As filed with the Securities and Exchange Commission on April 30,
1999
Securities Act Registration No. 2-51301
Investment Company Act Registration No. 811-2490
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.
[X] Post-Effective Amendment No. 52
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940,
Amendment No. 52
SMITH BARNEY MONEY FUNDS, INC.
(a Maryland Corporation)
(Exact name of Registrant as Specified in Charter)
388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Offices) (Zip Code)
(212) 816-6474
(Registrant's Telephone Number, including Area Code:)
Christina T. Sydor, Secretary
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent For Service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to Rule 485(b)
[XX] On April 30, 1999 pursuant to Rule 485(b)
[ ] 60 days after filing pursuant to paragraph (a)(1) of
Rule 485
[ ] On (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of
Rule 485
[ ] On (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new
effective date for a
previously filed post-effective amendment.
PART A: Prospectus
<PAGE>
--------------------------
[Logo]
Smith Barney Mutual Funds
Investing for your future.
Every day.
--------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
MONEY MARKET
FUNDS
Retirement Portfolio
Class A Shares
Cash Portfolio
Government Portfolio
Class A, L and Y Shares
April 30, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
MONEY MARKET FUNDS
Contents
<TABLE>
<S> <C>
Fund goals and main strategies..................................... 2
Risks, performance and expenses.................................... 3
Management......................................................... 8
Choosing a class of shares to buy.................................. 9
Comparing the funds' classes....................................... 10
Deferred sales charges............................................. 11
Buying shares...................................................... 12
Exchanging shares.................................................. 13
Redeeming shares................................................... 14
Other things to know
about share transactions........................................... 16
Smith Barney 401(k) and
ExecChoice(TM) programs............................................ 18
Distributions, dividends and taxes................................. 19
Share price........................................................ 20
Financial highlights............................................... 21
</TABLE>
You should know: An investment in a fund is not a bank deposit and is not
insured or guaranteed by the FDIC or any other government agency. There is no
assurance that each fund will be able to maintain a stable net asset value of
$1.00 per share.
Smith Barney Mutual Funds
1
<PAGE>
Fund goal and main strategies
INVESTMENT OBJECTIVES
Each fund seeks maximum current income and preservation of capital.
KEY INVESTMENTS
GOVERNMENT portfolio The fund invests exclusively in U.S. government obliga-
tions, including mortgage-backed securities and related repurchase agreements.
CASH PORTFOLIO AND RETIREMENT PORTFOLIO Each fund invests in high quality, U.S.
dollar denominated short term debt securities. These may include obligations
issued by U.S. and foreign banks, the U.S. government, its agencies or instru-
mentalities, U.S. states and municipalities and U.S. and foreign corporate
issuers. Each fund will invest at least 25% of its assets in obligations of
domestic and foreign banks. Either the principal amount of each obligation must
be fully insured by the FDIC or the issuing bank must have more than $100 mil-
lion of working capital or more than $1 billion of total assets.
Cash Portfolio and Retirement Portfolio may invest in all types of money market
securities including commercial paper, certificates of deposit, bankers'
acceptances, mortgage-backed and asset-backed securities, repurchase agreements
and other short term debt securities. The funds limit foreign investments to
issuers located in major industrialized countries.
MINIMUM CREDIT QUALITY Cash Portfolio and Retirement Portfolio invest in com-
mercial paper and other short-term obligations rated by a nationally recognized
rating organization in the highest short term rating category, or if unrated,
of equivalent quality, and in other corporate obligations and municipal obliga-
tions rated in the two highest rating categories, or if unrated, of equivalent
quality. Government Portfolio invests exclusively in securities rated in the
highest short-term rating category, or if unrated, of equivalent quality.
Maximum maturity Each fund invests exclusively in securities having remaining
maturities of 397 days or less. Each fund maintains a dollar-weighted average
portfolio maturity of 90 days or less.
SELECTION PROCESS
In selecting investments for the funds, the manager looks for:
. The best relative values based on an analysis of yield, price, interest rate
sensitivity and credit quality
. Issuers offering minimal credit risk
. Maturities consistent with the manager's outlook for interest rates
Money Market Funds
2
<PAGE>
Risks, performance and expenses
All investments involve some degree of risk. However, each fund is a "money
market fund" and, as such, seeks income by investing in short-term debt securi-
ties that meet strict standards established by the Board of Directors based on
special rules for money market funds adopted under federal law.
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
Although the funds seek to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the funds, or the funds
could underperform other short term debt instruments or money market funds if:
. Interest rates rise sharply.
. An issuer or guarantor of the funds' securities defaults, or has its credit
rating downgraded.
. The manager's judgment about the value or credit quality of a particular secu-
rity proves to be incorrect.
Cash Portfolio and Retirement Portfolio each invests at least 25% of its assets
in obligations of domestic and foreign banks and, as a result, is more suscep-
tible to events affecting the banking industry. The value of the funds' foreign
securities may go down because of unfavorable government actions or political
instability.
WHO MAY WANT TO INVEST
The funds may be an appropriate investment if you:
. Are seeking current income
. Are looking for an investment with lower risk than most other types of funds
. Are looking to allocate a portion of your assets to money market securities
Smith Barney Mutual Funds
3
<PAGE>
TOTAL RETURN
The bar charts indicate the risks of investing in the funds by showing changes
in the funds' performance from year to year. Past performance does not neces-
sarily indicate how a fund will perform in the future.
Total Return for Class A Shares
Cash Portfolio
[CHART APPEARS HERE]
QUARTERLY RETURNS:
Highest: 1.61% in 1st quarter 1991; Lowest: 0.64% in 2nd quarter 1993
The bar chart shows the performance of the fund's Class A shares for each of
the past 10 calendar years. Class L and Y shares would have different perfor-
mance because of their different expenses.
Total Return for Class A Shares
Government Portfolio
[CHART APPEARS HERE]
QUARTERLY RETURNS:
Highest: 1.39% in 2nd quarter 1991; Lowest: 0.63% in 2nd quarter 1993
The bar chart shows the performance of the fund's Class A shares for each of
the past 10 calendar years. Class L and Y shares would have different perfor-
mance because of their different expenses.
Total Return for Class A Shares
Retirement Portfolio
[CHART APPEARS HERE]
QUARTERLY RETURNS:
Highest: 1.38% in 2nd quarter 1991; Lowest: 0.63% in 2nd quarter 1993
The bar chart shows the performance of the fund's Class A shares for each of
the past 10 calendar years.
Money Market Funds
4
<PAGE>
COMPARATIVE PERFORMANCE
The table indicates the risks of investing in the funds by comparing the aver-
age annual total return of each class of the funds for the periods shown. This
table assumes redemption of shares at the end of the period and reinvestment of
distributions and dividends.
Average annual total returns
Calendar years ended December 31, 1998
<TABLE>
<CAPTION>
Fund 1 year 5 years 10 years Since Inception Inception Date
<S> <C> <C> <C> <C> <C>
Cash Portfolio
Class A 5.07% 4.88% 5.28% ---- 5/28/74
Class L 5.12% N/A N/A 5.16% 11/10/94
Class Y 5.29% N/A N/A 5.30% 12/29/94
Government Portfolio
Class A 5.00% 4.80% 5.09% ---- 5/28/74
Class L(/1/) 5.01% 4.76% N/A 4.52% 3/5/93
Class Y(/2/) 5.13% 4.85% N/A 5.18% 10/28/93
Retirement Portfolio
Class A 5.04% 4.80% 5.13% ---- 5/28/74
</TABLE>
(/1/) Represents previously issued Class B shares which were renamed Class C
shares on November 7, 1994 and renamed Class L shares on June 12, 1998.
(/2/) Represents previously issued Class C shares which were renamed Class Y
shares on November 7, 1994.
7 day yield as of December 31, 1998
<TABLE>
<CAPTION>
Retirement
Cash Portfolio Government Portfolio Portfolio
Class A Class L Class Y Class A Class L Class Y Class A
<S> <C> <C> <C> <C> <C> <C> <C>
7 day yield 4.66% 4.70% 4.86% 4.51% 4.54% 4.67% 4.67%
</TABLE>
Smith Barney Mutual Funds
5
<PAGE>
FEES AND EXPENSES
This table sets forth the fees and expenses you will pay if you invest in the
funds' shares.
Shareholder fees
<TABLE>
<CAPTION>
Cash Portfolio and
All Funds Government Portfolio only
(fees paid directly from your
investment) Class A Class L Class Y
<S> <C> <C> <C>
Maximum sales charge (load) imposed
on purchases None None None
Maximum deferred sales charge (load) None(/1/) None None
</TABLE>
Annual fund operating expenses
<TABLE>
<CAPTION>
Retirement
(Expenses deducted from Cash Portfolio Government Portfolio Portfolio
fund assets) Class A Class L Class Y Class A Class L Class Y Class A
<S> <C> <C> <C> <C> <C> <C> <C>
Management fee 0.39% 0.39% 0.39% 0.42% 0.42% 0.42% 0.45%
Distribution and service
(12b-1) fee 0.10 0.10 N/A 0.10 0.10 N/A 0.10
Other expenses 0.14 0.10 0.03 0.08 0.07 0.06 0.17
---- ---- ---- ---- ---- ---- ----
Total annual fund
operating expenses(/2/) 0.63% 0.59% 0.42% 0.60% 0.59% 0.48% 0.72%
</TABLE>
(/1/) Class A shares exchanged from another Smith Barney fund subject to a
deferred sales charge remain subject to the original fund's deferred sales
charge while held in the funds.
(/2/) Because the manager has voluntarily agreed to limit total annual fund
operating expenses to 0.70% of the fund's average daily net assets, actual
expenses were:
<TABLE>
<CAPTION>
Retirement
Cash Portfolio Government Portfolio Portfolio
Class A Class L Class Y Class A Class L Class Y Class A
<S> <C> <C> <C> <C> <C> <C> <C>
Management fee 0.39% 0.39% 0.39% 0.43% 0.43% 0.43% 0.43%
Total annual fund
operating expenses 0.63% 0.59% 0.42% 0.60% 0.59% 0.48% 0.70%
</TABLE>
The manager may change or eliminate these expense limits at any time on four-
teen days prior notice to shareholders.
