Registration Nos. 2-34576
                                                         811-1940

               SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549

                           FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933     X

Pre-Effective Amendment No.

Post-Effective Amendment No.          41                   X

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
      ACT OF 1940                                          X

Amendment No.      28                                       X


              SMITH BARNEY APPRECIATION FUND INC.
       (Exact name of Registrant as specified in Charter)

         388 Greenwich Street, New York, New York 10013
      (Address of principal executive offices) (Zip Code)

                    (212) 723-9218
      (Registrant's telephone number, including Area Code)

                       Christina T. Sydor
                           Secretary

              Smith Barney Appreciation Fund Inc.
                      388 Greenwich Street
                    New York, New York 10013
                          (22nd Floor)
            (Name and address of agent for service)

         Approximate Date of Proposed Public Offering:
    As soon as possible after this Post-Effective Amendment
                       becomes effective.

It is proposed that this filing will become effective:
   
      X          immediately  upon filing pursuant  to  Rule
485(b)
                 on ________ pursuant to Rule 485(b)
                 on                 pursuant to Rule 485(a)
    

The  Registrant  has  previously  filed  a  declaration   of
indefinite registration of its shares pursuant to Rule 24f-2
under the Investment Company Act of 1940.  Registrant's Rule
24f-2 Notice for the fiscal year ended December 31, 1995 was
filed  on  February 29, 1996 as Accession  Number  89558-96-
000001.

             CONTENTS OF REGISTRATION STATEMENT
                              
Front Cover
Contents Page
Cross-Reference Sheet
Part  A -  Prospectus dated March 1, 1996 for Class A, Class
B, Class C and Class Y Shares
     Prospectus dated March 1, 1996 for Class Z Shares
Part B - Statement of Additional Information dated March  1,
1996
Part C - Other Information
       

            SMITH  BARNEY APPRECIATION FUND INC.

                           FORM N-1A

                     CROSS REFERENCE SHEET

                    PURSUANT TO RULE 495(a)

Part A.
Item No.                     Prospectus Caption

1. Cover Page                     Cover Page

2. Synopsis                       Prospectus Summary    (Not
applicable for Class
                             Z Prospectus)    

3.   Condensed   Financial  Information            Financial
Highlights

4.  General  Description  of Registrant         Cover  Page;
Prospectus Summary    (Not
                                applicable   for   Class   Z
Prospectus)    ;
                             Investment Objective and
                             Management Policies; Additional
Information;
                             Annual Report

5.  Management  of the Fund              Management  of  the
Fund; Distributor
                                 (Not applicable for Class Z
Prospectus)    ;
                              Additional Information; Annual
Report

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

7.  Purchase of Securities Being Offered           Valuation
of Shares; Purchase of Shares;
                              Exchange Privilege; Redemption
of Shares;
                                 Minimum    Account    Size;
Distributor;    ( In
                               Class   Z   Prospectus,   see
Purchase, Exchange and
                             Redemption of Shares)    

8.  Redemption or Repurchase            Purchase of  Shares;
Redemption of Shares;
                               Exchange  Privilege;   (   In
Class Z Prospectus, see
                                Purchase,    Exchange    and
Redemption of Shares)    

9. Legal Proceedings                   Not Applicable

Part B                            Statement of
Item No.                     Additional Information Caption

10. Cover                         Cover Page

11. Table of Contents                  Table of Contents

12.    General    Information                   Distributor;
Additional Information

13.   Investment  Objective  and  Policies        Investment
Objective and Management
                             Policies

14.  Management  of the Fund             Management  of  the
Fund; Distributor

15.  Control  Persons and Principal           Management  of
the Fund
     Holders of Securities

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

17.   Brokerage   Allocation                      Investment
Objective and Management Policies

18.  Capital  Stock  and Other Securities       Purchase  of
Shares; Redemption of Shares;
                             Taxes

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

20. Tax Status                         Taxes

21. Underwriters                       Distributor

22.  Calculation  of  Performance  Data          Performance
Data;     (In Class Z Prospectus,
                             see Performance)    

23.    Financial   Statements                      Financial
Statements
             SMITH BARNEY APPRECIATION FUND INC.
                              
                           PART A
                              

<PAGE>

P R O S P E C T U S


SMITH BARNEY

Appreciation

   Fund Inc.    


   

MARCH 1, 1996     


PROSPECTUS BEGINS ON PAGE ONE






[LOGO] Smith Barney Mutual Funds
       Investing for your future.
       Every day.

<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS                                             MARCH
1, 1995


388 Greenwich Street
New York, New York 10013
(212) 723-9218

   Smith  Barney Appreciation Fund Inc. (the  "Fund")  is  a
mutual fund which seeks
long-term  appreciation  of  shareholders'  capital  through
investments primarily
in equity securities.

   This  Prospectus sets forth concisely certain information
about the Fund,
including sales charges, distribution and service  fees  and
expenses, that pro-
spective investors will find helpful in making an investment
decision. Invest-
ors  are  encouraged to read this Prospectus  carefully  and
retain it for future
reference.
   
   Additional information about the Fund is contained  in  a
Statement of Addi-
tional  Information  dated March  1,  1996,  as  amended  or
supplemented from time to
time,  that is available upon request and without charge  by
calling or writing
the  Fund at the telephone number or address set forth above
or by contacting a
Smith   Barney   Financial  Consultant.  The  Statement   of
Additional Information has
been  filed with the Securities and Exchange Commission (the
"SEC") and is
incorporated  by  reference  into  this  Prospectus  in  its
entirety.     

SMITH BARNEY INC.
Distributor

SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Adviser and Administrator

THESE  SECURITIES HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY
THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE SECURITIES COMMISSION  NOR
HAS THE SECURITIES
AND  EXCHANGE COMMISSION OR ANY STATE SECURITIES  COMMISSION
PASSED UPON THE
ACCURACY  OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS
A CRIMINAL OFFENSE.


1
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

TABLE OF CONTENTS

<TABLE>   
<S>                                           <C>
PROSPECTUS SUMMARY                              3
-------------------------------------------------
FINANCIAL HIGHLIGHTS                           10
-------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES   14
-------------------------------------------------
VALUATION OF SHARES                            17
-------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES             17
-------------------------------------------------
PURCHASE OF SHARES                             18
-------------------------------------------------
EXCHANGE PRIVILEGE                             29
-------------------------------------------------
REDEMPTION OF SHARES                           33
-------------------------------------------------
MINIMUM ACCOUNT SIZE                           35
-------------------------------------------------
PERFORMANCE                                    36
-------------------------------------------------
MANAGEMENT OF THE FUND                         37
-------------------------------------------------
DISTRIBUTOR                                    38
-------------------------------------------------
ADDITIONAL INFORMATION                         39
-------------------------------------------------
</TABLE>    


    No person has been authorized to give any information or
to make any
 representations in connection with this offering other than
those contained
  in  this  Prospectus  and, if given or  made,  such  other
information or
  representations  must not be relied upon  as  having  been
authorized by the
   Fund  or  the  distributor.  This  Prospectus  does   not
constitute an offer by the
  Fund  or the distributor to sell or a solicitation  of  an
offer to buy any of
  the  securities offered hereby in any jurisdiction to  any
person to whom it
  is  unlawful  to make such offer or solicitation  in  such
jurisdiction.


2
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS SUMMARY

The  following  summary  is qualified  in  its  entirety  by
detailed information
appearing  elsewhere in this Prospectus and in the Statement
of Additional
Information.  Cross  references  in  this  summary  are   to
headings in the Prospec-
tus. See "Table of Contents."

INVESTMENT  OBJECTIVE The Fund is an open-end,  diversified,
management invest-
ment company whose sole investment objective is to seek long-
term appreciation
of  shareholders' capital through investments  primarily  in
equity securities.
See "Investment Objective and Management Policies."

ALTERNATIVE  PURCHASE ARRANGEMENTS The Fund  offers  several
classes of shares
("Classes") to investors designed to provide them  with  the
flexibility of
selecting  an  investment best suited to  their  needs.  The
general public is
offered  three  classes of shares: Class A shares,  Class  B
shares and Class C
shares,  which differ principally in terms of sales  charges
and rates of
expenses  to  which  they are subject.  A  fourth  Class  of
shares, Class Y shares,
is  offered  only to investors meeting an initial investment
minimum of
$5,000,000.  In  addition, a fifth Class,  Class  Z  shares,
which is offered pur-
suant  to  a separate prospectus, is offered exclusively  to
(a) tax-exempt
employee  benefit and retirement plans of Smith Barney  Inc.
("Smith Barney")
and  its  affiliates and (b) unit investment trusts ("UITs")
sponsored by Smith
Barney  and  its  affiliates. See "Purchase of  Shares"  and
"Redemption of
Shares."
   
  Class A Shares. Class A shares are sold at net asset value
plus an initial
sales  charge  of up to 5.00% and are subject to  an  annual
service fee of 0.25%
of  the  average daily net assets of the Class. The  initial
sales charge may be
reduced or waived for certain purchases. Purchases of  Class
A shares, which
when  combined  with  current holdings  of  Class  A  shares
offered with a sales
charge  equal or exceed $500,000 in the aggregate,  will  be
made at net asset
value with no initial sales charge, but will be subject to a
contingent
deferred sales charge ("CDSC") of 1.00% on redemptions  made
within 12 months
of  purchase.  See  "Prospectus Summary  --  Reduced  or  No
Initial Sales Charge."
    
   Class  B Shares. Class B shares are offered at net  asset
value subject to a
maximum  CDSC of 5.00% of redemption proceeds, declining  by
1.00% each year
after  the date of purchase to zero. This CDSC may be waived
for certain
redemptions. Class B shares are subject to an annual service
fee of 0.25% and
an annual distribution fee of 0.75% of the average daily net
assets of the
Class.  The Class B shares' distribution fee may cause  that
Class to have
higher expenses and pay lower dividends than Class A shares.


3
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS SUMMARY (CONTINUED)

   Class  B  Shares Conversion Feature. Class B shares  will
convert automatically
to  Class A shares, based on relative net asset value, eight
years after the
date of the original purchase. Upon conversion, these shares
will no longer be
subject  to  an  annual distribution  fee.  In  addition,  a
certain portion of Class
B shares that have been acquired through the reinvestment of
dividends and dis-
tributions ("Class B Dividend Shares") will be converted  at
that time. See
"Purchase of Shares -- Deferred Sales Charge Alternatives."
   
  Class C Shares. Class C shares are sold at net asset value
with no initial
sales  charge. They are subject to an annual service fee  of
0.25% and an annual
distribution fee of 0.75% of the average daily net assets of
the Class, and
investors pay a CDSC of 1.00% if they redeem Class C  shares
within 12 months of
purchase.  The  CDSC may be waived for certain  redemptions.
The Class C shares'
distribution  fee  may  cause  that  Class  to  have  higher
expenses and pay lower
dividends  than  Class A shares. Purchases of  Fund  shares,
which when combined
with current holdings of Class C shares of the Fund equal or
exceed $500,000 in
the aggregate, should be made in Class A shares at net asset
value with no
sales  charge,  and will be subject to a CDSC  of  1.00%  on
redemptions made within
12 months of purchase.     

   Class  Y  Shares.  Class Y shares are available  only  to
investors meeting an
initial investment minimum of $5,000,000. Class Y shares are
sold at net asset
value  with  no initial sales charge or CDSC. They  are  not
subject to any service
or distribution fees.

   In  deciding  which  Class of Fund  shares  to  purchase,
investors should consider
the  following factors, as well as any other relevant  facts
and circumstances:
   
  Intended Holding Period. The decision as to which Class of
shares is more
beneficial to an investor depends on the amount and intended
duration of his or
her investment. Shareholders who are planning to establish a
program of regular
investment  may  wish to consider Class  A  shares;  as  the
investment accumulates,
shareholders may qualify for reduced sales charges  and  the
shares are subject
to  lower  ongoing expenses over the term of the investment.
As an alternative,
Class  B  and  Class C shares are sold without  any  initial
sales charge so the
entire  purchase price is immediately invested in the  Fund.
Any investment
return on these additional invested amounts may partially or
wholly offset the
higher  annual expenses of these Classes. Because the Fund's
future return can-
not  be  predicted, however, there can be no assurance  that
this would be the
case.     

4
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS SUMMARY (CONTINUED)


   Finally, investors should consider the effect of the CDSC
period and any con-
version  rights of the Classes in the context of  their  own
investment time
frame. For example, while Class C shares have a shorter CDSC
period than Class
B  shares,  they  do  not  have  a  conversion  feature  and
therefore are subject to an
ongoing  distribution fee. Thus, Class B shares may be  more
attractive than
Class  C  shares  to investors with longer  term  investment
outlooks.

   Investors investing a minimum of $5,000,000 must purchase
Class Y shares,
which  are not subject to an initial sales charge,  CDSC  or
service or distribu-
tion fee. The maximum purchase amount for Class A shares  is
$4,999,999, Class B
shares is $249,999 and Class C shares is $499,999. There  is
no maximum purchase
amount for Class Y shares.

   Reduced  or  No Initial Sales Charge. The  initial  sales
charge on Class A
shares  may  be waived for certain eligible purchasers,  and
the entire purchase
price will be immediately invested in the Fund. In addition,
Class A share pur-
chases, which when combined with current holdings of Class A
shares offered
with  a  sales  charge  equal  or  exceed  $500,000  in  the
aggregate, will be made at
net  asset value with no initial sales charge, but  will  be
subject to a CDSC of
1.00% on redemptions made within 12 months of purchase.  The
$500,000 aggregate
investment  may  be met by adding the purchase  to  the  net
asset value of all
Class  A  shares offered with a sales charge held  in  funds
sponsored by Smith
Barney  listed  under "Exchange Privilege."  Class  A  share
purchases may also be
eligible  for a reduced initial sales charge. See  "Purchase
of Shares." Because
the  ongoing  expenses of Class A shares may be  lower  than
those for Class B and
Class  C  shares,  purchasers eligible to purchase  Class  A
shares at net asset
value or at a reduced sales charge should consider doing so.

   Smith  Barney Financial Consultants may receive different
compensation for
selling  each  Class of shares. Investors should  understand
that the purpose of
the  CDSC on the Class B and Class C shares is the  same  as
that of the initial
sales charge on the Class A shares.

   See "Purchase of Shares" and "Management of the Fund" for
a complete descrip-
tion  of the sales charges and service and distribution fees
for each Class of
shares  and "Valuation of Shares," "Dividends, Distributions
and Taxes" and "Ex-
change  Privilege" for other differences between the Classes
of shares.

SMITH  BARNEY  401(K) PROGRAM Investors may be  eligible  to
participate in the
Smith Barney 401(k) Program, which is generally designed  to
assist plan spon-
sors in the creation and operation of retirement plans under
Section 401(a)


5
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS SUMMARY (CONTINUED)

of  the  Internal  Revenue Code of  1986,  as  amended  (the
"Code"), as well as other
types   of   participant  directed,  tax-qualified  employee
benefit plans (collec-
tively,  "Participating Plans"). Class A, Class B,  Class  C
and Class Y shares
are  available  as investment alternatives for Participating
Plans. See "Purchase
of Shares -- Smith Barney 401(k) Program."
   
PURCHASE  OF  SHARES  Shares may be  purchased  through  the
Fund's distributor,
Smith  Barney, a broker that clears securities  transactions
through Smith Barney
on  a fully disclosed basis (an "Introducing Broker") or  an
investment dealer in
the  selling  group. Direct purchases by certain  retirement
plans may be made
through  the  Fund's  transfer agent,  First  Data  Investor
Services Group, Inc.
(the "Transfer Agent"). See "Purchase of Shares."     
   
INVESTMENT MINIMUMS Investors in Class A, Class B and  Class
C shares may open
an  account  by  making an initial investment  of  at  least
$1,000 for each account,
or  $250 for an individual retirement account ("IRA")  or  a
Self-Employed Retire-
ment  Plan. Investors in Class Y shares may open an  account
for an initial
investment of $5,000,000. Subsequent investments of at least
$50 may be made
for  all  Classes.  For  participants  in  retirement  plans
qualified under Section
403(b)(7) or Section 401(a) of the Code, the minimum initial
investment
requirement for Class A, Class B and Class C shares and  the
subsequent invest-
ment requirement for all Classes is $25. The minimum initial
investment
requirement for Class A, Class B and Class C shares and  the
subsequent invest-
ment  requirement  for  all Classes through  the  Systematic
Investment Plan
described  below  is  $50. There is  no  minimum  investment
requirement in Class A
shares for unitholders who invest distributions from a  unit
investment trust
("UIT") sponsored by Smith Barney. See "Purchase of Shares."
    

SYSTEMATIC  INVESTMENT PLAN The Fund offers  shareholders  a
Systematic Investment
Plan  under which they may authorize the automatic placement
of a purchase order
each  month  or quarter for Fund shares in an amount  of  at
least $50. See "Pur-
chase of Shares."

REDEMPTION OF SHARES Shares may be redeemed on each day  the
New York Stock
Exchange,  Inc. ("NYSE") is open for business. See "Purchase
of Shares" and "Re-
demption of Shares."
   
MANAGEMENT  OF THE FUND Smith Barney Mutual Funds Management
Inc. ("SBMFM")
serves  as  the Fund's investment adviser and administrator.
SBMFM (formerly
known  as  Smith, Barney Advisers, Inc.) is a  wholly  owned
subsidiary of Smith
Barney  Holdings  Inc. ("Holdings"). Holdings  is  a  wholly
owned subsidi     

6
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS SUMMARY (CONTINUED)
   
ary  of  Travelers Group Inc. ("Travelers"),  a  diversified
financial services
holding   company   engaged,   through   its   subsidiaries,
principally in four business
segments:  Investment Services, Consumer  Finance  Services,
Life Insurance Serv-
ices  and  Property  &  Casualty  Insurance  Services.   See
"Management of Fund."     
          
EXCHANGE  PRIVILEGE Shares of a Class may be  exchanged  for
shares of the same
Class of certain Smith Barney Mutual Funds at the respective
net asset values
next   determined,   plus   any  applicable   sales   charge
differential. See "Exchange
Privilege."     

VALUATION  OF  SHARES Net asset value of the  Fund  for  the
prior day generally is
quoted daily in the financial section of most newspapers and
is also available
from  Smith Barney Financial Consultants. See "Valuation  of
Shares."

DIVIDENDS  AND  DISTRIBUTIONS Dividends from net  investment
income and distribu-
tions  of  net realized capital gains, if any, are  declared
and paid annually.
See "Dividends, Distributions and Taxes."

REINVESTMENT  OF DIVIDENDS Dividends and distributions  paid
on shares of a Class
will be reinvested automatically, unless otherwise specified
by an investor, in
additional  shares  of the same Class at current  net  asset
value. Shares acquired
by  dividend  and  distribution reinvestments  will  not  be
subject to any sales
charge or CDSC. Class B shares acquired through dividend and
distribution rein-
vestments  will become eligible for conversion  to  Class  A
shares on a pro rata
basis. See "Dividends, Distributions and Taxes."

RISK  FACTORS  AND SPECIAL CONSIDERATIONS There  can  be  no
assurance that the
Fund's  investment objective will be achieved. The value  of
the Fund's invest-
ments  will  fluctuate in response to changes in market  and
economic conditions,
as  well as the financial condition and prospects of issuers
in which the Fund
invests.  The Fund may invest in foreign securities,  though
management intends
to  limit  such  investments to 10% of  the  Fund's  assets.
Foreign investments may
include  additional risks associated with currency  exchange
rates, less complete
financial  information  about  individual  companies,   less
market liquidity and
political   instability.  See  "Investment   Objective   and
Management Policies."


7
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS SUMMARY (CONTINUED)


THE  FUND'S EXPENSES The following expense table  lists  the
costs and expenses an
investor  will  incur either directly  or  indirectly  as  a
shareholder of the Fund,
based  on the maximum sales charge or maximum CDSC that  may
be incurred at the
time  of purchase or redemption and, unless otherwise noted,
the Fund's operat-
ing expenses for its most recent fiscal year:

<TABLE>   
<CAPTION>
                                               CLASS A CLASS
B CLASS C CLASS Y
------------------------------------------------------------
------------------
   <S>                                          <C>      <C>
<C>     <C>
  SHAREHOLDER TRANSACTION EXPENSES
    Maximum sales charge imposed on purchases
      (as a percentage of offering price)       5.00%   None
None    None
    Maximum CDSC (as a percentage of original
      cost or redemption proceeds, whichever
         is   lower)                                   None*
5.00%   1.00%   None
------------------------------------------------------------
------------------
  ANNUAL FUND OPERATING EXPENSES
    (as a percentage of average net assets)
       Management   fees                               0.62%
0.62%   0.62%   0.62%
    12b-1 fees**                                0.25    1.00
1.00    None
    Other expenses***                           0.15    0.15
0.15    0.15
------------------------------------------------------------
------------------
    TOTAL  FUND  OPERATING  EXPENSES                   1.02%
1.77%   1.77%   0.77%
------------------------------------------------------------
------------------
</TABLE>    
   *  Purchases of Class A shares, which when combined  with
current holdings of
     Class  A  shares offered with a sales charge  equal  or
exceed $500,000 in the
    aggregate, will be made at net asset value with no sales
charge, but will
    be subject to a CDSC of 1.00% on redemptions made within
12 months.
  **  Upon  conversion of Class B shares to Class A  shares,
such shares will no
     longer be subject to a distribution fee. Class C shares
do not have a
     conversion  feature and, therefore, are subject  to  an
ongoing distribution
     fee.  As  a result, long-term shareholders of  Class  C
shares may pay more
     than  the  economic equivalent of the maximum front-end
sales charge
     permitted  by  the National Association  of  Securities
Dealers, Inc.
   
*** For Class Y shares, "Other Expenses" have been estimated
based on expenses
     incurred  by the Class A shares because there  were  no
Class Y shares
    outstanding as of December 31, 1995.     
       
  The sales charge and CDSC set forth in the above table are
the maximum
charges  imposed on purchases or redemptions of Fund  shares
and investors
may  actually  pay  lower or no charges,  depending  on  the
amount purchased and, in
the case of Class B, Class C and certain Class A shares, the
length of time the
shares are held and whether the shares are held through  the
Smith Barney 401(k)
Program.  See  "Purchase  of  Shares"  and  "Redemption   of
Shares." Smith Barney
receives  an annual 12b-1 service fee of 0.25% of the  value
of average daily net
assets  of Class A shares. Smith Barney also receives,  with
respect to Class B
and  Class  C  shares, an annual 12b-1 fee of 1.00%  of  the
value of average daily
net  assets of each respective Class, consisting of a  0.75%
distribution fee and
a  0.25%  service fee. "Other expenses" in the  above  table
include fees for
shareholder  services, custodial fees, legal and  accounting
fees, printing costs
and registration fees.

8
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PROSPECTUS SUMMARY (CONTINUED)


 EXAMPLE

  The following example is intended to assist an investor in
understanding the
various  costs  that  an  investor in  the  Fund  will  bear
directly or indirectly.
The  example  assumes  payment  by  the  Fund  of  operating
expenses at the levels set
forth   in  the  table  above.  See  "Purchase  of  Shares,"
"Redemption of Shares" and
"Management of the Fund."

