FORM OF CUSTODIAN SERVICES AGREEMENT 

	This Agreement is made as of [                          ] by and between 
SMITH BARNEY EQUITY FUNDS, a Massachusetts business trust (the "Fund") and PNC 
BANK, NATIONAL ASSOCIATION, a national banking association ("PNC Bank").
	The Fund is registered as an open-end investment company under the 
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund wishes 
to retain PNC Bank to provide custodian services and PNC Bank wishes to 
furnish such services, either directly or through an affiliate or affiliates, 
as more fully described herein.  In consideration of the premises and mutual 
covenants herein contained, the parties agree as follows:
	1.  Definitions.
		(a)    "Authorized Person".  The term "Authorized Person" shall 
mean any officer of the Fund and any other person, who is duly authorized by 
the Fund's Governing Board, to give Oral and Written Instructions on behalf of 
the Fund.  Such persons are listed in the Certificate attached hereto as the 
Authorized Persons Appendix, as such Appendix may be amended in writing by the 
Fund's Governing Board from time to time.
		(b)  "Book-Entry System".  The term "Book-Entry System" means 
Federal Reserve Treasury book-entry system for United States and federal 
agency securities, its successor or successors, and its nominee or nominees 
and any book-entry system maintained by an exchange registered with the SEC 
under the 1934 Act.
		(c)  "CFTC".  The term "CFTC" shall mean the Commodities Futures 
Trading Commission.
		(d)  "Governing Board".  The term "Governing Board" shall mean the 
Fund's Board of Directors if the Fund is a corporation or the Fund's Board of 
Trustees if the Fund is a trust, or, where duly authorized, a competent 
committee thereof.
		(e)  "Oral Instructions".  The term "Oral Instructions" shall mean 
oral instructions received by PNC Bank from an Authorized Person or from a 
person reasonably believed by PNC Bank to be an Authorized Person.
		(f)  "SEC".  The term "SEC" shall mean the Securities and Exchange 
Commission.
		(g)  "Securities and Commodities Laws".  The term "Securities and 
Commodities Laws" shall mean the "1933 Act" which shall mean the Securities 
Act of 1933, the "1934 Act" which shall mean the Securities Exchange Act of 
1934, the 1940 Act, and the "CEA" which shall mean the Commodities Exchange 
Act, as amended.
       	(h)  "Shares".  The term "Shares" shall mean the shares of stock 
of any series or class of the Fund, or, where appropriate, units of beneficial 
interest in a trust where the Fund is organized as a Trust.
		(i)  "Property".  The term "Property" shall mean:
 			(i)	any and all securities and other investment items 
which the Fund may from time to time deposit, or cause 
to be deposited, with PNC Bank or which PNC Bank may 
from time to time hold for the Fund;
		    (ii)	all income in respect of any of such securities or 
other investment items;
		   (iii)	all proceeds of the sale of any of such securities or 
investment items; and
		    (iv)	all proceeds of the sale of securities issued  by the 
Fund, which are received by PNC Bank from time to time, from 
or on behalf of the Fund.
		(j)  "Written Instructions".  The term "Written Instructions" 
shall mean written instructions signed by one Authorized Person and received 
by PNC Bank.  The instructions may be delivered by hand, mail, tested 
telegram, cable, telex or facsimile sending device.
	2.  Appointment.  The Fund hereby appoints PNC Bank to provide custodian 
services to the Fund, and PNC Bank accepts such appointment and agrees to 
furnish such services.
	3.  Delivery of Documents.  The Fund has provided or, where applicable, 
will provide PNC Bank with the following:
		(a)  certified or authenticated copies of the resolutions of the 
Fund's Governing Board, approving the appointment of PNC Bank or its 
affiliates to provide services;
		(b)  a copy of the Fund's most recent effective registration 
statement;
		(c)  a copy of the Fund's advisory agreement or agreements;
		(d)  a copy of the Fund's distribution agreement or  agreements;
		(e)  a copy of the Fund's administration agreements if PNC Bank is 
not providing the Fund with such services;
		(f)  copies of any shareholder servicing agreements made in 
respect of the Fund; and
		(g)  certified or authenticated copies of any and all amendments 
or supplements to the foregoing.
	4.  Compliance with Government Rules and Regulations.  	PNC Bank 
undertakes to comply with all applicable requirements of the Securities and 
Commodities Laws and any laws, rules and regulations of governmental 
authorities having jurisdiction with respect to all duties to be performed by 
PNC Bank hereunder.  Except as specifically set forth herein, PNC Bank assumes 
no responsibility for such compliance by the Fund.