Money Market Funds
6
<PAGE>
EXAMPLE
This example helps you compare the costs of investing in the funds with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
. You invest $10,000 in the fund for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends without a sales charge
. Redemption of your shares at the end of the period
Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Cash Portfolio
Class A $64 $202 $351 $786
Class L $60 $189 $329 $738
Class Y $43 $135 $235 $530
Government Portfolio
Class A $61 $192 $335 $750
Class L $60 $189 $329 $738
Class Y $49 $154 $269 $604
Retirement Portfolio
Class A $74 $230 $401 $894
</TABLE>
Smith Barney Mutual Funds
7
<PAGE>
Management
MANAGER The funds' investment manager is SSBC Fund Management Inc., an
affiliate of Salomon Smith Barney Inc. The manager's address is 388 Greenwich
Street, New York, New York 10013. The manager selects the funds' investments and
oversees their operations. The manager and Salomon Smith Barney are
subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range of
financial services--asset management, banking and consumer finance, credit and
charge cards, insurance, investments, investment banking and trading--and use
diverse channels to make them available to consumer and corporate customers
around the world.
MANAGEMENT FEE For its services, the manager received a fee during the fund's
last fiscal year equal to the amount shown below:
<TABLE>
<CAPTION>
Management fee as a percentage of
Fund the fund's average daily net assets
<S> <C>
Cash Portfolio 0.39%
Government Portfolio 0.42%
Retirement Portfolio 0.43%
</TABLE>
DISTRIBUTOR The fund has entered into an agreement with CFBDS, Inc. to distrib-
ute the fund's shares. A selling group consisting of Salomon Smith Barney and
other broker-dealers sells fund shares to the public.
DISTRIBUTION PLANS Each fund has adopted Rule 12b-1 distribution plans for its
Class A and, if applicable, Class L shares. Under each plan, the fund pays
service fees. These fees are an ongoing expense and, over time, may cost you
more than other types of sales charges.
YEAR 2000 ISSUE Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. The cost of addressing the Year 2000 issue, if
substantial, could adversely affect companies and governments that issue secu-
rities held by the funds. The manager and Salomon Smith Barney are addressing
the Year 2000 issue for their systems. The funds have been informed by other
service providers that they are taking similar measures. Although the funds do
not expect the Year 2000 issue to adversely affect them, the funds cannot guar-
antee the efforts of each fund (limited to requesting and receiving reports
from its service providers) or its service providers to correct the problem
will be successful.
Money Market Funds
8
<PAGE>
Choosing a class of shares to buy
Retirement Portfolio is available only through qualified retirement plans and
offers only Class A shares. For Cash Portfolio and Government Portfolio, you
can choose between two classes of shares: Classes A and Y. Class L shares are
available only to participating plans opened prior to June 21, 1996 (described
on page 18). Each class has different expenses, allowing you to choose the
class that best meets your needs.
You may buy shares from:
. A Salomon Smith Barney Financial Consultant
. An investment dealer in the selling group or a broker that clears through
Salomon Smith Barney--a dealer representative
. Each fund, but only if you are investing through certain qualified plans or
certain dealer representatives
INVESTMENT MINIMUMS--CASH PORTFOLIO AND GOVERNMENT PORTFOLIO Minimum initial
and additional investment amounts vary depending on the class of shares you buy
and the nature of your investment account.
<TABLE>
<CAPTION>
Initial Additional
Class A Class Y All Classes
<S> <C> <C> <C>
General $1,000 $15 million $50
IRAs, Self Employed Retirement Plans, Uniform
Gift to Minor Accounts $250 $15 million $50
Qualified Retirement Plans* $25 $15 million $25
Salomon Smith Barney Sweep Features variable n/a variable
Simple IRAs $1 n/a $1
Monthly Systematic Investment Plans $25 n/a $25
Quarterly Systematic Investment Plans $50 n/a $50
</TABLE>
* Qualified Retirement Plans are retirement plans qualified under Section
403(b)(7) or Section 401(a) of the Internal Revenue Code, including 401(k)
plans
INVESTMENT MINIMUMS--RETIREMENT PORTFOLIO The minimum initial investment is
$200; each additional investment must be $1 or more.
Smith Barney Mutual Funds
9
<PAGE>
SALOMON SMITH BARNEY BROKERAGE ACCOUNTS
If you maintain certain types of securities brokerage accounts with Salomon
Smith Barney, you may request that your free credit balances (i.e., immediately
available funds) be invested automatically in Class A shares of a designated
money market fund either daily or weekly. A complete record of fund dividends,
purchases and redemptions will be included on your regular Salomon Smith Barney
brokerage statement. In addition to this sweep service, shareholders of Salomon
Smith Barney FMA PLUSSM accounts may also take advantage of: a free IRA, free
dividend reinvestment, unlimited checking, 100 free ATM withdrawals each year,
gain/loss analysis and online computer access to account information. Contact
your Salomon Smith Barney Financial Consultant for more complete information.
Comparing the funds' classes
Your Salomon Smith Barney Financial Consultant or dealer representative can
help you decide which class meets your goals. They may receive different com-
pensation depending upon which class you choose.
<TABLE>
<CAPTION>
Class A Class L Class Y
for the Cash Portfolio and
Government Portfolio only
<S> <C> <C> <C>
Key features . Higher . Higher . Must invest
annual annual at least $15
expenses expenses million
than Class Y than Class Y . Lower
annual
expenses
than either
Class A or
Class L
- ------------------------------------------------------------------------------
Initial sales charge(/1/) None None None
- ------------------------------------------------------------------------------
Deferred sales charge(/2/) None None None
- ------------------------------------------------------------------------------
Annual service fees 0.10% of 0.10% of None
average average daily
daily net net assets
assets
- -------------------------------------------------------------------------------
Exchangeable into(/3/) Class A Class L Class Y
shares of shares of shares of
most Smith most Smith most Smith
Barney Barney funds Barney funds
funds
- -------------------------------------------------------------------------------
</TABLE>
(/1/) Initial sales charges may apply if you exchange shares of the funds for
shares of another Smith Barney fund.
(/2/) Shares exchanged from another Smith Barney fund subject to a deferred
sales charge remain subject to the original fund's deferred sales charge
while held in the funds.
(/3/) Ask your Salomon Smith Barney Financial Consultant or dealer
representative or visit the web site for the Smith Barney funds available
for exchange.
Money Market Funds
10
<PAGE>
LETTER OF INTENT: CLASS Y SHARES
You may buy Class Y shares of Cash Portfolio or Government Portfolio at net
asset value with no initial sales charge. To purchase Class Y shares, you must
meet the $15,000,000 initial investment requirement. You can use a letter of
intent to meet this requirement by buying Class Y shares of a fund over a 13-
month period. To qualify, you must initially invest $5,000,000.
Deferred sales charges
If Class A shares of the Cash Portfolio or Government Portfolio are acquired by
exchange from another Smith Barney fund subject to a deferred sales charge the
original deferred sales charge will apply to these shares. If you redeem any of
these shares within 12 months of the date you purchased shares of the original
fund, the funds' shares may be subject to a deferred sales charge of 1.00%.
The deferred sales charge is based on the net asset value at the time of pur-
chase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.
You do not pay a deferred sales charge on:
. Shares exchanged for shares of another Smith Barney fund
. Shares that represent reinvested distributions and dividends
. Shares that are no longer subject to the deferred sales charge
If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you
notify your Salomon Smith Barney Financial Consultant or dealer representative.
Salomon Smith Barney receives deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Salomon Smith Barney Financial Consultant or dealer representative.
DEFERRED SALES CHARGE WAIVERS
The deferred sales charge for each share class will generally be waived:
. On certain distributions from a retirement plan
. For involuntary redemptions of small account balances
. For 12 months following the death or disability of a shareholder
If you want to learn more about additional waivers of deferred sales charges,
contact your Salomon Smith Barney Financial Consultant or dealer representative
or consult the Statement of Additional Information ("SAI").
Smith Barney Mutual Funds
11
<PAGE>
Buying shares
Through a You should contact your Salomon Smith Barney Financial Con-
Salomon Smith sultant or dealer representative to open a brokerage account
Barney and make arrangements to buy shares.
Financial
Consultant or If you do not provide the following information, your order
dealer will be rejected
representative
. Specific fund being bought
. Class of shares being bought
. Dollar amount or number of shares to buy
You should pay for your shares through your brokerage account
at the time you place your order. Salomon Smith Barney or
your dealer representative may charge an annual account main-
tenance fee.
- --------------------------------------------------------------------------------
Through the Qualified retirement plans and certain other investors who
fund's are clients of the selling group are eligible to buy shares
transfer directly from the fund.
agent
. Write the transfer agent at the following address:
Smith Barney Money Funds
(Specify Portfolio and Class of Shares)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
. Enclose a check to pay for the shares. For initial pur-
chases, complete and send an account application.
. For more Information, call the transfer agent at 1-800-451-
2010.
- --------------------------------------------------------------------------------
Through a
systematic You may authorize Salomon Smith Barney, your dealer represen-
investment tative or the transfer agent to transfer funds automatically
plan from a regular bank account to buy shares on a regular basis.
. Amounts transferred should be at least: $25 monthly or $50
quarterly.
. If you do not have sufficient funds in your account on a
transfer date, Salomon Smith Barney, your dealer represen-
tative or the transfer agent may charge you a fee.
For more information, contact your Salomon Smith Barney
Financial Consultant, dealer representative or the transfer
agent or consult the SAI.
Money Market Funds
12
<PAGE>
Exchanging shares
Smith Barney You should contact your Salomon Smith Barney Financial Con-
offers a sultant or dealer representative to exchange into other Smith
distinctive Barney funds. Be sure to read the prospectus of the Smith
family of Barney fund you are exchanging into.
funds
tailored to . You may exchange shares only for shares of the same class of
help meet the another Smith Barney Fund. Not all Smith Barney funds offer
varying needs all classes.
of both large
and small . Not all Smith Barney funds may be offered in your state of
investors residence. Contact your Salomon Smith Barney Financial Con-
sultant, dealer representative or the transfer agent.
. You must meet the minimum investment amount for each fund.
. If you hold share certificates, the transfer agent must
receive the certificates endorsed for transfer or with
signed stock powers (documents transferring ownership of
certificates) before the exchange is effective.
. The fund may suspend or terminate your exchange privilege if
you engage in an excessive pattern of exchanges.
- --------------------------------------------------------------------------------
Sales charges Your shares may be subject to an initial sales charge at the
time of the exchange. For more information, contact your
Salomon Smith Barney Financial Consultant, dealer
representative or the transfer agent .
