As filed with the Securities and Exchange Commission on 
January 29, 1999

Registration No.	33-25087
811-5678
_______________________________________________
____________________

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._____
Post-Effective Amendment No.  22

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 
1940,
Amendment No.23

SMITH BARNEY PRINCIPAL RETURN FUND
(Exact name of Registrant as Specified in Charter)

388 Greenwich Street, New York, New York  10013
(Address of Principal Executive Office)  (Zip Code)

(800) 451-2010
(Registrant's Telephone Number, Including Area Code)

Christina T. Sydor
Secretary
Smith Barney Principal Return Fund
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent of Service)

Continuous
(Approximate Date of Proposed Public Offering)

It is proposed that this filing will become effective:
(check appropriate box)

_____	Immediately upon filing pursuant to paragraph (b)
_____	On (date) pursuant to paragraph (b)
 XXX	60 days after filing pursuant to paragraph (a) (1)
_____	On (date) pursuant to paragraph (a) (1)
_____	75 days after filing pursuant to paragraph (a)(2)
_____	On (date) pursuant to paragraph (a) (2) of Rule 485

If appropriate, check the following box:

_____	This post-effective amendment designates a new 
effective date for a previously filed post-effective 
amendment.

Title of Securities being Registered: Shares of Common 
Stock

PART A

[Logo]

Smith Barney Mutual 
Funds

Investing for your 
future.

Every day.



Everyday.















SMITH BARNEY PRINCIPAL RETURN FUND

	ZERO PLUS EMERGING GROWTH SERIES 2000
SECURITY AND GROWTH FUND



Prospectus
March 30, 1999





Current shareholders may purchase new shares through the 
reinvestment of dividends and distributions.  Except for 
reinvestment of dividends and distributions, shares of the 
funds are not currently being offered to investors.  
Consequently, a fund's assets may be reduced by market 
fluctuations, a redemption of shares and payment of cash 
dividends and distributions.  A reduction in a fund's net 
assets may increase the fund's expenses on a per share 
basis 
and make it more difficult for a fund to achieve its 
investment objective. 





The Securities and Exchange Commission has not approved the 
funds' shares as an investment or determined whether this 
prospectus is accurate or complete.  Any statement to the 
contrary is a crime.


Contents

	Page

Fund goals and strategies
1

Risks, performance and expenses3

Other investments6

Management8

Reinvestment of dividends9

Exchanging shares9

Redeeming shares10

Other things to know about share transactions11

Dividends, distributions and taxes12

Share price12

Financial highlights14




Smith Barney Mutual Funds offers a distinctive family of 
fund choices tailored to help meet the varying needs of 
large and small investors.  Currently, Smith Barney Mutual 
Funds offers more than 60 individual funds with assets of 
more than $xx billion.  











You should know:
An investment in the funds is not a bank deposit and is not 
insured or guaranteed by the Federal Deposit Insurance 
Corporation or any other government agency.


Fund goals and strategies


Investment objective

(a)	Zero Plus Emerging Growth Series 2000 ("Series 2000") 
and Security and Growth Fund both invest sufficient 
amounts in zero coupon U.S. Treasury securities to 
provide a return of the shareholder's original 
investment (including sales charges) by the fund's 
maturity date * February 28, 2000 for Series 2000 (the 
"Series 2000 Maturity Date") and August 31, 2005 for 
Security and Growth Fund (the "Security and Growth 
Fund Maturity Date").  At February 28, 1999, zero 
coupon U.S. Treasury securities represented ___% and 
___% of the net assets of Series 2000 and Security and 
Growth Fund, respectively.

(b)	The remaining assets of each fund are invested to 
seek 
long-term appreciation of capital.


Key investments



Series 2000

The fund's assets that are not invested in zero coupon U.S. 
Treasury securities are invested in equity securities of 
"emerging growth companies."  Emerging growth companies are 
small to medium capitalization companies that, in the 
manager's opinion, may generate superior earnings or cash 
flow over a 2 to 3 year time frame.  The manager will 
generally invest in companies with market capitalizations 
of 
less than $1 billion.  However, the manager may also invest 
in larger companies that present opportunities for capital 
growth. 


Security and Growth Fund

The fund's assets that are not invested in zero coupon U.S. 
Treasury Securities are invested in equity securities of 
companies the manager believes have the potential to 
provide 
above average capital appreciation.  The manager generally 
focuses on small and mid-cap companies with market 
capitalizations in the $500 million to $3 billion range.  
The manager seeks to obtain the benefits of both a 
diversified and focused portfolio by investing in a limited 
number of issuers without any single position representing 
a 
material portion of the fund's assets.


Investment strategy

The manager seeks zero coupon securities that will mature 
within one year before the respective fund's Maturity Date. 
 The manager expects that the aggregate stated principal 
amount of the zero coupon securities will be sufficient to 
meet each fund's objective of repaying the investor's 
original investment.  As each fund's zero coupon securities 
mature, the proceeds will be invested in short term U.S. 
government securities.


Investment strategy

Series 2000





In selecting individual securities for the actively managed 
portion of the fund, the manager looks for companies that 
it 
believes are undervalued in the marketplace or have 
earnings 
that can be expected to grow faster than the U.S. economy 
in 
general.  These companies typically would possess one or 
more of the following characteristics:

? High quality management
? New technologies, techniques, products or services or 
cost-reducing measures that give them a leading or 
dominant position in a major product line
? Sound financial position
? Relatively high rate of return on invested capital

The manager also seeks out "special situation companies" or 
companies that offer the possibility of accelerating 
earnings growth because of:

? Management changes
? Disposition of assets or corporate restructurings
? Governmental regulations
? Social, economic or industry trends that favorably 
affect the company


Security and Growth Fund

In selecting individual securities for the actively managed 
portion of the fund, the manager seeks to identify 
companies 
with excellent long term growth prospects but which are 
temporarily out of favor with investors.  The manager's 
investment process emphasizes limiting downside risk as an 
important factor in maintaining favorable risk/reward 
ratios 
in the fund.

When analyzing potential investment candidates for the 
fund, 
the manager looks for the following factors:

? New or innovative products, especially those likely to 
enhance revenues and earnings in the next 12 months
? High technology companies with substantial operating 
leverage and future earning power
? Catalysts such as a change in management, restructuring 
or other corporate events designed to reduce costs and 
increase earnings and cash flow
? Themes or trends likely to persist for a number of years 
that could benefit a company and/or industry
? Companies that are industry leaders or have a market 
niche differentiating them from other companies
? Strong balance sheets or ones likely to improve in a 
relatively short period of time as a result of asset 
sales or rapid growth of earnings and cash flow

Maturity date

On each fund's Maturity Date, the following events will 
occur:

? The fund's zero coupon investments will have matured
? The fund's remaining assets and liabilities will be 
liquidated
? The fund's shares will be redeemed

Within seven days after the Maturity Date, proceeds will be 
distributed to the shareholders and the fund will be 
terminated.


Risks, performance and expenses

Principal risks of investing in the funds

While the zero coupon component of each fund is designed to 
return to shareholders their initial investment on the 
Maturity Date, the funds' net asset value per share can 
fluctuate substantially prior to the Maturity Date.  If you 
sell your shares prior to the Maturity Date, you may 
receive 
less than your initial investment in the fund. Due to the 
nature of the funds' portfolios, the funds have risks 
associated with both equity and fixed income investments.  
Investors could lose money in the funds or the funds' 
performance could fall below other possible investments if 
any of the following occurs:

? The U.S. stock market declines
? The market favors value or large capitalization stocks 
over growth stocks or small to medium capitalization 
stocks
? An adverse event, such as an unfavorable earnings report 
about a company in a fund's portfolio, depresses the 
value of the company's stock
? The manager's judgment about the attractiveness, value 
or potential appreciation of a particular company's 
stock proves to be incorrect

Each fund's zero coupon securities are also susceptible to 
certain risks prior to maturity, including:

? If interest rates go up, the market value of zero coupon 
securities will go down
? Volatile market prices when compared to securities that 
pay interest periodically
? Greater sensitivity to changes in interest rates when 
compared to non-zero coupon securities having similar 
maturities and yields

The funds may not be appropriate for investors requiring 
cash distributions from a fund to meet tax obligations or 
current expenses. Total return

Each bar chart indicates the risks of investing in the 
funds 
by showing changes in the funds' performance from year to 
year.  Past performance does not necessarily indicate how 
the funds will perform in the future. 

Series 2000
%Total Return

Security and Growth Fund
%Total Return







The chart shows the performance of a share of the fund for 
each of the past seven years.  The performance information 
in the chart does not reflect sales charges, which would 
reduce your return.



The chart shows the performance of a share of the fund for 
each of the past three years.  The performance information 
in the chart does not reflect sales charges, which would 
reduce your return.

Quarterly returns:  Highest:  xx% in __ quarter 199x; 
Lowest:  xx% in __ quarter 199x. 



Quarterly returns:  Highest:  xx% in __ quarter 199x; 
Lowest:  xx% in __ quarter 199x. 

Comparative performance
This table indicates the risk of investing in the funds by 
comparing the average annual total return for the periods 
shown to that of the return of Value Line Composite Index 
and Lehman Brothers Intermediate Term Government Bond Index 
("Lehman Brothers Index"), in the case of Series 2000 and 
the Russell 2000 Index and the Lehman Brothers Index in the 
case of the Security and Growth Fund.  The Value Line 
Composite is an index of approximately 1,700 large and 
small 
capitalization companies.  The Lehman Brothers Index is an 
index of U.S. Treasury and agency securities.  The Russell 
2000 Index measures the performance of the 2,000 smallest 
stocks in the U.S. equity market.  Unlike the funds, the 
indices are unmanaged and do not incur expenses.  This 
table 
assumes imposition of the maximum sales charge, redemption 
of shares at the end of the period, and reinvestment of 
distributions and dividends.

Average Annual Total Return
Calendar Years Ended December 31, 1998




Inception Date

1 Year

5 Years

Since Inception





Inception Date

1 Year

5 Years

Since Inception

Series 2000

8/30/91









Security and Growth Fund

11/30/95

_____%

n/a

_____%

Value Line Composite Index

n/a









Russell 2000

n/a

_____%

_____%

n/a

Lehman Brothers Index

n/a









Lehman Brothers Index

n/a

_____%

_____%

n/a



Fees and Expenses

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


Shareholder fees
(paid directly from your investment)

Series 2000

Security and Growth Fund

Maximum sales charge on purchases (as a % of offering 
price)*

5.00%

4.00%

Annual fund operating expenses
(paid by the fund as a % of fund net assets)





  Management fees 

0.60%

0.50%

  Shareholder servicing fees

0.25%

0.25%

  Other expenses

____%

____%

  Total annual fund operating expenses

____%

____%

*  No sales charge applies to reinvestment of dividends in 
additional shares.


Example

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

? You invest $10,000 in a fund for the 
time periods shown
? Your investment has a 5% return each 
year
? You reinvest all distributions and 
dividends without a sales charge 
? Each fund's operating expenses remain 
the same


Number of years you own your shares

1 year

3 years

5 years

Maturity Date*

Series 2000

$____

$____

$____

$____ 

Security and Growth Fund

$____

$_____

n/a

$____

*  The Series 2000 Maturity Date is February 28, 2000.  The 
Security and Growth Fund Maturity Date is August 31, 2005.
Other investments

The summary for each fund describes its investment 
objective 
and principal investment strategies and risks.  This 
section 
provides additional information about the funds' 
investments 
and certain portfolio management techniques the funds may 
use.  More information about the funds' investments and 
portfolio management techniques, some of which entail 
risks, 
is included in the statement of additional information 
(SAI).

Zero coupon securities.  A zero coupon security is a debt 
obligation that does not entitle the holder to any periodic 
payments of interest prior to maturity and therefore is 
issued and traded at a discount from its face amount.  Zero 
coupon securities may be created by separating the interest 
and principal components of securities issued or guaranteed 
by the United States government or one of its agencies or 
instrumentalities ("U.S. government securities") or issued 
by private corporate issuers.  The funds, however, invest 
only in zero coupon securities that are direct obligations 
of the United States Treasury.  The discount from face 
value 
at which zero coupon securities are purchased varies 
depending on the time remaining until maturity, prevailing 
interest rates and the liquidity of the security.  Because 
the discount from face value is known at the time of 
investment, investors holding zero coupon securities until 
maturity know the total amount of their investment return 
at 
the time of investment.  

Zero coupon securities of the type held by each fund can be 
sold prior to their due date in the secondary market at 
their then prevailing market value which, depending on 
prevailing levels of interest rates and the time remaining 
to maturity, may be more or less than their value based 
solely on the amount due at maturity and accretion of 
interest to date.  The market prices of zero coupon 
securities are generally more volatile than the market 
prices of securities paying interest periodically and, 
accordingly, are likely to respond to a greater degree to 
changes in interest rates than do non-zero coupon 
securities 
having similar maturities and yields.  As a result, the net 
asset value of shares of each fund may fluctuate over a 
greater range than shares of other mutual funds that invest 
in U.S. government securities having similar maturities and 
yields but that make current distributions of interest.  
The 
current net asset value of each fund attributable to zero 
coupon securities and other debt instruments held by each 
fund generally will vary inversely with changes in 
prevailing interest rates.

Each year each fund will be required to accrue an 
increasing 
amount of income on its zero coupon securities utilizing 
the 
effective interest method.  To maintain its tax status as a 
pass-through entity and also to avoid imposition of excise 
taxes, each fund will be required to distribute dividends 
equal to substantially all of its net investment income, 
including the accrued income on its zero coupon securities 
for which it receives no payments in cash prior to their 
maturity.  Dividends of each fund's net investment income 
and distributions of its 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.  However, a shareholder who elects to 
receive dividends and distributions in cash, instead of 
reinvesting these amounts in additional shares of the fund, 
may realize an amount that is less than the entire amount 
originally invested.

