================================================================================
SEMI-ANNUAL REPORT
================================================================================
Smith Barney
Money Funds, Inc.
--------------------------------
June 30, 1997
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
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==============================
Smith Barney Money Funds, Inc.
==============================
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney Money
Funds, Inc. for the period ended June 30, 1997. In this report, we summarize the
period's prevailing economic and market conditions and outline our portfolio
strategy. A summary of performance and more detailed financial information can
be found in the appropriate sections that follow.
Performance Summary
The chart below provides the yields for the Cash, Government and Retirement
Portfolios that make up the Smith Barney Money Funds for the seven-day period
ended June 30, 1997.
Smith Barney Money Funds Yields (Class A Shares)
<TABLE>
<CAPTION>
Portfolio Seven-Day Yield Effective Yield*
- ----------------------------------------------------------------------------
<S> <C> <C>
Cash 5.09% 5.22%
Government 4.99 5.11
Retirement 5.01 5.13
</TABLE>
* Assumes dividends are reinvested.
You should be aware that your investment in Smith Barney Money Funds is neither
insured nor guaranteed by the U.S. Government. Moreover, no assurance can be
given that the Smith Barney Money Funds will be able to maintain a stable net
asset value (NAV) of $1.00 per share.
Market Update and Outlook
Over the past six months, the U.S. economy has grown vigorously. Gross Domestic
Product, the total output of goods and services, rose at a 5.9% annual rate in
the first quarter of 1997. This comes on the heels of a 3.8% annual rate of
growth in the fourth quarter of 1996. Much of the growth in the first quarter of
1997 came from higher personal consumption as evidenced by strong motor vehicle
and durable goods sales. High consumer confidence and a low unemployment rate
have also contributed to a healthy first half of the year. Absent from the
picture has been any concrete signs of inflation. For the first five months of
1997 consumer prices rose only 1.4%, down from the 3.8% for the comparable
period of 1996. Nevertheless, the Federal Open Market Committee raised
short-term interest rates by 25 basis points (0.25%) at its meeting in March
1997.
Going forward, we expect economic growth to slow down from its current pace.
Part of the strength in the first quarter of 1997 resulted from a buildup in
1
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business inventories, a factor that should detract from economic growth in
upcoming quarters. Furthermore, reports from auto manufacturers and department
stores suggest that retail sales have slowed in the second quarter of 1997. This
slowdown could be the result of temporary factors such as autoworker strikes and
April tax payments.
The overall trend indicates that both the labor market and corporate America
remain strong. Nevertheless, recently released economic reports gave the Federal
Reserve Board ("Fed") the necessary leeway to leave interest rates unchanged at
their May and July meetings, while it continues to closely monitor the economy
for any signs of excessive growth and inflationary pressures.
It appears that Fed Chairman Alan Greenspan has adopted a new policy based on
the possibility that we have entered a new economic era. Chairman Greenspan
seems willing to allow faster economic growth because productivity gains are
helping to keep inflation in check. In addition, successful deficit reduction
and real high interest rates (based on our belief that the current rate of
inflation is overstated) has resulted in the Fed pursuing a less restrictive
monetary policy.
We believe the Fed will continue to fine tune monetary policy and there should
be less interest rate volatility over the next several months. Given this
scenario and barring no inflation (as reflected in recent bond market yield
hovering below 7.0%), we will invest across the yield curve if we identify any
good values.
If inflation reports remain positive over the long term and the annual rate of
economic growth slows down to a 2%-3% range in 1998, the Fed might lower rates
to further prolong the economic expansion. In that case, we would expect the
average maturity of the Smith Barney Money Funds to be targeted between 65-85
days.
Investment Strategy
The Cash Portfolio is 50% invested in top-tier U.S. dollar-denominated foreign
obligations and 50% in domestic obligations. The Retirement Portfolio is 55% in
top-tier U.S. dollar-denominated foreign obligations and 45% in domestic
obligations. A few split-rated issuers that we purchased for the Portfolios such
as Fleet Financial, GTE and Nynex have had their short-term ratings upgraded by
several of the nationally recognized statistical rating organizations. In
addition, we have recently added several high-quality issuers such as Lucent
Technologies and Hertz Corporation to our Portfolios.
2
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In the Government Portfolio, we have focused on investing in obligations issued
or guaranteed as to payment of principal and interest by the U.S. Government or
by its agencies and instrumentalities (i.e., Fannie Mae, Freddie Mac, etc.).
Treasury borrowings have been reduced in 1997, partly because of
better-than-expected budget performance. The booming U.S. economy has caused a
surge in tax revenues, therefore alleviating the need for large issuance of U.S.
Treasury securities. One sector that has been greatly affected is U.S. Treasury
bills. At the beginning of the year there was upwards of $760 billion of
outstanding bills and by the end of the second quarter, this amount decreased to
just over $700 billion. The reduction in supply has caused a widening of the
spread between discount notes and the corresponding U.S. Treasury bill.
In closing, thank you for investing in the Smith Barney Money Funds, Inc. We
look forward to continuing to help you achieve your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Phyllis M. Zahorodny
Heath B. McLendon Phyllis M. Zahorodny
Chairman Vice President
July 11, 1997
3
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================================================================================
Schedules of Investments (unaudited) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
U.S. AGENCIES AND INSTRUMENTALITIES -- 6.8%
$ 255,000,000 Federal Farm Credit Bank
mature 9/3/97 to 1/2/98 5.55% to 6.01% $ 254,870,606
140,210,000 Federal Home Loan Bank
mature 9/9/97 to 10/3/97 5.86 to 6.10 140,178,538
271,000,000 Federal Home Loan Mortgage
Association
mature 7/3/97 to 4/8/98 5.46 to 6.00 270,835,920
1,027,100,000 Federal National Mortgage
Association
mature 9/3/97 to 3/25/98 5.50 to 6.10 1,026,426,123
344,300,000 Student Loan Marketing
Association
mature 9/12/97 to 6/10/98 6.00 to 6.16 344,123,709
- --------------------------------------------------------------------------------
TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $2,036,434,896) 2,036,434,896
================================================================================
MEDIUM TERM NOTES -- 7.8%
50,000,000 Abbey National PLC
matures 11/26/97 5.56 49,986,734
27,100,000 Associates Corp. of North America
matures 11/15/97 5.64 27,196,057
82,000,000 Australia and New Zealand Bank
mature 9/23/97 to 2/19/98 5.70 to 5.77 81,979,986
265,000,000 Bank America National Trust
Savings Association
mature 7/24/97 to 11/21/97 5.55 to 5.70 264,975,756
130,000,000 Bank of America (Illinois)
mature 12/19/97 to 5/22/98 5.70 to 6.10 129,969,966
145,000,000 Bank of New York
mature 1/15/98 to 3/24/98 5.85 to 6.10 144,897,399
55,000,000 CC USA Inc.
mature 6/4/98 to 6/30/98 6.00 55,018,697
432,500,000 FCC National Bank
mature 8/4/97 to 3/25/98 5.58 to 6.15 432,432,546
100,000,000 First Chicago Corp.
mature 8/18/97 to 5/26/98 5.70 to 6.10 99,991,398
200,000,000 First Union National Bank
mature 8/7/97 to 12/3/97 5.70 to 5.80 200,000,000
85,350,000 Ford Motor Credit Co.
matures 2/26/98 5.86 85,570,150
39,500,000 General Motors Acceptance Corp.
mature 10/7/97 to 6/8/98 5.70 to 6.10 39,539,679
225,000,000 Merrill Lynch & Co., Inc.
mature 9/11/97 to 1/26/98 5.84 to 6.16 224,984,339
300,000,000 NationsBank Corp.
mature 7/7/97 to 7/24/97 5.54 to 5.60 299,999,403
See Notes to Financial Statements.
