File No. 2-51301
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 49
to the
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
SMITH BARNEY MONEY FUNDS, INC.
(Exact name of Registrant as specified
in the Articles of Incorporation)
388 Greenwich Street, New York, New York 10013
(Address of principal executive offices)
(212) 816-6474
(Registrant's telephone number)
Christina T. Sydor
Smith Barney Money Funds, Inc.
388 Greenwich Street, New York, New York 10013 (22nd Floor)
(Name and address of agent for service)
To amend Parts, A, B and C
Rule 24f-2(a)(1) Declaration:
The common stock of Smith Barney Money Funds, Inc. registered hereunder is an
indefinite number of shares of common stock classified as Cash Portfolio
Shares, Government Portfolio Shares and Retirement Portfolio Shares.
Registrant filed its Rule 24f-2 Notice on February 18, 1997 for its most
recent fiscal year ended December 31, 1996.
It is proposed that this Post-Effective Amendment will become effective April
30, 1997 pursuant to paragraph (b) of Rule 485.
CROSS REFERENCE SHEET
(as required by Rule 495(a)
Part A of Form N-1A Prospectus Caption
1. Cover Page cover page
2. Synopsis "Fee Table"
3. Condensed Financial Information "Financial
Highlights"
4. General Description of Registrant "Shares of the Fund"
cover page
"Investment Objectives and
Policies"
5. Management of the Fund "Management of the Fund"
"Purchase of Shares"
6. Capital Stock and Other Securities "Shares of the Fund"
" Redemption of Shares"
Cover Page
"Dividends, Automatic
Reinvestment and Taxes"
7. Purchase of Securities Being Offered "Purchase of Shares"
"Exchange Privilege"
"Management of The Fund"
"Determination of Net Asset
Value"
8. Redemption or Repurchase "Redemption of Shares"
"Minimum Account Size"
9. Legal Proceedings not applicable
Statement of Additional
Part B of Form N-1A Information Caption
10. Cover Page cover page
11. Table of Contents "Table of Contents"
12. General Information and History not applicable
13. Investment Objectives and Policies "Investment Restrictions and
Fundamental Policies"
14. Management of the Registrant "Directors and
Officers"
15. Control Persons and Principal Holders of Securities "Voting
Rights"
"Directors and
Officers"
16. Investment Advisory and Other Services See Prospectus - "Management
of The Fund"
"Directors and
Officers"
"The Management Agreement,
Plan of Distribution and
Other Services"
"Custodian, Transfer and
Dividend Disbursing Agent"
"Independent Auditors"
17. Brokerage Allocation See Prospectus - "Management
of The Fund"
18. Capital Stock and Other Securities See Prospectus -
"Shares of the Fund"
"Voting Rights"
"Investment Restrictions and
Fundamental Policies"
19. Purchase, Redemptions and Pricing of Securities
Being Offered See Prospectus - "Management
of The Fund"
"IRA and Other Prototype
Retirement Plans"
"Valuation of Shares and
Amortized Cost Valuation"
See Prospectus - "Valuation
of Shares"
See Prospectus -
"Purchase of Shares"
"Financial
Statements"
20. Tax Status See Prospectus - "Dividends,
Automatic Reinvestment and
Taxes"
21. Underwriters See Prospectus - "Management
of The Fund"
22. Calculation of Performance Data "Computation of
Yield"
See Prospectus -
"Yield Information"
23. Financial Statements "Financial
Statements"
Part C of Form N-1A
Information required to be included in Part C is set forth under the
appropriate item, so numbered in Part C of this Post-Effective Amendment
to the Registration Statement.
P R O S P E C T U S
Smith Barney
Money Funds,
Inc.
APRIL 30, 1997
PROSPECTUS BEGINS ON PAGE ONE
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Everyday.
<PAGE>
PROSPECTUS
April 30, 1997
Smith Barney Money Funds, Inc.
388 Greenwich Street
New York, New York 10013
(800) 451-2010
Smith Barney Money Funds, Inc. (the "Fund") is a money market fund that
invests in high quality money market instruments.
The Fund seeks to provide:
. Daily Income
. Convenience
. Daily Liquidity
. Stability of Net Asset Value
Shares of the Fund are offered in three Portfolios:
. Cash Portfolio
. Government Portfolio
. Retirement Portfolio
SHARES OF THE FUND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
This Prospectus sets forth concisely certain information about the Fund and
the Portfolios, including service fees and expenses, that prospective investors
will find helpful in making an investment decision. Investors are encouraged to
read this Prospectus carefully and retain it for future reference.
Additional information about the Fund is contained in a Statement of Addi-
tional Information dated April 30, 1997, as amended or supplemented from time
to time, that is available upon request and without charge by calling or writ-
ing the Fund at the telephone number or address set forth above or by contact-
ing a Smith Barney Financial Consultant. The Statement of Additional Informa-
tion has been filed with the Securities and Exchange Commission (the "SEC") and
is incorporated by reference into this Prospectus in its entirety.
SMITH BARNEY INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FEE TABLE 3
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FINANCIAL HIGHLIGHTS 5
- ------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES 7
- ------------------------------------------------
VALUATION OF SHARES 10
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DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES 10
- ------------------------------------------------
PURCHASE OF SHARES 11
- ------------------------------------------------
REDEMPTION OF SHARES 15
- ------------------------------------------------
EXCHANGE PRIVILEGE 19
- ------------------------------------------------
MINIMUM ACCOUNT SIZE 21
- ------------------------------------------------
YIELD INFORMATION 22
- ------------------------------------------------
MANAGEMENT OF THE FUND 22
- ------------------------------------------------
DISTRIBUTOR 23
- ------------------------------------------------
ADDITIONAL INFORMATION 24
- ------------------------------------------------
</TABLE>
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No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the Fund
or the Distributor. This Prospectus does not constitute an offer by the Fund or
the Distributor to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
- --------------------------------------------------------------------------------
2
<PAGE>
FEE TABLE
The following expense table lists the costs and expenses that an investor
will incur either directly or indirectly as a shareholder of each Portfolio
based on its operating expenses for its most recent fiscal year:
<TABLE>
<CAPTION>
CASH PORTFOLIO AND
ALL PORTFOLIOS GOVERNMENT PORTFOLIO ONLY
CLASS A SHARES CLASS C SHARES* CLASS Y SHARES
- --------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Sales Charge Imposed on
Purchases None None None
Sales Charge Imposed on
Reinvested Dividends None None None
Deferred Sales Charge None** None** None
Redemption Fee None None None
Exchange Fee None None None
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RETIREMENT
CASH PORTFOLIO GOVERNMENT PORTFOLIO PORTFOLIO
CLASS A CLASS C CLASS Y CLASS A CLASS C CLASS Y CLASS A
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ANNUAL PORTFOLIO
OPERATING EXPENSES
(AS A PERCENTAGE
OF AVERAGE
NET ASSETS)
Management Fees 0.40% 0.40% 0.40% 0.43% 0.43% 0.43% 0.44%
12b-1 Fees 0.10 0.10 -- 0.10 0.10 -- 0.10
Other Expenses 0.12 0.12 0.12 0.08 0.08 0.08 0.17
- ------------------------------------------------------------------------------------
TOTAL PORTFOLIO
OPERATING EXPENSES 0.62% 0.62% 0.52% 0.61% 0.61% 0.51% 0.71%
- ------------------------------------------------------------------------------------
</TABLE>
* Class C shares are available for purchase only by Participating Plans (as
defined under "Purchase of Shares--Smith Barney 401(k) and ExecChoice(TM)
Programs") opened prior to June 21, 1996, either directly or as part of an
exchange privilege transaction with certain other funds of the Smith Barney
Mutual Funds. Class C shares of the Government Portfolio that represent
previously issued "Class B" shares may only be redeemed or exchanged out of
the Fund. See "Purchase of Shares" and "Exchange Privilege."
** Class A shares acquired as part of an exchange privilege transaction, which
were originally acquired in one of the other Smith Barney Mutual Funds at
net asset value subject to a contingent deferred sales charge ("CDSC"),
remain subject to the original fund's CDSC while held in the Fund. Class C
shares that represent previously issued "Class B" shares of the Government
Portfolio may be subject to a CDSC of 1.00% of redemption proceeds. See
"Purchase of Shares" and "Redemption of Shares--Contingent Deferred Sales
Charge."
Class A shares of the Fund purchased through the Smith Barney AssetOne
Program will be subject to an annual asset-based fee, payable quarterly. The
fee will vary to a maximum of 1.50%, depending on the amount of assets held
through the Program. For more information, please call your Smith Barney Finan-
cial Consultant.
3
<PAGE>
FEE TABLE (CONTINUED)
EXAMPLE
The following example is intended to assist an investor in understanding the
various costs that an investor in the Fund will bear directly or indirectly.
The example assumes payment by the Fund of operating expenses at the levels set
forth in the table above. See "Purchase of Shares," "Redemption of Shares,"
"Management of the Fund" and "Distributor."
<TABLE>
<CAPTION>
SMITH BARNEY MONEY FUNDS, INC. 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5.00%
annual return and (2) redemption at the end
of each time period:
Cash Portfolio
Class A $ 6 $20 $35 $77
Class C 6 20 35 77
Class Y 5 17 29 65
Government Portfolio
Class A 6 20 34 76
Class C 6 20 34 76
Class Y 5 16 29 64
Retirement Portfolio
Class A 7 23 40 88
- -------------------------------------------------------------------------------
</TABLE>
The example is included to provide a means for the investor to compare
expense levels of funds with different fee structures over varying investment
periods. To facilitate such comparison, all funds are required to utilize a
5.00% annual return assumption. This assumption is unrelated to the Fund's
prior performance and is not a projection of future performance. THIS EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP, indepen-
dent auditors, whose report thereon appears in the Fund's annual report dated
December 31, 1996. The information set out below should be read in conjunction
with the financial statements and related notes that also appear in the Fund's
Annual Report to Shareholders, which is incorporated by reference into the
Statement of Additional Information.
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
NET ASSET DIVIDENDS NET ASSET RATIOS TO AVERAGE NET
VALUE, NET FROM NET VALUE NET ASSETS ASSETS
YEAR ENDED BEGINNING INVESTMENT INVESTMENT END OF TOTAL END OF YEAR ---------------------
DECEMBER 31, OF YEAR INCOME INCOME YEAR RETURN (IN MILLIONS) NET INCOME EXPENSES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SMITH BARNEY MONEY FUNDS, INC.
CLASS A
CASH PORTFOLIO:
1996 $1.00 $0.050 $(0.050) $1.00 4.98% $27,434 4.87% 0.62%
1995 1.00 0.054 (0.054) 1.00 5.53 22,969 5.39 0.62
1994 1.00 0.037 (0.037) 1.00 3.73 17,590 4.10 0.64
1993 1.00 0.026 (0.026) 1.00 2.63 2,953 2.60 0.64
1992 1.00 0.033 (0.033) 1.00 3.31 2,841 3.17 0.60
1991 1.00 0.055 (0.055) 1.00 5.66 1,784 5.55 0.52
1990 1.00 0.076 (0.076) 1.00 7.92 1,998 7.60 0.52
1989 1.00 0.086 (0.086) 1.00 8.97 2,088 8.60 0.54
1988 1.00 0.069 (0.069) 1.00 7.15 1,379 6.93 0.58
1987 1.00 0.061 (0.061) 1.00 6.29 1,327 6.11 0.56
GOVERNMENT PORTFOLIO:
1996 1.00 0.048 (0.048) 1.00 4.89 4,353 4.78 0.61
1995 1.00 0.053 (0.053) 1.00 5.45 4,038 5.31 0.60
1994 1.00 0.036 (0.036) 1.00 3.63 3,695 4.03 0.61
1993 1.00 0.025 (0.025) 1.00 2.55 636 2.53 0.61
1992 1.00 0.032 (0.032) 1.00 3.32 675 3.15 0.55
1991 1.00 0.054 (0.054) 1.00 5.57 394 5.43 0.49
1990 1.00 0.074 (0.074) 1.00 7.76 363 7.39 0.49
1989 1.00 0.082 (0.082) 1.00 8.53 150 8.21 0.51
1988 1.00 0.066 (0.066) 1.00 6.77 105 6.55 0.54
1987 1.00 0.058 (0.058) 1.00 5.92 124 5.76 0.50
RETIREMENT PORTFOLIO
1996 1.00 0.048 (0.048) 1.00 4.86 1,355 4.75 0.71
1995 1.00 0.053 (0.053) 1.00 5.42 1,280 5.28 0.72
1994 1.00 0.036 (0.036) 1.00 3.67 1,061 3.57 0.70
1993 1.00 0.026 (0.026) 1.00 2.58 1,184 2.55 0.70
1992 1.00 0.032 (0.032) 1.00 3.26 1,030 3.21 0.64
1991 1.00 0.054 (0.054) 1.00 5.58 972 5.44 0.57
1990 1.00 0.075 (0.075) 1.00 7.83 923 7.51 0.59
1989 1.00 0.085 (0.085) 1.00 8.86 810 8.48 0.63
1988 1.00 0.068 (0.068) 1.00 7.03 463 6.84 0.69
1987 1.00 0.060 (0.060) 1.00 6.13 403 5.97 0.69
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
NET ASSET DIVIDENDS NET ASSET RATIOS TO AVERAGE NET
VALUE, NET FROM NET VALUE NET ASSETS ASSETS
YEAR ENDED BEGINNING INVESTMENT INVESTMENT END OF TOTAL END OF YEAR ---------------------
DECEMBER 31, OF YEAR INCOME INCOME YEAR RETURN (IN MILIONS) NET INCOME EXPENSES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SMITH BARNEY MONEY FUNDS, INC.
CLASS C
CASH PORTFOLIO:
1996 $1.00 $0.050 $(0.050) $1.00 4.98% $2 4.87% 0.62%
1995 1.00 0.054 (0.054) 1.00 5.53 2 5.39 0.62
1994 (a) 1.00 0.007 (0.007) 1.00 0.007++ 1 4.77+ 0.62+
GOVERNMENT PORTFOLIO:
1996 1.00 0.048 (0.048) 1.00 4.89 1 4.78 0.61
1995 1.00 0.053 (0.053) 1.00 5.46 2 5.36 0.60
1994 (b) 1.00 0.036 (0.036) 1.00 3.63 4 3.78 0.61
1993 (c) 1.00 0.025 (0.025) 1.00 2.55++ .2 2.52+ 0.62+
- -------------------------------------------------------------------------------------------------------------------
CLASS Y
CASH PORTFOLIO:
1996 1.00 0.051 (0.051) 1.00 5.09 52 4.97 0.52
1995 1.00 0.054 (0.054) 1.00 5.50 30 5.29 0.51
1994 (d) 1.00 0.0004 (0.0004) 1.00 0.0004++ .5 5.23+ 0.53+
GOVERNMENT PORTFOLIO:
1996 1.00 0.049 (0.049) 1.00 4.99 52 4.88 0.51
1995 1.00 0.054 (0.054) 1.00 5.55 5 5.51 0.50
1994 (e) 1.00 0.036 (0.036) 1.00 3.65 1 3.58 0.60
1993 (f) 1.00 0.025 (0.025) 1.00 2.55++ 2 2.52+ 0.62+
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Inception date November 10, 1994.
(b) Represents previously issued "Class B" shares, which were renamed "Class C"
shares on November 7, 1994.
(c) Inception date March 5, 1993.
(d) Inception date December 29, 1994.
(e) Represents previously issued "Class C" shares, which were renamed "Class Y"
shares on November 7, 1994.
(f) Inception date October 28, 1993.
+ Annualized.
++Total return is not annualized, as it may not be representative of the total
return for that period.
6
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are maximum current income and preservation
of capital. The Fund seeks to achieve its objectives with three separate money
market portfolios -- the Government Portfolio, which invests exclusively in
U.S. Government Obligations and related repurchase agreements, the Cash Portfo-
lio and the Retirement Portfolio, each of which may invest in Bank Obligations
and high quality Commercial Paper, Corporate Obligations and Municipal Obliga-
tions, in addition to U.S. Government Obligations and related repurchase agree-
ments. The Fund has adopted certain investment policies to assure that, to the
extent reasonably possible, each Portfolio's price per share will not change
from $1.00, although no assurance can be given that this goal will be achieved
on a continuous basis. In order to minimize fluctuations in market price a
Portfolio will not purchase a security with a remaining maturity of greater
than 13 months or maintain a dollar-weighted average portfolio maturity in
excess of 90 days (securities used as collateral for repurchase agreements are
not subject to these restrictions).
The Fund's investments will be limited to United States dollar-denominated
instruments that have received the highest rating from the "Requisite NRSROs",
securities of issuers that have received such rating with respect to other
short-term debt securities and comparable unrated securities. "Requisite
NRSROs" means (a) any two nationally recognized statistical ratings organiza-
tions ("NRSROs") that have issued a rating with respect to a security or class
of debt obligations of an issuer, or (b) one NRSRO, if only one NRSRO has
issued such a rating at the time that the Fund acquires the security. The
NRSROs currently designated as such by the SEC are Standard & Poor's Ratings
Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Services, Inc., Duff and Phelps Inc., IBCA Limited and its affiliate, IBCA,
Inc. and Thomson BankWatch.
The following is a description of the types of money market instruments in
which the Fund may invest:
U.S. Government Obligations -- Obligations issued or guaranteed as to payment
of principal and interest by the U.S. Government (including Treasury bills,
notes and bonds) or by its agencies and instrumentalities (such as the Govern-
ment National Mortgage Association, the Student Loan Marketing Association, the
Tennessee Valley Authority, the Bank for Cooperatives, the Farmers Home Admin-
istration, Federal Farm Credit Banks, Federal Home Loan Banks, Federal Interme-
diate Credit Banks, Federal Land Banks, the Export-Import Bank of the U.S., the
Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the
U.S. Postal Service, the Federal Financing Bank and the Federal National Mort-
gage Association). Some of these securities (such as Treasury bills) are sup-
ported by the full faith and credit of the U.S. Treasury; others (such as obli-
gations of the Federal Home Loan Bank) are supported by the right of the issuer
to borrow from the Treasury; while still others (such as obligations of the
Student Loan Marketing Association) are supported only by the credit of the
instrumentality.
7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
Repurchase Agreements -- The Fund may enter into repurchase agreement trans-
actions with any broker/dealer or other financial institution, including the
Fund's custodian, that is deemed creditworthy by the Manager, under guidelines
approved by the Board of Directors. A repurchase agreement arises when the
Fund acquires a security for a Portfolio and simultaneously agrees to resell
it to the vendor at an agreed-upon future date, normally the next business
day. The resale price is greater than the purchase price and reflects an
agreed-upon return unrelated to the coupon rate on the purchased security.
Such transactions afford an opportunity for the Fund to invest temporarily
available cash at no market risk. The Fund requires continual maintenance of
the market value of the collateral in amounts at least equal to the resale
price. The Fund's risk is limited to the ability of the seller to pay the
agreed-upon amount on the delivery date; however, if the seller defaults,
realization upon the collateral by the Fund may be delayed or limited, or the
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with liqui-
dating the collateral. The Fund as a matter of fundamental policy will not
enter into a repurchase agreement on behalf of a Portfolio if, as a result
thereof, more than 10% of that Portfolio's total assets (taken at current val-
ue) at that time would be subject to repurchase agreements maturing in more
than seven days.
The following are permitted investments for the Cash and Retirement Portfo-
lios; the Government Portfolio will invest only in U.S. Government Obligations
and repurchase agreements secured by such obligations.
High Quality Commercial Paper -- Promissory notes that have received the
highest rating from the Requisite NRSRO for short-term debt securities or com-
parable unrated securities. The Cash Portfolio and the Retirement Portfolio
may invest without limit in the commercial paper of foreign issuers.
High Quality Corporate Obligations -- Obligations of corporations that are:
(1) rated AA or better by the Requisite NRSRO or (2) issued by an issuer that
has a class of short-term debt obligations that are comparable in priority and
security with the obligation and that have been rated in one of the two high-
est rating categories for short-term debt obligations. A Portfolio will invest
only in corporate obligations with remaining maturities of 13 months or less.
Bank Obligations -- Obligations (including certificates of deposit, bankers'
acceptances and fixed time deposits) and securities backed by letters of
credit of U.S. Banks or other U.S. financial institutions that are members of
the Federal Reserve System or the Federal Deposit Insurance Corporation
("FDIC") (including obligations of foreign branches of such members) if
either: (a) the principal amount of the obligation is insured in full by the
FDIC, or (b) the issuer of such obligation has capital, surplus and undivided
profits in excess of $100 million or total assets of $1 billion (as reported
in its most recently published financial statements prior to the date of
investment). Under current FDIC regulations, the maximum insurance
8
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
payable as to any one certificate of deposit is $100,000; therefore, certifi-
cates of deposit in denominations greater than $100,000, that are purchased by
the Fund, will not be fully insured. The Cash Portfolio and the Retirement
Portfolio each will not purchase a fixed time deposit with an ultimate maturity
of more than six months, and will limit its investment in fixed time deposits
maturing from two business to seven calendar days to 10% of its total assets.
The Cash Portfolio and the Retirement Portfolio each intends to maintain at
least 25% of its total assets invested in obligations of domestic and foreign
banks, subject to the above-mentioned size criteria. Each such Portfolio may
invest in instruments issued by domestic banks, including those issued by their
branches outside the United States and subsidiaries located in Canada, and in
instruments issued by foreign banks through their branches located in the
United States and the United Kingdom. In addition, the Cash and Retirement
Portfolios may invest in fixed time deposits of foreign banks issued through
their branches located in Grand Cayman Island, London, Nassau, Tokyo and Toron-
to.
High Quality Municipal Obligations -- Debt obligations of states, cities,
counties, municipalities, municipal agencies and regional districts rated SP-1+
or A-1 or AA or better by S&P or MIG 2, VMIG 2 or Prime-1 or Aa or better by
Moody's or, if not rated, are determined by the Manager to be of comparable
quality. At certain times, supply/demand imbalances in the tax-exempt market
cause municipal obligations to yield more than taxable obligations of equiva-
lent credit quality and maturity length. The purchase of these securities could
enhance each Portfolio's yield. Each Portfolio will not invest more than 10% of
its total assets in municipal obligations.
Each Portfolio may, to a limited degree, engage in short-term trading to
attempt to take advantage of short-term market variations, or may dispose of a
portfolio security prior to its maturity if it believes such disposition advis-
able or it needs to generate cash to satisfy redemptions. In such cases, the
respective Portfolio may realize a gain or loss.
Though it has never done so, as a matter of fundamental policy, each Portfo-
lio may borrow money from banks for temporary purposes but only in an amount up
to 10% of the value of its total assets and may pledge its assets in an amount
up to 10% of the value of its total assets only to secure such borrowings. The
Fund will borrow money only to accommodate requests for the redemption of
shares while effecting an orderly liquidation of portfolio securities or to
clear securities transactions and not for leveraging purposes.
Each Portfolio's investments will be affected by general changes in interest
rates, which will result in increases or decreases in the value of the obliga-
tions held by the Portfolio. The market value of the obligations held by each
Portfolio can be expected to vary inversely to changes in prevailing interest
rates. Investors also
9
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
should recognize that, in periods of declining interest rates, each Portfolio's
yield will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates, each Portfolio's yield will tend to be some-
what lower. Also, when interest rates are falling, the inflow of net new money
to a Portfolio from the continuous sale of its shares will likely be invested
in instruments producing lower yields than the balance of its investments,
thereby reducing the Portfolio's current yield. In periods of rising interest
rates, the opposite can be expected to occur. In addition, securities in which
each Portfolio may invest may not yield as high a level of current income as
might be achieved by investing in securities with less liquidity and safety and
longer maturities.
Investments in securities issued by foreign banks or foreign issuers present
certain risks, including those resulting from fluctuations in currency exchange
rates, revaluation of currencies, future political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions and reduced availability of public informa-
tion. Foreign issuers generally are not subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and require-
ments applicable to domestic issuers. In addition, there may be less publicly
available information about a foreign bank than about a domestic bank.
None of the Fund's Portfolios can change its investment objectives without
the "vote of a majority of the outstanding voting securities," as defined in
the Investment Company Act of 1940, as amended (the "Act"). (See "Voting
Rights" in the Statement of Additional Information).
VALUATION OF SHARES
The net asset value per share of each Portfolio is determined as of 12 noon
New York City time on each day that the New York Stock Exchange ("NYSE") is
open by dividing the Portfolio's net assets attributable to each Class (i.e.,
the value of its assets less liabilities) by the total number of shares of the
Class outstanding. Each Portfolio may also determine net asset value per share
on days when the NYSE is not open, but when the settlement of securities may
otherwise occur. The Fund employs the amortized cost method of valuing portfo-
lio securities and intends to use its best efforts to continue to maintain a
constant net asset value of $1.00 per share.
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES
Each Portfolio declares a dividend of substantially all of its net investment
income on each day the NYSE is open. Net investment income includes interest
accrued and discount earned and all short-term realized gains and losses on
portfolio securities and is less premium amortized and expenses accrued. Income
divi-
10
<PAGE>
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES (CONTINUED)
dends are paid monthly and will automatically be reinvested in shares of the
same Class of the respective Portfolio unless a shareholder has elected to
receive distributions in cash. If a shareholder redeems in full an account
between payment dates, all dividends declared up to and including the date of
liquidation will be paid with the proceeds from the redemption of shares. The
per share dividends of Class A and Class C shares of the Cash Portfolio and the
Government Portfolio may be less than the per share dividends of Class Y shares
of each such Portfolio principally as a result of the service fee applicable to
Class A and Class C shares. Long-term capital gains, if any, will be in the
same per share amount for each Class and will be distributed annually.
The Fund has qualified and intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code. As a regu-
lated investment company the Fund will not be subject to Federal income taxes
to the extent that it distributes its taxable net income. For Federal income
tax purposes, dividends (other than dividends derived from income on tax-exempt
municipal obligations, if any) and capital gains distributions, if any, whether
in shares or cash, are taxable to shareholders of each Portfolio. Under the
Internal Revenue Code no portion of the Fund distributions will be eligible for
the dividends received deduction for corporations.
PURCHASE OF SHARES
Shares may be purchased through a brokerage account maintained with
Smith Barney Inc. ("Smith Barney"). Shares may also be purchased through a bro-
ker that clears securities transactions through Smith Barney on a fully dis-
closed basis (an "Introducing Broker") or an investment dealer in the selling
group. In addition, certain investors, including qualified retirement plans and
certain other institutional investors, may purchase shares directly from the
Fund through the Fund's transfer agent, First Data Investor Services Group,
Inc. ("First Data"). Smith Barney and other broker/dealers may charge their
customers an annual account maintenance fee in connection with a brokerage
account through which an investor purchases or holds shares. Accounts held
directly at First Data are not subject to a maintenance fee. The Fund reserves
the right to waive or change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time to time. Share certifi-
cates are issued only upon a shareholder's written request to First Data.
For shares purchased through a brokerage account maintained withSmith Barney,
Smith Barney has advised the Fund that depending on the type of securities
account, its clients' free credit balances (i.e., immediately available funds)
will be invested automatically in full shares of the designated Portfolio
either on a daily or weekly basis. In addition to this "sweep" service, share-
holders who open a Smith Barney FMA PLUSSM account, which is a full service
investment account,
11
<PAGE>
PURCHASE OF SHARES (CONTINUED)
will also be able to take advantage of, among other things: a free Individual
Retirement Account ("IRA"), free dividend reinvestment, unlimited checking,
100 free ATM withdrawals each year, gain/loss analysis and online computer
access to account information. Smith Barney clients should contact their
Financial Consultant for more complete information. A complete record of Fund
dividends, purchases and redemptions will be included on such shareholders'
regular Smith Barney statements.
A. CASH PORTFOLIO AND GOVERNMENT PORTFOLIO
The minimum initial investment for Class A is $1,000 for each Cash Portfolio
and Government Portfolio account and the minimum subsequent investment is $50,
except for purchases through (a) IRAs and Self-Employed Retirement Plans, for
which the minimum initial and subsequent investments are $250 and $50, respec-
tively, and (b) retirement plans qualified under Section 403(b)(7) or Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), for
which the minimum initial and subsequent investments are $25. There are no
minimum investment requirements in Class A shares for employees of Travelers
Group Inc. ("Travelers") and its subsidiaries, including Smith Barney, and
Directors or Trustees of any of the Smith Barney Mutual Funds, and their
spouses and children. The minimum initial investment for Class Y is $5,000,000
for each Cash Portfolio and Government Portfolio account (except for purchases
of Class Y shares by Smith Barney Concert Allocation Series Inc., for which
there is no minimum purchase amount) and the minimum subsequent investment is
$50. For shareholders purchasing shares of each Portfolio through the System-
atic Investment Plan on a monthly basis, the minimum initial investment
requirement for Class A shares and the subsequent investment requirement for
all Classes is $25. For shareholders purchasing shares of a Portfolio through
the Systematic Investment Plan on a quarterly basis, the minimum initial
investment requirement for Class A shares and the subsequent investment
requirement for all Classes is $50. In addition, Class Z shares, which are
offered pursuant to a separate prospectus, are offered exclusively to tax-
exempt employee benefit and retirement plans of Smith Barney and its affili-
ates.
Class A and Class Y shares of the Cash Portfolio and Government Portfolio
are available for purchase directly by investors. Class C shares of the Cash
Portfolio and Government Portfolio are available for purchase only by Partici-
pating Plans (as defined under "Purchase of Shares--Smith Barney 401(k) and
ExecChoice(TM) Programs") opened prior to June 21, 1996, either directly or as
part of an exchange privilege transaction with certain other funds sponsored
by Smith Barney. Class C shares of the Government Portfolio that represent
previously issued "Class B" shares may only be redeemed or exchanged out of
the Fund.
B. RETIREMENT PORTFOLIO
Shares of the Retirement Portfolio are offered exclusively to retirement
plans under Sections 401 and 408 of the Internal Revenue Code. To purchase
these
12
<PAGE>
PURCHASE OF SHARES (CONTINUED)
shares, a brokerage account for your retirement plan must be established with
Smith Barney upon completion of an account application available from your
Financial Consultant. Smith Barney has advised the Fund that the minimum ini-
tial purchase is $200 for each Retirement Portfolio account, and subsequent
investments may be $1.00 or more. Smith Barney also has advised the Fund that
on each business day it will automatically invest all good funds of $1.00 or
more in the brokerage account in full shares of the Retirement Portfolio, and
there is no charge for this service.
The Fund's shares are sold continuously at their net asset value next deter-
mined after a purchase order is received and becomes effective. A purchase
order becomes effective when the Fund, Smith Barney or an Introducing Broker
receives, or converts the purchase amount into, Federal funds (i.e., monies of
member banks within the Federal Reserve System held on deposit at a Federal
Reserve Bank). When orders for the purchase of Fund shares are paid for in Fed-
eral funds, or are placed by an investor with sufficient Federal funds or cash
balance in the investor's brokerage account with Smith Barney or the Introduc-
ing Broker, the order becomes effective on the day of receipt if received prior
to 12 noon, New York time, on any day the Fund calculates its net asset value.