Derivatives and hedging techniques.  Security and Growth 
Fund may, but need not, use derivative contracts, such as 
futures and options on securities or securities indices; 
and 
options on these futures; to hedge against the economic 
impact of adverse changes in the market value of its 
securities, due to changes in stock market prices.  A 
derivative contract will obligate or entitle a fund to 
deliver or receive an asset or cash payment that is based 
on 
the change in value of one or more securities, currencies 
or 
indices.  Even a small investment in derivative contracts 
can have a big impact on the fund's stock market exposure.  
Therefore, using derivatives can disproportionately 
increase 
losses and reduce opportunities for gains when stock prices 
are changing.  A fund may not fully benefit from or may 
lose 
money on derivatives if changes in their value do not 
correspond accurately to changes in the value of the fund's 
holdings.  The other parties to certain derivative 
contracts 
present the same types of credit risk as issuers of fixed 
income securities.  Derivatives can also make a fund less 
liquid and harder to value, especially in declining 
markets.

Foreign securities.  Each fund may invest up to 10% of its 
net assets (at the time of investment) in foreign 
securities.  Investments in securities of foreign entities 
and securities quoted or denominated in foreign currencies 
involve special risks.  These include possible political 
and 
economic instability and the possible imposition of 
exchange 
controls or other restrictions on investments.  If a fund 
invests in securities denominated or quoted in currencies 
other than the U.S. dollar, changes in foreign currency 
exchange rates relative to the U.S. dollar will affect the 
U.S. dollar value of the fund's assets.

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

Management

Manager.  Each fund's investment adviser and administrator 
(the "manager") is Mutual Management Corp., an affiliate of 
Salomon Smith Barney Inc.  The manager's address is 388 
Greenwich Street, New York, New York 10013.  The manager 
selects each fund's investments and oversees its 
operations. 
The manager and Salomon Smith Barney are subsidiaries of 
Citigroup Inc.  Citigroup businesses produce a broad range 
of financial services, (asset management, banking and 
consumer finance, credit and charge cards, insurance, 
investments, investment banking and trading) and use 
diverse channels to make them available to consumer and 
corporate customers around the world.  Among these 
businesses are Citibank, Commercial Credit, Primerica 
Financial Services, Salomon Smith Barney, SSBC Asset 
Management, Travelers Life & Annuity, and Travelers 
Property 
Casualty.

Richard Freeman has been responsible for the day to day 
management of the Series 2000 Fund since its inception.  
Mr. Freeman is an investment officer of Mutual Management 
Corp. and managing director of Salomon Smith Barney.  John 
G. Goode has been responsible for the day to day management 
of the Security and Growth Fund since its inception.  Mr. 
Goode is an investment officer of Mutual Management Corp. 
and Chairman and Chief Investment Officer of Davis Skaggs 
Investment Management, a division of Mutual Management 
Corp. 
and a managing director of Salomon Smith Barney. 

Management fees.  During the fiscal year ended November 30, 
1998, the manager received an advisory fee and 
administrative fee equal to 0.40% and 0.20%, respectively, 
of Series 2000 Fund's average daily net assets, and an 
management fee of 0.50% of Security and Growth Fund's 
average daily net assets. 

Year 2000 issue.  Information technology experts are 
concerned about computer systems' ability to process 
date-related information on and after January 1, 2000.  
This 
situation, commonly known as the "Year 2000" issue, could 
have an adverse impact on the funds.  The manager and 
Salomon Smith Barney are addressing the Year 2000 issue for 
their systems.  The funds have been informed by their other 
service providers that they are taking similar measures.  
Although the funds do not expect the Year 2000 issue to 
adversely affect them, the funds cannot guarantee that the 
efforts of the funds, which are limited to requesting and 
receiving reports from its service providers, or the 
efforts 
of their service providers to correct the problem will be 
successful. 


Reinvestment of dividends

Both Series 2000 Fund and Security and Growth Fund are 
currently closed to investors except through reinvestment 
of 
dividends or distributions from the funds.  The trustees 
may, upon 30 days' notice to shareholders, reopen a fund if 
the trustees determine the reopening to be in the best 
interests of that fund and its shareholders.


Exchanging shares


Smith Barney offers a distinctive family of mutual funds 
tailored to help meet the varying needs of both large and 
small investors.

Because the funds are not continuously offering shares, an 
investor who exchanges shares of a fund will not be able to 
effect an exchange back into the funds.  You should contact 
your Salomon Smith Barney Financial Consultant or dealer 
representative to exchange into other Smith Barney mutual 
funds.  Be sure to read the prospectus of the Smith Barney 
mutual fund you are exchanging into.  An exchange is a 
taxable transaction.  Upon an exchange prior to the 
Maturity 
Date, an investor may receive an amount less than the 
original investment in the fund. 

? You may exchange shares only for Class A shares of most 
Smith Barney mutual funds. Not all Smith Barney funds 
may be offered in your state of residence.  Contact your 
Salomon Smith Barney Financial Consultant, dealer 
representative or the transfer agent.
? You must meet the minimum investment amount for each 
fund.
? If you hold share certificates, the transfer agent must 
receive the certificates endorsed for transfer or with 
signed stock powers before the exchange is effective.
? The fund may suspend or terminate your exchange 
privilege if you engage in an excessive pattern of 
exchanges.

No additional  sales charges 

Shares acquired in the exchange will not be subject to an 
initial sales charge at the time of the exchange.



By telephone

If you do not have a brokerage account, you may be eligible 
to exchange shares through the transfer agent.  To find 
out, 
call the transfer agent.  You must complete an 
authorization 
form to authorize telephone transfers.  If eligible, you 
may 
make telephone exchanges on any day the New York Stock 
Exchange is open.  Call the transfer agent at 1-800-451-
2010 
between 9:00 a.m. and 4:00 p.m. (Eastern time).  Requests 
received after the close of regular trading on the Stock 
Exchange are priced at the net asset value next determined.

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

By mail

If you do not have a Salomon Smith Barney brokerage 
account, 
contact your dealer representative or write to the transfer 
agent at the address on the next page.

Redeeming shares


Generally

Contact your Salomon Smith Barney Financial Consultant or 
dealer representative to redeem shares of the funds. 

If you hold share certificates, the transfer agent must 
receive the certificates endorsed for transfer or with 
signed stock powers before the redemption is effective.  

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

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

If you have a Salomon Smith Barney brokerage account, your 
redemption proceeds will be placed in your account and not 
reinvested without your specific instruction.  In other 
cases, unless you direct otherwise, your redemption 
proceeds 
will be paid by check mailed to your address of record. 

By mail

For accounts held directly at the fund, send written 
requests to the transfer agent at the following address:

Smith Barney Principal Return Fund
(specify either Series 2000 Fund or Security and 
Growth Fund)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128

Your written request must provide the following:

? Your account number
? The specific fund and the dollar amount or number of 
shares to be redeemed
? Signatures of each owner exactly as account is 
registered


By telephone


If you do not have a brokerage account, you may be eligible 
to redeem shares (except those held in retirement plans) in 
amounts up to $10,000 per day through the transfer agent.  
You must complete an authorization form to authorize 
telephone redemptions.  If eligible, you may request 
redemptions by telephone on any day the New York Stock 
Exchange is open.  Call the transfer agent at 1-800-451-
2010 
between 9:00 a.m. and 4:00 p.m. (Eastern time). Requests 
received after the close of regular trading on the stock 
exchange are priced at the net asset value next determined.

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



Other things to know about share transactions

When you reinvest dividends, exchange or redeem shares, 
your 
request must be in good order.  This means that you have 
provided the following information without which your 
request will not be processed.  These same requirements 
would apply if a fund reopened to new investment purchases.

? Name of the fund
? Account number
? Dollar amount or number of shares to be exchanged or 
redeemed
? Signature of each owner exactly as account is 
registered

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

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

? Are redeeming (together with other requests submitted 
in the previous 10 days) over $10,000 of shares
? Are sending signed share certificates or stock powers 
to the transfer agent
? Instruct the transfer agent to mail the check to an 
address different from the one on your account
? Changed your account registration
? Want the check paid to someone other than the account 
owner(s)
? Are transferring the redemption proceeds to an account 
with a different registration

You can obtain a signature guarantee from most banks, 
dealers, brokers, credit unions and federal savings and 
loans, but not from a notary public.

The fund has the right to:

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

Share certificates.  The fund does not issue share 
certificates.  


Distributions, dividends and taxes

Dividends.  Each fund generally makes capital gain 
distributions and pays dividends, if any, once a year, 
typically in December.  Each fund may pay additional 
distributions and dividends at other times if necessary for 
the fund to avoid a federal tax.  Capital gain 
distributions 
and dividends are reinvested in additional fund shares.  
You 
do not pay a sales charge on reinvested distributions or 
dividends.  Alternatively, you can instruct your Salomon 
Smith Barney Financial Consultant, dealer representative or 
the transfer agent to have your distributions and/or 
dividends paid in cash.  You can change your choice at any 
time to be effective as of the next distribution or 
dividend, except that any change given to the transfer 
agent 
less than five days before the payment date will not  be 
effective until the next distribution or dividend is paid.  
A shareholder who elects to receive distributions and 
dividends in cash may realize an amount that is greater or 
less than the entire amount of his or her investment.

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


Transaction

Federal tax status

Redemption or exchange of shares

Usually capital gain or loss; long-term only if shares 
owned 
more than one year

Long-term capital gain distributions

Long-term capital gain

Short-term capital gain distributions

Ordinary income

Dividends 

Ordinary income

Long-term capital gain distributions are taxable to you as 
long-term capital gain regardless of how long you have 
owned 
your shares. 

After the end of each year, the fund will provide you with 
information about the distributions and dividends you 
received and any redemptions of shares during the previous 
year.  If you do not provide the fund with your correct 
taxpayer identification number and any required 
certifications, you may be subject to back-up withholding 
of 
31% of your distributions, dividends, and redemption 
proceeds.  Because each shareholder's circumstances are 
different and special tax rules may apply, you should 
consult your tax adviser about your investment in the fund.


Share price

You may reinvest dividends, exchange or redeem shares at 
their net asset value, next determined after receipt of 
your 
request in good order.  Each fund's net asset value is the 
value of its assets minus its liabilities.  Each fund 
calculates its net asset value every day the New York Stock 
Exchange is open.  This calculation is done when regular 
trading closes on the Exchange (normally 4:00 p.m., Eastern 
time). 

Each fund generally values its portfolio securities based 
on 
market prices or quotations.  When market prices are not 
available, or when the manager believes they are 
unreliable, 
the funds may price those securities at fair value.  Fair 
value is determined in accordance with procedures approved 
by the funds' board.  A fund that uses fair value to price 
securities may value those securities higher or lower than 
another fund using market quotations to price the same 
securities.

Investments in U.S. government securities (other than 
short-
term securities) are valued at the quoted bid price in the 
over-the-counter market.  Short-term investments maturing 
in 
60 days or less are valued at amortized cost.  Under the 
amortized cost method, an asset is valued by constantly 
amortizing over its remaining life the difference between 
the principal amount due at maturity and the cost of the 
instrument to the fund.In order to redeem or exchange 
shares 
at that day's price, you must place your order with your 
Salomon Smith Barney Financial Consultant or dealer 
representative before the New York Stock Exchange closes.  
If the New York Stock Exchange closes early, you must place 
your order prior to the actual closing time. Otherwise, you 
will receive the next business day's price. 

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

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

For a share of capital stock outstanding throughout each 
year ended November 30:


Series 2000

1998

1997

1996

1995

1994

Net asset value, beginning of period

$

$8.63

$9.28

$8.15

$9.00

Income (loss) from operations:










Net investment income (loss)

0.28
0.30
0.27
0.27
Net realized and unrealized gain (loss)

0.78
(0.16)
1.48
(0.28)

Total income (loss) from operations



1.06

0.14

1.75

(0.01)

Less distributions from:










Net investment income

--
(0.57)
(0.27)
(0.34)
Net realized gains

(1.23)
(0.22)
(0.35)
(0.50)

Total distributions



(1.23)

(0.79)

(0.62)

(0.84)

Net asset value, end of year



$8.46

$8.63

$9.28

$8.15

Total return(1)



12.28%

1.55%

22.17%

(0.20)%

Net assets, end of year (000,000)'s



$59

$65

$77

$75

Ratios to average net assets:











Expenses



1.05%

1.11%

1.17%

1.15%
Net investment income (loss)

3.15
3.15
3.12
3.27

Portfolio turnover rate



0%

0%

6%

1%

(1)	Total return does not reflect any applicable 
sales charges.
For a share of capital stock outstanding throughout each 
year ended November 30.


Security and Growth Fund

1998

1997

1996

1995(1)

Net asset value, beginning of period

$

$10.22

$10.68

$9.60

Income (loss) from operations:








Net investment income (loss)

0.28
0.33
0.28
Net realized and unrealized gain (loss)

1.40
0.82
0.94

Total income (loss) from operations



1.68

1.15

1.22

Less distributions from:








Net investment income

(0.03)
(0.62)
--
Net realized gains

(1.75)
(0.99)
(0.14)

Total distributions



(1.78)

(1.61)

(0.14)

Net asset value, end of year



$10.12

$10.22

$10.68

Total return(2)



16.42%

11.15%

12.70(3)

Net assets, end of year (000,000)'s



$204

$244

$310

Ratios to average net assets:









Expenses



0.92%

0.99%

1.02%(4)
Net investment income (loss)

2.62
2.88
4.07(4)

Portfolio turnover rate



20%

43%

26%

(1)	For the period from March 30, 1995 (commencement 
of operations) to November 30, 1995.
(2)	Total return does not reflect any applicable 
sales loads or deferred sales charges.
(3)	Not annualized.
(4)	Annualized.

