. His address is 277 Park Avenue, New York,
New York 10172.

JOSEPH J. McCANN (Age 69). Financial Consultant.
Retired Financial Executive, Ryan Homes, Inc.
Director or trustee of 13 investment companies
associated with Citigroup. His address is 200 Oak
Park Place, Pittsburgh, Pennsylvania 15243.

*HEATH B. McLENDON (Age 66). Chairman of the Board,
President and Investment Officer. Managing Director
of Salomon Smith Barney Inc. ("Salomon Smith Barney"),
President of SSB Citi and Travelers Investment
Adviser, Inc. ("TIA"); Chairman or Co-Chairman of the
Board of 71 investment companies associated with
Citigroup. His address is 7 World Trade Center, New
York, New York 10048.

CORNELIUS C. ROSE, JR. (Age 67). President, Cornelius
C. Rose Associates, Inc., financial consultants, and
Chairman and Director of Performance Learning Systems,
an educational consultant. Director or trustee of 13
investment companies associated with Citigroup. His
address is Meadowbrook Village, Building 4, Apt. 6,
West Lebanon, New Hampshire 03784.

LEWIS E. DAIDONE (Age 42). Senior Vice President and
Treasurer. Managing Director of Salomon Smith Barney,
Chief Financial Officer of the Smith Barney Mutual
funds; Director and Senior Vice President of SSB Citi
and TIA; Senior Vice President and Treasurer of 61
investment companies associated with Citigroup.

PAUL BROOK (Age 46). Controller. Director of Salomon
Smith Barney; from 1997-1998 Managing Director of AMT
Capital Services Inc.; prior to 1997 Partner with
Ernst & Young LLP; Controller or Assistant Treasurer
of 43 investment companies associated with Citigroup.

CHRISTINA T. SYDOR (Age 47). Secretary. Managing
Director of Salomon Smith Barney. General Counsel and
Secretary of SSB Citi and TIA; Secretary of 61
investment companies associated with Citigroup.

As of January 12, 2000, the Directors and officers of
the Company, as a group, owned less than 1% of the
outstanding shares of common stock of the Company. As
of January 12, 2000, to the knowledge of the Company
and the Board no single shareholder or "group" (as
that term is used in Section 13(d) of the Securities
Act of 1934) beneficially owned more than 5% of the
outstanding shares of the Company.

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

Name of Person

Aggregate
Compensat
ion
From
Company

Total
Pension or
Retirement
Benefits
Accrued
as part of
Company
Expenses

Compensation
from Company
and Fund
Complex
Paid to
Directors

Number of
Funds for
Which
Director
Serves
Within
Fund Complex

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

$3,250.00
$3,000.00
$2,750.00
$3,250.00
$3,250.00
$2,500.00
$3,250.00
$3,250.00
$
0.00
$3,000.00

$0
0
0
0
0
0
0
0
0
0

$105,425.00
$
51,200.00
$132,500.00
$139,975.00
$
51,200.00
$
47,550.00
$
96,400.00
$
51,200.00
$
0.00
$
51,200.00

18
13
22
25
13
13
15
13
71
13

* Designates an "interested" Director.
** Designates member of Audit Committee.

Upon attainment of age 80, Company Directors are
required to change to emeritus status. Directors
Emeritus are entitled to serve in emeritus status for
a maximum of 10 years, during which time they are paid
50% of the annual retainer fee and meeting fees
otherwise applicable to Company Directors, together
with reasonable out-of-pocket expenses for each
meeting attended. Directors Emeritus may attend
meetings but have no voting rights. During the
Company's last fiscal year, aggregate compensation
paid to Directors Emeritus was $1,500.

INVESTMENT MANAGEMENT AND OTHER SERVICES

Manager - SSB Citi

SSB Citi serves as Manager to each Fund pursuant to an
investment management agreement (the "Investment
Management Agreement") with each Fund which was
approved by the Board of Directors, including a
majority of directors who are not "interested persons"
of the Fund or the Manager. The Manager is a wholly
owned subsidiary of Salomon Smith Barney Holdings
Inc., which in turn, is a wholly owned subsidiary of
Citigroup Inc. Subject to the supervision and
direction of the Company's Board of Directors, the
Manager manages each Fund's portfolio in accordance
with the Fund's stated investment objective and
policies, makes investment decisions for the Fund,
places orders to purchase and sell securities, and
employs professional portfolio managers and securities
analysts who provide research services to the Fund.
The Manager pays the salary of any officer and
employee who is employed by both it and the Company.
The Manager bears all expenses in connection with the
performance of its services. The Manager also: (a)
assists in supervising all aspects of the Fund's
operations; (b) supplies the Fund with office
facilities (which may be in SSB Citi's own offices),
statistical and research data, data processing
services, clerical, accounting and bookkeeping
services, including, but not limited to, the
calculation of (i) the net asset value of shares of
the Fund, (ii) applicable contingent deferred sales
charges and similar fees and charges and (iii)
distribution fees, internal auditing and legal
services, internal executive and administrative
services, and stationary and office supplies; and (c)
prepares reports to shareholders of the Fund, tax
returns and reports to and filings with the SEC and
state blue sky authorities.

As compensation for investment management services,
the respective Fund pays the Manager the annual
investment management fee described below (based on a
percentage of the fund's average daily net assets):
Financial Services Fund: 0.80%
Health Sciences Fund: 0.80%
Technology Fund: 0.95%

Sub-adviser - Citibank, N.A.

CGAM serves as investment sub-adviser to each Fund
pursuant to a sub-advisory agreement (the "Sub-
advisory Agreement") with each Fund which was approved
by the Board of Directors, including a majority of
directors who are not "interested persons" of the Fund
or the Manager. CGAM is a division of Citigroup and,
together with its affiliates, managed more than $351
billion in assets as of December 31, 1999. CGAM
offers a wide range of investment services to
customers across the United States and throughout the
world. Its portfolio managers are responsible for
investing in money market, equity and fixed income
securities. CGAM manages the assets of various mutual
funds and provides certain administrative services to
those funds. CGAM employs a disciplined approach to
investing where its portfolio managers, fundamental
and quantitative analysts work together to meet client
objectives.

As compensation for investment sub-advisory services,
the Manager pays the sub-adviser the fee described
below (based on a percentage of the Fund's average
daily net assets):
Financial Services Fund: 0.50%
Health Sciences Fund: 0.50%
Technology Fund: 0.65%

Sub-administration

State Street Bank and Trust Company ("State Street"),
whose principal business address is 225 Franklin
Street, Boston, Massachusetts, 02110, serves as sub-
administrator for each Fund, pursuant to a written
agreement (the "Agreement") with the manager and each
Fund.

Under the Agreement, State Street has agreed to
oversee the computation of each Fund's net asset
value, net income and realized capital gains, if any;
furnish statistical and research data, clerical
services, and stationery and office supplies; prepare
and file various reports with the appropriate
regulatory agencies; and prepare various materials
required by the Securities and Exchange Commission.

Custodian

State Street is the custodian of each Fund's assets
pursuant to a custodian agreement (the "Custody
Contract") with the Company. State Street is also the
custodian with respect to the custody of foreign
securities held by the Funds. Under the Custody
Contract, State Street (i) holds and transfers
portfolio securities on account of each Fund, (ii)
accepts receipts and makes disbursements of money on
behalf of each Fund, (iii) collects and receives all
income and other payments and distributions on account
of each Fund's securities and (iv) makes periodic
reports to the Board of Directors concerning the
Funds' operations.

Transfer Agent and Sub-Transfer Agent

Smith Barney Private Trust Company ("SBPT" or the
"transfer agent") located at 388 Greenwich Street, New
York, New York 10013, serves as each Fund's transfer
agent. Under the transfer agency agreement, SBPT
maintains the shareholder account records for the
Fund, handles certain communications between
shareholders and the Fund and distributes dividends
and distributions payable by the Fund. For these
services, SBPT receives a monthly fee computed on the
basis of the number of shareholder accounts it
maintains for the Fund during the month and is
reimbursed for out-of-pocket expenses.

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

Auditors

KPMG LLP, independent auditors, 345 Park Avenue, New
York, New York 10154, have been selected to serve as
auditors of the Company and to render opinions on each
Fund's financial statements.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to the Company
and each Fund.

Distributor

CFBDS, Inc., located at 20 Milk Street, Boston,
Massachusetts 02109-5408 serves as the Funds'
distributor pursuant to a written agreement with the
Company dated October 8, 1998 (the "Distribution
Agreement") which was approved by the Company's Board
of Directors, including a majority of the independent
directors, on July 15, 1998, as amended on January 31,
2000.

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

Distribution Arrangements

To compensate Salomon Smith Barney for the services it
provides and for the expense it bears under the
Distribution Agreement, each Fund has adopted a
services and distribution plan (the "Plan") pursuant
to Rule l2b-1 under the 1940 Act. Under the Plan, the
Fund pays Salomon Smith Barney a service fee, accrued
daily and paid monthly, calculated at the annual rate
of 0.25% of the value of the Fund's average daily net
assets attributable to the Class A, Class B and Class
L shares. In addition, the Fund pays Salomon Smith
Barney a distribution fee with respect to the Class B
and Class L shares primarily intended to compensate
Salomon Smith Barney for its initial expense of paying
Financial Consultants a commission upon sales of those
shares. The Class B and Class L distribution fee is
calculated at the annual rate of 0.75% of the value of
the Fund's average daily net assets attributable to
the shares of the respective Class.

Under its terms, the Plan continues from year to year,
provided such continuance is approved annually by vote
of the Board of Directors, including a majority of the
directors who are not interested persons of the Fund
and who have no direct or indirect financial interest
in the operation of the Plan or in the Distribution
Agreement (the "independent directors"). The Plan may
not be amended to increase the amount of the service
and distribution fees without shareholder approval,
and all amendments of the Plan also must be approved
by the directors including all of the independent
directors in the manner described above. The Plan may
be terminated with respect to a Class at any time,
without penalty, by vote of a majority of the
independent directors or, with respect to the Fund, by
vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act).
Pursuant to the Plan, Salomon Smith Barney will
provide the Board of Directors with periodic reports
of amounts expended under the Plan and the purpose for
which such expenditures were made.

PORTFOLIO TRANSACTIONS

The Manager arranges for the purchase and sale of the
Fund's securities and selects brokers and dealers
(including Salomon Smith Barney) which in its best
judgment provide prompt and reliable execution at
favorable prices and reasonable commission rates. The
Manager may select brokers and dealers that provide it
with research services and may cause the Fund to pay
such brokers and dealers commissions which exceed
those other brokers and dealers may have charged, if
it views the commissions as reasonable in relation to
the value of the brokerage and/or research services.
In selecting a broker, including Salomon Smith Barney,
for a transaction, the primary consideration is prompt
and effective execution of orders at the most
favorable prices. Subject to that primary
consideration, dealers may be selected for research
statistical or other services to enable the Manager or
its affiliates to supplement its own research and
analysis.

Decisions to buy and sell securities for the Fund are
made by CGAM, subject to the overall supervision and
review of the Company's Board of Directors. Portfolio
securities transactions for the Fund are effected by
or under the supervision of the Manager.

Transactions on stock exchanges involve the payment of
negotiated brokerage commissions. There is generally
no stated commission in the case of securities traded
in the over-the-counter market, but the price of those
securities includes an undisclosed commission or mark-
up. Over-the-counter purchases and sales are
transacted directly with principal market makers
except in those cases in which better prices and
executions may be obtained elsewhere. The cost of
securities purchased from underwriters includes an
underwriting commission or concession, and the prices
at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down.

In executing portfolio transactions and selecting
brokers or dealers, it is the Fund's policy to seek
the best overall terms available. CGAM, in seeking the
most favorable price and execution, considers all
factors it deems relevant, including, for example, the
price, the size of the transaction, the reputation,
experience and financial stability of the broker-
dealer involved and the quality of service rendered by
the broker-dealer in other transactions. CGAM receives
research, statistical and quotation services from
several broker-dealers with which it places the Fund's
portfolio transactions. It is possible that certain of
the services received primarily will benefit one or
more other accounts for which the CGAM exercises
investment discretion. Conversely, the Fund may be the
primary beneficiary of services received as a result
of portfolio transactions effected for other accounts.
The sub-adviser's fee under the management agreement
is not reduced by reason of its receiving such
brokerage and research services. The Company's Board
of Directors, in its discretion, may authorize the
Manager to cause the Fund to pay a broker that
provides brokerage and research services to the
Manager a commission in excess of that which another
qualified broker would have charged for effecting the
same transaction. Salomon Smith Barney will not
participate in commissions from brokerage given by the
Fund to other brokers or dealers and will not receive
any reciprocal brokerage business resulting therefrom.

In accordance with Section 17(e) of the 1940 Act and
Rule 17e-1 thereunder, the Company's Board of
Directors has determined that any portfolio
transaction for the Fund may be executed through
Salomon Smith Barney or an affiliate of Salomon Smith
Barney if, in the Manager's judgment, the use of
Salomon Smith Barney or an affiliate is likely to
result in price and execution at least as favorable as
those of other qualified brokers and if, in the
transaction, Salomon Smith Barney or the affiliate
charges the Fund a commission rate consistent with
those charged by Salomon Smith Barney or an affiliate
to comparable unaffiliated customers in similar
transactions. In addition, under SEC rules, Salomon
Smith Barney may directly execute such transactions
for the Fund on the floor of any national securities
exchange, provided: (a) the Board of Directors has
expressly authorized Salomon Smith Barney to effect
such transactions; and (b) Salomon Smith Barney
annually advises the Fund of the aggregate
compensation it earned on such transactions.

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

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

PORTFOLIO TURNOVER

Each Fund's portfolio turnover rate (the lesser of
purchases or sales of portfolio securities during the
year, excluding purchases or sales of short-term
securities, divided by the monthly average value of
portfolio securities) is generally not expected to
exceed 100%. The rate of turnover will not be a
limiting factor, however, when the Fund deems it
desirable to sell or purchase securities.
The Manager may cause the Fund to sell or purchase
securities to ensure compliance with the Fund's
investment policies.

PURCHASE OF SHARES

Sales Charge Alternatives

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

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

Amount
of
Investme
nt

Sales Charge
as a %
of
Transaction

Sales
Charge as a
% of Amount
Invested

Dealers'
Reallowance as
%
of Offering
Price

Less than
$25,000
5.00%
5.26%
4.50%
$ 25,000 -
49,999
4.00

4.17

3.60
50,000 -
99,999
3.50

3.63

3.15
100,000 -
249,999
3.00

3.09

2.70
250,000 -
499,999
2.00

2.04

1.80
500,000 and
over
*
*
*

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

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

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

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

General

The Funds' shares are continuously offered to new
investors. See "Purchase of Shares"

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

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

Purchase orders received by the Fund or a Salomon
Smith Barney Financial Consultant 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 the Fund is due on the
third business day after the trade date. In all other
cases, payment must be made with the purchase order.

