g:\funds\natr\1996\secdoc\830stk.doc
SMITH BARNEY NATURAL RESOURCES FUND INC.
(the "Fund")
Supplement to Prospectus
dated January 5, 1996
The following information supplements, and to the
extent inconsistent therewith, supersedes the information
set forth in the Prospectus of the above Fund:
Investment Policies
Writing Options. The Fund may from time to time write
covered put and call options on securities in its portfolio.
The Fund will realize a fee (referred to as a "premium")
when it writes an option. The Fund will only write covered
put and call options, which means that for so long as the
Fund remains obligated as the writer of the option it will,
in the case of a call option, continue to own the underlying
security and, in the case of a put option, maintain an
amount of cash or permissible securities in a segregated
account equal to the exercise price of the option. A put
option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an
underlying security at a specified price at any time during
the option period. In contrast, a call option embodies the
right of its purchaser to compel the writer of the option to
sell the option holder an underlying security at a specified
price at any time during the option period. Thus, the
purchaser of a put option has the right to compel the Fund
to purchase from it the underlying security at the agreed-
upon price for a specified time period, while the purchaser
of a call option has the right to purchase from the Fund the
underlying security owned by the Fund at the agreed-upon
price for a specified time period.
Upon the exercise of a put option, the Fund may suffer a
loss equal to the difference between the price at which the
Fund is required to purchase the underlying security and its
market value at the time of the option exercise, less the
premium received for writing the option. Upon the exercise
of a call option, the Fund may suffer a loss equal to the
excess of the security's market value at the time of the
option exercise over the Fund's acquisition cost of the
security, less the premium received for writing the option.
The Fund ordinarily will write only covered put and call
options for which a secondary market exists on a national
securities exchange or in the over-the-counter market.
In order to realize a profit, to prevent an underlying
security from being called or to unfreeze an underlying
security (thereby permitting its sale or the writing of a
new option on the security prior to the option's
expiration), the Fund may engage in a closing purchase
transaction. The Fund will incur a loss if the cost of the
closing purchase transaction, plus transaction costs,
exceeds the premium received upon writing the original
option. To effect a closing purchase transaction, the Fund
would purchase, prior to the exercise of an option that it
has written, an option of the same series as that on which
it desires to terminate its obligation. There can be no
assurance that the Fund will be able to effect a closing
purchase transaction at a time when it wishes to do so. The
obligation of the Fund to purchase or deliver securities,
respectively, upon the exercise of a covered put or call
option which it has written terminates upon the effectuation
of a closing purchase transaction.
Stock Index Futures. The Fund may enter into futures
contracts on domestic and foreign stock indexes. A stock
index measures the movement of a certain group of stocks by
assigning relative values to the stocks included in the
index. The Fund will not enter into stock index futures
contracts for speculation and will only enter into futures
contracts that are traded on exchanges designated by the
Commodity Futures Commission ("CFTC") or, consistent with
CFTC regulations, on foreign exchanges.
When the Fund enters into a future to purchase, an amount of
cash, U.S. government securities or other high grade debt
securities, equal to the market value of the contract, will
be deposited in a segregated account with the Fund's
custodian to collaterize the position, thereby insuring that
the use of the contract is unleveraged.
The Fund may lose the expected benefit of these futures
transactions and may incur losses if the prices of the
underlying commodities move in an unanticipated manner. In
addition, changes in the value of the Fund's futures
positions may not prove to be perfectly or even highly
correlated with changes in the value of its portfolio
securities. Successful use of futures is subject to the
Fund's investment adviser's ability to predict correctly
movements in the direction of the securities markets
generally, which ability may require different skills and
techniques than predicting changes in the prices of
individual securities. Moreover, futures contracts may only
be closed out by entering into offsetting transactions on
the exchange where the position was entered into (or a
linked exchange), and as a result of daily price fluctuation
limits there can be no assurance that an offsetting
transaction could be entered into at an advantageous price
at any particular time. Consequently, the Fund may not be
able to close a futures position without incurring a loss in
the event of adverse price movements.
___________________
Supplement dated September 3, 1996