<TABLE>   
<CAPTION>
                                              1 YEAR 3 YEARS
5 YEARS 10 YEARS*
------------------------------------------------------------
-----------------
    <S>                                         <C>      <C>
<C>     <C>
  An investor would pay the following
  expenses on a $1,000 investment, assuming
  (1) 5.00% annual return and
  (2) redemption at the end of each time
  period:
     Class  A                                   $60      $81
$104     $169
     Class B                                     68       86
106      189
     Class C                                     28       56
96      208
     Class Y                                      8       25
43       95
  An investor would pay the following
  expenses on the same investment, assuming
  the same annual return and no redemption:
     Class  A                                   $60      $81
$104     $169
     Class B                                     18       56
96      189
     Class C                                     18       56
96      208
     Class Y                                      8       25
43       95
------------------------------------------------------------
-----------------
</TABLE>    

*   Ten-year figures assume conversion of Class B shares  to
Class A shares at
    the  end  of  the  eighth year  following  the  date  of
purchase.

   The  example  also provides a means for the  investor  to
compare expense levels
of   funds  with  different  fee  structures  over   varying
investment periods. To
facilitate  such  comparison,  all  funds  are  required  to
utilize a 5.00% annual
return  assumption. However, the Fund's actual  return  will
vary and may be
greater  or  less  than 5.00%. THIS EXAMPLE  SHOULD  NOT  BE
CONSIDERED A REPRESENTA-
TION  OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY  BE
GREATER OR LESS THAN
THOSE SHOWN.


9
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

FINANCIAL HIGHLIGHTS
   
The following information for the fiscal year ended December
31, 1995 has been
audited  by  KPMG  Peat  Marwick LLP, independent  auditors,
whose report thereon
appears in the Fund's Annual Report dated December 31, 1995.
The information
for  the  fiscal  years  ended  December  31,  1986  through
December 31, 1994 has
been audited by Coopers & Lybrand L.L.P. The information set
out below should
be  read  in  conjunction with the financial statements  and
related notes that
also   appear  in  the  Fund's  Annual  Report,   which   is
incorporated by reference
into the Statement of Additional Information. As of December
31, 1995, no
Class  Y  shares  were  outstanding  and,  accordingly,   no
comparable information is
available at this time for that Class.     
       
          
FOR  A  SHARE  OF  EACH CLASS OF CAPITAL  STOCK  OUTSTANDING
THROUGHOUT EACH YEAR:
    
<TABLE>   
<CAPTION>
CLASS     A                         1995(1)             1994
1993(1)        1992        1991
------------------------------------------------------------
---------------------------
<S>                         <C>           <C>            <C>
<C>         <C>
NET ASSET VALUE,
BEGINNING    OF    YEAR               $10.15          $11.01
$10.66      $10.26       $8.30
------------------------------------------------------------
---------------------------
INCOME (LOSS) FROM
OPERATIONS:
    Net   investment   income            0.20           0.16
0.15        0.18        0.18
 Net realized and
    unrealized   gain/(loss)           2.75           (0.24)
0.72        0.46        2.05
------------------------------------------------------------
---------------------------
Total Income (Loss) From
Operations                           2.95             (0.08)
0.87        0.64        2.23
------------------------------------------------------------
---------------------------
LESS DISTRIBUTION FROM:
   Net   investment   income           (0.20)         (0.18)
(0.16)      (0.15)      (0.20)
   Net   realized   gains              (1.00)         (0.60)
(0.36)      (0.09)      (0.07)
------------------------------------------------------------
---------------------------
Total     Distributions               (1.20)          (0.78)
(0.52)      (0.24)      (0.27)
------------------------------------------------------------
---------------------------
NET ASSET VALUE, END OF
YEAR                                $11.90            $10.15
$11.01      $10.66      $10.26
------------------------------------------------------------
---------------------------
TOTAL    RETURN+                     29.26%          (0.77)%
8.13%       6.29%      26.94%
------------------------------------------------------------
---------------------------
NET ASSETS, END OF YEAR
(000S)                          $1,932,573        $1,689,268
$1,579,248  $1,712,411  $1,752,884
------------------------------------------------------------
---------------------------
RATIOS TO AVERAGE NET
ASSETS:
     Expenses                          1.02%           1.02%
1.03%       0.88%       0.80%
    Net   investment   income              1.71         1.61
1.35        1.58        2.20
------------------------------------------------------------
---------------------------
PORTFOLIO   TURNOVER   RATE              57%             52%
52%         21%        19%
------------------------------------------------------------
---------------------------
AVERAGE COMMISSIONS PAID
ON
EQUITY SECURITY
TRANSACTIONS(2)                     $0.06                 --
--          --          --
------------------------------------------------------------
---------------------------
</TABLE>    
   
(1) Per share amounts have been calculated using the monthly
average shares
    method, which more appropriately presents per share data
for this year
    since the use of the undistributed income method did not
accord with
    results of operations.     
   
(2)  New  SEC disclosure guidelines require that the average
commission per
    share be calculated for the current year only.     
   
  ++Total  return  is  not annualized,  as  it  may  not  be
representative of the
   total return for the year.     
   
 + Annualized.     

10
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

FINANCIAL HIGHLIGHTS (CONTINUED)
          
FOR  A  SHARE  OF  EACH CLASS OF CAPITAL  STOCK  OUTSTANDING
THROUGHOUT EACH YEAR:
    
<TABLE>   
<CAPTION>
                                 1990         1989      1988
1987      1986
------------------------------------------------------------
--------------------
<S>                         <C>            <C>           <C>
<C>       <C>
NET ASSET VALUE,
BEGINNING OF YEAR              $8.66        $7.04      $6.49
$6.54     $5.82
------------------------------------------------------------
--------------------
INCOME (LOSS) FROM
OPERATIONS:
  Net investment income          0.23         0.18      0.18
0.14      0.12
 Net realized and
  unrealized gain/(loss)        (0.26)        1.90      0.69
0.32      1.01
------------------------------------------------------------
--------------------
Total Income (Loss) From
Operations                     (0.03)        2.08       0.87
0.46      1.13
------------------------------------------------------------
--------------------
LESS DISTRIBUTION FROM:
 Net investment income         (0.25)       (0.24)    (0.19)
(0.26)       --
 Net realized gains            (0.08)       (0.22)    (0.13)
(0.25)    (0.41)
------------------------------------------------------------
--------------------
Total Distributions            (0.33)       (0.46)    (0.32)
(0.51)    (0.41)
------------------------------------------------------------
--------------------
NET ASSET VALUE, END OF
YEAR                            $8.30        $8.66     $7.04
$6.49     $6.54
------------------------------------------------------------
--------------------
TOTAL RETURN+                  (0.27)%      29.55%    13.45%
6.95%    19.93%
------------------------------------------------------------
--------------------
NET ASSETS, END OF YEAR
(000S)                     $1,103,293   $1,000,433  $491,397
$431,092  $315,804
------------------------------------------------------------
--------------------
RATIOS TO AVERAGE NET
ASSETS:
 Expenses                       0.80%        0.90%     0.90%
0.90%     1.00%
 Net investment income          2.90%        3.20%     2.70%
2.20%     2.10%
------------------------------------------------------------
--------------------
PORTFOLIO TURNOVER RATE           30%          24%       25%
26%       30%
------------------------------------------------------------
--------------------
</TABLE>    
       

11
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

FINANCIAL HIGHLIGHTS (CONTINUED)
   
FOR  A  SHARE  OF CAPITAL STOCK OUTSTANDING THROUGHOUT  EACH
YEAR:     

<TABLE>   
<CAPTION>
CLASS   B   SHARES                       1995(1)        1994
1993(1)    1992(1)(2)
------------------------------------------------------------
--------------------
<S>                                 <C>       <C>        <C>
<C>
NET ASSET VALUE, BEGINNING OF
YEAR                                $   10.14  $   11.00   $
10.65  $    10.55
------------------------------------------------------------
--------------------
INCOME (LOSS) FROM OPERATIONS:
   Net   investment  income                  0.11       0.13
0.06        0.01
 Net realized and unrealized gain
   (loss)                                  2.74       (0.29)
0.73        0.34
------------------------------------------------------------
--------------------
Total Income (Loss) From
Operations                                2.85        (0.16)
0.79        0.35
------------------------------------------------------------
--------------------
LESS DISTRIBUTIONS FROM:
   Net  investment  income                 (0.11)     (0.10)
(0.08)      (0.16)
   Net  realized  gains                    (1.00)     (0.60)
(0.36)      (0.09)
------------------------------------------------------------
--------------------
Total   Distributions                     (1.11)      (0.70)
(0.44)      (0.25)
------------------------------------------------------------
--------------------
NET  ASSET  VALUE,  END  OF  YEAR          $11.88     $10.14
$11.00      $10.65
------------------------------------------------------------
--------------------
TOTAL   RETURN                            28.29%     (1.53)%
7.38%       3.28%++
------------------------------------------------------------
--------------------
NET  ASSETS,  END  OF  YEAR  (IN 000S)   $988,069   $761,000
$1,285,966  $1,122,249
------------------------------------------------------------
--------------------
RATIOS TO AVERAGE NET ASSETS:
   Expenses                                1.77%       1.80%
1.83%       1.82%+
   Net   investment  income                  0.96       0.83
0.56        0.64+
------------------------------------------------------------
--------------------
PORTFOLIO  TURNOVER  RATE                    57%         52%
52%         21%
------------------------------------------------------------
--------------------
AVERAGE COMMISSIONS PAID ON
    EQUITY   SECURITY  TRANSACTIONS(3)      $0.06         --
--          --
------------------------------------------------------------
--------------------
</TABLE>    
   
  (1)  Per  share  amounts have been  calculated  using  the
monthly average shares
      method,  which more appropriately presents  per  share
data for this year
      since  the use of the undistributed income method  did
not accord with
     results of operations.     
   
  (2)  For the period from November 6, 1992 (inception date)
to December 31,
     1992.     
   
  (3) New SEC disclosure guidelines require that the average
commissions per
     share be calculated for the current year only.     
   
  ++Total  return  is  not annualized,  as  it  may  not  be
representative of the
   total return for the year.     
   
 + Annualized.     

12
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

FINANCIAL HIGHLIGHTS (CONTINUED)

FOR  A  SHARE  OF  EACH CLASS OF CAPITAL  STOCK  OUTSTANDING
THROUGHOUT EACH YEAR:

<TABLE>   
<CAPTION>
CLASS  C  SHARES                             1995(1)    1994
1993(1)(2)
------------------------------------------------------------
-----------
<S>                                          <C>         <C>
<C>
NET  ASSET  VALUE, BEGINNING OF YEAR        $ 10.14   $11.00
$10.99
------------------------------------------------------------
-----------
INCOME (LOSS) FROM OPERATIONS:
  Net  investment income                       0.11     0.10
0.07
  Net  realized and unrealized gain (loss)     2.74   (0.25)
0.38
------------------------------------------------------------
-----------
Total  Income (Loss) From Operations          2.85    (0.15)
0.45
------------------------------------------------------------
-----------
LESS DISTRIBUTIONS FROM:
  Net  investment income                      (0.11)  (0.11)
(0.08)
  Distributions from net investment income   (1.00)   (0.60)
(0.36)
------------------------------------------------------------
-----------
Total  Distributions                         (1.11)   (0.71)
(0.44)
------------------------------------------------------------
-----------
NET  ASSET  VALUE, END OF YEAR               $11.88   $10.14
$11.00
------------------------------------------------------------
-----------
TOTAL  RETURN                                28.29%  (1.41)%
4.09%++
------------------------------------------------------------
-----------
NET  ASSET,  END OF YEAR (000S)             $14,653   $5,040
$2,214
------------------------------------------------------------
-----------
RATIOS TO AVERAGE NET ASSETS:
  Expenses                                    1.77%    1.66%
1.68%+
  Net  investment income                       0.96     0.98
0.71+
------------------------------------------------------------
-----------
PORTFOLIO TURNOVER RATE                         57%      52%
52%
------------------------------------------------------------
-----------
AVERAGE COMMISSIONS PAID ON
   EQUITY  SECURITY TRANSACTIONS(3)           $0.06       --
--
------------------------------------------------------------
-----------
</TABLE>    
   
(1) Per share amounts have been calculated using the monthly
average shares
    method, which more appropriately presents per share data
for this year
    since the use of the undistributed income method did not
accord with
    results of operations.     
   
(2) For the period from February 4, 1993 (inception date) to
December 31,
    1993.     
   
(3)  New  SEC  disclosure guidelines  require  that  average
commissions per share
    be calculated for current year only.     
   
  ++Total  return  is  not annualized,  as  it  may  not  be
representative of the
   total return for the year.     
   
 + Annualized.     
       
       

13
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES


    The   Fund's  sole  investment  objective  is  long-term
appreciation of sharehold-
ers'   capital  through  investments  primarily  in   equity
securities. This invest-
ment  objective may not be changed without the  approval  of
the holders of a
majority of the Fund's outstanding shares. There can  be  no
assurance that the
Fund's investment objective will be achieved.

   The Fund attempts to achieve its investment objective  by
investing primarily
in equity securities (consisting of common stocks, preferred
stocks, warrants,
rights and securities convertible into common stocks)  which
are believed to
afford attractive opportunities for investment appreciation.
The core holdings
of  the  Fund  are blue chip companies that are dominant  in
their industries. At
the  same  time, the Fund may hold securities  of  companies
with prospects of sus-
tained  earnings  growth and/or companies  with  a  cyclical
earnings record if it
is felt these offer attractive investment opportunities. For
example, the Fund
may invest in the securities of companies whose earnings are
expected to
increase,  companies whose securities prices are lower  than
are believed justi-
fied  in  relation  to their underlying  assets  or  earning
power, or companies in
which  changes are anticipated that would result in improved
operations or prof-
itability. Typically, the Fund invests in middle- and larger-
sized companies,
though  it does invest in smaller companies whose securities
may reasonably be
expected  to appreciate. The Fund's investments  are  spread
broadly among differ-
ent  industries.  The Fund may hold issues traded  over-the-
counter as well as
those listed on one or more national exchanges, and the Fund
may make invest-
ments  in  foreign securities though management  intends  to
limit such investments
to  10%  of  the Fund's assets. In analyzing securities  for
investment, SBMFM con-
siders   many  different  factors,  including  past   growth
records, management capa-
bility,   future   earnings  prospects   and   technological
innovation, as well as gen-
eral  market  and economic factors which can  influence  the
price of securities.
While   SBMFM  considers  dividend  potential  in  selecting
investments, current
income for distribution to shareholders is secondary to  the
Fund's principal
objective  of long-term capital appreciation. The  value  of
the Fund's invest-
ments,  and  thus the net asset value of the Fund's  shares,
will fluctuate in
response  to  changes in market and economic conditions,  as
well as the financial
condition  and  prospects  of  issuers  in  which  the  Fund
invests.

  Under normal market conditions, the majority of the Fund's
portfolio consists
of  common  stocks,  but it also may  contain  other  equity
securities as described
above,  as  well as short-term money market instruments  for
cash management pur-
poses.  When SBMFM believes that market conditions  warrant,
the Fund may adopt a
temporary defensive investment posture, and invest in debt

14
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
   
obligations,  increase its investment  in  short-term  money
market instruments, or
engage in repurchase agreement transactions with respect  to
the securities it
is authorized to hold (as described below).     

   Further information about the Fund's investment policies,
including a list of
those  restrictions on its investment activities that cannot
be changed without
shareholder approval, appears in the Statement of Additional
Information.

 INVESTMENT AND STRATEGIES

   Lending  of Portfolio Securities. From time to time,  the
Fund may lend its
portfolio securities to brokers, dealers and other financial
organizations.
These  loans  may  not exceed 33 1/3% of  the  Fund's  total
assets taken at value.
Loans   of  portfolio  securities  by  the  Fund   will   be
collateralized by cash, let-
ters   of  credit  or  obligations  of  the  United   States
government or its agencies
and  instrumentalities ("U.S. government securities")  which
are maintained at
all times in an amount equal to at least 100% of the current
market value of
the  loaned securities. By lending its portfolio securities,
the Fund will seek
to  generate income by continuing to receive interest on the
loaned securities,
by  investing the cash collateral in short-term  instruments
or by obtaining
yield in the form of interest paid by the borrower when U.S.
government securi-
ties  are used as collateral. 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 SBMFM to be of good  standing  and
will not be made
unless,  in the judgment of SBMFM, the consideration  to  be
earned from such
loans would justify the risk.

   Short-Term  Investments. As noted  above,  the  Fund  may
invest in short-term
money   market   instruments,  such  as:   U.S.   government
securities; certificates of
deposit,  time deposits and bankers' acceptances  issued  by
domestic banks (in-
cluding their branches located outside the United States and
subsidiaries
located  in  Canada), domestic branches  of  foreign  banks,
savings and loan asso-
ciations  and  similar institutions; high  grade  commercial
paper; and repurchase
agreements with respect to such instruments.

  Repurchase Agreements. The Fund will enter into repurchase
agreements with
banks  which  are the issuers of instruments acceptable  for
purchase by the Fund
and  with certain dealers on the Federal Reserve Bank of New
York's list of
reporting  dealers. Under the terms of a typical  repurchase
agreement, the Fund
would  acquire  an  underlying obligation for  a  relatively
short period (usu-


15
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)

ally not more than one week) subject to an obligation of the
seller to repur-
chase,  and the Fund to resell, the obligation at an agreed-
upon price and
time,  thereby  determining  the  yield  during  the  Fund's
holding period. This
arrangement  results in a fixed rate of return that  is  not
subject to market
fluctuations  during  the  Fund's  holding  period.  Further
information on repur-
chase   agreements  and  the  risks  associated  with   such
investments appears in the
Statement of Additional Information.
   
   Portfolio Transactions and Turnover. Portfolio securities
transactions on
behalf  of  the Fund are placed by SBMFM with  a  number  of
brokers and dealers,
including  Smith Barney Inc. ("Smith Barney"). Smith  Barney
has advised the
Fund  that  in  transactions with  the  Fund,  Smith  Barney
charges a commission
rate  at  least as favorable as the rate that  Smith  Barney
charges its compara-
ble unaffiliated customers in similar transactions.     
   
   The  Fund generally does not engage in short-term trading
but intends to pur-
chase  securities for long-term capital appreciation.  While
the Fund's portfo-
lio  turnover rate has in the past exceeded 100%, the Fund's
annual portfolio
turnover rate is not expected to exceed 100%.     

   Foreign Securities. The Fund may invest in securities  of
non-U.S. issuers in
the  form of American Depositary Receipts ("ADRs"), European
Depositary
Receipts   ("EDRs")   or  similar  securities   representing
interests in the common
stock  of  foreign issuers. Management intends to limit  the
Fund's investment in
these  types  of  securities, together with other  types  of
foreign securities, to
10%  of  the Fund's net assets. ADRs are receipts, typically
issued by a U.S.
bank   or   trust  company,  which  evidence  ownership   of
underlying securities
issued by a foreign corporation. EDRs are receipts issued in
Europe which evi-
dence  a similar ownership arrangement. Generally, ADRs,  in
registered form,
are designed for use in the U.S. securities markets and EDRs
are designed for
use   in   European  securities  markets.   The   underlying
securities are not always
denominated  in  the  same currency as  the  ADRs  or  EDRs.
Although investment in
the  form  of  ADRs or EDRs facilitates trading  in  foreign
securities, it does
not  mitigate the risks associated with investing in foreign
securities.

   Investments in foreign securities incur higher costs than
investments in
U.S. securities, including higher costs in making securities
transactions as
well  as  foreign  government taxes  which  may  reduce  the
investment return of the
Fund.   In   addition,  foreign  investments   may   include
additional risks associated
with   currency  exchange  rates,  less  complete  financial
information about indi-
vidual   companies,  less  market  liquidity  and  political
instability.

16
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

VALUATION OF SHARES
   
   The Fund's net asset value per share is determined as  of
the close of regular
trading  on the NYSE, on each day that the NYSE is open,  by
dividing the value
of  the Fund's net assets attributable to each Class by  the
total number of
shares of the Class outstanding.     

   Generally,  the Fund's investments are valued  at  market
value or, in the
absence of a market value with respect to any securities, at
fair value as
determined by or under the direction of the Fund's Board  of
Directors. Short-
term  investments that mature in 60 days or less are  valued
at amortized cost
whenever  the  Fund's  Board  of Directors  determines  that
amortized cost is the
fair   value   of  those  instruments.  Further  information
regarding the Fund's valu-
ation  policies is contained in the Statement of  Additional
Information.

DIVIDENDS, DISTRIBUTIONS AND TAXES


 DIVIDENDS AND DISTRIBUTIONS
   
   The Fund's policy is to distribute substantially all  its
net investment
income  (that  is,  its income other than its  net  realized
capital gains) and net
realized capital gains, if any, once a year, normally at the
end of the year in
which earned or at the beginning of the next year.     

   If  a  shareholder does not otherwise instruct, dividends
and capital gains
distributions will be reinvested automatically in additional
shares of the same
Class  at  net  asset value, subject to no sales  charge  or
CDSC. In order to avoid
the  application  of  a 4.00% nondeductible  excise  tax  on
certain undistributed
amounts  of ordinary income and capital gains, the Fund  may
make an additional
distribution,  shortly before December 31 in each  year,  of
any undistributed
ordinary  income  or capital gains and expects  to  pay  any
other dividends and
distributions  necessary to avoid the  application  of  this
tax. The per share
dividends on Class B and Class C shares of the Fund  may  be
lower than the per
share dividends on Class A and Class Y shares principally as
a result of the
distribution  fee applicable with respect  to  Class  B  and
Class C shares. The per
share  dividends on Class A shares of the Fund may be  lower
than the per share
dividends on Class Y shares principally as a result  of  the
service fee applica-
ble  to  Class A shares. Distributions of capital gains,  if
any, will be in the
same  amount  for  Class A, Class B, Class  C  and  Class  Y
shares.


17
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)


 TAXES

   The Fund has qualified and intends to continue to qualify
each year as a reg-
ulated  investment  company under the Code.  Dividends  paid
from net investment
income  and distributions of net realized short-term capital
gains are taxable
to  shareholders as ordinary income, regardless of how  long
shareholders have
held  their  Fund  shares  and whether  such  dividends  and
distributions are
received  in  cash or reinvested in additional Fund  shares.
Distributions of net
realized   long-term  capital  gains  will  be  taxable   to
shareholders as long-term
capital gains, regardless of how long shareholders have held
Fund shares and
whether  such  distributions are received  in  cash  or  are
reinvested in additional
Fund shares. Furthermore, as a general rule, a shareholder's
gain or loss on a
sale  or  redemption  of Fund shares  will  be  a  long-term
capital gain or loss if
the  shareholder has held the shares for more than one  year
and will be a short-
term  capital gain or loss if the shareholder has  held  the
shares for one year
or  less.  Some  of the Fund's dividends declared  from  net
investment income may
qualify  for  the Federal dividends-received  deduction  for
corporations.