4
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================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
MEDIUM TERM NOTES -- 7.8% (continued)
$ 25,000,000 National Bank of Detroit
matures 1/30/98 5.80% $ 24,998,472
150,000,000 Wachovia Bank
mature 8/19/97 to 12/3/97 5.58 to 5.80 150,000,000
- --------------------------------------------------------------------------------
TOTAL MEDIUM TERM NOTES
(Cost-- $2,311,540,582) 2,311,540,582
================================================================================
DOMESTIC CERTIFICATES OF DEPOSIT -- 5.1%
25,000,000 American Centurion Bank
matures 7/9/97 5.55 25,000,055
55,000,000 Bank of America Canada
mature 8/14/97 to 8/26/97 5.62 to 5.70 55,002,381
115,000,000 Bankers Trust
mature 7/8/97 to 9/22/97 5.64 to 5.65 115,000,373
100,000,000 Chase Manhattan USA Delaware
matures 12/4/97 5.81 100,000,000
320,000,000 Harris Bank
mature 7/1/97 to 7/7/97 5.54 to 5.55 319,999,977
700,000,000 Morgan Guaranty
mature 8/5/97 to 3/17/98 5.70 to 6.00 699,963,999
200,000,000 NationsBank Corp.
matures 8/12/97 5.72 200,000,000
- --------------------------------------------------------------------------------
TOTAL DOMESTIC CERTIFICATES
OF DEPOSIT
(Cost-- $1,514,966,785) 1,514,966,785
================================================================================
TIME DEPOSITS -- 10.1%
200,000,000 Bank America National Trust Savings
Association mature 7/15/97
to 8/1/97 5.60 to 5.74 200,000,000
350,000,000 Bank Austriengellschaft
matures 7/1/97 6.25 350,000,000
200,000,000 Bank of Nova Scotia
matures 7/7/97 5.75 200,000,000
100,000,000 Canadian Imperial Bank of Commerce
matures 7/1/97 6.19 100,000,000
150,000,000 Credit Agricole Indosuez
matures 7/1/97 6.12 150,000,000
600,000,000 Dresdner Bank
matures 7/1/97 6.19 600,000,000
407,371,000 First Chicago (National Bank)
matures 7/1/97 6.25 407,371,000
100,000,000 Postipankki matures 7/1/97 6.25 100,000,000
400,000,000 Republic National Bank of New York
matures 7/1/97 6.25 400,000,000
See Notes to Financial Statements.
5
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================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
TIME DEPOSITS -- 10.1% (continued)
$ 200,000,000 Toronto Dominion Bank
matures 7/1/97 6.25% $ 200,000,000
300,000,000 Westdeutsche Landesbank
matures 7/1/97 6.13 300,000,000
- --------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(Cost-- $3,007,371,000) 3,007,371,000
================================================================================
COMMERCIAL PAPER -- 43.6%
45,000,000 A.I. Credit
mature 7/7/97 to 8/19/97 5.62 to 5.66 44,791,558
200,000,000 Abbey National North America
mature 7/11/97 to 8/7/97 5.47 to 5.70 199,273,222
50,000,000 AIG Funding
matures 8/19/97 5.66 49,620,250
312,675,000 American Home Products
mature 7/7/97 to 8/20/97 5.56 to 5.75 311,248,134
45,000,000 American Home Products
(AC Acquisition)
matures 8/18/97 5.61 44,666,400
51,173,000 American Home Products
(A.H. Robins)
mature 7/7/97 to 8/20/97 5.61 to 5.67 50,915,523
300,000,000 American Express Credit Corp.
mature 7/1/97 to 8/22/97 5.55 to 5.60 298,407,250
608,000,000 Asset Securitization Corp.
mature 7/17/97 to 12/4/97 5.56 to 5.83 603,735,837
425,000,000 Associates Corp. of North America
mature 7/23/97 to 8/27/97 5.56 to 5.71 422,248,194
50,000,000 Australia and New Zealand
Banking Group
matures 9/17/97 5.64 49,397,667
50,000,000 Bank America National Trust
Savings Association
matures 8/25/97 5.41 49,597,431
250,000,000 Bank Brussel Lambert
mature 8/4/97 to 9/5/97 5.68 to 5.71 248,176,195
100,000,000 Bank of Montreal
matures 7/23/97 5.57 99,661,444
50,000,000 Bank of New York (Delaware)
matures 7/7/97 5.58 49,953,833
25,000,000 Bank of Nova Scotia
matures 9/23/97 5.64 24,675,667
35,000,000 Bayerische Vereinsbank
matures 9/16/97 5.64 34,583,772
250,000,000 Bear, Stearns & Co.
mature 8/12/97 to 8/28/97 5.60 to 5.73 248,104,472
52,000,000 Beta Finance, Inc.
mature 7/15/97 to 7/23/97 5.57 to 5.58 51,853,233
See Notes to Financial Statements.