SALOMON SMITH BARNEY_
a member of citigroup [Symbol]



SMITH BARNEY PRINCIPAL RETURN FUND

Zero Plus Emerging Growth Series 2000
Security and Growth Fund




ADDITIONAL INFORMATION

Shareholder reports.  Annual and semiannual reports to 
shareholders provide additional information about the 
funds' 
investments.  These reports discuss the market conditions 
and investment strategies that affected each fund's 
performance.

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

Statement of additional information.  The statement of 
additional information provides more detailed information 
about the fund and is incorporated by reference into (is 
legally part of) this prospectus.

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

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

You can also review each fund's shareholder reports, 
prospectus and statement of additional information at the 
Securities and Exchange Commission's Public Reference Room 
in Washington, D.C.  The Commission charges a fee for this 
service.  Information about the public reference room may 
be 
obtained by calling 1-800-SEC-0330. You can get the same 
reports and information free from the Commission's Internet 
web site at http:www.sec.gov

If someone makes a statement about the funds that is not in 
this prospectus, you should not rely upon that information. 
 The funds are not offering to sell their shares to any 
person to whom the funds may not lawfully sell their 
shares.


(Investment Company Act file no. 811-05678)
(FD-01103        3/99)

Principal Return Fund   -1-

PART B



March 31, 1999

STATEMENT OF ADDITIONAL INFORMATION
Smith Barney Principal Return Fund
Zero Plus Emerging Growth Series 2000
Security and Growth Fund

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

This Statement of Additional Information is not a 
prospectus.  It supplements the information contained 
in the current Prospectus dated March 31, 1999, as 
amended or supplemented from time to time, about the 
Zero Plus Emerging Growth Series 2000 ("Series 2000") 
and the Security and Growth Fund (each, a "fund" and 
collectively the "funds").  Each fund is an investment 
portfolio of Smith Barney Principal Return Fund (the 
"Trust").  This Statement of Additional Information is 
intended to provide more detailed information about 
the funds as well as matters already discussed in the 
Prospectus and therefore should be read in conjunction 
with the Prospectus.  

The Prospectus may be obtained from any Salomon Smith 
Barney Financial Consultant 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 Prospectus in its entirety.

Shares of Series 2000 and the Security and Growth Fund 
are not currently being offered for sale to new 
investors.  The net asset value per share of each 
series prior to the maturity date can be expected to 
fluctuate substantially due to changes in prevailing 
interest rates that will affect the current value of 
each fund's holdings of zero coupon securities, as 
well as changes in the value of each fund's other 
holdings.  Because the funds are not currently engaged 
in a continuous offering of shares, they are not 
benefitting from an inflow of new capital.  In 
addition, because each fund may experience redemptions 
and capital losses prior to the maturity date (or in 
preparation for each fund's liquidation at the 
maturity date) and will pay dividends and 
distributions in cash to shareholders who so elect, a 
diminution of its assets resulting from losses, 
redemptions and dividends and distributions paid in 
cash could make each fund's investment objectives 
unachievable; thus the accomplishment of each fund's 
investment objectives with respect to remaining 
shareholders that reinvest dividends and distributions 
could depend in part on the investment decisions of 
other shareholders.  

CONTENTS

Trustees and Executive Officers of the Trust2
Investment Objectives and Management Policies4
Risk Factors13
Investment Restrictions15
Purchase, Redemption and Exchange of Shares17
Portfolio Turnover20
Portfolio Transactions21
Determination of Net Asset Value22
Taxes23
Performance Information25
Investment Management and Other Services27
Other Information About the Trust28
Financial Statements29
	TRUSTEES AND EXECUTIVE OFFICERS OF THE TRUST

Overall responsibility for management and supervision 
of the Trust 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 Trust, including agreements with the 
Trust's investment manager, distributor, custodian and 
transfer agent.  The day-to-day operations of the 
Trust are delegated to the Trust's investment manager, 
Mutual Management Corp. ("MMC" or the "Manager"). 

The names of the Trustees and executive officers of 
the Trust, together with information as to their 
principal business occupations for the past five years 
and their ages, 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.

PAUL R. ADES, TRUSTEE
Partner in the law firm of Murov & Ades; 272 South 
Wellwood Avenue, P.O. Box 504, Lindenhurst, New York 
1137, 58.

HERBERT BARG, TRUSTEE
Private investor; 273 Montgomery Avenue, Bala Cynwyd, 
Pennsylvania 19004. Director of 18 investment 
companies associated with Salomon Smith Barney; 75.

DWIGHT B. CRANE, TRUSTEE
Professor, Harvard Business School; Soldiers Field 
Road, Boston, Massachusetts 02163. Director of 24 
investment companies associated with Salomon Smith 
Barney; 61.

FRANK HUBBARD, TRUSTEE
Vice President of S & S Industries; Former Corporate 
Vice President, Materials Management and Marketing 
Services of Huls American, Inc.; 80 Centennial Avenue 
P.O. Box 456, Piscataway; New Jersey 08855-0456; 63.

*HEATH B. MCLENDON, CHAIRMAN OF THE BOARD AND 
INVESTMENT OFFICER
Managing Director of Salomon Smith Barney, Chairman of 
Smith Barney Strategy Advisers Inc. and President of 
MMC and Travelers Investment Adviser, Inc. ("TIA"); 
388 Greenwich Street, New York, New York 10013. 
Director of 59 investment companies associated with 
Salomon Smith Barney 65.

JEROME MILLER, TRUSTEE
Retired, Former President, Asset Management Group of 
Shearson Lehman Brothers; 27 Hemlock Road, Manhassett, 
New York 11030.; 61.

KEN MILLER, TRUSTEE
President of Young Stuff Apparel Group, Inc.; 1407 
Broadway, 6th Floor, New York, New York 10018. ; 57.

RICHARD A. FREEMAN, VICE PRESIDENT AND INVESTMENT 
OFFICER
Managing Director of Smith Barney Investment Advisors, 
a division of MMC; 388 Greenwich Street, New York, New 
York 10013. Vice President and Investment Officer of 
one other mutual fund of the Smith Barney Mutual 
Funds; 45.

JOHN G. GOODE, VICE PRESIDENT AND INVESTMENT OFFICER
Managing Director of Salomon Smith Barney, President 
and Chief Investment Officer of Davis Skaggs 
Investment Management, a division of MMC; 1 Sansome 
Street, Suite 3850, San Francisco, California 94104. 
Vice President and Investment Officer of two other 
mutual funds; 53.

LEWIS E. DAIDONE, SENIOR VICE PRESIDENT AND TREASURER
Managing Director of Salomon Smith Barney, Chief 
Financial Officer of the Smith Barney Mutual Funds; 
Director and Senior Vice President of MMC and TIA; 388 
Greenwich Street, New York, New York 10013. Senior 
Vice President of 42 Smith Barney Mutual Funds; 41.

CHRISTINA T. SYDOR, SECRETARY
Managing Director of Salomon Smith Barney; General 
Counsel and Secretary of MMC and TIA; 388 Greenwich 
Street, New York, New York 10013.  Secretary of 42 
Smith Barney Mutual Funds; 47.

Each Trustee also serves as a trustee, general partner 
and/or director of other mutual funds for which 
Salomon Smith Barney serves as a distributor.  As of 
January 22, 1999, Trustees and officers of the funds, 
as a group, owned less than 1% of the outstanding 
shares of beneficial interest of each fund.

No director, officer or employee of Salomon Smith 
Barney or any of its affiliates will receive any 
compensation from the Trust for serving as an officer 
or Trustee.  The Trust pays each Trustee who is not a 
director, officer or employee of Salomon Smith Barney 
or any of its affiliates a fee of $4,000 per annum 
plus $500 per meeting attended and reimburses them for 
travel and out-of-pocket expenses.  

The following table shows the compensation paid by the 
Trust to each trustee during the Trust's last fiscal 
year.


Trustee

Aggregate Compensation from the Trust

Pension or Retirement Benefits Accrued as Part of the 
Trust Expenses

Estimated Annual Benefits Upon Retirement

Aggregate Compensation from the Smith Barney Mutual 
Funds

Number of Funds for Which Director Serves Within Fund 
Complex

Paul R. Ades



$0



49,000



Herbert Barg



0



101,600



Dwight B. Crane



0



33,850



Frank G. Hubbard



0



52,000



Heath B. McLendon



0







Jerome Miller



0



12,400



Ken Miller



0



52,000



**	Trustee Emeritus.  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 Trust 
together with reasonable out-of-pocket expenses for 
each meeting attended.  During the Trust's last fiscal 
year aggregate compensation paid by the Trust to 
Trustees Emeritus totaled $_____.

	INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

General.  The Prospectus discusses the investment 
objectives of each fund and the policies to be 
employed to achieve those objectives.  The funds are 
open-end, diversified management investment companies 
under the 1940 Act.  

Zero Plus Emerging Growth Series 2000 seeks (a) to 
return to each shareholder on February 28, 2000 (the 
"Series 2000 Maturity Date") the principal amount of 
the shareholder's original investment (including any 
sales charge paid) through investment of a portion of 
its assets in zero coupon securities and (b) to the 
extent consistent with that objective, to provide 
long-term appreciation of capital through investment 
of the balance of its assets primarily in equity 
securities issued by "emerging growth companies," 
which are small- to medium-sized companies that are 
believed by the fund's investment adviser to show a 
prospect of achieving significant profit and gain in a 
relatively short period of time.  There can be no 
assurance that Series 2000's investment objectives 
will be achieved.

Security and Growth Fund seeks (a) to return to each 
shareholder on August 31, 2005 (the "Security and 
Growth Fund Maturity Date") the principal amount of 
the shareholder's original investment (including any 
sales charge paid) through investment of a portion of 
its assets in zero coupon securities ("Repayment 
Objective") and (b) to the extent consistent with that 
objective, to provide long-term appreciation of 
capital through investment of the balance of its 
assets primarily in equity securities.  There can be 
no assurance that the Security and Growth Fund's 
investment objectives will be achieved.  

When used herein, the term Maturity Date shall refer 
to the "Series 2000 Maturity Date" and the "Security 
and Growth Fund Maturity Date," as applicable.

Set forth below is supplemental information concerning 
certain of the securities and other instruments in 
which the funds may invest, the investment policies 
and portfolio strategies that the funds may utilize 
and certain risks involved with those investments, 
policies and strategies.

Operation of the funds.  As of February 28, 1999, zero 
coupon securities represented approximately  ___% and 
___%, of Series 2000's and Security and Growth Fund's 
net assets, respectively, with the balance of each 
fund's net assets invested in equity securities (in 
the case of Series 2000, equity securities of emerging 
growth companies) and other securities as described 
below.  The funds' zero coupon securities will mature 
within one year before the Maturity Date and their 
aggregate stated principal amount is expected to be 
sufficient to meet the Repayment Objective; the funds 
will not receive any payments with respect to a zero 
coupon security prior to the maturity of that 
security.  The funds may hold zero coupon securities 
in excess of those required to meet the Repayment 
Objective to the extent the Manager deems appropriate. 
 As each fund's zero coupon securities mature, the 
proceeds will be invested in direct obligations of the 
United States government with remaining maturities of 
one year or less and, in any case, maturing on or 
prior to the Maturity Date.  On the Maturity Date, 
each fund's remaining equity investments will be sold 
and other investments will mature, the liabilities of 
each fund will be discharged or provision made 
therefor, each fund's shares will be mandatorily 
redeemed and, within seven days thereafter, the 
proceeds will be distributed to shareholders and each 
fund's existence thereafter will be terminated.  These 
arrangements may require the disposition of the funds' 
equity securities at a time when it is otherwise 
disadvantageous to do so and may involve selling 
securities at a substantial loss.  On a continuous 
basis and as the maturity date of each fund 
approaches, the Board of Trustees will consider the 
intended liquidation and termination of each fund 
together with other factors and determine whether 
liquidation and termination or such other action as it 
deems appropriate is in the best interests of the 
Trust and its shareholders.  The estimated expenses of 
liquidation and termination of each fund will be 
accrued ratably over the entire term of the fund and 
will be charged to income.  These expenses are not 
expected to affect materially the ordinary annual 
operating expenses of the funds and, accordingly, 
should have no effect on the funds' ability to meet 
the Repayment Objective.

Each fund may satisfy redemption requests and cash 
payments of dividends and distributions by liquidating 
a portion of its holdings of zero coupon securities, 
as well as other investments, provided that the fund 
would have sufficient zero coupon securities remaining 
to meet the Repayment Objective.

Thus, each fund's portfolio may be visualized as 
consisting of two portions: one, its zero coupon 
securities, which are expected to increase in value by 
reason of accretion of interest to equal at maturity 
an amount sufficient to meet the Repayment Objective; 
the other, its equity securities and all other 
investments (in the case of Series 2000, holdings of 
emerging growth securities), which represent a 
variable portion of the fund's assets depending on the 
performance of those investments, the funds' expenses, 
the level of dividend reinvestment and the level of 
redemptions over time.  In order to facilitate 
management of the fund's portfolios, shareholders are 
urged to reinvest dividends and distributions in 
additional shares; these amounts will be paid in cash 
only at the specific election of a shareholder.