Sales Charge Waivers and Reductions

Initial Sales Charge Waivers. Purchases of Class A
shares may be made at net asset value without a sales
charge in the following circumstances: (a) sales to
(i) Board Members and employees of Citigroup and its
subsidiaries and any Citigroup affiliated funds
including the Smith Barney Mutual Funds (including
retired Board Members and employees); the immediate
families of such persons (including the surviving
spouse of a deceased Board Member or employee); and to
a pension, profit-sharing or other benefit plan for
such persons and (ii) employees of members of the
National Association of Securities Dealers, Inc.,
provided such sales are made upon the assurance of the
purchaser that the purchase is made for investment
purposes and that the securities will not be resold
except through redemption or repurchase; (b) offers of
Class A shares to any other investment company to
effect the combination of such company with the Fund
by merger, acquisition of assets or otherwise;
(c) purchases of Class A shares by any client of a
newly employed Salomon Smith Barney Financial
Consultant (for a period up to 90 days from the
commencement of the Financial Consultant's employment
with Salomon Smith Barney), on the condition the
purchase of Class A shares is made with the proceeds
of the redemption of shares of a mutual fund which (i)
was sponsored by the Financial Consultant's prior
employer, (ii) was sold to the client by the Financial
Consultant and (iii) was subject to a sales charge;
(d) purchases by shareholders who have redeemed Class
A shares in the Fund (or Class A shares of another
Smith Barney Mutual Fund that is offered with a sales
charge) and who wish to reinvest their redemption
proceeds in the Fund, provided the reinvestment is
made within 60 calendar days of the redemption; (e)
purchases by accounts managed by registered investment
advisory subsidiaries of Citigroup; (f) direct
rollovers by plan participants of distributions from a
401(k) plan offered to employees of Citigroup or its
subsidiaries (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 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 the investor refers to such Letter
when placing orders. For purposes of a Letter of
Intent, the ''Amount of Investment'' as referred to in
the preceding sales charge table includes (i) all
Class A shares of the Fund and other Smith Barney
Mutual Funds offered with a sales charge acquired
during the term of the letter plus (ii) the value of
all Class A shares previously purchased and still
owned. Each investment made during the period
receives the reduced sales charge applicable to the
total amount of the investment goal. If the goal is
not achieved within the period, the investor must pay
the difference between the sales charges applicable to
the purchases made and the charges previously paid, or
an appropriate number of escrowed shares will be
redeemed. The term of the Letter will commence upon
the date the Letter is signed, or at the options of
the investor, up to 90 days before such date. Please
contact a Salomon Smith Barney Financial Consultant or
the sub-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 the Fund's Class A
shares, which may include a deferred sales charge of
1.00%. Please contact a Salomon Smith Barney Financial
Consultant or the sub-transfer agent for further
information.

Deferred Sales Charge Provisions

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

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

Year Since Purchase Payment Was
Made

Deferred Sales Charge

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

0.00

Class B shares will convert automatically to Class A
shares eight years after the date on which they were
purchased and thereafter will no longer be subject to
any distribution fees. There will also be converted at
that time such proportion of Class B Dividend Shares
owned by the shareholder 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 applicabilty 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) redemptions
of shares within 12 months following the death or
disability of the shareholder; (c) redemptions of
shares made in connection with qualified distributions
from retirement plans or IRAs upon the attainment of
age 591/2; (d) involuntary redemptions; and
(e) redemptions of shares to effect a combination of
the Fund with any investment company by merger,
acquisition of assets or otherwise. In addition, a
shareholder who has redeemed shares from other Smith
Barney Mutual Funds may, under certain circumstances,
reinvest all or part of the redemption proceeds within
60 days and receive pro rata credit for any deferred
sales charge imposed on the prior redemption.

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

Smith Barney 401(k) and ExecChoiceTM Programs

The Fund offers to Participating Plans Class A and
Class L shares as investment alternatives under the
Smith Barney 401(k) and ExecChoiceTM Programs. Class A
and Class L shares acquired through the Participating
Plans are subject to the same service and/or
distribution fees as the Class A and Class L shares
acquired by other investors; however, they are not
subject to any initial sales charge or Deferred Sales
Charge. Once a Participating Plan has made an initial
investment in the fund, all of its subsequent
investments in the fund must be in the same Class of
shares, except as otherwise described below.

Class A Shares. Class A shares of the Fund are
offered without any sales charge or Deferred Sales
Charge to any Participating Plan that purchases
$1,000,000 or more of Class A shares of one or more
funds of the Smith Barney Mutual Funds.

Class L Shares. Class L shares of the Fund are
offered without any sales charge or Deferred Sales
Charge to any Participating Plan that purchases less
than $1,000,000 of Class L shares of one or more funds
of the Smith Barney Mutual Funds.

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

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

Any Participating Plan in the Smith Barney 401(k) or
the Smith Barney ExecChoiceTM Programs, whether opened
before or after June 21, 1996, that has not previously
qualified for an exchange into Class A shares will be
offered the opportunity to exchange all of its Class L
shares for Class A shares of the Fund, regardless of
asset size, at the end of the eighth year after the
date the Participating Plan enrolled in the Smith
Barney 401(k) Program. 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 of the Fund, but instead may
acquire Class A shares of the Fund. Any Class L shares
not converted will continue to be subject to the
distribution fee.

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

Determination of Public Offering Price

The Fund offers its shares to current shareholders of
the Fund on a continuous basis. The public offering
price for a Class A, Class B and Class Y share of the
Fund is equal to the net asset value per share at the
time of purchase, plus for Class A shares an initial
sales charge based on the aggregate amount of the
investment. The public offering price for Class A
share purchases, including applicable rights of
accumulation, equaling or exceeding $500,000 is equal
to the net asset value per share at the time of
purchase and no sales charge is imposed at the time of
purchase. The public offering price for a Class L
share includes a 1.00% initial sales charge. A
contingent deferred sales charge ("CDSC") is imposed
on certain redemptions of Class B shares, and on Class
L shares and Class A shares (purchased in amounts
exceeding $500,000) redeemed within one year of
purchase.

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 New York Stock Exchange, Inc.
(the "NYSE") is closed (other than for customary
weekend and holiday closings), (b) when trading in the
markets the Fund normally utilizes is restricted, or
an emergency exists, as determined by the SEC, so that
disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable or
(c) for any other periods as the SEC by order may
permit for the protection of the Fund's shareholders.

If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed
for transfer (or be accompanied by an endorsed stock
power) and must be submitted to the sub-transfer agent
together with the redemption request. Any signature
appearing on a share certificate, stock power or
written redemption request in excess of $10,000 must
be guaranteed by an eligible guarantor institution
such as a domestic bank, savings and loan institution,
domestic credit union, member bank of the Federal
Reserve System or member firm of a national securities
exchange. Written redemption requests of $10,000 or
less do not require a signature guarantee unless more
than one such redemption request is made in any 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 sub-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
sub-transfer agent receives all required documents in
proper form.

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

Distributions in Kind

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

Additional Information Regarding Telephone Redemption
And Exchange Program

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

VALUATION OF SHARES

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

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

EXCHANGE PRIVILEGE

Except as noted below and in the Prospectus,
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, to
the extent such shares are offered for sale in the
shareholder's state of residence, 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 CDSC of the two funds and, for
purposes of calculating CDSC 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 CDSC
applicability, Class L shares of the Fund
exchanged for Class L shares of another Smith
Barney Mutual Fund will be deemed to have been
owned since the date the shares being exchanged
were deemed to be purchased.

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

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

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

PERFORMANCE INFORMATION

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

From time to time, the Company may quote the Fund's
yield or total return in advertisements or in reports
and other communications to shareholders. The Company
may include comparative performance information in
advertising or marketing the Fund's 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 Fund describes the expenses
or performance of any Class it will also disclose such
information for the other Classes.

Average Annual Total Return

"Average annual total return" figures are 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 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. The Fund's net investment income changes in
response to fluctuations in interest rates and the
expenses of the Fund.

Aggregate Total Return

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

ERV - P
P

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

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

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

Performance will vary from time to time depending on
market conditions, the composition of the Fund's
portfolio and operating expenses. Consequently, any
given performance quotation should not be considered
representative of the Fund'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 Fund with certain bank deposits or
other investments that pay a fixed yield for a stated
period of time.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

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

If a shareholder does not otherwise instruct,
dividends and capital gains distributions will be
reinvested automatically in additional shares of the
same Class at net asset value, subject to no sales
charge or deferred sales charge. A shareholder may
change the option at any time by notifying his Salomon
Smith Barney Financial Consultant or Dealer
Representative. Shareholders whose account is held
directly at the sub-transfer agent should notify them
in writing, requesting a change to this reinvest
option.

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

Taxes

The following is a summary of the material United
States federal income tax considerations regarding the
purchase, ownership and disposition of shares of the
Funds. Each Fund will be treated as a separate
corporation for federal income taxes, including
qualification as a regulated investment company; and
the following discussion applies separately to each
Fund. Each prospective shareholder is urged to consult
his own tax adviser with respect to the specific
federal, state, local and foreign tax consequences of
investing in a Fund. The summary is based on the laws
in effect on the date of this SAI, which are subject
to change.

The Fund and Its Investments

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

As a regulated investment company, the Fund will not
be subject to United States federal income tax on its
net investment income (i.e., income other than its net
realized long- and short-term capital gains) and its
net realized long- and short-term capital gains, if
any, that it distributes to its shareholders, provided
an amount equal to at least 90% of the sum of its
investment company taxable income (i.e., 90% of its
taxable income minus the excess, if any, of its net
realized long-term capital gains over its net realized
short-term capital losses (including any capital loss
carryovers), plus or minus certain other adjustments
as specified in the Code) and its net tax-exempt
income for the taxable year is distributed in
compliance with the Code's timing and other
requirements but will be subject to tax at regular
corporate rates on any taxable income or gains it does
not distribute. Furthermore, the Fund will be subject
to a United States corporate income tax with respect
to such distributed amounts in any year it fails to
qualify as a regulated investment company or fails to
meet this distribution requirement. The Code imposes a
4% nondeductible excise tax on the Fund to the extent
it does not distribute by the end of any calendar year
at least 98% of its net investment income for that
year and 98% of the net amount of its capital gains
(both long-and short-term) for the one-year period
ending, as a general rule, on October 31 of that year.
For this purpose, however, any income or gain retained
by the Fund that is subject to corporate income tax
will be considered to have been distributed by year-
end. In addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will
be increased or decreased to reflect any
underdistribution or overdistribution, as the case may
be, from the previous year. The Fund anticipates that
it will pay such dividends and will make such
distributions as are necessary in order to avoid the
application of this tax.

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

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

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

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

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

Alternatively, the Fund may elect a mark-to-market
regime that would result in the Fund being treated as
if it had sold and repurchased all of the PFIC stock
at the end of each year. In this case, the Fund would
report gains as ordinary income and would deduct
losses as ordinary losses to the extent of previously
recognized gains. The election, once made, would be
effective for all subsequent taxable years of the
Fund, unless revoked with the consent of the IRS. By
making the election, the Fund could potentially
ameliorate the adverse tax consequences with respect
to its ownership of shares in a PFIC, but in any
particular year may be required to recognize income in
excess of the distributions it receives from PFICs and
its proceeds from dispositions of PFIC company stock.
The Fund may have to distribute this "phantom" income
and gain to satisfy its distribution requirement and
to avoid imposition of the 4% excise tax.

The Fund will make the appropriate tax elections, if
possible, and take any additional steps that are
necessary to mitigate the effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions. Any dividend declared by
the Fund in October, November or December of any
calendar year and payable to shareholders of record on
a specified date in such a month shall be deemed to
have been received by each shareholder on December 31
of such calendar year and to have been paid by the
Fund not later than such December 31, provided such
dividend is actually paid by the Fund during January
of the following calendar year. The Fund intends to
distribute annually to its shareholders substantially
all of its investment company taxable income, and any
net realized long-term capital gains in excess of net
realized short-term capital losses (including any
capital loss carryovers).

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

Investors considering buying shares just prior to a
dividend or capital gain distribution should be aware
that, although the price of shares just purchased at
that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may
nevertheless be taxable to them. If the Fund is the
holder of record of any stock on the record date for
any dividends payable with respect to such stock, such
dividends are included in the Fund's gross income not
as of the date received but as of the later of (a) the
date such stock became ex-dividend with respect to
such dividends (i.e., the date on which a buyer of the
stock would not be entitled to receive the declared,
but unpaid, dividends) or (b) the date the Fund
acquired such stock. Accordingly, in order to satisfy
its income distribution requirements, the Fund may be
required to pay dividends based on anticipated
earnings, and shareholders may receive dividends in an
earlier year than would otherwise be the case.

Sales of Shares. Upon the sale or exchange of his
shares, a shareholder will realize a taxable gain or
loss equal to the difference between the amount
realized and his basis in his shares. Such gain or
loss will be treated as capital gain or loss, if the
shares are capital assets in the shareholder's hands,
and will be long-term capital gain or loss if the
shares are held for more than one year and short-term
capital gain or loss if the shares are held for one
year or less. Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed
of are replaced, including replacement through the
reinvesting of dividends and capital gains
distributions in the Fund, within a 61-day period
beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis
of the shares acquired will be increased to reflect
the disallowed loss. Any loss realized by a
shareholder on the sale of a Fund share held by the
shareholder for six months or less will be treated for
United States federal income tax purposes as a long-
term capital loss to the extent of any distributions
or deemed distributions of long-term capital gains
received by the shareholder with respect to such
share. If a shareholder incurs a sales charge in
acquiring shares of the Fund, disposes of those shares
within 90 days and then acquires shares in a mutual
fund for which the otherwise applicable sales charge
is reduced by reason of a reinvestment right (e.g., an
exchange privilege), the original sales charge will
not be taken into account in computing gain/loss on
the original shares to the extent the subsequent sales
charge is reduced. Instead, the disregarded portion
of the original sales charge will be added to the tax
basis in the newly acquired shares. Furthermore, the
same rule also applies to a disposition of the newly
acquired shares made within 90 days of the second
acquisition. This provision prevents a shareholder
from immediately deducting the sales charge by
shifting his or her investment in a family of mutual
funds.

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

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

Other Taxation

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

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

OTHER INFORMATION ABOUT THE COMPANY

The Company was incorporated under the laws of the
State of Maryland on July 16, 1986 under the name
Shearson Lehman Precious Metals and Minerals Fund Inc.
As the name of its sponsor has changed, the Company's
name has been changed on December 19, 1995 to Smith
Barney Natural Resources Fund Inc. (the "Natural
Resources Fund"). On November 29, 1999, the Board of
Directors voted to amend the Charter of the Company to
change its name to Smith Barney Sector Series Inc.,
with the Natural Resources Fund, Financial Services
Fund, Health Sciences Fund and Technology Fund each
classified as a series of the Company.

The Company offers shares of four separate series with
a par value of $.001 per share. Each Fund offers
shares currently classified into four Classes - A, B,
L and Y. Each Class of the Fund represents an
identical interest in the Fund's investment portfolio.
As a result, the Classes have the same rights,
privileges and preferences, except with respect to:
(a) the designation of each Class; (b) the effect of
the respective sales charges; if any, for each class;
(c) the distribution and/or service fees borne by each
Class pursuant to the Plan; (d) the expenses allocable
exclusively to each Class; (e) voting rights on
matters exclusively affecting a single Class; (f) the
exchange privilege of each Class; and (g) the
conversion feature of the Class B shares. The
Company's Board of Directors does not anticipate that
there will be any conflicts among the interests of the
holders of the different Classes. The directors, on
an ongoing basis, will consider whether any such
conflict exists and, if so, take appropriate action.

As permitted by Maryland law, there will normally be
no meetings of shareholders for the purpose of
electing directors unless and until such time as less
than a majority of the directors holding office have
been elected by shareholders. At that time, the
directors then in office will call a shareholder's
meeting for the election of directors. The directors
must call a meeting of shareholders for the purpose of
voting upon the question of removal of any director
when requested in writing to do so by the record
holders of not less than 10% of the outstanding shares
of the Fund. At such a meeting, a director may be
removed after the holders of record of not less than a
majority of the outstanding shares of the Fund have
declared that the director be removed either by
declaration in writing or by votes cast in person or
by proxy. Except as set forth above, the directors
shall continue to hold office and may appoint
successor directors.

As used in the Prospectus and this Statement of
Additional Information, a "vote of a majority of the
outstanding voting securities" means the affirmative
vote of the lesser of (a) more than 50% of the
outstanding shares of the Company (or the affected
series or Class) or (b) 67% or more of such shares
present at a meeting if more than 50% of the
outstanding shares of the Company (or the affected
series or Class) are represented at the meeting in
person or by proxy. A series or Class shall be deemed
to be affected by a matter unless it is clear that the
interests of each series or Class in the matter are
identical or that the matter does not affect any
interest of the series or Class. The approval of a
management agreement or any change in a fundamental
investment policy would be effectively acted upon with
respect to the Fund only if approved by a "vote of a
majority of the outstanding voting securities" of the
Fund; however, the ratification of independent
accountants, the election of directors, and the
approval of a distribution agreement submitted to
shareholders are not subject to the separate voting
requirements and may be effectively acted upon by a
vote of the holders of a majority of all Company
shares voting without regard to series or Class.

