SMITH BARNEY APPRECIATION FUND INC, PRES14A, 1997-12-05

SMITH BARNEY APPRECIATION FUND INC
PRES14A, 1997-12-05

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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

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 Disciplined Small Cap Fund, Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
Smith Barney Income Funds
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 Municipal Money Market Fund, Inc.
Smith Barney Muni Funds
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Principal Return Fund
Smith Barney Telecommunications Trust
Greenwich Street Series Fund
Travelers Series Fund Inc.

................................................................................
(Names of Co-Registrants as Specified In Their Charters)

................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

....................................................................

2) Aggregate number of securities to which transaction applies:

....................................................................

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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....................................................................
4) Proposed maximum aggregate value of transaction:

....................................................................

5) Total fee paid:

....................................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

....................................................................

2) Form, Schedule or Registration Statement No.:

...................................................................

3) Filing Party:

...................................................................

4) Date Filed:

...................................................................
<PAGE>

Dear Fellow Shareholder:

As an investor in the Smith Barney Mutual Fund Family, you are cordially
invited to attend a special shareholder meeting(s) to be held at the time and
place specified in the attached Notice of Special Meeting. Shareholder
meetings are held by mutual fund companies periodically as issues arise
requiring shareholder approval. This meeting is being held to elect Directors,
to propose changes to certain specific investment policies currently in effect
and, with respect to certain Funds, to approve retaining such Funds'
classification as non-diversified funds.

Enclosed for your review is a joint proxy statement that describes the
proposals that will be submitted to shareholders for approval at the meeting.
Note that not all of the proposals relate to each Fund. However, because many
of our shareholders own shares of more than one Smith Barney Mutual Fund, a
joint proxy statement is being sent to you to reduce the preparation,
printing, handling and postage expenses that would be incurred if we sent out
separate proxy statements for each Fund.

Please refer to page 6 of the proxy statement for a list of the proposals
which are applicable to your Fund.

PROPOSAL 1. ELECT THE FUND'S BOARD OF DIRECTORS/TRUSTEES

Proposal One asks that you elect the Board of Directors or Trustees of each
Fund. The pages following Proposal One provide a brief description of each
nominee's background and current status with the Fund.

The Board of each Fund recommends that you vote "FOR" the election of
nominees to the Board.

PROPOSAL 2. APPROVE PROPOSED CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICIES

Every mutual fund has certain specific investment policies that can only be
changed with the approval of the fund's shareholders. Such policies are often
referred to as "fundamental" investment policies. Proposal Two asks that you
approve certain changes to the fundamental investment policies of the Smith
Barney Mutual Funds in light of various regulatory, business and industry
developments that have occurred since the original adoption of these policies
by the Funds. The three principal objectives of this proposal are:

i) To simplify the funds' investment policies to make them consistent
among the investment companies distributed by Smith Barney.

ii) To eliminate or make non-fundamental certain investment policies
that are no longer required by law to be fundamental. Once an investment
policy has become "non-fundamental", the Fund's Board of Directors/
<PAGE>

Trustees would have to approve any changes to such policy. Giving the
Board the flexibility to make changes in non-fundamental policies without
the expense of obtaining shareholder approval each time a change is
desired will save the Fund money, and will make it easier for the Fund's
portfolio manager(s) to utilize new investment policies and techniques to
respond more rapidly to changing market conditions. Shareholders would of
course receive notice of any investment policy changes approved by the
Board.

iii) To reclassify as "non-fundamental" or eliminate certain investment
policies that had previously been adopted to meet certain requirements
under state securities laws that are no longer applicable. Prior to
October 11, 1996, mutual funds not only had to comply with various federal
investment policy restrictions, but also with state law investment
restrictions as well. Some of such state laws were actually more
restrictive than the federal laws, making compliance very difficult. In an
effort to streamline the registration process of mutual funds, effective
on October 11, 1996, the states no longer require that mutual funds adopt
specific investment policies. Because such investment policies were
originally adopted by the funds as "fundamental" investment policies,
shareholder approval is necessary to reclassify them non-fundamental or to
eliminate them.

As described more fully in the proxy statement, many of the changes are
currently not expected to result in changes in the investment techniques or
operations of a Fund. In most instances, the changes permit a Fund's Board to
determine whether the implementation of a new technique or policy is in the
best interests of the shareholders.

The Board of each Fund recommends that you vote "FOR" the changes to the
Fund's fundamental investment policies as described in the proxy statement.

PROPOSAL 3. APPROVE RETAINING THE FUNDS' CLASSIFICATION AS NON-DIVERSIFIED
(THE CALIFORNIA MUNICIPAL FUND INC., THE CALIFORNIA MONEY MARKET PORTFOLIO,
THE FLORIDA PORTFOLIO, THE GEORGIA PORTFOLIO AND THE PENNSYLVANIA PORTFOLIO
ONLY)

Every mutual fund elects to be either a "diversified" mutual fund or a "non-
diversified" mutual fund. As the words imply, a "non-diversified" mutual fund
is permitted to invest in a fewer number of securities than is required by a
diversified mutual fund. Many state municipal funds elect to be non-
diversified because, depending on market conditions, there may be a limited
number of securities issued by a state, which would thus limit the number of
investment opportunities available to such fund. Occasionally, a mutual fund
that originally elected to register as non-

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diversified, finds that there are ample investment opportunities, and is thus
able to invest its assets in a diversified manner. The Securities and Exchange
Commission has taken the position that any mutual fund that has elected to be
a non-diversified fund, but operates as a diversified fund for at least three
years, must obtain shareholder approval to retain its status as a non-
diversified fund for the future.

The Smith Barney California Municipals Fund Inc., the California Money
Market Portfolio, the Florida Portfolio, the Georgia Portfolio and the
Pennsylvania Portfolio each originally elected to operate as a non-diversified
mutual fund. During the last three years, however, each such Fund has operated
as a diversified fund and thus obtain shareholder approval to retain its
status as a non-diversified fund.

Proposal Three asks that you approve the retention by the Fund retaining its
classification as a "non-diversified" investment company.

The Board of each Fund, including a majority of the independent Board
members, recommends that you "FOR" the retention of the classification of the
Fund as a "non-diversified" mutual fund.

YOUR VOTE IS IMPORTANT!

We ask that you review the attached proxy carefully. If you do not plan to
attend the meeting, we ask that you complete, sign, date and return the proxy
as soon as possible in the enclosed postage-paid envelope. Thank you in
advance for your attention and vote with regard to these important proposals.

Sincerely,

Heath B. McLendon
Chairman

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<PAGE>

SMITH BARNEY

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.
(all Series)
Smith Barney Disciplined Small Cap Fund, Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
(all Series)
Smith Barney Income Funds
(all Series)
Smith Barney Investment Funds Inc.
(all Series)
Smith Barney Investment Trust
(all Series)
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc.
(all Series)
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Muni Funds
(all Series)
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Principal Return Fund
(all Series)
Smith Barney Telecommunications
Trust Greenwich Street Series Fund
(all Series)
Travelers Series Fund Inc.
(all Series)

388 GREENWICH STREET
NEW YORK, NEW YORK 10013

NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS

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

TO BE HELD ON FEBRUARY 6, FEBRUARY 20 AND MARCH 9, 1998

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

TO THE SHAREHOLDERS:

Notice is hereby given that a Special Meeting of Shareholders of each of the
registered investment companies listed above (each a "Fund," and collectively,
the "Funds"), will be held on the dates and at the times and locations
specified below. Also set out below are the number of shares of each Fund and
to the extent composed of one or more separate series, the number of shares of
each such series issued and outstanding at the close of business on November
3, 1997 or, in the case of the Cash Portfolio of Smith Barney Money Funds,
Inc., at the close of business on October 31, 1997.

The Special Meeting of each of the following Funds will be held in
Conference Room 26A at 388 Greenwich Street, New York, New York on February 6,
1998 at the following times:

<TABLE>
<CAPTION>
MEETING SHARES
TIME OUTSTANDING
---------- -----------------
<S> <C> <C>
Smith Barney Adjustable Rate Government Income
Fund............................................. 9:00 a.m. 11,709,786.754
Smith Barney Income Funds......................... 9:30 a.m.
Smith Barney Convertible Fund............................. 6,969,685.113
Smith Barney Diversified Strategic Income Fund............ 360,267,779.666
Smith Barney Exchange Reserve Fund........................ 123,061,418.278
Smith Barney High Income Fund............................. 108,978,103.716
Smith Barney Premium Total Return Fund.................... 179,166,246.547
Smith Barney Tax-Exempt Income Fund ...................... 43,164,637.992
Smith Barney Utilities Fund............................... 72,135,355.171
Smith Barney Investment Trust..................... 10:00 a.m.
Smith Barney Intermediate Maturity California Municipals
Fund...................................................... 3,253,804.675
Smith Barney Intermediate Maturity New York Municipals
Fund...................................................... 5,875,344.561
Smith Barney Large Capitalization Growth Fund............. 32,598,188.972
Smith Barney Massachusetts Municipals Fund........ 10:30 a.m. 4,541,017.520
Smith Barney Muni Funds........................... 11:00 a.m.
California Money Market Portfolio......................... 1,529,248,749.800
Florida Portfolio......................................... 14,080,589.973
Georgia Portfolio......................................... 2,171,357.629
Limited Term Portfolio.................................... 41,410,315.127
National Portfolio........................................ 26,966,981.493
New York Money Market Portfolio........................... 957,735,227.460
New York Portfolio........................................ 53,631,391.829
Pennsylvania Portfolio.................................... 2,986,677.475
</TABLE>
The Special Meeting of each of the following Funds will be held in
Conference Room 26B at 388 Greenwich Street, New York, New York on February 6,
1998 at the following times:
<TABLE>
<S> <C> <C>
Smith Barney Oregon Municipals Fund.................... 9:15 a.m. 2,627,401.688
Smith Barney Principal Return Fund..................... 9:45 a.m.
Zeros and Appreciation Series 1998............................ 10,395,760.111
Zeros and Emerging Growth Series 2000......................... 6,141,082.003
Smith Barney Security and Growth Fund......................... 17,370,851.626
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
MEETING SHARES
TIME OUTSTANDING
---------- --------------
<S> <C> <C>
Smith Barney Telecommunications Trust................. 10:15 a.m.
Smith Barney Telecommunications Income Fund................... 542,382.206
Greenwich Street Series Fund.......................... 10:45 a.m.
Appreciation Portfolio........................................ 6,953,411.704
Diversified Strategic Income Portfolio........................ 5,047,147.671
Emerging Growth Portfolio..................................... 1,074,927.984
Equity Income Portfolio....................................... 2,931,346.503
Equity Index Portfolio........................................ 1,115,198.752
Growth & Income Portfolio..................................... 2,186,261.713
Intermediate High Grade Portfolio............................. 1,331,481.537
International Equity Portfolio................................ 2,491,215.023
Money Market Portfolio........................................ 5,232,044.990
Total Return Portfolio........................................ 14,343,971.786
</TABLE>

The Special Meeting of the following Fund will be held in Conference Room
26A at 388 Greenwich Street, New York, New York on February 20, 1998 at the
following time:

<TABLE>
<CAPTION>
MEETING SHARES
TIME OUTSTANDING
--------- ---------------
<S> <C> <C>
Travelers Series Fund Inc............................. 9:00 a.m.
AIM Capital Appreciation Portfolio........................... 15,991,258.575
Alliance Growth Portfolio.................................... 26,153,412.317
Van Kampen American Capital Enterprise Portfolio............. 9,883,657.766
GT Global Strategic Income Portfolio......................... 2,334,911.062
MFS Total Return Portfolio................................... 17,220,795.036
Putnam Diversified Income Portfolio.......................... 9,881,455.509
Smith Barney High Income Portfolio........................... 9,337,510.474
Smith Barney Income and Growth Portfolio..................... 16,049,792.649
Smith Barney International Equity Portfolio.................. 16,556,697.734
Smith Barney Money Market Portfolio.......................... 104,139,803.610
Smith Barney Pacific Basin Portfolio......................... 2,267,262.368
TBC Managed Income Portfolio................................. 2,751,446.127
</TABLE>

The Special Meeting of each of the following Funds will be held in
Conference Room 26A at 388 Greenwich Street, New York, New York on March 9,
1998 at the following times:

<TABLE>
<CAPTION>
MEETING SHARES
TIME OUTSTANDING
---------- ---------------
<S> <C> <C>
Smith Barney Aggressive Growth Fund Inc. ............ 9:00 a.m. 20,239,472.409
Smith Barney Appreciation Fund Inc................... 9:30 a.m. 261,506,133.235
Smith Barney Arizona Municipals Fund Inc............. 10:00 a.m. 5,713,759.347
Smith Barney California Municipals Fund Inc. ........ 10:30 a.m. 49,990,802.028
Smith Barney Concert Allocation Series Inc........... 11:00 a.m.
High Growth Portfolio........................................ 36,292,079.711
Growth Portfolio............................................. 45,622,339.602
Income Portfolio............................................. 4,559,278.013
Balanced Portfolio........................................... 27,762,003.220
Conservative Portfolio....................................... 7,645,747.027
Select High Growth Portfolio................................. 1,670,784.534
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
MEETING SHARES
TIME OUTSTANDING
---------- ------------------
<S> <C> <C>
Select Growth Portfolio................................... 2,554,739.029
Select Income Portfolio................................... 258,497.863
Select Balanced Portfolio................................. 2,729,358.536
Select Conservative Portfolio............................. 639,808.887
Smith Barney Disciplined Small Cap Fund, Inc. .... 11:30 a.m. 5,164,865.683
Smith Barney Fundamental Value Fund Inc........... 12:00 p.m. 144,510,767.403
Smith Barney Funds, Inc. ......................... 12:30 p.m.
Equity Income Portfolio................................... 58,875,343.948
Short-Term U.S. Treasury Securities Portfolio............. 25,583,160.994
U.S. Government Securities Portfolio...................... 24,099,456.454

The Special Meeting of each of the following Funds will be held in Conference
Room 26B at 388 Greenwich Street, New York, New York on March 9, 1998 at the
following times:

Smith Barney Investment Funds Inc. ............... 9:15 a.m.
Smith Barney Government Securities Fund................... 58,849,840.071
Smith Barney Growth Opportunity Fund...................... 10,524,119.348
Smith Barney Investment Grade Bond Fund................... 40,280,239.699
Smith Barney Managed Growth Fund.......................... 65,790,520.461
Smith Barney Special Equities Fund........................ 24,583,500.062
Smith Barney Managed Governments Fund Inc......... 9:45 a.m. 43,219,374.854
Smith Barney Managed Municipals Fund Inc.......... 10:15 a.m. 208,383,171.065
Smith Barney Money Funds, Inc. ................... 10:45 a.m.
Cash Portfolio............................................ 30,490,344,964.414
Government Portfolio...................................... 4,645,496,644.191
Retirement Portfolio...................................... 1,348,637,071.208
Smith Barney Municipal Money Market Fund, Inc..... 11:15 a.m. 5,647,545,463.080
Smith Barney Natural Resources Fund Inc. ......... 11:45 a.m. 5,221,295.309
Smith Barney New Jersey Municipals Fund Inc....... 12:15 p.m. 16,469,481.447
</TABLE>

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<PAGE>

The special meetings are being held for the following purposes:

<TABLE>
<CAPTION>
PAGE NO. IN
THE ATTACHED
JOINT PROXY
STATEMENT
------------
<S> <C>
1. To elect Directors or Trustees of each Fund (Proposal 1)--ALL
FUNDS.......................................................... 8
2. To approve or disapprove the reclassification, modification
and/or elimination of certain fundamental investment policies
(Proposal 2)--ALL FUNDS (SERIES)............................... 23
3. To approve or disapprove the retention of each Fund's
classification as a "non-diversified" investment company under
the 1940 Act (Proposal 3)--SMITH BARNEY CALIFORNIA MUNICIPALS
FUND INC. AND SMITH BARNEY MUNI FUNDS (CALIFORNIA MONEY MARKET,
FLORIDA, GEORGIA AND PENNSYLVANIA PORTFOLIOS ONLY)............. 46
4. To transact such other business as may properly come before the
meeting or any adjournment thereof (Proposal 4)--ALL FUNDS..... 49
</TABLE>

The close of business on December 10, 1997 has been fixed as the record date
for the determination of shareholders of the Funds entitled to notice of and
to vote at the meeting and any adjournment thereof.

By Order of the Directors or Trustees,

Christina T. Sydor, Secretary

December 10, 1997

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

SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED
TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD(S) IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES.
INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXY CARDS ARE SET FORTH ON THE
FOLLOWING PAGE. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.

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<PAGE>

INSTRUCTIONS FOR SIGNING PROXY CARDS

The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund(s) involved in validating your
vote if you fail to sign your proxy card(s) properly.

1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card(s).

2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on
the proxy card(s).

3. All Other Accounts: The capacity of the individual signing the proxy
card(s) should be indicated unless it is reflected in the form of
registration. For example:

<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<C> <S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp............................................ ABC Corp.
(2) ABC Corp............................................ John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer........................... John Doe
(4) ABC Corp. Profit Sharing Plan....................... John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust........................................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78.................................... Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA..................... John B. Smith
(2) Estate of John B. Smith............................. John B. Smith,
Executor
</TABLE>

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<PAGE>

(This page intentionally left blank)
<PAGE>

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.
(all Series)
Smith Barney Disciplined Small Cap Fund, Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
(all Series)
Smith Barney Income Funds
(all Series)
Smith Barney Investment Funds Inc.
(all Series)
Smith Barney Investment Trust
(all Series)
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc.
(all Series)
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Muni Funds
(all Series)
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Principal Return Fund
(all Series)
Smith Barney Telecommunications Trust
Greenwich Street Series Fund
Travelers Series Fund Inc.
(all Series)

388 GREENWICH STREET
NEW YORK, NEW YORK 10013

SPECIAL MEETINGS OF SHAREHOLDERS

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

TO BE HELD ON FEBRUARY 6, FEBRUARY 20 AND MARCH 9, 1998

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

JOINT PROXY STATEMENT

INTRODUCTION

This document is a joint proxy statement for the registered investment
companies listed above (each a "Fund" and, collectively, the "Funds"*). This
joint proxy statement is being furnished to the shareholders of the Funds in
connection with each respective Fund's Board of Directors' or Trustees' (each
a "Board" and, collectively, the "Boards") solicitation of proxies to be used
at the special meetings of shareholders of the Funds to be held on the dates
specified in the Notice of Meeting of Shareholders and proxy card(s) that
accompany this Proxy Statement, or any adjournment or adjournments thereof
(collectively, the "Meeting"). The Meeting will be held on the day and at the
time and location specified in the Notice of Meeting of Shareholders and proxy
card(s) that accompany this Proxy Statement. This joint proxy statement and
accompanying proxy card(s) will first be mailed to shareholders on or about
December 12, 1997. Proxy solicitations will be made primarily by mail, but
proxy solicitations also may be made by telephone, telegraph or personal
interviews conducted by officers and employees of the Funds; Smith Barney Inc.
("Smith Barney") and PFS Distributors, Inc., distributors of shares of the
Funds; the investment adviser (each an "Adviser" and, collectively, the
"Advisers") of a Fund; and/or First Data Investor Services Group, Inc. ("First
Data"), the Funds' transfer agent. Such representatives and employees will not
receive additional compensation for solicitation activities. Smith Barney has
retained the services of First Data to assist in the solicitation of proxies.
The aggregate cost of solicitation of the shareholders of all of the Funds is
expected to be approximately $ . The costs of the proxy solicitation and
expenses incurred in connection with the preparation of this joint proxy
statement and its enclosures will be borne by the Funds, with the Funds' cost
being allocated based in part on a Fund's assets and in part on its number of
shareholders. The Funds also will reimburse expenses of forwarding
solicitation materials to beneficial owners of shares of the Funds. If the
Funds record votes by telephone, they will use procedures designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to confirm
that their instructions have been properly recorded. Proxies voted by
telephone may be revoked at any time before they are voted in the same manner
that proxies voted by mail may be revoked.

Each share is entitled to one vote and any fractional share is entitled to a
fractional vote. If the enclosed proxy is properly executed and returned in
time to be voted at the Meeting, the shares represented thereby will be voted
in accordance with the instructions marked thereon. Unless instructions to the
contrary are marked thereon, a proxy will be voted FOR the election of the
nominees for
- -----------
* Some Funds are composed of one or more separate series, each of which is
referred to herein as a "Series" or, for purposes of Proposals 2 and 3, as a
"Fund".

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<PAGE>

Directors or Trustees ("Board members"), FOR the other matters listed in the
accompanying Notice of Meeting of Shareholders and FOR any other matters
deemed appropriate. If you properly execute the enclosed proxy and give no
voting instructions, your shares will be voted FOR the proposals set forth
herein. Abstentions will be counted as present for purposes of determining a
quorum, but will not be counted as voting. Broker non-votes (i.e., proxies
received from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote the shares on a particular matter with respect to which the broker or
nominees do not have discretionary power) will be treated the same as
abstentions. Any shareholder who has given a proxy has the right to revoke it
at any time prior to its exercise either by attending the Meeting and voting
his or her shares in person or by submitting a letter of revocation or a
later-dated proxy to the appropriate Fund at the above address prior to the
date of the Meeting.

In the event that a quorum is not present at the Meeting, or in the event
that a quorum is present but sufficient votes to approve any of the proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies with
respect to any such proposals. In determining whether to adjourn the Meeting,
the following factors may be considered: the nature of the proposals that are
the subject of the Meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect
to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. When voting on a proposed adjournment, the persons named
as proxies will vote for the proposed adjournment all shares that they are
entitled to vote with respect to each item, unless directed to vote "Against"
the item, in which case such shares will be voted against the proposed
adjournment with respect to that item. A shareholder vote may be taken on one
or more of the proposals in this joint proxy statement prior to any
adjournment if sufficient votes have been received for approval. Under the
master trust agreement, charter or by-laws, as applicable, of each Fund (other
than Smith Barney Muni Funds and Smith Barney Disciplined Small Cap Fund,
Inc.) a quorum is constituted by the presence in person or by proxy of the
holders of a majority of the outstanding shares of a Fund entitled to vote at
the Meeting. Under the By-laws of Smith Barney Muni Funds and Smith Barney
Disciplined Small Cap Fund, Inc., a quorum is constituted by the presence in
person or by proxy of the holders of one-third of the outstanding shares of
that Fund entitled to vote at the Meeting.

3
<PAGE>

The Boards have fixed the close of business on December 10, 1997 as the
record date (the "Record Date") for the determination of shareholders of the
Funds entitled to notice of and to vote at the Meeting. At the close of
business on November 3, 1997 or, in the case of the Cash Portfolio of Smith
Barney Money Funds,. Inc., at the close of business on October 31, 1997, the
number of shares of each Fund shown in the accompanying Notice of Meeting were
issued and outstanding.

As of October 31, 1997, to the knowledge of each Fund and its Board, no
single shareholder or "group" (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934), except as set forth in Annex I hereto, owned
beneficially or of record more than 5% of the outstanding shares of a Fund. As
of the Record Date, the officers and Board members of each Fund beneficially
owned less than 1% of the shares of each Fund.

This joint proxy statement is being used in order to reduce the preparation,
printing, handling and postage expenses that would result from the use of a
separate proxy statement for each Fund and, because many shareholders own
shares of more than one Fund, to avoid burdening shareholders with more than
one proxy statement. Although some proposals described herein relate to
several or all of the Funds, shareholders of each Series of each Fund will
vote separately on each proposal on which shareholders of that Fund are
entitled to vote (except that all Series of each Fund will vote as a single
fund on Proposal 1), and separate proxy cards are enclosed for each Fund in
respect of which a shareholder is a record owner of shares. Thus, if a
proposal is approved by shareholders of one Fund and disapproved by
shareholders of other Funds, the proposal will be implemented for the Fund
that approved the proposal and will not be implemented for any Fund that did
not approve the proposal. It is therefore essential that shareholders
complete, date and sign each enclosed proxy card. Set forth below are the
proposals on which shareholders of each respective Fund are entitled to vote.

Proposal 1 requires for approval the affirmative vote of a plurality of the
votes cast at the Meeting in person or by proxy (a "Plurality Vote") for all
Funds. Because abstentions and broker non-votes are not treated as shares
voted, abstentions and broker non-votes have no impact on Proposal 1. Approval
of Proposals 2 and 3 requires the affirmative vote of a "majority of the
outstanding voting securities" of each Fund (or Series thereof) which, as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"),
means the lesser of (a) 67% of the Fund's (or Series') shares present at a
meeting of its shareholders if the owners of more than 50% of the shares of
the Fund (or Series) then outstanding are present in person or by proxy or (b)
more than 50% of the Fund's (or Series') outstanding shares (a "Majority
Vote"). Abstentions and broker non-votes are treated as votes "against"
Proposals 2 and 3.

4
<PAGE>

With respect to Travelers Series Fund Inc. and Greenwich Street Series Fund
(together, the "Insurance Funds"), all of the outstanding shares of the
Insurance Funds are sold exclusively to, and held of record by, certain
insurance company separate accounts (the "Insurance Cos."), for the benefit of
owners of contracts providing for participation in the accounts ("Contract
Owners"). With respect to the Meeting, Contract Owners have the right to
instruct the Insurance Cos. how to vote shares of the Insurance Funds
attributable to the value of their contracts allocated to the Insurance Funds,
through the accounts, on any matter affecting the Insurance Funds. Each share
is entitled to one vote, and any fractional share is entitled to a fractional
vote. Each Contract Owner has the right to direct the votes of that number of
shares of an Insurance Fund determined by multiplying the total number of
shares of such Insurance Fund outstanding by a fraction, the numerator of
which is the number of units held by such Contract Owner in such Insurance
Fund and the denominator of which is the total number of units of the
Insurance Fund outstanding on its Record Date. Units reflect the Contract
Owner's ownership in the accounts, while shares reflect the Insurance Cos.'
ownership in the Insurance Funds. The value of units is based on the net asset
value of the underlying portfolio adjusted for separate account fees. If
proper instructions are not received from a Contract Owner, the shares with
respect to which the Contract Owner has the right to direct votes will be
voted by the Insurance Cos. in the same ratio as those shares for which proper
instructions were received from other Contract Owners. In addition, the
Insurance Cos. will vote the shares for which they have voting rights in the
same proportion as the votes for which they have received proper instructions.

5
<PAGE>

PROPOSALS APPLICABLE TO EACH FUND

<TABLE>
<CAPTION>
FUND NAME PROPOSALS APPLICABLE TO FUND
--------- ----------------------------
<S> <C>
Smith Barney Adjustable Rate Government Income
Fund........................................... 1, 2(A,B,C,D,E,F,G,H,I,K,O,R)
Smith Barney Aggressive Growth
Fund Inc....................................... 1, 2(A,B,C,D,H,I)
Smith Barney Appreciation Fund Inc............... 1, 2(A,B,D,H,I)
Smith Barney Arizona Municipals
Fund Inc....................................... 1, 2(A,B,D,H,I)
Smith Barney California Municipals
Fund Inc....................................... 1, 2(B,D,H,I), 3
Smith Barney Concert Allocation
Series Inc..................................... 1, 2(B,D,F,G,I)
Smith Barney Disciplined Small Cap
Fund, Inc...................................... 1, 2(A,B,C,D,E,F,G,H,I,N)
Smith Barney Fundamental Value
Fund Inc....................................... 1, 2(A,D,F,H,I,R)
Smith Barney Funds, Inc.......................... 1, 2(A,B,D,E,F,G,H)
Equity Income Portfolio only................... 2(C,I,J,K,L,M,N,O,R,S)
Short-Term U.S. Treasury Securities Portfolio
only......................................... 2(I,M,O,R)
Smith Barney Income Funds........................ 1, 2(A,D,E,I,M,O,R)
Smith Barney Convertible Fund only............. 2(C,H)
Smith Barney Diversified Strategic Income Fund
only......................................... 2(C,H)
Smith Barney Exchange Reserve
Fund only.................................... 2(H)
Smith Barney High Income
Fund only.................................... 2(C,H)
Smith Barney Premium Total Return Fund only.... 2(C,H)
Smith Barney Tax-Exempt Income Fund only....... 2(C,H)
Smith Barney Investment Funds Inc................ 1, 2(A,C,G,H,I,J,K,L,M,N,O,P)
Smith Barney Growth Opportunity Fund only...... 2(D,R)
Smith Barney Investment Grade Bond Fund only... 2(D,Q,R)
Smith Barney Managed Growth
Fund only.................................... 2(D,R)
Smith Barney Special Equities
Fund only.................................... 2(D,R)
Smith Barney Investment Trust.................... 1, 2(C,D,E,F,G,H,I,O,Q,R)
Smith Barney Large Capitalization Growth Fund
only......................................... 2(A)
Smith Barney Managed Governments
Fund Inc....................................... 1, 2(A,B,D,H)
Smith Barney Managed Municipals Fund Inc......... 1, 2(A,B,D,H)
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
FUND NAME PROPOSALS APPLICABLE TO FUND
--------- ----------------------------
<S> <C>
Smith Barney Massachusetts Municipals Fund..... 1, 2(B,D,F,H)
Smith Barney Money Funds, Inc.................. 1, 2(A,B,D,E,F,G,H,I,J,M,N,O,R)
Smith Barney Municipal Money Market Fund, Inc.. 1, 2(A,B,D,E,F,G,H,I,O)
Smith Barney Muni Funds........................ 1, 2(B,C,D,E,F,G,H,I,R)
California Money Market Portfolio only....... 3
Florida Portfolio only....................... 3
Georgia Portfolio only....................... 3
Limited Term Portfolio only.................. 2(A)
National Portfolio only...................... 2(A,L,M)
New York Portfolio only...................... 2(L,M)
Pennsylvania Portfolio only.................. 3
Smith Barney Natural Resources Fund Inc........ 1, 2(A,B,D,H,I)
Smith Barney New Jersey Municipals Fund Inc.... 1, 2(B,D,H)
Smith Barney Oregon Municipals Fund............ 1, 2(B,D,H,I)
Smith Barney Principal Return Fund............. 1, 2(A,C,D,I)
Smith Barney Telecommunications Trust-- Income
Fund......................................... 1, 2(B,D,I,Q)
Greenwich Street Series Fund................... 1, 2(A,B,D,E,F,G,H,I,M,O,R)
Appreciation Portfolio only.................. 2(C)
Diversified Strategic Income Portfolio only.. 2(C)
Emerging Growth Portfolio only............... 2(C)
Equity Index Portfolio only.................. 2(C)
Growth & Income Portfolio only............... 2(C)
Intermediate High Grade Portfolio only....... 2(C)
International Equity Portfolio only.......... 2(C)
Total Return Portfolio only.................. 2(C)
Travelers Series Fund Inc...................... 1, 2(F,G,I)
AIM Capital Appreciation Portfolio only...... 2(C,N,O)
Alliance Growth Portfolio only............... 2(A,B,D)
Van Kampen American Capital Enterprise
Portfolio only............................. 2(A,B,D,E)
GT Global Strategic Income Portfolio only.... 2(E,H,K,L,N,O)
MFS Total Return Portfolio only.............. 2(B,D,O)
Putnam Diversified Income Portfolio only..... 2(A,B,D,E,H,J,L,N,O)
Smith Barney High Income Portfolio only...... 2(A,B,C,D,H,M)
Smith Barney Income and Growth Portfolio
only....................................... 2(A,B,C,D,E,M)
Smith Barney International Equity Portfolio
only....................................... 2(A,B,C,D,E,M)
Smith Barney Money Market Portfolio only..... 2(A,B,D,E,M)
Smith Barney Pacific Basin Portfolio only.... 2(A,B,C,D,E,M)
TBC Managed Income Portfolio only............ 2(A,D,H,J,K,M,N,O,R)
</TABLE>

7
<PAGE>

PROPOSAL 1:

TO ELECT DIRECTORS OR TRUSTEES OF EACH FUND

ALL FUNDS

The first proposal to be considered at the Meeting is the election of
Directors or Trustees of the Funds.

