SMITH BARNEY PRINCIPAL RETURN FUND

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

   
Statement of Additional Information					March 
30,1998
										As 
amended June 29, 1998
    
	This Statement of Additional Information supplements the 
information contained in the current Prospectus dated March 30, 1998, as 
amended or supplemented from time to time, of the Zeros and Appreciation 
Series 1998 ("Series 1998"), Zeros Plus Emerging Growth Series 2000 
("Series 2000"), and the Security and Growth Fund (collectively the 
"Series"), of Smith Barney Principal Return Fund (the "Trust"), and 
should be read in conjunction with that Prospectus.  The Prospectus may be 
obtained from any Smith Barney Financial Consultant or by writing or 
calling the Trust at the address or telephone number set forth above.  This 
Statement of Additional Information, although not in itself a prospectus, 
is incorporated by reference into the Prospectus in its entirety.

CONTENTS

	For ease of reference, the same section headings are used in both 
the Prospectus and the Statement of Additional Information, except where 
noted below.

	Management of the Trust	2
	Investment Objectives and Management Policies	5
	Redemption of Shares	13
	Valuation of Shares	13
	Exchange Privilege	13
	Determination of Performance	14
	(See in the Prospectus "The Series Performance")
	Taxes	15
	(See in the Prospectus "Dividends, Distributions and Taxes")
	Distributor	17
	Custodian and Transfer Agent (See in the Prospectus "Additional 
Information")	17
	Organization of the Trust	18
	Financial Statements	18


MANAGEMENT OF THE TRUST

The executive officers of the Trust are employees of certain of the 
organizations that provide services to the Series. These organizations are 
as follows:
Name
Service
Smith Barney Inc. ("Smith Barney or Distributor")
Distributor
Mutual Management Corp. ("MMC" or "Investment Adviser" or 
"Administrator" ) formerly Smith Barney Mutual Funds Management Inc.
Investment Adviser and Administrator
PNC Bank National Association ("PNC" or "Custodian")
Custodian

First Data Investor Services Group, Inc.("First Data" 
Transfer Agent or "Transfer Agent")

These organizations and the functions that they perform for the Series are 
discussed in the Prospectus and in this Statement of Additional 
Information.

Trustees and Executive Officers of the Trust

The names of the Trustees and executive officers of the Trust, together 
with information as to their principal business occupations for the past 
five years, are set forth below.  Each Trustee who is an "interested 
person" of the Trust, as defined in the Investment Company Act of 1940, as 
amended (the "1940 Act"), is indicated by an asterisk.

Paul R. Ades, Trustee (Age 57).  Partner in the law firm of Murov & Ades.  
His address is 272
South Wellwood Avenue, P.O. Box 504, Lindenhurst, New York 11757.

Herbert Barg, Trustee (Age 74).  Private investor.  His address is 273 
Montgomery Avenue,
Bala Cynwyd, Pennsylvania 19004.

Dwight B. Crane (Age 60).  Professor, Graduate School of Business 
Administration, Harvard
University; Business Consultant.  His address is Harvard Business School, 
Soldiers Field,
Morgan Hall #371, Boston, Massachusetts 02163.

Frank Hubbard, Trustee (Age 62).  Vice President, of S & S Industries; 
Former Corporate Vice
President, Materials Management and Marketing Services of Huls American, 
Inc.

* Heath B. McLendon, Chairman of the Board and Investment Officer (Age 64).  
Managing
Director of Smith Barney, 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, his address is 388 
Greenwich
Street, New York, New York 10013.

Jerome Miller, Trustee (Age 60).  Retired, Former President, Asset 
Management Group of
Shearson Lehman Brothers.  His address is 27 Hemlock Road, Manhassett, New 
York 11030.

Ken Miller, Trustee (Age 56).  President of Young Stuff Apparel Group, Inc.  
His address is 1407 Broadway, 6th Floor, New York, New York 10018.

John F. White, Trustee (Emeritus effective February 6, 1998) (Age 80).  
President Emeritus of The Cooper Union for the Advancement of Science and 
Art, Special Assistant to the President of the Aspen Institute.  His 
address is 97 Sunset Drive, Apt 402, Sarasota, Florida 34236.