Annual and Semi-annual Reports. The Fund sends its
shareholders a semi-annual report and an audited
annual report, which include listings of investment
securities held by the Fund at the end of the period
covered. In an effort to reduce the Fund's printing
and mailing costs, the Fund consolidates the mailing
of its semi-annual and annual reports by household.
This consolidation means that a household having
multiple accounts with the identical address of record
will receive a single copy of each report. In
addition, the Fund also consolidates the mailing of
its Prospectus so that a shareholder having multiple
accounts (that is, individual, IRA and/or Self-
Employed Retirement Plan accounts) will receive a
single Prospectus annually. Shareholders who do not
want this consolidation to apply to their accounts
should contact their Salomon Smith Barney Financial
Consultant or the transfer agent.

FINANCIAL STATEMENTS

As of the date of this SAI, the Funds had not yet
commenced operations. Consequently, there are no
financial statements for the Funds at this time.

OTHER INFORMATION

In an industry where the average portfolio manager has
seven years of experience (source: ICI, 1998), the
portfolio managers of Smith Barney Mutual Funds
average 21 years in the industry and 15 years with the
firm.
Smith Barney Mutual Funds offers more than 60 mutual
funds. We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.

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

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

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

SMITH BARNEY
SECTOR SERIES INC.

Financial Services Fund

Health Sciences Fund

Technology Fund

February 14, 2000

SMITH BARNEY SECTOR SERIES INC.
388 Greenwich Street
New York, NY 10013

SALOMON SMITH
BARNEY
A Member of
Citigroup [Symbol]

9
g:\fundaccounting\legal\boards\wed\1999\sectorfeederindexsai1999current120999

Part C-Other Information
Signature Page

Part C. Other Information

Item 23. Exhibits

All references are to the Registrant's Registration
Statement on Form N-1A as filed with the Securities
and Exchange Commission ("SEC") File Nos. 33-7339
and 811-4757 (the "Registration Statement").

(a)(1)Registrant's Articles of Incorporation are
incorporated by reference to Post-Effective
Amendment No. 12 to the Registration Statement
filed on October 27,1993 ("Post-Effective Amendment
No. 12").

(a)(2)Articles of Amendment dated October 30, 1986
to Articles of Incorporation are incorporated by
reference to Post-Effective Amendment No. 12.

(a)(3)Articles of Amendment dated November 17, 1989
to Articles of Incorporation are incorporated by
reference to Post-Effective Amendment No.12.

(a)(4)Articles Supplementary dated November 5, 1992
to Articles of Incorporation are incorporated by
reference to Post-Effective Amendment No.12.

(a)(5)Articles of Amendment dated November 19, 1992
to Articles of Incorporation are incorporated by
reference to Post-Effective Amendment No.12.

(a)(6)Articles of Amendment dated July 30, 1993 to
Articles of Incorporation are incorporated by
reference to Post-Effective Amendment No.12.

(a)(7)Articles of Amendment dated October 14, 1994
and November 7, 1994, respectively and Articles
Supplementary dated November 7, 1994 are
incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement
filed on December 29, 1994 ("Post- Effective
Amendment No. 15").

(a)(8)Articles of Amendment dated December 18, 1995
to the Articles of Incorporation are incorporated
by reference to Post Effective Amendment No. 20 to
the Registration Statement filed on January 23,
1996 ("Post-Effective Amendment No. 20").

(a)(9)Articles of Amendment dated June 1, 1998 to
the Articles of Incorporation are incorporated by
reference to Post-Effective Amendment No. 23 to the
Registration Statement filed on December 24, 1998
("Post-Effective Amendment No. 23").

(a)(10)Articles of Amendment dated November 29,
1999 to the Articles of Incorporation are
incorporated by reference to Post-Effective
Amendment No. 25 to the Registration Statement
filed on December 1, 1999 ("Post-Effective
Amendment No. 25").

(a)(11)Articles Supplementary dated November 29,
1999 are incorporated by reference to Post-
Effective Amendment No. 25.

(a)(12)Certificate of Correction dated November 29,
1999 is incorporated by reference to Post-Effective
Amendment No. 25.

(a)(13)Certificate of Correction dated November 29,
1999 is incorporated by reference to Post-Effective
Amendment No. 25.

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

(b)(2)Amendment to Registrant's By-Laws is
incorporated by reference to Post-Effective
Amendment No. 4 to the Registration Statement filed
on January 3, 1989 ("Post-Effective Amendment No.
4").

(c)Specimen form of common stock certificate is
incorporated by reference to Post-Effective
Amendment No. 23 to the Registration Statement
filed on December 24, 1998 ("Post-Effective
Amendment No. 23").

(d)(1)Form of Management Agreement between the
Registrant and Mutual Management Corp. (formerly
known as Smith Barney Mutual Funds Management Inc.)
is incorporated by reference to Post-Effective
Amendment No. 19 to the Registration Statement
filed on December 18, 1995 ("Post-Effective
Amendment No. 19").

(d)(2)Form of Investment Management Agreement
between the Registrant and SSB Citi Fund Management
LLC ("SSB Citi") on behalf of the Financial
Services Fund is filed herein.

(d)(3)Form of Investment Management Agreement
between the Registrant and SSB Citi on behalf of
the Health Sciences Fund is filed herein.

(d)(4)Form of Investment Management Agreement
between the Registrant and SSB Citi on behalf of
the Technology Fund is filed herein.

(d)(5)Form of Subadvisory Agreement between Smith
Barney Sector Series Inc. on behalf of the
Financial Services Fund, SSB Citi and Citibank,
N.A. ("Citibank") is filed herein.

(d)(6)Form of Subadvisory Agreement between Smith
Barney Sector Series Inc. on behalf of the Health
Sciences Fund, SSB Citi and Citibank is filed
herein.

(d)(7)Form of Subadvisory Agreement between Smith
Barney Sector Series Inc. on behalf of the
Technology Fund, SSB Citi and Citibank is filed
herein.

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

(e)(2)Amended Distribution Agreement between
Registrant and CFBDS, Inc. is incorporated by
reference to Post-Effective Amendment No. 23 to the
Registration Statement filed on December 24, 1998
("Post-Effective Amendment No. 23").

(e)(3)Selling Group Agreement is incorporated by
reference to Post-Effective Amendment No. 24 to the
Registration Statement filed on February 25,1999
("Post-Effective Amendment No. 24").

(e)(4)Form of Distribution Agreement between
Registrant and CFBDS, Inc. is filed herein.

(f)Not Applicable.

(g)Form of Custodian Agreement between the
Registrant and The Chase Manhattan Bank N.A. is
incorporated by reference to Post-Effective
Amendment No. 21 filed on February 20, 1997.

(h)Transfer Agency Agreement dated August 2, 1993
between the Registrant and First Data Investor
Services Group is incorporated by reference to
Post-Effective Amendment No. 14 to the Registration
Statement filed on December 30, 1993.

(i)Not Applicable.

(j)Consent of Independent Accountants is filed
herein.

(k)Not Applicable.

(l)Purchase Agreement between the Registrant and
Shearson Lehman Brothers is incorporated by
reference to Pre-Effective Amendment No. 1.

(m)(1)Amended Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant and
Salomon Smith Barney Inc. is incorporated by
reference to Post-Effective Amendment No. 15.

(m)(2)Form of Amended Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant and
Salomon Smith Barney Inc. is incorporated by
reference to Post-Effective Amendment No. 23 to the
Registration Statement filed on December 24, 1998
("Post-Effective Amendment No. 23").

(m)(3)Form of Amended Service and Distribution Plan
pursuant to Rule 12b-1 between Smith Barney Sector
Series Inc. on behalf of Financial Services Fund
and Salomon Smith Barney Inc. ("Salomon Smith
Barney") is filed herein.

(m)(4)Form of Amended Service and Distribution Plan
pursuant to Rule 12b-1 between Smith Barney Sector
Series Inc. on behalf of Health Sciences Fund and
Salomon Smith Barney is filed herein.

(m)(5)Form of Amended Service and Distribution Plan
pursuant to Rule 12b-1 between Smith Barney Sector
Series Inc. on behalf of Technology Fund and
Salomon Smith Barney is filed herein.

(n)Financial Data Schedule is filed herein.

(o)(1)Form of Rule 18f-3(d) Multiple Class Plan of
the Registrant is incorporated by reference to
Post-Effective Amendment No. 23.

(o)(2)Form of Rule 18f-3(d) Multiple Class Plan of
the Registrant is filed herein.

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

None.

Item 25.Indemnification

The response to this item is incorporated by
reference to Post - Effective Amendment No. 1 to
the Registration Statement filed on May 28, 1987.

Item 26.Business and Other Connections of
Investment Adviser

Investment Adviser - - SSB Citi Fund Management LLC
("SSB Citi") formerly known as SSBC Fund Management
Inc. ("SSBC")

SSB Citi was incorporated in December 1968 under the
laws of the State of Delaware. On September 21,
1999, SSB Citi was converted into a Delaware Limited
Liability Company. SSB Citi is a wholly owned
subsidiary of Salomon Smith Barney Holdings Inc.
(formerly known as Smith Barney Holdings Inc.) which
in turn is a wholly owned subsidiary of Citigroup
Inc. ("Citigroup"). SSB Citi is registered as an
investment adviser under the Investment Advisers Act
of 1940 (the "Advisers Act").

The list required by this Item 26 of officers and
directors of SSB Citi together with information as
to any other business, profession, vocation or
employment of a substantial nature engaged in by
such officers and directors during the past two
years, is incorporated by reference to Schedules A
and D of FORM ADV filed by SSBC pursuant to the
Advisers Act (SEC File No. 801-8314).

Item 27. Principal Underwriters
(a)

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

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

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

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

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

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

Item 28. Location of Accountants and Records

(1) Smith Barney Sector Series Inc.
(f/k/a Smith Barney Natural Resources
Fund Inc.)
388 Greenwich Street
New York, New York 10013

(2) SSB Citi Fund Management LLC
(formerly known as SSBC Fund Management
Inc.)
388 Greenwich Street
New York, New York 10013

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

(4) Smith Barney Private Trust Company, as
Transfer Agent
388 Greenwich Street
New York, New York 10013

(5) PFPC Global Fund Services, as Sub-
Transfer Agent
(formerly known as First Data Investor
Services Group,
Inc.)
One Exchange Place
Boston, Massachusetts 02109

(6) CFBDS, Inc.
21 Milk Street
Boston, Massachusetts 02109

Item 29. Management Services

Not Applicable.

Item 30. Undertakings
None

SIGNATURES

Pursuant to the requirements of the Securities Act
of 1933 (the "Securities Act") and the Investment
Company Act of 1940, as amended, the Registrant,
Smith Barney Sector Series Inc. certifies that it
meets all of the requirements for effectiveness of
this registration statement under rule 485(b) under
the Securities Act has duly caused this
Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in
the City of New York and State of New York, on the
11th day of February, 2000.

SMITH BARNEY SECTOR
SERIES INC.

By: /s/ Heath B.
McLendon
Health B.
McLendon
Chairman of
the Board,
President and
Chief Executive
Officer

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

Signature Title
Date

/s/Heath B. McLendon Chairman of the Board,
February 11,2000
Heath B. McLendon President and Chief
Executive Officer

/s/ Lewis E. Daidone Senior Vice President
February 11,2000
Lewis E. Daidone and Treasurer, Chief
Financial and Accounting
Officer

/s/Herbert Barg Director
February 11,2000
Herbert Barg

/s/Alfred J. Bianchetti Director
February 11,2000
Alfred J. Bianchetti

/s/Martin Brody Director
February 11,2000
Martin Brody

/s/Dwight B. Crane Director
February 11,2000
Dwight B. Crane

/s/Burt N. Dorsett Director
February 11,2000
Burt N. Dorsett

/s/Elliot S. Jaffe Director
February 11,2000
Elliot S. Jaffe

/s/Stephen E. Kaufman Director
February 11,2000
Stephen E. Kaufman

/s/Joseph J. McCann Director
February 11,2000
Joseph J. McCann

/s/Cornelius C. Rose, Jr. Director
February 11,2000
Cornelius C. Rose, Jr.

EXHIBIT INDEX

Exhibit No. Exhibit

(d)(2) Form of Investment Management Agreement
on behalf of the Financial Services Fund
(d)(3) Form of Investment Management Agreement
on behalf of the Health Sciences Fund
(d)(4) Form of Investment Management Agreement
on behalf of the Technology Fund
(d)(5) Form of Subadvisory Agreement on behalf
of the Financial Services Fund
(d)(6) Form of Subadvisory Agreement on behalf
of the Health Sciences Fund
(d)(7) Form of Subadvisory Agreement on behalf
of the Technology Fund
(e)(4) Form of Distribution Agreement
(j) Consent of Independent Accountants
(m)(3) Form of Amended Service and Distribution
Plan on behalf of the Financial Services
Fund
(m)(4) Form of Amended Service and Distribution
Plan on behalf of
the Health Sciences Fund
(m)(5) Form of Amended Service and Distribution
Plan on behalf of
the Technology Fund
(n) Financial Data Schedule
(o)(2) Form of Rule 18f-3(d) Multiple Class
Plan
cover

FORM OF SUBADVISORY AGREEMENT

Smith Barney Sector Series Inc.

Financial Services Fund

February 14, 2000

Citibank, N.A..

Dear Sirs:

Smith Barney Sector Series Inc. (the "Company"), a
corporation organized under the laws of the State of
Maryland on behalf of the Smith Barney Financial
Services Fund (the "Fund") and SSB Citi Fund
Management LLC. (the "Manager"), each confirms its
agreement with Citibank, N.A. (the "Sub-Adviser"), as
follows:

1. Investment Description; Appointment

The Company desires to employ its capital relating to
the Fund by investing and reinvesting in investments
of the kind and in accordance with the investment
objective(s), policies and limitations specified in
the prospectus (the "Prospectus") and the statement of
additional information (the "Statement") filed with
the Securities and Exchange Commission as part of the
Company's Registration Statement on Form N-1A, as
amended or supplemented from time to time, and in the
manner and to the extent as may from time to time be
approved by the Board of Directors of the Company (the
"Board"). Copies of the Prospectus, the Statement,
the Company's Bylaws (the "Bylaws") and any policies
or procedures adopted by the Board and in effect from
time-to-time related to the Company and the Sub-
Adviser (the "Procedures") have been or will be
submitted to the Sub-Adviser. The Company agrees
promptly to provide copies of all amendments and
supplements to the current Prospectus, the Statement,
the Bylaws and Procedures to the Sub-Adviser on an on-
going basis. Until the Company delivers any such
amendment or supplement to the Sub-Adviser, the Sub-
Adviser shall be fully protected in relying on the
Prospectus, Statement, Bylaws and Procedures as
previously furnished to the Sub-Adviser. The Company
employs the Manager as the manager to the Portfolio
pursuant to the Management Agreement dated February
14, 2000(the "Management Agreement"), and the Company
and the Manager desire to employ and hereby appoint
the Sub-Adviser to act as the sub-investment adviser
to the Fund. The Sub-Adviser accepts the appointment
and agrees to furnish the services for the
compensation set forth below.

2. Services as Sub-Adviser

Subject to the supervision, direction and approval of
the Board of the Company and the Manager, the Sub-
Adviser shall conduct a continual program of
investment, evaluation and, if appropriate in the view
of the Sub-Adviser, sale and reinvestment of the
Fund's assets. The Sub-Adviser is authorized, in its
sole discretion and without prior consultation with
the Manager, to: (a) manage the Fund's assets in
accordance with the Fund's investment objective(s) and
policies as stated in the Prospectus and the
Statement; (b) make investment decisions for the Fund;
(c) place purchase and sale orders for portfolio
transactions on behalf of the Fund; and (d) employ
professional portfolio managers and securities
analysts who provide research services to the Fund.

In addition, (i) the Sub-Adviser shall furnish the
Manager daily information concerning portfolio
transactions and quarterly and annual reports
concerning transactions and performance of the Fund in
such form as may be mutually agreed upon, and the Sub-
Adviser agrees to review the Fund and discuss the
management of it with the Manager and the Board of
Directors of the Company.