See "Valuation of Shares." Purchase orders received after 12 noon on any busi-
ness day are effective as of the time the net asset value is next determined.
When orders for the purchase of Fund shares are paid for other than in Federal
funds, Smith Barney or the Introducing Broker, acting on behalf of the invest-
or, will complete the conversion into, or itself advance, Federal funds, and
the order will become effective on the day following its receipt by the Fund,
Smith Barney or the Introducing Broker. Shares purchased directly through First
Data begin to accrue income dividends on the day that the purchase order
becomes effective. All other shares purchased begin to accrue income dividends
on the next business day following the day that the purchase order becomes
effective.
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any time by purchasing
shares through a service known as the Systematic Investment Plan. Under the
Systematic Investment Plan, Smith Barney or First Data is authorized through
preauthorized transfers of at least $25 on a monthly basis or at least $50 on a
quarterly basis to charge the regular bank account or other financial institu-
tion indicated by the shareholder, to provide systematic additions to the
shareholder's Portfolio account. A shareholder who has insufficient funds to
complete the transfer will be charged a fee of up to $25 by Smith Barney or
First Data. Additional information is available from the Fund or a Smith Barney
Financial Consultant.
13
<PAGE>
PURCHASE OF SHARES (CONTINUED)
SMITH BARNEY 401(K) AND EXECCHOICE(TM) PROGRAMS
Investors may be eligible to participate in the Smith Barney 401(k) Program
or the Smith Barney ExecChoice(TM) Program. To the extent applicable, the same
terms and conditions, which are outlined below, are offered to all plans par-
ticipating ("Participating Plans") in these programs.
The Cash Portfolio and Government Portfolio each offers to Participating
Plans Class A shares as an investment choice under the Smith Barney 401(k) and
ExecChoice(TM) Programs, provided the Participating Plan makes an initial
investment of $1,000,000 or more in Class A shares of one or more funds of the
Smith Barney Mutual Funds. Class A shares acquired through the Participating
Plans are subject to the same service and/or distribution fees as the Class A
shares acquired by other investors; however, they are not subject to any ini-
tial sales charge or contingent deferred sales charge ("CDSC").
Class C shares of the Cash Portfolio and Government Portfolio are not avail-
able for purchase by Participating Plans opened on or after June 21, 1996, but
may continue to be purchased by any Participating Plan opened prior to such
date and originally investing in such Class. Class C shares acquired are not
subject to any sales charge or CDSC.
In any year after the date a Participating Plan enrolled in the Smith Barney
401(k) Program, if its total Class C holdings in all non-money marketSmith Bar-
ney Mutual Funds equal at least $500,000 as of the calendar year-end, the Par-
ticipating Plan will be offered the opportunity to exchange all of its Class C
shares for Class A shares of the same Portfolio. Such Plans will be notified in
writing within 30 days after the last business day of the calendar year and,
unless the exchange offer has been rejected in writing, the exchange will occur
on or about the last business day of the following March.
Any Participating Plan that has not previously qualified for an exchange into
Class A shares will be offered the opportunity to exchange all of its Class C
shares for Class A shares of the same Portfolio, regardless of asset size, at
the end of the eighth year after the date the Participating Plan enrolled in
the Smith Barney 401(k) Program. Such Participating Plans will be notified of
the pending exchange in writing approximately 60 days before the eighth anni-
versary of the enrollment date and, unless the exchange has been rejected in
writing, the exchange will occur on or about the eighth anniversary date. Once
an exchange has occurred, a Participating Plan will not be eligible to acquire
additional Class C shares of the Portfolio but instead may acquire Class A
shares of the Portfolio.
Participating Plans wishing to acquire shares of the Cash Portfolio and Gov-
ernment Portfolio through the Smith Barney 401(k) Program or the Smith Barney
ExecChoice(TM) Program must purchase such shares directly from the Transfer
Agent. For further information regarding these Programs, investors should con-
tact a Smith Barney Financial Consultant.
14
<PAGE>
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any day the Fund cal-
culates its net asset value. See "Valuation of Shares." Redemption requests
received in proper form before 12 noon, New York time, are priced at the net
asset value as next determined on that day. Redemption requests received after
12 noon, New York time, are priced at the net asset value as next determined.
Redemption requests must be made through Smith Barney, an Introducing Broker
or the securities dealer through whom the shares were purchased, except that
shareholders who purchased shares of the Fund from First Data may also redeem
shares directly through First Data. A shareholder desiring to redeem shares
represented by certificates also must present the certificates to Smith Bar-
ney, the Introducing Broker or First Data endorsed for transfer (or accompa-
nied by an endorsed stock power), signed exactly as the shares are registered.
Redemption requests involving shares represented by certificates will not be
deemed received until the certificates are received by First Data in proper
form.
The Fund normally transmits redemption proceeds on the business day follow-
ing receipt of a redemption request but, in any event, payment will be made
within three days thereafter, except on days on which the NYSE is closed and
the settlement of securities does not otherwise occur, or as permitted under
the Act in extraordinary circumstances. Generally, if the redemption proceeds
are remitted to a Smith Barney brokerage account, these funds will not be
invested for the shareholder's benefit without specific instruction and Smith
Barney will benefit from the use of temporarily uninvested funds. A share-
holder who pays for Fund shares by personal check will be credited with the
proceeds of a redemption of those shares only after the purchase check has
been collected, which may take up to ten days or more. A shareholder who
anticipates the need for more immediate access to his or her investment should
purchase shares with Federal funds, by bank wire or with a certified or cash-
ier's check.
Fund shareholders who purchase securities through Smith Barney or an Intro-
ducing Broker may take advantage of special redemption procedures under which
Class A shares of the Fund will be redeemed automatically to the extent neces-
sary to satisfy debit balances arising in the shareholder's account with Smith
Barney or the Introducing Broker. One example of how an automatic redemption
may occur involves the purchase of securities. If a shareholder purchases
securities but does not pay for them by settlement date, the number of Fund
shares necessary to cover the debit will be redeemed automatically as of the
settlement date, which usually occurs three business days after the trade
date. Class A shares that are subject to a CDSC (see "Redemption of Shares--
Contingent Deferred Sales Charge") are not eligible for such automatic redemp-
tion and will only be redeemed upon specific request. If the shareholder does
not request redemption of such shares, the shareholder's account with Smith
Barney or the Introducing Broker may be margined to satisfy debit balances if
sufficient Fund shares that are not subject to any applicable
15
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
CDSC are unavailable. No fee is currently charged with respect to these auto-
matic transactions. Shareholders not wishing to participate in these arrange-
ments should notify their Smith Barney Financial Consultant or the Introducing
Broker.
A written redemption request must (a) state the Class and number or dollar
amount of shares to be redeemed, (b) identify the shareholder's account number
and (c) be signed by each registered owner exactly as the shares are regis-
tered. If the shares to be redeemed were issued in certificate form, the cer-
tificates must be endorsed for transfer (or be accompanied by an endorsed stock
power) and must be submitted to First Data together with the redemption
request. Any signature appearing on a written redemption request in excess of
$2,000, share certificate or stock power must be guaranteed by an eligible
guarantor institution such as a domestic bank, savings and loan institution,
domestic credit union, member bank of the Federal Reserve System or member firm
of a national securities exchange. Written redemption requests of $2,000 or
less do not require a signature guarantee unless more than one such redemption
request is made in any 10-day period. Redemption proceeds will be mailed to an
investor's address of record. First Data may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees or guardians. A redemption request will not be deemed properly
received until First Data receives all required documents in proper form.
TELEPHONE REDEMPTION AND EXCHANGE PROGRAM
To determine if a shareholder is entitled to participate in this program, he
or she should contact First Data at 1-800-451-2010. Once eligibility is con-
firmed, the shareholder must complete and return a Telephone/Wire Authorization
Form, along with a signature guarantee, that will be provided by First Data
upon request. (Alternatively, an investor may authorize telephone redemptions
on the new account application with the applicant's signature guarantee when
making his/her initial investment in the Fund.)
Redemptions. Redemption requests of up to $10,000 of any class or classes of
the Fund's shares, may be made by eligible shareholders by calling First Data
at 1-800-451-2010. Such requests may be made between 9:00 a.m. and 5:00 p.m.
(New York City time) on any day the NYSE is open. Redemptions of shares (i) by
retirement plans or (ii) for which certificates have been issued are not per-
mitted under this program.
A shareholder will have the option of having the redemption proceeds mailed
to his/her address of record or wired to a bank account predesignated by the
shareholder. Generally, redemption proceeds will be mailed or wired, as the
case may be, on the next business day following the redemption request. In
order to use the wire procedures, the bank receiving the proceeds must be a
member of the Federal Reserve System or have a correspondent relationship with
a member bank. The Fund reserves the right to charge shareholders a nominal fee
for each wire redemption. Such charges, if any, will be assessed against the
shareholder's account from
16
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
which shares were redeemed. In order to change the bank account designated to
receive redemption proceeds, a shareholder must complete a new Telephone/Wire
Authorization Form and, for the protection of the shareholder's assets, will
be required to provide a signature guarantee and certain other documentation.
Exchanges. Eligible shareholders may make exchanges by telephone if the
account registration of the shares of the fund being acquired is identical to
the registration of the shares of the fund exchanged. Such exchange requests
may be made by calling First Data at 1-800-451-2010 between 9:00 a.m. and 5:00
p.m. (New York City time) on any day on which the NYSE is open. See "Exchange
Privilege" for more information.
Additional Information regarding Telephone Redemption and Exchange
Program. Neither the Fund nor its agents will be liable for following instruc-
tions communicated by telephone that are reasonably believed to be genuine.
The Fund and its agents will employ procedures designed to verify the identity
of the caller and legitimacy of instructions (for example, a shareholder's
name and account number will be required and phone calls may be recorded). The
Fund reserves the right to suspend, modify or discontinue the telephone
redemption and exchange program or to impose a charge for this service at any
time following at least seven (7) days prior notice to shareholders.
CONTINGENT DEFERRED SALES CHARGE -- CASH PORTFOLIO AND GOVERNMENT PORTFOLIO
Class A shares of the Cash Portfolio and Government Portfolio and Class C
shares of the Government Portfolio that represent previously issued "Class B"
shares acquired as part of an exchange privilege transaction, which were orig-
inally acquired in one of the other Smith Barney Mutual Funds at net asset
value subject to a CDSC, continue to be subject to any applicable CDSC of the
original fund. Therefore, such Class A and Class C shares that are redeemed
within 12 months of the date of purchase of the original fund may be subject
to a CDSC of 1.00%. The amount of any CDSC will be paid to and retained by
Smith Barney. The CDSC will be assessed based on an amount equal to the net
asset value at the time of redemption. Accordingly, no CDSC will be imposed on
increases in net asset value above the initial purchase price in the original
Fund. In addition, no charge will be assessed on shares derived from reinvest-
ment of dividends or capital gains
distributions.
In determining the applicability of any CDSC, it will be assumed that a
redemption is made first of shares representing capital appreciation, next of
shares representing the reinvestments of dividends and capital gain distribu-
tions and finally of other shares held by the shareholder for the longest
period of time. The length of time that Class A and Class C shares have been
held will be calculated from the date that the shares were initially acquired
in one of the other Smith Barney Mutual
17
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
Funds, and such shares being redeemed will be considered to represent, as
applicable, capital appreciation or dividend and capital gain distribution
reinvestments in such other funds. For Federal income tax purposes, the amount
of the CDSC will reduce the gain or increase the loss, as the case may be, on
the amount realized on redemption.
The CDSC on Class A and Class C shares, if any, will be waived on (a)
exchanges (see "Exchange Privilege" below); (b) redemptions of shares within
twelve months following the death or disability of the shareholder; (c) redemp-
tion of shares made in connection with qualified distributions from retirement
plans or IRAs upon the attainment of age 59 1/2; (d) involuntary redemptions;
and (e) redemptions of shares to effect a combination of a Portfolio with any
investment company by merger, acquisition of assets or otherwise. In addition,
a shareholder who has redeemed shares from other funds of the Smith Barney
Mutual Funds may, under certain circumstances, reinvest all or part of the
redemption proceeds within 60 days and receive pro rata credit for any CDSC
imposed on the prior redemption.
CDSC waivers will be granted subject to confirmation (by Smith Barney in the
case of shareholders who are also Smith Barney clients or by First Data in the
case of all other shareholders) of the shareholder's status or holdings, as the
case may be.
For information concerning the CDSC applicable to Class A and Class C shares
acquired through the Smith Barney 401(k) or ExecChoice(TM) Program, see "Pur-
chase of Shares."
18
<PAGE>
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each Class may be exchanged for
shares of the same Class in the following funds of the Smith Barney Mutual
Funds, to the extent shares are offered for sale in the shareholder's state of
residence. Exchanges of Class A and Class C shares are subject to minimum
investment requirements and all shares are subject to other requirements of
the fund into which exchanges are made and a sales charge may apply.
FUND NAME
Growth Funds
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Fundamental Value Fund, Inc.
Smith Barney Growth Opportunity Fund
Smith Barney Managed Growth Fund
Smith Barney Natural Resources Fund Inc.
Smith Barney Special Equities Fund
Growth and Income Funds
Concert Social Awareness Fund
Smith Barney Convertible Fund
Smith Barney Funds, Inc. -- Equity Income Portfolio
Smith Barney Growth and Income Fund
Smith Barney Premium Total Return Fund
Smith Barney Utilities Fund
Taxable Fixed-Income Funds
*Smith Barney Adjustable Rate Government Income Fund
Smith Barney Diversified Strategic Income Fund
**Smith Barney Funds, Inc. -- Short-Term U.S. Treasury Securities Port-
folio
Smith Barney Funds, Inc. -- U.S. Government Securities Portfolio
Smith Barney Government Securities Fund
Smith Barney High Income Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
Tax-Exempt Funds
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Intermediate Maturity California Municipals Fund
19
<PAGE>
EXCHANGE PRIVILEGE (CONTINUED)
Smith Barney Intermediate Maturity New York Municipals Fund
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Muni Funds -- Florida Portfolio
Smith Barney Muni Funds -- Georgia Portfolio
Smith Barney Muni Funds -- Limited Term Portfolio
Smith Barney Muni Funds -- National Portfolio
Smith Barney Muni Funds -- New York Portfolio
Smith Barney Muni Funds -- Pennsylvania Portfolio
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Tax-Exempt Income Fund
International Funds
Smith Barney World Funds, Inc. -- Emerging Markets Portfolio
Smith Barney World Funds, Inc. -- European Portfolio
Smith Barney World Funds, Inc. -- Global Government Bond Portfolio
Smith Barney World Funds, Inc. -- International Balanced Portfolio
Smith Barney World Funds, Inc. -- International Equity Portfolio
Smith Barney World Funds, Inc. -- Pacific Portfolio
Smith Barney Concert Allocation Series Inc.
Smith Barney Concert Allocation Series Inc. -- Balanced Portfolio
Smith Barney Concert Allocation Series Inc. -- Conservative Portfolio
Smith Barney Concert Allocation Series Inc. -- Growth Portfolio
Smith Barney Concert Allocation Series Inc. -- High Growth Portfolio
Smith Barney Concert Allocation Series Inc. -- Income Portfolio
Money Market Funds
Smith Barney Municipal Money Market Fund, Inc.
**Smith Barney Muni Funds -- California Money Market Portfolio
**Smith Barney Muni Funds -- New York Money Market Portfolio
- --------------------------------------------------------------------------------
* Available for exchange with Class A and Class C shares of the Fund.
** Available for exchange with Class A and Class Y shares of the Fund.
Class A Exchanges. Class A shares of each Portfolio will be subject to the
appropriate sales charge upon the exchange of such shares for Class A shares of
another fund of the Smith Barney Mutual Funds sold with a sales charge.
Class Y Exchanges. Class Y shareholders of a Portfolio who wish to exchange
all or a portion of their Class Y shares for Class Y shares in any of the funds
identified above may do so without imposition of any charge.
20
<PAGE>
EXCHANGE PRIVILEGE (CONTINUED)
Additional Information Regarding the Exchange Privilege. Although the
exchange privilege is an important benefit, excessive exchange transactions
can be detrimental to each Portfolio's performance and its shareholders. The
investment manager may determine that a pattern of frequent exchanges is
excessive and contrary to the best interests of each Portfolio's other share-
holders. In this event the Fund may, at its discretion, decide to limit addi-
tional purchases and/or exchanges by the shareholder. Upon such a determina-
tion the Fund will provide notice in writing or by telephone to the share-
holder at least 15 days prior to suspending the exchange privilege and during
the 15 day period the shareholder will be required to (a) redeem his or her
shares in the Portfolio or (b) remain invested in the Portfolio or exchange
into any of the funds of the Smith Barney Mutual Funds ordinarily available,
which position the shareholder would be expected to maintain for a significant
period of time. All relevant factors will be considered in determining what
constitutes an abusive pattern of exchanges.
Certain shareholders may be able to exchange shares by telephone. See
"Redemption of Shares -- Telephone Redemption and Exchange Program". Exchanges
will be processed at the net asset value next determined, plus any applicable
sales charge. Redemption procedures discussed above are also applicable for
exchanging shares, and exchanges will be made upon receipt of all supporting
documents in proper form. If the account registration of the shares of the
fund being acquired is identical to the registration of the shares of the fund
exchanged, no signature guarantee is required. A capital gain or loss for tax
purposes will be realized upon the exchange, depending upon the cost or other
basis of shares redeemed. Before exchanging shares, investors should read the
current prospectus describing the shares to be acquired. These exchange privi-
leges are available to shareholders resident in any state in which the fund
shares being acquired may legally be sold. The Fund reserves the right to mod-
ify or discontinue exchange privileges upon 60 days' prior notice to share-
holders.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to redeem involuntarily any shareholder's
account in the Cash Portfolio or the Government Portfolio if the aggregate net
asset value of the shares held in the account in either Portfolio is less than
$500, and to redeem involuntarily any shareholder's account in the Retirement
Portfolio if the aggregate net asset value of the shares held in the account
is less than $100. With respect to the Cash Portfolio and Government Portfo-
lio, any applicable CDSC will be deducted from the proceeds of this redemp-
tion. (If a shareholder has more than one account in these Portfolios, each
account must satisfy the minimum account size.) Before the Board of Directors
of the Fund elects to exercise such right, shareholders will receive prior
written notice and will be permitted 60 days to bring accounts up to the mini-
mum to avoid involuntary redemption.
21
<PAGE>
YIELD INFORMATION
From time to time the Fund may advertise the yield and effective yield of its
Portfolios. For the Cash Portfolio and Government Portfolio, the Fund may
advertise the yield and effective yield of their Class A, Class C and Class Y
shares. These yield figures are based on historical earnings and are not
intended to indicate future performance. The yield of a Portfolio or a Class
refers to the net investment income generated by an investment in the Portfolio
or the Class over a specific seven-day period (which will be stated in the
advertisement). This net investment income is then annualized. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Portfolio or the Class is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the com-
pounding effect of the assumed reinvestment.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
Overall responsibility for management and supervision of the Fund rests with
the Fund's Board of Directors. The Directors approve all significant agreements
between the Fund and the companies that furnish services to the Fund and each
Portfolio, including agreements with the Fund's distributor, investment manag-
er, custodian and transfer agent. The day-to-day operations of each Portfolio
are delegated to the Portfolio's investment manager. The Statement of Addi-
tional Information contains background information regarding each Director and
executive officer of the Fund.
MANAGER
Smith Barney Mutual Funds Management Inc. ("SBMFM" or the "Manager") was
incorporated in 1968 under the laws of Delaware. It is a wholly-owned subsidi-
ary of Smith Barney Holdings Inc., the parent company of Smith Barney. Smith
Barney Holdings Inc. is a wholly-owned subsidiary of Travelers Group Inc.,
which is a diversified financial services holding company engaged, through its
subsidiaries, principally in four business segments: Investment Services, Con-
sumer Finance Services, Life Insurance Services and Property & Casualty Insur-
ance Services.
SBMFM, Smith Barney and Smith Barney Holdings Inc. are each located at 388
Greenwich Street, New York, New York 10013. SBMFM is also the investment man-
ager for numerous other investment companies having aggregate assets as of
March 31, 1997 of approximately $83 billion. For the Fund's last fiscal year
the management fee was 0.40% of the Cash Portfolio's average daily net assets,
0.43% of the Government Portfolio's average daily net assets and 0.44% of the
Retirement Portfolio's average daily net assets. Total expenses for the Cash
Portfolio were 0.62% of the average daily net assets for each of the Class A
and Class C shares and 0.52% of the average daily net assets for Class Y
shares. Total expenses for the
22
<PAGE>
MANAGEMENT OF THE FUND (CONTINUED)
Government Portfolio were 0.61% of the average daily net assets for each of the
Class A and Class C shares and 0.51% of the average daily net assets for Class
Y shares. Total expenses for the Retirement Portfolio were 0.71% of the average
daily net assets. Each Portfolio's management agreement provides for daily com-
pensation of the Manager at the following annual rates: Cash Portfolio--0.45%
on the first $6 billion of the Portfolio's net assets, 0.425% on the next $6
billion, 0.40% on the next $6 billion and 0.35% on net assets in excess of $18
billion; Government Portfolio--0.45% on the first $2.5 billion of the Portfo-
lio's net assets, 0.40% on the next $2.5 billion and 0.35% on net assets in
excess of $5 billion; and Retirement Portfolio--0.45% on the first $1 billion
of the Portfolio's net assets, 0.40% on the next $1 billion and 0.35% on net
assets in excess of $2 billion.
Under each management agreement SBMFM is responsible for furnishing or caus-
ing to be furnished to each Portfolio advice and assistance with respect to the
acquisition, holding or disposal of investments and recommendations with
respect to other aspects and affairs of each Portfolio, bookkeeping, accounting
and administrative services, office space and equipment, and the services of
the officers and employees of the Fund.
The term "Smith Barney" in the title of the Fund has been adopted by permis-
sion of Smith Barney and is subject to the right of Smith Barney to elect that
the Fund stop using the term in any form or combination of its name.
DISTRIBUTOR
Smith Barney serves as Principal Underwriter of shares of the Fund. The Fund
has adopted for each Portfolio a plan of distribution pursuant to Rule 12b-1
under the Act (the "Plan") under which a service fee is paid by Class A and
Class C shares to Smith Barney at an annual rate of 0.10% of the Class' average
daily net assets. The fee is used by Smith Barney to pay its Financial Consul-
tants for servicing shareholder accounts for as long as a shareholder remains a
holder of the Class. The service fee is also spent by Smith Barney on the fol-
lowing types of expenses: (1) the pro rata share of other employment costs of
such Financial Consultants (e.g., FICA, employee benefits, etc.); (2) employ-
ment expenses of home office personnel primarily responsible for providing
service to a Portfolio's shareholders and (3) the pro rata share of branch
office fixed expenses (including branch overhead allocations).
Smith Barney also advises profit-sharing and pension accounts. Smith Barney
and its affiliates may in the future act as investment advisers for other
accounts.
23
<PAGE>
ADDITIONAL INFORMATION
The Fund, an open-end, diversified investment company, was incorporated
under Maryland law on May 28, 1974. The Board of Directors has authorized the
issuance of four series of shares, each representing shares in one of four
separate Portfolios -- the Cash Portfolio, the Government Portfolio, the
Retirement Portfolio and the U.S. Treasury Portfolio -- and may also authorize
the creation of additional series of shares. Each share of a Portfolio or
Class represents an equal proportionate interest in the net assets of that
Portfolio or Class with each other share of the same Portfolio or Class and is
entitled to such dividends and distributions out of the net income of that
Portfolio or Class as are declared in the discretion of the Board. Sharehold-
ers are entitled to one vote for each share held and will vote in the aggre-
gate and not by Portfolio or Class except as otherwise required by the Act or
Maryland law. As described under "Voting Rights" in the Statement of Addi-
tional Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders have the right to call a meeting upon a vote of 10% of
the Fund's outstanding shares for the purpose of voting to remove directors
and the Fund will assist shareholders in calling such a meeting as required by
the Act.
PNC Bank, National Association, located at 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103, serves as custodian of each Portfolio's
investments.
First Data, located at Exchange Place, Boston, Massachusetts 02109, serves
as the Fund's transfer agent.
The Fund sends its shareholders a semi-annual report and an audited annual
report, which include listings of the investment securities held by the Fund
at the end of the period covered. In an effort to reduce the Fund's printing
and mailing costs, the Fund plans to consolidate the mailing of its semi-
annual and annual reports by household. This consolidation means that a house-
hold having multiple accounts with the identical address of record will
receive a single copy of each report. Shareholders who do not want this con-
solidation to apply to their account should contact their Smith Barney Finan-
cial Consultant or the Fund's transfer agent.
24
<PAGE>
SMITH BARNEY
------------
A Member of TravelersGroup
SMITH BARNEY
MONEY FUNDS, INC.
388 Greenwich Street
New York, New York 10013
FD 2322 4/97
P R O S P E C T U S
Smith Barney
Money Funds,
Inc.
Class Z Shares Only
APRIL 30, 1997
PROSPECTUS BEGINS ON PAGE ONE
LOGO Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
PROSPECTUS
April 30, 1997
Smith Barney Money Funds, Inc.
388 Greenwich Street
New York, New York 10013
(800) 451-2010
Smith Barney Money Funds, Inc. (the "Fund") is a money market fund that
invests in high quality money market instruments.
The Fund seeks to provide: daily income, convenience, daily liquidity and
stability of net asset value.
Class Z Shares of the Fund are offered in two Portfolios: Cash Portfolio and
Government Portfolio.
SHARES OF THE FUND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
This Prospectus sets forth concisely certain information about the Fund and
the Portfolios, including management fees and expenses, that prospective
investors will find helpful in making an investment decision. Investors are
encouraged to read this Prospectus carefully and retain it for future refer-
ence.
The Class Z shares described in this Prospectus are currently offered
exclusively for sale to tax-exempt employee benefit and retirement plans of
Smith Barney Inc. ("Smith Barney") or any of its affiliates ("Qualified
Plans").
Additional information about the Fund is contained in a Statement of Addi-
tional Information dated April 30, 1997, as amended or supplemented from time
to time, that is available upon request and without charge by calling or writ-
ing the Fund at the telephone number or address set forth above or by contact-
ing a Smith Barney Financial Consultant. The Statement of Additional Informa-
tion has been filed with the Securities and Exchange Commission (the "SEC") and
is incorporated by reference into this Prospectus in its entirety.
SMITH BARNEY INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FEE TABLE 3
- ------------------------------------------------
FINANCIAL HIGHLIGHTS 4
- ------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES 5
- ------------------------------------------------
VALUATION OF SHARES 8
- ------------------------------------------------
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES 9
- ------------------------------------------------
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES 9
- ------------------------------------------------
YIELD INFORMATION 10
- ------------------------------------------------
MANAGEMENT OF THE FUND 10
- ------------------------------------------------
DISTRIBUTOR 11
- ------------------------------------------------
ADDITIONAL INFORMATION 11
- ------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the Fund
or the Distributor. This Prospectus does not constitute an offer by the Fund or
the Distributor to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
- --------------------------------------------------------------------------------
2
<PAGE>
FEE TABLE
The following expense table lists the costs and expenses that an investor
will incur either directly or indirectly as a shareholder of Class Z shares of
the Fund, based on its operating expenses for its most recent fiscal year:
<TABLE>
<CAPTION>
CASH GOVERNMENT
PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.40% 0.43%
Other Expenses 0.13 0.08
- -----------------------------------------------------------------
TOTAL FUND OPERATING EXPENSES 0.53% 0.51%
- -----------------------------------------------------------------
</TABLE>
The nature of the services for which the Fund pays management fees is
described under "Management of the Fund." "Other expenses" in the above table
include fees for shareholder services, custodial fees, legal and accounting
fees, printing costs and registration fees.
EXAMPLE
The following example is intended to assist an investor in understanding the
various costs that an investor in the Fund will bear directly or indirectly.
The example assumes payment by the Fund of operating expenses at the levels set
forth in the table above. See "Purchase and Redemption of Shares" and "Manage-
ment of the Fund."
<TABLE>
<CAPTION>
SMITH BARNEY MONEY FUNDS, INC. 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5.00%
annual return and (2) redemption at the end
of each time period:
Cash Portfolio $ 5 $17 $30 $66
Government Portfolio 5 16 29 64
</TABLE>
The example is included to provide a means for the investor to compare
expense levels of funds with different fee structures over varying investment
periods. To facilitate such comparison, all funds are required to utilize a
5.00% annual return assumption. This assumption is unrelated to the Fund's
prior performance and is not a projection of future performance. THIS EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP, indepen-
dent auditors, whose report thereon appears in the Fund's annual report dated
December 31, 1996. The information set out below should be read in conjunction
with the financial statements and related notes that also appear in the Fund's
Annual Report to Shareholders, which is incorporated by reference into the
Statement of Additional Information.
FOR EACH SHARE OF CLASS Z CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
NET ASSET DIVIDENDS NET ASSET RATIOS TO AVERAGE NET
VALUE, NET FROM NET VALUE NET ASSETS ASSETS
YEAR ENDED BEGINNING INVESTMENT INVESTMENT END OF TOTAL END OF YEAR ---------------------
DECEMBER 31, OF YEAR INCOME INCOME YEAR RETURN (IN MILLIONS) NET INCOME EXPENSES
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH PORTFOLIO:
1996 $1.00 $0.051 $(0.051) $1.00 5.06% $6 0.53% 4.96%
1995 1.00 0.055 (0.055) 1.00 5.63 5 0.52 5.49
1994(a) 1.00 0.006 (0.006) 1.00 0.006++ 5 0.47+ 5.12+
GOVERNMENT PORTFOLIO:
1996 1.00 0.049 (0.049) 1.00 4.99 36.8 0.51 4.88
1995 1.00 0.054 (0.054) 1.00 5.56 31.1 0.50 5.42
1994(b) 1.00 0.007 (0.007) 1.00 0.007++ 30.0 0.51+ 4.93+
</TABLE>
- --------------------------------------------------------------------------------
(a)For the period from November 15, 1994 (inception date) to December 31, 1994.
(b)For the period from November 9, 1994 (inception date) to December 31, 1994.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+Annualized.
4
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are maximum current income and preservation
of capital. The Fund seeks to achieve its objectives with three separate money
market portfolios, two of which are available for purchasers of Class Z
shares -- the Government Portfolio, which invests exclusively in U.S. Govern-
ment Obligations and related repurchase agreements, and the Cash Portfolio,
which may invest in Bank Obligations and high quality Commercial Paper, Corpo-
rate Obligations and Municipal Obligations, in addition to U.S. Government
Obligations and related repurchase agreements. The Fund has adopted certain
investment policies to assure that, to the extent reasonably possible, each
Portfolio's price per share will not change from $1.00, although no assurance
can be given that this goal will be achieved on a continuous basis. In order to
minimize fluctuations in market price a Portfolio will not purchase a security
with a remaining maturity of greater than 13 months or maintain a dollar-
weighted average portfolio maturity in excess of 90 days (securities used as
collateral for repurchase agreements are not subject to these restrictions).
