STATEMENT ON FORM N-1A

   As filed with the Securities and Exchange 
Commission  on May 29, 1997
------------------------------------------------------
----------------------------------

							Registration 
No. 33-2627 
								
	811-4551
------------------------------------------------------
----------------------------------
	U.S. SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C.  20549

	FORM N-1A

	REGISTRATION STATEMENT UNDER 
	THE SECURITIES ACT OF 1933    

[ ] Pre-Effective Amendment No.	[X] Post-Effective
	Amendment No. 41  

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

	Amendment No.  41  [X]     

	SMITH BARNEY EQUITY FUNDS
	(Exact name of Registrant as Specified in Charter)

	Area Code and Telephone Number: (212) 723-9218
	 388 Greenwich Street, New York, New York  10013
	(Address of Principal Executive Offices)  (Zip Code)

	Christina T. Sydor
	Secretary
	388 Greenwich Street New York, New York  10013
	(Name and Address of Agent for Service)
	
	copies to:

	Burton M. Leibert, Esq.
	Willkie Farr & Gallagher LLP
	One Citicorp Center
	153 East 53rd Street
	New York, NY  10022
	Approximate Date of Proposed Public Offering:
	As soon as possible after this Post-Effective 
Amendment
	becomes effective.


It is proposed that this filing become effective:

_____    Immediately upon filing pursuant to Rule 
485(b) 
    X      on May 31, 1997 pursuant to Rule 485(b) 
            60 days after filing pursuant to Rule 
485(a) 
_____  on -------------- pursuant to Rule 485(a)


The Registrant has previously filed a declaration of 
indefinite registration of its shares pursuant to Rule 
24f-2 under the Investment Company Act of 1940, as 
amended. Registrant's Rule 24f-2 Notice for the fiscal 
year ended January 31, 1997 was filed on April 7,1997 
as accession number 0000091155-97-000182


To Register Additional Securities under Reg. 270.24e-2

Title of				Share
securities				Amount
being				being
registered			registered

Concert Social
Awareness Fund			1,428,640

During the fiscal year ended January 31, 1997 the 
Concert Social Awareness Fund redeemed 4,861,345 
shares.


During its current fiscal year, the fund used 
3,432,705 shares it redeemed during its fiscal year 
ended January 31, 1997, for a reduction pursuant to 
rule 24f-2(c).

The fund is currently registering 1,428,640 shares.

During its current fiscal year, the fund filed no 
other post effective amendments for the purpose of 
reduction pursuant to Rule 24e-2(a).

SMITH BARNEY EQUITY FUNDS

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following 
pages and documents:

Front Cover

Contents Page

Cross-Reference Sheet

Part A - Prospectus

Part B - Statement of Additional Information

Part C - Other Information

Signature Page

Exhibits


	SMITH BARNEY EQUITY FUNDS

	FORM  N-1A CROSS REFERENCE SHEET
	Pursuant to Rule 495(a) Under the Securities Act of 
1933, as amended


Part A 
Item No						
	Prospectus Caption


1.	Cover Page					Cover Page

2.	Synopsis					Prospectus 
Summary 

3.	Condensed Financial Information		
	Financial Highlights;

4.	General Description of Registrant		
	Cover Page; Prospectus Summary;
							Investment 
Objective and Management
							Policies; 
Distributor; Additional
							Information

5.	Management of the Fund			
	Prospectus Summary; Management of 
							the Trust 
and the Fund; Distributor;
							Additional 
Information

6.	Capital Stock and Other Securities		
	Investment Objective and Management
							Policies; 
Dividends, Distributions
							and Taxes; 
Additional Information

7.	Purchase of Securities Being Offered	
	Valuation of Shares; Purchase of
							Shares; 
Exchange Privilege; Redemption
							of Shares; 
Minimum Account Size; 
							Distributor; 
Additional Information

8.	Redemption or Repurchase of Shares	
	Purchase of Shares; Redemption of 			
					Shares; Exchange 
Privilege

9.	Pending Legal Proceedings			Not 
Applicable


Part B 						
	Statement of Additional
Item No.						Information 
Caption


10.	Cover Page					Cover page

11.	Table of Contents				Contents

12.	General Information and History		
	Distributor; Additional Information

13.	Investment Objectives and Policies		
	Investment Objectives and Management
							Policies

14.	Management of the Fund			
	Management of the Trust and the Funds;
							Distributor

15.	Control Persons and Principal		
	Management of the Trust and the Funds
	Holders of Securities

16.	Investment Advisory and Other Services	
	Management of the Trust and the Funds;
							Distributor

17.	Brokerage Allocation			
	Investment Objectives and Management
							Policies; 
Distributor

18.	Capital Stock and Other Securities		
	Investment Objectives and Management
							Policies; 
Purchase of Shares;
							Redemption 
of Shares; Taxes

19.	Purchase, Redemption and Pricing		
	Purchase of Shares; Redemption of
	of Securities Being Offered		
	Shares; Valuation of Shares; Distributor;
							Exchange 
Privilege

20.	Tax Status					Taxes

21.	Underwriters				
	Distributor

22.	Calculation of Performance Data		
	Performance Data

23.	Financial Statements			
	Financial Statements


                                   Prospectus 
 
                                    Smith Barney
 
                                     Growth and 
                                       Income 
                                         Fund 
 
                                      May 31, 1997 
 
                               Prospectus begins on page one 
 
                             [LOGO] SMITH BARNEY MUTUAL FUNDS 
                                   INVESTING FOR YOUR FUTURE. 
                                                    EVERY DAY. 
<PAGE> 
    
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Prospectus                                                       May 31, 1997 
------------------------------------------------------------------------------ 
 
     Smith Barney Growth and Income Fund 
     388 Greenwich Street 
     New York, New York 10013 
     800-451-2010 
     
 
     Smith Barney Growth and Income Fund (the "Fund") seeks long-term 
capital 
growth and income by investing in income producing equity securities, 
including 
dividend-paying common stocks, securities that are convertible into common 
stocks and warrants. 
 
     The Fund is one of a number of funds, each having distinct investment 
objectives and policies, making up Smith Barney Equity Funds (the "Trust"). 
The 
Fund is an open-end management investment company commonly referred to 
as a 
mutual fund. 
 
     This Prospectus sets forth concisely certain information about the Fund and
 
the Trust, including sales charges, distribution and service fees and expenses, 
that prospective investors will find helpful in making an investment decision. 
Investors are encouraged to read this Prospectus carefully and retain it for 
future reference. Shares of the other funds offered by the Trust are described 
in separate prospectuses that may be obtained by calling the Trust at the 
telephone number set forth above or by contacting a Smith Barney Financial 
Consultant. 
 
    
     Additional information about the Fund and the Trust is contained in a 
Statement of Additional Information dated May 31, 1997, as amended or 
supplemented from time to time, that is available upon request and without 
charge by calling or writing the Trust at the telephone number or address set 
forth above or by contacting a Smith Barney Financial Consultant. The 
Statement 
of Additional Information has been filed with the Securities and Exchange 
Commission (the "SEC") and is incorporated by reference into this Prospectus 
in 
its entirety. 
     
 
Smith Barney Inc. 
Distributor 
 
Smith Barney Mutual Funds Management Inc. 
Investment Adviser and Administrator 
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED 
BY THE SECURITIES AND 
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION 
NOR HAS THE SECURITIES 
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 
COMMISSION PASSED UPON THE 
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY 
REPRESENTATION TO THE CONTRARY IS A 
CRIMINAL OFFENSE. 
 
 
                                                                               1
 
<PAGE> 
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Table of Contents 
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Prospectus Summary                                                         3
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Financial Highlights                                                      10 
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Investment Objective and Management Policies                              13 
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Valuation of Shares                                                       23 
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Dividends, Distributions and Taxes                                        24 
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Purchase of Shares                                                        25 
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Exchange Privilege                                                        35 
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Redemption of Shares                                                      38 
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Minimum Account Size                                                      41 
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Performance                                                               41 
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Management of the Trust and the Fund                                      42 
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Distributor                                                               43 
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Additional Information                                                    44 
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     No person has been authorized to give any information or to make any 
representations in connection with this offering other than those contained in 
this Prospectus and, if given or made, such other information or representations
 
must not be relied upon as having been authorized by the Trust or the 
distributor. This Prospectus does not constitute an offer by the Fund or the 
distributor to sell or a solicitation of an offer to buy any of the securities 
offered hereby in any jurisdiction to any person to whom it is unlawful to make 
such an offer or solicitation in such jurisdiction. 
------------------------------------------------------------------------------- 
 
 
2 
<PAGE> 
 
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Prospectus Summary 
------------------- ------------------------------------------------------ 
 
     The following summary is qualified in its entirety by detailed
information appearing elsewhere in this Prospectus and in the Statement of
Additional Information. Cross references in this summary are to headings in
the Prospectus. 
See "Table of Contents." 
 
     Investment Objective The Fund is an open-end, diversified, management 
investment company that seeks long-term capital growth and income by 
investing 
in income producing equity securities, including dividend-paying common 
stocks, 
securities that are convertible into common stocks and warrants. See 
"Investment 
Objective and Management Policies." 
 
     Alternative Purchase Arrangements The Fund offers several classes of 
shares 
("Classes") designed to provide investors with the flexibility of selecting an 
investment best suited to their needs. The general public is offered three 
Classes of shares: Class A shares, Class B shares and Class C shares which 
differ principally in terms of the sales charges and rates of expenses to which 
they are subject. A fourth Class of shares, Class Y shares, is offered only to 
investors meeting an initial investment minimum of $5,000,000. See "Purchase 
of 
Shares" and "Redemption of Shares." 
 
    
     Class A Shares. Class A shares are sold at net asset value plus an initial 
sales charge of up to 5.00% and are subject to an annual service fee of 0.25% of
the average daily net assets of the Class. The initial sales charge may be 
reduced or waived for certain purchases. Purchases of Class A shares of 
$500,000 
or more will be made at net asset value with no initial sales charge, but will 
be subject to a contingent deferred sales charge ("CDSC") of 1.00% on 
redemptions made within 12 months of purchase. See "Prospectus Summary - 
Reduced 
or No Initial Sales Charge." 
     
 
     Class B Shares. Class B shares are offered at net asset value subject to a 
maximum CDSC of 5.00% of redemption proceeds, declining by 1.00% each 
year after 
the date of purchase to zero. This CDSC may be waived for certain 
redemptions. 
Class B shares are subject to an annual service fee of 0.25% and an annual 
distribution fee of 0.50% of the average daily net assets of the Class. The 
Class B shares' distribution fee may cause that Class to have higher expenses 
and pay lower dividends than Class A shares. 
 
     Class B Shares Conversion Feature. Class B shares will convert 
automatically to Class A shares, based on relative net asset value, eight years 
after the date of the original purchase. Upon conversion, these shares will no 
longer be subject to an annual distribution fee. In addition, a certain portion 
of Class B shares that have been acquired through the reinvestment of 
dividends 
and distributions ("Class B Dividend Shares") will be converted at that time. 
See "Purchase of Shares - Deferred Sales Charge Alternatives." 
 
 
                                                                           3 
<PAGE> 
 
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Prospectus Summary (continued) 
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     Class C Shares. Class C shares are sold at net asset value with no initial 
sales charge. They are subject to an annual service fee of 0.25% and an annual 
distribution fee of 0.50% of the average daily net assets of the Class, and 
investors pay a CDSC of 1.00% if they redeem Class C shares within 12 
months of 
purchase. The CDSC may be waived for certain redemptions. The Class C 
shares' 
distribution fee may cause that Class to have higher expenses and pay lower 
dividends than Class A shares. Purchases of Fund shares, which when 
combined 
with current holdings of Class C shares of the Fund equal or exceed $500,000 
in 
the aggregate, should be made in Class A shares at net asset value with
no sales charge, and will be subject to a CDSC of 1.00% on redemptions made
within 12 months of purchase. 
 
     Class Y Shares. Class Y shares are available only to investors meeting an 
initial investment minimum of $5,000,000 (except for purchases of Class Y 
shares 
by Smith Barney Concert Series Inc., for which there is no minimum purchase 
amount). Class Y shares are sold at net asset value with no initial sales charge
or CDSC. They are not subject to any service or distribution fees. 
 
     In deciding which Class of Fund shares to purchase, investors should 
consider the following factors, as well as any other relevant facts and 
circumstances: 
 
     Intended Holding Period. The decision as to which Class of shares is more 
beneficial to an investor depends on the amount and intended length of his or 
her investment. Shareholders who are planning to establish a program of 
regular 
investment may wish to consider Class A shares; as the investment accumulates 
shareholders may qualify for reduced sales charges and the shares are subject to
lower ongoing expenses over the term of the investment. As an investment 
alternative, Class B and Class C shares are sold without any initial sales 
charge so the entire purchase price is immediately invested in the Fund. Any 
investment return on these additional invested amounts may partially or wholly 
offset the higher annual expenses of these Classes. Because the Fund's future 
return cannot be predicted, however, there can be no assurance that this would 
be the case. 
 
     Finally, investors should consider the effect of the CDSC period and any 
conversion rights of the Classes in the context of their own investment time 
frame. For example, while Class C shares have a shorter CDSC period than 
Class B 
shares, they do not have a conversion feature, and therefore, are subject to an 
ongoing distribution fee. Thus, Class B shares may be more attractive than 
Class 
C shares to investors with longer term investment outlooks. 
 
    
     Reduced or No Initial Sales Charge. The initial sales charge on Class A 
shares may be waived for certain eligible purchasers, and the entire purchase 
price will be  
     
 
 
4 
<PAGE> 
 
------------------------------------------------------------------------------ 
Prospectus Summary (continued) 
----------------------------------------------------------------------------- 
    
immediately invested in the Fund. In addition, Class A share purchases of 
$500,000 or more will be made at net asset value with no initial sales charge, 
but will be subject to a CDSC of 1.00% on redemptions made within 12 months 
of 
purchase. The $500,000 investment may be met by adding the purchase to the 
net 
asset value of all Class A shares offered with a sales charge held in funds 
sponsored by Smith Barney Inc. ("Smith Barney") listed under "Exchange 
Privilege." Other Class A share purchases may also be eligible for a reduced 
initial sales charge. See "Purchase of Shares." Because the ongoing expenses of 
Class A shares will be lower than those for Class B and Class C shares, 
purchasers eligible to purchase Class A shares at net asset value or at a 
reduced sales charge should consider doing so. 
     
 
     Smith Barney Financial Consultants may receive different compensation for 
selling different Classes of shares. Investors should understand that the 
purpose of the CDSC on the Class B and Class C shares is the same as that of 
the 
initial sales charge on the Class A shares. 
 
     See "Purchase of Shares" and "Management of the Trust and the Fund" for a 
complete description of the sales charges and service and distribution fees for 
each Class of shares and "Valuation of Shares," "Dividends, Distributions and 
Taxes" and "Exchange Privilege" for other differences between the Classes of 
shares. 
 
    
Smith Barney 401(k) and ExecChoice(TM) Programs Investors may be eligible 
to 
participate in the Smith Barney 401(k) Program, which is generally designed to 
assist plan sponsors in the creation or operation of retirement plans under 
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), 
as 
well as other types of participant directed, tax-qualified employee benefit 
plans. Investors may also be eligible to participate in the Smith Barney 
ExecChoice(TM) Program. Class A and Class C shares are available without a 
sales 
charge as investment alternatives under both plans. See "Purchase of 
Shares-Smith Barney 401(k) and ExecChoice(TM) Programs." 
 
Purchase of Shares Shares may be purchased through the Fund's distributor, 
Smith 
Barney, a broker that clears securities transactions through Smith Barney on a 
fully disclosed basis (an "Introducing Broker") or an investment dealer in the 
selling group. Direct purchases by certain retirement plans may be made 
through 
the Fund's transfer agent, First Data Investor Services Group, Inc. ("First 
Data"). See "Purchase of Shares." 
     
 
Investment Minimums Investors in Class A, Class B and Class C shares may 
open an 
account by making an initial investment of at least $1,000 for each account, or 
$250 for an individual retirement account ("IRA") or a self-employed 
retirement 
plan. Investors in Class Y shares may open an account for an initial 
 
 
                                                                     5<PAGE> 
 
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Prospectus Summary (continued) 
--------------------------------------------------------------------------- 
    
investment of $5,000,000. Subsequent investments of at least $50 may be made 
for 
all Classes. For participants in retirement plans qualified under Section 
403(b)(7) or Section 401(a) of the Code, the minimum initial investment 
requirement for Class A, Class B and Class C shares and the subsequent 
investment requirement for all Classes is $25. The minimum initial investment 
requirements for the purchases of Fund shares through the Systematic 
Investment 
Plan are described below. See "Purchase of Shares." 
 
Systematic Investment Plan The Fund offers shareholders a Systematic 
Investment 
Plan under which they may authorize the automatic placement of a purchase 
order 
each month or quarter for Fund shares. The minimum initial investment 
requirement for Class A, Class B and Class C shares and the subsequent 
investment requirement for all Classes for shareholders purchasing shares 
through the Systematic Investment Plan on a monthly basis is $25 and on a 
quarterly basis is $50. See "Purchase of Shares." 
     
 
Redemption of Shares Shares may be redeemed on each day the New York 
Stock 
Exchange, Inc. ("NYSE") is open for business. See "Redemption of Shares." 
 
Management of the Trust and the Fund Smith Barney Mutual Funds 
Management Inc. 
("SBMFM") serves as the Fund's investment adviser. SBMFM provides 
investment 
advisory and management services to investment companies affiliated with 
Smith 
Barney. SBMFM is a wholly owned subsidiary of Smith Barney Holdings Inc. 
("Holdings"). Holdings is a wholly owned subsidiary of Travelers Group Inc. 
("Travelers"), a diversified financial services company engaged through its 
subsidiaries, principally in four business segments: Investment Services, 
Consumer Finance Services, Life Insurance Services and Property & Casualty 
Insurance Services. SBMFM also serves as the Fund's administrator. See 
"Management of the Trust and the Fund." 
 
    
Exchange Privilege Shares of a Class may be exchanged for shares of the same 
class of certain other funds of the Smith Barney Mutual Funds at the respective 
net asset values next determined. See "Exchange Privilege Services." 
 
Valuation of Shares Net asset value of the Fund for the prior day is generally 
quoted daily in the financial section of most newspapers and is also available 
from a Smith Barney Financial Consultant. See "Valuation of Shares." 
     
 
Dividends and Distributions Dividends from net investment income are paid 
quarterly. Distributions of net realized capital gains, if any, are declared and
paid annually. See "Dividends, Distributions and Taxes." 
 
 
6 
<PAGE> 
 
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Prospectus Summary (continued) 
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Reinvestment of Dividends Dividends and distributions paid on shares of a 
Class 
will be reinvested automatically, unless otherwise specified by an investor, in 
additional shares of the same Class at current net asset value. Shares acquired 
by dividend reinvestments will not be subject to any sales charge or CDSC. 
Class 
B shares acquired through dividend and distribution reinvestments will become 
eligible for conversion to Class A shares on a pro rata basis. See "Dividends, 
Distributions and Taxes." 
 
Risk Factors and Special Considerations There can be no assurance that the 
Fund's investment objective will be achieved. The market value of fixed income 
securities, which may constitute a part of the investments of the Fund, may vary
inversely in response to changes in prevailing interest rates. The mortgage 
related securities in which the Fund may invest are sensitive to changes in 
interest rates and to prepayment of mortgages. The Fund may make certain 
investments and employ certain investment techniques that involve other risks, 
including entering into repurchase agreements, purchasing foreign securities, 
lending portfolio securities and entering into futures contracts and related 
options as hedges. These risks and those associated with when-issued and 
delayed-delivery transactions and covered option writing are described under 
"Investment Objective and Management Policies - Risk Factors and Special 
Considerations." 
 
 
                                                                           7 
<PAGE> 
 
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Prospectus Summary (continued) 
---------------------------------------------------------------------------- 
    
The Fund's Expenses The following expense table lists the costs and expenses 
and 
investor will incur either directly or indirectly as a shareholder of the Fund, 
based on the maximum sales charge or maximum CDSC that may be incurred 
at the 
time of purchase or redemption and the Fund's current operating expenses for 
its 
most recent fiscal year: 
 
<TABLE> 
<CAPTION> 
Growth and Income Fund                                 Class A   Class B   Class C   
Class Y 
-------------------------------------------------------------------------------------------- 
<S>                                                     <C>       <C>       <C>       <C>  
Shareholder Transaction Expenses 
     Maximum sales charge imposed on purchases 
     (as a percentage of offering price)                5.00%     None      None      
None 
     Maximum CDSC 
     (as a percentage of original cost or redemption 
proceeds, whichever is lower)                           None*     5.00%     1.00%     
None 
-------------------------------------------------------------------------------------------- 
Annual Fund Operating Expenses 
     (as a percentage of average net assets) 
     Management fees                                    0.65%     0.65%     0.65%     0.65% 
     12b-1 fees**                                       0.25      0.75      0.75      None 
     Other expenses                                     0.22      0.22      0.21      0.08 
-------------------------------------------------------------------------------------------- 
TOTAL FUND OPERATING EXPENSES                           1.12%     1.62%     
1.61%     0.73% 
========================================================
==================================== 
</TABLE> 
 
*    Purchases of Class A shares of $500,000 or more will be made at net asset 
     value with no sales charge, but will be subject to a CDSC of 1.00% on 
     redemptions made within 12 months of purchase. 
**   Upon conversion of Class B shares to Class A shares, such shares will no 
     longer be subject to a distribution fee. Class C shares do not have a 
     conversion feature and, therefore, are subject to an ongoing distribution 
     fee. As a result, long-term shareholders of Class C shares may pay more 
     than the economic equivalent of the maximum front-end sales charge 
     permitted by the National Association of Securities Dealers, Inc. 
 
     Class A shares of the Fund purchased through the Smith Barney AssetOne 
Program will be subject to an annual asset-based fee, payable quarterly,
in lieu of the initial sales charge. The fee will vary to a maximum of 1.50%,
depending on the amount of assets held through the Program. For more 
information, please call your Smith Barney Financial Consultant. 
 
     The sales charge and CDSC set forth in the above table are the maximum 
charges imposed on purchases or redemptions of Fund shares and investors 
may actually pay lower or no charges, depending on the amount purchased and,
in the case of Class B, Class C and certain Class A shares, the length of 
time the shares are held and whether the shares are held through the 
Smith Barney 401(k) and ExecChoice Programs. See "Purchase of Shares" 
and "Redemption of Shares." 
Smith Barney receives an annual 12b-1 service fee of .25% of the value of 
average daily net assets of Class A shares. Smith Barney also receives an 
annual 12b-1 fee of .75% of the value of average daily net assets of 
Class B and Class C shares, consisting of a .50% distribution fee and a 
 .25% service fee. "Other expenses" in the above table include fees for 
shareholder services, custodial fees, legal and accounting fees, 
printing costs and registration fees. 
     
 
 
8 
<PAGE> 
 
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Prospectus Summary (continued) 
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EXAMPLE The following example is intended to assist an investor in 
understanding 
the various costs that an investor in the Fund will bear directly or
indirectly. The example assumes payment by the Fund of operating expenses at 
the levels set forth in the table above. See "Purchase of Shares," 
"Redemption of Shares" and "Management of the Trust and the Fund." 
 
    
<TABLE> 
<CAPTION> 
Growth and Income Fund                        1 year  3 years   5 years   10 
years* 
========================================================
======================================== 
<S>                                        <C>      <C>      <C>         <C>  
An investor would pay the following expenses on a $1,000 
investment, assuming (1) 5.00% annual return and 
(2) redemption at the end of each time period: 
     Class A                               $61      $84      $109        $180 
     Class B                                66       81        98         178 
     Class C                                27       51        88         191 
     Class Y                                 7       23        41          91 
 
An investor would pay the following expenses on the 
same investment, assuming the same annual return and 
no redemption: 
     Class A                                 61       85       109         180 
     Class B                                 16       52        88         178 
     Class C                                 16       51        88         192 
     Class Y                                  7       23        41          91 
========================================================
======================================== 
</TABLE> 
     
 
*Ten-year figures assume conversion of Class B shares to Class A shares at the 
end of the eighth year following the date of purchase. 
 
     The example also provides a means for the investor to compare expense 
levels of funds with different fee structures over varying investment periods. 
To facilitate such comparison, all funds are required to utilize a 5.00% annual 
return assumption. However, the Fund's actual return will vary and may result 
in 
an actual return greater or less than 5.00%. This example should not be 
considered a representation of past or future expenses and actual expenses may 
be greater or less than those shown. 
 
 
                                                                              9 
<PAGE>                                 ----------------------------------- 
Financial Highlights 
----------------------------------------------------------------------- 
    
     The following information for the two years ended January 31, 1997 has 
been 
audited by KPMG Peat Marwick LLP, independent auditors, whose report 
thereon 
appears in the Fund's Annual Report dated January 31, 1997. The information 
for 
the years ended January 31, 1993 through January 31, 1995, has been audited 
by 
other independent auditors. The information set forth below should be read in 
conjunction with the financial statements and related notes that also appear in 
the Fund's Annual Report, which is incorporated by reference into the 
Statement 
of Additional Information. 
 
For a Class A share of beneficial interest outstanding throughout each year: 
 
<TABLE> 
<CAPTION> 
Growth and Income Fund              1997       1996(1)    1995       1994(1)    
1993(2) 
========================================================
========================================= 
<S>                         <C>        <C>        <C>        <C>        <C>     
Net Asset Value, Beginning of Year  $ 12.16    $  9.62    $ 10.36    $  9.58    
$  9.50 
-----------------------------------------------------------------------
- 
Income (Loss) From Operations: 
  Net investment income      0.19       0.20       0.20       0.20       0.01 
  Net realized and unrealized gain (loss)     2.33       2.74      (0.61)     
 0.81       
0.07 
-------------------------------------------------------------------------------
- 
Total Income (Loss) From Operations 2.52       2.94      (0.41)      1.01       
0.08 
----------------------------------------------------------------------------
- 
Less Distributions From: 
  Net investment income   (0.20)     (0.20)     (0.19)     (0.23)        -- 
  Net realized gains      (0.18)     (0.20)     (0.14)        --         -- 
----------------------------------------------------------------------------
- 
Total Distributions       (0.38)     (0.40)     (0.33)     (0.23)        -- 
-- -------------------------------------------------------------------------
- 
Net Asset Value, End of Year       $ 14.30    $ 12.16    $  9.62    $ 10.36    
$  9.58 
--------------------------------------------------------------------------
- 
Total Return++                     20.97%     30.97%     (3.93)%    10.70%      
0.84%++ 
----------------------------------------------------------------------------
- 
Net Assets, End of Year (In millions)$133    $   110    $    95    $     4      
3 
---------------------------------------------------------------------------
- 
Ratios to Average Net Assets: 
  Expenses                          1.12%      1.16%      1.41%      1.54%      
1.41%+ 
  Net investment income             1.48       1.77       1.86       2.00       
0.28+ 
--------------------------------------------------------------------------
- 
Portfolio Turnover Rate            9%        15%       127%        79%         
1% 
========================================================
========================================= 
Average Commissions Paid on 
Equity Security Transactions(3)$  0.06    $  0.06         --         --  
       -- 
========================================================
========================================= 
</TABLE> 
 
(1) Per share amounts have been calculated using the monthly average shares 
    method, which more appropriately presents per share data for this year, 
    since use of the undistributed net investment income method did not accord 
    with results of operations. 
(2) For the period from November 6, 1992 (inception date) to January 31, 1993. 
(3) As of September 1995, the SEC instituted new guidelines requiring the 
    disclosure of average commissions per share. 
++  Total return is not annualized, as it may not be representative of the 
    total return for the year. 
+   Annualized. 
++  Total return represents the aggregate total return for the period indicated 
    and does not reflect any applicable sales charge. 
     