Harry D. Cohen, Vice President and Investment Officer (Age 57).  President 
and Director of Smith Barney Investment Advisors, a division of MMC; 
Executive Vice President of Smith Barney; prior to July 1993, President of 
Asset Management Division of Shearson Lehman Brothers.  Mr. Cohen also 
serves as Vice President and Investment Officer of 5 other mutual funds of 
the Smith Barney Mutual Funds.  Ms address is 388 Greenwich Street, New 
York, New York 10013.

Richard A. Freeman, Vice President and Investment Officer (Age 44).  
Managing Director of Smith Barney Investment Advisors, a division of MMC; 
prior to July 1993, First Executive Vice President of Shearson Asset 
Management; prior to July 1993, Executive Vice President of Shearson Asset 
Management.  Mr. Freeman also serves as Vice President and Investment 
Officer of one other mutual fund of the Smith Barney Mutual Funds.  His 
address is388 Greenwich Street, New York, New York 10013.

John G. Goode,(Age 52) Managing Director of Smith Barney, President and 
Chief Executive Officer of Davis Skaggs Investment Management, a division 
of the MMC, serves as Vice President of the Security and Growth Fund and 
manages its day-to-day operations, including handling all investment 
decisions.  Mr. Goode also serves as Vice President and Investment Officer 
of two other mutual funds of the Smith Barney Mutual Funds.  His address is 
1 Sansome St., Suite 3850 San Francisco, California 94104.

Lewis E. Daidone, Senior Vice President and Treasurer (Age 40).  Managing 
Director of Smith Barney; Director and Senior Vice President of MMC.  Mr. 
Daidone also serves as Senior Vice President and Treasurer of 42 other 
mutual funds of the Smith Barney Mutual Funds.  His address is 388 
Greenwich Street, New York New, York 10013.

Christina T. Sydor, Secretary (Age 47).  Managing Director of Smith Barney; 
General Counsel and Secretary of MMC.  Ms. Sydor also serves as Secretary 
of 42 other mutual funds of the Smith Barney Mutual Funds.  Her address is 
388 Greenwich Street, New York, New York 10013.

Each Trustee also serves as a trustee, general partner and/or director of 
other mutual funds for which Smith Barney serves as distributor.  As of 
March 10, 1998, Trustees and officers of the Series, as a group, owned less 
than 1% of the outstanding shares of beneficial interest of each Series.

No director, officer or employee of Smith Barney or any of its affiliates 
will receive any compensation from the Trust for serving as an officer or 
Trustee.  The Trust pays each Trustee who is not a director, officer or 
employee of Smith Barney or any of its affiliates a fee of $4,000 per annum 
plus $500 per meeting attended and reimburses them for travel and out-of-
pocket expenses.  For the fiscal year ended November 30, 1997, such fees 
and expenses for the Trust totaled $66,742.


For the calendar year ended December 31, 1997, the Trustees of the Trust 
were paid the following compensation:




Trustee

Aggregate Compensation from 
the Fund
Pension or Retirement Benefits Accrued as Part of the Trust Expenses
Aggregate Compensation from the Smith Barney Mutual Funds
Paul R. Ades (7)
$6,200
$0
49,000
Herbert Barg (20)
6,200
0
101,600
Alger B. Chapman (9)+
4,100
0
53,925
Dwight B. Crane (26)
6,100
0
33,850
Frank G. Hubbard (7)
6,200
0
52,000
Heath B. McLendon (42)
 ...
0
-
Jerome Miller (2)
6,200
0
12,400
Ken Miller (7)
6,200
0
52,000
John F. White (7)*
6,200
0
52,000
+	Mr. Chapman's compensation reflects his resignation from the 
Board of Trustees effective June 20, 1997.  
*	For 1997 Mr. White deferred $6,200 compensation from the Trust 
and from Smith Barney Mutual Funds.
**	Upon attainment of age 80 Trustees are required to change to 
emeritus status.  Trustees Emeritus are entitled to serve in emeritus 
status for a maximum of 10 years during which time they are paid 50% of the 
annual retainer fee and meeting fees otherwise applicable to the Trust 
Trustees together with reasonable out-of-pocket expenses for each meeting 
attended.  During the Trust's last fiscal year aggregate compensation paid 
by the Trust to Trustees emeritus totaled $2,410.