	5.  Instructions.  Unless otherwise provided in this Agreement, PNC Bank 
shall act only upon Oral and Written Instructions.  PNC Bank shall be entitled 
to rely upon any Oral and Written Instructions it receives from an Authorized 
Person (or from a person reasonably believed by PNC Bank to be an Authorized 
Person) pursuant to this Agreement.  PNC Bank may assume that any Oral or 
Written Instructions received hereunder are not in any way inconsistent with 
the provisions of organizational documents or this Agreement or of any vote, 
resolution or proceeding of the Fund's Governing Board or of the Fund's 
shareholders.
	The Fund agrees to forward to PNC Bank Written Instructions confirming 
Oral Instructions so that PNC Bank receives the Written Instructions by the 
close of business on the same day that such Oral Instructions are received.  
The fact that such confirming Written Instructions are not received by PNC 
Bank shall in no way invalidate the transactions or enforceability of the 
transactions authorized by the Oral Instructions.
	The Fund further agrees that PNC Bank shall incur no liability to the 
Fund in acting upon Oral or Written Instructions provided such instructions 
reasonably appear to have been received from an Authorized Person.
	6.  Right to Receive Advice.
		(a)  Advice of the Fund.  If PNC Bank is in doubt as to any action 
it should or should not take, PNC Bank may request directions or advice, 
including Oral or Written Instructions, from the Fund.
    		(b)  Advice of Counsel.  If PNC Bank shall be in doubt as to any 
questions of law pertaining to any action it should or should not take, PNC 
Bank may request advice at its own cost from such counsel of its own choosing 
(who may be counsel for the Fund, the Fund's advisor or PNC Bank, at the 
option of PNC Bank).
		(c)  Conflicting Advice.  In the event of a conflict between 
directions, advice or Oral or Written Instructions PNC Bank receives from the 
Fund, and the advice it receives from counsel, PNC Bank shall be entitled to 
rely upon and follow the advice of counsel.
		(d)  Protection of PNC Bank.  PNC Bank shall be protected in any 
action it takes or does not take in reliance upon directions, advice or Oral 
or Written Instructions it receives from the Fund or from counsel and which 
PNC Bank believes, in good faith, to be consistent with those directions, 
advice or Oral or Written Instructions.
	Nothing in this paragraph shall be construed  so as to impose an 
obligation upon PNC Bank (i) to seek such directions, advice or Oral or 
Written Instructions, or (ii) to act in accordance with such directions, 
advice or Oral or Written Instructions unless, under the terms of other 
provisions of this Agreement, the same is a condition of PNC Bank's properly 
taking or not taking such action.
    	7.  Records.  The books and records pertaining to the Fund which are in 
the possession of PNC Bank, shall be the property of the Fund.  Such books and 
records shall be prepared and maintained as required by the 1940 Act and other 
applicable securities laws, rules and regulations.  The Fund, or the Fund's 
Authorized Persons, shall have access to such books and records at all time 
during PNC Bank's normal business hours.  Upon the reasonable request of the 
Fund, copies of any such books and records shall be provided by PNC Bank to 
the Fund or to an Authorized Person of the Fund, at the Fund's expense.
	8.  Confidentiality.  PNC Bank agrees to keep confidential all records 
of the Fund and information relative to the Fund and its shareholders (past, 
present and potential), unless the release of such records or information is 
otherwise consented to, in writing, by the Fund.  The Fund agrees that such 
consent shall not be unreasonably withheld and may not be withheld where PNC 
Bank may be exposed to civil or criminal contempt proceedings or when required 
to divulge.  The Fund further agrees that, should PNC Bank be required to 
provide such information or records to duly constituted authorities (who may 
institute civil or criminal contempt proceedings for failure to comply), PNC 
Bank shall not be required to seek the Fund's consent prior to disclosing such 
information.
	9.  Cooperation with Accountants.  PNC Bank shall cooperate with the 
Fund's independent public accountants and shall take all reasonable action in 
the performance of its obligations under this Agreement to ensure that the 
necessary information is made available to such accountants for the expression 
of their opinion, as required by the Fund.
	10.  Disaster Recovery.  PNC Bank shall enter into and shall maintain in 
effect with appropriate parties one or more agreements making reasonable 
provision for emergency use of electronic data processing equipment to the 
extent appropriate equipment is available.  In the event of equipment 
failures, PNC Bank shall, at no additional expense to the Fund, take 
reasonable steps to minimize service interruptions but shall have no liability 
with respect thereto.
