Independent Accountants'
Report
To the Board of Trustees of Smith Barney Adjustable Rate
Government
Income Fund and the 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,
1998 and for the period from February 27, 1998 (the date of our
last examination) through May 31, 1998, 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, 1998 and for the period from February 27, 1998
through May 31, 1998, with respect to securities transactions,
without prior notice to management:
Count and inspection of all securities located in the vault of
Bankers Trust in New York without prior notice to management,
Agreement of all securities reported by the Fund's records to
PNC Bank's (the "Custodian") records as of May 31, 1998,
Confirmation of all futures and reverse repurchase agreements
shown on the Fund's accounting records as of May 31, 1998 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, 1998 with respective
counterparties and verification of such trades with Custodian
records,
Review of the Custodian'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, 1997 to September 30, 1997 noting no
exceptions 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 the Custodian's SAS 70 Report
identified in the prior paragraph, have remained in operation
and functioned adequately from February 27, 1998 through May
31, 1998, 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, 1998 and for the period from
February 27, 1998 through May 31, 1998 is fairly stated, in all
material respects.
This report is intended solely for the information and use of
management of Smith Barney Adjustable Rate Government Income Fund
and the Securities and Exchange Commission and should not be used
for any other purpose.
July 31, 1998