Except for Mr. Jerome Miller, who is currently serving as a Trustee for
Smith Barney Principal Return Fund only, all of the nominees are currently
serving as a director or trustee of the Board to which he or she is nominated,
and all of the nominees serve as a director, trustee and/or general partner of
other investment companies for which Smith Barney serves as distributor. Each
nominee has consented to serve as a Board member if elected at the Meeting. If
a designated nominee declines or otherwise becomes unavailable for election,
however, the proxy confers discretionary power on the persons named therein to
vote in favor of a substitute nominee or nominees.

If elected, the Board members will hold office without limit in time,
subject to the Emeritus Program* adopted by the Funds, and except that any
Board member may resign and any Board member may be removed at any meeting of
shareholders called for that purpose by at least a majority of the votes
entitled to be cast (or, in the case of Travelers Series Fund Inc., 75% of the
votes entitled to be cast) for the election of Board members. In case a
vacancy shall exist for any reason, the remaining Board members may fill the
vacancy by appointing another Board member. If at any time less than a
majority of the Board members holding office have been elected by
shareholders, the Board members then in office will call a shareholders
meeting for the purpose of electing Board members.

Each Board has an Audit Committee and a Nominating Committee (except the
Travelers Series Fund Inc. Board, which does not have a Nominating Committee)
each consisting of all Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund ("independent Board members"). The Audit
Committee reviews the scope and results of a Fund's annual audit with the
Fund's independent accountants and recommends the engagement of accountants.
Included
- -----------
* Each Fund has adopted an Emeritus Program for non-interested Board members
pursuant to which each Fund's Board and the management of that Fund can
continue to benefit from the experience of long-time Board members who have
resigned from the Board. Pursuant to this Program, Board members with 10
years of service may agree to provide services as an emeritus director at
age 72 and, pursuant to resolutions adopted by certain Funds, must retire
from the Boards at age 80. Service as an emeritus director is limited to 10
years. Each emeritus director agrees to be available for consultation with
the Board and management of the Fund and may attend Board meetings.

8
<PAGE>

among the functions of the Nominating Committee is the selection and nomination
for appointment and election of candidates to serve as independent Board
members. The Nominating Committee, in its discretion, may also coordinate with
Board members who are "interested persons" in the selection and election of
Fund officers and may consider nominees recommended by shareholders to serve as
directors or trustees, provided that shareholders submit such recommendations
in compliance with all the pertinent provisions of Rule 14a-8 under the
Securities Exchange Act of 1934. Exhibit A hereto sets forth certain
information regarding compensation paid to each of the Board members and the
number of Board, Audit Committee and Nominating Committee meetings each Fund
has held in the Calendar Year ended December 31, 1996. Each nominee for Board
member attended at least 75% of the meetings that were held in the Calendar
Year ended December 31, 1996. None of the Boards has a Compensation Committee.
The executive officers of each Fund are set forth in Exhibits B and C hereto.
Each officer of a Fund will serve at the discretion of the Board.

Set forth in the following tables are the nominees for election as Board
member of each Fund, together with certain other information. "Interested
persons" of the Fund, as defined in the 1940 Act, by virtue of their positions
as officer or director of the Fund's investment adviser, distributor or one of
their affiliates, are marked by an asterisk. Other directorships include
directorships, general partnerships or trusteeships of companies that are
required to report to the Securities and Exchange Commission (the "SEC"), other
than registered investment companies. For purposes of this Proxy Statement, the
address of each Board member is P.O. Box 5128, Westborough, MA, 01581-5128.

9
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

SMITH BARNEY APPRECIATION FUND INC.
SMITH BARNEY ARIZONA MUNICIPALS FUND INC.
SMITH BARNEY CALIFORNIA MUNICIPALS FUND INC.
SMITH BARNEY INVESTMENT TRUST
SMITH BARNEY MANAGED GOVERNMENTS FUND INC.
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND
SMITH BARNEY NATURAL RESOURCES FUND INC.
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.
SMITH BARNEY OREGON MUNICIPALS FUND AND
GREENWICH STREET SERIES FUND

<TABLE>
<CAPTION>
DIRECTOR OF
SMITH BARNEY
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER APPRECIATION
DIRECTORSHIPS DURING THE PAST FIVE YEARS FUND INC. SINCE
----------------------------------------- ---------------
<S> <C>
Herbert Barg, age 73. 1995
Private Investor.
**Alfred J. Bianchetti, age 74. 1995
Retired.
Martin Brody, age 76. 1995
Consultant, HMK Associates, a financial consulting firm;
Retired Vice Chairman of Restaurant Associates Corp.; Director
of Jaclyn, Inc., an apparel design and manufacturing company.
Dwight B. Crane, age 59. 1995
Professor, Harvard Business School.
Burt N. Dorsett, age 66. 1973
Managing Partner of Dorsett McCabe Management, Inc., an
investment counseling firm; Director of Research Corporation
Technologies, Inc., a non-profit patent-clearing and licensing
firm.
Elliot S. Jaffe, age 71. 1988
Chairman of the Board and Chief Executive Officer of The Dress
Barn, Inc., a publicly-held national retail apparel chain.
Stephen E. Kaufman, age 65. 1995
Attorney.
Joseph J. McCann, age 66. 1995
Financial Consultant; Retired Financial Executive, Ryan Homes
Inc.
*Heath B. McLendon, age 64. 1984
Managing Director of Smith Barney; President and Director of
Smith Barney Mutual Funds Management Inc. and Travelers
Investment Adviser, Inc.; Chairman of Smith Barney Strategy
Advisers Inc. Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice Chairman of
Shearson Asset Management, Director of PanAgora Asset
Management, Inc. and PanAgora Asset Management Limited.
Cornelius C. Rose, Jr., age 64. 1973
President, Cornelius C. Rose Associates, Inc., financial
consultants, and Chairman and Director of Performance Learning
Systems, an educational services company.
</TABLE>
- -----------
** Mr. Bianchetti is an Interested Person by reason of his children being
employed by Smith Barney Inc.

10
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

<TABLE>
<CAPTION>
DIRECTOR OF SMITH DIRECTOR OF SMITH DIRECTOR OF SMITH
BARNEY ARIZONA BARNEY CALIFORNIA TRUSTEE OF SMITH BARNEY MANAGED
MUNICIPALS FUND MUNICIPALS FUND INC. BARNEY INVESTMENT GOVERNMENTS FUND
INC. SINCE SINCE TRUST SINCE INC. SINCE
- ----------------- -------------------- ----------------- -----------------
<S> <C> <C> <C>
1988 1984 1995 1995
1988 1988 1995 1995
1988 1984 1995 1995
1987 1988 1995 1995
1994 1994 1991 1984
1994 1994 1991 1985
1988 1984 1995 1995
1988 1984 1995 1995
1988 1984 1991 1984
1994 1994 1991 1984
</TABLE>

11
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

<TABLE>
<CAPTION>
DIRECTOR OF
SMITH BARNEY TRUSTEE OF
MANAGED SMITH BARNEY
MUNICIPALS MASSACHUSETTS
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER FUND INC. MUNICIPALS
DIRECTORSHIPS DURING THE PAST FIVE YEARS SINCE FUND SINCE
----------------------------------------- ------------ --------------
<S> <C> <C>
Herbert Barg, age 73. 1981 1987
Private Investor.
**Alfred J. Bianchetti, age 74. 1988 1988
Retired.
Martin Brody, age 76. 1981 1987
Consultant, HMK Associates, a financial consulting
firm; Retired Vice Chairman of Restaurant
Associates Corp.; Director of Jaclyn, Inc., an
apparel design and manufacturing company.
Dwight B. Crane, age 59. 1988 1988
Professor, Harvard Business School.
Burt N. Dorsett, age 66. 1994 1994
Managing Partner of Dorsett McCabe Management,
Inc., an investment counseling firm; Director of
Research Corporation Technologies, Inc., a non-
profit patent-clearing and licensing firm.
Elliot S. Jaffe, age 71. 1994 1994
Chairman of the Board and Chief Executive Officer
of The Dress Barn, Inc., a publicly-held national
retail apparel chain.
Stephen E. Kaufman, age 65. 1981 1987
Attorney.
Joseph J. McCann, age 66. 1981 1987
Financial Consultant; Retired Financial Executive,
Ryan Homes Inc.
*Heath B. McLendon, age 64. 1984 1987
Managing Director of Smith Barney; President and
Director of Smith Barney Mutual Funds Management
Inc. and Travelers Investment Adviser, Inc.;
Chairman of Smith Barney Strategy Advisers Inc.
Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice
Chairman of Shearson Asset Management, Director of
PanAgora Asset Management, Inc. and PanAgora Asset
Management Limited.
Cornelius C. Rose, Jr., age 64. 1994 1994
President, Cornelius C. Rose Associates, Inc.,
Financial Consultants, and Chairman and Director
of Performance Learning Systems, an educational
services company.
</TABLE>
- -----------
** Mr. Bianchetti is an Interested Person by reason of his children being
employed by Smith Barney Inc.

12
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

DIRECTOR OF SMITH DIRECTOR OF SMITH TRUSTEE OF SMITH TRUSTEE OF
BARNEY NATURAL BARNEY NEW JERSEY BARNEY OREGON GREENWICH STREET
RESOURCES FUND INC. MUNICIPALS FUND MUNICIPALS FUND SERIES FUND
SINCE INC. SINCE SINCE SINCE
- ------------------- ----------------- ---------------- ----------------
1994 1988 1994 1995
1988 1988 1994 1995
1986 1988 1994 1995
1986 1988 1994 1995
1994 1994 1994 1991
1994 1994 1994 1991
1985 1988 1994 1995
1985 1988 1994 1995
1986 1988 1994 1991
1994 1994 1994 1991

13
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

SMITH BARNEY AGGRESSIVE GROWTH FUND INC.
SMITH BARNEY INVESTMENT FUNDS INC.
SMITH BARNEY PRINCIPAL RETURN FUND AND
SMITH BARNEY TELECOMMUNICATIONS TRUST

<TABLE>
<CAPTION>
DIRECTOR OF
SMITH BARNEY
AGGRESSIVE
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER GROWTH FUND
DIRECTORSHIPS DURING THE PAST FIVE YEARS INC. SINCE
------------------------------------------ ------------
<S> <C>
Paul R. Ades, age 57. 1983
Partner of the law firm of Murov & Ades.
Herbert Barg, age 74. 1983
Private Investor.
Dwight B. Crane, age 59. 1994
Professor, Harvard Business School.
Frank Hubbard, age 59. 1994
President of Avatar International, a consulting firm; Former Vice
President of S&S Industries, a chemical distributor; Former
Corporate Vice President, Materials Management and Marketing
Services of Huls America, Inc., a chemicals development company
*Heath B. McLendon, age 64. 1983
Managing Director of Smith Barney; President and Director of Smith
Barney Mutual Funds Management Inc. and Travelers Investment
Adviser, Inc.; Chairman of Smith Barney Strategy Advisers Inc.
Prior to July 1993, Senior Executive Vice President of Shearson
Lehman Brothers Inc., Vice Chairman of Shearson Asset Management,
Director of PanAgora Asset Management, Inc. and PanAgora Asset
Management Limited.
Jerome H. Miller, age 58. N/A
Retired, Former President, Asset Management Group of Shearson
Lehman Brothers Inc.
Ken Miller, age 55. 1983
President of Young Stuff Apparel Group, Inc.
</TABLE>

14
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

SMITH BARNEY AGGRESSIVE GROWTH FUND INC.
SMITH BARNEY INVESTMENT FUNDS INC.
SMITH BARNEY PRINCIPAL RETURN FUND AND
SMITH BARNEY TELECOMMUNICATIONS TRUST

<TABLE>
<CAPTION>
TRUSTEE OF SMITH
DIRECTOR OF SMITH TRUSTEE OF SMITH BARNEY TELE-
BARNEY INVESTMENT BARNEY PRINCIPAL COMMUNICATIONS
FUNDS INC. SINCE RETURN FUND SINCE TRUST SINCE
- ----------------- ----------------- ----------------
<S> <C> <C>
1994 1988 1983
1994 1994 1983
1981 1986 1994
1993 1994 1994
1992 1986 1983
N/A 1995 N/A
1994 1988 1983
</TABLE>

15
<PAGE>

NOMINEES FOR ELECTION TO THE BOARD OF

SMITH BARNEY INCOME FUNDS

<TABLE>
<CAPTION>
TRUSTEE OF SMITH
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER BARNEY INCOME
DIRECTORSHIPS DURING THE PAST FIVE YEARS FUNDS SINCE
----------------------------------------- ----------------
<S> <C>
Lee Abraham, age 69. 1993
Retired; formerly Chairman and Chief Executive Officer of
Associated Merchandising Corporation, a major retail
merchandising and sourcing organization; Director of Galey &
Lord, an apparel manufacturer, Liz Claiborne, a specialty
retailer, R.G. Barry Corp., a footwear manufacturer and Signet
Group plc, a specialty retailer.
Allan J. Bloostein, age 67. 1985
President of Allan J. Bloostein Associates, a consulting firm;
Retired Vice Chairman and Director of The May Department
Stores Company; Director of CVS Corporation, a drugstore
chain, and Taubman Centers Inc., a real estate development
company.
Richard E. Hanson, Jr., age 56. 1985
Head of School, New Atlanta Jewish Community High School,
since September 1996; formerly Headmaster, The Peck School,
Morristown, New Jersey; prior to July 1, 1994, Headmaster,
Lawrence Country Day School -- Woodmere Academy, Woodmere, New
York.
*Heath B. McLendon, age 64. 1985
Managing Director of Smith Barney; President and Director of
Smith Barney Mutual Funds Management Inc. and Travelers
Investment Adviser, Inc.; Chairman of Smith Barney Strategy
Advisers Inc. Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice Chairman of
Shearson Asset Management, Director of PanAgora Asset
Management, Inc. and PanAgora Asset Management Limited.
</TABLE>

16
<PAGE>

NOMINEES FOR ELECTION TO THE BOARD OF

SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND

<TABLE>
<CAPTION>
TRUSTEE OF SMITH
BARNEY ADJUSTABLE
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER RATE GOVERNMENT
DIRECTORSHIPS DURING THE PAST FIVE YEARS INCOME FUND SINCE
----------------------------------------- ------------------
<S> <C>
Allan J. Bloostein, age 67. 1992
President of Allan J. Bloostein Associates, a consulting
firm; Retired Vice Chairman and Director of The May
Department Stores Company; Director of CVS Corporation, a
drugstore chain, and Taubman Centers Inc., a real estate
development company.
Martin Brody, age 76. 1992
Consultant, HMK Associates, a financial consulting firm;
Retired Vice Chairman of Restaurant Associates Corp.;
Director of Jaclyn, Inc., an apparel design and
manufacturing company.
Dwight B. Crane, age 59. 1992
Professor, Harvard Business School.
Robert A. Frankel, age 70. 1994
Managing Partner of Robert A. Frankel Management
Consultants; Former Vice President of The Reader's Digest
Association, Inc.
William R. Hutchinson, age 54. 1995
Vice President, Financial Operations of AMOCO Corporation, a
petroleum and chemical company; Director of Associated Bank
and Associated Banc-Corp.
*Heath B. McLendon, age 64. 1992
Managing Director of Smith Barney; President and Director of
Smith Barney Mutual Funds Management Inc. and Travelers
Investment Adviser, Inc.; Chairman of Smith Barney Strategy
Advisers Inc. Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice Chairman of
Shearson Asset Management, Director of PanAgora Asset
Management, Inc. and PanAgora Asset Management Limited.
</TABLE>

17
<PAGE>

NOMINEES FOR ELECTION TO THE BOARD OF

SMITH BARNEY CONCERT ALLOCATION SERIES INC.

<TABLE>
<CAPTION>
DIRECTOR OF SMITH
BARNEY CONCERT
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER ALLOCATION SERIES
DIRECTORSHIPS DURING THE PAST FIVE YEARS INC. SINCE
----------------------------------------- -----------------
<S> <C>
Walter E. Auch, Jr., age 75. 1995
Consultant to companies in the financial services industry;
Director of Pimco Advisers L.P., Brinson Partners, Nicholas-
Applegate (each a registered investment advisor), Legend
Properties, Banyan Strategic Realty Trust, Banyan Strategic
Land Fund II (each a real estate investment firm), and
Geotek Communications Inc., a wireless communications
company.
Martin Brody, age 76. 1995
Consultant, HMK Associates, a financial consulting firm;
Retired Vice Chairman of the Board of Restaurant Associates
Corp.; Director of Jaclyn, Inc., an apparel design and
manufacturing company.
H. John Ellis, age 69. 1996
Retired; Prior to 1992, Executive Vice President of the
Consulting Services Division of Shearson Lehman Brothers,
Inc.
Armon Kamesar, age 69. 1995
Chairman of TEC, an international organization of Chief
Executive Officers; Trustee, U.S. Bankruptcy Court.
Stephen E. Kaufman, Jr., age 65. 1995
Attorney.
*Heath B. McLendon, age 64. 1995
Managing Director of Smith Barney; President and Director of
Smith Barney Mutual Funds Management Inc. and Travelers
Investment Adviser, Inc.; Chairman of Smith Barney Strategy
Advisers Inc. Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice Chairman of
Shearson Asset Management, Director of PanAgora Asset
Management, Inc. and PanAgora Asset Management Limited.
</TABLE>

18
<PAGE>

NOMINEES FOR ELECTION TO THE BOARD OF

SMITH BARNEY FUNDAMENTAL VALUE FUND INC.

<TABLE>
<CAPTION>
DIRECTOR OF SMITH
BARNEY
FUNDAMENTAL
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER VALUE FUND INC.
DIRECTORSHIPS DURING THE PAST FIVE YEARS SINCE
----------------------------------------- -----------------
<S> <C>
Lloyd J. Andrews, age 76. 1981
Private investor; Chairman Emeritus of Flow International, a
manufacturer of waterjet systems.
Robert M. Frayn, age 63. 1981
President and Director of Book Publishing Company.
Leon P. Gardner, age 69. 1984
Private investor; Former Chairman of Fargo's Pizza Company.
***Howard J. Johnson, age 58. 1981
Chief Executive Officer of Howard Johnson Company, a benefit
and pension consulting firm; Director and Chairman of the
Executive Committee of Northwestern Trust & Investors
Advisory Company; Director of Shurgard Storage, Inc.
David E. Maryatt, age 61. 1981
President of ALS Co., a real estate management and
development firm.
*Heath B. McLendon, age 64. 1987
Managing Director of Smith Barney; President and Director of
Smith Barney Mutual Funds Management Inc. and Travelers
Investment Adviser, Inc.; Chairman of Smith Barney Strategy
Advisers Inc. Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice Chairman of
Shearson Asset Management, Director of PanAgora Asset
Management, Inc. and PanAgora Asset Management Limited.
Frederick O. Paulsell, age 57.
Principal of Olympic Capital Partners, an investment banking
firm.
Jerry A. Viscione, age 52. 1993
Executive Vice President of Marquette University; Former Dean
of Albers School of Business and Economics, Seattle
University.
Julie W. Weston, age 53. 1987
Attorney.
</TABLE>
- -----------
***Mr. Johnson is an Interested Person by reason of his daughter being employed
by Smith Barney Inc.

19
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDS, INC.
SMITH BARNEY MONEY FUNDS, INC.
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC. AND
SMITH BARNEY MUNI FUNDS

<TABLE>
<CAPTION>
DIRECTOR OF
SMITH BARNEY DIRECTOR OF
DISCIPLINED SMALL SMITH BARNEY
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER CAP FUND, INC. FUNDS, INC.
DIRECTORSHIPS DURING THE PAST FIVE YEARS SINCE SINCE
- ----------------------------------------- ----------------- ------------
<S> <C> <C>
Donald R. Foley, age 74. 1997 1987
Retired; Former Vice President of Edwin Bird
Wilson, Incorporated, an advertising agency.
Paul Hardin, age 65. 1997 1994
Interim President of the University of Alabama
at Birmingham; Professor of Law at University of
North Carolina at Chapel Hill; a Director of The
Summit Bancorporation; Former Chancellor of the
University of North Carolina at Chapel Hill.
*Heath B. McLendon, age 64. 1997 1995
Managing Director of Smith Barney; President and
Director of Smith Barney Mutual Funds Management
Inc. and Travelers Investment Adviser, Inc.;
Chairman of Smith Barney Strategy Advisers Inc.
Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice
Chairman of Shearson Asset Management, Director
of PanAgora Asset Management, Inc. and PanAgora
Asset Management Limited.
Roderick C. Rasmussen, age 71. 1997 1981
Investment Counselor; Former Vice President of
Dresdner and Company Inc., investment
counselors.
*Bruce D. Sargent, age 53. 1997 1981
Managing Director of Smith Barney and Vice
President of Smith Barney Mutual Funds
Management, Inc.
John P. Toolan, age 66. 1997 1992
Retired; Former Director and Chairman of Smith
Barney Trust Company, Director of Smith Barney
Holdings Inc. and various subsidiaries; Senior
Executive Vice President, Director and Member of
the Executive Committee of Smith Barney;
Director of John Hancock Funds.
</TABLE>

20
<PAGE>

NOMINEES FOR ELECTION TO THE BOARDS OF

SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDS, INC.
SMITH BARNEY MONEY FUNDS, INC.
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC. AND
SMITH BARNEY MUNI FUNDS

<TABLE>
<CAPTION>
DIRECTOR OF
DIRECTOR OF SMITH BARNEY TRUSTEE OF
SMITH BARNEY MUNICIPAL MONEY SMITH BARNEY
MONEY FUNDS, INC. MARKET FUND, INC. MUNI FUNDS
SINCE SINCE SINCE
- ----------------- ----------------- -------------
<S> <C> <C>
1974 1975 1985
1994 1994 1994
1995 1995 1995
1982 1982 1985
N/A N/A N/A
1982 1982 1985
</TABLE>

21
<PAGE>

NOMINEES FOR ELECTION TO THE BOARD OF
TRAVELERS SERIES FUND INC.

<TABLE>
<CAPTION>
DIRECTOR OF
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER TRAVELERS SERIES
DIRECTORSHIPS DURING THE PAST FIVE YEARS FUND INC. SINCE
----------------------------------------- -----------------
<S> <C>
Victor K. Atkins, age 75. 1994
Retired; Former President of Lips Propellers, Inc., a ship
propeller repair company
Abraham E. Cohen, age 61. 1996
Consultant to MeesPierson, Inc., a Dutch investment bank;
Consultant to and Director of Chugai Pharmaceutical Co. Ltd.;
Director of Agouron Pharmaceuticals, Inc., Akzo Nobel N.V., a
chemical company, Vasomedical, Inc., Teva Pharmaceutical
Ind., Ltd., Neurobiological Technologies Inc., Vion
Pharmaceuticals, Inc., BlueStone Capital Partners, LP and The
Population Council, an international public interest
organization.
Robert A. Frankel, age 70. 1994
Managing Partner of Robert A. Frankel Management Consultants;
Former Vice President of The Reader's Digest Association,
Inc.
Rainer Greeven, age 60. 1994
Attorney.
Susan M. Heilbron, age 52. 1994
Attorney.
*Heath B. McLendon, age 64. 1995
Managing Director of Smith Barney; President and Director of
Smith Barney Mutual Funds Management Inc. and Travelers
Investment Adviser, Inc.; Chairman of Smith Barney Strategy
Advisers Inc. Prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers Inc., Vice Chairman of
Shearson Asset Management, Director of PanAgora Asset
Management, Inc. and PanAgora Asset Management Limited.
James M. Shuart, age 66. 1994
President of Hofstra University; Director of European
American Bank; Director of Long Island Tourism and Convention
Commission; Director of Association of Colleges and
Universities of the State of New York.
</TABLE>

REQUIRED VOTE

Election of the listed nominees for Board members of a Fund must be approved
by a Plurality Vote for all Funds other than Smith Barney Muni Funds, which
requires approval by a majority of the votes cast at the Meeting with a quorum
present.

THE BOARD OF EACH FUND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION
OF NOMINEES TO THE BOARD.

22
<PAGE>

PROPOSAL 2:

TO APPROVE OR DISAPPROVE THE RECLASSIFICATION, MODIFICATION AND/OR ELIMINATION
OF CERTAIN FUNDAMENTAL INVESTMENT POLICIES

ALL FUNDS

The 1940 Act requires a registered investment company, including each of the
Funds, to have certain specific investment policies that can be changed only
by a Majority Vote of the company's shareholders. Investment companies may
also elect to designate other policies that may be changed only by a
shareholder vote. Both types of policies are often referred to as
"fundamental" policies. (In this joint proxy statement, the word "restriction"
or "limitation" is sometimes used to describe a policy). Certain fundamental
policies have been adopted in the past by the Funds to reflect certain
regulatory, business or industry conditions that are no longer in effect.
Accordingly, each Fund's Board authorized a review of the Fund's fundamental
policies with the following goals: (i) to simplify, modernize and make
consistent with those of other investment companies distributed by Smith
Barney, the Funds' policies that are required to be fundamental, (ii) to
reclassify as non-fundamental any policies that are not required to be
fundamental under the 1940 Act or the positions of the staff of the SEC in
interpreting the 1940 Act, in which case, depending on the circumstances, the
policy would be either eliminated or adopted by the Board as a non-fundamental
policy in the same or a modified form and (iii) to reclassify as non-
fundamental or to eliminate certain policies previously required under state
securities laws. Non-fundamental policies can be changed by the Board without
shareholder approval, subject to compliance with applicable SEC disclosure
requirements.

This proposal seeks shareholder approval of changes that are intended to
accomplish the foregoing goals. Shareholders of any particular Fund will be
able to vote for or against or abstain from voting with respect to each of the
proposed changes applicable to that Fund. The proposed changes to the
fundamental policies are discussed in detail below. By reducing to a minimum
those policies that can be changed only by a shareholder vote, each Fund
should be able to avoid the costs and delay associated with a shareholder
meeting and each Board believes that the Adviser's ability to manage the
Fund's portfolio in a changing regulatory or investment environment will be
enhanced. Accordingly, investment management opportunities generally will be
increased. Before a Fund engages in any new investment policy, its Board must
approve it.

Generally, the Funds do not have precisely the same set of investment
restrictions. The Funds often have specific restrictions that are
substantially similar but not necessarily identical. Please refer to the
policies as set forth in Exhibit D hereto, which includes the current text of
the relevant Funds' fundamental investment restrictions. If a fundamental
policy is proposed by the Board to be modified or made non-fundamental, the
text of the proposed revision is supplied in the discussion below.

23
<PAGE>

The percentage limitations contained in the restrictions described herein
apply at the time of purchases of portfolio securities.

If these investment policy changes are approved by shareholders at the
meeting, each Fund's Prospectus and Statement of Additional Information will
be amended or supplemented in order to reflect the elimination, amendment
and/or reclassification of the investment policies. Shareholders will be
notified by the Fund of any future investment policy changes, either in the
Fund's Prospectus or Statement of Additional Information, which are updated at
least annually, or in other Fund correspondence.