Your deferred sales charge (if any) will continue to be mea-
sured from the date of your original purchase of another
fund's shares subject to a deferred sales charge.
- --------------------------------------------------------------------------------
By telephone If you do not have a brokerage account, you may be eligible
to exchange shares through the transfer agent. You must com-
plete an authorization form to authorize telephone transfers.
If eligible, you may make telephone exchanges on any day the
New York Stock Exchange is open. Call the transfer agent at
1-800-451-2010 between 9:00 a.m. and 5:00 p.m. (Eastern
time).
Smith Barney Mutual Funds
13
<PAGE>
Requests received after the close of regular trading on the
Exchange are priced at the net asset value next determined.
You can make telephone exchanges only between accounts that
have identical registrations.
- --------------------------------------------------------------------------------
By mail If you do not have a Salomon Smith Barney brokerage account,
contact your dealer representative or write to the transfer
agent at the address on the opposite page.
Redeeming shares
Generally Contact your Salomon Smith Barney Financial Consultant or
dealer representative to redeem shares of the funds.
If you hold share certificates, the transfer agent must
receive the certificates endorsed for transfer or with signed
stock powers before the redemption is effective.
If the shares are held by a fiduciary or corporation, other
documents may be required.
Your redemption proceeds generally will be sent on the next
business day after your request is received in good order.
However, if you recently purchased your shares by check, your
redemption proceeds will not be sent to you until your origi-
nal check clears, which may take up to 15 days.
If you have a Salomon Smith Barney brokerage account, your
redemption proceeds will be placed in your account and not
reinvested without your specific instruction. In other cases,
unless you direct otherwise, your redemption proceeds will be
paid by check mailed to your address of record.
- --------------------------------------------------------------------------------
By mail For accounts held directly at the funds, send written
requests to the transfer agent at the following address:
Smith Barney Money Funds
(Specify Portfolio and Class of Shares)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
14 Money Market Funds
<PAGE>
Your written request must provide the following:
. Your account number
. The class of shares and the dollar amount or number of
shares to be redeemed
. Signatures of each owner exactly as the account is registered
- --------------------------------------------------------------------------------
By telephone If you do not have a brokerage account, you may be eligible
to redeem shares (except those held in retirement plans) in
amounts up to $10,000 per day through the transfer agent. You
must complete an authorization form to authorize telephone
redemptions. If eligible, you may request redemptions by tel-
ephone on any day the New York Stock Exchange is open. Call
the transfer agent at 1-800-451-2010 between 9:00 a.m. and
5:00 p.m. (Eastern time). Requests received after the close
of regular trading on the Exchange are priced at the net
asset value next determined.
Your redemption proceeds can be sent by check to your address
of record or by wire transfer to a bank account designated on
your authorization form. You must submit a new authorization
form to change the bank account designated to receive wire
transfers and you may be asked to provide certain other
documents.
Smith Barney Mutual Funds
15
<PAGE>
Other things to know about share transactions
When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information, without which your
request will not be processed.
. Name of the fund
. Account number
. Class of shares being bought, exchanged or redeemed
. Dollar amount or number of shares being bought, exchanged or redeemed
. Signature of each owner exactly as the account is registered
A request to purchase shares becomes effective only when Salomon Smith Barney,
a selling group member or the transfer agent receives, or converts the purchase
amount into, federal funds.
The transfer agent will try to confirm that any telephone exchange or redemp-
tion request is genuine by recording calls, asking the caller to provide a per-
sonal identification number for the account, sending you a written confirmation
or requiring other confirmation procedures from time to time.
SIGNATURE GUARANTEES To be in good order, your redemption request must include
a signature guarantee if you:
. Are redeeming over $10,000 of shares
. Are sending signed share certificates or stock powers to the transfer agent
. Instruct the transfer agent to mail the check to an address different from the
one on your account
. Changed your account registration
. Want the check paid to someone other than the account owner(s)
. Are transferring the redemption proceeds to an account with a different regis-
tration
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loan institutions, but not from a notary public.
Each fund has the right to:
. Suspend the offering of shares
. Waive or change minimum and additional investment amounts
Money Market Funds
16
<PAGE>
. Reject any purchase or exchange order
. Change, revoke or suspend the exchange privilege
. Suspend telephone transactions
. Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the Securi-
ties and Exchange Commission
. Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities
SMALL ACCOUNT BALANCES If your account falls below $500 ($100 for Retirement
Portfolio) because of a redemption of fund shares, a fund may ask you to bring
your account up to $500 ($100 for Retirement Portfolio). If your account is
still below $500 ($100 for Retirement Portfolio) after 60 days, the fund may
close your account and send you the redemption proceeds.
EXCESSIVE EXCHANGE TRANSACTIONS The manager may determine that a pattern of
frequent exchanges is detrimental to the fund's performance and other share-
holders. If so, the funds may limit additional purchases and/or exchanges by
the shareholder.
SHARE CERTIFICATES The funds do not issue share certificates unless a written
request signed by all registered owners is made to the transfer agent. If you
hold share certificates, it will take longer to exchange or redeem shares.
Smith Barney Mutual Funds
17
<PAGE>
Smith Barney 401(k) and ExecChoice/TM/ programs
You may be eligible to participate in the Smith Barney 401(k) program or the
Smith Barney ExecChoice(TM) program. The Cash Portfolio and Government Portfo-
lio offer Class A and Class L shares to participating plans as investment
alternatives under the programs. You can meet minimum investment and exchange
amounts by combining the plan's investments in any of the Smith Barney funds.
There are no sales charges when you buy or sell shares and the class of shares
you may purchase depends on the amount of your initial investment. Once a class
of shares is chosen, all additional purchases must be of the same class.
. Class A shares may be purchased by plans investing at least $1 million.
. On purchases of less than $1 million, Class L shares will be issued. Class L
shares are eligible for conversion to Class A shares not later than 8 years
after the plan joined the program. They are eligible for conversion sooner in
the following circumstances:
If the account was opened on or after June 21, 1996 and a total of $1 mil-
lion is invested in Smith Barney Funds Class L shares (other than shares
of money market funds), all Class L shares are eligible for exchange after
the plan is in the program 5 years.
If the account was opened before June 21, 1996 and a total of $500,000 is
invested in Smith Barney Funds Class L shares (other than shares of money
market funds) on December 31 in any year, all such shares are eligible for
exchange on or about March 31 of the following year.
For more information, call your Salomon Smith Barney Financial Consultant or
the transfer agent, or consult the SAI.
Money Market Funds
18
<PAGE>
Distributions, dividends and taxes
DIVIDENDS Each fund declares a dividend of substantially all of its net invest-
ment income on each day the New York Stock Exchange is open. Income dividends
are paid monthly. Each fund generally makes capital gain distributions, if any,
once a year, typically in December. Each fund may pay additional distributions
and dividends at other times if necessary for the fund to avoid a federal tax.
Each fund expects distributions to be primarily from income. Dividends and cap-
ital gain distributions are reinvested in additional fund shares of the same
class you hold. Alternatively, you can instruct your Salomon Smith Barney
Financial Consultant, dealer representative or the transfer agent to have your
distributions and/or dividends paid in cash. You can change your choice at any
time to be effective as of the next distribution or dividend, except that any
change given to the transfer agent less than five days before the payment date
will not be effective until the next distribution or dividend is paid.
TAXES In general, receiving distributions (whether in cash or additional
shares) is a taxable event. However, distributions from Retirement Portfolio
are not taxable to the qualified retirement plans that hold its shares.
<TABLE>
<CAPTION>
Transaction Federal tax status
<S> <C>
Redemption or exchange of shares Usually no gain or loss;
loss may result to extent
of any deferred sales
charge
Long-term capital gain distributions Long-term capital gain
Short-term capital gain distributions Ordinary income
Dividends Ordinary income
</TABLE>
Each fund anticipates that it will normally not earn or distribute any long-
term capital gains.
After the end of each year, the fund will provide you with information about
the distributions and dividends you received during the previous year. If you
do not provide the fund with your correct taxpayer identification number and
any required certifications, you may be subject to back-up withholding of 31%
of your distributions and dividends. Because each shareholder's circumstances
are different and special tax rules may apply, you should consult your tax
adviser about your investment in the funds.
Smith Barney Mutual Funds
19
<PAGE>
Share price
You may buy, exchange or redeem shares at their net asset value, plus any
applicable deferred sales charge, next determined after receipt of your request
in good order. Each fund's net asset value is the value of its assets minus its
liabilities. Net asset value is calculated separately for each class of shares.
Each fund calculates its net asset value at noon, Eastern time, every day the
New York Stock Exchange is open. The Exchange is closed on certain holidays
listed in the SAI.
Each fund uses the amortized cost method to value its portfolio securities.
Using this method, a fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the fund.
<TABLE>
<CAPTION>
Purchase is effective
Form of purchase payment and Dividends begin
<S> <C> <C>
. Payment in federal If received At noon,
funds before noon, Eastern time,
. Having a suffi- Eastern time: on that day
cient cash balance
in your account
with Salomon Smith
Barney or a selling
group member
If received At noon the
after noon: next business
day
- -- -----------------------------------------------------------------------------
.Other forms of pay-
ment, with conver-
sion into, or
advance of, federal
funds by Salomon At noon on the next business day
Smith Barney or a
selling group member
.Other forms of
payment received by
the transfer agent
- ------------------------------------------------------------------------------
</TABLE>
Salomon Smith Barney or members of the selling group must promptly transmit all
orders to buy, exchange or redeem shares to the fund's agent.
Money Market Funds
20
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand the perfor-
mance of each fund's classes for the past 5 years. Certain information reflects
financial results for a single share. Total return represents the rate that a
shareholder would have earned (or lost) on a fund share assuming reinvestment
of all dividends and distributions. The information in the following tables was
audited by KPMG LLP, independent accountants, whose report, along with the
funds' financial statements, are included in the annual report (available upon
request).
