Securities Act Registration No. 33-43446
Investment Company Act Registration No. 811-6444
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
Pre-Effective Amendment No. [
]
Post-Effective Amendment No. 30 [X]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 30 [X]
__________________
Smith Barney Investment Trust
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street
New York, New York 10013
(Address of Principal Executive Offices)
(212) 816-6474
(Registrants Telephone Number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Investment Trust
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)
of Rule 485
[ X ] on August 21, 2000 pursuant to paragraph (b)
of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1)
of Rule 485
[ ] On (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
of rule 485
[ ] 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.
Title of Securities Being Registered: Shares of
Beneficial
PART A - PROSPECTUS FOR SMITH BARNEY MID CAP CORE FUND (formerly known as Mid
Cap Blend Fund)
<PAGE>
[GRAPHIC]
[SB]Smith Barney
[MF]Mutual Funds
Your Serious Money. Professionally Managed./SM/
P R O S P E C T U S
Mid Cap
Core Fund
Class A, B, L, Y and 1 Shares
---------------------------------------------------------------------------
March 29, 2000,
as amended August 21, 2000
The Securities and Exchange Commission has not approved the
fund's shares as an investment or determined whether this prospectus
is accurate or complete. Any statement to the contrary is a crime.
<PAGE>
Mid Cap Core Fund
(formerly Mid Cap Blend Fund)
Contents
<TABLE>
<S> <C>
Investments, risks and performance.......................................... 2
More on the fund's investments.............................................. 7
Management.................................................................. 9
Choosing a class of shares to buy........................................... 10
Comparing the fund's classes................................................ 11
Sales charges............................................................... 12
More about deferred sales charges........................................... 15
Buying shares............................................................... 16
Exchanging shares........................................................... 18
Redeeming shares............................................................ 20
Other things to know about share transactions............................... 22
Dividends, distributions and taxes.......................................... 24
Share price................................................................. 25
Financial highlights........................................................ 26
</TABLE>
You should know: An investment in the fund is not a bank deposit and is not
insured or guaranteed by the FDIC or any other government agency.
Smith Barney Mutual Funds
1
<PAGE>
Investments, risks and performance
Investment objective
The fund seeks long-term growth of capital.
Principal investment strategies
Key investments The fund invests primarily in equity securities of medium sized
companies. Medium sized companies are those whose market capitalization is
within the market capitalization range of companies in the S&P MidCap Index
(the "Index") at the time of the fund's investment. The size of the companies
in the Index changes with market conditions and the composition of the Index.
As of July 31, 2000, the largest market capitalization of a company in the
Index was $12.7 billion and the smallest market capitalization was $139 mil-
lion. Equity securities include exchange traded and over-the-counter common
stocks, preferred stocks, debt securities convertible into equity securities
and warrants and rights relating to equity securities. The fund may also invest
up to 25% of its assets in securities of foreign issuers both directly and
through depositary receipts for those securities.
Selection process The manager focuses on medium capitalization companies that
exhibit attractive growth characteristics. The manager selects individual
"growth" stocks for investment in two ways: by identifying those companies
which exhibit the most favorable growth prospects and by identifying those com-
panies which have favorable valuations relative to their growth characteris-
tics. This strategy is commonly known as "growth at a reasonable price" and
offers investors style diversification within a single mutual fund. In select-
ing individual companies for investment, the manager considers:
.Growth characteristics, including high historic growth rates and high relative
growth compared with companies in the same industry or sector
.Value characteristics, including low price/earnings ratios and other statis-
tics indicating a security is undervalued
.Increasing profits and sales
.Competitive advantages that could be more fully exploited by a company
.Skilled management committed to long-term growth
.Potential for a long-term investment by the fund
The manager uses fundamental research to find stocks with strong growth poten-
tial and also uses quantitative analysis to determine whether these stocks are
relatively undervalued or overvalued compared to stocks with similar fundamen-
tal characteristics. The manager's quantitative valuations determine whether
and when the fund will purchase or sell the stocks it identifies through funda-
mental research.
Mid Cap Core Fund
2
<PAGE>
Principal risks of investing in the fund
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if:
.U.S. stock markets decline, or perform poorly relative to other types of
investments
.An adverse company specific event, such as an unfavorable earnings report,
negatively affects the stock price of a company in which the fund invests
.Medium capitalization stocks fall out of favor with investors
.The manager's judgment about the attractiveness, growth prospects, value or
potential appreciation of a particular stock proves to be incorrect
Because the fund invests primarily in medium capitalization companies, an
investment in the fund may be more volatile and more susceptible to loss than
an investment in a fund which invests primarily in large capitalization compa-
nies. Medium capitalization companies may have more limited product lines, mar-
kets and financial resources than large capitalization companies. They may have
shorter operating histories and more erratic businesses, although they gener-
ally have more established businesses than small capitalization companies. The
prices of medium capitalization company stocks tend to be more volatile than
the prices of large capitalization company stocks.
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 U.S. stock
market
.Are looking for an investment with potentially greater return but higher risk
than a fund that invests primarily in large cap companies
.Are willing to accept the risks of the stock market
Smith Barney Mutual Funds
3
<PAGE>
Risk return bar chart
This bar chart shows the performance of the fund's Class A shares for the cal-
endar year 1999, and, in the future, will show changes in the fund's perfor-
mance from year to year. Past performance does not necessarily indicate how the
fund will perform in the future. This bar chart shows the performance of the
fund's Class A shares for the past year. Class 1, L and Y shares have different
performance because of different expenses. The performance information in the
chart does not reflect sales charges, which would reduce your return.
Total Return for Class A Shares
[BAR CHART]
99
----
29.63%
Calendar year ended December 31
Quarterly returns:
Highest: 23.91% in 4th quarter 1999; Lowest: (5.48)% in 3rd quarter 1999
Year to Date: 15.60% through 6/30/00
Mid Cap Core Fund
4
<PAGE>
Risk return table
This table compares the average annual total return of each class for the peri-
ods shown with that of the S&P Mid Cap Index, a broad-based unmanaged market
capitalization-weighted measure of 400 widely held common stocks. This table
assumes the imposition of the maximum sales charge applicable to the class, the
redemption of shares at the end of the period, and the reinvestment of distri-
butions and dividends.
Average Annual Total Returns
Calendar Years Ended December 31, 1999
<TABLE>
<CAPTION>
Since Inception
1 year Inception Date
<S> <C> <C> <C>
Class A 23.13% 48.96% 09/01/98
Class B 23.60% 51.00% 09/01/98
Class L 26.30% 52.41% 09/01/98
Class Y 30.03% 45.58% 12/03/98
Class 1 n/a n/a *
S&P Mid Cap Index 14.72% 36.15% **
</TABLE>
*Class 1 shares are currently not being offered. Their inception date will be
September 11, 2000.
**Index Comparison begins on 09/30/98.
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 Class 1
<S> <C> <C> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases
(as a % of offering price) 5.00% None 1.00% None 8.50%
Maximum deferred sales charge (load)
(as a % of the lower of net asset
value at purchase or redemption) None* 5.00% 1.00% None None
</TABLE>
*You may buy Class A shares in amounts of $1,000,000 or more at net asset value
(without an initial sales charge) but if you redeem those shares within 12
months of their purchase, you will pay a deferred sales charge of 1.00%.
Smith Barney Mutual Funds
5
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y Class 1
<S> <C> <C> <C> <C> <C>
Management fee 0.75% 0.75% 0.75% 0.75% 0.75%
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None None
Other expenses* 0.16% 0.15% 0.15% 0.07% 0.49%
----- ----- ----- ----- -----
Total annual fund operating expenses 1.16% 1.90% 1.90% 0.82% 1.24%
===== ===== ===== ===== =====
</TABLE>
*"Other expenses" for Class 1 shares have been estimated for the first full
fiscal year of performance.
Example
This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
.You invest $10,000 in the fund for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a sales charge
.The fund's operating expenses remain the same
Number of years you own your shares
<TABLE>
<CAPTION>
5
1 year 3 years years 10 years
<S> <C> <C> <C> <C>
Class A (with or without redemption) $612 $850 $1,106 $1,839
Class B (redemption at end of period) $693 $897 $1,126 $2,031
Class B (no redemption) $193 $597 $1,026 $2,031
Class L (redemption at end of period) $391 $691 $1,116 $2,300
Class L (no redemption) $291 $691 $1,116 $2,300
Class Y (with or without redemption) $ 84 $262 $ 455 $1,014
Class 1 (with or without redemption) $966 $1,210 $ n/a $ n/a
</TABLE>
Mid Cap Core Fund
6
<PAGE>
More on the fund's investments
Secondary investment practices The fund may invest up to 35% of its assets in
equity securities of companies with market capitalizations outside the market
capitalization range of companies in the Index (i.e., small or large capital-
ization companies).
Foreign investments The fund may invest up to 25% of its assets in foreign
securities directly or in the form of depositary receipts representing an
interest in those securities. The fund's investments in securities of foreign
issuers involve greater risk than investments in securities of U.S. issuers.
Many foreign countries the fund invests in have markets that are less liquid
and more volatile than markets in the U.S. In some foreign countries, less
information is available about foreign issuers and markets because of less rig-
orous accounting and regulatory standards than in the U.S. Currency fluctua-
tions could erase investment gains or add to investment losses. The risks of
investing in foreign securities are greater for securities of emerging market
issuers because political or economic instability, lack of market liquidity,
and negative government actions like currency controls or seizure of private
businesses or property are more likely.
Short-term debt securities While the fund intends to be substantially fully
invested in equity securities, the fund may maintain up to 10% of its assets in
money market instruments and/or cash to pay expenses and meet redemption
requests. Generally, the value of these fixed income obligations will go down
if interest rates go up, the credit rating of the security is downgraded or the
issuer defaults on its obligation to pay principal or interest.
Derivatives and hedging techniques The fund may, but need not, use derivative
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.
.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 the fund's stock market, currency and interest rate
exposure. Therefore, using derivatives can disproportionately
Smith Barney Mutual Funds
7
<PAGE>
increase losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The fund may not fully benefit from or
may lose money on derivatives if changes in their value do not correspond accu-
rately to changes in the value of the fund's holdings.
The other parties to certain derivative contracts present the same types of
credit risk as issuers of fixed income securities. Derivatives can also make
the fund less liquid and harder to value, especially in declining markets.
Defensive investing The 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 instruments. If the
fund takes a temporary defensive position, it may be unable to achieve its
investment goal.
Mid Cap Core Fund
8
<PAGE>
Management
Manager The fund's investment manager is SSB Citi Fund Management LLC (succes-
sor to SSBC Fund Management Inc.), an affiliate of Salomon Smith Barney Inc.
The manager's address is 388 Greenwich Street, New York, New York 10013. The
manager selects the fund's investments and oversees its operations. The manager
and Salomon Smith Barney are subsidiaries of Citigroup Inc. Citigroup busi-
nesses produce a broad range of financial services--asset management, banking
and consumer finance, credit and charge cards, insurance, investments, invest-
ment banking and trading--and use diverse channels to make them available to
consumer and corporate customers around the world.
Lawrence Weissman, investment officer of the manager and managing director of
Salomon Smith Barney, has been responsible for the day-to-day management of the
fund's portfolio since the fund's inception. Mr. Weissman has more than 15
years of securities business experience.
Management fee For its services, the manager received a fee during the fund's
last fiscal year equal on an annual basis to 0.75% of the fund's average daily
net assets.
Distributor The fund has entered into agreements with Salomon Smith Barney and
PFS Distributors Inc. to distribute the fund's shares.
Distribution plan The fund has adopted a Rule 12b-1 distribution plan for its
Class A, B and L shares. Under the plan, the fund pays distribution and/or
service fees. These fees are an ongoing expense and, over time, may cost you
more than other types of sales charges.
A distributor may make payments for distribution and/or shareholder servicing
activities out of its past profits and other available sources. A distributor
may also make payments for marketing, promotional or related expenses to deal-
ers. The amount of these payments is determined by the distributor and may be
substantial. SSB Citi or an affiliate may make similar payments under similar
arrangements.
Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). The transfer agent has entered into sub-transfer agency and
services agreements with PFPC Global Fund Services and PFS Shareholder Services
to serve as the fund's sub-transfer agents (the "sub-transfer agents"). The
sub-transfer agents will perform certain functions including shareholder
recordkeeping and accounting services.
Smith Barney Mutual Funds
9
<PAGE>
Choosing a class of shares to buy
You can choose among four classes of shares: Classes A, B, L and Y. In addi-
tion, you can buy additional Class 1 shares if you are a Class 1 share- holder.
Each class has different sales charges and expenses, allowing you to choose the
class that best meets your needs. Which class is more beneficial to an investor
depends on the amount and intended length of the investment.
.If you plan to invest regularly or in large amounts, buying Class A shares may
help you reduce sales charges and ongoing expenses.
.For Class B shares, all of your purchase amount and, for Class L shares, more
of your purchase amount (compared to Class A shares) will be immediately
invested. This may help offset the higher expenses of Class B and Class L
shares, but only if the fund performs well.
.Class L shares have a shorter deferred sales charge period than Class B
shares. However, because Class B shares convert to Class A shares, and
Class L shares do not, Class B shares may be more attractive to long-term
investors.
You may buy shares from:
.A broker-dealer, financial intermediary, financial institution or a distribu-
tor's financial consultants (each called a "Service Agent")
.The fund, but only if you are investing through certain qualified plans or
certain dealer representatives
All Classes of shares are not available through all Service Agents. You should
contact your Service Agent for further information.
Investment minimums Minimum initial and additional investment amounts vary
depending on the class of shares you buy and the nature of your investment
account.
<TABLE>
<CAPTION>
Initial Additional
Classes A, B, L Class Y All Classes
<S> <C> <C> <C>
General $1,000 $15 million $50
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts $ 250 $15 million $50
Qualified Retirement Plans* $ 25 $15 million $25
Simple IRAs $ 1 n/a $ 1
Monthly Systematic Investment Plans $ 25 n/a $25
Quarterly Systematic Investment Plans $ 50 n/a $50
</TABLE>
* Qualified Retirement Plans are retirement plans qualified under Section
403(b)(7) or Section 401(a) of the Internal Revenue Code, including 401(k)
plans
Mid Cap Core Fund
10
<PAGE>
Comparing the fund's classes
Your Service Agent can help you decide which class meets your goals. The Serv-
ice Agent may receive different compensation depending upon which class you
choose.
<TABLE>
<CAPTION>
Class A Class B Class L Class Y Class 1
<S> <C> <C> <C> <C> <C>
Key features .Initial .No ini- .Initial .No ini- .Only
avail-
sales tial sales tial or able to
charge sales charge is deferred eligible
.You may charge lower sales Class 1
qualify .Deferred than charge
shareholders
for sales Class A .Must .Higher
reduction charge .Deferred invest at initial
or waiver declines sales least $15 sales
of ini- over time charge million charge
tial .Converts for only .Lower .Lower
sales to Class 1 year annual annual
charge A after 8 .Does not expenses expenses
.Lower years convert than the than Class
annual .Higher to Class other A, B and L
expenses annual A classes
than expenses .Higher
Class B than annual
and Class A expenses
Class L than
Class A
--------------------------------------------------------------------------------
--
Initial sales charge Up to None 1.00% None Up to 8.50%
5.00%; reduced for
reduced large pur-
for large chases
purchases
and waived
for cer-
tain
investors.
No charge
for pur-
chases of
$1,000,000
or more
--------------------------------------------------------------------------------
--
Deferred sales charge 1.00% on Up to 1.00% if None None
purchases 5.00% you redeem
of charged within 1
$1,000,000 when you year of
or more if redeem purchase
you redeem shares.
within 1 The charge
year of is reduced
purchase over time
and there
is no
deferred
sales
charge
after 6
years
--------------------------------------------------------------------------------
--
Annual Distribution and 0.25% of 1.00% of 1.00% of None None
service fees average average average
daily net daily net daily net
assets assets assets
--------------------------------------------------------------------------------
--
Exchange Privilege* Class A Class B Class L Class Y Class 1
shares shares shares shares Shares of
of most of most of most of most Smith
Barney
Smith Smith Smith Smith funds that
Barney Barney Barney Barney offer Class
funds funds funds funds 1 shares
and
Class A
shares of
certain
other Smith
Barney
mutual
funds
--------------------------------------------------------------------------------
--
</TABLE>
* Ask your Service Agent for the Smith Barney funds available for exchange.
Smith Barney Mutual Funds
11
<PAGE>
Sales charges
Class A shares
You buy Class A shares at the offering price, which is the net asset value plus
a sales charge. You pay a lower sales charge as the size of your investment
increases to certain levels called breakpoints. You do not pay a sales charge
on the fund's distributions or dividends you reinvest in additional Class A
shares.
The table below shows the rate of sales charge you pay, depending on the amount
you purchase.
The table below also shows the amount of broker/dealer compensation that is
paid out of the sales charge. This compensation includes commissions and other
fees Service Agents that sell shares of the Fund receive. The distributors keep
up to approximately 10% of the sales charge imposed on Class A shares. Service
Agents will also receive the service fee payable on Class A shares at an annual
rate equal to 0.25% of the average daily net assets represented by the Class A
shares sold by them.
<TABLE>
<CAPTION>
Broker/Dealer
Sales Charge as a % of commission
Offering Net amount as a % of
Amount of purchase price (%) invested (%) offering price
<S> <C> <C> <C>
Less than $25,000 5.00 5.26 4.50
$25,000 but less than $50,000 4.25 4.44 3.83
$50,000 but less than $100,000 3.75 3.90 3.38
$100,000 but less than $250,000 3.25 3.36 2.93
$250,000 but less than $500,000 2.75 2.83 2.48
$500,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 or more -0- -0- up to 1.00
</TABLE>
Investments of $1,000,000 or more You do not pay an initial sales charge when
you buy $1,000,000 or more of Class A shares. However, if you redeem these
Class A shares within one year of purchase, you will pay a deferred sales
charge of 1%.
Qualifying for a reduced Class A sales charge There are several ways you can
combine multiple purchases of Class A shares of Smith Barney funds to take
advantage of the breakpoints in the sales charge schedule.
