Smith Barney
Appreciation Fund Inc.
388 Greenwich Street
New York, New York 10013
(800) 451-2010
   
Statement of Additional Information			April 29, 1997
							Amended as of March 20, 1998
    
This Statement of Additional Information expands upon and supplements 
the information contained in the current Prospectus of Smith Barney 
Appreciation Fund Inc. (the "Fund") dated April 29, 1997, as amended or 
supplemented from time to time, and should be read in conjunction with 
the Fund's Prospectus.  The Fund's Prospectus may be obtained from any 
Smith Barney Financial Consultant, or by writing or calling the Fund at 
the address or telephone number set forth above.  This Statement of 
Additional Information, although not in itself a prospectus, is 
incorporated by reference into the Prospectus in its entirety.

CONTENTS

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

Management of the Fund	1
Investment Objective and Management Policies	6
Purchase of Shares	12
IRA and Other Prototype Retirement Plans	13
Redemption of Shares	14
Distributors	15
Valuation of Shares 	17
Exchange Privilege	18
Performance Data  	18
Taxes (See in the Prospectus "Dividends, Distributions and Taxes")	21
Additional Information 	23
Financial Statements 	23

MANAGEMENT OF THE FUND

The executive officers of the Fund are employees of certain of the 
organizations that provide services to the Fund.  These organizations 
are the following:
Name	Service
Smith Barney Inc.
	("Smith Barney")
PFS Distributors, Inc.
	("PFS Distributors") 	Distributors
Smith Barney Mutual Funds Management Inc.
	("SBMFM")	Investment Adviser and 
Administrator
PNC Bank, National Association
	("PNC") 	Custodian
First Data Investor Services Group, Inc., 
	(the "Transfer Agent") 	Transfer Agent

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


Directors and Executive Officers of the Fund

The names of the Directors and executive officers of the Fund, together 
with information as to their principal business occupations during the 
past five years, are shown below. Each Director who is an "interested 
person'' of the Fund, as defined in the Investment Company Act of 1940, 
as amended (the "1940 Act"), is indicated by an asterisk.

Herbert Barg, Director (Age 73).  Private Investor. His address is 
273 Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.

*Alfred J. Bianchetti, Director (Age 74).  Retired; formerly Senior 
Consultant to Dean Witter Reynolds Inc. His address is 19 Circle End 
Drive, Ramsey, New Jersey 07466.

Martin Brody, Director (Age 75).  Vice Chairman of the Board of 
Restaurant Associates Corp. His address is HMK Associates, Three ADP 
Boulevard, Roseland, New Jersey 07068.

Dwight B. Crane, Director (Age 59).  Professor, Graduate School of 
Business Administration, Harvard University; Business Consultant. His 
address is Graduate School of Business Administration, Harvard 
University, Boston, Massachusetts 02163.

Burt N. Dorsett, Director (Age 66).  Managing Partner of Dorsett 
McCabe Management, Inc., an investment counseling firm; Director of 
Research Corporation Technologies, Inc., a non-profit patent-clearing 
and licensing firm. His address is 201 East 62nd Street, New York, New 
York 10021.

Elliot S. Jaffe, Director (Age 70).  Chairman of the Board and Chief 
Executive Officer of The Dress Barn, Inc. His address is 30 Dunnigan 
Drive, Suffern, New York 10901.

Stephen E. Kaufman, Director (Age 64).  Attorney. His address is 277 
Park Avenue, New York, New York 10172.

Joseph J. McCann, Director (Age 66).  Financial Consultant. His 
address is 200 Oak Park Place, Pittsburgh, Pennsylvania 15243.

*Heath B. McLendon, Chairman of the Board and Investment Officer (Age 
63).  Managing Director of Smith Barney and Chairman of Smith Barney 
Strategy Advisers Inc.; prior to July 1993, Senior Executive Vice 
President of Shearson Lehman Brothers Inc. ("Shearson Lehman Brothers"), 
Vice Chairman of Shearson Asset Management. Mr. McLendon is Chairman of 
the Board and Investment Officer of 41 Smith Barney Mutual Funds.  His 
address is 388 Greenwich Street, New York, New York 10013.

Cornelius C. Rose, Jr., Director (Age 63). President, Cornelius C. 
Rose Associates, Inc., Financial Consultants, and Chairman and Director 
of Performance Learning Systems, an educational consultant.  His address 
is P.O. Box 355, Fair Oaks, Enfield, New Hampshire 03748.

Jessica M. Bibliowicz, President (Age 37).  Executive Vice President 
of Smith Barney; prior to 1994, Director of Sales and Marketing for 
Prudential Mutual Funds; prior to 1990, First Vice President, Asset 
Management Division of Shearson Lehman Brothers.  Ms. Bibliowicz serves 
as President of 39 Smith Barney Mutual Funds.  Her address is 388 
Greenwich Street, New York, New York 10013.


Lewis E. Daidone, Senior Vice President and Treasurer (Age 38). 
Managing Director of Smith Barney; Director and Senior Vice President of 
SBMFM.  Mr. Daidone serves as Senior Vice President and Treasurer of 41 
Smith Barney Mutual Funds.  His address is 388 Greenwich Street, New 
York, New York 10013.