Investment Adviser and Administrator - MMC

	MMC serves as the Series' investment adviser under the terms of a 
written agreement for each Series (the "Advisory Agreements").  MMC is a 
wholly owned subsidiary of Salomon Smith Barney Holdings Inc. 
("Holdings"), which is in turn a wholly owned subsidiary of Travelers 
Group Inc. ("Travelers").  The Advisory Agreements for all Series were 
last approved by the Board of Trustees, including a majority of the 
Trustees who are not "interested persons" of the Trust or Smith Barney on 
July 24, 1997.  Certain of the services provided to, and fees paid by, the 
Series under the Advisory and Administration Agreements are described in 
the Prospectus under "Management of the Trust." MMC pays the salaries of 
all officers and employees who are employed by both it and the Trust and 
maintains office facilities for the Trust.  MMC bears all expenses in 
connection with the performance of its services under the Advisory 
Agreements.

	As compensation for investment advisory services rendered, Series 
1998 and Series 2000 pay MMC a fee computed daily and paid monthly at the 
annual rate of 0.30% and 0.40%, respectively, of the value of their average 
daily net assets.  The Security and Growth fund pays MMC a fee of 0.50% of 
the value of its average daily net assets for investment management 
services rendered.

	MMC also serves as the administrator of Series 1998, and Series 
2000 pursuant to a written agreement for each Series (the "Administration 
Agreements").  The Administration Agreements were most recently approved 
for each Series by the Board of Trustees, including a majority of the 
Trustees who are not "interested persons" of the Series or Smith Barney, 
on July 24, 1997.  The services provided by MMC under the Administration 
Agreements are described in the Prospectus under "Management of the 
Trust." MMC pays the salaries of all officers and employees who are 
employed by both it and the Trust, maintains office facilities for the 
Trust and bears all expenses in connection with the performance of its 
services.

	As compensation for administrative services rendered to Series 1998 
and Series 2000, MMC receives a fee computed daily and paid monthly at the 
annual rate of 0.20% of the value of each Series' average daily net assets.

	For the fiscal years ended November 30, 1997, 1996 and 1995, the 
Series paid investment advisory and/or administration fees to MMC as 
follows:


Fiscal Year

Series 1998

Series 2000
Security and 
Growth Fund*
Ended
Advisory Fee
Admin. Fee
Advisory Fee
Admin. Fee
Advisory Fee
Admin. Fee







1997
$266,201
$177,468
$249,071
$124,536
$1,007,814
N/A
1996
284,126
189,417
278,880
139,440
1,363,022
N/A
1995
298,009
198,673
300,015
150,007
1,074,991
N/A
* Security and Growth commenced operations on March 30, 1995.

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

Counsel and Auditors

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

	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 November 30, 1998.

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIIES

	The Prospectus discusses the investment objectives of each Series 
and the policies to be employed to achieve those objectives.  Set forth 
below is supplemental information concerning certain of the securities and 
other instruments in which the Series may invest, the investment policies 
and portfolio strategies that the Series may utilize and certain risks 
involved with those investments, policies and strategies.

Zero Coupon Securities

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

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

	Under the program, in order for a book-entry treasury security to 
be separated into its component parts, the face amount of the security must 
be an amount which, based on the stated interest rate of the security, will 
produce a semi-annual interest payment of $1,000 or a multiple of $1,000.  
Once a book-entry security has been separated, each interest and principal 
component may be maintained and transferred in multiples of $1,000 
regardless of the face value initially required for separation of the 
resulting amount required for each interest payment.

	CUBES, like STRIPS, are direct obligations of the United States 
government.  CUBES are coupons that have previously been physically 
stripped from treasury notes and bonds, but which were deposited with the 
Federal Reserve and are now carried and transferable in book-entry form 
only.  Only stripped treasury coupons maturing on or after January 15, 
1988, that were stripped prior to January 5, 1987, were eligible for 
conversion to book-entry form under the CUBES program.  Investment banks 
may also strip treasury securities and sell them under proprietary names.  
These securities may not be as liquid as STRIPS and CUBES and the Series 
have no present intention of investing in these instruments.