(ii) Unless the Manager gives the Sub-Adviser written
instructions to the contrary, the Sub-Adviser shall
use its good faith judgment in a manner which it
reasonably believes best serves the interests of the
Fund's shareholders to vote or abstain from voting all
proxies solicited by or with respect to the issuers of
securities in which assets of the Fund may be
invested.

(iii) The Sub-Adviser shall maintain and preserve such
records related to the Fund's transactions as shall be
required under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Manager shall maintain
and preserve all books and other records not related
to the Fund's transactions as required under the 1940
Act and shall timely furnish to Sub-Adviser all
information and copies of books and records reasonably
requested by Sub-Adviser to comply with any request
made in connection with a regulatory inspection. The
Sub-Adviser shall timely furnish to the Manager all
information relating to the Sub-Adviser's services
hereunder reasonably requested by the Manager to keep
and preserve the books and records of the Fund. The
Sub-Adviser agrees that all records which it maintains
for the Fund are the property of the Company and the
Sub-Adviser will surrender promptly to the Company
copies of any of such records.

(iv) The Sub-Adviser shall maintain compliance
procedures for the Fund that it reasonably believes
are adequate to ensure the Fund's compliance with (A)
the 1940 Act and the rules and regulations promulgated
thereunder and (B) the Fund's investment objective(s)
and policies as stated in the Prospectus and
Statement.

(v) The Sub-Adviser has adopted a written code of
ethics that it reasonably believes complies with the
requirements of Rule 17j-1 under the 1940 Act, which
it will provide to the Company. The Sub-Adviser has
written policies and procedures reasonably designed to
prevent the misuse of material, nonpublic information
by the Sub-Adviser or any person associated with the
Sub-Adviser.

3. Brokerage

In selecting brokers or dealers (including, if
permitted by applicable law, Salomon Smith Barney Inc.
or any other broker or dealer affiliated with the
Manager or the Sub-Adviser) to execute transactions on
behalf of the Fund, the Sub-Adviser will seek the best
overall terms available. In assessing the best
overall terms available for any transaction, the Sub-
Adviser will consider factors it deems relevant,
including, but not limited to, the breadth of the
market in the security, the price of the security, the
financial condition and execution capability of the
broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and
on a continuing basis. In selecting brokers or
dealers to execute a particular transaction, and in
evaluating the best overall terms available, the Sub-
Adviser is authorized to consider the brokerage and
research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934,
as amended) provided to the Fund and/or other accounts
over which the Sub-Adviser or its affiliates exercise
investment discretion. Nothing in this paragraph
shall be deemed to prohibit the Sub-Adviser from
paying an amount of commission for effecting a
securities transaction in excess of the amount of
commission another member of an exchange, broker, or
dealer would have charged for effecting that
transaction, if the Sub-Adviser determined in good
faith that such amount of commission was reasonable in
relation to the value of the brokerage and research
services provided by such member, broker, or dealer,
viewed in terms of either that particular transaction
or its overall responsibilities with respect to the
Fund and/or other accounts over which the Sub-Adviser
or its affiliates exercise investment discretion. In
making purchases or sales of securities or other
property for the account of the Fund, the Sub-Adviser
may deal with itself or its affiliates, or with the
Fund's underwriter or distributor, to the extent such
actions are permitted by the 1940 Act.

4. Information Provided to the Company and the Manager

The Sub-Adviser shall keep the Company and the Manager
informed of developments materially affecting the
Fund's holdings, and shall, on its own initiative,
furnish the Company and the Manager from time to time
with whatever information the Sub-Adviser believes is
appropriate for this purpose.

5. Compensation

(i) In consideration of the services rendered pursuant
to this Agreement, the Manager will pay the Sub-
Adviser an annual fee calculated at the rate of 0.50%
of the Fund's average daily net assets; the fee is
calculated daily and paid monthly. The Sub-Adviser
shall have no right to obtain compensation directly
from the Company for services provided hereunder and
agrees to look solely to the Manager for payment of
fees due. The fee for the period from the Effective
Date (defined below) of the Agreement to the end of
the month during which the Effective Date occurs shall
be prorated according to the proportion that such
period bears to the full monthly period. Upon any
termination of this Agreement before the end of a
month, the fee for such part of that month shall be
prorated according to the proportion that such period
bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. For
the purpose of determining fees payable to the Sub-
Adviser, the value of the Fund's net assets shall be
computed at the times and in the manner specified in
the Prospectus and/or the Statement.

(ii) The Sub-Adviser agrees that, to the extent that
the fee that is payable to the Manager by the Fund is
reduced by action of the Board, the fee payable to the
Sub-Adviser shall be reduced pro rata. Additionally,
to the extent that any part of the fee that is payable
to the Manager is waived by the Manager, the Sub-
Adviser agrees to waive its fees proportionately. The
Manager agrees to consult with the Sub-Adviser prior
to making a decision as to whether to waive its fees.

6. Expenses

The Sub-Adviser shall bear all expenses (excluding
brokerage costs, custodian fees, auditors fees or
other expenses to be borne by the Fund or the Company)
in connection with the performance of its services
under this Agreement. The Fund will bear certain
other expenses to be incurred in its operation,
including, but not limited to, investment advisory
fees, sub-advisory fees (other than sub-advisory fees
paid pursuant to this Agreement) and administration
fees; fees for necessary professional and brokerage
services; costs relating to local administration of
securities; fees for any pricing services; the costs
of regulatory compliance; and pro rata costs
associated with maintaining the Company's legal
existence and shareholder relations. All other
expenses not specifically assumed by the Sub-Adviser
hereunder or by the Manager under the Management
Agreement are borne by the Fund or the Company.

7. Standard of Care

The Sub-Adviser shall exercise its best judgment and
shall act in good faith in rendering the services
listed in paragraphs 2 and 3 above. The Sub-Adviser
shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or
the Manager in connection with the matters to which
this Agreement relates as well as in connection with
the performance of its obligations under this
Agreement, provided that nothing in this Agreement
shall be deemed to protect or purport to protect the
Sub-Adviser against any liability to the Manager, the
Company or to the shareholders of the Portfolio to
which the Sub-Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its
duties or by reason of the Sub-Adviser's reckless
disregard of its obligations and duties under this
Agreement.

8. Term and Amendments of Agreement

This Agreement shall become effective February 14,
2000 (the "Effective Date") and shall continue for an
initial two-year term. This Agreement shall continue
thereafter so long as such continuance is specifically
approved at least annually as required by the 1940
Act. This Agreement is terminable, without penalty,
on 60 days' written notice, by the Board of the
Company or by vote of holders of a majority (as
defined in the 1940 Act and the rules thereunder) of
the outstanding voting securities of the Fund, or upon
60 days' written notice by the Sub-Adviser except as
otherwise agreed by the Manager and the Sub-Adviser.
This Agreement will also terminate automatically in
the event of its assignment (as defined in the 1940
Act and the rules thereunder). This Agreement may be
amended only if such amendment is approved by the vote
of a majority of the outstanding voting securities of
the Fund (except for any amendment as may be effected
in the absence of such approval without violating the
1940 Act).

9. Services to Other Companies or Accounts

The Company understands that the Sub-Adviser now acts,
and may act in the future, unless otherwise agreed to
by the parties, as investment manager, adviser, or
sub-adviser to other investment companies and/or
managed accounts, including offshore entities. Sub-
Adviser agrees that whenever the Portfolio and one or
more other accounts managed or advised by the Sub-
Adviser have available funds for investment,
investments suitable and appropriate for each will be
allocated in accordance with a process designed by the
Sub-Adviser to provide equitable treatment to each
company and account. The Company recognizes that in
some cases this procedure may adversely affect the
size of the position obtainable for the Fund. In
addition, the Company understands that the persons
employed by the Sub-Adviser to assist in the
performance of the Sub-Adviser's duties under this
Agreement will not devote their full time to such
service.

10. Representations

The Company and Fund represent that (i) a copy of the
Company's Articles of Incorporation, dated
______________, together with all amendments thereto,
is on file with the Secretary of the State of
Maryland, (ii) the appointment of the Manager has been
duly authorized, (iii) the appointment of the Sub-
Adviser has been duly authorized, and (iv) they have
acted, and will continue to act, in conformity with
the 1940 Act and other applicable laws.

The Sub-Adviser represents that it is authorized to
perform the services described herein.

Each of the parties hereto represents that the
Agreement has been duly authorized, executed and
delivered by all required corporate action.

11. Materials

The Manager shall not publish or distribute or allow
the Company or the Fund to publish or distribute any
information, including but not limited to registration
statements, advertising or promotional materials,
specifically describing the Sub-Adviser, without prior
written consent of the Sub-Adviser, which consent
shall not be unreasonably withheld or delayed. If the
Sub-Adviser has not notified the Manager of its
disapproval of sample materials within three (3)
business days after its receipt thereof, such
materials shall be deemed approved. Materials
substantially similar to materials approved on an
earlier occasion shall also be deemed approved.

12. Governing Law

This Agreement shall be governed by the internal laws
of the State of Maryland, without regard to the
conflict of law principles thereof; provided, however,
that to the extent that anything herein is
inconsistent with the 1940 Act, the 1940 Act shall
control.

13. Notice

Any notice, advice or report to be given pursuant to
this Agreement shall be deemed sufficient if delivered
or mailed by registered, certified or overnight mail,
postage prepaid addressed by the party giving notice
to the other party at the last address furnished by
the other party:

To the Company at:

Smith Barney Sector Series Inc.
388 Greenwich Street
22nd Floor
New York, NY 10013
Attention: Heath B. McLendon

To the Manager at:

SSB Citi Fund Management LLC
388 Greenwich Street
22nd Floor
New York, NY 10013
Attention: Heath B. McLendon

To the Sub-Adviser at:

Citibank N.A.
Attention: Lawrence P. Keblusek
100 First Stamford Place
Stamford, CT 06902

14. Counterparts

This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together,
constitute only one instrument.

If the foregoing is in accordance with your
understanding, kindly indicate your acceptance of this
Agreement by signing and returning the enclosed copy
of this Agreement.

Very truly yours:

SSB CITI FUND MANAGEMENT LLC.

____________________________
By:

SMITH BARNEY SECTOR SERIES INC.

_____________________________
By:

Accepted:

CITIBANK N.A.

______________________________
By:

FORM OF SUBADVISORY AGREEMENT

Smith Barney Sector Series Inc.

Financial Services Fund

February 14, 2000

Citibank, N.A..

Dear Sirs:

1. Investment Description; Appointment

2. Services as Sub-Adviser

3. Brokerage

4. Information Provided to the Company and the Manager

5. Compensation

6. Expenses

7. Standard of Care

8. Term and Amendments of Agreement

9. Services to Other Companies or Accounts

10. Representations

The Sub-Adviser represents that it is authorized to
perform the services described herein.

Each of the parties hereto represents that the
Agreement has been duly authorized, executed and
delivered by all required corporate action.

11. Materials

12. Governing Law

13. Notice

To the Company at:

Smith Barney Sector Series Inc.
388 Greenwich Street
22nd Floor
New York, NY 10013
Attention: Heath B. McLendon

To the Manager at:

SSB Citi Fund Management LLC
388 Greenwich Street
22nd Floor
New York, NY 10013
Attention: Heath B. McLendon

To the Sub-Adviser at:

Citibank N.A.
Attention: Lawrence P. Keblusek
100 First Stamford Place
Stamford, CT 06902

14. Counterparts

This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together,
constitute only one instrument.

If the foregoing is in accordance with your
understanding, kindly indicate your acceptance of this
Agreement by signing and returning the enclosed copy
of this Agreement.

Very truly yours:

SSB CITI FUND MANAGEMENT LLC.

____________________________
By:

SMITH BARNEY SECTOR SERIES INC.

_____________________________
By:

Accepted:

CITIBANK N.A.

______________________________
By:

FORM OF SUBADVISORY AGREEMENT

Smith Barney Sector Series Inc.

Financial Services Fund

February 14, 2000

Citibank, N.A..

Dear Sirs:

1. Investment Description; Appointment

The Company desires to employ its capital relating
to the Fund by investing and reinvesting in
investments of the kind and in accordance with the
investment objective(s), policies and limitations
specified in the prospectus (the "Prospectus") and
the statement of additional information (the
"Statement") filed with the Securities and Exchange
Commission as part of the Company's Registration
Statement on Form N-1A, as amended or supplemented
from time to time, and in the manner and to the
extent as may from time to time be approved by the
Board of Directors of the Company (the "Board").
Copies of the Prospectus, the Statement, the
Company's Bylaws (the "Bylaws") and any policies or
procedures adopted by the Board and in effect from
time-to-time related to the Company and the Sub-
Adviser (the "Procedures") have been or will be
submitted to the Sub-Adviser. The Company agrees
promptly to provide copies of all amendments and
supplements to the current Prospectus, the
Statement, the Bylaws and Procedures to the Sub-
Adviser on an on-going basis. Until the Company
delivers any such amendment or supplement to the
Sub-Adviser, the Sub-Adviser shall be fully
protected in relying on the Prospectus, Statement,
Bylaws and Procedures as previously furnished to the
Sub-Adviser. The Company employs the Manager as the
manager to the Portfolio pursuant to the Management
Agreement dated February 14, 2000(the "Management
Agreement"), and the Company and the Manager desire
to employ and hereby appoint the Sub-Adviser to act
as the sub-investment adviser to the Fund. The Sub-
Adviser accepts the appointment and agrees to
furnish the services for the compensation set forth
below.

2. Services as Sub-Adviser

Subject to the supervision, direction and approval
of the Board of the Company and the Manager, the
Sub-Adviser shall conduct a continual program of
investment, evaluation and, if appropriate in the
view of the Sub-Adviser, sale and reinvestment of
the Fund's assets. The Sub-Adviser is authorized, in
its sole discretion and without prior consultation
with the Manager, to: (a) manage the Fund's assets
in accordance with the Fund's investment
objective(s) and policies as stated in the
Prospectus and the Statement; (b) make investment
decisions for the Fund; (c) place purchase and sale
orders for portfolio transactions on behalf of the
Fund; and (d) employ professional portfolio managers
and securities analysts who provide research
services to the Fund.

In addition, (i) the Sub-Adviser shall furnish the
Manager daily information concerning portfolio
transactions and quarterly and annual reports
concerning transactions and performance of the Fund
in such form as may be mutually agreed upon, and the
Sub-Adviser agrees to review the Fund and discuss
the management of it with the Manager and the Board
of Directors of the Company.

(ii) Unless the Manager gives the Sub-Adviser
written instructions to the contrary, the Sub-
Adviser shall use its good faith judgment in a
manner which it reasonably believes best serves the
interests of the Fund's shareholders to vote or
abstain from voting all proxies solicited by or with
respect to the issuers of securities in which assets
of the Fund may be invested.

(iii) The Sub-Adviser shall maintain and preserve
such records related to the Fund's transactions as
shall be required under the Investment Company Act
of 1940, as amended (the "1940 Act"). The Manager
shall maintain and preserve all books and other
records not related to the Fund's transactions as
required under the 1940 Act and shall timely furnish
to Sub-Adviser all information and copies of books
and records reasonably requested by Sub-Adviser to
comply with any request made in connection with a
regulatory inspection. The Sub-Adviser shall timely
furnish to the Manager all information relating to
the Sub-Adviser's services hereunder reasonably
requested by the Manager to keep and preserve the
books and records of the Fund. The Sub-Adviser
agrees that all records which it maintains for the
Fund are the property of the Company and the Sub-
Adviser will surrender promptly to the Company
copies of any of such records.

(iv) The Sub-Adviser shall maintain compliance
procedures for the Fund that it reasonably believes
are adequate to ensure the Fund's compliance with
(A) the 1940 Act and the rules and regulations
promulgated thereunder and (B) the Fund's investment
objective(s) and policies as stated in the
Prospectus and Statement.

(v) The Sub-Adviser has adopted a written code of
ethics that it reasonably believes complies with the
requirements of Rule 17j-1 under the 1940 Act, which
it will provide to the Company. The Sub-Adviser has
written policies and procedures reasonably designed
to prevent the misuse of material, nonpublic
information by the Sub-Adviser or any person
associated with the Sub-Adviser.