The Fund's investments will be limited to United States dollar-denominated
instruments that have received the highest rating from the "Requisite NRSROs",
securities of issuers that have received such rating with respect to other
short-term debt securities and comparable unrated securities. "Requisite
NRSROs" means (a) any two nationally recognized statistical ratings organiza-
tions ("NRSROs") that have issued a rating with respect to a security or class
of debt obligations of an issuer, or (b) one NRSRO, if only one NRSRO has
issued such a rating at the time that the Fund acquires the security. The
NRSROs currently designated as such by the SEC are Standard & Poor's Ratings
Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Services, Inc., Duff and Phelps Inc., IBCA Limited and its affiliate, IBCA,
Inc. and Thomson BankWatch.
The following is a description of the types of money market instruments in
which the Fund may invest:
U.S. Government Obligations -- Obligations issued or guaranteed as to payment
of principal and interest by the U.S. Government (including Treasury bills,
notes and bonds) or by its agencies and instrumentalities (such as the Govern-
ment National Mortgage Association, the Student Loan Marketing Association, the
Tennessee Valley Authority, the Bank for Cooperatives, the Farmers Home Admin-
istration, Federal Farm Credit Banks, Federal Home Loan Banks, Federal Interme-
diate Credit Banks, Federal Land Banks, the Export-Import Bank of the U.S., the
Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the
U.S. Postal Service, the Federal Financing Bank and the Federal National Mort-
gage Association). Some of these securities (such as Treasury bills) are sup-
ported by the full faith and credit of the U.S. Treasury; others (such as obli-
gations of the Federal Home Loan Bank) are supported by the right of the issuer
to borrow from the
5
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
Treasury; while still others (such as obligations of the Student Loan Market-
ing Association) are supported only by the credit of the instrumentality.
Repurchase Agreements -- The Fund may enter into repurchase agreement trans-
actions with any broker/dealer or other financial institution, including the
Fund's custodian, that is deemed creditworthy by the Manager, under guidelines
approved by the Board of Directors. A repurchase agreement arises when the
Fund acquires a security for a Portfolio and simultaneously agrees to resell
it to the vendor at an agreed-upon future date, normally the next business
day. The resale price is greater than the purchase price and reflects an
agreed-upon return unrelated to the coupon rate on the purchased security.
Such transactions afford an opportunity for the Fund to invest temporarily
available cash at no market risk. The Fund requires continual maintenance of
the market value of the collateral in amounts at least equal to the resale
price. The Fund's risk is limited to the ability of the seller to pay the
agreed-upon amount on the delivery date; however, if the seller defaults,
realization upon the collateral by the Fund may be delayed or limited, or the
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with liqui-
dating the collateral. The Fund as a matter of fundamental policy will not
enter into a repurchase agreement on behalf of a Portfolio if, as a result
thereof, more than 10% of that Portfolio's total assets (taken at current val-
ue) at that time would be subject to repurchase agreements maturing in more
than seven days.
The following are permitted investments for the Cash Portfolio; the Govern-
ment Portfolio will invest only in U.S. Government Obligations and repurchase
agreements secured by such obligations.
High Quality Commercial Paper -- Promissory notes that have received the
highest rating from the Requisite NRSROs for short-term debt securities or
comparable unrated securities. The Cash Portfolio may invest without limit in
the commercial paper of foreign issuers.
High Quality Corporate Obligations -- Obligations of corporations that are:
(1) rated AA or better by the Requisite NRSROs or (2) issued by an issuer that
has a class of short-term debt obligations that are comparable in priority and
security with the obligation and that have been rated in one of the two high-
est rating categories for short-term debt obligations. The Cash Portfolio will
invest only in corporate obligations with remaining maturities of 13 months or
less.
Bank Obligations -- Obligations (including certificates of deposit, bankers'
acceptances and fixed time deposits) and securities backed by letters of
credit of U.S. Banks or other U.S. financial institutions that are members of
the Federal Reserve System or the Federal Deposit Insurance Corporation
("FDIC") (including obligations of foreign branches of such members) if
either: (a) the principal amount
6
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
of the obligation is insured in full by the FDIC, or (b) the issuer of such
obligation has capital, surplus and undivided profits in excess of $100 mil-
lion or total assets of $1 billion (as reported in its most recently published
financial statements prior to the date of investment). Under current FDIC reg-
ulations, the maximum insurance payable as to any one certificate of deposit
is $100,000; therefore, certificates of deposit in denominations greater than
$100,000, that are purchased by the Fund, will not be fully insured. The Cash
Portfolio will not purchase a fixed time deposit with an ultimate maturity of
more than six months, and will limit its investment in fixed time deposits
maturing from two business to seven calendar days to 10% of its total assets.
The Cash Portfolio intends to maintain at least 25% of its total assets
invested in obligations of domestic and foreign banks, subject to the above-
mentioned size criteria. The Portfolio may invest in instruments issued by
domestic banks, including those issued by their branches outside the United
States and subsidiaries located in Canada, and in instruments issued by for-
eign banks through their branches located in London, the United States and the
United Kingdom. In addition, the Cash Portfolio may invest in fixed time
deposits of foreign banks issued through their branches located in Grand Cay-
man Island, London, Nassau, Tokyo and Toronto.
High Quality Municipal Obligations -- Debt obligations of states, cities,
counties, municipalities, municipal agencies and regional districts rated SP-
1+ or A-1 or AA or better by S&P or MIG 2, VMIG 2 or Prime-1 or Aa or better
by Moody's or, if not rated, are determined by the Manager to be of comparable
quality. At certain times, supply/demand imbalances in the tax-exempt market
cause municipal obligations to yield more than taxable obligations of equiva-
lent credit quality and maturity length. The purchase of these securities
could enhance the Cash Portfolio's yield. The Portfolio will not invest more
than 10% of its total assets in municipal obligations.
Each Portfolio may, to a limited degree, engage in short-term trading to
attempt to take advantage of short-term market variations, or may dispose of a
portfolio security prior to its maturity if it believes such disposition
advisable or it needs to generate cash to satisfy redemptions. In such cases,
the respective Portfolio may realize a gain or loss.
Though it has never done so, as a matter of fundamental policy, each Portfo-
lio may borrow money from banks for temporary purposes but only in an amount
up to 10% of the value of its total assets and may pledge its assets in an
amount up to 10% of the value of its total assets only to secure such
borrowings. The Fund will borrow money only to accommodate requests for the
redemption of shares while effecting an orderly liquidation of portfolio secu-
rities or to clear securities transactions and not for leveraging purposes.
7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
Each Portfolio's investments will be affected by general changes in interest
rates, which will result in increases or decreases in the value of the obliga-
tions held by the Portfolio. The market value of the obligations held by each
Portfolio can be expected to vary inversely to changes in prevailing interest
rates. Investors also should recognize that, in periods of declining interest
rates, each Portfolio's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates, each Portfolio's yield
will tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a Portfolio from the continuous sale of its shares
will likely be invested in instruments producing lower yields than the balance
of its investments, thereby reducing the Portfolio's current yield. In periods
of rising interest rates, the opposite can be expected to occur. In addition,
securities in which each Portfolio may invest may not yield as high a level of
current income as might be achieved by investing in securities with less
liquidity and safety and longer maturities.
Investments in securities issued by foreign banks or foreign issuers present
certain risks, including those resulting from fluctuations in currency exchange
rates, revaluation of currencies, future political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions and reduced availability of public informa-
tion. Foreign issuers generally are not subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and require-
ments applicable to domestic issuers. In addition, there may be less publicly
available information about a foreign bank than about a domestic bank.
None of the Fund's Portfolios can change its investment objectives without
the "vote of a majority of the outstanding voting securities," as defined in
the Investment Company Act of 1940, as amended (the "Act"). (See "Voting
Rights" in the Statement of Additional Information).
VALUATION OF SHARES
The net asset value per share of each Portfolio's Class Z shares is deter-
mined as of 12 noon New York City time on each day that the New York Stock
Exchange ("NYSE") is open by dividing the Portfolio's net assets attributable
to the Class (i.e., the value of its assets less liabilities) by the total num-
ber of shares of the Class outstanding. Each Portfolio may also determine net
asset value per share on days when the NYSE is not open, but when the settle-
ment of securities may otherwise occur. The Fund employs the amortized cost
method of valuing portfolio securities and intends to use its best efforts to
continue to maintain a constant net asset value of $1.00 per share.
8
<PAGE>
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES
Each Portfolio declares a dividend of substantially all of its net investment
income on each day the NYSE is open. Net investment income includes interest
accrued and discount earned and all short-term realized gains and losses on
portfolio securities and is less premium amortized and expenses accrued. Income
dividends are paid monthly and will automatically be reinvested in additional
Class Z shares of the respective Portfolio. If a shareholder redeems in full an
account between payment dates, all dividends declared up to and including the
date of liquidation will be paid with the proceeds from the redemption of
shares. The per share dividends of Class Z shares of each Portfolio may be
higher than the per share dividends of each Portfolio's other Classes princi-
pally as a result of lower fees applicable to Class Z shares. Long-term capital
gains, if any, will be in the same per share amount for each Class and will be
distributed annually.
The Fund has qualified and intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code. As a regu-
lated investment company the Fund will not be subject to Federal income taxes
to the extent that it distributes its taxable net income. For Federal income
tax purposes, dividends (other than dividends derived from income on tax-exempt
municipal obligations, if any) and capital gains distributions, if any, whether
in shares or cash, are taxable to shareholders of each Portfolio. Under the
Internal Revenue Code no portion of the Fund distributions will be eligible for
the dividends received deduction for corporations.
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES
Purchases of each Portfolio's Class Z shares must be made in accordance with
the terms of a Qualified Plan. The Fund reserves the right to reject any order
to purchase its shares and to suspend the offering of shares from time to time.
There are no minimum investment requirements for Class Z shares; however, the
Fund reserves the right to vary this policy at any time.
The Fund's shares are sold continuously at their net asset value next deter-
mined after a purchase order is received and becomes effective. A purchase
order becomes effective when Smith Barney receives, or converts the purchase
amount into, Federal funds (i.e., monies of members banks within the Federal
Reserve System held on deposit at a Federal Reserve Bank). The order becomes
effective on the day of receipt if received prior to 12 noon, New York time, on
any day the Fund calculates its net asset value. See "Valuation of Shares."
Purchase orders received after 12 noon on any business day are effective as of
the time the net asset value is next determined. Shares purchased begin to
accrue income dividends on the next business day following the day that the
purchase order becomes effective.
9
<PAGE>
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES (CONTINUED)
Shareholders may redeem their shares on any day the Fund calculates its net
asset value. See "Valuation of Shares." Redemption requests received in proper
form before 12 noon, New York time, are priced at the net asset value as next
determined on that day. Redemption requests received after 12 noon, New York
time, are priced at the net asset value as next determined. Shareholders
acquiring Class Z shares through a Smith Barney Qualified Plan should consult
the terms of their respective plans for redemption provisions.
Holders of Class Z shares should consult their Qualified Plans for informa-
tion about available exchange options.
YIELD INFORMATION
From time to time the Fund may advertise the yield and effective yield of
the Portfolios' Class Z shares. These yield figures are based on historical
earnings and are not intended to indicate future performance. The yield refers
to the net investment income generated by an investment in the Class over a
specific seven-day period (which will be stated in the advertisement). This
net investment income is then annualized. The effective yield is calculated
similarly but, when annualized, the income earned by an investment in the
Class is assumed to be reinvested. The effective yield will be slightly higher
than the yield because of the compounding effect of the assumed reinvestment.
MANAGEMENT OF THE FUND
Smith Barney Mutual Funds Management Inc. ("SBMFM" or the "Manager") manages
the day to day operations of each Portfolio pursuant to management agreements
entered into by the Fund on behalf of each Portfolio, subject to the direction
of the Board of Directors of the Fund. SBMFM is a subsidiary of Smith Barney
Holdings Inc., which is a subsidiary of Travelers Group Inc., a financial
services holding company engaged, through its subsidiaries, principally in
four business segments: Investment Services, Consumer Finance Services, Life
Insurance Services and Property & Casualty Services. SBMFM, Smith Barney and
Smith Barney Holdings Inc. are each located at 388 Greenwich Street, New York,
New York 10013. SBMFM is also the investment manager for numerous other
investment companies having aggregate assets as of March 31, 1997 of approxi-
mately $83 billion. For the Fund's last fiscal year the management fee was
0.40% of the Cash Portfolio's average daily net assets and 0.43% of the Gov-
ernment Portfolio's average daily net assets and total expenses were 0.52% and
0.50%, respectively. Each Portfolio's management agreement provides for daily
compensation of the Manager at the fol-
10
<PAGE>
MANAGEMENT OF THE FUND (CONTINUED)
lowing annual rates: Cash Portfolio--0.45% on the first $6 billion of the
Portfolio's net assets, 0.425% on the next $6 billion, 0.40% on the next $6
billion and 0.35% on net assets in excess of $18 billion; and Government Port-
folio--0.45% on the first $2.5 billion of the Portfolio's net assets, 0.40% on
the next $2.5 billion and 0.35% on net assets in excess of $5 billion.
DISTRIBUTOR
Smith Barney serves as Principal Underwriter of shares of the Fund. Smith
Barney also advises profit-sharing and pension accounts. Smith Barney and its
affiliates may in the future act as investment advisers for other accounts.
The term "Smith Barney" in the title of the Fund has been adopted by permis-
sion of Smith Barney and is subject to the right of Smith Barney to elect that
the Fund stop using the term in any form or combination of its name.
ADDITIONAL INFORMATION
The Fund, an open-end, diversified investment company, was incorporated
under Maryland law on May 28, 1974. The Board of Directors has authorized the
issuance of four series of shares, each representing shares in one of four
separate Portfolios -- the Cash Portfolio, the Government Portfolio, the
Retirement Portfolio and the U.S. Treasury Portfolio -- and may also authorize
the creation of additional series of shares. Each share of a Portfolio or
Class represents an equal proportionate interest in the net assets of that
Portfolio or Class with each other share of the same Portfolio or Class and is
entitled to such dividends and distributions out of the net income of that
Portfolio or Class as are declared in the discretion of the Board. Sharehold-
ers are entitled to one vote for each share held and will vote in the aggre-
gate and not by Portfolio or Class except as otherwise required by the Act or
Maryland law. As described under "Voting Rights" in the Statement of Addi-
tional Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders have the right to call a meeting upon a vote of 10% of
the Fund's outstanding shares for the purpose of voting to remove directors
and the Fund will assist shareholders in calling such a meeting as required by
the Act.
PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of each Portfolio's invest-
ments.
First Data Investor Services Group, Inc. ("First Data") (formerly, The
Shareholder Services Group Inc.), a subsidiary of First Data Corporation,
located at Exchange Place, Boston, Massachusetts 02109, serves as the Fund's
transfer agent.
11
<PAGE>
ADDITIONAL INFORMATION (CONTINUED)
The Fund sends its shareholders a semi-annual report and an audited annual
report, which include listings of the investment securities held by the Fund at
the end of the period covered. In an effort to reduce the Fund's printing and
mailing costs, the Fund plans to consolidate the mailing of its semi-annual and
annual reports by household. This consolidation means that a household having
multiple accounts with the identical address of record will receive a single
copy of each report. Shareholders who do not want this consolidation to apply
to their account should contact their Smith Barney Financial Consultant or the
Fund's transfer agent.
12
<PAGE>
SMITH BARNEY
------------
A Member of TravelersGroup [LOGO]
SMITH BARNEY
MONEY FUNDS, INC.
388 Greenwich Street
New York, New York 10013
FD 0669 4/97
CASH PORTFOLIO PROSPECTUS
April 30, 1997
- --------------------------------------------------------------------------------
3100 Breckinridge Blvd., Bldg. 200
Duluth, Georgia 30199-0062
(800) 544-5445
The Cash Portfolio (the "Portfolio") is one of the investment portfolios that
currently comprise Smith Barney Money Funds, Inc. The Portfolio is a money mar-
ket fund that invests in high quality money market instruments.
The Portfolio seeks to provide:
.Daily Income
.Convenience
.Daily Liquidity
.Stability of Net Asset Value
The Portfolio offers one Class of shares (Class A shares) to investors pur-
chasing through Registered Representatives of PFS Investments Inc. ("PFS
Investments"). In addition to Class A shares, the Portfolio offers Class C and
Class Y shares to investors purchasing through Smith Barney Inc. ("Smith Bar-
ney"), a distributor of the Fund. Those shares have different expenses than
Class A shares, which may affect performance.
SHARES OF THE FUND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
This Prospectus sets forth concisely certain information about the Fund and
the Portfolio, including service fees and expenses, that prospective investors
will find helpful in making an investment decision. Investors are encouraged to
read this Prospectus carefully and retain it for future reference.
Additional information about the Fund is contained in a Statement of Addi-
tional Information dated April 30, 1997, as amended or supplemented from time
to time, that is available upon request and without charge by calling or writ-
ing the Fund at the telephone number or address set forth above, or by contact-
ing a PFS Investments Registered Representative.
The Statement of Additional Information has been filed with the Securities
and Exchange Commission (the "SEC") and is incorporated by reference into this
Prospectus in its entirety.
PFS DISTRIBUTORS, INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FEE TABLE 3
- ------------------------------------------------
FINANCIAL HIGHLIGHTS 4
- ------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES 6
- ------------------------------------------------
VALUATION OF SHARES 9
- ------------------------------------------------
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES 9
- ------------------------------------------------
PURCHASE OF SHARES 10
- ------------------------------------------------
REDEMPTION OF SHARES 11
- ------------------------------------------------
EXCHANGE PRIVILEGE 14
- ------------------------------------------------
MINIMUM ACCOUNT SIZE 16
- ------------------------------------------------
YIELD INFORMATION 16
- ------------------------------------------------
MANAGEMENT OF THE FUND 16
- ------------------------------------------------
DISTRIBUTOR 17
- ------------------------------------------------
ADDITIONAL INFORMATION 18
- ------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the Fund
or the Distributor. This Prospectus does not constitute an offer by the Fund or
the Distributor to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
- --------------------------------------------------------------------------------
2
<PAGE>
FEE TABLE DATE
The following expense table lists the costs and expenses that an investor
will incur either directly or indirectly as a shareholder of the Portfolio
based on its operating expenses for its most recent fiscal year:
CASH PORTFOLIO--CLASS A
<TABLE>
- ------------------------
<S> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
<CAPTION>
Sales
Charge
Imposed
on
Purchases None
Sales
Charge
Imposed
on
Reinvested
Dividends None
Deferred
Sales
Charge None*
Redemption
Fee None
Exchange
Fee None
- ------------------------
<S> <C> <C>
ANNUAL PORTFOLIO
OPERATING EXPENSES
<CAPTION>
(as a
percentage
of
average
net
assets)
Management
Fees 0.40%
12b-1 Fees 0.10
Other
Expenses 0.12
- ------------------------
TOTAL
PORTFOLIO
OPERATING
EXPENSES 0.62%
- ------------------------
</TABLE>
* Class A shares acquired as part of an exchange privilege transaction, which
were originally acquired in one of the other Smith Barney Mutual Funds at
net asset value subject to a contingent deferred sales charge ("CDSC"),
remain subject to the original fund's CDSC while held in the Portfolio. See
"Redemption of Shares--Contingent Deferred Sales Charge."
EXAMPLE
The following example is intended to assist an investor in understanding the
various costs that an investor in the Portfolio will bear directly or indirect-
ly. The example assumes payment by the Portfolio of operating expenses at the
levels set forth in the table above. See "Purchase of Shares," "Redemption of
Shares," "Management of the Fund" and "Distributor."
<TABLE>
<CAPTION>
CASH PORTFOLIO--CLASS A 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5.00%
annual return and (2) redemption at the end
of each time period: $ 6 $20 $35 $77
</TABLE>
- --------------------------------------------------------------------------------
The example is included to provide a means for the investor to compare
expense levels of funds with different fee structures over varying investment
periods. To facilitate such comparison, all funds are required to utilize a
5.00% annual return assumption. This assumption is unrelated to the Portfolio's
prior performance and is not a projection of future performance. THIS EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP, indepen-
dent auditors, whose report thereon appears in the Fund's annual report dated
December 31, 1996. The information set out below should be read in conjunction
with the financial statements and related notes that also appear in the Fund's
Annual Report to Shareholders, which is incorporated by reference into the
Statement of Additional Information.
FOR A SHARE OF CLASS A STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
CASH PORTFOLIO 12/31/96 12/31/95 12/31/94
- -------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------
Net Investment Income 0.050 0.054 0.037
Dividends from Net Investment Income (0.050) (0.054) (0.037)
- -------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------
TOTAL RETURN 4.98% 5.53% 3.73%
- -------------------------------------------------------------------
NET ASSETS, END OF YEAR (IN MILLIONS) $27,434 $22,969 $17,590
- -------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Net Income 4.87% 5.39% 4.10%
Expenses 0.62 0.62 0.64
- -------------------------------------------------------------------
</TABLE>
4
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------
0.026 0.033 0.055 0.076 0.086 0.069 0.061
(0.026) (0.033) (0.055) (0.076) (0.086) (0.069) (0.061)
- ----------------------------------------------------------------------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------
2.63% 3.31% 5.66% 7.92% 8.97% 7.15% 6.29%
- ----------------------------------------------------------------------
$ 2,953 $ 2,841 $ 1,784 $ 1,998 $ 2,088 $ 1,379 $ 1,327
- ----------------------------------------------------------------------
2.60% 3.17% 5.55% 7.60% 8.60% 6.93% 6.11%
0.64 0.60 0.52 0.52 0.54 0.58 0.56
- ----------------------------------------------------------------------
</TABLE>
5
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Portfolio's investment objectives are maximum current income and preser-
vation of capital. The Portfolio seeks to achieve its objectives by investing
in Bank Obligations and high quality Commercial Paper, Corporate Obligations
and Municipal Obligations, in addition to U.S. Government Obligations and
related repurchase agreements. The Portfolio has adopted certain investment
policies to assure that, to the extent reasonably possible, its price per
share will not change from $1.00, although no assurance can be given that this
goal will be achieved on a continuous basis. In order to minimize fluctuations
in market price the Portfolio will not purchase a security with a remaining
maturity of greater than 13 months or maintain a dollar-weighted average port-
folio maturity in excess of 90 days (securities used as collateral for repur-
chase agreements are not subject to these restrictions).
The Portfolio's investments will be limited to United States dollar-
denominated instruments that have received the highest rating from the "Requi-
site NRSROs", securities of issuers that have received such rating with
respect to other short-term debt securities and comparable unrated securities.
"Requisite NRSROs" means (a) any two nationally recognized statistical ratings
organizations ("NRSROs") that have issued a rating with respect to a security
or class of debt obligations of an issuer, or (b) one NRSRO, if only one NRSRO
has issued such a rating at the time that the Portfolio acquires the security.
The NRSROs currently designated as such by the SEC are Standard & Poor's Rat-
ings Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Invest-
ors Services, Inc., Duff and Phelps Inc., IBCA Limited and its affiliate,
IBCA, Inc. and Thomson BankWatch.
The following is a description of the types of money market instruments in
which the Portfolio may invest:
U.S. Government Obligations--Obligations issued or guaranteed as to payment
of principal and interest by the U.S. Government (including Treasury bills,
notes and bonds) or by its agencies and instrumentalities (such as the Govern-
ment National Mortgage Association, the Student Loan Marketing Association,
the Tennessee Valley Authority, the Bank for Cooperatives, the Farmers Home
Administration, Federal Farm Credit Banks, Federal Home Loan Banks, Federal
Intermediate Credit Banks, Federal Land Banks, the Export-Import Bank of the
U.S., the Federal Housing Administration, the Federal Home Loan Mortgage Cor-
poration, the U.S. Postal Service, the Federal Financing Bank and the Federal
National Mortgage Association). Some of these securities (such as Treasury
bills) are supported by the full faith and credit of the U.S. Treasury; others
(such as obligations of the Federal Home Loan Bank) are supported by the right
of the issuer to borrow from the Treasury; while still others (such as obliga-
tions of the Student Loan Marketing Association) are supported only by the
credit of the instrumentality.
Repurchase Agreements--The Portfolio may enter into repurchase agreement
transactions with any broker/dealer or other financial institution, including
the
6
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
Fund's custodian, that is deemed creditworthy by the Manager, under guidelines
approved by the Board of Directors. A repurchase agreement arises when the
Portfolio acquires a security and simultaneously agrees to resell it to the
vendor at an agreed-upon future date, normally the next business day. The
resale price is greater than the purchase price and reflects an agreed-upon
return unrelated to the coupon rate on the purchased security. Such transac-
tions afford an opportunity for the Portfolio to invest temporarily available
cash at no market risk. The Portfolio requires continual maintenance of the
market value of the collateral in amounts at least equal to the resale price.
The Portfolio's risk is limited to the ability of the seller to pay the agreed-
upon amount on the delivery date; however, if the seller defaults, realization
upon the collateral by the Portfolio may be delayed or limited, or the Portfo-
lio might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with liqui-
dating the collateral. The Portfolio as a matter of fundamental policy will not
enter into a repurchase agreement if, as a result thereof, more than 10% of its
total assets (taken at current value) at that time would be subject to repur-
chase agreements maturing in more than seven days.
The following are permitted investments for the Portfolio:
High Quality Commercial Paper--Promissory notes that have received the high-
est rating from the Requisite NRSRO for short-term debt securities or compara-
ble unrated securities. The Portfolio may invest without limit in the commer-
cial paper of foreign issuers.
High Quality Corporate Obligations--Obligations of corporations that are: (1)
rated AA or better by the Requisite NRSRO or (2) issued by an issuer that has a
class of short-term debt obligations that are comparable in priority and secu-
rity with the obligation and that have been rated in one of the two highest
rating categories for short-term debt obligations. The Portfolio will invest
only in corporate obligations with remaining maturities of 13 months or less.
Bank Obligations--Obligations (including certificates of deposit, bankers'
acceptances and fixed time deposits) and securities backed by letters of credit
of U.S. Banks or other U.S. financial institutions that are members of the Fed-
eral Reserve System or the Federal Deposit Insurance Corporation ("FDIC") (in-
cluding obligations of foreign branches of such members) if either: (a) the
principal amount of the obligation is insured in full by the FDIC, or (b) the
issuer of such obligation has capital surplus and undivided profits in excess
of $100 million or total assets of $1 billion (as reported in its most recently
published financial statements prior to the date of investment). Under current
FDIC regulations, the maximum insurance payable as to any one certificate of
deposit is $100,000; therefore, certificates of deposit in denominations
greater than $100,000, that are purchased by the Fund, will not be fully
insured. The Portfolio will not purchase a fixed time deposit with an ultimate
maturity of more than six months, and will limit its investment in fixed
7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
time deposits maturing from two business to seven calendar days to 10% of its
total assets.
The Portfolio intends to maintain at least 25% of its total assets invested
in obligations of domestic and foreign banks, subject to the above-mentioned
size criteria. The Portfolio may invest in instruments issued by domestic
banks, including those issued by their branches outside the United States and
subsidiaries located in Canada, and in instruments issued by foreign banks
through their branches located in the United States and the United Kingdom. In
addition, the Portfolio may invest in fixed time deposits of foreign banks
issued through their branches located in Grand Cayman Island, London, Nassau,
Tokyo and Toronto.
High Quality Municipal Obligations--Debt obligations of states, cities, coun-
ties, municipalities, municipal agencies and regional districts rated SP-1+ or
A-1 or AA or better by S&P or MIG 2, VMIG 2 or Prime-1 or Aa or better by
Moody's or, if not rated, are determined by the Manager to be of comparable
quality. At certain times, supply/demand imbalances in the tax-exempt market
cause municipal obligations to yield more than taxable obligations of equiva-
lent credit quality and maturity length. The purchase of these securities could
enhance each Portfolio's yield. The Portfolio will not invest more than 10% of
its total assets in municipal obligations.
The Portfolio may, to a limited degree, engage in short-term trading to
attempt to take advantage of short-term market variations, or may dispose of a
portfolio security prior to its maturity if it believes such disposition advis-
able or it needs to generate cash to satisfy redemptions. In such cases, the
Portfolio may realize a gain or loss.
Though it has never done so, as a matter of fundamental policy, the Portfolio
may borrow money from banks for temporary purposes but only in an amount up to
10% of the value of its total assets and may pledge its assets in an amount up
to 10% of the value of its total assets only to secure such borrowings. The
Portfolio will borrow money only to accommodate requests for the redemption of
shares while effecting an orderly liquidation of portfolio securities or to
clear securities transactions and not for leveraging purposes.
The Portfolio's investments will be affected by general changes in interest
rates, which will result in increases or decreases in the value of the obliga-
tions held by the Portfolio. The market value of the obligations held by the
Portfolio can be expected to vary inversely to changes in prevailing interest
rates. Investors also should recognize that, in periods of declining interest
rates, the Portfolio's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates, the Portfolio's yield
will tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to the Portfolio from the continuous sale of its shares
will likely be invested in instruments producing
8
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (CONTINUED)
lower yields than the balance of its investments, thereby reducing the Portfo-
lio's current yield. In periods of rising interest rates, the opposite can be
expected to occur. In addition, securities in which the Portfolio may invest
may not yield as high a level of current income as might be achieved by invest-
ing in securities with less liquidity and safety and longer maturities.
Investments in securities issued by foreign banks or foreign issuers present
certain risks, including those resulting from fluctuations in currency exchange
rates, revaluation of currencies, future political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions and reduced availability of public informa-
tion. Foreign issuers generally are not subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and require-
ments applicable to domestic issuers. In addition, there may be less publicly
available information about a foreign bank than about a domestic bank.
The Portfolio cannot change its investment objectives without the "vote of a
majority of the outstanding voting securities," as defined in the Investment
Company Act of 1940, as amended (the "Act"). (See "Voting Rights" in the State-
ment of Additional Information).
VALUATION OF SHARES
The net asset value per share of the Portfolio is determined as of 12 noon
New York City time on each day that the New York Stock Exchange ("NYSE") is
open by dividing the Portfolio's net assets ( i.e., the value of its assets
less liabilities) by the total number of shares outstanding. The Portfolio may
also determine net asset value per share on days when the NYSE is not open, but
when the settlement of securities may otherwise occur. The Portfolio employs
the amortized cost method of valuing portfolio securities and intends to use
its best efforts to continue to maintain a constant net asset value of $1.00
per share.
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES
The Portfolio declares a dividend of substantially all of its net investment
income on each day the NYSE is open. Net investment income includes interest
accrued and discount earned and all short-term realized gains and losses on
portfolio securities and is less premium amortized and expenses accrued. Income
dividends are paid monthly and will automatically be reinvested in shares of
the Portfolio unless a shareholder has elected to receive distributions in
cash. If a shareholder redeems in full an account between payment dates, all
dividends declared up to and including the date of liquidation will be paid at
the end of the month in which the redemption occurs. Long-term capital gains,
if any, will be distributed annually.
9
<PAGE>
DIVIDENDS, AUTOMATIC REINVESTMENT AND TAXES (CONTINUED)
The Portfolio has qualified and intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code. As a regu-
lated investment company the Portfolio will not be subject to Federal income
taxes to the extent that it distributes its taxable net income. For Federal
income tax purposes, dividends (other than dividends derived from income on
tax-exempt municipal obligations, if any) and capital gains distributions, if
any, whether in shares or cash, are taxable to shareholders of the Portfolio.