 
 
10 
<PAGE> 
 
--------------------------------------------------------------------------- 
Financial Highlights (continued) 
--------------------------------------------------------------------------- 
    
For a Class B share of beneficial interest outstanding throughout each year: 
 
<TABLE> 
<CAPTION> 
Growth and Income Fund              1997     1996(1)    1995       1994(1)    
1993(2) 
========================================================
========================================= 
<S>                        <C>        <C>        <C>        <C>        <C>     
Net Asset Value,
 Beginning of Year         $ 12.19    $  9.65    $ 10.38    $  9.58 $  9.50 
---------------------------------------------------------------------------
- 
Income (Loss) From Operations 
  Net
investment income           0.13       0.14       0.17       0.15    (0.01) 
  Net realized
 and unrealized gain (loss) 2.34       2.75      (0.62)      0.80   0.09 
-----------------------------------------------------------------------------
 
Total Income
(Loss) From Operations      2.47       2.89      (0.45)      0.95   0.08 
----------------------------------------------------------------------------
 
Less Distributions From: 
  Net investment income    (0.15)     (0.15)     (0.14)     (0.15)        -- 
  Net realized gains       (0.18)     (0.20)     (0.14)        --         -- 
----------------------------------------------------------------------------
 
Total Distributions        (0.33)     (0.35)     (0.28)     (0.15)        -- 
----------------------------------------------------------------------------
 
<S>                         <C>        <C>        <C>        <C>        <C>     
Net Asset Value,
End of Year               $ 14.33    $ 12.19    $  9.65    $ 10.38 $  9.58 
-----------------------------------------------------------------------------
 
Total Return++             20.43%     30.23%     (4.33)%    10.01%   0.84%++ 
-----------------------------------------------------------------------------
 
Net Assets,
End of Year
(In millions)          $   137    $   112    $    92    $    68    $  35 
-----------------------------------------------------------------------------
 
Ratios to Average
Net Assets: 
Expenses                 1.62%      1.65%      1.90%      1.99%     1.91%+ 
  Net
investment income        0.98       1.27       1.38       1.55    (0.22)+ 
--------------------------------------------------------------------------
 
Portfolio
Turnover Rate               9%        15%       127%        79%   1% 
========================================================
========================================= 
Average Commissions
Paid on Equity
Security Transactions(3) $  0.06    $  0.06         --         --         -- 
========================================================
========================================= 
</TABLE> 
 
(1) Per share amounts have been calculated using the monthly average shares 
    method, which more appropriately presents per share data for this year, 
    since use of the undistributed net investment income method did not accord 
    with results of operations. 
(2) For the period from November 6, 1992 (inception date) to January 31, 1993. 
(3) As of September 1995, the SEC instituted new guidelines requiring the 
    disclosure of average commissions per share. 
++  Total return is not annualized, as it may not be representative of the 
    total return for the year. 
+   Annualized. 
++  Total return represents the aggregate total return for the period indicated 
    and does not reflect any applicable sales charge. 
     
 
                                                                           11 
<PAGE> 
 
 
---------------------------------------------------------------------------- 
Financial Highlights (continued) 
---------------------------------------------------------------------------- 
    
For a share of each class of beneficial interest outstanding throughout each 
year: 
 
<TABLE> 
<CAPTION> 
                               Class C Shares              Class Y Shares 
                           --------------------------        -------------- 
Growth
and Income Fund             1997     1996(1)   1995(2)      1997 1996(1)(3) 
========================================================
====================================== 
<S>                         <C>       <C>       <C>         <C>        <C>    
Net Asset Value,
Beginning of Year         $12.19    $ 9.65    $ 9.91      $ 12.16    $12.08 
----------------------------------------------------------------------------- 
Income (Loss)
From Operations: 
Net investment income      0.14      0.13      0.07         0.22        -- 
Net realized
and unrealized gain (loss) 2.33      2.76     (0.13)        2.36       0.08 
---------------------------------------------------------------------------- 
Total Income
(Loss) From Operations     2.47      2.89     (0.06)        2.58       0.08 
---------------------------------------------------------------------------- 
Less Distributions From: 
  Net investment income   (0.15)    (0.15)    (0.06)       (0.22)       -- 
  Net realized gains      (0.18)    (0.20)    (0.14)       (0.18)       -- 
---------------------------------------------------------------------------- 
Total Distributions      (0.33)    (0.35)    (0.20)       (0.40)       -- 
---------------------------------------------------------------------------- 
Net Asset Value,
End of Year               $14.33    $12.19    $ 9.65      $ 14.34   $12.16 
----------------------------------------------------------------------------- 
Total Return++             20.43%    30.23%    (0.58)%++    21.48%   N/A* 
----------------------------------------------------------------------------- 
Net Assets,
End of Year (000s)         $2,958    $  961    $   85      $78,192    $ 5 
---------------------------------------------------------------------------- 
Ratios to Average
Net Assets: 
Expenses                   1.61%     1.62%     1.83%+       0.73%    N/A* 
  Net investment income    0.94      1.11      1.44+        1.73     N/A* 
---------------------------------------------------------------------------- 
Portfolio Turnover Rate    9%       15%      127%           9%       15% 
============================================================================ 
Average Commissions
Paid on Equity Security
Transactions(4)          $ 0.06    $ 0.06      --      $  0.06    $ 0.06 
============================================================================= 
</TABLE> 
 
(1) Per share amounts have been calculated using the monthly average shares 
    method, which more appropriately presents per share data for this year, 
    since use of the undistributed net investment income method did not accord 
    with results of operations. 
(2) For the period from August 15, 1994 (inception date) to January 31, 1995. 
(3) Inception date is January 31, 1996. 
(4) As of September 1995, the SEC instituted new guidelines requiring the 
    disclosure of average commissions per share. 
*   Information is not meaningful since the class was only open for 1 day. 
++  Total return is not annualized, as it may not be representative of the 
    total return for the year. 
+   Annualized. 
++  Total return represents the aggregate total return for the period indicated 
    and does not reflect any applicable sales charge. 
     
 
 
12 
<PAGE> 
 
---------------------------------------------------------------------- 
Investment Objective and Management Policies 
---------------------------------------------------------------------- 
     INVESTMENT OBJECTIVE 
 
     The investment objective of the Fund is to seek income and long-term 
capital growth. The Fund's investment objective may be changed only with the 
approval of a majority of the Fund's outstanding shares. There can be no 
assurance that the Fund's investment objective will be achieved. 
 
    
     The Fund seeks to achieve its investment objective by investing in income 
producing equity securities, including dividend-paying common stocks, 
securities 
that are convertible into common stocks and warrants. SBMFM has developed 
quantitative investment criteria against which prospective investments will be 
evaluated and will make buy and sell decisions based on those criteria. Those 
criteria establish parameters for suitable investments and deal with such 
matters as market capitalization, credit quality, dividend growth, historic 
earnings, current yield and industry concentration. The criteria, which may be 
changed by SBMFM in light of its experience in managing the Fund or in 
response 
to changing market or economic conditions, are designed to identify companies 
with consistent dividend paying histories, relatively high levels of dividends, 
the capacity to raise dividends in the future and the potential for capital 
appreciation. Consistent with the data used in developing and maintaining the 
quantitative investment criteria, the Fund expects to invest primarily in 
domestic companies of varying sizes, generally with capitalizations exceeding 
$250 million in a wide range of industries. The Fund may also invest up to 
20% 
in the securities of foreign issuers, including American Depositary Receipts or 
European Depositary Receipts. Under normal market conditions, the Fund will 
invest substantially all - but not less than 65% - of its assets in equity 
securities. The Fund may invest the remainder of its assets in high grade money 
market instruments in order to develop income, as well as in corporate bonds 
and 
mortgage related securities that are rated investment grade or are deemed by 
SBMFM to be of comparable quality and in United States government 
securities, in 
furtherance of its objective of income and long-term capital growth. The Fund 
also may enter into repurchase agreements, invest in real estate investment 
trusts, lend portfolio securities, enter into interest rate and stock index 
futures and related options, purchase or sell securities on a when-issued or 
delayed-delivery basis and write covered options. 
     
 
     ADDITIONAL INVESTMENTS 
 
     Money Market Instruments. The Fund may, as a cash management tool, 
hold up 
to 20% of the value of its assets in cash and invest in short-term instruments 
and, when SBMFM believes that market conditions warrant, the Fund may 
adopt a 
temporary defensive posture and may hold cash and invest in short-term 
instruments without limitation. Short-term instruments in which the Fund may 
invest include securities issued or guaranteed by the United States government, 
its agencies or instrumentalities ("U.S. government securities");
obligations of banks 
 
                                                                           13 
<PAGE> 
 
----------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
----------------------------------------------------------------------------- 
    
having at least $1 billion in assets (including certificates of deposit, time 
deposits and bankers' acceptances of domestic or foreign banks, domestic 
savings 
and loan associations and similar institutions); commercial paper rated no 
lower 
than A-2 by Standard & Poor's Ratings Group ("S&P") or Prime-2 by Moody's 
Investors Service, Inc. ("Moody's") or the equivalent from another nationally 
recognized statistical rating organization ("NRSRO") or, if unrated, of an 
issuer having an outstanding, unsecured debt issue then rated within the two 
highest rating categories; and repurchase agreements with respect to any of the 
foregoing entered into with banks and non-bank dealers approved by the Trust's 
Board of Trustees. The NRSROs currently designated as such by the SEC are 
S&P, 
Moody's, Fitch Investors Service, Inc., Duff & Phelps Credit Rating Co., IBCA 
Limited and its affiliate, IBCA, Inc. and Thomson BankWatch. A more 
detailed 
discussion of the ratings of NRSROs is contained in the Statement ofAdditional 
Information. 
     
 
     U.S. Government Securities. The U.S. government securities in which the 
Fund may invest include: direct obligations of the United States Treasury (such 
as Treasury Bills, Treasury Notes and Treasury Bonds), and obligations issued 
by 
U.S. government agencies and instrumentalities, including securities that are 
supported by the full faith and credit of the United States (such as 
certificates issued by the Government National Mortgage Association); 
securities 
that are supported by the right of the issuer to borrow from the United States 
Treasury (such as securities of Federal Home Loan Banks); and securities that 
are supported only by the credit of the instrumentality (such as bonds 
issued by Federal National Mortgage Association and the Federal Home Loan 
Mortgage Corporation). Treasury Bills have maturities of less than one year, 
Treasury Notes have maturities of one to ten years and Treasury Bonds 
generally have maturities of greater than ten years at the date of issuance. 
 
     Convertible Securities. Convertible securities are fixed-income securities 
that may be converted at either a stated price or stated rate into underlying 
shares of common stock and therefore are deemed to be equity securities for 
purposes of the Fund's investment objective and techniques. Convertible 
securities have general characteristics similar to both fixed-income and equity 
securities Although to a lesser extent than with fixed-income securities 
generally, the market value of convertible securities tends to decline as 
interest rates increase and, conversely, tends to increase as interest rates 
decline. In addition, because of the conversion feature, the market value of 
convertible securities tends to vary with fluctuations in the market value of 
the underlying common stocks and, therefore, also will react to variations in 
the general market for equity securities. A unique feature of convertible 
securities is that as the market price of the underlying common stock declines, 
convertible securities tend to trade increasingly on a yield basis and so may 
not experience market value declines to the same extent as the underlying 
common 
stock. When the market price of the underlying common stock increases, 
 
 
14 
<PAGE> 
 
----------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
----------------------------------------------------------------------------- 
the prices of the convertible securities tend to rise as a reflection of the 
value of the underlying common stock. While no securities investments are 
without risk, investments in convertible securities generally entail less risk 
than investments in common stocks of the same issuer. 
 
     As fixed-income securities, convertible securities provide for a stable 
stream of income with generally higher yields than common stocks. Of course, 
like all fixed-income securities, convertible securities offer no assurance of 
current income because the issuers of the securities may default on their 
obligations. Convertible securities, however, generally offer lower interest or 
dividend yields than non-convertible securities of similar quality because of 
the potential for capital appreciation. A convertible security, in addition to 
providing fixed income, offers the potential for capital appreciation through 
the conversion feature, which enables the holder to benefit from increases in 
the market price of the underlying common stock. There can be no assurance of 
capital appreciation, however, because securities prices fluctuate. 
 
     Convertible securities generally are subordinated to other similar but 
non-convertible securities of the same issuer, although convertible bonds, as 
corporate debt obligations, enjoy seniority in right of payment to all equity 
securities, and convertible preferred stock is senior to common stock of the 
same issuer. Because of the subordination feature, however, convertible 
securities typically have lower ratings than similar non-convertible 
securities. 
 
     INVESTMENT STRATEGIES AND TECHNIQUES 
 
     In attempting to achieve its investment objective, the Fund may employ, 
among others, one or more of the strategies and techniques set forth below. The 
Fund is under no obligation to use any of the strategies or techniques at any 
given time or under any particular economic condition. More detailed 
information 
concerning these strategies and techniques and their related risks is contained 
in the Statement of Additional Information. 
 
     Repurchase Agreements. The Fund may enter into repurchase agreements 
with 
banks which are the issuers of instruments acceptable for purchase by the Fund 
and with certain dealers on the Federal Reserve Bank of New York's list of 
reporting dealers. Under the terms of a typical repurchase agreement, the Fund 
would acquire an underlying debt obligation for a relatively short period 
(usually not more than seven days), subject to an obligation of the seller to 
repurchase, and the Fund to resell, the obligation at an agreed-upon price and 
time, thereby determining the yield during the Fund's holding period. This 
arrangement results in a fixed rate of return that is not subject to market 
fluctuations during the Fund's holding period. The value of the underlying 
securities will be monitored on an ongoing basis by SBMFM to ensure that the 
value is at least equal at all times to the total amount of the repurchase 
obligation, including interest. The Fund bears a risk of loss in the 
 
                                                                           15 
<PAGE> 
 
----------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
----------------------------------------------------------------------------- 
event that the other party to a repurchase agreement defaults on its 
obligations and the Fund is delayed or prevented from exercising its 
rights to dispose of the collateral securities, including the risk of 
a possible decline in the value of the underlying securities during 
the period in which the Fund seeks to assert these rights. SBMFM, 
acting under the supervision of the Trust's Board of 
Trustees, reviews on an ongoing basis the value of the collateral and the 
creditworthiness of those banks and dealers with which the Fund enters into 
repurchase agreements to evaluate potential risks. 
 
    
     Zero Coupon Securities. The Fund may purchase zero coupon bonds which 
are 
bonds that pay no interest in cash to their holder during their life, although 
interest is accrued during that period. A zero coupon bond's value to an 
investor consists of the difference between its face value at the time of 
maturity and the price for which it was acquired, which is generally an amount 
significantly less than its face value (sometimes referred to as a "deep 
discount" price). Because such securities usually trade at a deep discount, 
they will be subject to greater fluctuations of market value in response to 
changing interest rates than debt obligations of comparable maturities which 
make periodic distributions of interest. On the other hand, because 
there are no periodic interest payments to be reinvested prior to maturity, 
zero coupon securities eliminate reinvestment risk and lock in a rate 
of return to maturity. 
     
 
     Lending of Securities. The Fund has the ability to lend portfolio 
securities to brokers, dealers and other financial organizations. By lending 
its securities, the Fund can increase its income by continuing to receive 
interest on the loaned securities as well as by either investing the cash 
collateral in short-term instruments or obtaining yield in the form of 
interest paid by the borrower when U.S. government securities are used as 
collateral. Loans of portfolio securities, if and when made, by the Fund may 
not exceed 331 1/43% of the Fund's total assets, taken at value. 
Loans of portfolio securities will be collateralized by cash, letters of 
credit or U.S. government securities, which are maintained at all times in 
an amount equal to the current market value of 
the loaned securities. Any gain or loss in the market price of the securities 
loaned that might occur during the term of the loan would be for the account of 
the Fund. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional 
collateral or in the recovery of the securities or possible loss of 
rights in the collateral should the borrower fail financially. Loans will 
be made to firms deemed by SBMFM to be of good standing and will not be 
made unless, in the judgment of SBMFM the consideration to be earned from 
such loans would justify the risk. 
 
     Futures and Options on Futures. When deemed advisable by SBMFM, the 
Fund 
may enter into interest rate futures contracts, stock index futures contracts 
and related options that are traded on a domestic exchange or board of trade. 
These transactions will be made solely for the purpose of hedging against the 
effects of changes in the value of portfolio securities due to anticipated 
changes in interest 
 
 
16 
<PAGE> 
 
----------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
----------------------------------------------------------------------------- 
rates, market conditions and currency values, as the case may be. All futures 
and options contracts will be entered into only when the transactions are 
economically appropriate to the reduction of risks inherent in the management 
of 
the Fund. 
 
    
    An interest rate futures contract provides for the future sale by one party 
and the purchase by the other party of a specified amount of a particular 
financial instrument (debt security) at a specified price, date, time and 
place. Similarly, a foreign currency futures contract provides for the 
future sale by one party and the purchase by another party of a certain 
amount of a particular currency at a specified price, date, time and place 
Stock index futures contracts are based on indexes that reflect the market 
value of common stock of the companies included in the indexes. An index 
futures contract is an agreement pursuant to which two parties agree 
to take or make delivery of an amount of cash equal to the difference 
between the value of the index at the close of the 
last trading day of the contract and the price at which the index contract was 
originally entered into. An option on an interest rate, stock index or currency 
futures contract gives the purchaser the right, in return for the premium paid, 
to assume a position in a futures contract (a long position if the option is a 
call and a short position if the option is a put) at a specified exercise price 
at any time prior to the expiration date of the option. 
     
 
     The use of futures contracts and options on futures contracts as a hedging 
device involves several risks. There can be no assurance that there will be a 
correlation between price movements in the underlying securities, index or 
currency, on the one hand, and price movements in the securities that are the 
subject of the hedge, on the other hand. Positions in futures contracts and 
options on futures contracts may be closed out only on the exchange or board of 
trade on which they were entered into, and there can be no assurance that an 
active market will exist for a particular contract or option at any particular 
time. 
 
     With respect to long positions in futures or options on futures, the Fund 
will set aside cash, short-term U.S. debt obligations or other U.S. dollar 
denominated high quality short-term money market instruments in an amount 
equal 
to the underlying commodity value of those positions. 
 
     When-Issued Securities and Delayed-Delivery Transactions. The Fund may 
purchase and sell securities on a when-issued basis, which calls for the 
purchase (or sale) of securities at an agreed-upon price on a specified future 
date The Fund will enter into a when-issued transaction for the purpose of 
acquiring portfolio securities and not for the purpose of leverage. In such 
transactions, delivery of the securities occurs beyond the normal settlement 
periods, but no payment or delivery is made by, and no interest accrues to, the 
Fund prior to the actual delivery or payment by the other party to the 
transaction. Due to fluctuations in the value of securities purchased or sold 
on a when-issued or delayed-delivery basis, the returns obtained on such 
securities may be higher or lower than the returns available in the market 
 
                                                                            17 
<PAGE> 
----------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
----------------------------------------------------------------------------- 
    
on the dates when the investments are actually delivered to the buyers. The 
Fund 
will establish a segregated account consisting of cash debt securities of any 
grade or equity securities, having a value equal to or greater than the Fund's 
purchase commitments, provided such securities have been determined by 
SBMFM to 
be liquid and unencumbered, and are marked to market daily pursuant to 
guidelines established by the Trustees ("eligible segregate assets"). Placing 
securities rather than cash in the segregated account may have a leveraging 
effect on the Fund's net assets. The Fund will not accrue income with 
respect to a when-issued security prior to its stated delivery date. 
     
 
     Covered Option Writing. The Fund may write put and call options on 
securities. The Fund realizes fees (referred to as "premiums") for granting the 
rights evidenced by the options. A put option embodies the right of its 
purchaser to compel the writer of the option to purchase from the option holder 
an underlying security at a specified price at any time during the option 
period. In contrast, a call option embodies the right of its purchaser to 
compel the writer of the option to sell to the option holder an underlying 
security at a specified price at any time during the option period. Thus, 
the purchaser of a put option written by the Fund has the right to compel 
the Fund to purchase from it the underlying security at the agreed-upon 
price for a specified time period, while the purchaser of a call option 
written by the Fund has the right to purchase from the Fund the underlying 
security owned by the Fund at the agreed-upon price for a specified time 
period. 
 
    Upon the exercise of a put option written by the Fund, the Fund may suffer 
a loss equal to the difference between the price at which the Fund is required 
to purchase the underlying security plus the premium received for writing the 
option and its market value at the time of the option exercise. Upon the 
exercise of a call option written by the Fund, the Fund may suffer a loss equal 
to the difference between the security's market value at the time of the option 
exercise less the premium received for writing the option and the Fund's 
acquisition cost of the security. 
 
    
     The Fund will write only covered options. Accordingly, whenever the Fund 
writes a call option, it will continue to own or have the present right to 
acquire the underlying security for as long as it remains obligated as the 
writer of the option. To support its obligation to purchase the underlying 
security if a put option is exercised, the Fund will either (a) deposit with 
PNC Bank, National Association ("PNC"), the Trust's custodian, in a segregated 
account, eligible segregate assets having a value at least equal to the 
exercise price of the underlying securities or (b) continue to own an 
equivalent number of puts of the same "series" (that is, puts on the same 
underlying security having the same exercise prices and expiration dates as 
those written by the Fund) or an equivalent number of puts of the same 
"class" (that is, puts on the same underlying security) with exercise prices 
greater than      
 
 
18 
<PAGE> 
 
------------------------------------------------------------------------------ 
Investment Objective and Management Policies (continued) 
------------------------------------------------------------------------------ 
those that it has written (or, if the exercise prices of the puts that it holds 
are less than the exercise prices of those that it has written, it will deposit 
the difference with PNC in a segregated account). 
 
     The Fund may engage in a closing purchase transaction to realize a profit, 
to prevent an underlying security from being called or put or, in the case of a 
call option, to unfreeze an underlying security (thereby permitting its sale or 
the writing of a new option on the security prior to the outstanding option's 
expiration). To effect a closing purchase transaction, the Fund would purchase, 
prior to the holder's exercise of an option that the Fund has written, an 
option of the same series as that on which the Fund desires to terminate its 
obligation. The obligation of the Fund under an option that it has written 
would be terminated by a closing purchase transaction, but the Fund would 
not be deemed to own an option as the result of the transaction. There can 
be no assurance that the Fund will be able to effect closing purchase 
transactions at a time when it wishes to do so. To facilitate closing 
purchase transactions, however, the Fund ordinarily will write options only 
if a secondary market for the options exists on a domestic securities 
exchange or in the over-the-counter market.  
 
     The staff of the SEC considers most over-the-counter options to be 
illiquid. The ability to terminate option positions established in the 
over-the-counter market may be more limited than in the case of exchange-
traded 
options and may also involve the risk that securities dealers participating in 
such transactions would fail to meet their obligations to the Fund. 
 
     Reverse Repurchase Agreements. In order to generate additional income, 
the 
Fund may engage in reverse repurchase agreement transactions with banks, 
broker-dealers and other financial intermediaries. Reverse repurchase 
agreements 
are the same as repurchase agreements except that, in this instance, the Fund 
would assume the role of seller/borrower in the transaction. The Fund will 
maintain segregated accounts with PNC consisting of U.S. government 
securities, 
cash or money market instruments that at all time are in an amount equal to 
their obligations under reverse repurchase agreements. The Fund will invest the 
proceeds in other money market instruments or repurchase agreements 
maturing not 
later than the expiration of the reverse repurchase agreement. Reverse 
repurchase agreements involve the risk that the market value of the securities 
sold by the Fund may decline below the repurchase price of the securities. 
 
     RISK FACTORS AND SPECIAL CONSIDERATIONS 
 
     Investing in the Fund involves special considerations, such as those 
described below: 
 
     Foreign Securities. There are certain risks involved in investing in 
securities of companies and governments of foreign nations which are in 
addition 
to the usual 
 
                                                                           19 
<PAGE> 
 
---------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
---------------------------------------------------------------------------- 
risks inherent in domestic investments. These risks include those resulting 
from revaluation of currencies, future adverse political and economical 
developments and the possible imposition of currency exchange blockages or 
other foreign governmental laws or restrictions, reduced availability of 
public information concerning issuers and the lack of uniform accounting, 
auditing and financial reporting standards or of other regulatory practices 
and requirements comparable to those applicable to domestic companies. 
The yield of the Fund may be adversely affected by fluctuations in value of 
one or more foreign currencies relative to the U.S. dollar. Moreover, 
securities of many foreign companies and their markets may be less liquid 
and their prices more volatile than those of securities of comparable 
domestic companies. In addition, with respect to 
certain foreign countries, there is the possibility of expropriation, 
nationalization, confiscatory taxation and limitations on the use or removal of 
funds or other assets of the Fund, including the withholding of dividends. 
Foreign securities may be subject to foreign government taxes that could reduce 
the yield on such securities. Because the Fund may invest in securities 
denominated or quoted in currencies other than the U.S. dollar, changes in 
foreign currency exchange rates may adversely affect the value of portfolio 
securities and the appreciation or depreciation of investments. Investment in 
foreign securities also may result in higher expenses due to the cost of 
converting foreign currency to U.S. dollars, the payment of fixed brokerage 
commissions on foreign exchanges, which generally are higher than 
commissions on 
domestic exchanges, and the expense of maintaining securities with foreign 
custodians, and the imposition of transfer taxes or transaction charges 
associated with foreign exchanges. 
 
     Fixed-Income Securities. The market value of the Fund's fixed-income 
obligations can be expected to vary inversely in relation to changes in 
prevailing interest rates and also may be affected by other market and credit 
factors. Investors also should recognize that in periods of declining interest 
rates the yield of an income-oriented fund such as the Fund may be somewhat 
higher than prevailing market rates, and in periods of rising interest rates 
the Fund's yield may be somewhat lower. In addition, when interest rates are 
falling, the inflow of net new money to the Fund from the continuous sale of 
its shares probably will be invested in instruments producing lower yields 
than the balance of its holdings, thereby reducing the Fund's current yield. 
In periods of rising interest rates the opposite can be expected to occur. 
In addition, fixed-income securities in which the Fund may invest may not 
yield as high a level of current income as might be achieved by investing in 
securities with less liquidity and safety and longer maturities. 
 
     To the extent the Fund purchases mortgage related securities at a premium, 
mortgage foreclosures and prepayments of principal by mortgagors (which may 
be 
 
 
20 
<PAGE> 
 
---------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
---------------------------------------------------------------------------- 
made at any time without penalty) may result in some loss of the Fund's 
principal investment to the extent of the premium paid. The yield of a fund 
that invests in mortgage related securities may be affected by reinvestment of 
prepayments at higher or lower rates than the original investment. In addition, 
like those of other debt securities, the values of mortgage related securities, 
including government and government-related mortgage pools, generally will 
fluctuate in relation to interest rates. 
 