Mid Cap Core Fund
12
<PAGE>
Accumulation privilege - lets you combine the current value of Class A shares
owned
.by you, or
.by members of your immediate family,
and for which a sales charge was paid, with the amount of your next purchase
of Class A shares for purposes of calculating the initial sales charge. 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 within 90 days before you sign the letter.
Waivers for certain Class A investors Class A initial sales charges are waived
for certain types of investors, including:
.Employees of NASD members
.Investors participating in a fee-based program sponsored by certain broker-
dealers affiliated with Citigroup
.Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if the investor's Service Agent is notified
If you want to learn about additional waivers of Class A initial sales charges,
contact your Service Agent or consult the Statement of Additional Information
("SAI").
Class B shares
You buy Class B shares at net asset value without paying an initial sales
charge. However, if you redeem your Class B shares within six years of pur-
chase, you will pay a deferred sales charge. The deferred sales charge
decreases as the number of years since your purchase increases.
Smith Barney Mutual Funds
13
<PAGE>
<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: Shares issued: Upon exchange from
At initial purchase On reinvestment of another Smith
dividends and Barney
distributions fund
<S> <C> <C>
Eight years after the date of purchase In same proportion On the date the
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 divi-
dends)
</TABLE>
Class 1 Sales Charge
Class 1 shares are offered to eligible Class 1 shareholders at the next deter-
mined net asset value plus a sales charge. You do not pay a sales charge on a
fund's distributions or dividends that you reinvest in additional Class 1
shares.
You pay a lower sales charge as the size of your investment increases to cer-
tain levels called breakpoints.
<TABLE>
<CAPTION>
Amount of investment sales charge sales charge Broker/Dealer
as % of as % of commission
offering net amount as a % of
price invested offering price
<S> <C> <C> <C>
Less than $10,000 8.50% 9.29% 7.00%
$10,000 but less than $25,000 7.75% 8.40% 6.25%
$25,000 but less than $50,000 6.00% 6.38% 5.00%
$50,000 but less than $100,000 4.50% 4.71% 3.75%
$100,000 but less than $250,000 3.50% 3.63% 3.00%
$250,000 but less than $400,000 2.50% 2.56% 2.00%
$400,000 but less than $600,000 2.00% 2.04% 1.60%
$600,000 but less than $5,000,000 1.00% 1.01% 0.75%
$5,000,000 or more 0.25% 0.25% 0.20%
</TABLE>
Mid Cap Core Fund
14
<PAGE>
Class L shares (available through certain Service Agents)
You buy Class L shares at the offering price, which is the net asset value plus
a sales charge of 1% (1.01% of the net amount invested). In addition, if you
redeem your Class L shares within one year of purchase, you will pay a deferred
sales charge of 1%. If you held Class C shares of the fund and/or other Smith
Barney mutual funds on June 12, 1998, you will not pay an initial sales charge
on Class L shares you buy before June 22, 2001.
Class Y shares (available through certain Service Agents)
You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of the fund over a 13-month period. To qualify, you
must initially invest $5,000,000.
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. Therefore you do not pay a sales charge
on amounts representing appreciation or depreciation.
In addition, you do not pay a deferred sales charge on:
.Shares exchanged for shares of another Smith Barney fund
.Shares representing reinvested distributions and dividends
.Shares no longer subject to the deferred sales charge
Each time you place a request to redeem shares, the fund will first redeem any
shares in your account that are not subject to a deferred sales charge and then
the shares in your account that have been held the longest.
If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you
notify your Service Agent.
The fund's distributors receive deferred sales charges as partial compensation
for their expenses in selling shares, including the payment of compensation to
your Service Agent.
Service Agents selling Class B shares receive a commission of up to 4.50% of
the purchase price of the Class B shares they sell, except for sales exempt
Smith Barney Mutual Funds
15
<PAGE>
from the deferred sales charge. Service Agents also receive a service fee at an
annual rate equal to 0.25% of the average daily net assets represented by the
Class B shares they are servicing.
Service Agents selling Class L shares receive a commission of up to 2.00% of
the purchase price of the Class L shares they sell.
Deferred sales charge waivers
The deferred sales charge for each share class will generally be waived:
.On payments made through certain systematic withdrawal plans
.On certain distributions from a retirement plan
.For involuntary redemptions of small account balances
.For 12 months following the death or disability of a shareholder
If you want to learn more about additional waivers of deferred sales charges,
contact your Service Agent or consult the SAI.
Buying shares
Through a You should contact your Service Agent to open a brokerage
Service Agent account and make arrangements to buy shares.
If you do not provide the following information, your order
will be rejected:
.Class of shares being bought
.Dollar amount or number of shares being bought
Your Service Agent may charge an annual account maintenance
fee.
--------------------------------------------------------------------------------
Through the Qualified retirement plans and certain other investors who
fund are clients of certain Service Agents are eligible to buy
shares directly from the fund.
.Write the fund at the following address:
Smith Barney Investment Trust Mid Cap Core Fund
(Specify class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
Mid Cap Core Fund
16
<PAGE>
.Enclose a check to pay for the shares. For initial pur-
chases, complete and send an account application
.For more information, call, the transfer agent at 1-800-451-
2010
--------------------------------------------------------------------------------
Through a
systematic You may authorize your Service Agent or a sub--transfer agent
investment to transfer funds automatically from (i) a regular bank
plan account, (ii) cash held in a brokerage account opened with a
Service Agent or (iii) certain money market funds, in order
to buy shares on a regular basis.
.Amounts transferred should be at least: $25 monthly or $50
quarterly.
.If you do not have sufficient funds in your account on a
transfer date, your Service Agent or the sub-transfer agent
may charge you a fee.
For more information, contact your Service Agent or the
transfer agent or consult the SAI.
Smith Barney Mutual Funds
17
<PAGE>
Exchanging shares
Smith Barney
offers a You should contact your Service Agent to exchange into other
distinctive Smith Barney mutual funds. Be sure to read the prospectus of
family of the Smith Barney mutual fund you are exchanging into. An
mutual funds exchange is a taxable transaction.
tailored to .You may exchange shares only for shares of the same class of
help meet the another Smith Barney mutual fund. Not all Smith Barney
varying needs funds offer all classes.
of both large
and small .Not all Smith Barney funds may be offered in your state of
investors residence. Contact your Service Agent or the transfer
agent.
.You must meet the minimum investment amount for each fund
(except for systematic investment plan exchanges)
.If you hold share certificates, the transfer agent must
receive the certificates endorsed for transfer or with
signed stock powers (documents transferring ownership of
certificates) 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.
--------------------------------------------------------------------------------
By telephone
If you do not have a brokerage account with a Service Agent,
you may be eligible to exchange shares through the fund. You
must complete an authorization form to authorize telephone
transfers. If eligible, you may make telephone exchanges on
any day the New York Stock Exchange is open. For clients of a
PFS Investments Registered Representative, call PFS Share-
holder Services at 1-800-544-5445 between 8:00 a.m. and 8:00
p.m. (Eastern time). All other shareholders should call the
transfer agent at 1-800- 451-2010 between 9:00 a.m. and 4:00
p.m. (Eastern time). Requests received after
Mid Cap Core Fund
18
<PAGE>
the close of regular trading on the Exchange are priced at
the net asset value next determined.
You can make telephone exchanges only between accounts that
have identical registrations.
--------------------------------------------------------------------------------
By mail
If you do not have a brokerage account, contact your Service
Agent or write to a sub-transfer agent at the address on the
following page.
Smith Barney Mutual Funds
19
<PAGE>
Redeeming shares
Generally
Contact your Service Agent to redeem shares of the fund.
If you hold share certificates, the sub-transfer agent must
receive the certificates endorsed for transfer or with signed
stock powers before the redemption is effective.
If the shares are held by a fiduciary or corporation, other
documents may be required.
Your redemption proceeds will be sent within three business
days after your request is received in good 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 brokerage account with a Service Agent, 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 fund at either of the following addresses:
For clients of a PFS Investments Registered Representative,
write PFS Shareholder Services at the following address:
PFS Shareholder Services
P.O. Box 105043
Atlanta, GA 30348-5043
For all other investors, send your request to PFPC Global
Fund Services at the following address:
Smith Barney Investment Trust
Mid Cap Core Fund
(Specify class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
Mid Cap Core Fund
20
<PAGE>
Your written request must provide the following:
.The fund and 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
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 $50,000 per day through the fund. You must com-
plete an authorization form to authorize telephone redemp-
tions. If eligible, you may request redemptions by telephone
on any day the New York Stock Exchange is open. For clients
of a PFS Investments Registered Representative, call PFS
Shareholder Services at 1-800-544-5445 between 8:00 a.m. and
8:00 p.m. (Eastern time). All other shareholders should call
the transfer agent at 1-800-451-2010 between 9:00 a.m. and
4:00 p.m. (Eastern time). Requests received after the close
of regular trading on the Exchange are priced at the net
asset value next determined.
Your redemption proceeds can be sent by check to your address
of record or by wire or electronic transfer (ACH) to a bank
account designated on your authorization form. You must sub-
mit a new authorization form to change the bank account des-
ignated to receive wire or electronic transfers and you may
be asked to provide certain other documents. The sub-transfer
agents may charge a fee on an electronic transfer (ACH).
--------------------------------------------------------------------------------
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. If your shares are subject
to a deferred sales charge, the sales charge will be waived
if your automatic payments do not exceed 1% per month of the
value of your shares subject to a deferred sales charge.
The following conditions apply:
.Your shares must not be represented by certificates
.All dividends and distributions must be reinvested
For more information, contact your Service Agent or consult
the SAI.
Smith Barney Mutual Funds
21
<PAGE>
Other things to know about share transactions
When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information without which your
request will not be processed:
.Name of the fund
.Account number
.Class of shares being bought, exchanged or redeemed
.Dollar amount or number of shares being bought, exchanged or redeemed
.Signature of each owner exactly as the account is registered
The fund will try to confirm that any telephone exchange or redemption request
is genuine by recording calls, asking the caller to provide certain personal
identification information, sending you a written confirmation or requiring
other confirmation procedures from time to time.
Signature guarantees To be in good order, your redemption request must include
a signature guarantee if you:
.Are redeeming over $50,000
.Are sending signed share certificates or stock powers to the sub-transfer
agent
.Instruct the sub-transfer agent to mail the check to an address different from
the one on your account
.Changed your account registration
.Want the check paid to someone other than the account owner(s)
.Are transferring the redemption proceeds to an account with a different 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.
The fund has the right to:
.Suspend the offering of shares
.Waive or change minimum and additional investment amounts
.Reject any purchase or exchange order
.Change, revoke or suspend the exchange privilege
.Suspend telephone transactions
.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
Mid Cap Core Fund
22
<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 ($250 for IRA accounts)
because of a redemption of fund shares, the fund may ask you to bring your
account up to the applicable minimum investment amounts. If you choose not to
do so within 60 days, the fund may close your account and send you the redemp-
tion proceeds.
Excessive exchange transactions The manager may determine that a pattern of
frequent exchanges is detrimental to the fund's performance and other share-
holders. If so, the fund may limit additional purchases and/or exchanges by the
shareholder.
Share certificates The fund does not issue share certificates unless a written
request signed by all registered owners is made to the sub-transfer agent. If
you hold share certificates it will take longer to exchange or redeem shares.
Smith Barney Mutual Funds
23
<PAGE>
Dividends, distributions and taxes
Dividends The fund generally pays dividends and makes capital gain distribu-
tions, if any, once a year, typically in December. The fund may pay additional
distributions and dividends at other times if necessary for the fund to avoid a
federal tax. Capital gain distributions and dividends are reinvested in addi-
tional fund shares of the same class you hold. The fund expects distributions
to be primarily from capital gains. You do not pay a sales charge on reinvested
distributions or dividends. Alternatively, you can instruct your Service Agent
or the transfer agent to have your distributions and/or dividends paid in cash.
You can change your choice at any time to be effective as of the next distribu-
tion 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 distri-
bution 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, the 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 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.
Mid Cap Core Fund
24
<PAGE>
Share price
You may buy, exchange or redeem shares at their net asset value, plus any
applicable sales charge, next determined after receipt of your request in good
order. The fund's net asset value is the value of its assets minus its liabili-
ties. Net asset value is calculated separately for each class of shares. The
fund calculates its net asset value every day the New York Stock Exchange is
open. The Exchange is closed on certain holidays listed in the SAI. This calcu-
lation is done when regular trading closes on the Exchange (normally 4:00 p.m.,
Eastern time).
The fund generally values its fund securities based on market prices or quota-
tions. The 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, the fund
may price those securities at fair value. Fair value is determined in accor-
dance with procedures approved by the fund's board. A fund that uses fair value
to price securities may value those securities higher or lower than another
fund using market quotations to price the same securities.
International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by the fund could change on days when you
cannot buy or redeem shares.
In order to buy, redeem or exchange shares at that day's price, you must place
your order with your Service Agent or the fund's sub-transfer agents before the
New York Stock Exchange closes. If the Exchange closes early, you must place
your order prior to the actual closing time. Otherwise, you will receive the
next business day's price.
Service Agents must transmit all orders to buy, exchange or redeem shares to
the fund's sub-transfer agent before the sub-transfer agent's close of busi-
ness.
Smith Barney Mutual Funds
25
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand the perfor-
mance of each class since inception. 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 divi-
dends and distributions. The information in the following tables was audited by
KPMG LLP, independent accountants, whose report, along with the fund's finan-
cial statements, is included in the annual report (available upon request).
For a Class A share of capital stock outstanding throughout each year
(except where noted) ended November 30:
<TABLE>
<CAPTION>
2000(/1/)(/2/) 1999(/2/) 1998(/3/)
------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 17.74 $ 13.63 $ 11.40
------------------------------------------------------------------------------
Income from operations:
Net investment income 0.02 0.04 0.02
Net realized and unrealized
gain 3.88 4.63 2.21
------------------------------------------------------------------------------
Total income from operations 3.90 4.67 2.23
------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (0.01) --
Net realized gains (0.15) (0.55) --
------------------------------------------------------------------------------
Total distributions (0.15) (0.56) --
------------------------------------------------------------------------------
Net asset value, end of period $ 21.49 $ 17.74 $ 13.63
------------------------------------------------------------------------------
Total return 22.00%+ 34.36% 19.56%++
------------------------------------------------------------------------------
Net assets, end of period
(000)'s $214,566 $130,534 $36,760
------------------------------------------------------------------------------
Ratios to average net assets:
Expenses 1.14%+ 1.16% 1.27%+
Net investment income (loss) 0.19+ (0.21) 0.78+
------------------------------------------------------------------------------
Portfolio turnover rate 47% 61% 15%
------------------------------------------------------------------------------
</TABLE>
(/1/)For the six months ended May 31, 2000 (unaudited).
(/2/) Per share amounts have been calculated using the monthly average shares
method.
(/3/) For the period from September 1, 1998 (inception date) to November 30,
1998.
++Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
Mid Cap Core Fund
26
<PAGE>
For a Class B share of capital stock outstanding throughout each year
(except where noted) ended November 30:
<TABLE>
<CAPTION>
2000(/1/)(/2/) 1999(/2/) 1998(/3/)
----------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period 17.58 $ 13.60 $ 11.40
----------------------------------------------------------------------------
Income (loss) from operations:
Net investment income (loss) (0.05) (0.09) 0.00*
Net realized and unrealized gain 3.83 4.62 2.20
----------------------------------------------------------------------------
Total income from operations 3.78 4.53 2.20
----------------------------------------------------------------------------
Less distributions from:
Net realized gains (0.15) (0.55) --
----------------------------------------------------------------------------
Total distributions (0.15) (0.55) --
----------------------------------------------------------------------------
Net asset value, end of period $ 21.21 $ 17.58 $ 13.60
----------------------------------------------------------------------------
Total return 21.52%+ 33.43% 19.30%++
----------------------------------------------------------------------------
Net assets, end of period (000)'s $349,873 $245,317 $69,153
----------------------------------------------------------------------------
Ratios to average net assets:
Expenses 1.89%+ 1.90% 2.01%+
Net investment income (loss) (0.55)+ (0.54) 0.02+
----------------------------------------------------------------------------
Portfolio turnover rate 47% 61% 15%
----------------------------------------------------------------------------
</TABLE>
(/1/) For the six months ended May 31, 2000 (unaudited).
(/2/) Per share amounts have been calculated using the monthly average shares
method.
(/3/) For the period from September 1, 1998 (inception date) to November 30,
1998.
* Represents less than $0.01.
++Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
Smith Barney Mutual Funds
27
<PAGE>
For a Class L share of capital stock outstanding throughout each year
(except where noted) ended November 30:
<TABLE>
<CAPTION>
2000 (/1/)(/2/) 1999(/2/) 1998(/3/)
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 17.57 $ 13.60 $ 11.40
-------------------------------------------------------------------------------
Income (loss) from operations:
Net investment income (loss) (0.05) (0.09) 0.00*
Net realized and unrealized
gain 3.84 4.61 2.20
-------------------------------------------------------------------------------
Total income from operations 3.79 4.52 2.20
-------------------------------------------------------------------------------
Less distributions from:
Net realized gains (0.15) (0.55) --
-------------------------------------------------------------------------------
Total distributions (0.15) (0.55) --
-------------------------------------------------------------------------------
Net assets value, end of period $ 21.21 $ 17.57 $ 13.60
-------------------------------------------------------------------------------
Total return 21.59%+ 33.35% 19.30%++
-------------------------------------------------------------------------------
Net assets, end of period
(000)'s $248,907 $167,671 $45,045
-------------------------------------------------------------------------------
Ratios to average net assets:
Expenses 1.89%+ 1.90% 2.01%+
Net investment income (loss) (0.55)+ (0.54) 0.03+
-------------------------------------------------------------------------------
Portfolio turnover rate 47% 61% 15%
-------------------------------------------------------------------------------
</TABLE>
(/1/) For the six months ended May 31, 2000 (unaudited).
(/2/) Per share amounts have been calculated using the monthly average shares
method.
(/3/) For the period from September 1, 1998 (inception date) to November 30,
1998.