In this Proposal 2, references to a "Fund" refer to a registered investment
company or a series thereof, as the case may be.

A.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 DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDAMENTAL VALUE FUND INC.
SMITH BARNEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY INCOME FUNDS (ALL SERIES)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (SMITH BARNEY LARGE CAPITALIZATION GROWTH
FUND ONLY)
SMITH BARNEY MANAGED GOVERNMENTS FUND INC.
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (LIMITED TERM PORTFOLIO AND NATIONAL PORTFOLIO
ONLY)
SMITH BARNEY NATURAL RESOURCES FUND INC.
SMITH BARNEY PRINCIPAL RETURN FUND (ALL SERIES)
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (ALLIANCE GROWTH PORTFOLIO, VAN KAMPEN AMERICAN
CAPITAL ENTERPRISE PORTFOLIO, PUTNAM DIVERSIFIED INCOME PORTFOLIO, SMITH
BARNEY HIGH INCOME PORTFOLIO, SMITH BARNEY INCOME AND GROWTH PORTFOLIO,
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO, SMITH BARNEY MONEY MARKET
PORTFOLIO, SMITH BARNEY PACIFIC BASIN PORTFOLIO AND TBC MANAGED INCOME
PORTFOLIO ONLY)

MODIFICATION OF EACH FUND'S FUNDAMENTAL POLICY RELATING TO DIVERSIFICATION

Under the 1940 Act, a "diversified" fund is permitted to invest, with
respect to 75% of its assets, up to 5% of its assets in one issuer, provided
that the

24
<PAGE>

investment represents less than 10% of the issuer's voting securities. A
number of these Funds initially adopted more restrictive fundamental
limitations of 5% per issuer with respect to 100% of Fund assets. Several
Funds' fundamental policies similarly apply the 10% limitation on voting
securities to 100% of its assets, in some cases applying this limitation to
"any class of securities" of an issuer. Further, Smith Barney Income Fund's
fundamental policies prohibit some of its Series from purchasing more than 10%
of the "outstanding debt securities" of any one issuer. The Board of each of
these Funds believes that these restrictions should be standardized and
conformed to the statutory definition of diversification under the 1940 Act in
order to enhance the Fund's ability to pursue its investment objective by
investing a larger but still limited amount of its assets in a single issuer.
If approved by shareholders, the Fund's new policy on diversification will
permit the Fund to invest, with respect to 25% of its assets, more than 5% of
its assets in an issuer. Notwithstanding the proposal, Smith Barney Money
Funds, Inc. and Smith Barney Municipal Money Market Fund, Inc. will, in
accordance with the requirements of the rules adopted under the 1940 Act with
respect to money market funds, continue to be managed so as to be 100%
diversified.

This Proposal will increase the amount of assets of some Funds that may be
invested in the securities of any one issuer, and with respect to other Funds,
this Proposal will eliminate the restriction against holding more than 10% of
any "class" of an issuer's securities. To the extent that the Fund invests a
greater proportion of its assets in a single issuer, it will be subject to a
correspondingly greater degree of risk associated with that investment. Please
refer to Appendix D to compare your Fund's current investment policy with the
one proposed below. For your convenience, a table of contents has been
inserted at the beginning of Appendix D which will refer you to the page on
which your Fund's current policies are set forth. Set forth below is each
Fund's policy on diversification, as proposed to be modified:

ALL SERIES EXCEPT VAN KAMPEN AMERICAN CAPITAL ENTERPRISE PORTFOLIO:

[The Fund will not] 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.

VAN KAMPEN AMERICAN CAPITAL ENTERPRISE PORTFOLIO ONLY:

Van Kampen American Capital Enterprise Portfolio, like other funds advised
by Van Kampen American Capital Asset Management Inc., currently has a
fundamental investment restriction which provides that the limitations imposed
by this fundamental policy should not apply to the acquisition of shares of
other open-end investment companies to the extent permitted by rule or order
of the SEC exempting the Portfolio from the limitations imposed by Section
12(d)(1) of the 1940 Act. Its policy as proposed to be adopted below is,
therefore, different from all other Funds:

[The Fund will not] invest in a manner that would cause it to fail to be
a "diversified company" under the 1940 Act and the rules, regulations and

25
<PAGE>

orders thereunder taking into account any rule or order of the SEC
exempting the Portfolio from the limitation imposed by Section 12(d)(1) of
the 1940 Act.

B.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 DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MANAGED GOVERNMENTS FUND INC.
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (ALL SERIES)
SMITH BARNEY NATURAL RESOURCES FUND INC.
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.
SMITH BARNEY OREGON MUNICIPALS FUND
SMITH BARNEY TELECOMMUNICATIONS TRUST
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (ALLIANCE GROWTH PORTFOLIO, VAN KAMPEN AMERICAN
CAPITAL ENTERPRISE PORTFOLIO, MFS TOTAL RETURN PORTFOLIO, PUTNAM
DIVERSIFIED INCOME PORTFOLIO, SMITH BARNEY HIGH INCOME PORTFOLIO, SMITH
BARNEY INCOME AND GROWTH PORTFOLIO, SMITH BARNEY INTERNATIONAL EQUITY
PORTFOLIO, SMITH BARNEY MONEY MARKET PORTFOLIO AND SMITH BARNEY PACIFIC
BASIN PORTFOLIO ONLY)

MODIFICATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING ISSUANCE OF
SENIOR SECURITIES

Although the definition of a "senior security" involves complex statutory
and regulatory concepts, a senior security is generally thought of as an
obligation of a fund which has a claim to the fund's assets or earnings that
takes precedence over the claims of the fund's shareholders. The 1940 Act
generally prohibits mutual funds from issuing senior securities; however,
mutual funds are permitted to engage in certain types of transactions that
might be considered "senior securities" as long as certain conditions are
satisfied. For example, a transaction which obligates a fund to pay money at a
future date (e.g., the purchase of securities to be settled on a date that is
further away than the normal settlement period) may be considered a "senior
security." A mutual fund is permitted to enter into this type of transaction
if it maintains a segregated account containing liquid securities in value
equal to its obligation to pay cash for the securities at a future date. The
Funds utilize transactions that may be considered to give rise to "senior
securities" only in accordance with applicable regulatory requirements under
the 1940 Act.

26
<PAGE>

The primary purpose of the proposal is to revise each Fund's fundamental
limitation with respect to senior securities to conform to a limitation that
is expected to become the standard for all Smith Barney Funds. If the proposal
is approved, the new fundamental senior securities limitation cannot be
changed without a vote of a Fund's shareholders.

Adoption of the proposed limitation on senior securities is not expected to
affect the way in which a Fund is managed, the investment performance of any
Fund, or the securities or instruments in which a Fund invests. None of the
Funds is currently engaged in issuing senior securities, except with the
protections afforded by segregated accounts, and the Funds have no current
intention to begin issuing senior securities. The proposed limitation would
recognize that Funds may issue such securities only to the extent permitted
under the 1940 Act. To the extent a Fund becomes involved in such securities
trading practices, the Board of each Fund will carefully review the Fund's
disclosure of its participation and the risks of loss to the Fund and its
shareholders which may result from such trading practices. The Board will
further determine whether such trading practices are consistent with the
Fund's investment policies.

Set forth below is the policy on issuance of senior securities, as proposed
to be modified:

[The Fund will not] 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.

C.SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND
SMITH BARNEY AGGRESSIVE GROWTH FUND INC.
SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO ONLY)
SMITH BARNEY INCOME FUNDS (SMITH BARNEY CONVERTIBLE FUND, SMITH BARNEY
DIVERSIFIED STRATEGIC INCOME FUND, SMITH BARNEY HIGH INCOME FUND, SMITH
BARNEY PREMIUM TOTAL RETURN FUND AND SMITH BARNEY TAX-EXEMPT INCOME FUND
ONLY)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MUNI FUNDS (ALL SERIES)
SMITH BARNEY PRINCIPAL RETURN FUND (ALL SERIES)
GREENWICH STREET SERIES FUND (APPRECIATION PORTFOLIO, DIVERSIFIED
STRATEGIC INCOME PORTFOLIO, EMERGING GROWTH PORTFOLIO, EQUITY INDEX
PORTFOLIO, GROWTH & INCOME PORTFOLIO, INTERMEDIATE HIGH GRADE PORTFOLIO,
INTERNATIONAL EQUITY PORTFOLIO AND TOTAL RETURN PORTFOLIO ONLY)

27
<PAGE>

TRAVELERS SERIES FUND INC. (AIM CAPITAL APPRECIATION PORTFOLIO, SMITH
BARNEY HIGH INCOME PORTFOLIO, SMITH BARNEY INCOME AND GROWTH PORTFOLIO,
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO AND SMITH BARNEY PACIFIC
BASIN PORTFOLIO ONLY)

MODIFICATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING INDUSTRY
CONCENTRATION

Each of these Funds has a fundamental policy that prohibits the Fund from
concentrating its investments in any one industry. The language of the Funds'
policies, however, varies widely. It is proposed that these policies be
standardized and made more flexible. The modified policies will not involve
any change in the manner in which each Fund's assets are currently managed.
Set forth below is each Fund's policy on industry concentration, as proposed
to be modified:

[The Fund will not] 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.

D.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. (ALL SERIES)
SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDAMENTAL VALUE FUND INC.
SMITH BARNEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY INCOME FUNDS (ALL SERIES)
SMITH BARNEY INVESTMENT FUNDS INC. (SMITH BARNEY GROWTH OPPORTUNITY FUND,
SMITH BARNEY INVESTMENT GRADE BOND FUND, SMITH BARNEY MANAGED GROWTH
FUND AND SMITH BARNEY SPECIAL EQUITIES FUND ONLY)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MANAGED GOVERNMENTS FUND INC.
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (ALL SERIES)
SMITH BARNEY NATURAL RESOURCES FUND INC.
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.

28
<PAGE>

SMITH BARNEY OREGON MUNICIPALS FUND
SMITH BARNEY PRINCIPAL RETURN FUND (ALL SERIES)
SMITH BARNEY TELECOMMUNICATIONS TRUST
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (ALLIANCE GROWTH PORTFOLIO, VAN KAMPEN AMERICAN
CAPITAL ENTERPRISE PORTFOLIO, MFS TOTAL RETURN PORTFOLIO, PUTNAM
DIVERSIFIED INCOME PORTFOLIO, SMITH BARNEY HIGH INCOME PORTFOLIO, SMITH
BARNEY INCOME AND GROWTH PORTFOLIO, SMITH BARNEY INTERNATIONAL EQUITY
PORTFOLIO, SMITH BARNEY MONEY MARKET PORTFOLIO, SMITH BARNEY PACIFIC
BASIN PORTFOLIO AND TBC MANAGED INCOME PORTFOLIO ONLY)

MODIFICATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING BORROWING

Every Fund is required to have a fundamental policy with respect to
borrowing and each Fund, except the Smith Barney International Equity and
Smith Barney Pacific Basin Portfolios of Travelers Series Fund Inc., is
presently prohibited from borrowing, except as borrowings may be necessary for
temporary or emergency purposes (such as meeting redemption requests that
might otherwise require the untimely disposition of securities). Certain Funds
had limited their permissible borrowings to amounts not in excess of a
specified amount, such as 10% or 33 -1/3% of the Fund's total assets, and, in
some cases, except as engaging in certain investment strategies may be
considered borrowings. The language of these policies, however, varies widely
from Fund to Fund. It is therefore proposed that this language be simplified
and standardized. In addition, the Funds that do not already have specific
authority are proposed to be granted authority to engage in reverse repurchase
agreements and forward roll transactions, practices that may be deemed to
involve borrowing and are frequently authorized for use by sophisticated
institutional asset managers.

Under a reverse repurchase agreement, a Fund would sell securities and agree
to repurchase them at a mutually agreed date and price. 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). Reverse repurchase agreements involve the risk that the
market value of the securities may decline prior to the repurchase date. The
cash proceeds of the sales may be invested in securities or other instruments.
In the event the buyer of securities under a reverse repurchase agreement
files for bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to enforce the
Fund's obligation to repurchase the securities, and the Fund's use of the
proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision.

A Fund also may enter into forward roll transactions, in which the Fund
sells fixed income securities for delivery in the current month and
simultaneously

29
<PAGE>

contracts to repurchase substantially similar (same type, coupon and maturity)
securities on a specified future date. During the roll period, the Fund would
forego principal and interest paid on such securities. The Fund would be
compensated by the difference between the current sales price and the forward
price for the future purchase, as well as by the interest earned on the cash
proceeds of the initial sale.

If a Fund borrows and uses the proceeds to make additional investments,
income and appreciation from such investments will improve its performance if
they exceed the associated borrowing costs but impair its performance if they
are less than such borrowing costs. This speculative factor is known as
"leverage". These Funds have chosen not to borrow money for leveraging
purposes. The policies of certain Funds currently provide that whenever
borrowings other than repurchase agreements and forward roll transactions
exceed 5% of the value of the Fund's total assets, the Fund will not make
additional investments. While the 1940 Act and the rules thereunder do not
require such a policy, and the Funds do not propose to include language to
this effect in their fundamental restrictions, the Board of each Fund has
determined that its assets should be managed in accordance with such a policy.
Set forth below is each such Fund's policy on borrowing, as proposed to be
modified or adopted:

ALL FUNDS EXCEPT SMITH BARNEY INTERNATIONAL EQUITY AND SMITH BARNEY
PACIFIC BASIN PORTFOLIOS:

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

SMITH BARNEY INTERNATIONAL EQUITY AND SMITH BARNEY PACIFIC BASIN
PORTFOLIOS ONLY:

These Funds may engage in leveraging. As the Prospectus of each of these
Funds describes, leverage creates an opportunity for increased returns to
shareholders of a Fund, but at the same time, it creates special risk
considerations. For example, leverage may exaggerate changes in the net asset
value of a Fund's shares and in the Fund's yield. Although the principal or
stated value of such borrowings will be fixed, Fund assets may change in value
during the time the borrowing is outstanding. Leverage will create interest or
dividend expenses for a Fund which can exceed the income from the assets
retained. To the extent the income or other gain derived from securities
purchased with borrowed funds exceeds the interest and other charges the Fund
will have to pay in respect thereof, the Fund's net income or other gain will
be greater than if leverage had not been used. Conversely, if the income or
other gain from the incremental assets is not

30
<PAGE>

sufficient to cover the cost of leverage, the net income or other gain of the
Fund will be less than if leverage had not been used. If the amount of income
from the incremental securities is insufficient to cover the cost of
borrowing, securities might have to be liquidated to obtain required funds.
Depending on market or other conditions, such liquidations could be
disadvantageous to a Fund. The fundamental policy limitation on borrowing as
proposed to be adopted by Smith Barney International Equity and Smith Barney
Pacific Basin Portfolios maintains the ability to leverage.

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

E.SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND
SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY INCOME FUNDS (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (ALL SERIES)
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (VAN KAMPEN AMERICAN CAPITAL ENTERPRISE
PORTFOLIO, GT GLOBAL STRATEGIC INCOME PORTFOLIO, PUTNAM DIVERSIFIED
INCOME PORTFOLIO, SMITH BARNEY INCOME AND GROWTH PORTFOLIO, SMITH BARNEY
INTERNATIONAL EQUITY PORTFOLIO, SMITH BARNEY MONEY MARKET PORTFOLIO AND
SMITH BARNEY PACIFIC BASIN PORTFOLIO ONLY)

ELIMINATION OF EACH FUND'S FUNDAMENTAL POLICY RESTRICTING ITS ABILITY TO
PLEDGE ASSETS

The Board of each of these Funds has approved, subject to shareholder
approval, the elimination of fundamental policies restricting the Fund's
ability to pledge its assets to other parties. The elimination of the Fund's
fundamental investment limitations regarding pledging assets would remove all
restrictions on the ability of each Fund to pledge, mortgage, hypothecate or
otherwise encumber its assets, except for those restrictions imposed by or
under the 1940 Act, and

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<PAGE>

would leave the imposition of any further limits on the Fund's pledging
activities to the sole discretion of the Board, subject to applicable SEC
disclosure requirements.

A Fund's current fundamental investment limitations on pledging assets may
conflict with its ability to engage in permitted borrowings, purchase
securities on a when-issued or delayed delivery basis, lend portfolio
securities, enter into escrow arrangements in connection with writing options,
enter into collateral arrangements in connection with investments involving
futures contracts and options thereon and possibly to engage in other
investments and arrangements that may develop in the future. Each Board has
approved the elimination of the Fund's fundamental investment limitations
restricting pledging of assets to avoid these potential conflicts and to
secure greater flexibility for the future.

The potential conflict between a Fund's pledging and borrowing limitations,
for instance, arises because banks generally require borrowers such as a Fund
to pledge assets in order to collateralize the amount borrowed. The Funds
currently are permitted to borrow from banks for temporary or emergency
purposes in limited amounts that vary from Fund to Fund and, in most cases, to
pledge assets to secure permitted borrowings. Loan agreements between
investment companies and banks generally require collateral or provide that
the bank may, at its option, require collateral for future outstanding loans.
The amount of required collateral, however, generally exceeds the principal
amount of the loan. Therefore, the limitation on the amount of portfolio
securities that a Fund is permitted to pledge effectively reduces the maximum
borrowing ability of such Fund to below the amount it is permitted to borrow.
Each Board believes that the pledging limitations should be eliminated to
ensure that the Fund's flexibility to consider borrowing money temporarily as
a means of raising cash is not limited by restrictions in its ability to
pledge assets. The pledging of assets may, however, limit some flexibility
that a portfolio manager has to engage in transactions involving Fund assets
or to meet extraordinary redemptions if, at the same time, the loans for which
the assets are pledged remain outstanding.

F.SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND
SMITH BARNEY CONCERT ALLOCATION SERIES INC. (ALL SERIES)
SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDAMENTAL VALUE FUND INC.
SMITH BARNEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (ALL SERIES)
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (ALL SERIES)

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<PAGE>

MODIFICATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING LENDING BY THE
FUND

Each of these Funds has or is required to have a fundamental policy
prohibiting the Fund from lending its assets to other persons, or limiting its
authority to lend assets, except that certain Funds may variously engage in
loans of their portfolio securities, enter into repurchase agreements and
purchase debt instruments. The language of these policies is proposed to be
standardized and clarified.

If this proposal is approved by shareholders, each Fund may lend portfolio
securities to well-known and recognized U.S. and foreign brokers, dealers and
banks. These loans, if and when made, would not exceed 33 -1/3% of the value
of a Fund's total assets. A Fund will not lend securities to Smith Barney or
its affiliates, unless the Fund has applied for and received specific
authority to do so from the SEC. A Fund's loan of securities will be
collateralized as required by the SEC, by cash, letters of credit or U.S.
government securities. The cash or instruments collateralizing a Fund's loan
of securities will be maintained at all times in a segregated account with the
Fund's custodian, or with a designated sub-custodian, in an amount at least
equal to the current market value of the loaned securities. From time to time,
a Fund may pay 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 is acting as a "finder" (unless the SEC permits
affiliated persons to serve as "finders"). Whenever a Fund loans securities,
it will comply with conditions established by the SEC, which conditions
currently include: (1) the Fund must receive at least 100% cash collateral or
equivalent securities from the borrower; (2) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (3) the Fund must be able to terminate the loan at
any time; (4) the Fund must receive reasonable interest on the loan, as well
as any dividends, interest or other distributions on the loaned securities,
and any increase in market value; (5) the Fund may pay only reasonable
custodian fees in connection with the loan; and (6) voting rights on the
loaned securities may pass to the borrower except that, if a material event
adversely affecting the investment in the loaned securities occurs, the Fund
must terminate the loan and regain the right to vote the securities. In
lending securities to U.S. and foreign brokers, dealers and banks, the Fund
will be subject to risks, which, like those associated with other extensions
of credit, include possible loss of rights in the collateral should the
borrower fail financially.

The practice of lending securities is expected to generate income for the
Funds. The Adviser for each Fund is responsible for assuring that this
practice will not effect adversely a Fund's ability to meet its investment
objective, including an objective of growth or capital appreciation.

Set forth below is the policy on lending, as proposed to be modified:

[The Fund will not] make loans. This restriction does not apply to: (a)
the purchase of debt obligations in which the Fund may invest consistent
with

33
<PAGE>

its investment objectives and policies; (b) repurchase agreements; and (c)
loans of its portfolio securities.

G.SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND
SMITH BARNEY CONCERT ALLOCATION SERIES INC. (ALL SERIES)
SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (ALL SERIES)
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (ALL SERIES)

MODIFICATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING THE UNDERWRITING
OF SECURITIES OF OTHER ISSUERS

Each of these Funds has or is required to have a policy regarding the Fund
acting as an underwriter of securities. The language of the Funds' policies,
however, varies widely. Some Funds combine this policy with the Funds' policy
regarding restricted securities. The policy respecting restricted securities
is now proposed to be adopted as a separate policy and is discussed below
under sub-paragraph J. This policy is proposed to be standardized and
clarified, but not changed in any material way. The modification will clarify
that the Fund will not be deemed to be an underwriter by reason of disposing
of portfolio securities. The modification will not involve any change in the
manner in which the Fund is currently managed.

Set forth below is each Fund's policy on underwriting, as proposed to be
modified:

[The Fund will not] 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.

H.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 DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDAMENTAL VALUE FUND INC.
SMITH BARNEY FUNDS, INC. (ALL SERIES)

34
<PAGE>

SMITH BARNEY INCOME FUNDS (SMITH BARNEY CONVERTIBLE FUND, SMITH BARNEY
DIVERSIFIED STRATEGIC INCOME FUND, SMITH BARNEY EXCHANGE RESERVE FUND,
SMITH BARNEY HIGH INCOME FUND, SMITH BARNEY PREMIUM TOTAL RETURN FUND
AND SMITH BARNEY TAX-EXEMPT INCOME FUND ONLY)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MANAGED GOVERNMENTS FUND INC.
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND INC.
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (ALL SERIES)
SMITH BARNEY NATURAL RESOURCES FUND INC.
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.
SMITH BARNEY OREGON MUNICIPALS FUND
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (GT GLOBAL STRATEGIC INCOME PORTFOLIO, PUTNAM
DIVERSIFIED INCOME PORTFOLIO, SMITH BARNEY HIGH INCOME PORTFOLIO AND TBC
MANAGED INCOME PORTFOLIO ONLY)

RECLASSIFICATION AS NON-FUNDAMENTAL AND MODIFICATION OF EACH FUND'S
FUNDAMENTAL POLICY REGARDING THE PURCHASE OF SECURITIES ON MARGIN AND THE
SHORT SALE OF SECURITIES

Each of these Funds has a fundamental policy that prohibits the Fund from
purchasing securities on margin and making short sales. The Board of each Fund
recommends that shareholders vote to eliminate these fundamental investment
limitations and replace them with the standard non-fundamental policy set
forth below. The policy, as proposed, would give each Fund's Board greater
flexibility in its ability to respond to the availability of new instruments
and strategies.

Margin purchases involve the purchase of securities with money borrowed from
a broker. Each Fund's current fundamental policy prohibits the Fund from
purchasing securities on margin, except to obtain short-term credits as may be
necessary for the clearance of transactions and for initial and variation
margin payments made in connection with the purchase and sale of futures
contracts and options on futures contracts or related options. With these
exceptions, mutual funds are unable to enter into most types of margin
transactions under applicable SEC regulations. As a result, elimination of
each Fund's fundamental limitation on margin transactions is unlikely to
affect the Fund's investment strategies at this time. However, in the event of
a change in the applicable federal regulatory requirements, the Funds may
alter their investment practices in the future.

Each Fund's current fundamental policy prohibits the making of short sales,
except short sales "against the box." As used in this context, a short sale
"against

35
<PAGE>

the box" means a short sale where the Fund owns the securities sold short or,
by virtue of its ownership of other securities, the Fund has the right to
obtain securities equivalent in kind and amount to the securities sold. The
proposed non-fundamental limitation includes this exception. As with margin
transactions, the Board of each Fund does not anticipate that elimination of
the fundamental policy on short sales will affect the Fund's investment
strategies at this time.

While certain Funds have a separate fundamental policy regarding the
purchase of securities on margin and making short sales, others combine these
policies into one global policy. The policy as proposed to be adopted below
eliminates these differences and combines the two investment policies into a
global one:

[The Fund will not] 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.

I.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 DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDAMENTAL VALUE FUND INC.
SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO AND SHORT TERM U.S.
TREASURY SECURITIES PORTFOLIO ONLY)
SMITH BARNEY INCOME FUNDS (ALL SERIES)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
SMITH BARNEY MUNI FUNDS (ALL SERIES)
SMITH BARNEY NATURAL RESOURCES FUND INC.
SMITH BARNEY OREGON MUNICIPALS FUND
SMITH BARNEY PRINCIPAL RETURN FUND (ALL SERIES)
SMITH BARNEY TELECOMMUNICATIONS TRUST
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (ALL SERIES)

MODIFICATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING THE FUND'S
PURCHASE OR SALE OF REAL

36
<PAGE>

ESTATE, REAL ESTATE LIMITED PARTNERSHIP INTERESTS OR COMMODITIES

Each of these Funds has or is required to have a policy with respect to
investments in real estate, which may or may not contain a restriction against
investments in real estate limited partnership interests and in commodities
contracts. If approved by shareholders, these restrictions would be amended to
permit the Fund to invest in securities of companies that deal in mortgages
and real estate and securities secured by real estate and interests therein.
In addition, the modified restriction reserves for the Fund the freedom of
action to hold and sell real estate acquired as a result of the Fund's
ownership of securities. For example, this modified policy would allow the
Fund to dispose of real estate in the event that it acquired real estate as
the result of a default on securities it holds.

The modified policy would also permit, without further action by
shareholders, the Fund to purchase and sell futures contracts and options
thereon. Under the modified policy, Smith Barney Natural Resources Fund Inc.
would retain its authority to invest in gold bullion and coins or receipts for
gold.

Although no Fund has any current intention of expanding the range of
instruments it is currently permitted to purchase, the modification of this
policy would permit a Fund greater flexibility to respond to market and other
developments. Any future change in the Fund's manner of investing or the
instruments it may purchase would require Board approval and appropriate
disclosure to shareholders.

The proposed modification also permits the Funds (other than Smith Barney
Money Funds, Inc.) to invest in real estate investment trust securities.
Although this modification is not expected to involve any change in the manner
in which a Fund's assets are currently invested, the proposed limitation seeks
to avoid ambiguity by making it explicit that the Funds (other than Smith
Barney Money Funds, Inc. which has a fundamental policy prohibiting it from
investing in such securities) may, to the extent consistent with their outlook
on the market, invest in real estate investment trust securities.

To the extent that the Funds invest in real estate related securities, the
Funds' performance will be subject to the risks of the real estate market.
This industry is sensitive to factors such as real estate values and property
taxes, overbuilding, variations in rental income, and interest rates.
Performance could also be affected by the structure, cash flow and management
skill of real estate companies.

Set forth below are the Funds' policies regarding the purchase or sale of
real estate or commodities, as proposed to be modified or adopted:

ALL FUNDS EXCEPT SMITH BARNEY NATURAL RESOURCES FUND INC. AND SMITH BARNEY
MONEY FUNDS, INC.:

37
<PAGE>

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.

SMITH BARNEY NATURAL RESOURCES FUND INC. ONLY:

Smith Barney Natural Resources Fund Inc. currently has an exception to its
fundamental restriction on purchasing or selling commodities allowing the Fund
to invest in gold bullion and coins or receipts of gold. The policy as
proposed to be adopted below preserves that ability.

[The Fund will not] 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); (d) investing in real
estate investment trust securities; or (e) investing in gold bullion and
coins or receipts for gold.

SMITH BARNEY MONEY FUNDS, INC. ONLY:

The policy of Smith Barney Money Funds Inc. currently prohibits the Fund
from investing in real estate investment trusts and trading in futures
contracts and options on futures contracts. The policy as proposed to be
adopted below maintains those restrictions and therefore differs from the
policies proposed above with respect to others.

[The Fund will not] purchase or sell real estate, real estate mortgages,
real estate investment trust securities, 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 or (b) holding or selling real estate
received in connection with securities it holds or held.

J.SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO ONLY)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)

38
<PAGE>

SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
TRAVELERS SERIES FUND INC. (PUTNAM DIVERSIFIED INCOME PORTFOLIO AND TBC
MANAGED INCOME PORTFOLIO ONLY)

RECLASSIFICATION AS NON-FUNDAMENTAL OF EACH FUND'S FUNDAMENTAL POLICIES
REGARDING INVESTMENTS IN RESTRICTED AND ILLIQUID SECURITIES.

Each of these Funds' fundamental policies currently provide that the Fund
will not purchase or otherwise acquire any securities that are subject to
legal or contractual restrictions on resale or for which there is no readily
available market or, in some cases, enter into a repurchase agreement maturing
in more than five business or seven calendar days, if as a result more than
10% (or 15% with respect to some Funds) of its assets would be invested in all
such securities. These policies are not required to be fundamental and,
additionally, are considered overly restrictive in the current regulatory and
market environment.

If approved by shareholders, these policies would be reclassified as non-
fundamental and each Board intends to adopt a non-fundamental investment
policy that could be changed by vote of the Board in response to regulatory or
market developments without further approval by shareholders. The non-
fundamental policy would provide that the Fund could not purchase or otherwise
acquire any security if, as a result, more than 15% (or 10% in the case of the
Smith Barney Money Funds, Inc.) of its net assets would be invested in
securities that are illiquid.