Harry D. Cohen, Vice President and Investment Officer (Age 55).  
President and Director of Smith Barney Investment Advisors, a division 
of SBMFM; Executive Vice President of Smith Barney; prior to July 1993, 
President of Asset Management Division of Shearson Lehman Brothers and 
Executive Vice President of Shearson Lehman Brothers.  Mr. Cohen also 
serves as Vice President and Investment Officer of 1 other of the Smith 
Barney Mutual Funds.  His address is 388 Greenwich Street, New York, New 
York 10013.

Christina T. Sydor, Secretary (Age 46). Managing Director of Smith 
Barney; General Counsel and Secretary of SBMFM.  Ms. Sydor serves as 
Secretary of 41 Smith Barney Mutual Funds.  Her address is 388 Greenwich 
Street, New York, New York 10013.

Each Director also serves as a director, trustee and/or general partner 
of certain other mutual funds for which Smith Barney serves as 
distributor.  As of April 11, 1997, the Directors and officers of the 
Fund, as a group, owned less than 1.00% of the outstanding common stock 
of the Fund. As of  April 11, 1997, to the knowledge of the Fund and the 
Board of Directors, no single shareholder or "group" (as that term is 
used in Section 13(d) of the Securities Act of 1934) beneficially owned 
more than 5% of the outstanding shares of the Fund with the exception of 
the following:


Shareholder
Class
Percent Ownership





Citibank NA Cust. Smith 
Barney
Shearson 401K Savings Plan
Smith Barney Account 
111 Wall Street 
New York, New York 10043
Class Z                      
99.92%






Smith Barney Concert 
Allocation Series Inc.
Growth Portfolio
PNC Bank NA
200 Stevens Drive
Lester, PA 19113-1522

Class Y
48.59%

Smith Barney Concert 
Allocation Series Inc.
High Growth Portfolio
PNC Bank NA
200 Stevens Drive
Lester, PA 19113-1522
Class Y
37.18%








Smith Barney Concert 
Allocation Series Inc.
Balanced Portfolio
PNC Bank NA
200 Stevens Drive
Lester, PA 19113-1522
Class Y
14.08%

 

No officer, director or employee of Smith Barney or any parent or 
subsidiary receives any compensation from the Fund for serving as an 
officer or Director of the Fund.  The Fund pays each Director who is not 
an officer, director or employee of Smith Barney or any of its 
affiliates a fee of $3,000 per annum plus $500 per in-person meeting and 
$100 per telephonic meeting. Upon attainment of age 80 Directors are 
required to change to emeritus status.  Directors Emeritus are entitled 
to serve in emeritus status for a maximum of 10 years during which time 
they receive $l,500 per annum plus $250 per in-person meeting and $50 
per telephonic meeting.  All Directors are reimbursed for travel and 
out-of-pocket expenses incurred in attending such meetings.

For the calendar year ended December 31, 1996, the Directors of the Fund 
were paid the following compensation.


Pension or 

Aggregate 
Compensation


Retirement  
Aggregate 
Compensation
from the Smith 
Barney

Director (*)
Benefits 
Accrued as 
part of Fund 
Expenses
from the Fund
Mutual Funds






Herbert Barg 
(16)
$0
$5,700
$105,175

Alfred 
Bianchetti 
(11)
  0
5,600
  51,500

Martin Brody 
(19)
  0
5,600
124,285  

Dwight B. 
Crane (22)
  0
 5,600
140,675

Burt N. 
Dorsett (11)+
  0
 5,200
  47,400

Elliot S. 
Jaffe (11)
  0
 5,700
  51,100

Stephen E. 
Kaufman (13)
  0
5,700
   92,335

Joseph J. 
McCann (11)
  0
5,700
52,700

Heath B. 
McLendon 
(41)++
  0
0
0

Cornelius C. 
Rose (11)
  0
5,700
51,400






* Indicates number of funds within the Smith Barney Mutual Fund 
complex for which each Director serves as Director/Trustee.
+ Pursuant to Fund's deferred compensation plan, the indicated 
Director had elected to defer the following payment of some or all of 
their compensation: Burt N. Dorsett - $5,200.  As of January 1, 1997, 
Mr. Dorsett has elected not to defer his future compensation.
++ Designates an "interested director".


Investment Adviser and Administrator -SBMFM

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

As compensation for SBMFM's investment advisory services rendered to the 
Fund, the Fund pays a fee computed daily and paid monthly at the 
following annual rates of the Fund's average daily net assets: 0.55%, up 
to $250 million; 0.513% of the next $250 million; 0.476% of the next 
$500 million; 0.439% of the next $1 billion, 0.402% of the next $l 
billion; and 0.365% of the net assets in excess of $3 billion.  For the 
fiscal years ended December 31, 1996, 1995 and 1994, the Fund paid 
$14,352,911, $12,764,132, and $l2,564,785, respectively, in investment 
advisory fees.

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

As compensation for administrative services rendered to the Fund, SBMFM 
receives a fee computed daily and paid monthly at the following annual 
rates: 0.20%, of the value of the Fund's average daily net assets up to 
$250 million; 0.187% of the next $250 million; 0.174% of the next $500 
million; 0.161% of the next $1 billion; 0.148% of the next $1 billion 
and 0.135% of the net assets in excess of $3 billion.  For the fiscal 
years ended December 31, 1996 and 1995, the Fund paid $5,262,374 and 
$4,675,818 in administration fees. For the fiscal period from April 20, 
1994 through December 31, 1994, the Fund paid $3,228,079 in 
administration fees. Prior to April 20, 1994, The Boston Company 
Advisors, Inc. ("The Boston Company") served as the Fund's 
administrator. For the fiscal period from January 1, l994 through April 
19, 1994, the Fund paid $1,374,456 to The Boston Company in 
administration fees.