* Represents less than $0.01.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
Mid Cap Core Fund
28
<PAGE>
For a Class Y share of capital stock outstanding throughout each year
(except where noted) ended November 30:
<TABLE>
<CAPTION>
Class Y Shares 2000(/1/)(/2/) 1999(/2/)(/3/)
---------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 17.78 $ 13.65
---------------------------------------------------------------------------
Income from operations:
Net investment income 0.05 0.08
Net realized and unrealized gain 3.90 4.61
---------------------------------------------------------------------------
Total income from operations 3.95 4.69
---------------------------------------------------------------------------
Less distributions from:
Net investment income -- (0.01)
Net realized gains (0.15) (0.55)
---------------------------------------------------------------------------
Total Distributions (0.15) (0.56)
---------------------------------------------------------------------------
Net assets value, end of period $21.58 $ 17.78
---------------------------------------------------------------------------
Total return++ 22.23% 34.49%
---------------------------------------------------------------------------
Net assets, end of period (000)'s $147,477 $112,075
---------------------------------------------------------------------------
Ratios to average net assets+:
Expenses 0.81% 0.82%
Net investment income 0.52 0.50
---------------------------------------------------------------------------
Portfolio turnover rate 47% 61%
---------------------------------------------------------------------------
</TABLE>
(/1/) For the six months ended May 31, 2000 (unaudited).
(/2/) Per share amounts have been calculated using the monthly average shares
method.
(/3/) For the period from December 3, 1998 (inception date) to November 30,
1999.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
Smith Barney Mutual Funds
29
<PAGE>
[SB] Smith Barney
[MF] Mutual Funds
Your Serious Money. Professionally Managed./SM/
Mid Cap Core Fund
An investment portfolio of Smith Barney Investment Trust
Shareholder reports Annual and semiannual reports to shareholders provide addi-
tional information about the fund's investments. These reports discuss the mar-
ket conditions and investment strategies that affected the fund's performance.
The fund sends only one report to a household if more than one account has the
same address. Contact your Service Agent or the transfer agent if you do not
want this policy to apply to you.
Statement of additional information The statement of additional information
provides more detailed information about the fund and is incorporated by refer-
ence into (is legally a part of) this prospectus.
You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent, by calling the fund's sub-transfer agents (PFS Shareholder Services at
1-800-544-5445 or PFPC Global Fund Services at 1-800-451-2010), or by writing
to the fund at Smith Barney Mutual Funds, 388 Greenwich Street, MF2, New York,
New York 10013.
Information about the fund (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the Pub-
lic Reference Room may be obtained by calling the Commission at 1-202-942-8090.
Reports and other information about the Fund are available on the EDGAR Data-
base 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 the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not law-
fully sell its shares.
(Investment Company Act file no. 811-06444)
FD01499 8/00
PART B - STATEMENT OF ADDITIONAL INFORMATION FOR SMITH BARNEY MID CAP CORE FUND
(formerly known as Mid Cap Blend Fund)
March 29, 2000,
as amended on August 21, 2000
STATEMENT OF ADDITIONAL INFORMATION
SMITH BARNEY INVESTMENT TRUST
Smith Barney Mid Cap Core 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 Mid Cap Core Fund (formerly Smith
Barney Mid Cap Blend Fund) (the "fund") dated March
29, 2000, as amended or supplemented from time to
time (the "prospectus"), and is incorporated by
reference in it entirety into the prospectus.
Additional information about the fund's investments
is available in the fund's annual and semi-annual
reports to shareholders which are incorporated herein
by reference. The prospectus and copies of the
reports may be obtained free of charge by contacting
a Salomon Smith Barney Financial Consultant, or a
registered representative of PFS Distributors, Inc.,
or by writing or calling Salomon Smith Barney Inc. at
the address or telephone number above. The fund is a
separate investment series of Smith Barney Investment
Trust (the "trust").
TABLE OF CONTENTS
Investment Objective and Management Policies 2
Investment Restrictions...... ........................13
Trustees of the Trust and Executive Officers of the
Fund 15
Investment Management and Other Services 18
Portfolio Transactions... ...................23
Portfolio Turnover....................25
Purchase of Shares .............................................26
PFS Accounts...................................32
Redemption of Shares 36
Valuation of Shares 38
Exchange Privilege 38
Performance Data 39
Dividends, Distribution and Taxes 43
Additional Information 48
Financial Statements ...................................................50
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The prospectus discusses the fund's investment
objective and policies. This section contains
supplemental information concerning the types of
securities and other instruments in which the fund
may invest, the investment policies and portfolio
strategies the fund may utilize and certain risks
associated with these investments, policies and
strategies. SSB Citi Fund Management LLC (successor
to SSBC Fund Management Inc.) ("SSB Citi" or the
"manager") serves as investment manager to the fund.
The fund is an open-end, diversified, management
investment company whose investment objective is to
seek long-term growth of capital by investing, under
normal market conditions, at least 65% of its total
assets in equity securities of medium-sized
companies. Medium sized companies are those whose
market capitalization is within the market
capitalization range of companies in the S&P Mid Cap
Index ("Index") at the time of investment. The size
of the companies in the Index changes with market
conditions and the composition of the Index. As of
July 31, 2000, the largest market capitalization of a
company in the Index was $12.7 billion and the
smallest market capitalization was $139 million.
Investing in medium-capitalization stocks may involve
greater risk than investing in large capitalization
stocks since they can be subject to more abrupt or
erratic movements. However, they tend to involve
less risk than stocks of small capitalization
companies.
The fund normally invests in all types of equity
securities, including common stocks, preferred
stocks, securities that are convertible into common
or preferred stocks, such as warrants and convertible
bonds, and depository receipts for those securities.
The fund may maintain a portion of its assets, which
will usually not exceed 10%, in U.S. Government
securities, money market obligations, and in cash to
provide for payment of the fund's expenses and to
meet redemption requests. It is the policy of the
fund to be as fully invested in equity securities as
practicable at all times. The 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.
Equity Securities. The fund will normally invest at
least 65% 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.
Real Estate Investment Trusts ("REITS"). The fund may
invest in REITS, which are pooled investment vehicles
that invest primarily in either real estate or real
estate related loans. The value of a REIT is affected
by changes in the value of the properties owned by
the REIT or securing mortgage loans held by the REIT.
REITs are dependent upon cash flow from their
investments to repay financing costs and the ability
of the REIT's manager. REITs are also subject to
risks generally associated with investments in real
estate. The fund will indirectly bear its
proportionate share of any expenses, including
management fees, paid by a REIT in which it invests.
Convertible Securities. Convertible securities in
which the fund may invest, including both convertible
debt and convertible preferred stock, may be
converted at either a stated price or stated rate
into underlying shares of common stock. Because of
this feature, convertible securities enable an
investor to benefit from increases in the market
price of the underlying common stock. Convertible
securities provide higher yields than the underlying
equity securities, but generally offer lower yields
than non-convertible securities of similar quality.
Like bonds, the value of convertible securities
fluctuates in relation to changes in interest rates
and, in addition, also fluctuates in relation to the
underlying common stock.
When-Issued, Delayed-Delivery and Forward Commitment
Transactions. The 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. The fund does not intend
to engage in these transactions for speculative
purposes, but only in furtherance of its investment
goal. These transactions occur when securities are
purchased or sold by the fund with payment and
delivery taking place in the future to secure what is
considered an advantageous yield and price to the
fund at the time of entering into the transaction.
The payment obligation and the interest rate that
will be received on when-issued securities are fixed
at the time the buyer enters into the commitment.
Due to 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, its 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 fund will set aside portfolio
securities to satisfy a purchase commitment, and in
such a case the fund may be required subsequently to
place additional assets in the segregated account in
order to ensure that the value of the account remains
equal to the amount of the fund's commitment. The
assets contained in the segregated account will be
marked-to-market daily. It may be expected that the
fund's net assets will fluctuate to a greater degree
when it sets aside portfolio securities to cover such
purchase commitments than when it sets aside cash.
When the fund engages in when-issued or delayed-
delivery transactions, it relies on the other party
to consummate the trade. Failure of the seller to do
so may result in the fund's incurring a loss or
missing an opportunity to obtain a price considered
to be advantageous.
Foreign Securities. The fund has the authority to
invest up to 25% of its assets in foreign securities
(including European Depository Receipts ("EDRs") and
Global Depository Receipts ("GDRs")) and American
Depository Receipts ("ADRs") or other securities
representing underlying shares of foreign companies.
EDRs are receipts issued in Europe which evidence
ownership of underlying securities issued by a
foreign corporation. ADRs are receipts typically
issued by an American bank or trust company which
evidence a similar ownership arrangement. Generally,
ADRs which are issued in registered form, are
designed for use in the United States securities
markets and EDRs, which are issued in bearer form,
are designed for use in European securities markets.
GDRs are tradable both in the U.S. and Europe and are
designed for use throughout the world.
There are certain risks involved in investing in
securities of companies and governments of foreign
nations that are in addition to the usual risks
inherent in domestic investments. These risks
include those resulting from revaluation of
currencies, future adverse 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 lack of
uniform accounting, auditing and financial reporting
standards or of other regulatory practices and
requirements comparable to those applicable to
domestic companies. The yield of the fund may be
adversely affected by fluctuations in value of one or
more foreign currencies relative to the U.S. dollar.
Moreover, securities of many foreign companies and
their markets may be less liquid and their prices
more volatile than those of securities of comparable
domestic companies. In addition, with respect to
certain foreign countries, there is the possibility
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. Foreign securities may be
subject to foreign government taxes that could reduce
the yield on such securities. Because the fund may
invest in securities denominated or quoted in
currencies other than the U.S. dollar, changes in
foreign currency exchange rates may adversely affect
the value of portfolio securities and the
appreciation or depreciation of investments.
Investment in foreign securities also may result in
higher expenses due to the cost of converting foreign
currency to U.S. dollars, the payment of fixed
brokerage commissions on foreign exchanges, which
generally are higher than commissions on domestic
exchanges, the expense of maintaining securities with
foreign custodians, and the imposition of transfer
taxes or transaction charges associated with foreign
exchanges. Moreover, individual foreign economies
may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic
product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payment
positions. The fund may invest in securities of
foreign governments (or agencies or subdivisions
thereof), and therefore many, if not all, of the
foregoing considerations apply to such investments as
well. These securities may not necessarily be
denominated in the same currency as the securities
into which they may be converted. In addition, the
fund may invest in securities into which they may be
converted. The fund also may invest in securities
denominated in European Currency Units (ECUs). An
ECU is a "basket" consisting of a specified amount of
currencies of certain of the twelve member states of
the European Community. In addition, the fund may
invest in securities denominated in other currency
"baskets."
Short-Term Debt Securities. Debt securities in which
the fund may invest include notes, bills, commercial
paper, obligations issued or guaranteed by the
government or any of its political subdivisions,
agencies or instrumentalities, and certificates of
deposit. Debt securities represent money borrowed
that obligate the issuer (e.g., a corporation,
municipality, government, government agency) to repay
the borrowed amount at maturity (when the obligation
is due and payable) and usually to pay the holder
interest at specific times.
All debt securities are subject to market risk and
credit risk. Market risk relates to market-induced
changes in a security's value, usually as a result of
changes in interest rates. The value of the fund's
investments in debt securities will change as the
general levels of interest rates fluctuate. During
periods of falling interest rates, the value of the
fund's debt securities will generally rise.
Conversely, during periods of rising interest rates,
the value of the fund's debt securities will
generally decline. Credit risk relates to the
ability of the issuer to make payments of principal
and interest. The fund has no restrictions with
respect to the maturities or duration of the debt
securities it holds. The fund's investment in fixed
income securities with longer terms to maturity or
greater duration are subject to greater volatility
than the fund's shorter-term securities.
Money Market Instruments. The fund may invest for
temporary defensive purposes in short-term
instruments including corporate and government bonds
and notes and money market instruments. Short-term
instruments in which the fund may invest include
obligations of banks having at least $1 billion in
assets (including certificates of deposit, time
deposits and bankers' acceptances of domestic or
foreign banks, domestic savings and loan associations
and similar institutions); commercial paper rated no
lower than A-2 by Standard & Poor's Ratings Group or
Prime-2 by Moody's Investors Service, Inc. or the
equivalent from another nationally recognized
statistical rating organization or, if unrated, of an
issuer having an outstanding, unsecured debt issue
then rated within the two highest rating categories;
and repurchase agreements with respect to any of the
foregoing entered into with banks and non-bank
dealers approved by the Trust's Board of Trustees.
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.
U.S. Government Securities. The fund may invest in
U.S. Government securities. Generally, these
securities include U.S. Treasury obligations and
obligations issued or guaranteed by U.S. Government
agencies, instrumentalities or sponsored enterprises.
U.S. Government securities also include Treasury
receipts and other stripped U.S. Government
securities, where the interest and principal
components of stripped U.S. Government securities are
traded independently. The fund may also invest in
zero coupon U.S. Treasury securities and in zero
coupon securities issued by financial institutions,
which represent a proportionate interest in
underlying U.S. Treasury securities. A zero coupon
security pays no interest to its holder during its
life and its value consists of the difference between
its face value at maturity and its cost. The market
values of zero coupon securities generally are more
volatile than the market prices of securities that
pay interest periodically.
Repurchase Agreements. The fund may agree to
purchase securities from a bank or recognized
securities dealer and simultaneously commit to resell
the securities to the bank or dealer at an agreed-
upon date and price reflecting a market rate of
interest unrelated to the coupon rate or maturity of
the purchased securities ("repurchase agreements").
The fund would maintain custody of the underlying
securities prior to their repurchase; thus, the
obligation of the bank or dealer to pay the
repurchase price on the date agreed to would be, in
effect, secured by such securities. If the value of
such securities were less than the repurchase price,
plus interest, the other party to the agreement would
be required to provide additional collateral so that
at all times the collateral is at least 102% of the
repurchase price plus accrued interest. Default by or
bankruptcy of a seller would expose the fund to
possible loss because of adverse market action,
expenses and/or delays in connection with the
disposition of the underlying obligations. The
financial institutions with which the fund may enter
into repurchase agreements will be banks and non-bank
dealers of U.S. Government securities that are 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 1940
Act.
Reverse Repurchase Agreements. The fund may enter
into reverse repurchase agreements with the same
parties with whom it may enter into repurchase
agreements. Reverse repurchase agreements involve
the sale of securities held by the fund pursuant to
its agreement to repurchase them at a mutually agreed
upon date, price and rate of interest. At the time
the fund enters into a reverse repurchase agreement,
it will establish and maintain a segregated account
with an approved custodian containing cash or liquid
securities having a value not less than the
repurchase price (including accrued interest). The
assets contained in the segregated account will be
marked-to-market daily and additional assets will be
placed in such account on any day in which the assets
fall below the repurchase price (plus accrued
interest). The fund's liquidity and ability to
manage its assets might be affected when it sets
aside cash or portfolio securities to cover such
commitments. Reverse repurchase agreements involve
the risk that the market value of the securities
retained in lieu of sale may decline below the price
of the securities the fund has sold but is obligated
to repurchase. If the buyer of securities under a
reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to
determine whether to enforce the fund's obligation to
repurchase the securities, and the fund's use of the
proceeds of the reverse repurchase agreement may
effectively be restricted pending such decision. The
fund currently intends to invest not more than 33% of
its net assets in reverse repurchase agreements.
Lending of Portfolio Securities. Consistent with
applicable regulatory requirements, the 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.
Illiquid Securities. The fund may invest up to an
aggregate amount equal to 15% of its net assets in
illiquid securities, which term includes securities
subject to contractual or other restrictions on
resale and other instruments that lack readily
available markets.
Options, Futures and Currency Strategies. The fund
may use forward currency contracts and certain
options and futures strategies to attempt to hedge
its portfolio, i.e., reduce the overall level of
investment risk normally associated with the fund.
There can be no assurance that such efforts will
succeed.
In order to assure that the fund will not be deemed
to be a "commodity pool" for purposes of the
Commodity Exchange Act, regulations of the Commodity
Futures Trading Commission ("CFTC") require that the
fund enter into transactions in futures contracts and
options on futures only (i) for bona fide hedging
purposes (as defined in CFTC regulations), or (ii)
for non-hedging purposes, provided that the aggregate
initial margin and premiums on such non-hedging
positions do not exceed 5% of the liquidation value
of the fund's assets. To attempt to hedge against
adverse movements in exchange rates between
currencies, the fund may enter into forward currency
contracts for the purchase or sale of a specified
currency at a specified future date. Such contracts
may involve the purchase or sale of a foreign
currency against the U.S. dollar or may involve two
foreign currencies. The fund may enter into forward
currency contracts either with respect to specific
transactions or with respect to its portfolio
positions. For example, when the manager anticipates
making a purchase or sale of a security, it may enter
into a forward currency contract in order to set the
rate (either relative to the U.S. dollar or another
currency) at which the currency exchange transaction
related to the purchase or sale will be made
("transaction hedging"). Further, when the manager
believes that a particular currency may decline
compared to the U.S. dollar or another currency, the
fund may enter into a forward contract to sell the
currency the manager expects to decline in an amount
approximating the value of some or all of the fund's
securities denominated in that currency, or when the
manager believes that one currency may decline
against a currency in which some or all of the
portfolio securities held by the fund are
denominated, it may enter into a forward contract to
buy the currency expected to decline for a fixed
amount ("position hedging"). In this situation, the
fund may, in the alternative, enter into a forward
contract to sell a different currency for a fixed
amount of the currency expected to decline where the
investment manager believes that the value of the
currency to be sold pursuant to the forward contract
will fall whenever there is a decline in the value of
the currency in which portfolio securities of the
fund are denominated ("cross hedging"). The fund
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 account of the
fund's commitments under forward contracts entered
into with respect to position hedges and cross-
hedges. If the value of the securities placed in a
separate account declines, additional cash or
securities are placed in the account on a daily basis
so that the value of the 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 by its custodian) 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. In the event that 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 be required to forfeit such
amounts in the event that the prices of securities
underlying the options do not move in the direction
or to the extent anticipated.
Although the fund might not employ the use of forward
currency contracts, options and futures, the use of
any of these strategies would involve certain
investment risks and transaction costs to which it
might not otherwise be subject. These risks include:
dependence on the manager's ability to predict
movements in the prices of individual debt
securities, fluctuations in the general fixed-income
markets and movements in interest rates and currency
markets, imperfect correlation between movements in
the price of currency, options, futures contracts or
options thereon and movements in the price of the
currency or security hedged or used for cover; the
fact that skills and techniques needed to trade
options, futures contracts and options thereon or to
use forward currency contracts are different from
those needed to select the securities in which the
fund invests; lack of assurance that a liquid market
will exist for any particular option, futures
contract or options thereon at any particular time
and possible need to defer or accelerate closing out
certain options, futures contracts and options
thereon in order to continue to qualify for the
beneficial tax treatment afforded "regulated
investment companies" under the Internal Revenue Code
of 1986, as amended (the "Code").