     CERTAIN INVESTMENT GUIDELINES 
 
   Up to 15% of the assets of the Fund may be invested in securities and other 
instruments that are illiquid ("illiquid securities"), although the Fund has no 
present intention to invest more than 10% of its assets in the aggregate in 
illiquid securities, including (a) repurchase agreements with maturities 
greater than seven days, (b) futures contracts and options thereon for which 
a liquid secondary market does not exist, (c) time deposits maturing in more 
than seven calendar days and (d) securities of new and early stage companies 
whose securities are not publicly traded. In addition, the Fund may invest up 
to 5% of its assets in the securities of issuers that have been in continuous 
operation for less than three years. 
 
     INVESTMENT RESTRICTIONS 
 
     The Trust has adopted certain fundamental investment restrictions with 
respect to the Fund that may not be changed without approval of a majority of 
the Fund's outstanding voting securities, as defined in the Investment Company 
Act of 1940, as amended ("1940 Act"). Included among those fundamental 
restrictions are the following that prohibit the Fund 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 U.S. government, or purchase 
          more than 10% of the outstanding voting securities of such issuer. 
 
     2.   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% 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. Whenever borrowings, including reverse 
          repurchase agreements, exceed 5% of the value of the total assets of 
          the Fund, the Fund will not make any additional investments. 
 
                                                                          21 
<PAGE> 
 
---------------------------------------------------------------------------- 
Investment Objective and Management Policies (continued) 
---------------------------------------------------------------------------- 
 
    3.   Making 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, (b) the entering into 
          repurchase agreements, and (c) the making of loans of its portfolio 
          securities. 
 
    4.   Investing 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 
         members of any industry. 
 
    
     A complete list of investment restrictions that the Trust has adopted with 
respect to the Fund identifying additional restrictions that cannot be changed 
without the approval of a majority of the Fund's outstanding shares is 
contained in the Statement of Additional Information. 
     
 
     PORTFOLIO TRANSACTIONS AND TURNOVER 
 
     Securities held by the Fund ordinarily are purchased from and sold to 
parties acting as either principal or agent. Newly-issued securities ordinarily 
are purchased directly from the issuer or from an underwriter; other purchases 
and sales usually are placed with those dealers from which it appears that the 
best price or execution will be obtained. Usually no brokerage commissions, as 
such, are paid by the Fund for purchases and sales undertaken through 
principal 
transactions, although the price paid usually includes an undisclosed 
compensation to the dealer acting as principal. The prices paid to underwriters 
of newly-issued securities usually include a concession paid by the issuer to 
the underwriter, and purchases of after-market securities from dealers 
ordinarily are executed at a price between the bid and asked price. 
 
     Transactions on behalf of the Fund are allocated to various brokers and 
dealers by SBMFM in its best judgment. The primary consideration is prompt 
and 
effective execution of orders at the most favorable price. Subject to that 
primary consideration, brokers and dealers, including Smith Barney, may be 
selected for research, statistical or other services to enable SBMFM to 
supplement its own research and analysis with the views and information of 
other 
securities firms. The Fund may, from time to time, in accordance with an 
exemptive order granted by the SEC, enter into principal transactions involving 
certain money market instruments with Smith Barney and certain Smith 
Barney 
affiliated dealers. 
 
     The Fund cannot accurately predict its portfolio turnover rate, but 
anticipates that its annual turnover will not exceed 50%. An annual turnover 
rate of 50% would occur if half of the securities held by the Fund are replaced 
once during a period of one year. SBMFM will not consider turnover rate a 
limiting factor in making investment decisions consistent with the Fund's 
investment objective and policies. 
 
 
22 
<PAGE> 
 
----------------------------------------------------------------------------- 
Valuation of Shares 
---------------------------------------------------------------------------- 
     The Fund's net asset value per share is determined as of the close of 
regular trading on the NYSE on each day that the NYSE is open, by dividing 
the 
value of the Fund's net assets attributable to each Class by the total number 
of shares of the Class outstanding. 
 
     Generally, the Fund's investments are valued at market value or, in the 
absence of a market value, at fair value as determined by or under the 
direction of the Trust's Board of Trustees. Portfolio securities that are 
primarily traded on foreign exchanges are generally valued at the preceding 
closing values of such securities on their respective exchanges, except that 
when an occurrence subsequent to the time a value was so established is 
likely to have changed such value, then the fair market value of those 
securities will be determined by consideration of other factors by or under 
the direction of the Trustees or its delegates. A security that is traded 
primarily on a domestic or foreign stock exchange is valued at the last sale 
price on that exchange or, if there were no sales during the day, at the 
current quoted bid price. Debt securities (other than U.S. government 
securities and short-term obligations) are valued by SBMFM 
after consultation with independent pricing services approved by the Trustees. 
Investments in U.S. government securities (other than short-term securities) 
are valued at the average of the quoted bid and asked prices in the 
over-the-counter market. Short-term investments that mature in 60 days or 
less are valued at amortized cost (which involves valuing an investment 
instrument at its cost and, thereafter, assuming a constant amortization to 
maturity of any discount or premium, regardless of the effect of fluctuating 
interest rates on the market value of the instrument) whenever the Trustees 
determine that amortized cost reflects fair value of those investments. 
An option written by the Fund is generally valued at the last sale price or, 
in the absence of the last sale price, the last offer price. An option 
purchased by the Fund is generally valued at the last sale price or, in the 
absence of the last sale price, the last bid price. Short sales of 
securities, which are not traded on a national securities 
exchange, are valued at the last asked price. Alternatively, long positions are 
valued at the last bid price. The value of a futures contract equals the 
unrealized gain or loss on the contract that is determined by marking the 
contract to the current settlement price for a like contract on the valuation 
date of the futures contract. A settlement price may not be used if the market 
makes a limit move with respect to a particular futures contract or if the 
securities underlying the futures contract experience significant price 
fluctuations after the determination of the settlement price. In such event, 
the futures contract will be valued at a fair market price as determined by 
or under the direction of the Board of Trustees. Further information 
regarding the Fund's valuation policies is contained in the Statement of 
Additional Information. 
 
 
                                                                           23 
<PAGE> 
 
---------------------------------------------------------------------------- 
Dividends, Distributions, and Taxes 
---------------------------------------------------------------------------- 
     DIVIDENDS AND DISTRIBUTIONS 
 
     The Fund's policy is to distribute its net investment income (that is, its 
income other than its net realized capital gains) quarterly, and to declare and 
pay its net realized capital gains, if any, once a year, normally at the end of 
the year in which earned or at the beginning of the next year. 
 
     If a shareholder does not otherwise instruct, dividends and capital gains 
distributions will be reinvested automatically in additional shares of the same 
Class at net asset value, subject to no sales charge or CDSC. In order to avoid 
the application of a 4% nondeductible excise tax on certain undistributed 
amounts of ordinary income and capital gains, the Fund may make an 
additional 
distribution shortly before December 31 in each year of any undistributed 
ordinary income or capital gains and expects to pay any other dividends and 
distributions necessary to avoid the application of this tax. 
 
     The per share dividends on Class B and Class C shares of the Fund may be 
lower than the per share dividends on Class A and Class Y shares principally 
as 
a result of the distribution fee applicable with respect to Class B and Class C 
shares. The per share dividends on Class A shares of the Fund may be lower 
than 
the per share dividends on Class Y shares principally as a result of the 
service 
fee applicable to Class A shares. Distributions of capital gains, if any, will 
be in the same amount for Class A, Class B, Class C and Class Y shares. 
 
     TAXES 
 
     The Fund will be treated as a separate taxpayer with the result that, for 
Federal income tax purposes, the amount of its net investment income and 
capital 
gains earned will be determined without regard to the earnings on distributions 
of the other funds of the Trust. The Trust intends for the Fund to qualify each 
year as a regulated investment company under the Code. Dividends paid from 
the 
Fund's net investment income and distributions of the Fund's net realized 
short-term capital gains are taxable to shareholders (other than IRAs, 
self-employed retirement plans and other tax-exempt investors) as ordinary 
income, regardless of how long shareholders have held their Fund shares and 
whether the dividends or distributions are received in cash or reinvested in 
additional Fund shares. Distributions of the Fund's net realized long-term 
capital gains will be taxable to shareholders as long-term capital gains, 
regardless of how long shareholders have held Fund shares and whether the 
distributions are received in cash or reinvested in additional Fund shares. In 
addition, as a general rule, a shareholder's gain or loss on a sale or 
redemption of shares of the Fund will be a long-term capital gain or loss if 
the shareholder has held the shares for more than one year and will be a 
short-term capital gain or loss if the shareholder has held the shares for 
one year or less. Some of the Fund's dividends declared from net investment 
income may qualify for the Federal dividends-received deduction for 
corporations. 
 
 
24 
<PAGE> 
 
----------------------------------------------------------------------------- 
Dividends, Distributions, and Taxes (continued) 
---------------------------------------------------------------------------- 
     Income received by the Fund from sources within foreign countries may be 
subject to withholding and other foreign taxes. The payment of such taxes will 
reduce the amount of dividends and distributions paid to the Fund's 
shareholders. If (a) the Fund qualifies as a regulated investment company, (b) 
certain distribution requirements are satisfied and (c) more than 50% of the 
value of the Fund's assets at the close of the taxable year consist of 
securities of foreign corporations, the Trust may elect, for Federal income tax 
purposes, to treat foreign income taxes paid by the Fund that can be treated as 
income taxes under Federal income tax principles as paid by the Fund's 
shareholders. The Fund may qualify for, and the Trust may make, this election 
in 
some, but not necessarily all, of the Fund's taxable years. If the Trust were
to make an election, an amount equal to the foreign income taxes paid by the 
Fund would be included in the income of its shareholders and the 
shareholders would be entitled to credit their portions of this amount 
against their Federal tax liabilities, if any, or to deduct such portions 
from their Federal taxable income, if any. Shortly after any year for which 
the Trust makes such an 
election, the Trust will report to the Fund's shareholders, in writing, the 
amount per share of such foreign tax that must be included in each 
shareholder's 
gross income and the amount that will be available for deduction or credit. No 
deduction for foreign taxes may be claimed by a shareholder who does not 
itemize 
deductions. Certain limitations will be imposed on the extent to which the 
credit (but not the deduction) for foreign taxes may be claimed. 
 
     Statements as to the tax status of each shareholder's dividends and 
distributions are mailed annually. Each shareholder also will receive, if 
appropriate, various written notices after the close of the Fund's prior 
taxable year as to the Federal income tax status of his or her dividends and 
distributions which were received from the Fund during the Fund's prior 
taxable 
year. Shareholders should consult their tax advisors about the status of the 
Fund's dividends and distributions for Federal, state and local tax 
liabilities. 
 
----------------------------------------------------------------------------- 
Purchase of Shares 
---------------------------------------------------------------------------- 
 
     GENERAL 
 
    
     The Fund offers four Classes of shares. Class A shares are sold to 
investors with an initial sales charge and Class B and Class C shares are sold 
without an initial sales charge but with higher ongoing expenses and a CDSC 
payable upon certain redemptions. Class Y shares are sold without an initial 
sales charge or CDSC, and are available only to investors investing a minimum 
of 
$5,000,000 (except for purchases of Class Y shares by Smith Barney Concert 
Allocation Series Inc., for which there is no minimum purchase amount). See 
"Prospectus Summary - Alternative Purchase Arrangements" for a discussion of 
factors to consider in selecting which Class of shares to purchase. 
     
 
                                                                           25 
<PAGE> 
 
---------------------------------------------------------------------------- 
Purchase of Shares (continued) 
---------------------------------------------------------------------------- 
    
     Purchases of shares must be made through a brokerage account maintained 
with Smith Barney, an Introducing Broker or an investment dealer in the 
selling 
group, except for investors purchasing shares of the Fund through a qualified 
retirement plan who may do so directly through First Data. When purchasing 
shares of the Fund, investors must specify whether the purchase is for Class A, 
Class B, Class C or Class Y shares. Smith Barney and other broker/dealers may 
charge their customers an annual account maintenance fee in connection with a 
brokerage account through which an investor purchases or holds shares. 
Accounts 
held directly at First Data are not subject to a maintenance fee. 
 
     Investors in Class A, Class B and Class C shares may open an account by 
making an initial investment of at least $1,000 for each account, or $250 
for an 
IRA or a self-employed retirement plan, in the Fund. Investors in Class Y 
shares 
may open an account by making an initial investment of $5,000,000. 
Subsequent 
investments of at least $50 may be made for all Classes. For participants in 
retirement plans qualified under Section 403(b)(7) or Section 401(a) of the 
Code, the minimum initial investment requirement for Class A, Class B and 
Class 
C shares and the subsequent investment requirement for all Classes in the Fund 
is $25. For shareholders purchasing shares of the Fund through the Systematic 
Investment Plan, on a monthly basis the minimum initial investment 
requirement 
for Class A, Class B and Class C shares and the subsequent investment 
requirement for all Classes is $25. For shareholders purchasing shares of the 
Fund through the Systematic Investment Plan on a quarterly basis, the 
minimum 
initial investment requirement for Class A, Class B, and Class Cshares and the 
subsequent investment requirement for all Classes if $50. There are no 
minimum 
investment requirements for Class A shares, for employees of Travelers and its 
subsidiaries, including Smith Barney or Trustees of the Trust and their spouses 
and children. The Fund reserves the right to waive or change minimums, to 
decline any order to purchase its shares and to suspend the offering of shares 
from time to time. Shares purchased will be held in the shareholder's account 
by 
the Trust's transfer agent, First Data. Share certificates are issued only upon 
a shareholder's written request to First Data. 
     
 
     Purchase orders received by the Fund or Smith Barney prior to the close of 
regular trading on the NYSE, on any day on which the Fund calculates its net 
asset value, are priced according to the net asset value determined on that 
day. 
Orders received by dealers or Introducing Brokers, prior to the close of 
regular trading on the NYSE on any day the Fund calculates its net asset 
value, are priced according to the net asset value determined on that day, 
provided the order is received by the Fund or Smith Barney prior to Smith 
Barney's close of business (the "trade date"). For shares
purchased through Smith Barney or 
Introducing Brokers purchasing through Smith Barney, payment for Fund 
shares is due on the third business day after the trade date. In all other 
cases, payment must be made with the purchase order. 
 
 
26 
<PAGE> 
 
---------------------------------------------------------------------------- 
Purchase of Shares (continued) 
---------------------------------------------------------------------------- 
 
     SYSTEMATIC INVESTMENT PLAN 
 
    
     Shareholders may make additions to their accounts at any time by 
purchasing 
shares through a service known as the Systematic Investment Plan. Under the 
Systematic Investment Plan, Smith Barney or First Data is authorized through 
preauthorized transfers of at least $25 on a monthly basis or at least $50 on a 
quarterly basis to charge the regular bank account or other financial 
institution indicated by the shareholder on a monthly or quarterly basis to 
provide systematic additions to the shareholder's Fund account. A shareholder 
who has insufficient funds to complete the transfer will be charged a fee of up 
to $25 by Smith Barney or First Data. The Systematic Investment Plan also 
authorizes Smith Barney to apply cash held in the shareholder's Smith Barney 
brokerage account or redeem the shareholder's shares of a Smith Barney money 
market fund to make additions to the account. Additional information is 
available from the Fund or a Smith Barney Financial Consultant. 
     
 
     INITIAL SALES CHARGE ALTERNATIVE - CLASS A SHARES 
 
   The sales charges applicable to purchases of Class A shares of the Fund are 
as follows: 
 
    
                         Sales Charge as    Sales Charge as       Dealers 
                              % of            % of Amount     Reallowance as 
Amount of Investment     Offering Price        Invested     % of Offering Price 
----------------------------------------------------------------------------- 
Less than $25,000             5.00%              5.26%             4.50% 
$25,000-$49,999               4.00               4.17              3.60 
$50,000-$99,999               3.50               3.63              3.15 
$100,000-$249,999             3.00               3.09              2.70 
$250,000-$499,999             2.00               2.04              1.80 
$500,000 and more               *                  *                 * 
========================================================
======================== 
* Purchases of Class A shares of $500,000 or more will be made at net asset 
  value without any initial sales charge, but will be subject to a CDSC of 
  1.00% on redemptions made within 12 months of purchase. The CDSC on 
Class A 
  shares is payable to Smith Barney, which compensates Smith Barney 
Financial 
  Consultants and other dealers whose clients make purchases of $500,000 or 
  more. The CDSC is waived in the same circumstances in which the CDSC 
  applicable to Class B and Class C shares is waived. See "Deferred Sales 
  Charge Alternatives" and "Waivers of CDSC." 
     
 
     Members of the selling group may receive up to 90% of the sales charge and 
may be deemed to be underwriters of the Fund as defined in the Securities Act 
of 
1933, as amended. 
 
    
     The reduced sales charges shown above apply to the aggregate of purchases 
of Class A shares of the Fund made at one time by "any person," which 
includes 
an individual and his or her immediate family, or a trustee or other fiduciary 
of a single trust estate or single fiduciary account. 
     
 
                                                                           27 
<PAGE> 
 
---------------------------------------------------------------------------- 
Purchase of Shares (continued) 
--------------------------------------------------------------------------- 
     INITIAL SALES CHARGE WAIVERS 
 
    
     Purchases of Class A shares may be made at net asset value without a sales 
charge in the following circumstances: (a) sales to (i) Board Members and 
employees of Travelers and its subsidiaries and any of the Smith Barney Mutual 
Funds (including retired Board Members and employees); the immediate 
families of 
such persons (including the surviving spouse of a deceased Board Member or 
employee); and to a pension, profit-sharing or other benefit plan for such 
persons and (ii)employees of members of the National Association of Securities 
Dealers, Inc., provided such sales are made upon the assurance of the purchaser 
that the purchase is made for investment purposes and that the securities will 
not be resold except through redemption or repurchase. (b) offers of Class A 
shares to any other investment company to effect the combination of such 
company 
with the Fund by merger, acquisition of assets or otherwise; (c) purchases of 
Class A shares by any client of a newly employed Smith Barney Financial 
Consultant (for a period up to 90 days from the commencement of the Financial 
Consultant's employment with Smith Barney), on the condition the purchase of 
Class A shares is made with the proceeds of the redemption of shares of a 
mutual 
fund which (i) was sponsored by the Financial Consultant's prior employer, (ii) 
was sold to the client by the Financial Consultant and (iii) was subject to a 
sales charge; (d) purchases by shareholders who have redeemed Class A shares 
in 
the Fund (or Class A shares of another fund of the Smith Barney Mutual Funds 
that are offered with a sales charge) and who wish to reinvest their redemption 
proceeds in the Fund provided the reinvestment is made within 60 calendar 
days 
of the redemption; (e) purchases by accounts managed by registered investment 
advisory subsidiaries of Travelers; (f) direct rollovers by plan participants
of distributions from a 401(k) plan offered to employees of Travelers or its 
subsidiaries or a 401(k)plan enrolled in the Smith Barney 401(k) Program 
(Note:subsequent investments will be subject to the applicable sales charge); 
(g) purchases by separate accounts used to fund certain unregistered variable 
annuity contracts; and (h) purchases by investors participating in a Smith 
Barney fee-based arrangement. In order to obtain such discounts, the purchaser 
must provide sufficient information at the time of purchase to permit 
verification that the purchaser would qualify for the elimination of the sales 
charge. 
     
 
     RIGHT OF ACCUMULATION 
 
     Class A shares of the Fund may be purchased by "any person" (as defined 
above) at a reduced sales charge or at net asset value determined by 
aggregating the dollar amount of the new purchase and the total net asset 
value of all Class A shares of the Fund and of funds sponsored by 
Smith Barney that are offered with a sales charge listed under 
"Exchange Privilege" then held by such person 
and applying the sales charge applicable to such aggregate. In order to obtain 
such discount, the purchaser must provide sufficient information at the time of 
purchase to permit 
 
 
28 
<PAGE> 
 
----------------------------------------------------------------------------- 
Purchase of Shares (continued) 
----------------------------------------------------------------------------- 
verification that the purchase qualifies for the reduced sales charge. 
The right of accumulation is subject to modification or discontinuance at 
any time with respect to all shares purchased thereafter. 
 
     GROUP PURCHASES 
 
     Upon completion of certain automated systems, a reduced sales charge or 
purchase at net asset value will also be available to employees (and partners) 
of the same employer purchasing as a group, provided each participant makes 
the 
minimum initial investment required. The sales charge applicable to purchases 
by 
each member of such a group will be determined by the table set forth above 
under "Initial Sales Charge Alternative - Class A Shares," and will be based 
upon the aggregate sales of Class A shares of Smith Barney Mutual Funds 
offered 
with a sales charge to, and share holdings of, all members of the group. To be 
eligible for such reduced sales charges or to purchase at net asset value, all 
purchases must be pursuant to an employer- or partnership-sanctioned plan 
meeting certain requirements. One such requirement is that the plan must be 
open 
to specified partners or employees of the employer and its subsidiaries, if 
any. 
Such plan may, but is not required to, provide for payroll deductions, IRAs or 
investments pursuant to retirement plans under Sections 401 or 408 of the 
Code. 
Smith Barney may also offer a reduced sales charge or net asset value purchase 
for aggregating related fiduciary accounts under such conditions that Smith 
Barney will realize economies of sales related expenses. An individual who is a 
member of a qualified group may also purchase Class A shares of the Fund at 
the 
reduced sales charge applicable to the group as a whole. The sales charge is 
based upon the aggregate dollar value of Class A shares offered with a sales 
charge that have been previously purchased and are still owned by the group, 
plus the amount of the current purchase. A "qualified group" is one which (a) 
has been in existence for more than six months, (b) has a purpose other than 
acquiring Fund shares at a discount and (c) satisfies uniform criteria which 
enable Smith Barney to realize economies of scale in its costs of distributing 
shares. A qualified group must have more than 10 members, must be available 
to 
arrange for group meetings between representatives of the Fund and the 
members, 
and must agree to include sales and other materials related to the Fund in its 
publications and mailing to members at no cost to Smith Barney. In order to 
obtain such reduced sales charge or to purchase at net asset value, the 
purchaser must provide sufficient information at the time of purchase to permit 
verification that the purchase qualifies for the reduced sales charge. Approval 
of group purchase reduced sales charge plans is subject to the discretion of 
Smith Barney. 
 
     LETTER OF INTENT 
 
     Class A Shares. A Letter of Intent for amounts of $50,000 or more provides 
an opportunity for an investor to obtain a reduced sales charge by aggregating 
 
                                                                           29 
<PAGE> 
 
---------------------------------------------------------------------------- 
Purchase of Shares (continued) 
---------------------------------------------------------------------------- 
investments over a 13 month period, provided that the investor refers to such 
Letter when placing orders. For purposes of a Letter of Intent, the "Amount of 
Investment" as referred to in the preceding sales charge table includes 
purchases of all Class A shares of the Fund and other funds of the Smith 
Barney 
Mutual Funds offered with a sales charge over the 13 month period based on 
the 
total amount of intended purchases plus the value of all Class A shares 
previously purchased and still owned. An alternative is to compute the 13 
month 
period starting up to 90 days before the date of execution of a Letter of 
Intent. Each investment made during the period receives the reduced sales 
charge 
applicable to the total amount of the investment goal. If the goal is not 
achieved within the period, the investor must pay the difference between the 
sales charges applicable to the purchases made and the charges previously paid, 
or an appropriate number of escrowed shares will be redeemed. Please contact a 
Smith Barney Financial Consultant or First Data to obtain a Letter of Intent 
application. 
 
     Class Y Shares. A Letter of Intent may also be used as a way for investors 
to meet the minimum investment requirement for Class Y shares. Such 
investors 
must make an initial minimum purchase of $1,000,000 of Class Y shares of the 
Fund and agree to purchase a total of $5,000,000 of Class Y shares of the same 
Fund within six months from the date of the Letter. If a total investment of 
$5,000,000 is not made within the six-month period, all Class Y shares 
purchased 
to date will be transferred to Class A shares, where they will be subject to 
all fees (including a service fee of 0.25%) and expenses applicable to the 
Fund's Class A shares, which may include a CDSC of 1.00%. The Fund expects that 
such 
transfer will not be subject to Federal income taxes. Please contact a Smith 
Barney Financial Consultant or First Data for further information. 
 
     DEFERRED SALES CHARGE ALTERNATIVES 
 
    
     "CDSC Shares" are sold at net asset value next determined without an 
initial sales charge so that the full amount of an investor's purchase payment 
may be immediately invested in the Fund. A CDSC, however, may be imposed 
on 
certain redemptions of these shares. "CDSC Shares" are: (a) Class B shares; (b) 
Class C shares; and (c) Class A shares that were purchased without an initial 
sales charge but subject to a CDSC. 
     
 
     Any applicable CDSC will be assessed on an amount equal to the lesser of 
the original cost of the shares being redeemed or their net asset value at the 
time of redemption. CDSC Shares that are redeemed will not be subject to a 
CDSC 
to the extent that the value of such shares represents: (a) capital 
appreciation of Fund assets; (b) reinvestment of dividends or capital gain 
distributions; (c) 
with respect to Class B shares, shares redeemed more than five years after 
their purchase; or (d) with respect to Class C shares and Class A shares that 
are CDSC Shares, shares redeemed more than 12 months after their purchase. 
 
 
30 
<PAGE> 
 
---------------------------------------------------------------------------- 
Purchase of Shares (continued) 
---------------------------------------------------------------------------- 
    
     Class C shares and Class A shares that are CDSC Shares are subject to a 
1.00% CDSC if redeemed within 12 months of purchase. In circumstances in 
which 
the CDSC is imposed on Class B shares, the amount of the charge will depend 
on 
the number of years since the shareholder made the purchase payment from 
which 
the amount is being redeemed. Solely for purposes of determining the number 
of 
years since a purchase payment, all purchase payments made during a month 
will 
be aggregated and deemed to have been made on the last day of the preceding 
Smith Barney statement month. The following table sets forth the rates of the 
charge for redemptions of Class B shares by shareholders, except in the case of 
Class B shares held under the Smith Barney 401(k) Program, as described 
below. 
See "Purchase of Shares - Smith Barney 401(k) and Exec Choice(TM) 
Programs." 
 
            Year Since Purchase 
            Payment was Made                                      CDSC 
========================================================
======================== 
            First                                                  5.00% 
            Second                                                 4.00 
            Third                                                  3.00 
            Fourth                                                 2.00 
            Fifth                                                  1.00 
            Sixth and thereafter                                   0.00 
========================================================
======================== 
     Class B shares automatically will convert to Class A shares eight years 
after the date on which they were purchased and thereafter will no longer be 
subject to any distribution fees. There also will be converted at that time 
such proportion of Class B Dividend Shares owned by the shareholder as the 
total number of his or her Class B shares converting at the time bears to 
the total number of outstanding Class B shares (other than Class B Dividend 
Shares) owned by the shareholder. See "Prospectus Summary - Alternative 
Purchase Arrangements 
- Class B Shares Conversion Feature." 
     
 
     The length of time that CDSC Shares acquired through an exchange have 
been 
held will be calculated from the date that the shares exchanged were initially 
acquired in one of the other Smith Barney Mutual Funds, and Fund shares 
being 
redeemed will be considered to represent, as applicable, capital appreciation 
or dividend and capital gain distribution reinvestments in such other funds. 
For Federal income tax purposes, the amount of the CDSC will reduce the gain or 
increase the loss, as the case may be, on the amount realized on redemption. 
The 
amount of any CDSC will be paid to Smith Barney. 
 