Under the Internal Revenue Code no portion of the Portfolio distributions will
be eligible for the dividends received deduction for corporations.
PURCHASE OF SHARES
The Portfolio offers one Class of shares to investors purchasing through PFS
Investments Registered Representatives. Class A shares are sold to investors
without an initial sales charge.
Initial purchases of Portfolio shares must be made through a PFS Investments
Registered Representative by completing the appropriate application found in
the prospectus. The completed application should be forwarded to the PFS
Shareholder Services (the Fund's "Sub-Transfer Agent"), 3100 Breckinridge
Blvd., Bldg 200, Duluth, Georgia 30199-0062. Checks drawn on foreign banks
must be payable in U.S. dollars and have the routing number of the U.S. bank
encoded on the check. Subsequent investments may be sent directly to the Sub-
Transfer Agent.
The minimum initial investment is $1,000 and the minimum subsequent invest-
ment is $50, except for purchases through (a) Individual Retirement Accounts
("IRAs") and Self-Employed Retirement Plans, for which the minimum initial and
subsequent investments are $250 and $50, respectively, and (b) retirement
plans qualified under Section 403(b)(7) or Section 401(a) of the Internal Rev-
enue Code of 1986, as amended (the "Code"), for which the minimum initial and
subsequent investments are $25. For the Fund's Systematic Investment Plan, the
minimum initial and subsequent requirement is $25. There are no minimum
investment requirements for employees of Travelers Group Inc. ("Travelers")
and its subsidiaries, including Smith Barney, and Directors or Trustees of any
of the Smith Barney Mutual Funds, and their spouses and children. The Fund
reserves the right to waive or change minimums, to decline any order to pur-
chase its shares and to suspend the offering of shares from time to time.
Share certificates are issued only upon a shareholder's written request to the
Sub-Transfer Agent. A shareholder who has insufficient funds to complete any
purchase, will be charged a fee by PFS Distributors, Inc. ("PFS"), the Fund's
distributor, or the Sub-Transfer Agent of $25 per returned purchase.
The Portfolio's shares are sold continuously at their net asset value next
determined after a purchase order is received and becomes effective. A pur-
chase order
10
<PAGE>
PURCHASE OF SHARES (CONTINUED)
becomes effective when the Sub-Transfer Agent receives, or converts the pur-
chase amount into, Federal funds (i.e., monies of member banks within the Fed-
eral Reserve System held on deposit at a Federal Reserve Bank). When orders
for the purchase of Portfolio shares are paid for in Federal funds, the order
becomes effective on the day of receipt if received prior to 12 noon, New York
time, on any day the Portfolio calculates its net asset value. See "Valuation
of Shares." Purchase orders received after 12 noon on any business day are
effective as of the time the net asset value is next determined. When orders
for the purchase of Portfolio shares are paid for other than in Federal funds,
the Sub-Transfer Agent, acting on behalf of the investor, will complete the
conversion into, or itself advance, Federal funds, and the order will become
effective on the day following its receipt by the Sub-Transfer Agent. All
shares purchased begin to accrue income dividends on the next business day
following the day that the purchase order becomes effective.
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any time by purchasing
shares through a service known as the Systematic Investment Plan. Under the
Systematic Investment Plan, the Sub-Transfer Agent is authorized through pre-
authorized transfers of $25 or more to charge the regular bank account or
other financial institution indicated by the shareholder on a monthly basis to
provide systematic additions to the shareholder's Portfolio account. A share-
holder who has insufficient funds to complete the transfer will be charged a
fee of up to $25 by PFS or the Sub-Transfer Agent. A shareholder who places a
stop payment on a transfer or the transfer is returned because the account has
been closed, will be charged a fee of $25 by PFS or the Sub-Transfer Agent.
REDEMPTION OF SHARES
Shareholders may redeem for cash some or all of their shares of the Portfo-
lio at any time by sending a written request in proper form directly to the
Sub-Transfer Agent, PFS Shareholder Services, at 3100 Breckinridge Blvd.,
Bldg. 200, Duluth, Georgia 30199-0062. If you should have any questions con-
cerning how to redeem your account after reviewing the information below,
please contact the Sub-Transfer Agent at (800) 544-5445 or Spanish-speaking
representatives at (800) 544-7278, or TDD Line for the Hearing Impaired at
(800) 824-1721.
The request for redemption must be signed by all persons in whose names the
shares are registered. Signatures must conform exactly to the account regis-
tration. If the proceeds of the redemption exceed $50,000, or if the proceeds
are not paid to the record owner(s) at the record address, if the sharehold-
er(s) has had an address change in the past 45 days, or if the shareholder is
a corporation, sole proprietor, partnership, trust or fiduciary, signature(s)
must be guaranteed by one of the following: a bank or trust company; a broker-
dealer; a credit union; a national securities exchange, registered securities
association or clearing agency; a savings and loan association; or a federal
savings bank.
11
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
Generally, a properly completed Redemption Form with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary. For example, in the case of shareholders
holding certificates, the certificates for the shares being redeemed must
accompany the redemption request. Additional documentary evidence of authority
is also required by the Sub-Transfer Agent in the event redemption is requested
by a corporation, partnership, trust, fiduciary, executor or administrator.
Additionally, if a shareholder requests a redemption from a Retirement Plan
account (IRA, SEP or 403(b)(7)), such request must state whether or not federal
income tax is to be withheld from the proceeds of the redemption check. A
shareholder may utilize the Sub-Transfer Agent's FAX to redeem their account as
long as a signature guarantee or other documentary evidence is not required.
Redemption requests should be properly signed by all owners of the account and
faxed to the Sub-Transfer Agent at (800) 554-2374. Facsimile redemptions may
not be available if the shareholder cannot reach the Sub-Transfer Agent by FAX,
whether because all telephone lines are busy or for any other reason; in such
case, a shareholder would have to use the Portfolio's regular redemption proce-
dure described above. Facsimile redemptions received by the Sub-Transfer Agent
prior to 12:00 p.m. Eastern time on a regular business day will be processed at
the net asset value per share determined that day.
In all cases, the redemption price is the net asset value per share of the
Portfolio next determined after the request for redemption is received in
proper form, by the Sub-Transfer Agent. Payment for shares redeemed will be
made by check mailed within three days after acceptance by the Sub-Transfer
Agent of the request and any other necessary documents in proper order. Such
payment may be postponed or the right of redemption suspended as provided by
the rules of the SEC. If the shares to be redeemed have been recently purchased
by check or draft, the Sub-Transfer Agent may hold the payment of the proceeds
until the purchase check or draft has cleared, usually a period of up to 15
days. Any taxable gain or loss will be recognized by the shareholder upon
redemption of shares.
After following the above-stated redemption guidelines, a shareholder(s) may
elect to have the redemption proceeds wire-transferred directly to the share-
holder's bank account of record (defined as a currently established pre-autho-
rized draft on the shareholder's account with no changes within the previous 45
days), as long as the bank account is registered in the same name(s) as the
account with the Portfo- lio. If the proceeds are not to be wired to the bank
account of record, or mailed to the registered owner(s), a signature guarantee
will be required from all shareholder(s). A $25 service fee will be charged by
the Sub-Transfer Agent to help defray the administrative expense of executing a
wire redemption. Redemption proceeds will normally be wired to the designated
bank account on the next business day following the redemption, and should
ordinarily be credited to the shareholders' bank account by his/her bank within
48 to 72 hours.
12
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
CONTINGENT DEFERRED SALES CHARGE
Class A shares of the Cash Portfolio, which were originally acquired in one
of the other Smith Barney Mutual Funds at net asset value subject to a CDSC,
continue to be subject to any applicable CDSC of the original fund. Therefore,
such Class A shares that are redeemed within 12 months of the date of purchase
of the original fund may be subject to a CDSC of 1.00%. The amount of any CDSC
will be paid to PFS. The CDSC will be assessed based on an amount equal to the
net asset value at the time of redemption. Accordingly, no CDSC will be imposed
on increases in net asset value above the initial purchase price in the origi-
nal Fund. In addition, no charge will be assessed on shares derived from rein-
vestment of dividends or capital gains distributions.
In determining the applicability of any CDSC, it will be assumed that a
redemption is made first of shares representing capital appreciation, next of
shares representing the reinvestments of dividends and capital gain distribu-
tions and finally of other shares held by the shareholder for the longest
period of time. The length of time that Class A shares have been held will be
calculated from the date that the shares were initially acquired in one of the
other Smith Barney Mutual Funds, and such shares being redeemed will be consid-
ered to represent, as applicable, capital appreciation or dividend and capital
gain distribution reinvestments in such other funds. For Federal income tax
purposes, the amount of the CDSC will reduce the gain or increase the loss, as
the case may be, on the amount realized on redemption.
The CDSC on Class A shares, if any, will be waived on (a) exchanges (see "Ex-
change Privilege" below); (b) automatic cash withdrawals in amounts equal to or
less than 1.00% per month of the value of the shareholder's shares at the time
the withdrawal plan commences (see "Redemption of Shares--Automatic Cash With-
drawal Plan"): (c) redemptions of shares within twelve months following the
death or disability of the shareholder; (d) redemptions of shares made in con-
nection with qualified distributions from retirement plans or IRAs upon the
attainment of age 59 1/2; (e) involuntary redemptions; and (f) redemptions of
shares to effect a combination of the Portfolio with any investment company by
merger, acquisition of assets or otherwise. In addition, a shareholder who has
redeemed shares from other funds of the Smith Barney Mutual Funds may, under
certain circumstances, reinvest all or part of the redemption proceeds within
60 days and receive pro rata credit for any CDSC imposed on the prior redemp-
tion.
CDSC waivers will be granted subject to confirmation by PFS of the sharehold-
er's status or holdings, as the case may be.
AUTOMATIC CASH WITHDRAWAL PLAN
The Portfolio offers shareholders an automatic cash withdrawal plan, under
which shareholders who own shares with a value of at least $10,000 may elect to
receive periodic cash payments of at least $50 monthly or quarterly. Retirement
13
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
plan accounts are eligible for automatic cash withdrawal plans only where the
shareholder is eligible to receive qualified distributions and has an account
value of at least $5,000. The withdrawal plan will be carried over on the
exchanges between funds. Any applicable CDSC will not be waived on amounts
withdrawn by a shareholder that exceed 1.00% per month of the value of the
shareholder's shares subject to the CDSC at the time the withdrawal plan com-
mences. For further information regarding the automatic cash withdrawal plan,
shareholders should contact the Sub-Transfer Agent.
EXCHANGE PRIVILEGE
Except as otherwise noted below, Class A shares may be exchanged for Class A
shares of the following funds of the Smith Barney Mutual Funds, to the extent
shares are offered for sale in the shareholder's state of residence. Exchanges
of Class A shares are subject to minimum investment requirements and all
shares are subject to other requirements of the fund into which exchanges are
made, including the appropriate sales charge.
FUND NAME
Concert Social Awareness Fund
Smith Barney Appreciation Fund Inc.
Smith Barney Growth Opportunity Fund
Smith Barney Concert Allocation Series Inc.
The Balanced Portfolio
The Conservative Portfolio
The Growth Portfolio
The High Growth Portfolio
The Income Portfolio
Smith Barney Investment Grade Bond Fund
Class A shares of the Portfolio will be subject to the appropriate sales
charge upon the exchange of such shares for Class A shares of another fund of
the Smith Barney Mutual Funds sold with a sales charge.
Although the exchange privilege is an important benefit, excessive exchange
transactions can be detrimental to the Portfolio's performance and its share-
holders. The investment manager may determine that a pattern of frequent
exchanges is excessive and contrary to the best interests of the Portfolio's
other shareholders. In this event the Portfolio may, at its discretion, decide
to limit additional purchases and/or exchanges by the shareholder. Upon such a
determination by the Portfolio, PFS will provide notice in writing or by tele-
phone to the shareholder at least 15 days prior to suspending the exchange
privilege and during the 15 day period the shareholder will be required to (a)
redeem his or her shares in the Portfolio or (b) remain invested in the Port-
folio or exchange into any of the funds of the Smith
14
<PAGE>
EXCHANGE PRIVILEGE (CONTINUED)
Barney Mutual Funds listed under "Exchange Privilege," which position the
shareholder would be expected to maintain for a significant period of time. All
relevant factors will be considered in determining what constitutes an abusive
pattern of exchanges.
Exchanges will be processed at the net asset value next determined, plus any
applicable sales charge. Redemption procedures discussed above are also appli-
cable for exchanging shares, and exchanges will be made upon receipt of all
supporting documents in proper form. If the account registration of the shares
of the fund being acquired is identical to the registration of the shares of
the fund exchanged, no signature guarantee is required. A capital gain or loss
for tax purposes will be realized upon the exchange, depending upon the cost or
other basis of shares redeemed. Before exchanging shares, investors should read
the current prospectus describing the shares to be acquired. These exchange
privileges are available to shareholders resident in any state in which the
fund shares being acquired may legally be sold. The Fund reserves the right to
modify or discontinue exchange privileges upon 60 days' prior notice to share-
holders.
CHECK WRITING PRIVILEGE
A shareholder holding shares for which certificates have not been issued may
appoint the Fund's Sub-Transfer Agent as agent and request, on the application
form, special forms of drafts payable through Fidelity National Bank ("Fideli-
ty"). The Sub-Transfer Agent issues these drafts on behalf of the Portfolio in
books of ten drafts, for which there is a charge by PFS of $7.50 per book.
These drafts may be made payable by the shareholder to the order of any person
in any amount of $250 or more. When a draft is presented to Fidelity for pay-
ment, full and fractional shares required to cover the amount of the draft will
be redeemed from the shareholder's account by the Sub-Transfer Agent at the
next determined net asset value. Any gain or loss realized on the sale of
shares is a taxable event. See "Redemption of Shares". Drafts will not be hon-
ored for redemption of shares held less than fifteen (15) days, or until the
Sub-Transfer Agent is presented with satisfactory evidence that the purchase
check has cleared. Any shares for which there are outstanding certificates may
not be redeemed by draft. If the amount of the draft is greater than the pro-
ceeds of all uncertificated shares held in the shareholder's account, the draft
will be returned and the shareholder may be subject to additional charges
imposed by banks. A shareholder may not liquidate the entire account by means
of a draft. The check writing privilege may be terminated or suspended at any
time by PFS or Fidelity. Retirement plans and accounts that are subject to
backup withholding are not eligible for the privilege. A "stop payment" system
is not available on the checks. Fidelity will only honor those drafts autho-
rized by PFS. A shareholder who has insufficient funds to honor a draft will be
charged a fee of $25 by PFS or the Sub-Transfer Agent. To defray administration
expenses involved with providing copies of money market drafts, there is a $10
fee for each draft copy requested.
15
<PAGE>
MINIMUM ACCOUNT SIZE
The Fund reserves the right to redeem involuntarily any shareholder's account
in the Portfolio if the aggregate net asset value of the shares held in the
Portfolio account is less than $500. Any applicable CDSC will be deducted from
the proceeds of this redemption. (If a shareholder has more than one account in
the Portfolio, each account must satisfy the minimum account size.) Before the
Board of Directors of the Fund elects to exercise such right, shareholders will
receive prior written notice and will be permitted 60 days to bring accounts up
to the minimum to avoid involuntary redemption.
YIELD INFORMATION
From time to time the Fund may advertise the yield and effective yield of the
Portfolio. These yield figures are based on historical earnings and are not
intended to indicate future performance. The yield of the Portfolio or a Class
refers to the net investment income generated by an investment in the Portfolio
or the Class over a specific seven-day period (which will be stated in the
advertisement). This net investment income is then annualized. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Portfolio or the Class is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the com-
pounding effect of the assumed reinvestment.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
Overall responsibility for management and supervision of the Fund rests with
the Fund's Board of Directors. The Directors approve all significant agreements
between the Fund and the companies that furnish services to the Fund and the
Portfolio, including agreements with the Fund's distributor, investment manag-
er, custodian and transfer agent. The day-to-day operations of the Portfolio
are delegated to the Portfolio's investment manager. The Statement of Addi-
tional Information contains background information regarding each Director and
executive officer of the Fund.
MANAGER
Smith Barney Mutual Funds Management Inc. ("SBMFM" or the "Manager") was
incorporated in 1968 under the laws of Delaware. It is a wholly-owned subsidi-
ary of Smith Barney Holdings Inc., the parent company of Smith Barney. Smith
Barney Holdings Inc. is a wholly-owned subsidiary of Travelers Group Inc.,
which is a diversified financial services holding company engaged, through its
subsidiaries, principally in four business segments: Investment Services, Con-
sumer Finance Services, Life Insurance Services and Property & Casualty Insur-
ance Services.
16
<PAGE>
MANAGEMENT OF THE FUND (CONTINUED)
SBMFM, Smith Barney and Smith Barney Holdings Inc. are each located at 388
Greenwich Street, New York, New York 10013. SBMFM is also the investment man-
ager for numerous other investment companies having aggregate assets as of
March 31, 1997 of approximately $83 billion. For the Fund's last fiscal year
ended December 31, 1996 the management fee was 0.40% of the Portfolio's aver-
age daily net assets. The Portfolio's management agreement provides for daily
compensation of the Manager at the following annual rates: 0.45% on the first
$6 billion of the Portfolio's net assets, 0.425% on the next $6 billion, 0.40%
on the next $6 billion and 0.35% on net assets in excess of $18 billion.
Under the management agreement SBMFM is responsible for furnishing or caus-
ing to be furnished to the Portfolio advice and assistance with respect to the
acquisition, holding or disposal of investments and recommendations with
respect to other aspects and affairs of the Portfolio, bookkeeping, accounting
and administrative services, office space and equipment, and the services of
the officers and employees of the Fund.
The term "Smith Barney" in the title of the Fund has been adopted by permis-
sion of Smith Barney and is subject to the right of Smith Barney to elect that
the Fund stop using the term in any form or combination of its name.
DISTRIBUTOR
PFS is located at 3100 Breckinridge Boulevard, Duluth, Georgia 30199-0001.
PFS distributes shares of the Fund as principal underwriter and as such con-
ducts a continuous offering pursuant to a "best efforts" arrangement requiring
PFS to take and pay for only such securities as may be sold to the public.
Pursuant to a plan of distribution adopted by the Fund under Rule 12b-1 under
the 1940 Act (the "Plan"), PFS is paid an annual service fee with respect to
Class A shares of the Fund at the annual rate of 0.10% of the average daily
net assets of the Class A shares. The fees are paid to PFS which in turn pays
PFS Investments to pay its Registered Representatives for servicing share-
holder accounts for as long as a shareholder remains a holder of the Class.
The service fee is also spent by PFS to cover payments to and expenses of PFS
Investments Registered Representatives and other persons who provide share-
holder services.
17
<PAGE>
ADDITIONAL INFORMATION
From time to time, PFS or its affiliates may also pay for certain non-cash
sales incentives provided to PFS Investments Registered Representatives. Such
incentives do not have any effect on the net amount invested. PFS may from
time to time, pay or allow additional reallowances or promotional incentives,
in the form of cash or other compensation to PFS Investments Registered Repre-
sentatives that sell shares of the Fund.
The Fund, an open-end, diversified investment company, was incorporated
under Maryland law on May 28, 1974. The Board of Directors has authorized the
issuance of four series of shares, each representing shares in one of four
separate Portfolios--the Cash Portfolio, the Government Portfolio, the Retire-
ment Portfolio and the U.S. Treasury Portfolio--and may also authorize the
creation of additional series of shares. Each share of a Portfolio or Class
represents an equal proportionate interest in the net assets of that Portfolio
or Class with each other share of the same Portfolio or Class and is entitled
to such dividends and distributions out of the net income of that Portfolio or
Class as are declared in the discretion of the Board. Shareholders are enti-
tled to one vote for each share held and will vote in the aggregate and not by
Portfolio or Class except as otherwise required by the Act or Maryland law. As
described under "Voting Rights" in the Statement of Additional Information,
the Fund ordinarily will not hold shareholder meetings; however, shareholders
have the right to call a meeting upon a vote of 10% of the Fund's outstanding
shares for the purpose of voting to remove directors and the Fund will assist
shareholders in calling such a meeting as required by the Act.
PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the Portfolio's invest-
ments.
First Data Investor Services Group, Inc. located at Exchange Place, Boston,
Massachusetts 02109, serves as the Fund's transfer agent.
PFS Shareholder Services is located at 3100 Breckinridge Blvd., Bldg. 200,
Duluth, Georgia 30199-0062 and serves as the Fund's Sub-Transfer Agent.
The Fund sends its shareholders a semi-annual report and an audited annual
report, which include listings of the investment securities held by the Fund
at the end of the period covered. In an effort to reduce the Fund's printing
and mailing costs, the Fund plans to consolidate the mailing of its semi-
annual and annual reports by household. This consolidation means that a house-
hold having multiple accounts with the identical address of record will
receive a single copy of each report. Shareholders who do not want this con-
solidation to apply to their account should contact their PFS Investments Reg-
istered Representative or the Fund's Sub-Transfer agent.
18
<PAGE>
ADDITIONAL INFORMATION (CONTINUED)
Also available at the shareholder's request, is an Account Transcript identi-
fying every financial transaction in an account since it was opened. To defray
administrative expenses involved with providing multiple years worth of infor-
mation, there is a $15 charge for each Account Transcript requested.
Additional copies of tax forms are available at the shareholder's request. A
$10 charge for each tax form will be assessed.
Additional information regarding the Sub-Transfer Agent's services may be
obtained by contacting the Client Services Department at (800) 544-5445.
19
<PAGE>
SMITH BARNEY
------------
A MEMBER OF TRAVELERSGROUP [LOGO]
SMITH BARNEY
MONEY FUNDS, INC.
3100 Breckinridge Blvd., Bldg. 200
Duluth, Georgia 30199-0062
(800) 544-5445
FUND 26
FD [ ]
- --------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER INSTRUCTIONS
What Number to Give
Please make sure that the social security number or taxpayer identification
number (TIN) which appears on the Application complies with the following
guidelines:
Account
Type
Individual
Joint Account
Unif. Gifts
to Minors
Legal Guardian
Sole Proprietor
Give Social
Security
Number of:
Individual
Owner who will be
paying tax
Minor
Ward, Minor or Incompetent
Owner of Business
Account
Type
Trust, Estate,
Pension Plan Trust
Corporation, Partnership Other Organization
Broker/Nominee
Give
Employer I.D.
Number of:
Trust, Estate, Pension Plan Trust and not personal TIN of
fiduciary
Corporation, Partnership Other Organization
Broker/Nominee
Obtaining a Number
If you dont have a TIN or you dont know your number, obtain Form SS-5,
Application for Social Security Number Card, or Form SS-4, Application for
Employer Identification Number, at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a
number. Write applied for in the space provided on the account application.
Backup Withholding
Dividends and other distributions and the proceeds of redemption or repurchase
of Fund shares paid to individuals and other non-exempt payees will be subject
to a 31% backup Federal
withholding tax if the Fund is not provided with the shareholders taxpayer
identification number (TIN) and certification that the shareholder is not
subject to backup withholding. A shareholder may furnish the TIN and the
required certification by completing, signing and
sending to the Fund either an Account Application or IRS Form W-9. If the
required certification is not received with the submission of the application,
backup withholding will commence.
IRS Penalties
If you do not supply us with your TIN, you will be subject to an IRS $50
penalty unless your failure is due to a reasonable cause and not willful
neglect. If you fail to report interest, dividend or
patronage dividend income on your federal income tax return, you will be
treated as negligent and subject to an IRS 5% penalty tax on any resulting
underpayment of tax unless there is clear and convincing evidence to the
contrary. If you falsify information on this form or make any other false
statement resulting in no backup withholding on an account which should be
subject to backup withholding, you may be subject to an IRS $500 penalty and
certain criminal penalties including fines and/or imprisonment.
Internal Revenue Service Department of the Treasury
Washington, DC 20224
Person to Contact:
PFS Investments Inc. Mr. C. Thompson
3120 Breckinridge Boulevard Telephone Number:
Duluth, GA 30199 (202) 622-7021
Refer Reply to:
CP:E:EP:T:1
Date:
EIN Number: 58-1436188 September 28, 1995
Gentlemen:
In a letter dated March 17, 1995, and subsequent letters, your authorized
representative requested a written notice of approval that PFS Investments
Inc. may act as a nonbank custodian of plans qualified under section 401 of
the Internal Revenue Code, accounts described in section 403(b)(7), and of
individual retirement arrangements (IRAs) established under section 408.
Section 401(f) of the Code provides that a custodial account shall be treated
as a qualified trust under this section if such custodial account would,
except for the fact it is not a trust, constitute a qualified trust under this
section and the custodian is a bank (as defined in section 408(n)) or other
person who demonstrates to the satisfaction of the Secretary that the manner
in which such other person will hold the assets will be consistent with the
requirements of section 401 of the Code. Section 401(f) also provides that in
the case of a custodial account treated as a qualified trust by reason of the
preceding sentence, the person holding the assets of such account shall be
treated as the trustee thereof.
Section 403(b)(7)(A) of the Code requires, in part, that for amounts paid by
an employer to a custodial account to be treated as amounts contributed to an
annuity contract for his employee, the custodial account must satisfy the
requirements of section 401(f)(2). This section also requires, in order for
the amounts paid by an employer to be treated as amounts contributed to an
annuity contract for his employee, that the amounts are to be invested in
regulated investment company stock to be held in that custodial account, and
under the custodial account no such amounts by be paid or made available to
any distributee before the employee dies, attains the age 59 1/2, separates
from service, becomes disabled (within the meaning of section 72(m)(7)), or in
the case of contibutions made pursuant to a salary reduction agreement (within
the meaning of section 3121(a)(1)(D)), encounters financial hardship.
Section 408(h) of the Code provides that a custodial account shall be treated
as a trust under this section if the assets of such account are held by a bank
(as defined in subsection(n)) or such other person who demonstrates to the
satisfaction of the Secretary that the manner in which such other person will
administer the account will be consistent with the requirements of this
section, and if the custodial account would, except for the fact that it is
not a trust, constitute an IRA described in subsection (a). Section 408(h)
also provides that, in the case of a custodial account treated as a trust by
reason of the preceding sentence, the custodian of such account shall be
treated as the trustee thereof.
The Income Tax Regulations at section 1.401-12(n) are used to determine the
ability of such person, for purposes of sections 401(f), 403(b)(7), and 408(h)
of the Code, to act as a trustee or custodian. Section 1.401-12(n) of the
regulations provides that such person must file a written application with the
Commissioner demonstrating, as set forth in that section, its ability to act
as a trustee or custodian.
Based on all the information submitted to this office and all the
representations made in the application, we have concluded that PFS
Investments Inc. meets the requirements of section 1.401-12(n) of the
regulations, and, therefore, is approved to act as a nonbank custodian of
plans qualified under section 401 of the Internal Revenue Code, accounts
described in section 403 (b)(7), and of IRAs established under section 408.
This letter authorizes PFS Investments Inc. to act only as a nonbank custodian
in a fashion similar to a passive nonbank trustee, within the meaning of
section 1.401-12(n)(7) of the regulations, that is, it is authorized only to
acquire and hold particular investments specified by the owner. It may not act
as custodian if under the written agreement it has discretion to direct
investments of the custodial funds.
This letter while authorizing PFS Investments Inc. to act as a custodian does
not authorize it to pool accounts in a common investment fund (other than a
mutual fund) within the meaning of section 1.401-12(n)(6)(viii)(C) of the
regulations. PFS Investments Inc. may not act as a custodian unless it
undertakes to act only under custodial agreements that contain a provision to
the effect that the owner is to substitute another trustee or custodian upon
notification by the Commissioner that such substitution is required because
the applicant has failed to comply with the requirements of section 1.401-
12(n) of the regulations or is not keeping such records, or making such
returns or rendering such statements as are required by forms or regulations.
PFS Investments Inc. is required to notify the Commissioner of Internal
Revenue, Attn: C:E:EP:T, Internal Revenue Service, Washington, D.C. 20224, in
writing, of any change which affects the continuing accuracy of any
representations made in its application. Further, the continued approval of
its application to act as a nonbank custodian of plans qualified under section
401 of the Code, accounts described in section 403(b)(7), and of IRAs
established under section 408 is contingent upon the continued satisfaction of
the criteria set forth in section 1.401-12(n) of the regulations.
This approval letter is not transferable to any other entity. An entity that
is a member of a controlled group of corporations, within the meaning of
section 1563 (a) of the Code, may not rely on an approval letter issued to
another member of the same controlled group. Further, any entity that goes
through a merger, consolidation or other type of reorganization may no longer
rely on the approval letter issued to such entity prior to the merger,
consolidation or other type of reorganization. Such entity will have to apply
for a new determination letter in accordance with section 1.401-12(n) of the
regulations.
This letter constitutes a determination that PFS Investments Inc. may act as a
nonbank custodian of plans qualified under section 401 of the Code, accounts
described in section 403(b)(7), and of IRAs established under section 408, and
does not bear upon its capacity to act as a custodian under any other
applicable law.
In accordance with the power of attorney on file in this office, the original
of this letter is being sent to your authorized representative and a copy is
being sent to you.
Sincerely,
John Swieca
Chief, Employee Plans
Technical Branch 1
Individual Retirement Custodial Account
(Under Section 408(a) of the Internal Revenue Code)
Form 5305-A
(Rev. October 1992)
Department of the Treasury
Internal Revenue Service
DO NOT File
with the
Internal
Revenue Service
This agreement is entered into on the date written on the accompanying
Adoption Agreement by and between the Depositor whose name and signature
appear on the Adoption Agreement (the Depositor) and PFS Investments Inc. (the
Custodian) having its principal place of business at Duluth, Georgia.
The Depositor is establishing an Individual Retirement Account (under Section
408(a) of the Internal Revenue Code) to provide for his or her retirement and
for the support of his or her beneficiaries after death.
The Custodian has given to the Depositor a Disclosure Statement as required
under Internal Revenue Regulation 1.408-6.
The Depositor has given to the Custodian the sum listed on the Adoption
Agreement (in cash) and the Depositor and the Custodian agree to the
following:
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 403(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
Article II
The Depositors interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with
other property except in a common trust fund or common investment fund (within
the meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectables (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositors interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
the Depositor under paragraph 3, or to the surviving spouse under paragraph 4,
other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositors entire interest in the custodial account must be, or begin
to be, distributed by the Depositors required beginning date, (April 1
following the calendar year end in which the Depositor reaches age 70 1/2 ).
By that date, the Depositor may elect, in a manner acceptable to the
Custodian, to have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.
(d) Equal or substantially equal payments over a specified period that may
not be longer than the Depositors life expectancy.
(e) Equal or substantially equal annual payments over a specified period that
may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest has
begun, distribution must continue to be made in accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor
or, if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositors death, or
(ii) Be distributed in equal or substantially equal payments over the life or
life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositors death. If,
however, the beneficiary is the Depositors surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 12.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the Depositor's
required beginning date, even though payments may actually have been made
before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the Depositors entire interest in the Custodial account
as of the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositors designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or
joint life and last survivor expectancy) using the attained ages of the
Depositor and designated beneficiary as of their birthdays in the year the
Depositor reaches age 70 12. In the case of a distribution in accordance with
paragraph 4(b)(ii), determine life expectancy using the attained age of the
designated beneficiary as of the beneficiarys birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
alternative method described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles
I through III and this sentence will be controlling. Any additional articles
that are not consistent with section 408(a) and the related regulations will
be invalid.