Over-the-counter options in which the fund may invest
differ from exchange traded options in that they are
two-party contracts, with price and other terms
negotiated between buyer and seller, and generally do
not have as much market liquidity as exchange-traded
options. The fund may be required to treat as
illiquid over-the-counter options purchased and
securities being used to cover certain written over-
the-counter options.
Options on Securities. As discussed more generally
above, the fund may engage in the writing of covered
call options. The fund may also purchase put options
and enter into closing transactions.
The principal reason for writing covered call options
on securities is to attempt to realize, through the
receipt of premiums, a greater return than would be
realized on the securities alone. In return for a
premium, the writer of a covered call option 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 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 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
SSB Citi expects the price of the underlying security
to remain flat or decline moderately during the
option period, (b) at-the-money call options when SSB
Citi 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 SSB
Citi 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 SSB Citi 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 SSB Citi 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,
the fund may purchase put and call options and write
call options on domestic stock indexes listed on
domestic exchanges in order to realize its investment
objective of capital appreciation or for the purpose
of hedging its portfolio. A stock index fluctuates
with changes in the market values of the stocks
included in the index. Some stock index options are
based on a broad market index such as the New York
Stock Exchange Composite Index or the Canadian Market
Portfolio Index, or a narrower market index such as
the Standard & Poor's 100. Indexes also are based on
an industry or market segment such as the American
Stock Exchange Oil and Gas Index or the Computer and
Business Equipment Index.
Options on stock indexes are generally similar to
options on stock except that the delivery
requirements are different. Instead of giving the
right to take or make delivery of stock at a
specified price, an option on a stock index gives the
holder the right to receive a cash "exercise
settlement amount" equal to (a) the amount, if any,
by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in
the case of a call) the closing value of the
underlying index on the date of exercise, multiplied
by (b) a fixed "index multiplier." Receipt of this
cash amount will depend upon the closing level of the
stock index upon which the option is based being
greater than, in the case of a call, or less than, in
the case of a put, the exercise price of the option.
The amount of cash received will be equal to such
difference between the closing price of the index and
the exercise price of the option expressed in dollars
or a foreign currency, as the case may be, times a
specified multiple. The writer of the option is
obligated, in return for the premium received, to
make delivery of this amount. The writer may offset
its position in stock index options prior to
expiration by entering into a closing transaction on
an exchange or it may let the option expire
unexercised.
The effectiveness of purchasing or writing stock
index options as a hedging technique will depend upon
the extent to which price movements in the portion of
the securities portfolio of the fund correlate with
price movements of the stock index selected. Because
the value of an index option depends upon movements
in the level of the index rather than the price of a
particular stock, whether the fund will realize a
gain or loss from the purchase or writing of options
on an index depends upon movements in the level of
stock prices in the stock market generally or, in the
case of certain indexes, in an industry or market
segment, rather than movements in the price of a
particular stock. Accordingly, successful use by the
fund of options on stock indexes will be subject to
the manager's ability to predict correctly movements
in the direction of the stock market generally or of
a particular industry. This requires different skills
and techniques than predicting changes in the price
of individual stocks.
Futures Contracts and Options on Futures Contracts.
As described generally above, the fund may invest in
stock index futures contracts and options on futures
contracts that are 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 only enter into futures contracts and options on
futures contracts that are traded on a domestic
exchange and board of trade. Assets committed to
futures contracts will be segregated on the fund's
books to the extent required by law.
The purpose of entering into a futures contract by
the fund is to protect the fund from fluctuations in
the value of securities without actually buying or
selling the securities. For example, in the case of
stock index futures contracts, if the fund
anticipates an increase in the price of stocks that
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
on the fund's books an amount of cash or cash
equivalents equal to the total market value of the
underlying futures contract, less amounts held in the
fund's commodity brokerage account at its broker. At
any time prior to the expiration of a futures
contract, the fund may elect to close the position by
taking an opposite position, which will operate to
terminate the fund's existing position in the
contract.
There are several risks in connection with the use of
futures contracts as a hedging device. Successful use
of futures contracts by the fund is subject to the
ability of the manager to predict correctly movements
in the stock market or in the direction of interest
rates. These predictions involve skills and
techniques that may be different from those involved
in the management of investments in securities. In
addition, there can be no assurance that there will
be a perfect correlation between movements in the
price of the securities underlying the futures
contract and movements in the price of the securities
that are the subject of the hedge. A decision of
whether, when and how to hedge involves the exercise
of skill and judgment, and even a well-conceived
hedge may be unsuccessful to some degree because of
market behavior or unexpected trends in market
behavior or interest rates.
Positions in futures contracts may be closed out only
on the exchange on which they were entered into (or
through a linked exchange) and no secondary market
exists for those contracts. In addition, although the
fund intends to enter into futures contracts only if
there is an active market for the contracts, there is
no assurance that an active market will exist for the
contracts at any particular time. Most futures
exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices
during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may
be made that day at a price beyond that limit. It is
possible that futures contract prices could move to
the daily limit for several consecutive trading days
with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some
futures traders to substantial losses. In such event,
and in the event of adverse price movements, the fund
would be required to make daily cash payments of
variation margin; in such circumstances, an increase
in the value of the portion of the portfolio being
hedged, if any, may partially or completely offset
losses on the futures contract. As described above,
however, no assurance can be given that the price of
the securities being hedged will correlate with the
price movements in a futures contract and thus
provide an offset to losses on the futures contract.
INVESTMENT RESTRICTIONS
The investment restrictions numbered 1 through 7
below and the fund's investment objective have been
adopted by the trust as fundamental policies of the
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 trust's board of trustees at any time.
Under the investment restrictions adopted by the
trust with respect to the fund: The fund will not
1. Invest in a manner that would cause it to
fail to be a "diversified company" under the 1940 Act
and the rules, regulations and orders thereunder.
2. Issue "senior securities" as defined in
the 1940 Act, and the rules, regulations and orders
thereunder, except as permitted under the 1940 Act
and the rules, regulations and orders thereunder.
3. Invest more than 25% of its total assets
in securities, the issuers of which conduct their
principal business activities in the same industry.
For purposes of this limitation, securities of the
U.S. government (including its agencies and
instrumentalities) and securities of state or
municipal governments and their political
subdivisions are not considered to be issued by
members of any industry.
4. Borrow money, except that (a) the fund
may borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of
redemption requests which might otherwise require the
untimely disposition of securities, and (b) the fund
may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements,
forward roll transactions and similar investment
strategies and techniques. To the extent that it
engages in transactions described in (a) and (b), the
fund will be limited so that no more than 33 1/3% of
the value of its total assets (including the amount
borrowed), valued at the lesser of cost or market,
less liabilities (not including the amount borrowed),
is derived from such transactions.
5. Make loans. This restriction does not
apply to: (a) the purchase of debt obligations in
which the fund may invest consistent with its
investment objective and policies; (b) repurchase
agreements; and (c) loans of its portfolio
securities, to the fullest extent permitted under the
1940 Act.
6. Engage in the business of underwriting
securities issued by other persons, except to the
extent that the fund may technically be deemed to be
an underwriter under the Securities Act of 1933, as
amended, in disposing of portfolio securities.
7. Purchase or sell real estate, real estate
mortgages, commodities or commodity contracts, but
this restriction shall not prevent the fund from: (a)
investing in securities of issuers engaged in the
real estate business or the business of investing in
real estate (including interests in limited
partnerships owning or otherwise engaging in the real
estate business or the business of investing in real
estate) and securities which are secured by real
estate or interests therein; (b) holding or selling
real estate received in connection with securities it
holds or held; (c) trading in futures contracts and
options on futures contracts (including options on
currencies to the extent consistent with the funds'
investment objective and policies); or (d) investing
in real estate investment trust securities.
8. Purchase any securities on margin (except
for such short-term credits as are necessary for the
clearance of purchases and sales of portfolio
securities) or sell any securities short (except
"against the box"). For purposes of this restriction,
the deposit or payment by the fund of underlying
securities and other assets in escrow and collateral
agreements with respect to initial or maintenance
margin in connection with futures contracts and
related options and options on securities, indexes or
similar items is not considered to be the purchase of
a security on margin.
9. Invest in oil, gas or other mineral
exploration or development programs.
10. Purchase or otherwise acquire any
security if, as a result, more than 15% of its net
assets would be invested in securities that are
illiquid.
11. Invest for the purpose of exercising
control of management.
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.
TRUSTEES OF THE TRUST AND EXECUTIVE OFFICERS OF THE
FUND
The names of the trustees of the trust and executive
officers of the fund, together with information as to
their principal business occupations, are set forth
below. The executive officers of the fund are
employees of organizations that provide services to
the fund. Each trustee who is an "interested person"
of the trust, as defined in the 1940 Act, is
indicated by an asterisk. The address of the "non-
interested" trustees and the executive officers of
the fund is 388 Greenwich Street, New York, New York
10013, unless otherwise indicated.
Herbert Barg, Trustee (Age 76). Private Investor.
His address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004. Director/Trustee of sixteen
investment companies associated with Citigroup, Inc.
("Citigroup")
*Alfred J. Bianchetti Trustee (Age 77). Retired;
formerly Senior Consultant to Dean Witter Reynolds
Inc. His address is 19 Circle End Drive, Ramsey, New
Jersey 07466. Director/Trustee of eleven investment
companies associated with Citigroup.
Martin Brody Trustee (Age 78). Consultant, HMK
Associates; Retired Vice Chairman of the Board of
Restaurant Associates Corp. His address is c/o HMK
Associates, 30 Columbia Turnpike, Florham Park, New
Jersey 07932. Director/Trustee of twenty-one
investment companies associated with Citigroup.
Dwight B. Crane Trustee (Age 62). Professor, Harvard
Business School. His address is c/o Harvard Business
School, Soldiers Field Road, Boston, Massachusetts
02163. Director/Trustee of twenty-four investment
companies associated with Citigroup.
Burt N. Dorsett Trustee (Age 69). Managing Partner
of Dorsett McCabe Management. Inc., an investment
counseling firm; Director of Research Corporation
Technologies, Inc., a nonprofit patent clearing and
licensing firm. His address is 201 East 62nd Street,
New York, New York 10021. Director/Trustee of eleven
investment companies associated with Citigroup.
Elliot S. Jaffe Trustee (Age 73). Chairman of the
Board and President of The Dress Barn, Inc. His
address is 30 Dunnigan Drive, Suffern, New York
10901. Director/Trustee of eleven investment
companies associated with Citigroup.
Stephen E. Kaufman Trustee (Age 68). Attorney. His
address is 277 Park Avenue, New York, New York 10172.
Director/Trustee of thirteen investment companies
associated with Citigroup.
Joseph J. McCann Trustee (Age 69). Financial
Consultant; Retired Financial Executive, Ryan Homes,
Inc. His address is 200 Oak Park Place, Pittsburgh,
Pennsylvania 15243. Director/Trustee of eleven
investment companies associated with Citigroup.
*Heath B. McLendon Trustee (Age 66). Chairman of the
Board, President and Chief Executive Officer;
Managing Director of Salomon Smith Barney; President
of SSB Citi and Travelers Investment Adviser, Inc.
("TIA"); Chairman or Co-Chairman of the Board of
seventy-eight investment companies associated with
Salomon Smith Barney. His address is 7 World Trade
Center, New York, New York 10048.
Cornelius C. Rose, Jr. Trustee (Age 66). President,
Cornelius C. Rose Associates, Inc., financial
consultants, and Chairman and Director of Performance
Learning Systems, an educational consultant. His
address is Meadowbrook Village, Building 4, Apt 6,
West Lebanon, New Hampshire 03784. Director/Trustee
of eleven investment companies associated with
Citigroup.
Lewis E. Daidone (Age 42). 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 sixty-one investment companies
associated with Citigroup. His address is 125 Broad
Street, New York, New York 10004.
Lawrence Weissman (Age 39). Vice President and
Investment Officer; Managing Director of Salomon
Smith Barney; Investment Officer of SSB Citi; prior
to 1998, portfolio manager at Neuberger & Berman,
LLC.; prior to that he was a portfolio manager at
TIAA-CREFF. His address is 7 World Trade Center, New
York, New York 10048.
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 forty-three investment companies associated with
Citigroup. His address is 125 Broad Street, New York,
New York 10004.
Christina T. Sydor (Age 49). Secretary; Managing
Director of Salomon Smith Barney; General Counsel and
Secretary of SSB Citi and TIA. Secretary of sixty-one
investment companies associated with Citigroup. Her
address is 388 Greenwich Street, New York, New York
10013.
As of August 11, 2000, the trustees and officers
owned, in the aggregate, less than 1% of the
outstanding shares of each of the funds. No officer,
director or employee of Salomon Smith Barney or any
of its affiliates receives any compensation from the
trust for serving as an officer of the funds or
trustee of the trust. The trust pays each trustee
who is not an officer, director or employee of
Salomon Smith Barney or any of its affiliates a fee
of $12,000 per annum plus $1000 per in-person meeting
and $100 per telephonic meeting. Each trustee
emeritus who is not an officer, director or employee
of Salomon Smith Barney or its affiliates receives a
fee of $5,000 per annum plus $500 per in-person
meeting and $50 per telephonic meeting. All trustees
are reimbursed for travel and out-of-pocket expenses
incurred to attend such meetings and for the most
recent calendar year it was $14,437.
The following table contains a list of shareholders
of record or who beneficially owned at least 5% of
the outstanding shares of a particular class of
shares of a fund as of August 11, 2000.
CLASS Y - PERCENTAGE OF SHARES
Smith Barney Concert Series, Inc.
Growth Portfolio
PNC Bank NA
200 Stevens Drive, Suite 440
Attn: Beverly Timson
Lester, PA 19113
Owned 2,981,907.611 (46.43%) shares
Smith Barney Concert Series, Inc.
High Growth Portfolio
PNC Bank NA
200 Stevens Drive, Suite 440
Attn: Beverly Timson
Lester, PA 19113
Owned 2,337,012.659 (36.39%) shares
Smith Barney Concert Series, Inc.
Select Growth Portfolio
PNC Bank NA
200 Stevens Drive, Suite 440
Attn: Beverly Timson
Lester, PA 19113
Owned 621,386.504 (9.67%) shares
Smith Barney Concert Series, Inc.
Select High Growth Portfolio
PNC Bank NA
200 Stevens Drive, Suite 440
Attn: Beverly Timson
Lester, PA 19113
Owned 406,460.413 (6.32%) shares
For the fiscal year ended November 30, 1999, the
Trustees of the fund were paid the following
compensation:
Name of Person
Aggregate
Compensat
ion
From
Trust
Total
Pension or
Retirement
Benefits
Accrued
As part of
Trust
Expenses
Compensation
From Trust
and Fund
Complex
Paid to
Trustees
Number of
Funds for
Which Trustee
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.**
$15,600
14,600
13,600
15,500
15,500
12,600
15,600
15,600
-----
14,600
$0
0
0
0
0
0
0
0
0
0
$114,288
53,900
138,600
155,363
57,950
45,100
110,650
58,050
------
53,500
16
11
21
24
11
11
13
11
71
11
* Designated an "interested" trustee.
** Designates member of Audit Committee
Upon attainment of age 80, fund trustees are required
to change to emeritus status. Trustees emeritus are
entitled to serve in emeritus status for a maximum of
10 years. A trustee emeritus may attend meetings but
has no voting rights.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Manager - SSB Citi
SSB Citi serves as investment manager to the fund
pursuant to an investment management agreement (the
"Investment Management Agreement") with the trust
which was approved by the board of trustees,
including a majority of trustees who are not
"interested persons" of the trust or the manager.
The manager is a wholly owned subsidiary of Salomon
Smith Barney Holdings Inc. ("Holdings"), which in
turn, is a wholly owned subsidiary of Citigroup.
Subject to the supervision and direction of the
trust's board of trustees, the manager manages the
fund's portfolio in accordance with the fund's stated
investment objective and policies, makes investment
decisions for the fund, places orders to purchase and
sell securities, and employs professional portfolio
managers and securities analysts who provide research
services to the fund. The manager pays the salary of
any officer and employee who is employed by both it
and the trust. The manager bears all expenses in
connection with the performance of its services. The
manager 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 except those performed by the fund's
investment manager under its investment advisory
agreement; b) supplies the fund with office
facilities (which may be in SSBC'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 ("CDSC") 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 fund pays the manager a fee computed daily and
paid monthly at the annual rate of 0.75% of the
fund's average daily net assets. The management fee
paid by the fund in fiscal year ended November 30,
1999 was $3,544,958.
Auditors
KPMG LLP, independent auditors, 757 Third Avenue, New
York, New York 10017, have been selected to serve as
auditors of the trust and to render opinions on the
fund's financial statements for the fiscal year
ending November 30, 2000.
Counsel
Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to the fund.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York, serves as counsel to the directors
who are not "interested persons" of the fund.
Custodian, Transfer Agent and Sub-Transfer Agent
PNC Bank, National Association ("PNC" or "custodian")
located at 17th and Chestnut Streets, Philadelphia,
Pennsylvania, 19103, serves as the custodian of the
fund. Under its custody agreement with the fund, PNC
holds the fund's securities and keeps all necessary
accounts and records. For its services, PNC receives
a monthly fee based upon the month-end market value
of securities held in custody and also receives
securities transactions charges. The assets of the
fund are held under bank custodianship in compliance
with the 1940 Act.
Citi Fiduciary Trust Company (the "transfer agent"),
located at 125 Broad Street, New York, New York
10004, serves as the fund's transfer and dividend-
paying agent. Under the transfer agency agreement,
the transfer agent maintains the shareholder account
records for the fund, handles certain communications
between shareholders and the fund, distributes
dividends and distributions payable by the fund and
produces statements with respect to account activity
for the fund and its shareholders. For these
services, the transfer agent receives fees from the
fund computed on the basis of the number of
shareholder accounts that the transfer agent
maintains for the fund during the month and is
reimbursed for out-of-pocket expenses.