	11.  Compensation.  As compensation for custody services rendered by PNC 
Bank during the term of this Agreement, the Fund will pay to PNC Bank a fee or 
fees as may be agreed to in writing from time to time by the Fund and PNC 
Bank.
  	12.  Indemnification.  The Fund agrees to indemnify and hold harmless 
PNC Bank and its nominees from all taxes, charges, expenses, assessment, 
claims and liabilities (including, without limitation, liabilities arising 
under the Securities and Commodities Laws and any state and foreign securities 
and blue sky laws, and amendments thereto, and expenses, including (without 
limitation) attorneys' fees and disbursements, arising directly or indirectly 
from any action which PNC Bank takes or does not take (i) at the request or on 
the direction of or in reliance on the advice of the Fund or (ii) upon Oral or 
Written Instructions.  Neither PNC Bank, nor any of its nominees, shall be 
indemnified against any liability to the Fund or to its shareholders (or any 
expenses incident to such liability) arising out of PNC Bank's own willful 
misfeasance, bad faith, negligence or reckless disregard of its duties and 
obligations under this Agreement.
	13.  Responsibility of PNC Bank.  PNC Bank shall be under no duty to 
take any action on behalf of the Fund except as specifically set forth herein 
or as may be specifically agreed to by PNC Bank, in writing.  PNC Bank shall 
be obligated to exercise care and diligence in the performance of its duties 
hereunder, to act in good faith and to use its best effort, within reasonable 
limits, in performing services provided for under this Agreement.  PNC Bank 
shall be responsible for its own negligent failure to perform its duties under 
this Agreement. Notwithstanding the foregoing, PNC Bank shall not be 
responsible for losses beyond its control, provided that PNC Bank has acted in 
accordance with the standard of care set forth above; and provided further 
that PNC Bank shall only be responsible for that portion of losses or damages 
suffered by the Fund that are attributable to the negligence of PNC Bank.
	Without limiting the generality of the foregoing or of any other 
provision of this Agreement, PNC Bank, in connection with its duties under 
this Agreement, shall not be under any duty or obligation to inquire into and 
shall not be liable for (a) the validity or invalidity or authority or lack 
thereof of any Oral or Written Instruction, notice or other instrument which 
conforms to the applicable requirements of this Agreement, and which PNC Bank 
reasonably believes to be genuine; or (b) delays or errors or loss of data 
occurring by reason of circumstances beyond PNC Bank's control, including acts 
of civil or military authority, national emergencies, labor difficulties, 
fire, flood or catastrophe, acts of God, insurrection, war, riots or failure 
of the mails, transportation, communication or power supply.
	Notwithstanding anything in this Agreement to the contrary, PNC Bank 
shall have no liability to the Fund for any consequential, special or indirect 
losses or damages which the Fund may incur or suffer by or as a consequence of 
PNC Bank's performance of the services provided hereunder, whether or not the 
likelihood of such losses or damages was known by PNC Bank.
	14.  Description of Services.
		(a)  Delivery of the Property.  The Fund will deliver or arrange 
for delivery to PNC Bank, all the property owned by the Fund, including cash 
received as a result of the distribution of its Shares, during the period that 
is set forth in this Agreement.  PNC Bank will not be responsible for such 
property until actual receipt.
