SMITH BARNEY PRINCIPAL RETURN FUND
(the "Trust")

Supplement Dated June 290, 1998
to Prospectus Dated March 30, 1998

The following information supplements, and to the extent 
inconsistent therewith replaces, the information set forth in the 
Prospectus under "Investment Objectives and Management Policies-
Additional Investments and Investment Techniques: Lending 
Securities and the first paragraph under Money Market Instruments."

Lending Securities.  Consistent with applicable regulatory 
requirements, each Series is authorized to lend securities it holds 
to brokers, dealers and other financial organizations.  A Series' 
loans of securities will be collateralized by cash, letters of 
credit or U.S. government securities that are maintained at all 
times in a segregated account with the Trust's custodian in an 
amount at least equal to the current market value of the loaned 
securities.  By lending its portfolio securities, a Series 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 
MMC to be of good standing and will not be made unless, in the 
judgement of MMC, the consideration to be earned from such loans 
would justify the risk.

Money Market Instruments.  Each Series may hold at any time 
up to 10% of the value of its assets in cash and money market 
instruments in order to cover the Series' expenses, anticipated 
redemptions, cash payments of dividends and distributions and to 
meet settlement requirements for securities.  In addition, when MMC 
believes that, with respect to its equity portfolio, a temporary 
defensive investment posture is warranted, a Series may invest 
without limitation in cash and money market instruments.  To the 
extent that it holds cash or invests in money market instruments, a 
Series will not achieve its investment objective of long-term 
appreciation of capital.  Money market instruments in which the 
Series may invest are: U.S. government securities; bank obligations 
(including certificates of deposit, time deposits and bankers' 
acceptances of domestic or foreign banks, domestic savings and loan 
associations and other banking institutions having total assets in 
excess of $500 million); commercial paper rated no lower than A-2 
by Standard & Poor's Rating Group or Prime-2 by Moody's Investors 
Service, Inc. or the equivalent from another nationally recognized 
statistical rating organization ("NRSRO") or, if unrated, of an 
issuer having an outstanding, unsecured debt issue then rated 
within the three highest rating categories of an NRSRO; and 
repurchase agreements.  At no time will a Series' investments in 
bank obligations, including time deposits, exceed 25% of its 
assets.  In addition, a Series will not invest in time deposits 
maturing in more than seven days if, as a result, its holdings of 
those time deposits would exceed 5% of Security and Growth Fund's 
or Series 1998's net assets and 10% of Series 2000's net assets.

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