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

Money Market Instruments

	As noted in the Prospectus, each Series may hold at any time up to 
10% of the value of its assets in cash and money market instruments.  In 
addition, when MMC believes that opportunities for capital appreciation do 
not appear attractive, each Series may, notwithstanding its investment 
objective, take a temporary defensive posture with respect to its equity 
securities and invest without limitation in cash and money market 
instruments.  Among the money market instruments in which the Series may 
invest are obligations of the United States government and its agencies and 
instrumentalities ("U.S. government securities"); certain bank 
obligations, commercial paper, and repurchase agreements involving U.S. 
government securities.

U.S. Government Securities

	U.S. government securities include debt obligations of varying 
maturities issued or guaranteed by the United States government or its 
agencies or instrumentalities.  Direct obligations of the United States 
Treasury include a variety of securities that differ in their interest 
rates, maturities and dates of issuance.

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

Repurchase Agreements

	Each Series may enter into repurchase agreements with certain banks 
which are the issuers of instruments acceptable for purchase by the Fund 
and with certain dealers on the Federal Reserve Bank of New York's list of 
reporting dealers.  A repurchase agreement is a contract under which the 
buyer of a security simultaneously commits to resell the security to the 
seller at an agreed upon price on an agreed upon date.  Under each 
repurchase agreement, the selling institution will be required to maintain 
the value of the securities subject to the repurchase agreement at not less 
than their repurchase price.  Repurchase agreements could involve certain 
risks in the event of default or insolvency of the seller, including 
possible delays or restrictions on a Series' ability to dispose of the 
underlying securities, the risk of a possible decline in the value of the 
underlying securities during the period in which a Series seeks to assert 
its rights to them, the risk of incurring expenses associated with 
asserting these rights and the risk of losing all or part of the income 
from the agreement.  In evaluating these potential risks, MMC, acting under 
the supervision of the Board of Trustees, and on an ongoing basis, monitors 
(a) the value of the collateral underlying each repurchase agreement to 
ensure that the value is at least equal to the total amount of the purchase 
obligation, including interest, and (b) the creditworthiness of the banks 
and dealers with which the Series enters into repurchase agreements.

Warrants (Series 2000 and Security and Growth Fund)

	Because a warrant does not carry with it the right to dividends or 
voting rights with respect to securities that the warrant holder is 
entitled to purchase, and because it does not represent any rights to the 
assets of the issuer, a warrant may be considered more speculative than 
certain other types of investments.  In addition, the value of a warrant 
does not necessarily change with the value of the underlying securities and 
a warrant ceases to have value if it is not exercised by its expiration 
date.


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.

Preferred Stock

	Preferred stocks, like debt obligations, are generally fixed-income 
securities.  Shareholders of preferred stock normally have the right to 
receive dividends at a fixed rate when and as declared by the issuer's 
board of directors, but do not participate in other amounts available for 
distribution by the issuing corporation.  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.
   
Lending Portfolio Securities

	Although the Series are authorized to lend their securities to 
brokers, dealers and other financial organizations, they will not lend 
securities to their distributor, Smith Barney, or its affiliates unless the 
Series apply for and receive specific authority to do so from the SEC.  
These loans, if and when made, must be consistent with applicable 
regulatory requirements. The Series' loans of securities will be 
collateralized by cash, letters of credit or U.S. government securities 
that will be maintained at all times in an amount at least equal to the 
current market value of the loaned securities.  From time to time, a Series 
may pay 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 that is unaffiliated with that Series and that is acting as a 
"finder."

	By lending its securities, a Series 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 a Series' portfolio securities are loaned: 
(a) the Series 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 
level of such collateral; (c) the Series must be able to terminate the loan 
at any time; (d) the Series 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 Series 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 
in the loaned securities occurs, the Board of Trustees must terminate the 
loan and regain the Series' right to vote the securities.
    

   
Investment Restrictions

	The investment restrictions recited in the Prospectus and those 
numbered 1 through 7 below have been adopted by the Trust as fundamental 
policies.  Under the 1940 Act, a fundamental policy may not be changed 
without the vote of a majority of the outstanding voting securities of the 
Series, as defined in the 1940 Act.  "Majority" means the lesser of (a) 
67% or more of the shares present at a meeting, if the holders of more than 
50% of the outstanding shares of the Series are present or represented by 
proxy, or (b) more than 50% of the outstanding shares.  Investment 
restrictions 8 through 15 may be changed by vote of a majority of the Board 
of Trustees at any time.