An open-end investment company, including each of the Funds, may not hold a
significant amount of illiquid securities because these securities may be
difficult to value accurately and because it is possible that the investment
company would have difficulty liquidating such securities if necessary in
order to satisfy in a timely manner requests to redeem shares of the Fund. In
general, illiquid securities have included those enumerated in each Fund's
fundamental restriction (e.g., securities subject to contractual or legal
restrictions on resale, securities for which there is no readily available
market and repurchase agreements or time deposits maturing in greater than
seven days). The securities markets are evolving, however, and new types of
instruments have developed that make each Fund's current policies on illiquid
investments overbroad and unnecessarily restrictive. In addition, the markets
for some types of securities are almost exclusively institutional--repurchase
agreements, commercial paper, many types of municipal securities and some
corporate bonds and notes. These instruments are often exempt from
registration under the U.S. securities laws or sold in transactions not
requiring registration. Consequently, institutional investors depend on the
issuer's ability to honor a demand for repayment in less than seven days or on
an efficient institutional market in which the unregistered security can
readily be resold. The fact that there may be legal or contractual
restrictions on resale to the general public, therefore, does not necessarily
determine the liquidity of these investments.

In recognition of the increased size and liquidity of the institutional
market for unregistered securities and the importance of institutional
investors in the capital formation process, the SEC has advanced rule and
legislative proposals

39
<PAGE>

designed to facilitate efficient trading among institutional investors. The
most important of these, Rule 144A under the Securities Act of 1933, as
amended, contemplates a particularly broad institutional trading market for
securities subject to restriction on resale to the general public. As these
institutional markets develop, the Funds could be constrained by their current
investment restrictions even though the institutional restricted securities
markets would provide readily ascertainable market values for such securities
and the ability to liquidate an investment in order to satisfy Fund share
redemption orders on a timely basis. In order to take advantage of these
regulatory initiatives and the increasingly liquid institutional trading
markets, the Board of each Fund recommends that the Fund reclassify as non-
fundamental its policies regarding investments in illiquid securities and
limit such investments to not more than 15% (or 10% in the case of the Smith
Barney Money Funds, Inc.) of its net assets. Under this new policy, restricted
securities that have nonetheless been determined to be liquid may be purchased
without limitation. As a result, Funds like the Equity Income Portfolio of
Smith Barney Funds, Inc. that may previously have been prohibited from
investing in all restricted securities, will be able, under the new proposal,
to invest in securities that are restricted but liquid, such as those that can
be offered and sold to "qualified institutional buyers" under Rule 144A.

If this proposal is approved by shareholders, the specific types of
securities that may be deemed to be illiquid or liquid will be determined by
the Board in a manner consistent with current regulatory positions of the SEC
and its staff. The Board has adopted guidelines and delegated to management
the daily function of determining and monitoring liquidity of restricted
securities available pursuant to Rule 144A. The Board, however, retains
sufficient oversight and is ultimately responsible for the determinations.
Since it is not possible to predict with assurance exactly how the market for
Rule 144A restricted securities will develop, the Board will carefully monitor
each Fund's investments in these securities, focusing on such important
factors, among others, as valuation, liquidity and availability of
information. Investments in restricted securities could have the effect of
increasing the level of illiquidity in a Fund to the extent that qualified
institutional buyers become for a time uninterested in these restricted
securities. By making each Fund's policy on illiquid securities non-
fundamental, the Funds will be able to respond more rapidly to regulatory and
market developments because a shareholder vote will not be required to
redefine the types of securities that are deemed illiquid. Set forth below is
the non-fundamental policy proposed to be adopted by the Board of each Fund if
this proposal is approved by shareholders of the Fund:

ALL FUNDS EXCEPT SMITH BARNEY MONEY FUNDS, INC.:

[The Fund will not] 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.

SMITH BARNEY MONEY FUNDS, INC. ONLY:

As required under SEC guidelines, the policy as proposed to be adopted by
Smith Barney Money Funds Inc. has a 10% limit on investments in illiquid
securities:

40
<PAGE>

[The Fund will not] purchase or otherwise acquire any security if, as a
result, more than 10% of its net assets would be invested in securities
that are illiquid.

K.SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND
SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO ONLY)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
TRAVELER'S SERIES FUND INC. (GT GLOBAL STRATEGIC INCOME PORTFOLIO AND TBC
MANAGED INCOME PORTFOLIO ONLY)

RECLASSIFICATION AS NON-FUNDAMENTAL OF EACH FUND'S FUNDAMENTAL POLICY
REGARDING INVESTMENTS IN THE SECURITIES OF COMPANIES THAT, TOGETHER WITH
ANY PREDECESSORS, HAVE BEEN IN CONTINUOUS OPERATION FOR LESS THAN THREE
YEARS

The Board of each Fund has recommended shareholder approval of the
reclassification of the Fund's fundamental policies regarding investments in
the securities of companies that, together with any predecessors, have been in
continuous operation for less than three years ("unseasoned issuers"). This
investment limitation, which limits or prohibits a Fund's investments in
unseasoned issuers, was adopted to meet certain requirements of state
securities laws, although this limitation need not be fundamental. If the
reclassification of this limitation is approved by shareholders, each Fund's
Board presently intends to adopt a substantially similar non-fundamental
policy that could be changed by vote of the Board without approval by
shareholders. This will provide each Fund greater flexibility to respond to
regulatory, capital markets and other developments.

L.SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO ONLY)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY MUNI FUNDS (NATIONAL PORTFOLIO AND NEW YORK PORTFOLIO ONLY)
TRAVELERS SERIES FUND INC. (GT GLOBAL STRATEGIC INCOME PORTFOLIO AND
PUTNAM DIVERSIFIED INCOME PORTFOLIO ONLY)

ELIMINATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING THE PURCHASE OF
SECURITIES OF AN ISSUER WHEN THE BOARD MEMBERS AND OFFICERS OF THE FUND OR
OF THE ADVISER HOLD MORE THAN 1/2 OF 1% AND/OR TOGETHER THEY OWN MORE THAN
5% OF THE SECURITIES OF THE ISSUER

These Funds' fundamental policies currently include a restriction that
prohibits the Funds from purchasing or retaining the securities of any issuer
if any

41
<PAGE>

officer or Board member of the Fund or of the Fund's investment adviser
individually owns more than 1/2 of 1% of the securities of that issuer and/or
together they own more than 5% of such securities. This investment restriction
was originally adopted to address requirements no longer applicable to the
Funds under state securities laws in connection with the registration of
shares of the Funds for sale in certain states. Neither the Funds nor their
management is aware of any past violations of this policy, but the Funds have
been advised by their management that accurate monitoring of compliance with
this restriction is difficult, burdensome and may inhibit portfolio
management. Accordingly, the Board of each of these Funds has determined that
the benefits derived from this restriction are now outweighed by the cost of
compliance and the possible inhibitions on management, and elimination of this
restriction will potentially increase the Funds' flexibility when selecting
investments for a Fund in the future. The ability of a Fund to invest in
companies in which its directors and officers, or its affiliates and their
directors and officers, hold interests would continue to be restricted by the
1940 Act and each Fund's Code of Ethics, whether or not the current
fundamental investment restriction is eliminated. The elimination of this
restriction is not expected to involve any change in the manner in which a
Fund's assets are currently invested.

M.SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO AND SHORT TERM U.S.
TREASURY SECURITIES PORTFOLIO ONLY)
SMITH BARNEY INCOME FUNDS (ALL SERIES)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNI FUNDS (NATIONAL PORTFOLIO AND NEW YORK PORTFOLIO ONLY)
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (SMITH BARNEY HIGH INCOME PORTFOLIO, SMITH
BARNEY INCOME AND GROWTH PORTFOLIO, SMITH BARNEY INTERNATIONAL EQUITY
PORTFOLIO, SMITH BARNEY MONEY MARKET PORTFOLIO, SMITH BARNEY PACIFIC
BASIN PORTFOLIO AND TBC MANAGED INCOME PORTFOLIO ONLY)

RECLASSIFICATION AS NON-FUNDAMENTAL OF EACH FUND'S INVESTMENT POLICY
REGARDING PURCHASES OF SECURITIES OF OTHER INVESTMENT COMPANIES.

These Funds currently have a fundamental investment policy prohibiting
investments in other investment companies, except as part of a merger,
consolidation, or acquisition of assets or, in the case of some Funds, in
certain other circumstances such as when the investment is otherwise generally
permitted by the 1940 Act. If approved by shareholders, this restriction would
be reclassified as non-fundamental. Each Fund's Board currently intends to
maintain a policy that would involve no change in the manner in which the
Fund's assets are invested. In addition, the 1940 Act currently limits the
amount an investment company may invest in other investment companies. As a
result, this reclassification should not

42
<PAGE>

be material but will provide each Fund greater flexibility to respond to
regulatory and other developments.

N.SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC.
SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO ONLY)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
TRAVELERS SERIES FUND INC. (AIM CAPITAL APPRECIATION PORTFOLIO, GT GLOBAL
STRATEGIC INCOME PORTFOLIO, PUTNAM DIVERSIFIED INCOME PORTFOLIO AND TBC
MANAGED INCOME PORTFOLIO ONLY)

RECLASSIFICATION AS NON-FUNDAMENTAL OF EACH FUND'S FUNDAMENTAL POLICY
PROHIBITING THE PURCHASE OF SECURITIES FOR PURPOSES OF EXERCISING CONTROL
OR MANAGEMENT

These Funds have a fundamental policy prohibiting the Fund from investing
its assets so as to exercise control or management (or control of management)
of an issuer. Although the restriction was required under certain state
securities laws, it is not required to be fundamental. If approved by
shareholders, this policy would be reclassified as non-fundamental and each
Board currently intends to adopt a substantially similar non-fundamental
investment policy that would involve no change in the manner in which the
Fund's assets are currently invested. This will provide each Fund greater
flexibility to respond to regulatory and other developments.

O.SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND
SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO AND SHORT-TERM U.S.
TREASURY SECURITIES PORTFOLIO ONLY)
SMITH BARNEY INCOME FUNDS (ALL SERIES)
SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (AIM CAPITAL APPRECIATION PORTFOLIO, GT GLOBAL
STRATEGIC INCOME PORTFOLIO, MFS TOTAL RETURN PORTFOLIO, PUTNAM
DIVERSIFIED INCOME PORTFOLIO AND TBC MANAGED INCOME PORTFOLIO ONLY)

RECLASSIFICATION AS NON-FUNDAMENTAL OF EACH FUND'S FUNDAMENTAL POLICY
REGARDING THE FUND'S

43
<PAGE>

INVESTMENTS IN OIL, GAS OR OTHER MINERAL EXPLORATION OR DEVELOPMENT
PROGRAMS

Each of these Funds has a fundamental policy prohibiting investment in any
oil, gas or other mineral exploration or development program, with certain
exceptions. This investment restriction was adopted to address requirements
under certain state securities laws, but is not required to be fundamental.
Each Board believes that this investment restriction should be reclassified as
a non-fundamental policy to respond to regulatory developments. If approved by
shareholders, each Board currently intends to adopt a substantially similar
non-fundamental policy.

P.SMITH BARNEY INVESTMENT FUNDS INC. (ALL SERIES)

ELIMINATION OF THE FUND'S FUNDAMENTAL POLICY LIMITING THE FUND'S
PARTICIPATION IN JOINT SECURITIES TRADING ACCOUNTS

Smith Barney Investment Funds Inc. has a fundamental policy prohibiting the
Fund from participating "on a joint or joint and several basis in any
securities trading account." Each investment company advised by Smith Barney
or an affiliated person thereof has been authorized by the SEC to participate
in a joint trading account for the purpose of managing cash held by each Fund
on an efficient and cost effective basis. Such an account typically holds
repurchase agreements so as to facilitate each participating Fund's earning a
market rate of return on cash that might be otherwise difficult to invest.
This SEC exemptive order does not currently benefit Smith Barney Investment
Funds Inc. and its various series because of that Fund's fundamental policy.
The policy is therefore proposed to be eliminated.

Q.SMITH BARNEY INVESTMENT FUNDS INC. (SMITH BARNEY INVESTMENT GRADE BOND FUND
ONLY)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY TELECOMMUNICATIONS TRUST

ELIMINATION OF EACH FUND'S FUNDAMENTAL POLICY LIMITING THE FUND'S
INVESTMENTS TO CERTAIN ENUMERATED INSTRUMENTS

Each of these Funds has a fundamental policy limiting the Fund's
investments. Smith Barney Investment Trust has a policy limiting its Series'
investments to "Municipal Obligations and Taxable Investments as those terms
are defined in the Prospectuses or . . . Statement of Additional Information."
Smith Barney Telecommunications Trust's policy prohibits it from "investing
less than 65% of the value of its total assets in the telecommunications
industry" as described in its Prospectus. Smith Barney Investment Grade Bond
Fund has a policy prohibiting it from investing in corporate bonds and
commercial paper rated below certain levels by certain rating agencies. These
limitations are not required to be included among the Funds' fundamental
policies and, further, are superfluous because they do no more than restate
the investments the Funds may make in pursuit of their

44
<PAGE>

investment objectives, as recited in their Prospectuses and Statements of
Additional Information. Each Board therefore believes that this policy should
be eliminated. The elimination of this restriction is not expected to involve
any change in the manner in which the Funds' assets are currently invested.

R.SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND
SMITH BARNEY FUNDAMENTAL VALUE FUND INC.
SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO AND SHORT-TERM U.S.
TREASURY SECURITIES PORTFOLIO ONLY)
SMITH BARNEY INCOME FUNDS (ALL SERIES)
SMITH BARNEY INVESTMENT FUNDS INC. (SMITH BARNEY GROWTH OPPORTUNITY FUND,
SMITH BARNEY INVESTMENT GRADE BOND FUND, SMITH BARNEY MANAGED GROWTH
FUND AND SMITH BARNEY SPECIAL EQUITIES FUND ONLY)
SMITH BARNEY INVESTMENT TRUST (ALL SERIES)
SMITH BARNEY MONEY FUNDS, INC. (ALL SERIES)
SMITH BARNEY MUNI FUNDS (ALL SERIES)
GREENWICH STREET SERIES FUND (ALL SERIES)
TRAVELERS SERIES FUND INC. (TBC MANAGED INCOME PORTFOLIO ONLY)

RECLASSIFICATION AS NON-FUNDAMENTAL OF EACH FUND'S FUNDAMENTAL POLICY ON
THE PURCHASE OR SALE OF PUTS, CALLS, AND COMBINATIONS THEREOF

Each of these Funds has a fundamental policy limiting investments involving
puts, calls, straddles and spreads. The Board of each Fund recommends that
shareholders vote to eliminate this fundamental investment limitation.
Although no Fund has any current intention of actually expanding the range of
instruments it is currently permitted to purchase, the reclassification as
non-fundamental of a Fund's fundamental policy limiting investments involving
puts, calls, straddles and/or spreads would permit the Fund greater
flexibility to respond to market and other developments. Certain Funds'
current investment policies place limits on the percentage of Fund assets that
may be invested in options such as puts and calls. Although these Funds are
proposing to reclassify such investment policies as non-fundamental, the Funds
have no current intention of changing their investment policies with respect
to puts, calls and combinations thereof, including changing any such limits
which are now placed on the Funds' ability to invest in such instruments. In
addition, Funds that historically have not engaged in investing in such
instruments will do so pursuant to the new policy only under the careful
review of each Fund's Board, which review may include, among other things,
placing limitations on the value of the Fund's assets invested in such
instruments and limitations on the level of risk deemed to be acceptable in
connection with such investments. Put and call options involve a certain
degree of risk. If a put or call option written by a Fund were exercised, the
Fund would be obligated to buy or

45
<PAGE>

sell the underlying security at the exercise price. As a result, writing a put
option involves the risk of a decrease in the market value of the underlying
security, in which case the option could be exercised and the underlying
security would then be sold by the option holder to the Fund at a higher price
than its current market value. Writing a call option involves the risk of an
increase in the market value of the underlying security, in which case the
option could be exercised and the underlying security would then be sold by
the Fund to the option holder at a lower price than its current market value.
Any future change in the Fund's manner of investing or the instruments it may
purchase will accompany appropriate disclosure to shareholders.

S. SMITH BARNEY FUNDS, INC. (EQUITY INCOME PORTFOLIO ONLY)

ELIMINATION OF THE FUND'S FUNDAMENTAL POLICY LIMITING THE FUND'S ABILITY
TO PURCHASE FROM OR SELL SECURITIES TO AFFILIATES

The Equity Income Portfolio of Smith Barney Funds, Inc. has a fundamental
policy limiting the Fund's ability to purchase or sell securities other than
shares of the Fund from or to the Fund's adviser or any officer or director of
the Fund or the Fund's adviser. The Board of the Fund believes that this
policy should be eliminated as the transactions described are prohibited by
the 1940 Act and, therefore, the policy is superfluous.

REQUIRED VOTE

Approval of each investment policy proposal requires a Majority Vote of each
Fund. Each Board has considered various factors and believes that approval of
these investment policy changes are in the best interest of the Fund and its
shareholders. If these investment proposals are not approved by any Fund, that
Fund's current fundamental investment policies will remain in effect.

THE BOARD OF EACH FUND, INCLUDING A MAJORITY OF THE INDEPENDENT BOARD MEMBERS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE RECLASSIFICATION, MODIFICATION
AND/OR ELIMINATION OF THE FUNDS' FUNDAMENTAL POLICIES AS DESCRIBED ABOVE.

PROPOSAL 3:

TO APPROVE RETENTION OF THE FUNDS' CLASSIFICATION AS "NON-DIVERSIFIED"
INVESTMENT COMPANIES UNDER THE 1940 ACT.

SMITH BARNEY CALIFORNIA MUNICIPALS FUND INC.
SMITH BARNEY MUNI FUNDS (CALIFORNIA MONEY MARKET PORTFOLIO, FLORIDA PORTFOLIO,
GEORGIA PORTFOLIO AND PENNSYLVANIA PORTFOLIO ONLY)

46
<PAGE>

Each of Smith Barney California Municipals Fund Inc. and the California
Money Market, Florida, Georgia and Pennsylvania Series of Smith Barney Muni
Funds (collectively referred to in this Proposal 3 as the "Funds") were
originally registered as "non-diversified" investment companies under the 1940
Act. As defined in the 1940 Act, a "diversified" investment company must, with
respect to 75% of its assets, have no more than 5% of its total assets
invested in a single issuer and own not more than 10% of the outstanding
voting securities of any single issuer. All other funds not electing to meet
this definition are "non-diversified" investment companies within the meaning
of the 1940 Act. During the past three years, the portfolio managers for these
Funds have found it appropriate to diversify their investments, in light of
available investment opportunities and market conditions, notwithstanding this
original election. The SEC has taken the position that non-diversified funds
that have operated as diversified investment companies for at least three
years must obtain shareholder approval to retain their status as non-
diversified funds.

The Adviser has advised the Boards of Smith Barney California Municipals
Fund Inc. and Smith Barney Muni Funds that non-diversified status affords the
Funds greater investment flexibility in the best interest of shareholders.
This flexibility could be especially useful and desirable for Funds such as
the ones to which this Proposal pertains, where investments are limited
largely to issues yielding income that is not subject to income tax in a
particular state. If this Proposal is approved, the Funds will not be limited
by the 1940 Act in the proportion of their assets that they may invest in the
obligations of a single issuer. Each Fund, however, intends to conduct its
operations so as to qualify as a "regulated investment company" for purposes
of the Internal Revenue Code of 1986, as amended (the "Code"), which will
relieve the Fund of any liability for Federal income tax and state franchise
taxes to the extent its earnings are distributed to shareholders. To so
qualify, among other requirements, each Fund or Portfolio will limit its
investments so that, at the close of each quarter of the taxable year, (a) not
more than 25% of the market value of the Fund's total assets will be invested
in the securities of a single issuer, (b) with respect to 50% of the market
value of its total assets, not more than 5% of the market value of its total
assets will be invested in the securities of a single issuer, and (c) the Fund
will not own more than 10% of the outstanding voting securities of a single
issuer.

A Fund's assumption of larger positions in the obligations of a smaller
number of issuers may cause that Fund's share price to fluctuate to a greater
extent than that of a diversified company as a result of changes in the
financial condition or in the market's assessment of the issuers.

REQUIRED VOTE

Approval of this Proposal for each Fund requires a Majority Vote of the
Fund. The Board of each Fund has considered various factors and believes that
approval of this Proposal is in the best interest of each Fund and its
shareholders. If the Proposal is not approved, the Boards will consider
various alternatives, including allowing the Funds to be classified as
diversified funds under the 1940 Act or resoliciting shareholders.

47
<PAGE>

THE BOARD OF EACH FUND, INCLUDING A MAJORITY OF THE INDEPENDENT BOARD
MEMBERS, RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RETENTION OF
CLASSIFICATION OF THE FUND AS A "NON-DIVERSIFIED" INVESTMENT COMPANY UNDER THE
1940 ACT.

ADDITIONAL INFORMATION

The name and address of each Fund's investment adviser(s), principal
underwriter and Administrator are set forth in Exhibit C hereto.

SUBMISSION OF SHAREHOLDER PROPOSALS

The Funds do not hold regular shareholders meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Fund at the address set forth on the cover of this joint proxy statement.
Proposals must be received at a reasonable time prior to the date of a meeting
of shareholders to be considered for inclusion in the materials for a Fund's
meeting. Timely submission of a proposal does not, however, necessarily mean
that such proposal will be included.

SHAREHOLDERS' REQUEST FOR SPECIAL MEETING

Shareholders holding at least 10% (25% in the case of some Funds) of each
Fund's outstanding voting securities (as defined in the 1940 Act) may require
the calling of a meeting of shareholders for the purpose of voting on the
removal of any Board member of the Fund. Meetings of shareholders for any
other purpose also shall be called by the Board members when requested in
writing by shareholders holding at least 10% (25% in the case of some Funds)
of the shares then outstanding or, if the Board members shall fail to call or
give notice of any meeting of shareholders for a period of 30 days after such
application, shareholders holding at least 10% of the shares then outstanding
may call and give notice of such meeting.

48
<PAGE>

OTHER MATTERS TO COME BEFORE THE MEETING

The Funds do not intend to present any other business at the Meeting, nor
are they aware that any shareholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying proxy card(s) will vote thereon in accordance with their
judgment.

December 10, 1997

A FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT AND THE MOST
RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT, IF ANY, TO A
SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD BE DIRECTED TO A FUND BY
CALLING (800) OR BY WRITING TO A FUND, 388 GREENWICH STREET, NEW YORK,
NEW YORK 10013.

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

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN EACH PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PAID ENVELOPE.

49
<PAGE>

EXHIBIT A

BOARD MEMBER COMPENSATION,
BOARD AND COMMITTEE MEETINGS

<TABLE>
<CAPTION>
AMOUNTS PAID DURING CALENDAR YEAR ENDED LEE PAUL R. LLOYD J.
DECEMBER 30, 1996 FROM FUND TO BOARD MEMBER ABRAHAM ADES ANDREWS
- ------------------------------------------- ------- ------- --------
<S> <C> <C> <C>
Smith Barney Adjustable Rate Government Income Fund... N/A N/A N/A
Smith Barney Aggressive Growth Fund Inc. ............. N/A $ 5,500 N/A
Smith Barney Appreciation Fund Inc.................... N/A N/A N/A
Smith Barney Arizona Municipals Fund Inc.............. N/A N/A N/A
Smith Barney California Municipals Fund Inc........... N/A N/A N/A
Smith Barney Concert Allocation Series Inc............ N/A N/A N/A
Smith Barney Disciplined Small Cap Fund, Inc.*........ N/A N/A N/A
Smith Barney Fundamental Value Fund Inc............... N/A N/A $10,600
Smith Barney Funds, Inc............................... N/A N/A N/A
Smith Barney Income Funds............................. $33,450 N/A N/A
Smith Barney Investment Funds Inc..................... N/A $28,600 N/A
Smith Barney Investment Trust......................... N/A N/A N/A
Smith Barney Managed Governments Fund Inc............. N/A N/A N/A
Smith Barney Managed Municipals Fund Inc.............. N/A N/A N/A
Smith Barney Massachusetts Municipals Fund............ N/A N/A N/A
Smith Barney Money Funds, Inc. ....................... N/A N/A N/A
Smith Barney Municipal Money Market Fund, Inc......... N/A N/A N/A
Smith Barney Muni Funds............................... N/A N/A N/A
Smith Barney Natural Resources Fund Inc............... N/A N/A N/A
Smith Barney New Jersey Municipals Fund Inc........... N/A N/A N/A
Smith Barney Oregon Municipals Fund................... N/A N/A N/A
Smith Barney Principal Return Fund.................... N/A $ 6,500 N/A
Smith Barney Telecommunications Trust................. N/A $ 5,375 N/A
Greenwich Street Series Fund.......................... N/A N/A N/A
Travelers Series Fund Inc. ........................... N/A N/A N/A
Compensation Paid to Board Members from all other
Smith Barney Funds.................................. $11,100 $ 6,500 $ 0
Total Compensation**.................................. $44,550 $52,475 $10,600
</TABLE>
- -----------
* Smith Barney Disciplined Small Cap Fund, Inc. is a successor to The
Inefficient-Market Fund, Inc., a closed-end investment company. The figures
reflected in this Exhibit A were accrued largely during the period that
Fund functioned as a closed-end investment company.
** Reflects amounts paid to Board member for the last complete Calendar Year
of each Fund on whose Board the Board member sits.