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

SBMFM and the Fund have agreed that it in any fiscal year the aggregate 
expenses of the Fund (including fees paid pursuant to the Advisory and 
Administration Agreements, but excluding interest, taxes, brokerage, 
fees paid pursuant to the Fund's services and distribution plan, and, 
with the prior written consent of the necessary state securities 
commissions, extraordinary expenses) exceed the expense limitation of 
any state having jurisdiction over the Fund, SBMFM will, to the extent 
required by state law, reduce its management fees by such excess 
expense.  Such a fee reduction, if any, will be reconciled on a monthly 
basis.  The most restrictive state expense limitation applicable to the 
Fund would require SBMFM to reduce its fees in any year that such excess 
expenses exceed 2.50% of the first $30 million of average net assets, 
2.00% of the next $70 million of average net assets and 1.50% of the 
remaining average assets.  No fee reduction was necessary for the 
1996,1995 or 1994  fiscal years.


Counsel and Auditors

Willkie Farr & Gallagher serves as counsel to the Fund.  The Independent 
Directors of the Fund have selected Stroock & Stroock & Lavan to serve 
as their legal counsel.

KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154, has 
been selected as the Fund's independent auditor to examine and report on 
the Fund's financial statements and highlights for the fiscal year 
ending December 31, 1997.

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

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

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

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

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

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

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

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

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

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

In lending its portfolio securities, the Fund can increase its income by 
continuing to receive interest on the loaned securities as well as by 
either investing the cash collateral in short-term instruments or 
obtaining yield in the form of interest paid by the borrower when U S. 
government securities are used as collateral.  Requirements of the SEC, 
which may be subject to future modifications, currently provide that the 
following conditions must be met whenever the Fund's portfolio 
securities are loaned: (a) the Fund must receive at least 100% cash 
collateral or equivalent securities from the borrower; (b) the borrower 
must increase such collateral whenever the market value of the 
securities rises above the value of such collateral; (c) the Fund must 
be able to terminate the loan at any time; (d) the Fund must receive 
reasonable interest on the loan, as well as an amount equal to any 
dividends, interest or other distributions on the loaned securities, and 
any increase in market value; (e) the Fund may pay only reasonable 
custodian fees in .connection with the loan; and ( f) voting rights on 
the loaned securities may pass to the borrower; however, if a material 
event adversely affecting the investment occurs, the Fund's Board of 
Directors must terminate the loan and regain the right to vote the 
securities.  The risks in lending portfolio securities, as with other 
extensions of secured credit, consist of possible delay in receiving 
additional collateral or in the recovery of the securities or possible 
loss of rights in the collateral should the borrower fail financially.  
Loans will be made to firms deemed by SBMFM to be of good standing and 
will not be made unless, in the judgment of SBMFM, the consideration to 
be earned from such loans would justify the risk.  From time to time, 
the Fund may return a part of the interest earned from the investment of 
collateral received for securities loaned to: (a) the borrower; and/or 
(b) a third party, which is unaffiliated with the Fund or with Smith 
Barney and, which is acting as a "finder."

Convertible Securities.  Convertible securities are fixed-income 
securities that may be converted at either a stated price or stated rate 
into underlying shares of common stock.  Convertible securities have 
general characteristics similar to both fixed-income and equity 
securities.  Although to a lesser extent than with fixed-income 
securities generally, the market value of convertible securities tends 
to decline as interest rates increase and, conversely, tends to increase 
as interest rates decline.  In addition, because of the conversion 
feature, the market value of convertible securities tends to vary with 
fluctuations in the market value of the underlying common stocks and, 
therefore, also will react to variations in the general market for 
equity securities.  A unique feature of convertible securities is that 
as the market price of the underlying common stock declines, convertible 
securities tend to trade increasingly on a yield basis, and so may not 
experience market value declines to the same extent as the underlying 
common stock.  When the market price of the underlying common stock 
increases, the prices of the convertible securities tend to rise as a 
reflection of the value of the underlying common stock.  While no 
securities investments are without risk, investments in convertible 
securities generally entail less risk than investments in common stock 
of the same issuer.

As fixed-income securities, convertible securities are investments that 
provide for a stable stream of income with generally higher yields than 
common stocks.  Of course, like all fixed-income securities, there can 
be no assurance of current income because the issuers of the convertible 
securities may default on their obligations.  Convertible securities, 
however, generally offer lower interest or dividend yields than non-
convertible securities of similar quality because of the potential for 
capital appreciation.  A convertible security, in addition to providing 
fixed income, offers the potential for capital appreciation through the 
conversion feature, which enables the holder to benefit from increases 
in the market price of the underlying common stock.  There can be no 
assurance of capital appreciation, however, because securities prices 
fluctuate.

Convertible securities generally are subordinated to other similar but 
non-convertible securities of the same issuer, although convertible 
bonds, as corporate debt obligations, enjoy seniority in right of 
payment to all equity securities, and convertible preferred stock is 
senior to common stock, of the same issuer.  Because of the 
subordination feature, however, convertible securities typically have 
lower ratings than similar non-convertible securities.