		(b)  Receipt and Disbursement of Money.  PNC Bank, acting upon 
Written Instructions, shall open and maintain separate account(s) in the 
Fund's name using all cash received from or for the account of the Fund, 
subject to the terms of this Agreement.  In addition, upon Written 
Instructions, PNC Bank shall open separate custodial accounts for each 
separate series, class or portfolio of the Fund and shall hold in such 
account(s) all cash received from or for the accounts of the Fund specifically 
designated to each separate series, class or portfolio.  PNC Bank shall make 
cash payments from or for the account of the Fund only for:
			(i)	purchases of securities in the name of the Fund or PNC 
Bank or PNC Bank's nominee as provided in 
sub-paragraph j and for which PNC Bank has received a 
copy of the broker's or dealer's confirmation or 
payee's invoice, as appropriate;
		    (ii)	purchase or redemption of Shares of the Fund   
delivered to PNC Bank;
		   (iii)	payment of, subject to Written Instructions, interest, 
taxes, administration, accounting, distribution, advisory, 
management fees or similar expenses which are to be borne by 
the Fund;
		    (iv)	payment to, subject to receipt of Written 
Instructions, the Fund's transfer agent, as agent for the 
shareholders, an amount equal to the amount of dividends and 
distributions stated in the Written Instructions to be 
distributed in cash by the transfer agent to shareholders, 
or, in lieu of paying the Fund's transfer agent, PNC Bank 
may arrange for the direct payment of cash dividends and 
distributions to shareholders in accordance with procedures 
mutually agreed upon from time to time by and among the 
Fund, PNC Bank  and the Fund's transfer agent;
			(v)	payments, upon receipt of Written Instructions, in 
connection with the conversion, exchange or surrender 
of securities owned or subscribed to by the Fund and 
held by or delivered to PNC Bank;
		    (vi)	payments of the amounts of dividends received  with 
respect to securities sold short; payments made to a 
sub-custodian pursuant to provisions in sub-paragraph c of 
this Paragraph; and 
		  (viii)	payments, upon Written Instructions made for other 
proper Fund purposes.  PNC Bank is hereby authorized to 
endorse and collect all checks, drafts or other orders for 
the payment of money received as custodian for the account 
of the Fund.
		(c)  Receipt of Securities.
			(i)	PNC Bank shall hold all securities received  by it for 
the account of the Fund in a  separate account that 
physically segregates  such securities from those of 
any other   persons, firms or corporations, except for 
securities held in a Book-Entry System.  All such   
securities shall be held or disposed of only  upon 
Written Instructions of the Fund  pursuant to the 
terms of this Agreement.  PNC Bank shall have no power 
or authority to assign, hypothecate, pledge or 
otherwise dispose of any such securities or 
investment, except upon the express terms of this 
Agreement and upon Written Instructions, accompanied 
by a certified resolution of the Fund's Governing 
Board, authorizing the transaction.  In no case may 
any member of the Fund's Governing Board, or any 
officer, employee or agent of the Fund withdraw any 
securities.  At PNC Bank's own expense and for its own 
convenience, PNC Bank may enter into sub-custodian 
agreements with other banks or trust companies to 
perform duties described in this sub-paragraph c.  
Such bank or trust company shall have an aggregate 
capital, surplus and undivided profits, according to 
its last published report, of at least one million 
dollars ($1,000,000), if it is a subsidiary or 
affiliate of PNC Bank, or at least twenty million 
dollars ($20,000,000) if such bank or trust company is 
not a subsidiary or   affiliate of PNC Bank.  In 
addition, such bank or trust company must agree to 
comply with the relevant provisions of the 1940 Act 
and other applicable rules and regulations.  PNC Bank 
shall remain responsible for the performance of all of 
its duties as described in this Agreement and shall 
hold the Fund harmless from PNC Bank's own (or any 
sub-custodian chosen by PNC Bank under the terms of 
this sub-paragraph c) acts or omissions, under the 
standards of care provided for herein.
		(d)  Transactions Requiring Instructions.  Upon receipt of Oral or 
Written Instructions and not otherwise, PNC Bank, directly or through the use 
of the Book-Entry System, shall:
			(i)	deliver any securities held for the Fund against the 
receipt of payment for the sale of such securities;
		    (ii)	execute and deliver to such persons as may be  
designated in such Oral or Written Instructions, proxies, 
consents, authorizations, and any other instruments whereby 
the authority of the Fund as owner of  any securities may be 
exercised;    
		   (iii)	deliver any securities to the issuer thereof,  or its 
agent, when such securities are called, redeemed, retired or 
otherwise become payable; provided that, in any such case, 
the cash or other consideration is to be delivered to PNC 
Bank;
		    (iv)	deliver any securities held for the Fund against 
receipt of other securities or cash issued or paid in 
connection with the liquidation, reorganization, 
refinancing, tender offer, merger, consolidation or 
recapitalization of any corporation, or the exercise of any 
conversion privilege;
			(v)	deliver any securities held for the Fund to  any 
protective committee, reorganization committee or 
other person in connection with   the reorganization, 
