SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND

DISTRIBUTION AGREEMENT



							October 8, 1998



CFBDS, Inc.
21 Milk Street
Boston, MA 02109

Dear Sirs:

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

	1.	Services as Principal Underwriter and Distributor

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

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

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

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

2.	Duties of the Fund

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

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

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

	3.	Representations and Warranties

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

	4.	Indemnification

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

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

	5.	Effectiveness of Registration

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

6. Offering Price

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


7.	Notice to You

	The Fund agrees to advise you immediately in writing:

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

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

		(c)  of the happening of any
event that makes untrue any statement
of a material fact made in the
registration statement, prospectus or
statement of additional information
then in effect or that requires the
making of a change in such registration
statement, prospectus or statement of
additional
	information in order to make the
statements therein not misleading; and

		(d)  of all actions of the SEC
with respect to any amendment to the
registration statement, or any
supplement to the prospectus or
statement of additional information
which may from time to time be filed
with the SEC.

	8.	Term of the Agreement

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

9. Arbitration

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

10.	Miscellaneous

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

	11.	Limitation of Liability  (Massachusetts business
trusts only)

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

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


				Very truly yours,
SMITH BARNEY ADJUSTABLE RATE
GOVERNMENT INCOME FUND

						By:  _____________________
						       Authorized Officer

Accepted:

CFBDS, INC.


By:  __________________________
       Authorized Officer

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