FIXED INCOME SECURITIES

Zero coupon securities.  A zero coupon security is a 
debt obligation that does not entitle the holder to 
any periodic payments of interest prior to maturity 
and therefore is issued and traded at a discount from 
its face amount.  Zero coupon securities may be 
created by separating the interest and principal 
components of securities issued or guaranteed by the 
United States government or one of its agencies or 
instrumentalities ("U.S. government securities") or 
issued by private corporate issuers.  The funds, 
however, invest only in zero coupon securities that 
are direct obligations of the United States Treasury. 
 The discount from face value at which zero coupon 
securities are purchased varies depending on the time 
remaining until maturity, prevailing interest rates 
and the liquidity of the security.  Because the 
discount from face value is known at the time of 
investment, investors holding zero coupon securities 
until maturity know the total amount of their 
investment return at the time of investment.  In 
contrast, a portion of the total realized return from 
conventional interest-paying obligations comes from 
the reinvestment of periodic interest.  Because the 
rate to be earned on these reinvestments may be higher 
or lower than the rate quoted on the interest-paying 
obligations at the time of the original purchase, the 
investor's return on reinvestments is uncertain even 
if the securities are held to maturity.  This 
uncertainty is commonly referred to as reinvestment 
risk.  With zero coupon securities, however, there are 
no cash distributions to reinvest, so investors bear 
no reinvestment risk if they hold the zero coupon 
securities to maturity; holders of zero coupon 
securities, however, forego the possibility of 
reinvesting at a higher yield than the rate paid on 
the originally issued security.  With both zero coupon 
and interest-paying securities, there is no 
reinvestment risk on the principal amount of the 
investment.

There are currently two basic types of zero coupon 
securities, those created by separating the interest 
and principal components of a previously issued 
interest-paying security and those originally issued 
in the form of a face value only security paying no 
interest.  Zero coupon securities of the U.S. 
government and certain of its agencies and 
instrumentalities and of private corporate issuers are 
currently available, although the funds will purchase 
only those that represent direct obligations of the 
government.

Zero coupon securities of the U.S. government that are 
currently available are called Separate Trading of 
Registered Interest and Principal of Securities 
("STRIPS") or Coupon Under Book-Entry Safekeeping 
("CUBES").  STRIPS and CUBES are issued under 
programs introduced by the United States Treasury and 
are direct obligations of the U.S. government.  The 
U.S. government does not issue zero coupon securities 
directly.  The STRIPS program which is ongoing, is 
designed to facilitate the secondary market stripping 
of selected treasury notes and bonds into individual 
interest and principal components.  Under the program, 
the United States Treasury continues to sell its notes 
and bonds through its customary auction process.  
However, a purchaser of those notes and bonds who has 
access to a book-entry account at a Federal Reserve 
Bank (the "Federal Reserve") may separate the 
specified treasury notes and bonds into individual 
interest and principal components.  The selected 
treasury securities may thereafter be maintained in 
the book-entry system operated by the Federal Reserve 
in a manner that permits the separate trading and 
ownership of the interest and principal payments.  The 
Federal Reserve does not charge a fee for this 
service, but the book-entry transfer of interest or 
principal components is subject to the same fee 
schedule applicable to the transfer of treasury 
securities.

Under the program, in order for a book-entry treasury 
security to be separated into its component parts, the 
face amount of the security must be an amount which, 
based on the stated interest rate of the security, 
will produce a semi-annual interest payment of $1,000 
or a multiple of $1,000.  Once a book-entry security 
has been separated, each interest and principal 
component may be maintained and transferred in 
multiples of $1,000 regardless of the face value 
initially required for separation of the resulting 
amount required for each interest payment.
CUBES, like STRIPS, are direct obligations of the U.S. 
government.  CUBES are coupons that have previously 
been physically stripped from treasury notes and 
bonds, but which were deposited with the Federal 
Reserve and are now carried and transferable in book-
entry form only.  Only stripped treasury coupons 
maturing on or after January 15, 1988, that were 
stripped prior to January 5, 1987, were eligible for 
conversion to book-entry form under the CUBES program. 
 Investment banks may also strip treasury securities 
and sell them under proprietary names.  These 
securities may not be as liquid as STRIPS and CUBES 
and the funds have no present intention of investing 
in these instruments.

STRIPS and CUBES are purchased at a discount from 
$1,000.  Absent a default by the United States 
government, a purchaser will receive face value for 
each of the STRIPS and CUBES provided that the STRIPS 
and CUBES are held to their due date.  While STRIPS 
and CUBES can be purchased on any business day, they 
all currently come due on February 15, May 15, August 
15 or November 15 in any given year.

Convertible securities (each fund).  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 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, 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 (each fund).  Preferred stocks, like 
debt obligations, are generally fixed-income 
securities.  Shareholders of preferred stock 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. 
 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.

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

EQUITY SECURITIES 

Security and Growth Fund.  Although the Manager 
anticipates that Security and Growth Fund's non-zero 
coupon security portfolio primarily will be invested 
in small- to medium-sized companies, it may also be 
invested in the equity securities of larger, 
established companies that the Manager determines 
present particular opportunities for capital growth.

Under normal market conditions, the bulk of Security 
and Growth Fund's non-zero coupon security portfolio 
consists of common stocks, but they also may contain 
other equity securities, including preferred stocks 
and debt securities convertible into common stocks.  
Preferred securities and convertible securities will 
be selected on the basis of their equity 
characteristics.  Ratings by statistical rating 
organizations generally will not be a factor in the 
selection process.

Series 2000.  Series 2000's non-zero coupon security 
portfolio has been designed to provide investors with 
significant opportunities for long-term capital 
appreciation that the Manager believes are presented 
by the equity securities of small capitalization 
companies.  The Manager believes that these securities 
are undervalued as compared, on a relative historical 
basis, with equity securities of larger capitalization 
companies, and have tended over time to outperform 
securities of larger capitalization companies.

Common Stocks (each fund).  Each fund may invest in 
common stocks.  Common stocks are shares of a 
corporation or other entity that entitle the holder to 
a pro rata share of the profits of the corporation, 
after interest payments to preferred stockholders.  
Common stock usually carries with it the right to vote 
and frequently an exclusive right to do so.

Warrants (each fund).  A warrant is a security that 
gives the holder the right, but not the obligation, to 
subscribe for newly created securities of the issuer 
or a related company at a fixed price either at a 
certain date or during a set period.  Because a 
warrant does not carry with it the right to dividends 
or voting rights with respect to securities that the 
warrant holder is entitled to purchase, and because it 
does not represent any rights to the assets of the 
issuer, a warrant may be considered more speculative 
than certain other types of investments.  In addition, 
the value of a warrant does not necessarily change 
with the value of the underlying securities and a 
warrant ceases to have value if it is not exercised by 
its expiration date.

Foreign securities (each fund).  Each fund may each 
invest up to 10% of its net assets in securities of 
foreign issuers.

Investing in foreign securities involves certain 
risks, including those resulting from fluctuations in 
currency exchange rates, revaluation of currencies, 
future political or economic developments and the 
possible imposition of restrictions or prohibitions on 
the repatriation of foreign currencies or other 
foreign governmental laws or restrictions, reduced 
availability of public information concerning issuers, 
and, typically, the lack of uniform accounting, 
auditing and financial reporting standards or other 
regulatory practices and requirements comparable to 
those applicable to domestic companies.  Moreover, 
securities of many foreign companies 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, 
the possibility exists of expropriation, confiscatory 
taxation and limitations on the use or removal of 
funds or other assets of the fund including the 
withholding of dividends.

INVESTMENT TECHNIQUES

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

The risks in lending portfolio securities, as with 
other extensions of secured credit, consist of 
possible delays in receiving additional collateral or 
in the recovery of the securities or possible loss of 
rights in the collateral should the borrower fail 
financially.  Loans will be made to firms deemed by 
the Manager to be of good standing and will not be 
made unless, in the judgement of the Manager, the 
consideration to be earned from such loans would 
justify the risk.

Temporary defensive investing (each fund).  Each fund 
may hold at any time up to 10% of the value of its 
assets in cash and money market instruments in order 
to cover the fund's expenses, anticipated redemptions, 
cash payments of dividends and distributions and to 
meet settlement requirements for securities.  In 
addition, when the Manager believes that, with respect 
to its equity portfolio, a temporary defensive 
investment posture is warranted, a fund may invest 
without limitation in cash and money market 
instruments.  To the extent that it holds cash or 
invests in money market instruments, a fund will not 
achieve its investment objective of long-term 
appreciation of capital.  Money market instruments in 
which the funds may invest are:  U.S. government 
securities; bank obligations (including certificates 
of deposit, time deposits and bankers' acceptances of 
domestic or foreign banks, domestic savings and loan 
associations and other banking institutions having 
total assets in excess of $500 million); commercial 
paper rated no lower than A-2 by Standard & Poor's 
Rating Group or Prime-2 by Moody's Investors Service, 
Inc. 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 three 
highest rating categories; and repurchase agreements. 
 At no time will a fund's investments in bank 
obligations, including time deposits, exceed 25% of 
its assets.  In addition, a fund will not invest in 
time deposits maturing in more than seven days if, as 
a result, its holdings of those time deposits would 
exceed 5% of Security and Growth Fund's net assets and 
10% of Series 2000's net assets.

A fund will invest in an obligation of a foreign bank 
or foreign branch of a United States bank only if the 
Manager determines that the obligation presents 
minimal credit risks.  Obligations of foreign banks or 
foreign branches of United States banks in which a 
fund will invest may be traded in the United States or 
outside the United States, but will be denominated in 
U.S. dollars.  These obligations entail risks that are 
different from those of investments in obligations of 
United States 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 or 
other taxes on 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.

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

Repurchase agreements (each fund).  Each fund may 
engage in repurchase agreement transactions with 
certain 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.  A repurchase agreement is a 
contract under which the buyer of a security 
simultaneously commits to resell the security to the 
seller at an agreed upon price on an agreed upon date. 
Under the terms of a typical repurchase agreement, a 
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 price and time, thereby determining the 
yield during the fund's holding period.  This 
arrangement results in a fixed rate of return that is 
not subject to market fluctuations during the fund's 
holding period.  The value of the underlying 
securities will be monitored on an ongoing basis by 
the Manager to ensure that the value is at least equal 
at all times to the total amount of the repurchase 
obligation, including interest.  The Manager also will 
review on an ongoing basis the creditworthiness of 
those banks and dealers with which the fund may enter 
into repurchase agreements to evaluate the potential 
risks.  The fund bears a risk of loss if the other 
party to a repurchase agreement defaults on its 
obligations and the fund is delayed in or prevented 
from exercising its rights to dispose of the 
underlying 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 its rights to them, the risk of incurring 
expenses associated with asserting those rights and 
the risk of losing all or a part of the income from 
the agreement.  At any one time, Series 2000's 
aggregate holdings of repurchase agreements having a 
duration of more than five business days and 
securities lacking readily available market quotations 
will not exceed 10% of Series 2000's total assets.

DERIVATIVES

Covered option writing (Security and Growth Fund).  
Security and Growth Fund may write covered call 
options with respect to its portfolio securities.  
Security and Growth Fund realizes a fee (referred to 
as a "premium") for granting the rights evidenced by 
the options.  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 call option written by 
Security and Growth 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 call option written by the 
fund, the fund may suffer a loss equal to the excess 
of the security's market value at the time of the 
option exercise over the fund's cost of the security, 
less the premium received for writing the option.  
Security and Growth Fund will write only covered 
options with respect to its portfolio securities.  
Accordingly, whenever the fund writes a call option on 
its securities, 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 sell the 
underlying security if a call option is exercised, the 
fund will either (a) deposit with its custodian in a 
segregated account, cash, or equity and debt 
securities of any grade provided such securities have 
been determined by the Manager to be liquid and 
unencumbered pursuant to guidelines established by the 
Trustees ("eligible segregated assets") having a value 
at least equal to the value of the underlying 
securities or (b) continue to own an equivalent number 
of shares of the security or of calls of the same 
"series" (that is, calls on the same underlying 
security) with exercise prices equal to or less than 
those that it has written (or, if the exercise prices 
of the calls that it holds are more than the exercise 
prices of those that it has written, it will deposit 
the difference with its custodian in a segregated 
account).

Security and Growth Fund may engage in a closing 
purchase transaction to realize a profit, to prevent 
an underlying security from being called or to 
unfreeze an underlying security (thereby permitting 
its sale or the writing of a new option on the 
security prior to the 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 a result of the transaction.  There can 
be no assurances 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 domestic securities exchanges or in the 
over-the-counter market.

Security and Growth Fund may also, for hedging 
purposes, purchase put options on securities traded on 
national securities exchanges as well as in the 
over-the-counter market.  The fund may purchase put 
options on particular securities in order to protect 
against a decline in the market value of the 
underlying securities below the exercise price less 
the premium paid for the option.  Put options on 
individual securities are intended to protect against 
declines in market value which occur prior to the 
option's expiration date.  Prior to expiration, most 
options may be sold in a closing sale transaction.  
Profit or loss from such a sale will depend on whether 
the amount received is more or less than the premium 
paid for the option plus the related transaction cost.

Security and Growth Fund may purchase options in the 
over-the-counter market ("OTC options") to the same 
extent that it may engage in transactions in exchange 
traded options.  OTC options differ from exchange 
traded options in that they are negotiated 
individually and terms of the contract are not 
standardized as in the case of exchange traded 
options.  Moreover, because there is no clearing 
corporation involved in an OTC option, there is a risk 
of non-performance by the counterparty to the option. 
 However, OTC options are generally much more 
available for securities in a wider range of 
expiration dates and exercise prices than exchange 
traded options.  It is the current position of the 
staff of the SEC that OTC options (and securities 
underlying the OTC options) are illiquid securities.  
Accordingly, the fund will treat OTC options as 
subject to the fund's limitation on illiquid 
securities until such time as there is a change in the 
SEC's position.