PFPC Global Fund Services ("PFPC" or "sub-transfer
agent"), located at Exchange Place, Boston,
Massachusetts 02109, serves as the trust's sub-
transfer agent. Under the transfer agency agreement,
the sub-transfer agent maintains the shareholder
account records for the trust, handles certain
communications between shareholders and the trust and
distributes dividends and distributions payable by
the trust. For these services, the sub-transfer
agent receives a monthly fee computed on the basis of
the number of shareholder accounts it maintains for
the trust during the month, and is reimbursed for
out-of-pocket expenses.
The Trust on behalf of the fund has also engaged the
services of PFS Shareholder Services as a sub-
transfer agent for PFS Accounts ( "PFS" or "sub-
transfer agent"). PFS is located at 3100
Breckinridge Blvd, Bldg 200, Duluth, Georgia 30099-
0062.
Code of Ethics. Pursuant to Rule 17j-1 of the 1940
Act, the fund, its investment adviser and principal
underwriter has adopted a code of ethics that permits
personnel to invest in securities for their own
accounts, including securities that may be purchased
or held by the fund. All personnel must place the
interests of clients first and avoid activities,
interests and relationships that might interfere with
the duty to make decisions in the best interests of
the clients. All personal securities transactions by
employees must adhere to the requirements of the code
and must be conducted in such a manner as to avoid
any actual or potential conflict of interest, the
appearance of such a conflict, or the abuse of an
employee's position of trust and responsibility. A
copy of the Fund's Code of Ethics is on file with the
Securities and Exchange Commission.
Distributor
Effective June 5, 2000, Salomon Smith Barney, Inc.,
located at 388 Greenwich Street, New York, New York
10013 and PFS serve as the fund's co-distributors
pursuant to a written agreement dated June 5, 2000
(the "Distribution Agreement") which was approved by
the fund's Board of Directors, including a majority
of the independent directors, on April 17, 2000.
Prior to and up to June 5, 2000, CFBDS, Inc. served
as the Fund's Distributor.
The Distributor may be deemed to be an underwriter
for purposes of the Securities Act of 1933. From time
to time, the Distributor, or PFS or its affiliates
may also pay for certain non-cash sales incentives
provided to PFS Investments Registered
Representatives. Such incentives do not have any
effect on the net amount invested. In addition to the
reallowances from the applicable public offering
price described above, PFS may, from time to time,
pay or allow additional reallowances or promotional
incentives, in the form of cash or other compensation
to PFS Investments Registered Representatives that
sell shares of each portfolio.
The Distributor has entered into a selling agreement
with PFS and PFS has entered into an agreement with
PFSI giving PFSI the right to sell shares of each
portfolio of the fund on behalf of the Distributor.
The Distributor's obligation is an agency or "best
efforts" arrangement under which the Distributor is
required to take and pay only for such shares of each
portfolio as may be sold to the public. The
Distributor is not obligated to sell any stated
number of shares. The Distribution Agreement is
renewable from year to year if approved (a) by the
directors or by a vote of a majority of the fund's
outstanding voting securities, and (b) by the
affirmative vote of a majority of directors who are
not parties to the Distribution Agreement or
interested persons of any party by votes cast in
person at a meeting called for such purpose. The
Distribution Agreement provides that it will
terminate if assigned, and that it may be terminated
without penalty by either party on 60 days' written
notice.
For the period September 1, 1998 through October 7,
1998 the aggregate dollar amount of commissions on
Class A shares was $104,000 all of which was paid to
Salomon Smith Barney. For the period October 8, 1998
through November 30, 1998 the aggregate dollar amount
of commissions on Class A shares was $592,000,
$532,800 of which was paid to Salomon Smith Barney.
For the fiscal year ended November 30, 1999 the
aggregate dollar amount of commissions on Class A
shares was $1,421,000 of which $1278,900 was paid to
Salomon Smith Barney
For the period September 1, 1998 through October 7,
1998 the aggregate dollar amount of commissions on
Class L shares was $58,000, all of which was paid to
Salomon Smith Barney. For the period October 8, 1998
through November 30, 1998 the aggregate dollar amount
of commissions on Class L shares was $270,000,
$243,000 of which was paid to Salomon Smith Barney.
For the fiscal year ended November 30, 1999 the
aggregate dollar amount of commissions on Class L
shares was $919,000, of which $827,000 was paid to
Salomon Smith Barney
For the fiscal period ended November 30, 1998,
Salomon Smith Barney received from shareholders
$10,000 and $2,000, in deferred sales charges on the
redemption of Class B and Class L shares,
respectively. For the fiscal year ended November 30,
1999 Salomon Smith Barney received from shareholders
$6,000, $318,000 and $44,000 in deferred sales
charges on the redemption of Class A, Class B, and
Class L shares respectively.
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 trustees has
been advised of the benefits to Salomon Smith Barney
resulting from these settlement procedures and will
take such benefits into consideration when reviewing
the Investment Management and Distribution Agreements
for continuance.
Distribution Arrangements. To compensate Salomon
Smith Barney and PFSI for the service it provides and
for the expense it bears, the fund has adopted a
services and distribution plan (the "Plan") pursuant
to Rule 12b-1 under the 1940 Act. The only classes
of shares being offered for sale through PFSI are
Class1 shares, Class A shares and Class B shares.
Under the Plan, the fund pays Salomon Smith Barney or
PFSI (which pays it registered representative) 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, and Class B 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
period indicated:
Distribution Plan Fees
Fiscal Year
Ended
11/30/99
Fiscal
Period
Ended
11/30/98
Class A
$
231,993
$16,625
Class B
$1,695,0
42
$121,87
4
Class L
$1,130,2
46
$81,200
For the fiscal year ended November 30, 1999, the
distributor incurred distribution expenses totaling
$9,195,907, consisting of $357,515 for advertising,
$20,500 for printing and mailing of prospectuses,
$1,412,337 for support services, $6,490,212 to
Salomon Smith Barney Financial Consultants, and
$295,836 in accruals for interest on the excess of
Salomon Smith Barney expenses incurred in
distribution of the funds' shares over the sum of the
distribution fees and Deferred Sales Charge received
by Salomon Smith Barney from the fund. For the
fiscal year ended November 30, 1999, the distributor,
received $3,057,281 in the aggregate from the Plan.
Under its terms, the Plan continues from year to
year, provided such continuance is approved annually
by vote of the board of trustees, including a
majority of the trustees 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 the Distribution Agreement (the
"independent trustees"). 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 trustees including all of the independent
trustees 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 trustees or, with respect to any fund, by
vote of a majority of the outstanding voting
securities of a fund (as defined in the 1940 Act).
Pursuant to the Plan, Salomon Smith Barney will
provide the board of trustees with periodic reports
of amounts expended under the Plan and the purpose
for which such expenditures were made.
The only classes of shares being offered for sale
through PFS Distributors is Class A shares and
Class B shares. Pursuant to the Plan (described
above), PFS Distributors is paid an annual service
fee with respect to Class A and Class B shares of the
fund sold through PFS Distributors at the annual rate
of 0.25% of the average daily net assets of the
respective class. PFS Distributors is also paid an
annual distribution fee with respect to Class B
shares at the annual rate of 0.75% of the average
daily net assets attributable to that Class. Class B
shares that automatically convert to Class A shares
eight years after the date of original purchase will
no longer be subject to a distribution fee. The fees
are paid to PFS Distributors, which in turn, pays PFS
Investments Inc. ("PFS Investments") to pay its PFS
Investments Registered Representatives for servicing
shareholder accounts and, in the case of Class B
shares, to cover expenses primarily intended to
result in the sale of those shares. These expenses
include: advertising expenses; the cost of printing
and mailing prospectuses to potential investors;
payments to and expenses of PFS Investments
Registered Representatives and other persons who
provide support services in connection with the
distribution of shares; interest and/or carrying
charges; and indirect and overhead costs of PFS
Investments associated with the sale of fund shares,
including lease, utility, communications and sales
promotion expenses.
The payments to PFS Investments Registered
Representatives for selling shares of a class include
a commission or fee paid by the investor or PFS at
the time of sale and, with respect to Class A and
Class B shares, a continuing fee for servicing
shareholder accounts for as long as a shareholder
remains a holder of that class. PFS Investments
Registered Representatives may receive different
levels of compensation for selling different classes
of shares.
PFS Investments may be deemed to be an underwriter
for purposes of the Securities Act of 1933. From time
to time, PFS or its affiliates may also pay for
certain non-cash sales incentives provided to PFS
Investments Registered Representatives. Such
incentives do not have any effect on the net amount
invested. In addition to the reallowances from the
applicable public offering price described above, PFS
may from time to time, pay or allow additional
reallowances or promotional incentives, in the form
of cash or other compensation to PFS Investments
Registered Representatives who sell shares of the
fund.
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 to supplement its own research and analysis.
Decisions to buy and sell securities for the fund are
made by the manager, subject to the overall
supervision and review of the trust's board of
trustees. 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. The manager, 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.
The manager 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 manager 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
manager's fee under the management agreement is not
reduced by reason of its receiving such brokerage and
research services. The trust's Board of Trustees, 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 trust's board of trustees
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 trustees 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 the manager, 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 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. 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 is a
member, except to the extent permitted by the SEC.
Under certain circumstances, the fund may be at a
disadvantage because of this limitation in comparison
with other funds that have similar investment
objectives but that are not subject to a similar
limitation.
The fund has paid the following in brokerage
commissions for portfolio transactions :
Fiscal Year Ended
Fiscal Period Ended
11/30/99
11/30/98
Total Brokerage Commissions $496,811
$133,876
Total Brokerage Commissions
paid to Salomon Smith Barney $10,200
$ 0
% of Total Brokerage Commissions 2.05%
0%
paid to Salomon Smith Barney
% of Total Transactions involving 2.04%
0%
Commissions paid to Salomon
Smith Barney
During the fiscal period ended November 30, 1998, the
total amount of commissionable transactions was
$133,217,263, and during the fiscal year ended
November 30, 1999, the total amount of commissionable
transactions was $426,679,434 .
Portfolio securities transactions on behalf of the
fund are placed by the manager with a number of
brokers and dealers, including Salomon Smith Barney.
Salomon Smith Barney has advised the fund that in
transactions with the fund, Salomon Smith Barney
charges a commission rate at least as favorable as
the rate that Salomon Smith Barney charges its
comparable unaffiliated customers in similar
transactions.
PORTFOLIO TURNOVER
The fund's portfolio turnover rate (the lesser of
purchases or sales of portfolio securities during the
year, excluding purchases or sales of short-term
securities, divided by the monthly average value of
portfolio securities) 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. This
policy should not result in higher brokerage
commissions to the fund, as purchases and sales of
portfolio securities are usually effected as
principal transactions. Securities may be sold in
anticipation of a rise in interest rates (market
decline) or purchased in anticipation of a decline in
interest rates (market rise) and later sold. In
addition, a security may be sold and another security
of comparable quality purchased at approximately the
same time to take advantage of what the fund believes
to be a temporary disparity in the normal yield
relationship between the two securities. These yield
disparities may occur for reasons not directly
related to the investment quality of particular
issues or the general movement of interest rates,
such as changes in the overall demand for, or supply
of, various types of tax-exempt securities. The
fund's portfolio turnover rate for the fiscal period
ended November 30, 1998 was 15%, and for the fiscal
year ended November 30, 1999 was 61%.
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% 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).
Class 1 Shares. Class 1 shares are offered only
through PFS Accounts, and only to Eligible Class 1
Purchasers, at the next determined net asset value
plus a sales charge, as set forth below.
Size of Investment
As % of
Net Amount
Invested
As % of
Offering
Price
Reallowed to
PFS
(as a % of
Offering
Price)*
Less than $10,000
9.29%
8.50%
7.00%
$ 10,000 but less than
$ 25,000
8.40%
7.75%
6.25%
$ 25,000 but less than
$ 50,000
6.38%
6.00%
5.00%
$ 50,000 but less than
$ 100,000
4.71%
4.50%
3.75%
$ 100,000 but less than
$ 250,000
3.63%
3.50%
3.00%
$ 250,000 but less than
$ 400,000
2.56%
2.50%
2.00%
$ 400,000 but less than
$ 600,000
2.04%
2.00%
1.60%
$ 600,000 but less than
$5,000,000
1.01%
1.00%
0.75%
$5,000,000 or more
0.25%
0.25%
0.20%
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 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 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 or proceeds form a sale of a UIT
sponsored by Salomon Smith Barney; (i) purchases by
investors participating in a Salomon Smith Barney
fee-based arrangement; and (j) purchases of Class A
shares by Section 403(b) or Section 401(a) or (k)
accounts associated with Copeland Retirement
Programs. In order to obtain such discounts, the
purchaser must provide sufficient information at the
time of purchase to permit verification that the
purchase would qualify for the elimination of the
sales charge.
Right of Accumulation. Class A shares of the fund
may be purchased by ''any person'' (as defined above)
at a reduced sales charge or at net asset value
determined by aggregating the dollar amount of the
new purchase and the total net asset value of all
Class A shares of the fund and of other Smith Barney
mutual funds that are offered with a sales charge as
currently listed under ''Exchange Privilege'' then
held by such person and applying the sales charge
applicable to such aggregate. In order to obtain
such discount, the purchaser must provide sufficient
information at the time of purchase to permit
verification that the purchase qualifies for the
reduced sales charge. The right of accumulation is
subject to modification or discontinuance at any time
with respect to all shares purchased thereafter.
Letter of Intent - Class A Shares. A Letter of
Intent for an amount of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales
charge by aggregating investments over a 13 month
period, provided that the investor refers to such
Letter when placing orders. For purposes of a Letter
of Intent, the ''Amount of Investment'' as referred
to in the preceding sales charge table includes
(i) all Class A shares of the fund and other Smith
Barney mutual funds offered with a sales charge
acquired during the term of the letter plus (ii) the
value of all Class A shares previously purchased and
still owned. Each investment made during the period
receives the reduced sales charge applicable to the
total amount of the investment goal. If the goal is
not achieved within the period, the investor must pay
the difference between the sales charges applicable
to the purchases made and the charges previously
paid, or an appropriate number of escrowed shares
will be redeemed. The term of the Letter will
commence upon the date the Letter is signed, or at
the options of the investor, up to 90 days before
such date. Please contact 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 owned by the shareholders as the total number
of his or her Class B shares converting at the time
bears to the total number of outstanding Class B
shares (other than Class B Dividend Shares) owned by
the shareholder.
In determining the applicability of any deferred
sales charge, it will be assumed that a redemption is
made first of shares representing capital
appreciation, next of shares representing the
reinvestment of dividends and capital gain
distributions and finally of other shares held by the
shareholder for the longest period of time. The
length of time that deferred sales charge shares
acquired through an exchange have been held will be
calculated from the date that the shares exchanged
were initially acquired in one of the other Smith
Barney mutual funds, and fund shares being redeemed
will be considered to represent, as applicable,
capital appreciation or dividend and capital gain
distribution reinvestments in such other funds. For
Federal income tax purposes, the amount of the
deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount
realized on redemption. The amount of any deferred
sales charge will be paid to Salomon Smith Barney.
To provide an example, assume an investor purchased
100 Class B shares of the fund at $10 per share for a
cost of $1,000. Subsequently, the investor acquired
5 additional shares of the fund through dividend
reinvestment. During the fifteenth month after the
purchase, the investor decided to redeem $500 of his
or her investment. Assuming at the time of the
redemption the net asset value had appreciated to $12
per share, the value of the investor's shares would
be $1,260 (105 shares at $12 per share). The deferred
sales charge would not be applied to the amount which
represents appreciation ($200) and the value of the
reinvested dividend shares ($60). Therefore, $240 of
the $500 redemption proceeds ($500 minus $260) would
be charged at a rate of 4.00% (the applicable rate
for Class B shares) for a total deferred sales charge
of $9.60.
Waivers of Deferred Sales Charge
The deferred sales charge will be waived on: (a)
exchanges (see ''Exchange Privilege''); (b) automatic
cash withdrawals in amounts equal to or less than
1.00% per month of the value of the shareholder's
shares at the time the withdrawal plan commences (see
''Automatic Cash Withdrawal Plan'') (provided,
however, that automatic cash withdrawals in amounts
equal to or less than 2.00% per month of the value of
the shareholder's shares will be permitted for
withdrawal plans that were established prior to
November 7, 1994); (c) redemptions of shares within
12 months following the death or disability of the
shareholder; (d) redemptions of shares made in
connection with qualified distributions from
retirement plans or IRAs upon the attainment of age
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.
PFS ACCOUNTS
Initial purchase of shares of the fund must be made
through a PFS Investments Registered Representative
by completing the appropriate application. The
completed application should be forwarded to PFS
Shareholder Services, the sub-transfer agent, with
regard to PFS Accounts, P.O. Box 105033, Atlanta,
Georgia 30348-5033. Checks drawn on foreign banks
must be payable in U.S. dollars and have the routing
number of the U.S. bank encoded on the check.
Subsequent investments may be sent directly to the
sub-transfer agent. In processing applications and
investments, the transfer agent acts as agent for the
investor and for PFS Investments and also as agent
for the distributor, in accordance with the terms of
the prospectus. If the transfer agent ceases to act
as such, a successor company named by the fund will
act in the same capacity so long as the account
remains open.
Shares purchased will be held in the shareholder's
account by the sub-transfer agent. Share certificates
are issued only upon a shareholder's written request
to the sub-transfer agent. A shareholder that has
insufficient funds to complete any purchase will be
charged a fee of $30 per returned purchase by PFS.
A shareholder, enrolled in the Systematic Investment
Plan, who has insufficient funds to complete a
transfer will be charged a fee of up to $30.00.
Investors in Class A and Class B shares may open an
account by making an initial investment of at least
$1,000 for each account in each Class (except for
Systematic Investment Plan accounts), or $250 for an
IRA or a Self-Employed Retirement Plan in a fund.