     To provide an example, assume an investor purchased 100 Class B shares at 
$10 per share for a cost of $1,000. Subsequently, the investor acquired five 
additional shares through dividend reinvestment. During the 15th month after 
the 
purchase, the investor decided to redeem $500 of the investment. Assuming at 
the 
time of the redemption the net asset value had appreciated to $12 per share, 
the 
value of the investor's shares would be $1,260 (105 shares at $12 per share). 
The  
 
                                                                           31 
<PAGE> 
 
---------------------------------------------------------------------------- 
Purchase of Shares (continued) 
---------------------------------------------------------------------------- 
CDSC would not be applied to the amount which represents appreciation 
($200) and 
the value of the reinvested dividend shares ($60). Therefore, $240 of the $500 
redemption proceeds ($500 minus $260) would be charged at a rate of 4.00% 
(the 
applicable rate for Class B shares) for a total deferred sales charge of $9.60. 
 
     WAIVERS OF CDSC 
 
    
     The CDSC will be waived on: (a) exchanges (see "Exchange Privilege"); (b) 
automatic cash withdrawals in amounts equal to or less than 1% per month of 
the 
value of the shareholder's shares at the time the withdrawal plan commences 
(see 
"Automatic Cash Withdrawal Plan") provided, however, that automatic cash 
withdrawals in amounts equal to or less than 2% per month of the value of the 
shareholder's shares will be permitted for withdrawal plans that were 
established prior to November 7, 1994; (c) redemptions of shares within 12 
months following the death or disability of the shareholder; (d) redemption of 
shares made in connection with qualified distributions from retirement plans or 
IRAs upon the attainment of age 591/2; (e) involuntary redemptions; and (f) 
redemptions of shares to effect a combination of the Fund with any investment 
company by merger, acquisition of assets or otherwise. In addition, a 
shareholder who has redeemed shares from other funds of the Smith Barney 
Mutual 
Funds may, under certain circumstances, reinvest all or part of the redemption 
proceeds within 60 days and receive pro rata credit for any CDSC imposed on 
the 
prior redemption. 
     
 
     CDSC waivers will be granted subject to confirmation (by Smith Barney in 
the case of shareholders who are also Smith Barney clients or by First Data in 
the case of all other shareholders) of the shareholder's status or holdings, as 
the case may be. 
 
    
     SMITH BARNEY 401(K) AND EXECCHOICE(TM) PROGRAMS 
 
    Investors may be eligible to participate in the Smith Barney 401(k) Program 
or the Smith Barney ExecChoice(TM) Program. To the extent applicable, the 
same 
terms and conditions, which are outlined below, are offered to all plans 
participating ("Participating Plans") in these programs. 
 
     The Fund offers to Participating Plans Class A and Class C shares as 
investment alternatives under the Smith Barney 401(k) and ExecChoice(TM) 
Programs. Class A and Class C shares acquired through the Participating Plans 
are subject to the same service and/or distribution fees as the Class A and 
Class C shares acquired by other investors; however, they are not subject to 
any initial sales charge or CDSC. Once a Participating Plan has made an initial 
investment in the Fund, all of its subsequent investments in the Fund must be 
in 
the same Class of shares, except as otherwise described below. 
     
 
 
32 
<PAGE> 
 
----------------------------------------------------------------------------- 
Purchase of Shares (continued) 
----------------------------------------------------------------------------- 
    
     Class A Shares. Class A shares of the Fund are offered without any sales 
charge or CDSC to any Participating Plan that purchases $1,000,000 or more of 
Class A shares of one or more funds of the Smith Barney Mutual Funds. 
 
     Class C Shares. Class C shares of the Fund are offered without any sales 
charge or CDSC to any Participating Plan that purchases less than $1,000,000 
of 
Class C shares of one or more funds of the Smith Barney Mutual Funds. 
 
     401(k) and ExecChoice(TM) Plans Opened On or After June 21, 1996. If, at 
the end of the fifth year after the date the Participating Plan enrolled in the 
Smith Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program, 
a 
Participating Plan's total Class C holdings in all non-money market Smith 
Barney 
Mutual Funds equal at least $1,000,000, the Participating Plan will be offered 
the opportunity to exchange all of its Class C shares for Class A shares of the 
Fund. (For Participating Plans that were originally established through a Smith 
Barney retail brokerage account, the five year period will be calculated from 
the date the retail brokerage account was opened.) Such Participating Plans 
will be notified of the pending exchange in writing within 30 days after the 
fifth anniversary of the enrollment date and, unless the exchange offer has 
been rejected in writing, the exchange will occur on or about the 90th day 
after the fifth anniversary date. If the Participating Plan does not qualify 
for the five year exchange to Class A shares, a review of the Participating 
Plan's holdings will be performed each quarter until either the 
Participating Plan qualifies or the end of the eighth year. 
 
     401(k) Plans Opened Prior to June 21, 1996. In any year after the date a 
Participating Plan enrolled in the Smith Barney 401(k) Program, if its total 
Class C holdings in all non-money market Smith Barney Mutual Funds equal 
at 
least $500,000 as of the calendar year-end, the Participating Plan will be 
offered the opportunity to exchange all of its Class C shares for Class A 
shares of the Fund. Such Plans will be notified in writing within 30 days 
after the 
last business day of the calendar year and, unless the exchange offer has been 
rejected in writing, the exchange will occur on or about the last business day 
of the following March. 
 
     Any Participating Plan in the Smith Barney 401(k) or ExecChoice(TM) 
Program, whether opened before or after June 21, 1996, that has not previously 
qualified for an exchange into Class A shares will be offered the opportunity
to exchange all of its Class C shares for Class A shares of the Fund 
regardless of asset size, at the end of the eighth year after the date the 
Participating Plan enrolled in the Smith Barney 401(k) or ExecChoice(TM) 
Program. Such Plans will be notified of the pending exchange in writing 
approximately 60 days before the 
eighth anniversary of the enrollment date and, unless the exchange has been 
rejected in writing, the exchange will occur on or about the eighth anniversary 
date. Once an exchange has occurred, a Participating Plan will not be eligible 
to acquire additional Class C shares of the 
     
 
                                                                           33 
<PAGE> 
 
---------------------------------------------------------------------------- 
Purchase of Shares (continued) 
---------------------------------------------------------------------------- 
    
Fund but instead may acquire Class A shares of the Fund. Any Class C shares 
not 
converted will continue to be subject to the distribution fee. 
 
    Participating Plans wishing to acquire shares of the Fund through the Smith 
Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program must 
purchase 
such shares directly from First Data. For further information regarding these 
Programs, investors should contact a Smith Barney Financial Consultant. 
 
     Existing 401(k) Plans Investing in Class B Shares. Class B shares of the 
Fund are not available for purchase by Participating Plans opened on or after 
June 21, 1996, but may continue to be purchased by any Participating Plan in 
the 
Smith Barney 401(k) Program opened prior to such date and originally 
investing 
in such Class. Class B shares acquired are subject to a CDSC of 3.00% of 
redemption proceeds, if the Participating Plan terminates within eight years of 
the date the Participating Plan first enrolled in the Smith Barney 401(k) 
Program. 
 
     At the end of the eighth year after the date the Participating Plan 
enrolled in the Smith Barney 401(k) Program, the Participating Plan will be 
offered the opportunity to exchange all of its Class B shares for Class A 
shares 
of the Fund. Such Participating Plan will be notified of the pending exchange 
in 
writing approximately 60 days before the eighth anniversary of the enrollment 
date and, unless the exchange has been rejected in writing, the exchange will 
occur on or about the eighth anniversary date. Once the exchange has occurred, 
a 
Participating Plan will not be eligible to acquire additional Class B shares of 
the Fund but instead may acquire Class A shares of the Fund. If the 
Participating Plan elects not to exchange all of its Class B shares at that 
time, each Class B share held by the Participating Plan will have the same 
conversion feature as Class B shares held by other investors. See "Purchase of 
Shares -- Deferred Sales Charge Alternatives." 
 
     No CDSC is imposed on redemptions of Class B shares to the extent that the 
net asset value of the shares redeemed does not exceed the current net asset 
value of the shares purchased through reinvestment of dividends or capital gain 
distributions, plus the current net asset value of Class B shares purchased 
more than eight years prior to the redemption, plus increases in the net 
asset value of the shareholder's Class B shares above the purchase payments 
made during the preceding eight years. Whether or not the CDSC applies to the 
redemption by a Participating Plan depends on the number of years since the 
Participating Plan first became enrolled in the Smith Barney 401(k) Program, 
unlike the applicability of the CDSC to redemptions by other shareholders, 
which depends on the number of years since those shareholders made the 
purchase payment from which the amount is being redeemed. 
 
     The CDSC will be waived on redemptions of Class B shares in connection 
with 
lump-sum or other distributions made by a Participating Plan as a result of: 
(a) 
the retirement of an employee in the Participating Plan; (b) the termination of 
employment of an employee in the Participating Plan; (c) the death or 
disability 
     
 
 
34 
<PAGE> 
 
----------------------------------------------------------------------------- 
Purchase of Shares (continued) 
 ---------------------------------------------------------------------------- 
    
of an employee in the Participating Plan; (d) the attainment of age 591 1/42 by 
an employee in the Participating Plan; (e) hardship of an employee in the 
Participating Plan to the extent permitted under Section 401(k) of the Code; or 
(f) redemptions of shares in connection with a loan made by the Participating 
Plan to an employee. 
     
 
------------------------------------------------------------------------------ 
Exchange Privilege 
------------------------------------------------------------------------------ 
 
    
     Except as otherwise noted below, shares of each Class may be exchanged at 
the net asset value next determined for shares of the same Class in the 
following funds of the Smith Barney Mutual Funds, to the extent shares are 
offered for sale in the shareholder's state of residence. Exchanges of Class A, 
Class B and Class C shares are subject to minimum investment requirements 
and 
all shares are subject to the other requirements of the fund into which 
exchanges are made. 
     
 
     FUND NAME 
     Growth Funds 
     Smith Barney Aggressive Growth Fund Inc. 
     Smith Barney Appreciation Fund Inc. 
     Smith Barney Fundamental Value Fund Inc. 
     Smith Barney Growth Opportunity Fund 
     Smith Barney Managed Growth Fund 
     Smith Barney Natural Resources Fund 
     Smith Barney Special Equities Fund 
 
    
     Growth and Income Funds 
     Concert Social Awareness Fund 
     Smith Barney Convertible Fund 
     Smith Barney Funds, Inc.--Equity Income Portfolio 
     Smith Barney Premium Total Return Fund 
     Smith Barney Utilities Fund 
 
     Taxable Fixed-Income Funds 
   * Smith Barney Adjustable Rate Government Income Fund 
     Smith Barney Diversified Strategic Income Fund 
 +++ Smith Barney Funds, Inc.--Short-Term U.S. Treasury Securities Portfolio 
     Smith Barney Funds, Inc.--U.S. Government Securities Portfolio 
     Smith Barney Government Securities Fund 
     Smith Barney High Income Fund 
     Smith Barney Investment Grade Bond Fund 
     Smith Barney Managed Governments Fund Inc. 
     
 
                                                                           35 
<PAGE> 
 
---------------------------------------------------------------------------- 
Exchange Privilege (continued) 
---------------------------------------------------------------------------- 
    
     Tax-Exempt Funds 
     Smith Barney Arizona Municipals Fund Inc. 
     Smith Barney California Municipals Fund Inc. 
  ** Smith Barney Intermediate Maturity California Municipals Fund 
  ** Smith Barney Intermediate Maturity New York Municipals Fund 
     Smith Barney Managed Municipals Fund Inc. 
     Smith Barney Massachusetts Municipals Fund 
     Smith Barney Muni Funds--Florida Portfolio 
     Smith Barney Muni Funds--Georgia Portfolio 
 **  Smith Barney Muni Funds--Limited Term Portfolio 
     Smith Barney Muni Funds--New York Portfolio 
     Smith Barney Muni Funds--Pennsylvania Portfolio 
     Smith Barney New Jersey Municipals Fund Inc. 
     Smith Barney Oregon Municipals Fund 
     Smith Barney Tax-Exempt Income Fund 
     
 
     International Funds 
     Smith Barney World Funds, Inc. -- Emerging Markets Portfolio 
     Smith Barney World Funds, Inc. -- European Portfolio 
     Smith Barney World Funds, Inc. -- Global Government Bond Portfolio 
     Smith Barney World Funds, Inc. -- International Balanced Portfolio 
     Smith Barney World Funds, Inc. -- International Equity Portfolio 
     Smith Barney World Funds, Inc. -- Pacific Portfolio 
 
    
     Smith Barney Concert Allocation Series, Inc. 
     Smith Barney Concert Allocation Series, Inc. -- Balanced Portfolio 
     Smith Barney Concert Allocation Series, Inc. -- Conservative Portfolio 
     Smith Barney Concert Allocation Series, Inc. -- Growth Portfolio 
     Smith Barney Concert Allocation Series, Inc. -- High Growth Portfolio 
     Smith Barney Concert Allocation Series, Inc. -- Income Portfolio 
     
 
 
36 
<PAGE> 
 
----------------------------------------------------------------------------- 
Exchange Privilege (continued) 
---------------------------------------------------------------------------- 
 
     Money Market Funds 
  ++ Smith Barney Exchange Reserve Fund 
 +++ Smith Barney Money Funds, Inc.--Cash Portfolio 
 +++ Smith Barney Money Funds, Inc.--Government Portfolio 
 *** Smith Barney Money Funds, Inc.--Retirement Portfolio 
   + Smith Barney Municipal Money Market Fund, Inc. 
   + Smith Barney Muni Funds--California Money Market Portfolio 
   + Smith Barney Muni Funds--New York Money Market Portfolio 
========================================================
======================== 
    
   * Available for exchange with Class A and Class B shares of the Fund. In 
     addition, shareholders who own Class C shares of the Fund through the 
Smith 
     Barney 401(k) Program may exchange those shares for Class C shares of 
this 
     fund. 
  ** Available for exchange with Class A, Class C and Class Y shares of the 
     Fund. 
 *** Available for exchange with Class A shares of the Fund. 
   + Available for exchange with Class A and Class Y shares of the Fund. 
  ++ Available for exchange with Class B and Class C shares of the Fund. 
 +++ Available for exchange with Class A and Class Y shares of the Fund. In 
     addition, participating plans opened prior to June 21, 1996 and investing 
     in Class C shares may exchange Fund shares for Class C shares of this 
     fund. 
 
     Class B Exchanges. In the event a Class B shareholder wishes to exchange 
all or a portion of his or her shares in any of the funds imposing a higher 
CDSC 
than that imposed by the Fund, the exchanged Class B shares will be subject to 
the higher applicable CDSC. Upon an exchange, the new Class B shares will be 
deemed to have been purchased on the same date as the Class B shares of the 
Fund 
that have been exchanged. 
     
 
     Class C Exchanges. Upon an exchange, the new Class C shares will be 
deemed 
to have been purchased on the same date as the Class C shares of the Fund that 
have been exchanged. 
 
    
     Class A and Class Y Exchanges. Class A and Class Y shareholders of the 
Fund 
who wish to exchange all or a portion of their shares for shares of the 
respective Class in any of the funds identified above may do so without 
imposition of any charge. 
     
 
     Additional Information Regarding the Exchange Privilege. Although the 
exchange privilege is an important benefit, excessive exchange transactions can 
be detrimental to the Fund's performance and its shareholders. SBMFM may 
determine that a pattern of frequent exchanges is excessive and contrary to the 
best interests of the Fund's other shareholders. In this event, SBMFM will 
notify Smith Barney, and the Fund may, at its discretion, decide to limit 
additional purchases and/or exchanges by a shareholder. Upon such a 
determination, the Fund will provide notice in writing or by telephone to the 
shareholder at least 15 days prior to  
 
                                                                           37 
<PAGE> 
 
---------------------------------------------------------------------------- 
Exchange Privilege (continued) 
---------------------------------------------------------------------------- 
 
suspending the exchange privilege and during the 15 day period the 
shareholder 
will be required to (a) redeem his or her shares in the Fund or (b) remain 
invested in the Fund or exchange into any of the funds of the Smith Barney 
Mutual Funds ordinarily available, which position the shareholder would 
expect 
to maintain for a significant period of time. All relevant factors will be 
considered in determining what constitutes an abusive pattern of exchanges. 
 
    
     Certain shareholders may be able to exchange shares by telephone. See 
"Redemption of Shares -- Telephone Redemption and Exchange Program." 
Exchanges 
will be processed at the net asset value next determined. Redemption 
procedures 
discussed below are also applicable for exchanging shares, and exchanges will 
be 
made upon receipt of all supporting documents in proper form. If the account 
registration of the shares of the fund being acquired is identical to the 
registration of the shares of the fund exchanged, no signature guarantee is 
required. A capital gain or loss for tax purposes will be realized upon the 
exchange, depending upon the cost or other basis of shares redeemed. Before 
exchanging shares, investors should read the current prospectus describing the 
shares to be acquired. The Fund reserves the right to modify or discontinue 
exchange privileges upon 60 days' prior notice to shareholders. 
     
 
---------------------------------------------------------------------------- 
Redemption of Shares 
---------------------------------------------------------------------------- 
 
     The Fund is required to redeem the shares of the Fund tendered to it, as 
described below, at a redemption price equal to their net asset value per share 
next determined after receipt of a written request in proper form at no charge 
other than any applicable CDSC. Redemption requests received after the close 
of 
regular trading on the NYSE are priced at the net asset value next determined. 
 
    
     If a shareholder holds shares in more than one Class, any request for 
redemption must specify the Class being redeemed. In the event of a failure to 
specify which Class, or if the investor owns fewer shares of the Class than 
specified, the redemption request will be delayed until the Fund's transfer 
agent receives further instructions from Smith Barney, or if the shareholder's 
account is not with Smith Barney, from the shareholder directly. The 
redemption 
proceeds will be remitted on or before the third business day following receipt 
of proper tender, except on any days on which the NYSE is closed or as 
permitted 
under the 1940 Act in extraordinary circumstances. Generally, if the 
redemption 
proceeds are remitted to a Smith Barney brokerage account, these funds will 
not 
be invested for the shareholder's benefit without specific instruction and 
Smith 
Barney will benefit from the use of temporarily uninvested funds. Redemption 
proceeds for shares purchased by check, other than a certified or official bank 
check, will be remitted upon clearance of the check, which may take up to ten 
days or more. 
     
 
 
38 
<PAGE> 
 
------------------------------------------------------------------------------ 
Redemption of Shares (continued) 
------------------------------------------------------------------------------ 
 
     Shares held by Smith Barney as custodian must be redeemed by submitting 
a 
written request to a Smith Barney Financial Consultant. Shares other than 
those 
held by Smith Barney as custodian may be redeemed through an investor's 
Financial Consultant, Introducing Broker or dealer in the selling group or by 
submitting a written request for redemption to: 
 
    
     Smith Barney Growth and Income Fund  
     Class A, B, C or Y (please specify) 
     c/o First Data Investor Services Group, Inc. 
     P.O. Box 5128 
     Westborough, Massachusetts 01581-5128 
 
     A written redemption request must (a) state the Class and number or dollar 
amount of shares to be redeemed, (b) identify the shareholder's account number 
and (c) be signed by each registered owner exactly as the shares are 
registered. 
If the shares to be redeemed were issued in certificate form, the certificates 
must be endorsed for transfer (or be accompanied by an endorsed stock power) 
and 
must be submitted to First Data together with the redemption request. Any 
signature appearing on a share certificate, stock power or written redemption 
request in excess of $2,000 must be guaranteed by an eligible guarantor 
institution such as a domestic bank, savings and loan institution, domestic 
credit union, member bank of the Federal Reserve System or member firm of a 
national securities exchange. Written redemption requests of $2,000 or less do 
not require a signature guarantee unless more than one such redemption 
request 
is made in any 10-day period or the redemption proceeds are to be sent to an 
address other than the address of record. Unless otherwise directed, redemption 
proceeds will be mailed to an investor's address of record. First Data may 
require additional supporting documents for redemptions made by corporations, 
executors, administrators, trustees or guardians. A redemption request will not 
be deemed properly received until First Data receives all required documents in 
proper form. 
     
 
     AUTOMATIC CASH WITHDRAWAL PLAN 
 
     The Fund offers shareholders an automatic cash withdrawal plan, under 
which 
shareholders who own shares with a value of at least $10,000 may elect to 
receive cash payments of at least $50 monthly or quarterly. Retirement plan 
accounts are eligible for automatic cash withdrawal plans only where the 
shareholder is eligible to receive qualified distributions and has an account 
value of at least $5,000. The withdrawal plan will be carried over on exchanges 
between funds or Classes of the Fund. Any applicable CDSC will not be waived 
on 
amounts withdrawn by a shareholder that exceed 1.00% per month of the value 
of 
the shareholder's shares subject to the CDSC at the time the withdrawal plan 
commences. (With respect to withdrawal plans in effect prior to November 7, 
1994, any applicable CDSC will be waived on amounts withdrawn that do not 
exceed 
2.00% per month of the value of  
 
                                                                         39 
<PAGE> 
 
---------------------------------------------------------------------------- 
Redemption of Shares (continued) 
---------------------------------------------------------------------------- 
 
the shareholder's shares subject to the CDSC.) For further information 
regarding 
the automatic cash withdrawal plan, shareholders should contact a Smith 
Barney 
Financial Consultant. 
 
     TELEPHONE REDEMPTION AND EXCHANGE PROGRAM 
 
     Shareholders who do not have a Smith Barney brokerage account may be 
eligible to redeem and exchange Fund shares by telephone. To determine if a 
shareholder is entitled to participate in this program, he or she should 
contact 
First Data at 1-800-331-1710. Once eligibility is confirmed, the shareholder 
must complete and return a Telephone/Wire Authorization Form, along with a 
signature guarantee that will be provided by First Data upon request. 
(Alternatively, an investor may authorize telephone redemption on the new 
account application with the applicant's signature guarantee when making 
his/her 
initial investment in the Fund.) 
 
     Redemptions. Redemption requests of up to $10,000 of any class or classes 
of the Fund's shares may be made by eligible shareholders by calling First Data 
at 1-800-331-1710. Such requests may be made between 9:00 a.m. and 5:00 
p.m. 
(New York City time) on any day the NYSE is open. Redemption requests 
received 
after the close of regular trading on the NYSE are priced at the net asset 
value 
next determined. Redemptions of shares (i) by retirement plans or (ii) for 
which 
certificates have been issued are not permitted under this program. 
 
     A shareholder will have the option of having the redemption proceeds 
mailed 
to his/her address of record or wired to a bank account predesignated by the 
shareholder. Generally, redemption proceeds will be mailed or wired, as the 
case 
may be, on the next business day following the redemption request. In order to 
use the wire procedures, the bank receiving the proceeds must be a member of 
the 
Federal Reserve System or have a correspondent relationship with a member 
bank. 
The Fund reserves the right to charge shareholders a nominal fee for each wire 
redemption. Such charges, if any, will be assessed against the shareholder's 
account from which shares were redeemed. In order to change the bank account 
designated to receive redemption proceeds, a shareholder must complete a new 
Telephone/Wire Authorization Form and, for the protection of the shareholder's 
assets, will be required to provide a signature guarantee and certain other 
documentation. 
 
     Exchanges. Eligible shareholders may make exchanges by telephone if the 
account registration of the shares of the fund being acquired is identical to 
the registration of the shares of the fund exchanged. Such exchange requests 
may 
be made by calling First Data at 1-800-331-1710 between 9:00 a.m. and 5:00 
p.m. 
(New York City time) on any day on which the NYSE is open. Exchange 
requests 
received after the close of regular trading on the NYSE are processed at the 
net 
asset value next determined. 
 
 
40 
<PAGE> 
 
------------------------------------------------------------------------------ 
Redemption of Shares (continued) 
----------------------------------------------------------------------------- 
 
     Additional Information regarding Telephone Redemption and Exchange 
Program. 
Neither the Fund nor its agents will be liable for following instructions 
communicated by telephone that are reasonably believed to be genuine. The 
Fund 
and its agents will employ procedures designed to verify the identity of the 
caller and legitimacy of instructions (for example, a shareholder's name and 
account number will be required and phone calls may be recorded). The Fund 
reserves the right to suspend, modify or discontinue the telephone redemption 
and exchange program or to impose a charge for this service at any time 
following at least seven (7) days' prior notice to shareholders. 
 
----------------------------------------------------------------------------- 
Minimum Account Size 
----------------------------------------------------------------------------- 
 
    
     The Fund reserves the right to involuntarily liquidate any shareholder's 
account in the Fund if the aggregate net asset value of the shares held in the 
Fund account is less than $500. (If a shareholder has more than one account in 
this Fund, each account must satisfy the minimum account size). The Fund, 
however, will not redeem shares based solely on market reductions in net asset 
value. Before the Fund exercises such right, shareholders will receive written 
notice and will be permitted 60 days to bring accounts up to the minimum to 
avoid involuntary liquidation. 
     
 
------------------------------------------------------------------------------ 
Performance 
------------------------------------------------------------------------------ 
 
     TOTAL RETURN 
 
     From time to time, the Fund may include its total return, average annual 
total return and current dividend return in advertisements and/or other types 
of 
sales literature. These figures are computed separately for Class A, Class B, 
Class C and Class Y shares of the Fund. These figures are based on historical 
earnings and are not intended to indicate future performance. Total return is 
computed for a specified period of time assuming deduction of the maximum 
sales 
charge, if any, from the initial amount invested and reinvestment of all income 
dividends and capital gains distributions on the reinvestment dates at prices 
calculated as stated in this Prospectus, then dividing the value of the 
investment at the end of the period so calculated by the initial amount 
invested 
and subtracting 100%. The standard average annual total return, as prescribed 
by 
the SEC, is derived from this total return, which provides the ending 
redeemable 
value. Such standard total return information may also be accompanied by 
nonstandard total return information for differing periods computed in the 
same 
manner but without annualizing the total return or taking sales charges into 
account. The Fund calculates current dividend return for each Class by 
annualizing the most recent monthly distribution and  
 
 
                                                                           41 
<PAGE> 
 
----------------------------------------------------------------------------- 
Performance (continued) 
------------------------------------------------------------------------------- 
 
dividing by the net asset value or the maximum public offering price (including 
sales charge) on the last day of the period for which current dividend return 
is presented. The current dividend return for each Class may vary from time to 
time 
depending on market conditions, the composition of its investment portfolio 
and 
operating expenses. These factors and possible differences in the methods used 
in calculating current dividend return should be considered when comparing a 
Class' current return to yields published for other investment companies and 
other investment vehicles. The Fund may also include comparative 
performance 
information in advertising or marketing its shares. Such performance 
information 
may include data from Lipper Analytical Services, Inc. and other financial 
publications. 
 
----------------------------------------------------------------------------- 
Management of the Trust and the Fund 
----------------------------------------------------------------------------- 
 
     BOARD OF TRUSTEES 
 
    
     Overall responsibility for management and supervision of the Fund rests 
with the Trust's Board of Trustees. The Trustees approve all significant 
agreements between the Trust and the companies that furnish services to the 
Fund, including agreements with the Trust's distributor, custodian and transfer 
agent and the Fund's investment adviser and administrator. The day-to-day 
operations of the Fund are delegated to the Fund's investment adviser and 
administrator. The Statement of Additional Information contains background 
information regarding each Trustee of the Trust and the executive officers of 
the Fund. 
     
 
     INVESTMENT ADVISER -- SBMFM 
 
    
     SBMFM, located at 388 Greenwich Street, New York, New York 10013, 
serves as 
the Fund's investment adviser pursuant to a transfer of the investment advisory 
agreement effective November 7, 1994, from its affiliate, Mutual Management 
Corp., also a wholly owned subsidiary of Holdings. SBMFM renders 
investment 
advice to investment companies that had aggregate assets under management 
as of 
January 31, 1997 in excess of $80 billion. 
     