Under the investment restrictions adopted by the Series:

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

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

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

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

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

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

7.	A Series will not issue "Senior Securities" as defined in the 1940 
Act and the rules, regulations and orders thereunder, except as permitted 
under the 1940 Act and the rules, regulations and orders thereunder.

8.	A Series will not sell securities short.

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

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

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

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

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

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

15.	A Series will not invest in time deposits maturing in more than 
seven days, enter into repurchase agreements having a duration of more than 
seven days, or purchase instruments lacking readily available market 
quotations ("illiquid instruments"), if as a result of the purchase a 
Series' aggregate holdings of illiquid instruments exceed 100% of a Series' 
net assets.

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

	The Series intend not to seek profits through short-term trading of 
their securities.  Nevertheless, a Series will not consider portfolio 
turnover rate a limiting factor in making investment decisions.  The Series 
cannot accurately predict their portfolio turnover rates, but anticipate 
that their annual turnover rates will not exceed 50%.  The turnover rates 
would be 100% if all of a Series' securities that are included in the 
computation of turnover were replaced once during a period of one year.  
The Series turnover rate is calculated by dividing the lesser of purchases 
or sales of portfolio securities for the year by the monthly average value 
of portfolio securities.  Securities with remaining maturities of one year 
or less on the date of acquisition are excluded from the calculation.  For 
the fiscal years-ended November 30,1997 and 1996, the Series' portfolio 
turnover rates were as follows:


1997
1996
Series 1998
11%
12%
Series 2000
0
0
Security and Growth Fund
20
43

Portfolio Transactions

	Decisions to buy and sell securities for the Series are made by 
MMC, subject to the overall review of the Trust's Board of Trustees.  
Although investment decisions for a Series are made independently from 
those of the other accounts managed by MMC, investments of the type made by 
a Series also may be made by those accounts.  When a Series and one or more 
other accounts managed by MMC are prepared to invest in, or desire to 
dispose of, the same security, available investments or opportunities for 
sales will be allocated in a manner believed by MMC to be equitable to 
each.  In some cases, this procedure may adversely affect the price paid or 
received by a Series or the size of the position obtained or disposed of by 
the Series.

	Transactions on United States stock exchanges involve the payment 
of negotiated brokerage commissions. On exchanges on which commissions are 
negotiated, the cost of transactions may vary among different brokers.  No 
stated commission is generally applicable to securities traded in over-the-
counter markets, but the prices of those securities include undisclosed 
commissions or mark-ups.  Over-the-counter purchases and sales are 
transacted directly with principal market makers except in those cases in 
which better prices and executions may be obtained elsewhere.  The cost of 
securities purchased from underwriters includes an underwriting commission 
or concession, and the prices at which securities are purchased from and 
sold to dealers include a dealer's mark-up or mark-down.  U.S. government 
securities are generally purchased from underwriters or dealers, although 
certain newly issued U.S. government securities may be purchased directly 
from the United States Treasury or from the issuing agency or 
instrumentality.  The following table sets forth-certain information 
regarding the Series' payment of brokerage commissions:


Fiscal Year Ended

Series

Series

Security and

November 30
1998
2000
Growth Fund
Total Brokerage Commissions
1995
37,974
5,760
$475,496

1996
39,223
8,690
303,127

1997
28,011
3,090
128,979





Total Brokerage Commissions Paid to Smith Barney
1995
1996
$420
0
$0
0
$0
3,000

1997
180
0
5,448





% of Total Brokerage Commissions paid to Smith Barney
1995
1996
0%
0
0%
0
0%
0.99

1997
0.6
0
4.22





% of Total Transaction involving Commissions paid to Smith Barney
1995
1996
1997
0%
0
0
1.0%
0
0
0%
0.99
0.66