Options on stock indexes (Security and Growth Fund).  
Security and Growth Fund may, for hedging purposes 
only, write call options and purchase put options on 
broad based domestic stock indexes and enter into 
closing transactions with respect to such options.  
Options on stock indexes are similar to options on 
securities except that, rather than having the right 
to take or make delivery of stock at the specified 
exercise price, an option on a stock index gives the 
holder the right to receive, upon exercise of the 
option, an amount of cash if the closing level of the 
stock index upon which the option is based is "in the 
money," i.e., the closing level of the index is higher 
than the exercise price of the option.  This amount of 
cash is equal to the difference between the closing 
level of the index and the exercise price of the 
option, expressed in dollars times a specified 
multiple.  The writer of the option is obligated, in 
return for the premium received, to make delivery of 
this amount.  Unlike stock options, all settlements 
are in cash, and gain or loss depends on price 
movements in the stock market generally rather than 
price movements in the individual stocks.

The effectiveness of purchasing and writing puts and 
calls on stock index options depends to a large extent 
on the ability of the Manager to predict the price 
movement of the stock index selected.  Therefore, 
whether the fund realizes a gain or loss from the 
purchase of options on an index depends upon movements 
in the level of stock prices in the stock market 
generally.  Additionally, because exercises of index 
options are settled in cash, a call writer such as the 
fund cannot determine the amount of the settlement 
obligations in advance and it cannot provide in 
advance for, or cover, its potential settlement 
obligations by acquiring and holding the underlying 
securities.  When the fund has written the call, there 
is also a risk that the market may decline between the 
time the fund has a call exercised against it, at a 
price which is fixed as of the closing level of the 
index on the date of exercise, and the time the fund 
is able to exercise the closing transaction with 
respect to the long call position it holds.

Futures contracts and options on futures contracts 
(Security and Growth Fund).  A futures contract 
provides for the future sale by one party and the 
purchase by the other party of a certain amount of a 
specified security at a specified price, date, time 
and place.  Security and Growth Fund may enter into 
futures contracts to sell securities when the Manager 
believes that the value of the fund's securities will 
decrease.  An option on a futures contract, as 
contrasted with the direct investment in a futures 
contract gives the purchaser the right, in return for 
the premium paid, to assume a position in a futures 
contract at a specified exercise price at any time 
prior to the expiration date of the option.  A call 
option gives the purchaser of the option the right to 
enter into a futures contract to buy and obligates the 
writer to enter into a futures contract to sell the 
underlying securities.  A put option gives a purchaser 
the right to sell and obliges the writer to buy the 
underlying contract.  The fund may enter into futures 
contracts to purchase securities when the Manager 
anticipates purchasing the underlying securities and 
believes that prices will rise before the purchases 
will be made.  When the fund enters into a futures 
contract to purchase an underlying security, an amount 
of eligible segregated assets, equal to the market 
value of the contract, will be deposited in a 
segregated account with the fund's custodian to 
collateralize the position, thereby insuring that the 
use of the contract is unleveraged.  The fund will not 
enter into futures contracts for speculation and will 
only enter into futures contracts that are traded on a 
U.S. exchange or board of trade.

	RISK FACTORS

Zero coupon securities.  Zero coupon securities of the 
type held by each fund can be sold prior to their due 
date in the secondary market at their then prevailing 
market value which, depending on prevailing levels of 
interest rates and the time remaining to maturity, may 
be more or less than their value based solely on the 
amount due at maturity and accretion of interest to 
date.  The market prices of zero coupon securities are 
generally more volatile than the market prices of 
securities that pay interest periodically and, 
accordingly, are likely to respond to a greater degree 
to changes in interest rates than do non-zero coupon 
securities having similar maturities and yields.  As a 
result, the net asset value of shares of each fund may 
fluctuate over a greater range than shares of other 
mutual funds that invest in U.S. government securities 
having similar maturities and yields but that make 
current distributions of interest.  The current net 
asset value of each fund attributable to zero coupon 
securities and other debt instruments held by each 
fund generally will vary inversely with changes in 
prevailing interest rates.

As a series of an open-end investment company, each 
fund is required to redeem its shares upon the request 
of any shareholder at the net asset value next 
determined after receipt of the request.  However, 
because of the price volatility of zero coupon 
securities prior to maturity, a shareholder who 
redeems shares prior to the Maturity Date may realize 
an amount that is greater or less than the purchase 
price of those shares, including any sales charge 
paid.  Although shares redeemed prior to the Maturity 
Date would no longer be subject to the possible 
achievement of the Repayment Objective, the amount 
originally invested in shares not redeemed would 
remain subject to the possible achievement of the 
Repayment Objective, provided dividends and 
distributions with respect to these shares are 
reinvested.  Thus, if each fund is successful in 
achieving the Repayment Objective, the holder of those 
remaining shares plus shares acquired through 
reinvestment of dividends and distributions thereon 
("Remaining Shares") would receive at the Maturity 
Date an amount that equals or exceeds the purchase 
price of those shares.  Nonetheless, the amount 
received on the Maturity Date in respect of Remaining 
Shares, when combined with the amount received in 
respect of shares redeemed prior to the Maturity Date, 
may be more or less than the aggregate purchase price 
of all shares purchased.

Each year each fund will be required to accrue an 
increasing amount of income on its zero coupon 
securities utilizing the effective interest method.  
To maintain its tax status as a pass-through entity 
and also to avoid imposition of income and excise 
taxes, however, each fund will be required to 
distribute dividends equal to substantially all of its 
net investment income, including the accrued income on 
its zero coupon securities for which it receives no 
payments in cash prior to their maturity.  Dividends 
of each fund's net investment income and distributions 
of its 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.  See "Taxes."  However, a 
shareholder who elects to receive dividends and 
distributions in cash, instead of reinvesting these 
amounts in additional shares of the funds, may realize 
an amount that is less or greater than the entire 
amount originally invested.

Emerging growth securities (Series 2000).  Securities 
of the kinds of companies in which Series 2000 will 
invest may be subject to significant price fluctuation 
and above-average risk.  In addition, companies 
achieving a high earnings growth rate tend to reinvest 
their earnings rather than distribute them.  As a 
result, Series 2000 is not likely to receive 
significant dividend income on its portfolio of equity 
securities.

Smaller and medium sized companies (each Fund).  
Securities of smaller and medium sized companies 
(companies with a capitalization of less than $1 
billion) may be subject to a limited liquidity and 
more volatility which could result in significant 
fluctuations in the price of their shares.

Operational risk (each Fund)  In order to generate 
sufficient cash to meet distribution requirements and 
other operational needs and to redeem its shares on 
request, each fund may be required to limit 
reinvestment of capital on the disposition of its 
non-zero coupon securities and may be required to 
liquidate some or all of its non-zero coupon 
securities over time.  Each fund may be required to 
effect these liquidations at a time when it is 
otherwise disadvantageous to do so.  If a fund 
realizes capital losses on dispositions of non-zero 
coupon securities that are not offset by capital gains 
on the disposition of other such securities, the fund 
may be required to liquidate a disproportionate amount 
of its zero coupon securities or borrow money, in an 
amount not exceeding 33-1/3% of the fund's total 
assets, to satisfy the distribution and redemption 
requirements described above.  The liquidation of zero 
coupon securities and the expenses associated with 
borrowing money in these circumstances could render 
the fund unable to meet the Repayment Objective.

Derivative instruments (Security and Growth Fund).  In 
accordance with its investment policies, the fund may 
invest in certain derivative instruments which are 
securities or contracts that provide for payments 
based on or "derived" from the performance of an 
underlying asset, index or other economic benchmark.  
Essentially, a derivative instrument is a financial 
arrangement or a contract between two parties.  
Transactions in derivative instruments can be, but are 
not necessarily, riskier than investments in 
conventional stocks, bonds and money market 
instruments.  A derivative instrument is more 
accurately viewed as a way of reallocating risk among 
different parties or substituting one type of risk for 
another.  Every investment by a fund, including an 
investment in conventional securities, reflects an 
implicit prediction about future changes in the value 
of that investment.  Every fund investment also 
involves a risk that the portfolio manager's 
expectations will be wrong.  Transactions in 
derivative instruments often enable a fund to take 
investment positions that more precisely reflect the 
portfolio manager's expectations concerning the future 
performance of the various investments available to 
the fund.  Derivative instruments can be a legitimate 
and often cost-effective method of accomplishing the 
same investment goals as could be achieved through 
other investment in conventional securities.

Derivative contracts include options, futures 
contracts, forward contracts, forward commitment and 
when-issued securities transactions, forward foreign 
currency exchange contracts and interest rate, 
mortgage and currency swaps.  The following are the 
principal risks associated with derivative 
instruments.

Leverage and associated price volatility:  
Leverage causes increased volatility in the price and 
magnifies the impact of adverse market changes, but 
this risk may be consistent with the investment 
objective of even a conservative fund in order to 
achieve an average portfolio volatility that is within 
the expected range for that type of fund. 

Liquidity and valuation risk:  Many derivative 
instruments are traded in institutional markets rather 
than on an exchange.  Nevertheless, many derivative 
instruments are actively traded and can be priced with 
as much accuracy as conventional securities.  
Derivative instruments that are custom designed to 
meet the specialized investment needs of a relatively 
narrow group of institutional investors such as the 
funds are not readily marketable and are subject to a 
fund's restrictions on illiquid investments.

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

Year 2000.  The investment management services 
provided to the Trust by MMC and the services provided 
to shareholders by Salomon Smith Barney, depend on the 
smooth functioning of their computer systems.  Many 
computer software systems in use today cannot 
recognize the year 2000, but revert to 1900 or some 
other date, due to the manner in which dates were 
encoded and calculated.  That failure could have a 
negative impact on the Trust's operations, including 
the handling of securities trades, pricing and account 
services.  MMC and Salomon Smith Barney have advised 
the Trust that they have been reviewing all of their 
computer systems and actively working on necessary 
changes to their systems to prepare for the year 2000 
and expect that their systems will be compliant before 
that date.  In addition, MMC has been advised by the 
Trust's custodian, transfer agent and accounting 
service agent that they are also in the process of 
modifying their systems with the same goal.  There 
can, however, be no assurance that MMC, Salomon Smith 
Barney or any other service provider will be 
successful, or that interaction with other 
noncomplying computer systems will not impair Trust 
services at that time.

	INVESTMENT RESTRICTIONS

These investment restrictions have been adopted by the 
Trust as fundamental policies.  Under the 1940 Act, a 
fundamental policy may not be changed without the vote 
of a majority of the outstanding voting securities of 
the fund, as defined in the 1940 Act.  "Majority" 
means the lesser of (a) 67% or more of the shares 
present at a meeting, if the holders of more than 50% 
of the outstanding shares of the Series are present or 
represented by proxy, or (b) more than 50% of the 
outstanding shares.

Under the investment restrictions adopted by each 
fund:

1.	A fund will not invest in a manner that would 
cause it to fail to be a "diversified company" under 
the 1940 Act and the rules, regulations and orders 
thereunder.

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

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

4.	A fund will invest no more than 25% of the value 
of its total assets in securities the issuers of which 
conduct their principal business activities in the 
same industry.  For the purpose of this limitation, 
securities of the U.S. government (including its 
agencies and instrumentalities) and securities of 
state or municipal governments and their political 
subdivisions are not considered to be issued by 
members of any industry.

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

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

7.	A fund will not issue "senior securities" as 
defined in the 1940 Act and the rules, regulations and 
orders thereunder, except as permitted under the 1940 
Act and the rules, regulations and orders thereunder.

Nonfundamental restrictions.  The following investment 
restrictions may be changed by a vote of a majority of 
the Board of Trustees at any time.

1.	A fund will not sell securities short.

2.	A fund will not purchase securities on margin, 
except that a fund may obtain any short-term credits 
necessary for the clearance of purchases and sales of 
securities.

3.	A fund will not invest in oil, gas, mineral 
leases or other mineral exploration or development 
programs, except that a fund may invest in the 
securities of companies that invest in or sponsor 
those programs.

4.	A fund will not write or sell put options, call 
options, straddles or combinations of those options, 
except that the Security and Growth Fund may write 
covered call options with respect to its portfolio 
securities and may, for hedging purposes only, (i) 
write call options and purchase put options on broad-
based domestic stock indexes and enter into closing 
transactions with respect to such options; and (ii) 
write or purchase options on futures contracts.

5.	A fund will not purchase any security, except 
U.S. government securities, if as a result of the 
purchase, the fund would then have more than 5% of its 
total assets invested in securities of companies 
(including predecessor companies) that have been in 
continuous operation for fewer than three years.  (For 
purposes of this limitation, issuers include 
predecessors, sponsors, controlling persons, general 
partners, guarantors and originators of underlying 
assets which may have less than three years of 
continuous operation or relevant business experience.)

6.	A fund will not make investments for the purpose 
of exercising control or management of any other 
issuer.

7.	A fund will not invest in warrants, if as a 
result, more than 2% of the value of a fund's net 
assets would be invested in warrants that are not 
listed on a recognized United States stock exchange, 
or more than 5% of a fund's net assets would be 
invested in warrants regardless of whether they are 
listed on such an exchange.

8.	A fund will not invest in time deposits maturing 
in more than seven days, enter into repurchase 
agreements having a duration of more than seven days, 
or purchase instruments lacking readily available 
market quotations ("illiquid instruments"), if as a 
result of the purchase a fund's aggregate holdings of 
illiquid instruments exceed 10% of a fund's net 
assets.

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

PURCHASE, REDEMPTION AND EXCHANGE OF SHARES

PURCHASE OF SHARES.

Shares of the funds are not currently being offered 
for sale to new investors, although each fund, upon at 
least 30 days' notice to shareholders, may commence a 
continuous offering if the Trustees determine it to be 
in the best interests of that fund and its 
shareholders.

WRITTEN REDEMPTION REQUESTS. 

The Trust is required to redeem shares of a 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.  Redemption requests received after the 
close of regular trading on the NYSE are priced at the 
net asset value per share next determined.