Warrants.  Because a warrant does not carry with it the right to 
dividends or voting rights with respect to the securities that the 
warrant holder is entitled to purchase, and because it does not 
represent any rights to the assets of the issuer, a warrant may be 
considered more speculative than certain other types of investments.  In 
addition, the value of a warrant does not necessarily change with the 
value of the underlying securities and a warrant ceases to have value if 
it is not exercised prior to its expiration date.  The investment in 
warrants, valued at the lower of cost or market, may not exceed 5% of 
the value of the Fund's net assets.  Included within that amount, but 
not to exceed 2% of the value of the Fund's net assets, may be warrants 
that are not listed on the New York Stock Exchange, Inc. (the "NYSE") or 
the American Stock Exchange.  Warrants acquired by the Fund in units or 
attached to securities may be deemed to be without value.

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

Futures Contracts and Related Options. Futures contracts and options 
thereon may be undertaken for hedging and other risk management purposes 
in an effort to reduce the impact of several kinds of anticipated price 
fluctuation risks on the securities held by the Fund. For example, 
futures contracts for the sale of foreign currency might be entered into 
to protect against declines in the value of currencies in which 
portfolio securities are denominated; and put options on interest rate 
futures might be purchased to protect against declines in the market 
values of debt securities occasioned by higher interest rates. If these 
transactions are successful, the futures or options positions taken by 
the Fund will rise in value by an amount which approximately offsets the 
decline in value of the portion of the securities held by the Fund that 
is being hedged.
    
	On other occasions, the Fund may enter into contracts to purchase 
the underlying instrument. For example, futures contracts for the 
purchase of debt securities might be entered into to protect against an 
anticipated increase in the price of debt securities to be purchased in 
the future resulting from decreased interest rates.    
    
	The Fund will incur brokerage costs whether or not its hedging is 
successful and will be required to post and maintain "margin" as a good-
faith deposit against performance of its obligations under futures 
contracts and under options written by the Fund. Futures and options 
positions are marked to the market daily and the Fund may be required to 
make subsequent "variation" margin payments depending upon whether its 
positions increase or decrease in value. In this context margin payments 
involve no borrowing on the part of the Fund.


Options on Securities.    The Fund may purchase put and call options on 
securities owned by the Fund and on securities which the Fund may 
acquire in the future. The exercise price of the options may be below, 
equal to or above the market values of the underlying securities at the 
times the options are written.

	An option position may be closed out only where there exists a 
secondary market for an option of the same series on a recognized 
securities exchange or in the over-the-counter market.  In light of this 
fact and current trading conditions, the Fund expect to purchase not 
only call or put options issued by the Clearing Corporation, but also 
options in the domestic and foreign over-the-counter markets.  When the 
Fund has purchased an option and engages in a closing sale transaction, 
whether the Fund realizes a profit or loss will depend upon whether the 
amount received in the closing sale transaction is more or less than the 
premium that the Fund initially paid for the original option plus the 
related transaction costs.

	Although the Fund generally will purchase only those options for 
which SBMFM believes there is an active secondary market so as to 
facilitate closing transactions, there is no assurance that sufficient 
trading interest to create a liquid secondary market on a securities 
exchange will exist for any particular option or at any particular time, 
and for some options no such secondary market may exist.  A liquid 
secondary market in an option may cease to exist for a variety of 
reasons.  In the past, for example, higher than anticipated trading 
activity or order flow or other unforeseen events have at times rendered 
inadequate certain of the facilities of the Clearing Corporation and 
securities exchanges and resulted in the institution of special 
procedures, such as trading rotations, restrictions on certain types of 
orders or trading halts or suspensions in one or more options.  There 
can be no assurance that similar events, or events that may otherwise 
interfere with the timely execution of customers' orders, will not 
recur.  In such event, it might not be possible to effect closing 
transactions in particular options.

	Securities exchanges generally have established limitations 
governing the maximum number of calls and puts of each class which may 
be held  or exercised within certain time periods, by an investor or 
group of investors acting in concert (regardless of whether the options 
are written on the same or different securities exchanges or are held, 
written or exercised in one or more accounts or through one or more 
brokers).  It is possible that the Fund and other clients of SBMFM and 
certain of their affiliates may be considered to be such a group.  A 
securities exchange may order the liquidation of positions found to be 
in violation of these limits and it may impose certain other sanctions.


Stock Index Options. 	The Fund may purchase and write put and call 
options on domestic and foreign stock indexes for the purpose of hedging 
their portfolios.  A stock index fluctuates with changes in the market 
values of the stocks included in the index.  Stock index options may be 
based on a broad market index such as the New York Stock Exchange 
Composite Index or a narrower market index such as the Standard & Poor's 
Daily Price Index of 500 Common Stocks ("S&P 500").  Indexes also may be 
based on an industry or market segment.

	Options on stock indexes are generally similar to options on stock 
except that the delivery requirements are different.  Instead of giving 
the right to take or make delivery of stock at a specified price, an 
option on a stock index gives the holder the right to receive a cash 
"exercise settlement amount" equal to (a) the amount, if any, by which 
the fixed exercise price of the option exceeds (in the case of a put) or 
is less than (in the case of a call) the closing value of the underlying 
index on the date of exercise, multiplied by (b) a fixed "index 
multiplier." Receipt of this cash amount will depend upon the closing 
level of the stock index upon which the option is based being greater 
than, in the case of a call, or less than, in the case of a put, the 
exercise price of the option.  The amount of cash received will be equal 
to such difference between the closing price of the index and the 
exercise price of the option, expressed in dollars, times a specified 
multiple.  The writer of the option is obligated, in return for the 
premium received, to make delivery of this amount.  The writer may 
offset its position in stock index options prior to expiration by 
entering into a closing transaction on an exchange, or it may let the 
option expire unexercised.