Article VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
Article VIII
Individual Retirement Account
Custodial Account Agreement
1. The Depositor appoints PFS Investments Inc. (PFSI) as Custodian of the
Account. After deduction of all applicable fees and charges (if not paid
separately in a timely manner), the balance of Depositors contributions shall
be invested as hereafter provided.
2. The Depositor directs the Custodian to invest contributions and reinvest
dividends and capital gains distributions in shares of the Fund as directed on
the Adoption Agreement or in any subsequent investment instructions. The
designated fund(s) may be any one or more of the mutual funds portfolios.
3. The Custodian shall have no investment responsibility or discretion with
respect to this Account and shall not vote the shares held therein, except as
directed by Depositor. By establishing (or by having established) the IRA
account, the participant affirmatively directs the Custodian to vote any
Investment Company shares held on the applicable record date for which no
timely instructions are received in the same proportions as the Custodian has
been instructed to vote the shares held by all IRA accounts for which it has
received instructions.
4. This document constitutes the entire agreement between Depositor and
Custodian and no field representative of PFS Investments Inc., PFS
Distributors nor any broker-dealer shall be deemed to be a representative of
or acting on behalf of the Custodian nor shall any representative have any
authority to make representations or to bind the Custodian beyond the terms of
this document.
5. The Depositor shall have the right, only by written notice to the
Custodian, to designate or to change a beneficiary to receive any benefit to
which the Depositor may be entitled in the event of his death prior to the
complete distribution of the Account. Such written designation shall be on a
form provided by the Custodian for such purpose, or in such other written
format which may be acceptable to the Custodian. The Custodian may rely upon
the last written designation received at the Custodians office which shall
supersede all prior designations. Unless specifically designated otherwise by
the Depositor in a form acceptable to the Custodian, death benefits shall be
distributed equally among all surviving primary beneficiaries or all surviving
contingent beneficiaries (should all primary beneficiaries predecease the
Depositor). If no such designation is in effect upon the Depositors death, or
if the Custodian receives satisfactory proof that all such named beneficiaries
have predeceased the Depositor, then the Account shall be distributed to the
Depositors spouse, if married at the time of death followed by the
Depositors estate.
6. Notwithstanding anything therein to the contrary, distributions shall not
be made as described in paragraph 3(b) or 3(c) of Article IV, but only as
provided in paragraphs 3(a), (d) and (e) of Article IV. Further, not
withstanding the provisions of Article IV, paragraph 3, if the Depositor has
not made an election by April 1 of the year following the year in which he
attains age 70 12, then distribution will commence being made to the
Depositor on such April 1 in equal or substantially equal annual payments over
a period based on the Depositors life expectancy. Also, all Required Minimum
Distributions will be processed using the non-recalculate (declining years)
method.
7. Neither PFS Investments, as Custodian, nor PFS Distributors, as Sponsor,
assumes any responsibility to make any distribution unless and until Depositor
specifies in writing on the form provided by the Custodian the occasion for
such distribution and the elected manner of distribution. Further, the
Custodian and the Sponsor shall not be responsible to make minimum
distributions in accordance with Article IV or Section 6 or Article VIII above
following the Depositors attainment of age 70 12 other than upon the
Depositors express instructions as herein provided.
8. The Custodial Account Agreement shall terminate upon the complete
distribution of the Account to the Depositor or his beneficiaries, to
successor individual retirement account or annuities, or when no assets
otherwise remain in the account.
9. The Custodian reserves the right to reject any rollover contributions
received in kind (other than Fund shares).
10. The Sponsor may remove the Custodian and appoint a Successor Custodian at
any time upon 30 days written notice to the Custodian and to the Depositor or
any current beneficiary. The Custodian may resign at any time upon thirty (30)
days written notice to the Depositor. Upon its resignation, the Custodian
may, but shall not be required to appoint a Successor Custodian under this
Custodial Account Agreement. If a resigning Custodian does not appoint a
Successor Custodian, the Depositor or current beneficiary may appoint a
Successor Custodian and if no Successor Custodian is appointed, this Custodial
Account Agreement shall be terminated by distribution of all assets held in
the Account hereunder to the Depositor or current beneficiary. Any Successor
Custodian appointed hereunder shall satisfy the requirements of Section
408(a)(2) of the Code. Upon any such successors acceptance of appointment,
the Custodian shall transfer the assets of the Account, together with copies
of relevant books and records, to such Successor Custodian; provided, however,
that the Custodian is authorized to reserve such sum of money or property as
it may deem advisable for payment of any liabilities constituting a charge on
or against the assets of the Account or of the Custodian and where necessary
may liquidate such assets.
11. The Custodian shall be entitled to compensation for its services
hereunder in accordance with its Custodial Account Fees Schedule as it may be
published and amended from time to time. The Custodian shall also be entitled
to reasonable compensation for any extraordinary services rendered and to be
reimbursed for any administrative expenses incurred in the performance of its
duties hereunder including fees for legal services rendered to the Custodian.
All such fees and expenses of the Custodian may be charged against the
Custodial Account in such manner as the Custodian may determine, or at the
Custodians option, may be paid directly by the Depositor. The Custodian may
pay from the Custodial Account any other costs, fees or expenses associated
with the maintenance of management of the Account on the written authorization
of the Depositor.
12. By execution of the Adoption Agreement, Depositor consents to the
amendment of this Article VIII by the Sponsor to make any changes herein which
the Sponsor determines in its discretion are necessary or desirable, provided,
however, that no such amendment will be made which increases the duties of the
Custodian without the Custodians consent.
13. This Custodial Account Agreement shall be construed under the laws of the
State of Georgia and shall become effective upon acceptance by the Custodian
as evidence by receipt of a confirmation statement from the Custodian.
14. The acceptance by the Depositor of this Custodial Account Agreement
incorporating the IRA Disclosure Statement is indicated by Depositors
signature in item 11. of the related Adoption Agreement incorporated by this
reference herein.
15. Annual contributions may be made by or on behalf of the Depositor into a
Simplified Employee Pension Plan - Individual Retirement Account (SEP-IRA)
under Section 408(k) of the Code. Contributions by the Depositors employer(s)
may not exceed the lesser of 15% of the Depositors compensation from each
such employer or $30,000 as adjusted annually per Depositor. Employer
contributions shall be made, with respect to any year, on or before the due
date for filing the employers tax return for such taxable year (including
extensions thereof).
16. If otherwise eligible, in addition to any amount contributed by his
employer(s) under a SEP Plan, the Depositor may make a regular IRA
contribution into this account which may not exceed 100% of his compensation
or $2,000.
17. When a SEP contribution is made in or for any year in which the Depositor
becomes 70 12 or thereafter, the minimum distribution under Article IV of
this Individual Retirement Account Agreement shall be computed in accordance
with such Article and the Regulations thereunder.
18. The Depositor shall deliver a written form to PFSI indicating that the
contribution is eligible to be treated as SEP-IRA contribution. PFSI may rely
upon such statement and may treat the contribution as a SEP-IRA thereafter.
19. Although the termination of the Depositors SEP-IRA Account may have an
adverse affect on the SEP Plan in which the Depositor participates, PFSI shall
not have any liability to the Depositor and/or his employer(s) with respect to
such termination and shall not have an obligation to provide any notice
thereof.
Individual Retirement Account
Disclosure Statement
Introduction
The following information is being provided in accordance with the
requirements of the Internal Revenue Service and is based on the law as in
effect on January 1, 1993, for the tax year 1993 and later. This disclosure
statement should be read together with the Custodial Account Agreement.
Revocation
You may revoke this account at any time within seven calendar days after it is
established by mailing or delivering a written request for revocation to PFS
Investments Inc., 3100 Breckinridge Blvd., Bldg. 200, Duluth, GA 30199-1025.
Mailed notice will be considered given on the date postmarked (or the date
certified or registered if mailed by this method). Upon proper written
notification of revocation, you will receive a full return of your initial
contribution, including sales commissions and/or administrative fees. If you
have any questions, please phone 1-800-544-5445.
General Information
Any eligible person may establish an Individual Retirement Account (IRA) and
contribute as much as 100% of his compensation in cash or cash equivalent to
such program up to a maximum of $2,000 each year. Contributions made to an IRA
may be income tax deductible. Under certain conditions an individual and his
or her spouse may open an IRA and contribute up to $4,000 (not to exceed
$2,000 in any one account). Rollover contributions in excess of $2,000 may
also be made.
Contributions may only be made for years prior to the year in which the
Depositor attains age 70 12 (or the year in which the spouse attains age 70
12 for Spousal Accounts). This rule does not apply to Rollover contributions
or to employer contributions made under a SEP.
Under a Simplified Employee Pension Plan (SEP) the employer of an eligible
person may under certain circumstances make contributions to an employees
IRA. If an employer does make contributions to an employees IRA, the employee
may also contribute to the IRA up to $2,000 for the taxable year. It is your
and your employers responsibility to see that contributions in excess of
normal IRA limits are made under a valid SEP and are, therefore proper.
If contributions are being made under an employers SIMPLE Retirement Plan,
you must establish a separate SIMPLE-IRA document to which SIMPLE
contributions may be made. This type of account is called a SIMPLE-IRA.
SIMPLE-IRA contributions may not be moved into an individual retirement
account.
Your IRA is a custodial account created for your exclusive benefit. Your
interest in the IRA is at all times nonforfeitable.
Contributions to your IRA, and any dividends or capital gain distributions
thereon, will be invested in a Smith Barney Portfolio (and otherwise
authorized by it for use hereunder) as directed by you on your IRA Adoption
Agreement or in any subsequent instructions. As required by applicable law, no
part of your IRA may be invested in life insurance contracts or in
collectables (as defined in section 408(m) of the Code, as amended), nor may
the assets of your IRA be commingled with other property except in a common
trust fund or common investment fund.
Eligibility
You are eligible to make regular contributions into an IRA for a year if you
have received compensation during that year from the performance of personal
services. Compensation includes such items as salaries, bonuses, commissions,
and in the case of a self-employed individual, net earnings from self-
employment. All taxable alimony and separate maintenance payments received by
an individual under a decree of divorce or a separate maintenance agreement
are also treated as compensation. However, the deductibility of contributions
based on your compensation is subject to special limitations.
The deductibility of the contributions will depend upon whether or not you are
an active participant. Generally, you are considered an active participant
for a year if at any time during the year, you are covered by a defined
benefit plan under which money is added to your account or you are eligible to
earn retirement credits, regardless of your vested status. The phrase
retirement plans includes for these purposes profit sharing plans,
government plans (other than a section 457 plan), salary reduction
arrangements (such as a tax sheltered annuity arrangement, SARSEP, or a 401(k)
plan), simplified employee pension plans (SEP), SIMPLE Retirement Plans, or a
plan which promises you a retirement benefit which is based upon the number of
years of service you have with the employer. Your Form W-2 for the year should
indicate your participation status. We suggest that you obtain assistance from
your employer or tax advisor to determine whether you are an active
participant.
Also, if you make required contributions or voluntary employee contributions
to a retirement plan, you are an active participant. In certain plans you may
be an active participant even if you were with the employer for only part of
the year.
If you are unmarried and you are not an active participant, you may deduct the
full amount which you are allowed to contribute. Beginning in 1988, you will
be treated as unmarried if you and your spouse lived apart at all times during
the taxable year and you filed separate returns.
If you or your spouse is an active participant, you must look at your Adjusted
Gross Income (AGI) for the year to determine whether you can deduct your IRA
contribution. Your tax return will show you how to calculate your AGI for this
purpose. If you are at or below a certain AGI level, called the Threshold
Level. you are treated as if you were not an active participant and may
deduct the full amount of your contribution under the same rules as a person
who is not an active participant.
If you are single, your Threshold Level is $25,000. The Threshold Level if you
are married and file a joint tax return is $40,000, and if you are married but
file a separate tax return, the Threshold Level is $0.
If your AGI is less than $10,000 above your Threshold Level, you will still be
able to deduct a portion of your contribution but it will be limited in
amount. The formula for calculating your Maximum Allowable Deduction is a two-
step process:
STEP ONE: Compute (A) = .20 x (AGI Threshold Level).
STEP TWO: Subtract (A) above from the lesser of $2,000 or 100% of your
compensation and round this amount up to the next $10 level to calculate your
deduction limit. If the amount is between $0 and $200, you may deduct $200.
Examples: A. An unmarried person, active participant, AGI = $34,425
STEP ONE: .20 x ($34,425 25,000) = $1,885
STEP TWO: $2,000 1,885 = $115, rounded up to $120. Since this
is less than $200, this
person may deduct up to $200.
B. Married couple: at least one person is an active participant;
joint return is filed; joint AGI =
$40,366; both persons have compensation greater than $2,000.
STEP ONE: .20 x ($40,366 40,000) = $73.20.
STEP TWO: $2,000 73.20 = $1,926.80, rounded up to $1,930. Each
person may deduct
$1,930.
C. Married couple, one spouse either has no earned income or elects
to be treated as having
no earned income; joint AGI = $42,742, active participant.
STEP ONE: .20 ($50,000 $42,742) = $1,452.
STEP TWO: ($2,000 $1,452) = $548, rounded up to $550. Each
person may deduct $550.
Spousal IRA
For married persons who file a joint return, contribution may be made to a
separate IRA (spousal IRA) for a spouse who either (1) has no compensation or
(2) elects to be treated as having received no compensation for the taxable
year. Aggregate contributions for the working spouses account and the Spousal
IRA may not exceed the lesser of $4,000 or 100% of compensation, and no more
than $2,000 may be contributed to any one account.
Non-deductible Contributions to IRAs
Even if you are an active participant with AGI above the applicable dollar
limit and thus may not make a deductible contribution of $2,000 ($4,000 for a
Spousal IRA), you may still contribute up to the lesser of 100% of
compensation or $2,000 to an IRA ($4,000 for a Spousal IRA). The amount of
your contribution which is not deductible will be a non-deductible
contribution to the IRA. You may also choose to make a contribution non-
deductible even if you could have deducted part or all of the contribution.
Interest or other earnings on your IRA contribution, whether from deductible
or non-deductible contributions, will not be taxed until taken out of your IRA
and distributed to you.
If you make a non-deductible contribution to an IRA, you must report the
amount of the non-deductible contribution to the IRS on Form 8606 which is
filed with your tax return. Failure to report non-deductible contributions
properly may subject you to a penalty for each failure in the amount of $50.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, even if you have not yet
determined how much will be deductible. When you fill out our tax return you
may then calculate how much is deductible.
Excess Contributions
Generally, any contributions (other than rollover contributions described
below) exceeding the maximum contribution limitation are excess contributions
which are subject to a non-deductible 6% excise tax. The amount of the tax for
any year cannot exceed 6% of the value of your IRA at the close of that tax
year.
A contribution made with respect to any year (whether or not such contribution
is an excess contribution) may be withdrawn without being a taxable
distribution if such contribution and the earnings thereon are withdrawn from
your IRA prior to the due date for filing your Federal income tax return for
that year. The earnings will be taxable in the year in which the contribution
was made and may be subject to the 10% additional tax on premature
distributions.
Besides being subject to the excise tax, excess contributions withdrawn after
the due date for filing your Federal income tax return for the year will be
taxed as ordinary income if you made contributions in excess of $2,000 for
such tax year and may be subject to the premature distribution penalty. Excess
contributions made in a prior year may nevertheless be applied as deductible
and non-deductible contributions in the current year if less than the maximum
permissible contribution is made for the current year and if the amount of the
excess contributions was not allowed as a deduction in a prior year.
Rollover from another IRA
You may rollover part or all of a distribution you receive from another IRA
into your mutual fund IRA. You must rollover your distribution no later than
the 60th day after you receive it. You are allowed only one IRA to IRA
rollover during a twelve-month period beginning with the date you receive the
IRA distribution that you rollover. You must rollover the same property you
received as a distribution from your other IRA. You must irrevocably designate
a contribution as a rollover at the time you make the contribution.
Only a spouse beneficiary has the option to rollover a death distribution. If
you have a SEP plan, it will follow the IRA rollover rules because SEP
contributions are made directly into an IRA. You should obtain competent tax
advice before attempting a rollover.
Rollover from SIMPLE-IRA plans
A SIMPLE-IRA is a separate IRA that may only secure contributions under an
employer-sponsored SIMPLE Retirement Plan. These contributions must remain
segregated in a SIMPLE-IRA account for a two-year period from your initial
participation in the employers SIMPLE plan. A rollover or transfer from a
SIMPLE-IRA to any other IRA may not occur until the initial two-year period
has been met. Rollovers or transfers between
SIMPLE-IRA plans are permitted. All of the IRA to IRA rollover rules generally
apply to rollovers from a SIMPLE-IRA.
Rollover from a qualified retirement plan
If you are entitled to receive a distribution from a retirement plan, part or
all of it may be an eligible rollover distribution which can be rolled over
into your mutual fund IRA. Your employer can tell you what part of your
distribution will be an eligible rollover distribution.
If the eligible rollover distribution is paid to you , it is subject to
mandatory withholding of 20%, so that you will receive only 80% of your
distribution amount. You may rollover this distribution into your mutual fund
IRA in the same way you would rollover a distribution from another IRA, but in
order to avoid current tax, you will have to replace from other sources the
20% that was withheld. Otherwise, you will be deemed to have received the 20%
and be taxed on it.
You may also instruct your retirement plan to make a Direct Rollover of your
eligible rollover distribution to your mutual fund IRA. Your retirement plan
will pay the distribution directly to your IRA (or give you a check payable to
PFS Investments Inc. as Custodian or your IRA). A direct rollover is not
subject to withholding, so the entire amount will be included in the direct
rollover.
Conduit IRA. A conduit IRA is an IRA which contains only a rollover
distribution from a tax-qualified retirement plan. The IRA is then used as a
holding account until you subsequently roll that IRA back into another
retirement plan. To take advantage of this conduit treatment, you must
establish a separate IRA plan into which the eligible rollover distribution
will be placed.
Distributions
How to Distribute: Contact your account representative or mail request to PFS
Investments Inc., 3100 Breckinridge Blvd., Bldg. 200, Duluth, GA 30199-0025,
Telephone 1-800-544-5445. Request must include information as to whether or
not taxes are to be withheld.
When to Distribute. Generally, the minimum age at which a distribution from an
IRA may be made without incurring a premature distribution tax liability is
age 59 12. However, you are required to take minimum distributions after
attainment of age 70 12.
Minimum Distributions. No later than April 1 following the calendar year in
which you attain age 70 12 you are required to either take distribution of
the entire interest in your IRA or to begin taking distributions from your IRA
payable over your life (or the lives of you and your beneficiary) or over a
period certain not exceeding your life expectancy (or the life expectancies of
you and your beneficiary). You will be subject to a 50% excise tax on any
required distribution amount that is not distributed in a particular year. If
you wait to make your withdrawal for the 70 12 year until April 1 of the
following year, your total withdrawal in that year must equal the minimum
distribution for the 70 12 year and a second withdrawal by December 31 that
is equal to the minimum distribution for that year. In each year thereafter,
you must withdraw the minimum distribution for the year by December 31.
If you have more than one IRA, you can satisfy the minimum distribution rules
by withdrawing from one IRA the amount required to satisfy the minimum
distribution requirement for all of your IRAs.
If someone other than or in addition to your spouse is your named beneficiary,
the minimum distribution required is the greater of the amount determined
under the regular 70 12 rules and the amount determined under the minimum
distribution incidental benefit rules. The minimum distribution incidental
benefit rules is the amount determined by taking the balance in your IRA
account and dividing it by the life expectancy of you and a beneficiary who is
assumed to be 10 years younger than you.
Beneficiaries. If you die after your required beginning date, the remaining
balance must be distributed to your beneficiary at least as rapidly as under
the method of distribution in effect prior to your death. If you die prior to
your required beginning date, your beneficiary must elect by December 31 of
the year following your death to receive their entire interest in your account
either (1) by December 31 of the year containing the fifth anniversary of your
death or (2) in equal or substantially equal payments over their own life or
life expectancy commencing by December 31 of the year containing the first
anniversary of your death if no election is made within the prescribed time
and the beneficiary is:
(A) anyone other than the surviving spouse, if the spouse is named,
distributions are required to be made in accordance with option (1) above or
(B) the surviving spouse alone, distributions are required to be made in
accordance with option (2) above, except the surviving spouse is not required
to commence such distributions until the year in which you would have attained
age 70 12.
Taxation of Distributions
Generally, distributions from an IRA are taxed as ordinary income when
received regardless of their source. Distributions are not eligible for
capital gains treatment or the special 5-or-10-year averaging rules that may
apply to lump sum distributions from retirement plans.
Non-taxable Portion of Distribution. Because non-deductible IRA contributions
are made using income which has already been taxed (that is, they are not
deductible contributions) the portion of the IRA distributions consisting of
non-deductible contributions will not be taxed again when received by you. The
non-taxable portion of an IRA distribution, if any, will be a percentage based
on the ratio of your previously unrecovered non-taxable contributions to year
end values in all of your IRA accounts as of the close of the calendar year in
which your taxable year begins, plus any distributions taken from the account
during the year. All of your IRAs will be included in this calculation,
including regular IRAs, Simplified Employee Pension Plans (SEP), IRAs,
Rollover IRAs and SIMPLE-IRAs.
Estate Tax. A distribution to the beneficiary of your IRA will be included in
your gross estate for Federal estate tax purposes.
Gift Tax. Designation of a beneficiary which causes payment to be made to
such beneficiary on or after the owners death will not be considered a
transfer for Federal gift tax purposes.
Federal Income Tax Withholding. The taxable portion of distributions from
your IRA is subject to Federal income tax withholding unless you elect not to
have withholding apply. If you elect not to have withholding apply to taxable
distributions from your IRA, or if insufficient Federal income tax is withheld
from any distribution, you may be responsible for payment of estimated taxes,
as well as for penalties under the estimated tax rules, if withholding and
estimated tax payments were not sufficient. You have the right to change your
withholding election at any time prior to distribution by informing the
Custodian in writing. Additional information regarding withholding and the
necessary election forms will be provided to you no later than at the time a
distribution is requested.
Premature Distributions
A distribution from your IRA prior to your attaining age 59 12 will be
considered a premature distribution unless such distribution is on account of
your death, becoming disabled, or the distribution is made as part of a series
of substantially equal periodic payments (not less frequently than annually)
made for your life (or life expectancy) or the joint lives (or joint life
expectancies) of yourself and your beneficiary; medical expenses that exceed
7.5% of your adjusted gross income, health insurance premiums paid by certain
unemployed individuals, a qualifying rollover distribution, or the timely
withdrawal of the principal amount of an excess or nondeductible contribution.
If you receive a premature distribution, the amount received is included in
your gross income in the taxable year of receipt. In addition, your income tax
liability for that year is increased by an amount equal to 10% of the amount
of the premature distribution which is includable in your gross income, unless
a rollover contribution is made with the distributed funds.
If distributions are being made under the periodic distribution option, such
distributions must continue for at least five years and may not be changed to
a method which does not qualify for the exception prior to age 59 12. If
these conditions are not met, the tax will be imposed in the first taxable
year in which the modification or discontinuance is made and will be equal to
the tax that would have been imposed had the exception not applied, plus
interest.
Amounts deemed distributed to you because either the account was used as
collateral for a loan or because of a prohibited transaction will likewise be
subject to the 10% additional tax if you had not attained age 59 12.
Special rules apply where the amount distributed constitutes the return of a
prior contribution to the IRA. If the contribution, together with any income
earned thereon, is returned to you prior to the due date for filing your tax
return for the year for which the contribution was made, and if no deduction
was claimed for the contribution, then distribution of the contribution itself
will neither be included in income nor subject to the additional 10% tax. Any
earnings on the contribution will nevertheless be includable in income for the
year in which the contribution was made and will be subject to the additional
10% tax.
If the time for filing the return has passed, a withdrawal of excess
contributions will neither be taxable nor subject to the additional 10% tax on
premature distributions provided the total amount contributed for the year did
not exceed $2,000 and no deduction was allowed for the contribution. The
$2,000 limitation does not apply to certain excess rollover contributions.
Excess Distributions
If the aggregate of your distributions from qualified retirement plans and
individual accounts exceed a certain limit for any calendar year, a 15% excise
tax will be imposed on such excess distributions. Generally, the limit is the
greater of $150,000 or $112,500 as adjusted for cost-of-living increases since
1987. For any such excess distributions prior to your attainment of age 59
12, the 15% excise tax will be offset by the 10% additional income tax on
premature distributions. You should seek advice from your tax advisor with
respect to the application of these rules. For tax years 1997, 1998, and 1999,
the 15% excess distribution tax will not apply.
Prohibited Transactions
If you or your beneficiary were to engage in any prohibited transactions as
defined in Section 4975 of the Code, as amended, (such as any sale, exchange
or leasing of any property between you and your IRA, the lending of money or
other extensions of credit between you and your IRA, and/or the furnishings of
goods, services or facilities between you and your IRA) then the IRA would
lose its exemption from tax and be treated as having been distributed to you.
The value of the entire IRA would be includable in your gross income, and if
you were under age 59 12, you would also be subject to the additional 10% tax
for a premature distribution.
If you pledge part or all of your IRA as security for a loan, the portion so
pledged will be treated as if it had been distributed to you in the year in
which you make such a pledge. Such amount will be taxable to you as ordinary
income and, if you had not yet reached age 59 12, will be subject to the 10%
additional income tax on premature distributions.
Financial Disclosure
Because the assets held in your IRA are invested at your direction and will be
subject to market fluctuation, the value of your IRA can neither be guaranteed
nor projected. However, you will be provided with periodic statements of your
IRA, including current market values of investments.
Information about the shares of each mutual fund that you choose for
investment through your Individual Retirement Account must be furnished to you
in the form of a prospectus governed by the rules of the Securities and
Exchange Commission. Please refer to the prospectus for detailed information
concerning the fund objectives, the sales charges and the income and expenses
of your mutual funds.
Miscellaneous
You must file an appropriate form (currently Form 5329) with the Internal
Revenue Service to report the tax on excess contributions, premature
distributions and excess accumulations (insufficient distributions after age
70 12). In the event of your death, your estate may be subject to a 15% tax
on the excess accumulation in all your qualified plans, TSAs and IRAs. You
should seek the advice of your own tax advisor with respect to the application
of this excess accumulation excess tax.
The proceeds from your IRA may be used as a rollover contribution to another
individual retirement account or individual retirement annuity.
The form of your IRA has been approved by the Internal Revenue Service. Such
approval is a determination only as to the form of the IRA and does not
represent a determination of the merits of the IRA. This Retirement Plan Trust
is exempt from Taxation under 408(e) IRC.
Further information regarding your IRA is available in the Internal Revenue
Service Publication 590. You may obtain this publication from any district
office of the Internal Revenue Service or by calling the Internal Revenue
Service Forms Request toll-free number 1-800-TAX FORM.
There is an annual Custodian fee of up to $50 per social security number
irrespective of the number of mutual fund accounts. This fee is deducted from
a shareholders account balance each December, unless
pre-paid. If a redemption is requested during the year, the Custodian fee is
deducted from the redemption proceeds. Additionally, beginning in 1997, a
termination fee of up to $50 will be imposed on redemptions for full
liquidation of premature distributions (prior to age 59 12 ) and all
transfers of assets to other Custodians.
4.97
Smith Barney
Individual Retirement Account Adoption Agreement
Please print clearly. Mail completed application to: PFS Investments Inc.,
Custodian, c/o PFS Investments Inc., 3100 Breckinridge Blvd., Bldg 200,
Duluth, GA 30199-0025.
The owner named below hereby establishes an Individual Retirement Account
(IRA) by executing this Adoption Agreement and herein agrees to the
provisions of the Custodial Account Agreement (make check payable to PFS
Shareholder Services).
1. Type of Account Registration
Please check the appropriate box indicating how you would like the account
registered.
Contributory Non-Contributory o SEP o Minor IRA
Name Social Security Number
Birth Date
If client is a minor, please print parent or guardian name:
2. Address
Street or P.O. Box City, State, Zip
4. Please authorize your current Trustee or Custodian to transfer your IRA to
a Smith Barney IRA
3. Annual Custodian Fee Payment
The custodian fee is an annual fee to maintain your retirement plan account.
Your annual custodian fee will be directly deducted from your account at the
end of each year. If you prefer to prepay this year's fee, please check the
box below and include the fee amount in the Total Amount Enclosed area in
Section 4. There is only one fee assessed per person.
o Pre-pay first year $25.00 Annual Fee
4. Investment Section
Tell us how much you want to invest and in what Fund(s).
Smith Barney Offered at A and B Pricing
Class of Share - Must Select Only One
A Shares B Shares
(front-end sales
charge)
(contingent deferred sales
charge)
Fund Name and Number
Contribution Type
Prior Year IRA
Jan 1- April 15 (14)
Current Year IRA (03)
60-Day Rollover (11)
Prior Year Employer
Contribution (SEP Only) (31)
Current Year Employer
Contribution (SEP only) (30)
PAC AMOUNT ($25 min.)
Growth Social
Investment Money
Concert Allocation Series Opportunity
Appreciation Awareness Grade Bond Fund
High Growth Growth Balanced Conservative Income
(700) (710) (770) (730) (740)
(780) (790) (720) (760) (750)
(A shares only)
$________ $________ $________ $________ $________ $________
$________ $________ $________ $________
$________ $________ $________ $________ $________ $________
$________ $________ $________ $________
$________ $________ $________ $________ $________ $________
$________ $________ $________ $________
$________ $________ $________ $________ $________ $________
$________ $________ $________ $________
$________ $________ $________ $________ $________ $________
$________ $________ $________ $________
$________ $________ $________ $________ $________ $________
$________ $________ $________ $________
Total Amount Enclosed: $___________________ Total PAC Amount:
$____________
_______ Please Indicate PAC Start Date:
Month__________Day__________ Year__________
(minimum $25 per PAC) (1-28)
To establish a PAC, you must attach a voided check in the space provided on
the reverse side of this application. This check must be from the bank account
that you wish us to draft. When selecting the PAC Option, your IRA
contributions will be coded as current year purchases. Additionally, if you
are establishing a SEP account, your PAC contributions will be coded as
current year employer purchases. When executing a transfer of assets into
Smith Barney, attach a completed Transfer Form. If your transfer represents
the initial investment into this account, please do not complete Section 4.
5. PAC Automatic Increase Option
If you would like to increase your PAC on a regular basis, please indicate the
dollar amount or percentage and the interval that you would like between
increases.
Note: Maximum monthly amount for a contributory IRA is $166.66 and $1,875.00
for employer contribution to a SEP.