refinancing, merger, consolidation, recapitalization 
or sale of assets of any corporation, and receive and 
hold under the terms of this Agreement such 
certificates of deposit, interim receipts or other 
instruments or documents as may be issued to it to 
evidence such delivery;
		    (vi)	make such transfer or exchanges of the assets  of the 
Fund and take such other steps as  shall be stated in said 
Oral or Written Instructions to be for the purpose of 
effectuating a duly authorized plan of liquidation, 
reorganization, merger, consolidation or recapitalization of 
the Fund;
		   (vii)	release securities belonging to the Fund to  any bank 
or trust company for the purpose of a pledge or 
hypothecation to secure any loan incurred by the Fund; 
provided, however, that  securities shall be released only 
upon payment to PNC Bank of the monies borrowed, except that 
in cases where additional collateral is required to secure a 
borrowing already made subject to proper prior 
authorization, further securities may be released for that 
purpose; and repay such loan upon redelivery to it of the 
securities pledged or hypothecated therefor and upon 
surrender of the note or notes evidencing the loan;
		  (viii)	release and deliver securities owned by the Fund in 
connection with any repurchase agreement entered into on 
behalf of the Fund, but only on receipt of payment therefor; 
and pay out moneys of the Fund in connection with such 
repurchase agreements, but only upon the delivery of the 
securities;
		    (ix)	release and deliver or exchange securities owned by 
the Fund in connection with any conversion of such 
securities, pursuant to their terms, into other securities;
			(x)	release and deliver securities owned by the Fund for 
the purpose of redeeming in kind shares of the Fund 
upon delivery thereof to PNC Bank; and
		    (xi)	release and deliver or exchange securities owned by 
the Fund for other corporate purposes.  PNC Bank must also 
receive a certified resolution describing the nature of the 
corporate purpose and the name and address of the person(s) 
to whom delivery shall be made when such action is pursuant 
to sub-paragraph d above.
	(e)  Use of Book-Entry System.  The Fund shall deliver to PNC Bank 
certified resolutions of the Fund's Governing Board approving, authorizing and 
instructing PNC Bank on a continuous and on-going basis, to deposit in the 
Book-Entry System all securities belonging to the Fund eligible for deposit 
therein and to utilize the Book-Entry System to the extent possible in 
connection with settlements of purchases and sales of securities by the Fund, 
and deliveries and returns of securities loaned, subject to repurchase 
agreements or used as collateral in connection with borrowings.  PNC Bank 
shall continue to perform such duties until it receives Written or Oral 
Instructions authorizing contrary actions(s).     
	To administer the Book-Entry System properly, the following provisions 
shall apply:
			(i)	With respect to securities of the Fund which are 
maintained in the Book-Entry system, established 
pursuant to this sub-paragraph e hereof, the records 
of PNC Bank shall identify by Book-Entry or otherwise 
those securities belonging to the Fund.  PNC Bank 
shall furnish the Fund a detailed statement of the 
Property held for the Fund under this Agreement at 
least monthly and from time to time and upon written 
request.
		    (ii)	Securities and any cash of the Fund deposited  in the 
Book-Entry System will at all times be  segregated from any 
assets and cash controlled by PNC Bank in other than a  
fiduciary or custodian capacity but may be commingled with 
other assets held in such capacities.  PNC Bank and its 
sub-custodian, if any, will pay out money only upon receipt 
of securities and will deliver securities only upon the 
receipt of money.
		   (iii)	All books and records maintained by PNC Bank  which 
relate to the Fund's participation in the Book-Entry System 
will at all times during PNC Bank's regular business hours 
be open to the inspection of the Fund's duly authorized 
employees or agents, and the Fund will be furnished with all 
information in respect of the services rendered to it as it 
may require.
		    (iv)	PNC Bank will provide the Fund with copies of any 
report obtained by PNC Bank on the system of internal 
accounting control of the Book-Entry System promptly after 
receipt of such a report by PNC Bank.  PNC Bank will also 
provide the Fund with such reports on its own system of 
internal control as the Fund may reasonably request from 
time to time.
		(f)  Registration of Securities.  All Securities held for the Fund 
which are issued or issuable only in bearer form, except such securities held 
in the Book-Entry System, shall be held by PNC Bank in bearer form; all other 
securities held for the Fund may be registered in the name of the Fund; PNC 
Bank; the Book-Entry System; a sub-custodian; or any duly appointed nominee(s) 
of the Fund, PNC Bank, Book-Entry system or sub-custodian.  The Fund reserves 
the right to instruct PNC Bank as to the method of registration and 
safekeeping of the securities of the Fund.  The Fund agrees to furnish to PNC 
Bank appropriate instruments to enable PNC Bank to hold or deliver in proper 
form for transfer, or to register its registered nominee or in the name of the 
Book-Entry System, any securities which it may hold for the account of the 
Fund and which may from time to time be registered in the name of the Fund.  