   Statements  as  to  the tax status of each  shareholder's
dividends and distribu-
tions  are  mailed  annually.  Each  shareholder  also  will
receive, if appropriate,
various written notices after the close of the Fund's  prior
taxable year as to
the  Federal  income tax status of his or her dividends  and
distributions which
were  received from the Fund during the Fund's prior taxable
year. Shareholders
should  consult their own tax advisors about the  status  of
the Fund's dividends
and distributions for state and local tax liabilities.

PURCHASE OF SHARES


 GENERAL
   
  The Fund offers the general public four Classes of shares.
Class A shares are
sold  to investors with an initial sales charge and Class  B
and Class C shares
are sold without an initial sales charge but are subject  to
a CDSC payable upon
certain  redemptions. Class Y shares  are  sold  without  an
initial sales charge or
CDSC and are available only to investors investing a minimum
of $5,000,000 (ex-
cept for purchases of Class Y shares by Smith Barney Concert
Series Inc., for
which  there is no minimum purchase amount). Class Z  shares
are offered without
a  sales  charge,  CDSC,  or service  or  distribution  fee,
exclusively to: (a) tax-
exempt employee benefit and retirement plans of Smith Barney
and its affiliates
and  (b)  certain  UITs sponsored by Smith  Barney  and  its
affiliates. Investors
meet     

18
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)

ing either of these criteria who are interested in acquiring
Class Z shares
should  contact  a Smith Barney Financial Consultant  for  a
Class Z Shares Pro-
spectus.  See  "Prospectus Summary --  Alternative  Purchase
Arrangements" for a
discussion  of factors to consider in selecting which  Class
of shares to pur-
chase.
   
   Purchases of Fund shares must be made through a brokerage
account maintained
with  Smith  Barney, an Introducing Broker or an  investment
dealer in the selling
group,  except for investors purchasing shares of  the  Fund
through a qualified
retirement plan who may do so directly through the  Transfer
Agent. When pur-
chasing  shares of the Fund, investors must specify  whether
the purchase is for
Class  A, Class B, Class C or Class Y shares. No maintenance
fee will be charged
by  the  Fund in connection with a brokerage account through
which an investor
purchases or holds shares.     

   Investors in Class A, Class B and Class C shares may open
an account by mak-
ing  an  initial  investment of at  least  $1,000  for  each
account, or $250 for an
IRA   or  a  Self-Employed  Retirement  Plan  in  the  Fund.
Investors in Class Y shares
may  open  an  account  by making an initial  investment  of
$5,000,000.
   
  Subsequent investments of at least $50 may be made for all
Classes. For par-
ticipants  in  retirement  plans  qualified  under   Section
403(b)(7) or Section
401(a)   of   the  Code,  the  minimum  initial   investment
requirement for Class A,
Class  B  and  Class C shares and the subsequent  investment
requirement for all
Classes  in  the  Fund  is $25. For  the  Fund's  Systematic
Investment Plan, the min-
imum initial investment requirement for Class A, Class B and
Class C shares and
the  subsequent  investment requirement for all  Classes  is
$50. There are no min-
imum   investment  requirements  for  Class  A  shares   for
employees of Travelers and
its  subsidiaries, including Smith Barney, Directors of  the
Fund and their
spouses   and   children   and   unitholders   who    invest
distributions from a UIT spon-
sored  by Smith Barney. The Fund reserves the right to waive
or change minimums,
to  decline any order to purchase its shares and to  suspend
the offering of
shares  from time to time. Shares purchased will be held  in
the shareholder's
account by the Transfer Agent. Share certificates are issued
only upon a share-
holder's written request to the Transfer Agent.     
   
  Purchase orders received by the Fund or Smith Barney prior
to the close of
regular  trading on the NYSE, on any day the Fund calculates
its net asset val-
ue,  are  priced according to the net asset value determined
on that day. Orders
received  by  dealers or Introducing Brokers  prior  to  the
close of regular trad-
ing  on  the  NYSE, on any day the Fund calculates  its  net
asset value, are priced
according  to  the net asset value determined on  that  day,
provided the order is
    

19
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)
   
received by the Fund or Smith Barney prior to Smith Barney's
close of business
(the  "trade  date").  For  shares purchased  through  Smith
Barney or Introducing
Brokers  purchasing through Smith Barney, payment  for  Fund
shares is due on the
third  business day (the "settlement date") after the  trade
date. In all other
cases, payment must be made with the purchase order.     

 SYSTEMATIC INVESTMENT PLAN
   
   Shareholders may make additions to their accounts at  any
time by purchasing
shares  through a service known as the Systematic Investment
Plan. Under the
Systematic  Investment Plan, Smith Barney  or  the  Transfer
Agent is authorized,
through  preauthorized transfers of $50 or more,  to  charge
the regular bank
account  or  other  financial institution indicated  by  the
shareholder on a
monthly  or quarterly basis to provide systematic  additions
to the sharehold-
er's  Fund account. A shareholder who has insufficient funds
to complete the
transfer will be charged a fee of up to $25 by Smith  Barney
or the Transfer
Agent. The Systematic Investment Plan also authorizes  Smith
Barney to apply
cash  held  in  the  shareholder's  Smith  Barney  brokerage
account or redeem the
shareholder's shares of a Smith Barney money market fund  to
make additions to
the  account. Additional information is available  from  the
Fund or a Smith Bar-
ney Financial Consultant.     

 INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES

   The  sales  charges applicable to purchases  of  Class  A
shares of the Fund are
as follows:

<TABLE>
<CAPTION>

DEALERS
                         SALES CHARGE AS % SALES CHARGE AS %
REALLOWANCE AS %
   AMOUNT  OF  INVESTMENT    OF  OFFERING  PRICE  OF  AMOUNT
INVESTED OF OFFERING PRICE
------------------------------------------------------------
-------------------
       <S>                        <C>                    <C>
<C>
   Less  than  $25,000             5.00%               5.26%
4.50%
   $  25,000  -  $ 49,999           4.00                4.17
3.60
   $  50,000  -  $ 99,999           3.50                3.63
3.15
    $100,000  -  $249,999           3.00                3.09
2.70
    $250,000  -  $499,999           2.00                2.04
1.80
    $500,000  and  over                *                   *
*
------------------------------------------------------------
-------------------
</TABLE>
*  Purchases  of  Class A shares, which when  combined  with
current holdings of
  Class A shares offered with a sales charge equal or exceed
$500,000 in the
   aggregate,  will be made at net asset value  without  any
initial sales charge
  but will be subject to a CDSC of 1.00% on redemptions made
within 12 months
   of  purchase.  The CDSC on Class A shares is  payable  to
Smith Barney, which
   compensates Smith Barney Financial Consultants and  other
dealers whose
   clients make purchases of $500,000 or more. The  CDSC  is
waived in the same
   circumstances in which the CDSC applicable to Class B and
Class C shares is
   waived.  See  "Deferred  Sales Charge  Alternatives"  and
"Waivers of CDSC."

20
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)


   Members of the selling group may receive up to 90% of the
sales charge and
may  be deemed to be underwriters of the Fund as defined  in
the Securities Act
of 1933, as amended.

   The  reduced  sales  charges shown  above  apply  to  the
aggregate of purchases of
Class A shares of the Fund made at one time by "any person,"
which includes an
individual, his or her spouse and children, or a trustee  or
other fiduciary of
a  single  trust  estate  or single fiduciary  account.  The
reduced sales charge
minimums  may also be met by aggregating the purchases  with
the net asset value
of  all  Class  A  shares held in funds sponsored  by  Smith
Barney that are offered
with a sales charge listed under "Exchange Privilege."

 INITIAL SALES CHARGE WAIVERS
   
  Purchases of Class A shares may be made at net asset value
without a sales
charge in the following circumstances: (a) sales of Class  A
shares to Board
Members  of  any  of  the  Smith  Barney  Mutual  Funds  and
employees of Travelers and
its  subsidiaries and employees of members of  the  National
Association of Secu-
rities  Dealers, Inc., or the spouses and children  of  such
persons (including
the surviving spouse of a deceased Board Member or employee,
and retired Board
Members  or  employees),  or sales to  any  trust,  pension,
profit-sharing or other
benefit  plan for such persons provided such sales are  made
upon the assurance
of  the  purchaser that the purchase is made for  investment
purposes and that the
securities will not be re-sold except through redemption  or
repurchase; (b)
offers of Class A shares to any other investment company  in
connection with the
combination  of  such  company  with  the  Fund  by  merger,
acquisition of assets or
otherwise; (c) purchases of Class A shares by any client  of
a newly employed
Smith  Barney Financial Consultant (for a period  up  to  90
days from the com-
mencement  of  the  Financial Consultant's  employment  with
Smith Barney), on the
condition  the purchase of Class A shares is made  with  the
proceeds of the
redemption  of  shares  of  a  mutual  fund  which  (i)  was
sponsored by the Financial
Consultant's prior employer, (ii) was sold to the client  by
the Financial Con-
sultant  and  (iii)  was  subject to  a  sales  charge;  (d)
shareholders who have
redeemed  Class A shares in the Fund (or Class A  shares  of
another Smith Barney
Mutual Fund that is offered with a sales charge equal to  or
greater than the
maximum  sales charge of the Fund) and who wish to  reinvest
their redemption
proceeds  in  the  Fund, provided the reinvestment  is  made
within 60 calendar days
of  the  redemption;  (e)  accounts  managed  by  registered
investment advisory sub-
sidiaries of Travelers; and (f) investments of distributions
from a UIT spon-
sored  by  Smith Barney. In order to obtain such  discounts,
the purchaser must
provide  sufficient information at the time of  purchase  to
permit verification
that  the purchase would qualify for the elimination of  the
sales charge.     


21
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)


 RIGHT OF ACCUMULATION

   Class  A  shares  of the Fund may be  purchased  by  "any
person" (as defined
above)  at  a  reduced sales charge or at  net  asset  value
determined by aggregat-
ing  the dollar amount of the new purchase and the total net
asset value of all
Class  A shares of the Fund and of funds sponsored by  Smith
Barney which are
offered   with   a  sales  charge  listed  under   "Exchange
Privilege" then held by
such person and applying the sales charge applicable to such
aggregate. In
order  to  obtain such discount, the purchaser must  provide
sufficient informa-
tion at the time of purchase to permit verification that the
purchase quali-
fies for the reduced sales charge. The right of accumulation
is subject to
modification or discontinuance at any time with  respect  to
all shares pur-
chased thereafter.

 GROUP PURCHASES

   Upon  completion of certain automated systems, a  reduced
sales charge or pur-
chase at net asset value will also be available to employees
(and partners) of
the  same  employer  purchasing as a  group,  provided  each
participant makes the
minimum  initial  investment  required.  The  sales   charge
applicable to purchases
by  each  member of such a group will be determined  by  the
table set forth above
under  "Initial Sales Charge Alternative -- Class A Shares,"
and will be based
upon  the  aggregate sales of Class A shares  of  the  Smith
Barney Mutual Funds
offered  with a sales charge to, and share holdings of,  all
members of the
group. To be eligible for such reduced sales charges  or  to
purchase at net
asset  value, all purchases must be pursuant to an employer-
or partnership-
sanctioned  plan  meeting  certain  requirements.  One  such
requirement is that the
plan must be open to specified partners or employees of  the
employer and its
subsidiaries, if any. Such plan may, but is not required to,
provide for pay-
roll  deductions, IRAs or investments pursuant to retirement
plans under Sec-
tions 401 or 408 of the Code. Smith Barney may also offer  a
reduced sales
charge  or net asset value purchase for aggregating  related
fiduciary accounts
under   such  conditions  that  Smith  Barney  will  realize
economies of sales
efforts and sales related expenses. An individual who  is  a
member of a quali-
fied  group may also purchase Class A shares at the  reduced
sales charge appli-
cable  to  the group as a whole. The sales charge  is  based
upon the aggregate
dollar  value of Class A shares offered with a sales  charge
that have been pre-
viously purchased and are still owned by the group, plus the
amount of the
current  purchase. A "qualified group" is one which (a)  has
been in existence
for  more  than  six  months, (b) has a purpose  other  than
acquiring Fund shares
at  a  discount  and  (c) satisfies uniform  criteria  which
enable Smith Barney to
realize economies of scale in its costs of distribut-

22
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)

ing  shares.  A  qualified group  must  have  more  than  10
members, must be available
to arrange for group meetings between representatives of the
Fund and the mem-
bers,  and  must agree to include sales and other  materials
related to the Fund
in  its  publications and mailings to members at no cost  to
Smith Barney. In
order to obtain such reduced sales charge or to purchase  at
net asset value,
the  purchaser  must provide sufficient information  at  the
time of purchase to
permit  verification  that the purchase  qualifies  for  the
reduced sales charge.
Approval  of  group purchase reduced sales charge  plans  is
subject to the discre-
tion of Smith Barney.

 LETTER OF INTENT
   
   Class A Shares. A Letter of Intent for amounts of $50,000
or more provides an
opportunity for an investor to obtain a reduced sales charge
by aggregating
investments  over  a  13  month period,  provided  that  the
investor refers to such
Letter  when  placing orders. For purposes of  a  Letter  of
Intent, the "Amount of
Investment"  as  referred to in the preceding  sales  charge
table includes pur-
chases  of  all Class A shares of the Fund and  other  Smith
Barney Mutual Funds
offered  with a sales charge over the 13 month period  based
on the total amount
of  intended purchases plus the value of all Class A  shares
previously purchased
and  still owned. An alternative is to compute the 13  month
period starting up
to  90  days  before the date of execution of  a  Letter  of
Intent. Each investment
made  during  the period receives the reduced  sales  charge
applicable to the
total  amount  of the investment goal. If the  goal  is  not
achieved within the
period,  the  investor must pay the difference  between  the
sales charges applica-
ble  to the purchases made and the charges previously  paid,
or an appropriate
number of escrowed shares will be redeemed. Please contact a
Smith Barney
Financial  Consultant  or the Transfer  Agent  to  obtain  a
Letter of Intent appli-
cation.     
   
   Class Y Shares. A Letter of Intent may also be used as  a
way for investors to
meet  the minimum investment requirement for Class Y shares.
Such investors must
make  an  initial minimum purchase of $1,000,000 in Class  Y
shares of the Fund
and  agree  to  purchase a total of $5,000,000  of  Class  Y
shares of the Fund
within  six months from the date of the Letter. If  a  total
investment of
$5,000,000  is  not  made within the six-month  period,  all
Class Y shares pur-
chased to date will be transferred to Class A shares,  where
they will be sub-
ject  to  all  fees (including a service fee of  0.25%)  and
expenses applicable to
the  Fund's  Class  A shares, which may include  a  CDSC  of
1.00%. The Fund expects
that  such  transfer will not be subject to  Federal  income
taxes. Please contact
a  Smith  Barney Financial Consultant or the Transfer  Agent
for further informa-
tion.     


23
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)


 DEFERRED SALES CHARGE ALTERNATIVES

   "CDSC  Shares"  are  sold at the  net  asset  value  next
determined without an
initial  sales  charge  so  that  the  full  amount  of   an
investor's purchase payment
may  be  immediately invested in the Fund. A CDSC,  however,
may be imposed on
certain  redemptions of these shares. CDSC Shares  are:  (a)
Class B shares;
(b)  Class  C  shares; and (c) Class A  shares  which,  when
combined with Class A
shares  offered  with a sales charge currently  held  by  an
investor, equal or
exceed $500,000 in the aggregate.

  Any applicable CDSC will be assessed on an amount equal to
the lesser of the
cost  of the shares being redeemed or their net asset  value
at the time of
redemption.  CDSC  Shares  that are  redeemed  will  not  be
subject to a CDSC to the
extent that the value of such shares represents: (a) capital
appreciation of
Fund  assets; (b) reinvestment of dividends or capital  gain
distributions; (c)
with  respect to Class B shares, shares redeemed  more  than
five years after
their  purchase; or (d) with respect to Class C  shares  and
Class A shares that
are  CDSC Shares, shares redeemed more than 12 months  after
their purchase.

  Class C shares and Class A shares that are CDSC Shares are
subject to a
1.00%  CDSC  if  redeemed within 12 months of  purchase.  In
circumstances in which
the  CDSC  is imposed on Class B shares, the amount  of  the
charge will depend on
the  number of years since the shareholder made the purchase
payment from which
the  amount  is  being  redeemed.  Solely  for  purposes  of
determining the number of
years  since a purchase payment, all purchase payments  made
during a month will
be  aggregated and deemed to have been made on the last  day
of the preceding
Smith Barney statement month. The following table sets forth
the rates of the
charge  for  redemptions of Class B shares by  shareholders,
except in the case
of purchases by Participating Plans, as described below. See
"Purchase of
Shares -- Smith Barney 401(k) Program."

<TABLE>        
<CAPTION>
      YEAR SINCE PURCHASE
      PAYMENT WAS MADE      CDSC
---------------------------------
      <S>                   <C>
      First                 5.00%
      Second                4.00
      Third                 3.00
      Fourth                2.00
      Fifth                 1.00
      Sixth and thereafter  0.00
---------------------------------
</TABLE>    
   
   Class  B  shares will convert automatically  to  Class  A
shares eight years
after  the  date on which they were purchased and thereafter
will no longer be
subject     

24
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)

to  any  distribution fees. There also will be converted  at
that time such pro-
portion  of Class B Dividend Shares owned by the shareholder
as the total number
of his or her Class B shares converting at the time bears to
the total number
of  outstanding Class B shares (other than Class B  Dividend
Shares) owned by the
shareholder. Shareholders who held Class B shares  of  Smith
Barney Shearson
Short-Term  World Income Fund (the "Short-Term World  Income
Fund") on July 15,
1994 and who subsequently exchange those shares for Class  B
shares of the Fund
will be offered the opportunity to exchange all such Class B
shares for Class A
shares of the Fund four years after the date on which  those
shares were deemed
to  have been purchased. Holders of such Class B shares will
be notified of the
pending exchange in writing approximately 30 days before the
fourth anniversary
of  the  purchase  date and, unless the  exchange  has  been
rejected in writing, the
exchange will occur on or about the fourth anniversary date.
See "Prospectus
Summary  --  Alternative Purchase Arrangements --   Class  B
Shares Conversion Fea-
ture."  The length of time that CDSC Shares acquired through
an exchange have
been  held will be calculated from the date that the  shares
exchanged were ini-
tially  acquired in one of the other applicable Smith Barney
Mutual Funds, and
Fund  shares being redeemed will be considered to represent,
as applicable, cap-
ital  appreciation or dividend and capital gain distribution
reinvestments in
such  other  funds.  For Federal income  tax  purposes,  the
amount of the CDSC will
reduce the gain or increase the loss, as the case may be, on
the amount real-
ized  on redemption. The amount of any CDSC will be paid  to
Smith Barney.

   To  provide an example, assume an investor purchased  100
Class B shares at $10
per  share for a cost of $1,000. Subsequently, the  investor
acquired 5 addi-
tional  shares  through  dividend reinvestment.  During  the
fifteenth month after
the purchase, the investor decided to redeem $500 of his  or
her investment.
Assuming  at the time of the redemption the net asset  value
had appreciated to
$12  per share, the value of the investor's shares would  be
$1,260 (105 shares
at  $12  per  share). The CDSC would not be applied  to  the
amount which represents
appreciation ($200) and the value of the reinvested dividend
shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500  minus
$260) would be
charged at a rate of 4.00% (the applicable rate for Class  B
shares) for a total
deferred sales charge of $9.60.

 WAIVERS OF CDSC

   The  CDSC will be waived on: (a) exchanges (see "Exchange
Privilege"); (b) au-
tomatic  cash withdrawals in amounts equal to or  less  than
1.00% per


25
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)
   
month  of the value of the shareholder's shares at the  time
the withdrawal plan
commences  (see "Automatic Cash Withdrawal Plan") (provided,
however, that auto-
matic  cash  withdrawals in amounts equal to  or  less  than
2.00% per month of the
value  of  the  shareholder's shares will be  permitted  for
withdrawal plans that
were established prior to November 7, 1994); (c) redemptions
of shares within
12   months  following  the  death  or  disability  of   the
shareholder; (d) redemptions
of  shares  made in connection with qualified  distributions
from retirement plans
or  IRAs  upon the attainment of age 59 1/2; (e) involuntary
redemptions; and (f)
redemptions  of  shares in connection with a combination  of
the Fund with any
investment  company  by  merger, acquisition  of  assets  or
otherwise. In addition,
a  shareholder  who  has redeemed shares  from  other  Smith
Barney Mutual Funds may,
under  certain circumstances, reinvest all or  part  of  the
redemption proceeds
within  60  days and receive pro rata credit  for  any  CDSC
imposed on the prior
redemption.     
   
   CDSC waivers will be granted subject to confirmation  (by
Smith Barney in the
case of shareholders who are also Smith Barney clients or by
the Transfer Agent
in  the case of all other shareholders) of the shareholder's
status or holdings,
as the case may be.     

 SMITH BARNEY 401(K) PROGRAM

   Investors  may be eligible to participate  in  the  Smith
Barney 401(k) Program,
which  is generally designed to assist plan sponsors in  the
creation and opera-
tion  of retirement plans under Section 401(a) of the  Code.
To the extent appli-
cable,  the  same terms and conditions are  offered  to  all
Participating Plans in
the Smith Barney 401(k) Program.

   The Fund offers to Participating Plans Class A, Class  B,
Class C and Class Y
shares  as  investment alternatives under the  Smith  Barney
401(k) Program.
Class  A,  Class B and Class C shares acquired  through  the
Smith Barney 401(k)
Program  are subject to the same service and/or distribution
fees as, but dif-
ferent  sales charge and CDSC schedules than, the  Class  A,
Class B and Class C
shares  acquired  by  other  investors.  Similar  to   those
available to other invest-
ors, Class Y shares acquired through the Smith Barney 401(k)
Program are not
subject  to  any initial sales charge, CDSC  or  service  or
distribution fee. Once
a  Participating Plan has made an initial investment in  the
Fund, all of its
subsequent investments in the Fund must be in the same Class
of shares, except
as otherwise described below.

26
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)
   
   Class  A  Shares. Class A shares of the Fund are  offered
without any initial
sales  charge to any Participating Plan that purchases  from
$500,000 to
$4,999,999  of Class A shares of one or more  of  the  Smith
Barney Mutual Funds.
Class  A  shares  acquired through the Smith  Barney  401(k)
Program after November
7,  1994  are  subject  to  a CDSC of  1.00%  of  redemption
proceeds if the Partici-
pating  Plan  terminates within four years of the  date  the
Participating Plan
first enrolled in the Smith Barney 401(k) Program.     
   
