SMITH BARNEY PRINCIPAL RETURN FUND

DISTRIBUTION AGREEMENT



								
	October 8, 1998



CFBDS, Inc.
21 Milk Street
Boston, MA 02109

Dear Sirs:

	This is to confirm that, in consideration of the 
agreements hereinafter contained, the above-named 
investment company (the "Fund") has agreed that you 
shall be, for the period of this Agreement, the non-
exclusive principal underwriter and distributor of 
shares of the Fund and each Series of the Fund set 
forth on Exhibit A hereto, as such Exhibit may be 
revised from time to time (each, including any shares 
of the Fund not designated by series, a "Series").  
For purposes of this Agreement, the term "Shares" 
shall mean shares of the each Series, or one or more 
Series, as the context may require.

	1.	Services as Principal Underwriter and 
Distributor

		1.1  You will act as agent for the 
distribution of Shares covered by, and in  accordance 
with, the registration statement, prospectus and 
statement of additional information then in effect 
under the Securities Act of 1933, as amended (the 
"1933 Act"), and the Investment Company Act of 1940, 
as amended (the "1940 Act"), and will transmit or 
cause to be transmitted promptly any orders received 
by you or those with whom you have sales or servicing 
agreements for purchase or redemption of Shares to the 
Transfer and Dividend Disbursing Agent for the Fund of 
which the Fund has notified you in writing.

		1.2  You agree to use your best efforts to 
solicit orders for the sale of Shares.  It is 
contemplated that you will enter into sales or 
servicing agreements with registered securities 
dealers and banks and into servicing agreements with 
financial institutions and other industry 
professionals, such as investment advisers, 
accountants and estate planning firms.  In entering 
into such agreements, you will act only on your own 
behalf as principal underwriter and distributor.  You 
will not be responsible for making any distribution 
plan or service fee payments pursuant to any plans the 
Fund may adopt or agreements it may enter into.

		1.3  You shall act as principal 
underwriter and distributor of Shares in compliance 
with all applicable laws, rules, and regulations, 
including, without limitation, all rules and 
regulations made or adopted from time to time by the 
Securities and Exchange Commission (the "SEC") 
pursuant to the 1933 Act or the 1940 Act or by any 
securities association registered under the Securities 
Exchange Act of 1934, as amended.

		1.4  Whenever in their judgment such 
action is warranted for any reason, including, without 
limitation, market, economic or political conditions, 
the Fund's officers may decline to accept any orders 
for, or make any sales of, any Shares until such time 
as those officers deem it advisable to accept such 
orders and to make such sales and the Fund shall 
advise you promptly of such determination.

2.	Duties of the Fund

2.1	The Fund agrees to pay all costs and 
expenses in connection with the registration of Shares 
under the 1933 Act, and all expenses in connection 
with maintaining facilities for the issue and transfer 
of Shares and for supplying information, prices and 
other data to be furnished by the Fund hereunder, and 
all expenses in connection with the preparation and 
printing of the Fund's prospectuses and statements of 
additional information for regulatory purposes and for 
distribution to shareholders; provided however, that 
nothing contained herein shall be deemed to require 
the Fund to pay any of the costs of advertising or 
marketing the sale of Shares.

		2.2  The Fund agrees to execute any and 
all documents and to furnish any and all information 
and otherwise to take any other actions that may be 
reasonably necessary in the discretion of the Fund's 
officers in connection with the qualification of 
Shares for sale in such states and other U.S. 
jurisdictions as the Fund may approve and designate to 
you from time to time, and the Fund agrees to pay all 
expenses that may be incurred in connection with such 
qualification.  You shall pay all expenses connected 
with your own qualification as a securities broker or 
dealer under state or Federal laws and, except as 
otherwise specifically provided in this Agreement, all 
other expenses incurred by you in connection with the 
sale of Shares as contemplated in this Agreement.