3. Brokerage

In selecting brokers or dealers (including, if
permitted by applicable law, Salomon Smith Barney
Inc. or any other broker or dealer affiliated with
the Manager or the Sub-Adviser) to execute
transactions on behalf of the Fund, the Sub-Adviser
will seek the best overall terms available. In
assessing the best overall terms available for any
transaction, the Sub-Adviser will consider factors
it deems relevant, including, but not limited to,
the breadth of the market in the security, the price
of the security, the financial condition and
execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In
selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall
terms available, the Sub-Adviser is authorized to
consider the brokerage and research services (as
those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended)
provided to the Fund and/or other accounts over
which the Sub-Adviser or its affiliates exercise
investment discretion. Nothing in this paragraph
shall be deemed to prohibit the Sub-Adviser from
paying an amount of commission for effecting a
securities transaction in excess of the amount of
commission another member of an exchange, broker, or
dealer would have charged for effecting that
transaction, if the Sub-Adviser determined in good
faith that such amount of commission was reasonable
in relation to the value of the brokerage and
research services provided by such member, broker,
or dealer, viewed in terms of either that particular
transaction or its overall responsibilities with
respect to the Fund and/or other accounts over which
the Sub-Adviser or its affiliates exercise
investment discretion. In making purchases or sales
of securities or other property for the account of
the Fund, the Sub-Adviser may deal with itself or
its affiliates, or with the Fund's underwriter or
distributor, to the extent such actions are
permitted by the 1940 Act.

4. Information Provided to the Company and the
Manager

The Sub-Adviser shall keep the Company and the
Manager informed of developments materially
affecting the Fund's holdings, and shall, on its own
initiative, furnish the Company and the Manager from
time to time with whatever information the Sub-
Adviser believes is appropriate for this purpose.

5. Compensation

(i) In consideration of the services rendered
pursuant to this Agreement, the Manager will pay the
Sub-Adviser an annual fee calculated at the rate of
0.65% of the Fund's average daily net assets; the
fee is calculated daily and paid monthly. The Sub-
Adviser shall have no right to obtain compensation
directly from the Company for services provided
hereunder and agrees to look solely to the Manager
for payment of fees due. The fee for the period from
the Effective Date (defined below) of the Agreement
to the end of the month during which the Effective
Date occurs shall be prorated according to the
proportion that such period bears to the full
monthly period. Upon any termination of this
Agreement before the end of a month, the fee for
such part of that month shall be prorated according
to the proportion that such period bears to the full
monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of
determining fees payable to the Sub-Adviser, the
value of the Fund's net assets shall be computed at
the times and in the manner specified in the
Prospectus and/or the Statement.

(ii) The Sub-Adviser agrees that, to the extent that
the fee that is payable to the Manager by the Fund
is reduced by action of the Board, the fee payable
to the Sub-Adviser shall be reduced pro rata.
Additionally, to the extent that any part of the fee
that is payable to the Manager is waived by the
Manager, the Sub-Adviser agrees to waive its fees
proportionately. The Manager agrees to consult with
the Sub-Adviser prior to making a decision as to
whether to waive its fees.

6. Expenses

The Sub-Adviser shall bear all expenses (excluding
brokerage costs, custodian fees, auditors fees or
other expenses to be borne by the Fund or the
Company) in connection with the performance of its
services under this Agreement. The Fund will bear
certain other expenses to be incurred in its
operation, including, but not limited to, investment
advisory fees, sub-advisory fees (other than sub-
advisory fees paid pursuant to this Agreement) and
administration fees; fees for necessary professional
and brokerage services; costs relating to local
administration of securities; fees for any pricing
services; the costs of regulatory compliance; and
pro rata costs associated with maintaining the
Company's legal existence and shareholder relations.
All other expenses not specifically assumed by the
Sub-Adviser hereunder or by the Manager under the
Management Agreement are borne by the Fund or the
Company.

7. Standard of Care

The Sub-Adviser shall exercise its best judgment and
shall act in good faith in rendering the services
listed in paragraphs 2 and 3 above. The Sub-Adviser
shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund
or the Manager in connection with the matters to
which this Agreement relates as well as in
connection with the performance of its obligations
under this Agreement, provided that nothing in this
Agreement shall be deemed to protect or purport to
protect the Sub-Adviser against any liability to the
Manager, the Company or to the shareholders of the
Portfolio to which the Sub-Adviser would otherwise
be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-
Adviser's reckless disregard of its obligations and
duties under this Agreement.

8. Term and Amendments of Agreement

This Agreement shall become effective February 14,
2000 (the "Effective Date") and shall continue for
an initial two-year term. This Agreement shall
continue thereafter so long as such continuance is
specifically approved at least annually as required
by the 1940 Act. This Agreement is terminable,
without penalty, on 60 days' written notice, by the
Board of the Company or by vote of holders of a
majority (as defined in the 1940 Act and the rules
thereunder) of the outstanding voting securities of
the Fund, or upon 60 days' written notice by the
Sub-Adviser except as otherwise agreed by the
Manager and the Sub-Adviser. This Agreement will
also terminate automatically in the event of its
assignment (as defined in the 1940 Act and the rules
thereunder). This Agreement may be amended only if
such amendment is approved by the vote of a majority
of the outstanding voting securities of the Fund
(except for any amendment as may be effected in the
absence of such approval without violating the 1940
Act).

9. Services to Other Companies or Accounts

The Company understands that the Sub-Adviser now
acts, and may act in the future, unless otherwise
agreed to by the parties, as investment manager,
adviser, or sub-adviser to other investment
companies and/or managed accounts, including
offshore entities. Sub-Adviser agrees that whenever
the Portfolio and one or more other accounts managed
or advised by the Sub-Adviser have available funds
for investment, investments suitable and appropriate
for each will be allocated in accordance with a
process designed by the Sub-Adviser to provide
equitable treatment to each company and account.
The Company recognizes that in some cases this
procedure may adversely affect the size of the
position obtainable for the Fund. In addition, the
Company understands that the persons employed by the
Sub-Adviser to assist in the performance of the Sub-
Adviser's duties under this Agreement will not
devote their full time to such service.

10. Representations

The Company and Fund represent that (i) a copy of
the Company's Articles of Incorporation, dated
______________, together with all amendments
thereto, is on file with the Secretary of the State
of Maryland, (ii) the appointment of the Manager has
been duly authorized, (iii) the appointment of the
Sub-Adviser has been duly authorized, and (iv) they
have acted, and will continue to act, in conformity
with the 1940 Act and other applicable laws.

The Sub-Adviser represents that it is authorized to
perform the services described herein.

Each of the parties hereto represents that the
Agreement has been duly authorized, executed and
delivered by all required corporate action.

11. Materials

The Manager shall not publish or distribute or allow
the Company or the Fund to publish or distribute any
information, including but not limited to
registration statements, advertising or promotional
materials, specifically describing the Sub-Adviser,
without prior written consent of the Sub-Adviser,
which consent shall not be unreasonably withheld or
delayed. If the Sub-Adviser has not notified the
Manager of its disapproval of sample materials
within three (3) business days after its receipt
thereof, such materials shall be deemed approved.
Materials substantially similar to materials
approved on an earlier occasion shall also be deemed
approved.

12. Governing Law

This Agreement shall be governed by the internal
laws of the State of Maryland, without regard to the
conflict of law principles thereof; provided,
however, that to the extent that anything herein is
inconsistent with the 1940 Act, the 1940 Act shall
control.

13. Notice

Any notice, advice or report to be given pursuant to
this Agreement shall be deemed sufficient if
delivered or mailed by registered, certified or
overnight mail, postage prepaid addressed by the
party giving notice to the other party at the last
address furnished by the other party:

To the Company at:

Smith Barney Sector Series Inc.
388 Greenwich Street
22nd Floor
New York, NY 10013
Attention: Heath B. McLendon

To the Manager at:

SSB Citi Fund Management LLC
388 Greenwich Street
22nd Floor
New York, NY 10013
Attention: Heath B. McLendon

To the Sub-Adviser at:

Citibank N.A.
Attention: Lawrence P. Keblusek
100 First Stamford Place
Stamford, CT 06902

14. Counterparts

This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together,
constitute only one instrument.

If the foregoing is in accordance with your
understanding, kindly indicate your acceptance of
this Agreement by signing and returning the enclosed
copy of this Agreement.

Very truly yours:

SSB CITI FUND MANAGEMENT LLC.

____________________________
By:

SMITH BARNEY SECTOR SERIES INC.

_____________________________
By:

Accepted:

CITIBANK N.A.

______________________________
By:

SMITH BARNEY SECTOR SERIES INC.

FORM OF INVESTMENT MANAGEMENT AGREEMENT

February 14, 2000

SSB Citi Fund Management LLC
388 Greenwich Street
New York, New York 10013

Dear Sirs:

This Investment Management Agreement (the "Agreement")
is made on this 14th day of February, 2000, by and
between Smith Barney Sector Series Inc., a corporation
organized under the laws of the State of Maryland
(the "Corporation"), in respect of its new series,
Smith Barney Financial Services Fund (the "Fund"), and
SSB Citi Fund Management LLC (the "Manager") as
follows:

1. Investment Description; Appointment

The Fund desires to employ its capital by investing
and reinvesting in investments of the kind and in
accordance with the limitations specified in: (i) the
Corporation's Charter as amended from time to time
(the "Charter of the Corporation"); (ii) the Fund's
Prospectus (the "Prospectus"); and (iii) the Fund's
Statement of Additional Information (the "Statement")
filed with the Securities and Exchange Commission (the
"SEC") as part of the Fund's Registration Statement on
Form N-1A, as amended from time to time, and in such
manner and to such extent as may from time to time be
approved by the Board of Directors of the Corporation
(the "Board"). Copies of the Fund's Prospectus and the
Statement and the Charter of the Corporation have been
or will be submitted to the Manager. The Corporation
desires to employ and hereby appoints the Manager to
act as investment manager for the Fund. The Manager
accepts the appointment and agrees to furnish the
services for the compensation set forth below. The
Manager is hereby authorized to retain third parties
and is hereby authorized to delegate some or all of
its duties and obligations hereunder to such persons,
provided such persons shall remain under the general
supervision of the Manager.

2. Services as Investment Manager

Subject to the supervision and direction of the Board,
the Manager will: (a) manage the Fund's holdings in
accordance with the Fund's investment objective and
policies as stated in the Charter and the Registration
Statement; (b) assist in supervising all aspects of
the Fund's operations; (c) supply the Fund with office
facilities (which may be in SSB Citi's own offices),
statistical and research data, data processing
services, clerical, accounting and bookkeeping
services, including, but not limited to, the
calculation of (i) the net asset value of shares of
the Fund, (ii) applicable contingent deferred sales
charges and similar fees and charges and (iii)
distribution fees, internal auditing and legal
services, internal executive and administrative
services, and stationery and office supplies; and (d)
prepare reports to shareholders of the Fund, tax
returns and reports to and filings with the SEC and
state blue sky authorities. The Manager is hereby
authorized to retain third parties and to delegate
some or all of its duties and obligations under this
paragraph 2 to such persons provided that such persons
shall remain under the general supervision of the
Manager.

3. Compensation

In consideration of the services rendered pursuant to
this Agreement, the Corporation will pay the Manager,
on the first business day of each month, a fee for the
previous month at an annual rate of 0.80% of the
Fund's average daily net assets. The fee for the
period from the date the Fund commences its investment
operations to the end of the month during which the
Fund commences its investment operations shall be pro-
rated according to the proportion that such period
bears to the full monthly period. Upon any
termination of this Agreement before the end of any
month, the fee for such part of that month shall be
pro-rated according to the proportion that such period
bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. For
the purpose of determining fees payable to the
Manager, the value of the Fund's net assets shall be
computed at the times and in the manner specified in
the Fund's Prospectus and/or the Statement, as from
time to time in effect.

4. Expenses

The Manager will bear all expenses in connection with
the performance of its services under this Agreement.
The Fund will bear certain other expenses to be
incurred in its operation, including: investment
advisory and administration fees; charges of
custodians and transfer and dividend disbursing
agents; fees for necessary professional services, such
as the Fund's and Board members' proportionate share
of insurance premiums, professional associations, dues
and/or assessments; and brokerage services, including
taxes, interest and commissions; costs attributable to
investor services, including without limitation,
telephone and personnel expenses; costs of preparing
and printing prospectuses and statements of additional
information for regulatory purposes and for
distribution to existing shareholders; the costs of
regulatory compliance, such as SEC fees and state blue
sky qualifications fees; outside auditing and legal
expenses and costs associated with maintaining the
Fund's legal existence; costs of shareholders' reports
and meetings of the officers or Board; fees of the
members of the Board who are not officers, directors
or employees of Salomon Smith Barney, Inc. or its
affiliates or any person who is an affiliate of any
person to whom duties may be delegated hereunder and
any extraordinary expenses. In addition, the Fund
will pay all service and distribution fees pursuant to
a Services and Distribution Plan adopted under Rule
12b-1 of the Investment Company Act of 1940, as
amended (the "1940 Act").

5. Brokerage

In selecting brokers or dealers to execute
transactions on behalf of the Fund, the Manager will
seek the best overall terms available. In assessing
the best overall terms available for any transaction,
the Manager will consider factors it deems relevant,
including, but not limited to, the breadth of the
market in the security, the price of the security, the
financial condition and execution capability of the
broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and
on a continuing basis. In selecting brokers or
dealers to execute a particular transaction, and in
evaluating the best overall terms available, the
Manager is authorized to consider the brokerage and
research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934,
as amended) provided to the Fund and/or other accounts
over which the Manager or its affiliates exercise
investment discretion.

6. Information Provided to the Fund

The Manager will keep the Corporation informed of
developments materially affecting the Fund's
portfolio, and will, on its own initiative, furnish
the Corporation from time to time with whatever
information the Manager believes is appropriate for
this purpose.

7. Standard of Care

The Manager shall exercise its best judgment in
rendering the services listed in paragraph 2 above.
The Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this
Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to
protect the Manager against any liability to the
Corporation or to the Fund's shareholders to which the
Manager would otherwise be subject by reason of
willful malfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason
of the Manager's reckless disregard of its obligations
and duties under this Agreement.

8. Services to Other Companies or Accounts

The Corporation understands that the Manager now acts,
will continue to act and may act in the future as:
investment adviser to fiduciary and other managed
accounts, as well as to other investment companies;
and the Corporation has no objection to the Manager's
so acting, provided that whenever the Fund and one or
more other investment companies advised by the Manager
have available funds for investment, investments
suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to
each company. The Corporation recognizes that in some
cases this procedure may adversely affect the size of
the position obtainable for the Fund. In addition,
the Corporation understands that the persons employed
by the Manager to assist in the performance of the
Manager's duties under this Agreement will not devote
their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict
the right of the Manager or any affiliate of the
Manager to engage in and devote time and attention to
other businesses or to render services of whatever
kind or nature.

9. Term of Agreement

This Agreement shall become effective as of the date
the Fund commences its investment operations and
continue for an initial two-year term and shall
continue thereafter so long as such continuance is
specifically approved at least annually by (i) the
Board or (ii) a vote of a "majority" (as defined in
the 1940 Act) of the Fund's outstanding voting
securities, provided that in either event the
continuance is also approved by a majority of the
Board members who are not "interested persons" (as
defined in the 1940 Act) of any party to this
Agreement, by vote cast in person or by proxy at a
meeting called for the purpose of voting on such
approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board or
by vote of holders of a majority of the Fund's shares,
or upon 90 days' written notice, by the Manager. This
Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act).

10. Representation by the Corporation

The Corporation represents that a copy of the Charter
of Corporation is on file with the State of Maryland
Department of Assessments and Taxation.

If the foregoing is in accordance with your
understanding, kindly indicate your acceptance hereof
by signing and returning the enclosed copy of this
Agreement to us.

Very
truly yours,

Smith
Barney Sector
Series Inc.,

on behalf of
Smith
Barney Financial
Services Fund

By:
Heath B. McLendon
Title:
Chairman of the Board

Accepted:

SSB Citi Fund Management LLC

By: Lewis E. Daidone
Title: Senior Vice President

SECT\INVESTMENT MANAGEMENT AGREEMENT FSF

SMITH BARNEY SECTOR SERIES INC.