The funds normally transmit redemption proceeds for 
credit to the shareholder's account at Salomon Smith 
Barney, an investment dealer in the selling group or a 
broker that clears securities transactions through 
Salomon Smith Barney ("Dealer Representative"), or at 
no charge within three days after 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, these funds will not be 
invested for the shareholder's benefit without 
specific instruction and Salomon Smith Barney will 
benefit from the use of temporarily uninvested funds.

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

Smith Barney Principal Return Fund
(specify either Series 2000 or Security and 
Growth Fund)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128

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

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

EXCHANGE PRIVILEGE

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 resident 
in any state in which the fund shares being acquired 
may be legally sold.  Prior to any exchange, the 
investor should obtain and review a copy of the then 
current prospectus of each fund into which an exchange 
is being made.  Prospectuses may be obtained from a 
Salomon Smith Barney Financial Consultant. A 
shareholder who has redeemed shares of either of the 
funds, through the exchange privilege or otherwise, 
will not be able to purchase new shares of either 
fund.

Upon receipt of proper instructions and all necessary 
supporting documents in proper form, shares submitted 
for exchange are redeemed at the then current net 
asset value and the proceeds are immediately invested, 
at a price as described above, in shares of the fund 
being acquired with such shares being subject to any 
applicable contingent deferred sales charge.  If the 
account registration of the shares of the fund being 
acquired is identical to the registration of shares of 
the fund exchanged, no signature guarantee is 
required.  Salomon Smith Barney reserves the right to 
reject any exchange request.  The exchange privilege 
may be modified or terminated at any time after 
written notice to shareholders.  The Trust reserves 
the right to modify or discontinue exchange privileges 
upon 60 days' prior notice to shareholders.

Except as otherwise noted below, shares of a fund may 
be exchanged at the net asset value next determined 
for Class A shares in any of the Smith Barney Mutual 
Funds, to the extent shares are offered for sale in 
the shareholder's state of residence.  Exchanges of 
fund shares are subject to minimum investment 
requirements and to the other requirements of the 
Smith Barney fund into which exchanges are made.  
Shareholders of a fund who wish to exchange all or a 
portion of their shares for Class A shares in any of 
the Smith Barney funds may do so without imposition of 
any charge.   Certain shareholders may be able to 
exchange shares by telephone.  See "Telephone 
Redemption and Exchange Program."

Additional information regarding the exchange 
privilege.  An exchange is a taxable transaction.  
Before exchanging shares, investors should read the 
current prospectus describing the shares to be 
acquired. 

A shareholder who exchanges shares prior to the 
maturity date may realize an amount that is less or 
greater than the entire amount of his or her 
investment.  Moreover, because each fund is not 
engaging in a continuous offering of shares, a 
shareholder who exchanges his or her fund shares will 
not be able to effect a further exchange back into 
that fund.

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

TELEPHONE REDEMPTION AND EXCHANGE PROGRAM

General.  Shareholders who do not have a Salomon 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 
1-800-451-2010.  Once eligibility is confirmed, the 
shareholder must complete and return a Telephone/Wire 
Authorization Form, along with a signature guarantee 
that will be provided by First Data upon request.

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

A shareholder will have the option of having the 
redemption proceeds mailed to his/her address of 
record or wired to a bank account predesignated by the 
shareholder.  Generally, redemption proceeds will be 
mailed or wired, as the case may be, on the 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 funds 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 1-800-451-2010 between 9:00 a.m. and 4:00 p.m. 
(Eastern 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.

Additional information regarding the telephone 
redemption and exchange program.  Neither the Trust 
nor its agents will be liable for following 
instructions communicated by telephone that are 
reasonably believed to be genuine.  The Trust 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 Trust reserves the right to suspend, modify or 
discontinue the telephone redemption and exchange 
program or to impose a change for this service at any 
time following at least seven (7) days' prior notice 
to shareholders.

Redemptions in kind.  If the Trust's Board of Trustees 
determines that it would be detrimental to the best 
interests of remaining shareholders to make a 
redemption payment wholly in cash, a fund may pay any 
portion of a redemption in excess of the lesser of 
$250,000 or 1% of the fund's net assets by 
distribution in kind of securities from the fund's 
portfolio in lieu of cash in conformity with SEC 
rules.  Portfolio securities distributed in a 
redemption in kind will be readily marketable, 
although a shareholder that receives a distribution in 
kind of securities may incur transaction costs in the 
disposition of those securities and could experience a 
loss on the securities between the time of such 
distribution and such disposition.

	PORTFOLIO TURNOVER

General.  The funds do not intend to seek profits 
through short-term trading of their securities.  
Nevertheless, a fund will not consider portfolio 
turnover rate a limiting factor in making investment 
decisions.  The funds cannot accurately predict their 
portfolio turnover rates, but anticipate that their 
annual turnover rates will not exceed 50%.  The 
turnover rate would be 100% if all of a fund's 
securities that are included in the computation of 
turnover were replaced once during a period of one 
year.  A fund's turnover rate 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 November 30, 1998, 1997 and 
1996, the funds' portfolio turnover rates were as 
follows:





1998

1997

	1996

Series 2000
Security and Growth Fund




0%
20%

	0%
	43%


	PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the funds are 
made by MMC, subject to the overall review of the 
Trust's Board of Trustees.  Although investment 
decisions for a fund are made independently from those 
of the other accounts managed by MMC, investments of 
the type made by a fund also may be made by those 
accounts.  When a fund and one or more other accounts 
managed by MMC 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 MMC 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 U.S. 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. 
 No stated commission is generally applicable to 
securities traded in over-the-counter markets, but the 
prices of those securities include undisclosed 
commissions or mark-ups.  Over-the-counter purchases 
and sales are transacted directly with principal 
market makers except in those cases in which better 
prices and executions may be obtained elsewhere.  The 
cost of securities purchased from underwriters 
includes an underwriting commission or concession, and 
the prices at which securities are purchased from and 
sold to dealers include a dealer's mark-up or mark-
down.  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.  The 
following table sets forth certain information 
regarding the funds' payment of brokerage commissions:















Fiscal Year Ended November 30




Series 2000


Security and Growth Fund


Total Brokerage Commissions


1996
1997
1998

$8,690
3,090
_____

$303,127
128,979
_______

Total Brokerage Commissions paid to Salomon Smith 
Barney


1996
1997
1998

$0
0
0

$3,000
5,448
________

% of Total Brokerage Commissions paid to Salomon Smith 
Barney


1996
1997
1998

0%
0
0

0.99%
4.22
_______

% of Total Transaction involving Commissions paid to 
Salomon Smith Barney


1996
1997
1998

0%
0
_______

0.99%
0.66
_______

The Manager seeks the best overall terms available in 
selecting brokers or dealers to execute transactions 
on behalf of the fund.  In assessing the best overall 
terms available for any transaction the Manager will 
consider factors it deems relevant, including the 
breadth of the market in the security, the price of 
the security, the financial condition and execution 
capability of the broker or dealer and the 
reasonableness of the commission, if any, for the 
specific transaction and on a continuing basis.  In 
addition, the Manager is authorized 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 funds and/or 
other accounts over which the Manager or its 
affiliates exercise investment discretion.  The fees 
under the funds' advisory agreements are not reduced 
by reason of the Manager receiving brokerage and 
research services.  The Trust's Board of Trustees will 
periodically 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.

In accordance with Section 17(e) of the 1940 Act and 
Rule 17e-1 under the 1940 Act, the Trust's Board of 
Trustees has determined that transactions for the 
funds may be executed through Salomon Smith Barney and 
other affiliated broker-dealers if, in the judgment of 
the Manager, the use of an affiliated 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, the affiliated broker-
dealer charges the fund a rate consistent with that 
charged to comparable unaffiliated customers in 
similar transactions.  In addition, under the rules 
adopted by the SEC, Salomon Smith Barney may directly 
execute such transactions for the fund on the floor of 
any national securities exchange, provided: (a) the 
Board of Trustees has expressly authorized Salomon 
Smith Barney to effect such transactions; and (b) 
Salomon Smith Barney annually advises the fund of the 
aggregate compensation it earned on such transactions.

	DETERMINATION OF NET ASSET VALUE

When calculated.  The funds' net asset value is 
calculated on each day, Monday through Friday, except 
on days on which the NYSE is closed.  The NYSE 
currently is scheduled to be closed on New Year's Day, 
Martin Luther King Jr. Day, Presidents' Day, Good 
Friday, Memorial Day, Independence Day, Labor Day, 
Thanksgiving and Christmas, and on the preceding 
Friday or subsequent Monday when Christmas falls on a 
Saturday or Sunday.  On those days, securities held by 
the funds may nevertheless be actively traded, and the 
value of the funds' shares could be significantly 
affected.

Valuation.  Generally, the funds' 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.  
Securities that are primarily traded on non-U.S. 
exchanges are generally valued at the preceding 
closing values of the securities on their respective 
exchanges, except that when an occurrence subsequent 
to the time that a non-U.S. security is valued is 
likely to have changed the value, then the fair value 
of those securities will be determined by 
consideration of other factors by or under the 
direction of the Board of Trustees.  A security that 
is primarily traded on a U.S. or non-U.S. 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.  In cases in which 
securities are traded on more than one exchange, the 
securities are valued on the exchange designated by or 
under the authority of the Board of Trustees as the 
primary market.  Unlisted non-U.S. securities are 
valued at the mean between the last available bid and 
offer price prior to the time of valuation.  U.S. 
over-the-counter securities will be valued on the 
basis of the bid price at the close of business on 
each day.  Any assets or liabilities initially 
expressed in terms of non-U.S. currencies will be 
converted into U.S. dollar values based on a formula 
prescribed by the Trust or, if the information 
required by the formula is unavailable, as determined 
in good faith by the Board of Trustees.  Investments 
in U.S. government securities (other than short-term 
securities) are valued at the quoted bid price 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 at its cost 
initially and, thereafter, assuming a constant 
amortization to maturity of any discount or premium, 
regardless of the effect of fluctuating interest rates 
on the market value of the investment) when the Board 
of Trustees determines that amortized cost reflects 
the fair value of the investment.  In carrying out the 
Board's valuation policies, the Manager may consult 
with an independent pricing service retained by the 
Trust.

	TAXES

The following is a summary of the material 
United States federal income tax considerations 
regarding the purchase, ownership and disposition of 
shares of a fund.  Each prospective shareholder is 
urged to consult his own tax adviser with respect to 
the specific federal, state, local and foreign tax 
consequences of investing in a fund.  The summary is 
based on the laws in effect on the date of this 
Statement of Additional Information, which are subject 
to change.

The Funds and Their Investments

Each fund intends to qualify to be treated as a 
regulated investment company each taxable year under 
the Internal Revenue Code of 1986, as amended (the 
"Code").  To so qualify, a fund must, among other 
things: (a) derive at least 90% of its gross income in 
each taxable year from dividends, interest, payments 
with respect to securities, loans and gains from the 
sale or other disposition of stock or securities or 
foreign currencies, or other income (including, but 
not limited to, gains from options, futures or forward 
contracts) derived with respect to its business of 
investing in such stock, securities or currencies; and 
(b) diversify its holdings so that, at the end of each 
quarter of a fund's taxable year, (i) at least 50% of 
the market value of a fund's assets is represented by 
cash, securities of other regulated investment 
companies, United States government securities and 
other securities, with such other securities limited, 
in respect of any one issuer, to an amount not greater 
than 5% of a fund's assets and not greater than 10% of 
the outstanding voting securities of such issuer and 
(ii) not more than 25% of the value of its assets is 
invested in the securities (other than United States 
government securities or securities of other regulated 
investment companies) of any one issuer or any two or 
more issuers that a fund controls and are determined 
to be engaged in the same or similar trades or 
businesses or related trades or businesses.  Each fund 
expects that all of its foreign currency gains will be 
directly related to its principal business of 
investing in stocks and securities.

As a regulated investment company, each fund 
will not be subject to United States federal income 
tax on its net investment income (i.e., income other 
than its net realized long- and short-term capital 
gains) and its net realized long- and short-term 
capital gains, if any, that it distributes to its 
shareholders, provided that an amount equal to at 
least 90% of the sum of its investment company taxable 
income (i.e., 90% of its taxable income minus the 
excess, if any, of its net realized long-term capital 
gains over its net realized short-term capital losses 
(including any capital loss carryovers), plus or minus 
certain other adjustments as specified in the Code) 
and its net tax-exempt income for the taxable year is 
distributed, but will be subject to tax at regular 
corporate rates on any taxable income or gains that it 
does not distribute.  Furthermore, each fund will be 
subject to a United States corporate income tax with 
respect to such distributed amounts in any year that 
it fails to qualify as a regulated investment company 
or fails to meet this distribution requirement.

The Code imposes a 4% nondeductible excise tax 
on each fund to the extent a fund does not distribute 
by the end of any calendar year at least 98% of its 
net investment income for that year and 98% of the net 
amount of its capital gains (both long-and short-term) 
for the one-year period ending, as a general rule, on 
October 31 of that year.  For this purpose, however, 
any income or gain retained by a fund that is subject 
to corporate income tax will be considered to have 
been distributed by year-end.  In addition, the 
minimum amounts that must be distributed in any year 
to avoid the excise tax will be increased or decreased 
to reflect any underdistribution or overdistribution, 
as the case may be, from the previous year.  Each fund 
anticipates that it will pay such dividends and will 
make such distributions as are necessary in order to 
avoid the application of this tax.

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

Each fund will invest in zero coupons securities 
having an original issue discount (that is, the 
discount represented by the excess of the stated 
redemption price at maturity over the issue price).  
Each year, each fund will be required to accrue as 
income a portion of this original issue discount even 
though the fund will receive no cash payment of 
interest with respect to these securities.  In 
addition, if the fund acquires a security after its 
initial issuance at a discount that resulted from 
fluctuations in prevailing interest rates ("market 
discount"), the fund may elect to include in income 
each year a portion of this market discount.
 