	MMC seeks the best overall terms available in selecting brokers or 
dealers to execute transactions on behalf of the Series.  In assessing the 
best overall terms available for any transaction MMC will consider factors 
it deems relevant, including the breadth of the market in the security, the 
price of the security, the financial condition and execution capability of 
the broker or dealer and the reasonableness of the commission, if any, for 
the specific transaction and on a continuing basis.  In addition, MMC is 
authorized in selecting brokers or dealers to execute a particular 
transaction and in evaluating the best overall terms available to consider 
the brokerage and research services (as those terms are defined in Section 
28(e) of the Securities Exchange Act of 1934) provided to the Series and/or 
other accounts over which MMC or its affiliates exercise investment 
discretion.  The fees under the Series Advisory Agreements are not reduced 
by reason of MMC receiving brokerage and research services.  The Trust's 
Board of Trustees will periodically review the commissions paid by the 
Series to determine if the commissions paid over representative periods of 
time were reasonable in relation to the benefits inuring to the Series.

	In accordance with Section 17(e) of the 1940 Act and Rule 17e-I 
under the 1940 Act, the Trust's Board of Trustees has determined that 
transactions for the Series may be executed through Smith Barney and other 
affiliated broker-dealers if, in the judgment of MMC, the use of an 
affiliated broker-dealer is likely to result in price and execution at 
least as favorable as those of other qualified broker-dealers and if, in 
the transaction, the affiliated broker-dealer charges the Series a rate 
consistent with that charged to comparable unaffiliated customers in 
similar transactions.  In addition, under the rules recently adopted by the 
SEC, Smith Barney may directly execute such transactions for the Series on 
the floor of any national securities exchange, provided: (a) the Board of 
Trustees has expressly authorized Smith Barney to effect such transactions; 
and (b) Smith Barney annually advises the Series of the aggregate 
compensation it earned on such transactions.

REDEMPTION OF SHARES

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

VALUATION OF SHARES

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

EXCHANGE PRIVILEGE

	Except as noted below, shareholders of any fund of the Smith Barney 
Mutual Funds may exchange all or part of their shares for shares of the 
same class of other funds of the 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.

	A shareholder who has redeemed shares of any of the Series, through 
the exchange privilege or otherwise, will not be able to purchase new 
shares of any Series'.

	The exchange privilege enables shareholders to acquire shares of 
the same Class in a fund with different investment objectives when they 
believe that a shift between funds is an appropriate investment decision.  
This privilege is available to shareholders resident in any state in which 
the fund shares being acquired may be legally sold.  Prior to any exchange, 
the investor should obtain and review a copy of the then current prospectus 
of each fund into which an exchange is being made.  Prospectuses may be 
obtained from a 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 the proceeds are immediately invested, at a price as 
described above, in shares of the fund being acquired with such shares 
being subject to any applicable contingent deferred sales charge.  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.

DETERMINATION OF PERFORMANCE

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

Average Annual Total Return

	The Series' "average annual total return" figures are computed 
according to a formula prescribed by the SEC.  The formula can be expressed 
as follows:
P(l +T)n = ERV
Where:
P =	a hypothetical initial payment of $1,000
T =	average annual total return
n =	number of years
ERV =	Ending Redeemable Value of a hypothetical $1,000 investment made at 
the beginning of a 1-, 5- or 10-year period at the end of the 1-, 
5-, or 10-year period (or fractional portion thereof), assuming 
reinvestment of all dividends and distributions

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




Name of Series

One Year
Period Ended
11/30/97

Five Year
Period Ended
11/30/97
Per Annum for Period
from Commencement of
Operations through
11/30/97




Series 1998 (1)
5.96%
8.39%
9.53%
Series 2000 (2)
6.72
8.85
8.45
Security & Growth Fund (3)
11.72
N/A
13.41
(1) Series 1998 commenced operations on January 25, 1991.
(2) Series 2000 commenced operations on August 30, 1991.
(3) Security & Growth Fund commenced operations on March 30, 1995.
These total return figures assume that the maximum sales charge has been 
included in the investment at the time of purchase.
Aggregate Total Return

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

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


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




Name of Series

One Year
Period Ended
11/30/97*

Five Year
Period Ended
11/30/97*
Period from Commencement of Operations through 11/30/97*


One Year
Period Ended
11/30/97**

Five Year
Period Ended
11/30/97**
Period from Commencement of Operations through 11/30/97*