FORM OF INVESTMENT MANAGEMENT AGREEMENT

February 14, 2000

SSB Citi Fund Management LLC
388 Greenwich Street
New York, New York 10013

Dear Sirs:

This Investment Management Agreement (the "Agreement")
is made on this 14th day of February, 2000, by and
between Smith Barney Sector Series Inc. , a
corporation organized under the laws of the State of
Maryland (the "Corporation"), in respect of its new
series, Smith Barney Health Sciences Fund (the
"Fund"), and SSB Citi Fund Management LLC (the
"Manager") as follows:

1. Investment Description; Appointment

2. Services as Investment Manager

3. Compensation

4. Expenses

5. Brokerage

6. Information Provided to the Fund

7. Standard of Care

8. Services to Other Companies or Accounts

9. Term of Agreement

10. Representation by the Corporation

The Corporation represents that a copy of the Charter
of Corporation is on file with the State of Maryland
Department of Assessments and Taxation.

If the foregoing is in accordance with your
understanding, kindly indicate your acceptance hereof
by signing and returning the enclosed copy of this
Agreement to us.

Very
truly yours,

Smith
Barney Sector
Series Inc.,

on behalf of
Smith
Barney Health
Sciences Fund

By:
Heath B. McLendon
Title:
Chairman of the Board

Accepted:

SSB Citi Fund Management LLC

By: Lewis E. Daidone
Title: Senior Vice President

SECT\INVESTMENT MANAGEMENT AGREEMENT HSF

SMITH BARNEY SECTOR SERIES INC.

FORM OF INVESTMENT MANAGEMENT AGREEMENT

February 14, 2000

SSB Citi Fund Management LLC
388 Greenwich Street
New York, New York 10013

Dear Sirs:

This Investment Management Agreement (the
"Agreement") is made on this 14th day of February,
2000, by and between Smith Barney Sector Series Inc.
, a corporation organized under the laws of the
State of Maryland (the "Corporation"), in respect
of its new series, Smith Barney Technology Fund (the
"Fund"), and SSB Citi Fund Management LLC (the
"Manager") as follows:

1. Investment Description; Appointment

The Fund desires to employ its capital by investing
and reinvesting in investments of the kind and in
accordance with the limitations specified in: (i)
the Corporation's Charter as amended from time to
time (the "Charter of the Corporation"); (ii) the
Fund's Prospectus (the "Prospectus"); and (iii) the
Fund's Statement of Additional Information (the
"Statement") filed with the Securities and Exchange
Commission (the "SEC") as part of the Fund's
Registration Statement on Form N-1A, as amended from
time to time, and in such manner and to such extent
as may from time to time be approved by the Board of
Directors of the Corporation (the "Board"). Copies
of the Fund's Prospectus and the Statement and the
Charter of the Corporation have been or will be
submitted to the Manager. The Corporation desires
to employ and hereby appoints the Manager to act as
investment manager for the Fund. The Manager accepts
the appointment and agrees to furnish the services
for the compensation set forth below. The Manager is
hereby authorized to retain third parties and is
hereby authorized to delegate some or all of its
duties and obligations hereunder to such persons,
provided such persons shall remain under the general
supervision of the Manager.

2. Services as Investment Manager

Subject to the supervision and direction of the
Board, the Manager will: (a) manage the Fund's
holdings in accordance with the Fund's investment
objective and policies as stated in the Charter and
the Registration Statement; (b) assist in
supervising all aspects of the Fund's operations;
(c) supply the Fund with office facilities (which
may be in SSB Citi's own offices), statistical and
research data, data processing services, clerical,
accounting and bookkeeping services, including, but
not limited to, the calculation of (i) the net asset
value of shares of the Fund, (ii) applicable
contingent deferred sales charges and similar fees
and charges and (iii) distribution fees, internal
auditing and legal services, internal executive and
administrative services, and stationery and office
supplies; and (d) prepare reports to shareholders of
the Fund, tax returns and reports to and filings
with the SEC and state blue sky authorities. The
Manager is hereby authorized to retain third parties
and to delegate some or all of its duties and
obligations under this paragraph 2 to such persons
provided that such persons shall remain under the
general supervision of the Manager.

3. Compensation

In consideration of the services rendered pursuant
to this Agreement, the Corporation will pay the
Manager, on the first business day of each month, a
fee for the previous month at an annual rate of
0.95% of the Fund's average daily net assets. The
fee for the period from the date the Fund commences
its investment operations to the end of the month
during which the Fund commences its investment
operations shall be pro-rated according to the
proportion that such period bears to the full
monthly period. Upon any termination of this
Agreement before the end of any month, the fee for
such part of that month shall be pro-rated according
to the proportion that such period bears to the full
monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of
determining fees payable to the Manager, the value
of the Fund's net assets shall be computed at the
times and in the manner specified in the Fund's
Prospectus and/or the Statement, as from time to
time in effect.

4. Expenses

The Manager will bear all expenses in connection
with the performance of its services under this
Agreement. The Fund will bear certain other
expenses to be incurred in its operation, including:
investment advisory and administration fees; charges
of custodians and transfer and dividend disbursing
agents; fees for necessary professional services,
such as the Fund's and Board members' proportionate
share of insurance premiums, professional
associations, dues and/or assessments; and brokerage
services, including taxes, interest and commissions;
costs attributable to investor services, including
without limitation, telephone and personnel
expenses; costs of preparing and printing
prospectuses and statements of additional
information for regulatory purposes and for
distribution to existing shareholders; the costs of
regulatory compliance, such as SEC fees and state
blue sky qualifications fees; outside auditing and
legal expenses and costs associated with maintaining
the Fund's legal existence; costs of shareholders'
reports and meetings of the officers or Board; fees
of the members of the Board who are not officers,
directors or employees of Salomon Smith Barney, Inc.
or its affiliates or any person who is an affiliate
of any person to whom duties may be delegated
hereunder and any extraordinary expenses. In
addition, the Fund will pay all service and
distribution fees pursuant to a Services and
Distribution Plan adopted under Rule 12b-1 of the
Investment Company Act of 1940, as amended (the
"1940 Act").

5. Brokerage

In selecting brokers or dealers to execute
transactions on behalf of the Fund, the Manager will
seek the best overall terms available. In assessing
the best overall terms available for any
transaction, the Manager will consider factors it
deems relevant, including, but not limited to, the
breadth of the market in the security, the price of
the security, the financial condition and execution
capability of the broker or dealer and the
reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In
selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall
terms available, the Manager is authorized to
consider the brokerage and research services (as
those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended)
provided to the Fund and/or other accounts over
which the Manager or its affiliates exercise
investment discretion.

6. Information Provided to the Fund

7. Standard of Care

The Manager shall exercise its best judgment in
rendering the services listed in paragraph 2 above.
The Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered
by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in
this Agreement shall be deemed to protect or purport
to protect the Manager against any liability to the
Corporation or to the Fund's shareholders to which
the Manager would otherwise be subject by reason of
willful malfeasance, bad faith or gross negligence
on its part in the performance of its duties or by
reason of the Manager's reckless disregard of its
obligations and duties under this Agreement.

8. Services to Other Companies or Accounts

The Corporation understands that the Manager now
acts, will continue to act and may act in the future
as: investment adviser to fiduciary and other
managed accounts, as well as to other investment
companies; and the Corporation has no objection to
the Manager's so acting, provided that whenever the
Fund and one or more other investment companies
advised by the Manager have available funds for
investment, investments suitable and appropriate for
each will be allocated in accordance with a formula
believed to be equitable to each company. The
Corporation recognizes that in some cases this
procedure may adversely affect the size of the
position obtainable for the Fund. In addition, the
Corporation understands that the persons employed by
the Manager to assist in the performance of the
Manager's duties under this Agreement will not
devote their full time to such service and nothing
contained in this Agreement shall be deemed to limit
or restrict the right of the Manager or any
affiliate of the Manager to engage in and devote
time and attention to other businesses or to render
services of whatever kind or nature.

9. Term of Agreement

This Agreement shall become effective as of the date
the Fund commences its investment operations and
continue for an initial two-year term and shall
continue thereafter so long as such continuance is
specifically approved at least annually by (i) the
Board or (ii) a vote of a "majority" (as defined in
the 1940 Act) of the Fund's outstanding voting
securities, provided that in either event the
continuance is also approved by a majority of the
Board members who are not "interested persons" (as
defined in the 1940 Act) of any party to this
Agreement, by vote cast in person or by proxy at a
meeting called for the purpose of voting on such
approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board or
by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by the
Manager. This Agreement will also terminate
automatically in the event of its assignment (as
defined in the 1940 Act).

10. Representation by the Corporation

The Corporation represents that a copy of the
Charter of Corporation is on file with the State of
Maryland Department of Assessments and Taxation.

If the foregoing is in accordance with your
understanding, kindly indicate your acceptance
hereof by signing and returning the enclosed copy of
this Agreement to us.

Very
truly yours,

Smit
h Barney Sector
Series Inc.,

on behalf
of
Smit
h Barney
Technology Fund

By:
Heath B.
McLendon

Title: Chairman of the Board

Accepted:

SSB Citi Fund Management LLC

By: Lewis E. Daidone
Title: Senior Vice President

SECT\INVESTMENT MANAGEMENT AGREEMENT TF

SMITH BARNEY SECTOR SERIES INC.

DISTRIBUTION AGREEMENT

February 14, 2000

CFBDS, Inc.
21 Milk Street
Boston, MA 02109

Dear Sirs:

This is to confirm that, in consideration of the
agreements hereinafter contained, the above-named
investment company (the "Fund") has agreed that you
shall be, for the period of this Agreement, the non-
exclusive principal underwriter and distributor of
shares of the Fund and each Series of the Fund set
forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, including any shares
of the Fund not designated by series, a "Series").
For purposes of this Agreement, the term "Shares"
shall mean shares of the each Series, or one or more
Series, as the context may require.

1. Services as Principal Underwriter and
Distributor

1.1 You will act as agent for the
distribution of Shares covered by, and in accordance
with, the registration statement, prospectus and
statement of additional information then in effect
under the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940,
as amended (the "1940 Act"), and will transmit or
cause to be transmitted promptly any orders received
by you or those with whom you have sales or servicing
agreements for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of
which the Fund has notified you in writing.

1.2 You agree to use your best efforts
to solicit orders for the sale of Shares. It is
contemplated that you will enter into sales or
servicing agreements with registered securities
brokers and banks and into servicing agreements with
financial institutions and other industry
professionals, such as investment advisers,
accountants and estate planning firms. In entering
into such agreements, you will act only on your own
behalf as principal underwriter and distributor. You
will not be responsible for making any distribution
plan or service fee payments pursuant to any plans the
Fund may adopt or agreements it may enter into.

1.3 You shall act as the non-exclusive
principal underwriter and distributor of Shares in
compliance with all applicable laws, rules, and
regulations, including, without limitation, all rules
and regulations made or adopted from time to time by
the Securities and Exchange Commission (the "SEC")
pursuant to the 1933 Act or the 1940 Act or by any
securities association registered under the Securities
Exchange Act of 1934, as amended.

1.4 Whenever in their judgment such
action is warranted for any reason, including, without
limitation, market, economic or political conditions,
the Fund's officers may decline to accept any orders
for, or make any sales of, any Shares until such time
as those officers deem it advisable to accept such
orders and to make such sales and the Fund shall
advise you promptly of such determination.

2. Duties of the Fund

2.1 The Fund agrees to pay all costs and
expenses in connection with the registration of Shares
under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer
of Shares and for supplying information, prices and
other data to be furnished by the Fund hereunder, and
all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of
additional information for regulatory purposes and for
distribution to shareholders; provided however, that
nothing contained herein shall be deemed to require
the Fund to pay any costs of advertising or marketing
the sale of Shares.

2.2 The Fund agrees to execute any and
all documents and to furnish any and all information
and otherwise to take any other actions that may be
reasonably necessary in the discretion of the Fund's
officers in connection with the qualification of
Shares for sale in such states and other U.S.
jurisdictions as the Fund may approve and designate to
you from time to time, and the Fund agrees to pay all
expenses that may be incurred in connection with such
qualification. You shall pay all expenses connected
with your own qualification as a securities broker or
dealer under state or Federal laws and, except as
otherwise specifically provided in this Agreement, all
other expenses incurred by you in connection with the
sale of Shares as contemplated in this Agreement.

2.3 The Fund shall furnish you from time
to time, for use in connection with the sale of
Shares, such information reports with respect to the
Fund or any relevant Series and the Shares as you may
reasonably request, all of which shall be signed by
one or more of the Fund's duly authorized officers;
and the Fund warrants that the statements contained in
any such reports, when so signed by the Fund's
officers, shall be true and correct. The Fund also
shall furnish you upon request with (a) the reports of
the annual audits of the financial statements of the
Fund for each Series made by independent certified
public accountants retained by the Fund for such
purpose; (b) semi-annual unaudited financial
statements pertaining to each Series; (c) quarterly
earnings statements prepared by the Fund for any
Series; (d) a monthly itemized list of the securities
in each Series' portfolio; (e) monthly balance sheets
as soon as practicable after the end of each month;
(f) the current net asset value and offering price
per share for each Series on each day such net asset
value is computed and (g) from time to time such
additional information regarding the financial
condition of each Series of the Fund as you may
reasonably request.

3. Representations and Warranties

The Fund represents to you that all registration
statements, prospectuses and statements of additional
information filed by the Fund with the SEC under the
1933 Act and the 1940 Act with respect to the Shares
have been prepared in conformity with the requirements
of said Acts and the rules and regulations of the SEC
thereunder. As used in this Agreement, the terms
"registration statement", "prospectus" and "statement
of additional information" shall mean any registration
statement, prospectus and statement of additional
information filed by the Fund with the SEC and any
amendments and supplements thereto filed by the Fund
with the SEC. The Fund represents and warrants to you
that any such registration statement, prospectus and
statement of additional information, when such
registration statement becomes effective and as such
prospectus and statement of additional information are
amended and supplemented, includes at the time of such
effectiveness, amendment or supplement all statements
required to be contained therein in conformance with
the 1933 Act, the 1940 Act and the rules and
regulations of the SEC; that all statements of
material fact contained in any registration statement,
prospectus or statement of additional information will
be true and correct when such registration statement
becomes effective; and that neither any registration
statement nor any prospectus or statement of
additional information when such registration
statement becomes effective will include an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading to a purchaser of the Fund's Shares. The
Fund may, but shall not be obligated to, propose from
time to time such amendment or amendments to any
registration statement and such supplement or
supplements to any prospectus or statement of
additional information as, in the light of future
developments, may, in the opinion of the Fund, be
necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by the
Fund of a written request from you to do so, you may,
at your option, terminate this Agreement or decline to
make offers of the Fund's Shares until such amendments
are made. The Fund shall not file any amendment to
any registration statement or supplement to any
prospectus or statement of additional information
without giving you reasonable notice thereof in
advance; provided, however, that nothing contained in
this Agreement shall in any way limit the Fund's right
to file at any time such amendments to any
registration statement and/or supplements to any
prospectus or statement of additional information, of
whatever character, as the Fund may deem advisable,
such right being in all respects absolute and
unconditional.