 
     Subject to the supervision and direction of the Trust's Board of Trustees, 
SBMFM manages the Fund's portfolio in accordance with the Fund's 
investment 
objective and policies and makes investment decisions for the Fund, places 
orders to purchase and sell securities and employs professional portfolio 
managers and securities analysts who provide research services to the Fund. 
For 
investment advisory services rendered, the Fund pays SBMFM a fee at the 
annual 
rate of .45% of the value of the Fund's average daily net assets. 
 
 
42 
<PAGE> 
 
----------------------------------------------------------------------------- 
Management of the Trust and the Fund (continued) 
----------------------------------------------------------------------------- 
 
     PORTFOLIO MANAGEMENT 
 
    
     R. Jay Gerken, Managing Director of Smith Barney, has served as 
Investment 
Officer of the Fund since it commenced operations and manages the day-to-day 
operations of the Fund, including making all investment decisions. 
 
     Management's discussion and analysis, and additional performance 
information regarding the Fund during the fiscal year ended January 31, 1997 
is 
included in the Annual Report dated January 31, 1997. A copy of the Annual 
Report may be obtained upon request and without charge from a Smith Barney 
Financial Consultant or by writing or calling the Fund at the address or phone 
number listed on page one of this Prospectus. 
     
 
     ADMINISTRATOR 
 
     SBMFM also serves as the Fund's administrator and oversees all aspects of 
the Fund's administration. For administration services rendered, the Fund pays 
SBMFM a fee at an annual rate of .20% of the value of the Fund's average daily 
net assets. 
 
---------------------------------------------------------------------------- 
Distributor 
---------------------------------------------------------------------------- 
 
     Smith Barney is located at 388 Greenwich Street, New York, New York 
10013. 
Smith Barney distributes shares of the Fund as principal underwriter and as 
such 
conducts a continuous offering pursuant to a "best efforts" arrangement 
requiring Smith Barney to take and pay for only such securities as may be sold 
to the public. Pursuant to a plan of distribution adopted by the Fund under 
Rule 
12b-1 under the 1940 Act (the "Plan"), Smith Barney is paid a service fee with 
respect to Class A, Class B and Class C shares of the Fund at the annual rate 
of 
0.25% of the value of the average daily net assets of the respective Class. 
Smith Barney is also paid an annual distribution fee with respect to Class B 
and Class C shares at the annual rate of 0.50% of the value of the average 
daily netassets attributable to those Classes. Class B shares which 
automatically convert to Class A shares eight years after the date of 
original purchase will no longer be subject to distribution fees. The fees 
are used by Smith Barney to pay its 
Financial Consultants for servicing shareholder accounts and, in the case of 
Class B and Class C shares, to cover expenses primarily intended to result in 
the sale of those shares. These expenses include: advertising expenses; the 
cost 
of printing and mailing prospectuses to potential investors; payments to and 
expenses of Smith Barney Financial Consultants and other persons who provide 
support services in connection with the distribution of shares; interest and/or 
carrying charges; and indirect and overhead costs of Smith Barney associated 
with the sale of Fund shares, including lease, utility, communications and sale 
promotion expenses. 
 
     The payments to Smith Barney Financial Consultants for selling shares of a 
 
                                                                           43 
<PAGE> 
 
---------------------------------------------------------------------------- 
Distributor (continued) 
---------------------------------------------------------------------------- 
 
Class include a commission or fee paid by the investor or Smith Barney at the 
time of sale and, with respect to Class A, Class B and Class C shares, a 
continuing fee for servicing shareholder accounts for as long as a shareholder 
remains a holder of that Class. Smith Barney Financial Consultants may 
receive 
different levels of compensation for selling different Classes of shares. 
 
    
     Payments under the Plan are not tied exclusively to the distribution and 
shareholder service expenses actually incurred by Smith Barney and the 
payments 
may exceed distribution expenses actually incurred. The Trust's Board of 
Trustees will evaluate the appropriateness of the Plan and its payment terms on 
a continuing basis and in so doing will consider all relevant factors, 
including expenses borne by Smith Barney, amounts received under the Plan and 
proceeds of 
the CDSC. 
     
 
----------------------------------------------------------------------------- 
Additional Information 
----------------------------------------------------------------------------- 
 
     The Trust was organized on January 8, 1986 under the laws of the 
Commonwealth of Massachusetts and is a business entity commonly known as 
a 
"Massachusetts business trust." The Trust offers shares of beneficial interest 
of separate funds with a par value of $.001 per share. The Fund offers 
shares of beneficial interest currently classified into four Classes - A, B, 
C and Y. Each 
Class represents an identical interest in the Fund's investment portfolio. As a 
result, the Classes have the same rights, privileges and preferences, except 
with respect to: (a) the designation of each Class; (b) the effect of the 
respective sales charges, if any, for each Class; (c) the distribution and/or 
service fees borne by each Class; (d) the expenses allocable exclusively to 
each Class; (e) voting rights on matters exclusively affecting a single 
Class; (f) 
the exchange privilege of each Class; and (g) the conversion feature of the 
Class B shares. The Trust's Board of Trustees does not anticipate that there 
will be any conflicts among the interests of the holders of the different 
Classes. The Trustees, on an ongoing basis, will consider whether any such 
conflict exists and, if so, take appropriate action. 
 
     The Trust does not hold annual shareholder meetings. There normally will 
be 
no meeting of shareholders for the purpose of electing Trustees unless and 
until 
such time as less than a majority of the Trustees holding office have been 
elected by shareholders. The Trustees will call a meeting for any purpose upon 
written request of shareholders holding at least 10% of the Trust's outstanding 
shares and the Fund will assist shareholders in calling such a meeting as 
required by the 1940 Act. Shareholders of record owning no less than two-
thirds 
of the outstanding shares of the Trust may remove a Trustee through a 
declaration in writing or by vote cast in person or by proxy at a meeting 
called 
for that purpose. 
 
   When matters are submitted for shareholder vote, shareholders of each Class 
 
 
44 
<PAGE> 
 
----------------------------------------------------------------------------- 
Additional Information (continued) 
---------------------------------------------------------------------------- 
 
will have one vote for each full share owned and a proportionate, fractional 
vote for any fractional share held of that Class. Generally, shares of the 
Trust 
vote by individual fund on all matters except (a) matters affecting only the 
interests of one or more of the funds, in which case only shares of the 
affected 
fund or funds would be entitled to vote or (b) when the 1940 Act requires that 
shares of the funds be voted in the aggregate. Similarly, shares of the Fund 
will be voted generally on a Fund-wide basis except for matters affecting the 
interests of one Class of shares. 
 
     PNC is located at 17th and Chestnut Streets, Philadelphia, Pennsylvania 
19103, and serves as custodian of the Fund's investments. 
 
    
     First Data is located at PO Box 5128 Westborough, MA 01581-5128, and 
serves 
as the Trust's transfer agent. 
 
     The Trust sends shareholders of the Fund a semi-annual report and an 
audited annual report, which include listings of the investment securities held 
by the Fund at the end of the reporting period. In an effort to reduce the 
Fund's printing and mailing costs, the Trust plans to consolidate the mailing 
of 
its semi-annual and annual reports by household. This consolidation means that 
a 
household having multiple accounts with the identical address of record will 
receive a single copy of each report. Shareholders who do not want this 
consolidation to apply to their accounts should contact a Smith Barney 
Financial 
Consultant or First Data. 
     
 
                                                                          45 
<PAGE> 
 
                                                        SMITH BARNEY 
 
                                         A Member of Travelers Group[LOGO] 
 
                                                              Smith Barney 
                                                                    Growth and 
                                                                       Income 
                                                                          Fund 
 
                                                          388 Greenwich Street 
                                                      New York, New York 10013 
 
    
                                                                  FD 0250 5/97 
     

  
                   CONCERT SOCIAL AWARENESS FUND (THE "FUND") 
              A SERIES OF SMITH BARNEY EQUITY FUNDS (THE "TRUST") 
  
       Amendment dated May 31, 1997 to Prospectus dated February 24, 1997 
  
   The following information amends the information contained in the Fund's 
prospectus dated February 24, 1997 (the "Prospectus"). 
  
                           ------------------------ 
  
THE FUND'S EXPENSES The following expense table lists the costs and 
expenses an 
investor will incur either directly or indirectly as a shareholder of the Fund, 
based on the maximum sales charge or maximum CDSC that may be incurred 
at the 
time of purchase or redemption and the Fund's operating expenses for its most 
recent fiscal year: 
  
<TABLE> 
<CAPTION> 
  CONCERT SOCIAL AWARENESS FUND                  CLASS A CLASS B 
CLASS C CLASS Y 
------------------------------------------------------------------------------- 
  <S>                                            <C>     <C>     <C>     <C> 
  SHAREHOLDER TRANSACTION EXPENSES 
    Maximum sales charge imposed on purchases 
       (as a percentage of offering price)        5.00%   None    None    None 
    Maximum CDSC (as a percentage of redemption 
       proceeds, whichever is lower)              None*   5.00%   1.00%   None 
------------------------------------------------------------------------------- 
  ANNUAL FUND OPERATING EXPENSES 
      (AS A PERCENTAGE OF AVERAGE NET ASSETS) 
    Management fees                               0.75%   0.75%   0.75%   0.75% 
    12b-1 fees**                                  0.25    1.00    1.00    None 
    Other expenses                                0.28    0.28    0.26    0.15 
------------------------------------------------------------------------------- 
  TOTAL FUND OPERATING EXPENSES                   1.28%   2.03%   2.01%   
0.90% 
------------------------------------------------------------------------------- 
</TABLE> 
 * Purchases of Class A shares of $500,000 or more will be made at net asset 
   value with no sales charge, but will be subject to a CDSC of 1.00% on 
   redemptions made within 12 months of purchase. 
** Upon conversion of Class B shares to Class A shares, such shares will no 
   longer be subject to a distribution fee, but will be subject to the 
   applicable service fee. Class C shares do not have a conversion feature and, 
   therefore, are subject to an ongoing distribution fee. As a result, long- 
   term shareholders of Class C shares may pay more than the economic 
   equivalent of the maximum front-end sales charge permitted by the National 
   Association of Securities Dealers, Inc. 
  
   Class A shares of the Fund purchased through the Smith Barney AssetOne 
Program will be subject to an annual asset-based fee, payable quarterly, in 
lieu of the initial sales charge. The fee will vary to a maximum of 1.50%, 
depending on the amount of assets held through the Program. For more 
information, please call your Smith Barney Financial Consultant. 
  
<PAGE> 
  
EXAMPLE 
  
   The following example is intended to assist an investor in understanding the 
various costs that an investor in the Fund will bear directly or indirectly. 
The example assumes payment by the Fund of operating expenses at the levels 
set 
forth in the table above. See "Purchase of Shares," "Redemption of Shares" and 
"Management of the Trust and the Fund" in the Prospectus. 
  
<TABLE> 
<CAPTION> 
                                              1 YEAR 3 YEARS 5 YEARS 10 YEARS* 
------------------------------------------------------------------------------ 
  <S>                                         <C>    <C>     <C>     <C> 
  An investor would pay the following 
  expenses on a $1,000 investment, assuming 
  (1) 5.00% annual return and (2) redemption 
  at the end of each time period: 
    Class A.................................   $62     $89    $117     $197 
    Class B.................................    71      94     119      217 
    Class C.................................    31      63     108      234 
    Class Y.................................     9      29      50      111 
  An investor would pay the following ex- 
  penses on the same investment, assuming 
  the same annual return and no redemption: 
    Class A.................................   $62     $89    $117     $197 
    Class B.................................    21      64     109      217 
    Class C.................................    20      63     108      234 
    Class Y.................................     9      29      50      111 
------------------------------------------------------------------------------ 
</TABLE> 
* Ten-year figures assume conversion of Class B shares to Class A shares at the 
  end of the eighth year following the date of purchase. 
  
   The example also provides a means for the investor to compare expense 
levels 
of funds with different fee structures over varying investment periods. To fa- 
cilitate such comparison, all funds are required to utilize a 5.00% annual re- 
turn assumption. However, the Fund's actual return will vary and may result in 
an actual return greater or less than 5.00%. THIS EXAMPLE SHOULD NOT 
BE CONSID- 
ERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND 
ACTUAL EXPENSES MAY BE 
GREATER OR LESS THAN THOSE SHOWN. 
  
2 
<PAGE> 
  
                              FINANCIAL HIGHLIGHTS 
  
   The following information for the two years ended January 31, 1997 has been 
audited by KPMG Peat Marwick LLP, independent auditors, whose report 
thereon 
appears in the Fund's Annual Report dated January 31, 1997. The information 
for 
the years ended January 31, 1988 through January 31, 1995 has been audited by 
other independent auditors. The information set out below should be read in 
conjunction with the financial statements and related notes that also appear in 
the Fund's Annual Report which is incorporated by reference into the Statement 
of Additional Information. The financial information set out below represents 
the financial history of the Fund prior to implementing a social awareness 
criteria and the Fund's performance may have been different if it had pursued a 
social awareness criteria since its inception. 
  
FOR A CLASS A SHARE OF BENEFICIAL INTEREST OUTSTANDING 
THROUGHOUT EACH YEAR: 
<TABLE> 
<CAPTION> 
                                           YEAR ENDED JANUARY 31, 
                                     1997    1996    1995    1994(1)  1993(2) 
------------------------------------------------------------------------------- 
<S>                                 <C>     <C>     <C>      <C>      <C> 
NET ASSET VALUE, 
  BEGINNING OF YEAR                 $19.00  $15.91  $17.72   $16.85   $16.80 
------------------------------------------------------------------------------- 
INCOME (LOSS) FROM OPERATIONS: 
 Net investment income                0.57    0.61    0.57     0.52     0.13 
 Net realized and unrealized gain 
   (loss)                             1.71    3.52   (1.25)    2.37     0.88 
------------------------------------------------------------------------------- 
Total Income (Loss) From Opera- 
  tions                               2.28    4.13   (0.68)    2.89     1.01 
------------------------------------------------------------------------------- 
LESS DISTRIBUTIONS FROM: 
 Net investment income               (0.60)  (0.52)  (0.47)   (0.56)   (0.11) 
 Net realized gains                  (1.32)  (0.52)  (0.66)   (1.46)   (0.85) 
------------------------------------------------------------------------------- 
Total Distributions                  (1.92)  (1.04)  (1.13)   (2.02)   (0.96) 
------------------------------------------------------------------------------- 
NET ASSET VALUE, END OF YEAR        $19.36  $19.00  $15.91   $17.72   
$16.85 
------------------------------------------------------------------------------- 
TOTAL RETURN+++                      12.41%  26.47%  (3.82)%  17.80%    
6.12%+++ 
------------------------------------------------------------------------------- 
NET ASSETS, END OF YEAR (MILLIONS)    $178    $175    $159       $6    
$0.6 
------------------------------------------------------------------------------- 
RATIOS TO AVERAGE NET ASSETS: 
Expenses                              1.28%   1.21%   1.33%    1.25%    1.25%+ 
Net investment income                 2.98    3.10    2.89     2.85     3.61+ 
------------------------------------------------------------------------------- 
PORTFOLIO TURNOVER RATE                 68%     81%     103%    131%      
93% 
------------------------------------------------------------------------------- 
AVERAGE COMMISSIONS PAID ON 
  EQUITY SECURITY TRANSACTIONS(3)    $0.06   $0.06      --      --       -- 
------------------------------------------------------------------------------- 
</TABLE> 
(1) Per share amounts have been calculated using the monthly average shares 
    method, which more appropriately presents the per share data for this pe- 
    riod since use of the undistributed net investment income method does not 
    accord with results of operations. 
(2) For the period from November 6, 1992 (inception date) to January 31, 1993. 
(3) As of September 1995, the SEC instituted new guidelines requiring the dis- 
    closure of average commissions per share. 
++  Total return represents the aggregate total return for the period indicated 
    and does not reflect any applicable sales charge. 
+++ Total return is not annualized, as it may not be representative of the to- 
    tal return for the year. 
 +  Annualized. 
                                                                            3 
<PAGE> 
  
FOR A CLASS B SHARE OF BENEFICIAL INTEREST OUTSTANDING 
THROUGHOUT EACH YEAR: 
  
<TABLE> 
<CAPTION> 
                                      1997    1996    1995    1994(1)   1993 
------------------------------------------------------------------------------ 
<S>                                  <C>     <C>     <C>      <C>      <C> 
NET ASSET VALUE, BEGINNING OF YEAR   $19.05  $15.97  $17.79   
$16.84   $17.26 
------------------------------------------------------------------------------ 
INCOME (LOSS) FROM 
  INVESTMENT OPERATIONS 
 Net investment income                 0.43    0.49    0.39     0.38     0.51 
 Net realized and unrealized 
   gain/(loss)                         1.71    3.53   (1.20)    2.37     1.06 
------------------------------------------------------------------------------ 
Total Income (Loss) From Operations    2.14    4.02   (0.81)    2.75     1.57 
------------------------------------------------------------------------------ 
LESS DISTRIBUTIONS FROM: 
 Net investment income                (0.45)  (0.42)  (0.35)   (0.34)   (0.50) 
 Net realized gains                   (1.32)  (0.52)  (0.66)   (1.46)   (1.49) 
 Capital                                --      --      --       --       -- 
------------------------------------------------------------------------------ 
Total Distributions                   (1.77)  (0.94)  (1.01)   (1.80)   (1.99) 
------------------------------------------------------------------------------ 
NET ASSET VALUE, END 
  OF YEAR                            $19.42  $19.05  $15.97   $17.79   $16.84 
------------------------------------------------------------------------------ 
TOTAL RETURN+++                       11.60%  25.58%  (4.54%)  16.88%    
9.68% 
------------------------------------------------------------------------------ 
NET ASSETS, END OF YEAR (MILLIONS)     $202    $226    $216     $334     
$288 
------------------------------------------------------------------------------ 
RATIOS TO AVERAGE NET ASSETS: 
Expenses                               2.03%   1.94%   2.00%    1.98%    2.02% 
Net investment income                  2.23    2.37    2.21     2.11     2.84 
------------------------------------------------------------------------------ 
PORTFOLIO TURNOVER RATE                  68%     81%    103%     131%      
93% 
------------------------------------------------------------------------------ 
AVERAGE COMMISSIONS 
  PAID ON EQUITY SECURITY 
  TRANSACTIONS(3)                     $0.06   $0.06     --       --       -- 
------------------------------------------------------------------------------ 
</TABLE> 
(1) The per share amounts have been calculated using the monthly average 
    shares method, which more appropriately presents per share data for this 
    year since use of the undistributed net investment income method does not 
    accord with results of operations. 
(2) The Fund commenced operations on February 2, 1987. On November 6, 
1992, 
    the Fund commenced selling Class B shares. Any shares outstanding prior to 
    November 6, 1992 were designated as Class B shares. 
(3) As of September 1995, the SEC instituted new guidelines requiring the dis- 
    closure of average commissions per share. 
++  Total return represents the aggregate total return for the period indi- 
    cated and does not reflect any applicable sales charge. 
 +  Annualized. 
+++ Total return is not annualized, as it may not be representative of the to- 
    tal return for the year. 
  
4 
<PAGE> 
  
<TABLE> 
<CAPTION> 
1992(2)   1991          1990                    1989                    1988 
----------------------------------------------------------------------------
----- 
 <S>  <C>               <C>                     <C>                     <C> 
 $15.61   $15.57       $15.03                  $13.62                  $14.00 
---------------------------------------------------------------------------
----- 
   0.52 0.54       0.53                    0.52                    0.36 
   2.56 0.47       1.10                    1.48                   (0.44) 
----------------------------------------------------------------------------
----- 
   3.08    1.01        1.63                    2.00                   (0.08) 
----------------------------------------------------------------------------
----- 
  (0.55) (0.51)         (0.69)                  (0.48)                  (0.23) 
  (0.88) (0.46)          (0.38)                  (0.11)                  (0.07) 
    --    --            (0.02)                    --                      -- 
-------------------------------------------------------------------------
----- 
  (1.43) ( 0.97)       (1.09)                  (0.59)                  (0.30) 
--------------------------------------------------------------------------
----- 
 $17.26 $15.61         $15.57                  $15.03                  $13.62 
--------------------------------------------------------------------------
----- 
  19.96%  
        6.80%                  10.76%                  15.10%                  
(0.57%)+++ 
-----------------------------------------------------------------------------
----- 
   $234              $197                    $206                    $147    
                $151 
   --------------------------------------------------------------------------
----- 
2.06%       2.09%              2.24%                   2.29%                   
2.14%+ 
3.02       3.43                    3.46                    3.59          2.83+ 
----------------------------------------------------------------------
----- 
     76%    56%           61%                     42%                     56% 
--------------------------------------------------------------------------
----- 
    --       --          --                      --                      -- 
---------------------------------------------------------------------------
----- 
</TABLE> 
  
                                                                           5 
<PAGE> 
  
FOR A CLASS C SHARE OF BENEFICIAL INTEREST OUTSTANDING 
THROUGHOUT EACH YEAR. 
  
<TABLE> 
<CAPTION> 
                                              YEAR ENDED JANUARY 31, 
                                          1997    1996   1995(1)   1994(2)(3) 
------------------------------------------------------------------------------ 
<S>                                      <C>     <C>     <C>       <C> 
NET ASSET VALUE, 
  BEGINNING OF YEAR                      $19.08  $15.97  $17.79      $17.54 
------------------------------------------------------------------------------ 
INCOME (LOSS) FROM OPERATIONS: 
 Net investment income                     0.44    0.45    0.38        0.32 
 Net realized and unrealized gain (loss)   1.71    3.60   (1.19)       1.67 
------------------------------------------------------------------------------ 
Total Income (Loss) From Operations        2.15    4.05   (0.81)       1.99 
------------------------------------------------------------------------------ 
LESS DISTRIBUTIONS FROM: 
 Net investment income                    (0.45)  (0.42)  (0.35)      (0.28) 
 Net realized gains                       (1.32)  (0.52)  (0.66)      (1.46) 
------------------------------------------------------------------------------ 
Total Distributions                       (1.77)  (0.94)  (1.01)      (1.74) 
------------------------------------------------------------------------------ 
NET ASSET VALUE, END OF YEAR             $19.46  $19.08  $15.97      
$17.79 
------------------------------------------------------------------------------ 
TOTAL RETURN+++                           11.65%  25.77%  (4.54)%     
11.83%+++ 
------------------------------------------------------------------------------ 
NET ASSETS, END OF YEAR 
  (000S)                                 $4,000  $3,396  $1,972        $399 
------------------------------------------------------------------------------ 
RATIOS TO AVERAGE NET ASSETS: 
Expenses                                   2.01%   1.94%   1.98%       1.93%+ 
Net investment income                      2.25    2.31    2.24        2.16+ 
------------------------------------------------------------------------------ 
PORTFOLIO TURNOVER RATE                      68%     81%    103%        
131% 
------------------------------------------------------------------------------ 
AVERAGE COMMISSIONS PAID ON 
  EQUITY SECURITY TRANSACTIONS(4)        $ 0.06  $ 0.06     --          -- 
------------------------------------------------------------------------------ 
</TABLE> 
(1) On November 7, 1994, the former Class D shares were renamed Class C 
shares. 
(2) Per share amounts have been calculated using the monthly average shares 
    method, which more appropriately presents per share data for this period 
    since use of the undistributed net investment income method does not accord 
    with results of operations. 
(3) For the period from May 5, 1993 (inception date) to January 31, 1994. 
(4) As of September 1995, the SEC instituted new guidelines requiring the dis- 
    closure of average commissions per share. 
++  Total return represents the aggregate total return for the period indicated 
    and does not reflect any applicable sales charge. 
+++ Total return is not annualized, as it may not be representative of the to- 
    tal return for the year. 
 +  Annualized. 
  
6 
<PAGE> 
  
FOR A CLASS Y SHARE OF BENEFICIAL INTEREST OUTSTANDING 
THROUGHOUT THE PERIOD. 
  
<TABLE> 
<CAPTION> 
                                      1997(1) 
--------------------------------------------- 
<S>                                   <C> 
NET ASSET VALUE, BEGINNING OF PERIOD  $19.00 
--------------------------------------------- 
INCOME FROM OPERATIONS: 
 Net investment income                  0.51 
 Net realized and unrealized gain       1.69 
--------------------------------------------- 
Total Income From Operations            2.20 
--------------------------------------------- 
LESS DISTRIBUTIONS FROM: 
 Net investment income                 (0.49) 
 Net realized gains                    (1.32) 
--------------------------------------------- 
Total Distributions                    (1.81) 
--------------------------------------------- 
NET ASSET VALUE, END OF PERIOD        $19.39 
--------------------------------------------- 
TOTAL RETURN+++                        11.94% 
--------------------------------------------- 
NET ASSETS, END OF PERIOD (000S)        $143 
--------------------------------------------- 
RATIOS TO AVERAGE NET ASSETS+: 
Expenses                                0.90% 
Net investment income                   3.31 
--------------------------------------------- 
PORTFOLIO TURNOVER RATE                   68% 
--------------------------------------------- 
AVERAGE COMMISSIONS PER SHARE 
  PAID ON EQUITY TRANSACTIONS          $0.06 
--------------------------------------------- 
</TABLE> 
(1) For the period from March 28, 1996 (inception date) to January 31, 1997. 
+++ Total return is not annualized, as it may not be representative of the to- 
    tal return for the year. 
 +  Annualized. 
  
FD 01301 
  
                                                                               7



Smith Barney
EQUITY FUNDS

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

STATEMENT OF ADDITIONAL INFORMATION		May 31, 1997


	This Statement of Additional Information expands 
upon and supplements the information contained in the 
current Prospectuses, dated May 31, 1997, and February 
24, 1997, as amended May 31, 1997, respectively, as 
amended or supplemented from time to time, of  Smith 
Barney Growth and Income Fund ("Growth and Income 
Fund") and Concert Social Awareness Fund ("Social 
Awareness Fund") (Growth and Income Fund and Social 
Awareness Fund each a "Fund" and collectively, the 
"Funds").  Each Fund is a series of Smith Barney 
Equity Funds (the "Trust").  This Statement of 
Additional Information should be read in conjunction 
with the Prospectuses. The Prospectuses may be 
obtained from a Smith Barney Financial Consultant, a 
PFS Investments Inc. Registered Representative or by 
writing or calling the Trust at the address or 
telephone number set forth above. This Statement of 
Additional Information, although not in itself a 
prospectus, is incorporated by reference into the 
Prospectuses in its entirety.


CONTENTS

	For ease of reference, the same section headings 
are used in the Prospectuses and in this Statement of 
Additional Information, except where shown below: 
 

Management of the 
Trust.................................................
 ...............................        2
Investment Objectives and Management 
Policies............................................        
6
Purchase of 
Shares................................................
 .........................................       14
Redemption of 
Shares................................................
 ....................................       15
Distributor...........................................
 ......................................................
 ....       16
Valuation of 
Shares................................................
 ........................................      19
Exchange 
Privilege.............................................
 ...........................................      19
Performance Data (See in each Prospectus 
"Performance")............................      20
Taxes (See in each Prospectus "Dividends, 
Distributions and Taxes")............      23
Additional 
Information...........................................
 .......................................      26
Financial 
Statements............................................
 .........................................       26
Appendix..............................................
 ......................................................
 ...     A-1



MANAGEMENT OF THE TRUST

The executive officers of the Trust are employees of 
certain of the organizations that provide services to 
the Trust. These organizations are the following:

Name						Service

Smith Barney Inc.
   ("Smith 
Barney")..............................................
 ......Distributor of each Fund
PFS 
Distributors.(PFS)....................................
 ...........Co. Distributor of the Social Awareness 
Fund
Smith Barney Mutual Funds Management Inc.
   