	The effectiveness of purchasing stock index options as a hedging 
technique will depend upon the extent to which price movements in the 
portion of a securities portfolio being hedged correlate with price 
movements of the stock index selected.  Because the value of an index 
option depends upon movements in the level of the index rather than the 
price of a particular stock, whether the Fund will realize a gain or 
loss from the purchase or writing of options on an index depends upon 
movements in the level of stock prices in the stock market generally or, 
in the case of certain indexes, in an industry or market segment, rather 
than movements in the price of a particular stock. Accordingly, 
successful use by the Fund of options on stock indexes will be subject 
to SBMFM's ability to predict correctly movements in the direction of 
the stock market generally or of a particular industry.  This requires 
different skills and techniques than predicting changes in the price of 
individual stocks. 

	The Fund will engage in stock index options transactions only when 
determined by SBMFM to be consistent with the Fund's efforts to control 
risk.  There can be no assurance that such judgment will be accurate or 
that the use of these portfolio strategies will be successful. 

Investment Restrictions
   
The Fund has adopted the following investment restrictions for the 
protection of shareholders. Restrictions l through 7 below cannot be 
changed without approval by the holders of a majority of the outstanding 
shares of the Fund, defined as the lesser of  (a) 67% or more of the 
Fund's shares present at a meeting, if the holders of more than 50% of 
the outstanding shares are present in person or by proxy or (b) more 
than 50% of the Fund's outstanding shares.  The remaining restrictions 
may be changed by the Fund's Board of Directors at any time.  In 
accordance with these restrictions, the Fund will not:

1. 		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. 		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.

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

4.	Borrow money, except that (a)  the Fund may borrow from banks for 
temporary or emergency (not leveraging) purposes,  including the 
meeting of redemption requests which might otherwise require the 
untimely disposition of securities,  and (b) the Fund 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),  the Fund 
will be limited so that no more than 33 1/3% of the value of its 
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.

5. 	Make loans.  This restriction does not apply to: (a) the purchase 
of debt obligations in which the Portfolio 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.

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

7. 	Purchase or sell real estate, real estate mortgages, commodities 
or commodity contracts, but this restriction shall not prevent the 
Fund 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 secured 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 Funds' 
investment objective and policies);  or (d) investing in real 
estate investment trust securities.

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

9.	Invest more than 5% of the value of its net assets in warrants, 
included within that amount, but not to exceed 2% of the value of 
the Fund's net assets, may be warrants that are not listed on the 
New York Stock Exchange, Inc. (the "NYSE") or the American Stock 
Exchange.  Warrants acquired by the Fund in units or attached to 
securities may be deemed to be without value.

10.	Invest in mineral-type programs or leases.

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

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

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

14.	Purchase securities of any company with a record of less than 
three years' continuous operation if such purchase would cause its 
investments in such companies to exceed 5% of the value of its 
total assets.  (For purposes of this limitation, issuers include 
predecessors, sponsors, controlling persons, general partners, 
guarantors and originators of underlying assets.)
    
If any percentage restriction described above is complied with at the 
time of an investment, a later increase or decrease in percentage 
resulting from a change in values or assets will not constitute a 
violation of such restriction.

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

Certain Investment Activities

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

Portfolio Turnover

The Fund generally does not engage in short-term trading but intends to 
purchase securities for long-term capital appreciation.  While the 
Fund's portfolio turnover rate has in the past exceeded 100%, the Fund's 
annual portfolio turnover rate is not expected to exceed 100%. A 
portfolio turnover rate of 100% would occur if all of the securities in 
the Fund's portfolio were replaced once during a period of one year.  
The portfolio turnover rate is calculated by dividing the lesser of 
purchases or sales of portfolio securities for the year by the monthly 
average value of portfolio securities.  Securities with remaining 
maturities of one year or less at the date of acquisition are excluded 
from the calculation.  For the fiscal years ended December 31, 1996 and 
1995, the Fund's portfolio turnover rate was 62% and 57%, respectively.

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

Portfolio Transactions

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

Transactions on stock exchanges involve the payment of negotiated 
brokerage commissions. There is generally no stated commission in the 
case of securities traded in the over-the-counter market, but the price 
of those securities includes an undisclosed commission or mark-up.  
Over-the-counter purchases and sales are transacted directly with 
principal market makers except in those cases in which better prices and 
executions may be obtained elsewhere.  The cost of securities purchased 
from underwriters includes an underwriting commission or concession, and 
the prices at which securities are purchased from and sold to dealers 
include a dealer's mark-up or mark-down.  For the fiscal years ended 
December 31, 1996, 1995 and 1994, the Fund paid total brokerage 
commissions of  $4,357,932, $3,736,847 and $3,433,551, respectively.