4. Indemnification

4.1 The Fund authorizes you to use any
prospectus or statement of additional information
furnished by the Fund from time to time, in connection
with the sale of Shares. The Fund agrees to
indemnify, defend and hold you, your several officers
and directors, and any person who controls you within
the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of
investigating or defending such claims, demands or
liabilities and any such counsel fees incurred in
connection therewith) which you, your officers and
directors, or any such controlling person, may incur
under the 1933 Act or under common law or otherwise,
arising out of or based upon any untrue statement, or
alleged untrue statement, of a material fact contained
in any registration statement, any prospectus or any
statement of additional information or arising out of
or based upon any omission, or alleged omission, to
state a material fact required to be stated in any
registration statement, any prospectus or any
statement of additional information or necessary to
make the statements in any of them not misleading;
provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any
such controlling person shall not be deemed to cover
any claims, demands, liabilities or expenses arising
out of any statements or representations made by you
or your representatives or agents other than such
statements and representations as are contained in any
prospectus or statement of additional information and
in such financial and other statements as are
furnished to you pursuant to paragraph 2.3 of this
Agreement; and further provided that the Fund's
agreement to indemnify you and the Fund's
representations and warranties herein before set forth
in paragraph 3 of this Agreement shall not be deemed
to cover any liability to the Fund or its shareholders
to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in
the performance of your duties, or by reason of your
reckless disregard of your obligations and duties
under this Agreement. The Fund's agreement to
indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly
conditioned upon the Fund's being notified of any
action brought against you, your officers or
directors, or any such controlling person, such
notification to be given by letter or by telegram
addressed to the Fund at its principal office in New
York, New York and sent to the Fund by the person
against whom such action is brought, within ten days
after the summons or other first legal process shall
have been served. The failure so to notify the Fund
of any such action shall not relieve the Fund from any
liability that the Fund may have to the person against
whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the
Fund's indemnity agreement contained in this paragraph
4.1. The Fund will be entitled to assume the defense
of any suit brought to enforce any such claim, demand
or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by the
Fund. In the event the Fund elects to assume the
defense of any such suit and retains counsel of good
standing, the defendant or defendants in such suit
shall bear the fees and expenses of any additional
counsel retained by any of them; but if the Fund does
not elect to assume the defense of any such suit, the
Fund will reimburse you, your officers and directors,
or the controlling person or persons named as
defendant or defendants in such suit, for the
reasonable fees and expenses of any counsel retained
by you or them. The Fund's indemnification agreement
contained in this paragraph 4.1 and the Fund's
representations and warranties in this Agreement shall
remain operative and in full force and effect
regardless of any investigation made by or on behalf
of you, your officers and directors, or any
controlling person, and shall survive the delivery of
any of the Fund's Shares. This agreement of indemnity
will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their
respective estates, and to the benefit of the
controlling persons and their successors. The Fund
agrees to notify you promptly of the commencement of
any litigation or proceedings against the Fund or any
of its officers or Board members in connection with
the issuance and sale of any of the Fund's Shares.

4.2 You agree to indemnify, defend and
hold the Fund, its several officers and Board members,
and any person who controls the Fund within the
meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands,
liabilities and expenses (including the costs of
investigating or defending such claims, demands or
liabilities and any counsel fees incurred in
connection therewith) that the Fund, its officers or
Board members or any such controlling person may incur
under the 1933 Act, or under common law or otherwise,
but only to the extent that such liability or expense
incurred by the Fund, its officers or Board members,
or such controlling person resulting from such claims
or demands shall arise out of or be based upon any
untrue, or alleged untrue, statement of a material
fact contained in information furnished in writing by
you to the Fund and used in the answers to any of the
items of the registration statement or in the
corresponding statements made in the prospectus or
statement of additional information, or shall arise
out of or be based upon any omission, or alleged
omission, to state a material fact in connection with
such information furnished in writing by you to the
Fund and required to be stated in such answers or
necessary to make such information not misleading.
Your agreement to indemnify the Fund, its officers or
Board members, and any such controlling person, as
aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its
officers or Board members, or any such controlling
person, such notification to be given by letter or
telegram addressed to you at your principal office in
Boston, Massachusetts and sent to you by the person
against whom such action is brought, within ten days
after the summons or other first legal process shall
have been served. You shall have the right to control
the defense of such action, with counsel of your own
choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or
omission on your part or with the Fund's consent, and
in any event the Fund, its officers or Board members
or such controlling person shall each have the right
to participate in the defense or preparation of the
defense of any such action with counsel of its own
choosing reasonably acceptable to you but shall not
have the right to settle any such action without your
consent, which will not be unreasonably withheld. The
failure to so notify you of any such action shall not
relieve you from any liability that you may have to
the Fund, its officers or Board members, or to such
controlling person by reason of any such untrue, or
alleged untrue, statement or omission, or alleged
omission, otherwise than on account of your indemnity
agreement contained in this paragraph 4.2. You agree
to notify the Fund promptly of the commencement of any
litigation or proceedings against you or any of your
officers or directors in connection with the issuance
and sale of any of the Fund's Shares.

5. Effectiveness of Registration

No Shares shall be offered by either you or the
Fund under any of the provisions of this Agreement and
no orders for the purchase or sale of such Shares
under this Agreement shall be accepted by the Fund if
and so long as the effectiveness of the registration
statement then in effect or any necessary amendments
thereto shall be suspended under any of the provisions
of the 1933 Act, or if and so long as a current
prospectus as required by Section 5(b) (2) of the 1933
Act is not on file with the SEC; provided, however,
that nothing contained in this paragraph 5 shall in
any way restrict or have any application to or bearing
upon the Fund's obligation to repurchase its Shares
from any shareholder in accordance with the provisions
of the Fund's prospectus, statement of additional
information or charter documents, as amended from time
to time.

6. Offering Price

Shares of any class of any Series of the Fund
offered for sale by you shall be offered for sale at a
price per share (the "offering price") equal to (a)
their net asset value (determined in the manner set
forth in the Fund's charter documents and the then-
current prospectus and statement of additional
information) plus (b) a sales charge, if applicable,
which shall be the percentage of the offering price of
such Shares as set forth in the Fund's then-current
prospectus relating to such Series. In addition to or
in lieu of any sales charge applicable at the time of
sale, Shares of any class of any Series of the Fund
offered for sale by you may be subject to a contingent
deferred sales charge as set forth in the Fund's then-
current prospectus and statement of additional
information. You shall be entitled to receive any
sales charge levied at the time of sale in respect of
the Shares without remitting any portion to the Fund.
Any payments to a broker or dealer through whom you
sell Shares shall be governed by a separate agreement
between you and such broker or dealer and the Fund's
then-current prospectus and statement of additional
information. Any payments to any provider of services
to you shall be governed by a separate agreement
between you and such service provider.

7. Notice to You

The Fund agrees to advise you immediately in
writing:

(a) of any request
by the SEC for amendments
to the registration
statement, prospectus or
statement of additional
information then in effect
or for additional
information;

(b) in the event of
the issuance by the SEC of
any stop order suspending
the effectiveness of the
registration statement,
prospectus or statement of
additional information then
in effect or the initiation
of any proceeding for that
purpose;

(c) of the happening
of any event that makes
untrue any statement of a
material fact made in the
registration statement,
prospectus or statement of
additional information then
in effect or that requires
the making of a change in
such registration
statement, prospectus or
statement of additional
information in order to
make the statements therein
not misleading; and

(d) of all actions
of the SEC with respect to
any amendment to the
registration statement, or
any supplement to the
prospectus or statement of
additional information
which may from time to time
be filed with the SEC.

8. Term of the Agreement

This Agreement shall become effective on the
date hereof, shall have an initial term of one year
from the date hereof, and shall continue for
successive annual periods thereafter so long as such
continuance is specifically approved at least annually
by (a) the Fund's Board or (b) by a vote of a majority
(as defined in the 1940 Act) of the Fund's outstanding
voting securities, provided that in either event the
continuance is also approved by a majority of the
Board members of the Fund who are not interested
persons (as defined in the 1940 Act) of any party to
this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement is terminable with or without cause,
without penalty, on 60 days' notice by the Fund's
Board or by vote of holders of a majority of the
relevant Series outstanding voting securities, or on
90 days' notice by you. This Agreement will also
terminate automatically, as to the relevant Series, in
the event of its assignment (as defined in the 1940
Act and the rules and regulations thereunder).

9. Arbitration

Any claim, controversy, dispute or
deadlock arising under this Agreement (collectively, a
"Dispute") shall be settled by arbitration
administered under the rules of the American
Arbitration Association ("AAA") in New York, New York.
Any arbitration and award of the arbitrators, or a
majority of them, shall be final and the judgment upon
the award rendered may be entered in any state or
federal court having jurisdiction. No punitive
damages are to be awarded.

10. Miscellaneous

So long as you act as a principal underwriter
and distributor of Shares, you shall not perform any
services for any entity other than investment
companies advised or administered by Citigroup Inc. or
its subsidiaries. The Fund recognizes that the
persons employed by you to assist in the performance
of your duties under this Agreement may not devote
their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict
the persons employed by you or any of your affiliates
right to engage in and devote time and attention to
other businesses or to render services of whatever
kind or nature, provided, however, that in conducting
such business or rendering such services your
employees and affiliates would take reasonable steps
to assure that the other parties involved are put on
notice as to the legal entity with which they are
dealing. This Agreement and the terms and conditions
set forth herein shall be governed by, and construed
in accordance with, the laws of the State of New York
without giving effect to its conflict of interest
principles.

If the foregoing is in accordance with your
understanding, kindly indicate your acceptance of this
Agreement by signing and returning to us the enclosed
copy, whereupon this Agreement will become binding on
you.

Very truly yours,

SMITH BARNEY
SECTOR SERIES INC.

By:
_____________________
Authorized
Officer

Accepted:

CFBDS, INC.

By: __________________________
Authorized Officer

\SECT\DISTRIBUTION CFBDS

EXHIBIT A

Smith Barney Sector Series Inc.

Smith Barney Natural Resources Fund
Smith Barney Financial Services Fund
Smith Barney Health Sciences Fund
Smith Barney Technology Fund

Page: 3

Independent Auditors' Consent

To the Shareholders and Board of Directors of
Smith Barney Sector Series Inc.:
We consent to the incorporation by reference, in
this Prospectus and Statement of Additional
Information, of our report dated December 16,
1999, on the statement of assets and liabilities
for the Smith Barney Sector Series Inc. - Natural
Resources Fund (the Fund) as of October 31, 1999,
and the related statement of operations for the
year then ended, the statements of changes in net
assets for each of the years in the two-year
period then ended and the financial highlights for
each of the years in the five-year period then
ended. These financial statements and financial
highlights and our report thereon are included in
the Annual Report of the Fund as filed on Form N-
30D.
We also consent to the references to our firm
under the headings "Financial Highlights" in the
Prospectus and "Auditors" in the Statement of
Additional Information for the Smith Barney Sector
Series Inc. - Natural Resources Fund, Financial
Services Fund, Health Sciences Fund and Technology
Fund.

K
PM
G
LL
P
New York, New York
February 7, 2000
Page

FORM OF
SHAREHOLDER SERVICES AND DISTRIBUTION
PLAN PRIVATE

This Shareholder Services and Distribution Plan
(the "Plan") is adopted in accordance with Rule
12b-1 (the "Rule") under the Investment Company Act
of 1940, as amended (the "1940 Act"), by Smith
Barney Sector Series Inc., a corporation organized
under the laws of the State of Maryland (the
"Fund") on behalf of its Smith Barney Financial
Services series (the "Series"), subject to the
following terms and conditions:

Section 1. Annual Fee.

(a) Service Fee for Class A shares. The Fund
will pay to Salomon Smith Barney Inc., a
corporation organized under the laws of
the State of Delaware ("Salomon Smith
Barney"), a service fee under the Plan at
an annual rate of .25% of the average
daily net assets of the Series
attributable to the Class A shares sold
and not redeemed (the "Class A Service
Fee").

(b) Service Fee for Class B shares. The Fund
will pay to Salomon Smith Barney a service
fee under the Plan at the annual rate of
.25% of the average daily net assets of
the Series attributable to the Class B
shares sold and not redeemed (the "Class B
Service Fee").

(c) Distribution Fee for Class B shares. In
addition to the Class B Service Fee, the
Fund will pay Salomon Smith Barney a
distribution fee under the Plan at the
annual rate of .75% of the average daily
net assets of the Series attributable to
the Class B shares sold and not redeemed
(the "Class B Distribution Fee").

(d) Service Fee for Class L shares. The Fund
will pay to Salomon Smith Barney a service
fee under the plan at the annual rate of
.25% of the average daily net assets of
the Series attributable to the Class L
shares sold and not redeemed (the "Class L
Service Fee").

(e) Distribution Fee for Class L shares. In
addition to the Class L Service Fee, the
Fund will pay Salomon Smith Barney a
distribution fee under the Plan at the
annual rate of .75% of the average daily
net assets of the Series attributable to
the Class L shares sold and not redeemed
(the "Class L Distribution Fee").

(f) Payment of Fees. The Service Fees and
Distribution Fees will be calculated daily
and paid monthly by the Fund with respect
to the foregoing classes of the Series'
shares (each a "Class" and together, the
"Classes") at the annual rates indicated
above.

Section 2. Expenses Covered by the Plan.

With respect to expenses incurred by each Class,
its respective Service Fee and/or Distribution Fee
may be used by Salomon Smith Barney for: (a) costs
of printing and distributing the Fund's
prospectuses, statements of additional information
and reports to prospective investors in the Fund;
(b) costs involved in preparing, printing and
distributing sales literature pertaining to the
Fund; (c) an allocation of overhead and other
branch office distribution-related expenses of
Salomon Smith Barney; (d) payments made to, and
expenses of, Salomon Smith Barney's financial
consultants and other persons who provide support
services to Fund shareholders in connection with
the distribution of the Fund's shares, including
but not limited to, office space and equipment,
telephone facilities, answering routine inquires
regarding the Fund and its operation, processing
shareholder transactions, forwarding and collecting
proxy material, changing dividend payment elections
and providing any other shareholder services not
otherwise provided by the Fund's transfer agent;
and (e) accruals for interest on the amount of the
foregoing expenses that exceed the Distribution Fee
for that Class and, in the case of Class B and
Class L shares, any contingent deferred sales
charges received by Salomon Smith Barney; provided,
however, that (i) the Distribution Fee for a
particular Class may be used by Salomon Smith
Barney only to cover expenses primarily intended to
result in the sale of shares of that Class,
including, without limitation, payments to the
financial consultants of Salomon Smith Barney and
other persons as compensation for the sale of the
shares, and (ii) the Service Fees are intended to
be used by Salomon Smith Barney primarily to pay
its financial consultants for servicing shareholder
accounts, including a continuing fee to each such
financial consultant, which fee shall begin to
accrue immediately after the sale of such shares.

Section 3. Approval by Directors.

Neither the Plan nor any related agreements will
take effect until approved by a majority vote of
both (a) the Board of Directors and (b) those
Directors who are not interested persons of the
Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any
agreements related to it (the "Qualified
Directors"), cast in person at a meeting called for
the purpose of voting on the Plan and the related
agreements.

Section 4. Continuance of the Plan.

The Plan will continue in effect with respect to
each Class until February , 2001 and thereafter
for successive twelve-month periods with respect to
each Class; provided, however, that such
continuance is specifically approved at least
annually by the Directors of the Fund and by a
majority of the Qualified Directors.

Section 5. Termination.

The Plan may be terminated at any time with
respect to a Class (i) by the Fund without the
payment of any penalty, by the vote of a majority
of the outstanding voting securities of such Class
or (ii) by a majority vote of the Qualified
Directors. The Plan may remain in effect with
respect to a particular Class even if the Plan has
been terminated in accordance with this Section 5
with respect to any other Class.

Section 6. Amendments.

The Plan may not be amended with respect to any
Class so as to increase materially the amounts of
the fees described in Section 1 above, unless the
amendment is approved by a vote of holders of at
least a majority of the outstanding voting
securities of that Class. No material amendment to
the Plan may be made unless approved by the Fund's
Board of Directors in the manner described in
Section 3 above.

Section 7. Selection of Certain Directors.

While the Plan is in effect, the selection and
nomination of the Fund's Directors who are not
interested persons of the Fund will be committed to
the discretion of the Directors then in office who
are not interested persons of the Fund.

Section 8. Written Reports

In each year during which the Plan remains in
effect, any person authorized to direct the
disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement will
prepare and furnish to the Fund's Board of
Directors and the Board will review, at least
quarterly, written reports complying with the
requirements of the Rule, which set out the amounts
expended under the Plan and the purposes for which
those expenditures were made.

Section 9. Preservation of Materials.

The Fund will preserve copies of the Plan, any
agreement relating to the Plan and any report made
pursuant to Section 8 above, for a period of not
less than six years (the first two years in an
easily accessible place) from the date of the Plan,
agreement or report.