PAC: o Quarterly o Semi-Annually o Annually
Beginning on: Month ____________ Day _____________ Year _____________
(1-28)
Please check only 1 box below:
o Amount of Increase: o $10.00 o $25.00 o $50.00 o
Other ____________
Percentage of Increase: o 10% o 25% o 50% o Other _____________
18130 4.97
6. Primerica Life Directed Investment
If you have elected a Primerica Life/National Benefit Life T-2000 or Eagle 15
Insurance Policy and wish to have PFS Shareholder Services begin drafting the
amount of your premium reduction in the 13th month from your bank account,
please indicate below your policy number (if known), or the social security
number of the policyholder and the month/year you submitted the application.
You may designate only one Fund to receive your premium reduction. Please
ensure you have designated only one Fund in Section 4.
o T-2000 o Eagle-15
Primerica Life/National Benefit Life Policy Number:
_________________________________________________________
(Policy Number/Social Security Number)
Policy Submitted
(month/year)
7. Related Account Information
Do you have other Smith Barney accounts?
o Yes o No
If so, please indicate the account number(s) or social security number
of the primary owner.
Acct # Acct #
Acct # Acct #
8. Letter of Intent/Reduced Sales Charge
If this purchase qualifies for a reduced sales charge due to the accumulated
value in any related account(s) for any Smith Barney Fund sold through PFS
Investments Inc., or if you would like to establish a Letter of Intent to
qualify for a lower sales load, please indicate your expected breakpoint
amount. Group Plan Purchases (i.e., Payroll Deduction Plans (PDP), 403(b)(7),
SEP) are linked for reduced sales charges.
o New Letter of Intent
o Existing Letter of Intent
o Cumulative Purchases
o Group Plan Purchases (403(b)(7), SEP, PDP)
o $25,000* o $50,000 o $100,000 o $250,000 o $500,000
Applicable to Class A Shares only.
*Not Available for Letter of Intent
9. Representative Information
Solution # (Primary Representative)
Primary Representative Name (Please Print)
Solution # (Secondary Representative)
Secondary Representative Name (Please Print)
Representative Daytime Phone # (____________) ______
State of Sale
(Must complete only if different from clients resident state.)
10. Beneficiary Information
In the event no Beneficiary is designated, then the Depositor's Beneficiary
shall be the spouse, followed by the Depositor's estate.
If you desire to designate a different Beneficiary, please complete the
section below:
Beneficiary________________________________________________________
Relationship _______________________________________________________
Social Security Number ______________________________________________
Birth Date
11. Signature
The Undersigned certifies that he/she has full authority and is of legal age
to
purchase shares of the fund selected, has received and read a current
prospectus, the Custodial Account Agreement (IRS form 5305-A and any
attachments) and the IRA Disclosure Statement and agrees to all their terms
and accompanying custodial fees incorporated in this brochure. In the event
that I make any rollover contributions to this account, I hereby elect,
pursuant to the requirement of Section 1.402(a)(5)-IT of the IRS regulations,
to treat these contributions as rollover contributions. If the account will
have the PAC or Primerica Life/National Benefit Life Directed Investment
Option, that I agree to the terms of the PAC Indemnification Agreement below.
This plan shall be deemed to have been accepted by the Custodian upon receipt
of the first transaction statement. I also acknowledge that I determine the
deductibility of any contribution.
I authorize PFS Shareholder Services (hereafter called company) to initiate
debit entries, electronically, by means of check, draft or by any other
commercially acceptable method, to my checking account indicated by the
attached check, for deposit to my Smith Barney account(s) and I authorize the
depository named on the attached check (hereafter called depository) to
debit the same to such account. This authority is to remain in full force and
effect until company and depository have each received written notification
from me of its termination in such time and in such manner as to afford
company and depository a reasonable opportunity to act on it. I further agree
that if any such debit be dishonored, whether with or without cause and
whether intentionally or inadvertently, depository shall be under no liability
whatsoever, regardless of the consequences of such action. The Internal
Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.
Signature Owner (Parent/Guardian if Owner is a Minor) Date
Dont forget to sign this application!
Please attach your voided check here if you have selected the PAC Option.
Smith Barney IRA to IRA Transfer Form
Must be Accompanied by a Smith Barney IRA Adoption Agreement
Complete this form with the IRA Adoption Agreement to transfer your IRA into a
Smith Barney IRA and return to PFS Investments Inc., 3100 Breckinridge Blvd.,
Bldg. 200, Duluth, GA 30199-0025. Your present custodian may require the
completion of the following documents prior to executing your Smith Barney IRA
to IRA Transfer: Cash Surrender Form, Original Contract, and/or Signature
Guarantee. Please contact your present custodian for specific transfer
procedures.
1. Print your name and address here
_____________________________________________________
Name
_____________________________________________________
Address
_____________________________________________________
City State Zip
( )
_____________________________________________________
Your Social Security Number Your Daytime Phone
2. Please tell us about your present IRA
Transfer from: (please complete entirely)
_____________________________________________________
Name of Resigning Trustee or Custodian
( )
_____________________________________________________
Attention Telephone Number
_____________________________________________________
Address of Resigning Trustee or Custodian
_____________________________________________________
City State Zip
Policy/Account Number ________________________________
3. Please tell us how to invest your Transfer of Assets
o New Account Please attach a Smith Barney IRA Adoption Agreement and a
PFSI New Account Application. Please indicate the share class, your social
security number and percentage allocated to each fund. If all transfer
proceeds are deposited into the same fund, the fund allocation percentage
should be 100%.
o Existing Accounts Indicate existing account number and percentage
allocated to each account. If all transfer proceeds are to be deposited into
the same account, the fund allocation percent should be 100%.
Fund Share Class Social Security #/ Percentage
Name (Must Indicate) Existing Fund Account # Allocated
Select only one
Concert Allocation Series
High Growth (780) A B ______________________ _______
Growth (790) A B ______________________ _______
Balanced (720) A B ______________________ _______
Conservative (760) A B ______________________ _______
Income (750) A B ______________________ _______
Growth Opportunity (700) A B ______________________ _______
Appreciation (710) A B ______________________ _______
Social Awareness (770) A B ______________________ _______
Investment Grade Bond (730) A B ______________________ _______
Money Fund (740) A B ______________________ _______
Total 100%
_______
4. Please authorize your current Trustee or Custodian to transfer
your IRA to a Smith Barney IRA
To Resigning Trustee or Custodian:
Please liquidate o all, or o part ($___________) of the account listed in
Section 2 and transfer the proceeds of liquidation to my Smith Barney IRA. The
estimated value is:
$______________________.
immediately o at maturity* ____________________.
maturity date
* Please send us this transfer form at least two weeks prior to maturity date
but no earlier than four weeks.
5. Signature of Client
I understand that my former Trustee or Custodian may have a surrender charge
or liquidation penalty when redeeming my account. If I am over age 70 1/2, I
attest that none of the amount to be transferred will include the requirement
minimum distribution for the current year pursuant to Section 401(a)(9) of the
Internal Revenue Code.
_____________________________________________________
Client Signature Date
An important note: Your Resigning Trustee or Custodian may require your
signature to be guaranteed. Please call them for requirements.
_____________________________________________________
Name of Bank or Firm
_____________________________________________________
Signature of Officer and Title
6. Acceptance by Successor Custodian
Please liquidate and transfer account as instructed in Section 4. Make check
payable and send to address shown above. This account is accepted by PFS
Investments Inc. as Custodian upon placement of authorized signatures in the
space below. Should you have any questions, please contact our Client Services
Department at 1-800-544-5445.
(Acceptance Signatures)
_______________________________________________
Account Number (must provide on check)
18130 4.97
Smith Barney Qualified Plan or 403(b)/
403(b)(7) Plan to an IRA Direct Rollover Form
Must be Accompanied by a Smith Barney IRA Adoption Agreement
Complete this form with the IRA Adoption Agreement to complete a Direct
Rollover from your Qualified Plan or 403(b)/403(b)(7) Plan to a Smith Barney
IRA and return to PFS Investments Inc., 3100 Breckinridge Blvd., Bldg. 200,
Duluth, GA 30199-0025.
Important Notes: Contact the Plan Administrator, Trustee, or Custodian of the
current plan to determine if: (a) The employer/employee is eligible to receive
their monies. (b) What requirements do the Plan Administrator, Trustee or
Custodian have in order to process a Direct Rollover to Smith Barney.
Remember, 403(b)/403(b)(7) distributions may not be placed in an IRA unless
the employee has separated from service. Your present custodian may require
the completion of the following documents prior to executing your Smith Barney
Direct Rollover: Cash Surrender Form, Original Contract, and/or Signature
Guarantee. Please contact your present custodian for specific Direct Rollover
procedures.
1. Print your name and address here
___________________________________________________________ Name
_____________________________________________________
Address
_____________________________________________________
City State Zip
( )
_____________________________________________________
Your Social Security Number Your Daytime Phone
2. Please tell us about your present
Qualified Retirement Plan or 403(b)(7)
Transfer from: (please complete entirely)
_____________________________________________________
Name of Resigning Plan Administrator, Trustee or Custodian
( )
_____________________________________________________
Attention Telephone Number
_____________________________________________________
Address of Resigning Plan Administrator, Trustee or Custodian
_____________________________________________________
City State Zip
_____________________________________________________
Policy/Account Number
3. Please tell us how to invest your Direct Rollover
o New Account Please attach a Smith Barney IRA Adoption Agreement and a
PFSI New Account Application. Please indicate the share class, your social
security number and percentage allocated to each fund. If all transfer
proceeds are deposited into the same fund, the fund allocation percentage
should be 100%.
o Existing Accounts Indicate existing account number and percentage
allocated to each account. If all transfer proceeds are to be deposited into
the same account, the fund allocation percent should be 100%.
Fund Share Class Social Security #/ Percentage
Name (Must Indicate) Existing Fund Account # Allocated
Select only one
Concert Allocation Series
High Growth (780) o A o B ______________________ _______
Growth (790) o A o B ______________________ _______
Balanced (720) o A o B ______________________ _______
Conservative (760) o A o B ______________________ _______
Income (750) o A o B ______________________ _______
Growth Opportunity (700) o A o B ______________________ _______
Appreciation (710) o A o B ______________________ _______
Social Awareness (770) o A o B ______________________ _______
Investment Grade Bond (730) o A o B ______________________ _______
Money Fund (740) o A o B ______________________ _______
Total 100%
4. Please authorize your current Trustee or
Custodian to complete a Direct Rollover
from your Qualified Plan or 403(b)/403(b)(7)
Plan to a Smith Barney IRA
To Resigning Plan Administrator, Trustee or Custodian:
Please liquidate o all, or o part ($___________) of the account listed in
Section 2 and transfer the proceeds of liquidation to my Smith Barney IRA. The
estimated value is:
$______________________.
o immediately o at maturity* ____________________.
maturity date
* Please send us this transfer form at least two weeks prior to maturity date
but no earlier than four weeks.
5. Signature of Client
I understand that my former Trustee or Custodian may have a surrender charge
or liquidation penalty when redeeming my account. If I am over age 70 1/2, I
attest that none of the amount to be transferred will include the requirement
minimum distribution for the current year pursuant to Section 401(a)(9) of the
Internal Revenue Code.
________________________________________________________
Client Signature Date
An important note: Your Resigning Plan Administrator, Trustee, or Custodian
may require your signature to be guaranteed. Please call them for
requirements.
________________________________________________________
Name of Bank or Firm
________________________________________________________
Signature of Officer and Title
6. Acceptance by Successor Custodian
Please liquidate and send monies as instructed in Section 4. Make check
payable and send to address shown above. This account is accepted by PFS
Investments Inc. as Custodian upon placement of Authorized Signatures in the
space below. Should you have any questions, please contact our Client Services
Department at 1-800-544-5445.
(Acceptance Signatures)
_______________________________________________
Account Number (must provide on check)
18130 4.97
Smith Barney
Voluntary Account Application
Please print clearly, mail completed applications and make checks
payable to: PFS Shareholder Services, 3100 Breckinridge Blvd., Bldg
200, Duluth, GA 30199-0062
1. Account Registration
Please complete this Section.
Please check the appropriate box indicating how you would like the account
registered.
o Individual or o Joint* Account
Name (First, Middle Initial, Last)
Social Security Number Birth Date
Joint Owner's Name
Social Security Number Birth Date
* Joint Tenants with Right of Survivorship unless you specify otherwise
( ) Joint Tenants in Common
o Gift or Transfer to Minor (UGMA/UTMA)
Custodian's Name (First, Middle Initial, Last)
Custodian's Social Security Number Birth Date
Minor's Name (First, Middle Initial, Last)
Minor's Social Security Number Birth Date
o Trust
______________________________________________________________
Trustee's Name
______________________________________________________________
Name of Trust Agreement
__________________________________ ___________________
Taxpayer Identification Number Date of
Trust
o Other Registration
(i.e. corporation, non-profit, partnership, sole proprietorship,
etc.)
_______________________________________________________________________
Registration
_______________________________________________________________________
Registration
____________________________________ ______________________________
Taxpayer Identification Number Type of
Organization
2. Address and Citizenship
Well need to know this info!
_______________________________________________________________________
Street or P.O. Box
_______________________________________________________________________
City, State, Zip
________________________________
Daytime Telephone Number
o U.S. Citizen oNon-Resident Alien___________________________________
Specify Country
o Resident Alien
3. Investment Section
Tell us how much you want to invest, in what share class and in what fund(s).
Smith Barney Offered at A and B Share Pricing
o A Share
(front-end sales
charge)
o B Share
(contingent deferred sales
charge
PAC Draft Amount
Amount Enclosed ($25 min per PAC)
Fund Name and Number:
Concert Allocation Series
High Growth (780) $ $
Growth (790) $ $
Balanced (720) $ $
Conservative (760) $ $
Income (750) $ $
Growth Opportunity (700) $ $
Appreciation (710) $ $
Social Awareness (770) $ $
Investment Grade Bond (730) $ $
Money Fund (740) $ $
(A Share Only)
Total Amount Enclosed $ ________________________
Total PAC Amount ($25 min. per pac) $_________________________________
Please indicate PAC start date: Month_____________ Day________ Year_________
(1-28)
To establish a PAC, you must attach a voided check from the bank account that
you wish us to draft in the space provided on the reverse side of this
application. All Dividends and Capital Gains will be reinvested unless
otherwise indicated on the Additional New Account Options form contained in
the prospectus.
4. PAC Automatic Increase Option
If you would like to increase your PAC on a regular basis, please indicate the
dollar amount or percentage and the interval that you would like between
increases.
Please increase my PAC: o Quarterly o Semi-Annually o Annually
Beginning on: Month _____________ Day ____________ Year _____________
(1-28)
Please check only 1 box below:
Amount of Increase: o$10.00 o$25.00 o$50.00 oOther________
Percentage of Increase: o10% o25% o50% oOther________
18130 4.97
5. Primerica Life Directed Investment
Tell us about your Primerica Life/National Benefit Life Product.
If you have elected a Primerica Life/National Benefit Life T-2000 or Eagle 15
Insurance Policy and wish to have PFS Shareholder Services begin drafting the
amount of your premium reduction in the 13th month from your bank account,
please indicate below your policy number (if known) or the social security
number of the policyholder and the month/year you submitted your insurance
application.You may designate only one Fund to receive your premium reduction.
Please be sure you have designated only one Fund in Section 3.
o T-2000 o Eagle 15
Primerica Life/National Benefit Life Policy Number:
_________________________________________________________
Policy Number/Social Security Number
Policy Submitted:
Month/Year
6. Related Account Information
Do you have other Smith Barney Accounts?
o Yes o No
If so, please indicate the account number(s) or social security number of the
primary owner.
Acct # Acct #
Acct # Acct #
7. Letter of Intent/Reduced Sales Charge
If this purchase qualifies for a reduced sales charge due to the accumulated
value in any related account(s) for any Smith Barney Fund, or if you would
like to establish a Letter of Intent to qualify for a lower sales load, please
check the appropriate box and indicate your expected breakpoint amount. Group
Plan Purchases (i.e., Payroll Deduction Plans, PDP) are linked for reduced
sales charge.
o New Letter of Intent o Cumulative Purchases
o Existing Letter of Intent o Group Plan Purchases (PDP)
o $25,000* o $50,000 o $100,000 o $250,000 o $500,000
Applicable to Class A Shares only.
*Not available for Letter of Intent.
8. Representative Information
Solution # (Primary Representative)
Primary Representative Name (Please Print)
Solution # (Secondary Representative)
Secondary Representative Name (Please Print)
Representative Daytime Phone # (____________) ______
State of Sale
(must complete only if different from clients resident state.)
9. Check Writing Option
Please check the box below if you would like to have check writing capability
on the Smith Barney Money Fund. Please be sure to enclose the signature card
found on the Additional New Account Options form contained in the prospectus.
o Money Fund (740) (A Shares Only)
Other Information about the check writing option
1. Checks must be written for at least $250.
2. Each book of 10 checks costs $7.50 which will be deducted from your
account balance.
3. Please complete and attach the signature card found on the Additional
New Account Option form so we can process your request.
4. You should receive your checkbook two or three weeks after we receive
your application and completed signature card.
10. Signature and PAC Authorization
By my/our signature below, I/we certify, under penalties of perjury, that the
social security or taxpayer identification number provided in Section 1 is
correct, that I am not subject to nor has the IRS notified me that I am
subject to backup withholding, that I have been given a current prospectus,
and if the account will have the PAC or Primerica Life/National Benefit Life
Directed Investment Option, that I agree to the terms of the PAC
Indemnification Agreement below.
I/we authorize PFS Shareholder Services (hereafter called company) to
initiate debit entries, electronically, by means of check, draft or by any
other commercially acceptable method, to my (our) checking account indicated
by the attached check, for deposit to my Smith Barney account(s) and I
authorize the depository named on the attached check (hereafter called
depository) to debit the same to such account. This authority is to remain
in full force and effect until company and depository have each received
written notification from me (or either of us) of its termination in such time
and in such manner as to afford company and depository a reasonable
opportunity to act on it. I further agree that if any such debit be
dishonored, whether with or without cause and whether intentionally or
inadvertently, depository shall be under no liability whatsoever, regardless
of the consequences of such action. The Internal Revenue Service does not
require your consent to any provision of this document other than the
certifications required to avoid backup withholding.
Signature - Owner or Custodian Date
Signature - Joint Owner Date
Dont forget to sign this application
Please attach your voided check here if you have selected the PAC Option.
Smith Barney Additional New Account Options
This Form Must be Accompanied by a New Account Application
1. Account Information
Owner(s) name: Owner(s) Social Security Number:
___
2. Systematic Exchange
You may automatically exchange shares from certain Smith Barney Fund for
shares in another Smith Barney Fund of the same class on a regular schedule.
The accounts must have identical registrations. Exchange must be for a minimum
of $50. You may incur an additional sales charge when moving shares from a
fund with a lower charge to a fund with a higher charge. Please see the
prospectus for details on possible tax consequences.
Frequency (select one): Monthly Quarterly
Exchanged from: _________________________________________
(Name of fund)
Beginning on Month __________ Day __________ Year __________
Exchange into the: ________________________________________
(1-28) (Name of fund)
Amount to be exchanged each period: o $___________ or o Shares
____________ Account No.: ____________________________________
3. Dividend and Capital Gain Distributions Option
__________________________________________________
(Name)
__________________________________________________
(Name)
__________________________________________________
(Address)
__________________________________________________
(City) (State) (Zip)
4. Systematic Withdrawal Plan (SWP)
You may automatically sell shares at net asset value from your Smith Barney
account on a regular basis. You may designate either a set dollar amount or a
set number of shares. To establish this service, your account must have a
minimum value of $5,000 or $10,000 depending on the Fund. You may establish a
SWP Distribution on a retirement plan account only if you have obtained the
age of 59 1/2 and indicated whether you elected to have 10% Federal Income Tax
withheld from your SWP Distributions. Please call Client Services at 1-800-
544-5445 for further information. Should you need assistance in calculating
your payment, please contact one of our Retirement Plan Specialists at 1-800-
544-5445. Your SWP Distribution will start on the day indicated below. You may
choose any day between
1-28. Your check will usually be mailed within two business days from the date
your distribution is processed, but in no event later than seven days.
q Yes, please withhold 10% Federal Income Tax
q No, please do not withhold 10% Federal Income Tax
Frequency (select one): q Monthly q Quarterly q Semi-Annually q
Annually
Amount to be redeemed:
q $ ___________________ or q shares ___________________________
From Fund # _____________________________________________________
Payment Method Mail SWP check:
To me (us for joint accounts) as identified on my/our account registration.
To the following payee and address:
__________________________________________________
(Name)
__________________________________________________
(Name)
__________________________________________________
(Address)
__________________________________________________
(City) (State) (Zip)
Begin SWP Distribution on: ____________/____________/____________
(Month)
(Day 1-28) (Year)
5. Check Writing Privilege
Complete only if electing Check Writing Privilege.
This option is available for non-retirement plan accounts in the Smith Barney
Money Fund (A Shares Only).
The payment of funds on the conditions set forth below is authorized by the
signature(s) appearing below. If two (2) signatures appear, either signature
authorizes payment of funds and each signatory guarantees the genuineness of
the others signature.
The Fund is hereby appointed agent by the person(s) signing this card
(Depositors) and as such agent is directed to request redemption of shares
of the Fund registered in the name of such person(s) upon receipt of and to
the amount of checks drawn upon this account and to deposit the proceeds of
such redemptions in this account. In so acting the bank shall be liable only
for its own negligence. Depositors will be subject to the Funds rules and
regulations governing such accounts including the right of the Fund not to
honor checks in amounts exceeding the value of the depositors shareholder
account with the Fund at the time the check is presented for payment.
Additionally, deposits made into your account cannot be withdrawn until they
have cleared the Funds 15 calendar day escrow period. Please see the
Prospectus for further details on the Smith Barney Check Writing Privilege.
Name (please print): Fund:
Name (please print): Account Number:
By signing this signature card the undersigned agree(s) to be subject to: 1)
the conditions stated above, and 2) the current rules and regulations of the
Smith Barney Money Fund and any amendments thereto.
(Signature) (Date)
(Signature) (Date)
18130 4.97
Part B
April 30, 1997
SMITH BARNEY MONEY FUNDS, INC.
388 Greenwich Street
New York, New York 10013
STATEMENT OF ADDITIONAL INFORMATION
Smith Barney Money Funds, Inc. is a money market
fund that invests in high quality money market
instruments. The Fund seeks to provide:
Daily Income Convenience Daily Liquidity
Stability of Net Asset Value
Shares of the Fund are currently offered in three Portfolios:
Cash Portfolio
Government Portfolio
Retirement Portfolio
This Statement of Additional information is not a Prospectus. It is
intended to provide more detailed information about Smith Barney Money Funds,
Inc. (the "Fund") as well as matters already discussed in the Prospectus and
therefore should be read in conjunction with the April 30, 1997 Prospectus
which may be obtained from the Fund or a Smith Barney Financial Consultant.
TABLE OF CONTENTS
Page Reference In:
Statement of Additional
Information
Directors and Officers 2
Investment Restrictions and Fundamental Policies 4
Computation of Yield 5
Valuation of Shares and Amortized Cost Valuation 6
IRA and Other Prototype Retirement Plan 7
The Management Agreement, Plan of Distribution and Other Services
8
Voting Rights 9
Custodian, Transfer and Dividend Disbursing Agent 11
Independent Auditors 11
Financial Statements 11
Appendix - Securities Ratings 12
DIRECTORS AND OFFICERS
*JESSICA BIBLIOWICZ, Director and President
Executive Vice President of Smith Barney Inc. ("Smith Barney"), President of
thirty-nine investment companies associated with Smith Barney and Director of
twelve investment companies associated with Smith Barney; Director and Chief
Executive Officer of Smith Barney Mutual Funds Management Inc. ("SBMFM" or the
"Manager"), prior to January, 1994, Director of Sales and Marketing of
Prudential Mutual Funds; Prior to September, 1991, Assistant Portfolio Manager
for Shearson Lehman Brothers; 37.
JOSEPH H. FLEISS, Director
Retired, 3849 Torrey Pines Blvd., Sarasota, Florida 34238. Director of ten
investment companies associated with Smith Barney. Formerly, Senior Vice
President of Citibank, Manager of Citibank's Bond Investment Portfolio and
Money Management Desk and a Director of Citicorp Securities Co., Inc.; 79.
DONALD R. FOLEY, Director
Retired, 3668 Freshwater Drive, Jupiter, Florida 33477. Director of ten
investment companies associated with Smith Barney. Formerly, Vice President
of Edwin Bird Wilson, Incorporated (advertising); 74.
PAUL HARDIN, Director
Interim President of University of Alabama at Birmingham; Professor of Law at
the University of North Carolina at Chapel Hill, 12083 Morehead, Chapel Hill,
NC 27514. Director of twelve investment companies associated with Smith Barney
and a Director of The Summit Bancorporation. Formerly, Chancellor of the
University of North Carolina at Chapel Hill; 65.
FRANCIS P. MARTIN, Director
Practicing physician, 2000 North Village Avenue, Rockville Centre, New York
11570. Director of ten investment companies associated with Smith Barney.
Formerly, President of the Nassau Physicians' Fund, Inc.; 72.
*HEATH B. MCLENDON, Chairman of the Board and Chief Executive Officer
Managing Director of Smith Barney; Director of forty-one investment companies
associated with Smith Barney; President of the Manager; Chairman of Smith
Barney Strategy Advisers Inc.; prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers, Inc.; Vice Chairman of Shearson Asset
Management; 63.
RODERICK C. RASMUSSEN, Director
Investment Counselor, 81 Mountain Road, Verona, New Jersey 07044. Director of
ten investment companies associated with Smith Barney. Formerly, Vice
President of Dresdner and Company Inc. (investment counselors); 70.
JOHN P. TOOLAN, Director
Retired, 13 Chadwell Place, Morristown, New Jersey, 07960. Director of ten
investment companies associated with Smith Barney. Formerly, Director and
Chairman of Smith Barney Trust Company, Director of Smith Barney Holdings Inc.
and the Manager and Senior Executive Vice President, Director and Member of
the Executive Committee of Smith Barney; 66.
*LEWIS E. DAIDONE, Senior Vice President and Treasurer
Managing Director of Smith Barney; Senior Vice President and Treasurer of
forty-one investment companies associated with Smith Barney, and Director and
Senior Vice President of the Manager; 39.
*Designates an "interested person" as defined in the Investment Company Act of
1940 whose business address is 388 Greenwich Street, New York, NY 10013.
Such person is not separately compensated as a Fund officer or director.
*PHYLLIS M. ZAHORODNY, Vice President and Investment Officer
Managing Director of Smith Barney. Prior to August, 1993, Managing Director
and Portfolio Manager of Shearson Lehman Brothers Inc.; 39.
*MARTIN R. HANLEY, Investment Officer
Vice President of Smith Barney. Prior to August, 1993, Vice President and
Senior Trader of Shearson Lehman Brothers; 31.
*IRVING DAVID, Controller and Assistant Secretary
Vice President of Smith Barney and the Manager , Controller of 2 investment
companies associated with Smith Barney. Prior to March, 1994, Assistant
Treasurer of First Investment Management Company; 36.
*CHRISTINA T. SYDOR, Secretary
Managing Director of Smith Barney and Secretary of forty-one investment
companies associated with Smith Barney; Secretary and General Counsel of the
Manager; 46.
__________________
* Designates an "interested person" as defined in the Investment Company Act
of 1940 whose business address is 388 Greenwich Street, New York, NY 10013.
Such person is not separately compensated as a Fund officer or director.
On April 12, 1997, directors and officers owned in the aggregate
less than 1% of the outstanding securities of each Portfolio.
The following table shows the compensation paid by the Fund to
each director during the Fund's last fiscal year. None of the officers of the
Fund received any compensation from the Fund for such period. Officers and
interested directors of the Fund are compensated by Smith Barney.
COMPENSATION TABLE
Total
Pension or
Compensation Number of
Retirement from
Fund Funds for
Aggregate Benefits Accrued
and Fund Which Director
Compensation as part of
Complex Serves Within
Name of Person from Fund Fund Expenses
Paid to Directors Fund Complex
Jessica Bibliowicz() $ 0 $0 0 12
Joseph H. Fleiss 31,902.00* 0 58,300.00 10
Donald R. Foley 31,902.00* 0 58,300.00 10
Paul Hardin 31,902.00 0 73,850.00 12
Francis P. Martin 31,902.00** 0 58,300.00 10
Heath B. McLendon() 0 0 0 41
Roderick C. Rasmussen 31,902.00 0 58,300.00 10
John P. Toolan 31,902.00** 0 58,300.00 10
C. Richard Youngdahl 31,902.00 0 58,300.00 10
Designates an interested director.
Effective January 1, 1997, Mr. Youngdahl elected to become a Director
Emeritus.* $14,953 of the Director's Compensation has been Deferred
**All of the Director's Compensation has been Deferred
Upon attainment of age 72 the Fund's current Directors may elect to
change to emeritus status. Any directors elected or appointed to the
Board in the future will be required to change to emeritus status upon
attainment of age 80. Directors Emeritus are entitled to serve in
emeritus status for a maximum of 10 years during which time they are
paid 50% of the annual retainer fee and meeting fees otherwise applicable
to the Fund Directors, together with reasonable out-of-pocket expenses for
each meeting attended.
INVESTMENT RESTRICTIONS AND FUNDAMENTAL POLICIES
The Fund has adopted the following restrictions and
fundamental policies that cannot be changed without approval by a
"vote of a majority of the outstanding voting securities" of each
Portfolio affected by the change, as defined in the Investment
Company Act of 1940 (the "Act") and in accordance with Rule 18f-2
thereunder (see "Voting Rights").
(1) No Portfolio may borrow money except from banks for temporary
purposes in an amount up to 10% of the value of its total assets
and may pledge its assets in an amount up to 10% of the value of
its total assets only to secure such borrowings. The Fund will
borrow money only to accommodate requests for the redemption of
shares while effecting an orderly liquidation of portfolio
securities or to clear securities
transactions and not for leveraging purposes. Whenever borrowings
exceed 5% of the value of a Portfolio's total assets, the
Portfolio will not make any additional investments. This
restriction shall not be deemed to prohibit the Government
Portfolio from entering into reverse repurchase agreements so long
as not more than 33 1/3% of the Portfolio's total assets are
subject to such agreements, nor will it be deemed to prohibit the
Fund from obtaining letters of credit solely for purposes of
participating in a captive insurance company sponsored by the
Investment Company Institute to provide fidelity and directors and
officers liability insurance; (2) The Cash Portfolio and the
Retirement Portfolio each may not with respect to 75% of its
assets invest more than 5% of its assets in the securities of any
one issuer, except securities issued or guaranteed as to principal
and interest by the U.S. Government, its agencies or
instrumentalities or U.S. bank obligations; (3) Neither the Cash
Portfolio nor the Retirement Portfolio may invest less than 25% of
its assets in bank obligations (including both domestic and
foreign bank obligations) and each reserves freedom of action to
concentrate in securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies of
instrumentalities; (4) No Portfolio may sell securities short; (5)
No Portfolio may write or purchase put or call options; (6) No
Portfolio may purchase illiquid securities (such as repurchase
agreements with maturities in excess of seven days) or other
securities that are not readily marketable if more than 10% of the
total assets of the Portfolio would be invested in such
securities; (7) No Portfolio may purchase or sell real estate,
real estate investment trust securities, commodities, or oil and
gas interests; (8) No Portfolio may make loans to others (except
through the purchase of debt obligations referred to under
"Investment Objectives and Policies" in the Prospectus), except
that the Fund may purchase and simultaneously resell for later
delivery, obligations issued or guaranteed as to principal and
interest by the U.S. Government or its agencies or
instrumentalities; provided, however, that the Fund will not enter
into such a repurchase agreement on behalf of a Portfolio if, as a
result thereof, more than 10% of its total assets (taken at
current value) at that time would be subject to repurchase
agreements maturing in more than seven days; (9) No Portfolio may
invest in companies for the purpose of exercising control; and
(10) No Portfolio may invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
Notwithstanding any of the foregoing investment
restrictions, each of the Cash Portfolio, the Government Portfolio
and the Retirement Portfolio may invest up to 100% of its assets
in U.S. Government Obligations.