CASH PORTFOLIO
For a Class A share of capital stock outstanding throughout each year ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Income from operations:
Net investment income 0.050 0.050 0.050 0.054 0.037
- -----------------------------------------------------------------------------
Total income from operations 0.050 0.050 0.050 0.054 0.037
- -----------------------------------------------------------------------------
Less distributions from:
Net investment income (0.050) (0.050) (0.050) (0.054) (0.037)
- -----------------------------------------------------------------------------
Total distributions (0.050) (0.050) (0.050) (0.054) (0.037)
- -----------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Total return 5.07% 5.12% 4.98% 5.53% 3.73%
- -----------------------------------------------------------------------------
Net assets, end of year (billions) $40 $31 $27 $23 $18
- -----------------------------------------------------------------------------
Ratios to average net assets:
Expenses 0.63% 0.64% 0.62% 0.62% 0.64%
Net investment income 4.95 5.01 4.87 5.39 4.10
- -----------------------------------------------------------------------------
</TABLE>
Smith Barney Mutual Funds
21
<PAGE>
CASH PORTFOLIO
For A Class L(/1/) share of capital stock outstanding throughout each year
ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994(/2/)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
Income from operations:
Net investment income 0.050 0.051 0.050 0.054 0.007
- -------------------------------------------------------------------------------
Total income from
operations 0.050 0.051 0.050 0.054 0.007
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.050) (0.051) (0.050) (0.054) (0.007)
- -------------------------------------------------------------------------------
Total distributions (0.050) (0.051) (0.050) (0.054) (0.007)
- -------------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
Total return 5.12% 5.17% 4.98% 5.53% 0.70%(/3/)
- -------------------------------------------------------------------------------
Net assets, end of year
(millions) $0.4 $2 $2 $2 $1
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses 0.59% 0.59% 0.62% 0.62% 0.62%(/4/)
Net investment income 5.07 5.05 4.87 5.39 4.77 (/4/)
- -------------------------------------------------------------------------------
</TABLE>
(/1/) On June 12, 1998, Class C shares were renamed Class L shares.
(/2/) Inception date is November 10, 1994.
(/3/) Not annualized.
(/4/) Annualized.
Money Market Funds
22
<PAGE>
CASH PORTFOLIO
For a Class Y share of capital stock outstanding throughout each year ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994(/1/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
Income from
operations:
Net investment income
0.052 0.052 0.051 0.054 0.0004
- --------------------------------------------------------------------------------
Total income from
operations 0.052 0.052 0.051 0.054 0.0004
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.052) (0.052) (0.051) (0.054) (0.0004)
- --------------------------------------------------------------------------------
Total distributions (0.052) (0.052) (0.051) (0.054) (0.0004)
- --------------------------------------------------------------------------------
Net asset value, end of
year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
Total return 5.29% 5.32% 5.09% 5.50% 0.40%(/2/)
- --------------------------------------------------------------------------------
Net assets, end of year
(millions) $159 $64 $52 $30 $0.5
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.42% 0.43% 0.52% 0.51% 0.53%(/3/)
Net investment income
5.17 5.22 4.97 5.29 5.23(/3/)
- --------------------------------------------------------------------------------
</TABLE>
(/1/) Inception date is December 29, 1994.
(/2/) Not Annualized.
(/3/) Annualized.
Smith Barney Mutual Funds
23
<PAGE>
GOVERNMENT PORTFOLIO
For a Class A share of capital stock outstanding throughout each year ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Income from operations:
Net investment income 0.049 0.049 0.048 0.053 0.036
- -----------------------------------------------------------------------------
Total income from operations 0.049 0.049 0.048 0.053 0.036
- -----------------------------------------------------------------------------
Less distributions from:
Net investment income (0.049) (0.049) (0.048) (0.053) (0.036)
- -----------------------------------------------------------------------------
Total distributions (0.049) (0.049) (0.048) (0.053) (0.036)
- -----------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Total return 5.00% 5.04% 4.89% 5.45% 3.63%
- -----------------------------------------------------------------------------
Net assets, end of year (billions) $5 $5 $4 $4 $4
- -----------------------------------------------------------------------------
Ratios to average net assets:
Expenses 0.60% 0.61% 0.61% 0.60% 0.61%
Net investment income 4.88 4.92 4.78 5.31 4.03
- -----------------------------------------------------------------------------
</TABLE>
Money Market Funds
24
<PAGE>
GOVERNMENT PORTFOLIO
For a Class L(/1/) share of capital stock outstanding throughout each year
ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994(/2/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
Income from operations:
Net investment income 0.049 0.049 0.048 0.053 0.036
- --------------------------------------------------------------------------------
Total income from
operations 0.049 0.049 0.048 0.053 0.036
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.049) (0.049) (0.048) (0.053) (0.036)
- --------------------------------------------------------------------------------
Total distributions (0.049) (0.049) (0.048) (0.053) (0.036)
- --------------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
Total return 5.01% 5.04% 4.89% 5.46% 3.63%
- --------------------------------------------------------------------------------
Net assets, end of year
(millions) $0.2 $0.5 $1 $2 $4
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.59% 0.61% 0.61% 0.60% 0.61%
Net investment income 4.94 4.90 4.78 5.36 4.77
- --------------------------------------------------------------------------------
</TABLE>
(/1/) On June 12, 1998, Class C shares were renamed Class L shares.
(/2/) Represents previously issued Class B shares which were renamed Class C
shares on November 7, 1994.
Smith Barney Mutual Funds
25
<PAGE>
GOVERNMENT PORTFOLIO
For a Class Y share of capital stock outstanding throughout each year ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994(/1/)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
Income from operations:
Net investment income 0.050 0.050 0.049 0.054 0.036
- -------------------------------------------------------------------------------
Total income from operations 0.050 0.050 0.049 0.054 0.036
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.050) (0.050) (0.049) (0.054) (0.036)
- -------------------------------------------------------------------------------
Total distributions (0.050) (0.050) (0.049) (0.054) (0.036)
- -------------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------
Total return 5.13% 5.14% 4.99% 5.55% 3.65%
- -------------------------------------------------------------------------------
Net assets, end of year (millions) $4 $7 $52 $5 $1
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses 0.48% 0.51% 0.51% 0.50% 0.60%
Net investment income 5.06 4.98 4.88 5.51 3.58
- -------------------------------------------------------------------------------
</TABLE>
(/1/) Represents previously issued Class C shares, which were renamed Class Y
shares on November 7, 1994.
Money Market Funds
26
<PAGE>
RETIREMENT PORTFOLIO
For a Class A share of capital stock outstanding throughout each year ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Income from operations:
Net investment income (1) 0.049 0.049 0.048 0.053 0.036
- -----------------------------------------------------------------------------
Total income from operations 0.049 0.049 0.048 0.053 0.036
- -----------------------------------------------------------------------------
Less distributions from:
Net investment income (0.049) (0.049) (0.048) (0.053) (0.036)
- -----------------------------------------------------------------------------
Total distributions (0.049) (0.049) (0.048) (0.053) (0.036)
- -----------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Total return 5.04% 5.03% 4.86% 5.42% 3.67%
- -----------------------------------------------------------------------------
Net assets, end of year (billions) $2 $1 $1 $1 $1
- -----------------------------------------------------------------------------
Ratios to average net assets:
Expenses(1)(2) 0.70% 0.71% 0.71% 0.72% 0.70%
Net investment income 4.92 4.92 4.75 5.28 3.57
- -----------------------------------------------------------------------------
</TABLE>
(/1/) The investment manager waived a portion of their management fees for the
year ended December 31, 1998. If such fees were not waived, the per share
decrease on net investment income and the actual expense ratio would have
been 0.0002 and 0.72%, respectively.
(/2/) As a result of the 0.70% voluntary expense limitation for the ratio of
expenses to average net assets, the investment manager will reimburse fees
for the amount that exceeds the limitation.
Smith Barney Mutual Funds
27
<PAGE>
SalomonSmithBarney
----------------------------
A member of citigroup [LOGO]
MONEY MARKET FUNDS
SHAREHOLDER REPORTS Annual and semiannual reports to shareholders provide addi-
tional information about the funds' investments. These reports discuss the mar-
ket conditions and investment strategies that affected the funds' performance.
The funds send only one report to a household if more than one account has the
same address. Contact your Salomon Smith Barney Financial Consultant, dealer
representative or the transfer agent if you do not want this policy to apply to
you.
STATEMENT OF ADDITIONAL INFORMATION The statement of additional information
provides more detailed information about the funds and is incorporated by ref-
erence into (is legally part of) this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Salomon
Smith Barney Financial Consultant or dealer representative, by calling the
funds at 1-800-451-2010, or by writing to the funds at Smith Barney Mutual
Funds, 388 Greenwich Street, MF2, New York, New York 10013.
Visit our web site. Our web site is located at www.smithbarney.com
You can also copy and review the funds' shareholder reports, prospectus and
statement of additional information at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. You can get copies of these materials
for a duplicating fee by writing to the Public Reference Section of the Commis-
sion, Washington, D.C. 20549-6009. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You can get the same information
free from the Commission's Internet web site at http:www.sec.gov
If someone makes a statement about the funds that is not in this prospectus,
you should not rely upon that information. Neither the funds nor the distribu-
tor is offering to sell shares of the funds to any person to whom the funds may
not lawfully sell their shares.
/SM/Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
(Investment Company Act file no. 811-02490)
FD 2322 4/99
[Logo] Smith Barney Mutual
Investing for your future.
Every day.
PROSPECTUS
MONEY
MARKET FUNDS
Class Z Shares
----------------------------------------------------------------------
April 30, 1999
The Securities and Exchange Commission has not approved or disapproved
these securities or determined whether this prospectus is accurate or
complete. Any statement to the contrary is a crime.
<PAGE>
Money Market Funds
Contents
<TABLE>
<S> <C>
Fund goals and main strategies.............................................. 2
Risks, performance and expenses............................................. 3
Management.................................................................. 7
Buying, selling and exchanging Class Z shares................................ 8
Share price................................................................. 9
Distributions, dividends and taxes.......................................... 10
Financial highlights........................................................ 11
</TABLE>
The Class Z shares described in this prospectus are offered exclusively for
sale to tax-exempt employee benefit and retirement plans of Salomon Smith Bar-
ney Inc. and any of its affiliates.
You should know: An investment in a fund is not a bank deposit and is not
insured or guaranteed by the FDIC or any other government agency. There is no
assurance that each fund will be able to maintain a stable net asset value of
$1.00 per share.
Smith Barney Mutual Funds
1
<PAGE>
Fund goals and main strategies
Investment objectives
Each fund seeks maximum current income and preservation of capital.
Key investments
Government Portfolio The fund invests exclusively in U.S. government obliga-
tions, including mortgage-backed securities and related repurchase agreements.