6
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================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
COMMERCIAL PAPER -- 43.6% (continued)
$ 322,800,000 BCI Funding Corp.
mature 7/9/97 to 9/23/97 5.50% to 5.72% $ 319,873,240
320,000,000 Cades
mature 8/18/97 to 8/22/97 5.41 to 5.72 317,564,906
403,300,000 Cafco
mature 7/3/97 to 9/16/97 5.55 to 5.70 400,622,276
207,200,000 Caisse Des Depots et Cos.
mature 7/14/97 to 8/22/97 5.60 to 5.76 206,171,232
220,000,000 Cariplo Finance Inc.
mature 8/14/97 to 9/18/97 5.66 to 5.70 217,952,978
61,500,000 CC USA Inc.
mature 7/22/97 to 7/23/97 5.58 to 5.60 61,294,761
100,000,000 Chase Manhattan Bank
matures 10/10/97 5.68 98,435,903
100,000,000 Cheltenham & Gloucester Building
Society matures 7/11/97 5.47 99,850,833
350,000,000 Ciesco L.P.
mature 7/14/97 to 8/19/97 5.58 to 5.71 347,899,368
400,000,000 CIT Group Holdings, Inc.
mature 7/7/97 to 10/8/97 5.63 to 5.70 395,715,958
400,000,000 Citicorp
matures 7/1/97 6.25 400,000,000
50,000,000 Commerzbank US Finance
matures 9/16/97 5.70 49,407,528
41,000,000 Compagnie de Saint-Gobain
mature 9/22/97 to 10/15/97 5.64 to 5.68 40,399,211
235,000,000 Credit Suisse First Boston
mature 7/8/97 to 8/6/97 5.51 to 5.71 233,868,460
85,000,000 Creditanstalt Finance, Inc.
mature 7/14/97 to 7/23/97 5.57 to 5.70 84,759,313
140,000,000 Credito Italiano Delaware, Inc.
mature 7/10/97 to 8/21/97 5.48 to 5.74 139,245,150
342,000,000 Cregum North America
mature 7/30/97 to 9/22/97 5.65 to 5.70 339,281,087
143,750,000 Daimler-Benz North American Corp.
mature 8/22/97 to 9/16/97 5.60 to 5.71 142,218,393
357,846,000 Delaware Funding Corp.
mature 7/8/97 to 8/21/97 5.60 to 5.74 356,163,993
100,000,000 Den Danske Corp.
matures 8/6/97 5.69 99,439,000
270,844,000 Enterprise Funding Corp.
mature 7/7/97 to 8/8/97 5.58 to 5.72 270,070,280
100,000,000 First Union Corp.
matures 8/1/97 5.70 99,516,056
See Notes to Financial Statements.
7
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================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
COMMERCIAL PAPER -- 43.6% (continued)
$ 171,000,000 Ford Credit Europe PLC
mature 8/6/97 to 8/22/97 5.60% to 5.71% $ 169,810,173
200,000,000 Ford Motor Credit Co.
mature 8/18/97 to 9/22/97 5.59 to 5.76 198,342,493
196,000,000 Generale Bank Inc.
mature 7/18/97 to 9/24/97 5.65 to 5.79 194,300,398
550,000,000 General Electric Capital Corp.
mature 7/7/97 to 12/2/97 5.58 to 5.79 544,956,306
460,430,000 General Motors Acceptance Corp.
mature 8/25/97 to 12/9/97 5.48 to 6.00 452,118,840
500,000,000 Goldman Sachs Group L.P.
mature 7/7/97 to 10/6/97 5.55 to 5.69 496,172,438
225,400,000 GTE Corp.
mature 7/21/97 to 9/18/97 5.59 to 5.69 223,381,179
317,000,000 Halifax Building Society
mature 7/7/97 to 12/8/97 5.40 to 5.76 315,586,175
48,000,000 Indosuez N.A. Inc.
mature 8/13/97 to 8/14/97 5.70 47,674,196
95,000,000 International Nederlanden US
matures 7/11/97 5.54 94,854,597
10,675,000 Lloyds Bank
matures 8/22/97 5.61 10,589,422
150,000,000 Lucent Technologies
mature 7/17/97 to 8/20/97 5.63 to 5.70 149,103,694
434,150,000 Merrill Lynch & Co., Inc.
mature 8/13/97 to 12/1/97 5.62 to 5.85 428,293,127
450,000,000 Morgan Stanley Group, Inc.
mature 7/7/97 to 8/13/97 5.66 to 5.71 449,000,861
250,000,000 Morgan Stanley Dean Witter
Discover Co. mature 8/12/97
to 10/10/97 5.60 to 5.70 247,355,063
100,000,000 National Australia Funding Co.
matures 11/3/97 5.89 98,013,889
64,000,000 NationsBank Corp.
matures 8/4/97 5.72 63,659,698
150,500,000 Nynex
mature 7/7/97 to 7/31/97 5.57 to 5.64 150,080,758
25,000,000 Ontario Hydro
matures 8/21/97 5.66 24,802,375
95,100,000 Oesterreichische Kontrollbank AG
matures 9/25/97 5.75 to 5.76 93,829,506
50,000,000 Pepsico Inc.
matures 8/15/97 5.55 49,656,250
42,000,000 Province of British Columbia
matures 8/18/97 5.65 41,688,080
See Notes to Financial Statements.
8
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
COMMERCIAL PAPER -- 43.6% (continued)
$ 50,000,000 Royal Bank of Canada
matures 8/21/97 5.42% $ 49,626,000
150,000,000 San Paolo US Finance Inc.
mature 8/13/97 to 10/14/97 5.70 to 5.77 148,597,764
50,000,000 Swedish Export Credit Corp.
matures 7/8/97 5.46 49,947,889
48,500,000 Toronto Dominion Holdings USA Inc.
matures 12/10/97 5.76 47,277,800
70,000,000 Unilever Capital Corp.
matures 7/7/97 5.63 69,934,433
250,000,000 Union Bank of Switzerland
matures 7/7/97 5.64 249,765,417
100,000,000 Westdeutsche Landesbank
matures 8/22/97 5.65 99,195,444
100,000,000 Woolwich Building Society
mature 8/26/97 to 8/27/97 5.41 99,172,903
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost-- $12,957,447,176) 12,957,447,176
================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 24.9%
200,000,000 Abbey National PLC
mature 8/14/97 to 5/27/98 5.70 to 6.10 200,010,085
25,000,000 ABN-AMRO (Canada)
matures 9/26/97 5.75 24,662,573
100,000,000 ABN-AMRO (Chicago)
matures 1/22/98 5.81 99,989,245
150,000,000 ABN-AMRO (New York)
mature 10/10/97 to 5/26/98 5.70 to 6.09 149,970,212
169,000,000 Australia & New Zealand Banking
Group mature 7/7/97 to 10/9/97 5.63 to 5.77 168,994,404
50,000,000 Bank Austria
matures 9/16/97 5.94 49,996,776
225,000,000 Bank of Nova Scotia
mature 8/19/97 to 6/5/98 5.64 to 6.10 224,983,044
479,000,000 Banque National de Paris
mature 8/21/97 to 6/8/98 5.60 to 6.12 478,956,870
27,900,000 Banque National de Paris (Canada)
matures 8/6/97 5.71 27,742,923
50,000,000 Banque National de Paris
(San Fransisco) matures 8/18/97 5.71 50,000,657
500,000,000 Barclays Bank
mature 8/7/97 to 1/23/98 5.70 to 5.81 499,981,805
195,000,000 Bayerische Landesbank
mature 7/10/97 to 9/26/97 5.54 to 5.90 195,004,046
See Notes to Financial Statements.