Each fund will be required to distribute 
substantially all of its income (including accrued 
original issue and recognized market discount) in 
order to qualify for "pass-through" federal income tax 
treatment and also in order to avoid the imposition of 
4% excise tax referred to above.  Therefore, a fund 
may be required in some years to distribute an amount 
greater than the total cash income the fund actually 
receives.  In order to make the required distribution 
in such a year, a fund may be required to borrow or to 
liquidate securities.  The amount of cash that a fund 
would have to distribute, and thus the degree to which 
securities would need to be liquidated or borrowing 
made would depend upon the number of shareholders who 
chose not to have their dividends reinvested.   
A fund's transactions in foreign currencies, 
forward contracts, options and futures contracts 
(including options and futures contracts on foreign 
currencies) will be subject to special provisions of 
the Code (including provisions relating to "hedging 
transactions" and "straddles") that, among other 
things, may affect the character of gains and losses 
realized by a fund (i.e., may affect whether gains or 
losses are ordinary or capital), accelerate 
recognition of income to a fund and defer fund losses. 
 These rules could therefore affect the character, 
amount and timing of distributions to shareholders.  
These provisions also (a) will require a fund to mark-
to-market certain types of the positions in its 
portfolio (i.e., treat them as if they were closed 
out) and (b) may cause a fund to recognize income 
without receiving cash with which to pay dividends or 
make distributions in amounts necessary to satisfy the 
distribution requirements for avoiding income and 
excise taxes.  Each fund will monitor its 
transactions, will make the appropriate tax elections 
and will make the appropriate entries in its books and 
records when it acquires any foreign currency, forward 
contract, option, futures contract or hedged 
investment in order to mitigate the effect of these 
rules and prevent disqualification of a fund as a 
regulated investment company.

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

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

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

Recently, legislation was enacted that provides 
a mark-to-market election for regulated investment 
companies effective for taxable years beginning after 
December 31, 1997.  This election would result in a 
fund being treated as if it had sold and repurchased 
all of the PFIC stock at the end of each year.  In 
this case, a fund would report gains as ordinary 
income and would deduct losses as ordinary losses to 
the extent of previously recognized gains.  The 
election, once made, would be effective for all 
subsequent taxable years of a fund, unless revoked 
with the consent of the IRS.  By making the election, 
a fund could potentially ameliorate the adverse tax 
consequences with respect to its ownership of shares 
in a PFIC, but in any particular year may be required 
to recognize income in excess of the distributions it 
receives from PFICs and its proceeds from dispositions 
of PFIC company stock.  A fund may have to distribute 
this "phantom" income and gain to satisfy its 
distribution requirement and to avoid imposition of 
the 4% excise tax.  Each fund will make the 
appropriate tax elections, if possible, and take any 
additional steps that are necessary to mitigate the 
effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions.  Any dividend 
declared by a fund in October, November or December of 
any calendar year and payable to shareholders of 
record on a specified date in such a month shall be 
deemed to have been received by each shareholder on 
December 31 of such calendar year and to have been 
paid by a fund not later than such December 31, 
provided that such dividend is actually paid by a fund 
during January of the following calendar year.  Each 
fund intends to distribute annually to its 
shareholders substantially all of its investment 
company taxable income, and any net realized long-term 
capital gains in excess of net realized short-term 
capital losses (including any capital loss 
carryovers).  Each fund currently expects to 
distribute any excess annually to its shareholders.  
However, if a fund retains for investment an amount 
equal to all or a portion of its net long-term capital 
gains in excess of its net short-term capital losses 
and capital loss carryovers, it will be subject to a 
corporate tax (currently at a rate of 35%) on the 
amount retained.  In that event, a fund will designate 
such retained amounts as undistributed capital gains 
in a notice to its shareholders who (a) will be 
required to include in income for United Stares 
federal income tax purposes, as long-term capital 
gains, their proportionate shares of the undistributed 
amount, (b) will be entitled to credit their 
proportionate shares of the 35% tax paid by the fund 
on the undistributed amount against their United 
States federal income tax liabilities, if any, and to 
claim refunds to the extent their credits exceed their 
liabilities, if any, and (c) will be entitled to 
increase their tax basis, for United States federal 
income tax purposes, in their shares by an amount 
equal to 65% of the amount of undistributed capital 
gains included in the shareholder's income.  
Organizations or persons not subject to federal income 
tax on such capital gains will be entitled to a refund 
of their pro rata share of such taxes paid by a fund 
upon filing appropriate returns or claims for refund 
with the Internal Revenue Service (the "IRS").

Dividends of net investment income and 
distributions of net realized short-term capital gains 
are taxable to a United States shareholder as ordinary 
income, whether paid in cash or in shares.  
Distributions of net-long-term capital gains, if any, 
that a fund designates as capital gains dividends are 
taxable as long-term capital gains, whether paid in 
cash or in shares and regardless of how long a 
shareholder has held shares of a fund.  Dividends and 
distributions paid by a fund (except for the portion 
thereof, if any, attributable to dividends on stock of 
U.S. corporations received by a fund) will not qualify 
for the deduction for dividends received by 
corporations.  Distributions in excess of a fund's 
current and accumulated earnings and profits will, as 
to each shareholder, be treated as a tax-free return 
of capital, to the extent of a shareholder's basis in 
his shares of a fund, and as a capital gain thereafter 
(if the shareholder holds his shares of a fund as 
capital assets).

Shareholders receiving dividends or 
distributions in the form of additional shares should 
be treated for United States federal income tax 
purposes as receiving a distribution in the amount 
equal to the amount of money that the shareholders 
receiving cash dividends or distributions will 
receive, and should have a cost basis in the shares 
received equal to such amount.

Investors considering buying shares just prior 
to a dividend or capital gain distribution should be 
aware that, although the price of shares just 
purchased at that time may reflect the amount of the 
forthcoming distribution, such dividend or 
distribution may nevertheless be taxable to them.

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

Sales of Shares.  Upon the sale or exchange of 
his shares, a shareholder will realize a taxable gain 
or loss equal to the difference between the amount 
realized and his basis in his shares.  Such gain or 
loss will be treated as capital gain or loss, if the 
shares are capital assets in the shareholder's hands, 
and will be long-term capital gain or loss if the 
shares are held for more than one year and short-term 
capital gain or loss if the shares are held for one 
year or less.  Any loss realized on a sale or exchange 
will be disallowed to the extent the shares disposed 
of are replaced, including replacement through the 
reinvesting of dividends and capital gains 
distributions in a fund, within a 61-day period 
beginning 30 days before and ending 30 days after the 
disposition of the shares.  In such a case, the basis 
of the shares acquired will be increased to reflect 
the disallowed loss.  Any loss realized by a 
shareholder on the sale of a fund share held by the 
shareholder for six months or less will be treated for 
United States federal income tax purposes as a long-
term capital loss to the extent of any distributions 
or deemed distributions of long-term capital gains 
received by the shareholder with respect to such 
share.

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

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

Other Taxation

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

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

	PERFORMANCE INFORMATION

From time to time, the Trust may quote a fund's 
performance in terms of its total return in reports or 
other communications to shareholders.  A fund's 
performance will vary from time to time depending upon 
market conditions, the composition of its portfolio 
and its operating expenses.

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

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

The funds' average annual total returns were as 
follows for the periods indicated:




Name of Funds



One Year
Period Ended
11/30/98



Five Year
Period Ended
11/30/98


Per Annum for Period
from Commencement of
Operations through
11/30/98










Series 2000 (1)
Security and Growth Fund (2)

6.72
11.72

8.85
N/A

8.45
13.41

(1)	Series 2000 commenced operations on August 30, 
1991.
(2)	Security and Growth Fund commenced operations on 
March 30, 1995.
These total return figures assume that the maximum 
sales charge has been included in the investment at 
the time of purchase.

Aggregate total return.  The funds' aggregate total 
return figures shown below represent the cumulative 
change in the value of an investment in a fund for the 
specified period and are computed by the following 
formula:

ERV-P
P

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

The funds' aggregate total returns were as follows for 
the periods indicated:


Name of Fund


One Year
Period Ended
11/30/98*


Five Year
Period Ended
11/30/98*


Period from Commencement of Operations through 
11/30/98*


One Year Period Ended
11/30/98**


Five Year
Period Ended 11/30/98**


Period from Commencement of Operations through 
11/30/98*
















Series 2000 (1)
Security and Growth Fund(2)

12.28
16.42

60.89
       N/A

74.92
45.83

6.72
11.72

52.84
      N/A

66.17
40.0

*	Figures do not include the effect of the maximum 
sales charge.
**	Figures include the effect of the maximum sales 
charge.
(1)  Series 2000 commenced operations on August 30, 
1991.
(2)  Security and Growth Fund commenced operations on 
March 30, 1995.

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

INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment adviser.  MMC, at 388 Greenwich Street, New 
York, New York 10013, serves as the funds' investment 
adviser under the terms of a written agreement for 
each fund (the "Advisory Agreements").  The Manager 
is a wholly owned subsidiary of Salomon Smith Barney 
Holdings Inc. ("Holdings"), which is in turn a 
wholly owned subsidiary of Citigroup, Inc. 
("Citigroup").  The Advisory Agreements for the funds 
were last approved by the Board of Trustees, including 
a majority of the Trustees who are not "interested 
persons" of the Trust or Salomon Smith Barney on July 
23, 1998.  The Manager pays the salaries of all 
officers and employees who are employed by both it and 
the Trust and maintains office facilities for the 
Trust.  The Manager bears all expenses in connection 
with the performance of its services under the 
Advisory Agreements.

As compensation for investment advisory services 
rendered, Series 2000 pays the Manager a fee computed 
daily and paid monthly at the annual rate of 0.40% of 
the value of its average daily net assets.  Security 
and Growth Fund pays the Manager a fee of 0.50% of the 
value of its average daily net assets for investment 
management services rendered.

Administrator.  The Manager also serves as the 
administrator of Series 2000 pursuant to a written 
agreement (the "Administration Agreement").  The 
Administration Agreement was most recently approved 
for the fund by the Board of Trustees, including a 
majority of the Trustees who are not "interested 
persons" of the fund or Salomon Smith Barney, on July 
23, 1998.  The Manager pays the salaries of all 
officers and employees who are employed by both it and 
the Trust, maintains office facilities for the Trust 
and bears all expenses in connection with the 
performance of its services.

As compensation for administrative services rendered 
to Series 2000, the Manager receives a fee computed 
daily and paid monthly at the annual rate of 0.20% of 
the value of the fund's average daily net assets.

For the fiscal years ended November 30, 1998, 1997 and 
1996, the funds paid investment advisory and/or 
administration fees to the Manager as follows:



Fiscal Year


	Series 2000



	Security and 
	Growth Fund



Ended


	Advisory Fee


	Administration Fee


	Advisory Fee


	Administration Fee












1998







N/A

1997

$249,071

$124,536

$1,007,814

N/A

1996

278,880

139,440

1,363,022

N/A

The Trust bears expenses incurred in its operation, 
including taxes, interest, brokerage fees and 
commissions, if any, fees of Trustees who are not 
officers, directors, shareholders or employees of 
Salomon Smith Barney; SEC fees and state Blue Sky 
qualification fees; charges of custodians; transfer 
and dividend disbursing agents fees; certain insurance 
premiums; outside auditing and legal expenses; costs 
of maintenance of corporate existence; investor 
services (including allocated telephone and personnel 
expenses); and costs of preparation and printing of 
prospectuses for regulatory purposes and for 
distribution to existing shareholders; cost of 
shareholders' reports and shareholder meetings and 
meetings of the officers or Board of Trustees of the 
Trust.

Distributor.  CFBDS, Inc. serves as the funds' 
distributor pursuant to a written agreement dated 
October 8, 1998(the "Distribution Agreement") with 
the Trust.  To compensate Salomon Smith Barney for the 
services it provides as Shareholder Servicing Agent 
and for the expenses it bears, the Trust has adopted a 
Shareholder Services Plan (the "Plan").  Under the 
Plan, the Trust pays Salomon Smith Barney, with 
respect to Series 2000 and Security and Growth Fund, a 
fee, accrued daily and paid monthly, calculated at the 
annual rate of .25% of the value of the respective 
Series average daily net assets.  Under its terms, the 
Plan continues from year to year, provided that its 
continuance is approved annually by vote of the 
Trust's Board of Trustees, including a majority of the 
Trustees who are not interested persons of the Trust 
and who have no direct or indirect financial interest 
in the operation of the Plan (the "Independent 
Trustees").  The Plan may not be amended to increase 
materially the amount to be spent for the services 
provided by CFBDS without shareholder approval, and 
all material amendments of the Plan must be approved 
by the Trustees in the manner described above.  The 
Plan may be terminated at any time, without penalty, 
by vote of a majority of the Independent Trustees or 
by a vote of a majority of the outstanding voting 
securities (as defined in the 1940 Act) of the 
relevant Fund.  Pursuant to the Plan, Salomon Smith 
Barney will provide the Board of Trustees periodic 
reports of amounts expended under the Plan and the 
purpose for which such expenditures were made.  Prior 
to the merger of Travelers Group, Inc. and Citicorp, 
Inc. on October 8, 1998 Salomon Smith Barney served as 
the Fund's distributor.  For the fiscal year ended 
November 30, 1998, Salomon Smith Barney was paid 
$______ and $______ in shareholder servicing fees for 
Series 2000 and the Security and Growth Fund 
respectively.

Custodian.  PNC Bank is located at 17th and Chestnut 
Streets, Philadelphia, PA 19103 and serves as the 
custodian of Trust. 