Subsequent investments of at least $50 may be made
for each Class. For participants in retirement plans
qualified under Section 403(b)(7) or Section 401(a)
of the Code, the minimum initial investment
requirement for Class A and Class B shares and the
subsequent investment requirement for each Class in
the fund is $25. For the fund's Systematic Investment
Plan, the minimum initial investment requirement for
Class A and Class B shares and the subsequent
investment requirement for each Class is $25. There
are no minimum investment requirements in Class A
shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney,
directors or trustees of any of the Smith Barney
mutual funds, and their spouses and children. The
fund reserves the right to waive or change minimums,
to decline any order to purchase its shares and to
suspend the offering of shares from time to time.
Purchase orders received by the transfer agent or
sub-transfer agent prior to the close of regular
trading on the NYSE, on any day the fund calculates
its net asset value, are priced according to the net
asset value determined on that day.
Upon completion of certain automated systems,
shareholders who establish telephone transaction
authority on their account and supply bank account
information may make additions to their accounts at
any time. Initial purchases of fund shares may also
be made by wire. The minimum investment that can be
made by wire is $10,000. Once an account is open, a
shareholder may make additional investments by wire.
Prior to sending a wire, shareholders should contact
the sub-transfer agent at (800) 544-5445 between 8:00
a.m. and 8:00 p.m. eastern time any day that the NYSE
is open. If a shareholder does not wish to allow
telephone subsequent investments by any person in his
account, he should decline the telephone transaction
option on the account application. The minimum
telephone subsequent investment is $250 and can be up
to a maximum of $10,000. By requesting a subsequent
purchase by telephone, you authorize the sub-transfer
agent to transfer funds from the bank account
provided for the amount of the purchase. A
shareholder that has insufficient funds to complete
the transfer will be charged a fee of up to $30 by
PFS or the sub-transfer agent. A shareholder who
places a stop payment on a transfer or the transfer
is returned because the account has been closed, will
also be charged a fee of up to $30 by PFS or the sub-
transfer agent. Subsequent investments by telephone
may not be available if the shareholder cannot reach
the sub-transfer agent whether because all telephone
lines are busy or for any other reason; in such case,
a shareholder would have to use the fund's regular
subsequent investment procedure described above.
Redemption proceeds can be sent by check to the
address of record or by wire transfer to a bank
account designated on the application. A shareholder
will be charged a $25 service fee for wire transfers
and a nominal service fee for transfers made directly
to the shareholder's bank by the Automated Clearing
House.
Additional information regarding the sub-transfer
agent's services may be obtained by contacting the
Client Services Department at (800) 544-5445. The
sub-transfer agent will process and mail usually
within two or three business days after receiving the
redemption request in good order. The shareholder
may request the proceeds to be mailed by two days air
express for a $8 fee that will be deducted from the
shareholders account or by one day express for a $15
fee that will be deducted from the shareholder's
account.
Smith Barney Retirement Programs
You may be eligible to participate in a retirement
program sponsored by Salomon Smith Barney or one of
its affiliates. The fund offers Class A and Class L
shares at net asset value to participating plans
under the programs. You can meet minimum investment
and exchange amounts, if any by combining the plan's
investments in any of the Smith Barney mutual funds.
There are no sales charges when you buy or sell
shares and the class of shares you may purchase
depends on the amount of your initial investment
and/or the date your account is opened. Once a class
of shares is chosen, all additional purchases must by
of the same class.
For plans opened on or after March 1, 2000 that are
not part of the Paychex offering, Class A shares may
be purchased regardless of the amount invested.
For plans opened prior to March 1, 2000 and for plans
that are part of the Paychex offering, the class of
shares you may purchase depends on the amount of your
initial investment:
Class A Shares. Class A shares may be purchased by
plans investing at least $1million.
Class L Shares. Class L shares may be purchased by
plans investing less than $1 million. Class L shares
are eligible to exchange into Class A shares not
later than 8 years after the plan joined the program.
They are eligible for exchange in the following
circumstances:
If the plan was opened on or after June 21, 1996 and
a total of $1 million is invested in Smith Barney
Funds Class L shares (other than money market funds),
all Class L shares are eligible for exchange after
the plan is in the program for 5 years.
If the plan was opened before June 21, 1996 and a
total of $500,000 is invested in Smith Barney Funds
Class L shares (other than money market funds) on
December 31 in any year, all Class L shares are
eligible for exchange on or about March 31 of the
following year.
For more information, call your Salomon Smith Barney
Financial Consultant or the transfer agent.
Retirement Programs Opened On or After June 21, 1996.
If, at the end of the fifth year after the date the
participating plan enrolled in the Smith Barney
401(k) Program or the ExecChoiceTM Program, a
participating plan's total Class L holdings in all
non-money market Smith Barney mutual funds equal at
least $1,000,000, the participating plan will be
offered the opportunity to exchange all of its Class
L shares shares for Class A shares of the fund. (For
participating plans that were originally established
through a Salomon Smith Barney retail brokerage
account, the five-year period will be calculated from
the date the retail brokerage account was opened.)
Such participating plans will be notified of the
pending exchange in writing within 30 days after the
fifth anniversary of the enrollment date and, unless
the exchange offer has been rejected in writing, the
exchange will occur on or about the 90th day after
the fifth anniversary date. If the participating plan
does not qualify for the five-year exchange to Class
A shares, a review of the participating plan's
holdings will be performed each quarter until either
the participating plan qualifies or the end of the
eighth year.
Retirement Programs Opened Prior to June 21, 1996.
In any year after the date a participating plan
enrolled in the Smith Barney 401(k) Program, if a
participating plan's total Class L holdings in all
non-money market Smith Barney mutual funds equal at
least $500,000 as of the calendar year-end, the
participating plan will be offered the opportunity to
exchange all of its Class L shares for Class A shares
of the fund. Such Plans will be notified in writing
within 30 days after the last business day of the
calendar year and, unless the exchange offer has been
rejected in writing, the exchange will occur on or
about the last business day of the following March.
Any participating plan in the Smith Barney 401(k) or
the ExecChoiceTM Program, whether opened before or
after June 21, 1996, that has not previously
qualified for an exchange into Class A shares will be
offered the opportunity to exchange all of its Class
L shares for Class A shares of the fund, regardless
of asset size, at the end of the eighth year after
the date the participating plan enrolled in the Smith
Barney 401(k) Program or ExecChoiceTM Program. Such
plans will be notified of the pending exchange in
writing approximately 60 days before the eighth
anniversary of the enrollment date and, unless the
exchange has been rejected in writing, the exchange
will occur on or about the eighth anniversary date.
Once an exchange has occurred, a participating plan
will not be eligible to acquire additional Class L
shares, but instead may acquire Class A shares of the
same fund. Any Class L shares not converted will
continue to be subject to the distribution fee.
Participating plans wishing to acquire shares of the
fund through the Smith Barney 401(k) Program or the
Smith Barney ExecChoiceTM Program must purchase such
shares directly from the transfer agent. For further
information regarding these Programs, investors
should contact a Salomon Smith Barney Financial
Consultant.
Retirement Programs Investing in Class B Shares:
Class B shares of a fund are not available for
purchase by participating plans opened on or after
June 21, 1996, but may continue to be purchased by
any participating plan in the Smith Barney 401 (k)
Program opened prior to such date and originally
investing in Such Class. Class B shares acquired are
subject to a deferred sales charge of 3.00% of
redemption proceeds if the participating plan
terminates within eight years of the date the
participating plan first enrolled in the Smith Barney
401 (k) Program.
At the end of the eighth year after the date the
participating plan enrolled in the Smith Barney 401
(k) Program, the participating plan will be offered
the opportunity to exchange all of its Class B shares
for Class A shares of the same fund. Such
participating plan will be notified of the pending
exchange in writing approximately 60 days before the
eighth anniversary of the enrollment date and, unless
the exchange has been rejected in writing, the
exchange will occur on or about the eighth
anniversary date. Once the exchange has occurred, a
participating plan will not be eligible to acquire
additional Class B shares, but instead may acquire
Class A shares of a the same fund. If the
participating elects not to exchange all of its Class
B shares at that time, each Class B share held by the
participating plan will have the same conversion
feature as Class B shares held by other investors.
See "Purchase of Shares-Deferred Sales Charge
Alternatives."
No deferred sales charge is imposed on redemptions of
Class B shares to the extent that the net asset value
of the shares redeemed does not exceed the current
net asset value of the shares purchased through
reinvestment of dividends or capital gain
distributions, plus the current net asset value of
Class B shares purchased more than eight years prior
to the redemption, plus increases in the net asset
value of the shareholders Class B shares above the
purchase payments made during the preceding eight
years. Whether or not the deferred sales charge
applies to the redemption by a participating plan
depends on the number of years since the
participating plan first became enrolled in the
Smith Barney 401(k) Program, unlike the applicability
of the deferred sales charge to redemptions by other
shareholders, which depends on the number of years
since those shareholders made the purchase payment
from which the amount is being redeemed.
The deferred sales charge will be waived on
redemptions of Class B shares in connection with
lump-sum or other distributions made by a
participating plan; as a result of (a) the retirement
of an employee in the participating plan; (b) the
termination of employment of an employee in the
participating plan; (c) the death or disability or an
employee in the participating plan; (d) the
attainment of age 59 1/2 by an employee in the
participating plan; (e) hardship of an employee in
the participating plan to the extent permitted under
Section 401(k) o the Code; or (f) redemptions of
shares in connection with a loan made by the
participating plan to an employee.
Determination of Public Offering Price
The fund offers its shares to the public on a
continuous basis. The public offering price for a
Class A and Class Y share of the fund is equal to the
net asset value per share at the time of purchase,
plus for Class A shares an initial sales charge based
on the aggregate amount of the investment. The
public offering price for a Class L share (and Class
A share purchases, including applicable rights of
accumulation, equaling or exceeding $500,000) is
equal to the net asset value per share at the time of
purchase and no sales charge is imposed at the time
of purchase. A deferred sales charge, however, is
imposed on certain redemptions of Class L shares, and
Class A shares when purchased in amounts exceeding
$500,000. The method of computation of the public
offering price is shown in each fund's financial
statements, incorporated by reference in their
entirety into this SAI.
REDEMPTION OF SHARES
The right of redemption of shares of the fund may be
suspended or the date of payment postponed (a) for
any periods during which the NYSE is closed (other
than for customary weekend and holiday closings), (b)
when trading in the markets the fund normally
utilizes is restricted, or an emergency exists, as
determined by the SEC, so that disposal of the fund's
investments or determination of its net asset value
is not reasonably practicable or (c) for any other
periods as the SEC by order may permit for the
protection of the fund's shareholders.
If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed
for transfer (or be accompanied by an endorsed stock
power) and must be submitted to the sub-transfer
agent together with the redemption request. Any
signature appearing on a share certificate, stock
power or written redemption request in excess of
$10,000 must be guaranteed by an eligible guarantor
institution such as a domestic bank, savings and loan
institution, domestic credit union, member bank of
the Federal Reserve System or member firm of a
national securities exchange. Written redemption
requests of $10,000 or less do not require a
signature guarantee unless more than one such
redemption request is made in any 10-day period or
the redemption proceeds are to be sent to an address
other than the address of record. Unless otherwise
directed, redemption proceeds will be mailed to an
investor's address of record. The Transfer Agent may
require additional supporting documents for
redemptions made by corporations, executors,
administrators, trustees or guardians. A redemption
request will not be deemed properly received until
the Transfer Agent receives all required documents in
proper form.
If a shareholder holds shares in more than one Class,
any request for redemption must specify the Class
being redeemed. In the event of a failure to specify
which Class, or if the investor owns fewer shares of
the Class than specified, the redemption request will
be delayed until the Transfer Agent receives further
instructions from Salomon Smith Barney, or if the
shareholder's account is not with Salomon Smith
Barney, from the shareholder directly. The
redemption proceeds will be remitted on or before the
third business day following receipt of proper
tender, except on any days on which the NYSE is
closed or as permitted under the 1940 Act, in
extraordinary circumstances. Generally, if the
redemption proceeds are remitted to a Salomon Smith
Barney brokerage account, these funds will not be
invested for the shareholder's benefit without
specific instruction and Salomon Smith Barney will
benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check,
other than a certified or official bank check, will
be remitted upon clearance of the check, which may
take up to fifteen days or more.
Distribution in Kind
If the board of trustees of the trust determines that
it would be detrimental to the best interests of the
remaining shareholders to make a redemption payment
wholly in cash, the fund may pay, in accordance with
SEC rules, any portion of a redemption in excess of
the lesser of $250,000 or 1.00% of the fund's net
assets by a distribution in kind of portfolio
securities in lieu of cash. Securities issued as a
distribution in kind may incur brokerage commissions
when shareholders subsequently sell those securities.
Automatic Cash Withdrawal Plan
An automatic cash withdrawal plan (the "Withdrawal
Plan") is available to shareholders of the fund who
own shares of the fund with a value of at least
$10,000 and who wish to receive specific amounts of
cash monthly or quarterly. Withdrawals of at least
$50 may be made under the Withdrawal Plan by
redeeming as many shares of the fund as may be
necessary to cover the stipulated withdrawal payment.
Any applicable deferred sales charge will not be
waived on amounts withdrawn by shareholders that
exceed 1.00% per month of the value of a
shareholder's shares at the time the Withdrawal Plan
commences. (With respect to Withdrawal Plans in
effect prior to November 7, 1994, any applicable
deferred sales charge will be waived on amounts
withdrawn that do not exceed 2.00% per month of the
value of a shareholder's shares at the time the
Withdrawal Plan commences). To the extent that
withdrawals exceed dividends, distributions and
appreciation of a shareholder's investment in a fund,
continued withdrawal payments will reduce the
shareholder's investment, and may ultimately exhaust
it. Withdrawal payments should not be considered as
income from investment in a fund. Furthermore, as it
generally would not be advantageous to a shareholder
to make additional investments in the fund at the
same time he or she is participating in the
Withdrawal Plan, purchases by such shareholders in
amounts of less than $5,000 ordinarily will not be
permitted.
Shareholders of a fund who wish to participate in the
Withdrawal Plan and who hold their shares of the fund
in certificate form must deposit their share
certificates with the sub-transfer agent as agent for
Withdrawal Plan members. All dividends and
distributions on shares in the Withdrawal Plan are
reinvested automatically at net asset value in
additional shares of the fund involved. A
shareholder who purchases shares directly through the
sub-transfer agent may continue to do so and
applications for participation in the Withdrawal Plan
must be received by the sub-transfer agent no later
than the eighth day of the month to be eligible for
participation beginning with that month's withdrawal.
For additional information, shareholders should
contact a Salomon Smith Barney Financial Consultant.
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 trust in
valuing its assets.
Securities listed on a national securities exchange
will be valued on the basis of the last sale on the
date on which the valuation is made or, in the
absence of sales, at the mean between the closing bid
and asked prices. Over-the-counter securities will
be valued at the mean between the closing bid and
asked prices on each day, or, if market quotations
for those securities are not readily available, at
fair value, as determined in good faith by the fund's
board of trustees. Short-term obligations with
maturities of 60 days or less are valued at amortized
cost, which constitutes fair value as determined by
the fund's board of trustees. Amortized cost
involves valuing an instrument at its original cost
to the fund and thereafter assuming a constant
amortization to maturity of any discount or premium,
regardless of the effect of fluctuating interest
rates on the market value of the instrument. All
other securities and other assets of the fund will be
valued at fair value as determined in good faith by
the fund's board of trustees.
EXCHANGE PRIVILEGE
Shareholders of any of the Smith Barney mutual funds
may exchange all or part of their shares for shares
of the same Class of other Smith Barney mutual funds,
on the basis of relative net asset value per share at
the time of exchange as follows:
A. Class A and Class Y shares of the fund may
be exchanged without a sales charge for the
respective shares of any of the Smith Barney
mutual funds.
B. Class B shares of any fund may be exchanged
without a sales charge. Class B shares of the
fund exchanged for Class B shares of another
Smith Barney mutual fund will be subject to the
higher applicable deferred sales charge of the
two funds and, for purposes of calculating
deferred sales charge rates and conversion
periods, will be deemed to have been held since
the date the shares being exchanged were deemed
to be purchased.
C. Class L shares of any fund may be exchanged
without a sales charge. For purposes of
deferred sales charge applicability, Class L
shares of the fund exchanged for Class C shares
of another Smith Barney mutual fund will be
deemed to have been owned since the date the
shares being exchanged were deemed to be
purchased.
The exchange privilege enables shareholders in any
Smith Barney mutual fund to acquire shares of the
same Class in a fund with different investment
objectives when they believe a shift between funds is
an appropriate investment decision. This privilege
is available to shareholders residing in any state in
which the fund shares being acquired may legally be
sold. Prior to any exchange, the shareholder should
obtain and review a copy of the current prospectus of
each fund into which an exchange is being considered.
Prospectuses may be obtained from a 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,
subject to any applicable deferred sales charge, the
proceeds are immediately invested, at a price as
described above, in shares of the fund being
acquired. Salomon Smith Barney reserves the right to
reject any exchange request. The exchange privilege
may be modified or terminated at any time after
written notice to shareholders.
Additional Information Regarding the Exchange
Privilege. Although the exchange privilege is an
important benefit, excessive exchange transactions
can be detrimental to the fund's performance and its
shareholders. The manager may determine that a
pattern of frequent exchanges is excessive and
contrary to the best interests of the fund's other
shareholders. In this event, the fund may, at its
discretion, decide to limit additional purchases
and/or exchanges by a shareholder. Upon such a
determination, the fund will provide notice in
writing or by telephone to the shareholder at least
15 days prior to suspending the exchange privilege
and during the 15 day period the shareholder will be
required to (a) redeem his or her shares in the fund
or (b) remain invested in the fund or exchange into
any of the funds of the Smith Barney mutual funds
ordinarily available, which position the shareholder
would be expected to maintain for a significant
period of time. All relevant factors will be
considered in determining what constitutes an abusive
pattern of exchanges.
PERFORMANCE DATA
From time to time the fund may advertise its total
return and average annual total return in
advertisements and/or other types of sales
literature. These figures are computed separately
for Class A, Class B, Class L 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 trust may quote a fund's yield
or total return in advertisements or in reports and
other communications to shareholders. The trust may
include comparative performance information in
advertising or marketing the fund's shares. Such
performance information may include the following
industry and financial publications- Barron's,
Business Week, CDA Investment Technologies, Inc.,
Changing Times, Forbes, Fortune, Institutional
Investor, Investors Business Daily, Money,
Morningstar Mutual Fund Values, The New York Times,
USA Today and The Wall Street Journal. To the extent
any advertisement or sales literature of the fund
describes the expenses or performance of any Class it
will also disclose such information for the other
Classes.
THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
Average Annual Total Return
A fund's "average annual total return," as described
below, is computed according to a formula prescribed
by the SEC. The formula can be expressed as follows:
P(1 + T)n = ERV
Where: P = a
hypothetical initial payment of $1,000.
T = average annual
total return.
n = number of years.
ERV = Ending Redeemable
Value of a
hypothetical
$1,000 investment
made at the
beginning of a 1-
, 5- or 10-year
period at the end
of a 1-, 5- or
10-year period
(or fractional
portion thereof),
assuming
reinvestment of
all dividends and
distributions.
The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period. A fund's net investment income changes in
response to fluctuations in interest rates and the
expenses of the fund.
Average Annual Total Return
Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
27.62%
N/A
N/A
40.37%
Class B3
28.43%
N/A
N/A
42.26%
Class L4
30.99%
N/A
N/A
43.91%
Class Y
N/A
N/A
N/A
34.49%
_______________________
1 Class A, B, L and Y commenced operations on
September 1, 1998.
2 The average annual total return figure assumes
that the maximum 5.00% sales charge has been
deducted from the investment at the time of
purchase. If the maximum sales charge had not
been deducted, the average annual total return
for Class A shares for the same period would
have been 34.36% and 46.27% for one year and
since inception of the fund, respectively.
3 The average annual total return figure assumes
that the maximum applicable deferred sales
charge has been deducted from the investment at
the time of redemption. If the maximum
deferred sales charge had not been deducted,
the average annual total return for Class B
shares for the same period would have been
33.43% and 45.19% for one year and since
inception of the fund, respectively.
4 The average annual total return figure assumes
that the maximum applicable initial and
deferred sales charges have been deducted from
the investment at the time of redemption. If
the maximum initial and deferred sales charges
had not been deducted, the average annual total
return for Class L shares for the same period
would have been 33.35% and 45.13% for one year
and since inception of the fund, respectively..
Aggregate Total Return
The fund's "aggregate total return," as described
below, represents the cumulative change in the value
of an investment in the fund for the specified period
and is computed by the following formula:
ERV - P
P
Where: P = a hypothetical initial
payment of $10,000.
ERV = Ending Redeemable Value
of a hypothetical
$10,000 investment made
at the beginning of the
1-, 5- or 10-year
period at the end of
the 1-, 5- or 10-year
period (or fractional
portion thereof),
assuming reinvestment
of all dividends and
distributions.
The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.
Aggregate Annual Total Return
Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
27.62%
N/A
N/A
52.61%
Class B3
28.43%
N/A
N/A
55.18%
Class L4
30.99%
N/A
N/A
57.43%
Class Y
N/A
N/A
N/A
34.49%
_______________________
1 Classes A, B L and Y commenced operations on
September 1, 1998.
2 The average annual total return figure assumes
that the maximum 5.00% sales charge has been
deducted from the investment at the time of
purchase. If the maximum sales charge had not
been deducted, the average annual total return
for Class A shares for the same period would
have been 34.36% and 60.65% for one year and
since inception of the fund, respectively.
3 The average annual total return figure assumes
that the maximum applicable deferred sales
charge has been deducted from the investment at
the time of redemption. If the maximum
deferred sales charge had not been deducted,
the average annual total return for Class B
shares for the same period would have been
33.43% and 59.18% for on e year and since
inception of the fund, respectively.
4 The average annual total return figure assumes
that the maximum applicable initial and
deferred sales charges have been deducted from
the investment at the time of redemption. If
the maximum initial and deferred sales charges
had not been deducted, the average annual total
return for Class L shares for the same period
would have been 33.35% and 59.09% for one year
and since inception of the fund, 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's performance
for any specified period in the future. Because
performance will vary, it may not provide a basis for
comparing an investment in the Class with certain
bank deposits or other investments that pay a fixed
yield for a stated period of time. Investors
comparing a Class's performance with that of other
mutual funds should give consideration to the quality
and maturity of the respective investment companies'
portfolio securities.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions.
The fund's policy is to distribute its net investment
income and net realized capital gains, if any,
annually. The fund may also pay additional dividends
shortly before December 31 from certain amounts of
undistributed ordinary and capital gains realized, in
order to avoid a Federal excise tax liability.
If a shareholder does not otherwise instruct,
dividends and capital gains distributions will be
reinvested automatically in additional shares of the
same Class at net asset value, subject to no sales
charge or deferred sales charge. A shareholder may
change the option at any time by notifying his
Salomon Smith Barney Financial Consultant or Dealer
Representative. Shareholders whose account are held
directly at PFPC should notify PFPC in writing,
requesting a change to this reinvest option
The per share dividends on Class B and Class L shares
of the fund may be lower than the per share dividends
on Class A and Class Y shares principally as a result
of the distribution fee applicable with respect to
Class B and Class L shares. The per share dividends
on Class A shares of the fund may be lower than the
per share dividends on Class Y shares principally as
a result of the service fee applicable to Class A
shares. Distributions of capital gains, if any, will
be in the same amount for Class A, Class B, Class L
and Class Y shares.
Taxes
The following is a summary of the material United
States federal income tax considerations regarding
the purchase, ownership and disposition of shares of
a 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
and existing judicial and administrative
interpretations thereof, both of which are subject to
change.
The Fund and Its Investments
The fund intends to continue to qualify to be treated
as a regulated investment company during each taxable
year under the Internal Revenue Code of 1986, as
amended (the "Code"). To so qualify, the fund must,
among other things: (a) derive at least 90% of its
gross income in each taxable year from dividends,
interest, payments with respect to securities loans
and gains from the sale or other disposition of stock
or securities, foreign currencies, or other income
(including, but not limited to, gains from options,
futures or forward contracts) derived with respect to
its business of investing in such stock, securities
or currencies; and (b) diversify its holdings so
that, at the end of each quarter of the fund's
taxable year, (i) at least 50% of the market value of
the fund's assets is represented by cash, securities
of other regulated investment companies, United
States government securities and other securities,
with such other securities limited, in respect of any
one issuer, to an amount not greater than 5% of the
fund's assets and not greater than 10% of the
outstanding voting securities of such issuer and (ii)
not more than 25% of the value of its assets is
invested in the securities (other than United States
government securities or securities of other
regulated investment companies) of any one issuer or
any two or more issuers that the fund controls and
which are determined to be engaged in the same or
similar trades or businesses or related trades or
businesses..
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-term 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 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
to its shareholders in compliance with the Code's
timing and other requirements, but will be subject to
tax at regular corporate rates on any taxable income
or gains it does not distribute.
The Code imposes a 4% nondeductible excise tax on
the fund to the extent it does not distribute by the
end of any calendar year at least 98% of its ordinary
income for that year and at least 98% of its net of
its capital gains (both long-term and short-term) for
the one-year period ending, as a general rule, on
October 31 of that year. For this purpose, however,
any ordinary income or net capital gains 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 excise 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. Moreover, if the fund fails to qualify as a
regulated investment company in any year, it must pay
out its earnings and profits accumulated in that year
in order to qualify again as a regulated investment
company. In addition, the fund may be required to
recognize any net built-in gains with respect to
certain of its assets (i.e. the excess of the
aggregate gains, including items of income, over
aggregate losses that would have been realized with
respect to such assets if the fund 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 so-called "section 1256
contracts", such as regulated futures contracts, most
foreign currency forward contracts traded in the
interbank market and options on most stock indices,
are subject to special tax rules. All section 1256
contracts held by the fund at the end of its taxable
year are required to be marked to their market value,
and any unrealized gain or loss on those positions
will be included in the fund's income as if each
position had been sold for its fair market value at
the end of the taxable year. The resulting gain or
loss will be combined with any gain or loss realized
by the fund from positions in section 1256 contracts
closed during the taxable year. Provided such
positions were held as capital assets and were not
part of a "hedging transaction" nor part of a
"straddle," 60% of the resulting net gain or loss
will be treated as long-term capital gain or loss,
and 40% of such net gain or loss will be treated as
short-term capital gain or loss, regardless of the
period of time the positions were actually held by
the fund.
Foreign Investments. Dividends or other income
(including, in some cases, capital gains) received by
the fund from investments in foreign securities may
be subject to withholding and other taxes imposed by
foreign countries. Tax conventions between certain
countries and the United States may reduce or
eliminate such taxes in some cases. The fund will
not be eligible to elect to treat any foreign taxes
paid by it as paid by its shareholders, who therefore
will not be entitled to credits for such taxes on
their own tax returns. Foreign taxes paid by the
fund will reduce the return from the fund's
investments.
Passive Foreign Investment Companies. If the fund
purchases shares in certain foreign investment
entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United
States federal income tax on a portion of any "excess
distribution" or gain from the disposition of such
shares even if such income is distributed as a
taxable dividend by the fund to its shareholders.
Additional charges in the nature of interest may be
imposed on the fund in respect of deferred taxes
arising from such distributions or gains. If the
fund were to invest in a PFIC and elected to treat
the PFIC as a "qualified electing fund" under the
Code, in lieu of the foregoing requirements, the fund
might be required to include in income each year a
portion of the ordinary earnings and net capital
gains of the qualified electing fund, even if not
distributed to the fund, and such amounts would be
subject to the 90% and excise tax distribution
requirements described above. In order to make this
election, the fund would be required to obtain
certain annual information from the passive foreign
investment companies in which it invests, which may
be difficult or impossible to obtain.
Alternatively, the fund may make a mark-to-market
election that will 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 such case, the
fund would report any such gains as ordinary income
and would deduct any such losses as ordinary losses
to the extent of previously recognized gains. The
election, once made, would be effective for all
subsequent taxable years of the fund, unless revoked
with the consent of the Internal Revenue Service..
By making the election, the fund could potentially
ameliorate the adverse tax consequences with respect
to its ownership of shares in a PFIC, but in any
particular year may be required to recognize income
in excess of the distributions it receives from PFICs
and its proceeds from dispositions of PFIC stock.
The fund may have to distribute this "phantom" income
and gain to satisfy the 90% 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). The fund currently expects
to distribute any excess annually to its
shareholders. However, if the fund retains for
investment an amount equal to all or a portion of its
net long-term capital gains in excess of its net
short-term capital losses and capital loss
carryovers, it will be subject to a corporate tax
(currently at a rate of 35%) on the amount retained.
In that event, the fund will designate such retained
amounts as undistributed capital gains in a notice to
its shareholders who (a) will be required to include
in income for United Stares federal income tax
purposes, as long-term capital gains, their
proportionate shares of the undistributed amount, (b)
will be entitled to credit their proportionate shares
of the 35% tax paid by the fund on the undistributed
amount against their United States federal income tax
liabilities, if any, and to claim refunds to the
extent their credits exceed their liabilities, if
any, and (c) will be entitled to increase their tax
basis, for United States federal income tax purposes,
in their shares by an amount equal to 65% of the
amount of undistributed capital gains included in the
shareholder's income. Organizations or persons not
subject to federal income tax on such capital gains
will be entitled to a refund of their pro rata share
of such taxes paid by the fund upon filing
appropriate returns or claims for refund with the IRS
Dividends of net investment income and distributions
of net realized short-term capital gains are taxable
to a United States shareholder as ordinary income,
whether paid in cash or in shares. Distributions of
net realized 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 an
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 during such six-month period..
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 of 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
fund.
ADDITIONAL INFORMATION
The trust was organized on October 17, 1991 under the
laws of the Commonwealth of Massachusetts and is a
business entity commonly known as a "Massachusetts
business trust." The trust offers shares of
beneficial interest of five separate funds with a par
value of $.001 per share. The fund offers shares of
beneficial interest 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 trust's board of trustees does
not anticipate that there will be any conflicts among
the interests of the holders of the different
Classes. The trustees, on an ongoing basis, will
consider whether any such conflict exists and, if so,
take appropriate action.
Under Massachusetts's law, shareholders could, under
certain circumstances, be held personally liable for
the obligations of the fund. The Master Trust
Agreement disclaims shareholder liability for acts or
obligations of the fund, however, and requires that
notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by
the fund or a trustee. The Master Trust Agreement
provides for indemnification from fund property for
all losses and expenses of any shareholder held
personally liable for the obligations of the fund.
Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is limited
to circumstances in which the fund itself would be
unable to meet its obligations, a possibility which
management of the fund believes is remote. Upon
payment of any liability incurred by the fund, a
shareholder paying such liability will be entitled to
reimbursement from the general assets of the fund.
The trustees intend to conduct the operation of the
fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for
liabilities of the fund.
The Master Trust Agreement of the fund permits the
trustees of the fund to issue an unlimited number of
full and fractional shares of a single class and to
divide or combine the shares into a greater or lesser
number of shares without thereby changing the
proportionate beneficial interests in the fund. Each
share in the fund represents an equal proportional
interest in the fund with each other share.
Shareholders of the fund are entitled upon its
liquidation to share pro rata in its net assets
available for distribution. No shareholder of the
fund has any preemptive or conversion rights. Shares
of the fund are fully paid and non-assessable.
Pursuant to the Master Trust Agreement, the fund's
trustees may authorize the creation of additional
series of shares (the proceeds of which would be
invested in separate, independently managed
portfolios) and additional classes of shares within
any series (which would be used to distinguish among
the rights of different categories of shareholders,
as might be required by future regulations or other
unforeseen circumstances).
The fund does not hold annual shareholder meetings.
There normally will be no meetings of shareholders
for the purpose of electing trustees unless and until
such time as less than a majority of the trustees
holding office have been elected by shareholders, at
which time the trustees then in office will call a
shareholders' meeting for the election of trustees.
Shareholders of record of no less than two-thirds of
the outstanding shares of the trust may remove a
trustee through a declaration in writing or by vote
cast in person or by proxy at a meeting called for
that purpose. The trustees will call a meeting for
any purpose upon written request of shareholders
holding at least 10% of the trust's outstanding
shares and the trust will assist shareholders in
calling such a meeting as required by the 1940 Act.
When matters are submitted for shareholder vote,
shareholders of each Class will have one vote for
each full share owned and a proportionate, fractional
vote for any fractional share held of that Class.
Generally, shares of the fund will be voted on a
fund-wide basis on all matters except matters
affecting only the interests of one Class, in which
case only shares of the affected Class would be
entitled to vote.
The trust was organized as an unincorporated
Massachusetts business trust on October 17, 1991
under the name Shearson Lehman Brothers Intermediate-
Term Trust. On October 14, 1994 and August 16, 1995,
the Trust's name was changed Smith Barney Income
Trust and Smith Barney Investment Trust,
respectively. On August 16, 2000, the name of the
Smith Barney Mid Cap Blend Fund changed to Smith
Barney Mid Cap Core Fund.
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.
Styles of Fund Management: In an industry where the
average portfolio manager has seven years of
experience (source: ICI, 1998), the portfolio
managers of Smith Barney Mutual Funds average 21
years in the industry and 15 years with the firm.
Smith Barney Mutual Funds offers more than 60 mutual
funds. We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.
That's why we offer four "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.
Style Pure Series - Our style Pure Series funds stay
fully invested within their asset class and
investment style, enabling investors to make asset
allocation decisions in conjunction with their
Salomon Smith Barney Financial Consultant.
Classic Investor Series - Our Classic Investor Series
funds offer a range of equity and fixed income
strategies that seek to capture opportunities across
asset classes and investment styles using disciplined
investment approaches.
The Concert Allocation Series - As a fund of funds,
investors can select a Concert Portfolio that may
help their investment needs. As needs change,
investors can easily choose another long-term,
diversified investment from our Concert family.
Special Discipline Series - Our Special Discipline
Series funds are designed for investors who are
looking beyond more traditional market categories:
from natural resources to a roster of state-specific
municipal funds.
FINANCIAL STATEMENTS
The fund's annual report for the fiscal year ended
November 30, 1999 is incorporated herein by reference
in its entirety. The annual report was filed on
February 16, 2000, Accession Number 91155-00-000110.
The semi-annual report was filed on August 3, 2000,
Accession Number 0000950130-00-004202.
SMITH BARNEY
INVESTMENT TRUST
Mid Cap Core Fund
March 29, 2000,
as amended on August 21,
2000
SMITH BARNEY INVESTMENT TRUST
388 Greenwich Street
New York, NY 10013
SALOMON SMITH
BARNEY
A Member of
Citigroup [Symbol]
1
1
PART C - OTHER INFORMATION
Item 23. Exhibits
Unless otherwise noted, all references are to
the Registrants Registration Statement on Form N-1A
(the Registration Statement) as filed with the
Securities and Exchange
Commission (SEC) on October 21, 1991 (File Nos.
33-43446 and 811-6444).
(a)(1) Registrant's Master Trust Agreement dated
October 17, 1991 and Amendments to the Master Trust
Agreement dated November 21, 1991 and July 30,1993,
respectively, are incorporated by reference to Post-
Effective Amendment No. 4 to the Registration
Statement filed on January 28, 1994 (Post-Effective
Amendment No. 4).
(a)(2) Amendments to the Master Trust Agreement
dated October 14, 1994 and November 7, 1994,
respectively, are incorporated by reference to the
Registration Statement filed on Form N-14 on January
6, 1995 (the N-14).
(a)(3) Amendments to the Master Trust Agreement
dated July 20, 1995 and August 10, 1995 are
incorporated by reference to Post-Effective Amendment
No. 9 to the Registration Statement filed on August
29, 1995 (Post-Effective Amendment No. 9).
(a)(4) Amended and Restated Master Trust Agreement
dated February 28, 1998 is incorporated by reference
to Post Effective Amendment No. 18 to the Registration
Statement filed on March 30, 1998 (Post-
Effective Amendment No, 18)
(a)(5) Amendment No. 1 to the First Amended and
Restated
Master Trust Agreement dated June 1, 1998
is incorporated by reference to Post-Effective Amendment
No.20 to the
Registration Statement filed on June 26, 1998.
(a)(6) Amendment No. 2 to the First Amended and
Restated Master
Trust Agreement dated October 16, 1998 is incorporated by
reference
to Post-Effective Amendment No.21 to the Registration
Statement
filed on November 12, 1998.