2.3  The Fund shall furnish you from time 
to time, for use in connection with the sale of 
Shares, such information reports with respect to the 
Fund or any relevant Series and the Shares as you may 
reasonably request, all of which shall be signed by 
one or more of the Fund's duly authorized officers; 
and the Fund warrants that the statements contained in 
any such reports, when so signed by the Fund's 
officers, shall be true and correct.  The Fund also 
shall furnish you upon request with (a) the reports of 
annual audits of the financial statements of the Fund 
for each Series made by independent certified public 
 accountants retained by the Fund for such 
purpose; (b) semi-annual unaudited financial 
statements pertaining to each Series; (c) quarterly 
earnings statements prepared by the Fund; (d) a 
monthly itemized list of the securities in each 
Series' portfolio; (e) monthly balance sheets as soon 
as practicable after the end of each month; (f)  the 
current net asset value and  offering price per share 
for each Series on each day such net asset value is 
computed and (g) from time to time such additional 
information regarding the financial condition of each 
Series of the Fund as you may reasonably request.

	3.	Representations and Warranties

	The Fund represents to you that all registration 
statements, prospectuses and statements of additional 
information filed by the Fund with the SEC under the 
1933 Act and the 1940 Act with respect to the Shares 
have been prepared in conformity with the requirements 
of said Acts and the rules and regulations of the SEC 
thereunder.  As used in this Agreement, the  terms 
"registration statement", "prospectus" and "statement 
of additional information" shall mean any registration 
statement, prospectus and statement of additional 
information filed by the Fund with the SEC and any 
amendments and supplements thereto filed by the Fund 
with the SEC.  The Fund represents and warrants to you 
that any registration statement, prospectus and 
statement of additional information, when such 
registration statement becomes effective and as such 
prospectus and statement of additional information are 
amended or supplemented, will include at the time of 
such effectiveness, amendment or supplement all 
statements required to be contained therein in 
conformance with the 1933 Act, the 1940 Act and the 
rules and regulations of the SEC; that all statements 
of material fact contained in any registration 
statement, prospectus or statement of additional 
information will be true and correct when such 
registration statement becomes effective; and that 
neither any registration statement nor any prospectus 
or statement of additional information when such 
registration statement becomes effective will include 
an untrue statement of a material fact or omit to 
state a material fact required to be stated therein or 
necessary to make the statements therein not 
misleading to a purchaser of the Fund's Shares.  The 
Fund may, but shall not be obligated to, propose from 
time to time such amendment or amendments to any 
registration statement and such supplement or 
supplements to any prospectus or statement of 
additional information as, in the light of future 
developments, may, in the opinion of the Fund, be 
necessary or advisable.  If the Fund shall not propose 
such amendment or amendments and/or supplement or 
supplements within fifteen days after receipt by the 
Fund of a written request from you to do so, you may, 
at your option, terminate this Agreement or decline to 
make offers of the Fund's Shares until such amendments 
are made.  The Fund shall not file any amendment to 
any registration statement or supplement to any 
prospectus or statement of additional information 
without giving you reasonable notice thereof in 
advance; provided, however, that nothing contained in 
this Agreement shall in any way limit the Fund's right 
to file at any time such amendments to any 
registration statement and/or supplements to any 
prospectus or statement of additional information, of 
whatever character, as the Fund may deem advisable, 
such right being in all respects absolute and 
unconditional.