A-1
<PAGE>

<TABLE>
<CAPTION>
VICTOR WALTER E. HERBERT ALFRED J. ALLAN J. MARTIN
ATKINS AUCH BARG BIANCHETTI BLOOSTEIN BRODY
------- --------- -------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
N/A N/A N/A N/A $ 3,600 $ 3,350
N/A N/A $ 5,500 N/A N/A N/A
N/A N/A $ 5,800 $ 5,600 N/A $ 5,600
N/A N/A $ 1,600 $ 1,500 N/A $ 1,500
N/A N/A $ 4,700 $ 4,500 N/A $ 4,500
N/A $ 5,350 N/A N/A N/A $ 5,350
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A $33,450 N/A
N/A N/A $ 28,600 N/A N/A N/A
N/A N/A $ 6,600 $ 6,500 N/A $ 6,500
N/A N/A $ 8,200 $ 8,100 N/A $ 8,100
N/A N/A $ 6,800 $ 6,600 N/A $ 6,600
N/A N/A $ 1,600 $ 1,500 N/A $ 1,500
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A $ 3,450 $ 3,450 N/A $ 3,350
N/A N/A $ 1,600 $ 1,500 N/A $ 1,500
N/A N/A $ 3,850 $ 3,750 N/A $ 3,750
N/A N/A $ 6,500 N/A N/A N/A
N/A N/A $ 5,375 N/A N/A N/A
N/A N/A $ 7,500 $ 7,500 N/A $ 7,500
$12,220 N/A N/A N/A N/A N/A
$15,180 $32,586 $ 7,500 $ 1,000 $11,100 $32,686
$27,400 $37,936 $105,175 $51,500 $48,150 $91,786
</TABLE>

A-2
<PAGE>

<TABLE>
<CAPTION>
AMOUNTS PAID DURING CALENDAR YEAR ENDED ABRAHAM E. DWIGHT B.
DECEMBER 31, 1996 FROM FUND TO BOARD MEMBER COHEN CRANE
- ------------------------------------------- ---------- ---------
<S> <C> <C>
Smith Barney Adjustable Rate Government Income Fund....... N/A $ 3,500
Smith Barney Aggressive Growth Fund Inc................... N/A $ 5,000
Smith Barney Appreciation Fund Inc. ...................... N/A $ 5,600
Smith Barney Arizona Municipals Fund Inc.................. N/A $ 1,500
Smith Barney California Municipals Fund Inc............... N/A $ 4,600
Smith Barney Concert Allocation Series Inc. .............. N/A N/A
Smith Barney Disciplined Small Cap Fund, Inc.............. N/A N/A
Smith Barney Fundamental Value Fund Inc................... N/A N/A
Smith Barney Funds, Inc................................... N/A N/A
Smith Barney Income Funds................................. N/A N/A
Smith Barney Investment Funds Inc......................... N/A $ 26,100
Smith Barney Investment Trust............................. N/A $ 6,500
Smith Barney Managed Governments Fund Inc................. N/A $ 8,100
Smith Barney Managed Municipals Fund Inc. ................ N/A $ 6,700
Smith Barney Massachusetts Municipals Fund................ N/A $ 1,500
Smith Barney Money Funds, Inc............................. N/A N/A
Smith Barney Municipal Money Market Fund, Inc............. N/A N/A
Smith Barney Muni Funds................................... N/A N/A
Smith Barney Natural Resources Fund Inc................... N/A $ 3,450
Smith Barney New Jersey Municipals Fund Inc............... N/A $ 1,500
Smith Barney Oregon Municipals Fund....................... N/A $ 3,750
Smith Barney Principal Return Fund........................ N/A $ 6,500
Smith Barney Telecommunications Trust..................... N/A $ 5,375
Greenwich Street Series Fund.............................. N/A $ 7,500
Travelers Series Fund Inc................................. $8,000 N/A
Compensation Paid to Board Members from all other Smith
Barney Funds............................................ $ 0 $ 7,500
Total Compensation........................................ $8,000 $104,675
</TABLE>

A-3
<PAGE>

<TABLE>
<CAPTION>
BURT N. JOHN H. DONALD R. ROBERT A. ROBERT M.
DORSETT ELLIS FOLEY FRANKEL FRAYN, JR.
- ------- ------- --------- --------- ----------
<S> <C> <C> <C> <C>
N/A N/A N/A $ 3,600 N/A
N/A N/A N/A N/A N/A
$ 5,200 N/A N/A N/A N/A
$ 1,500 N/A N/A N/A N/A
$ 4,200 N/A N/A N/A N/A
N/A $ 5,500 N/A N/A N/A
N/A N/A $ 828 N/A N/A
N/A N/A N/A N/A $10,500
N/A N/A $ 3,458 N/A N/A
N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A
$ 6,100 N/A N/A N/A N/A
$ 6,200 N/A N/A N/A N/A
$ 6,200 N/A N/A N/A N/A
$ 1,500 N/A N/A N/A N/A
N/A N/A $16,944 N/A N/A
N/A N/A $ 3,226 N/A N/A
N/A N/A $ 8,421 N/A N/A
$ 3,300 N/A N/A N/A N/A
$ 1,500 N/A N/A N/A N/A
$ 3,600 N/A N/A N/A N/A
N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A
$ 7,000 N/A N/A N/A N/A
N/A N/A N/A $12,220 N/A
$ 1,100 $31,300 $ 1,822 $15,180 $ 0
$47,400 $36,800 $34,699 $31,000 $10,500
</TABLE>

A-4
<PAGE>

<TABLE>
<CAPTION>
AMOUNTS PAID DURING CALENDAR YEAR ENDED LEON P. RAINER RICHARD E.
DECEMBER 31, 1996 FROM FUND TO BOARD MEMBER GARDNER GREEVEN HANSON, JR.
- ------------------------------------------- ------- ------- -----------
<S> <C> <C> <C>
Smith Barney Adjustable Rate Government Income
Fund............................................. N/A N/A N/A
Smith Barney Aggressive Growth Fund Inc. .......... N/A N/A N/A
Smith Barney Appreciation Fund Inc................. N/A N/A N/A
Smith Barney Arizona Municipals Fund Inc........... N/A N/A N/A
Smith Barney California Municipals Fund Inc. ...... N/A N/A N/A
Smith Barney Concert Allocation Series Inc......... N/A N/A N/A
Smith Barney Disciplined Small Cap Fund, Inc....... N/A N/A N/A
Smith Barney Fundamental Value Fund Inc. .......... $9,500 N/A N/A
Smith Barney Funds, Inc............................ N/A N/A N/A
Smith Barney Income Funds.......................... N/A N/A $33,450
Smith Barney Investment Funds Inc.................. N/A N/A N/A
Smith Barney Investment Trust...................... N/A N/A N/A
Smith Barney Managed Governments Fund Inc.......... N/A N/A N/A
Smith Barney Managed Municipals Fund Inc........... N/A N/A N/A
Smith Barney Massachusetts Municipals Fund......... N/A N/A N/A
Smith Barney Money Funds, Inc...................... N/A N/A N/A
Smith Barney Municipal Money Market Fund, Inc...... N/A N/A N/A
Smith Barney Muni Funds............................ N/A N/A N/A
Smith Barney Natural Resources Fund Inc. .......... N/A N/A N/A
Smith Barney New Jersey Municipals Fund Inc........ N/A N/A N/A
Smith Barney Oregon Municipals Fund................ N/A N/A N/A
Smith Barney Principal Return Fund................. N/A N/A N/A
Smith Barney Telecommunications Trust.............. N/A N/A N/A
Greenwich Street Series Fund....................... N/A N/A N/A
Travelers Series Fund Inc. ........................ N/A $12,220 N/A
Compensation Paid to Board Members from all other
Smith Barney Funds............................... $ 0 $15,180 $11,100
Total Compensation................................. $9,500 $27,400 $44,550
</TABLE>

A-5
<PAGE>

<TABLE>
<CAPTION>
PAUL SUSAN M. FRANK WILLIAM R. ELLIOT S. HOWARD
HARDIN HEILBRON HUBBARD HUTCHINSON JAFFE JOHNSON
------- -------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
N/A N/A N/A $3,500 N/A N/A
N/A N/A $ 5,500 N/A N/A N/A
N/A N/A N/A N/A $ 5,700 N/A
N/A N/A N/A N/A $ 1,600 N/A
N/A N/A N/A N/A $ 4,700 N/A
N/A N/A N/A N/A N/A N/A
$ 956 N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A $10,600
$ 4,379 N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A $28,600 N/A N/A N/A
N/A N/A N/A N/A $ 6,600 N/A
N/A N/A N/A N/A $ 6,700 N/A
N/A N/A N/A N/A $ 6,700 N/A
N/A N/A N/A N/A $ 1,600 N/A
$32,301 N/A N/A N/A N/A N/A
$ 5,895 N/A N/A N/A N/A N/A
$11,161 N/A N/A N/A N/A N/A
N/A N/A N/A N/A $ 3,550 N/A
N/A N/A N/A N/A $ 1,600 N/A
N/A N/A N/A N/A $ 3,850 N/A
N/A N/A $ 6,500 N/A N/A N/A
N/A N/A $ 5,375 N/A N/A N/A
N/A N/A N/A N/A $ 7,500 N/A
N/A $12,220 N/A N/A N/A N/A
$ 2,136 $15,180 $ 6,500 $ 0 $ 1,000 $ 0
$56,828 $27,400 $52,475 $3,500 $51,100 $10,600
</TABLE>

A-6
<PAGE>

<TABLE>
<CAPTION>
AMOUNTS PAID DURING CALENDAR YEAR ENDED ARMON STEPHEN E.
DECEMBER 31, 1996 FROM FUND TO BOARD MEMBER KAMESAR KAUFMAN
- ------------------------------------------- ------- ----------
<S> <C> <C>
Smith Barney Adjustable Rate Government Income Fund.......... N/A N/A
Smith Barney Aggressive Growth Fund Inc...................... N/A N/A
Smith Barney Appreciation Fund Inc. ......................... N/A $ 5,700
Smith Barney Arizona Municipals Fund Inc..................... N/A $ 1,600
Smith Barney California Municipals Fund Inc.................. N/A $ 4,700
Smith Barney Concert Allocation Series Inc. ................. $ 5,950 $ 5,950
Smith Barney Disciplined Small Cap Fund, Inc................. N/A N/A
Smith Barney Fundamental Value Fund Inc...................... N/A N/A
Smith Barney Funds, Inc...................................... N/A N/A
Smith Barney Income Funds.................................... N/A N/A
Smith Barney Investment Funds Inc............................ N/A N/A
Smith Barney Investment Trust................................ N/A $ 6,600
Smith Barney Managed Governments Fund Inc.................... N/A $ 8,200
Smith Barney Managed Municipals Fund Inc. ................... N/A $ 6,800
Smith Barney Massachusetts Municipals Fund................... N/A $ 1,600
Smith Barney Money Funds, Inc................................ N/A N/A
Smith Barney Municipal Money Market Fund, Inc................ N/A N/A
Smith Barney Muni Funds...................................... N/A N/A
Smith Barney Natural Resources Fund Inc...................... N/A $ 3,450
Smith Barney New Jersey Municipals Fund Inc. ................ N/A $ 1,600
Smith Barney Oregon Municipals Fund.......................... N/A $ 3,850
Smith Barney Principal Return Fund........................... N/A N/A
Smith Barney Telecommunications Trust........................ N/A N/A
Greenwich Street Series Fund................................. N/A $ 7,500
Travelers Series Fund Inc.................................... N/A N/A
Compensation Paid to Board Members from all
other Smith Barney Funds................................... $32,686 $34,786
Total Compensation........................................... $38,636 $92,336
</TABLE>

A-7
<PAGE>

<TABLE>
<CAPTION>
DAVID E. JOSEPH J. HEATH B. JEROME H. KEN
MARYATT MCCANN MCLENDON MILLER MILLER
- -------- --------- -------- --------- -------
<S> <C> <C> <C> <C>
N/A N/A $ 0 N/A N/A
N/A N/A $ 0 $ 125 $ 3,750
N/A $ 5,700 $ 0 N/A N/A
N/A $ 1,600 $ 0 N/A N/A
N/A $ 4,700 $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
$9,500 N/A $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
N/A N/A $ 0 N/A $19,600
N/A $ 6,600 $ 0 N/A N/A
N/A $ 8,200 $ 0 N/A N/A
N/A $ 6,700 $ 0 N/A N/A
N/A $ 1,600 $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
N/A $ 3,550 $ 0 N/A N/A
N/A $ 1,600 $ 0 N/A N/A
N/A $ 3,850 $ 0 N/A N/A
N/A N/A $ 0 $ 6,375 $ 5,000
N/A N/A $ 0 N/A $ 4,000
N/A $ 7,500 $ 0 N/A N/A
N/A N/A $ 0 N/A N/A
$ 0 $ 1,100 $ 0 $ 6,500 $ 5,000
$9,500 $52,700 $ 0 $13,000 $37,350
</TABLE>

A-8
<PAGE>

<TABLE>
<CAPTION>
AMOUNTS PAID DURING CALENDAR YEAR ENDED
DECEMBER 31, 1996 FROM FUND TO BOARD FREDERICK O. RODERICK C. CORNELIUS C.
MEMBER PAULSELL RASMUSSEN ROSE
- --------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Smith Barney Adjustable Rate Government
Income Fund............................ N/A N/A N/A
Smith Barney Aggressive Growth Fund Inc.. N/A N/A N/A
Smith Barney Appreciation Fund Inc. ..... N/A N/A $ 5,700
Smith Barney Arizona Municipals Fund
Inc.................................... N/A N/A $ 1,600
Smith Barney California Municipals
Fund Inc. ............................. N/A N/A $ 4,700
Smith Barney Concert Allocation Series
Inc. .................................. N/A N/A N/A
Smith Barney Disciplined Small Cap
Fund, Inc.............................. N/A $ 856 N/A
Smith Barney Fundamental Value Fund Inc.. $10,500 N/A N/A
Smith Barney Funds, Inc.................. N/A $ 4,214 N/A
Smith Barney Income Funds................ N/A N/A N/A
Smith Barney Investment Funds Inc. ...... N/A N/A N/A
Smith Barney Investment Trust............ N/A N/A $ 6,600
Smith Barney Managed Governments
Fund Inc............................... N/A N/A $ 6,700
Smith Barney Managed Municipals Fund
Inc.................................... N/A N/A $ 6,900
Smith Barney Massachusetts
Municipals Fund........................ N/A N/A $ 1,600
Smith Barney Money Funds, Inc............ N/A $32,002 N/A
Smith Barney Municipal Money Market
Fund, Inc.............................. N/A $ 5,754 N/A
Smith Barney Muni Funds.................. N/A $10,239 N/A
Smith Barney Natural Resources Fund Inc.. N/A N/A $ 3,550
Smith Barney New Jersey Municipals
Fund Inc............................... N/A N/A $ 1,600
Smith Barney Oregon Municipals Fund...... N/A N/A $ 3,850
Smith Barney Principal Return Fund....... N/A N/A N/A
Smith Barney Telecommunications Trust.... N/A N/A N/A
Greenwich Street Series Fund............. N/A N/A $ 7,500
Travelers Series Fund Inc................ N/A N/A N/A
Compensation Paid to Board Members from
all other Smith Barney Funds........... $ 0 $ 1,837 $ 1,100
Total Compensation....................... $10,500 $54,902 $51,400
</TABLE>

A-9
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NUMBER OF AUDIT NOMINATING
BOARD COMMITTEE COMMITTEE
MEETINGS MEETINGS MEETINGS
HELD HELD HELD
DURING DURING DURING
CALENDAR CALENDAR CALENDAR
YEAR ENDED YEAR ENDED YEAR ENDED
BRUCE D. JAMES M. JOHN P. JERRY A. JULIE DECEMBER 31, DECEMBER 31, DECEMBER 31,
SARGENT SHUART TOOLAN VISCIONE WESTON 1996 1996 1996
- -------- -------- ------- -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
N/A N/A N/A N/A N/A 0
N/A N/A N/A N/A N/A 5 2 0
N/A N/A N/A N/A N/A 7 1 0
N/A N/A N/A N/A N/A 6 2 0
N/A N/A N/A N/A N/A 7 1 0
N/A N/A N/A N/A N/A 7 1 0
$ 0 N/A $ 856 N/A N/A 7 1 0
N/A N/A N/A $10,600 $9,600 0
$ 0 N/A $ 4,214 N/A N/A 7 1 0
N/A N/A N/A N/A N/A 6 2 0
N/A N/A N/A N/A N/A 6 2 0
N/A N/A N/A N/A N/A 6 1 0
N/A N/A N/A N/A N/A 7 2 0
N/A N/A N/A N/A N/A 8 1 0
N/A N/A N/A N/A N/A 6 1 0
$ 0 N/A $32,002 N/A N/A 6 1 0
$ 0 N/A $ 5,754 N/A N/A 5 1 0
$ 0 N/A $10,239 N/A N/A 7 1 0
N/A N/A N/A N/A N/A 8 1 0
N/A N/A N/A N/A N/A 6 1 0
N/A N/A N/A N/A N/A 6 1 0
N/A N/A N/A N/A N/A 4 2 0
N/A N/A N/A N/A N/A 4 2 0
N/A N/A N/A N/A N/A 5 1 0
$ 0 $12,220 N/A N/A N/A 5 1 0
$ 0 $15,180 $ 1,937 $ 0 $ 0
$ 0 $27,400 $55,002 $10,600 $9,600
</TABLE>

A-10
<PAGE>

EXHIBIT B

EXECUTIVE OFFICERS OF THE FUNDS

<TABLE>
<CAPTION>
NAME OF EXECUTIVE OFFICER
(AGE) PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE FOR PAST 5 YEARS
------------------------- -------------------------------------------------------------
<C> <S>
Joseph Benevento Vice President of Smith Barney.
(29)
John C. Bianchi (42) Managing Director of Smith Barney; prior to July 1993, Managing
Director of Shearson Lehman Advisors ("SLA").
Sandip A. Bhagat President of Travelers Investment Management Company ("TIMCO");
(37) prior to 1995, Senior Portfolio Manager for TIMCO.
Alan J. Blake (48) Managing Director of Smith Barney; prior to July 1993, Managing
Director of SLA.
Peter M. Coffey (53) Managing Director of Smith Barney.
Harry D. Cohen (56) Managing Director of Smith Barney; prior to July 1993, President
of Asset Management Division of Shearson Lehman Brothers and
Executive Vice President of Shearson Lehman Brothers.
James B. Conheady Managing Director of Smith Barney.
(61)
James Conroy (46) Managing Director of Smith Barney; prior to July 1993, Managing
Director of SLA.
Lewis E. Daidone Managing Director of Smith Barney; Director and Senior Vice
(40) President of Smith Barney Mutual Funds Management Inc. ("SBMFM")
and Travelers Investment Adviser, Inc. ("TIA"); Senior Vice
President and Treasurer of 41 Funds of Smith Barney Mutual
Funds.
Joseph P. Deane (50) Managing Director of Smith Barney; prior to July 1993, Managing
Director of SLA.
David Fare (33) Vice President of Smith Barney; prior to July 1993, Vice
President of SLA.
Victor S. Filatov Managing Director of Smith Barney; President and Director of
(45) Smith Barney Global Capital Management, Inc.; prior to November
1993, Vice President of J.P. Morgan Securities Inc.
Richard A. Freeman Managing Director of Smith Barney; prior to July 1993, Managing
(44) Director of SLA.
R. Jay Gerken (46) Managing Director of Smith Barney; prior to July 1993 Managing
Director of SLA.
Lamond Godwin (55) Managing Director of Smith Barney and Chairman and Chief
Executive Officer of Peachtree Asset Management ("Peachtree").
John G. Goode (52) Managing Director of Smith Barney; Chairman and Chief Investment
Officer of Davis Skaggs Investment Management ("Davis Skaggs"),
a division of Smith Barney Mutual Funds Management Inc.
</TABLE>

B-1
<PAGE>

<TABLE>
<CAPTION>
NAME OF EXECUTIVE OFFICER
(AGE) PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE FOR PAST 5 YEARS
------------------------- -------------------------------------------------------------
<C> <S>
Peter Hable (38) Managing Director of Smith Barney and President of Davis
Skaggs.
Martin R. Hanley (31) Vice President of Smith Barney; prior to August 1993, Vice
President of SLA.
Simon Hildreth (42) Managing Director of Smith Barney; prior to 1994, Director of
Mercury Asset Management.
David S. Ishibashi (42) Managing Director of Smith Barney; prior to 1993, Vice
President of S.G. Warburg.
Dennis Johnson (37) Managing Director of Smith Barney and Chief Investment Officer
of Peachtree; prior to 1994, Vice President and Portfolio
Manager of Trusco Capital.
Douglas H. Johnson (43) Director of Smith Barney; prior to January 1995, Vice President
of SafeCo Asset Management Company.
Scott E. Kalb (41) Managing Director of Smith Barney.
Kent A. Kelley (47) Chief Executive Officer of TIMCO; prior to 1995, president and
Chief Investment Officer of TIMCO.
Jack S. Levande (51) Managing Director of Smith Barney; prior to July 1993, Managing
Director of SLA.
Denis P. Mangan (44) Vice President of Smith Barney Global Capital Management, Inc.;
prior to January 1994, Vice President of J.P. Morgan and
Citibank.
Heath B. McLendon (64) Managing Director of Smith Barney; President and Director of
SBMFM and TIA; Chairman of Smith Barney Strategy Advisers Inc.;
prior to 1993, Senior Executive Vice President of Shearson
Lehman Brothers Inc. and Vice Chairman of Asset Management
Division of Shearson Lehman Brothers Inc.
Lawrence T. McDermott (49) Managing Director of Smith Barney; prior to July 1993, Managing
Director of SLA.
George E. Mueller, Jr. Managing Director of Smith Barney; prior to July 1993, Managing
(56) Director of SLA.
George V. Novello (55) Managing Director of Smith Barney; prior to July 1993, Managing
Director of SLA.
Jeffrey Russell (39) Managing Director of Smith Barney.
Bruce D. Sargent (53) Managing Director of Smith Barney and Vice President of SBMFM.
Patrick Sheehan (49) Managing Director of Smith Barney.
David A. Stadlin (32) Vice President of Smith Barney.
Robert E. Swab (40) Vice President of Smith Barney; prior to July 1993, Vice
President of SLA.
Christina T. Sydor (45) Managing Director of Smith Barney; General Counsel, Secretary
of SBMFM and TIA and Secretary of 41 Smith Barney Mutual Funds.
George R. Vernon, Jr. (38) Vice President of Smith Barney.
Ayako H. Weissman (40) Managing Director of Smith Barney.
Phyllis M. Zahorodny (39) Managing Director of Smith Barney; prior to July 1993, Managing
Director of SLA.
</TABLE>

B-2
<PAGE>

EXHIBIT C
NAMES AND ADDRESSES OF INVESTMENT ADVISERS, DISTRIBUTORS, ADMINISTRATORS AND
OFFICERS

UNLESS OTHERWISE INDICATED IN THIS EXHIBIT C, THE FOLLOWING INFORMATION
APPLIES TO ALL FUNDS:

INVESTMENT ADVISER AND EXECUTIVE OFFICERS*:
ADMINISTRATOR:

Heath B. McLendon, Chairman of the Board and
Smith Barney Mutual Chief Executive Officer
Funds Management
Inc.388 Greenwich
StreetNew York, NY
10013

Lewis E. Daidone, Senior Vice President and
Treasurer

Christina T. Sydor, Secretary
DISTRIBUTOR:

Smith Barney Inc.388
Greenwich StreetNew
York, NY 10013

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS*
---- ------------------------------- -------------------
<S> <C> <C>
Smith Barney Adjustable Investment Adviser: Heath B. McLendon, Chairman of
Rate Smith Barney Strategy Advisers the Board and Investment Officer
Government Income Fund Inc.
388 Greenwich Street
New York, NY 10013
Investment Sub-Adviser:
BlackRock Financial Management
Inc.
345 Park Avenue, New York, NY
10154
Smith Barney Aggressive Richard A. Freeman, Vice
Growth Fund Inc. President and Investment Officer
Phyllis M. Zahorodny, Investment
Officer
Smith Barney Harry D. Cohen, Vice President
Appreciation Fund Inc. and Investment Officer
Smith Barney Arizona Lawrence T. McDermott, Vice
Municipals Fund Inc. President and Investment Officer
</TABLE>

- ----
* Please refer to Exhibit B for a description of each officer's background.

C-1
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS
---- ------------------------------- ------------------
<S> <C> <C>
Smith Barney California Joseph P. Deane, Vice President
Municipals Fund Inc. and Investment Officer
David Fare, Investment Officer
Smith Barney Concert Co-Distributor: R. Jay Gerken, Vice President and
Allocation Series Inc. PFS Distributors, Inc. Investment Officer
3100 Breckenridge Blvd
Duluth, GA 30199-0062
Smith Barney Disciplined Investment Adviser: Sandip A. Bhagat, Vice President
Small Cap Funds, Inc. Travelers Investment Management Kent A. Kelley, Vice President
Company
One Tower Square
Hartford, CT 06183-2030
Smith Barney Fundamental John G. Goode, Vice President and
Value Fund Inc. Investment Officer.
Peter Hable, Investment Officer
Smith Barney Funds, Inc. Bruce D. Sargent, Director, Vice
President and Investment Officer
Patrick Sheehan, Vice President
and
Investment Officer
Ayako H. Weissman, Vice President
and
Investment Officer
James Conroy, Vice President and
Investment Officer
</TABLE>

C-2
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS
---- ------------------------------- ------------------
<S> <C> <C>
Smith Barney Income Investment Adviser for Premium John C. Bianchi, Vice President
Funds Total Return Fund: and Investment Officer
Smith Barney Strategy Advisers James Conroy, Vice President and
Inc. Investment Officer
Investment Sub-Adviser for Simon Hildreth, Investment
individual Funds: Officer
Diversified Strategic Income Jack S. Levande, Vice President
Fund: and Investment Officer
Global Capital Management, Lawrence T. McDermott, Vice
10 Piccadilly, London W1V 9LA, President and Investment Officer
United Kingdom George E. Mueller, Jr. Investment
Premium Total Return Fund: Officer
Boston Partners Harry Rosenbluth, Investment
One Financial Center Officer
Boston, MA 02111 Robert E. Swab, Investment
Co-Distributor for Exchange Officer
Reserve Fund: Phyllis M. Zahorodny, Vice
PFS Distributors, Inc. President and Investment Officer
Smith Barney Investment Co-Distributor for Investment Douglas H. Johnson, Vice
Funds Inc. Grade Bond and Growth Opportunity President and Investment Officer
Funds: George E. Mueller, Jr., Vice
PFS Distributors, Inc. President and Investment Officer
George V. Novello, Vice President
and
Investment Officer
Dennis Johnson, Vice-President
and
Investment Officer
James Conroy, Vice-President and
Investment Officer
Phyllis M. Zahorodny, Investment
Officer
Smith Barney Investment Joseph P. Deane, Vice President
Trust and Investment Officer
Peter M. Coffey, Vice President
and Investment Officer
Alan J. Blake, Vice President and
Investment Officer
</TABLE>

C-3
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS
---- ------------------------------- ------------------
<S> <C> <C>
Smith Barney Managed James Conroy, Vice President and
Governments Fund Inc. Investment Officer
Smith Barney Managed Joseph P. Deane, Vice President
Municipals Fund Inc. and Investment Officer
David Fare, Investment Officer
Smith Barney Lawrence T. McDermott, Vice
Massachusetts Municipals President and Investment Officer
Fund
Smith Barney Money Phyllis M. Zahorodny, Vice
Funds, Inc. President and Investment Officer
Martin R. Hanley, Vice President
and
Investment Officer
Smith Barney Municipal Lawrence T. McDermott, Vice
Money President and Investment Officer
Market Fund, Inc.
Peter M. Coffey, Vice President
and Investment Officer
Joseph Benevento, Vice President
and
Investment Officer
Smith Barney Muni Funds Peter M. Coffey, Vice President
and Investment Officer
Lawrence T. McDermott, Vice
President and Investment Officer
Joseph Benevento, Vice President
and
Investment Officer
</TABLE>

C-4
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS
---- ------------------------------- ------------------
<S> <C> <C>
Smith Barney Natural John G. Goode, Vice President and
Resources Fund Inc. Investment Officer
David A. Stadlin, Vice President
and Investment Officer
Smith Barney New Jersey Lawrence T. McDermott, Vice
Municipals Fund Inc. President and Investment Officer
Smith Barney Oregon Peter M. Coffey, Vice President
Municipals Fund and Investment Officer
Smith Barney Principal Harry D. Cohen, Vice President
Return Fund** and Investment Officer
Richard A. Freeman, Vice
President and Investment Officer
John G. Goode, Vice President and
Investment Officer
Phyllis M. Zahorodny, Vice
President and Investment Officer
Smith Barney Investment Adviser: Heath B. McLendon, Chairman of
Telecommunications Trust Smith Barney Strategy Advisers the Board
Inc. and Investment Officer
Investment Sub-Adviser for Smith Phyllis M. Zahorodny, Investment
Barney Telecommunications Income Officer
Fund:
The Boston Company Asset
Management, Inc.
One Boston Place
Boston, MA 02108
</TABLE>
- ------
** There is currently no administrator for the Smith Barney Security and
Growth Fund.

C-5
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS
---- ------------------------------- ------------------
<S> <C> <C>
Greenwich Street Series Investment Adviser for individual John C. Bianchi, Vice President
Fund Portfolios: and Investment Officer

Equity Index Portfolio: Sandip A. Bhagat, Vice President
Travelers Investment Management and Investment Officer
Company
One Tower Square Harry D. Cohen, Vice President
Hartford, CT 06138-2030 and Investment Officer

Emerging Growth Portfolio: James Conroy, Vice President and
Van Kampen American Capital Asset Investment Officer
Management, Inc.
One Parkview Plaza Victor S. Filatov, Vice President
Oakwood Terrace, IL 60181 and Investment Officer

Investment Sub-Adviser for R. Jay Gerken, Vice President and
Diversified Strategic Income Investment Officer
Fund:
Smith Barney Global Capital John G. Goode, Vice President and
Management, Inc. Investment Officer
10 Piccadilly
London, WIV9LA George R. Vernon, Jr., Vice
England President and Investment Officer

Jack S. Levande, Vice President
and Investment Officer

George E. Mueller, Jr., Vice
President and Investment Officer

Phyllis M. Zahorodny, Vice
President and Investment Officer

Jeffrey Russell, Vice President
and Investment Officer
</TABLE>

C-6
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS
---- ------------------------------- ------------------
<S> <C> <C>
Travelers Series Fund Investment Advisor for individual Bruce D. Sargent, Vice President
Inc. Portfolios
listed below: James B. Conheady, Vice President
Travelers Investment Adviser,
Inc. Jeffrey Russell, Vice President
388 Greenwich Street
New York, NY 10013 John C. Bianchi, Vice President

Investment Sub-Advisors for Martin Hanley, Vice President
individual Portfolios:
David S. Ishibashi, Vice
AIM Capital Appreciation President
Portfolio:
AIM Capital Management Inc. Scott E. Kalb, Vice President
11 Greenway Plaza Phyllis M. Zahorodny, Vice
Suite 1919 President
Houston, TX 77046

Alliance Growth Portfolio:
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105

Van Kampen American Capital
Enterprise Portfolio:
Van Kampen American Capital Asset
Management Inc.
One Parkview Plaza
Oakbook Terrace, IL 60181

GT Global Strategic Income
Portfolio:
Chancellor LGT Asset Management,
Inc.
50 California Street
San Francisco, CA 94111

</TABLE>

C-7
<PAGE>

<TABLE>
<CAPTION>
INVESTMENT ADVISERS,
FUND DISTRIBUTORS AND ADMINISTRATORS EXECUTIVE OFFICERS
- ---- ------------------------------- ------------------
<S> <C> <C>
MFS Total Return Portfolio:
Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116

Putnam Diversified Income
Portfolio:
Putnam Investment Management,
Inc.
One Post Office Square
Boston, MA 02109

TBC Managed Income Portfolio:
The Boston Company Asset
Management, Inc.
One Boston Place
Boston, MA 01208
</TABLE>

C-8
<PAGE>

EXHIBIT D

CURRENT TEXT OF THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES SUBJECT TO CHANGES
AS DESCRIBED IN PROPOSAL 2

INDEX

<TABLE>
<S> <C>
Smith Barney Adjustable Rate Government Income Fund...................... D-1
Smith Barney Aggressive Growth Fund Inc.................................. D-2
Smith Barney Appreciation Fund Inc....................................... D-3
Smith Barney Arizona Municipals Fund Inc................................. D-4
Smith Barney California Municipals Fund Inc.............................. D-5
Smith Barney Concert Allocation Series Inc............................... D-6
Smith Barney Disciplined Small Cap Fund, Inc............................. D-6
Smith Barney Fundamental Value Fund Inc.................................. D-7
Smith Barney Funds, Inc.
Equity Income Portfolio................................................ D-8
Short-Term U.S. Treasury Securities Portfolio.......................... D-10
U.S. Government Securities Portfolio................................... D-11
Smith Barney Income Funds................................................ D-11
Smith Barney Investment Funds Inc........................................ D-13
All Funds Except Government Securities Fund............................ D-15
All Funds Except Growth Opportunity Fund, Managed Growth Fund and
Special Equities Fund................................................ D-15
Special Equities Fund.................................................. D-15
Investment Grade Bond Fund............................................. D-16
Smith Barney Investment Trust............................................ D-16
Smith Barney Managed Governments Fund Inc................................ D-17
Smith Barney Managed Municipals Fund Inc................................. D-18
Smith Barney Massachusetts Municipals Fund............................... D-19
Smith Barney Money Funds, Inc............................................ D-20
Smith Barney Municipal Money Market Fund, Inc............................ D-21
Smith Barney Muni Funds
California Money Market Portfolio and New York Money Market Portfolio.. D-22
Florida Portfolio, Georgia Portfolio, Limited Term Portfolio, and
Pennsylvania Portfolio............................................... D-22
National Portfolio and New York Portfolio.............................. D-23
Smith Barney Natural Resources Fund Inc.................................. D-24
Smith Barney New Jersey Municipals Fund Inc.............................. D-25
Smith Barney Oregon Municipals Fund...................................... D-26
Smith Barney Principal Return Fund....................................... D-27
Smith Barney Telecommunications Trust--Income Fund....................... D-28
Greenwich Street Series Fund............................................. D-28
</TABLE>
<PAGE>

<TABLE>
<S> <C>
Travellers Series Fund Inc.
Smith Barney Income and Growth Portfolio, Smith Barney International
Equity Portfolio and Smith Barney Pacific Basin Portfolio............ D-30
Aim Capital Appreciation Portfolio..................................... D-31
Alliance Growth Portfolio.............................................. D-31
Van Kampen American Capital Enterprise Portfolio....................... D-32
GT Global Strategic Income Portfolio................................... D-33
MFS Total Return Portfolio............................................. D-34
Putnam Diversified Income Portfolio.................................... D-35
Smith Barney High Income Portfolio..................................... D-36
Smith Barney Money Market Portfolio.................................... D-37
TBC Managed Income Portfolio........................................... D-38
</TABLE>

To the extent the text of each of your Fund's current fundamental investment
policies is proposed to be modified by Proposal 2 of this Proxy Statement,
such investment policy is followed in this Appendix D by a parenthetical
referencing the sub-proposal in Proposal 2 which proposes to modify it. Please
use these parenthetical references to compare each of your Fund's current
fundamental investment policies with each of the policies as proposed to be
adopted in Proposal 2 hereto.
<PAGE>

TEXT

SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND:

(1) The Fund will not purchase securities (other than U.S. government
securities) of any issuer if, as a result of the purchase, more than 5% of the
value of the Fund's total assets would be invested in the securities of the
issuer, except that up to 25% of the value of the Fund's total assets may be
invested without regard to this 5% limitation. (Subproposal A).