Cash Portfolio The fund invests in high quality, U.S. dollar denominated short
term debt securities. These may include obligations issued by U.S. and foreign
banks, the U.S. government, its agencies or instrumentalities, U.S. states and
municipalities and U.S. and foreign corporate issuers. The fund will invest at
least 25% of its assets in obligations of domestic and foreign banks. Either
the principal amount of each obligation must be fully insured by the FDIC or
the issuing bank must have more than $100 million of working capital or more
than $1 billion of total assets.
Cash Portfolio may invest in all types of money market securities including
commercial paper, certificates of deposit, bankers' acceptances, mortgage-
backed and asset-backed securities, repurchase agreements and other short term
debt securities. The funds limit foreign investments to issuers located in
major industrialized countries.
Minimum credit quality Cash Portfolio invests in commercial paper and other
short-term obligations rated by a nationally recognized rating organization in
the highest short term rating category, or if unrated, of equivalent quality,
and in other corporate obligations and municipal obligations rated in the two
highest rating categories, or if unrated, of equivalent quality. Government
Portfolio invests exclusively in securities rated in the highest short-term
rating category, or if unrated, of equivalent quality.
Maximum maturity Each fund invests exclusively in securities having remaining
maturities of 397 days or less. Each fund maintains a dollar-weighted average
portfolio maturity of 90 days or less.
Selection process
In selecting investments for the funds, the manager looks for:
. The best relative values based on an analysis of yield, price, interest rate
sensitivity and credit quality
. Issuers offering minimal credit risk
. Maturities consistent with the manager's outlook for interest rates
Money Market Funds--Class Z Shares
2
<PAGE>
Risks, performance and expenses
All investments involve some degree of risk. However, each fund is a "money
market fund" and, as such, seeks income by investing in short-term debt securi-
ties that meet strict standards established by the Board of Directors based on
special rules for money market funds adopted under federal law.
Principal risks of investing in the funds
Although the funds seek to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the funds, or the funds
could underperform other short term debt instruments or money market funds if:
. Interest rates rise sharply.
. An issuer or guarantor of the funds' securities defaults, or has its credit
rating downgraded.
. The manager's judgment about the value or credit quality of a particular secu-
rity proves to be incorrect.
Cash Portfolio invests at least 25% of its assets in obligations of domestic
and foreign banks and, as a result, is more susceptible to events affecting the
banking industry. The value of the funds' foreign securities may go down
because of unfavorable government actions or political instability.
Who may want to invest
The funds may be an appropriate investment if you:
. Are seeking current income
. Are looking for an investment with lower risk than most other types of funds
. Are looking to allocate a portion of your assets to money market securities
Smith Barney Mutual Funds
3
<PAGE>
Total return
The bar charts indicate the risks of investing in the funds by showing changes
in the funds' performance from year to year. Past performance does not neces-
sarily indicate how a fund will perform in the future.
Total Return for Class Z Shares
Cash Portfolio
[BAR GRAPH APPEARS HERE]
95 96 97 98
5.63% 5.06% 5.33% 5.29%
Calendar year ended December 31
The bar chart shows the performance of the fund's Class Z shares for the last
four full calendar years since inception on November 15, 1994.
Quarterly returns:
Highest: 1.42% in 2nd quarter 1995; Lowest: 1.20% in 2nd quarter 1996
Total Return for Class Z Shares
Government Portfolio
[BAR GRAPH APPEARS HERE]
95 96 97 98
5.56% 4.99% 5.14% 5.13%
Calendar year ended December 31
The bar chart shows the performance of the fund's Class Z shares for the last
four full calendar years since inception on November 9, 1994.
Quarterly returns:
Highest: 1.29% in 4th quarter 1997; Lowest: 1.19% in 2nd quarter 1996
Money Market Funds--Class Z Shares
4
<PAGE>
Comparative performance
The table indicates the risks of investing in the funds by comparing the
average annual total return of Class Z shares of the funds for the periods
shown. This table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
Average Annual Total Returns
Calendar Years Ended December 31, 1998
<TABLE>
<CAPTION>
Fund 1 year 5 years Since inception Inception Date
<S> <C> <C> <C> <C>
Cash Portfolio 5.29% N/A 5.30% 11/15/94
Government Portfolio 5.13% N/A 5.16% 11/9/94
</TABLE>
As of December 31, 1998, the 7-day yield for Cash Portfolio and Government
Portfolio was 4.66% and 4.52%, respectively.
Smith Barney Mutual Funds
5
<PAGE>
Fees and expenses
The table sets forth the fees and expenses you will pay if you invest in the
funds' shares.
Shareholder fees
<TABLE>
<CAPTION>
Cash Government
(fees paid directly from your investment) Portfolio Portfolio
<S> <C> <C>
Maximum sales charge (load) imposed on purchases None None
Maximum deferred sales charge (load) None None
Annual fund operating expenses
<CAPTION>
Cash Government
(expenses deducted from fund assets) Portfolio Portfolio
<S> <C> <C>
Management fee 0.39% 0.42%
Distribution and service (12b-1) fee -- --
Other expenses 0.04 0.05
---- ----
Total annual fund operating expenses 0.43% 0.47%
Example
This example helps you compare the costs of investing in the funds with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
.You invest $10,000 in the fund for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a sales charge
.Redemption of your shares at the end of the period
Number of years you own your shares
</TABLE>
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Cash Portfolio $44 $138 $241 $542
Government Portfolio $48 $151 $263 $591
</TABLE>
Money Market Funds--Class Z Shares
6
<PAGE>
Management
Manager The fund's investment manager is SSBC Fund Management Inc., an affili-
ate of Salomon Smith Barney Inc. The manager's address is 388 Greenwich Street,
New York, New York 10013. The manager selects each fund's investments and
oversees its operations. The manager and Salomon Smith Barney are subsidiaries
of Citigroup Inc. Citigroup businesses produce a broad range of financial serv-
ices--asset management, banking and consumer finance, credit and charge cards,
insurance, investments, investment banking and trading--and use diverse chan-
nels to make them available to consumer and corporate customers around the
world.
Management fee For its services, the manager received a fee during each fund's
last fiscal year equal to the amount shown below.
Management fee as a percentage of the fund's average daily net assets
<TABLE>
<CAPTION>
Fund
<S> <C>
Cash Portfolio 0.39%
Government Portfolio 0.42%
</TABLE>
Distributor Each fund has entered into an agreement with CFBDS, Inc. to dis-
tribute the fund's shares.
Year 2000 issue Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. The manager and Salomon Smith Barney are address-
ing the Year 2000 issue for their systems. The cost of addressing the Year 2000
issue, if substantial, could adversely affect companies and governments that
issue securities held by the funds. Each fund has been informed by its other
service providers that they are taking similar measures. Although the funds do
not expect the Year 2000 issue to adversely affect them, the funds cannot guar-
antee that their efforts (limited to requesting and receiving reports from
their service providers) or their service providers to correct the problem will
be successful.
Smith Barney Mutual Funds
7
<PAGE>
Buying, selling and exchanging Class Z shares
Through a You may buy, sell or exchange Class Z shares only through a
qualified "qualified plan." A qualified plan is a tax-exempt employee
plan benefit or retirement plan of Salomon Smith Barney, Inc. or
one of its affiliates.
There are no minimum investment requirements for Class Z
shares. However, each fund reserves the right to change this
policy at any time.
- --------------------------------------------------------------------------------
Buying
Orders to buy Class Z shares must be made in accordance with
the terms of a qualified plan. If you are a participant in a
qualified plan, you may place an order with your plan to buy
Class Z shares at net asset value, without any sales charge.
Payment is due to Salomon Smith Barney on settlement date,
which is the third business day after your order is accepted.
If you make payment prior to this date, you may designate a
temporary investment (such as a money market fund of the
Smith Barney Mutual Funds) for payment until settlement date.
Each fund reserves the right to reject any order to buy
shares and to suspend the offering of shares for a period of
time.
- --------------------------------------------------------------------------------
Selling Qualified plans may redeem their shares on any day on which
the fund calculates its net asset value. You should consult
the terms of your qualified plan for special redemption pro-
visions.
- --------------------------------------------------------------------------------
Exchanging You should consult your qualified plan for information about
available exchange options.
Money Market Funds--Class Z Shares
8
<PAGE>
Share price
Qualified plans may buy, exchange or redeem Class Z shares of each fund at the
net asset value next determined after receipt of your request in good order.
Each fund's net asset value is the value of its assets minus its liabilities.
Net asset value is calculated separately for each class of shares. Each fund
calculates net asset value at noon, Eastern time, every day the New York Stock
Exchange is open. The Exchange is closed on certain holidays listed in the SAI.
Each fund uses the amortized cost method to value its portfolio securities.
Using this method, a fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the fund.
<TABLE>
<CAPTION>
Purchase is effective and
Form of purchase payment Dividends begin
<S> <C> <C>
. Payment in federal funds If received At noon,
before noon, Eastern
Eastern time, on
time: that day
. Having a sufficient cash balance in your account If received At noon the
with Salomon Smith Barney or a selling group after noon: next
member business day
- ------------------------------------------------------------------------------
. Other forms of payment, with conversion into, or At noon on the next
advance of, federal funds by Salomon Smith Barney business day
or a selling group member
. Other forms of payment received by the transfer
agent
- ------------------------------------------------------------------------------
</TABLE>
In order to buy, redeem or exchange shares at that day's price, you must place
your order with your qualified plan before the New York Stock Exchange closes.
If the New York Stock Exchange closes early, you must place your order with
your qualified plan prior to the actual closing time. Otherwise, you will
receive the next business day's price.
Your qualified plan must transmit all orders to buy, exchange or redeem shares
to the funds' agent before the agent's close of business.
Smith Barney Mutual Funds
9
<PAGE>
Distributions, dividends and taxes
Dividends Each fund generally makes capital gain distributions, if any, once a
year, typically in December. Each fund may pay additional distributions and
dividends at other times if necessary for the fund to avoid a federal tax. Cap-
ital gain distributions and dividends are reinvested in additional Class Z
shares. Each fund expects distributions to be primarily from income. A sales
charge is paid on reinvested distributions or dividends. Alternatively, a
shareholder can instruct its Salomon Smith Barney Financial Consultant, dealer
representative or the transfer agent to have its distributions and/or dividends
paid in cash. The choice to receive cash may be changed at any time to be
effective as of the next distribution or dividend, except that any change given
to the transfer agent less than five days before the payment date will not be
effective until the next distribution or dividend is paid.