   Class B Shares. Class B shares of the Fund are offered to
any Participating
Plan that purchases less than $250,000 of one or more of the
Smith Barney
Mutual  Funds.  Class B shares acquired  through  the  Smith
Barney 401(k) Program
are subject to a CDSC of 3.00% of redemption proceeds if the
Participating Plan
terminates  within eight years of the date the Participating
Plan first enrolled
in  the  Smith Barney 401(k) Program. Eight years after  the
date the Participat-
ing  Plan  enrolled in the Smith Barney 401(k)  Program,  it
will be offered the
opportunity to exchange all of its Class B shares for  Class
A shares of the
Fund. Such Plans will be notified of the pending exchange in
writing approxi-
mately  60  days  before  the  eighth  anniversary  of   the
enrollment date and, unless
the exchange has been rejected in writing, the exchange will
occur on or about
the eighth anniversary date. Once the exchange has occurred,
a Participating
Plan  will  not  be eligible to acquire additional  Class  B
shares of the Fund but
instead  may  acquire Class A shares of  the  Fund.  If  the
Participating Plan
elects  not  to exchange all of its Class B shares  at  that
time, each Class B
share  held  by  the Participating Plan will have  the  same
conversion feature as
Class  B  shares held by other investors. See  "Purchase  of
Shares -- Deferred
Sales Charge Alternatives."     
   
   Class C Shares. Class C shares of the Fund are offered to
any Participating
Plan  that invests from $250,000 to $499,999 in one or  more
Smith Barney Mutual
Funds.  Class  C  shares acquired through the  Smith  Barney
401(k) Program after
November  7,  1994  are  subject  to  a  CDSC  of  1.00%  of
redemption proceeds if the
Participating Plan terminates within four years of the  date
the Participating
Plan  first enrolled in the Smith Barney 401(k) Program.  In
any year after the
date  a  Participating Plan enrolled  in  the  Smith  Barney
401(k) Program, if its
total  Class C holdings equal at least $500,000  as  of  the
calendar year-end, the
Participating  Plan  will  be  offered  the  opportunity  to
exchange all of its Class
C  shares for Class A shares of the Fund. Such Plans will be
notified in writing
within  30 days after the last business day of the  calendar
year, and unless the
exchange  offer has been rejected in writing,  the  exchange
will occur on or
about the last business day of the following March. Once the
exchange has
occurred,  a  Participating Plan will  not  be  eligible  to
acquire Class C shares
    

27
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

PURCHASE OF SHARES (CONTINUED)

of  the  Fund but instead may acquire Class A shares of  the
Fund. Class C shares
not   converted   will  continue  to  be  subject   to   the
distribution fee.
   
   Class  Y  Shares. Class Y shares of the Fund are  offered
without any service
or   distribution  fees,  sales  charge  or  CDSC   to   any
Participating Plan that pur-
chases  $5,000,000 or more of Class Y shares of one or  more
of the Smith Bar-
ney Mutual Funds.     
   
   Whether  or not the CDSC applies to a Participating  Plan
depends on the num-
ber  of  years  since the Participating  Plan  first  became
enrolled in the Smith
Barney 401(k) Program, unlike the applicability of the  CDSC
to other share-
holders,  which depends on the number of years  since  those
shareholders made
the   purchase  payment  for  the  shares  which  are  being
redeemed. Where applica-
ble,  the  CDSC will be assessed on shares held through  the
Smith Barney 401(k)
Program  on  an amount equal to the lesser of  the  original
cost of the shares
being  redeemed  or their net asset value  at  the  time  of
redemption; provided,
however,  that shares will not be subject to a CDSC  to  the
extent that the
value of such shares represents capital appreciation of Fund
assets and/or
reinvestments of dividends or capital gain distributions. In
addition, the
CDSC  will  be  waived  on redemptions  of  CDSC  Shares  in
connection with lump-sum
or  other  distributions made by a Participating Plan  as  a
result of: (a) the
retirement of an employee in the Participating Plan; (b) the
termination of
employment of an employee in the Participating Plan; (c) the
death or disabil-
ity  of  an  employee  in the Participating  Plan;  (d)  the
attainment of age 59 1/2
by an employee in the Participating Plan; (e) hardship of an
employee in the
Participating  Plan  to the extent permitted  under  Section
401(k) of the Code;
or  (f) redemptions of shares in connection with a loan made
by the Participat-
ing Plan to an employee.     
   
   Participating Plans wishing to acquire shares of the Fund
through the
Smith  Barney  401(k)  Program  must  purchase  such  shares
directly from the Trans-
fer  Agent.  For  further information  regarding  the  Smith
Barney 401(k) Program,
investors   should   contact  a   Smith   Barney   Financial
Consultant.     

28
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

EXCHANGE PRIVILEGE
   
   Except as otherwise noted below, shares of each Class may
be exchanged at the
net asset value next determined for shares of the same Class
in the following
Smith  Barney Mutual Funds, to the extent shares are offered
for sale in the
shareholder's  state  of residence. Exchanges  of  Class  A,
Class B and Class C
shares  are  subject to minimum investment requirements  and
all shares are sub-
ject  to  the  other  requirements of the  fund  into  which
exchanges are made and a
sales charge differential may apply.     

 FUND NAME

  Growth Funds

  Smith Barney Aggressive Growth Fund Inc.
  Smith Barney Fundamental Value Fund Inc.
  Smith Barney Growth Opportunity Fund
  Smith Barney Managed Growth Fund
     
  Smith Barney Natural Resources Fund Inc.     
  Smith Barney Special Equities Fund
  Smith Barney Telecommunications Growth Fund

  Growth and Income Funds

  Smith Barney Convertible Fund
     
  Smith Barney Funds, Inc. -- Equity Income Portfolio     
       
  Smith Barney Growth and Income Fund
  Smith Barney Premium Total Return Fund
  Smith Barney Strategic Investors Fund
  Smith Barney Utilities Fund

  Taxable Fixed-Income Funds

 **Smith Barney Adjustable Rate Government Income Fund
   Smith Barney Diversified Strategic Income Fund
   *Smith  Barney  Funds,  Inc.  --  Income  Return  Account
Portfolio
       
+++Smith  Barney  Funds,  Inc. -- Short-Term  U.S.  Treasury
Securities Portfolio
    Smith  Barney Funds, Inc. -- U.S. Government  Securities
Portfolio
   Smith Barney Government Securities Fund


29
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

EXCHANGE PRIVILEGE (CONTINUED)

  Smith Barney High Income Fund
  Smith Barney Investment Grade Bond Fund
  Smith Barney Managed Governments Fund Inc.

  Tax-Exempt Funds

  Smith Barney Arizona Municipals Fund Inc.
  Smith Barney California Municipals Fund Inc.
       
   *Smith Barney Intermediate Maturity California Municipals
Fund
   *Smith  Barney Intermediate Maturity New York  Municipals
Fund
       
   Smith Barney Managed Municipals Fund Inc.
   Smith Barney Massachusetts Municipals Fund
       
  *Smith Barney Muni Funds -- Florida Limited Term Portfolio
   Smith Barney Muni Funds -- Florida Portfolio
   Smith Barney Muni Funds -- Georgia Portfolio
  *Smith Barney Muni Funds -- Limited Term Portfolio
   Smith Barney Muni Funds -- National Portfolio
       
   Smith Barney Muni Funds -- New York Portfolio
   Smith Barney Muni Funds -- Ohio Portfolio
   Smith Barney Muni Funds -- Pennsylvania Portfolio
   Smith Barney New Jersey Municipals Fund Inc.
       
   Smith Barney Oregon Municipals Fund
   Smith Barney Tax-Exempt Income Fund

  International Funds
     
    Smith  Barney  World  Funds, Inc.  --  Emerging  Markets
Portfolio     
   Smith Barney World Funds, Inc. -- European Portfolio
    Smith Barney World Funds, Inc. -- Global Government Bond
Portfolio
    Smith Barney World Funds, Inc. -- International Balanced
Portfolio
    Smith  Barney World Funds, Inc. -- International  Equity
Portfolio
   Smith Barney World Funds, Inc. -- Pacific Portfolio
     
   Smith Barney Concert Series Inc.     
     
   Smith Barney Concert Series Inc. -- High Growth Portfolio
    

30
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

EXCHANGE PRIVILEGE (CONTINUED)
     
   Smith Barney Concert Series Inc. -- Growth Portfolio     
     
    Smith  Barney Concert Series Inc. -- Balanced  Portfolio
    
     
     Smith   Barney  Concert  Series  Inc.  --  Conservative
Portfolio     
     
   Smith Barney Concert Series Inc. -- Income Portfolio     

  Money Market Funds

  +Smith Barney Exchange Reserve Fund
 ++Smith Barney Money Funds, Inc. -- Cash Portfolio
 ++Smith Barney Money Funds, Inc. -- Government Portfolio
***Smith Barney Money Funds, Inc. -- Retirement Portfolio
+++Smith  Barney  Muni  Funds  --  California  Money  Market
Portfolio
+++Smith  Barney  Muni  Funds  --  New  York  Money   Market
Portfolio
+++Smith Barney Municipal Money Market Fund, Inc.
------------------------------------------------------------
-------------------
  * Available for exchange with Class A, Class C and Class Y
shares of the
    Fund.
 ** Available for exchange with Class A, Class B and Class Y
shares of the
     Fund.  In addition, shareholders who own Class C shares
of the Fund through
     the  Smith  Barney  401(k) Program may  exchange  those
shares for Class C
    shares of this Fund.
*** Available for exchange with Class A shares of the Fund.
   +  Available for exchange with Class B and Class C shares
of the Fund.
  ++  Available for exchange with Class A and Class Y shares
of the Fund. In
     addition,  shareholders who own Class C shares  of  the
Fund through the
     Smith  Barney 401(k) Program may exchange those  shares
for Class C shares
    of this fund.
+++  Available for exchange with Class A and Class Y  shares
of the Fund.

   Class  A  Exchanges. Class A shares of the  Smith  Barney
Mutual Funds sold
without  a  sales charge or with a maximum sales  charge  of
less than the maximum
charged  by other Smith Barney Mutual Funds will be  subject
to the appropriate
"sales charge differential" upon the exchange of such shares
for Class A
shares of a fund sold with a higher sales charge. The "sales
charge differen-
tial"  is  limited to a percentage rate no greater than  the
excess of the sales
charge  rate applicable to purchases of shares of the mutual
fund being
acquired  in  the  exchange over the  sales  charge  rate(s)
actually paid on the
mutual  fund shares relinquished in the exchange and on  any
predecessor of
those shares. For purposes of the exchange privilege, shares
obtained through
automatic   reinvestment  of  dividends  and  capital   gain
distributions are treated
as  having  paid  the same sales charges applicable  to  the
shares on which the
dividends or distributions were paid; however, except in the
case of the Smith
Barney  401(k) Program, if no sales charge was imposed  upon
the initial pur-
chase of the shares,


31
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

EXCHANGE PRIVILEGE (CONTINUED)

any  shares obtained through automatic reinvestment will  be
subject to a sales
charge differential upon exchange.

   Class  B  Exchanges. In the event a Class  B  shareholder
(unless such share-
holder  was  a  Class B shareholder of the Short-Term  World
Income Fund on July
15,  1994) wishes to exchange all or a portion of his or her
shares in any of
the  funds imposing a higher CDSC than that imposed  by  the
Fund, the exchanged
Class  B  shares  will be subject to the  higher  applicable
CDSC. Upon an exchange,
the new Class B shares will be deemed to have been purchased
on the same date
as the Class B shares of the fund that have been exchanged.

   Class  C  Exchanges. Upon an exchange, the  new  Class  C
shares will be deemed to
have  been purchased on the same date as the Class C  shares
of the fund that
have been exchanged.

   Class  Y Exchanges. Class Y shareholders of the Fund  who
wish to exchange all
or  a portion of their Class Y shares for Class Y shares  in
any of the funds
identified above may do so without imposition of any charge.
   
   Additional Information Regarding the Exchange  Privilege.
Although the
exchange   privilege  is  an  important  benefit,  excessive
exchange transactions can
be   detrimental   to   the  Fund's  performance   and   its
shareholders. SBMFM may deter-
mine  that a pattern of frequent exchanges is excessive  and
contrary to the best
interests  of the Fund's other shareholders. In this  event,
the Fund may, at its
discretion,  decide  to  limit additional  purchases  and/or
exchanges by a share-
holder.  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 main-
tain  for a significant period of time. All relevant factors
will be considered
in  determining  what  constitutes  an  abusive  pattern  of
exchanges.     
   
   Certain  shareholders may be able to exchange  shares  by
telephone.
See""Redemption of Shares--Telephone Redemption and Exchange
Program."
Exchanges  will  be processed at the net  asset  value  next
determined, plus any
applicable  sales charge differential. Redemption procedures
discussed below are
also applicable for exchanging shares, and exchanges will be
made upon receipt
of  all  supporting documents in proper form. If the account
registration of the
shares  of  the  fund  being acquired is  identical  to  the
registration of the
shares of     

32
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

EXCHANGE PRIVILEGE (CONTINUED)

the  fund  exchanged, no signature guarantee is required.  A
capital gain or loss
for  tax  purposes  will  be  realized  upon  the  exchange,
depending upon the cost or
other  basis  of shares redeemed. Before exchanging  shares,
investors should read
the current prospectus describing the shares to be acquired.
The Fund reserves
the  right to modify or discontinue exchange privileges upon
60 days' prior
notice to shareholders.

REDEMPTION OF SHARES
   
   The Fund is required to redeem shares tendered to it,  as
described below, at
a  redemption price equal to their net asset value per share
next determined
after  receipt  of a written request in proper  form  at  no
charge other than any
applicable  CDSC.  Redemption requests  received  after  the
close of regular trad-
ing  on  the  NYSE  are priced at the net asset  value  next
determined.     
   
   If a shareholder holds shares in more than one Class, any
request for redemp-
tion must specify the Class being redeemed. In the event  of
a failure to spec-
ify which Class, or if the investor owns fewer shares of the
Class than speci-
fied,  the  redemption  request will be  delayed  until  the
Transfer Agent receives
further   instructions  from  Smith  Barney,   or   if   the
shareholder's account is not
with  Smith  Barney,  from  the  shareholder  directly.  The
redemption proceeds will
be  remitted  on or before the third business day  following
receipt of proper
tender, except on any days on which the NYSE is closed or as
permitted under
the  Investment Company Act of 1940, as amended  (the  "1940
Act"), in extraordi-
nary  circumstances.  Generally, if the redemption  proceeds
are remitted to a
Smith  Barney  brokerage account, these funds  will  not  be
invested for the share-
holder's  benefit  without specific instruction,  and  Smith
Barney will benefit
from  the  use  of temporarily uninvested funds.  Redemption
proceeds for shares
purchased by check, other than a certified or official  bank
check, will be
remitted upon clearance of the check, which may take  up  to
ten days or more.
    
   Shares held by Smith Barney as custodian must be redeemed
by submitting
a  written  request to a Smith Barney Financial  Consultant.
Shares other than
those  held  by  Smith Barney as custodian may  be  redeemed
through an invest-


33
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

REDEMPTION OF SHARES (CONTINUED)

or's  Financial Consultant, Introducing Broker or dealer  in
the selling group or
by submitting a written request for redemption to:
        
     Smith Barney Appreciation Fund Inc.
     Class A, B, C or Y (please specify)
     c/o First Data Investor Services Group, Inc.     
     P.O. Box 9134
     Boston, Massachusetts 02205-9134
   
   A written redemption request must (a) state the Class and
number or dollar
amount   of   shares  to  be  redeemed,  (b)  identify   the
shareholder's account number
and  (c) be signed by each registered owner exactly  as  the
shares are regis-
tered.  If  the  shares  to  be  redeemed  were  issued   in
certificate form, the cer-
tificates  must be endorsed for transfer (or be  accompanied
by an endorsed stock
power)  and must be submitted to the Transfer Agent together
with the redemption
request.  Any  signature appearing on a redemption  request,
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 member firm of a national
securities exchange.
The   Transfer  Agent  may  require  additional   supporting
documents for redemptions
made by corporations, executors, administrators, trustees or
guardians. A
redemption  request  will  not be deemed  properly  received
until the Transfer
Agent receives all required documents in proper form.     
    
  TELEPHONE REDEMPTION AND EXCHANGE PROGRAM FOR SHAREHOLDERS
WHO DO NOT HAVE A
 SMITH BARNEY BROKERAGE ACCOUNT     
   
   Certain  shareholders  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 the Transfer  Agent  at
(800) 451-2010. Once
eligibility is confirmed, the shareholder must complete  and
return a Telephone/
Wire  Authorization  Form, including a signature  guarantee,
that will be provided
by  the  Transfer  Agent  upon request.  (Alternatively,  an
investor may authorize
telephone redemptions on the new account application with  a
signature guarantee
when making his/her initial investment in the Fund.)     
   
   Redemptions. Redemption requests of up to $10,000 of  any
class or classes of
the  Fund's  shares may be made by eligible shareholders  by
calling the Transfer
Agent  at  (800) 451-2010. Such request may be made  between
9:00 a.m. and 4:00
p.m.  (New  York  City time) on any day the  NYSE  is  open.
Redemptions of     

34
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     
   
REDEMPTION OF SHARES (CONTINUED)     
   
shares   (i)   by  retirement  plans  or  (ii)   for   which
certificates have been issued
are not permitted under this program.     
   
    A  shareholder  will  have  the  option  of  having  the
redemption proceeds mailed
to  his/her  address of record or wired to  a  bank  account
predesignated by the
shareholder. Generally, redemption proceeds will  be  mailed
or wired, as the
case  may  be,  on  the  next  business  day  following  the
redemption request. In
order  to  use  the wire procedures, the bank receiving  the
proceeds must be a
member of the Federal Reserve System or have a correspondent
relationship with
a  member  bank.  The  Fund reserves  the  right  to  charge
shareholders a nominal fee
for  each  wire redemption. Such charges, if  any,  will  be
assessed against the
shareholder's  account from which shares were  redeemed.  In
order to change the
bank  account designated to receive redemption  proceeds,  a
shareholder must com-
plete  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 fund being acquired is identical
to the registra-
tion  of  the  shares of the fund exchanged.  Such  exchange
requests may be made by
calling  the  Transfer Agent at (800) 451-2010 between  9:00
a.m. and 4:00 p.m.
(New York City time) on any day the NYSE is open.     
   
   Additional Information regarding Telephone Redemption and
Exchange
Program. Neither the Fund nor its agents will be liable  for
following instruc-
tions communicated by telephone that are reasonably believed
to be genuine. The
Fund  and  its  agents  will employ procedures  designed  to
verify the identity of
the  caller  and legitimacy of instructions (for example,  a
shareholder's name
and  account number will be required and phone calls may  be
recorded). The Fund
reserves  the  right to suspend, modify or  discontinue  the
telephone redemption
and  exchange program or to impose a charge for this service
at any time follow-
ing  at  least seven (7) days' prior notice to shareholders.
    

 AUTOMATIC CASH WITHDRAWAL PLAN

   The Fund offers shareholders an automatic cash withdrawal
plan, under which
shareholders who own shares with a value of at least $10,000
may elect to
receive  cash payments of at least $50 monthly or quarterly.
Retirement plan
accounts  are  eligible for automatic cash withdrawal  plans
only where the share-
holder  is  eligible to receive qualified distributions  and
has an account value
of at least $5,000. The withdrawal plan will be carried over
on exchanges
between


35
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     
   
REDEMPTION OF SHARES (CONTINUED)     

funds  or Classes of the Fund. Any applicable CDSC will  not
be waived on amounts
withdrawn  by a shareholder that exceed 1.00% per  month  of
the value of the
shareholder's  shares subject to the CDSC at  the  time  the
withdrawal plan com-
mences. (With respect to withdrawal plans in effect prior to
November 7, 1994,
any applicable CDSC will be waived on amounts withdrawn that
do not exceed
2.00%  per month of the shareholder's shares subject to  the
CDSC.) For further
information  regarding the automatic cash  withdrawal  plan,
shareholders should
contact a Smith Barney Financial Consultant.
   
MINIMUM ACCOUNT SIZE     
   
  The Fund reserves the right to involuntarily liquidate any
shareholder's
account in the Fund if the aggregate net asset value of  the
shares held in the
Fund  account is less than $500. (If a shareholder has  more
than one account in
the  Fund,  each  account must satisfy the  minimum  account
size.) The Fund, howev-
er, will not redeem shares based solely on market reductions
in net asset val-
ue.  Before the Fund exercises such right, shareholders will
receive written
notice and will be permitted 60 days to bring accounts up to
the minimum to
avoid automatic redemption.     

PERFORMANCE


   From time to time, the Fund may include its total return,
average annual
total  return  and current dividend return in advertisements
and/or other types
of  sales  literature. These figures are computed separately
for Class A, Class
B, Class C and Class Y shares of the Fund. These figures are
based on histori-
cal  earnings  and  are  not  intended  to  indicate  future
performance. Total return
is   computed  for  a  specified  period  of  time  assuming
deduction of the maximum
sales  charge, if any, from the initial amount invested  and
reinvestment of all
income  dividends  and  capital gain  distributions  on  the
reinvestment dates at
prices  calculated  as  stated  in  this  Prospectus,   then
dividing the value of the
investment  at  the end of the period so calculated  by  the
initial amount
invested  and subtracting 100%. The standard average  annual
total return, as
prescribed  by  the SEC, is derived from this total  return,
which provides the
ending   redeemable  value.  Such  standard   total   return
information may also be
accompanied  with nonstandard total return  information  for
differing periods
computed  in  the  same manner but without  annualizing  the
total return or taking
sales  charges  into  account. The Fund  calculates  current
dividend return for
each   Class   by   annualizing  the  most  recent   monthly
distribution and dividing by
the net asset value or the maximum public

36
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     
   
PERFORMANCE (CONTINUED)     
   
offering price (including sales charge) on the last  day  of
the period for
which  current  dividend  return is presented.  The  current
dividend return for
each  Class may vary from time to time depending  on  market
conditions, the com-
position of its investment portfolio and operating expenses.
These factors and
possible  differences  in the methods  used  in  calculating
current dividend
return  should be considered when comparing a Class' current
return to yields
published   for   other  investment  companies   and   other
investment vehicles. The
Fund may also include comparative performance information in
advertising or
marketing  its  shares.  Such  performance  information  may
include data from
Lipper   Analytical  Services,  Inc.  and  other   financial
publications.     
   
MANAGEMENT OF THE FUND     


 BOARD OF DIRECTORS
   
   Overall responsibility for the management and supervision
of the Fund rests
with  the  Fund's Board of Directors. The Directors  approve
all significant
agreements  between the Fund and the companies that  furnish
services to the
Fund,  including  agreements with  the  Fund's  distributor,
investment adviser and
administrator, custodian and transfer agent. The  day-to-day
operations of the
Fund  are  delegated  to the Fund's investment  adviser  and
administrator. The
Statement  of  Additional  Information  contains  background
information regarding
each Director and executive officer of the Fund.     
    
 INVESTMENT ADVISER AND ADMINISTRATOR -- SBMFM     
   
   The  Fund's  investment adviser, SBMFM, is  a  registered
investment adviser
whose  principal  executive  offices  are  located  at   388
Greenwich Street,
New  York,  New  York 10013. SBMFM (through its  predecessor
entities) has been in
the  investment counseling business since 1940  and  renders
investment advice to
a  wide  variety of individual, institutional and investment
company clients
that had aggregate assets under management as of January 31,
1996 in excess of
$74 billion.     