PNC Bank shall hold all such securities which are not held in the Book-Entry 
System in a separate account for the Fund in the name of the Fund physically 
segregated at all times from those of any other person or persons.
		(g)  Voting and Other Action.  Neither PNC Bank nor its nominee 
shall vote any of the securities held pursuant to this Agreement by or for the 
account of the Fund, except in accordance with Written Instructions.  PNC 
Bank, directly or through the use of the Book-Entry System, shall execute in 
blank and promptly deliver all notice, proxies, and proxy soliciting materials 
to the registered holder of such securities.  If the registered holder is not 
the Fund then Written or Oral Instructions must designate the person(s) who 
owns such securities.
		(h)  Transactions Not Requiring Instructions.  In the absence of 
contrary Written Instructions, PNC Bank is authorized to take the following 
actions:
			(i)	Collection of Income and Other Payments.
				(A)	collect and receive for the account of the Fund, 
all income, dividends,  distributions, coupons, 
option premiums, other payments and similar 
items, included or to be included in the 
Property, and, in addition, promptly advise the 
Fund of such receipt and credit such income, as 
collected, to the Fund's custodian account;
				(B)	endorse and deposit for collection, in the name 
of the Fund, checks, drafts, or other orders for 
the payment of money;
				(C)	receive and hold for the account of the Fund all 
securities received as a  distribution on the 
Fund's portfolio securities as a result of a 
stock dividend, share split-up or 
reorganization, recapitalization, readjustment 
or other rearrangement or distribution of rights 
or similar securities issued with respect to any 
portfolio securities belonging to the Fund held 
by PNC Bank hereunder;
				(D)	present for payment and collect the amount 
payable upon all securities which may mature or 
be called, redeemed, or retired, or otherwise 
become payable on the date such securities 
become payable; and
				(E)	take any action which may be necessary and 
proper in connection with the collection and 
receipt of such income and other payments and 
the endorsement for collection of checks, 
drafts, and other negotiable instruments.
		    (ii)  Miscellaneous Transactions.
				(A)	PNC Bank is authorized to deliver or cause to be 
delivered Property against payment or other 
consideration or written receipt therefor in the 
following cases:
					(1)	for examination by a broker or dealer 
selling for the account of the Fund in 
accordance with street delivery custom;
					(2)	for the exchange of interim receipts or 
temporary securities for definitive 
securities; and
					(3)	for transfer of securities into the name 
of the Fund or PNC Bank or nominee of 
either, or for exchange of securities for 
a different number of bonds,certificates, 
or other evidence, representing the same 
aggregate face amount or number of units 
bearing the same interest rate, maturity 
date and call provisions, if any; provided 
that, in any such case, the new securities 
are to be delivered to PNC Bank.
				(B)	Unless and until PNC Bank receives Oral or 
Written Instructions to the contrary, PNC Bank 
shall:
					(1)	pay all income items held by it which call 
for payment upon presentation and hold the 
cash received by it upon such payment for 
the account of the Fund;
					(2)	collect interest and cash dividends 
received, with notice to the Fund, to the 
Fund's account;
					(3)	hold for the account of the Fund all stock 
dividends, rights and similar securities 
issued with respect to any securities held 
by PNC Bank; and
					(4)	execute as agent on behalf of        the 
Fund all necessary ownership certificates 
required by the Internal Revenue Code or 
the Income Tax Regulations of the United 
States Treasury Department or under the 
laws of any State now or hereafter in 
effect, inserting the Fund's name, on such 
certificate as the owner of the securities 
covered thereby, to the extent it may 
lawfully do so.   
		(i)  Segregated Accounts.                  
			(i)	PNC Bank shall upon receipt of Written or Oral 
Instructions establish and maintain segregated 
account(s) on its records for and on behalf of the 
Fund.  Such account(s) may be used to transfer cash 
and securities, including securities in the Book-Entry 
System:
				(A)	for the purposes of compliance by the Fund with 
the procedures required by a securities or 
option exchange, providing such procedures 
comply with the 1940 Act and any releases of the 
SEC relating to the maintenance of segregated 
accounts by registered investment companies; and  
				(B)	Upon receipt of Written Instructions, for other 
proper corporate purposes.     