Taxes In general, redeeming Class Z shares, exchanging Class Z shares and
receiving distributions or dividends (whether in cash or additional Class Z
shares) are all non-taxable events for purposes of federal income taxation.
Each fund anticipates that it will normally not earn or distribute any long-
term capital gains.
After the end of each year, each fund will provide you with information about
the distributions and dividends paid during the previous year. If you do
not provide your qualified plan with your correct taxpayer identification
number and any required certifications, you may be subject to back-up withhold-
ing of 31% of your distributions, dividends, and redemption proceeds.
Because each shareholder's circumstances are different and special tax rules
may apply, you should consult with your tax adviser about your investment in
the funds.
Money Market Funds--Class Z Shares
10
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand the perfor-
mance of each fund's Class Z shares for the past 5 years. Certain information
reflects financial results for a single share. Total return represents the rate
that a shareholder would have earned (or lost) on a fund share assuming rein-
vestment of all dividends and distributions. The information in the following
tables was audited by KPMG LLP, independent accountants, whose report, along
with the funds' financial statements, are included in the annual report (avail-
able upon request).
Cash Portfolio
For a Class Z share of capital stock outstanding throughout each year ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994(/1/)
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------
Income from
operations:
Net investment income
0.052 0.052 0.051 0.055 0.006
- ---------------------------------------------------------------------
Total income from
operations 0.052 0.052 0.051 0.055 0.006
- ---------------------------------------------------------------------
Less distributions from:
Net investment income (0.052) (0.052) (0.051) (0.055) (0.006)
- ---------------------------------------------------------------------
Total distributions (0.052) (0.052) (0.051) (0.055) (0.006)
- ---------------------------------------------------------------------
Net asset value, end of
year $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------
Total return 5.29% 5.33% 5.06% 5.63% 0.60%(/2/)
- ---------------------------------------------------------------------
Net assets, end of year
(millions) $2 $6 $6 $5 $5
- ---------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.43% 0.44% 0.53% 0.52% 0.47%(/3/)
Net investment income
5.21 5.21 4.96 5.49 5.12(/3/)
- ---------------------------------------------------------------------
</TABLE>
(/1/) For the period from November 15, 1994 (inception date) to December 31,
1994.
(/2/) Not annualized.
(/3/) Annualized.
Smith Barney Mutual Funds
11
<PAGE>
Government Portfolio
For a Class Z share of capital stock outstanding throughout each year ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994(/1/)(/2/)
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------
Income from
operations:
Net investment income
0.050 0.050 0.049 0.054 0.007
- ---------------------------------------------------------------------
Total income from
operations 0.050 0.050 0.049 0.054 0.007
- ---------------------------------------------------------------------
Less distributions from:
Net investment income (0.050) (0.050) (0.049) (0.054) (0.007)
- ---------------------------------------------------------------------
Total distributions (0.050) (0.050) (0.049) (0.054) (0.007)
- ---------------------------------------------------------------------
Net asset value, end of
year $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------
Total return 5.13% 5.14% 4.99% 5.56% 0.70%(/3/)
- ---------------------------------------------------------------------
Net assets, end of year
(millions) $57 $51 $37 $31 $30
- ---------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.47% 0.51% 0.51% 0.50% 0.51%(/4/)
Net investment income
5.01 5.03 4.88 5.42 4.93(/4/)
- ---------------------------------------------------------------------
</TABLE>
(/1/) On November 7, 1994, the former Class Y shares were renamed Class Z
shares.
(/2/) For the period from November 9, 1994 (inception date) to December 31,
1994.
(/3/) Not annualized.
(/4/) Annualized.
Money Market Funds--Class Z Shares
12
<PAGE>
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<PAGE>
This page is intentionally left blank
<PAGE>
SALOMON SMITH BARNEY (SM)
a member of citigroup [Symbol]
Money Market Funds
Shareholder reports Annual and semiannual reports to shareholders provide addi-
tional information about the funds' investments. These reports discuss the mar-
ket conditions and investment strategies that affected the funds' performance.
The fund sends only one report to a household if more than one account has the
same address. Contact your qualified plan or the transfer agent if you do not
want this policy to apply to you.
Statement of additional information The statement of additional information
provides more detailed information about the funds and is incorporated by ref-
erence into (is legally a part of) this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by contacting your quali-
fied plan, [by calling the fund at 1-800-451-2010, or by writing to the funds
at Smith Barney Mutual Funds, 388 Greenwich Street, MF2, New York, New York
10013].
Visit our web site. Our web site is located at www.smithbarney.com
You can also copy and review the funds' shareholder reports, prospectus and
statement of additional information at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. You can get copies of these materials
for a duplicating fee by writing to the Public Reference Section of the Commis-
sion, Washington, D.C. 20549-6009. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You can get the same information
free from the Commission's Internet web site at http:www.sec.gov
If someone makes a statement about the funds that is not in this prospectus,
you should not rely upon that information. Neither the funds nor the distribu-
tor is offering to sell shares of the funds to any person to whom the funds may
not lawfully sell its shares.
SMSalomon Smith Barney is a service mark of Salomon Smith Barney Inc.
(Investment Company Act file no. 811-02490)
FD 0669 4/99
Part B: Statement of Additional Information
April 30, 1999
STATEMENT OF ADDITIONAL INFORMATION
SMITH BARNEY MONEY FUNDS, INC.
388 Greenwich Street
New York, New York 10013
(800) 451-2010
Class A Shares
Class L Shares
Class Y Shares
Class Z Shares
Smith Barney Money Funds, Inc. (the "Company") is a money
market fund that invests in high quality money market
instruments. The Company seeks to provide:
Daily Income
Convenience
Daily Liquidity
Stability of Net Asset Value
Shares of the Company are currently offered in three
Portfolios (each, a "fund"):
Cash Portfolio
Government Portfolio
Retirement Portfolio
This Statement of Additional information is not a Prospectus.
It is intended to provide more detailed information about the
Company as well as matters already discussed in the Prospectus
and therefore should be read in conjunction with the April 30,
1999 Prospectus which may be obtained from the Company or a
Salomon Smith Barney Financial Consultant.
CONTENTS
Directors and Executive Officers 2
Investment Objectives and Management Policies 3
Risk Factors 7
Investment Restrictions and Fundamental Policies 7
Computation of Yield 9
Valuation of Shares and Amortized Cost Valuation 9
IRA and Other Prototype Retirement Plans 10
Purchase of Shares 11
Redemption of Shares 12
Exchange Privilege 15
Taxes 15
Investment Management and Other Services 16
Additional Information about the Funds 18
Voting Rights 18
Financial Statements 20
Appendix A - Securities Ratings A-1
In all cases, there can be no assurance that a fund will
achieve its investment objective.
Shares of the funds are not insured or guaranteed by the U.S.
Government. There is no assurance that each fund will be able
to maintain a stable net asset value of $1.00 per share.
DIRECTORS AND EXECUTIVE OFFICERS
Overall responsibility for management and supervision of each
fund rests with the Company's Board of Directors. The
directors approve all significant agreements between the
Company and the companies that furnish services to the Company
and the funds, including agreements with the Company's
distributor, investment manager, custodian, transfer agent and
dividend disbursing agent. The day-to-day operations of each
fund are delegated to that fund's investment manager. The
directors and executive officers of the Company, together with
information as to their principal business occupations during
the past five years are shown below. Each Director who is an
"interested person" of the Company, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"),
is indicated by an asterisk.
JANE F. DASHER, Director
Investment Officer; Korsant Partners, a family investment
company, 283 Greenwich Avenue, Greenwich, Connecticut 06830;
Prior to 1997, Independent Financial Consultant from 1975 to
1987, held various positions with Philip Morris Companies,
Inc. including Director of Financial Services, Treasurers
Department; 49.
DONALD R. FOLEY, Director
Retired; 3668 Freshwater Drive, Jupiter, Florida 33477;
Formerly Vice President of Edwin Bird Wilson, Incorporated (an
advertising agency); 76.
PAUL HARDIN, Director
Professor of Law at University of North Carolina at Chapel
Hill; 12083 Morehead, Chapel Hill, North Carolina 27514;
Director of The Summit Bancorporation; Formerly, Chancellor of
the University of North Carolina at Chapel Hill; 67.
*HEATH B. McLENDON, Chairman of the Board, President and Chief
Executive Officer
Managing Director of Salomon Smith Barney and President of
SSBC Fund Management Inc. ("SSBC" or the "Manager") (formerly
known as Mutual Management Corp.) and Travelers Investment
Advisers, Inc. ("TIA"); Director of 64 investment companies
associated with Citigroup Inc. ("Citigroup"), formerly
Chairman of the Board of Smith Barney Strategy Advisers Inc.;
65.
RODERICK C. RASMUSSEN, Director
Investment Counselor; 9 Cadence Court, Morristown, New Jersey
07960; Formerly Vice President of Dresdner and Company Inc.
(investment counselors); 72.
JOHN P. TOOLAN, Director
Retired; 13 Chadwell Place, Morristown, New Jersey 07960;
Trustee of John Hancock Funds; Formerly, Director and Chairman
of Smith Barney Trust Company, Director of Smith Barney
Holdings Inc. and various subsidiaries, Senior Executive Vice
President, Director and Member of the Executive Committee of
Smith Barney; 68.
LEWIS E. DAIDONE, Senior Vice President and Treasurer
Managing Director of Salomon Smith Barney; Senior Vice
President and Treasurer of 59 investment companies associated
with Citigroup; Director and Senior Vice President of the
Manager and TIA; 41.
PHYLLIS M. ZAHORODNY, Vice President and Investment Officer
Managing Director of Salomon Smith Barney; Vice President
and/or Investment Officer of certain other investment
companies associated with Citigroup; 41.
MARTIN R. HANLEY, Vice President and Investment Officer
Vice President of Salomon Smith Barney; Vice President and/or
Investment Officer of certain other investment companies
associated with Citigroup; 33.
IRVING DAVID, Controller
Vice President of Salomon Smith Barney and the Manager;
Controller or Assistant Treasurer of 43 investment companies
associated with Citigroup; Prior to March, 1994, Assistant
Treasurer of First Investment Management Company; 38.
CHRISTINA T. SYDOR, Secretary
Managing Director of Salomon Smith Barney; Secretary of 59
investment companies associated with Citigroup; Secretary and
General Counsel of the Manager and TIA; 48.