   Subject  to the supervision and direction of  the  Fund's
Board of Directors,
SBMFM  manages the Fund's portfolio in accordance  with  the
Fund's stated
investment   objective   and  policies,   makes   investment
decisions for the Fund,
places  orders to purchase and sell securities, and  employs
professional port-
folio  managers and securities analysts who provide research
services to the
Fund.


37
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

MANAGEMENT OF THE FUND (CONTINUED)
   
   Investment  advisory  fees are computed  daily  and  paid
monthly at the follow-
ing  annual  rates of the Fund's average daily  net  assets:
0.55% up to $250 mil-
lion;  0.513% of the next $250 million; 0.476% of  the  next
$500 million; 0.439%
of  the next $1 billion; 0.402% of the next $1 billion;  and
0.365% of net
assets  in  excess of $3 billion. For the fiscal year  ended
December 31, 1995,
the  Fund  paid investment advisory fees equal to 0.453%  of
the value of the
average daily net assets of the Fund.     
   
  Administration fees are computed daily and paid monthly at
the following
annual  rates of the Fund's average daily net assets:  0.20%
up to $250 million;
0.187%  of  the next $250 million; 0.174% of the  next  $500
million; 0.161% of
the  next  $1  billion; 0.148% of the next $1  billion;  and
0.135% of net assets
in  excess of $3 billion. For the fiscal year ended December
31, 1995, the Fund
paid administration fees equal to 0.166% of the value of the
average daily net
assets of the Fund. For the Fund's most recent fiscal  year,
total operating
expenses were 1.02%, 1.77% and 1.77% for Class A,  B  and  C
shares, respective-
ly.     

 PORTFOLIO MANAGEMENT

   Harry D. Cohen, Vice President and Investment Officer  of
the Fund, is pri-
marily responsible for management of the Fund's assets.  Mr.
Cohen has served
in this capacity since January 1979, and manages the day-to-
day operations of
the Fund, including making all investment decisions.
   
    Management's  discussion  and  analysis  and  additional
performance information
regarding the Fund during the fiscal year ended December 31,
1995 is included
in  the Annual Report dated December 31, 1995. A copy of the
Annual Report may
be  obtained  upon request and without charge from  a  Smith
Barney Financial Con-
sultant or by writing or calling the Fund at the address  or
phone number
listed on page one of this Prospectus.     
       
DISTRIBUTOR


  Smith Barney is located at 388 Greenwich Street, New York,
New York 10013.
Smith  Barney  distributes shares of the Fund  as  principal
underwriter and as
such  conducts  a continuous offering pursuant  to  a  "best
efforts" arrangement
requiring  Smith  Barney  to take  and  pay  for  only  such
securities as may be sold
to the public. Pursuant to a plan of distribution adopted by
the Fund under
Rule 12b-1 under the 1940 Act (the "Plan"), Smith Barney  is
paid an annual
service  fee  with respect to Class A, Class B and  Class  C
shares of the Fund at
the annual rate of 0.25% of the average daily net assets  of
the respec-

38
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

DISTRIBUTOR (CONTINUED)

tive Class. Smith Barney is also paid an annual distribution
fee with respect
to Class B and Class C shares at the annual rate of 0.75% of
the average daily
net  assets  attributable to those Classes. Class  B  shares
which automatically
convert  to  Class A shares eight years after  the  date  of
original purchase will
no longer be subject to distribution fees. The fees are used
by Smith Barney
to  pay  its Financial Consultants for servicing shareholder
accounts and, in
the  case  of Class B and Class C shares, to cover  expenses
primarily intended
to  result  in  the  sale  of those shares.  These  expenses
include: advertising;
the  cost  of printing and mailing prospectuses to potential
investors; payments
to  and  expenses of Smith Barney Financial Consultants  and
other persons who
provide support services in connection with the distribution
of shares; inter-
est and/or carrying charges; and indirect and overhead costs
of Smith Barney
associated  with  the sale of Fund shares, including  lease,
utility, communica-
tions and sales promotion expenses.

   The  payments  to Smith Barney Financial Consultants  for
selling shares of a
Class  include a commission or fee paid by the  investor  or
Smith Barney at the
time of sale and, with respect to Class A, Class B and Class
C shares, a con-
tinuing  fee for servicing shareholder accounts for as  long
as a shareholder
remains  a  holder  of  that Class. Smith  Barney  Financial
Consultants may receive
different  levels  of  compensation  for  selling  different
Classes of shares.
   
   Payments under the Plan with respect to Class B and Class
C shares are not
tied exclusively to the distribution and shareholder service
expenses actually
incurred  by  Smith  Barney  and  the  payments  may  exceed
distribution expenses
actually  incurred.  The  Fund's  Board  of  Directors  will
evaluate the appropri-
ateness  of  the Plan and its payment terms on a  continuing
basis and in so
doing will consider all relevant factors, including expenses
borne by Smith
Barney, amounts received under the Plan and proceeds of  the
CDSC.     

ADDITIONAL INFORMATION


   The Fund was incorporated under the laws of the State  of
Maryland on
September  2,  1969, and is registered with  the  SEC  as  a
diversified, open-end
management investment company.

    The   Fund  offers  shares  of  common  stock  currently
classified into
fiveClasses  -- A, B, C, Y and Z. Each Class  represents  an
identical interest
in the Fund's investment portfolio. As a result, the Classes
have the same
rights, privileges and preferences, except with respect  to:
(a) the designa-
tion of each Class;


39
<PAGE>

SMITH BARNEY
   
Appreciation Fund Inc.     

ADDITIONAL INFORMATION (CONTINUED)

(b)  the  effect  of the respective sales charges  for  each
Class; (c) the distri-
bution and/or service fees, if any, borne by each Class; (d)
the expenses allo-
cable  exclusively  to  each Class;  (e)  voting  rights  on
matters exclusively
affecting a single Class; (f) the exchange privilege of each
Class; and (g) the
conversion  feature of Class B shares. The Fund's  Board  of
Directors does not
anticipate  that  there  will be  any  conflicts  among  the
interests of the holders
of  the  different  Classes. The Directors,  on  an  ongoing
basis, will consider
whether   any  such  conflict  exists  and,  if   so,   take
appropriate action.
   
   The Fund does not hold annual shareholder meetings. There
normally will be no
meeting   of  shareholders  for  the  purpose  of   electing
Directors unless and until
such  time as less than a majority of the Directors  holding
office have been
elected  by shareholders. The Directors will call a  meeting
for any purpose upon
written request of shareholders holding at least 10% of  the
Fund's outstanding
shares and the Fund will assist shareholders in calling such
a meeting as
required  by  the 1940 Act. When matters are  submitted  for
shareholder vote,
shareholders of each Class will have one vote for each  full
share owned and a
proportionate fractional vote for any fractional share  held
of that Class. Gen-
erally,  shares  of the Fund will be voted  on  a  Fund-wide
basis on all matters
except  matters affecting only the interests of one or  more
of the Classes.     
   
   PNC  Bank,  National  Association, located  at  17th  and
Chestnut Streets,
Philadelphia, Pennsylvania 19103, serves as custodian of the
Fund's invest-
ments.     
   
   First  Data  Investor Services Group,  Inc.,  located  at
Exchange Place, Boston,
Massachusetts  02109, serves as the Fund's  transfer  agent.
    
   
   The Fund sends its shareholders a semi-annual report  and
an audited annual
report,  which include listings of the investment securities
held by the Fund at
the  end  of the period covered. In an effort to reduce  the
Fund's printing and
mailing costs, the Fund plans to consolidate the mailing  of
its semi-annual and
annual reports by household. This consolidation means that a
household having
multiple accounts with the identical address of record  will
receive a single
copy  of  each  report. Shareholders who do  not  want  this
consolidation to apply
to   their  accounts  should  contact  their  Smith   Barney
Financial Consultant or the
Transfer Agent.     

40
<PAGE>


SMITH BARNEY

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

                                                 A Member of
TravelersGroup[ART]





   

SMITH BARNEY

APPRECIATION

FUND INC.     


388 Greenwich Street
                                                         New
York, New York 10013
       



<PAGE>


   

SMITH BARNEY     


Appreciation

Fund Inc.


Class Z Shares Only


   

MARCH 1, 1996     



PROSPECTUS BEGINS ON PAGE ONE




P R O S P E C T U S




[LOGO] Smith Barney Mutual Funds
       Investing for your future.
       Every day.
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

PROSPECTUS
   

MARCH 1, 1996     

  388 Greenwich Street
  New York, New York 10013
  (212) 723-9218

   Smith  Barney Appreciation Fund Inc. (the  "Fund")  is  a
mutual fund which
seeks   long-term  appreciation  of  shareholders'   capital
through investments pri-
marily in equity securities.

   This  Prospectus sets forth concisely certain information
about the Fund,
including  expenses,  that prospective investors  will  find
helpful in making an
investment decision. Investors are encouraged to  read  this
Prospectus care-
fully and retain it for future reference.

    The   Class   Z  shares  described  in  this  Prospectus
(previously designated as
"Class C" shares) are currently offered exclusively for sale
to tax-exempt
employee  benefit and retirement plans of Smith Barney  Inc.
("Smith Barney") or
any  of  its  affiliates ("Qualified Plans") and to  certain
unit investment
trusts sponsored by Smith Barney or any of its affiliates ("Smith
Barney
UITs").
   
   Additional information about the Fund is contained  in  a
Statement of Addi-
tional  Information  dated March  1,  1996,  as  amended  or
supplemented from time
to  time, that is available upon request and without  charge
by calling or writ-
ing  the  Fund at the telephone number or address set  forth
above or by contact-
ing  a  Smith Barney Financial Consultant. The Statement  of
Additional Informa-
tion  has  been  filed  with  the  Securities  and  Exchange
Commission (the "SEC")
and is incorporated by reference into this Prospectus in its
entirety.     

SMITH BARNEY INC.
Distributor

SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Adviser and Administrator

THESE  SECURITIES HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY
THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE SECURITIES COMMISSION  NOR
HAS THE SECURITIES
AND  EXCHANGE COMMISSION OR ANY STATE SECURITIES  COMMISSION
PASSED UPON THE
ACCURACY  OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS
A CRIMINAL OFFENSE.



1
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

TABLE OF CONTENTS

<TABLE>   
<S>                                           <C>
THE FUND'S EXPENSES                             3
-------------------------------------------------
FINANCIAL HIGHLIGHTS                            4
-------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES    5
-------------------------------------------------
VALUATION OF SHARES                             8
-------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES              8
-------------------------------------------------
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES     9
-------------------------------------------------
PERFORMANCE                                    10
-------------------------------------------------
MANAGEMENT OF THE FUND                         12
-------------------------------------------------
ADDITIONAL INFORMATION                         13
-------------------------------------------------
</TABLE>    

------------------------------------------------------------
-------------------
   No person has been authorized to give any information  or
to make any
representations in connection with this offering other  than
those contained in
this   Prospectus  and,  if  given  or  made,   such   other
information or
representations  must  not be relied  upon  as  having  been
authorized by the Fund
or  the distributor. This Prospectus does not constitute  an
offer by the Fund
or  the distributor to sell or a solicitation of an offer to
buy any of the
securities offered hereby in any jurisdiction to any  person
to whom it is
unlawful  to  make  such an offer or  solicitation  in  such
jurisdiction.
------------------------------------------------------------
-------------------

2
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

THE FUND'S EXPENSES

   The  following expense table lists the costs and expenses
an investor will
incur  either  directly or indirectly as  a  shareholder  of
Class Z shares of the
Fund,  based on the Fund's operating expenses for  its  most
recent fiscal year:

<TABLE>   
<CAPTION>
                                      AS A % OF
                                  AVERAGE NET ASSETS
----------------------------------------------------
  <S>                             <C>
  ANNUAL FUND OPERATING EXPENSES
    Management fees                     0.62%
    Other expenses                      0.15%
----------------------------------------------------
  TOTAL FUND OPERATING EXPENSES         0.77%
----------------------------------------------------
</TABLE>    

   The  nature  of  the  services for which  the  Fund  pays
management fees is
described under "Management of the Fund." Other expenses  in
the above table
include fees for shareholder services, custodial fees, legal
and accounting
fees, printing costs and registration fees.

 EXAMPLE

  The following example is intended to assist an investor in
understanding the
various  costs  that  an  investor in  the  Fund  will  bear
directly or indirectly.
The  example  assumes  payment  by  the  Fund  of  operating
expenses at the levels set
forth  in  the table above. See "Purchase and Redemption  of
Shares" and "Manage-
ment of the Fund."

<TABLE>   
<CAPTION>
                                                  1  YEAR  3
YEARS 5 YEARS 10 YEARS
------------------------------------------------------------
-------------------
   <S>                                           <C>     <C>
<C>     <C>
  An investor would pay the following expenses
  on a $1,000 investment in Class Z shares of
  the Fund, assuming (1) 5.00% annual return
  and (2) redemption at the end of each time
  period:                                        $ 8     $25
$43     $95
</TABLE>    

   The  example  also provides a means for the  investor  to
compare expense levels
of   funds  with  different  fee  structures  over   varying
investment periods. To
facilitate  such  comparison,  all  funds  are  required  to
utilize a 5.00% annual
return  assumption. However, the Fund's actual  return  will
vary and may be
greater  or  less  than 5.00%. THIS EXAMPLE  SHOULD  NOT  BE
CONSIDERED A REPRESENTA-
TION  OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY  BE
GREATER OR LESS THAN
THOSE SHOWN.


3
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

FINANCIAL HIGHLIGHTS
   
The following information for the fiscal year ended December
31, 1995 has been
audited  by  KPMG  Peat  Marwick LLP, independent  auditors,
whose report thereon
appears in the Fund's Annual Report dated December 31, 1995.
The information
for  the  fiscal period ended December 31, 1992 through  the
fiscal year ended
December  31,  1994  has been audited by Coopers  &  Lybrand
L.L.P. The information
set  out  below  should  be  read in  conjunction  with  the
financial statements and
related  notes that also appear in the Fund's Annual Report,
which is incorpo-
rated   by   reference  into  the  Statement  of  Additional
Information.     
   
FOR  A  SHARE  OF  EACH CLASS OF CAPITAL  STOCK  OUTSTANDING
THROUGHOUT EACH YEAR:
    
<TABLE>   
<CAPTION>
CLASS  Z  SHARES                         1995(1)        1994
1993(1)   1992(2)
------------------------------------------------------------
-------------------
<S>                                       <C>            <C>
<C>       <C>
NET  ASSET  VALUE,  BEGINNING OF YEAR      $10.16     $11.02
$10.66    $10.55
------------------------------------------------------------
-------------------
INCOME (LOSS) FROM OPERATIONS:
  Net  investment  income                    0.23       0.20
0.19      0.03
 Net realized and unrealized gain
   (loss)                                   2.75      (0.24)
0.71      0.33
------------------------------------------------------------
-------------------
Total  Income  (Loss) From Operations       2.98      (0.04)
0.90      0.36
------------------------------------------------------------
-------------------
LESS DISTRIBUTIONS FROM:
  Net  investment income                   (0.23)     (0.22)
(0.18)    (0.16)
  Net  realized  gains                     (1.00)     (0.60)
(0.36)    (0.09)
------------------------------------------------------------
-------------------
Total   distributions                      (1.23)     (0.82)
(0.54)    (0.25)
------------------------------------------------------------
-------------------
NET  ASSET  VALUE,  END OF YEAR            $11.91     $10.16
$11.02    $10.66
------------------------------------------------------------
-------------------
TOTAL  RETURN                             29.52%     (0.41)%
8.47%     3.38%++
------------------------------------------------------------
-------------------
NET  ASSETS,  END  OF YEAR (000S)        $131,357   $101,532
$157,876  $151,427
------------------------------------------------------------
-------------------
RATIOS TO AVERAGE NET ASSETS:
   Expenses                                 0.77%      0.64%
0.66%     0.80%+
  Net  investment  income                    1.96       1.99
1.73      1.66+
------------------------------------------------------------
-------------------
PORTFOLIO  TURNOVER  RATE                     57%        52%
52%       21%
------------------------------------------------------------
-------------------
AVERAGE COMMISSIONS PAID ON
  EQUITY  SECURITY TRANSACTIONS  (3)        $0.06         --
--        --
------------------------------------------------------------
-------------------
</TABLE>    
   
(1) Per share amounts have been calculated using the monthly
average shares
    method, which more appropriately presents per share data
for this year
    since the use of the undistributed income method did not
accord with
    results of operations.     
   
(2) For the period from November 6, 1992 (inception date) to
December 31,
    1992.     
   
(3)  New  SEC disclosure guidelines require that the average
commission per
    share be calculated for the current year only.     
   
++Total  return  is  not  annualized,  as  it  may  not   be
representative of the total
  return for the year.     
   
+ Annualized.     

4
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

    The   Fund's  sole  investment  objective  is  long-term
appreciation of sharehold-
ers'   capital  through  investments  primarily  in   equity
securities. This invest-
ment  objective may not be changed without the  approval  of
the holders of a
majority of the Fund's outstanding shares. There can  be  no
assurance that the
Fund's investment objective will be achieved.

   The Fund attempts to achieve its investment objective  by
investing primarily
in equity securities (consisting of common stocks, preferred
stocks, warrants,
rights and securities convertible into common stocks)  which
are believed to
afford attractive opportunities for investment appreciation.
The core holdings
of  the  Fund  are blue chip companies that are dominant  in
their industries. At
the  same  time, the Fund may hold securities  of  companies
with prospects of
sustained  earnings growth and/or companies with a  cyclical
earnings record if
it  is felt these offer attractive investment opportunities.
For example, the
Fund  may  invest  in  the  securities  of  companies  whose
earnings are expected to
increase,  companies whose securities prices are lower  than
are believed justi-
fied  in  relation  to their underlying  assets  or  earning
power, or companies in
which  changes are anticipated that would result in improved
operations or
profitability.  Typically, the Fund invests in  middle-  and
larger-sized compa-
nies,  though  it  does  invest in smaller  companies  whose
securities may reasona-
bly  be  expected to appreciate. The Fund's investments  are
spread broadly among
different industries. The Fund may hold issues traded  over-
the-counter as well
as  those listed on one or more national exchanges, and  the
Fund may make
investments in foreign securities though management  intends
to limit such
investments  to  10%  of  the Fund's  assets.  In  analyzing
securities for invest-
ment,  Smith  Barney Mutual Funds Management Inc.  ("SBMFM")
considers many dif-
ferent  factors,  including past growth records,  management
capability, future
earnings prospects and technological innovation, as well  as
general market and
economic   factors  which  can  influence   the   price   of
securities. While SBMFM con-
siders  dividend potential in selecting investments, current
income for distri-
bution  to shareholders is secondary to the Fund's principal
objective of long-
term   capital  appreciation.  The  value  of   the   Fund's
investments, and thus the
net  asset  value  of the Fund's shares, will  fluctuate  in
response to changes in
market  and  economic conditions, as well as  the  financial
condition and pros-
pects of issuers in which the Fund invests.

  Under normal market conditions, the majority of the Fund's
portfolio con-
sists of common stocks, but it also may contain other equity
securities as
described   above,  as  well  as  short-term  money   market
instruments for cash


5
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
   
management   purposes.  When  SBMFM  believes  that   market
conditions warrant, the
Fund may adopt a temporary defensive investment posture, and
invest in debt
obligations,  increase its investment  in  short-term  money
market instruments, or
engage in repurchase agreement transactions with respect  to
the securities it
is authorized to hold (as described below).     

   Further information about the Fund's investment policies,
including a list of
those  restrictions on its investment activities that cannot
be changed without
shareholder approval, appears in the Statement of Additional
Information.

  INVESTMENT POLICIES AND STRATEGIES

   Lending of Portfolio Securities -- From time to time, the
Fund may lend its
portfolio securities to brokers, dealers and other financial
organizations.
These  loans  may  not exceed 33 1/3% of  the  Fund's  total
assets taken at value.
Loans   of  portfolio  securities  by  the  Fund   will   be
collateralized by cash, let-
ters   of  credit  or  obligations  of  the  United   States
government and its agencies
or  instrumentalities ("U.S. government  securities")  which
are maintained at all
times  in  an  amount equal to at least 100% of the  current
market value of the
loaned securities. By lending its portfolio securities,  the
Fund will seek to
generate  income  by continuing to receive interest  on  the
loaned securities, by
investing  the cash collateral in short-term instruments  or
by obtaining yield
in  the  form  of  interest paid by the borrower  when  U.S.
government securities
are  used  as  collateral. 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 SBMFM to be of good  standing  and
will not be made
unless,  in the judgment of SBMFM, the consideration  to  be
earned from such
loans would justify the risk.

   Short-Term  Investments -- As noted above, the  Fund  may
invest in short-term
money   market   instruments,  such  as:   U.S.   government
securities; certificates of
deposit,  time deposits and bankers' acceptances  issued  by
domestic banks (in-
cluding their branches located outside the United States and
subsidiaries
located  in  Canada), domestic branches  of  foreign  banks,
savings and loan asso-
ciations  and  similar institutions; high  grade  commercial
paper; and repurchase
agreements with respect to such instruments.

    Repurchase  Agreements  --  The  Fund  will  enter  into
repurchase agreements with
banks  which  are  issuers  of  instruments  acceptable  for
purchase by the

6
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)

Fund and with certain dealers on the Federal Reserve Bank of
New York's list of
reporting  dealers. Under the terms of a typical  repurchase
agreement, the Fund
would acquire an underlying debt obligation for a relatively
short period (usu-
ally not more than one week) subject to an obligation of the
seller to repur-
chase,  and the Fund to resell, the obligation at an agreed-
upon price and time,
thereby  determining  the yield during  the  Fund's  holding
period. This arrange-
ment  results in a fixed rate of return that is not  subject
to market fluctua-
tions during the Fund's holding period.

    Portfolio   Transactions  and  Turnover   --   Portfolio
securities transactions on
behalf  of  the Fund are placed by SBMFM with  a  number  of
brokers and dealers,
including  Smith Barney. Smith Barney has advised  the  Fund
that in transactions
with  the  Fund, Smith Barney charges a commission  rate  at
least as favorable as
the   rate   that   Smith  Barney  charges  its   comparable
unaffiliated customers in
similar transactions.
   
   The  Fund generally does not engage in short-term trading
but intends to pur-
chase  securities for long-term capital appreciation.  While
the Fund's portfolio
turnover  rate  has in the past exceeded  100%,  the  Fund's
annual portfolio turn-
over rate is not expected to exceed 100%.     

  Foreign Securities -- The Fund may invest in securities of
non-U.S. issuers
in  the  form  of  American  Depositary  Receipts  ("ADRs"),
European Depositary
Receipts   ("EDRs")   or  similar  securities   representing
interests in the common
stock  of  foreign issuers. Management intends to limit  the
Fund's investment in
these  types  of  securities, together with other  types  of
foreign securities, to
10%  of  the Fund's net assets. ADRs are receipts, typically
issued by a U.S.
bank   or   trust  company,  which  evidence  ownership   of
underlying securities issued
by a foreign corporation. EDRs are receipts issued in Europe
which evidence a
similar   ownership   arrangement.   Generally,   ADRs,   in
registered form, are
designed for use in the U.S. securities markets and EDRs are
designed for use
in  European  securities markets. The underlying  securities
are not always denom-
inated  in  the same currency as the ADRs or EDRs.  Although
investment in the
form   of  ADRs  or  EDRs  facilitates  trading  in  foreign
securities, it does not
mitigate  the  risks  associated with investing  in  foreign
securities.