9
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 24.9% (continued)
$ 310,000,000 Bayerische Vereinsbank
mature 8/21/97 to 9/30/97 5.64% to 5.75% $ 310,006,151
389,000,000 Canadian Imperial Holdings Inc.
mature 8/1/97 to 1/13/98 5.71 to 5.85 389,013,473
50,000,000 Cariplo
matures 7/25/97 5.58 50,000,000
227,000,000 Commerzbank AG
mature 9/23/97 to 1/15/98 5.58 to 5.87 226,981,796
200,000,000 Credit Agricole
mature 9/25/97 to 12/4/97 5.75 to 5.80 200,000,000
301,000,000 Credit Agricole Indosuez
mature 7/9/97 to 6/26/98 5.55 to 6.00 300,977,451
225,000,000 Creditanstalt Bankverein
mature 8/22/97 to 6/9/98 5.41 to 6.10 224,992,480
50,000,000 Credit Suisse
matures 8/27/97 5.50 50,000,770
490,000,000 Deutsche Bank
mature 7/10/97 to 5/27/98 5.45 to 6.12 489,999,679
286,200,000 Hessiche Landesbank
mature 7/14/97 to 6/10/98 5.45 to 6.12 286,186,411
25,000,000 International Nederlanden Group
matures 1/13/98 5.80 25,001,286
150,000,000 Lloyds Bank
mature 7/22/97 to 8/21/97 5.70 to 5.71 150,001,974
155,000,000 National Australia Bank
mature 8/21/97 to 9/25/97 5.64 to 5.71 155,003,180
300,000,000 National Bank of Canada
mature 8/1/97 to 5/22/98 5.70 to 6.12 299,979,662
500,000,000 National Westminster Bank PLC
mature 8/1/97 to 5/26/98 5.70 to 6.09 499,897,574
92,000,000 Rabobank Nederlands N.V.
mature 8/22/97 to 9/26/97 5.74 to 5.75 92,002,445
400,000,000 Royal Bank of Canada
mature 9/18/97 to 1/14/98 5.70 to 5.93 399,971,852
50,000,000 San Paolo Bank
matures 9/18/97 5.66 50,001,082
625,000,000 Societe Generale NY
mature 8/20/97 to 6/5/98 5.70 to 6.18 624,934,725
50,000,000 Swiss Bank Corp.
matures 5/22/98 6.10 49,978,745
195,000,000 Toronto Dominion Bank
mature 8/18/97 to 10/14/97 5.42 to 5.71 195,012,266
See Notes to Financial Statements.
10
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
CASH PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 24.9% (continued)
$149,000,000 Union Bank of Switzerland
mature 8/13/97 5.71% to 5.74% $ 148,995,186
- --------------------------------------------------------------------------------
TOTAL FOREIGN CERTIFICATES
OF DEPOSIT
(Cost -- $7,389,230,828) 7,389,230,828
================================================================================
REPURCHASE AGREEMENTS -- 1.7%
300,000,000 Goldman, Sachs & Co., 5.54% due 7/7/97;
Proceeds at maturity -- $300,323,167;
(Fully collateralized by FNMA, due 7/25/97 to
7/1/27; Market value-- $306,000,000) 300,000,000
200,000,000 Morgan Stanley Dean Witter Discover Co., 5.61%
due 7/7/97; Proceeds at maturity -- $200,218,167;
(Fully collateralized by FNMA, due 7/1/99 to
5/1/27; Market value -- $204,579,132) 200,000,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost -- $500,000,000) 500,000,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost-- $29,716,991,267*) $29,716,991,267
================================================================================
See Notes to Financial Statements.
11
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================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
GOVERNMENT PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
U.S. GOVERNMENT OBLIGATIONS -- 1.0%
$ 45,000,000 U.S. Treasury Notes
mature 9/30/97 to 3/31/98
(Cost -- $45,019,629) 5.84% to 5.93% $ 45,019,629
================================================================================
U.S. AGENCIES AND INSTRUMENTALITIES -- 93.9%
248,000,000 Federal Farm Credit Bank
mature 7/3/97 to 5/22/98 5.34 to 5.94 245,736,144
916,225,000 Federal Home Loan Bank
mature 7/1/97 to 6/12/98 5.32 to 6.00 911,546,055
908,627,000 Federal Home Loan Mortgage Corp.
mature 7/1/97 to 9/19/97 5.41 to 5.64 902,860,516
2,071,760,000 Federal National Mortgage
Association
mature 7/3/97 to 6/24/98 5.43 to 6.01 2,053,847,550
45,000,000 Student Loan Marketing
Association
mature 9/12/97 to 10/3/97 5.85 to 5.91 44,995,657
- --------------------------------------------------------------------------------
TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $4,158,985,922) 4,158,985,922
================================================================================
REPURCHASE AGREEMENTS -- 5.1%
15,853,000 Citibank, 6.00% due 7/1/97;
Proceeds at maturity -- $15,855,642;
(Fully collateralized by U.S. Treasury Bills,
due 5/15/00; Market value-- $16,174,688) 15,853,000
210,000,000 Morgan Guaranty, 6.00% due 7/1/97;
Proceeds at maturity -- $210,035,000;
(Fully collateralized by U.S. Treasury Notes,
5.00% to 11.87% due 7/10/97 to 5/15/04;
Market value-- $214,200,517) 210,000,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost-- $225,853,000) 225,853,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost-- $4,429,858,551*) $4,429,858,551
================================================================================
See Notes to Financial Statements.
12
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
RETIREMENT PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
U.S. GOVERNMENT OBLIGATION -- 0.7%
$ 10,000,000 U.S. Treasury Note
matures 9/30/97
(Cost -- $9,995,840) 5.93% $ 9,995,840
================================================================================
U.S. AGENCIES AND INSTRUMENTALITIES -- 1.9%
12,000,000 Federal Farm Credit Bank
matures 10/1/97 5.80 12,001,733
3,000,000 Federal Home Loan Bank
matures 1/22/98 5.66 2,999,001
12,120,000 Federal National Mortgage
Association
mature 7/17/97 to 8/4/97 5.62 to 5.70 12,078,047
- --------------------------------------------------------------------------------
TOTAL U.S. AGENCIES AND
INSTRUMENTALITIES
(Cost -- $27,078,781) 27,078,781
================================================================================
DOMESTIC BANK OBLIGATIONS -- 6.6%
29,800,000 Bank America National Trust
Savings Association
mature 8/19/97 to 11/21/97 5.60 to 5.70 29,797,464
38,000,000 FCC National
mature 8/4/97 to 3/25/98 5.71 to 6.10 37,992,967
24,000,000 Wachovia Bank
matures 8/19/97 5.65 24,000,000
- --------------------------------------------------------------------------------
TOTAL DOMESTIC BANK OBLIGATIONS
(Cost -- $91,790,431) 91,790,431
================================================================================
COMMERCIAL PAPER -- 54.8%
11,800,000 AIG Funding
matures 7/2/97 5.53 11,798,194
40,000,000 Asset Securitization Corp.
mature 8/5/97 to 8/28/97 5.61 to 5.70 39,711,889
28,800,000 Banca Commerciale Italiana
mature 8/18/97 to 8/25/97 5.62 to 5.71 28,569,966
17,000,000 Bank Brussels Lambert
matures 8/4/97 5.71 16,909,607
10,000,000 Bank of America Corp.
matures 8/8/97 5.47 9,943,739
35,000,000 Bank of New York
matures 7/7/97 5.59 34,967,625
See Notes to Financial Statements.