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

In accordance with Section 17(e) of the 1940 Act and Rule 17(e) 
thereunder, the Fund's Board of Directors has determined that any 
portfolio transaction for the Fund may be executed through Smith Barney 
or an affiliate of Smith Barney if, in SBMFM's judgment, the use of 
Smith Barney or an affiliate is likely to result in price and execution 
at least as favorable as those of other qualified brokers and if, in the 
transaction, Smith Barney or the affiliate charges the Fund a commission 
rate consistent with those charged by Smith Barney or an affiliate to 
comparable unaffiliated customers in similar transactions.  In addition, 
under rules recently adopted by the SEC, Smith Barney may directly 
execute such transactions for the Fund on the floor of any national 
securities exchange, provided: (a) the Board of Directors has expressly 
authorized Smith Barney to effect such transactions; and (b) Smith 
Barney annually advises the Fund of the aggregate compensation it earned 
on such transactions.  For the fiscal year ended December 31, 1996, the 
Fund paid $685,248 in brokerage commissions to Smith Barney, or 15.7% of 
the total brokerage commissions paid.  Smith Barney secured 13.2% of the 
aggregate dollar amount of transactions involving commissions during the 
1996 fiscal year.  For the 1996, 1995 and 1994 fiscal years, the Fund 
paid $685,248, $637,506 and $487,203, respectively, in brokerage 
commissions to Smith Barney and/or Shearson Lehman Brothers, the Fund's 
distributor prior to Smith Barney.

Even though investment decisions for the Fund are made independently 
from those of the other accounts managed by SBMFM, investments of the 
kind made by the Fund also may be made by those other accounts.  When 
the Fund and one or more accounts managed by SBMFM are prepared to 
invest in, or desire to dispose of, the same security, available 
investments or opportunities for sales will be allocated in a manner 
believed by SBMFM to be equitable.  In some cases, this procedure may 
adversely affect the price paid or received by the Fund or the size of 
the position obtained for or disposed of by the Fund.

PURCHASE OF SHARES

Volume Discounts

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

Combined Right of Accumulation

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

Determination of Public Offering Price

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


IRA AND OTHER PROTOTYPE RETIREMENT PLANS

	Copies of the following plans with custody or trust agreements 
have been approved by the Internal Revenue Service and are available 
from the Fund or Smith Barney; investors should consult with their own 
tax or retirement planning advisors prior to the establishment of a 
plan. 

IRA, Rollover IRA and Simplified Employee Pension - IRA

	The Small Business Job Protection Act of 1996 changed the 
eligibility requirements for participants in Individual Retirement 
Accounts ("IRAs").  Under these new provisions, if you or your spouse 
have earned income, each of you may establish an IRA and make maximum 
annual contributions equal to the lesser of earned income or $2,000.  As 
a result of this legislation, married couples where one spouse is non-
working may now contribute a total of $4,000 annually to their IRAs.

	If you or your spouse is an active participant in an employer-
sponsored retirement plan, a deduction for contributions to an IRA might 
still be allowed in full or in part, depending on your combined adjusted 
gross income.  For married couples filing jointly, a full deduction for 
contributions to an IRA will be allowed where the couples' adjusted 
gross income is below $40,001 ($25,001 for an unmarried individual); a 
partial deduction will be allowed when adjusted gross income is between 
$40,001 - $50,000 ($25,001-$35,000 for an unmarried individual);  and no 
deduction when adjusted gross income is $50,000 ($35,000 for an 
unmarried individual).

	A Rollover IRA is available to defer taxes on lump sum payments 
and other qualifying rollover amounts (no maximum) received from another 
retirement plan. 

	An employer who has established a Simplified Employee Pension - 
IRA ("SEP-IRA") on behalf of eligible employees may make a maximum 
annual contribution to each participant's account of 15% (up to $24,000) 
of each participant's compensation.  Compensation is capped at $160,000 
for 1997.

Paired Defined Contribution Prototype

	Corporations (including Subchapter S corporations) and non-
corporate entities may purchase shares of the Fund through the Smith 
Barney Prototype Paired Defined Contribution Plan (the "Prototype").  
The Prototype permits adoption of profit-sharing provisions, money 
purchase pension provisions, or both, to provide benefits for eligible 
employees and their beneficiaries.  The Prototype provides for a maximum 
annual tax deductible contribution on behalf of each Participant of up 
to 25% of compensation, but not to exceed $30,000 (provided that a money 
purchase pension plan or both a profit-sharing plan and a money purchase 
pension plan are adopted thereunder). 


REDEMPTION OF SHARES

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

Distributions in Kind 

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

Automatic Cash Withdrawal Plan

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

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


DISTRIBUTORS

Smith Barney serves as the Fund's distributor on a best efforts basis 
pursuant to a written agreement (the "Distribution Agreement") which was 
most recently approved by the Fund's Board of Directors on July 17, 
1996.  For the fiscal years ended December 31, 1996, 1995 and 1994, 
Smith Barney and/or its predecessor, Shearson Lehman Brothers, received 
approximately $1.8 million, $1.7 million and $1.4 million respectively, 
in sales charges for the sale of Class A shares and did not reallow any 
portion thereof to dealers.  For the fiscal years ended December 31, 
1996, 1995 and 1994, Smith Barney or Shearson Lehman Brothers received 
approximately $1,512,000, $1,912,000 and $2,313,000, respectively, 
representing CDSC on redemptions of the Fund's Class B shares.  For the 
fiscal years ended December 31, 1996, 1995, and 1994, Smith Barney 
received approximately $6,000, $4000 and  $1, respectively,  
representing CDSC on redemptions of the Fund's Class C shares.