   Investments in foreign securities incur higher costs than
investments in U.S.
securities,  including  higher costs  in  making  securities
transactions as well as
foreign  government  taxes which may reduce  the  investment
return of the Fund. In
addition,  foreign investments may include additional  risks
associated with


7
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)

currency exchange rates, less complete financial information
about individual
companies, less market liquidity and political instability.

VALUATION OF SHARES


   The  net  asset  value per share of  Class  Z  shares  is
determined as of the
close  of  regular trading on the New York  Stock  Exchange,
Inc. (the "NYSE"), on
each day that the NYSE is open by dividing the value of  the
Fund's net assets
attributable to Class Z by the number of shares of the Class
outstanding. The
per  share  net  asset value of the Class Z  shares  may  be
higher than those of
other Classes because of the lower expenses attributable  to
Class Z shares.

   Generally,  the Fund's investments are valued  at  market
value or, in the
absence of a market value with respect to any securities, at
fair value as
determined by or under the direction of the Fund's Board  of
Directors. Short-
term  investments that mature in 60 days or less are  valued
at amortized cost
whenever  the  Fund's  Board  of Directors  determines  that
amortized cost reflects
fair   value   of  those  instruments.  Further  information
regarding the Fund's val-
uation  policies is contained in the Statement of Additional
Information.

DIVIDENDS, DISTRIBUTIONS AND TAXES


 DIVIDENDS AND DISTRIBUTIONS
   
   The Fund's policy is to distribute substantially all  its
net investment
income  (that  is,  its income other than its  net  realized
capital gains) and net
realized capital gains, if any, once a year, normally at the
end of the year
in which earned or at the beginning of the next year.     

    Unless   a   shareholder  is  eligible   for   qualified
distributions and instructs
that dividends and capital gains distributions on shares  be
paid in cash and
credited to the shareholder's account, dividends and capital
gains distribu-
tions  will be reinvested automatically in additional shares
of the Class at
net  asset  value, subject to no sales charge  or  CDSC.  In
addition, in order to
avoid  the application of a 4% nondeductible excise  tax  on
certain undistrib-
uted  amounts of ordinary income and capital gains, the Fund
may make an addi-
tional  distribution, shortly before  December  31  in  each
year, of any undis-
tributed ordinary income

8
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)

or  capital gains and expects to pay any other dividends and
distributions nec-
essary to avoid the application of this tax.

 TAXES

   The Fund has qualified and intends to continue to qualify
each year as a reg-
ulated investment company under Subchapter M of the Internal
Revenue Code of
1986, as amended.

    Dividends   paid   from   net  investment   income   and
distributions of net realized
short-term  capital  gains are taxable  to  shareholders  as
ordinary income,
regardless  of  how long shareholders have held  their  Fund
shares and whether
such  dividends and distributions are received  in  cash  or
reinvested in addi-
tional  Fund shares. Distributions of net realized long-term
capital gains are
taxable   to   shareholders  as  long-term  capital   gains,
regardless of how long
shareholders   have  held  Fund  shares  and  whether   such
distributions are received
in  cash  or  are  reinvested  in  additional  Fund  shares.
Furthermore, as a general
rule,  a  shareholder's gain or loss on a sale or redemption
of Fund shares will
be  a long-term capital gain or loss if the shareholder  has
held the shares for
more than one year and will be a short-term capital gain  or
loss if the share-
holder has held the shares for one year or less. Some of the
Fund's dividends
declared  from  net investment income may  qualify  for  the
Federal dividends-
received deduction for corporations.

   Statements  as  to  the tax status of each  shareholder's
dividends and distribu-
tions  are  mailed  annually.  Each  shareholder  also  will
receive, if appropriate,
various written notices after the close of the Fund's  prior
taxable year as to
the  Federal  income tax status of his or her dividends  and
distributions which
were  received from the Fund during the Fund's prior taxable
year. Shareholders
should consult their plan document or tax advisors about the
tax consequences
associated with participating in a Qualified Plan  or  Smith
Barney UIT.
   
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES     
   
   Purchases  of the Fund's Class Z shares must be  made  in
accordance with the
terms of a Qualified Plan or Smith Barney UIT. Purchases are
effected at the
net  asset value next determined after a purchase  order  is
received by Smith
Barney  (the  "trade  date"). For shares  purchased  through
Smith Barney or Intro-
ducing     


9
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares
   
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES (CONTINUED)     
   
Brokers purchasing through Smith Barney, payment is  due  to
Smith Barney on the
third  business day (the "settlement date") after the  trade
date. In all other
cases,  payment  must  be  made  with  the  purchase  order.
Investors who make pay-
ment  prior to the settlement date may designate a temporary
investment (such
as a money market fund of the Smith Barney Mutual Funds) for
such payment
until settlement date. The Fund reserves the right to reject
any purchase
order and to suspend the offering of shares for a period  of
time. There are no
minimum investment requirements for Class Z shares; however,
the Fund reserves
the right to vary this policy at any time.     
   
  Purchase orders received by the Fund or Smith Barney prior
to the close of
regular  trading on the NYSE, currently 4:00 p.m., New  York
time, on any day
that  the  Fund calculates its net asset value,  are  priced
according to the net
asset  value  determined  on that  day.  See  "Valuation  of
Shares." Certificates
for  Fund  shares  are  issued upon request  to  the  Fund's
transfer agent.     

   Shareholders may redeem their shares on any day on  which
the Fund calculates
its  net  asset value. See "Valuation of Shares." Redemption
requests received
in  proper form prior to the close of regular trading on the
NYSE are priced at
the  net  asset  value  per share determined  on  that  day.
Redemption requests
received after the close of regular trading on the NYSE  are
priced at the net
asset value as next determined. Shareholders acquiring Class
Z shares through
a  Qualified  Plan or a Smith Barney UIT should consult  the
terms of their
respective plans for redemption provisions.
   
   Holders  of Class Z shares should consult their Qualified
Plans for informa-
tion about exchange options.     
       
PERFORMANCE


 TOTAL RETURN

   From time to time, the Fund may include its total return,
average annual
total  return and current dividend return for Class Z shares
in advertisements.
These  figures are based on historical earnings and are  not
intended to indi-
cate  future  performance. Total return is  computed  for  a
specified period of
time assuming deduction of the maximum sales charge, if any,
from the initial
amount invested and reinvestment of all income dividends and
capital gain dis-
tributions on the reinvestment dates at prices calculated as
stated in this
Prospec-

10
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

PERFORMANCE (CONTINUED)

tus, then dividing the value of the investment at the end of
the period so
calculated  by  the initial amount invested and  subtracting
100%. The standard
average  annual total return, as prescribed by the  SEC,  is
derived from this
total  return,  which provides the ending redeemable  value.
Such standard total
return  information may also be accompanied with nonstandard
total return
information  for  differing periods  computed  in  the  same
manner but without
annualizing  the total return or taking sales  charges  into
account. The Fund
calculates  current dividend return for Class  Z  shares  by
annualizing the most
recent  monthly distribution and dividing by the  net  asset
value on the last
day  of the period for which the current dividend return  is
presented. The cur-
rent dividend return may vary from time to time depending on
market condi-
tions,  the  composition  of its  investment  portfolio  and
operating expenses.
These  factors and possible differences in the methods  used
in calculating cur-
rent dividend return should be considered when comparing the
Fund's current
return  to  yields published for other investment  companies
and other investment
vehicles.  The Fund may also include comparative performance
information in
advertising   or   marketing  the  Class  Z   shares.   Such
performance information may
include data from Lipper Analytical Services, Inc. and other
financial publi-
cations.

   Class Z's average annual total return was as follows  for
the periods indi-
cated:
     
  29.52%   for the one-year period beginning January 1, 1995
through
           December 31, 1995.     
     
   12.43%    for the period from commencement of  operations
(November 6, 1992)
           through December 31, 1995.     

   Class  Z's aggregate total return was as follows for  the
periods indicated:
     
   29.52%   for the one-year period beginning on January  1,
1995 through
           December 31, 1995.     
     
   44.65%    for the period from commencement of  operations
(November 6, 1992)
           through December 31, 1995.     


11
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

MANAGEMENT OF THE FUND

 BOARD OF DIRECTORS
   
   Overall responsibility for management and supervision  of
the Fund rests with
the  Fund's  Board of Directors. The Directors  approve  all
significant agreements
between  the Fund and the persons or companies that  furnish
services to the
Fund,  including  agreements with  the  Fund's  distributor,
investment adviser and
administrator, custodian and transfer agent. The  day-to-day
operations of the
Fund  are  delegated  to the Fund's investment  adviser  and
administrator. The
Statement  of  Additional  Information  contains  background
information regarding
each Director and executive officer of the Fund.     
    
 INVESTMENT ADVISER AND ADMINISTRATOR -- SBMFM     
   
   SBMFM (formerly known as Smith, Barney Advisers, Inc.) is
a registered
investment  adviser  whose principal executive  offices  are
located at 388 Green-
wich  Street,  New York, New York 10013, and serves  as  the
Fund's investment
adviser. SBMFM is a wholly owned subsidiary of Smith  Barney
Holdings Inc.
("Holdings").  Holdings  is  a wholly  owned  subsidiary  of
Travelers Group Inc.
("Travelers"),  a  diversified  financial  services  holding
company engaged,
through  its  subsidiaries,  principally  in  four  business
segments: Investment
Services,   Consumer  Financial  Services,  Life   Insurance
Services and Property &
Casualty   Insurance  Services.  SBMFM  has  been   in   the
investment counseling busi-
ness  (through  its  predecessors) since  1940  and  renders
investment advice to a
wide  variety  of individual, institutional  and  investment
company clients that
had aggregate assets under management as of January 31, 1996
in excess of $74
billion.     

   Subject  to the supervision and direction of  the  Fund's
Board of Directors,
SBMFM  manages the Fund's portfolio in accordance  with  the
Fund's stated invest-
ment objective and policies, makes investment decisions  for
the Fund, places
orders   to  purchase  and  sell  securities,  and   employs
professional portfolio man-
agers  and securities analysts who provide research services
to the Fund.
   
   Investment  advisory  fees are computed  daily  and  paid
monthly at the following
annual  rates of the value of the Fund's average  daily  net
assets: 0.55% up to
$250 million; 0.513% of the next $250 million; 0.476% of the
next $500 million;
0.439%  of  the  next  $1 billion; 0.402%  of  the  next  $1
billion; and 0.365% of the
net  assets  in  excess of $3 billion. For the  fiscal  year
ended December 31,
1995, the Fund paid investment advisory fees equal to 0.453%
of the value of
the average daily net assets of the Fund.     


12
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

MANAGEMENT OF THE FUND (CONTINUED)
   
  Administration fees are computed daily and paid monthly at
the following
annual  rates of the value of the Fund's average  daily  net
assets: 0.20% up to
$250 million; 0.187% of the next $250 million; 0.174% of the
next $500 million;
0.161%  of  the  next  $1 billion; 0.148%  of  the  next  $1
billion; and 0.135% of the
net  assets  in  excess of $3 billion. For the  fiscal  year
ended December 31,
1995,  the Fund paid administration fees equal to 0.166%  of
the value of the
average  daily net assets of the Fund. For the  Fund's  last
fiscal year, total
operating expenses were 0.77%.     

 PORTFOLIO MANAGEMENT

   Harry D. Cohen, Vice President and Investment Officer  of
the Fund, is primar-
ily  responsible  for management of the Fund's  assets.  Mr.
Cohen has served in
this capacity since January of 1979, and manages the day-to-
day operations of
the Fund, including making all investment decisions.
   
    Management's  discussion  and  analysis  and  additional
performance information
regarding the Fund during the fiscal year ended December 31,
1995 is included
in  the Annual Report dated December 31, 1995. A copy of the
Annual Report may
be  obtained  upon request and without charge from  a  Smith
Barney Financial Con-
sultant or by writing or calling the Fund at the address  or
phone number listed
on page one of this Prospectus.     

        

 DISTRIBUTOR -- SMITH BARNEY

  Smith Barney is located at 388 Greenwich Street, New York,
New York 10013,
and  serves  as the Fund's distributor. Smith  Barney  is  a
wholly owned subsidiary
of Travelers.

ADDITIONAL INFORMATION


   The  Fund  was incorporated in the state of  Maryland  on
September 2, 1969 and
is  registered  with  the  SEC as  a  diversified,  open-end
management investment
company.

    The   Fund  offers  shares  of  common  stock  currently
classified into five Clas-
ses--  A, B, C , Y and Z. Each Class represents an identical
pro rata interest
in the Fund's investment portfolio. As a result, the Classes
have the same
rights, privileges and preferences, except with respect  to:
(a) the designation
of  each  Class;  (b)  the effect of  the  respective  sales
charges, if any, for each
Class; (c) the distri-


13
<PAGE>

Smith Barney
Appreciation Fund Inc. -- Class Z Shares

ADDITIONAL INFORMATION (CONTINUED)

bution  and/or  service fees, if any, borne  by  each  Class
pursuant to a plan
adopted  by  the  Fund  pursuant to  Rule  12b-1  under  the
Investment Company Act of
1940,   as  amended  (the  "1940  Act");  (d)  the  expenses
allocable to each Class;
(e)  voting rights on matters exclusively affecting a single
Class; (f) the
exchange  privilege  of each Class; and (g)  the  conversion
feature of Class B
shares.  The  Fund's Board of Directors does not  anticipate
that there will be
any  conflicts  among the interests of the  holders  of  the
different Classes. The
Directors,  on an ongoing basis, will consider  whether  any
such conflict exists
and, if so, take appropriate action.

   The Fund does not hold annual shareholder meetings. There
normally will be no
meeting   of  shareholders  for  the  purpose  of   electing
Directors unless and until
such  time as less than a majority of the Directors  holding
office have been
elected  by shareholders. The Directors will call a  meeting
for any purpose upon
the written request of shareholders holding at least 10%  of
the Fund's out-
standing  shares  and the Fund will assist  shareholders  in
calling such a meeting
as  required by the 1940 Act. When matters are submitted for
shareholder vote,
shareholders of each Class will have one vote for each  full
share owned and a
proportionate fractional vote for any fractional share  held
of that Class. Gen-
erally,  shares  of the Fund will be voted  on  a  Fund-wide
basis on all matters
except  matters affecting only the interests of one or  more
of the Classes.

   The Fund sends its shareholders a semi-annual report  and
an audited annual
report, which include a listing of the investment securities
held by the Fund
at the end of the period covered.
   
   PNC  Bank,  National  Association, located  at  17th  and
Chestnut Streets, Phila-
delphia,  Pennsylvania 19103, serves  as  custodian  of  the
Fund's investments.    
   
   First  Data  Investor Services Group,  Inc,,  located  at
Exchange Place, Boston,
Massachusetts  02109, serves as the Fund's  transfer  agent.
    
   
   Shareholders may seek information regarding the Fund from
their Smith Barney
Financial Consultant.     

14
<PAGE>


SMITH BARNEY

------------
                                               A  Member  of
Travelers Group [LOGO]











SMITH BARNEY

APPRECIATION

FUND INC.


388 Greenwich Street
                                                         New
York, New York 10013
       

             SMITH BARNEY APPRECIATION FUND INC.
                              
                           PART B

Smith Barney
Appreciation Fund Inc.
388 Greenwich Street
New York, New York 10013
(212) 723-9218

Statement of Additional Information        March 1, 1996    

This Statement of Additional Information expands upon and
supplements the information contained in the current
Prospectus of Smith Barney Appreciation Fund Inc. (the
"Fund") dated    March 1, 1996,     as amended or
supplemented from time to time, and should be read in
conjunction with the Fund's Prospectus.  The Fund's
Prospectus may be obtained from any Smith Barney Financial
Consultant, or by writing or calling the Fund 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.

CONTENTS

For ease of reference, the same section headings are used in
both the Prospectus and this Statement of Additional
Information, except where shown below:
<TABLE>   
<S>
<C>
Management of the Fund   1
Investment Objective and Management Policies 5
Purchase of Shares  12
Redemption of Shares     12
Distributor    13
Valuation of Shares      15
Exchange Privilege  15
Performance Data (See in the Prospectus "Performance")
16
Taxes (See in the Prospectus "Dividends, Distributions and
Taxes")   18
Additional Information   20
Financial Statements     20
    </TABLE>
MANAGEMENT OF THE FUND

The executive officers of the Fund are employees of certain
of the organizations that provide services to the Fund.
These organizations are the following:
<TABLE>   
       <S>
<C>
Name Service
Smith Barney Inc.
     ("Smith Barney")    Distributor
Smith Barney Mutual Funds Management Inc.
     ("SBMFM") Investment Adviser and Administrator
PNC Bank, National Association
     ("PNC")   Custodian
First Data Investor Services Group, Inc.,
     formerly The Shareholder Services Group, Inc.
     (the "Transfer Agent")   Transfer Agent
    </TABLE>
These organizations and the functions they perform for the
Fund are discussed in the Prospectus and in this Statement
of Additional Information.

Directors and Executive Officers of the Fund

The names of the Directors and executive officers of the
Fund, together with information as to their principal
business occupations during the past five years, are shown
below. Each Director who is an "interested person'' of the
Fund, as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), is indicated by an asterisk.
   
Herbert Barg, Director (Age 72).  Private Investor. His
address is 273 Montgomery Avenue, Bala Cynwyd, Pennsylvania
19004.

*Alfred J. Bianchetti, Director (Age 73).  Retired; formerly
Senior Consultant to Dean Witter Reynolds Inc. His address
is 19 Circle End Drive, Ramsey, New Jersey 07466.

Martin Brody, Director (Age 74).  Vice Chairman of the Board
of Restaurant Associates Corp. His address is HMK
Associates, Three ADP Boulevard, Roseland, New Jersey 07068.

Dwight B. Crane, Director (Age 58).  Professor, Graduate
School of Business Administration, Harvard University;
Business Consultant. His address is Graduate School of
Business Administration, Harvard University, Boston,
Massachusetts 02163.

Burt N. Dorsett, Director (Age 65).      Managing Partner of
Dorsett McCabe Management, Inc., an investment counseling
firm; Director of Research Corporation Technologies, Inc., a
non-profit patent-clearing and licensing firm. His address
is 201 East 62nd Street, New York, New York 10021.

Elliot S. Jaffe, Director (Age 69).  Chairman of the Board
and    Chief Executive Officer     of The Dress Barn, Inc.
His address is 30 Dunnigan Drive, Suffern, New York 10901.
   
Stephen E. Kaufman, Director (Age 63).  Attorney. His
address is 277 Park Avenue, New York, New York 10172.

Joseph J. McCann, Director (Age 65).  Financial Consultant.
His address is 200 Oak Park Place, Pittsburgh, Pennsylvania
15243.
    
*Heath B. McLendon, Chairman of the Board and Investment
Officer (Age 62).  Managing Director of Smith Barney and
Chairman of Smith Barney Strategy Advisers Inc.; prior to
July 1993, Senior Executive Vice President of Shearson
Lehman Brothers Inc. ("Shearson Lehman Brothers"), Vice
Chairman of Shearson Asset Management, a Director of
PanAgora Asset Management, Inc. and PanAgora Asset
Management Limited.     Mr. McLendon is Chairman of the
Board and Investment Officer of 41 Smith Barney Mutual
Funds.  His address is 388 Greenwich Street, New York, New
York 10013.    
   
Cornelius C. Rose, Jr., Director (Age 62). President,
Cornelius C. Rose Associates, Inc., Financial Consultants,
and Chairman and Director of Performance Learning Systems,
an educational consultant.  His address is P.O. Box 355,
Fair Oaks, Enfield, New Hampshire 03748.

Jessica M. Bibliowicz, President (Age 36).      Executive
Vice President of Smith Barney; prior to 1994, Director of
Sales and Marketing for Prudential Mutual Funds; prior to
1990, First Vice President, Asset Management Division of
Shearson Lehman Brothers.  Ms. Bibliowicz serves as
President of 39 Smith Barney Mutual Funds.  Her address is
388 Greenwich Street, New York, New York 10013.
   
Lewis E. Daidone, Senior Vice President and Treasurer (Age
38). Managing Director of Smith Barney; Director and Senior
Vice President of SBMFM.  Mr. Daidone serves as Senior Vice
President and Treasurer of 41 Smith Barney Mutual Funds.
His address is 388 Greenwich Street, New York, New York
10013.

Harry D. Cohen, Vice President and Investment Officer (Age
54).      President and Director of Smith Barney Investment
Advisors, a division of SBMFM; Executive Vice President of
Smith Barney; prior to July 1993, President of Asset
Management Division of Shearson Lehman Brothers and
Executive Vice President of Shearson Lehman Brothers.  Mr.
Cohen also serves as Vice President and Investment Officer
of 1 other of the Smith Barney Mutual Funds.  His address is
388 Greenwich Street, New York, New York 10013.

Christina T. Sydor, Secretary    (Age 44).     Managing
Director of Smith Barney; General Counsel and Secretary of
SBMFM.  Ms. Sydor serves as Secretary of 41 Smith Barney
Mutual Funds.  Her address is 388 Greenwich Street, New
York, New York 10013.

Each Director also serves as a director, trustee and/or
general partner of certain other mutual funds for which
Smith Barney serves as distributor.     As of February 1,
1996, the Directors and officers of the Fund, as a group,
owned less than 1.00% of the outstanding common stock of the
Fund. As of February 1, 1996, to the knowledge of the Fund
and the Board of Directors, no single shareholder or "group"
(as that term is used in Section 13(d) of the Securities Act
of 1934) beneficially owned more than 5% of the outstanding
shares of the Fund with the exception of the following:
<TABLE>
<S>                      <C>                    <C>
Shareholder    Class     Percent Ownership

Citibank NA Cust. Smith BarneyShearson 401K Savings
PlanSmith Barney Account 111 Wall Street New York, New York
10043     Class C                       99.92%
 </TABLE>    

No officer, director or employee of Smith Barney or any
parent or subsidiary receives any compensation from the Fund
for serving as an officer or Director of the Fund.     The
Fund pays each Director who is not an officer, director or
employee of Smith Barney or any of its affiliates a fee of
$3,000 per annum plus $500 per in-person meeting and $100
per telephonic meeting. Each Director emeritus receives
$l,500 per annum plus $250 per in-person meeting and $50 per
telephonic meeting.  All Directors are reimbursed for travel
and out-of-pocket expenses incurred in attending such
meetings.

For the calendar year ended December 31, 1995, the Directors
of the Fund were paid the following compensation.
<TABLE>
<S>                      <C>                 <C>
          Aggregate Compensation
     Aggregate Compensation   from the Smith Barney
Director (*)   from the Fund  Mutual Funds

Herbert Barg (18)   $3,850    $81,850
Alfred Bianchetti (13)    3,850      37,000
Martin Brody (21)    3,750      93,300
Dwight B. Crane (24)      3,850    119,250
Burt N. Dorsett (13)      5,100      51,400
Elliot S. Jaffe (13)      5,100      50,900
Stephen E. Kaufman (15)  3,850     57,000
Joseph J. McCann (13)    3,850     37,400
Heath B. McLendon (41)   -------   --------
Cornelius C. Rose (13)   5,100     51,500


</TABLE>

* Indicates number of funds within the Smith Barney Mutual
Fund complex for which each Director serves as
Director/Trustee.
    