13
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
RETIREMENT PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
COMMERCIAL PAPER -- 54.8% (continued)
$ 20,000,000 Bear, Stearns & Co.
matures 8/5/97 5.61% $19,891,694
20,000,000 Cades
matures 10/20/97 5.66 19,657,750
23,000,000 Cariplo
mature 7/23/97 to 8/22/97 5.62 to 5.68 22,860,899
22,000,000 Ciesco L.P.
matures 8/14/97 5.70 21,848,884
35,000,000 CIT Group Holdings
matures 7/21/97 5.69 34,890,333
10,000,000 Compagnie de Saint Gobain
matures 12/3/97 5.71 9,760,611
17,000,000 Credito Italiano
matures 8/29/97 5.47 16,851,779
40,000,000 Cregum North America
mature 7/14/97 to 8/7/97 5.53 to 5.70 39,814,332
35,000,000 Dresdner Bank
matures 7/8/97 5.53 34,962,569
27,000,000 E.I. Dupont de Nemours
mature 8/18/97 to 12/4/97 5.68 to 5.75 26,597,520
14,000,000 Eli Lilly & Co.
matures 8/4/97 5.47 13,929,658
37,000,000 Ford Motor Credit Corp.
mature 7/7/97 to 12/2/98 5.55 to 5.80 36,733,893
30,000,000 General Electric Capital Corp.
matures 11/10/97 5.71 29,386,200
20,000,000 Generale Bank
matures 7/25/97 5.59 19,925,867
15,000,000 Goldman Sachs Group L.P.
matures 10/7/97 5.69 14,771,742
20,800,000 Halifax Building Society
matures 7/24/97 5.55 20,726,513
15,000,000 International Nederlanden Group
matures 7/3/97 5.50 14,995,542
22,000,000 J.P. Morgan & Co.
matures 9/23/97 5.63 21,715,100
40,000,000 Merrill Lynch &Co., Inc.
mature 9/2/97 to 10/20/97 5.64 to 5.89 39,525,853
24,800,000 Morgan Stanley Group Inc.
matures 7/21/97 5.62 24,723,258
30,000,000 National Bank of Canada
matures 8/19/97 5.68 29,771,333
15,000,000 NationsBank Corp.
matures 8/5/97 5.70 14,918,042
See Notes to Financial Statements.
14
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
RETIREMENT PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
COMMERCIAL PAPER -- 54.8% (continued)
$ 35,000,000 Norwest Corp.
matures 7/7/97 5.54% $ 34,967,858
30,000,000 Ontario Hydro
matures 8/21/97 5.65 29,763,275
10,000,000 Oesterreichische Kontrollbank
matures 9/25/97 5.75 9,866,581
23,122,000 San Paolo US Finance Inc.
matures 9/10/97 5.66 22,867,542
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost -- $767,625,648) 767,625,648
================================================================================
DOMESTIC CERTIFICATES OF DEPOSIT -- 1.4%
20,000,000 Morgan Guaranty
mature 9/30/97 to 1/6/98
(Cost -- $19,993,611) 5.74 to 5.83 19,993,611
================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 25.0%
12,000,000 Abbey National PLC
matures 12/19/97 5.71 12,000,554
20,000,000 ABN-AMRO Bank N.V.
matures 7/22/97 5.70 20,000,116
10,000,000 ANZ Delaware Inc.
matures 9/23/97 5.76 9,999,279
10,000,000 Australia and New Zealand Bank
matures 2/19/97 5.60 10,000,192
27,000,000 Bank of Montreal
matures 7/1/97 5.55 27,000,000
20,000,000 Bank of Nova Scotia
matures 7/14/97 5.48 20,000,000
14,900,000 Banque National de Paris
matures 8/4/97 5.50 14,900,114
10,000,000 Barclays Bank
matures 6/24/98 5.99 9,994,375
25,000,000 Bayerische Landesbank
mature 7/7/97 to 7/30/97 5.50 to 5.55 25,000,147
30,000,000 Bayerische Vereinsbank
matures 9/15/97 5.65 30,000,000
28,000,000 Den Danske Bank
matures 7/2/97 5.65 28,000,012
22,000,000 National Westminster Bank PLC
matures 7/2/97 5.69 21,999,987
33,000,000 Rabobank
mature 8/22/97 to 2/3/98 5.54 to 5.69 33,000,919
See Notes to Financial Statements.
15
<PAGE>
================================================================================
Schedules of Investments (unaudited) (continued) June 30, 1997
================================================================================
RETIREMENT PORTFOLIO
FACE ANNUALIZED
AMOUNT SECURITY YIELD VALUE
================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 25.0% (continued)
$ 10,000,000 Royal Bank of Canada
matures 6/8/98 6.10% $ 9,995,528
34,900,000 Societe Generale
mature 8/22/97 to 1/9/98 5.67 to 5.82 34,897,850
10,000,000 Swiss Bank Corp.