(2) The Fund will not purchase more than 10% of the voting securities of any
one issuer, except that this limitation is not applicable to the Fund's
investments in U.S. government securities. (Subproposal A).

(3) The Fund will not issue senior securities, borrow money or pledge its
assets, except that the Fund may borrow from banks or through reverse
repurchase agreements or dollar rolls in an amount equal to up to 33- 1/3% of
the value of its total assets (calculated when the loan is made) for
temporary, extraordinary or emergency purposes and to take advantage of
investment opportunities and may pledge up to 33- 1/3% of the value of its
total assets to secure those borrowings. (Subproposals B, D, E).

(4) The Fund will not make loans, except through (a) repurchase agreements
and (b) loans of portfolio securities limited to 30% of the value of the
Fund's total assets. (Subproposal F).

(5) The Fund will not invest more than 25% of the value of its total assets
in securities of issuers in any one industry, except that this limitation is
not applicable to the Fund's investment in U.S. government securities.
(Subproposal C).

(6) The Fund will not purchase securities, other than MBSs, ABSs or U.S.
government securities, of any issuer having a record, together with
predecessors, of less than three years of continuous operations if,
immediately after the purchase, more than 5% of the Fund's total assets would
be invested in the securities. (Subproposal K).

(7) The Fund will not buy or sell real estate or interests in real estate,
except that the Fund may purchase and sell MBSs, securities collateralized by
mortgages, securities that are secured by real estate, securities of companies
that invest or deal in real estate and publicly traded securities of real
estate investment trusts. (Subproposal I).

(8) The Fund may not purchase interests in real estate limited partnerships
that are not readily marketable. (Subproposal I).

(9) The Fund will not invest in interests in oil, gas or other mineral
exploration or development programs, except that the Fund may invest in the
securities of companies that invest in or sponsor those programs. (Subproposal
O).

(10) The Fund will not buy or sell commodities or commodity contracts,
except that the Fund may purchase and sell financial futures contracts and
options on financial futures contracts. (Subproposal I).

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(11) The Fund will not purchase securities on margin, except that the Fund
may obtain any short-term credits necessary for the clearance of purchases and
sales of securities and except that the Fund may pay initial or variation
margin in connection with options or futures contracts. (Subproposal H).

(12) The Fund will not make short sales of securities, or maintain a short
position if, when added together, more than 25% of the value of the Fund's net
assets would be (a) deposited as collateral for the obligation to replace
securities borrowed to effect the short sales and (b) allocated to segregated
accounts in connection with the short sales. Short sales "against the box" are
not subject to this restriction. (Subproposal H).

(13) The Fund will not pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings. (Subproposal E).

(14) The Fund will not act as an underwriter of securities, except that the
Fund may acquire securities under circumstances in which, if the securities
were sold, the Fund could be deemed to be an underwriter for purposes of the
1933 Act. (Subproposal G).

(15) The Fund will not write or purchase puts, calls, straddles, spreads or
combinations of those transactions, except as consistent with the Fund's
investment objectives and policies as described in the Prospectus and this
Statement of Additional Information. (Subproposal R).

SMITH BARNEY AGGRESSIVE GROWTH FUND INC. MAY NOT:

(1) With respect to 75% of the value of its total assets, invest more than
5% of its total assets in securities of any one issuer, except securities
issued or guaranteed by the United States government, or purchase more than
10% of the outstanding voting securities of such issuer. (Subproposal A).

(2) Issue senior securities as defined in the 1940 Act and any rules and
orders thereunder, except insofar as the Fund may be deemed to have issued
senior securities by reason of (a) borrowing money or purchasing securities on
a when-issued or delayed-delivery basis, (b) purchasing or selling futures
contracts and options on futures contracts and other similar instruments and
(c) issuing separate classes of shares. (Subproposal B).

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

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

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

(6) Purchase or sell real estate, real estate mortgages, real estate
investment trust securities, commodities or commodity contracts, but this
shall not prevent the Fund from: (a) investing in securities of issuers
engaged in the real estate business 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 (c) trading in futures contracts and
options on futures contracts. (Subproposal I).

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

(8) Borrow money in excess of 33 -1/3% of the total value of its assets
(including the amount borrowed) less its liabilities (not including its
borrowings). (Subproposal D).

SMITH BARNEY APPRECIATION FUND INC. MAY NOT:

(2) Issue senior securities as defined in the 1940 Act and any rules and
orders thereunder, except insofar as the Fund may be deemed to have issued
senior securities by reason of (a) borrowing money or purchasing securities on
a when-issued or delayed-delivery basis; (b) purchasing or selling futures
contracts and options on futures contracts and other similar instruments; and
(c) issuing separate classes of shares. (Subproposal B).

(4) Borrow in excess of 33 -1/3% of the total value of its assets (including
the amount borrowed) less its liabilities (not including such borrowings). See
the discussion of "Certain Investment Activities" later in this Statement of
Additional information. (Subproposal D).

(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.

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(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, real estate
investment trust securities, commodities or commodity contracts, but this
shall not prevent the Fund from: (a) investing in securities of issuers
engaged in the real estate business 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 (c) trading in futures contracts and
options on futures contracts. (Subproposal I).

(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 initial or
maintenance margin in connection with futures contracts and related options
and options on securities is not considered to be the purchase of a security
on margin. (Subproposal H).

SMITH BARNEY ARIZONA MUNICIPALS FUND INC. MAY NOT:

(2) Issue senior securities as defined in the 1940 Act and any rules and
orders thereunder, except insofar as the Fund may be deemed to have issued
senior securities by reason of (a) borrowing money or purchasing securities on
a when-issued or delayed-delivery basis; (b) purchasing or selling futures
contracts and options on futures contracts and other similar instruments; and
(c) issuing separate classes of shares. (Subproposal B).

(4) Borrow money, except that 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,
in an amount not exceeding 10% of the value of the Fund, total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the Fund's total assets, the Fund will
not make additional investments. (Subproposal D).

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(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 initial or
maintenance margin, in connection with futures contracts and related options
and options on securities, is not considered to be the purchase of a security
on margin. (Subproposal H).

SMITH BARNEY CALIFORNIA MUNICIPALS FUND INC. MAY NOT:

(1) Issue senior securities as defined in the 1940 Act and any rules and
orders thereunder, except insofar as the Fund may be deemed to have issued
senior securities by reason of: (a) borrowing money or purchasing securities
on a when-issued or delayed-delivery basis; (b) purchasing or selling futures
contracts and options on futures contracts and other similar instruments; and
(c) issuing separate classes of shares. (Subproposal B).

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

(3) Borrow money, except that 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,
in an amount not exceeding 10% of the value of the Fund's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the Fund's total assets, the Fund will
not make any additional investments. (Subproposal D).

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

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(6) Purchase or sell real estate, real estate mortgages, real estate
investment trust securities, commodities or commodity contracts, but this
shall not prevent the Fund from: (a) investing in securities of issuers
engaged in the real estate business 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 (c) trading in futures contracts and
options on futures contracts. (Subproposal I).

SMITH BARNEY CONCERT ALLOCATION SERIES INC. IS PROHIBITED FROM:

(1) Borrowing money except from banks for temporary or emergency purposes,
including the meeting of redemption requests in an amount not exceeding 33-
1/3% of the value of a portfolio's total assets (including the amount
borrowed) valued at market less liabilities (not including the amount
borrowed) at the time the borrowing is made. (Subproposal D).

(2) Making loans of money to others, except through the purchase of
portfolio securities consistent with its investment objective and policies and
repurchase agreements. (Subproposal F).

(3) Underwriting the securities of other issuers, except insofar as the
portfolio may be deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities. (Subproposal G).

(4) Purchasing or selling real estate except that each portfolio may
purchase and sell money market securities that are secured by real estate or
issued by companies that invest or deal in real estate. (Subproposal I).

(5) Investing in commodities. (Subproposal I).

(6) Issuing senior securities except as permitted by investment restriction
(1). (Subproposal B).

SMITH BARNEY DISCIPLINED SMALL CAP FUND, INC. MAY NOT:

(1) Invest 25% or more of the value of its total assets in any one industry.
(Subproposal C).

(2) Borrow money (including borrowing through entering into reverse
repurchase agreements) in excess of 33- 1/3% of its total assets (including
the amount borrowed but excluding any liabilities and indebtedness
constituting senior securities) except that the Fund may borrow up to an
additional 5% of its total assets for temporary purposes, pledge its assets
other than to secure such borrowings or in connection with hedging
transactions, short sales, when-issued

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and forward commitment transaction and similar investment strategies.
(Subproposal D).

(3) Issue any senior security if such issuance is specifically prohibited by
the 1940 Act or the rules and regulations thereunder (for the purpose of this
restriction, collateral arrangements with respect to options, futures
contracts and options on futures contracts and collateral arrangements with
respect to initial and variation margin are not deemed to be the issuance of a
senior security). (Subproposal B).

(4) Make loans, except that the Fund may purchase debt obligations, may
enter into repurchase agreements and may lend its securities. (Subproposal F).

(5) Underwrite the securities of other issuers, except to the extent that in
connection with the disposition of portfolio securities the Fund may be deemed
to be an underwriter. (Subproposal G).

(6) Invest for the purpose of exercising control over management of any
company. (Subproposal N).

(7) Purchase real estate or interests therein other than securities secured
by real estate, participation therein or real estate investment trusts and
similar instruments. (Subproposal I).

(8) Purchase or sell commodities or commodities contracts except for hedging
purposes. (Subproposal I).

(9) Make any short sale of securities except in conformity with applicable
laws, rules and regulations and unless, giving effect to such sales, the value
of the Fund's total assets and the Fund's aggregate short sales of a
particular class of an issuer's securities do not exceed 25% of the then
outstanding securities of that class of the issuer's securities. (Subproposal
H).

(10) Purchase any security (other than U.S. obligations) such that (a) more
than 25% of the Fund's total assets would be invested in securities of a
single issuer or (b) as to 75% of the Fund's total assets (i) more than 5% of
the Fund's total assets would be invested in the securities of a single issuer
or (ii) the Fund would own more than 10% of the voting securities of a single
issuer. (Subproposal A).

SMITH BARNEY FUNDAMENTAL VALUE FUND INC. MAY NOT:

(1) With respect to 75% of the value of its total assets, invest more than
5% of its total assets in securities of any one issuer, except securities
issued or guaranteed by the U.S. government, or purchase more than 10% of the
outstanding voting securities of such issuer. (Subproposal A).

(2) Issue senior securities as defined in the 1940 Act, and any rules and
orders thereunder, except insofar as the Fund may be deemed to have issued
senior securities by reason of: (a) borrowing money or purchasing securities
on a when-issued or delayed-delivery basis; (b) purchasing or selling futures
contracts and options on future contracts and other similar instruments; and
(c) issuing separate classes of shares.

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(4) Borrow money, except that 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,
in an amount not exceeding 10% of the value of the Fund's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the Fund's total assets, the Fund will
not make any additional investments. (Subproposal D).

(6) 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 initial or
maintenance margin in connection with futures contracts and related options
and options on securities is not considered to be the purchase of a security
on margin. (Subproposal H).

(7) Purchase or sell real estate, real estate mortgages, commodities or
commodity contracts, but this shall not prevent the Fund from: (a) investing
in real estate investment trust securities traded on the New York Stock
Exchange, Inc. ("NYSE"), American Stock Exchange or the National Association
of Securities Dealers, Inc.'s Automated Quotation System; (b) investing in
securities of issuers engaged in the real estate business and securities which
are secured by real estate or interests therein; or (c) holding or selling
real estate received as a result of a default on securities it holds.
(Subproposal I).

(8) Make loans of its funds or securities. 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 as described in the
Prospectus and this Statement of Additional Information under "Investment
Objective and Management Policies." (Subproposal F).

(9) Write, purchase or sell puts, calls, straddles, spreads or combinations
thereof or engage in transactions involving futures contracts and related
options, except as permitted under the Fund's investment goals and policies,
as set forth in the current Prospectus and the Statement of Additional
Information. (Subproposal R).

SMITH BARNEY FUNDS, INC.:

EQUITY INCOME PORTFOLIO MAY NOT:

(1) Invest more than 5% of the value of its total assets in any one issuer
(except securities of the U.S. Government and its instrumentalities).
(Subproposal A).

(2) Invest more than 25% of the value of its total assets in any one
industry. (Subproposal C).

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

(4) Purchase more than 10% of any class of outstanding securities, or any
class of voting securities, of any one issuer. (Subproposal A).

(5) Purchase any securities on margin. (Subproposal H).

(6) Make short sales of securities or maintain a short position unless at
all times when a short position is open, the Portfolio owns or has the right
to obtain, at no added cost, securities identical to those sold short.
(Subproposal H).

(7) Borrow money, except as a temporary measure for extraordinary or
emergency purposes, and then not in excess of the lesser of 10% of its total
assets taken at cost or 5% of the value of its total assets. (Subproposal B).

(8) Mortgage or pledge any of its assets. (Subproposal E).

(9) Act as a securities underwriter or invest in real estate or commodities
(the purchase by the Portfolio of securities for which there is an established
market of companies engaged in real estate activities or investments shall not
be deemed to be prohibited by this fundamental investment limitation).
(Subproposal G).

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

(11) Invest in or hold securities of an issuer if those officers and
directors of the Fund, its Adviser, or Smith Barney, owning beneficially more
than 1/2 of 1% of the securities of such issuer together own more than 5% of
the securities of such issuer. (Subproposal L).

(12) Invest in "restricted securities", that is, securities which at the
time of purchase by the Portfolio would have to be registered under the
Securities Act of 1933 before they could be sold. (Subproposal J).

(13) Invest in any company for the purpose of exercising control of
management. (Subproposal N).

(14) Have more than 15% of its net assets at any time invested in or subject
to puts, calls or combinations thereof and may not purchase or sell options
that are not listed on a national securities exchange. (Subproposal R).

(15) Invest in interests in oil or gas or other mineral exploration or
development programs. (Subproposal O).

(16) Purchase or sell any securities other than shares of the Fund from or
to the Adviser or any officer or director of the Adviser or the Funds.
(Subproposal S).

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(17) Lend money or assets, except that the Portfolio may purchase a portion
of issues of publicly distributed bonds, debentures or notes and may invest in
certificates of deposit or commercial paper, and may lend a portion of its
portfolio securities to broker-dealers and financial institutions, provided
that any such loan must be secured at all times by cash or U.S. Government
Obligations equal at all times to at least 100% of the market value of the
portfolio securities loaned. The Portfolio will not make a portfolio
securities loan if immediately thereafter as a result thereof, portfolio
securities with a market value of 20% or more of the Portfolio's total net
assets would be subject to such loans. (Subproposal F).

SHORT-TERM U.S. TREASURY SECURITIES PORTFOLIO MAY NOT:

(1) Invest more than 5% of the value of its total assets in the securities
of any one issuer (other than obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities). (Subproposal A).

(2) Purchase common stocks, preferred stocks, warrants, other equity
securities, corporate bonds, municipal bonds or industrial revenue bonds.

(3) Borrow money except from banks for temporary purposes in an amount up to
10% of the value of its total assets. The Portfolio will borrow money only to
accommodate requests for the redemption of shares while effecting an orderly
liquidation of portfolio securities or to clear securities transactions and
may not for leveraging purposes. Whenever borrowings exceed 5% of the value of
the Portfolio's total assets, the Portfolio will not make any additional
investments. This restriction will not be deemed to prohibit the Fund from
obtaining letters of credit solely for purposes of participating in a captive
insurance company sponsored by the Investment Company Institute to provide
fidelity and directors and officers liability insurance. (Subproposal D).

(4) Pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 10% of the value of its total assets, but only to secure
borrowings for temporary purposes. (Subproposal E).

(5) Sell securities short or purchase securities on margin. (Subproposal H).

(6) Write or purchase put or call options. (Subproposal R).

(7) Underwrite the securities of other issuers or purchase restricted
securities. (Subproposal G).

(8) Purchase or sell real estate, real estate investment trust securities,
commodities or commodity contracts or oil and gas interests. (Subproposal I).

(9) Make loans to others except through the purchase of qualified debt
obligations in accordance with the Portfolio's investment objective and
policies. (Subproposal F).

(10) Issue senior securities as defined in the Act except insofar as the
Portfolio may be deemed to have issued a senior security by reason of: (a)
borrowing money in accordance with restrictions described above or (b) by
purchasing securities on a when-issued or delayed delivery basis or purchasing
or selling securities on a forward commitment basis. (Subproposal B).

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(11) Invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation, acquisition of assets or plan
of reorganization. (Subproposal M).

U.S. GOVERNMENT SECURITIES PORTFOLIO MAY NOT:

(1) Purchase any securities other than obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, some of which may be
subject to repurchase agreements. There is no limit on the amount of its
assets which may be invested in the securities of any one issuer of such
obligations.

(2) Purchase securities on margin, sell securities short (provided however
each Portfolio may sell short if it maintains a segregated account of cash or
U.S. Government Obligations with the Custodian, so that the amount deposited
in it plus the collateral deposited with the broker equals the current market
value of the securities sold short and is not less than the market value of
the securities at the time they were sold short) or purchase mortgage related
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities). (Subproposal H).

(3) Borrow money, except from banks for temporary purposes and then in
amounts not in excess of 5% of the value of each Portfolio's assets at the
time of such borrowing; or mortgage, pledge or hypothecate any assets except
in connection with any such borrowing and in amounts not in excess of 7 1/2%
of the value of the Fund's assets at the time of such borrowing. (This
borrowing provision is not for investment leverage, but solely to facilitate
management of each Portfolio by enabling each Portfolio to meet redemption
requests where the liquidation of portfolio securities is deemed to be
disadvantageous or inconvenient.) Borrowings may take the form of a sale of
portfolio securities accompanied by a simultaneous agreement as to their
repurchase. (Subproposals B, E).

(4) Make loans, except through the purchase of debt obligations (described
in restriction 1 above), repurchase agreements and loans of each Portfolio's
securities. (Subproposal F).

(5) Act as an underwriter of securities except to the extent the Fund may be
deemed to be an underwriter in connection with the sale of portfolio holdings.
(Subproposal G).

SMITH BARNEY INCOME FUNDS ARE PROHIBITED FROM:

(1) Purchasing the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the Fund's total
assets would be invested in the securities of the issuer, except that up to
25% of the value of the Fund's total assets may be invested without regard to
this 5% limitation. (Subproposal A).

(2) Purchasing (a) more than 10% of the voting securities of any one issuer,
(b) more than 10% of the securities of any class of any one issuer or (c) more
than 10% of the outstanding debt securities of any one issuer, except that
limitation (c) does not apply to the Exchange Reserve and Diversified
Strategic Income Funds and limitations (b) and (c) do not apply to the
Utilities Fund; provided that this

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limitation shall not apply to investment in U.S. government securities.
(Subproposal A).

(3) Purchasing securities on margin, except that the Fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or related
options will not be deemed to be a purchase of securities on margin by any
Fund permitted to engage in transactions in futures contracts or related
options. (Subproposal H).

(4) Making short sales of securities or maintaining a short position except
that (a) the Premium Total Return, Utilities and Convertible Funds may engage
in such activities if, at all times when a short position is open, the
relevant Fund owns an equal amount of the securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issuer as, and at least equal in amount to, the securities sold
short, and if, with respect to the Premium Total Return and Convertible Funds,
not more than 10% of the relevant Fund's net assets (taken at current value)
is held as collateral for such sales at any one time and (b) Utilities Fund
may make short sales or maintain a short position to the extent of 5% of its
net assets. (Subproposal H).

(5) Borrowing money, except that (a) the Fund may borrow from banks for
temporary or emergency (not leveraging) purposes, including the meeting of
redemption requests that might otherwise require the untimely disposition of
securities, in an amount not exceeding 10% (20% for Utilities Fund) of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing is made, (b) Diversified Strategic Income Fund may enter into
reverse repurchase agreements and forward roll transactions and (c) one or
more Funds may enter into futures contracts. Except for Diversified Strategic
Income Fund, whenever borrowings described in (a) exceed 5% of the value of a
Fund's total assets, the Fund will not make any additional investments.
Immediately after any borrowing (including reverse repurchase agreements and
forward roll transactions), Diversified Strategic income Fund will maintain an
asset coverage of at least 300% with respect to all its borrowings.
(Subproposal D).

(6) Pledging, hypothecating, mortgaging or otherwise encumbering more than
10% of the value of the Fund's total assets. For purposes of this restriction,
(a) the deposit of assets in escrow in connection with the writing of covered
put or call options and the purchase of securities on a when-issued or
delayed-delivery basis and (b) collateral arrangements with respect to (i) the
purchase and sale of stock options, options on foreign currencies and options
on stock indexes and (ii) initial or variation margin for futures contracts,
will not be deemed to be pledges of a Fund's assets. (Subproposal E).

(7) Underwriting the securities of other issuers, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.

(8) Purchasing or selling real estate or interests in real estate, except
that the Fund may purchase and sell securities that are secured by real estate
and may

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purchase securities issued by companies that invest or deal in real estate.
(Subproposal I).

(9) Investing in commodities, except that (a) the High Income, Diversified
Strategic Income, Utilities and Tax-Exempt Income Funds may invest in futures
contracts and options on futures contracts as described in their Prospectuses
and (b) upon 60 days' notice given to its shareholders, the Premium Total
Return and Convertible Funds may engage in hedging transactions involving
futures contracts and related options, including stock index futures contracts
and financial futures contracts. (Subproposal I).

(10) Investing in oil, gas or other mineral exploration or development
programs, except that the Premium Total Return, Convertible, Diversified
Strategic Income, Utilities and High Income Funds may invest in the securities
of companies that invest in or sponsor those programs. [Does not apply to the
Utilities Fund.] (Subproposal O).

(11) Making loans to others, except through the purchase of qualified debt
obligations, the entry into repurchase agreements and, with respect to Funds
other than the Exchange Reserve Fund, loans of portfolio securities consistent
with the Fund's investment objective.

(12) Investing in securities of other investment companies registered or
required to be registered under the 1940 Act except as they may be acquired as
part of a merger, consolidation, reorganization, acquisition of assets or an
offer of exchange. (Subproposal M).

(13) Purchasing any securities which would cause more than 25% of the value
of the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the
same industry, except that Exchange Reserve Fund and Utilities Fund will
invest in excess of 25% of their respective assets in the securities of
companies within the banking industry and utility industry, respectively;
provided that there shall be no limit on the purchase of (a) U.S. government
securities or (b) for Funds other than the Exchange Reserve and Utilities
Funds, Municipal Securities issued by governments or political subdivisions of
governments. (Subproposal C).

(14) Writing or selling puts, calls, straddles, spreads or combinations
thereof, except, with respect to Funds other than Exchange Reserve Fund, as
permitted under the Fund's investment objective and policies. (Subproposal R).

The Trust has adopted an additional investment restriction applicable to
Exchange Reserve Fund, which prohibits Exchange Reserve Fund from:

(1) Investing in common stocks, preferred stocks, warrants, other equity
securities, corporate bonds or debentures, state bonds, municipal bonds or
industrial revenue bonds.

SMITH BARNEY INVESTMENT FUNDS INC. MAY NOT:

(1) Purchase the securities of any one issuer, other than the U.S.
government or its agencies or instrumentalities, if immediately after such
purchase more than 5% of the value of the total assets of the Fund would be
invested in securities of such issuer. (Subproposal A).

D-13
<PAGE>

(2) Invest in real estate (including real estate limited partnerships), real
estate mortgage loans, or interests in oil, gas and/or mineral exploration,
mineral leases or development programs, provided that this limitation shall
not prohibit the purchase of securities by companies, including real estate
investment trusts, which invest in real estate or interests therein.
(Subproposal I).

(3) Purchase securities of any other investment company, except in
connection with a merger, consolidation, reorganization, or acquisition or
assets. (For purposes of this limitation, foreign banks or their agencies or
subsidiaries are not considered "investment companies") (the Managed Growth
Fund may purchase the securities of closed-end investment companies to the
extent permitted by law). (Subproposal M).

(4) Make investments in securities for the purpose of exercising control
over or management of the issuer. (Subproposal N).

(5) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders of two or more Funds--or of
one or more Funds and of other accounts--for the sale or purchase of portfolio
securities shall not be considered participation in a joint securities trading
account). (Subproposal P).

(6) Purchase the securities of any one issuer if, immediately after such
purchase, the Fund would own more than 10% of the outstanding voting
securities of such issuer. (Subproposal A).

(7) Purchase securities on margin, except such short-term credits as are
necessary for the clearance of transactions. (For this purpose, the deposit or
payment by Government Securities Fund of initial or maintenance margin in
connection with futures contracts and related options is not considered to be
the purchase of a security on margin. Additionally, borrowing by Government
Securities Fund to increase its holdings of portfolio securities is not
considered to be the purchase of securities on margin). (Subproposal H).

(8) Make loans, except that this restriction shall not prohibit (a) the
purchase and holding of a portion of an issue of publicly distributed debt
securities, (b) the lending of portfolio securities, or (c) entry into
repurchase agreements.

(9) Invest in securities of an issuer which, together with any predecessor,
has been in operation for less than three years if, as a result, more than 5%
of the total assets of the Fund would then be invested in such securities (for
purposes of this restriction, issuers include predecessors, sponsors,
controlling persons, general guarantors and originators of underlying assets).
(Subproposal K).

(10) Purchase the securities of an issuer if one or more of the Directors or
officers of the Company individually own beneficially more than 1/2 of 1% of
the outstanding securities of such issuer or together own beneficially more
than 5% of such securities. (Subproposal L).

(11) Purchase a security which is not readily marketable if, as a result,
more than 10% of the Fund's total assets would consist of such securities.
(For purposes of this limitation, restricted securities and repurchase
agreements having more than seven days remaining to maturity are considered
not readily marketable). (Subproposal J).

D-14
<PAGE>

(12) Purchase the securities of issuers conducting their principal business
activities in the same industry, if immediately after such purchase the value
of its investments in such industry would exceed 25% of the value of the total
assets of the Fund, provided that (a) neither all utility companies (including
telephone companies), as a group, nor all banks, savings and loan associations
and savings banks, as a group, will be considered a single industry for
purposes of this limitation, and (b) there is no such limitation with respect
to repurchase agreements or to investments in U.S. government securities or
certificates of deposit or bankers' acceptances issued by domestic
institutions (but not their foreign branches). (Subproposal C).

(13) Sell securities short, unless at all times when a short position is
open, it owns an equal amount of the securities or securities convertible
into, or exchangeable without payment of any further consideration for,
securities of the same issue as the securities sold short. (Subproposal H).

ALL FUNDS EXCEPT GOVERNMENT SECURITIES FUND MAY NOT:

(1) Invest in commodities or commodity futures contracts. (Subproposal I).

