SMITH BARNEY HIGH INCOME FUND
SMITH BARNEY DIVERSIFIED STRATEGIC INCOME FUND
Supplement dated October 8, 1997
to the Prospectuses dated November 28, 1996
The following information supplements, and to the extent inconsistent
therewith, supersedes, the information set forth in the prospectuses under
"Certain Investment Guidelines."
Illiquid Securities. Up to 15% of the Fund may be invested in illiquid
securities. The Fund's investments in illiquid securities are subject to
the risks that these securities may not be transferable and, if
transferable, there may be no ascertainable market for them. Accordingly,
should the Fund desire to sell any of these securities, it may be legally
unable to do so, or unable to do so at a price that the Fund deems
representative of their value.
In addition, the Fund may invest up to 5% of its assets in the securities of
issuers that have been in continuous operation for less than three years.
The Fund may also borrow from banks for temporary or emergency purposes, but
not for investment purposes, in an amount up to 10% of its total assets, and
may pledge its assets to the same extent in connection with such borrowings.
Whenever these borrowings exceed 5% of the value of the Fund's total assets,
the Fund will not make any additional investments. Immediatly after any
borrowing (including reverse repurchase agreements and forward roll
transactions) by the Fund, the Fund will maintain
asset coverage of at least 300% with respect to all of its borrowings.
Except for the limitations on borrowing, the investment guidelines set
forth below in this paragraph may be changed at any time without shareholder
consent by vote of the Trust's Board of Trustees. A complete list of
investment restrictions that identifies additional restrictions that cannot
be changed without the approval of a majority of the Fund's outstanding
shares is contained in the Statment of Additional Information.
The following information supplements and to the extent inconsistent
therewith supersedes the information contained in the Smith Barney
Diversified Strategic Income Fund Prospectus under the section "Risk Factors
and Special Considerations- Non-Publicly Traded and Illiquid Securities" and
the Smith Barney High Income Fund Prospectus under the section "Additional
Investments-Non-Publicly Traded and Illiquid Securities."
Rule 144A Securities. The Portfolio may purchase Rule 144A Securities,
which are unregistered securities restricted to purchase by "qualified
institutional buyers" pursuant to Rule 144A under the 1933 Act. Because
Rule 144A Securities are freely transferable among qualified institutional
buyers, a liquid market may exist among such buyers. The Board of Trustees
has adopted guidelines and delegated to management the daily function of
determining and monitoring liquidity of Rule 144A securities. However, the
Board of Trustees maintains sufficient oversights and is ultimately responsible
for the liquidity determinations. Investments in restricted securities such as
Rule 144A securities could have the effect of increasing the level of
illiquidity in the Portfolio to the extent that there is temporarily no
market for these securities among qualified institutional buyers.
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