Series 1998 (1)
11.60%
57.42%
96.36%

5.96%
49.62%
86.52%
Series 2000 (2)
12.28
60.89
74.92

6.72
52.84
66.17
Security & Growth Fund (3)
16.42
N/A
45.83

11.72
N/A
40.0
*	Figures do not include the effect of the maximum sales charge.
**	Figures include the effect of the maximum sales charge.
(1) Series 1998 commenced operations on January 25, 1991.
(2) Series 2000 commenced operations on August 30, 1991.
(3) Security & Growth Fund commenced operations on March 30, 1995.
	A Series' performance will vary from time to time depending upon 
market conditions, the composition of its portfolio and its operating 
expenses.  Consequently, any given performance quotation should not be 
considered representative of the Series' performance for any specified 
period in the future.  In addition, because performance will fluctuate, it 
may not provide a basis for comparing an investment in the Series with 
certain bank deposits or other investments that pay a fixed yield for a 
stated period of time.  Investors comparing the Series performance with 
that of other mutual funds should give consideration to the quality and 
maturity of the respective investment companies' portfolio securities.

TAXES

	The following is a summary of certain Federal income tax 
considerations that my affect the Trust and its shareholders.  The summary 
is not intended as a substitute for individual tax planning, and investors 
are urged to consult their own tax advisors as to the Federal, state and 
local income tax consequences of an investment in a Series,

Tax Status of the Trust and its Shareholders

	Each of the Series has qualified and intends to continue to qualify 
each year as a regulated investment company under the Internal Revenue Code 
of 1986, as amended (the "Code").  To qualify as a regulated investment 
company, the Series must meet certain requirements set forth in the Code.  
Each Series is required to earn at least 90% of its gross income from (a) 
interest, (b) dividends, (c) payments with respect to securities loans, (d) 
gains from the sale or other disposition of stock or securities and (e) 
other income derived with respect to the Series' business of investing in 
stock or securities.

	Dividends of net investment income and distributions of net 
realized short-term capital gains will be taxable to shareholders as 
ordinary income for Federal income tax purposes, whether received in cash 
or reinvested in additional shares of the Series.  Distributions of long-
term capital gains will be taxable to shareholders as long-term gain, 
whether paid in cash or reinvested in additional shares, and regardless of 
the length of time that the shareholder has held his or her shares of the 
Series.

	Dividends of investment income (but not distributions of capital 
gain) from the Series generally will qualify for the Federal dividends-
received deduction for corporate shareholders to the extent that the 
dividends do not exceed the aggregate amount of dividends received by the 
Series from domestic corporations.  If securities held by the Series are 
considered to be "debt financed" (generally, acquired with borrowed 
funds) or are held by the Series for less than 46 days (91 days in the case 
of certain preferred stock), the portion of the dividends paid by the 
Series that corresponds to the dividends paid with respect to the debt-
financed securities or securities that have not been held for the requisite 
period will not be eligible for the corporate dividends-received deduction.

	Foreign countries may impose withholding and other taxes on 
dividends and interest paid to a Series with respect to investments in 
foreign securities.  Certain foreign countries, however, have entered into 
tax conventions with the United States to reduce or eliminate such taxes.

	If a Series is the holder of record of any stock on the record date 
for any dividends payable with respect to the stock, the dividends are 
included in the Series' gross income not as of the date received but as of 
the later of (a) the date on which the stock became ex-dividend with 
respect to the 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 on which the Series acquired the stock.

	Capital Gains.  In general, a shareholder who redeems or exchanges 
his or her Series shares will recognize long-term capital gain or loss if 
the shares have been held for more than one year, and will recognize short-
term capital gain or loss if the shares have been held for one year or 
less.  For individuals, the maximum tax rate for long-term capital gains is 
28% (20% if the shares have been held for more than 18 months).  If a 
shareholder receives a distribution taxable as long-term capital gain with 
respect to shares of a Series and redeems or exchanges the shares before he 
or she has held them for more than six months, however, any loss on the 
redemption or exchange that is less than or equal to the amount of the 
distribution will be treated as a long-term capital loss.

	Backup Withholding.  If a shareholder fails to furnish a correct 
taxpayer identification number, fails to report fully dividend or 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) dividends and distributions and (b) the 
proceeds of any redemptions of a Series' 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.