("SBMFM").............................................
 ...............Investment Adviser and Administrator of 
Growth 							and 
Income Fund and Administrator of Social 			
				Awareness Fund
Smith Barney Strategy Advisers Inc.         
   ("Strategy 
Advisers")............................................
 ..Investment Adviser of Social Awareness Fund
PNC Bank, National Association
   
("PNC")...............................................
 ....................Custodian
First Data Investor Services Group, Inc.
   ("First 
Data")................................................
 ...........Transfer Agent

	These organizations and the services they 
perform for the Trust and the Funds are discussed in 
the Prospectuses and in this Statement of Additional 
Information.

Trustees and Executive Officers of The Trust

The names of the Trustees and the executive officers 
of the Trust, together with information as to their 
principal business occupations, are set forth below. 
Each Trustee who is an "interested person" of the 
Trust, as defined in the Investment Company Act of 
1940, as amended (the "1940 Act"), is indicated by
an asterisk.

Lee Abraham, Trustee (Age 67). Retired; formerly 
Chairman and Chief Executive Officer of Associated 
Merchandising Corporation, a major retail 
merchandising and sourcing organization. His address 
is 35 Old Forge Road, Wilton, Connecticut 06897.

Allan J. Bloostein, Trustee (Age 65). Consultant; 
formerly Vice Chairman of the Board of and Consultant 
to The May Department Stores Company; Director of 
Crystal Brands, Inc., Melville Corp. and R.G. Barry 
Corp. His address is 27 West 67th Street, New York, 
New York 10023.

Richard E. Hanson, Jr., Trustee (Age 55). Head of 
School, The New Atlanta Jewish Community High School, 
Atlanta Georgia; prior to July 1,1994, Headmaster, 
Lawrence County Day School-Woodmere Academy, Woodmere, 
New York; prior to July 1, 1990, Headmaster of the 
Woodmere Academy. His address is 2865 Lenox Road, 
N.E., Apt. 507, Atlanta, GA 30324-2855.

*Heath B. McLendon, Chairman of the Board and 
Investment Officer (Age 61). Managing Director of 
Smith Barney and Chairman of the Board of Strategy 
Advisers; prior to July 1993, Senior Executive Vice 
President of Shearson Lehman Brothers Inc. ("Shearson 
Lehman Brothers"); Vice Chairman of Shearson Asset 
Management, a Director of PanAgora Asset Management, 
Inc. and PanAgora Asset Management Limited. Mr. 
McLendon also serves as Chairman of the Board of 41 
other mutual funds of the Smith Barney Mutual Funds. 
His address is 388 Greenwich Street, New York, New 
York 10013.

Madelon DeVoe Talley, Trustee (Age 62). Author; 
Governor at Large of the National Association of 
Securities Dealers, Inc.; Commissioner of Port 
Authority of New York and New Jersey as of 1996. Her 
address is 876 Park Avenue, New York, New York 10021.

Jessica M. Bibliowicz, President (Age 36). Executive 
Vice President of Smith Barney; prior to 1994, 
Director of Sales and Marketing for Prudential Mutual 
Funds. Ms. Bibliowicz also serves as President of 40 
other mutual funds of the Smith Barney Mutual Funds. 
Her address is 388 Greenwich Street, New York, New 
York, 10013.

R. Jay Gerken, Investment Officer (Age 43). Managing 
Director of Smith Barney; prior to July 1993 Managing 
Director of Shearson Lehman Advisors. His address is 
388 Greenwich Street, New York, New York 10013.

Robert  J. Brady, Investment Officer (Age 56). 
Managing Director of Smith Barney. Mr. Brady was 
previously Director of Investment Strategy at EF 
Hutton and Special Situations Analyst for Forbes Inc. 
His address is 388 Greenwich Street, New York, New 
York  10013.

Ellen S. Cammer, Investment Officer (Age 41). Managing 
Director of Smith Barney. Her address is 388 Greenwich 
Street, New York, New York 10013.

Lewis E. Daidone, Senior Vice President and Treasurer 
(Age 39). Managing Director of Smith Barney; Director 
and Senior Vice President of SBMFM. Mr. Daidone also 
serves as Senior Vice President and Treasurer of 41 
other funds of the Smith Barney Mutual Funds. His 
address is 388 Greenwich Street, New York, New York 
10013.

Christina T. Sydor, Secretary (Age 46). Managing 
Director of Smith Barney; General Counsel and 
Secretary of SBMFM. Ms. Sydor also serves as Secretary 
of 41 other funds of the Smith Barney Mutual Funds. 
Her address is 388 Greenwich Street, New York, New 
York 10013.

	As of January 31, 1997, the Trust's Trustees and 
officers of the Funds as a group owned less than 1.00% 
of the outstanding shares of the Trust.

	No officer, director or employee of Smith 
Barney, or of any parent or subsidiary receives any 
compensation from the Trust for serving as an officer 
or Trustee of the Trust. The Trust pays each Trustee 
who is not an officer, director or employee of Smith 
Barney or any of its affiliates a fee of $6,000 per 
annum plus $1,000 per meeting attended and reimburses 
each Trustee for travel and out-of-pocket expenses. 
For the fiscal year ended January 31, 1997, such fees 
and expenses totaled $52,899.

	For the fiscal year ended January 31, 1997, the 
Trustees of the Trust were paid the following 
compensation:
							
	Aggregate Compensation
				Aggregate Compensation	from 
the Smith Barney
Trustee(*)			      from the Fund**		        
Mutual Funds	

Lee Abraham(9)....................................       
$12,600				$44,500
Allan J. Bloostein(15)............................        
12,600				  83,150
Richard E. Hanson, Jr.(9)......................        
12,500				  44,550
Madelon Devoe Talley(10)# ................        
12,600				  45,343
Heath B. McLendon.....................................      
N/A				      N\A
(*)  Number of directorships/trusteeships held with 
other mutual funds in the Smith Barney Mutual Funds.
**   The aggregate remuneration paid to the Trustees 
by the Trust for the fiscal year ended January 31, 
1997, which includes reimbursement for travel and out-
of-pocket expenses.
  #   Ms. Talley has deferred $6,300 of compensation 
from the Trust for the fiscal year ended January 31, 
1997.
Upon attainment of age 80 Trustees are required to 
change to emeritus status.  Trustees Emeritus are 
entitled to serve in emeritus status for a maximum of 
10 years during which time they are paid 50% of the 
annual retainer fee and meeting fees otherwise 
applicable to the Funds Trustees together with 
reasonable out-of-pocket expenses for each meeting 
attended.


Investment Advisers and Administrator

SBMFM serves as investment adviser to Growth and 
Income Fund pursuant to a transfer of the investment 
advisory agreement effective November 7, 1994 (the 
"Growth and Income Advisory Agreement"), from its 
affiliate, Mutual Management Corp.  Mutual Management 
Corp. and SBMFM are both wholly owned subsidiaries of 
Smith Barney Holdings Inc. ("Holdings"), which in turn 
is a wholly owned subsidiary of Travelers Group Inc. 
("Travelers"). The Growth and Income  Advisory 
Agreement was most recently approved on August 31, 
1996.  The services provided by SBMFM under the 
Advisory Agreements are described in the Prospectuses 
under "Management of the Trust and the Fund."

	SBMFM bears all expenses in connection with the 
performance of its services and pays the salary of any 
officer and employee who is employed by both it and 
the Trust. As compensation for investment advisory 
services rendered to Growth and Income Fund, the Fund 
pays a fee computed daily and paid monthly at the 
annual rate of 0.45% of the value of the average daily 
net assets of the Fund.

	SBMFM also serves as administrator to the Funds 
pursuant to written agreements (each an 
"Administration Agreement") dated August 31, 1996.  
For administration services rendered, the Funds  pay 
SBMFM a fee at the annual rate of 0.20% of the value 
of the respective Funds' average daily net assets.

	Certain of the services provided to the Funds by 
SBMFM are described in the Prospectuses under 
"Management of the Trust and the Fund." In addition to 
those services, SBMFM pays the salaries of all 
officers and employees who are employed by SBMFM and 
the Fund, maintains office facilities for each Fund, 
furnishes each Fund with statistical and research 
data, clerical help and accounting, data processing, 
bookkeeping, internal auditing and legal services and 
certain other services required by the Funds, prepares 
reports to the Funds' shareholders and prepares tax 
returns, reports to and filings with the Securities 
and Exchange Commission (the "SEC") and state Blue Sky 
authorities. SBMFM bears all expenses in connection 
with the performance of its services.

	Strategy Advisers serves as investment adviser 
to Social Awareness Fund pursuant to a written 
agreement (the "Social Awareness Advisory Agreement"), 
dated August 31, 1996.  Strategy Advisers is a wholly 
owned subsidiary of Holdings. Certain of the services 
provided by Strategy Advisers under the Strategy 
Advisory Agreement are described in the Prospectus 
under "Management of the Trust and the Fund." As 
compensation for Strategy Advisers' services rendered 
to Social Awareness Fund, the Fund pays a fee computed 
daily and paid monthly at the annual rate of 0.55% of 
the value of the Fund's average daily net assets.  

	Each of SBMFM and Strategy Advisers (each, an 
"Adviser" and collectively, the "Advisers") pays the 
salaries of all officers and employees who are 
employed by both it and the Trust, and maintains 
office facilities for the Funds. Each of the service 
providers also bears all expenses in connection with 
the performance of its services under its agreement 
relating to a Fund.



	For the fiscal years ended January 31, 1995, 
1996 and 1997, the Funds paid investment advisory 
and/or administration fees to their respective 
Advisers and the administrator as follows:

						Growth and Income 
Fund
					          Fiscal Year 
Ended January 31,
					  1995		   
1996		    1997

Investment Advisory fees...........................  
$847,149	$918,110	$1,256,354	
Administration 
fees....................................   376,511	  
408,049	     558,380


						 Social Awareness 
Fund
					     Fiscal Year Ended 
January 31,
					1995		1996	
	1997

Investment Advisory fees...........................  
$2,013,080	$2,095,050	$2,146,284
Administration 
fees....................................      732,029	     
761,836	     780,467

	Each Adviser and the administrator has agreed 
that if in any fiscal year the aggregate expenses of 
the Fund it serves (including fees payable pursuant to 
its agreement with respect to the Fund, but excluding 
interest, taxes, brokerage, fees paid pursuant to the 
Trust's services and distribution plan, and, if 
permitted by the relevant state securities 
commissions, extraordinary expenses) exceed the 
expense limitation of any state having jurisdiction 
over the Fund, the Adviser and administrator, to the 
extent required by state law, will reduce their fees 
to the Fund by the amount of such excess expense, such 
amount to be allocated between them in the same 
proportion as their respective fees bear to the 
combined fees for investment advice and 
administration. Such fee reduction, if any, will be 
estimated and reconciled on a monthly basis. The most 
restrictive state expense limitation currently 
applicable to any Fund requires a reduction of fees in 
any year that such expenses exceed 2.50% of the Fund's 
first $30 million of average net assets, 2.00% of the 
next $70 million of average net assets and 1.50% of 
the remaining average net assets.

Counsel and Auditors

	Willkie Farr & Gallagher LLP, serves as legal 
counsel to the Trust. Stroock & Stroock & Lavan LLP 
serves as counsel to the Independent Trustees of the 
Funds.

	KPMG Peat Marwick LLP, 345 Park Avenue, New 
York, New York 10154, has been selected as the Trust's 
independent auditor to examine and report on the 
Trust"s financial statements and financial highlights 
for the fiscal year ending January 31, 1998.






INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

	The Prospectuses discuss the investment 
objectives of the Funds and the policies employed to 
achieve those objectives. This section contains 
supplemental information concerning the types of 
securities and other instruments in which the Funds 
may invest, the investment policies and portfolio 
strategies the Funds may utilize and certain risks 
attendant to such investments, policies and 
strategies. There can be no assurance that the 
respective investment objectives of the Funds will be 
achieved.

	United States Government Securities.  United 
States government securities include debt obligations 
of varying maturities issued or guaranteed by the 
United States government or its agencies or 
instrumentalities ("U.S. government securities"). 
Direct obligations of the United States Treasury 
include a variety of securities that differ in their 
interest rates, maturities and dates of issuance.

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

	Venture Capital Investments (Social Awareness 
Fund).  Social Awareness Fund may invest up to 5% of 
its total assets in venture capital investments, that 
is, new and early stage companies whose securities are 
not publicly traded. Venture capital investments may 
present significant opportunities for capital 
appreciation but involve a high degree of business and 
financial risk that can result in substantial losses. 
The disposition of U.S. venture capital investments, 
which may include limited partnership interests, 
normally would be restricted under Federal securities 
laws. Generally, restricted securities may be sold 
only in privately negotiated transactions or in public 
offerings registered under the Securities Act of 1933, 
as amended. The Fund also may be subject to 
restrictions contained in the securities laws of other 
countries in disposing of portfolio securities. As a 
result of these restrictions, the Fund may be unable 
to dispose of such investments at times when disposal 
is deemed appropriate due to investment or liquidity 
considerations; alternatively, the Fund may be forced 
to dispose of such investments at less than fair 
market value. Where registration is required, the Fund 
may be obligated to pay part or all of the expenses of 
such registration. 

	Lending of Portfolio Securities.  Each Fund has 
the ability to lend portfolio securities to brokers, 
dealers and other financial organizations. These 
loans, if and when made, may not exceed 20% of a 
Fund's total assets taken at value. A Fund will not 
lend portfolio securities to Smith Barney unless it 
has applied for and received specific authority to do 
so from the SEC. Loans of portfolio securities will be 
collateralized by cash, letters of credit or U.S. 
government securities that are maintained at all times 
in a segregated account in an amount equal to 100% of 
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 
that is acting as a "finder."  

	By lending its securities, a Fund can increase 
its income by continuing to receive interest on the 
loaned securities as well as by either investing the 
cash collateral in short-term instruments or obtaining 
yield in the form of interest paid by the borrower 
when U.S. government securities are used as 
collateral.  A Fund will comply with the following 
conditions whenever its portfolio securities are 
loaned: (a) the Fund must receive at least 100% cash 
collateral or equivalent securities from the borrower; 
(b) the borrower must increase such collateral 
whenever the market value of the securities loaned 
rises above the level of such collateral; (c) the Fund 
must be able to terminate the loan at any time; (d) 
the Fund must receive reasonable interest on the loan, 
as well as any dividends, interest or other 
distributions on the loaned securities, and any 
increase in market value; (e) the Fund may pay only 
reasonable custodian fees in connection with the loan; 
and (f) voting rights on the loaned securities may 
pass to the borrower, provided, however, that if a 
material event adversely affecting the investment in 
the loaned securities occurs, the Trust's Board of 
Trustees must terminate the loan and regain the right 
to vote the securities. The risks in lending portfolio 
securities, as with other extensions of secured 
credit, consist of a possible delay in receiving 
additional collateral or in the recovery of the 
securities or possible loss of rights in the 
collateral should the borrower fail financially. Loans 
will be made to firms deemed by each Fund's Adviser to 
be of good standing and will not be made unless, in 
its judgment, the consideration to be earned from such 
loans would justify the risk.

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

	Options written by the Funds normally will have 
expiration dates between one and nine months from the 
date they are written. The exercise price of the 
options may be below ("in-the-money"), equal to ("at-
the-money"), or above ("out-of-the-money") the market 
values of the underlying securities at the times the 
options are written. A Fund may write (a) in-the-money 
call options when its Adviser expects that the price 
of the underlying security will remain flat or decline 
moderately during the option period, (b) at-the-money 
call options when its Adviser expects that the price 
of the underlying security will remain flat or advance 
moderately during the option period and (c) out-of-
the-money call options when its Adviser expects that 
the price of the underlying security may increase but 
not above a price equal to the sum of the exercise 
price plus the premiums received from writing the call 
option. In any of the preceding situations, if the 
market price of the underlying security declines and 
the security is sold at this lower price, the amount 
of any realized loss will be offset wholly or in part 
by the premium received.

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

	An option position may be closed out only where 
there exists a secondary market for an option of the 
same series on a securities exchange or in the over-
the-counter market. Social Awareness Fund expects to 
write options only on domestic securities exchanges. A 
Fund may realize a profit or loss upon entering into a 
closing transaction. In cases in which a Fund has 
written an option, it will realize a profit if the 
cost of the closing purchase transaction is less than 
the premium received upon writing the original option 
and will incur a loss if the cost of the closing 
purchase transaction exceeds the premium received upon 
writing the original option.

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

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

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

	Money Market Instruments.  Subject to the 
restrictions noted in the Prospectuses, the money 
market instruments in which the Funds may invest are: 
U.S. government securities; certificates of deposit 
("CDs"), time deposits ("TDs") and bankers' 
acceptances issued by domestic banks (including their 
branches located outside the United States and 
subsidiaries located in Canada), domestic branches of 
foreign banks, savings and loan associations and 
similar institutions; high grade commercial paper; and 
repurchase agreements with respect to the foregoing 
types of instruments. The following is a more detailed 
description of such money market instruments.

	Bank Obligations.  CDs are short-term, 
negotiable obligations of commercial banks; TDs are 
non-negotiable deposits maintained in banking 
institutions for specified periods of time at stated 
interest rates; and bankers' acceptances are time 
drafts drawn on commercial banks by borrowers usually 
in connection with international transactions. 
Domestic commercial banks organized under Federal law 
are supervised and examined by the Comptroller of the 
Currency and are required to be members of the Federal 
Reserve System and to be insured by the Federal 
Deposit Insurance Corporation (the "FDIC"). Domestic 
banks organized under state law are supervised and 
examined by state banking authorities but are members 
of the Federal Reserve System only if they elect to 
join. Most state banks are insured by the FDIC 
(although such insurance may not be of material 
benefit to a Fund, depending upon the principal amount 
of CDs of each bank held by the Fund) and are subject 
to federal examination and to a substantial body of 
Federal law and regulation. As a result of 
governmental regulations, domestic branches of 
domestic banks, among other things, generally are 
required to maintain specified levels of reserves, and 
are subject to other supervision and regulation 
designed to promote financial soundness.

	Obligations of foreign branches of domestic 
banks, such as CDs and TDs, may be general obligations 
of the parent bank in addition to the issuing branch, 
or may be limited by the terms of a specific 
obligation and governmental regulations. Such 
obligations are subject to different risks than are 
those of domestic banks or domestic branches of 
foreign banks. These risks include foreign economic 
and political developments, foreign governmental 
restrictions that may adversely affect payment of 
principal and interest on the obligations, foreign 
exchange controls and foreign withholding and other 
taxes on interest income. Foreign branches of domestic 
banks are not necessarily subject to the same or 
similar regulatory requirements that apply to domestic 
banks, such as mandatory reserve requirements, loan 
limitations, and accounting, auditing and financial 
recordkeeping requirements. In addition, less 
information may be publicly available about a foreign 
branch of a domestic bank than about a domestic bank. 
CDs issued by wholly owned Canadian subsidiaries of 
domestic banks are guaranteed as to repayment of 
principal and interest (but not as to sovereign risk) 
by the domestic parent bank.

	Obligations of domestic branches of foreign 
banks may be general obligations of the parent bank in 
addition to the issuing branch, or may be limited by 
the terms of a specific obligation and by Federal and 
state regulation as well as governmental action in the 
country in which the foreign bank has its head office. 
A domestic branch of a foreign bank with assets in 
excess of $1 billion may or may not be subject to 
reserve requirements imposed by the Federal Reserve 
System or by the state in which the branch is located 
if the branch is licensed in that state. In addition, 
branches licensed by the Comptroller of the Currency 
and branches licensed by certain states ("State 
Branches") may or may not be required to: (a) pledge 
to the regulator by depositing assets with a 
designated bank within the state, an amount of its 
assets equal to 5% of its total liabilities; and (b) 
maintain assets within the state in an amount equal to 
a specified percentage of the aggregate amount of 
liabilities of the foreign bank payable at or through 
all of its agencies or branches within the state. The 
deposits of State Branches may not necessarily be 
insured by the FDIC. In addition, there may be less 
publicly available information about a domestic branch 
of a foreign bank than about a domestic bank.

	In view of the foregoing factors associated with 
the purchase of CDs and TDs issued by foreign branches 
of domestic banks or by domestic branches of foreign 
banks, each Fund's Adviser will carefully evaluate 
such investments on a case-by-case basis. Savings and 
loan associations, the CDs of which may be purchased 
by the Funds, are supervised by the Office of Thrift 
Supervision and are insured by the Savings Association 
and Insurance Fund. As a result, such savings and loan 
associations are subject to regulation and 
examination.

	Commercial Paper.  Commercial paper is a short-
term, unsecured negotiable promissory note of a 
domestic or foreign company. A Fund may invest in 
short-term debt obligations of issuers that at the 
time of purchase are rated A-2, A-1 or A-1+ by 
Standard & Poor's Ratings Group ("S&P") or Prime-2 or 
Prime-1 by Moody's Investors Service, Inc. ("Moody's") 
or, if unrated, are issued by companies having an 
outstanding unsecured debt issue currently rated 
within the two highest ratings of S&P or Moody's. A 
discussion of S&P and Moody's rating categories 
appears in the Appendix to this Statement of 
Additional Information.

	A Fund also may invest in variable rate master 
demand notes, which typically are issued by large 
corporate borrowers providing for variable amounts of 
principal indebtedness and periodic adjustments in the 
interest rate according to the terms of the 
instrument. Demand notes are direct lending 
arrangements between the Fund and an issuer, and are 
not normally traded in a secondary market. A Fund, 
however, may demand payment of principal and accrued 
interest at any time. In addition, while demand notes 
generally are not rated, their issuers must satisfy 
the same criteria as those set forth above for issuers 
of commercial paper. Each Fund's Adviser will consider 
the earning power, cash flow and other liquidity 
ratios of issuers of demand notes and continually will 
monitor their financial ability to meet payment on 
demand.

	Convertible Securities.  The Funds may invest in 
convertible securities. Convertible securities are 
fixed-income securities that may be converted at 
either a stated price or stated rate into underlying 
shares of common stock. Convertible securities have 
general characteristics similar to both fixed-income 
and equity securities. Although to a lesser extent 
than with fixed-income securities generally, the 
market value of convertible securities tends to 
decline as interest rates increase and, conversely, 
tends to increase as interest rates decline. In 
addition, because of the conversion feature, the 
market value of convertible securities tends to vary 
with fluctuations in the market value of the 
underlying common stocks and, therefore, also will 
react to variations in the general market for equity 
securities. A unique feature of convertible securities 
is that as the market price of the underlying common 
stock declines, convertible securities tend to trade 
increasingly on a yield basis, and thus may not 
experience market value declines to the same extent as 
the underlying common stock. When the market price of 
the underlying common stock increases, the prices of 
the convertible securities tend to rise as a 
reflection of the value of the underlying common 
stock. While no securities investments are without 
risk, investments in convertible securities generally 
entail less risk than investments in common stock of 
the same issuer.

	As fixed-income securities, convertible 
securities are investments that provide for a stable 
stream of income with generally higher yields than 
common stocks. Of course, like all fixed-income 
securities, there can be no assurance of current 
income because the issuers of the convertible 
securities may default on their obligations. 
Convertible securities, however, generally offer lower 
interest or dividend yields than non-convertible 
securities of similar quality because of the potential 
for capital appreciation. A convertible security, in 
addition to providing fixed income, offers the 
potential for capital appreciation through the 
conversion feature, which enables the holder to 
benefit from increases in the market price of the 
underlying common stock. There can be no assurance of 
capital appreciation, however, because securities 
prices fluctuate.

	Convertible securities generally are 
subordinated to other similar but non-convertible 
securities of the same issuer, although convertible 
bonds, as corporate debt obligations, enjoy seniority 
in right of payment to all equity securities, and 
convertible preferred stock is senior to common stock, 
of the same issuer. Because of the subordination 
feature, however, convertible securities typically 
have lower ratings than similar non-convertible 
securities.  

	Preferred Stock.  The Funds may invest in 
preferred stocks. Preferred stocks, like debt 
obligations, are generally fixed-income securities. 
Shareholders of preferred stocks normally have the 
right to receive dividends at a fixed rate when and as 
declared by the issuer's board of directors, but do 
not participate in other amounts available for 
distribution by the issuing corporation. Dividends on 
the preferred stock may be cumulative, and all 
cumulative dividends usually must be paid prior to 
common stockholders receiving any dividends. Preferred 
stock dividends must be paid before common stock 
dividends and for that reason preferred stocks 
generally entail less risk than common stocks. Upon 
liquidation, preferred stocks are entitled to a 
specified liquidation preference, which is generally 
the same as the par or stated value, and are senior in 
right of payment to common stock. Preferred stocks 
are, however, equity securities in the sense that they 
do not represent a liability of the issuer and 
therefore do not offer as great a degree of protection 
of capital or assurance of continued income as 
investments in corporate debt securities. In addition, 
preferred stocks are subordinated in right of payment 
to all debt obligations and creditors of the issuer, 
and convertible preferred stocks may be subordinated 
to other preferred stock of the same issuer.

	American, European, Global and Continental 
Depository Receipts.  The assets of Social Awareness 
Fund and the Growth Fund may be invested in the 
securities of foreign issuers in the form of American 
Depository Receipts ("ADRs"), European Depository 
Receipts ("EDRs") and Global Depository Receipts 
("GDRs"). These securities may not necessarily be 
denominated in the same currency as the securities 
into which they may be converted. ADRs are U.S. 
dollar-denominated receipts typically issued by a 
domestic bank or trust company that evidence ownership 
of underlying securities issued by a foreign 
corporation. EDRs, which are sometimes referred to as 
Continental Depository Receipts ("CDRs"), are receipts 
issued in Europe typically by non-U.S. banks and trust 
companies that evidence ownership of either foreign or 
domestic securities. Generally, ADRs in registered 
form are designed for use in U.S. securities markets 
and EDRs and CDRs in bearer form are designed for use 
in European securities markets.

Investment Restrictions

The Trust has adopted the following investment 
restrictions for the protection of shareholders. 
Restrictions 1 through 8 below have been adopted by 
the Trust with respect to each Fund as fundamental 
policies. Under the 1940 Act, a fundamental policy of 
a Fund may not be changed without the vote of a 
majority, as defined in the 1940 Act, of the 
outstanding voting securities of the Fund. Such 
majority is defined as the lesser of (a) 67% or more 
of the shares present at the meeting, if the holders 
of more than 50% of the outstanding shares of the Fund 
are present or represented by proxy, or (b) more than 
50% of the outstanding shares. Investment restrictions 
9 through 17 may be changed by vote of a majority of 
the Trust's Board of Trustees at any time. 

	The investment policies adopted by the Trust 
prohibit a Fund 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.

       2	Purchasing 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; provided that this limitation shall not 
apply to investments in U.S. government 
securities.

       3.	Borrowing 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 borrowings exceed 5% 
of the value of the total assets of a Fund, the 
Fund will not make any additional investments.

       4.	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.

       5.	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 purchase 
securities issued by companies that invest or 
deal in real estate.

       6.	Investing in commodities, except that each 
Fund may invest in futures contracts and options 
on futures contracts as described in each Fund's 
Prospectus.

       7.	Making loans to others, except through the 
purchase of qualified debt obligations, loans of 
portfolio securities and the entry into 
repurchase agreements.