	PFS Distributors, located at 3100 Breckinridge Blvd., Building 
200, Duluth, Georgia 30199-0062, also, serves as one of the Fund's 
distributors on a best efforts basis requiring PFS Distributors to take 
and pay for only such securities as may be sold to the public pursuant 
to a Distribution Agreement dated July 1, 1995.  The only classes of 
shares being offered for sale through PFS Distributors are Class A 
shares and Class B shares.  

When payment is made by the investor, unless otherwise noted by the 
investor, the funds will be held as a free credit balance in the 
investor's brokerage account and Smith Barney may benefit from the 
temporary use of the funds.  The investor may designate another use for 
the funds prior to settlement date, such as an investment in a money 
market fund (other than Smith Barney Exchange Reserve Fund) of the Smith 
Barney Mutual Funds.  If the investor instructs Smith Barney to invest 
the funds in a Smith Barney money market fund, the amount of the 
investment will be included as part of the average daily net assets of 
both the Fund and the Smith Barney money market fund, and affiliates of 
Smith Barney that serve the funds in an investment advisory or 
administrative capacity will benefit from the fact they are receiving 
fees from both such investment companies for managing these assets 
computed on the basis of their average daily net assets.  The Fund's 
Board of Directors has been advised of the benefits to Smith Barney 
resulting from these settlement procedures and will take such benefits 
into consideration when reviewing the Advisory, Administration and 
Distribution Agreements for continuance.

For the fiscal year ended December 31, 1996, Smith Barney and/or PFS 
Distributors incurred distribution expenses totaling approximately 
$15,711,344, consisting of approximately $732,273 for advertising, 
$108,000 for printing and mailing of Prospectuses, $5,771,362 for 
support services, $8,062,780 to Smith Barney Financial Consultants, and 
$698,000 in accruals for interest on the excess of Smith Barney expenses 
incurred in distribution of the Fund's shares over the sum of the 
distribution fees and CDSC received by Smith Barney and/or PFS 
Distributors from the Fund.

Distributions Arrangements

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

The only Classes of shares being offered for sale through PFS 
Distributors are Class A shares and  Class B shares.  Pursuant to the 
Plan (described above), PFS Distributors is paid an annual service fee 
with respect to Class A and Class B shares of the Fund sold through PFS 
Distributors at the annual rate of 0.25% of the average daily net assets 
of the respective Class.  PFS Distributors is also paid an annual 
distribution fee with respect to Class B shares at the annual rate of 
0.75% of the average daily net assets attributable to that Class. Class 
B shares that automatically convert to Class A shares eight years after 
the date of original purchase will no longer be subject to a 
distribution fee.  The fees are paid to PFS Distributors, which in turn, 
pays PFS Investments Inc. ("PFS Investments") to pay its Investments 
Registered Representatives for servicing shareholder accounts and, in 
the case of Class B shares, to cover expenses primarily intended to 
result in the sale of those shares.  These expenses include: advertising 
expenses; the cost of printing and mailing prospectuses to potential 
investors; payments to and expenses of Investments Registered 
Representatives and other persons who provide support services in 
connection with the distribution of shares; interest and/or carrying 
charges; and indirect and overhead costs of PFS Investments associated 
with the sale of Fund shares, including lease, utility, communications 
and sales promotion expenses.

The payments to PFS Investments Registered Representatives for selling 
shares of a Class include a commission or fee paid by the investor or 
PFS at the time of sale and, with respect to Class A and Class B shares, 
a continuing fee for servicing shareholder accounts for as long as a 
shareholder remains a holder of that Class.  PFS Investments Registered 
Representatives may receive different levels of compensation for selling 
different Classes of shares.

PFS Investments may be deemed to be an underwriter for purposes of the 
Securities Act of 1933.  From time to time, PFS or its affiliates may 
also pay for certain non-cash sales incentives provided to PFS 
Investments Registered Representatives.  Such incentives do not have any 
effect on the net amount invested.  In addition to the reallowances from 
the applicable public offering price described above, PFS may from time 
to time, pay or allow additional reallowances or promotional incentives, 
in the form of cash or other compensation to PFS Investments Registered 
Representatives that sell shares of  the Fund.



  
The following service and distribution fees were incurred during the 
periods indicated:


SERVICE FEES


Fiscal Year
Ended 12/31/96

Fiscal Year
Ended 
12/31/95

Fiscal 
Year
Ended 
12/31/94

Fiscal Year
Ended 
12/31/93
For Period
From 2/4/93
Through 
12/31/93*

Class A    $5,002,144
           
$4,551,117       
$3,818,714
$4,143,053
nil

Class B      2,626,359
             
2,192,717
2,832,127
3,054,126
nil

Class C           
50,941
                  
21,953
9,200
nil
$1,600




DISTRIBUTION FEES


Fiscal Year
Ended 12/31/96

Fiscal Year
Ended 
12/31/95

Fiscal 
Year
Ended 
12/31/94

Fiscal Year
Ended 
12/31/93
For Period
From 2/4/93
Through 
12/31/93*

Class B     $7,879,077
           
$6,578,149
$8,496,382
$9,162,378
nil

Class C         152,823
                  
65,858
27,602
nil
$4,800

				
* The Fund commenced selling Class C shares on February 4, 1993.