The business address of each of the officers of the Company
listed above is 388 Greenwich Street, New York, NY 10013. Such
persons are compensated by Salomon Smith Barney Inc. ("Salomon
Smith Barney") and are not separately compensated by the
Company. On April 9, 1999, directors and officers owned in
the aggregate less than 1% of the outstanding securities of
each fund.
The following table shows the compensation paid by the Company
to each director during the Company's last fiscal year. None
of the officers of the Company received any compensation from
the Company for such period. Fees for directors who are not
"interested persons" of the Company and who are directors of
a group of funds sponsored by Salomon Smith Barney are set at
$42,000 per annum and are allocated based on relative net
assets of each fund in the group. In addition, these
directors received $100 per fund or portfolio for each meeting
attended and plus travel and out-of-pocket expenses incurred
in connection with board meetings. The board meeting fees and
out-of-pocket expenses are borne equally by each individual
fund or portfolio in the group. During the fiscal year ended
December 31, 1998 such expenses totaled $13,732. Officers and
interested directors of the Company are compensated by Salomon
Smith Barney.
COMPENSATION TABLE
Name of
Director
Aggregate
Compensation
from the Fund
For Fiscal Year
Ended 12/31/98
Pension or
Retirement
Benefits
Accrued as Part
of Fund's
Expenses
Total
Compensation
from Fund
Complex for
Calendar
Year Ended
12/31/98
Total Number
of Funds for
Which Director
Serves within
Fund Complex
as of 4/30/99
Jane Dasher+
0
$0
0
7
Joseph H. Fleiss++
$21,279
0
$32,942
10
Donald R. Foley**
33,333
0
57,100
12
Paul Hardin
32,933
0
71,400
14
Heath B. McLendon*
0
0
0
64
Roderick C. Rasmussen
33,333
0
57,100
12
John P. Toolan**
33,033
0
54,700
12
* Designates a director who is an "interested person" of the
Company.
** Pursuant to the Company's deferred compensation plan, the
indicated directors have elected to defer the following
amounts of their compensation from the Company: Donald R
Foley: $15,666, and John P. Toolan: $33,033, and the
following amounts of their total compensation from the Fund
Complex: Donald R. Foley: $21,000 and John P. Toolan:
$54,700. During the Company's most recent fiscal year ended
December 31, 1998, the estate of a deceased director was
paid his previously deferred compensation, which totaled
$97,597 from the Company and $171,148 from the Fund
Complex.
+ Elected by the fund's board of directors on March 19, 1999,
therefore no compensation was paid by the fund through
December 31, 1998.
++ Effective January 1, 1998, Mr. Fleiss became a Director
Emeritus. Upon attainment of age 72 the Company's current
directors may elect to change to emeritus status. Any
directors elected or appointed to the Board of Directors 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 Company's
directors, together with reasonable out-of-pocket expenses
for each meeting attended. During the Company's last
fiscal year, aggregate compensation from the Company to
Emeritus Directors (other than Mr. Fleiss who is covered in
the table above) totaled $11,844.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
General. The Prospectus discusses each fund's investment
objective and the policies each fund employs to achieve its
objective. Each fund is an open-end, diversified management
investment company under the 1940 Act. Each fund's investment
manager is SSBC.
The funds operate as money market funds, and utilize certain
investment policies so that, to the extent reasonably
possible, each fund'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.
Each fund's investments are limited to United States dollar-
denominated instruments (and repurchase agreements thereon)
that, at the time of acquisition (including any related credit
enhancement features) have received a rating in one of the two
highest categories (the highest category for Cash Portfolio)
for short-term debt obligations from the "Requisite NRSROs",
securities of issuers that have received such a rating with
respect to other comparable securities, and comparable unrated
securities. "Requisite NRSROs" means (a) any two nationally
recognized statistical rating 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 Fund
acquires the security. The NRSROs currently designated as
such by the Securities and Exchange Commission ("SEC") are
Standard & Poor's Ratings Group ("S&P"), Moody's Investors
Service, Inc. ("Moody's"), Duff and Phelps Inc., Fitch IBCA,
Inc. and Thompson BankWatch.
The following is a description of the types of money market
instruments in which each fund may invest:
U.S. government obligations (each fund). 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 Government
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 Corporation, 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 obligations of the
Student Loan Marketing Association) are supported only by the
credit of the particular agency or instrumentality.
Repurchase agreements (each fund). Each fund may enter into
repurchase agreement transactions with any broker/dealer or
other financial institution, including the funds' custodian,
that is deemed creditworthy by the Manager, under guidelines
approved by the Board of Directors. A repurchase agreement
arises when the Company acquires a security for a fund 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 liquidating the collateral. The fund
will not enter into a repurchase agreement if, as a result
thereof, more than 10% of the fund's net assets at that time
would be comprised of repurchase agreements maturing in more
than seven days and/or any other investments deemed to be
illiquid.
The following are permitted investments for the Cash Portfolio
and Retirement Portfolio; the Government Portfolio will invest
only in U.S. Government obligations and repurchase agreements
secured by those obligations.
Commercial Paper and Other Short-term Obligations (Cash
Portfolio and Retirement Portfolio). Commercial paper
(including variable amount master demand notes and funding
agreements) consists of short-term, unsecured promissory notes
issued by corporations, partnerships, trusts and other
entities to finance short-term credit needs. Short-term
obligations also include mortgage-related or asset-backed debt
or debt-like instruments, including pass-through certificates
representing participation in, or bonds and notes backed by,
pools of mortgage, credit card, automobile or other types of
receivables. These structured financings will be supported by
sufficient collateral and other credit enhancements, including
letters of credit, insurance, reserve funds and guarantees by
third parties, to enable such instruments to obtain the
requisite quality ratings from NRSROs. Commercial paper and
such other short-term obligations will be rated in the highest
category for short-term debt obligations by the requisite
NRSROs at the time of acquisition by a fund, or will be
unrated securities determined to be comparable thereto.
High Quality Corporate Obligations (Cash Portfolio and
Retirement Portfolio). Obligations of corporations that are
originally issued with a maturity of greater than 397 days and
are: (1) rated as long-term debt obligations in the two
highest rating categories (the highest for Cash Portfolio) by
the requisite NRSROs and (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 highest rating categories for short-
term debt obligations, or are otherwise comparable to short-
term debt obligations having such a rating. Each fund will
invest only in corporate obligations with remaining maturities
of 13 months or less.
Bank Obligations (Cash Portfolio and Retirement Portfolio).
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 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 a fund will not be
fully insured. The Cash Portfolio and 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 and/or any other investments deemed to
be illiquid to 10% of its net assets.
The Cash Portfolio and Retirement Portfolio each will maintain
at least 25% of its total assets invested in obligations of
domestic and foreign banks, subject to the above-mentioned
size criteria. Each fund 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 Portfolio and Retirement Portfolio may
invest in fixed time deposits of foreign banks issued through
their branches located in Grand Cayman Island, London, Nassau,
Tokyo and Toronto.
Municipal Obligations (Cash Portfolio and Retirement
Portfolio). 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. Cash
Portfolio only invests in municipal obligations rated in the
highest short-term rating category. At certain times,
supply/demand imbalances in the tax-exempt market cause
municipal obligations to yield more than taxable obligations
of equivalent credit quality and maturity length. The
purchase of these securities could enhance a fund's yield.
Each of Cash Portfolio and Retirement Portfolio will not
invest more than 10% of its total assets in municipal
obligations.
Time Deposits (Cash Portfolio and Retirement Portfolio). Cash
Portfolio and Retirement Portfolio may invest in fixed time
deposits with an ultimate maturity of not more than six
months. In addition, each of these funds currently intends to
limit investment in fixed time deposits with a maturity of two
business days or more, when combined with other illiquid
assets of the fund, so that not more than 10% of its assets
would be invested in all such illiquid 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.
Asset-Backed Securities (Cash Portfolio and Retirement
Portfolio). Cash Portfolio and Retirement Portfolio may
invest in asset-backed securities arising through the grouping
by governmental, government-related and private organizations
of loans, receivables and other assets originated by various
lenders. Interests in pools of these assets differ from other
forms of debt securities, which normally provide for periodic
payment of interest in fixed amounts with principal paid at
maturity or specified call dates. Instead, asset-backed
securities provide periodic payments which generally consist
of both interest and principal payments.
The estimated life of an asset-backed security varies with the
prepayment experience with respect to the underlying debt
instruments. The rate of such prepayments, and hence the life
of an asset-backed security, will be primarily a function of
current market interest rates, although other economic and
demographic factors may be involved. For example, falling
interest rates generally result in an increase in the rate of
prepayments of mortgage loans while rising interest rates
generally decrease the rate of prepayments. An acceleration
in prepayments in response to sharply falling interest rates
will shorten the security's average maturity and limit the
potential appreciation in the security's value relative to a
conventional debt security. In periods of sharply rising
rates, prepayments generally slow, increasing the security's
average life and its potential for price depreciation.
Illiquid and Restricted Securities (Cash Portfolio and
Retirement Portfolio). Each fund may purchase securities that
are not registered ("restricted securities") under the
Securities Act of 1933, as amended (the "1933 Act"), but can
be offered and sold to "qualified institutional buyers" under
Rule 144A under the 1933 Act ("Rule 144A"). Each fund may
also invest a portion of its assets in illiquid investments,
which include repurchase agreements maturing in more than
seven days. The Board of Directors may determine, based upon
a continuing review of the trading markets for the specific
restricted security, that such restricted securities are
liquid. The Board of Directors has adopted guidelines and
delegated to management the daily function of determining and
monitoring liquidity of restricted securities available
pursuant to Rule 144A. The Board, however, retains sufficient
oversight and is ultimately responsible for the
determinations. Since it is not possible to predict with
assurance exactly how the market for Rule 144A restricted
securities will develop, the Board will monitor each fund's
investments in these securities, focusing on such important
factors, among others, as valuation, liquidity and
availability of information. Investments in restricted
securities could have the effect of increasing the level of
illiquidity in a fund to the extent that qualified
institutional buyers become for a time uninterested in
purchasing these restricted securities. The funds may also
purchase restricted securities that are not registered under
Rule 144A.
The Articles of Incorporation of the Company permit the Board
of Directors to establish additional funds of the Company from
time to time. The investment restrictions applicable to any
such additional fund would be established by the Board of
Directors at the time such fund were established and may
differ from those set forth above.
Other Investment Techniques
The following pertains to each fund:
Portfolio Turnover. Each fund 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, a fund may realize a gain or loss.