matures 5/22/97 6.10 9,995,749
11,000,000 Toronto Dominion Bank
matures 6/3/97 6.00 11,012,323
23,000,000 Union Bank of Switzerland
matures 8/13/97 5.71 22,999,534
- --------------------------------------------------------------------------------
TOTAL FOREIGN CERTIFICATES
OF DEPOSIT
(Cost -- $350,796,679) 350,796,679
================================================================================
TIME DEPOSITS -- 9.6%
35,000,000 Bank Austriengellschaft
matures 7/1/97 6.25 35,000,000
34,277,000 Canadian Imperial Bank of NY
matures 7/1/97 6.12 34,277,000
30,000,000 Credit Agricole Indosuez
matures 7/1/97 6.12 30,000,000
35,000,000 Republic National Bank of New York
matures 6/30/97 6.25 35,000,000
- --------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(Cost-- $134,277,000) 134,277,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $1,401,557,990*) $1,401,557,990
================================================================================
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
16
<PAGE>
================================================================================
Statements of Assets and Liabilities (unaudited) June 30, 1997
================================================================================
<TABLE>
<CAPTION>
Cash Government Retirement
Portfolio Portfolio Portfolio
==========================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $ 29,716,991,267 $ 4,429,858,551 $ 1,401,557,990
Cash 353 640,379
Interest receivable 198,855,394 6,776,004 6,957,874
Other assets 6,908,365 2,262 342,756
- ------------------------------------------------------------------------------------------
Total Assets 29,922,755,379 4,436,637,457 1,408,858,999
- ------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 61,382,261 9,085,886 2,861,817
Management fees payable 9,397,973 1,880,970 490,780
Distribution fees payable 845,745 86,790 40,206
Deferred compensation payable 48,298 8,354 5,500
Accrued expenses 3,554,309 12,422 163,600
- ------------------------------------------------------------------------------------------
Total Liabilities 75,228,586 11,074,422 3,561,903
- ------------------------------------------------------------------------------------------
Total Net Assets $ 29,847,526,793 $ 4,425,563,035 $ 1,405,297,096
==========================================================================================
NET ASSETS CONSIST OF:
Capital Stock
(40,000,000,000,
10,000,000,000, and
5,000,000,000 shares
authorized, respectively;
par value $0.01 per share) $ 298,484,427 $ 44,255,463 $ 14,052,971
Capital paid in excess of
par value 29,550,206,159 4,381,307,572 1,391,244,125
Accumulated net realized loss
from security transactions (1,163,793) -- --
- ------------------------------------------------------------------------------------------
Total Net Assets $ 29,847,526,793 $ 4,425,563,035 $ 1,405,297,096
==========================================================================================
Shares Outstanding:
Class A 29,753,695,322 4,361,633,756 1,405,297,096
----------------------------------------------------------------------------------------
Class C 2,052,007 761,010 --
----------------------------------------------------------------------------------------
Class Y 92,689,692 13,303,859 --
----------------------------------------------------------------------------------------
Class Z 5,718 49,847,765 --
----------------------------------------------------------------------------------------
Net Asset Value, per Class $1.00 $1.00 $1.00
==========================================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
================================================================================
Statements of Operations (unaudited)
================================================================================
For the Six Months Ended June 30, 1997
Cash Government Retirement
Portfolio Portfolio Portfolio
================================================================================
INVESTMENT INCOME:
Interest $800,270,277 $123,004,981 $37,759,777
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 56,697,199 9,609,366 2,959,481
Shareholder and system
servicing fees 15,027,885 1,384,002 703,310
Distribution fees (Note 3) 14,252,254 2,206,738 678,053
Registration fees 1,196,181 186,853 215,900
Shareholder communications 1,087,055 186,349 98,000
Custody 988,839 60,555 33,000
Directors' fees 111,295 12,308 3,500
Audit and legal 64,305 39,060 10,500
Other 240,966 53,599 --
- --------------------------------------------------------------------------------
Total Expenses 89,665,979 13,738,830 4,701,744
- --------------------------------------------------------------------------------
Net Investment Income 710,604,298 109,266,151 33,058,033
- --------------------------------------------------------------------------------
Net Realized Gain From
Security Transactions 7,953 -- 4,874
- --------------------------------------------------------------------------------
Increase in Net Assets
From Operations $710,612,251 $109,266,151 $33,062,907
================================================================================
See Notes to Financial Statements.
18
<PAGE>
================================================================================
Statements of Changes in Net Assets
================================================================================
For the Six Months Ended June 30, 1997 (unaudited)
and the Year Ended December 31, 1996
Cash Portfolio 1997 1996
================================================================================
OPERATIONS:
Net investment income $ 710,604,298 $ 1,245,706,580
Net realized gain 7,953 282,722
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 710,612,251 1,245,989,302
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS (NOTE 2) (710,604,298) (1,245,706,580)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Proceeds from sale of shares 64,658,770,806 112,463,129,671
Net asset value of shares issued
for reinvestment of dividends 689,844,634 1,224,522,521
Cost of shares reacquired (62,988,428,425) (109,201,241,036)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 2,360,187,015 4,486,411,156
- --------------------------------------------------------------------------------
Increase in Net Assets 2,360,194,968 4,486,693,878
NET ASSETS:
Beginning of period 27,487,331,825 23,000,637,947
- --------------------------------------------------------------------------------
End of period $ 29,847,526,793 $ 27,487,331,825
================================================================================
See Notes to Financial Statements.
19
<PAGE>
================================================================================
Statements of Changes in Net Assets (continued)
================================================================================
For the Six Months Ended June 30, 1997 (unaudited)
and the Year Ended December 31, 1996
Government Portfolio 1997 1996
================================================================================
OPERATIONS:
Net investment income $ 109,266,151 $ 208,495,636
Net realized gain -- 23,025
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 109,266,151 208,518,661
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS (NOTE 2) (109,266,151) (208,518,661)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Proceeds from sale of shares 8,513,982,356 16,447,868,058
Net asset value of shares issued
for reinvestment of dividends 107,310,169 207,002,672
Cost of shares reacquired (8,638,450,163) (16,287,630,574)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions (17,157,638) 367,240,156
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (17,157,638) 367,240,156
NET ASSETS:
Beginning of period 4,442,720,673 4,075,480,517
- --------------------------------------------------------------------------------
End of period $4,425,563,035 $ 4,442,720,673
================================================================================
See Notes to Financial Statements.
20
<PAGE>
================================================================================
Statements of Changes in Net Assets (continued)
================================================================================
For the Six Months Ended June 30, 1997 (unaudited)
and the Year Ended December 31, 1996
Retirement Portfolio 1997 1996
================================================================================
OPERATIONS:
Net investment income $ 33,058,033 $ 60,467,590
Net realized gain 4,874 --
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 33,062,907 60,467,590
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 2):
Net investment income (33,058,033) (60,467,590)
Net realized gain (4,874) --
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (33,062,907) (60,467,590)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Proceeds from sale of shares 2,452,393,672 4,577,974,101
Net asset value of shares issued
for reinvestment of dividends 32,508,277 60,304,723
Cost of shares reacquired (2,434,622,345) (4,562,913,860)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 50,279,604 75,364,964
- --------------------------------------------------------------------------------
Increase in Net Assets 50,279,604 75,364,964
NET ASSETS:
Beginning of period 1,355,017,492 1,279,652,528
- --------------------------------------------------------------------------------
End of period $ 1,405,297,096 $ 1,355,017,492
================================================================================
See Notes to Financial Statements.
21
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Money Funds, Inc. ("Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund consists of three
separate investment portfolios ("Portfolios"): the Cash Portfolio, the
Government Portfolio and the Retirement Portfolio.