Transfer agent.  First Data is located at Exchange 
Place, Boston, Massachusetts 02109, and serves as the 
Trust's transfer agent.  Under the transfer agency 
agreement, First Data maintains the shareholder 
account records for the Trust, handles certain 
communications between shareholders and the Trust, 
distributes dividends and distributions payable by the 
Trust and produces statements with respect to account 
activity for the Trust and its shareholders.  For 
these services, First Data receives a monthly fee 
computed on the basis of the number of shareholder 
accounts First Data maintains for the Trust during the 
month and is reimbursed for out-of-pocket expenses.

Independent auditors.  KPMG, 345 Park Avenue, New 
York, New York 10154, has been selected as the Trust's 
independent auditor to examine and report on each 
fund's financial statements and highlights for the 
fiscal year ending November 30, 1999.

Counsel.  Willkie Farr & Gallagher serves as counsel 
to the Trust.  Stroock & Stroock & Lavan LLP serves as 
counsel to the Trustees who are not "interested 
persons" of the Trust.

OTHER INFORMATION ABOUT THE TRUST

Organization of the Trust.  The Trust is organized as 
an unincorporated business trust under the laws of The 
Commonwealth of Massachusetts pursuant to a Master 
Trust Agreement dated October 18, 1988, as amended 
(the "Trust Agreement").  On November 18, 1988, 
August 27, 1990, July 30, 1993 and October 14, 1994, 
the Trust changed its name from SLH Secured Capital 
Fund to SLH Principal Return Fund, Shearson Lehman 
Brothers Principal Return Fund, Smith Barney Shearson 
Principal Return Fund and Smith Barney Principal 
Return Fund, respectively.  Under the Trust Agreement, 
the Trustees have authority to issue an unlimited 
number of shares of beneficial interest with a par 
value of $.001 per share.

Massachusetts law provides that shareholders could, 
under certain circumstances, be held personally liable 
for the obligations of the Trust.  The Trust has been 
structured, and will be operated in such a way, so as 
to ensure as much as possible, that shareholders will 
not be liable for obligations of the fund.  The Trust 
Agreement disclaims shareholder liability for acts or 
obligations of the Trust, and requires that notice of 
the disclaimer be given in each agreement, obligation 
or instrument entered into or executed by the Trust or 
a Trustee.  The Trust Agreement also provides for 
indemnification from the Trust's property for all 
losses and expenses of any shareholder held personally 
liable for the obligations of the Trust.  Thus, the 
risk of a shareholder's incurring financial loss on 
account of shareholder liability is limited to 
circumstances in which the Trust would be unable to 
meet its obligations, a possibility that the Trust's 
management believes is remote.  Upon payment of any 
liability incurred by the Trust, the shareholder 
paying the liability will be entitled to reimbursement 
from the general assets of the Trust.  The Trustees 
intend to conduct the operations of the Trust and each 
of its series in such a way so as to avoid, as far as 
possible, ultimate liability of the shareholders for 
liabilities of the Trust.

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

Voting rights.  When matters are submitted for 
shareholder vote, shareholders of each fund will have 
one vote for each full share owned and a 
proportionate, fractional vote for any fractional 
share held.  Generally shares of the Trust vote by 
individual funds 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 
would be entitled to vote or (b) when the 1940 Act 
requires that shares of the fund be voted in the 
aggregate.  There normally will be no annual meetings 
of shareholders for the purpose of electing Trustees 
unless and until such time as less than a majority of 
the Trustees holding office have been elected by 
shareholders.  Shareholders of record of no less than 
two-thirds of the outstanding shares of the Trust may 
remove a Trustee through a declaration in writing or 
by vote cast in person or by proxy at a meeting called 
for that purpose.  A meeting will be called for the 
purpose of voting on the removal of a Trustee at the 
written request of holders of 10% of the Trust's 
outstanding shares and the Trust will assist 
shareholders in calling such a meeting as required by 
the 1940 Act.

Annual and semi-annual reports.  The Trust sends its 
shareholders a semi-annual report and an audited 
annual report, each of which includes a listing of the 
investment securities held by the fund at the end of 
the period covered.  In an effort to reduce each 
fund's printing and mailing costs, each fund 
consolidates the mailing of its semi-annual and annual 
reports by household.  This consolidation means that a 
household having multiple accounts with the identical 
address of record will receive a single copy of each 
report.  Any shareholder who does not want this 
consolidation to apply to his or her account should 
contact his or her Financial Consultant or First Data.

FINANCIAL STATEMENTS

Each Fund's Annual Reports for the fiscal year ended 
November 30, 1998 accompany this Statement of 
Additional Information and are incorporated herein by 
reference in its entirety.

1



PART C

b)	Exhibits

Exhibit No.	Description of Exhibit

Item 23. Exhibits

All references are to the Registrant's registration 
Statement on Form N-1A as filed with  the Securities 
Exchange Commission (the "SEC").  File Nos. 33-25087 and 
811-5678).

(a)(1)	Registrant's Master Trust Agreement and 
Amendments to the Master Trust Agreement 
dated October 18, 1988, November 18, 1988, 
August 24, 1990, October 5, 1990, February 
26, 1991, May 1, 1991, and July 30, 1993, is 
incorporated by reference to the Registrant's 
Registration Statement filed with the SEC on 
January 28, 1994 ("Post-Effective Amendment 
No. 13").

(a)(2)	Amendment to Master Trust Agreement with 
respect to Security and Growth Fund is 
incorporated by reference to the Registrant's 
Registration Statement filed with the SEC on 
March 23, 1995 ("Post-Effective Amendment No. 
16").

(b)	By-Laws are incorporated by reference to 
Registrant's Registration Statement filed 
with the SEC on October 19, 1988 (the 
"Registration Statement").

(c)	Not Applicable.

(d)(1)	Investment Advisory Agreement between the 
Registrant and Smith Barney Shearson Asset 
Management ("Asset Management") relating to 
Series 2000 is incorporated by reference to 
Post-Effective Amendment No. 13. 

(d)(2)	Investment Advisory Agreement and 
Administration Agreement between the 
Registrant and Smith Barney Mutual Funds 
Management Inc. relating to Security and 
Growth Fund is incorporated by reference to 
Post-Effective Amendment No. 16.

(e)	Distribution Agreement between the Registrant 
and CFBDS Inc. filed herein.

(f)	Not Applicable.

(g)	Form of Custodian Agreement is incorporated 
by reference to Post-Effective Amendment No. 
19

(h)(1)	Administration Agreements dated April 21, 
1994 between the Registrant and Smith Barney 
Advisers, Inc. relating to Series 2000 is 
incorporated by reference to Post-Effective 
Amendment No.16.

(h)(2)	Transfer Agency Agreement between the 
Registrant and First Data Investor Services 
Group formerly known as The Shareholder 
Services Group, Inc. dated August 2, 1993 is 
incorporated by reference to Post-Effective 
Amendment No. 13.

(h)(3)	Shareholder Services Plan between the 
Registrant and Smith Barney Shearson relating 
to Series 2000 is incorporated by reference 
to Post-Effective Amendment No. 13. 

(h)(4)	Shareholder Services Plan between the 
Registrant and Smith Barney relating to 
Security & Growth Fund is incorporated by 
reference to Post-Effective Amendment No. 16

(i)	Not Applicable

(j)	To be filed by amendment.

(k)	Not Applicable.

(l)(1)	Form of Purchase Agreement relating to Series 
2000 is incorporated by reference to Post-
Effective Amendment No. 8.

(1)(2)	Form of Purchase Agreement relating to 
Security and Growth Fund is incorporated by 
reference to Post-Effective Amendment No. 16.

(m)	Not Applicable.

(n)	Not Applicable.

(o)	Not Applicable.

Item 24.	None

Item 25.	Indemnification

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

Item 26.	Business and Other Connections of Investment 
Adviser

Investment Adviser - Mutual Management Corp.("MMC") 
(formerly Smith Barney Mutual Funds Management, Inc.,) was 
incorporated in December 1968 under the laws of the State 
of Delaware. MMC is a wholly owned subsidiary of Salomon 
Smith Barney Holdings Inc. (formerly known as Smith Barney 
Holdings Inc.), which in turn is a wholly owned subsidiary 
of Citigroup Inc.  MMC 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 MMC, 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 27.	Principal Underwriters
(a) CFBDS, Inc. the Registrant's Distributor, is also the 
distributor for 
CitiFundsSM International Growth & Income Portfolio, 
CitiFundsSM International Equity Portfolio,
CitiFundsSM Large Cap Growth Portfolio,
CitiFundsSM Intermediate Income Portfolio, 
CitiFundsSM Short-Term U.S. Government Income Portfolio, 
CitiFundsSM Emerging Asian Markets Equity Portfolio, 
CitiFundsSM U.S. Treasury Reserves,
CitiFundsSM Cash Reserves, 
CitiFundsSM Premium U.S. Treasury Reserves, 
CitiFundsSM Premium Liquid Reserves,
CitiFundsSM Institutional U.S. Treasury Reserves,
CitiFundsSM Institutional Liquid Reserves,
SM Institutional Cash Reserves,
CitiFundsSM Tax Free Reserves, 
CitiFundsSM Institutional Tax Free Reserves, 
CitiFundsSM California Tax Free Reserves, 
CitiFundsSM Connecticut Tax Free Reserves, 
CitiFundsSM New York Tax Free Reserves,
CitiFundsSM Balanced Portfolio, 
CitiFundsSM Small Cap Value Portfolio,
CitiFundsSM Growth & Income Portfolio,
CitiFundsSM Small Cap Growth Portfolio,
CitiFundsSM National Tax Free Income Portfolio,
CitiFundsSM New York Tax Free Income Portfolio, 
CitiSelect VIP Folio 200,
Citiselect VIP Folio 300,
CitiSelect (VIP Folio 400,
CitiSelect (VIP Folio 500, 
CitiFundsSM Small Cap Growth VIP Portfolio,
CitiSelect (Folio 200,
CitiSelect (Folio 300,
CitiSelect (Folio 400,
and CitiSelect (Folio 500.
CFBDS is also the placement agent for
Large Cap Value Portfolio, 
International Portfolio,
Foreign Bond Portfolio, 
Intermediate Income Portfolio,
Short-Term Portfolio,
Growth & Income Portfolio,
Large Cap Growth Portfolio, 
Small Cap Growth Portfolio,
International Equity Portfolio, 
Balanced Portfolio, Government Income Portfolio,
Emerging Asian Markets Equity Portfolio,
Tax Free Reserves Portfolio, 
Cash Reserves Portfolio
and U.S. Treasury Reserves Portfolio. 
CFBDS, Inc. is also the distributor for the following Smith 
Barney Mutual Fund registrants: 
Concert Investment Series
Consulting Group Capital Markets Funds
Greenwich Street Series Fund
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Concert Allocation Series Inc.
Smith Barney Equity Funds
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
Smith Barney Income Funds
Smith Barney Institutional Cash Management Fund, Inc.
Smith Barney Investment Trust
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc.
Smith Barney Muni Funds
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund Inc.
Smith Barney Investment Funds Inc.
Smith Barney Small Cap Blend Fund, Inc.
Smith Barney Telecommunications Trust
Smith Barney Variable Account Funds
Smith Barney World Funds, Inc.
Travelers Series Fund Inc.
And various series of unit investment trusts.

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

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

Item 28.	Location of Accountants and Record

(1)	Smith Barney Principal Return Fund
	388 Greenwich Street
	New York, New York  10013

(2)	Mutual Management Corp.
	388 Greenwich Street
	New York, New York 10013


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

(4)	First Data Investor Services Group, Inc.
	One Exchange Place
	Boston, Massachusetts  02109

(6) 	CFBDS Inc.
21 Milk Street, 5th floor
Boston, Massachusetts 02109

Item 29.	Management Services

	Not Applicable.

Item 30.	Undertakings


	(a)  Registrant undertakes to call a meeting of the 
shareholders for the purpose of voting upon the question  
of removal of trustee or trustees when requested in writing 
to do so by the holders of at least 10% of Registrant's 
outstanding Shares and, in connection worth such meeting, 
to comply with the provisions of Section 16(c) of the 
Investment Company Act of 1940, as amended, relating to 
communications with the  shareholders of certain common-law 
trusts.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, 
and the Investment Company Act of 1940, the Registrant, 
SMITH BARNEY PRINCIPAL RETURN FUND, 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 29 day of 
January, 1999.

		SMITH BARNEY PRINCIPAL RETURN FUND 

		By:/s/ Heath B. McLendon *
		Heath B. McLendon,
		President and Chief Executive Officer

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

Signature				Title				Date

/s/ Heath B. McLendon	Chairman of the Board	
Heath B. McLendon		(Chief Executive Officer)
	01/29/99

/s/ Lewis E. Daidone	Senior Vice President
Lewis E. Daidone		and Treasurer 
				(Chief Financial and
				Accounting Officer)	
	01/29/99


/s/ Paul R. Ades*		Trustee			
	01/29/99
Paul R. Ades

Herbert Barg*		Trustee			
	01/29/99
Herbert Barg

/s/ Dwight B. Crane*	Trustee			
	01/29/99
Dwight B. Crane

/s/ Frank Hubbard*	Trustee			
	01/29/99
Frank Hubbard

/s/Jerome Miller*		Trustee			
	01/29/99
Jerome Miller

/s/ Ken Miller*		Trustee			
	01/29/99
Ken Miller

*Signed by Heath B. McLendon, their duly authorized 
attorney-in-fact, pursuant to power of attorney dated 
December 23, 1994

/s/ Heath B. McLendon
Heath B. McLendon


Exhibit Index

Exhibit No.     Exhibit

(e)             Form of Distribution Agreement