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

VALUATION OF SHARES

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

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


EXCHANGE PRIVILEGE

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

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

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

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

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

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

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

PERFORMANCE DATA

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

Average Annual Total Return

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

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

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

13.26% for the one-year period beginning on January 1, 1996 through 
December 31, 1996
10.80% per annum during the five-year period beginning on January 1, 
1992 through December 31, 1996
12.77% per annum during the ten-year period beginning on January 1, 1987 
through December 31, 1996

The average annual total return figures assume that the maximum 5.00% 
sales charge has been deducted from the investment at the time of 
purchase.  If the maximum sales charge had not been deducted, Class A's 
average annual total return for those same periods would have been 
19.25%, 11.94% and 13.34%, respectively.

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

13.29% for the one-year period beginning on January 1, 1996 through 
December 31, 1996
12.77% for the period from inception (November 6, 1992) through December 
31, 1996

The average annual total return figures assume that the maximum 
applicable CDSC has been deducted from the investment at the time of 
redemption.  If the maximum CDSC had not been deducted, Class B's 
average annual total return for those same periods would have been 
28.29% and 12.93%, respectively.

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

17.34% for the one-year period beginning on January 1, 1996 through 
December 31,1996
12.02% for the period from inception (February 4, 1993) through December 
31,1996

The average annual total return figures assume that the maximum 
applicable CDSC has been deducted from the investment at the time of 
redemption.  If the maximum CDSC had not been deducted, Class C's 
average annual total return for those same periods would have been 
18.34% and 12.02%, respectively.



Class Y's average annual total return was as follows for the period 
indicated:

17.65% for the period from inception (January 30, 1996) through December 
31,1996

Class Y shares do not incur sales charges nor CDSCs.

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

19.66% for the one-year period beginning on January 1, 1996 through 
December 31,1996
14.12% for the period from inception (November 6, 1992) through December 
31, 1996

Class Z shares do not incur sales charges nor CDSCs.

Aggregate Total Return

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

ERV - P
  P

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

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

13.26% for the one-year period beginning on January 1, 1996 through 
December 31, 1996
67.00% for the five-year period beginning on January 1, 1992 through 
December 31, 1996
232.54% for the ten-year period beginning on January 1, 1987 through 
December 31, 1996

These aggregate total return figures assume the maximum 5.00% sales 
charge has been deducted from the investment at the time of purchase. If 
the maximum sales charge had not been deducted, Class A's aggregate 
total return for those same periods would have been 19.25%, 75.79% and 
249.82%, respectively.

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

13.29% for the one-year period beginning on January 1, 1996 through 
December 31, 1996
64.72% for the period from inception (November 6, 1992) through December 
31, 1996.

These aggregate total return figures assume that the maximum applicable 
CDSC has been deducted from the investment at the time of redemption.  
If the maximum applicable CDSC had not been deducted, Class B's 
aggregate total return for those same periods would have been 18.29% and 
65.72%, respectively.

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

17.34% for the one-year period beginning on January 1, 1996 through 
December 31, 1996
55.80% for the period from inception (February 4, 1993) through December 
31, 1996

Class Y's average annual total return was as follows for the period 
indicated:

17.65% for the period from inception (January 30, 1996) through December 
31,1996

Class Y shares do not incur sales charges nor CDSCs.

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

19.66% for the one-year period beginning on January 1, 1996 through 
December 31,1996
73.09% for the period from inception (November 6, 1992) through December 
31, 1996

Class Z shares do not incur sales charges nor CDSCs.

These aggregate total return figures assume that the maximum applicable 
CDSC has been deducted from the investment at the time of redemption.  
If the maximum CDSC had not been deducted, Class C's aggregate total 
return for those same periods would have been 18.34% and 55.80%, 
respectively.

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

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

TAXES

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

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

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

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

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

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

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

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

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


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

ADDITIONAL INFORMATION

The Fund was incorporated on September 2, 1969 under the name The 
Shearson Appreciation Fund, Inc.  On October 28, 1987, November 5, 1995, 
July 30, 1993 and October 14, 1994, the Fund changed its name to 
Shearson Lehman Appreciation Fund Inc., Shearson Lehman Brothers 
Appreciation Fund Inc., Smith Barney Shearson Appreciation Fund Inc. and 
Smith Barney Appreciation Fund Inc., respectively.

PNC, located at 17th and Chestnut Streets, Philadelphia, Pennsylvania 
19103, serves as the custodian of the Fund.  Under its agreement with 
the Fund, PNC holds the Fund's portfolio securities and keeps all 
necessary accounts and records.  For its services, PNC receives a 
monthly fee based upon the month-end market value of securities held in 
custody and also receives securities transaction charges.  The assets of 
the Fund are held under bank custodianship in compliance with the 1940 
Act.

First Data Investor Services Group, Inc., located at Exchange Place, 
Boston, Massachusetts 02109, serves as the Fund's transfer agent.  Under 
the transfer agency agreement, the Transfer Agent maintains the 
shareholder account records for the Fund, handles certain communications 
between shareholders and the Fund and distributes dividends and 
distributions payable by the Fund.  For these services, the Transfer 
Agent receives a monthly fee computed on the basis of the number of 
shareholder accounts it maintains for the Fund during the month and is 
reimbursed for out-of-pocket expenses.

FINANCIAL STATEMENTS

The Fund's Annual Report for the fiscal year ended December 31, 1996 is 
incorporated herein by reference in its entirety.



	Smith Barney
	Appreciation
	Fund Inc.





Statement of



Additional Information



















April 29, 1997



Amended as of


   
March 20, 1998
    

















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




29


g/funds/appr/1998/secdocs/sai1997a.doc