The significant accounting policies consistently followed by the Fund are:
(a) transactions in money market instruments and government obligations are
accounted for on trade date; (b) the Fund uses the amortized cost method for
valuing investments; accordingly, the cost of securities plus accreted discount,
or minus amortized premium, approximates value; (c) interest income is recorded
on an accrual basis; (d) direct expenses are charged to each Portfolio and each
class; management fees and general fund expenses are allocated on the basis of
relative net assets; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) the Portfolios
intend to comply with the applicable provisions of the Internal Revenue Code of
1986, as amended, pertaining to regulated investment companies and to make
distributions of taxable income sufficient to be relieved from substantially all
Federal income and excise taxes; and (g) estimates and assumptions are required
to be made regarding assets, liabilities and changes in net assets resulting
from operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ.
2. DIVIDENDS
Each Portfolio declares and records a dividend of substantially all of its
net investment income on each business day. Such dividends are paid or
reinvested monthly in each respective Portfolio's shares on the payable date.
3. MANAGEMENT AGREEMENT AND OTHER TRANSACTIONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings, Inc. ("SBH"), acts as investment manager to the Fund. As
compensation for its services, each Portfolio pays SBMFM a daily fee calculated
at the following rates: Cash Portfolio: 0.45% on the first $6.0 billion of
average daily net assets, 0.425% on the next $6.0 billion, 0.40% on the next
$6.0 billion and 0.35% on the average daily net assets in excess of $18.0
billion; Government Portfolio: 0.45% on the first $2.5 billion of the average
daily net assets, 0.40% on the next $2.5 billion and 0.35% on average daily net
assets in excess of $5.0 billion; and Retirement Portfolio: 0.45% on the first
$1.0 billion of average daily net assets, 0.40% on the next $1.0 billion
22
<PAGE>
================================================================================
Notes to Financial Statements (unaudited) (continued)
================================================================================
and 0.35% on average daily net assets in excess of $2.0 billion. These fees are
calculated daily and paid monthly.
Pursuant to a Distribution Plan, each Portfolio makes payments to Smith
Barney Inc. ("SB"), another subsidiary of SBH, for assistance in distributing
Class A and C shares, calculated at an annual rate of 0.10% of average daily net
assets of each class, respectively. For the six months ended June 30, 1997,
total Distribution Plan fees incurred were:
Portfolio Class A Class C
================================================================================
Cash $14,251,190 $1,064
Government 2,206,306 432
Retirement 678,053 --
================================================================================
All officers and one Director of the Fund are employees of SB.
4. CAPITAL LOSS CARRYFORWARD
At December 31, 1996, the Cash Portfolio had, for Federal tax purposes,
approximately $1,357,000 of capital loss carryforwards available to offset
future capital gains. To the extent that these carryforward losses are used to
offset capital gains, it is probable that the gains so offset will not be
distributed. The amount and expiration of the carryforwards are indicated below.
Expiration occurs on December 31 of the year indicated:
2000 2001
================================================================================
Capital Loss Carryforward $226,000 $1,131,000
================================================================================
5. REPURCHASE AGREEMENTS
The Fund purchases (and its custodian takes possession of) U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day) at
an agreed-upon higher repurchase price. The Fund requires continual maintenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
6. CAPITAL SHARES
The Fund has multiple classes of shares within the Cash and Government
Portfolios. Class A and Class Y shares can be purchased directly by investors;
Class C shares can only be purchased by participants in the Smith Barney 401(k)
Program; and, Class Z shares can only be purchased by participants in the Smith
Barney Employee 401(k) Program.
23
<PAGE>
================================================================================
Notes to Financial Statements (unaudited) (continued)
================================================================================
Transactions in shares of each Portfolio were as follows:
Six Months Ended Year Ended
Cash Portfolio June 30, 1997 December 31, 1996
================================================================================
Class A
Shares sold 64,437,167,233 112,083,943,961
Shares issued on reinvestment 688,155,703 1,222,436,770
Shares redeemed (62,806,144,023) (108,841,816,611)
- --------------------------------------------------------------------------------
Net Increase 2,319,178,913 4,464,564,120
================================================================================
Class C
Shares sold 690,935 2,153,797
Shares issued on reinvestment 52,945 100,716
Shares redeemed (844,207) (1,838,758)
- --------------------------------------------------------------------------------
Net Increase (Decrease) (100,327) 415,755
================================================================================
Class Y
Shares sold 220,912,638 377,031,913
Shares issued on reinvestment 1,635,842 1,984,761
Shares redeemed (181,440,195) (357,585,667)
- --------------------------------------------------------------------------------
Net Increase 41,108,285 21,431,007
================================================================================
Class Z
Shares sold -- --
Shares issued on reinvestment 144 274
Shares redeemed -- --
- --------------------------------------------------------------------------------
Net Increase 144 274
================================================================================
24
<PAGE>
================================================================================
Notes to Financial Statements (unaudited) (continued)
================================================================================
Six Months Ended Year Ended
Government Portfolio June 30, 1997 December 31, 1996
================================================================================
Class A
Shares sold 8,417,507,358 16,321,871,925
Shares issued on reinvestment 105,260,674 204,615,591
Shares redeemed (8,514,143,550) (16,210,993,997)
- --------------------------------------------------------------------------------
Net Increase 8,624,482 315,493,519
================================================================================
Class C
Shares sold 29,705 97,252
Shares issued on reinvestment 21,126 57,445
Shares redeemed (271,540) (631,770)
- --------------------------------------------------------------------------------
Net Decrease (220,709) (477,073)
================================================================================
Class Y
Shares sold 82,184,061 118,300,033
Shares issued on reinvestment 862,842 616,191
Shares redeemed (121,616,200) (72,418,898)
- --------------------------------------------------------------------------------
Net Increase (Decrease) (38,569,297) 46,497,326
================================================================================
Class Z
Shares sold 14,261,232 7,598,848
Shares issued on reinvestment 1,165,527 1,713,445
Shares redeemed (2,418,873) (3,585,909)
- --------------------------------------------------------------------------------
Net Increase 13,007,886 5,726,384
================================================================================
Retirement Portfolio
================================================================================
Class A
Shares sold 2,452,393,672 4,577,974,101
Shares issued on reinvestment 32,508,277 60,304,723
Shares redeemed (2,434,622,345) (4,562,913,860)
- --------------------------------------------------------------------------------
Net Increase 50,279,604 75,364,964
================================================================================
25
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------------
Cash Portfolio 1997(1) 1996 1995 1994 1993 1992
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.025 0.050 0.054 0.037 0.026 0.033
Dividends from
net investment income (0.025) (0.050) (0.054) (0.037) (0.026) (0.033)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 2.48%++ 4.98% 5.53% 3.73% 2.63% 3.31%
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period
(millions) $29,753 $27,434 $22,969 $17,590 $2,953 $2,841
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.63%+ 0.62% 0.62% 0.64% 0.64% 0.60%
Net investment income 4.96+ 4.87 5.39 4.10 2.60 3.17
====================================================================================================================================
<CAPTION>
Class C
---------------------------------------------------------
Cash Portfolio 1997(1) 1996 1995 1994(2)
===================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------
Net investment income 0.025 0.050 0.054 0.007
Dividends from net investment
income (0.025) (0.050) (0.054) (0.007)
- ---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------
Total Return 2.51%++ 4.98% 5.53% 0.70%++
- ---------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,052 $2,152 $1,737 $1,323
- ---------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.58%+ 0.62% 0.62% 0.62%+
Net investment income 5.00+ 4.87 5.39 4.77+
===================================================================================================
<CAPTION>
Class Y
------------------------------------------------------------
Cash Portfolio 1997(1) 1996 1995 1994(3)
===================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------
Net investment income 0.026 0.051 0.054 0.0004
Dividends from net investment income (0.026) (0.051) (0.054) (0.0004)
- ---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------
Total Return 2.58%++ 5.09% 5.50% 0.40%++
- ---------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $92,692 $51,581 $30,150 $507
- ---------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.43%+ 0.52% 0.51% 0.53%+
Net investment income 5.15+ 4.97 5.29 5.23+
===================================================================================================
</TABLE>
(1) For the six months ended June 30, 1997 (unaudited).