(2) Borrow amounts in excess of 5% (33- 1/3% in the case of the Managed
Growth Fund and the Growth Opportunity Fund) of their total assets taken at
cost or at market value, whichever is lower, and then only from banks as a
temporary measure for extraordinary or emergency purposes. A Fund may not
mortgage, pledge or in any other manner transfer any of its assets as security
for any indebtedness. This restriction shall not prohibit entry into reverse
repurchase agreements, provided that a Fund may not enter into a reverse
repurchase agreement if, as a result, its current obligations under such
agreements would exceed one-third of the current market value of the Fund's
total assets (less its liabilities other than obligations under such
agreements). (Subproposal D).

(3) Write, purchase or sell puts, calls, straddles, spreads or any
combinations thereof (the Managed Growth Fund and the Growth Opportunity Fund
each may purchase puts, calls, straddles, spreads and any combination thereof
up to 5% of their assets). (Subproposal R).

ALL FUNDS EXCEPT GROWTH OPPORTUNITY FUND, MANAGED GROWTH FUND AND SPECIAL
EQUITIES FUND MAY NOT:

(1) Purchase securities which may not be resold to the public without
registration under the Securities Act of 1993, as amended (the "1933 Act").
(Subproposal J).

(2) Act as an underwriter of securities. (Subproposal G).

SPECIAL EQUITIES FUND MAY NOT:

(1) Act as an underwriter of securities, except that the Fund may invest up
to 10% of its total assets in securities which it may not be free to resell
without registration under the 1933 Act, in which registration the Fund may
technically be deemed an underwriter for purposes of the 1933 Act.
(Subproposal G).

D-15
<PAGE>

INVESTMENT GRADE BOND FUND MAY NOT:

(1) Purchase corporate bonds unless rated at the time of purchase Baa or
better by Moody's or BBB or better by S&P, or purchase commercial paper unless
issued by a U.S. corporation and rated at the time of purchase Prime-1 or
Prime-2 by Moody's or A-1 or A-2 by S&P (or, if not rated, issued by a
corporation having outstanding debt rated Aa or better by Moody's or AA or
better by S&P), although it may continue to hold a security if its quality
rating is reduced by a rating service below those specified.

SMITH BARNEY INVESTMENT TRUST:

(1) No Fund will purchase securities other than Municipal Obligations and
Taxable Investments as those terms are defined in the Prospectuses or this
Statement of Additional Information.

(2) No Fund will invest more than 25% of the value of its total assets in
securities of issuers in any one industry, except that this limitation is not
applicable to a Fund's investments in U.S. government securities. (Subproposal
C).

(3) No Fund will borrow money, except that a Fund may borrow from banks for
temporary or emergency (not leveraging) purposes, including the meeting of
redemption requests that might otherwise require the untimely disposition of
securities, in an amount not to exceed 10% of the value of the Fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever a
Fund's borrowings exceed 5% of the value of its total assets, the Fund will
not make any additional investments. (Subproposal D).

(4) No Fund will pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure permitted borrowings. (Subproposal E).

(5) No Fund will lend money to other persons except through purchasing
Municipal Obligations or Taxable Investments and entering into repurchase
agreements, each in a manner consistent with the Fund's investment objective
and policies. (Subproposal F).

(6) No Fund will purchase securities on margin, except that a Fund may
obtain any short-term credits necessary for the clearance of purchases and
sales of securities. (Subproposal H).

(7) No Fund will make short sales of securities or maintain a short
position. (Subproposal H).

(8) No Fund will purchase or sell real estate or real estate limited
partnership interests. (Subproposal I).

(9) No Fund will purchase or sell commodities or commodity contracts.
(Subproposal I).

(10) No Fund will act as an underwriter of securities, except that a Fund
may acquire securities under circumstances in which, if the securities were
sold, the Fund could be deemed to be an underwriter for purposes of the
Securities Act of 1933, as amended. (Subproposal G).

D-16
<PAGE>

(11) No Fund will invest in oil, gas or other mineral leases or exploration
or development programs. (Subproposal O).

(12) No Fund may write or sell puts, calls, straddles, spreads or
combinations of those transactions, except as permitted under the Fund's
investment objective and policies. (Subproposal R).

SMITH BARNEY MANAGED GOVERNMENTS FUND INC. MAY NOT:

(2) Issue senior securities as defined in the 1940 Act and any rules and
orders thereunder, except insofar as the Fund may be deemed to have issued
senior securities by reason of: (a) borrowing money or purchasing securities
on a when-issued or delayed-delivery basis; (b) purchasing or selling futures
contracts and options on futures contracts and other similar instruments; and
(c) issuing separate classes of shares. (Subproposal B).

(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, in an amount not exceeding 10% of the value of the Fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made; and (b) the
Fund may enter into reverse repurchase agreements and forward roll
transactions. Whenever borrowings other than reverse repurchase agreements and
forward roll transactions exceed 5% of the value of the Fund's total assets,
the Fund will not make additional investments. (Subproposal D).

D-17
<PAGE>

SMITH BARNEY MANAGED MUNICIPALS FUND INC. MAY NOT:

(4) Borrow money, except that 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,
in an amount not exceeding 10% of the value of the Fund's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the Fund's total assets, the Fund will
not make additional investments. (Subproposal D).

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

(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 1933 Act, in disposing of portfolio securities.

D-18
<PAGE>

SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND MAY NOT:

(6) Purchase or sell real estate, real estate mortgages, real estate
investment trust securities, commodities or commodity contracts, but this
shall not prevent the Fund from: (a) investing in securities of issuers
engaged in the real estate business 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 (c) trading in futures contracts and
options on futures contracts.

D-19
<PAGE>

SMITH BARNEY MONEY FUNDS, INC.:

(1) No Portfolio may borrow money except from banks for temporary purposes
in an amount up to 10% of the value of its total assets and may pledge its
assets in an amount up to 10% of the value of its total assets only to secure
such borrowings. The Fund will borrow money only to accommodate requests for
the redemption of shares while effecting an orderly liquidation of portfolio
securities or to clear securities transactions and not for leveraging
purposes. Whenever borrowings exceed 5% of the value of a Portfolio's total
assets, the Portfolio will not make any additional investments. This
restriction shall not be deemed to prohibit the Government Portfolio from
entering into reverse repurchase agreements so long as not more than 33- 1/3%
of the Portfolio's total assets are subject to such agreements, nor will it be
deemed to prohibit the Fund from obtaining letters of credit solely for
purposes of participating in a captive insurance company sponsored by the
Investment Company Institute to provide fidelity and directors and officers
liability insurance. (Subproposals D, E).

(2) The Cash Portfolio and the Retirement Portfolio each may not with
respect to 75% of its assets invest more than 5% of its assets in the
securities of any one issuer, except securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities or U.S. bank obligations./1/ (Subproposal A).

(3) Neither the Cash Portfolio nor the Retirement Portfolio may invest less
than 25% of its assets in bank obligations (including both domestic and
foreign bank obligations) and each reserves freedom of action to concentrate
in securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities.

(4) No Portfolio may sell securities short. (Subproposal H).

(5) No Portfolio may write or purchase put or call options. (Subproposal R).

(6) No Portfolio may purchase illiquid securities (such as repurchase
agreements with maturities in excess of seven days) or other securities that
are not readily marketable if more than 10% of the total assets of the
Portfolio would be invested in such securities. (Subproposal J).

(7) No Portfolio may purchase or sell real estate, real estate investment
trust securities, commodities, or oil and gas interests. (Subproposals I, O).

(8) No Portfolio may make loans to others (except through the purchase of
debt obligations referred to under "Investment Objectives and Policies" in the
- -----------
/1/ In compliance with Rule 2a-7 under the Act, the Cash Portfolio and
Retirement Portfolio each will not purchase any securities, other than
obligations of the U.S. Government or its agencies and instrumentalities, if,
immediately after such purchase, more than 5% of the value of the Portfolio's
total assets would be invested in securities of any one issuer. The Fund's
fundamental policy would give each such Portfolio the ability to invest, with
respect to 25% of the Portfolio's assets, more than 5% of its assets in any
one issuer only in the event that Rule 2a-7 is amended in the future.

D-20
<PAGE>

Prospectus), except that the Fund may purchase and simultaneously resell for
later delivery, obligations issued or guaranteed as to principal and interest
by the U.S. Government or its agencies or instrumentalities; provided,
however, that the Fund will not enter into such a repurchase agreement on
behalf of a Portfolio if, as a result thereof, more than 10% of its total
assets (taken at current value) at that time would be subject to repurchase
agreements maturing in more than seven days. (Subproposal F).

(9) No Portfolio may invest in companies for the purpose of exercising
control. (Subproposal N).

(10) No Portfolio may invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation or
acquisition of assets. (Subproposal M).

Notwithstanding any of the foregoing investment restrictions, each of the
Cash Portfolio, the Government Portfolio, and the Retirement Portfolio may
invest up to 100% of its assets in U.S. Government obligations.

SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC. MAY NOT:

(1) Purchase the securities of any issuer (except states, territories and
possessions of the United States, the United States Government and its
agencies and instrumentalities or securities which are backed by the full
faith and credit of the United States) if as a result more than 5% of its
total assets would be invested in the securities of such issuer, except that
up to 25% of the Fund's total assets may be invested without regard to such
limitation (as used in this Prospectus, the entity that has the ultimate
responsibility for the payment of interest and principal on a security will be
deemed to be its issuer). (Subproposal A).

(2) Borrow money except for temporary or emergency purposes and not for
investment purposes, and then in an amount not exceeding 10% of the value of
its total assets at the time of borrowing and no investments will be made
while borrowings exceed 5% of total assets. (Subproposal D).

(3) Pledge, mortgage or hypothecate its assets except that, to secure
borrowings permitted by subparagraph (2) above, it may pledge assets having a
market value at the time of pledge not exceeding 10% of the value of its total
assets. (Subproposal E).

(4) Underwrite any issue of securities except in connection with the
purchase of securities for its portfolio of municipal obligations.
(Subproposal G).

(5) Purchase or sell real estate but it may invest in municipal securities
secured by real estate or interests therein. (Subproposal I).

(6) Purchase or sell commodities or commodity contracts or oil, gas, or
other mineral exploration or development programs. (Subproposal O).

(7) Make loans, except by engaging in repurchase transactions.
(Subproposal F).

(8) Make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions. (Subproposal H).

D-21
<PAGE>

SMITH BARNEY MUNI FUNDS:

THE CALIFORNIA MONEY MARKET PORTFOLIO AND THE NEW YORK MONEY MARKET PORTFOLIO
EACH MAY NOT:

(1) Borrow money, except from banks for temporary purposes (such as
facilitating redemptions or for extraordinary or emergency purposes) in an
amount not to exceed 10% of the value of its total assets at the time the
borrowing is made (not including the amount borrowed) and no investments will
be made while borrowings exceed 5% of total assets. (Subproposal D).

(2) Mortgage or pledge any of its assets, except to secure borrowings
permitted under (1) above. (Subproposal E).

(3) Invest more than 25% of total assets taken at market value in any one
industry; except that Municipal Obligations and securities of the U.S.
Government, its agencies and instrumentalities and Municipal Obligations of
California with respect to the California Money Market Portfolio and Municipal
Obligations of New York with respect to the New York Money Market Portfolio
are not considered an industry for purposes of this limitation. (Subproposal
C).

(4) Purchase or hold any real estate, except that the Portfolio may invest
in securities secured by real estate or interests therein or issued by persons
(other than real estate investment trusts) which deal in real estate or
interests therein. (Subproposal I).

(5) Write or purchase put, call, straddle or spread options; purchase
securities on margin or sell "short". (Subproposals H, R).

(6) Underwrite the securities of other issuers. (Subproposal G).

(7) Purchase or sell commodities and commodity contracts. (Subproposal I).

(8) Make loans, except to the extent the purchase of bonds or other
evidences of indebtedness or the entry into repurchase agreements or deposits
with banks, including the Fund's Custodian, may be considered loans.
(Subproposal F).

THE FLORIDA PORTFOLIO, THE GEORGIA PORTFOLIO, THE LIMITED TERM PORTFOLIO, AND
THE PENNSYLVANIA PORTFOLIO EACH MAY NOT:

(2) Mortgage or pledge any of its assets, except to secure borrowings
permitted under (1) above. (Subproposal E).

(3) Invest more than 25% of total assets taken at market value in any one
industry, except that Municipal Obligations and securities of the U.S.
Government, its agencies and instrumentalities and Municipal Obligations of
California with respect to the California Portfolio and the California Limited
Term Portfolio, Municipal Obligations of New Jersey with respect to the New
Jersey Portfolio,

D-22
<PAGE>

Municipal Obligations of Georgia with respect to the Georgia Portfolio,
Municipal Obligations of Pennsylvania with respect to the Pennsylvania
Portfolio and Municipal Obligations of Florida with respect to the Florida
Portfolio and the Florida Limited Term Portfolio are not considered an
industry for purposes of this limitation. (Subproposal C).

(5) Write or purchase put, call, straddle or spread options; purchase
securities on margin or sell "short". (Subproposals H, R).

(6) Underwrite the securities of other issuers. (Subproposal G).

(7) Purchase or sell commodities and commodity contracts, except that the
Portfolio may invest in or sell municipal bond index futures contracts,
provided that immediately thereafter not more than 33- 1/3% of its net assets
would be hedged or the amount of margin deposits on the Portfolio's existing
futures contracts would not exceed 5% of the value of its total assets.
(Subproposal I).

(8) Make loans, except to the extent the purchase of bonds or other
evidences of indebtedness or the entry into repurchase agreements or deposits
with banks, including the Funds' Custodian, may be considered loans.
(Subproposal F).

THE NATIONAL PORTFOLIO AND THE NEW YORK PORTFOLIO EACH MAY NOT:

(1) Borrow money, except from banks for temporary purposes (such as
facilitating redemptions or for extraordinary or emergency purposes) in an
amount not to exceed 10% of the value of its total assets at the time the
borrowing is made (not including the amount borrowed) and no investment will
be made while borrowing exceeds 5% of total assets. (Subproposal D).

(2) Mortgage or pledge any of its assets, except to secure borrowings
permitted under (1) above. (Subproposal E).

(3) Invest more than 25% of total assets taken at market value in any one
industry, except that Municipal Obligations and securities of the U.S.
Government, its agencies and instrumentalities and Municipal Obligations of
New York State with respect to the New York Portfolio are not considered an
industry for purposes of this limitation. (Subproposal C).

(4) The National Portfolio may not with respect to 75% of the value of its
total assets, purchase securities of any issuer if immediately thereafter more
than 5% of total assets at market value would be invested in the securities of
any issuer (except that this limitation does not apply to obligations issued
or guaranteed as to principal and interest either by the U.S. Government or
its agencies or instrumentalities or by New York State or its political
subdivisions with respect to the New York Portfolio). (Subproposal A).

(5) Invest in securities issued by other investment companies, except as
permitted by Section 12(d)(1) of the Investment Company Act of 1940 or in
connection with a merger, consolidation, acquisition or reorganization.
(Subproposal M).

D-23
<PAGE>

(6) Purchase or hold any real estate, except that a Portfolio may invest in
securities secured by real estate or interests therein or issued by persons
(other than real estate investment trusts) who deal in real estate or
interests therein. (Subproposal I).

(7) Purchase or hold the securities of any issuer, if to its knowledge,
Trustees or officers of the Fund individually owning beneficially more than
.5% of the securities of that issuer own in the aggregate more than 5% of such
securities. (Subproposal L).

(8) Write or purchase put, call, straddle or spread options; purchase
securities on margin or sell "short". (Subproposals H, R).

(9) Underwrite the securities of other issuers. (Subproposal G).

(10) Purchase or sell commodities and commodity contracts, except that each
Portfolio may invest in or sell municipal bond index future contracts;
provided that immediately thereafter not more than 33- 1/3% of its net assets
would be hedged or the amount of margin deposits on the Portfolio's existing
futures contracts would not exceed 5% of the value of its total assets.
(Subproposal I).

(11) Make loans, except to the extent the purchase of bonds or other
evidences of indebtedness or the entry into repurchase agreements or deposits
with banks, including the Fund's Custodian, may be considered loans (and the
Fund has no present intention of entering into repurchase agreements).
(Subproposal F).

SMITH BARNEY NATURAL RESOURCES FUND INC. IS PROHIBITED FROM:

(1) With respect to 75% of the value of its total assets, investing more
than 5% of its total assets in securities of any one issuer, except securities
issued or guaranteed by the United States government, or purchase more than
10% of the outstanding voting securities of such issuer. (Subproposal A).

(2) Issuing senior securities as defined in the 1940 Act and any rules and
orders thereunder, except insofar as the Fund may be deemed to have issued
senior securities by reason of: (a) borrowing money or purchasing securities
on a when-issued or delayed-delivery basis; (b) purchasing or selling futures
contracts and options on futures contracts and other similar instruments; and
(c) issuing separate classes of shares. (Subproposal B).

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

(4) Borrowing money, except that 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, in an amount not exceeding 10% of the value of the Fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the Fund's total assets, the Fund will
not make any additional investments. (Subproposal D).

D-24
<PAGE>

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

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

(7) Purchasing or selling commodities or commodity contracts, but this shall
not prevent the Fund from: (a) trading in futures contracts and options on
futures contracts, or (b) investing in gold bullion and coins or receipts for
gold. (Subproposal I).

(8) Purchasing any securities on margin (except for such short-term credits
as are necessary for the clearance of purchases and sales of portfolio
securities) or selling any securities short (except "against the box"). For
purposes of this restriction, the deposit or payment by the Fund of initial or
maintenance margin in connection with futures contracts and related options
and options on securities is not considered to be the purchase of a security
on margin. (Subproposal H).

SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC. MAY NOT:

D-25
<PAGE>

(6) Purchase or sell real estate, real estate mortgages, real estate
investment trust securities, commodities or commodity contracts, but this
shall not prevent the Fund from: (a) investing in securities of issuers
engaged in the real estate business 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 (c) trading in futures contracts and
options on futures contracts.

SMITH BARNEY OREGON MUNICIPALS FUND MAY NOT:

(6) Purchase or sell real estate, real estate mortgages, real estate
investment trust securities, commodities or commodity contracts, but this
shall not prevent the Fund from: (a) investing in securities of issuers
engaged in the real estate business 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 (c) trading in futures contracts and
options on futures contracts. (Subproposal I).

D-26
<PAGE>

SMITH BARNEY PRINCIPAL RETURN FUND:

(1) A Series will not purchase securities (other than U.S. government
securities) of any issuer if, as a result of the purchase, more than 5% of the
value of a Series' total assets would be invested in the securities of that
issuer, except that up to 25% of the value of a Series' total assets may be
invested without regard to this 5% limitation. (Subproposal A).

(2) A Series will not purchase more than 10% of the voting securities of any
one issuer, or more than 10% of the securities of any class of any one issuer,
except that this limitation is not applicable to a Series' investments in U.S.
government securities, and up to 25% of a Series' assets may be invested
without regard to these 10% limitations. (Subproposal A).

(3) A Series will not borrow money, except that a Series may borrow from
banks temporarily for emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments of dividends and
distributions that might otherwise require the untimely disposition of
securities, in an amount not to exceed 33- 1/3% of the value of a Series'
total assets (including the amount borrowed) at the time the borrowing is
made. Whenever borrowings exceed 5% of the value of the total assets of a
Series, a Series will not make any additional investments. (Subproposal D).

(4) A Series will not lend money to other persons, except through purchasing
debt obligations, lending portfolio securities and entering into repurchase
agreements.

(5) A Series will invest no more than 25% of the value of its total assets
in securities of issuers in any one industry, except that this restriction
does not apply to investments in U.S. government securities. (Subproposal C).

(6) A Series will not underwrite the securities of other issuers, except
insofar as a Series may be deemed to be an underwriter under the Securities
Act of 1933, as amended (the "1933 Act"), in disposing of its portfolio
securities.

(7) A Series will not purchase or sell real estate, interests in real estate
limited partnerships or interests in real estate, except that a Series may
purchase and sell securities that are secured by real estate and may purchase
securities issued by companies that invest or deal in real estate.
(Subproposal I).

(8) A Series will not purchase or sell commodities or commodities futures
contracts. (Subproposal I).

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<PAGE>

SMITH BARNEY TELECOMMUNICATIONS TRUST-- INCOME FUND MAY NOT:

(1) Invest less than 65% of the value of its total assets in the
telecommunications industry under normal market conditions as determined by
SBSA and/or TBCAM as described under "Investment Objective and Management
Policies" in the Prospectus. (Subproposal Q).

(2) Purchase or sell real estate, real estate mortgages, real estate
investment trust securities, commodities or commodity contracts, but this
shall not prevent the Income Fund from (a) investing in securities of issuers
engaged in the real estate business 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 (c) trading in futures contracts and
options on futures contracts. (Subproposal I).

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

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

(5) Borrow money, except that the Income 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, in an amount not exceeding 10% of the value of the Income Fund's
total assets (including the amount borrowed) valued at market less liabilities
(not including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of the Income Fund's total assets,
the Income Fund will not make any additional investments. (Subproposal D).

(6) Purchase the securities of any issuer (except U.S. government
securities) if, as a result of such purchase, more than 10% of any class of
securities or of the outstanding voting securities of such issuer would be
held in the Income Fund; for this purpose, all securities of an issuer shall
be divided into three classes, namely, all debt securities, all preferred
stock and all common stock.

(7) Issue senior securities as defined in the 1940 Act and any rules and
orders thereunder, except insofar as the Income Fund may be deemed to have
issued Senior Securities by reason of (a) borrowing money or purchasing
securities on a when-issued or delayed-delivery basis, (b) purchasing or
selling futures contracts and options on futures contracts and other similar
instruments and (c) issuing separate classes of shares. (Subproposal B).

GREENWICH STREET SERIES FUND IS PROHIBITED FROM:

(1) Purchasing the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the Portfolio's total
assets would be invested in the securities of the issuer, except that, with
respect to each Portfolio other than the Money Market Portfolio, up to 25% of
the value of the Portfolio's total assets may be invested without regard to
this 5% limitation. (Subproposal A).

D-28
<PAGE>

(2) Purchasing more than 10% of the voting securities of any class of any
one issuer; provided that this limitation shall not apply to investments in
U.S. government securities. (Subproposal A).

(3) Purchasing securities on margin, except that the Portfolio may obtain
any short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or related
options will not be deemed to be a purchase of securities on margin.
(Subproposal H).

(4) Making short sales of securities or maintaining a short position, except
for short sales "against the box". (Subproposal H).

(5) Borrowing money or issuing senior securities, except that (a) the
Portfolio may borrow from banks for temporary or emergency (not leveraging)
purposes including the meeting of redemption requests that might otherwise
require the untimely disposition of securities in an amount not exceeding 30%
of the value of the Portfolio's total assets (including the amount borrowed),
valued at market less liabilities (not including the amount borrowed) at the
time the borrowing is made, (b) one or more of the Portfolios may enter into
futures contracts, reverse repurchase agreements and forward roll transactions
and (c) the International Equity Portfolio may borrow up to one-third of the
Portfolio's assets. In the event that the asset coverage for a Portfolio's
borrowings falls below 30%, the Portfolio would reduce, within three days
(excluding Saturdays, Sundays and holidays), the amount of its borrowings in
order to provide for 30% asset coverage. Whenever borrowings pursuant to (a)
above exceed 5% of the value of a Portfolio's total assets, the Portfolio
(other than the International Equity Portfolio) will not make any additional
investments. (Subproposals B, D).

(6) Pledging, hypothecating, mortgaging or otherwise encumbering more than
30% of the value of the Portfolio's total assets. For purposes of this
restriction, (a) the deposit of assets in escrow in connection with the
writing of options and the purchase of securities on a when-issued or delayed
delivery basis, (b) the International Equity Portfolio's pledge of its assets
to secure permitted borrowing and (c) collateral arrangements with respect to
(i) the purchase and sale of stock options, options on foreign currencies and
options on stock indexes and (ii) initial or variation margin for futures
contracts will not be deemed to be pledges of a Portfolio's assets.
(Subproposal E).

(7) Underwriting the securities of other issuers, except insofar as the
Portfolio may be deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities. (Subproposal G).

(8) Purchasing or selling real estate or interests in real estate, except
that the Portfolio may purchase and sell securities that are secured, directly
or indirectly, by real estate and may purchase securities issued by companies
that invest or deal in real estate. (Subproposal I).

(9) Investing in commodities, except that one or more of the Portfolios may
invest in futures contracts and options on futures contracts. (Subproposal I).

(10) Investing in oil, gas or other mineral exploration or development
programs, except that the Portfolios may invest in the securities of companies
that invest in or sponsor these programs. (Subproposal O).

D-29
<PAGE>

(11) Making loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and entry into repurchase
agreements. (Subproposal F).

(12) Investing in securities of other investment companies registered or
required to be registered under the 1940 Act, except as they may be acquired
as part of a merger, consolidation, reorganization, acquisition of assets or
an offer of exchange or as otherwise permitted by law. (Subproposal M).

(13) Purchasing any securities that would cause more than 25% of the value
of the Portfolio's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the
same industry; provided that this limitation shall not apply to the purchase
of (a) U.S. government securities or (b) with respect to the Money Market
Portfolio, U.S. dollar-denominated bank instruments such as certificates of
deposit, time deposits, bankers' acceptances and letters of credit that have
been issued by U.S. banks or (c) with respect to the Equity Income Portfolio,
the securities of companies within the utility industry. (Subproposal C).

(14) Purchasing, writing or selling puts, calls, straddles, spreads or
combinations thereof, except as permitted under the Portfolio's investment
goals and policies. (Subproposal R).

TRAVELERS SERIES FUND INC.

SMITH BARNEY INCOME AND GROWTH PORTFOLIO, SMITH BARNEY INTERNATIONAL EQUITY
PORTFOLIO AND SMITH BARNEY PACIFIC BASIN PORTFOLIO MAY NOT:

(1) With respect to 75% of its total assets, invest more than 5% of its
total assets in the securities of any single issuer and purchase more than 10%
of the outstanding voting securities of an issuer (except securities of the
U.S. Government and its agencies and instrumentalities). (Subproposal A).

(2) Invest more than 25% of its total assets in a particular industry. This
limitation shall not apply to any obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. (Subproposal C).

(3) Purchase or sell real estate, although the Portfolio may purchase
securities of issuers which engage in real estate operations and securities
secured by real estate or interests therein. (Subproposal I).

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

(5) Purchase or sell physical commodities or contracts thereon except for
purchases of currencies, futures and options and other related contracts as
described in the Prospectus. (Subproposal I).

(6) Borrow money (including borrowings through entering into reverse
repurchase agreements) in excess of 33- 1/3% of its total assets (including
the amount of money borrowed but excluding any liabilities and indebtedness
not constituting senior securities, or letters of credit solely for purposes
of participating in a captive insurance company sponsored by the Investment
Company Institute to provide fidelity and directors and officers liability
insurance), or pledge its assets other than to secure such borrowings or in
connection with short sales, when-issued and delayed delivery transactions and
similar investment strategies. Whenever borrowings exceed 5% of the value of
the Portfolio's total assets, the Portfolio will not make any additional
investments. If at any time any borrowings exceed 33- 1/3% of the value of a
Portfolio's total assets, the Portfolio will reduce its borrowings within
three

D-30
<PAGE>

business days to the extent necessary to comply with the 33- 1/3% limitation.
(Subproposals D, E).

(7) Make loans, except the Portfolio may purchase debt obligations, may
enter into repurchase agreements and may lend securities. (Subproposal F).

(8) Underwrite securities of other issuers, except to the extent the
Portfolio, in disposing of portfolio securities, may be deemed an underwriter
within the meaning of the Securities Act of 1933, as amended (the "1933 Act").
(Subproposal G).

(9) Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder. (Subproposal B).

AIM CAPITAL APPRECIATION PORTFOLIO MAY NOT:

(1) Invest for the purpose of exercising control over or management of any
company. (Subproposal N).

(2) Engage in the underwriting of securities of other issuers. (Subproposal
G).

(3) Purchase and sell real estate or commodities or commodity contracts.
(Subproposal I).

(4) Make loans, except by the purchase of a portion of an issue of publicly
distributed bonds, debentures or other obligations, provided that the Fund may
lend its portfolio securities provided the value of such loaned securities
does not exceed 33 1/3% of its total assets. (Subproposal F).

(5) Invest in interests in oil, gas or other mineral exploration or
development programs. (Subproposal O).

(6) Invest in securities of other investment companies.

(7) Invest more than 25% of the value of its total assets in securities of
issuers all of which conduct their principal business activities in the same
industry. (Subproposal C).

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

ALLIANCE GROWTH PORTFOLIO MAY NOT:

(1) Borrow money in excess of 10% of the value (taken at the lower of cost
or current value) of its total assets (not including the amount borrowed) at
the time the borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests (not for leverage)
which might otherwise require the untimely disposition of portfolio
investments or pending settlement of securities transactions or for
extraordinary or emergency purposes. (Subproposal D).

D-31
<PAGE>

(2) Underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain federal securities laws.
(Subproposal G).

(3) Purchase or retain real estate or interests in real estate, although the
Portfolio may purchase securities which are secured by real estate and
securities of companies which invest in or deal in real estate. (Subproposal
I).

(4) Make loans to other persons except by the purchase of obligations in
which the Portfolio may invest consistent with its investment policies and by
entering into repurchase agreements, or by lending its portfolio securities
representing not more than 25% of its total assets. (Subproposal F).

(5) Issue any senior securities, except as permitted by the 1940 Act or any
rule, order or interpretation thereunder. For the purposes of this
restriction, collateral arrangements with respect to options, futures
contracts and options on futures contracts and collateral arrangements with
respect to initial and variation margin are not deemed to be the issuance of a
senior security. (There is no intention to issue senior securities except as
set forth in paragraph (1) above.) (Subproposal B).