	4.	Indemnification

		4.1  The Fund authorizes you to use any 
prospectus or statement of additional information 
furnished by the Fund from time to time, in connection 
with the sale of Shares.  The Fund agrees to 
indemnify, defend and hold you, your several officers 
and directors, and any person who controls you within 
the meaning of Section 15 of the 1933 Act, free and 
harmless from and against any and all claims, demands, 
liabilities and expenses (including the cost of 
investigating or defending such claims, demands or 
liabilities and any such counsel fees incurred in 
connection therewith) which you, your officers and 
directors, or any such controlling person, may incur 
under the 1933 Act or under common law or otherwise, 
arising out of or based upon any untrue statement, or 
alleged untrue statement, of a material fact contained 
in any registration statement, any prospectus or any 
statement of additional information or arising out of 
or based upon any omission, or alleged omission, to 
state a material fact required to be stated in any 
registration statement, any prospectus or any 
statement of additional information or necessary to 
make the statements in any of them not misleading; 
provided, however, that the Fund's agreement to 
indemnify you, your officers or directors, and any 
such controlling person shall not be deemed to cover 
any claims, demands, liabilities or expenses arising 
out of any statements or representations made by you 
or your representatives or agents other than such 
statements and representations as are contained in any 
prospectus or statement of additional information and 
in such financial and other statements as are 
furnished to you pursuant to paragraph 2.3 of this 
Agreement; and further provided that the Fund's 
agreement to indemnify you and the Fund's 
representations and warranties herein before set forth 
in paragraph 3 of this Agreement shall not be deemed 
to cover any liability to the Fund or its shareholders 
to which you would otherwise be subject by reason of 
willful misfeasance, bad faith or gross negligence in 
the performance of your duties, or by reason of your 
reckless disregard of your obligations and duties 
under this Agreement.  The Fund's agreement to 
indemnify you, your officers and directors, and any 
such controlling person, as aforesaid, is expressly 
conditioned upon the Fund's being notified of any 
action brought against you, your officers or 
directors, or any such controlling person, such 
notification to be given by letter or by telegram 
addressed to the Fund at its principal office in New 
York, New York and sent to the Fund by the person 
against whom such action is brought, within ten days 
after the summons or other first legal process shall 
have been served.  The failure so to notify the Fund 
of any such action shall not relieve the Fund from any 
liability that the Fund may have to the person against 
whom such action is brought by reason of any such 
untrue, or alleged untrue, statement or omission, or 
alleged omission, otherwise than on account of the 
Fund's indemnity agreement contained in this paragraph 
4.1.  The Fund will be entitled to assume the defense 
of any suit brought to enforce any such claim, demand 
or liability, but, in such case, such defense shall be 
conducted by counsel of good standing chosen by the 
Fund.  In the event the Fund elects to assume the 
defense of any such suit and retains counsel of good 
standing, the defendant or defendants in such suit 
shall bear the fees and expenses of any additional 
counsel retained by any of them; but if the Fund does 
not elect to assume the defense of any such suit, the 
Fund will reimburse you, your officers and directors, 
or the controlling person or persons named as 
defendant or defendants in such suit, for the fees and 
expenses of any counsel retained by you or them.  The 
Fund's indemnification agreement contained in this 
paragraph 4.1 and the Fund's representations and 
warranties in this Agreement shall remain operative 
and in full force and effect regardless of any 
investigation made by or on behalf of you, your 
officers and directors, or any controlling person, and 
shall survive the delivery of any of the Fund's 
Shares.  This agreement of indemnity will inure 
exclusively to your benefit, to the benefit of your 
several officers and directors, and their respective 
estates, and to the benefit of the controlling persons 
and their successors.  The Fund agrees to notify you 
promptly of the commencement of any litigation or 
proceedings against the Fund or any of its officers or 
Board members in connection with the issuance and sale 
of any of the Fund's Shares.