(2) For the period from November 10, 1994 (inception date) to December 31,
1994.
(3) For the period from December 29, 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.
26
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------
Cash Portfolio 1997(1) 1996 1995 1994(2)
=================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------
Net investment income 0.026 0.051 0.055 0.006
Dividends from net investment income (0.026) (0.051) (0.055) (0.006)
- -------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------
Total Return 2.58%++ 5.06% 5.63% 0.60%++
- -------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $6 $6 $5 $5
- -------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.42%+ 0.53% 0.52% 0.47%+
Net investment income 5.16+ 4.96 5.49 5.12+
=================================================================================================
<CAPTION>
Class A
------------------------------------------------------------------------------------
Government Portfolio 1997(1) 1996 1995 1994 1993(3) 1992
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.024 0.048 0.053 0.036 0.025 0.032
Dividends from
net investment income (0.024) (0.048) (0.053) (0.036) (0.025) (0.032)
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Return 2.43%++ 4.89% 5.45% 3.63% 2.55% 3.32%
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period
(millions) $4,361 $4,353 $4,038 $3,695 $636 $675
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.61%+ 0.61% 0.60% 0.61% 0.61% 0.55%
Net investment income 4.84+ 4.78 5.31 4.03 2.53 3.15
==============================================================================================================================
<CAPTION>
Class C(4)
----------------------------------------------------
Government Portfolio 1997(1) 1996 1995 1994(5)
===============================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------
Net investment income 0.024 0.048 0.053 0.036
Dividends from net investment
income (0.024) (0.048) (0.053) (0.036)
- -----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------
Total Return 2.43%++ 4.89% 5.46% 3.63%
- -----------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $761 $982 $1,459 $3,961
- -----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.61%+ 0.61% 0.60% 0.61%
Net investment income 4.84+ 4.78 5.36 3.78
===============================================================================================
</TABLE>
(1) For the six months ended June 30, 1997 (unaudited).
(2) For the period from November 15, 1994 (inception date) to December 31,
1994.
(3) Since no difference in expenses existed for Class A, C and Y shares of the
Government Portfolio for 1993, this information is identical for each class
of shares.
(4) The inception date for Class C shares is March 5, 1993.
(5) On November 7, 1994, the former Class C shares were renamed as Class Y
shares.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
27
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Class Y(1)
---------------------------------------------------------
Government Portfolio 1997(2) 1996 1995 1994(3)
====================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------------------------------------------------------------
Net investment income 0.024 0.049 0.054 0.036
Dividends from net investment
income (0.024) (0.049) (0.054) (0.036)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------------------------------------------------------------
Total Return 2.50%++ 4.99% 5.55% 3.65%
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $13,305 $51,873 $5,376 $917
- ----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.51%+ 0.51% 0.50% 0.60%
Net investment income 4.92+ 4.88 5.51 3.58
====================================================================================================
<CAPTION>
Class Z
------------------------------------------------------------
Government Portfolio 1997(2) 1996 1995 1994(4)
=========================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------
Net investment income 0.025 0.049 0.054 0.007
Dividends from net investment income (0.025) (0.049) (0.054) (0.007)
- ---------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------
Total Return 2.48%++ 4.99% 5.56% 0.70%++
- ---------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $49,848 $36,840 $31,113 $29,669
- ---------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.51%+ 0.51% 0.50% 0.51%+
Net investment income 4.95+ 4.88 5.42 4.93+
=========================================================================================================
<CAPTION>
Class A
-------------------------------------------------------------------------------
Retirement Portfolio 1997(2) 1996 1995 1994 1993 1992
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
Net investment income 0.024 0.048 0.053 0.036 0.026 0.032
Dividends from
net investment income (0.024) (0.048) (0.053) (0.036) (0.026) (0.032)
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
Total Return 2.44%++ 4.86% 5.42% 3.67% 2.58% 3.26%
- --------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period
(millions) $1,405 $1,355 $1,280 $1,061 $1,184 $1,030
- --------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.69%+ 0.71% 0.72% 0.70% 0.70% 0.64%
Net investment income 4.86+ 4.75 5.28 3.57 2.55 3.21
==========================================================================================================================
</TABLE>
(1) The inception date for Class Y shares is October 28, 1993.
(2) For the six months ended June 30, 1997 (unaudited).
(3) On November 7, 1994, the former Class Y shares were renamed as Class Z
shares.
(4) 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.
28
<PAGE>
Smith Barney SMITH BARNEY
Money Funds, Inc. ------------
A Member of TravelersGroup[LOGO]
Directors Investment Adviser
Joseph H. Fleiss Smith Barney Mutual Funds
Donald R. Foley Management Inc.
Paul Hardin
Francis P. Martin, M.D. Distributors
Heath B. McLendon, Chairman Smith Barney Inc.
Roderick C. Rasmussen PFS Distributor, Inc.
John P. Toolan
C. Richard Youngdahl, Emeritus Custodian
PNC Bank, N.A.
Officers Shareholder
Heath B. McLendon Servicing Agent
Chief Executive Officer First Data Investor Services Group, Inc.
P.O. Box 9134
Lewis E. Daidone Boston, MA 02205-9134
Senior Vice President
and Treasurer
Phyllis M. Zahorodny
Vice President
This report is submitted for the general
Martin R. Hanley information of the shareholders of Smith
Investment Officer Barney Money Funds, Inc. It is not
authorized for distribution to
Irving P. David prospective investors unless accompanied
Controller or preceded by an effective Prospectus
for the Fund, which contains information
Christina T. Sydor concerning the Fund's investment
Secretary policies and expenses as well as other
pertinent information.
Smith Barney
Money Funds, Inc.
388 Greenwich Street
New York, New York 10013
FD0622 8/97