Section 10. Meanings of Certain Terms.

As used in the Plan, the terms "interested
person" and "majority of the outstanding voting
securities" will be deemed to have the same meaning
that those terms have under the rules and
regulations under the 1940 Act, subject to any
exemption that may be granted to the Fund under the
1940 Act, by the Securities and Exchange
Commission.

IN WITNESS WHEREOF, the Fund has executed the
Plan as of February 14, 2000.

SMITH BARNEY SECTOR
SERIES INC.
on behal of the
Smith Barney Financial Services Fund

By:
____________________________________
Heath B.
McLendon
Chairman of
the Board
SECT\12B1PLAN-SSB-FSF

FORM OF
SHAREHOLDER SERVICES AND DISTRIBUTION
PLAN PRIVATE

This Shareholder Services and Distribution Plan
(the "Plan") is adopted in accordance with Rule
12b-1 (the "Rule") under the Investment Company Act
of 1940, as amended (the "1940 Act"), by Smith
Barney Sector Series Inc., a corporation organized
under the laws of the State of Maryland (the
"Fund") on behalf of its Smith Barney Health
Sciences series (the "Series"), subject to the
following terms and conditions:

Section 1. Annual Fee.

Section 2. Expenses Covered by the Plan.

Section 3. Approval by Directors.

Section 4. Continuance of the Plan.

Section 5. Termination.

Section 6. Amendments.

Section 7. Selection of Certain Directors.

Section 8. Written Reports

Section 9. Preservation of Materials.

Section 10. Meanings of Certain Terms.

IN WITNESS WHEREOF, the Fund has executed the
Plan as of February 14, 2000.

SMITH BARNEY SECTOR
SERIES INC.
on behal of the
Smith Barney Health Sciences Fund

By:
____________________________________
Heath B.
McLendon
Chairman of
the Board
SECT\12B1PLAN-SSB-HSF

FORM OF
SHAREHOLDER SERVICES AND DISTRIBUTION
PLAN PRIVATE

This Shareholder Services and Distribution Plan
(the "Plan") is adopted in accordance with Rule
12b-1 (the "Rule") under the Investment Company Act
of 1940, as amended (the "1940 Act"), by Smith
Barney Sector Series Inc., a corporation organized
under the laws of the State of Maryland (the
"Fund") on behalf of its Smith Barney Technology
series (the "Series"), subject to the following
terms and conditions:

Section 1. Annual Fee.

Section 2. Expenses Covered by the Plan.

Section 3. Approval by Directors.

Section 4. Continuance of the Plan.

Section 5. Termination.

Section 6. Amendments.

Section 7. Selection of Certain Directors.

Section 8. Written Reports

Section 9. Preservation of Materials.

Section 10. Meanings of Certain Terms.

IN WITNESS WHEREOF, the Fund has executed the
Plan as of February 14, 2000.

SMITH BARNEY SECTOR
SERIES INC.
on behal of the
Smith Barney Technology Fund

By:
____________________________________
Heath B.
McLendon
Chairman of
the Board
SECT\12B1PLAN-SSB-TF

Rule 18f-3 (d) Multiple Class Plan for Smith Barney
Mutual Funds

Introduction

This plan (the "Plan") is adopted pursuant to Rule
18f-3 (d) of the Investment Company Act of 1940, as
amended (the "1940 Act"). The purpose of the Plan is
to restate the existing arrangements previously
approved by the Boards of Directors and Trustees of
certain of the open-end investment companies set forth
on Schedule A (the "Funds" and each a "Fund") under
the Funds' existing order of exemption (Investment
Company Act Release Nos. 20042 (January 28, 1994)
(notice) and 20090 (February 23, 1994)). Shares of
the Funds are distributed pursuant to a system (the
"Multiple Class System") in which each class of shares
(a "Class") of a Fund represents a pro rata interest
in the same portfolio of investments of the Fund and
differs only to the extent outlined below.

I. Distribution Arrangements and Service Fees

One or more Classes of shares of the Funds are offered
for purchase by investors with the following sales
load structure. In addition, pursuant to Rule 12b-1
under the 1940 Act (the "Rule"), the Funds have each
adopted a plan (the "Services and Distribution Plan")
under which shares of the Classes are subject to the
services and distribution fees described below.

1. Class A Shares

Class A shares are offered with a front-end sales load
and under the Services and Distribution Plan are
subject to a service fee of up to 0.25% of average
daily net assets. In addition, the Funds are
permitted to assess a contingent deferred sales charge
("CDSC") on certain redemptions of Class A shares sold
pursuant to a complete waiver of front-end sales loads
applicable to large purchases, if the shares are
redeemed within one year of the date of purchase.
This waiver applies to sales of Class A shares where
the amount of purchase is equal to or exceeds $500,000
although this amount may be changed in the future.

2. Class B Shares

Class B shares are offered without a front-end sales
load, but are subject to a five-year declining CDSC
and under the Services and Distribution Plan are
subject to a service fee at an annual rate of up to
0.25% of average daily net assets and a distribution
fee at an annual rate of up to 0.75% of average daily
net assets.

3. Class D Shares

Class D shares are offered without a front-end sales
load, CDSC, service fee or distribution fee.

4. Class L Shares

Class L shares are offered with a front-end load, are
subject to a one-year CDSC and under the Services and
Distribution Plan are subject to a service fee at an
annual rate of up to 0.25% of average daily net assets
and a distribution fee at an annual rate of up to
0.75% of average daily net assets. Unlike Class B
shares, Class L shares do not have the conversion
feature as discussed below and accordingly, these
shares are subject to a
distribution fee for an indefinite period of time.
The Funds reserve the right to impose these fees at
such higher rates as may be determined.

5. Class I Shares

Class I shares are offered without a front-end sales
load, but are subject under the Services and
Distribution Plan to a service fee at an annual rate
of up to 0.25% of average daily net assets.

6. Class O Shares

Class O shares are offered without a front-end load,
but are subject to a one-year CDSC and under the
Services and Distribution Plan are subject to a
service fee at an annual rate of up to 0.25% of
average daily net assets and a distribution fee at an
annual rate of up to 0.50% of average daily net
assets. Unlike Class B
shares, Class O shares do not have the conversion
feature as discussed below and accordingly, these
shares are subject to a distribution fee for an
indefinite period of time. The Funds reserve the
right to impose these fees at such higher rates as may
be determined.

Effective June 28, 1999, Class O shares will be
offered with a front-end load and will continue to be
subject to a one year CDSC, a service fee at an annual
rate of up to 0.25% of average daily net assets and a
distribution fee at an annual rate of up to 0.50% of
average daily net assets.

7. Class Y Shares

Class Y shares are offered without imposition of
either a sales charge or a service or distribution fee
for investments where the amount of purchase is equal
to or exceeds a specific amount as specified in each
Fund's prospectus.

8. Class Z Shares

Class Z shares are offered without imposition of
either a sales charge or a service or distribution fee
for purchase (i) by employee benefit and retirement
plans of Salomon Smith Barney Inc. ("Salomon Smith
Barney") and its affiliates, (ii) by certain unit
investment trusts sponsored by Salomon Smith Barney
and its affiliates, and (iii) although not currently
authorized by the governing boards of the Funds, when
and if authorized, (x) by employees of Salomon Smith
Barney and its affiliates and (y) by directors,
general partners or trustees of any investment company
listed on Schedule A and, for each of (x) and (y),
their
spouses and minor children.

9. Additional Classes of Shares

The Boards of Directors and Trustees of the Funds have
the authority to create additional classes, or change
existing Classes, from time to time, in accordance
with Rule 18f-3 of the 1940 Act.

II. Expense Allocations

Under the Multiple Class System, all expenses incurred
by a Fund are allocated among the various Classes of
shares based on the net assets of the Fund
attributable to each Class, except that each Class's
net asset value and expenses reflect the expenses
associated with that Class under the Fund's Services
and
Distribution Plan, including any costs associated with
obtaining shareholder approval of the Services and
Distribution Plan (or an amendment thereto) and any
expenses specific to that Class. Such expenses are
limited to the following:

(i) transfer agency fees as identified by the
transfer agent as being attributable to a specific
Class;

(ii) printing and postage expenses related to
preparing and distributing materials such as
shareholder reports, prospectuses and proxies to
current shareholders;

(iii) Blue Sky registration fees incurred by a
Class of shares;

(iv) Securities and Exchange Commission
registration fees incurred by a Class of shares;

(v) the expense of administrative personnel
and services as required to support the shareholders
of a specific Class;

(vi) litigation or other legal expenses
relating solely to one Class of shares; and

(vii) fees of members of the governing boards of
the funds incurred as a result of issues relating to
one Class of shares.

Pursuant to the Multiple Class System, expenses of a
Fund allocated to a particular Class of shares of that
Fund are borne on a pro rata basis by each outstanding
share of that Class.

III. Conversion Rights of Class B Shares

All Class B shares of each Fund will automatically
convert to Class A shares after a certain holding
period, expected to be, in most cases, approximately
eight years but may be shorter. Upon the expiration
of the holding period, Class B shares (except those
purchases through the reinvestment of dividends and
other
distributions paid in respect of Class B shares) will
automatically convert to Class A shares of the Fund at
the relative net asset value of each of the Classes,
and will, as a result, thereafter be subject to the
lower fee under the Services and Distribution Plan.
For purposes of calculating the holding period
required for conversion, newly created Class B shares
issued after the date of implementation of the
Multiple Class
System are deemed to have been issued on (i) the date
on which the issuance of the Class B shares occurred
or (ii) for Class B shares obtained through an
exchange, or a series of exchanges, the date on which
the issuance of the original Class B shares occurred.

Shares purchased through the reinvestment of dividends
and other distributions paid in respect of Class B
shares are also Class B shares. However, for purposes
of conversion to Class A, all Class B shares in a
shareholder's Fund account that were purchased through
the reinvestment of dividends and other distributions
paid in respect of Class B shares (and that have not
converted to Class A shares as provided in the
following sentence) are considered to be held in a
separate sub-account. Each time any Class B shares
in the shareholder's Fund account (other than those in
the sub-account referred to in the preceding
sentence) convert to Class A, a pro rata portion of
the Class B shares then in the sub-account also
converts to Class A. The portion is determined by the
ratio that the shareholder's Class B shares converting
to Class A bears to the shareholder's total Class B
shares not acquired through dividends and
distributions.

The conversion of Class B shares to Class A shares is
subject to the continuing availability of a ruling of
the Internal Revenue Service that payment of different
dividends on Class A and Class B shares does not
result in the Fund's dividends or distributions
constituting "preferential dividends" under the
Internal Revenue
Code of 1986, as amended (the "Code"), and the
continuing availability of an opinion of counsel to
the effect that the conversion of shares does not
constitute a taxable event under the Code. The
conversion of Class B shares to Class A shares may be
suspended if this opinion is no longer available, In
the event that conversion of Class B shares does not
occur, Class B shares would continue to be subject to
the distribution fee and any incrementally higher
transfer agency costs attending the Class B shares for
an indefinite period.

IV. Exchange Privileges

Shareholders of a Fund may exchange their shares at
net asset value for shares of the same Class in
certain other of the Smith Barney Mutual Funds as set
forth in the prospectus for such Fund. Funds only
permit exchanges into shares of money market funds
having a plan under the Rule if, as permitted by
paragraph (b) (5) of Rule 11a-3 under the 1940 Act,
either (i) the time period during which the shares of
the money market funds are held is included in the
calculations of the CDSC or (ii) the time period is
not included but the amount of the CDSC is reduced by
the amount of any payments made under a plan adopted
pursuant to the
Rule by the money market funds with respects to those
shares. Currently, the Funds include the time period
during which shares of the money market fund are held
in the CDSC period. The exchange privileges
applicable to all Classes of shares must comply with
Rule 11a-3 under the 1940 Act.

Smith Barney Sponsored Investment Companies
Operating under Rule 18f-3 - Schedule A
(as of October 31, 1998)

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
Smith Barney Concert Allocation Series Inc.
Conservative Portfolio
Balanced Portfolio
Global Portfolio
Growth Portfolio
Income Portfolio
High Growth Portfolio
Smith Barney Equity Funds -
Concert Social Awareness Fund
Smith Barney Large Cap Blend Fund
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc. -
Large Cap Value Fund
Short-Term High Grade Bond Fund
U.S. Government Securities Fund
Smith Barney Income Funds -
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

Smith Barney Investment Trust -
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 Investment Funds Inc. -
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 Special Equities Fund

Smith Barney Institutional Cash Management Fund, Inc.
Cash Portfolio
Government Portfolio
Municipal Portfolio
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc. -
Cash Portfolio
Government Portfolio
Retirement Portfolio
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Muni Funds -
California Money Market Portfolio
Florida Portfolio
Georgia Portfolio
Limited Term Portfolio
National Portfolio
New York Portfolio
New York Money Market
Pennsylvania Portfolio
Smith Barney Sector Series Inc.
Smith Barney Natural Resources Fund
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
Smith Barney Small Cap Blend Fund, Inc.
Smith Barney Telecommunications Trust -
Smith Barney Telecommunications Income Fund
Smith Barney World Funds, Inc. -
International Equity Portfolio
International Balanced Portfolio
European Portfolio
Pacific Portfolio
Global Government Bond Portfolio
Emerging Markets Portfolio

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000797480
<NAME> SMITH BARNEY NATURAL RESOURCES FUND INC. CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 50,820,810
<INVESTMENTS-AT-VALUE> 49,539,061
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<SHARES-COMMON-PRIOR> 1,639,534
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<ACCUMULATED-NET-GAINS> (15,316,808)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,281,749)
<NET-ASSETS> 47,987,153
<DIVIDEND-INCOME> 1,019,338
<INTEREST-INCOME> 125,463
<OTHER-INCOME> 0
<EXPENSES-NET> 1,125,896
<NET-INVESTMENT-INCOME> 18,905
<REALIZED-GAINS-CURRENT> (318,093)
<APPREC-INCREASE-CURRENT> 7,443,234
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<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 9,164,942
<NUMBER-OF-SHARES-REDEEMED> 9,687,078
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (11,564,883)
<ACCUMULATED-NII-PRIOR> (6,373)
<ACCUMULATED-GAINS-PRIOR> (16,006,078)
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 400,065
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,125,896
<AVERAGE-NET-ASSETS> 23,868,210
<PER-SHARE-NAV-BEGIN> 15.56
<PER-SHARE-NII> 00.05
<PER-SHARE-GAIN-APPREC> 02.24
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.85
<EXPENSE-RATIO> 01.73

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000797480
<NAME> SMITH BARNEY NATURAL RESOURCES FUND INC. CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 50,820,810
<INVESTMENTS-AT-VALUE> 49,539,061
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<ASSETS-OTHER> 3,449,536
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<DIVIDEND-INCOME> 1,019,338
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<ACCUMULATED-NII-PRIOR> (6,373)
<ACCUMULATED-GAINS-PRIOR> (16,006,078)
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,125,896
<AVERAGE-NET-ASSETS> 26,505,273
<PER-SHARE-NAV-BEGIN> 16.00
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 02.18
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<PER-SHARE-NAV-END> 18.15
<EXPENSE-RATIO> 02.24

</TABLE>

<ARTICLE> 6
<CIK> 0000797480
<NAME> SMITH BARNEY NATURAL RESOURCES FUND INC. CLASS L

<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 50,820,810
<INVESTMENTS-AT-VALUE> 49,539,061
<RECEIVABLES> 4,591
<ASSETS-OTHER> 3,449,536
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 52,993,188
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,006,035
<TOTAL-LIABILITIES> 5,006,035
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 64,580,814
<SHARES-COMMON-STOCK> 163,845
<SHARES-COMMON-PRIOR> 193,162
<ACCUMULATED-NII-CURRENT> 4,896
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15,316,808)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,281,749)
<NET-ASSETS> 47,987,153
<DIVIDEND-INCOME> 1,019,338
<INTEREST-INCOME> 125,463
<OTHER-INCOME> 0
<EXPENSES-NET> 1,125,896
<NET-INVESTMENT-INCOME> 18,905
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</TABLE>