(a)(7) Amendment No.3 to the First Amended and
Restated Master Trust Agreement dated February 28, 1998
is incorporated by reference to Post-Effective Amendment
No. 29 to the Registration Statement filed on April 25,
2000 (Post-Effective Amendment No. 29).
(a)(8) Amendment No.4 to the First Amended and
Restated Master Trust Agreement dated February 28, 1998
is filed herein.
(a)(9) Amendment No.5 to the First Amended and
Restated Master Trust Agreement dated February 28, 1998
is filed herein.
(b) Registrant's by-laws are incorporated by
reference to the Registration Statement.
(c)(1) Registrant's form of stock certificate
for Smith Barney S&P 500 Index Fund is incorporated by
reference to Post-Effective Amendment No. 16 to the
Registration Statement filed on December 29, 1997.
(c)(2) Registrant's form of stock certificate
for Smith Barney Large Capitalization Growth Fund is
incorporated by reference to Post-Effective Amendment
No.17 to the Registration Statement filed on
February 20, 1998 (Post-Effective Amendment No. 17).
(c)(3) Registrant's form of stock certificate for
Smith Barney Mid Cap Blend Fund is incorporated by
reference to Post-Effective Amendment No. 22 to the
Registration Statement filed on January 28, 1999
(Post-Effective Amendment No. 22).
(d)(1) Investment Advisory Agreement between
the Registrant and
Greenwich Street Advisors dated July 30, 1993 is
incorporated by reference to Post-Effective Amendment
No. 3 to the Registration Statement filed on December
1, 1993 (Post-Effective Amendment No. 3).
(d)(2) Transfer of Investment Advisory Agreement
dated November 7, 1994 between the Registrant on
behalf of Smith Barney Intermediate Maturity
California Municipals Fund, Greenwich Street Advisors
and Mutual Management Corp. is incorporated by
reference to the N-14.
(d)(3) Form of Transfer of Investment Advisory
Agreement for Smith Barney Limited Maturity
Municipals Fund, Smith Barney Intermediate Maturity
New York Municipals Fund and Smith Barney Limited
Maturity Treasury Fund is incorporated by reference
to Post-Effective Amendment No. 6 to the Registration
Statement filed on January 27, 1995 (Post-Effective
Amendment No. 6).
(d)(4) Form of Investment Advisory Agreement
between the Registrant on behalf of Smith Barney S&P
500 Index Fund and Travelers Investment
Management Company dated December 11, 1997 is
incorporated by reference to Post Effective Amendment
No. 15 to the Registration Statement
filed on December 12, 1997.
(d)(5) Form of Investment Management Agreement
between the Registrant on behalf of Smith Barney
Large Capitalization Growth Fund and Mutual
Management Corp.("MMC") (f/k/a Smith Barney Mutual Funds
Management Inc.) is incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement filed on February 20,1998 (Post-Effective
Amendment No. 17)
(d)(6) Form of Investment Management Agreement
between Smith Barney Mid Cap Blend Fund and MMC
is incorporated by reference to Post-Effective Amendment
No. 17 to the Registration Statement filed on February
20,1998
(Post-Effective Amendment No. 17)
(e)(1) Distribution Agreement between the
Registrant and Smith Barney Shearson Inc. dated July
30, 1993 is incorporated by reference to Post-
Effective Amendment No. 3.
(e)(2) Form of Distribution Agreement between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund and PFS Distributors is incorporated by
reference to Post-Effective Amendment No. 10.
(e)(3) Distribution Agreement between the
Registrant
and CFBDS, Inc. dated October 8, 1998 is incorporated by
reference
to Post-Effective Amendment No.21 to the Registration
Statement
Filed on November 12, 1998.
(e)(4) Selling Group Agreement between CFBDS Inc.
and
Salomon Smith Barney is incorporated by reference to
Post-Effective
Amendment No. 24 to the Registration Statement filed on
March 30, 1999
(Post-Effective Amendment No.24).
(e)(5) Form of Third Party Feeder Agreement between
the
Registrant, CFBDS Inc. and Barclays Global Fund Advisors
on
behalf of the Smith Barney U.S. 5000 Index Fund and EAFE
Index Fund
is incorporated by reference to Post-Effective Amendment
No. 29.
(e)(6) Form of Distribution Agreement with Salomon
Smith Barney Inc. is filed herewith.
(e)(7) Form of Distribution Agreement with PFS
Distributors, Inc. is filed herewith.
(e)(8)Form of Third Party Feeder Agreement between
the Registrant, Salomon Smith Barney Inc. and Master Investment
Portfolio on behalf of the Smith Barney U.S. 5000 Index Fund,
and EAFE Index Fund is filed herein.
(f) Not Applicable.
(g)(1) Form of Custody Agreement with PNC Bank,
National Association, is incorporated by reference to
Post-Effective Amendment No. 9.
(g)(2) Form of Custodian Agreement with Investors
Bank & Trust Company is incorporated by reference to
Post-Effective Amendment No. 29.
(h)(1) Administration Agreement between the
Registrant on behalf of Smith Barney Intermediate
Maturity California Municipals Fund and Smith Barney
Advisers, Inc. (SBA) is incorporated by reference to
the N-14.
(h)(2) Form of Administration Agreement between
the Registrant on behalf of Smith Barney Limited
Maturity Municipals Fund and Smith Barney
Intermediate Maturity New York Municipals Fund and
SBA is incorporated by reference to Post-Effective
Amendment No. 6.
(h)(3) Form of Administration Agreement between
the Registrant on behalf of Smith Barney S&P 500
Index Fund and MMC is incorporated by reference
to Post Effective Amendment No. 15.
(h)(4) Transfer Agency Agreement with First Data
Investor Services Group, Inc. is incorporated by
reference
to Post-Effective Amendment No. 3.
(h)(5) Form of Sub-Transfer Agency Agreement
between the Registrant on behalf of Smith Barney S&P
500 Index Fund and PFS Shareholder Services is
incorporated by reference to Post-Effective Amendment
No. 10.
(h)(6) Form of Administration Agreement between
the Registrant on behalf of Smith Barney U.S. 5000 Index
Fund ("U.S. 5000 Index Fund") and SSB Citi Fund
Management LLC ("SSB Citi") is incorporated by reference
to
Post-Effective Amendment No. 26 to the Registration
Statement
filed on October 13, 1999 (Post-Effective Amendment No.
26).
(h)(7) Form of Administration Agreement between
the Registrant on behalf of Smith Barney EAFE Index Fund
("EAFE Index Fund") and SSB Citi is incorporated by
reference
to Post-Effective Amendment No. 26.
(h)(8) Transfer Agency Agreement dated October 1, 1999
between the Registrant and Citi Fiduciary Trust Company
f/k/a Smith Barney Private Trust Company) is filed herein.
(h)(9) Sub-Transfer Agency Agreement dated October 1, 1999
between Citi Fiduciary Trust Company ( f/k/a Smith Barney
Private Trust Company) and First Data Investor Services Group,
Inc. is filed herein.
(i) Opinion of counsel regarding legality of
shares being registered is incorporated by reference to
Pre-
Effective Amendment No. 1 to the Registration
Statement filed on December 6, 1991.
(i)(2) Legal Counsel's consent is incorporated by
reference to Post-Effective Amendment No. 24.
(j) Auditor's consent is filed herein.
(k) Not Applicable.
(l) Purchase Agreement between the Registrant
and Shearson Lehman Brothers Inc. 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 on
behalf of Smith Barney Intermediate Maturity
California Municipals Fund and Smith Barney Inc. is
incorporated by reference to the N-14.
(m)(2) Form of Amended Service and Distribution
Plan pursuant to Rule 12b-1 between the Registrant on
behalf of Smith Barney Limited Maturity Municipals
Fund and Smith Barney Intermediate Maturity New York
Municipals Fund and Smith Barney Inc. is incorporated
by reference to Post-Effective Amendment No. 6.
(m)(3) Form of Shareholder Services and
Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund is incorporated by reference to Post Effective
Amendment No. 15.
(m)(4) Form of Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on behalf
of the Fund and Smith Barney Large Capitalization Growth
Fund is incorporated by reference to Post
Effective Amendment No. 17 to the Registration
Statement filed on February 20, 1998 (Post-Effective
Amendment
No. 17).
(m)(5) Form of Amended and Restated
Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on behalf
of the Funds is incorporated by
reference to Post-Effective Amendment No. 22.
(m)(6) Form of Shareholder Services Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of the U.S. 5000 Index Fund and Salomon
Smith Barney Inc. is incorporated by reference to
Post-Effective Amendment No. 26.
(m)(7) Form of Shareholder Services Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of the EAFE Index Fund and Salomon
Smith Barney Inc. is incorporated by reference
to Post-Effective Amendment No. 26.
(m)(8) Form of Amended and Restated Shareholder
Services and Distribution Plan pursuant to
Rule 12b-1 of Registrant is filed herein.
(n) Financial Data Schedules are
filed herein.
(o)(1) Plan adopted pursuant to Rule 18f-3(d) of
the Investment Company Act of 1940, as amended, is
incorporated by reference to Post-Effective Amendment
No. 10.
(o)(2) Rule 18f-3(d) Multiple Class Plan of the
Registrant
is incorporated by reference to Post-Effective Amendment
No. 22.
(p) Code of Ethics is incorporated by reference to
Post-Effective
Amendment No. 27 to the Registration Statement filed on
March 27, 2000 (Post-Effective Amendment No. 27).
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 Pre-Effective Amendment No. 1.
Item 26(a). Business and Other Connections of Investment
Adviser
Investment Adviser - SSB Citi Fund Management LLC ("SSB
Citi")
(successor to SSBC Fund Management Inc.) was incorporated
in
March 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. (formerly known as
Travelers
Group Inc.). SSB Citi is registered as an investment
adviser under the
Investment Advisers Act of 1940 (the "Advisers Act") and
has, through its
predecessors, been in the investment counseling business
since 1968.
SSB Citi serves as the Investment Adviser and
Administrator
for Smith Barney Intermediate Maturity California
Fund and Smith Barney Intermediate Maturity New York
Fund and Investment Manager for Smith Barney Large
Capitalization Growth Fund and Smith Barney Mid Cap Blend
Fund.
SSB Citi also serves as the administrator to the Smith
Barney S&P 500
Index Fund, the Smith Barney U.S. 5000 Index Fund and the
Smith Barney EAFE Index Fund.
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 fiscal years,
is incorporated
by reference to Schedules A and D of FORM ADV filed by
SSB Citi
pursuant to the Advisers Act (SEC File No. 801-8314).
Investment Adviser - Travelers Investment Management
Company. (TIMCO). TIMCO serves as the investment
adviser for Smith Barney S&P 500 Index Fund pursuant to a
written
agreement (the Advisory Agreement). TIMCO was
incorporated on August 31, 1967 under the laws of the
State of Connecticut. TIMCO is a wholly owned
subsidiary of Holdings, which in turn is a wholly owned
subsidiary of Citigroup.
TIMCO is registered as an investment adviser under
the Investment Advisers Act of 1940 (the Advisers
Act) since 1971 and has, through its predecessors,
been in the investment counseling business since
1967.
The list required by this Item 26 of the officers
and directors of TIMCO 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 fiscal
years, is incorporated by reference to Schedules A
and D of FORM ADV filed by SSBC pursuant to the
Advisers Act (SEC File No.801-07212).
Item 27. Principal Underwriters
(a) Salomon Smith Barney, Inc. ("Salomon Smith Barney")
the Registrant's Distributor, is also the distributor for the
following Smith Barney funds: 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
Natural Resources Fund Inc., Smith Barney New Jersey Municipals
Fund Inc., Smith Barney Oregon Municipals Fund Inc., Smith Barney
Principal Return Fund, Smith Barney Small Cap Blend Fund, Inc., Smith
Barney Telecommunications Trust, Smith Barney Variable Account Funds,
Smith Barney World Funds, Inc., Travelers Series Fund Inc., and
various series of unit investment trusts.
In addition, Salomon Smith Barney is also the distributor for the Centurion
Funds, Inc.
(b) The information required by this Item 27 with respect to each
director and officer of Salomon Smith Barney is incorporated by reference to
Schedule A of Form BD filed by Salomon Smith Barney pursuant to the Securities
and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records
(1) Smith Barney Investment Trust
388 Greenwich Street, 22nd Floor
New York, New York 10013
(2) With respect to the Registrant's Administrator:
SSB Citi Fund Management LLC
(successor to SSBC Fund Management Inc.)
388 Greenwich Street, 22nd Floor
New York, New York 10013
(3) With respect to the Registrant's Investment
Adviser:
Travelers Investment Management Company
One Tower Square
Hartford, CT 06183
(For Smith Barney S&P 500 Index Fund)
(4) With respect to the Registrant's Custodian:
(a) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA
(Custodian for Smith Barney Intermediate Maturity
California Municipals Fund, Smith Barney
Intermediate
Maturity New York Municipals Fund, Smith Barney
Large Capitalization Growth Fund and Smith Barney
Mid Cap Blend Fund and Smith Barney S&P 500
Index Fund)
(b) Investors Bank and Trust Company
200 Clarendon Street
Boston, Massachusetts 02117-9130
(Custodian for Smith Barney U.S. 5000 Index Fund
and
Smith Barney EAFE Index Fund)
(5) With respect to the Registrant's Sub-Transfer
Agent:
PFPC Global Fund Services
One Exchange Place
Boston, Massachusetts 02109
With respect to the Registrant's Sub-Transfer Agent
only in connection with Smith Barney Mid Cap Core Fund:
PFS Shareholder Services
3100 Breckinridge Boulevard, Building 200
Duluth, Georgia 30099-0062
(6) With respect to the Registrant's Co-Distributors:
Salomon Smith Barney Inc.
7 World Trade Center
New York, New York 10048
PFS Distributors, Inc.
3100 Breckinridge Boulevard, Building 200
Duluth, Georgia 30099-0062
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, and the Investment Company Act of 1940,
the Fund certifies that it meets all of the requirements
for effectiveness
of this registration statement under rule 485(b) under
the Securities
Act and has duly caused this registration statement to be
signed
on its behalf by the undersigned, thereto duly
authorized in the City of New York, in the State of
New York on the 16th day of August, 2000.
SMITH BARNEY INVESTMENT TRUST
/s/Heath B. McLendon
Heath B. McLendon,
Chief Executive Officer
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed
below by the following persons in the capacities and on
the date indicated.
Signature Title
Date
/s/Heath B. McLendon Chairman of the Board
08/16/00
Heath B. McLendon (Chief Executive Officer)
and President
/s/Lewis E. Daidone Treasurer
08/16/00
Lewis E. Daidone (Chief Financial and
Accounting Officer)
/s/Herbert Barg* Trustee
08/16/00
Herbert Barg
/s/Alfred J. Bianchetti* Trustee
08/16/00
Alfred J. Bianchetti
/s/Martin Brody* Trustee
08/16/00
Martin Brody
/s/Dwight B. Crane* Trustee
08/16/00
Dwight B. Crane
/s/Burt N. Dorsett* Trustee
08/16/00
Burt N. Dorsett
/s/Elliot S. Jaffe* Trustee
08/16/00
Elliot S. Jaffe
/s/Stephen E. Kaufman* Trustee
08/16/00
Stephen E. Kaufman
/s/Joseph J. McCann* Trustee
08/16/00
Joseph J. McCann
/s/Cornelius C. Rose, Jr.* Trustee
08/16/00
Cornelius C. Rose, Jr.
_________________________________________________________
____________
* Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant to power
of attorney dated January 27, 1995.
/s/ Heath B. McLendon
Heath B. McLendon
We, the undersigned, hereby severally constitute and appoint Heath
B. McLendon, Christina T. Sydor, Lewis E. Daidone and Michael
Kocur and each of them individually, our true and lawful
attorneys, with full power to them and each of them to sign for
us, and in our hands and in the capacities indicated below, any
and all Registration Statements on behalf of the Smith Barney
Investment Trust including any and all Amendments
thereto and to file the same, with all exhibits thereto, and other
documents therewith, with the Securities and Exchange Commission,
granting unto said attorneys and each of them, acting alone, full
authority and power to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to all
intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys or any of them
may lawfully do or cause to be done by virtue thereof.
WITNESS our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Power of Attorney has been signed below by the
following persons in the capacities and as of the dates indicated.
Signature:
Title:
Date:
/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the
Board
(Chief Executive
Officer)
July 16, 2000
/s/ Lewis E. Daidone
Lewis E. Daidone
Senior Vice
President and
Treasurer (Chief
Financial and Accounting
Officer)
July 16, 2000
Signature:
Title:
Date:
/s/ Herbert Barg
Herbert Barg
Trustee
July 16, 2000
/s/ Alfred J.
Bianchetti
Alfred J. Bianchetti
Trustee
July 16, 2000
/s/ Martin Brody
Martin Brody
Trustee
July 16, 2000
/s/ Dwight B. Crane
Dwight B. Crane
Trustee
July 16, 2000
/s/ Burt N. Dorsett
Burt N. Dorsett
Trustee
July 16, 2000
/s/ Elliot S. Jaffe
Elliot S. Jaffe
Trustee
July 16, 2000
/s/ Stephen E.
Kaufman
Stephen E. Kaufman
Trustee
July 16, 2000
/s/ Joseph J. McCann
Joseph J. McCann
Trustee
July 16, 2000
/s/ Cornelius C.
Rose, Jr.
Cornelius C. Rose,
Jr.
Trustee
July 16, 2000
EXHIBIT INDEX
Exhibit No. Exhibit
(a)(8) Amendment No. 4 to the First Amended and
Restated Master Trust Agreement
(a)(9) Amendment No. 5 to the First Amended and
Restated Master Trust Agreement
(e)(6) Form of Distribution Agreement with Salomon Smith Barney Inc.
(e)(7) Form of Distribution Agreement with PFS Distributors Inc.
(e)(8) Form of Third Party Feeder Agreement
(h)(2) Transfer Agency Agreement
(h)(3) Sub-Transfer Agency Agreement
(j) Auditor's Consent
(m)(8) Form of Amended and Restated Shareholder Services and
Distribution Plan pursuant to Rule 12b-1
(n) Financial Data Schedules
