SMITH BARNEY AGGRESSIVE GROWTH FUND

There aren't too many funds around whose portfolio managers have been at the helm ever since the fund's inception, but Smith Barney Aggressive Growth Fund, (800-544-5445), is one of them. There also aren't too many 5-star funds with a history of low turnover rates making them attractive from a tax-efficiency point of view. Or, funds in which the name reads "Aggressive Growth" and Morningstar's risk assessment is "below average."

"The most misunderstood thing about this fund is with the name itself, " says Richard Freeman, portfolio manager of the Smith Barney Aggressive Growth Fund. "The word 'aggressive' really has that rapid turnover connotation but our turnover rate has averaged seven or eight percent for the last five years. And, what we've done is, the companies are clearly aggressive but we're managing them in a very prudent manner."

Prudent to Freeman means when he originally designed the portfolio back in 1983 it was with a buy-and-hold bent. So while he looks to invest in up and coming small- and mid-cap companies, his intent is to hold on to them as long as possible.

Currently there are about 70 stocks in the fund's portfolio. However, Freeman says that the real concentration is in the top 40 names and that "the top 10 names probably make upo about half of the assets in the fund." Here's more from him about how the fund is managed:

Q: Last year, when the average multi-cap growth fund was down over 11 percent, according to Lipper Inc., your fund closed the year up over 19 percent. What were you doing differently than other funds?

Freeman: We really weren't doing anything differently. In fact if you look at our turnover rate it was one percent last year which meant that the stocks we were buying in prior years just did very very well.

Q: And what are you doing this year?

Freeman: What we're basically doing is adding to the positions that we like.

Genzyme is a name that we've owned since the late 1980s. It's a biotech company, the stock sold off this year and we see that as an opportunity to add to our position.

Another is Micron Technology and it started out for us as a mid-cap company. We'd been very underweighted in technology stocks for the last couple of years because we found other stocks that had much better value points. I think what's happening in terms of the valuation of technology stocks--- particularly at the end of last year and into the first quarter of this year--- is many are no longer on everybody's wish list.

But, now that valuations have come down dramatically and earnings expectations down significantly too, people realize that we're in a very tough economic climate. We find this to be a particularly opportune time to be adding to stocks including technology names.

Q: Give me an idea of you find attractive about Micron?

Freeman: It's in a very competitive business, d-rams. Their market share a few years ago was five percent, its much higher now and I like to own companies that have increased their market share particularly during difficult economic times.

Q: Tell me more about your low turnover rate?

Freeman: Last year's turnover was really made up of a couple of takeovers and we were forced to sell. So it's almost a question of why does he hold on as opposed to why doesn't he sell them (stocks) very quickly. And the answer is , everyday I second guess myself and ask should we have taken money off the table?

But I keep coming back to the results that we've had over the past 18 years and that is trying to identify great trends and great companies. Trying to find the next Genetech, which we luckily found in Amgen. Then the next Amgen, and we've been very lucky with a company like IDEC Pharmaceuticals. It's always trying to own the next great growth company. And if management is heavily incentivised and remain substantial stock holders, as long as management is doing a good job, we'll let them have the money forever.

Q: What have you learned over the past 18 years about managing money for this fund?

Freeman: What I've learned is that no two markets are exactly the same. That's No.1. Then, volatility is so much greater today than when the fund first started. And, people make their biggest mistakes by saying, "Well this time it's different." Those are the most dangerous words that you could possibly ever say in the investment business because it really is never different. Stocks over time will track their earnings.

Smith Barney Aggressive Growth Fund:

SYMBOL SHRAX TOP HOLDINGS ACablevision Systems; Tyco Intl.; Comcast; Lehman Bros.; and United Health Care. PERFORMANCE Year-to-date through March 21, down 13.2.. In 2000, it as was up 19.2 percent and in 1999, up 63.7 percent. TOLL-FREE: 800-544-5445 WEBSITE www.salomonsmithbarney.com/mutualfunds