		4.2  You agree to indemnify, defend and 
hold the Fund, its several officers and Board members, 
and any person who controls the Fund within the 
meaning of Section 15 of the 1933 Act, free and 
harmless from and against any and all claims, demands, 
liabilities and expenses (including the costs of 
investigating or defending such claims, demands or 
liabilities and any counsel fees incurred in 
connection therewith) that the Fund, its officers or 
Board members or any such controlling person may incur 
under the 1933 Act, or under common law or otherwise, 
but only to the extent that such liability or expense 
incurred by the Fund, its officers or Board members, 
or such controlling person resulting from such claims 
or demands shall arise out of or be based upon (a) any 
unauthorized sales literature, advertisements, 
information, statements or representations or (b) any 
untrue, or alleged untrue, statement of a material 
fact contained in information furnished in writing by 
you to the Fund and used in the answers to any of the 
items of the registration statement or in the 
corresponding statements made in the prospectus or 
statement of additional information, or shall arise 
out of or be based upon any omission, or alleged 
omission, to state a material fact in connection with 
such information furnished in writing by you to the 
Fund and required to be stated in such answers or 
necessary to make such information not misleading.  
Your agreement to indemnify the Fund, its officers or 
Board members, and any such controlling person, as 
aforesaid, is expressly conditioned upon your being 
notified of any action brought against the Fund, its 
officers or Board members, or any such controlling 
person, such notification to be given by letter or 
telegram addressed to you at your principal office in 
Boston, Massachusetts and sent to you by the person 
against whom such action is brought, within ten days 
after the summons or other first legal process shall 
have been served.  You shall have the right to control 
the defense of such action, with counsel of your own 
choosing, satisfactory to the Fund, if such action is 
based solely upon such alleged misstatement or 
omission on your part or with the Fund's consent, and 
in any event the Fund, its officers or Board members 
or such controlling person shall each have the right 
to participate in the defense or preparation of the 
defense of any such action with counsel of its own 
choosing reasonably acceptable to you but shall not 
have the right to settle any such action without your 
consent, which will not be unreasonably withheld.  The 
failure to so notify you of any such action shall not 
relieve you from any liability that you may have to 
the Fund, its officers or Board members, or to such 
controlling person by reason of any such untrue, or 
alleged untrue, statement or omission, or alleged 
omission, otherwise than on account of your indemnity 
agreement contained in this paragraph 4.2.  You agree 
to notify the Fund promptly of the commencement of any 
litigation or proceedings against you or any of your 
officers or directors in connection with the issuance 
and sale of any of the Fund's Shares.
		
	5.	Effectiveness of Registration

	No Shares shall be offered by either you or the 
Fund under any of the provisions of this Agreement and 
no orders for the purchase or sale of such Shares 
under this Agreement shall be accepted by the Fund if 
and so long as the effectiveness of the registration 
statement then in effect or any necessary amendments 
thereto shall be suspended under any of the provisions 
of the 1933 Act, or if and so long as a current 
prospectus as required by Section 5(b) (2) of the 1933 
Act is not on file with the SEC; provided, however, 
that nothing contained in this paragraph 5 shall in 
any way restrict or have an application to or bearing 
upon the Fund's obligation to repurchase its Shares 
from any shareholder in accordance with the provisions 
of the Fund's prospectus, statement of additional 
information or charter documents, as amended from time 
to time.

6. Offering Price

Shares of any class of any Series of the Fund 
offered for sale by you shall be offered for sale at a 
price per share (the "offering price") equal to (a) 
their net asset value (determined in the manner set 
forth in the Fund's charter documents and the then-
current prospectus and statement of additional 
information) plus (b) a sales charge, if applicable, 
which shall be the percentage of the offering price of 
such Shares as set forth in the Fund's then-current 
prospectus relating to such Series.  In addition to or 
in lieu of any sales charge applicable at the time of 
sale, Shares of any class of any Series of the Fund 
offered for sale by you may be subject to a contingent 
deferred sales charge as set forth in the Fund's then-
current prospectus and statement of additional 
information.  You shall be entitled to receive any 
sales charge levied at the time of sale in respect of 
the Shares without remitting any portion to the Fund.  
Any payments to a broker or dealer through whom you 
sell Shares shall be governed by a separate agreement 
between you and such broker or dealer and the Fund's 
then-current prospectus and statement of additional 
information 

	7.	Notice to You

	The Fund agrees to advise you immediately in 
writing:

		(a)  of any request 
by the SEC for amendments 
to the registration 
statement, prospectus or 
statement of additional 
information then in effect 
or for additional 
information;

		(b)  in the event of 
the issuance by the SEC of 
any stop order suspending 
the effectiveness of the 
registration statement, 
prospectus or statement of 
additional information then 
in effect or the initiation 
of any proceeding for that 
purpose;

		(c)  of the happening 
of any event that makes 
untrue any statement of a 
material fact made in the 
registration statement, 
prospectus or statement of 
additional information then 
in effect or that requires 
the making of a change in 
such registration 
statement, prospectus or 
statement of additional 
	information in order to 
make the statements therein 
not misleading; and
		
		(d)  of all actions 
of the SEC with respect to 
any amendment to the 
registration statement, or 
any supplement to the 
prospectus or statement of 
additional information 
which may from time to time 
be filed with the SEC.