		    (ii)	PNC Bank may enter into separate custodial agreements 
with various futures commission merchants ("FCMs") that the 
Fund uses ("FCM Agreement").  Pursuant to an FCM Agreement,  
the Fund's margin deposits in any transactions involving 
futures contracts and options on futures contracts will be 
held by PNC Bank in accounts ("FCM Account") subject to the 
disposition by the FCM involved in such contracts and in 
accordance with the customer contract between FCM and the 
Fund ("FCM Contract"), SEC rules and the rules of the 
applicable commodities exchange.  Such FCM Agreements shall 
only be  entered into upon receipt of Written  Instructions 
from the Fund which state that:
				(A)	a customer agreement between the FCM and  the 
Fund has been entered into; and
				(B)	the Fund is in compliance with all the rules and 
regulations of the CFTC. Transfers of initial 
margin shall be made into a FCM Account only 
upon Written Instructions; transfers of premium 
and variation margin may be made  into a FCM 
Account pursuant to Oral Instructions.
					Transfers of funds from a FCM Account to the FCM 
for which PNC Bank holds such an account may 
only occur upon certification by the FCM to PNC 
Bank that pursuant to the FCM Agreement and the 
FCM Contract, all conditions precedent to its 
right to give PNC Bank such instructions have 
been satisfied.
		   (iii)	PNC Bank shall arrange for the establishment  of IRA 
custodian accounts for such share- holders holding Shares 
through IRA accounts, in accordance with the Fund's 
prospectuses, the Internal Revenue Code (including 
regulations), and with such other procedures as are mutually 
agreed upon from time to time by and among the Fund, PNC 
Bank and the Fund's transfer agent.
		(j)  Purchases of Securities.  PNC Bank shall settle purchased 
securities upon receipt of Oral or Written Instructions from the Fund or its 
investment advisor(s) that specify:
			(i)	the name of the issuer and the title of the 
securities, including CUSIP number if applicable;
		    (ii)	the number of shares or the principal amount purchased 
and accrued interest, if any;
		   (iii)	the date of purchase and settlement;
		    (iv)	the purchase price per unit;
			(v)	the total amount payable upon such purchase; and
		    (vi)	the name of the person from whom or the broker through 
whom the purchase was made. PNC Bank shall upon receipt of 
securities purchased by or for the Fund pay out of the 
moneys held for the account of the Fund the total amount 
payable to the person from whom or the broker through whom 
the purchase was made, provided that the same conforms to 
the total amount payable as set forth in such Oral or 
Written Instructions.
		(k)  Sales of Securities.  PNC Bank shall settle sold securities 
upon receipt of Oral or Written Instructions from the Fund that specify:
         		(i)	the name of the issuer and the title of the security, 
including CUSIP number if applicable;
		    (ii)	the number of shares or principal amount sold, and 
accrued interest, if any;
		   (iii)	the date of trade, settlement and sale;
		    (iv)	the sale price per unit;
			(v)	the total amount payable to the Fund upon such sale;
		    (vi)	the name of the broker through whom or the person to 
whom the sale was made; and
		   (vii)	the location to which the security must be delivered 
and delivery deadline, if any. PNC Bank shall deliver the 
securities upon receipt of the total amount payable to the 
Fund upon such sale, provided that the total amount payable 
is the same as was set forth in the Oral or Written 
Instructions.  Subject to the foregoing, PNC Bank may accept 
payment in such form as shall be satisfactory to it, and may 
deliver securities and arrange for payment in accordance 
with the customs prevailing among dealers in securities.
		(l)  Reports.
			(i)	PNC Bank shall furnish the Fund the following reports:
				(A)	such periodic and special reports as the Fund 
may reasonably request;
				(B)	a monthly statement summarizing all transactions 
and entries for the account of the Fund, listing 
the portfolio securities belonging to the Fund 
with the adjusted average cost of each issue and 
the market value at the end of such month, and 
stating the cash account of the Fund including 
disbursement;
				(C)	the reports to be furnished to the Fund pursuant 
to Rule 17f-4; and
				(D)	such other information as may be agreed upon 
from time to time between the Fund and PNC Bank.
		    (ii)	PNC Bank shall transmit promptly to the Fund any proxy 
statement, proxy material, notice of a call or conversion or 
similar communication received by it as custodian of the 
Property. PNC Bank shall be under no other obligation to 
inform the Fund as to such actions or events.
