Independent
Accountants' Report


To the Board of Trustees of Smith Barney Adjustable Rate
Government
Income Fund and Securities and Exchange Commission:

We have examined management's assertion about Smith Barney
Adjustable Rate Government Income Fund's (the "Fund")
compliance with the requirements of subsection (b) and (c)
of Rule 17f-2 under the Investment Company Act of 1940 as of
May 31, 1997 and for the period from March 14, 1997 (the
date of our last examination) through May 31, 1997, included
in the accompanying Management Statement regarding
Compliance with Certain Provisions of the Investment Company
Act of 1940.  Management is responsible for the Fund's
compliance with those requirements. Our responsibility is to
express an opinion on management's assertion about the
Fund's compliance based on our examination.

Our examination was made in accordance with standards
established by the American Institute of Certified Public
Accountants and, accordingly, included examining, on a test
basis, evidence about the Fund's compliance with those
requirements and performing such other procedures as we
considered necessary in the circumstances.  Included among
our procedures were the following tests performed as of May
31, 1997 and for the period from March 14, 1997 through May
31, 1997, with respect to securities transactions, without
prior notice to management:

    Agreement of all securities reported by the Fund's
  records to PNC Bank (the "Custodian") records as of May 31,
  1997;

    Confirmation of all futures and reverse repurchase
  agreements shown on the Fund's accounting records as of May
  31, 1997 with respective counterparties and agreement of
  underlying collateral with Custodian records;

    Confirmation of all trades shown as pending on the
  Fund's accounting records as of May 31, 1997 with respective
  counterparties and verification of such trades with
  Custodian records;

    Review of  PNC Bank's Report on Policies and Procedures
  Placed in Operation and Tests of Operating Effectiveness
  Pertaining to Custody Services ("SAS 70 Report") for the
  period January 1, 1996 to December 31, 1996 and noted no
  negative findings reported in the areas of Asset
  Safekeeping, Security Transaction Processing, Asset
  Maintenance and Computerized Information Systems;

     Representation  from the Custodian  that  all  control
  policies  and procedures as detailed in PNC  Bank  SAS  70
  Report identified in the prior paragraph, have remained in
  operation and functioned adequately from January  1,  1997
  through May 31, 1997; and

    Tests of selected security transactions since the date
  of our last report.




We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal
determination on the Fund's compliance with the specified
requirements.

In our opinion, management's assertion that Smith Barney
Adjustable Rate Government Income Fund was in compliance
with the above mentioned provisions of Rule 17f-2 of the
Investment Company Act of 1940 as of May 31, 1997 and for
the period from March 14, 1997 through May 31, 1997 is
fairly stated, in all material respects.

This report is intended solely for the information and use
of management of the Smith Barney Adjustable Rate Government
Income Fund and the Securities and Exchange Commission and
should not be used for any other purpose.


                                                            


July 14, 1997
          SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
       388 Greenwich Street, New York, New York 10013



       Management Statement Regarding Compliance with
  Certain Provisions of the Investment Company Act of 1940


We, as members of management of Smith Barney Adjustable Rate
Government Income Fund ("the Fund") are responsible for
complying with the requirements of subsections (b) and (c)
of Rule 17f-2, "Custody of Investments by Registered
Management Investment Companies", of the Investment Company
Act of 1940. We are also responsible for establishing and
maintaining an effective internal control structure over
compliance with Rule 17f-2 requirements. We have performed
an evaluation of the Fund's compliance with the requirements
of subsections (b) and (c) of Rule 17f-2 as of May 31, 1997
and for the period from March 14, 1997 through May 31, 1997.

Based on this evaluation, we assert that the Fund was in
compliance with the requirements of subsections (b) and (c)
of Rule 17f-2 of the Investment Company Act of 1940 as of
May 31, 1997 and for the period from March 14, 1997 through
May 31, 1997, with respect to securities reflected in the
investment accounts of the Fund.



Smith Barney Adjustable Rate Government Income Fund




Thomas M. Reynolds
Controller