If a Portfolio adheres to a percentage restriction at the
time of investment, a later increase or decrease in percentage
resulting from a change in values of portfolio securities or
amount of total or net assets will not be considered a violation
of any of the foregoing policies.
Though the Fund has never entered into reverse repurchase
agreements and does not currently intend to commit more than 5% of
its net assets to such agreements, the Government Portfolio's
fundamental policies permit it to invest 1/3 of its total assets
in reverse repurchase agreements and to enter into reverse
repurchase agreements with broker/dealers and other financial
institutions including the Fund's custodian. Such agreements
involve the sale of portfolio securities with an agreement to
repurchase the securities at an agreed-upon price, date and
interest payment and have the characteristics of borrowing. Since
the proceeds of borrowings under reverse repurchase agreements are
invested, this would introduce the speculative factor known as
"leverage." Such transactions are only advantageous if the
Government Portfolio has an opportunity to earn a greater rate of
interest on the cash derived from the transaction than the
interest cost of obtaining that cash. Opportunities to realize
earnings from the use of the proceeds equal to or greater than the
interest required to be paid may not always be available, and the
Fund intends to use the reverse repurchase technique only when the
Manager believes it will be advantageous to the Government
Portfolio. The use of reverse repurchase agreements may
exaggerate any interim increase or decrease in the value of the
Government Portfolio's assets. The Fund's custodian bank will
maintain a separate account for the Government Portfolio with
securities having a value equal to or greater than such
commitments.
The investment policies of the Cash Portfolio and the
Retirement Portfolio permit each Portfolio to invest in fixed time
deposits with an ultimate maturity of not more than six months. In
addition, each of these Portfolios currently intends to limit to
10% of its total assets investment in fixed time deposits with a
maturity of from two business to seven calendar days and will
invest only if, when combined with other illiquid assets of the
Portfolio, not more than 10% of its assets would be invested in
all such instruments. Fixed time deposits, unlike negotiable
certificates of deposit, generally do not have a market and may be
subject to penalties for early withdrawal of funds.
The Articles of Incorporation of the Fund permit the Board
of Directors to establish additional Portfolios of the Fund from
time to time. The investment restrictions applicable to any such
additional Portfolio would be established by the Board of
Directors at the time such Portfolio were established and may
differ from those set forth above. In the event of the
liquidation or dissolution of a Portfolio or of the Fund, shares
of a Portfolio are entitled to receive the assets belonging to
that Portfolio and a proportionate distribution of any general
assets not belonging to any particular Portfolio that are
available for distribution based upon the relative net assets of
the respective Portfolios.
COMPUTATION OF YIELD
For the seven-day period ended December 31, 1996 the yield
for the Cash Portfolio was 4.90% (the effective yield was 5.02%)
for Class A and Class C shares and 5.01% (the effective yield was
5.12%) for the Class Y shares with an average dollar-weighted
portfolio maturity of 77 days; the yield for the Government
Portfolio was 4.83% (the effective yield was 4.93%) for the Class
A and Class C shares and 4.93% (the effective yield was 5.03%) for
the Class Y shares with an average dollar-weighted maturity of 66
days; and the yield for the Retirement Portfolio was 4.81% (the
effective yield was 4.92%) with an average dollar-weighted
portfolio maturity of 50 days. The Fund quotes current yield of
each Portfolio and class by dividing the net change in the value
of a hypothetical pre-existing account having a balance of one
share at the beginning of a recent seven-day base period by the
value of the account at the beginning of the base period and
multiplying this base period return by 365/7. (Net change in
account value being the value of additional shares purchased with
dividends from original shares and dividends declared on both
original shares and any additional shares, but does not include
any changes in unrealized appreciation or depreciation.) In
addition, for each Portfolio and class the Fund may from time to
time quote effective yield figures assuming the compounding of
dividends. The effective yield will be slightly higher than the
yield because of the compounding effect. The Fund also quotes for
each Portfolio and class the average dollar-weighted portfolio
maturity for the corresponding seven-day period.
Although principal is not insured, it is not expected that
the net asset value of each Portfolio's shares will fluctuate
because the Fund uses the amortized cost method of valuation.
(See "Valuation of Shares" in the Prospectus and below.) The
investor should remember that yield is a function of the type,
quality and maturity of the instruments in a Portfolio, and the
Portfolio's operating expenses. While current yield information
may be useful, investors should realize that each Portfolio's
current yield will fluctuate, is not necessarily representative of
future results and may not provide a basis for comparison with
bank deposits or other investments that pay a fixed yield for a
stated period of time.
VALUATION OF SHARES AND AMORTIZED COST VALUATION
The Prospectus states that net asset value will be determined on
any day the New York Stock Exchange is open and that the net asset
value may be determined on any day that the settlement of
securities otherwise occurs. The New York Stock Exchange is
closed on the following holidays: New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Fund uses the "amortized cost method" for valuing portfolio
securities pursuant to a rule under the Act. The amortized cost
method of valuation of the Fund's portfolio securities involves
valuing a security at its cost at the time of purchase and
thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. The market
value of portfolio securities will fluctuate on the basis of the
creditworthiness of the issuers of such securities and with
changes in interest rates generally. While the amortized cost
method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if it sold the
instrument. During such periods the yields to investors in the
Fund may differ somewhat from that obtained in a similar company
that uses mark-to-market values for all its portfolio securities.
For example, if the use of amortized cost resulted in a lower
(higher) aggregate portfolio value on a particular day, a
prospective investor in the Fund would be able to obtain a
somewhat higher (lower) yield than would result from investment in
such similar company, and existing investors would receive less
(more) investment income.
The purpose of this method of valuation is to attempt to maintain
a constant net asset value per share, and it is expected that the
price of the Fund's shares will remain at $1.00; however,
shareholders should be aware that despite procedures that will be
followed to have a stabilized price, including maintaining a
maximum dollar-weighted average portfolio maturity of 90 days and
investing in securities with remaining maturities of only 13
months or less, there is no assurance that at some future date
there will not be a rapid change in prevailing interest rates, a
default by an issuer or some other event that could cause the
Fund's price per share to change from $1.00.
IRA AND OTHER PROTOTYPE RETIREMENT PLANS
Copies of the following plans with custody or trust
agreements have been approved by the Internal Revenue Service and
are available from the Fund or Smith Barney; investors should
consult with their own tax or retirement planning advisors prior
to the establishment of a plan.
IRA, Rollover IRA, and Simplified Employee Pension - IRA
The Small Business Job Protection Act of 1966 changed the
eligibility requirements for participants in Individual Retirement
Accounts ("IRAs"). Under these new provisions, if you or your
spouse have earned income, each of you may establish an IRA and
make maximum annual contributions equal to the lesser of earned
income or $2,000. As a result of this legislation, married
couples where one spouse is non-working may now contribute a total
of $4,000 annually to their IRAs.
If you or your spouse is an active participant in an
employer-sponsored retirement plan, a deduction for contributions
to an IRA might still be allowed in full or in part, depending on
your combined adjusted gross income. For married couples filing
jointly, a full deduction for contributions to an IRA will be
allowed where the couples' adjusted gross income is below $40,001
($25,001 for an unmarried individual); a partial deduction will be
allowed where adjusted gross income is between $40,001-50,000
($25,001-35,000 for an unmarried individual); and no deduction
when adjusted gross income is $50,000 or more ($35,000 for an
unmarried individual). Shareholders should consult their tax
advisors concerning the effects of the Tax Reform Act on the
deductibility of their IRA contributions.
A Rollover IRA is available to defer taxes on lump sum
payments and other qualifying rollover amounts (no maximum)
received from another retirement plan.
An employer who has established a Simplified Employee
Pension - IRA ("SEP-IRA") on behalf of eligible employees may make
a maximum annual contribution to each participant's account of 15%
(up to $24,000) of each participant's compensation.
Paired Defined Contribution Prototype
Corporations (including Subchapter S corporations) and
non-corporate entities may purchase shares of the Fund through the
Smith Barney Prototype Paired Defined Contribution Plan. The
prototype permits adoption of profit-sharing provisions, money
purchase pension provisions, or both, to provide benefits for
eligible employees and their beneficiaries. The prototype
provides for a maximum annual tax deductible contribution on
behalf of each Participant of up to 25% of compensation, but not
to exceed $30,000 (provided that a money purchase pension plan or
both a profit-sharing plan and a money purchase pension plan are
adopted thereunder).
THE MANAGEMENT AGREEMENT, PLAN OF DISTRIBUTION AND OTHER
SERVICES
Manager
Smith Barney Mutual Funds Management Inc. (the "Manager")
manages the day to day operations of each Portfolio pursuant to
management agreements entered into by the Fund on behalf of each
Portfolio. Under the management agreements, the Manager offers
each Portfolio advice and assistance with respect to the
acquisition, holding or disposal of securities and recommendations
with respect to other aspects of the business and affairs of each
Portfolio. It also furnishes each Portfolio with executive and
other personnel; management, bookkeeping, accounting and
administrative services; office space and equipment; and the
services of the officers and employees of the Fund.
For the years 1994, 1995 and 1996, the management fee for
the Cash Portfolio was $20,507,822, $85,620,015 and $103,013,084,
respectively; for the years 1994, 1995 and 1996 the management fee
for the Government Portfolio was $4,378,067, $17,222,206 and
$18,688,740, respectively, and for the years 1994, 1995 and 1996
the management fee for the Retirement Portfolio was $5,058,146,
$5,043,576 and $5,588,496 respectively.
Each Portfolio's management agreement, which was approved by
its shareholders on September 16, 1994 and became effective on
November 21, 1994, provides for daily compensation of the Manager
at the following annual rate: (1) Cash Portfolio - 0.45% on the
first $6 billion of the Portfolio's net assets, 0.425% on the next
$6 billion, 0.40% on the next $6 billion and 0.35% on net assets
in excess of $18 billion; (2) Government Portfolio - 0.45% on the
first $2.5 billion of the Portfolio's net assets, 0.40% on the
next $2.5 billion and 0.35% on net assets in excess of $5 billion;
and (c) Retirement Portfolio - 0.45% on the first $1 billion of
the Portfolio's net assets, 0.40% on the next $1 billion and 0.35%
on net assets in excess of $2 billion.
Each Portfolio's management agreement further provides that
all other expenses not specifically assumed by the Manager under
each management agreement are borne by the Fund. Expenses payable
by the Fund include, but are not limited to, all charges of
custodians (including sums as custodian and sums for keeping
books, performing portfolio valuations, and for rendering other
services to the Fund) and shareholder servicing agents, filing
fees and expenses relating to the registration and qualification
of the Fund's shares under Federal or state securities laws and
maintaining such registrations and qualifications (including the
printing of the Fund's registration statements and prospectuses),
expenses of preparing, printing and distributing all proxy
material, reports and notices to shareholders, out-of-pocket
expenses of directors and fees of directors who are not
"interested persons" as defined in the Act, fees of auditors and
legal counsel, interest, taxes, fees and commissions of every
kind, expenses of issue, repurchase or redemption of shares, and
all other costs incident to the Fund's corporate existence and
extraordinary expenses such as litigation and indemnification
expenses. Direct expenses are charged to each Portfolio; the
management fee and general corporate expenses are allocated on the
basis of relative net assets. No sales or promotion expenses are
incurred by the Fund, but expenses incurred in complying with laws
regulating the issue or sale of the Fund's shares are not deemed
sales or promotion expenses.
The Manager has agreed that if in any fiscal year the total
expenses of any Portfolio, exclusive of taxes, brokerage, interest
and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses exceed 0.7% of the
average daily net assets for that fiscal year of the Portfolio,
the Manager will reduce its fee to the extent of such excess. The
0.7% voluntary expense limitation shall be in effect until it is
terminated by 14 days' written notice to shareholders and by
supplement to the then current prospectus.
Each Portfolio's management agreement will continue in
effect if specifically approved annually by a majority of the
directors of the Fund, including a majority of the directors who
are not parties to such contract or "interested persons" of any
such party. Each agreement may be terminated without penalty by
either of the parties on 60 days' written notice and must
terminate in the event of its assignment. It may be amended or
modified only if approved by vote of the holders of "a majority of
the outstanding voting securities" of such Portfolio as defined in
the Act and Rules thereunder which is discussed below under
"Voting Rights."
Each agreement provides that the Manager is not liable for
any act or omission in the course of or in connection with
rendering services under the agreement in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations or duties.
Plan of Distribution
The Fund has adopted for each Portfolio a plan of
distribution pursuant to Rule 12b-1 under the Act (the "Plan")
under which a service fee is paid by each of Class A and Class C
to Smith Barney for shares of the Portfolios attributable to Smith
Barney at an annual rate of 0.10% of such Class A shares' average
daily net assets. See "Distributor" in the Prospectus. In
addition, the Plan provides for a service fee to be paid to PFS
Distributors, Inc. by each Class A share attributable to PFS
Distributors, Inc. at an annual rate of 0.10% of such Class A
shares average daily net assets.
Brokerage
The Manager places orders for the purchase and sale of
securities for the portfolios of the Fund. All of the Fund's
portfolio transactions have been principal transactions with major
dealers in money market instruments, on which no brokerage
commissions are paid. Purchases from or sales to dealers serving
as market-makers include the spread between the bid and asked
prices. No portfolio transactions are handled by Smith Barney.
VOTING RIGHTS
As permitted by Maryland law, there will normally be no
meetings of shareholders for the purpose of electing directors
unless and until such time as less than a majority of the
directors holding office have been elected by shareholders. At
that time, the directors then in office will call a shareholders'
meeting for the election of directors. The directors must call a
meeting of shareholders for the purpose of voting upon the
question of removal of any director when requested in writing to
do so by the record holders of not less than 10% of the
outstanding shares of the fund. At such a meeting, a director may
be removed after the holders of record of not less than a majority
of the outstanding shares of the Fund have declared that the
director be removed either by declaration in writing or by votes
cast in person or by proxy. Except as set forth above, the
directors shall continue to hold office and may appoint successor
directors.
Rule 18f-2 under the Act provides that any matter required
to be submitted by the provisions of the Act or applicable state
law, or otherwise, to the holders of the outstanding voting
securities of an investment company such as the Fund shall not be
deemed to have been effectively acted upon unless approved by
"vote of a majority of the outstanding voting securities" (as
defined below) of each Portfolio or class affected by the matter.
Rule 18f-2 further provides that a Portfolio or class shall be
deemed to be affected by a matter unless it is clear that the
interests of each Portfolio or class in a matter are identical or
that the matter does not affect any interest of the Portfolio or
class. Under the Rule the approval of a management agreement or
any change in a fundamental investment policy would be effectively
acted upon with respect to a Portfolio only if approved by a
majority of the outstanding voting securities of the Portfolio
affected by the matter. The Rule, however, also provides that the
ratification of independent public accountants, the election of
directors, and the approval of a distribution agreement that is
submitted to shareholders are not subject to the separate voting
requirements and may be effectively acted upon by a vote of the
holders of a majority of all Fund shares voting without regard to
Portfolio.
As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding voting
securities" means the affirmative vote of the lesser of (a) more
than 50% of the outstanding shares of the Fund (or the affected
Portfolio or class) or (b) 67% or more of such shares present at a
meeting if more than 50% of the outstanding shares of the Fund (or
the affected Portfolio or class) are represented at the meeting in
person or by proxy.
Following are the names, addresses and percent of ownership
of each person who owns of record or is known by the Fund to own
of record of beneficially 5% or more of any Class of the Cash
Portfolio as of April 11, 1997: Frontier Trust Company as TTEE,
Reynolds Brothers Inc. 1000 Airport Rd. Lakewood, NJ 08701, owned
of record 289,082.27 shares (13.53%) of the Class C shares;
Frontier Trust Company as TTEE, DAS-CO of Idaho Inc. 401(K) Plan,
411 East Karcher Rd., Nampa, ID 83687 owned of record 244,901.96
shares (11.46%) of the outstanding Class C shares; Frontier Trust
Company as TTEE, United Mizrahi 401(K) and Profit Sharing Plan,
611 Wilshire Blvd. Ste 700, Los Angeles, CA 90017 owned of record
176,335.16 shares (8.25%) of the outstanding Class C shares,
Frontier Trust Company As TTEE, Napolean Spring Works Inc., Attn.
Patrick Glynn, RT 60 South, Archbold OH 43502 owned of record
148,492.300 shares (6.95%) of the outstanding Class C shares,
Frontier Trust Company as TTEE, Truck & Trailer Parts Inc., Attn.
Guy Comparetta, 4145 Bonsal Road, PO Box 975, Conley, GA 30027
owned of record 115,200.706 shares (5.38%) of the outstanding
Class C shares, Corestates Bank NA NDTA, Taxable Account, Att.
Chas. Mercado/Joe Alteri, PO Box 7829, Philadelphia, PA 19101-7829
owned of record 19,776,290.65 shares (18.96%) of the outstanding
Class Y shares, SB Corp Trust Co., T/F Nine West Group Inc.
Defined Benefit Pension Plan, Money Market Account, 201 N. Walnut
St., STE 905. Wilmington, DE 19801-3999 owned of record
13,618,679.55 shares (13.05%) of the outstanding Class Y shares,
Samuel Earl Upchurch Jr., Regions Financial Corp., PO Box 10247,
Birmingham, AL 35202-0247 owned of record 10,072,189.56 shares
(9.65%) of the outstanding Class Y shares, Cogen Tech Financial
Ser. LP, Attn: Dick Lydecker, 1600 Smith St, Ste 4300, Houston, TX
77002-7348 owned of record 10,000,000 shares (9.58%) of the
outstanding Class Y shares, Corestates Bank NA, ANDTA IRA Account,
Att: Chas. Mercado/Joe Alteri, PO Box 7829, Philadelphia, PA
19101-7829 owned or record 9,945,852.71 shares (9.53%) of the
outstanding Class Y shares, Jay Norton Zidell TTEE, FBO Jay Norton
Zidell Trust, U/A/D 11/1/91, 6900 SE Riverside Dr, #27, Vancouver,
WA 98664-1600 owned of record 9,430,139.43 shares (9.04%) of the
outstanding Class Y shares, Vincent J. Bruno, 2854 Shook Hill
Circle, Birmingham AL 35223-2600 owned of record 6,388,130.83
shares (6.12%) of the outstanding Class Y shares, Rooke Corp.,
D/B/A Aviation Equipment Inc., Attn.: Jim Shaw-V.P. /CFO, 7230
Fulton Avenue, North Hollywood, CA 91605-4110 owned or record
6,021,786.95 shares (5.77%) of the outstanding Class Y shares,
Daniel M. Johnston, Smith Barney Inc., IRA Custodian, North Road
PO Box 296, Tully, NY 13159-0296 owned or record 5,644.06 shares
(100%) of the outstanding Class Z shares of the Cash Portfolio..
Following are the names, addresses and percent ownership of
each person who owns of record or is known by the Fund to own of
record or beneficially 5% or more of any Class of the Government
Portfolio as of April 11, 1997: Jerry L. Calkins, Smith Barney
Inc. Rollover Custodian, 8694 W. 101 Street, Overland Park, KS
66212-3416 owned of record 148,147.98 shares (18.14%) of the
outstanding Class C shares; Daniel K. Silva, 415 Monticello Rd.,
San Rafael, CA 94903-3315 owned of record 148,078.77 shares
(18.13%) of the outstanding Class C shares; Mercedes Beltran Maso,
Mercedes Hearn, Cesar A Maso & Rosa F Maso, 7327 Pocahontas Ave,
Tampa FL 33634-4700 owned of record 54,887.92 shares (6.72%) of
the outstanding Class C shares; Frontier Trust Company As TTEE
DANY/Leisure Life Industries Inc., Attn: Carolyn Clark, 1930 North
Jackson, Athens TN 37303 owned of record 47,684.28 shares (5.83%)
of the outstanding Class C shares; Frontier Trust Company As TTEE,
FBO Migration Software, Attn: Mary McFarland, 2107 N First St.,
STE 600, San Jose CA 95131 owned of record 45,118.37 shares
(5.52%) of the outstanding Class C shares; William M. Haber, 54
Wilton RD, Westport CT 06880-3108 owned of record 5,184,888.29
shares (33.73) of the outstanding Class Y shares, Helen Kimmel,
445 Park Ave, Suite 2100, New York, NY 10022-2606 owned of record
3,517,580.13 shares (22.88%) of the outstanding Class Y shares and
CSEA Employee Benefit Fund, A non-profit organization, attn.: Karl
Bellinger/ Director of Internal Operations, 1 Lear Jet Lane, Suite
#1, Latham NY 12110-2392 owned of record 2,747,212.17 shares
(17.87%) of the outstanding Class Y shares, James E. Smith and
Jeralyn K. Talcott JTWROS, Main Account 2525 Trumble Creek Rd.,
Kalispell MT 59901-6715 owned of record 2,066,095.45 shares
(13.44%) of the outstanding Class Y shares, Frederick Wiesman
Company Attn: Michael P Chura, Malcolm George Smith, 1875 Century
Park East #1790, Los Angeles, CA 90067-2518 owned or record
1,348,997.66 shares (8.77%) of the outstanding Class Y shares,
Citibank NA Trustee, Smith Barney Harris Upham & Co. Inc., 401 K
Savings Plan, 111 Wall Street, 20th Floor, Attn.: N. Kronenberg,
New York, NY 10043 owned of record 49,362,330.12 shares (100%) of
the outstanding Class Z shares of the Government Portfolio. .
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
PNC Bank, National Association, a national banking
association with offices at 17th and Chestnut Streets,
Philadelphia, Pennsylvania, (the "Custodian"), serves as custodian
of the Fund's investments. First First Data Investor Services
Group, Inc., Exchange Place, Boston, Massachusetts 02109, serves
as the Fund's dividend disbursing and transfer agent.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York
10154, have been selected as independent auditors for the Fund for
its fiscal year ending December 31, 1997 to examine and report on
their examination of the financial statements and financial
highlights of the Fund.
FINANCIAL STATEMENTS
The following financial information is hereby incorporated
by reference to the Fund's 1996 Annual Report to Shareholders, a
copy of which is furnished with this Statement of Additional
information:
Pages in
Annual Report
Statements of Assets and Liabilities 17
Statements of Operations 18
Statement of Changes in Net Assets 19-21
Notes to Financial Statements 22-25
Financial Highlights 26-28
Independent Auditors' Report 29
APPENDIX - SECURITIES RATINGS
BOND (AND NOTES) RATINGS
Moody's Investors Service, Inc.
Aaa - Bonds that are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds that are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present that make the long term
risks appear somewhat larger than in "Aaa" securities.
Note: The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Standard & Poor's Rating Group
AAA - Debt rated "AAA" has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated "AA" has a very strong capacity to pay interest
and repay principal and differs from the highest rated issues only in
small degree.
Plus (+) or Minus (-): The ratings from 'AA' to 'B' may be
modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of
the project being financed by the debt being rated and indicates that
payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion. The investor should exercise judgment
with respect to such likelihood and risk.
L - The letter "L" indicates that the rating pertains to the
principal amount of those bonds where the underlying deposit collateral
is fully insured by the Federal Savings & Loan Insurance Corp. or the
Federal Deposit Insurance Corp.
- Continuance of the rating is contingent upon S&P's receipt of
closing documentation confirming investments and cash flow.
* - Continuance of the rating is contingent upon S&P's receipt of
an executed copy of the escrow agreement.
NR - Indicates no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Fitch Investors Service, Inc.
AAA - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated
"AAA". Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-term
debt of these issuers is generally rated "F-1+".
Plus (+) Minus (-): Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the "AAA"
category.
NR - Indicates that Fitch does not rate the specific issue.
Conditional - A conditional rating is premised on the successful
completion of a project or the occurrence of a specific event.
Suspended - A rating is suspended when Fitch deems the amount of
information available from the issuer to be inadequate for rating
purposes.
Withdrawn - A rating will be withdrawn when an issue matures or is
called or refinanced and at Fitch's discretion when an issuer fails to
furnish proper and timely information.
FitchAlert - Ratings are placed on FitchAlert to notify investors
of an occurrence that is likely to result in a rating change and the
likely direction of such change. These are designated as "Positive",
indicating a potential upgrade, "Negative", for potential downgrade, or
"Evolving", where ratings may be lowered. FitchAlert is relatively
short-term, and should be resolved within 12 months.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.
Issuers rated "Prime-1" (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment will normally be evidenced by the following
characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative
capitalization structures with moderated reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial
changes and high internal cash generation; well-established access to a
range of financial markets and assured sources of alternate liquidity.
Standard & Poor's Ratings Group
A-1 - This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issuers determined to possess overwhelming safety characteristics will
be denoted with a plus (+) sign designation.
IBCA Limited or its affiliate, IBCA Inc.
A-1+ - This designation indicates the highest capacity for timely
repayment.
Fitch Investors Service, Inc.
F-1+ - Indicates the strongest degree of assurance for
timely payment.
Duff & Phelps Inc.
Duff 1+ - Indicates the highest certainty of timely payment:
short-term liquidity is clearly outstanding, and safety is just below
risk-free United States Treasury short-term obligations.
The Thompson BankWatch ("TBW")
TBW-1 - Indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
In compliance with Rule 2a-7 under the Act, the Cash Portfolio and
Retirement Portfolio each will not purchase any securities, other than
obligations of the U.S. Government or its agencies and instrumentalities,
if, immediately after such purchase, more than 5% of the value of the
Portfolio's total assets would be invested in securities of any one issuer.
The Fund's fundamental policy would give each such Portfolio the ability to
invest, with respect to 25% of the Portfolio's assets,more than 5% of
its assets in any one issuer only in the event that Rule 2a-7 is amended
in the future.
PART C - OTHER INFORMATION
Item 24. Financial Statement and Exhibits
(a) Financial Statements
Location in:
Part A Part B
Annual Report
Statements of Assets and Liabilities - *
Statements of Operations - *
Statements of Changes in Net Assets - *
Notes to Financial Statements - *
* The Registrant's Annual Reports for the fiscal year ended December 31,
1996 and the Reports of Independent Accountants dated February 5, 1997 are
incorporated by reference to the N-30D filed on February 18, 1997 as
Accession # 0000091155-97- 000081.
All other statements and schedules are omitted because they are not applicable
or the required information will be shown in the financial statements or notes
thereto.
(b) Exhibits
(1) (a) Articles Supplementary to the Articles of Incorporation
dated November 7, 1985, January 30, 1984, August 12, 1980
and May 8, 1980 are incorporated by reference to Exhibits
(a) through (d) to Post-Effective Amendment No. 32.
(b) Articles Supplementary to the Articles of Incorporation
dated December 5, 1990 and Articles of Amendment dated
April 19, 1991 are incorporated by reference to Exhibit
1(b) and (c) to Post-Effective Amendment No. 35.
(c) Articles of Amendment to the Articles of Incorporation
dated October
28,1992 and Articles Supplementary to the Articles of Incorporation
dated December 8, 1992 are incorporated by reference to Exhibit
1(c) and (d) to Post-Effective Amendment No. 41.
(2) Bylaws are incorporated by reference to Exhibit 2 to Post-
Effective Amendment No. 32.
(3) Not applicable.
(4) Specimen Stock Certificates for the Cash Portfolio, Government
Portfolio and Retirement Portfolio are incorporated by
reference to Exhibits 4(a) through (c) to Post-Effective
Amendment No. 32
(5) (a) Management Agreement - U.S. Treasury Portfolio is
incorporated by reference to Exhibit 5(a) to Post-
Effective Amendment No. 34.
(b) Management Agreement for the Cash Portfolio is
incorporated by reference to Exhibit 5(b) to Post-
Effective Amendment No. 44.
(c) Management Agreement for the Government Portfolio is
incorporated by reference to Exhibit 5(c) to Post-
Effective Amendment No. 44.
(d) Management Agreement for the Retirement Portfolio is
incorporated by reference to Exhibit 5(d) to Post-
Effective Amendment No. 44..
(6) Underwriting Agreement is incorporated by reference to Exhibit
6 to Post-Effective Amendment No. 32.
(7) Not applicable.
(8) Custodian Agreement is incorporated by reference to Exhibit 8
to Post-Effective Amendment No. 32.
(9) Form of Transfer Agency Agreement (filed herewith).
(10) Previously Filed
(11) (i) Auditors' Report (see the Annual Report to Shareholders
which is incorporated by reference in the Statement of
Additional Information)
(ii) Auditors' Consent (filed herewith)
(12) Previously Filed.
(13) Not applicable.
(14) Previously Filed.
(15) (a) Plan of Distribution Pursuant to Rule 12b-1 for the Cash
Portfolio is incorporated by reference to Exhibit 15(a) to
Post-Effective Amendment No. 44..
(b) Plan of Distribution Pursuant to Rule 12b-1 for the
Government Portfolio is
incorporated by reference to Exhibit 15(b) to Post-Effective Amendment
No. 44..
(c) Plan of Distribution Pursuant to Rule 12b-1 for the
Retirement Portfolio is incorporated by reference to Exhibit 15
to Post-Effective Amendment No. 42.
(16) Schedule of 7 Day Yield Computation is incorporated by
reference to Exhibit 16 to
Post-Effective Amendment No. 29.
(17) Financial Data Schedule (filed herewith)
(18) Plan 3 pursuant to Rule 18f-3 is incorporated by
reference to Exhibit 18 to
Post-Effective Amendment No. 47.
Item 25. Persons Controlled by or under Common Control with Registrant
(None)
Item 26. Number of Holders of Securities Number of Recordholders on
Title of Class April 11, 1997
Cash Portfolio 2,260,816
Government Portfolio 221,662
Retirement Portfolio 156,224
Treasury Portfolio 0
Item 27. Indemnification
Reference is made to Article SEVENTH of Registrant's Articles of
Incorporation for a complete statement of its terms.
Subparagraph (9) of Article SEVENTH provides: "Anything herein
contained to the contrary notwithstanding, no officer or director of
the corporation shall be indemnified for any liability to the
registrant or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office."
Registrant is a named assured on a joint insured bond pursuant to
Rule 17g-1 of the Investment Company Act of 1940. Other assureds
include Smith Barney Mutual Funds Management Inc. (Registrant's
Manager) and affiliated investment companies.