(6) Invest more than 5% of its total assets in the securities of any one
issuer (other than U.S. Government securities and repurchase agreements
relating thereto), although up to 25% of the Portfolio's total assets may be
invested without regard to this restriction. (Subproposal A).

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

(8) It is also a fundamental policy of the Portfolio that it may purchase
and sell futures contracts and related options.

VAN KAMPEN AMERICAN CAPITAL ENTERPRISE PORTFOLIO MAY NOT:

(1) Make loans except that the Portfolio may invest up to 25% of the
Portfolio's total assets in Repurchase Agreements. (Subproposal F).

(2) Primarily engage in the underwriting or distribution of securities,
except insofar as the Portfolio may be deemed an underwriter under the 1933
Act in selling a portfolio security. (Subproposal G).

(3) Make any investment in real estate, commodities or commodities
contracts; however, the Portfolio is not prohibited from investing in
securities issued by a real estate investment trust, provided that such trust
is not permitted to invest in real estate or interests in real estate other
than mortgages or other security interests, and the Portfolio is not
prohibited from entering into transactions in futures contracts and related
options. (Subproposal I).

(4) Invest more than 5% of the value of its assets in the securities of any
one issuer with the exception of U.S. Government securities or purchase more
than 10% of the outstanding voting securities of any one issuer. Neither
limitation shall apply to the acquisition of shares of other open-end
investment companies to the extent permitted by rule or order of the SEC
exempting the Portfolio from the limitations imposed by Section 12(d)(1) of
the 1940 Act. (Subproposal A).

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

(6) Borrow more than 10% of the value of its net assets valued at the lower
of cost or market at the time of borrowing; and then only from banks and

D-32
<PAGE>

undertaken as a temporary measure for extraordinary or emergency purposes; or
pledge, transfer, assign or otherwise encumber its assets except to secure
such borrowing and in an amount not exceeding the amount of the borrowing.
Notwithstanding the foregoing, the Portfolio may engage in transactions in
options, futures contracts and related options, segregate or deposit assets to
cover or secure options written, and make margin deposits or payments for
futures contracts and related options. (Subproposals D, E).

(7) Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder, except that this restriction shall
not be deemed to prohibit the Portfolio from (i) making and collateralizing
any permitted borrowings, (ii) making any permitted loans of its portfolio
securities, or (iii) entering into repurchase agreements, utilizing options,
futures contracts, options on futures contracts and other investment
strategies and instruments that would be considered "senior securities" but
for the maintenance by the Portfolio of a segregated account with its
custodian or some other form of "cover". (Subproposal B).

GT GLOBAL STRATEGIC INCOME PORTFOLIO MAY NOT:

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

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

(3) Buy or sell real estate (including real estate limited partnerships) or
commodities or commodity contracts; however, the Portfolio may invest in debt
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein, including real estate
investment trusts, and may purchase or sell currencies (including forward
currency exchange contracts), futures contracts and related options generally
as described in the Prospectus and Statement of Additional Information and
subject to (13) below. (Subproposal I).

(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act. (Subproposal G).

(5) Make loans, except that the Portfolio may invest in loans and
participations, purchase debt securities and enter into repurchase agreements
and make loans of portfolio securities. (Subproposal F).

(6) Sell securities short, except to the extent that the Portfolio
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short. (Subproposal H).

(7) Purchase securities on margin, provided that the Portfolio may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities; except that it may make margin deposits in connection
with futures contracts subject to (13) below. (Subproposal H).

D-33
<PAGE>

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

(9) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing or to letters of credit obtained solely for purposes
of participating in a captive insurance company sponsored by the Investment
Company Institute to provide fidelity and directors and officers liability
insurance. (Subproposal E).

(10) Invest in interests in oil, gas, or other mineral exploration or
development programs. (Subproposal O).

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

(12) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Portfolio's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such issuer.
(Subproposal L).

(13) Enter into a futures contract, if, as a result thereof, more than 5% of
the Portfolio's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.

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

MFS TOTAL RETURN PORTFOLIO MAY NOT:

(1) Borrow amounts in excess of 33 -1/3% of its assets, including amounts
borrowed, and then only as a temporary measure for extraordinary or emergency
purposes. (Subproposal D).

(2) Underwrite securities issued by other persons except insofar as the
Portfolio may technically be deemed an underwriter under the 1933 Act in
selling a portfolio security. (Subproposal G).

(3) Issue any senior securities except as permitted by the 1940 Act. For
purposes of this restriction, collateral arrangements with respect to any type
of option, any type of forward contract, any type of futures contract and any
type of swap and collateral arrangements with respect to initial and variation
margin are not deemed to be the issuance of a senior security. (Subproposal
B).

(4) Purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein and
securities of

D-34
<PAGE>

companies, such as real estate investment trusts, which deal in real estate or
interests therein), interests in oil, gas or mineral leases, commodities or
commodity contracts (excluding currencies and any type of option, any type of
futures contract and any type of forward contract) in the ordinary course of
its business. The Portfolio reserves the freedom of action to hold and to sell
real estate, mineral leases, commodities or commodity contracts (including
currencies and any type of option, any type of futures contract and any type
of forward contract) acquired as a result of the ownership of securities.
(Subproposal I).

(5) Make loans to other persons. For these purposes, the purchase of
commercial paper or a portion or all of an issue of debt securities, the
lending of portfolio securities, or the investment of the Portfolio's assets
in repurchase agreements, shall not be considered the making of a loan.
(Subproposal F).

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

PUTNAM DIVERSIFIED INCOME PORTFOLIO MAY NOT:

(1) Borrow money in excess of 10% of the value (taken at the lower of cost
or current value) of its total assets (not including the amount borrowed) at
the time the borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests (not for leverage)
which might otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such borrowings will
be repaid before any additional investments are purchased. (Subproposal D).

(2) Pledge, hypothecate, mortgage or otherwise encumber its assets in excess
of 15% of its total assets (taken at current value) and then only to secure
borrowings permitted by restriction (1) above. (The deposit of underlying
securities and other assets in escrow and other collateral arrangements in
connection with the writing of put or call options and collateral arrangements
with respect to margin for futures contracts and related options or letters of
credit obtained solely for purposes of participating in a captive insurance
company sponsored by the Investment Company Institute to provide fidelity and
directors and officers liability insurance, are not considered to be pledges
or other encumbrances.) (Subproposal E).

(3) Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities, and except
that it may make margin payments in connection with transactions in futures
contracts and related options. (Subproposal H).

(4) Make short sales of securities or maintain a short position for the
account of the Portfolio unless at all times when a short position is open the
Portfolio owns an equal amount of such securities or owns securities which,
without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount to, the
securities sold short. (Subproposal H).

(5) Underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain federal securities laws.
(Subproposal G).

(6) Purchase or sell real estate, although it may purchase securities of
issuers which deal in real estate, securities which are secured by interests
in real estate and securities representing interests in real estate.
(Subproposal I).

D-35
<PAGE>

(7) Purchase or sell commodities or commodity contracts, except that it may
purchase or sell futures contracts, options on futures, forward contracts and
options on foreign currencies. (Subproposal I).

(8) Make loans, except by purchase of debt obligations in which the
Portfolio may invest consistent with its investment policies, by entering into
repurchase agreements with respect to not more than 25% of its total assets
(taken at current value), or through the lending of its portfolio securities
with respect to not more than 25% of its assets. (Subproposal F).

(9) Invest in securities of any issuer if, to the knowledge of the Putnam
Management, officers and Directors of Putnam Management who beneficially own
more than 0.5% of the securities of that issuer together beneficially own more
than 5%. (Subproposal L).

(10) Invest in securities of any issuer if, immediately after such
investment, more than 5% of the total assets of the Portfolio (taken at
current value) would be invested in the securities of such issuer; provided
that this limitation does not apply to U.S. Government securities, or, with
respect to 25% of the Portfolio's total assets, securities of any foreign
government, its agencies or instrumentalities, securities of supranational
entities, and securities backed by the credit of a governmental entity.
(Subproposal A).

(11) Acquire more than 10% of the voting securities of any issuer.
(Subproposal A).

(12) Invest more than 25% of the value of its total assets in any one
industry. (U.S. Government securities and securities of any foreign
government, its agencies or instrumentalities, securities of supranational
entities, and securities backed by the credit of a governmental entity are not
considered to represent an industry).

(13) Purchase securities the disposition of which is restricted under
federal securities laws, if, as a result, such investments would exceed 15% of
the value of the Portfolio's net assets, excluding restricted securities that
have been determined by the Directors of the Fund (or the person designated by
them to make such determinations) to be readily marketable. (Subproposal J).

(14) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts. (Subproposal O).

(15) Make investments for the purpose of gaining control of a company's
management. (Subproposal N).

(16) Issue any senior securities except as permitted by the 1940 Act or any
rule, order or interpretation thereunder. (Subproposal B).

SMITH BARNEY HIGH INCOME PORTFOLIO MAY NOT:

(1) Purchase the securities of any issuer (other than U.S. Government
securities) if as a result more than 5% of the value of the Portfolio's total
assets would be invested in the securities of the issuer, except that up to
25% of the value of the Portfolio's total assets may be invested without
regard to this 5% limitation. (Subproposal A).

(2) Purchase more than 10% of the voting securities of any one issuer (other
than U.S. Government securities), except that up to 25% of the value of the
Portfolio's total assets may be invested without regard to this 10%
limitation. (Subproposal A).

D-36
<PAGE>

(3) Make short sales of securities, except that the Portfolio may engage in
short sales "against the box." (Subproposal H).

(4) Borrow money, except that (a) the Portfolio may borrow from banks for
temporary or emergency (not leveraging) purposes in an amount not exceeding
10% of the value of the Portfolio's total assets (including the amount
borrowed) valued at market less liabilities (not including the amount
borrowed) at the time the borrowing is made and (b) the Portfolio may enter
into futures contracts. Whenever borrowings described in (a) exceed 5% of the
value of the Portfolio's total assets, the Portfolio will not make any
additional investments. (Subproposal D).

(5) Underwrite the securities of other issuers, except insofar as the
Portfolio may be deemed an underwriter in the course of disposing of portfolio
securities. (Subproposal G).

(6) Issue any senior securities, except as permitted under the 1940 Act or
any rule, order or interpretation thereunder, except that this restriction
shall not be deemed to prohibit the Portfolio from (i) making and
collateralizing any permitted borrowings, (ii) making any permitted loans of
its portfolio securities, or (iii) entering into repurchase agreements,
utilizing options, futures contracts, options on futures contracts and other
investment strategies and instruments that would be considered "senior
securities" but for the maintenance by the Portfolio of a segregated account
with its custodian or some other form of "cover". (Subproposal B).

(7) Purchase or sell real estate or interests in real estate, except that
the Portfolio may purchase and sell securities that are secured by real estate
or interests in real estate and may purchase securities issued by companies
that invest or deal in real estate. (Subproposal I).

(8) Invest in commodities, except that the Portfolio may invest in futures
contracts, options on futures contracts and options on currencies.
(Subproposal I).

(9) Make loans to others, except through the purchase of qualified debt
obligations, the entry into repurchase agreements and loans of portfolio
securities consistent with the Portfolio's investment objectives and policies.
(Subproposal F).

(10) Invest in securities of other investment companies registered or
required to be registered under the 1940 Act, except as they may be acquired
as part of a merger, consolidation, reorganization, acquisition of assets or
an offer of exchange, or to the extent permitted by the 1940 Act. (Subproposal
M).

(11) Purchase any securities which would cause more than 25% of the value of
the Portfolio's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the
same industry; provided that there shall be no limit on the purchase of U.S.
Government securities. (Subproposal C).

SMITH BARNEY MONEY MARKET PORTFOLIO MAY NOT:

(1) Borrow money except from banks for temporary purposes in an amount up to
10% of the value of its total assets and may pledge its assets in an amount up
to 10% of the value of its total assets only to secure such borrowings. The
Portfolio may borrow money only to accommodate requests for the redemption of
shares while effecting an orderly liquidation of portfolio securities or to
clear securities transactions and not for leveraging purposes. Whenever
borrowings exceed 5% of the value of a Portfolio's total assets, the Portfolio
will not make any additional investments. (Subproposals D, E).

D-37
<PAGE>

(2) With respect to 75% of its assets invest more than 5% of its assets in
the securities of any one issuer, except securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities./2/ (Subproposal A).

(3) Invest more than 25% of its assets in the securities of issuers in any
industry, except it may not invest less than 25% of its assets in bank
obligations (including both domestic and foreign bank obligations) and it
reserves freedom of action to concentrate in securities issued or guaranteed
as to principal and interest by the U.S. Government, its agencies or
instrumentalities.

(4) Make loans to others (except through the purchase of debt obligations
and the lending of portfolio securities referred to under "Smith Barney Money
Market Portfolio" in the Prospectus), except that the Portfolio may purchase
and simultaneously resell for later delivery, obligations issued or guaranteed
as to principal and interest by the U.S. Government or its agencies or
instrumentalities; provided, however, that the Portfolio will not enter into
such a repurchase agreement if, as a result thereof, more than 10% of its
total assets (taken at current value) at that time would be subject to
repurchase agreements maturing in more than seven days. (Subproposal F).

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

(6) Underwrite securities of other issuers, except to the extent the
Portfolio, in disposing of portfolio securities, may be deemed an underwriter
within the meaning of the 1933 Act. (Subproposal G).

(7) Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder. (Subproposal B).

TBC MANAGED INCOME PORTFOLIO MAY NOT:

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

(2) Make investments in real estate or commodities or commodity contracts,
although the Portfolio may purchase securities of issuers which deal in real
estate and may purchase securities which are secured by interests in real
estate. (Subproposal I).

(3) Act as securities underwriter. (Subproposal G).
- -----------
/2/ In compliance with Rule 2a-7 under the Act, the Smith Barney Money Market
Portfolio will not purchase any securities, other than obligations of the U.S.
Government or its agencies and instrumentalities, if, immediately after such
purchase, more than 5% of the value of the Portfolio's total assets would be
invested in securities of any one issuer. The Portfolio's fundamental policy
would give it the ability to invest, with respect to 25% of the Portfolio's
assets, more than 5% of its assets in any one issuer only in the event that
Rule 2a-7 is amended in the future.

D-38
<PAGE>

(4) Make loans, except that the Portfolio may (i) purchase bonds, debentures
and other securities of a like nature, (ii) make loans in the form of call
loans or loans maturing in not more than one year which are secured by
marketable collateral and are in amounts and on terms similar to those
currently in effect in the case of loans made by national banks, (iii) enter
into repurchase agreements to the extent set forth in the Prospectus and (iv)
lend its portfolio securities. (Subproposal F).

(5) Borrow money, except that (a) the Portfolio may borrow money for
temporary administrative purposes provided that the aggregate of such
borrowing does not exceed 5%. (Subproposal D).

(6) Lend its portfolio securities in an amount in excess of 1/3 of the total
assets taken at value. Any loans of portfolio securities will be made
according to guidelines established by the SEC and the Directors, including
the borrower's maintaining collateral equal at all times to the value of the
securities loaned.

(7) Purchase "illiquid" securities, including repurchase agreements maturing
in more then seven days, securities lacking readily available market
quotations and securities which cannot be sold without registration or the
filing of a notification under Federal or state securities laws, if as a
result, such investment would exceed 15% of the value of the Portfolio's net
assets. (Subproposal J).

(8) Purchase securities of companies for the purpose of exercising control.
(Subproposal N).

(9) Purchase securities on margin, except short-term credits as are
necessary for the purchase and sale of securities, or effect short sales.
(Subproposal H).

(10) As to 75% of the total assets of the Portfolio, purchase securities of
any issuer, if immediately thereafter (a) more than 5% of total assets (taken
at market value) would be invested in the securities of such issuer, or (b)
more than 10% of the outstanding securities of any class of such issuer would
be held by the Portfolio, provided that this limitation does not apply to U.S.
Government securities. (Subproposal A).

(11) Purchase securities of any other investment company except as part of a
plan of merger or consolidation. (Subproposal M).

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

(13) Invest in puts, calls, straddles, spreads and any combination thereof.
(Subproposal R).

(14) Invest in oil, gas or other mineral exploration or development
programs, provided, however, this shall not prohibit the Portfolio from
purchasing publicly traded securities of companies engaging in whole or in
part in such activities. (Subproposal O).

(15) Purchase securities from or sell securities to any of its officers or
Directors, except with respect to its own shares and as is permissible under
applicable statutes, rules and regulations.

D-39
<PAGE>

ANNEX I
5% BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NAME AND AMOUNT OF
ADDRESS OF BENEFICIAL PERCENT
FUND BENEFICIAL OWNER OWNERSHIP OF FUND
---- ---------------- ---------- -------
<C> <S> <C> <C>
SMITH BARNEY Citibank N.A. Customer Smith Barney 1,046,314.024 5.17%
AGGRESSIVE Shearson 401K Savings Plan
GROWTH FUND Smith Barney Account
INC. Attn: Nancy Kronenberg
111 Wall Street FISD/20th Floor
New York, NY 10043
Smith Barney Concert Allocation 2,230,761.406 11.02%
Series Inc.
High Growth Portfolio PNC Bank N.A.
Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester PA 19113-1522
Smith Barney Concert Allocation 1,424,630.929 7.04%
Series Inc.
Growth Portfolio PNC Bank N.A.
Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester PA 19113-1522
SMITH BARNEY CONCERT
ALLOCATION SERIES INC.
High Growth PFS Shareholder Services 23,560,174.494 64.92%
Portfolio Attn: Jay Barnhill
3100 Breckinridge Blvd
Duluth GA 30199
Growth PFS Shareholder Services 23,212,473.771 50.88%
Portfolio Attn: Jay Barnhill
3100 Breckinridge Blvd
Duluth GA 30199
Income PFS Shareholder Services 2,750,452.662 60.33%
Portfolio Attn: Jay Barnhill
3100 Breckinridge Blvd
Duluth GA 30199
Balanced PFS Shareholder Services 15,919,247.205 57.34%
Portfolio Attn: Jay Barnhill
3100 Breckinridge Blvd
Duluth GA 30199
Conservative PFS Shareholder Services 5,467,236.492 71.51%
Portfolio Attn: Jay Barnhill
3100 Breckinridge Blvd
Duluth GA 30199
</TABLE>

<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
FUND OF BENEFICIAL OWNER OWNERSHIP OF FUND
---- ------------------- ---------- -------
<C> <S> <C> <C>
Select High Equitable Life of Iowa 1,353,556.820 81.01%
Growth Prime Elite
Portfolio Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50306-9133
The Travelers Insurance Co. 317,330.790 18.99%
Attn: Roger Ferland 5MS
One Tower Square
Hartford, CT 06183
Select Equitable Life of Iowa 193,310.130 74.78%
Income Prime Elite
Portfolio Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50306-9133
The Travelers Insurance Co. 65,087.952 25.18%
Attn: Roger Ferland 5MS
One Tower Square
Hartford, CT 06183
Select Equitable Life of Iowa 1,891,725.602 74.05%
Growth Prime Elite
Portfolio Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50306-9133
The Travelers Insurance Co. 641,170.838 25.10%
Attn: Roger Ferland 5MS
One Tower Square
Hartford, CT 06183
Select Equitable Life of Iowa 2,071,668.844 75.90%
Balanced Prime Elite
Portfolio Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50306-9133
The Travelers Insurance Co. 644,305.897 23.61%
Attn: Roger Ferland 5MS
One Tower Square
Hartford, CT 06183
Select Equitable Life of Iowa 492,457.093 76.97%
Conservative Prime Elite
Portfolio Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50306-9133
</TABLE>

I-1
<PAGE>

<TABLE>
<CAPTION>
NAME AND AMOUNT OF
ADDRESS OF BENEFICIAL PERCENT
FUND BENEFICIAL OWNER OWNERSHIP OF FUND
---- ---------------- ---------- -------
<C> <S> <C> <C>
The Travelers Insurance Co. 132,917.525 20.77%
Attn: Roger Ferland 5MS
One Tower Square
Hartford, CT 06183
SMITH BARNEY Smith Barney International Inc. 520,000.903 10.07%
DISCIPLINED Tokyo Branch
SMALL CAP B-1 Acct- F. Reidenbach
FUND, INC. Yebusi Garden Pl Tower 28FL
20-3, Ebisu 4-Chome Shibuya-Ku
Tokyo 150, Japan
Charles Schwab & Co. Inc 501,076.598 9.70%
101 Montgomery Street
San Francisco, CA 94104
SMITH BARNEY Citibank N.A. Trustee 7,789,275.685 13.23%
FUNDS, INC. Smith Barney Harris Upham & Co Inc.
Equity 401k Savings Plan
Income 111 Wall Street
Portfolio 20th Floor--Attn N, Kronenberg
New York, NY 10043
Smith Barney Concert Allocation 3,515,446.543 5.97%
Series Inc.
Growth Portfolio PNC Bank, N.A.
Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
Short Term Smith Barney Concert Allocation 3,917,553.886 15.31%
U.S. Series Inc.
Treasury Balanced Portfolio PNC Bank, N.A.
Securities Attn: Beverly Timson
Portfolio 200 Stevens Drive Suite 440
Lester, PA 19113-1522
U.S. Citibank N.A. Trustee 1,531,512.416 6.35%
Government Smith Barney Harris Upham & Co Inc.
Securities 401k Savings Plan
Portfolio 111 Wall Street
20th Floor--Attn N. Kronenberg
New York, NY 10043
SMITH BARNEY Smith Barney Concert Allocation 1,869,778.471 26.83%
INCOME Series Inc.
FUNDS Balanced Portfolio PNC Bank, N.A.
Smith Barney Attn: Beverly Timson
Convertible 200 Stevens Drive Suite 440
Fund Lester, PA 19113-1522
</TABLE>
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
FUND OF BENEFICIAL OWNER OWNERSHIP OF FUND
---- ------------------- ---------- -------
<C> <S> <C> <C>
Smith Barney Concert Allocation 495,939.467 7.12%
Series Inc.
Conservative Portfolio PNC Bank, N.A.
Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
SMITH BARNEY INVESTMENT
FUNDS INC.
Smith Barney Smith Barney Concert Allocation 6,514,398.331 11.07%
Government Series Inc.
Securities Growth Portfolio PNC Bank, N.A.
Fund Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
Smith Barney Smith Barney Concert Allocation 2,301,243.019 21.87%
Growth Series Inc.
Opportunity Growth Portfolio PNC Bank, N.A.
Fund Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
PFS Shareholder Services 7,497,299.169 71.24%
Attn: Jay Barnhill
3100 Breckinridge Blvd
Duluth, GA 30199
Smith Barney Smith Barney Concert Allocation 4,063,610.543 10.09%
Investment Series Inc.
Grade Bond Growth Portfolio PNC Bank, N.A.
Fund Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
Smith Barney Smith Barney Concert Allocation 3,429,584.979 13.95%
Special Series Inc.
Equities High Growth Portfolio PNC Bank, N.A.
Fund Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
Smith Barney Concert Allocation 2,118,629.406 8.62%
Series Inc.
Growth Portfolio PNC Bank, N.A.
Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
</TABLE>

I-2
<PAGE>

<TABLE>
<CAPTION>
NAME AND AMOUNT OF
ADDRESS OF BENEFICIAL PERCENT
FUND BENEFICIAL OWNER OWNERSHIP OF FUND
---- ---------------- ---------- -------
<C> <S> <C> <C>
SMITH BARNEY INVESTMENT
TRUST
Smith Barney Smith Barney Concert Allocation 4,161,337.333 12.77%
Large Series Inc.
Capitalization High Growth Portfolio PNC Bank, N.A.
Growth Fund Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
Smith Barney Concert Allocation 2,586,765.779 7.94%
Series Inc.
Growth Portfolio PNC Bank, N.A.
Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
SMITH BARNEY Smith Barney Concert Allocation 2,821,215.072 6.53%
MANAGED Series Inc.
GOVERNMENTS Balanced Portfolio PNC Bank, N.A.
FUND INC. Attn: Beverly Timson
200 Stevens Drive Suite 440
Lester, PA 19113-1522
SMITH BARNEY MUNI FUNDS
Pennsylvania James J. Broussard 197,971.084 6.63%
Portfolio 530 Derwyn Road
Drexel Hill, PA 19026-1203
GREENWICH STREET SERIES FUND
Appreciation IDS Life Variable Account 5,476,698.746 78.76%
Portfolio For Shearson
Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
Equitable Life of Iowa 1,254,845.998 18.05%
Prime Elite
Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50306-9133
Diversified IDS Life Variable Account 4,824,546.223 95.59%
Strategic For Shearson
Income Attn: Unit 229
Portfolio IDS Tower 10
Minneapolis MN 55402
</TABLE>

<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
FUND OF BENEFICIAL OWNER OWNERSHIP OF FUND
---- ------------------- ---------- -------
<C> <S> <C> <C>
Emerging IDS Life Variable Account 1,063,735.680 98.96%
Growth For Shearson
Portfolio Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
Equity Income IDS Life Variable Account 2,931,346.503 100.00%
Portfolio For Shearson
Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
Equity Index IDS Life Variable Account 998,978.642 89.58%
Portfolio For Shearson
Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
The Travelers Insurance Co. 112,945.407 10.13%
Separate Account QPN 401 (k)-TIC
The Travelers Insurance Co.
Attn: Roger Ferland 5 MS
One Tower Square
Hartford CT 06183
Growth and IDS Life Variable Account 2,184,549.066 99.92%
Income For Shearson
Portfolio Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
Intermediate IDS Life Variable Account 1,320,565.482 99.18%
High Grade For Shearson
Portfolio Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
International IDS Life Variable Account 2,482,314.204 99.64%
Equity For Shearson
Portfolio Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
Money Market IDS Life Variable Account 5,104,848.744 97.57%
Portfolio For Shearson
Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
</TABLE>

I-3
<PAGE>

<TABLE>
<CAPTION>
NAME AND AMOUNT OF
ADDRESS OF BENEFICIAL PERCENT
FUND BENEFICIAL OWNER OWNERSHIP OF FUND
---- ---------------- ---------- -------
<C> <S> <C> <C>
Total Return The Travelers Insurance Co. 12,198,188.739 85.04%
Portfolio Attn: Roger Ferland
One Tower Square
Hartford CT 06183
IDS Life Variable Account 2,116,514.205 14.76%
For Shearson
Attn: Unit 229
IDS Tower 10
Minneapolis MN 55402
TRAVELERS SERIES FUND INC.
AIM Capital The Travelers Insurance Co. 15,991,258.575 100.00%
Appreciation Attn: Roger Ferland 5MS
Portfolio One Tower Square
Hartford, CT 06183
Alliance The Travelers Insurance Co. 26,153,412.317 100.00%
Growth Attn: Roger Ferland 5MS
Portfolio One Tower Square
Hartford, CT 06183
Van Kampen 9,883,657.766 100.00%
American The Travelers Insurance Co.
Capital Attn: Roger Ferland 5MS
Enterprise One Tower Square
Portfolio Hartford, CT 06183
GT Global The Travelers Insurance Co. 2,334,911.062 100.00%
Strategic Attn: Roger Ferland 5MS
Income One Tower Square
Portfolio Hartford, CT 06183
MFS Total The Travelers Insurance Co. 17,220,795.036 100.00%
Return Attn: Roger Ferland 5MS
Portfolio One Tower Square
Hartford, CT 06183
Putnam The Travelers Insurance Co. 9,881,455.509 100.00%
Diversified Attn: Roger Ferland 5MS
Income One Tower Square
Portfolio Hartford, CT 06183
Smith Barney The Travelers Insurance Co. 7,884,238.847 84.44%
High Income Attn: Roger Ferland 5MS
Portfolio One Tower Square
Hartford, CT 06183
Equitable Life of Iowa 1,440,368.531 15.43%
Prime Elite
Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50309-3828
</TABLE>
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
FUND OF BENEFICIAL OWNER OWNERSHIP OF FUND
---- ------------------- ---------- -------
<C> <S> <C> <C>
Smith Barney The Travelers Insurance Co. 12,556,926.069 78.24%
Income and Attn: Roger Ferland 5MS
Growth One Tower Square
Portfolio Hartford, CT 06183
Equitable Life of Iowa 3,423,306.889 21.33%
Prime Elite
Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50309-3828
Smith Barney The Travelers Insurance Co. 14,472,245.943 87.41%
International Attn: Roger Ferland 5MS
Equity One Tower Square
Portfolio Hartford, CT 06183
Equitable Life of Iowa 1,677,410.667 10.13%
Prime Elite
Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50309-3828
Smith Barney The Travelers Insurance Co. 89,268,743.794 85.72%
Money Market Attn: Roger Ferland 5MS
Portfolio One Tower Square
Hartford, CT 06183
Equitable Life of Iowa 14,307,038.639 13.74%
Prime Elite
Attn: Gina Keck M51
604 Locust Street
Des Moines IA 50309-3828
Smith Barney Attn: Roger Ferland 5MS 2,149,600.520 94.81%
Pacific Basin One Tower Square
Portfolio Hartford, CT 06183
Mutual Management Corp 117,659.581 5.19%
c/o Smith Barney Inc.
Attn: Tom Reynolds
388 Greenwich Street
New York, NY 10013
TBC Managed The Travelers Insurance Co. 2,751,446.127 100.00%
Income Attn: Roger Ferland 5MS
Portfolio One Tower Square
Hartford, CT 06183
</TABLE>

I-4