       8.	Purchasing any securities (other than U.S. 
government 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.

       9.	Purchasing securities on margin. 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. 

      10.	Making short sales of securities or 
maintaining a short position.

      11.	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 call 
options and (b) collateral arrangements with 
respect to (i) the purchase and sale of options 
on stock indices and (ii) initial or variation 
margin for futures contracts, will not be deemed 
to be pledges of a Fund's assets.

      12.	Investing 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.

      13.	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 or acquisition of 
assets or an offer of exchange.

      14.	Writing or selling puts, calls, straddles, 
spreads or combinations thereof, except that 
Social Awareness Fund may write covered call 
options.

      15.	Purchasing illiquid securities (such as 
repurchase agreements with maturities in excess 
of seven days) or other securities that are not 
readily marketable if more than 15% of the total 
assets of the Fund would be invested in such 
securities. 

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

      17.	Purchasing or retaining securities of any 
company if, to the knowledge of the Trust, any 
of a Fund's officers or Trustees of the Trust or 
any officer or director of an Adviser 
individually owns more than 1/2 of 1% of the 
outstanding securities of such company and 
together they own beneficially more than 5% of 
such securities. 

	The Trust may make commitments more restrictive 
than the restrictions listed above with respect to a 
Fund so as to permit the sale of shares of the Fund in 
certain states. Should the Trust determine that any 
such commitment is no longer in the best interests of 
a Fund and its shareholders, the Trust will revoke the 
commitment by terminating the sale of shares of the 
Fund in the relevant state. The percentage limitations 
contained in the restrictions listed above apply at 
the time of purchases of securities.

Portfolio Turnover

The Funds do not intend to seek profits through short-
term trading. Nevertheless, the Funds will not 
consider turnover rate a limiting factor in making 
investment decisions.

	Under certain market conditions, a Fund may 
experience increased portfolio turnover as a result of 
its options activities. For instance, the exercise of 
a substantial number of options written by a Fund (due 
to appreciation of the underlying security in the case 
of call options or depreciation of the underlying 
security in the case of put options) could result in a 
turnover rate in excess of 100%. In addition, Social 
Awareness Fund may experience increased portfolio 
turnover as a result of the asset allocation strategy 
that it employs and the Growth Fund's disciplined sell 
strategy may result in an increased portfolio 
turnover. The portfolio turnover rate of a Fund is 
calculated by dividing the lesser of purchases or 
sales of portfolio securities for the year by the 
monthly average value of portfolio securities. 
Securities with remaining maturities of one year or 
less on the date of acquisition are excluded from the 
calculation.

	For the fiscal years ended January 31, 1996 and 
1997, the portfolio turnover rates of the Funds were 
as follows:

						1996		1997

Social Awareness Fund				81%	
	68%
Growth and Income Fund				15%		  
9%

Portfolio Transactions

	Most of the purchases and sales of securities 
for a Fund, whether transacted on a securities 
exchange or in the over-the-counter market, will be 
effected in the primary trading market for the 
securities. The primary trading market for a given 
security generally is located in the country in which 
the issuer has its principal office. Decisions to buy 
and sell securities for a Fund are made by its 
Adviser, which also is responsible for placing these 
transactions, subject to the overall review of the 
Trust's Trustees.

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

	Transactions on domestic stock exchanges and 
some foreign stock exchanges involve the payment of 
negotiated brokerage commissions. On exchanges on 
which commissions are negotiated, the cost of 
transactions may vary among different brokers. On most 
foreign exchanges, commissions are generally fixed. 
There is generally no stated commission in the case of 
securities traded in domestic or foreign over-the-
counter markets, but the prices of those securities 
include undisclosed commissions or mark-ups. The cost 
of securities purchased from underwriters includes an 
underwriting commission or concession, and the prices 
at which securities are purchased from and sold to 
dealers include a dealer's mark-up or mark-down. U.S. 
government securities are generally purchased from 
underwriters or dealers, although certain newly issued 
U.S. government securities may be purchased directly 
from the United States Treasury or from the issuing 
agency or instrumentality, respectively.

	The following table sets forth certain 
information regarding the payment of brokerage 
commissions by the Social Awareness Fund and the 
Growth and Income Fund: 

						Fiscal Year	Social
						Ended	
	Awareness	Growth and
						January 31,	Fund	
	Income Fund

Total Brokerage Commissions			1995		  
541,403	  567,988
						1996		  
232,581	    95,978
						1997		  
215,689	  130,854
						
Commissions paid to				1995		  
117,328	   53,370
Smith Barney					1996		    
16,210	     3,690
						1997		     
6,276	     8,046





% of Total Brokerage
Commissions paid to
Smith Barney 					1997	
	3%		6.14%	

% of Total Transactions
involving Commissions paid
to Smith Barney					1997	
	2%		5.75%

	The total brokerage commissions paid by the 
Funds for each fiscal year vary primarily due to 
increases or decreases in the Funds' volume of 
securities transactions on which brokerage commissions 
are charged.

	In selecting brokers or dealers to execute 
portfolio transactions on behalf of a Fund, the Fund's 
Adviser seeks the best overall terms available. In 
assessing the best overall terms available for any 
transaction, each Adviser will consider the factors 
the Adviser deems relevant, including the breadth of 
the market in the security, the price of the security, 
the financial condition and the execution capability 
of the broker or dealer and the reasonableness of the 
commission, if any, for the specific transaction and 
on a continuing basis. In addition, each advisory 
agreement between the Trust and an Adviser relating to 
a Fund authorizes the Adviser, in selecting brokers or 
dealers to execute a particular transaction and in 
evaluating the best overall terms available, to 
consider the brokerage and research services (as those 
terms are defined in Section 28(e) of the Securities 
Exchange Act of 1934) provided to the Fund, the other 
Funds and/or other accounts over which the Adviser or 
its affiliates exercise investment discretion. The 
fees under the advisory agreements relating to the 
Funds between the Trust and the Advisers are not 
reduced by reason of their receiving such brokerage 
and research services. The Trust's Board of Trustees 
periodically will review the commissions paid by the 
Funds to determine if the commissions paid over 
representative periods of time were reasonable in 
relation to the benefits inuring to the Funds.

	To the extent consistent with applicable 
provisions of the 1940 Act and the rules and 
exemptions adopted by the SEC thereunder, the Board of 
Trustees has determined that transactions for a Fund 
may be executed through Smith Barney and other 
affiliated broker-dealers if, in the judgment of the 
Fund's Adviser, the use of such broker-dealer is 
likely to result in price and execution at least as 
favorable as those of other qualified broker-dealers, 
and if, in the transaction, such broker-dealer charges 
the Fund a rate consistent with that charged to 
comparable unaffiliated customers in similar 
transactions. Smith Barney may directly execute such 
transactions for the Funds on the floor of any 
national securities exchange, provided (a) the Board 
of Trustees has expressly authorized Smith Barney to 
effect such transactions, and (b) Smith Barney 
annually advises the Trust of the aggregate 
compensation it earned on such transactions. Over-the-
counter purchases and sales are transacted directly 
with principal market makers except in those cases in 
which better prices and executions may be obtained 
elsewhere.

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


PURCHASE OF SHARES

Volume Discounts

	The schedule of sales charges on Class A shares 
described in the Prospectuses applies to purchases 
made by any "purchaser," which is defined to include 
the following: (a) an individual; (b) an individual's 
spouse and his or her children purchasing shares for 
his or her own account; (c) a trustee or other 
fiduciary purchasing shares for a single trust estate 
or single fiduciary account; (d) a pension, profit-
sharing or other employee benefit plan qualified under 
Section 401(a) of the Internal Revenue Code of 1986, 
as amended (the "Code"), and qualified employee 
benefit plans of employers who are "affiliated 
persons" of each other within the meaning of the 1940 
Act; (e) Tax-Exempt organizations enumerated in 
Section 501(c)(3) or (13) of the Code; and (f) a 
trustee or other professional fiduciary (including a 
bank, or an investment adviser registered with the SEC 
under the Investment Advisers Act of 1940, as amended) 
purchasing shares of a Fund for one or more trust 
estates or fiduciary accounts. Purchasers who wish to 
combine purchase orders to take advantage of volume 
discounts on Class A shares should contact a Smith 
Barney Financial Consultant. 

Combined Right of Accumulation

	Reduced sales charges, in accordance with the 
schedules in the Prospectuses, apply to any purchase 
of Class A shares if the aggregate investment in Class 
A shares of any Fund and in Class A shares of other 
funds of the Smith Barney Mutual Funds that are 
offered with a sales charge, including the purchase 
being made, of any purchaser is $25,000 or more. The 
reduced sales charge is subject to confirmation of the 
shareholder's holdings through a check of appropriate 
records. The Trust reserves the right to terminate or 
amend the combined right of accumulation at any time 
after written notice to shareholders. For further 
information regarding the combined right of 
accumulation, shareholders should contact a Smith 
Barney Financial Consultant or a PFS Investment 
Registered Representative.

Determination of Public Offering Price

	The Trust offers shares of the Funds to the 
public on a continuous basis. The public offering 
price for Class A shares of the Funds is equal to the 
net asset value per share at the time of purchase, 
plus a sales charge based on the aggregate amount of 
the investment. The public offering price for Class B, 
Class C, Class Y and Class Z shares of a Fund (and 
Class A share purchases, including applicable right of 
accumulation, equaling or exceeding $500,000) is equal 
to the net asset value per share at the time of 
purchase and no sales charge is imposed at the time of 
purchase. A contingent deferred sales charge ("CDSC"), 
however, is imposed on certain redemptions of Class B 
and Class C shares and of Class A shares when 
purchased in amounts equaling or exceeding $500,000. 
The method of computation of the public offering price 
is shown in the Funds' financial statements, which are 
incorporated by reference in their entirety into this 
Statement of Additional Information.


REDEMPTION OF SHARES

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

Distributions in Kind

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



Automatic Cash Withdrawal Plan

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

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


DISTRIBUTOR
	Smith Barney serves as the Trust's distributor 
on a best efforts basis pursuant to a distribution 
agreement (the "Smith Barney Distribution Agreement") 
which was most recently approved by the Trust's Board 
of Trustees on March 31, 1997.

	PFS serves as one of the Trust's distributors 
with respect to the Concert Social Awareness Fund 
pursuant to a distribution agreement (the "PFS 
Distribution Agreement") which was most recently 
approved by the Trust's Board of Trustees.(the Smith 
Barney Distribution Agreements and the PFS 
Distribution Agreements a "Distribution Agreement" and 
collectively the "Distribution Agreements")

	When payment is made by the investor before 
settlement date, unless otherwise noted by the 
investor, the funds will be held as a free credit 
balance in the investor's brokerage account and Smith 
Barney may benefit from the temporary use of the 
Funds. The investor may designate another use for the 
funds prior to settlement date, such as an investment 
in a money market fund (other than Smith Barney 
Exchange Reserve Fund) of the Smith Barney Mutual 
Funds. If the investor instructs Smith Barney to 
invest the funds in a Fund of the Smith Barney money 
market fund, the amount of the investment will be 
included as part of the average daily net assets of 
both the Fund and the Smith Barney money market fund, 
and affiliates of Smith Barney that serve the funds in 
an investment advisory or administrative capacity will 
benefit from the fact they are receiving investment 
management fees from both such investment companies 
for managing these assets computed on the basis of 
their average daily net assets. The Trust's Board of 
Trustees has been advised of the benefits to Smith 
Barney resulting from these settlement procedures and 
will take such benefits into consideration when 
reviewing the Advisory, Administration and 
Distribution Agreements for continuance.

For the fiscal year ended January 31, 1997, Smith 
Barney incurred distribution expenses totaling 
approximately $3,615,355 consisting of approximately 
$156,719 for advertising, $34,098 for printing and 
mailing of Prospectuses, $1,649,706 for support 
services, $1,726,208  to Smith Barney Financial 
Consultants, $49,624 in accruals for interest on 
the excess of Smith Barney expenses incurred in 
distributing the Fund's shares over the sum of the 
distribution fees and CDSC received by Smith Barney 
from the Fund.

Distribution Arrangements

	To compensate Smith Barney or PFS, as the case 
may be, for the services they provide and for the 
expense they bear under the Distribution Agreements, 
the Trust has adopted a services and distribution plan 
(the "Plan") pursuant to Rule 12b-1 under the 1940 
Act. Under the Plan, the Trust pays Smith Barney and, 
with respect to Class A and Class B shares of the 
Concert Social Awareness Fund, PFS, a service fee, 
accrued daily and paid monthly, calculated at the 
annual rate of 0.25% of the value of the Fund's 
average daily net assets attributable to the Fund's 
Class A, Class B and Class C shares. In addition, the 
Trust pays Smith Barney and with respect to Class B 
shares of Concert Social Awareness Fund, PFS, a 
distribution fee with respect to each Fund's Class B 
and Class C shares primarily intended to compensate 
Smith Barney and/or PFS for its initial expense of 
paying its Financial Consultants and/or PFS 
Investments Registered Representatives a commission 
upon sales of those shares. The Class B and Class C 
distribution fees are calculated at the annual rate of 
0.75% for the Social Awareness Fund and 0.50% for the 
Growth and Income Fund of the value of a Fund's 
average daily net assets attributable to the shares of 
that Class.



	The following expenses were incurred during the 
periods indicated:

	Sales Charges (paid to Smith Barney).

						Class A		
	
			Fiscal Year		Fiscal Year	
	Fiscal Year
Name of Fund		Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97

Social Awareness	 	$13,735		    
	$47,000			$49,000
Growth and Income	  39,518			  69,000	
		 105,014


	CDSC (paid to Smith Barney)

						Class B		
	
			Fiscal Year		Fiscal Year	
	Fiscal Year
Name of Fund		Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97
 
Social Awareness		   $ 311,572		  
$382,000		$261,000
Growth and Income	      271,979		    216,000	
	  165,000


							Class C
						(formerly Class D 
Shares)		
			Fiscal Year		Fiscal Year	
	Fiscal Year
			Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97
Name of Fund

Social Awareness		$55			$1,000	
		$2,000
Growth and Income	N/A			N/A			  
1,000


	Service Fees (paid to Smith Barney)

						Class A		
	
			Fiscal Year		Fiscal Year	
	Fiscal Year
Name of Fund		Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97

Social Awareness		$148,061		$401,114	
	$440,493
Growth and Income	    97,689		  256,112		  
296,444



						Class B		
	
			Fiscal Year		Fiscal Year	
	Fiscal Year
Name of Fund		Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97

Social Awareness		$ 764,217		$544,656	
	$525,603
Growth and Income	   372,877		  252,848		  
304,609


						Class C
					(formerly Class D 
Shares)	
			Fiscal Year		Fiscal Year	
	Fiscal Year
			Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97
Name of Fund

Social Awareness		$2,759			$6,110
			$9,603
Growth and Income*	$1,100			$1,100
			  4,573
____________________________
* Class C Shares were first purchased by the public on 
August 15, 1994.


	Distribution Fees (paid to Smith Barney)

						Class B		
	
			Fiscal Year		Fiscal Year	
	Fiscal Year
Name of Fund		Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97

Social Awareness		$2,292,652		$1,633,968	
	$2,100,943
Growth and Income	     745,754		     505,697
		     609,219


						Class C
					(formerly Class D 
Shares)			
			Fiscal Year		Fiscal Year	
	Fiscal Year
			Ended 1/31/95		Ended 
1/31/96		Ended 1/31/97
Name of Fund

Social Awareness		$8,277		
	$18,328			$38,410
Growth and Income*	      78			    
2,200			    9,146
_____________________________
* Class C Shares were first purchased by the public on 
August 15, 1994.

	For the fiscal year ended January 31, 1997, the 
distribution expenses incurred by Smith Barney on 
Class B and Class C shares totaled $618,364.

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


VALUATION OF SHARES

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

	A security that is listed or traded on more than 
one exchange is valued at the quotation on the 
exchange determined to be the primary market for such 
security. All assets and liabilities initially 
expressed in foreign currency values will be converted 
into U.S. dollar values at the mean between the bid 
and offered quotations of such currencies against U.S. 
dollars as last quoted by any recognized dealer. If 
such quotations are not available, the rate of 
exchange will be determined in good faith by the 
Trust's Board of Trustees. In carrying out the Board's 
valuation policies, SBMFM, as administrator, may 
consult with an independent pricing service (the 
"Pricing Service") retained by the Trust.

	Debt securities of domestic issuers (other than 
U.S. government securities and short-term investments) 
are valued by SBMFM, as administrator, after 
consultation with the Pricing Service approved by the 
Trust's Board of Trustees. When, in the judgment of 
the Pricing Service, quoted bid prices for investments 
are readily available and are representative of the 
bid side of the market, these investments are valued 
at the mean between the quoted bid prices and asked 
prices. Investments for which, in the judgment of the 
Pricing Service, there are no readily obtainable 
market quotations are carried at fair value as 
determined by the Pricing Service. The procedures of 
the Pricing Service are reviewed periodically by the 
officers of the Funds under the general supervision 
and responsibility of the Trust's Board of Trustees.


EXCHANGE PRIVILEGE

	Except as noted below, shareholders of any fund 
of the Smith Barney Mutual Funds may exchange all or 
part of their shares for shares of the same class of 
other funds of the Smith Barney Mutual Funds, to the 
extent such shares are offered for sale in the 
shareholder's state of residence, on the basis of 
relative net asset value per share at the time of 
exchange, except that Class B shares of any fund may 
be exchanged without a sales charge. Class B shares of 
a Fund exchanged for Class B shares of another fund 
will be subject to the higher applicable CDSC of the 
two funds and, for purposes of calculating CDSC rates 
and conversion periods, will be deemed to have been 
held since the date the shares being exchanged were 
deemed to be purchased.

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

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

PERFORMANCE DATA

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

Average Annual Total Return

	"Average annual total return" figures are 
computed according to a formula prescribed by the SEC. 
The formula can be expressed as follows:

					P(1+T)n = ERV

Where:		P	=	a hypothetical initial 
payment of $1,000.
		T	=	average annual total return.
		n	=	number of years.
		ERV	=	Ending Redeemable Value of a 
hypothetical $1,000 payment made
				at the beginning of the 1-, 5- 
or 10-year period at the
				end of the 1-, 5- or 10-year 
period (or fractional portion thereof),
				assuming reinvestment of all 
dividends and distributions.



	The average annual total returns of the Funds' 
Class A shares were as follows for the periods 
indicated:

								        
Per Annum
								       
for the Period
							       from 
the Commencement of
					One Year Period
	Operations* through
					Ended 1/31/97		
	1/31/97		

Name of Fund

Social Awareness Fund			6.80%			
	12.13%
Growth and Income Fund		            14.92		
		11.96
______________________________
*The Funds commenced selling Class A shares on 
November 6, 1992.


	The average annual total returns of the Funds' 
Class B shares were as follows for the 
periods indicated:

						Per Annum	        
Per Annum
						     for the	       
for the Period
				One Year	Five Year	from 
the Commencement of
				Period Ended	Period Ended
	    Operations through
				    1/31/97  	     1/31/97
		1/31/97		
Name of Fund

Social Awareness Fund(1)		  6.60%	
	11.26%			10.78%
Growth and Income Fund(2)	  15.43		    
		12.62
________________________________
(1) The Fund commenced selling Class B shares on 
February 2, 1987.
(2) The Fund commenced selling Class B shares on 
November 6, 1992.


	The average annual total returns of the Funds' 
Class C shares were as follows for the 
periods indicated:

								Per 
Annum
								for 
the period
				One Year		from the 
Commencement of
				Period Ended		    
Operations* through
				   1/31/97		
	1/31/97		
Name of Fund

Social Awareness Fund		10.65%			
	11.41%
Growth and Income Fund		19.43  			
	19.73
______________________________
*The Funds commenced selling Class C shares 
(previously Class D shares) on January 29, 1993.

	Average annual total return figures calculated 
in accordance with the above formula assume that the 
maximum 5% sales charge or maximum CDSC, as the case 
may be, has been deducted from the hypothetical 
investment. A Fund's net investment income changes in 
response to fluctuations in interest rates and the 
expenses of the Fund.

Aggregate Total Return

"Aggregate total return" figures represent the 
cumulative change in the value of an investment in the 
Class for the specified period and are computed by the 
following formula:

ERV-P
-----
P

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

	The aggregate total returns (with fees waived) 
for the following classes, were as follows for  the 
periods indicated:

				Without Sales Charge			      
With Sales Charge		
						Period from	|		
	Period from
			One Year   Five Year   Commencement	|One Year  
Five Year  Commencement
			Period	     Period	of Operations
	|Period	     Period	of Operations
			Ended	     Ended	   through	|Ended	     
Ended	    through
			1/31/97*     1/31/97*	  1/31/97*	|1/31/97**   
1/31/97**	   1/31/97**

Social Awareness 
	Class A+	12.42%	     	70.93%		     
6.80% 62.43%
	Class B (1)	11.60	      71.48%          178.50		     
6.60		70.48%		178.50
	Class C++	11.65	     49.90		     
10.65  49.90

Growth and Income
	Class A+	20.97	     13.32		     14.92
			11.96
	Class B (2)	20.43	     12.78		     15.43
			12.62
	Class C++	20.43	     19.73		     
19.43			19.73

  *	Figures do not include the effect of the maximum 
sales charge or maximum applicable CDSC. If
	they had been included, it would have had the 
effect of lowering the returns shown.
**	Figures include the effect of the maximum sales 
charge or maximum applicable CDSC. 
  +	The Fund commenced selling Class A shares on 
November 6, 1992.
++	The Fund commenced selling Class C shares 
(previously Class D shares) on January  29, 1993.
(1)	The Fund commenced selling Class B shares on 
February 2, 1987. 
(2)	The Fund commenced selling Class B shares on 
November 6, 1992. 

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

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


TAXES

The following is a summary of certain Federal income 
tax considerations that may affect the Funds and their 
shareholders. This summary is not intended as a 
substitute for individual tax advice, and investors 
are urged to consult their own tax advisors as to the 
tax consequences of an investment in either Fund of 
the Trust.  

Tax Status of the Funds

Each Fund will be treated as a separate taxable entity 
for Federal income tax purposes with the result that: 
(a) each Fund must meet separately the income and 
distribution requirements for qualification as a 
regulated investment company and (b) the amounts of 
investment income and capital gains earned will be 
determined on a Fund-by-Fund (rather than on a Trust-
wide) basis.

Taxation of Shareholders

Dividends paid by a Fund from investment income and 
distributions of short-term capital gains will be 
taxable to shareholders as ordinary income for Federal 
income tax purposes, whether received in cash or 
reinvested in additional shares. Distributions of 
long-term capital gains will be taxable to 
shareholders as long-term capital gains, whether paid 
in cash or reinvested in additional shares, and 
regardless of the length of time the investor has held 
his or her shares of the Fund.

	Dividends of investment income (but not capital 
gains) from any Fund generally will qualify for the 
Federal dividends-received deduction for corporate 
shareholders to the extent such dividends do not 
exceed the aggregate amount of dividends received by 
the Fund from domestic corporations. If securities 
held by a Fund are considered to be "debt-financed" 
(generally, acquired with borrowed funds), are held by 
the Fund for less than 46 days (91 days in the case of 
certain preferred stock), or are subject to certain 
forms of hedges or short sales, the portion of the 
dividends paid by the Fund that corresponds to the 
dividends paid with respect to such securities will 
not be eligible for the corporate dividends-received 
deduction.  

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



	Capital Gains Distribution.  In general, a 
shareholder who redeems or exchanges his or her shares 
will recognize long-term capital gain or loss if the 
shares have been held for more than one year, and will 
recognize short-term capital gain or loss if the 
shares have been held for one year or less. If a 
shareholder receives a distribution taxable as long-
term capital gain with respect to shares of a Fund and 
redeems or exchanges the shares before he or she has 
held them for more than six months, any loss on such 
redemption or exchange that is less than or equal to 
the amount of the distribution will be treated as
long-term capital loss.  

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

Regulated Investment Company Status

Each Fund intends to qualify or continue to qualify in 
subsequent years, as applicable, as a regulated 
investment company within the meaning of Section 851 
of the Code. The Trust will monitor each Fund's 
investments so as to meet the requirements for 
qualification on a continuing basis.

	As a regulated investment company, a Fund will 
not be subject to Federal income tax on the net 
investment income and net capital gains, if any, that 
it distributes to its shareholders, provided that at 
least 90% of the sum of investment income and short-
term capital gains is distributed to its shareholders. 
All net investment income and net capital gains earned 
by a Fund will be reinvested automatically in 
additional shares of the Fund, unless the shareholder 
elects to receive dividends and distributions in cash. 
Amounts reinvested in additional shares will be 
considered to have been distributed to shareholders.

	To qualify as a regulated investment company, 
each Fund must meet certain requirements set forth in 
the Code. One requirement is that each Fund must earn 
at least 90% of its gross income from (a) interest, 
(b) dividends, (c) payments with respect to securities 
loans, (d) gains from the sale or other disposition of 
stock or securities or foreign currencies and (e) 
other income (including but not limited to gains from 
options, futures, or forward contracts) derived with 
respect to its business of investing in such stock, 
securities, or currencies (the "90% Test"). An 
additional requirement is that each Fund must earn 
less than 30% of its gross income from the sale or 
other disposition of stock or securities held for less 
than three months (the "30% Test").  Depending upon 
the circumstances, the 30% Test may  limit the extent 
to which the Fund may: (a) sell securities held for 
less than three months; (b) effect short sales of 
securities that are identical (or substantially 
identical) to securities held by it for less than 
three months; (c) write options that expire in less 
than three months; and (d) effect closing transactions 
with respect to call or put options that have been 
written or purchased within the preceding three 
months. A Fund's gain or loss from the sale (including 
open short sales) or other dispositions of stock or 
securities (with the term "securities" defined to 
include put and call options) held for less than three 
months will be netted against its gain or loss on 
positions that are part of a "designated hedge" with 
respect to such three-month investments.

Taxation of Fund Investments

Gain or loss on the sale of a security by a Fund 
generally will be long-term capital gain or loss if 
the Fund has held the security for more than one year. 
Gain or loss on the sale of a security held for not 
more than one year generally will be short-term 
capital gain or loss. If a Fund acquires a debt 
security at a substantial discount, a portion of any 
gain upon sale or redemption of such debt security 
will be taxed as ordinary income rather than capital 
gain to the extent it reflects accrued market 
discount.

	Options Transactions.  The tax consequences of 
options transactions entered into by a Fund will vary 
depending on whether the underlying security is held 
as a capital asset, whether the Fund is writing or 
purchasing the option and whether the "straddle" 
rules, discussed separately below, apply to the 
transaction.

	A Fund may write a call option on an equity or 
convertible debt security. If the option expires 
unexercised or if the Fund enters into a closing 
purchase transaction, the Fund will realize a gain or 
loss without regard to any unrealized gain or loss on 
the underlying security. Generally, any such gain or 
loss will be short-term capital gain or loss, except 
that any loss on certain covered call stock options 
will be treated as long-term capital loss. If a call 
option written by a Fund is exercised, the Fund will 
treat the premium received for writing such call 
option as additional sales proceeds and will recognize 
a capital gain or loss from the sale of the underlying 
security. Whether the gain or loss will be long-term 
or short-term will depend on the Fund's holding period 
for the underlying security.