Item 28. Business and other Connections of Investment Adviser
Information as to the Directors and Officers of Smith Barney Mutual Funds
Management Inc. is included in its Form ADV (File No. 801-8314), filed
with the Commission, which is incorporated herein
by reference thereto.
Item 29. Principal Underwriters
(a) Smith Barney Inc. ("Smith Barney") also acts as principal
underwriter for Travelers Series Fund Inc., Smith Barney World
Funds, Inc., Smith Barney Municipal Money Market Fund, Inc., Smith
Barney Muni Funds, Smith Barney Funds, Inc., Smith Barney Variable
Account Funds; The Inefficient-Market Fund, Inc., Smith Barney
Intermediate Municipal Fund, Inc., Smith Barney Investment Trust,
Smith Barney Municipal Fund, Inc., High Income Opportunity Fund
Inc., Smith Barney Adjustable Rate Government Income Fund, Smith
Barney Equity Funds, Smith Barney Income Funds, Smith Barney
Institutional Cash Management Fund Inc., Smith Barney Massachusetts
Municipals Fund, Zenix Income Fund Inc., Smith Barney Arizona
Municipals Fund Inc., Smith Barney Principal Return Fund, Municipal
High Income Fund Inc., The Trust for TRAK Investments, Smith Barney
Series Fund, Smith Barney Concert Allocation Series Inc., Smith
Barney Aggressive Growth Fund Inc., Smith Barney Appreciation Fund
Inc., Smith Barney California Municipals Fund Inc., Smith Barney
Fundamental Value Fund Inc., Smith Barney Managed Governments Fund
Inc., Smith Barney Managed Municipals Fund Inc., Smith Barney New
Jersey Municipals Fund Inc., Smith Barney Oregon Municipals Fund
Inc., Smith Barney Natural Resources Fund Inc., Smith Barney
Investment Funds Inc., The Italy Fund Inc., Smith Barney
Telecommunications Trust, Managed Municipals Portfolio Inc., Managed
Municipals Portfolio II Inc., Managed High Income Portfolio Inc.,
Greenwich Street California Municipal Fund Inc. and Greenwich Street
Municipal Fund Inc.
(b) The information required by this Item 29 with respect to each
director and officer of Smith Barney is incorporated by reference
to Schedule A of Form BD filed by Smith Barney pursuant to the
Securities Exchange Act of 1934 (SEC File No. 8-8177)
(c) not applicable
Item 30.Location of Accounts and Records
PNC Bank, National Association, 17th and Chestnut Streets, Philadelphia,
Pennsylvania
19103, and First Data Investor Services Group, Inc., 53 State Street,
Boston, Massachusetts 02109, will maintain the custodian and the
shareholders servicing agent records, respectively required by Section
31(a).
All other records required by Section 31(a) are maintained at the
offices of the Registrant at 388 Greenwich Street, New York, New York
10013 (and preserved for the periods specified by Rule 31a-2).
Item 31.Management Services
Not applicable.
Item 32.Undertakings
(a) Not applicable
(b) Not applicable
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest report to shareholders,
upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Post-Effective Amendment
to the Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned, and
where applicable, the true and lawful attorney-in-fact, thereto duly
authorized, in the City of New York, and State of New York on the 23rd
day of April 1997.
SMITH BARNEY MONEY FUNDS, INC.
BY/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signatures Title Date
/s/ Heath B. McLendon Chairman of the Board April 23, 1997
(Heath B. McLendon) and Chief Executive Officer
/s/ Jessica Bibliowicz President April 22, 1997
(Jessica Bibliowicz)
Joseph H. Fleiss* Director April 23, 1997
(Joseph H. Fleiss)
Donald R. Foley* Director April 23, 1997
(Donald R. Foley)
Director April , 1997
(Paul Hardin)
Francis P. Martin* Director April 23, 1997
(Francis P. Martin)
Roderick C. Rasmussen* Director April 23, 1997
(Roderick C. Rasmussen)
John P. Toolan* Director April 23, 1997
(John P. Toolan)
/s/ Lewis E. Daidone Treasurer and Principal
April 22, 1997
(Lewis E. Daidone) Financial Officer
*By: /s/ Christina T. Sydor
April 23, 1997
Christina T. Sydor
Pursuant to Power of Attorney
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
8(ii) Form of Transfer Agency Agreement
(11) (ii) Auditor's Consent
(17) Financial Data Schedule
Independent Auditors' Consent
To the Shareholders and Board of Directors of
The Smith Barney Money Funds, Inc.:
We consent to the use of our report dated February 5, 1997 with respect to
The Smith Barney Money Funds, Inc. incorporated herein by reference and to
the references to our Firm under the headings "Financial Highlights" in the
Prospectus and "Independent Auditors" in the Statement of Additional
Information.
KPMG Peat Marwick LLP
New York, New York
April 21, 1997
FORM OF
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of ___________, 1995 between Smith Barney
Money Funds, Inc.., (the "Fund"), a corporation organized under the laws
of Maryland and having its principal place of business at 388 Greenwich
Street
New York, NY 10013, and The Shareholder Services Group, Inc.Inc. (MA) (the
"Transfer Agent"), a Massachusetts corporation with principal offices at One
Exchange Place, 53 State Street, Boston, Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, Partnership Agreement, or similar
organizational document as the case may be, of the Fund as the same may be
amended from time to time.
(b) "Authorized Person" shall be deemed to include any person,
whether or not such person is an officer or employee of the Fund, duly
authorized to give Oral Instructions or Written Instructions on behalf of the
Fund as
indicated in a certificate furnished to the Transfer Agent pursuant to Section
4(c)
hereof as may be received by the Transfer Agent from time to time.
(c) "Board of Directors" shall mean the Board of Directors, Board
of Trustees or, if the Fund is a limited partnership, the General Partner(s)
of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time deposit,
or cause to be deposited or held under the name or account of such a
custodian pursuant to a Custodian Agreement.
(f) "Fund" shall mean the entity executing this Agreement, and if
it is a series fund, as such term is used in the 1940 Act, such term shall
mean each series of the Fund hereafter created, except that appropriate
documentation
with respect to each series must be presented to the Transfer Agent before
this
Agreement shall become effective with respect to each such series.
(g) "1940 Act" shall mean the Investment Company Act of 1940.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by the Transfer Agent from a person
reasonably
believed by the Transfer Agent to be an Authorized Person;
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital stock,
beneficial interest or limited partnership interests, as the case may be, of
the Fund as may be issued from time to time and, if the Fund is a closed-end
or a
series fund, as such terms are used in the 1940 Act any other classes or
series of
stock, shares of beneficial interest or limited partnership interests that may
be
issued from time to time.
(k) "Shareholder" shall mean a holder of shares of capital stock,
beneficial interest or any other class or series, and also refers to
partners of limited partnerships.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by the Transfer Agent to be an
Authorized Person and actually received by the Transfer Agent. Written
Instructions
shall include manually executed originals and authorized electronic
transmissions,
including telefacsimile of a manually executed original or other process.
2. Appointment of the Transfer Agent. The Fund hereby appoints and
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Fund and as shareholder servicing agent for
the Fund.
The Transfer Agent accepts such appointments and agrees to perform the
duties hereinafter set forth.
3. Compensation.
(a) The Fund will compensate or cause the Transfer Agent to
be compensated for the performance of its obligations hereunder in
accordance with the fees set forth in the written schedule of fees
annexed hereto as Schedule A and incorporated herein. The Transfer Agent
will transmit an invoice to the Fund as soon as practicable after the end
of each calendar month which will be detailed in accordance with Schedule
A, and the Fund will pay to the Transfer Agent the amount of such invoice
within thirty (30) days after the Fund's receipt of the invoice.
In addition, the Fund agrees to pay, and will be billed separately for,
reasonable out-of-pocket expenses incurred by the Transfer Agent in the
performance of its duties hereunder. Out-of-pocket expenses shall include,
but shall not be limited to, the items specified in the written schedule
of out-of-pocket charges annexed hereto as Schedule B and incorporated
herein. Unspecified out-of-pocket expenses shall be limited to those
out-of-pocket expenses reasonably incurred by the Transfer Agent in the
performance of its obligations hereunder. Reimbursement by the Fund for
expenses incurred by the Transfer Agent in any month shall be made as soon
as practicable but no later than 15 days after the receipt of an itemized
bill from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule A, a revised fee schedule executed and
dated by the parties hereto.
4. Documents. In connection with the appointment of the Transfer Agent
the Fund shall deliver or caused to be delivered to the Transfer Agent the
following documents on or before the date this Agreement goes into effect,
but in any case within a reasonable period of time for the Transfer Agent to
prepare to perform its duties hereunder:
(a) If applicable, specimens of the certificates for Shares of
the Fund;
(b) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Fund;
(c) A signature card bearing the signatures of any officer of the
Fund or other Authorized Person who will sign Written Instructions or is
authorized to give Oral Instructions.
(d) A certified copy of the Articles of Incorporation, as
amended;
(e) A certified copy of the By-laws of the Fund, as amended;
(f) A copy of the resolution of the Board of Directors
authorizing the execution and delivery of this Agreement;
(g) A certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each Shareholder, and the
number of Shares of the Fund held by each, certificate numbers and
denominations (if any certificates have been issued), lists of any
accounts against which stop transfer orders have been placed, together
with the reasons therefore, and the number of Shares redeemed by the
Fund; and
(h) An opinion of counsel for the Fund with respect to the
validity of the Shares and the status of such Shares under the Securities
Act of 1933,as amended.
5. Further Documentation. The Fund will also furnish the Transfer
Agent with copies of the following documents promptly after the same shall
become
available:
(a) each resolution of the Board of Directors authorizing the
issuance of Shares;
(b) any registration statements filed on behalf of the Fund and
all pre-effective and post-effective amendments thereto filed with the
Commission;
(c) a certified copy of each amendment to the Articles of
Incorporation or the By-laws of the Fund;
(d) certified copies of each resolution of the Board of Directors
or other authorization designating Authorized Persons; and
(e) such other certificates, documents or opinions as the
TransferAgent may reasonably request in connection with the performance of
its duties hereunder.
6. Representations of the Fund. The Fund represents to the Transfer
Agent that all outstanding Shares are validly issued, fully paid and non-
assessable. When Shares are hereafter issued in accordance with the terms of
the
Fund'sArticles of Incorporation and its Prospectus, such Shares shall be
validly issued, fully paid and non-assessable.
7. Distributions Payable in Shares. In the event that the Board of
Directors of the Fund shall declare a distribution payable in Shares,
the Fund shall deliver or cause to be delivered to the Transfer Agent
written notice of such declaration signed on behalf of the Fund by an
officer thereof, upon which the Transfer Agent shall be entitled to rely
for all purposes, certifying (i) the identity of the Shares involved,
(ii) the number of Shares involved, and (iii) that all
appropriate action has been taken.
8. Duties of the Transfer Agent. The Transfer Agent shall be
responsible for administering and/or performing those functions typically
performed by a
transfer agent; for acting as service agent in connection with dividend and
distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance, transfer and
redemption or repurchase (including coordination with the Custodian) of
Shares in accordance with the terms of the Prospectus and applicable law.
The operating standards and procedures to be followed shall be determined
from time to time by agreement between the Fund and the Transfer Agent and
shall initially be as described in Schedule C attached hereto. In addition,
the Fund shall deliver to the Transfer Agent all notices issued by the
Fund with respect to the Shares in accordance with and pursuant to the
Articles of Incorporation or By-laws of the Fund or as required by law
and shall perform such other specific duties as are set forth
in the
9. Record Keeping and Other Information. The Transfer Agent shall
create and maintain all records required of it pursuant to its duties
hereunder and as set forth in Schedule C in accordance with all applicable
laws, rules and regulations, including records required by Section 31(a) of
the 1940 Act. All records shall be available during regular business hours
for inspection and use by the Fund. Where applicable, such records shall
be maintained by the Transfer Agent for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this
Agreement for reasonable visitation by the Fund, or any person retained
by the Fund as may be necessary for the Fund to evaluate the quality of
the services performed by the Transfer Agent pursuant hereto.
10. Other Duties. In addition to the duties set forth in Schedule C,
the Transfer Agent shall perform such other duties and functions, and shall
be paid such amounts therefor, as may from time to time be agreed upon
in writing between the Fund and the Transfer Agent. The compensation for
such other duties and functions shall be reflected in a written amendment
to Schedule A or B and the duties and functions shall be reflected in an
amendment to Schedule C,
both dated and signed by authorized persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions
(a) The Transfer Agent will have no liability when acting upon
Written or Oral Instructions believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice
of any change of authority of any person until receipt of a Written
Instruction
thereof from the Fund pursuant to Section 4(c). The Transfer Agent will
also have no liability when processing Share certificates which it
reasonably believes to bear the proper manual or facsimile signatures of
the officers of the Fund and the proper countersignature of the Transfer
Agent.
(b) At any time, the Transfer Agent may apply to any Authorized
Person of the Fund for Written Instructions and may seek advice from legal
counsel for the Fund, or its own legal counsel, with respect to any matter
arising in connection with this Agreement, and it shall not be liable for
any action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or in accordance with the
opinion of counsel for the Fund or for the Transfer Agent. Written
Instructions requested by the Transfer Agent will be provided by the
Fund within a reasonable period of time. In addition, the
Transfer Agent, its officers, agents or employees, shall accept Oral
Instructions or
Written Instructions given to them by any person representing or acting on
behalf of
the Fund only if said representative is an Authorized Person. The Fund
agrees
that all Oral Instructions shall be followed within one business day by
confirming
Written Instructions, and that the Fund's failure to so confirm shall not
impair in
any respect the Transfer Agent's right to rely on Oral Instructions. The
Transfer
Agent shall have no duty or obligation to inquire into, nor shall the Transfer
Agent
be responsible for, the legality of any act done by it upon the request or
direction of a person reasonably believed by the Transfer Agent to be an
Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares, or
the propriety of the amount to be paid therefor; (iii) the legality of
the declaration of any dividend by the Board of Directors, or the legality
of the issuance of any Shares in payment of any dividend; or (iv)
the legality of any recapitalization or readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
responsible for delays or errors by acts of God or by reason of circumstances
beyond its
control, including acts of civil or military authority, national
emergencies, labor difficulties, mechanical breakdown, insurrection,
war, riots, or failure or unavailability of transportation,
communication or power supply, fire, flood
or other catastrophe.
13. Duty of Care and Indemnification. Each party hereto (the
"Indemnifying Party') will indemnify the other party (the "Indemnified
Party") against and hold it harmless from any and all losses, claims,
damages, liabilities or expenses of any sort or kind (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit
or other proceeding (a "Claim") unless such Claim has resulted from a
negligent failure to act or omission to
act or bad faith of the Indemnified Party in the performance of its duties
hereunder.
In addition, the Fund will indemnify the Transfer Agent against and hold it
harmless from any Claim, damages, liabilities or expenses (including
reasonable counsel
fees) that is a result of: (i) any action taken in accordance with Written
or Oral Instructions, or any other instructions, or share certificates
reasonably believed by the Transfer Agent to be genuine and to be signed,
countersigned or executed,or orally communicated by an Authorized Person;
(ii) any action taken in accordance with written or oral advice
reasonably believed by the Transfer Agent to have
been given by counsel for the Fund or its own counsel; or (iii) any action
taken as a result of any error or omission in any record (including but not
limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
delivered, or caused to be delivered by the Fund to the Transfer Agent in
connection with
this Agreement.
In any case in which the Indemnifying Party may be asked to indemnify or
hold the Indemnified Party harmless, the Indemnifying Party shall be advised
of all pertinent facts concerning the situation in question.
The Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party
although the failure to do so shall not prevent
recovery by the Indemnified Party. The Indemnifying Party shall have the
option to defend
the Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects,
such defense shall be conducted by counsel chosen by the Indemnifying
Party and satisfactory to the Indemnified Party, and thereupon the
Indemnifying Party shall take over complete defense of the Claim and the
Indemnified Party shall sustain no further legal or other expenses in
respect of such Claim. The Indemnified Party will not confess any Claim
or make any compromise in any case in which the Indemnifying Party will be
asked to provide indemnification, except with the Indemnifying Party's
prior written consent. The obligations of the parties hereto under this
Section shall survive the termination of this Agreement.
14. Consequential Damages. In no event and under no circumstances
shall either party under this Agreement be liable to the other party for
indirect loss of profits, reputation or business or any other special
damages under any provision of this Agreement or for any act or failure to
act hereunder.
15. Term and Termination.
(a) This Agreement shall be effective on the date first written
above and shall continue until September 2, 1994, and thereafter shall
automatically continue for successive annual periods ending on the
anniversary of the date first written above, provided that it may be
terminated by either party upon written notice given at least 60 days
prior to termination.
(b) In the event a termination notice is given by the Fund, it
shall be accompanied by a resolution of the Board of Directors, certified by
the Secretary of the Fund, designating a successor transfer agent or
transfer agents. Upon such termination and at the expense of the Fund,
the Transfer Agent will deliver to such successor a certified list of
shareholders of the Fund (with names and addresses), and all other
relevant books, records, correspondence and other Fund records or data
in the possession of the Transfer Agent, and the Transfer
Agent will cooperate with the Fund and any successor transfer agent or
agents in the substitution process.
16. Confidentiality. Both parties hereto agree that any non public
information obtained hereunder concerning the other party is confidential
and may not be disclosed to any other person without the consent of the
other party, except as may be required by applicable law or at the request
of the Commission or other governmental agency. The parties further
agree that a breach of this provision would irreparably damage the other
party and accordingly agree that each of them is entitled, without bond
or other security, to an injunction or injunctions to prevent breaches of
this provision.
17. Amendment. This Agreement may only be amended or modified by a
written instrument executed by both parties.
18. Subcontracting. The Fund agrees that the Transfer Agent may, in
its discretion, subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
Transfer Agent shall not relieve the Transfer Agent of its responsibilities
hereunder.
19. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund or the
Transfer Agent, shall be sufficiently given if addressed to that party
and received by it at its office set forth below or at such other place as
it may from time to time designate in writing.
To the Fund:
Smith Barney Money Funds, Inc.
388 Greenwich Street, 22 Floor
New York, NY 10013
Attention:Heath B. McLendon
To the Transfer Agent:
The Shareholder Services Group
One Exchange Place
53 State Street
Boston, Massachusetts 02109
(b) Successors. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and
assigns,provided, however, that this Agreement shall not be assigned to
any person other than a person controlling, controlled by or under
common control with the assignor without the written consent of the other
party, which consent shallnot be unreasonably withheld.
(c) Governing Law. This Agreement shall be governed
exclusively by the laws of the State of New York without reference to the
choice of law provisions thereof. Each party hereto hereby agrees that (i)
the
Supreme Court of New York sitting in New York County shall have exclusive
jurisdiction
over any and all disputes arising hereunder; (ii) hereby consents to the
personal jurisdiction of such court over the parties hereto, hereby waiving
any defense
of lack of personal jurisdiction; and (iii) appoints the person to whom
notices
hereunder are to be sent as agent for service of process.
(d) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
(e) Captions. The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hreof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Fund shall not use the
name of the Transfer Agent in any Prospectus, Statement of Additional
Information, shareholders' report, sales literature or other material
relating to the Fund in a manner not approved prior thereto in writing;
provided, that the Transfer Agent need only receive notice of all
reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by any government agency or
applicable law or rule. Notwithstanding the foregoing, any reference to
the Transfer Agent shall include a statement to the effect that it is a
wholly owned subsidiary of First Data Corporation.
(g) Use of Fund's Name. The Transfer Agent shall not use the
name of the Fund or material relating to the Fund on any documents or forms
for other than internal use in a manner not approved prior thereto in
writing;provided, that the Fund need only receive notice of all reasonable
uses of its name which merely refer in accurate terms to the appointment
of the Transfer Agent or which are required by any government agency or
applicable law or rule.
(h) Independent Contractors. The parties agree that they are
independent contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the
Schedules attached hereto constitute the entire agreement of the parties
hereto relating to the matters covered hereby and supersede any previous
agreements.
If any provision is held to be illegal, unenforceable or invalid for any
reason,
the remaining provisions shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized officers, as of the
day and year first above written.
SMITH BARNEY MONEY FUNDS INC.
By: _______________
Heath B. McLendon
President
THE SHAREHOLDER SERVICES GROUP, INC.
By:__________________
Michael G. McCarthy
Vice President
A-1
Transfer Agent Fee
Schedule A
Class A shares
The Fund shall pay the Transfer Agent an annualized fee of $11.00 per
shareholder account that is open during any monthly period. Such fee shall
be billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all accounts that are open during such
a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such
fee shall be billed by the Transfer Agent monthly in arrears.
Class B shares
The Fund shall pay the Transfer Agent an annualized fee of $12.50 per
shareholder account that is open during any monthly period. Such fee shall
be billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all accounts that are open during such a
month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such
fee shall be billed by the Transfer Agent monthly in arrears.
Class C shares
The Fund shall pay the Transfer Agent an annualized fee of $8.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by
the Transfer Agent monthly in arrears on a prorated basis of 1/12 of the
annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such
fee shall be billed by the Transfer Agent monthly in arrears.
A-2
Class D shares
The Fund shall pay the Transfer Agent an annualized fee of $9.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by
the Transfer Agent monthly in arrears on a prorated basis of 1/12 of the
annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such
fee shall be billed by the Transfer Agent monthly in arrears.
B-1
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including
all lease, maintenance and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record keeping vendors
- Third party audit reviews
- Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer Agent in performing its duties and responsibilities under this
Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with the Transfer Agent. In addition,
the
Fund will promptly reimburse the Transfer Agent for any other unscheduled
expenses
incurred by the Transfer Agent whenever the Fund and the Transfer Agent
mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
C-1
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent
shall maintain a record of the number of Shares held by each holder of
record which shall include name, address, taxpayer identification and
which shall indicate whether such Shares are held in certificates or
uncertificated form.
2. Shareholder Services. The Transfer Agent or its agent will
investigate all inquiries from shareholders of the Fund relating to
Shareholder accounts and will respond to all communications from Shareholders
and others
relating to its duties hereunder and such other correspondence as may from
time to time be mutually agreed upon between the Transfer Agent and the Fund.
The
Transfer Agent shall provide the Fund with reports concerning shareholder
inquires and the responses thereto by the Transfer Agent, in such form and
at such times as are agreed to by the Fund and the Transfer Agent.
3. Share Certificates.
(a) At the expense of the Fund, it shall supply the Transfer
Agent or its agent with an adequate supply of blank share certificates to
meet the Transfer Agent or its agent's requirements therefor. Such Share
certificates shall be properly signed by facsimile. The Fund agrees that,
notwithstanding the death, resignation, or removal of any officer of the
Fund whose signature appears on such certificates, the Transfer Agent or
its agent may continue to countersign certificates which bear such
signatures until otherwise directed by Written Instructions.
(b) The Transfer Agent or its agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or
destroyed, upon receipt by the Transfer Agent or its agent of properly
executed affidavits and
lost certificate bonds, in form satisfactory to the Transfer Agent or its
agent,with the Fund and the Transfer Agent or its agent as obligees
under the bond.
(c) The Transfer Agent or its agent shall also maintain a record
of each certificate issued, the number of Shares represented thereby
and the holder of record. With respect to Shares held in open accounts or
uncertificated form, i.e., no certificate being issued with respect
thereto, the Transfer Agent or its agent shall maintain comparable records
of the record holders thereof, including their names, addresses and
taxpayer identification. The Transfer Agent or its agent
shall further maintain a stop transfer record on lost and/or replaced
certificates.
C-2
4. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent or its agent will address and mail to
Shareholders of the Fund, all reports to Shareholders, dividend and
distribution notices and proxy material for the Fund's meetings of
Shareholders. In connection with meetings of Shareholders, the Transfer
Agent or its Agent will prepare Shareholder lists, mail and certify as to
the mailing of proxy materials,process and tabulate returned proxy cards,
report on proxies voted prior to meetings,act as inspector of election at
meetings and certify Shares voted at meetings.
5. Sales of Shares
(a) Suspension of Sale of Shares. The Transfer Agent or its
agent shall not be required to issue any Shares of the Fund where it has
received a
Written Instruction from the Fund or official notice from any appropriate
authority that the sale of the Shares of the Fund has been suspended or
discontinued. The existence of such Written Instructions or such official
notice shall be conclusive evidence of the right of the Transfer Agent or
its agent to rely on such Written Instructions or official notice.
(b) Returned Checks. In the event that any check or other order
for the payment of money is returned unpaid for any reason, the Transfer
Agent or its agent will: (i) give prompt notice of such return to the Fund
or its designee; (ii) place a stop transfer order against all Shares issued
as a result of such check or order; and (iii) take such actions as the
Transfer Agent may from time to time deem appropriate.
6. Transfer and Repurchase
(a) Requirements for Transfer or Repurchase of Shares. The
Transfer Agent or its agent shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in
the
Fund's Prospectus.
The Transfer Agent or its agent will transfer or repurchase Shares
upon receipt of Oral or Written Instructions or otherwise pursuant to the
Prospectus and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as the Transfer Agent or its agent
reasonably may deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on
the instructions is valid and genuine. The Transfer Agent or its agent also
reserves the right to refuse to transfer or repurchase Shares until it is
satisfied that the requested transfer or repurchase is legally authorized,
and it shall incur no liability for the refusal, in good faith, to make
transfers or repurchases which the TransferAgent or its agent, in C-3
its good judgement, deems improper or unauthorized, or until it is
reasonably satisfied that there is no basis to any claims adverse
to such transfer or repurchase.
(b) Notice to Custodian and Fund. When Shares are redeemed, the
Transfer Agent or its agent shall, upon receipt of the instructions and
documents in proper form, deliver to the Custodian and the Fund or its
designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate
accounts maintained by the Transfer Agent or its agent reflecting
outstanding Shares of the Fund and Shares attributed to individual accounts.
(c) Payment of Repurchase Proceeds. The Transfer Agent or its
agent shall, upon receipt of the moneys paid to it by the Custodian for the
repurchase of Shares, pay such moneys as are received from the Custodian,
all in accordance with the procedures described in the written instruction
received
by the Transfer Agent or its agent from the Fund.
The Transfer Agent or its agent shall not process or effect any
repurchase with respect to Shares of the Fund after receipt by the Transfer
Agent or its agent of notification of the suspension of the determination of
the net asset value of the Fund.
7. Dividends
(a) Notice to Agent and Custodian. Upon the declaration of each
dividend and each capital gains distribution by the Board of Directors of
the Fund with respect to Shares of the Fund, the Fund shall furnish or
cause to be furnished to the Transfer Agent or its agent a copy of a
resolution of the Fund's Board of Directors certified by the Secretary
of the Fund setting forth the date of the declaration of such dividend
or distribution, the ex-dividend date, the date
of payment thereof, the record date as of which shareholders entitled to
payment
shall be determined, the amount payable per Share to the shareholders of
record as of that date, the total amount payable to the Transfer Agent or its
agent on
the payment date and whether such dividend or distribution is to be paid in
Shares
of such class at net asset value.
On or before the payment date specified in such resolution of the
Board of Directors, the Custodian of the Fund will pay to the Transfer Agent
sufficient cash to make payment to the shareholders of record as of such
payment date.
(b) Insufficient Funds for Payments. If the Transfer Agent or
its agent does not receive sufficient cash from the Custodian to make total
dividend and/or distribution payments to all shareholders of the Fund as of
the record date, the Transfer
C-4
Agent or its agent will, upon notifying the Fund, withhold payment to all
Shareholders of record as of the record date until sufficient cash is
provided to the Transfer Agent or its agent.
C-5
Exhibit
1
to
Schedule C
Summary of Services
The services to be performed by the Transfer Agent or its agent shall be
as follows:
A. DAILY RECORDS
Maintain daily the following information with respect to each
Shareholder account as received:
o Name and Address (Zip Code)
o Class of Shares
o Taxpayer Identification Number
o Balance of Shares held by Agent
o Beneficial owner code: i.e., male, female, joint tenant,
etc.
o Dividend code (reinvestment)
o Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
o Answer written inquiries relating to Shareholder accounts
(matters relating to portfolio management, distribution of
Shares and other management policy questions will be
referred to the Fund).
o Process additional payments into established Shareholder
accounts in accordance with Written Instruction from the
Agent.
o Upon receipt of proper instructions and all required
documentation, process requests for repurchase of Shares.
o Identify redemption requests made with respect to accounts
in which Shares have been purchased within an
agreed-upon period of time for determining whether good
funds have been collected with respect to such purchase
and process as agreed by the Agent in accordance with
written instructions set forth by the Fund.
o Examine and process all transfers of Shares, ensuring that
all transfer requirements and legal documents have been
supplied.
C-6
o Issue and mail replacement checks.
o Open new accounts and maintain records of exchanges
between accounts
C. DIVIDEND ACTIVITY
o Calculate and process Share dividends and distributions as
instructed by the Fund.
o Compute, prepare and mail all necessary reports to
Shareholders or various authorities as requested by the
Fund. Report to the Fund reinvestment plan share
purchases and determination of the reinvestment price.
D. MEETINGS OF SHAREHOLDERS
o Cause to be mailed proxy and related material for all
meetings of Shareholders. Tabulate returned proxies
(proxies must be adaptable to mechanical equipment of the
Agent or its agents) and supply daily reports when
sufficient proxies have been received.
o Prepare and submit to the Fund an Affidavit of Mailing.
o At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm or microfiche and, if
requested by the Fund, Inspection of Election.
E. PERIODIC ACTIVITIES
o Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Fund (material must be adaptable to mechanical
equipment of Agent or its agents).
o Receive all notices issued by the Fund with respect to the
Preferred Shares in accordance with and pursuant to the Articles of
Incorporation and the Indenture and perform such other specific
duties as are set forth in the Articles of Incorporation including a
giving of notice of a special meeting and notice of redemption in
the circumstances and otherwise in accordance with all relevant
provisions of the Articles of Incorporation.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000275811
<NAME> SMITH BARNEY MONEY FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> CASH PORTFOLIO CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 27,630,012,671
<INVESTMENTS-AT-VALUE> 27,630,012,671
<RECEIVABLES> 175,122,276
<ASSETS-OTHER> 4,587,461
<OTHER-ITEMS-ASSETS> 459
<TOTAL-ASSETS> 27,809,722,867
<PAYABLE-FOR-SECURITIES> 249,871,044
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72,519,998
<TOTAL-LIABILITIES> 322,391,042
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,488,503,571
<SHARES-COMMON-STOCK> 27,434,516,409
<SHARES-COMMON-PRIOR> 22,969,952,289
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 27,487,331,825
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,403,732,878
<OTHER-INCOME> 0
<EXPENSES-NET> 158,026,298
<NET-INVESTMENT-INCOME> 1,245,706,580
<REALIZED-GAINS-CURRENT> 282,722
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,245,989,302
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,243,224,534
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 112,083,943,961
<NUMBER-OF-SHARES-REDEEMED> (108,841,816,611)
<SHARES-REINVESTED> 1,222,436,770
<NET-CHANGE-IN-ASSETS> 4,486,411,156
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 103,013,084
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 158,026,298
<AVERAGE-NET-ASSETS> 25,520,326,409
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> 0.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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