		(m)  Collections.  All collections of monies or other property, in 
respect, or which are to become part of the Property (but not the safekeeping 
thereof upon receipt by PNC Bank) shall be at the sole risk of the Fund.  If 
payment is not received by PNC Bank within a reasonable time after proper 
demands have been made, PNC Bank shall notify the Fund in writing, including 
copies of all demand letters, any written responses, memoranda of all oral 
responses and telephonic demands thereto, and await instructions from the 
Fund.  PNC Bank shall not be obliged to take legal action for collection 
unless and until reasonably indemnified to its satisfaction.  PNC Bank shall 
also notify the Fund as soon as reasonably practicable whenever income due on 
securities is not collected in due course.
	15.  Duration and Termination.  This Agreement shall continue until 
terminated by the Fund or by PNC Bank on sixty (60) days' prior written notice 
to the other party.  In the event this Agreement is terminated (pending 
appointment of a successor to PNC Bank or vote of the shareholders of the Fund 
to dissolve or to function without a custodian of its cash, securities or 
other property), PNC Bank shall not deliver cash, securities or other property 
of the Fund to the Fund.  It may deliver them to a bank or trust company of 
PNC Bank's choice, having an aggregate capital, surplus and undivided profits, 
as shown by its last published report, of not less than twenty million dollars 
($20,000,000), as a custodian for the Fund to be held under terms similar to 
those of this Agreement.  PNC Bank shall not be required to make any such 
delivery or payment until full payment shall have been made to PNC Bank of all 
of its fees, compensation, costs and expenses.  PNC Bank shall have a security 
interest in and shall have a right of setoff against Property in the Fund's 
possession as security for the payment of such fees, compensation, costs and 
expenses.     
	16.  Notices.  All notices and other communications, including Written 
Instructions, shall be in writing or by confirming telegram, cable, telex or 
facsimile sending device.  Notice shall be addressed (a) if to PNC Bank at PNC 
Bank's address: Airport Business Center, International Court 2, 200 Stevens 
Drive, Lester, Pennsylvania 19113, marked for the attention of the Custodian 
Services Department (or its successor) (b) if to the Fund, at the address of 
the Fund; or (c) if to neither of the foregoing, at such other address as 
shall have been notified to the sender of any such notice or other 
communication.  If notice is sent by confirming telegram, cable, telex or 
facsimile sending device, it shall be deemed to have been given immediately.  
If notice is sent by first-class mail, it shall be deemed to have been given 
five days after it has been mailed.  If notice is sent by messenger, it shall 
be deemed to have been given on the day it is delivered.
	17.  Amendments.  This Agreement, or any term hereof, may be changed or 
waived only by a written amendment, signed by the party against whom 
enforcement of such change or waiver is sought.     	18.  Delegation.  PNC 
Bank may assign its rights and delegate its duties hereunder to any 
wholly-owned direct or indirect subsidiary of PNC Bank, National Association 
or PNC Bank Corp., provided that (i) PNC Bank gives the Fund thirty (30) days 
prior written notice; (ii) the delegate agrees with PNC Bank to comply with 
all relevant provisions of the 1940 Act; and (iii) PNC Bank and such delegate 
promptly provide such information as the Fund may request, and respond to such 
questions as the Fund may ask, relative to the assignment, including (without 
limitation) the capabilities of the delegate.     
	19.  Counterparts.  This Agreement may be executed in two or more 
counterparts, each of which shall be deemed an original, but all of which 
together shall constitute one and the same instrument.  	
	20.  Further Actions.  Each party agrees to perform such further acts 
and execute such further documents as are necessary to effectuate the purposes 
hereof.     
	21.  Miscellaneous.  This Agreement embodies the entire agreement and 
understanding between the parties and supersedes all prior agreements and 
understandings relating to the subject matter hereof, provided that the 
parties may embody in one or more separate documents their agreement, if any, 
with respect to delegated duties and/or Oral Instructions.  The captions in 
this Agreement are included for convenience of reference only and in no way 
define or delimit any of the provisions hereof or otherwise affect their 
construction or effect.             
	This Agreement shall be deemed to be a contract made in Pennsylvania and 
governed by Pennsylvania law, without regard to principles of conflicts of 
law.  If any provision of this Agreement shall be held or made invalid by a 
court decision, statute, rule or otherwise, the remainder of this Agreement 
shall not be affected thereby.  This Agreement shall be binding upon and shall 
inure to the benefit of the parties hereto and their respective successors and 
permitted assigns.     
	IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 
executed by their officers designated below on the day and year first above 
written.                                 

 						PNC BANK, NATIONAL ASSOCIATION


						By:                               
						Title:                            


						SMITH BARNEY PRINCIPAL RETURN FUND


						By:                             
						Title:                       



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