Investment Adviser and Administrator-SBMFM

SBMFM serves as investment adviser to the Fund pursuant to a
written agreement (the "Advisory Agreement"), which was
first approved by the Fund's Board of Directors, including a
majority of the Directors who are not interested persons of
the Fund or Smith Barney    (the "Independent Directors"),
on April 1, 1993 and by shareholders on June 1, 1993.  The
services provided by SBMFM under the Advisory Agreement are
described in the Prospectus under "Management of the Fund."
SBMFM pays the salary of any officer and employee who is
employed by both it and the Fund.  SBMFM bears all expenses
in connection with the performance of its services.  SBMFM
is a wholly owned subsidiary of Smith Barney Holdings Inc.
("Holdings"), which in turn is a wholly owned subsidiary of
Travelers  Group Inc. ("Travelers").    

As compensation for SBMFM's investment advisory services
rendered to the Fund, the Fund pays a fee computed daily and
paid monthly at the following annual rates of the Fund's
average daily net assets: 0.55%, up to $250 million; 0.513%
of the next $250 million; 0.476% of the next $500 million;
0.439% of the next $1 billion, 0.402% of the next $l
billion; and 0.365% of the net assets in excess of $3
billion.  For the fiscal years ended    December 31, 1995,
1994 and 1993, the Fund paid $12,764,132, $l2,564,785 and
$l3,580,825, respectively, in investment advisory fees.    

SBMFM also serves as administrator to the Fund pursuant to a
written agreement dated April 10, 1994    (the
"Administration Agreement"), which was most recently
approved by the Fund's Board of Directors, including a
majority of the Independent Directors of the Fund or Smith
Barney, on July 19, 1995.  The services provided by SBMFM
under the Administration Agreement are described in the
Prospectus under "Management of the Fund."  SBMFM pays the
salary of any officer and employee who is employed by both
it and the Fund and bears all expenses in connection with
the performance of its services.    

As compensation for administrative services rendered to the
Fund, SBMFM receives a fee computed daily and paid monthly
at the following annual rates: 0.20%, of the value of the
Fund's average daily net assets up to $250 million; 0.187%
of the next $250 million; 0.174% of the next $500 million;
0.161% of the next $1 billion; 0.148% of the next $1 billion
and 0.135% of the net assets in excess of $3 billion.
   For the fiscal year ended December 31, 1995, the Fund
paid $4,675,818 in administration fees. For the fiscal
period from April 20, 1994 through December 31, 1994, the
Fund paid $3,228,079 in administration fees. Prior to April
20, 1994, The Boston Company Advisors, Inc. ("The Boston
Company") served as the Fund's administrator and prior to
May 21, 1993, also served as the Fund's sub-investment
adviser.  For the fiscal period from January 1, l994 through
April 19, 1994, the Fund paid $1,374,456 to The Boston
Company     in administration fees.  For the fiscal years
ended December 31, 1993 and 1992, the Fund paid sub-
investment advisory and/or administration fees of $4,977,511
and $3,295,537, respectively.

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

SBMFM and the Fund have agreed that it in any fiscal year
the aggregate expenses of the Fund (including fees paid
pursuant to the Advisory and Administration Agreements, but
excluding interest, taxes, brokerage, fees paid pursuant to
the Fund's services and distribution plan, and, with the
prior written consent of the necessary state securities
commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over the Fund,
SBMFM will, to the extent required by state law, reduce its
management fees by such excess expense.  Such a fee
reduction, if any, will be reconciled on a monthly basis.
The most restrictive state expense limitation applicable to
the Fund would require SBMFM to reduce its fees in any year
that such excess expenses exceed 2.50% of the first $30
million of average net assets, 2.00% of the next $70 million
of average net assets and 1.50% of the remaining average
assets.     No fee reduction was necessary for the 1995,
1994 or 1993 fiscal years.    

Counsel and Auditors

Willkie Farr & Gallagher serves as counsel to the Fund.  The
Independent Directors of the Fund have selected Stroock &
Stroock & Lavan to serve as their legal counsel.
   
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York
10154, has been selected as the Fund's independent auditor
to examine and report on the Fund's financial statements and
highlights for the fiscal year ending December 31, 1996.
    
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The Prospectus discusses the Fund's investment objective and
the policies it employs to achieve its objective.  This
section contains supplemental information concerning the
types of securities and other instruments in which the Fund
may invest, the investment policies and portfolio strategies
that the Fund may utilize and certain risks attendant to
such investments, policies and strategies.

Money Market Instruments. As stated in the Prospectus, the
Fund may invest for temporary defensive purposes in
corporate and government bonds and notes and money market
instruments.  Money market instruments in which the Fund may
invest include: obligations issued or guaranteed by the
United States government, its agencies or instrumentalities
("U.S. government securities"); certificates of deposit,
time deposits and bankers' acceptances issued by domestic
banks (including their branches located outside the United
States and subsidiaries located in Canada), domestic
branches of foreign banks, savings and loan associations and
similar institutions; high grade commercial paper; and
repurchase agreements with respect to the foregoing types of
instruments.  The following is a more detailed description
of such money market instruments.

Certificates of deposit ("CDs") are short-term, negotiable
obligations of commercial banks.  Time deposits ("TDs") are
non-negotiable deposits maintained in banking institutions
for specified periods of time at stated interest rates.
Bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with international
transactions.

Domestic commercial banks organized under Federal law are
supervised and examined by the Comptroller of the Currency
and are required to be members of the Federal Reserve System
and to be insured by the Federal Deposit Insurance
Corporation the ("FDIC").  Domestic banks organized under
state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System
only it they elect to join.  Most state banks are insured by
the FDIC (although such insurance may not be of material
benefit to the Fund, depending upon the principal amount of
CDs of each bank held by the Fund) and are subject to
Federal examination and to a substantial body of Federal law
and regulation.  As a result of governmental regulations,
domestic branches of domestic banks are, among other things,
generally required to maintain specialized levels of
reserves, and are subject to other supervision and
regulation designed to promote financial soundness.

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

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

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

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

Lending of Portfolio Securities.  As stated in the
Prospectus, the Fund has the ability to lend securities from
its portfolio to brokers, dealers and other financial
organizations.  Such loans, if and when made, may not exceed
33 1/3% of the Fund's total assets taken at value.  The Fund
may not lend its portfolio securities to Smith Barney or its
affiliates unless it has applied for and received specific
authority from the SEC.  Loans of portfolio securities by
the Fund will be collateralized by cash, letters of credit
or U S. government securities that are maintained at all
times in an amount equal to at least 100% of the current
market value of the loaned securities.

In lending its portfolio 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.  Requirements
of the SEC, which may be subject to future modifications,
currently provide that 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 from the borrower; (b) the borrower
must increase such collateral whenever the market value of
the securities rises above the value 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 SBMFM to be of good standing and will not be made
unless, in the judgment of SBMFM, the consideration to be
earned from such loans would justify the risk.  From time to
time, the Fund may return a part of the interest earned from
the investment of collateral received for securities loaned
to: (a) the borrower; and/or (b) a third party, which is
unaffiliated with the Fund or with Smith Barney and, which
is acting as a "finder."

Convertible Securities.  Convertible securities are fixed-
income securities that may be converted at either a stated
price or stated rate into underlying shares of common stock.
Convertible securities have general characteristics similar
to both fixed-income and equity securities.  Although to a
lesser extent than with fixed-income securities generally,
the market value of convertible securities tends to decline
as interest rates increase and, conversely, tends to
increase as interest rates decline.  In addition, because of
the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market
value of the underlying common stocks and, therefore, also
will react to variations in the general market for equity
securities.  A unique feature of convertible securities is
that as the market price of the underlying common stock
declines, convertible securities tend to trade increasingly
on a yield basis, and 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.

Warrants.  Because a warrant does not carry with it the
right to dividends or voting rights with respect to the
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 prior to its expiration
date.  The investment in warrants, valued at the lower of
cost or market, may not exceed 5% of the value of the Fund's
net assets.  Included within that amount, but not to exceed
2% of the value of the Fund's net assets, may be warrants
that are not listed on the New York Stock Exchange, Inc.
(the "NYSE") or the American Stock Exchange.  Warrants
acquired by the Fund in units or attached to securities may
be deemed to be without value.

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

Investment Restrictions

The Fund has adopted the following investment restrictions
for the protection of shareholders. Restrictions l through 8
below cannot be changed without approval by the holders of a
majority of the outstanding shares of the Fund, defined as
the lesser of  (a) 67% or more of the Fund's shares present
at a meeting, if the holders of more than 50% of the
outstanding shares are present in person or by proxy or (b)
more than 50% of the Fund's outstanding shares.  The
remaining restrictions may be changed by the Fund's Board of
Directors at any time.  In accordance with these
restrictions, the Fund will not:

1.   With respect to 75% of the value of its total assets,
invest more than 5% of its total assets in securities of any
one issuer, except securities issued or guaranteed by the
United States government, or purchase more than 100% of the
outstanding voting securities of such issuer.

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

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

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

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

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

7.   Purchase or sell real estate, real estate mortgages,
real estate investment trust securities, commodities or
commodity contracts, but this shall not prevent the Fund
from: (a) investing in securities of issuers engaged in the
real estate business and securities which are secured by
real estate or interests therein; (b) holding or selling
real estate received in connection with securities it holds;
or (c) trading in futures contracts and options on futures
contracts.

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

9.   Pledge, hypothecate, mortgage or otherwise encumber its
assets in an amount in excess of 5% of its assets to secure
borrowings for investment purposes or otherwise.

10.  Invest more than 2% of the value of its assets in
warrants, provided that warrants acquired in connection with
other securities shall not be subject to this restriction.

11.  Invest in mineral-type programs or leases.

12.  Purchase or otherwise acquire any security if, as a
result, more than l5% of its net assets would be invested in
securities that are illiquid.

13.  Purchase or retain the securities of any issuer if
those officers and Directors of the Fund or SBMFM owning
individually more than 1/2 of l% of the securities of such
issuer, together own more than 5% of the securities of such
issuer.

14.  Purchase the securities of any other open-end
investment company, except through a purchase on the open
market involving no commission or profit to a sponsor or
dealer (other than the customary stock exchange or over-the-
counter brokerage commission) and except as part of a
merger, consolidation or acquisition of assets.

15.  Invest for the purpose of exercising control of
management.

16.  Purchase securities of any company with a record of
less than three years' continuous operation if such purchase
would cause its investments in such companies to exceed 5%
of the value of its total assets.  (For purposes of this
limitation, issuers include predecessors, sponsors,
controlling persons, general partners, guarantors and
originators of underlying assets.)

17.  Purchase or write put or call options.

If any percentage restriction described above is complied
with at the time of an investment, a later increase or
decrease in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.

Certain of these restrictions were adopted as the result of
undertakings to state securities commissions and must be
complied with only as long as the Fund's shares are
registered in the particular state.  In order to permit the
sale of the Fund's shares in certain states, the Fund may
make commitments more restrictive than the investment
restrictions described above such as those regarding oil and
mineral leases and real estate limited partnerships.

Certain Investment Activities

While the Fund is authorized to borrow money from banks for
purposes of investment (leveraging) and to invest in
securities of foreign issuers, it has no current intention
of engaging in these investment activities and will do so
only when the Fund's Board of Directors determines that
either or both of these activities are in the best interests
of shareholders.

Portfolio Turnover

The Fund generally does not engage in short-term trading but
intends to purchase securities for long-term capital
appreciation.  While the Fund's portfolio turnover rate has
in the past exceeded 100%, the Fund's annual portfolio
turnover rate is not expected to exceed 100%. A portfolio
turnover rate of 100% would occur if all of the securities
in the Fund's portfolio were replaced once during a period
of one year.  The portfolio 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 at the date of acquisition are excluded
from the calculation.     For the fiscal years ended
December 31, 1994 and 1995, the Fund's portfolio turnover
rate was 52% and 57%, respectively.    

Future portfolio turnover rates may vary greatly from year
to year as well as within a particular year and may be
affected by cash requirements for redemptions of the Fund's
shares as well as by requirements that enable the Fund to
receive favorable tax treatment.  Portfolio turnover rates
will largely depend on the level of purchases and
redemptions of Fund shares.  Higher portfolio turnover rates
can result in corresponding increases in brokerage
commissions.  In addition, to the extent that the Fund
realizes short-term gains as the result of more portfolio
transactions, such gains would be taxable to shareholders at
ordinary income tax rates.

Portfolio Transactions

Decisions to buy and sell securities for the Fund are made
by SBMFM, subject to the overall supervision and review of
the Fund's Board of Directors. Portfolio securities
transactions for the Fund are effected by or under the
supervision of SBMFM.

Transactions on stock exchanges involve the payment of
negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the
over-the-counter market, but the price of those securities
includes an undisclosed commission or mark-up.  Over-the-
counter purchases and sales are transacted directly with
principal market makers except in those cases in which
better prices and executions may be obtained elsewhere.  The
cost of securities purchased from underwriters includes an
underwriting commission or concession, and the prices at
which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down.     For the fiscal
years ended December 31, 1995, 1994 and  1993, the Fund paid
total brokerage commissions of  $3,736,847, $3,433,551 and
$3,034,151, respectively.    

In executing portfolio transactions and selecting brokers or
dealers, it is the Fund's policy to seek the best overall
terms available.  SBMFM, in seeking the most favorable price
and execution, considers all factors it deems relevant,
including, for example, the price, the size of the
transaction, the reputation, experience and financial
stability of the broker-dealer involved and the quality of
service rendered by the broker-dealer in other transactions.
SBMFM receives research, statistical and quotation services
from several broker-dealers with which it places the Fund's
portfolio transactions.  It is possible that certain of the
services received primarily will benefit one or more other
accounts for which SBMFM exercises investment discretion.
Conversely, the Fund may be the primary beneficiary of
services received as a result of portfolio transactions
effected for other accounts.  SBMFM's fee under the Advisory
Agreement is not reduced by reason of its receiving such
brokerage and research services.  The Fund's Board of
Directors, in its discretion, may authorize SBMFM to cause
the Fund to pay a broker that provides brokerage and
research services to SBMFM a commission in excess of that
which another qualified broker would have charged for
effecting the same transaction.  Smith Barney will not
participate in commissions from brokerage given by the Fund
to other brokers or dealers and will not receive any
reciprocal brokerage business resulting therefrom.

In accordance with Section 17(e) of the 1940 Act and Rule
17(e) thereunder, the Fund's Board of Directors has
determined that any portfolio transaction for the Fund may
be executed through Smith Barney or an affiliate of Smith
Barney if, in SBMFM's judgment, the use of Smith Barney or
an affiliate is likely to result in price and execution at
least as favorable as those of other qualified brokers and
if, in the transaction, Smith Barney or the affiliate
charges the Fund a commission rate consistent with those
charged by Smith Barney or an affiliate to comparable
unaffiliated customers in similar transactions.  In
addition, under rules recently adopted by the SEC, Smith
Barney may directly execute such transactions for the Fund
on the floor of any national securities exchange, provided:
(a) the Board of Directors has expressly authorized Smith
Barney to effect such transactions; and (b) Smith Barney
annually advises the Fund of the aggregate compensation it
earned on such transactions.     For the fiscal year ended
December 31, 1995, the Fund paid $637,506 in brokerage
commissions to Smith Barney, or 17% of the total brokerage
commissions paid.  Smith Barney secured 14% of the aggregate
dollar amount of transactions involving commissions during
the 1995 fiscal year.  For the 1995, 1994 and 1993 fiscal
years, the Fund paid $637,506, $487,203 and $579,597,
respectively, in brokerage commissions to Smith Barney
and/or Shearson Lehman Brothers, the Fund's distributor
prior to Smith Barney.    

Even though investment decisions for the Fund are made
independently from those of the other accounts managed by
SBMFM, investments of the kind made by the Fund also may be
made by those other accounts.  When the Fund and one or more
accounts managed by SBMFM 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 SBMFM to be equitable.  In some cases,
this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained
for or disposed of by the Fund.

PURCHASE OF SHARES

Volume Discounts

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

Combined Right of Accumulation

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

Determination of Public Offering Price

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

REDEMPTION OF SHARES

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

Distributions in Kind

If the Board of Directors of the Fund determines that it
would be detrimental to the best interests of the remaining
shareholders to make a redemption payment wholly in cash,
the Fund may pay, in accordance with SEC rules, any portion
of a redemption in excess of the lesser of $250,000 or 1% of
the Fund's net assets by distribution in kind of portfolio
securities in lieu of cash.  Securities issued as a
distribution in kind may incur brokerage commissions when
shareholders subsequently sell those securities.

Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the "Withdrawal Plan") is
available to shareholders who own shares with a value of at
least $10,000 ($5,000 for retirement plan accounts) and who
wish to receive specific amounts of cash monthly or
quarterly.  Withdrawals of at least $50 may be made under
the Withdrawal Plan by redeeming as many shares of the Fund
as may be necessary to cover the stipulated withdrawal
payment.  Any applicable CDSC will not be waived on amounts
withdrawn by shareholders that exceed 1.00% per month of the
value of a shareholder's shares at the time the Withdrawal
Plan commences.  (With respect to Withdrawal Plans in effect
prior to November 7, 1994, any applicable CDSC will be
waived on amounts withdrawn that do not exceed 2.00% per
month of the value of a shareholder's shares at the time the
Withdrawal Plan commenced.) To the extent withdrawals exceed
dividends, distributions and appreciation of a shareholder's
investment in the Fund, there will be a reduction in the
value of the shareholder's investment and continued
withdrawal payments will reduce the shareholder's investment
and ultimately may exhaust it.  Withdrawal payments should
not be considered as income from investment in the Fund.
Furthermore, as it generally would not be advantageous to a
shareholder to make additional investments in the Fund at
the same time he or she is participating in the Withdrawal
Plan, purchases by such shareholders in amounts of less than
$5,000 ordinarily will not be permitted.

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

DISTRIBUTOR
   
Smith Barney serves as the Fund's distributor on a best
efforts basis pursuant to a written agreement (the
"Distribution Agreement") which was most recently approved
by the Fund's Board of Directors on July 19, 1995.  For the
fiscal years ended December 31, 1995, 1994 and 1993, Smith
Barney and/or its predecessor, Shearson Lehman Brothers,
received approximately $1.7 million $1.4 million and $3.1
million  respectively, in sales charges for the sale of
Class A shares and did not reallow any portion thereof to
dealers.  For the fiscal years ended December 31, 1995, 1994
and 1993, Smith Barney or Shearson Lehman Brothers received
approximately $1,912,000, $2,313,000 and $1,794,000,
respectively, representing CDSC on redemptions of the Fund's
Class B shares.  For the fiscal years ended December 31,
1995, and 1994, Smith Barney received approximately $4000
and  $1, respectively,  representing CDSC on redemptions of
the Fund's Class C shares.
    
When payment is made by the investor, unless otherwise noted
by the investor, the funds will be held as a free credit
balance in the investor's brokerage account and Smith Barney
may benefit from the temporary use of the funds.  The
investor may designate another use for the funds prior to
settlement date, such as an investment in a money market
fund (other than Smith Barney Exchange Reserve Fund) of the
Smith Barney Mutual Funds.  If the investor instructs Smith
Barney to invest the funds in a Smith Barney money market
fund, the amount of the investment will be included as part
of the average daily net assets of both the Fund and the
Smith Barney money market fund, and affiliates of Smith
Barney that serve the funds in an investment advisory or
administrative capacity will benefit from the fact they are
receiving fees from both such investment companies for
managing these assets computed on the basis of their average
daily net assets.  The Fund's Board of Directors has been
advised of the benefits to Smith Barney resulting from these
settlement procedures and will take such benefits into
consideration when reviewing the Advisory, Administration
and Distribution Agreements for continuance.

For the fiscal year ended December 31, 1995, Smith Barney
incurred distribution expenses totaling approximately
$14,769,000, consisting of approximately $807,000 for
advertising, $112,000 for printing and mailing of
Prospectuses, $6,213,000 for support services, $7,487,000 to
Smith Barney Financial Consultants, and $150,000 in accruals
for interest on the excess of Smith Barney expenses incurred
in distribution of the Fund's shares over the sum of the
distribution fees and CDSC received by Smith Barney from the
Fund.

Distributions Arrangements

To compensate Smith Barney for the services it provides and
for the expense it bears under the Distribution Agreement,
the Fund has adopted a services and distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act.  Under
the Plan, the Fund pays Smith Barney a service fee, accrued
daily and paid monthly, calculated at the annual rate of
0.25% of the value of the Fund's average daily net assets
attributable to the Class A, Class B and Class C shares.  In
addition, the Fund pays Smith Barney a distribution fee with
respect to the Class B and Class C shares primarily intended
to compensate Smith Barney for its initial expense of paying
Financial Consultants a commission upon sales of those
shares. The Class B and Class C distribution fee is
calculated at the annual rate of 0.75% of the value of the
Fund's average daily net assets attributable to the shares
of the respective Class.

The following service and distribution fees were incurred
during the periods indicated:
<TABLE>   
<S>                 <C>            <C>       <C>       <C>
     SERVICE FEES
     Fiscal YearEnded 12/31/95     Fiscal YearEnded 12/31/94
Fiscal YearEnded 12/31/93     For PeriodFrom 2/4/93Through
12/31/93*
Class A                   $4,551,117         $3,818,714
$4,143,053     -
Class B                     2,192,717   2,832,127 3,054,126
-
Class C                          21,953 9,200     -
$1,600
</TABLE>
<TABLE>
<S>                 <C>            <C>       <C>       <C>
     DISTRIBUTION FEES
     Fiscal YearEnded 12/31/95     Fiscal YearEnded 12/31/94
Fiscal YearEnded 12/31/93     For PeriodFrom 2/4/93Through
12/31/93*
Class B                   $6,578,149    $8,496,382
$9,162,378     -
Class C                          65,858 27,602    -
$4,800

* The Fund commenced selling Class C shares on February 4,
1993.
</TABLE>    
Under its terms, the Plan continues from year to year,
provided such continuance is approved annually by vote of
the Fund's Board of Directors, including a majority of the
Independent Directors.  The Plan may not be amended to
increase the amount of the service and distribution fees
without shareholder approval, and all amendments of the Plan
also must be approved by the Directors and Independent
Directors in the manner described above.  The Plan may be
terminated with respect to a Class of the Fund at any time,
without penalty, by vote of a majority of the Independent
Directors or by vote of a majority (as defined in the 1940
Act) of the outstanding voting securities of the Class.
Pursuant to the Plan, Smith Barney will provide the Fund's
Board of Directors with periodic reports of amounts expended
under the Plan and the purpose for which such expenditures
were made.