	8.	Term of the Agreement

	This Agreement shall become effective on the 
date hereof, shall have an initial term of one year 
from the date hereof, and shall continue for 
successive annual periods thereafter so long as such 
continuance is specifically approved at least annually 
by (a) the Fund's Board or (b) by a vote of a majority 
(as defined in the 1940 Act) of the Fund's outstanding 
voting securities, provided that in either event the 
continuance is also approved by a majority of the 
Board members of the Fund who are not interested 
persons (as defined in the 1940 Act) of any party to 
this Agreement, by vote cast in person at a meeting 
called for the purpose of voting on such approval.  
This Agreement is terminable, without penalty, on 30 
days' notice by the Fund's Board or by vote of holders 
of a majority of the relevant Series outstanding 
voting securities, or on 90 days' notice by you.  This 
Agreement will also terminate automatically, as to the 
relevant Series, in the event of its assignment (as 
defined in the 1940 Act and the rules and regulations 
thereunder).

9. Arbitration

Any claim, controversy, dispute or 
deadlock arising under this Agreement (collectively, a 
"Dispute") shall be settled by arbitration 
administered under the rules of the American 
Arbitration Association ("AAA") in New York, New 
York.  Any arbitration and award of the arbitrators, 
or a majority of them, shall be final and the judgment 
upon the award rendered may be entered in any state or 
federal court having jurisdiction.  No punitive 
damages are to be awarded.
	
10.	Miscellaneous

	So long as you act as a principal underwriter 
and distributor of Shares, you shall not perform any 
services for any entity other than investment 
companies advised or administered by Citigroup Inc. or 
its subsidiaries.  The Fund recognizes that the 
persons employed by you to assist in the performance 
of your duties under this Agreement may not devote 
their full time to such service and nothing contained 
in this Agreement shall be deemed to limit or restrict 
your or any of your affiliates right to engage in and 
devote time and attention to other businesses or to 
render services of whatever kind or nature.   This 
Agreement and the terms and conditions set forth 
herein shall be governed by, and construed in 
accordance with, the laws of the State of New York.

	11.	Limitation of Liability  (Massachusetts 
business trusts only)

	The Fund and you agree that the obligations of 
the Fund under this Agreement shall not be binding 
upon any of the Trustees, shareholders, nominees, 
officers, employees or agents, whether past, present 
or future, of the Fund, individually, but are binding 
only upon the assets and property of the Fund, as 
provided in the Master Trust Agreement.  The execution 
and delivery of this Agreement have been authorized by 
the Trustees and signed by an authorized officer of 
the Fund, acting as such, and neither such 
authorization by such Trustees nor such execution and 
delivery by such officer shall be deemed to have been 
made by any of them individually or to impose any 
liability on any of them personally, but shall bind 
only the trust property of the Fund as provided in its 
Master Trust Agreement.

	If the foregoing is in accordance with your 
understanding, kindly indicate your acceptance of this 
Agreement by signing and returning to us the enclosed 
copy, whereupon this Agreement will become binding on 
you.

						Very truly yours,
SMITH BARNEY 
PRINCIPAL RETURN FUND


						By:  
_____________________
						       Authorized 
Officer

Accepted:

CFBDS, INC.


By:  __________________________
       Authorized Officer



g:\legal\general\forms\agreemts\dist12b1\SBPrincipalRe
turnFund

	EXHIBIT A





Smith Barney Principal Return Fund

Zeros Plus Emerging Growth Series 2000
Smith Barney Security and Growth Fund

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