	If a Fund purchases a put option on an equity or 
convertible debt security and it expires unexercised, 
the Fund will realize a capital loss equal to the cost 
of the option. If a Fund enters into a closing sale 
transaction with respect to the option, it will 
realize a capital gain or loss and such gain or loss 
will be short-term or long-term depending on the 
Fund's holding period for the option. If a Fund 
exercises such a put option, it will realize a short-
term or long-term capital gain or loss (depending on 
the Fund's holding period for the underlying security) 
from the sale of the underlying security. The amount 
realized on such sale will be the sales proceeds 
reduced by the premium paid.  

	Mark-to-Market.  The Code imposes a special 
"mark-to-market" system for taxing "Section 1256 
contracts" including options on nonconvertible debt 
securities (including U.S. government securities), 
options on certain stock indexes and certain foreign 
currency contracts. In general, gain or loss on 
Section 1256 contracts will be taken into account for 
tax purposes when actually realized (by a closing 
transaction, by exercise, by taking delivery or by 
other termination). In addition, any Section 1256 
contracts held at the end of the taxable year will be 
treated as though they were sold at their year-end 
fair market value (that is, "marked to market"), and 
the resulting gain or loss will be recognized for tax 
purposes. Provided that a Fund holds its Section 1256 
contracts as capital assets and they are not part of a 
straddle, both the realized and the unrealized year-
end gains or losses from these investment positions 
(including premiums on options that expire 
unexercised) will be treated as 60% long-term and 40% 
short-term capital gain or loss, regardless of the 
period of time particular positions have actually been 
held by a Fund.

	A portion of the mark-to-market gain on 
instruments held for less than three months at the 
close of a Fund's taxable year may represent a gain on 
securities held for less than three months for 
purposes of the 30% Test discussed above. Accordingly, 
the Funds may restrict their fourth-quarter 
transactions in Section 1256 contracts.  

	Straddles.  The Code contains rules applicable 
to "straddles," which are "offsetting positions in 
actively traded personal property," including equity 
securities and options of the type in which a Fund may 
invest. If applicable, the "straddle" rules generally 
override the other provisions of the Code. In general, 
investment positions will be offsetting if there is a 
substantial diminution in the risk of loss from 
holding one position by reason of holding one or more 
other positions. The Funds generally are authorized to 
enter into put, call, and covered put and call 
positions. Depending on what other investments are 
held by a Fund at the time it enters into one of the 
above transactions, a Fund may create a straddle for 
Federal income tax purposes.  

	If two (or more) positions constitute a 
straddle, recognition of a realized loss from one 
position (including a mark-to-market loss) must be 
deferred to the extent of unrecognized gain in an 
offsetting position. Interest and other carrying 
charges allocable to personal property that is part of 
a straddle must be capitalized. In addition, "wash 
sale" rules apply to straddle transactions to prevent 
the recognition of loss from the sale of a position at 
a loss when a new offsetting position is or has been 
acquired within a prescribed period. To the extent the 
straddle rules apply to positions established by a 
Fund, losses realized by the Fund may be deferred or 
recharacterized as long-term losses, and long-term 
gains realized by the Fund may be converted to short-
term gains.  

	If a Fund chooses to identify a particular 
offsetting position as being one component of a 
straddle, a realized loss on any component of that 
straddle will be recognized no earlier than upon the 
liquidation of all components of that straddle. 
Special rules apply to "mixed" straddles (that is, 
straddles consisting of a Section 1256 contract and an 
offsetting position that is not a Section 1256 
contract). If the Trust makes certain elections, all 
or a portion of the Section 1256 contract components 
of such mixed straddles of a Fund will not be subject 
to the 60%/40% mark-to-market rules. If any such 
election is made, the amount, the nature (as long-term 
or short-term) and the timing of the recognition of 
the Fund's gains or losses from the affected straddle 
positions will be determined under rules that will 
vary according to the type of election made.


ADDITIONAL INFORMATION

The Trust was organized as an unincorporated business 
trust under the laws of The Commonwealth of 
Massachusetts pursuant to a Master Trust Agreement 
dated January 8, 1986, as amended from time to time 
(the "Trust Agreement"). The Trust commenced business 
as an investment company on March 3, 1986, under the 
name Shearson Lehman Special Equity Portfolios. On 
December 6, 1988, August 27, 1990, November 5, 1992, 
July 30, 1993 and October 14, 1994, the Trust changed 
its name to SLH Equity Portfolios, Shearson Lehman 
Brothers Equity Portfolios, Shearson Lehman Brothers 
Equity Funds, Smith Barney Shearson Equity Funds and 
Smith Barney Equity Funds, respectively.

	PNC is located at 17th and Chestnut Streets, 
Philadelphia, Pennsylvania 19103, and serves as 
custodian for the Funds. Under its custodial agreement 
with the Trust, PNC is authorized to appoint one or 
more foreign or domestic banking institutions as sub-
custodians of assets owned by a Fund. For its custody 
services, PNC receives monthly fees charged to each 
Fund based upon the month-end, aggregate net asset 
value of the Fund, plus certain charges for securities 
transactions. The assets of the Trust are held under 
bank custodianship in accordance with the 1940 Act.

	First Data is located at Exchange Place, Boston, 
Massachusetts 02109, and serves as the Trust's 
transfer agent. For its services as transfer agent, 
First Data receives fees charged to the Funds at an 
annual rate based upon the number of shareholder 
accounts maintained during the year. First Data also 
is reimbursed by the Funds for its out-of-pocket 
expenses.


FINANCIAL STATEMENTS

The Annual Reports of the Social Awareness Fund and 
the Growth and Income Fund for the fiscal year ended 
January 31, 1997 are incorporated into this Statement 
of Additional Information by reference in their 
entirety.


APPENDIX

Description of Ratings

Description of S&P Corporate Bond Ratings

	AAA

	Bonds rated AAA have the highest rating assigned 
by S&P to a debt obligation. Capacity to pay interest 
and repay principal is extremely strong.

	AA

	Bonds rated AA have a very strong capacity to 
pay interest and repay principal and differ from the 
highest rated issues only in small degree.

	A

	Bonds rated A have a strong capacity to pay 
interest and repay principal although they are 
somewhat more susceptible to the adverse effects of 
changes in circumstances and economic conditions than 
bonds in higher rated categories.

	BBB

	Bonds rated BBB are regarded as having an 
adequate capacity to pay interest and repay principal. 
Whereas they normally exhibit adequate protection 
parameters, adverse economic conditions or changing 
circumstances are more likely to lead to a weakened 
capacity to pay interest and repay principal for bonds 
in this category than for bonds in higher rated 
categories.

	BB, B and CCC

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

Description of Moody's Corporate Bond Ratings

	Aaa

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


	A-1


	Aa

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

	A

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

	Baa

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

	Ba

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

	B

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

	Caa

	Bonds that are rated Caa are of poor standing. 
These issues may be in default or present elements of 
danger may exist with respect to principal or 
interest.

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



	A-2


Description of S&P Municipal Bond Ratings

	AAA

	Prime -- These are obligations of the highest 
quality. They have the strongest capacity for timely 
payment of debt service.

	General Obligation Bonds -- In a period of 
economic stress, the issuers will suffer the smallest 
declines in income and will be least susceptible to 
autonomous decline. Debt burden is moderate. A strong 
revenue structure appears more than adequate to meet 
future expenditure requirements. Quality of management 
appears superior.

	Revenue Bonds -- Debt service coverage has been, 
and is expected to remain, substantial. Stability of 
the pledged revenues is also exceptionally strong due 
to the competitive position of the municipal 
enterprise or to the nature of the revenues. Basic 
security provisions (including rate covenant, earnings 
test for issuance of additional bonds, debt service 
reserve requirements) are rigorous. There is evidence 
of superior management.

	AA

	High Grade -- The investment characteristics of 
bonds in this group are only slightly less marked than 
those of the prime quality issues. Bonds rated AA have 
the second strongest capacity for payment of debt 
service.

	A

	Good Grade -- Principal and interest payments on 
bonds in this category are regarded as safe although 
the bonds are somewhat more susceptible to the adverse 
affects of changes in circumstances and economic 
conditions than bonds in higher rated categories. This 
rating describes the third strongest capacity for 
payment of debt service. Regarding municipal bonds, 
the ratings differ from the two higher ratings 
because:

	General Obligation Bonds -- There is some 
weakness, either in the local economic base, in debt 
burden, in the balance between revenues and 
expenditures, or in quality of management. Under 
certain adverse circumstances, any one such weakness 
might impair the ability of the issuer to meet debt 
obligations at some future date.

	Revenue Bonds -- Debt service coverage is good, 
but not exceptional. Stability of the pledged revenues 
could show some variations because of increased 
competition or economic influences on revenues. Basic 
security provisions, while satisfactory, are less 
stringent. Management performance appears adequate.



	A-3



	BBB

	Medium Grade -- Of the investment grade ratings, 
this is the lowest. Bonds in this group are regarded 
as having an adequate capacity to pay interest and 
repay principal. Whereas they normally exhibit 
adequate protection parameters, adverse economic 
conditions or changing circumstances are more likely 
to lead to a weakened capacity to pay interest and 
repay principal for bonds in this category than for 
bonds in higher rated categories.

	General Obligation Bonds -- Under certain 
adverse conditions, several of the above factors could 
contribute to a lesser capacity for payment of debt 
service. The difference between A and BBB ratings is 
that the latter shows more than one fundamental 
weakness, or one very substantial fundamental 
weakness, whereas the former shows only one deficiency 
among the factors considered.

	Revenue Bonds -- Debt coverage is only fair. 
Stability of the pledged revenues could show 
substantial variations, with the revenue flow possibly 
being subject to erosion over time. Basic security 
provisions are no more than adequate. Management 
performance could be stronger.

	BB, B, CCC and CC

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

	C

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

	D

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

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

Description of S&P Municipal Note Ratings

Municipal notes with maturities of three years or less 
are usually given note ratings (designated SP-1, -2 or 
-3) to distinguish more clearly the credit quality of 
notes as compared to bonds. Notes rated SP-1 have a 
very strong or strong capacity to pay principal and 
interest. Those issues determined to possess 
overwhelming safety characteristics are given the 
designation of SP-1+. Notes rated SP-2 have 
satisfactory capacity to pay principal and interest.



	A-4



Description of Moody's Municipal Bond Ratings

	Aaa

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

	Aa

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

	A

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

	Baa

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

	Ba

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

	B

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


	A-5


	Caa

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

	Ca

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

	C

	Bonds which are rated C are the lowest rated 
class of bonds, and issues so rated can be regarded as 
having extremely poor prospects of ever attaining any 
real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 in 
each generic rating classification from Aa through B. 
The modifier 1 indicates that the security ranks in 
the higher end of its generic ratings category; the 
modifier 2 indicates a mid-range ranking; and the 
modifier 3 indicates that the issue ranks in the lower 
end of its generic ratings category.

Description of Moody's Municipal Note Ratings

Moody's ratings for state and municipal notes and 
other short-term loans are designated Moody's 
Investment Grade (MIG) and for variable rate demand 
obligations are designated Variable Moody's Investment 
Grade (VMIG). This distinction recognizes the 
differences between short- and long-term credit risk. 
Loans bearing the designation MIG 1/VMIG 1 are the 
best quality, enjoying strong protection from 
established cash flows of funds for their servicing or 
from established and broad-based access to the market 
for refinancing, or both. Loans bearing the 
designation MIG 2/VMIG 2 are of high quality, with 
margins of protection ample, although not as large as 
the preceding group. Loans bearing the designation MIG 
3/VMIG 3 are of favorable quality, with all security 
elements accounted for but lacking the undeniable 
strength of the preceding grades. Market access for 
refinancing, in particular, is likely to be less well 
established. Loans bearing the designation MIG 4/VMIG 
4 are of adequate quality. Protection commonly 
regarded as required of an investment security is 
present and although not distinctly or predominantly 
speculative, there is specific risk.

Description of Commercial Paper Ratings

The rating A-1+ is the highest, and A-1 the second 
highest, commercial paper rating assigned by S&P. 
Paper rated A-1+ must have either the direct credit 
support of an issuer or guarantor that possesses 
excellent long-term operating and financial strength 
combined with strong liquidity characteristics 
(typically, such issuers or guarantors would display 
credit quality characteristics which would warrant a 
senior bond rating of A\- or higher) or the direct 
credit support of an issuer or guarantor that 
possesses above average long-term fundamental 
operating and financing capabilities combined with 
ongoing excellent liquidity characteristics. Paper 
rated A-1 must have the following characteristics: 
liquidity ratios are adequate to meet cash 
requirements; long-term senior debt is rated A or 
better; the issuer has access to at least two 
additional channels of borrowing; basic earnings and 
cash flow have an upward trend with allowance made for 
unusual circumstances; typically, the issuer's 
industry is well established and the issuer has a 
strong position within the industry; and the 
reliability and quality of management are 
unquestioned.


	A-6



	The rating Prime-1 is the highest commercial 
paper rating assigned by Moody's. Among the factors 
considered by Moody's in assigning ratings are the 
following: (a) evaluation of the management of the 
issuer; (b) economic evaluation of the issuer's 
industry or industries and an appraisal of 
speculative-type risks which may be inherent in 
certain areas; (c) evaluation of the issuer's products 
in relation to competition and customer acceptance; 
(d) liquidity; (e) amount and quality of long-term 
debt; (f) trend of earnings over a period of ten 
years; (g) financial strength of parent company and 
the relationships which exist with the issue; and (h) 
recognition by the management of obligations which may 
be present or may arise as a result of public interest 
questions and preparations to meet such obligations.

	Short-Term obligations, including commercial 
paper, rated A-1+ by IBCA Limited or its affiliate 
IBCA Inc. are obligations supported by the highest 
capacity for timely repayment. Obligations rated A-1 
have a very strong capacity for timely repayment. 
Obligations rated A-2 have a strong capacity for 
timely repayment, although such capacity may be 
susceptible to adverse changes in business, economic 
and financial conditions.

	Thomson BankWatch employs the rating "TBW-1" as 
its highest category, which indicates that the degree 
of safety regarding timely repayment of principal and 
interest is very strong. "TBW-2" is its second highest 
rating category. While the degree of safety regarding 
timely repayment of principal and interest is strong, 
the relative degree of safety is not as high as for 
issues rated "TBW-1".

	Fitch Investors Services, Inc. employs the 
rating F-1+ to indicate issues regarded as having the 
strongest degree of assurance of timely payment. The 
rating F-1 reflects an assurance of timely payment 
only slightly less in degree than issues rated F-1+, 
while the rating F-2 indicates a satisfactory degree 
of assurance of timely payment although the margin of 
safety is not as great as indicated by the F-1+ and 
F-1 categories. 

	Duff & Phelps Inc. employs the designation of 
Duff 1 with respect to top grade commercial paper and 
bank money instruments. Duff 1+ indicates the highest 
certainty of timely payment: short-term liquidity is 
clearly outstanding and safety is just below risk-free 
U.S. Treasury short-term obligations. Duff 1 - 
indicates high certainty of timely payment. Duff 2 
indicates good certainty of timely payment: liquidity 
factors and company fundamentals are sound.

	Various NRSROs utilize rankings within ratings 
categories indicated by a + or -. The Funds, in 
accordance with industry practice, recognize such 
ratings within categories as gradations, viewing for 
example S&P's rating of A-1+ and A-1 as being in S&P's 
highest rating category.



	A-7








								Smith 
Barney
								EQUITY 
FUNDS









							Growth and 
Income Fund

							Social 
Awareness Fund







							
	Statement of
							
	Additional Information
								May 
31, 1997



Smith Barney
Equity Funds
388 Greenwich Street
New York, New York 10013					
		SMITH BARNEY




	SMITH BARNEY EQUITY FUNDS
	PART C

Item 24.	Financial Statements and Exhibits

(a)	Financial Statements:

		Included in Part A:

			Financial Highlights

		Included in Part B:

			The Registrant's Annual Reports for 
the fiscal year ended January 31, 
1997 and the Report of Independent 
Accountants was filed pursuant to 
Rule 30b-2 of the 1933 Act, on April 
18, 1997 as accession number 91155-
96-000161.

		Included in Part C:

			Consent of Auditors (filed herewith)

(b)	Exhibits

	All references are to the Registrant's 
registration statement on Form N-1A (the "Registration 
Statement") as filed with the Securities and Exchange 
Commission (the "SEC") on January 9, 1986 (File Nos. 
33-2627 and 811-4551).

	(1)(a)	Amended and Restated Master Trust 
Agreement and all Amendments are incorporated by 
reference to Post-Effective Amendment No. 26 to the 
Registration Statement filed on January 31, 1994 
("Post-Effective Amendment No. 26"). 

	    (b)	Amendment dated October 14, 1994 and 
Form of Amendment to Amended and Restated Master Trust 
Agreement are incorporated by reference to Post-
Effective Amendment No. 29 to the Registration 
Statement filed on November 7, 1994 ("Post-Effective 
Amendment No. 29").

	(2)	Registrant's By-Laws are incorporated by 
reference to Pre-Effective Amendment No. 1 to the 
Registration Statement filed on February 25, 1986 
("Pre-Effective Amendment No. 1"). 

	(3)	Not applicable.

	(4)	Form of share certificate for Class A, B, 
C   and Y shares will be filed by amendment.

	(5)(a)	Investment Advisory Agreement 
between Registrant and Smith Barney Strategy Advisers 
Inc., with respect to Concert Social Awareness Fund, 
is incorporated by reference to Post-Effective 
Amendment No. 31 to the Registration Statement filed 
on January 30, 1996 ("Post-Effective Amendment No. 
31").

	    (b)	Investment Advisory Agreement 
between Registrant and Greenwich Street Advisors 
(relating to the Growth and Income Fund) dated May 22, 
1993  is incorporated by reference to Post-Effective 
Amendment No. 26. 


	(6)	Distribution Agreement between Registrant 
and Smith Barney Shearson dated July 30, 1993 is 
incorporated by reference to Post-Effective Amendment 
No. 26. 

	(7)	Not applicable.

	(8)	Custodian Agreement between Registrant and 
PNC Bank, National Association ("PNC Bank") is 
incorporated by reference to Post-Effective Amendment 
No. 31.

	(9)(a)	Administration Agreements between 
Registrant and SBMFM (relating to the Growth and 
Income Fund and Strategic Investors Fund) dated May 4, 
1994 are incorporated by reference to Post-
Effective Amendment No. 29

	    (b)	Transfer Agency Agreement between 
Registrant and First Data Investor Services Group 
(formerly The Shareholder Services Group, Inc.) dated 
August 5, 1993  is incorporated by reference to Post-
Effective Amendment No. 26. 

	(10)	Opinion of Robert A. Vegliante, Deputy 
General Counsel of Smith Barney Mutual 		
	Funds Management Inc. filed with the 
Registrant's rule 24-f2 (Accession No. 			
	000091155-97-000182) is incorporated by 
reference.

	(11)	Consent of KPMG Peat Marwick LLP is filed 
herewith.

	(12)	Not applicable.

	(13)	Not Applicable

	(14)	(a)	Prototype Defined Contribution Plan 
relating to 401(k) program is incorporated by 
reference to Post-Effective Amendment No. 33.
		(b)	Form of Individual Retirement 
Account Disclosure Statement is incorporated by 
reference to Post-Effective Amendment No. 33.

	(15)	Amended Services and Distribution Plans 
pursuant to Rule 12b-1 between the Registrant on 
behalf of Smith Barney Growth and Income Fund and 
Concert Social Awareness Fund are incorporated by 
reference to Post-Effective Amendment No. 29.

	(16)	Performance information is incorporated by 
reference to Post-Effective Amendments No. 9 and 10. 

	(17)	Financial Data Schedule (filed herewith).

	(18)	Plan pursuant to Rule 18f-3 is 
incorporated by reference to Post-Effective Amendment 
No. 31.


Item 25		Persons Controlled by or Under 
Common Control with
		Registrant

			None.



Item 26		Number of Holders of Securities

							Number of 
Record Holders by Class
Title of Class						as of 
May 16,1997

Beneficial Interest par value
$.001 per share				Class A	
	Class B		Class C		Class Y

Concert Social Awareness Fund		18,492	
	15,436		336		2

Smith Barney Growth and Income Fund	11,790	
	10,943		295		6


Item 27		Indemnification

The response to this item is incorporated by reference 
to Registrant's Pre-Effective Amendment No. 1 to the 
Registration Statement.


Item 28(a)	Business and Other Connections of 
Investment Adviser

Investment Adviser - - Smith Barney Mutual Funds 
Management Inc. ("SBMFM")

SBMFM, formerly known as Smith, Barney Advisers, Inc., 
was incorporated in December 1968 under the laws of 
the State of Delaware. SBMFM is a wholly owned 
subsidiary of Smith Barney Holdings Inc. ("Holdings") 
(formerly known as Smith Barney Shearson Holdings 
Inc.), which in turn is a wholly owned subsidiary of 
Travelers Group Inc. (formerly known as Primerica 
Corporation) ("Travelers"). SBMFM is registered as an 
investment adviser under the Investment Advisers Act 
of 1940 (the "Advisers Act").

The list required by this Item 28 of officers and 
directors of SBMFM together with information as to any 
other business, profession, vocation or employment of 
a substantial nature engaged in by such officers and 
directors during the past two fiscal years, is 
incorporated by reference to Schedules A and D of FORM 
ADV filed by SBMFM pursuant to the Advisers Act (SEC 
File No. 801-8314).


Item 28(a)	Business and Other Connections of 
Investment Adviser

Investment Adviser - Smith Barney Strategy Advisers 
Inc. ("Strategy Advisers")

Strategy Advisers was incorporated on October 22, 1986 
under the laws of the State of Delaware. Strategy 
Advisers is a wholly owned subsidiary of SBMFM. 
Strategy Advisers is registered as an investment 
adviser under the Investment Advisers Act of 1940 (the 
"Advisers Act"). Strategy Advisers is also registered 
with the Commodity Futures Trading Commission (the 
"CFTC") as a commodity pool operator under the 
Commodity Exchange Act (the "CEA"), and is a member of 
the National Futures Association (the "NFA").

The list required by this Item 28 of officers and 
directors of SBMFM and Strategy Advisers, together 
with information as to any other business, profession, 
vocation or employment of a substantial nature engaged 
in by such officers and directors during the past two 
years, in incorporated b reference to Schedules A and 
D of FORM ADV filed by SBMFM on behalf of Strategy 
Advisers pursuant to the Advisers Act (SEC File No. 
801-8314).

Item 29.	Principal Underwriters

		 Smith Barney Inc. ("Smith Barney ") 
also acts as principal underwriter for 
the Smith Barney Money Funds, Inc.; 
Smith Barney Municipal Money Market 
Fund, Inc.; Smith Barney Muni Funds; 
Smith Barney Funds, Inc.; Smith Barney 
World Funds, Inc.; Smith Barney 
Variable Account Funds; Travelers 
Series Fund Inc.; Smith Barney 
Intermediate Municipal Fund, Inc.; 
Smith Barney Municipal Fund, Inc.; High 
Income Opportunity Fund Inc.; Greenwich 
Street California Municipal Fund Inc.; 
Greenwich Street Municipal fund Inc.; 
The Inefficient-Market Fund Inc.; Smith 
Barney Investment Funds, Inc.; Smith 
Barney Adjustable Rate Government 
Income Fund; Smith Barney Income Funds; 
Smith Barney Massachusetts Municipals 
Fund; Zenix Income Fund Inc.; Smith 
Barney Arizona Municipals Fund Inc.; 
Smith Barney Principal Return Fund; 
Municipal High Income Fund Inc.; 
Consulting Group Capital Markets Fund; 
Smith Barney Series Fund; Smith Barney 
Investment Trust; Smith Barney 
Aggressive Growth Fund Inc.; Smith 
Barney Appreciation Fund Inc.; Smith 
Barney California Municipals Fund Inc.; 
Smith Barney Fundamental Value Fund 
Inc.; Smith Barney Managed Governments 
Fund Inc.; Smith Barney Managed 
Municipals Fund Inc.; Smith Barney New 
Jersey Municipals Fund Inc.; Smith 
Barney Natural Resources Fund Inc.; 
Smith Barney Investment Funds Inc.; The 
Italy Fund Inc.; Smith Barney 
Telecommunications Trust; Managed 
Municipals Portfolio Inc.; Managed 
Municipals Portfolio II Inc.; Managed 
High Income Portfolio Inc. Smith Barney 
Institutional Cash Management Fund 
Inc.; Smith Barney Concert Allocation 
Series Inc. 

Smith Barney is a wholly owned subsidiary of Holdings. 
On June 1, 1994, Smith Barney changed its name from 
Smith Barney Shearson Inc. to its current name. The 
information required by this Item 29 with respect to 
each director, officer and partner of Smith Barney is 
incorporated by reference to Schedule A of FORM BD 
filed by Smith Barney pursuant to the Securities 
Exchange Act of 1934 (SEC File No. 812-8510).

Item 30	.	Location of Accounts and Records

		(1)	Smith Barney Inc.
			388 Greenwich Street
			New York, New York  10013

		(2)	Smith Barney Equity Funds
			388 Greenwich Street
			New York, New York  10013

		(3)	Smith Barney Mutual Funds Management 
Inc.
			388 Greenwich Street
			New York, New York  10013

		(4)	Smith Barney Strategy Advisers Inc.
			388 Greenwich Street
			New York, New York  10013

		(5)	PNC Bank, National Association
			17th and Chestnut Streets
			Philadelphia, PA  19103

		(6)	First Data Investor Services Group
			One Exchange Place
			Boston, Massachusetts  02109

Item 31	Management Services

		Not Applicable.


Item 32	Undertakings

	(a)	The Registrant hereby undertakes to call a 
meeting of its shareholders for the 
purpose of voting upon the question of 
removal of a trustee or trustees of 
Registrant when requested in to do so by 
the holders of at least 10% of 
Registrant's outstanding shares. 
Registrant undertakes further, in 
connection with the meeting, to comply 
with the provisions of Section 16(c) of 
the 1940 Act relating to communications 
with the shareholders of certain common-
law trusts.
	SIGNATURES

	Pursuant to the requirements of the Securities 
Act of 1933, as amended, and the Investment Company 
Act of 1940, as amended, the Registrant, SMITH BARNEY 
EQUITY FUNDS, has duly caused this Amendment to the 
Registration Statement to be signed on its behalf by 
the undersigned, thereunto duly authorized, all in the 
City of New York, State of New York on the 29th day of 
May, 1997.

	SMITH BARNEY EQUITY FUNDS

					    By: /s/ Heath B. 
McLendon*
						Heath B. McLendon, 
Chairman of the Board

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

Signature				Title			
	Date


/s/ Heath B. McLendon			Chairman of the 
Board		5/29/97
Heath B. McLendon			(Chief Executive 
Officer)


/s/ Lewis E. Daidone			Senior Vice 
President and		5/29/97
Lewis E. Daidone			Treasurer (Chief 
Financial
					and Accounting Officer)


/s/ Lee Abraham*			Trustee			
	5/29/97
Lee Abraham



/s/ Allan J. Bloostein*			Trustee		
		5/29/97
Allan J. Bloostein


/s/ Madelon Devoe-Talley*		Trustee		
		5/29/97
Madelon Devoe-Talley


/s/ Richard E. Hanson*			Trustee		
		5/29/97
Richard E. Hanson

* Signed by Heath B. McLendon, their duly authorized 
attorney-in-fact, pursuant to power of attorney dated 
October 27, 1992.


/s/ Heath B. McLendon
Heath B Mclendon




EXHIBITS



     Exhibit No.		Description of Exhibits


	17			Financial Data Schedule

				Auditor's Consent

				Cover Letter to SEC







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