VALUATION OF SHARES

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

Securities listed on a national securities exchange will be
valued on the basis of the last sale on the date on which
the valuation is made or, in the absence of sales, at the
mean between the closing bid and asked prices.  Over-the-
counter securities will be valued at the mean between the
closing bid and asked prices on each day, or, if market
quotations for those securities are not readily available,
at fair value, as determined in good faith by the Fund's
Board of Directors.  Short-term obligations with maturities
of 60 days or less are valued at amortized cost, which
constitutes fair value as determined by the Fund's Board of
Directors.  Amortized cost involves valuing an instrument at
its original cost to the Fund and thereafter assuming a
constant amortization to maturity of any discount or
premium, regardless of the effect of fluctuating interest
rates on the market value of the instrument.  All other
securities and other assets of the Fund will be valued at
fair value as determined in good faith by the Fund's Board
of Directors.

EXCHANGE PRIVILEGE

Except as noted below, shareholders of any Smith Barney
Mutual Fund may exchange all or part of their shares for
shares of the same Class of other Smith Barney Mutual Funds,
to the extent such shares are offered for sale in the
shareholder's state of residence, on the basis of relative
net asset value per share at the time of exchange as
follows:

     A.   Class A shares of any fund purchased with a sales
charge may be exchanged for Class A shares of any of the
other funds, and the sales charge differential, if any, will
be applied.  Class A shares of any fund may be exchanged
without a sales charge for shares of the funds that are
offered without a sales charge.  Class A shares of any fund
purchased without a sales charge may be exchanged for shares
sold with a sales charge, and the appropriate sales charge
differential will be applied.

     B.   Class A shares of any fund acquired by a previous
exchange of shares purchased with a sales charge may be
exchanged for Class A shares of any of the other funds, and
the sales charge differential, if any, will be applied.

     C.   Class B shares of any fund may be exchanged
without a sales charge.  Class B shares of the Fund
exchanged for Class B shares of another fund will be subject
to the higher applicable CDSC of the two funds and, for
purposes of calculating CDSC rates and conversion periods,
will be deemed to have been held since the date the shares
being exchanged were deemed to be purchased.

Dealers other than Smith Barney must notify the Transfer
Agent of the investor's prior ownership of Class A shares of
Smith Barney High Income Fund and the account number in
order to accomplish an exchange of shares of Smith Barney
High Income Fund under paragraph B above.

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

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

PERFORMANCE DATA

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

Average Annual Total Return

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

                    P(1 + T)n = ERV
     Where     P    =    a hypothetical initial payment of
$1,000
          T    =    average annual total return
          n    =    number of years
          ERV  =    Ending Redeemable Value of a
hypothetical $1,000 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.

Class A's average annual total return was as follows for the
periods indicated:
   
22.84% for the one-year period beginning on January 1, 1995
through December 31, 1995
12.19% per annum during the five-year period beginning on
January 1, 1991 through December 31, 1995
12.82% per annum during the ten-year period beginning on
January 1, 1986 through December 31, 1995

The average annual total return figures assume that the
maximum 5.00% sales charge has been deducted from the
investment at the time of purchase.  If the maximum sales
charge had not been deducted, Class A's average annual total
return for those same periods would have been 29.26%, 13.35%
and 13.40%, respectively.

Class B's average annual total return was as follows for the
periods indicated:

23.29% for the one-year period beginning on January 1, 1995
through December 31, 1995
10.79% for the period from inception (November 6, 1992)
through December 31, 1995

The average annual total return figures assume that the
maximum applicable CDSC has been deducted from the
investment at the time of redemption.  If the maximum CDSC
had not been deducted, Class B's average annual total return
for those same periods would have been 28.29% and 11.30%,
respectively.

Class C's (formerly Class D's) average annual total return
was as follows for the periods indicated:

27.29% for the one-year period beginning on January 1, 1995
through December 31,1995
9.93% for the period from inception (February 4, 1993)
through December 31,1995
    
The average annual total return figures assume that the
maximum applicable CDSC has been deducted from the
investment at the time of redemption.  If the maximum CDSC
had not been deducted, Class C's average annual total return
for those same periods would have been 28.29% and 9.93%,
respectively.

Aggregate Total Return

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

ERV - P
  P


     Where:    P    =    a hypothetical initial payment of
$10,000
          ERV  =    Ending Redeemable Value of a
hypothetical $10,000 investment
                    made at the beginning of 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.

Class A's aggregate total return was as follows for the
periods indicated:
   
22.84% for the one-year period beginning on January 1, 1995
through December 31, 1995
77.71% for the five-year period beginning on January 1, 1991
through December 31, 1995
233.76% for the ten-year period beginning on January 1, 1986
through December 31, 1995

These aggregate total return figures assume the maximum
5.00% sales charge has been deducted from the investment at
the time of purchase. If the maximum sales charge had not
been deducted, Class A's aggregate total return for those
same periods would have been 29.26%, 87.13% and 251.52%,
respectively.

Class B's aggregate total return was as follows for the
periods indicated:

23.29% for the one-year period beginning on January 19, 1995
through December 31, 1995
38.10% for the period from inception (November 6, 1992)
through December 31, 1995.

These aggregate total return figures assume that the maximum
applicable CDSC has been deducted from the investment at the
time of redemption.  If the maximum applicable CDSC had not
been deducted, Class B's aggregate total return for those
same periods would have been 28.29% and 40.10%,
respectively.

Class C's aggregate total return was as follows for the
periods indicated:

27.29% for the one-year period beginning on January 1, 1995
through December 31, 1995
31.65% for the period from inception (February 4, 1993)
through December 31, 1995
    
These aggregate total return figures assume that the maximum
applicable CDSC has been deducted from the investment at the
time of redemption.  If the maximum CDSC had not been
deducted, Class C's aggregate total return for those same
periods would have been 28.29% and 31.65%, respectively.

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

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

TAXES

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

The Fund has qualified and intends to continue to qualify
each year as a regulated investment company under the Code.
To so qualify, the Fund must, among other things, derive
less than 30% of its gross income in each taxable year from
the sale or disposition of stocks, securities, and certain
financial instruments held for less than three months.  This
requirement may limit the extent to which the Fund is able
to sell stocks, securities or financial instruments held for
less than three months.  If the Fund (a) qualifies as a
regulated investment company and (b) distributes to its
shareholders at least 90% of its net investment income
(including, for this purpose, its net realized short-term
capital gains), the Fund will not be liable for Federal
income taxes to the extent that its net investment income
and its net realized long- and short-term capital gains, if
any, are distributed to its shareholders.

Gains or losses on the sales of stock or securities by the
Fund generally will be long-term capital gains or losses if
the Fund has held the stock or securities for more than one
year.  Gains or losses on sales of stock or securities held
for not more than one year generally will be short-term
capital gains or losses.

Any net long-term capital gains realized by the Fund will be
distributed annually as described in the Prospectus.  Such
distributions ("capital gain dividends") will be taxable to
shareholders as long-term capital gains, regardless of how
long a shareholder has held Fund shares, and will be
designated as capital gain dividends in a written notice
mailed by the Fund to shareholders after the close of the
Fund's prior taxable year.  If a shareholder receives a
capital gain dividend with respect to any share and if the
share has been held by the shareholder for six months or
less, then any loss on the sale or exchange of such share
will be treated as a long-term capital loss to the extent of
the capital gain dividend.

The portion of the dividends received from the Fund that
qualifies for the dividends-received deduction for
corporations will be reduced to the extent that the Fund
holds dividend-paying stock for less than 46 days (91 for
certain preferred stocks).  The Fund's holding period will
not include any period during which the Fund has reduced its
risk of loss from holding the stock by purchasing an option
to sell or entering into a short sale of substantially
identical stock or securities convertible into the stock.
The holding period for stock may also be reduced if the Fund
diminishes its risk of loss by holding one or more other
positions with respect to substantially similar or related
properties.  Dividends-received deductions will be allowed
only with respect to shares that a corporate shareholder has
held for at least 46 days within the meaning of the same
holding period rules applicable to the Fund.

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

If a shareholder incurs a sales charge in acquiring shares
of the Fund, disposes of those shares within 90 days and
then acquires shares in a mutual fund for which the
otherwise applicable sales charge is reduced by reason of a
reinvestment right (that is exchange privilege), the
original sales charge will not be taken into account in
computing gain/loss on the original shares to the extent the
subsequent sales charge is reduced.  Instead, it will he
added to the tax basis in the newly acquired shares.
Furthermore, the same rule also applies to a disposition of
the newly acquired or redeemed shares made within 90 days of
the second acquisition.  This provision prevents a
shareholder from immediately deducting the sales charge by
shifting his or her investment in a family of mutual funds.

Investors considering buying shares of the Fund on or just
prior to a record date for a taxable dividend or capital
gain distribution should be aware that, regardless of
whether the price of the Fund shares to be purchased
reflects the amount of the forthcoming dividend or
distribution payment, any such payment will be a taxable
dividend or distribution payment.

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

The foregoing is only a summary of certain tax
considerations generally affecting the Fund and its
shareholders and is not intended as a substitute for careful
tax planning.  Shareholders are urged to consult their tax
advisors with specific reference to their own tax
situations, including their state and local tax liabilities.
ADDITIONAL INFORMATION

The Fund was incorporated on September 2, 1969 under the
name The Shearson Appreciation Fund, Inc.  On October 28,
1987, November 5, 1995, July 30, 1993 and October 14, 1994,
the Fund changed its name to Shearson Lehman Appreciation
Fund Inc., Shearson Lehman Brothers Appreciation Fund Inc.,
Smith Barney Shearson Appreciation Fund Inc. and Smith
Barney Appreciation Fund Inc., respectively.
   
PNC, located at 17th and Chestnut Streets, Philadelphia,
Pennsylvania 19103, serves as the custodian of the Fund.    
Under its agreement with the Fund, PNC holds the Fund's
portfolio securities and keeps all necessary accounts and
records.  For its services, PNC receives a monthly fee based
upon the month-end market value of securities held in
custody and also receives securities transaction charges.
The assets of the Fund are held under bank custodianship in
compliance with the 1940 Act.
   
First Data Investor Services Group, Inc.,     located at
Exchange Place, Boston, Massachusetts 02109, serves as the
Fund's transfer agent.  Under the transfer agency agreement,
the Transfer Agent maintains the shareholder account records
for the Fund, handles certain communications between
shareholders and the Fund and distributes dividends and
distributions payable by the Fund.  For these services, the
Transfer Agent receives a monthly fee computed on the basis
of the number of shareholder accounts it maintains for the
Fund during the month and is reimbursed for out-of-pocket
expenses.

FINANCIAL STATEMENTS

The Fund's Annual Report for the fiscal year ended December
31,    1995     is incorporated herein by reference in its
entirety.

     Smith Barney
     Appreciation
     Fund Inc.





Statement of

Additional Information













March 1,    1996    

















Smith Barney
Appreciation Fund Inc.
388 Greenwich Street
New York, New York 10013





              SMITH BARNEY APPRECIATION FUND INC.

                             PART C

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

         Included in Part A:

                Financial  Highlights  are  incorporated  by
reference to Part A filed herewith.

         Included in Part B:

               The  Registrant's Annual Report for the  year
               ended  December 31, 1995 and  the  Report  of
               Independent  Accountants are incorporated  by
               reference  to the Definitive 30b-1  filed  on
               March  1,  1996  as  Accession  #   91155-96-
               000098.

         Included in Part C:

               Consent  of Independent Accountants is  filed
herein.

(b) Exhibits

Exhibit No.   Description of Exhibits

               All   references  are  to  the   Registrant's
         Registration   Statement  on   Form   N-8B-1   (the
         "Registration Statement") as filed with the SEC  on
         September  9, 1969 and Form N-1A File  No.  2-34576
         and 811-1940.

(1)(a)         Registrant's   Articles   of   Incorporation,
         Articles  of  Amendment and Articles  Supplementary
         dated  August  25,  1969, May 9, 1983,  August  26,
         1987,  July  20, 1989, November 2, 1992,  and  July
         30,   1993,   respectively,  are  incorporated   by
         reference to Post-Effective Amendment No. 34  filed
         on  December  29,  1993 ("Post-Effective  Amendment
         No. 34").

(b)            Registrant's  Articles  of  Amendment   dated
         October  14,  1994, Form of Articles  Supplementary
         dated  November  7, 1994 and Form  of  Articles  of
         Amendment  dated November 7, 1993 are  incorporated
         by  reference  to Post-Effective Amendment  No.  37
         filed   on   November   7,  1994   ("Post-Effective
         Amendment No. 37").

(2)(a)         Registrant's  By-Laws  are  incorporated   by
         reference to the Registration Statement.

(b)            Amendment   to   Registrant's   By-Laws   are
         incorporated   by   reference   to   Post-Effective
         Amendment No. 24 filed on February 29, 1988.

(c)            Amendment   to  Registrant's  By-Laws   dated
         January   24,  1987  and  October  21,   1987   are
         incorporated   by   reference   to   Post-Effective
         Amendment No. 26.
   
(d)       Amendment to Registrant's By-Laws dated  July  20,
1994 are filed herein.
    
(3)      Not Applicable.

(4)(a)        Registrant's  form  of  stock  certificate  is
         incorporated   by   reference   to   Post-Effective
         Amendment No. 31 filed on November 6, 1992  ("Post-
         Effective Amendment No. 31").

(5)            Investment  Advisory  Agreement  between  the
         Registrant   and   Smith  Barney   Shearson   Asset
         Management,  dated July 30, 1993,  is  incorporated
         by reference to Post-Effective Amendment No. 34.

(6)(a)        Distribution Agreement between the  Registrant
         and  Smith  Barney Shearson Inc.,  dated  July  30,
         1993,   is  incorporated  by  reference  to   Post-
         Effective Amendment No. 34.

(b)           Form  of  Distribution Agreement  between  the
         Registrant and PFS Distributors is incorporated  by
         reference to Post-Effective Amendment No. 39  filed
         on  July  3,  1995 ("Post-Effective  Amendment  No.
         39").

(7)          Not Applicable.

(8)            Form  of  Custodian  Agreement  between   the
         Registrant  and  PNC Bank, National Association  is
         incorporated   by   reference   to   Post-Effective
         Amendment No. 39.

(9)(a)          Administration   Agreement    between    the
         Registrant  and Smith, Barney Advisers, Inc.  dated
         April  20,  1994, is incorporated by  reference  to
         Post-Effective Amendment No. 35 filed  on  July  1,
         1994 ("Post-Effective Amendment No. 35").

(b)            Transfer   Agency   Agreement   between   the
         Registrant  and  The  Shareholder  Services  Group,
         Inc.,  dated  April  20, 1993, is  incorporated  by
         reference to Post-Effective Amendment No. 35.

(d)           Form  of Sub-Transfer Agency Agreement between
         the  Registrant  and  PFS Shareholder  Services  is
         incorporated   by   reference   to   Post-Effective
         Amendment No. 39.

(10)           Opinion  of  Counsel  regarding  legality  of
         shares   being   registered  is   incorporated   by
         reference to Post-Effective Amendment No. 38  filed
         on  February  28,  1995 ("Post-Effective  Amendment
         No. 38").
   
(11)          Consent  of  KPMG Peat Marwick  LLP  is  filed
         herein.
    
(12)          Not Applicable.

(13)          Not Applicable.

(14)          Not Applicable.

(15)           Amended   Services   and  Distribution   Plan
         pursuant  to Rule 12b-1 between the Registrant  and
         Smith  Barney  Inc.,  dated November  7,  1994,  is
         incorporated   by   reference   to   Post-Effective
         Amendment No. 37.
   
(16)          Performance Data is incorporated by  reference
         to Post-Effective Amendment No. 26..

(17)          A Financial Data Schedule is filed herein.

(18)          Form  of Rule 18f-3(d) Multiple Class Plan  of
         the  Registrant  is incorporated  by  reference  to
         Post-Effective Amendment No. 40 filed  on  December
         22, 1995.
    



Item  25. Persons Controlled by or under Common Control with
Registrant

         None
   
Item 26. Number of Holders of Securities

              (1)                      (2)
                                  Number of Record Holders
          Title  of  Class                 by  Class  as  of
February 16, 1996

         Common stock, par             Class A   163,438
           value   $.001  per  share               Class   B
96,940
                                  Class C      1,503
                                  Class Y            3
                                  Class Z           18
    
Item 27. Indemnification

          Response to this item is incorporated by reference
to Post-Effective Amendment No. 38.


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


Investment Adviser - - Smith Barney Mutual Funds Management
Inc., formerly known as Smith, Barney Advisers, Inc.
("SBMFM")

SBMFM,  through its predecessors, has been in the investment
counseling  business  since 1934  and  was  incorporated  in
December 1968 under the laws of the State of Delaware. SBMFM
is  a  wholly owned subsidiary of Smith Barney Holdings Inc.
(formerly  known  as Smith Barney Shearson  Holdings  Inc.),
which  in  turn  is a wholly owned subsidiary  of  Travelers
Group   Inc.   (formerly  known  as  Primerica  Corporation)
("Travelers").  SBMFM is registered as an investment adviser
under  the  Investment Advisers Act of 1940  (the  "Advisers
Act").

The  list  required  by  this Item 28  of  the  officer  and
directors of SBMFM together with information as to any other
business,   profession,  vocation   or   employment   of   a
substantial nature engaged in by such officer 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).

Prior  to  the  close  of  business  on  November  7,  1994,
Greenwich  Street  Advisors served  as  investment  adviser.
Greenwich  Street  Advisors, through its  predecessors,  has
been  in  the investment counseling business since 1934  and
was  a division of Mutual Management Corp. ("MMC"). MMC  was
incorporated  in 1978 and is a wholly owned  subsidiary   of
Smith Barney Holdings Inc. ("Holdings"), which in turn is  a
wholly owned subsidiary of  Travelers. The list required  by
this Item 28 of officers and directors  of MMC and Greenwich
Street  Advisors, 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  MMC  on
behalf of Greenwich Street Advisors pursuant to the Advisers
Act (SEC File No. 801-14437).



Item 29. Principal Underwriters

   
(a)  Smith  Barney Inc. ("Smith Barney") currently  acts  as
     distributor  for  Smith Barney Managed Municipals  Fund
     Inc.,  Smith  Barney California Municipals  Fund  Inc.,
     Smith   Barney  Massachusetts  Municipals  Fund,  Smith
     Barney   Aggressive  Growth  Fund  Inc.,  Smith  Barney
     Appreciation  Fund Inc., Smith Barney Principal  Return
     Fund, Smith Barney Managed Governments Fund Inc., Smith
     Barney  Income Funds, Smith Barney Equity Funds,  Smith
     Barney  Investment  Funds Inc.,  Smith  Barney  Natural
     Resources  Fund  Inc., Smith Barney  Telecommunications
     Trust, Smith Barney Arizona Municipals Fund Inc., Smith
     Barney  New Jersey Municipals Fund Inc., The  USA  High
     Yield  Fund N.V., Garzarelli Sector Analysis  Portfolio
     N.V.,  Smith Barney Fundamental Value Fund Inc.,  Smith
     Barney  Series  Fund, Consulting Group Capital  Markets
     Funds,  Smith  Barney  Investment Trust,  Smith  Barney
     Adjustable  Rate Government Income Fund,  Smith  Barney
     Oregon Municipals Fund, Smith Barney Funds, Inc., Smith
     Barney  Muni  Funds,  Smith Barney World  Funds,  Inc.,
     Smith  Barney Money Funds, Inc., Smith Barney  Tax-Free
     Money  Fund, Inc., Smith Barney Variable Account Funds,
     Smith   Barney  U.S.  Dollar  Reserve  Fund   (Cayman),
     Worldwide  Special  Fund,  N.V.,  Worldwide  Securities
     Limited,  (Bermuda),  Smith Barney  International  Fund
     (Luxembourg),    Smith   Barney   Institutional    Cash
     Management Fund Inc., Smith Barney Concert Series  Inc.
     and various series of unit investment trusts.
    

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


(b)  PFS  Distributors ("PFS") currently acts as distributor
     for:  Common  Sense Growth; Common Sense Growth/Income;
     Common  Sense  Government; Common Sense  Money  Market;
     Common    Sense   Municipal   Bond;   CSII   Aggressive
     Opportunity - A; CSII Aggressive Opportunity - B;  CSII
     Growth  - A; CSII Growth - B; CSII Growth/Income  -  A;
     CSII  Growth/Income  -  B; CSII Government  -  A;  CSII
     Government - B; CSII Emerging Growth - A; CSII Emerging
     Growth  -  B;  CSII  International  Equity  -  A;  CSII
     International  Equity - B; Smith Barney Concert  Series
     Inc;  Smith  Barney Money Funds, Inc. - Cash Portfolio;
     Smith Barney Exchange Reserve Fund; Smith Barney Growth
     Opportunity  Fund;  and Smith Barney  Investment  Grade
     Bond Fund.

     On  May 8, 1995, PFS changed its name from Common Sense
     Distributors to PFS Distributors, its current name. The
     information  required by this Item 29 with  respect  to
     each   director,  officer  and  partner   of   PFS   is
     incorporated  by reference to Schedule A  of  FORM  BD,
     filed by PFS pursuant to the Securities Exchange Act of
     1934 (SEC File No. 8-37352).

Item 30. Location of Accounts and Records
   
    (1)  Smith Barney Appreciation Fund Inc.
         388 Greenwich Street
         New York, New York 10013
    

    (2)  Smith Barney Mutual Funds Management Inc.
         388 Greenwich Street
         New York, New York 10013
       
    (3)  PNC Bank, National Association
         17th & Chestnut Streets
         Philadelphia, PA 19103

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


Item 31. Management Services

         None


Item 32. Undertakings

         None

Rule 485(b) Certification

         The Registrant hereby certifies that it meets all
of the requirements for effectiveness pursuant to Rule
485(b) under the Securities Act of 1933, as amended.


                           SIGNATURES

    Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant, SMITH BARNEY APPRECIATION FUND
INC., 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
    
    20th day of February, 1996    .

                             SMITH BARNEY APPRECIATION FUND
INC.



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



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

Signature               Title                         Date

/s/ Heath B. McLendon        Director, Chairman of the Board       2/20/96    
Heath B. McLendon

/s/ Lewis E. Daidone              Senior Vice President and
   2/20/96    
Lewis E. Daidone        Treasurer (Chief Financial
                   and Accounting Officer)

/s/ Alfred J. Bianchetti          Director                         2/20/96    
Alfred J. Bianchetti

/s/ Herbert Barg                  Director                         2/20/96    
Herbert Barg

/s/ Martin Brody                  Director                         2/20/96    
Martin Brody


Signature               Title                         Date

/s/ Burt N. Dorsett               Director                         2/20/96    
Burt N. Dorsett

/s/ Dwight B. Crane               Director                         2/20/96    
Dwight B. Crane


/s/ Elliott S. Jaffe              Director                         2/20/96    
Elliott S. Jaffe

/s/ Stephen E. Kaufman       Director
   2/20/96    
Stephen E. Kaufman

/s/ Joseph J. McCann              Director                         2/20/96    
Joseph J. McCann


/s/ Cornelius C. Rose, Jr.        Director                         2/20/96    
Cornelius C. Rose