Taxation of the Series' Investments

	Zero Coupon Securities.  The Series will invest in zero coupon 
securities having an original issue discount (that is, the discount 
represented by the excess of the stated redemption price at maturity over 
the issue price).  Each year, the Series will be required to accrue as 
income a portion of this original issue discount even though the Series 
will receive no cash payment of interest with respect to these securities.  
In addition, if the Series acquires a security at a discount that resulted 
from fluctuations in prevailing interest rates ("market discount"), the 
Series may elect to include in income each year a portion of this market 
discount.

	The Series will be required to distribute substantially all of its 
income (including accrued original issue and market discount) in order to 
qualify for "pass-through" Federal income tax treatment and also in order 
to avoid the imposition of the 4% excise tax described in the Prospectus.  
Therefore, a Series may be required in some years to distribute an amount 
greater than the total cash income the Series actually receives.  In order 
to make the required distribution in such a year, a Series may be required 
to borrow or to liquidate securities.  The amount of actual cash that a 
Series would have to distribute, and thus the degree to which securities 
would need to be liquidated, would depend upon the number of shareholders 
who chose not to have their dividends reinvested.  Capital losses resulting 
from the liquidation of securities can only be used to offset capital gains 
and cannot be used to reduce the Series' ordinary income.  These capital 
losses may be carried forward for eight years.

	Capital Gain Distribution.  Gain or loss on the sale of a security 
by a Series will generally be long-term capital gain or loss if the Series 
has held the security for more than one year (and will be eligible for the 
20% maximum rate if the Series has held the security for more than 18 
months).  Gain or loss on the sale of a security held for one year or less 
will generally be short-term capital gain or loss.  Generally, if a Series 
acquires a debt security at a discount, any gain on the sale or redemption 
of the security will be taxable as ordinary income to the extent that the 
gain reflects seemed market discount.

DISTRIBUTOR AND SHAREHOLDER SERVICING AGENT - SMITH BARNEY

	Smith Barney serves as the Series' distributor pursuant to a 
written agreement (the "Distribution Agreement") with the Trust.  To 
compensate Smith Barney for the services it provides as Shareholder 
Servicing Agent and for the expenses it bears, the Trust has adopted a 
Shareholder Services Plan (the "Plan").  Under the Plan, the Trust pays 
Smith Barney, with respect to Series 1998, Series 2000 and Security and 
Growth Fund, a fee, accrued daily and paid monthly, calculated at the 
annual rate of .25% of the value of the respective Series average daily net 
assets.  Under its terms, the Plan continues from year to year, provided 
that its continuance is approved annually by vote of the Trust's Board of 
Trustees, including a majority of the Trustees who are not interested 
persons of the Trust and who have no direct or indirect financial interest 
in the operation of the Plan (the "Independent Trustees").  The Plan may 
not be amended to increase materially the amount to be spent for the 
services provided by Smith Barney without shareholder approval, and all 
material amendments of the Plan must be approved by the Trustees in the 
manner described above.  The Plan may be terminated at any time, without 
penalty, by vote of a majority of the Independent Trustees or by a vote of 
a majority of the outstanding voting securities (as defined in the 1940 
Act) of the relevant Series on not more than 30 days' written notice to any 
other party to the Plan.  Pursuant to the Plan, Smith Barney will provide 
the Board of Trustees periodic reports of amounts expended under the Plan 
and the purpose for which such expenditures were made.  For the fiscal year 
ended November 30, 1997, Smith Barney was paid $221,835, $155,670 and 
$538,907 in shareholder servicing fees for Series 1998, Series 2000 and the 
Security and Growth Fund respectively.

CUSTODIAN AND TRANSFER AGENT

	PNC Bank is located at 17th and Chestnut Streets, Philadelphia, PA 
19103 and serves as the custodian of Trust.  The assets of the Trust are 
held under bank custodianship in compliance with the 1940 Act.

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


ORGAN1ZATION OF THE TRUST

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

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

FINANCIAL STATEMENTS

The Trust's Annual Reports for the fiscal year ended November 30, 1997 
accompany this Statement of Additional Information and are incorporated 
herein by reference in its entirety.



22
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