Borrowing. Each fund may borrow money from banks for
temporary or emergency purposes, including for the purpose of
accommodating requests for the redemption of shares while
effecting an orderly liquidation of portfolio securities, and
not for leveraging purposes.
Reverse Repurchase Agreements. The Government Portfolio may
invest 1/3 of its total assets in reverse repurchase
agreements and enter into reverse repurchase agreements with
broker/dealers and other financial institutions including the
funds' 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 funds' custodian bank will maintain a separate account
for the Government Portfolio with securities having a value
equal to or greater than such commitments.
Year 2000. The investment management services provided to
each fund by the Manager and the services provided to
shareholders by Salomon Smith Barney, the funds' Distributor,
depend on the smooth functioning of their computer systems.
Many computer software systems in use today cannot recognize
the year 2000, but revert to 1900 or some other date, due to
the manner in which dates were encoded and calculated. That
failure could have a negative impact on the funds' operations,
including the handling of securities trades, pricing and
account services. The Manager and Salomon Smith Barney have
advised the funds that they have been reviewing all of their
computer systems and actively working on necessary changes to
their systems to prepare for the year 2000 and expect that
their systems will be compliant before that date. In
addition, the Manager has been advised by the funds'
custodian, transfer agent and accounting service agent that
they are also in the process of modifying their systems with
the same goal. There can, however, be no assurance that the
Manager, Salomon Smith Barney or any other service provider
will be successful, or that interaction with other non-
complying computer systems will not impair fund services at
that time.
RISK FACTORS
Interest Rate Risk. General changes in interest rates result
in increases or decreases in the market value of the
obligations held by a fund (but do not affect the amortized
cost valuations). The market value of the obligations held by
each fund can be expected to vary inversely to changes in
prevailing interest rates. Investors also should recognize
that, in periods of declining interest rates, each fund's
yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, each fund's
yield will tend to be somewhat lower. Also, when interest
rates are falling, the inflow of net new money to a fund 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.
Foreign Investments (Cash Portfolio and Retirement Portfolio).
Investments in securities issued by foreign banks or foreign
issuers present certain additional risks. Foreign issuers
generally are not subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices
and requirements applicable to domestic issuers. In addition,
there may be less publicly available information about a
foreign issuer than about a domestic issuer. Cash Portfolio
and Retirement Portfolio may invest in Eurodollar and Yankee
obligations, which are certificates of deposit issued in U.S.
dollars by foreign banks and foreign branches of U.S. banks.
The risks of Eurodollar and Yankee obligations include the
possibility that a foreign government will not allow U.S.
dollar-denominated assets to leave the foreign country and the
possibility that adverse political or economic developments
will affect investments in a foreign country.
INVESTMENT RESTRICTIONS AND FUNDAMENTAL POLICIES
The funds are subject to following restrictions and policies
that are "fundamental," which means that they cannot be
changed without approval by a vote of a majority of the
outstanding voting securities of a fund affected by the
change, as defined in the 1940 Act and in accordance with Rule
18f-2 thereunder (see "Voting Rights").
Fundamental Policies - Each fund. Without the approval of a
majority of its outstanding voting securities, no fund may:
1. Invest in a manner that would cause it to fail to be a
"diversified company" under the 1940 Act and the rules,
regulations and orders thereunder. (However, since each
of the funds operates as money market fund under Rule
2a-7 under the Act, compliance with Rule 2a-7 is deemed
to satisfy the diversification requirements otherwise
applicable to diversified investment companies under the
1940 Act.)
2. Issue "senior securities" as defined in the 1940 Act and
the rules, regulations and orders thereunder, except as
permitted under the 1940 Act and the rules, regulations
and orders thereunder.
3. Borrow money, except that (a) the fund may borrow from
banks for temporary or emergency (not leveraging)
purposes, including the meeting of redemption requests
which might otherwise require the untimely disposition
of securities, and (b) the fund may, to the extent
consistent with its investment policies, enter into
reverse repurchase agreements, forward roll transactions
and similar investment strategies and techniques. To
the extent that it engages in transactions described in
(a) and (b), the fund will be limited so that no more
than 33-1/3% of the value of its total assets (including
the amount borrowed), valued at the lesser of cost or
market, less liabilities (not including the amount
borrowed) valued at the time the borrowing is made, is
derived from such transactions.
4. Make loans. This restriction does not apply to: (a) the
purchase of debt obligations in which the fund may
invest consistent with its investment objectives and
policies; (b) repurchase agreements; and (c) loans of
its portfolio securities, to the fullest extent
permitted under the 1940 Act.
5. Purchase or sell real estate, real estate mortgages,
real estate investment trust securities, commodities or
commodity contracts, but this restriction shall not
prevent each fund from (a) investing in securities of
issuers engaged in the real estate business or the
business of investing in real estate (including
interests in limited partnerships owning or otherwise
engaging in the real estate business or the business of
investing in real estate) and securities which are
secured by real estate or interests therein; (b) holding
or selling real estate received in connection with
securities it holds or held; or (c) trading in futures
contracts and options on futures contracts (including
options on currencies to the extent consistent with the
fund's investment objective and policies).
Additional Fundamental Policies - Cash Portfolio and
Retirement Portfolio. In addition to the fundamental policies
stated above for all funds:
1. Neither Cash Portfolio nor Retirement Portfolio may
invest less than 25% of its assets in bank obligations
(including both domestic and foreign bank obligations)
and reserves freedom of action to concentrate in
securities issued or guaranteed as to principal and
interest by the U.S. government, its agencies and
instrumentalities.
Nonfundamental Policies. The funds are subject to the
following restrictions and policies which are "non-
fundamental" and which may be changed by the Company's Board
of Directors without shareholder approval, subject to any
applicable disclosure requirements. As a nonfundamental
policy, no fund may:
1. Purchase any securities on margin (except for such
short-term credits as are necessary for the clearance of
purchases and sales of portfolio securities) or sell any
securities short (except "against the box"). For
purposes of this restriction, the deposit or payment by
the fund of underlying securities and other assets in
escrow and collateral agreements with respect to initial
or maintenance margin in connection with futures
contracts and related options and options on securities,
indexes or similar items is not considered to be the
purchase of a security on margin.
2. Invest in securities of other investment companies
except as may be acquired as part of a merger,
consolidation, or acquisition of assets.
3. Purchase or otherwise acquire any security if, as a
result, more than 10% of its net assets would be
invested in securities that are illiquid.
4. Invest in oil and gas interests.
5. Invest in any company for the purpose of exercising
control.
6. Write or purchase put or call options.
All of the foregoing restrictions that are stated in terms of
percentages will apply at the time an investment is made; a
subsequent increase or decrease in the percentage that may
result from changes in values or net assets will not result in
a violation of the restriction. Notwithstanding any of the
foregoing investment restrictions, each of the funds may
invest up to 100% of its assets in U.S. Government
Obligations.
COMPUTATION OF YIELD
From time to time the Company may advertise the yield and
effective yield of its funds. For Cash Portfolio and
Government Portfolio, each fund may advertise the yield and
effective yield of Class A, Class L and Class Y shares. These
yield figures are based on historical earnings and are not
intended to indicate future performance. The yield of a fund
or a class refers to the net investment income generated by an
investment in the fund 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 fund or 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.
For the seven-day period ended December 31, 1998, the yield
for the Cash Portfolio was 4.66% (the effective yield was
4.77%) for Class A shares, 4.70% (the effective yield was
4.81%) for Class L shares, and 4.86% (the effective yield was
4.98%) for Class Y shares, with an average dollar-weighted
portfolio maturity of 62 days; the yield for the Government
Portfolio was 4.51% (the effective yield was 4.62%) for the
Class A shares, 4.54% (the effective yield was 4.64%) for
Class L shares and 4.67% (the effective yield was 4.78%) for
the Class Y shares with an average dollar-weighted maturity of
59 days; and the yield for the Retirement Portfolio was 4.67%
(the effective yield was 4.78%) with an average dollar-
weighted portfolio maturity of 55 days. The Company quotes
current yield of each fund and class by dividing the net
change in the value of a hypothetical preexisting 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 is 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 fund and class the Company 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 Company also quotes
for each fund and class the average dollar-weighted portfolio
maturity for the corresponding seven-day period.
Although principal is not insured and there can be no
assurance that a $1.00 per share net asset value will be
maintained, it is not expected that the net asset value of any
fund's shares will fluctuate because the Company uses the
amortized cost method of valuation. (See "Valuation of Shares
and Amortized Cost Valuation.") Investors should bear in mind
that yield is a function of the type, quality and maturity of
the instruments in a fund and the fund's operating expenses.
While current yield information may be useful, investors
should realize that each fund'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 net asset value per share of each fund is determined as of
12 noon Eastern time on each day that the New York Stock
Exchange ("NYSE") is open by dividing the fund'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 fund 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. As noted above,
each fund employs the amortized cost method of valuing
portfolio securities and seeks to continue to maintain a
constant net asset value of $1.00 per share.
The Prospectus states that net asset value will be determined
on any day the NYSE 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, Martin Luther King,
Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas
Day and on the preceding Friday or subsequent Monday when one
of these holidays falls on a Saturday or Sunday, respectively.
The Company uses the "amortized cost method" for valuing
portfolio securities pursuant to Rule 2a-7 under the 1940 Act.
The amortized cost method of valuation of each 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 from or premium to
the stated principal amount of the security, regardless of the
impact of fluctuating interest rates on its market value. 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 fund would receive if it sold the instrument.
During such periods the yields to investors in a fund may
differ somewhat from that obtained in a similar fund 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 funds 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 funds' 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 Company or Salomon 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 1996 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.
The Taxpayer Relief Act of 1997 has changed the requirements
for determining whether or not you are eligible to make a
deductible IRA contribution. Under the new rules effective
January 1, 1998, if you are considered an active participant
in an employer-sponsored retirement plan, you may still be
eligible for a full or partial deduction depending upon your
combined adjusted gross income ("AGI"). For married couples
filing jointly for 1998, a full deduction is permitted if your
combined AGI is $50,000 or less ($30,000 for unmarried
individuals); a partial deduction will be allowed when AGI is
between $50,000-$60,000 ($30,000-$40,000 for an unmarried
individual); and no deduction is available when AGI is $60,000
or more ($40,000 for an unmarried individual). However, if
you are married and your spouse is covered by a employer-
sponsored retirement plan, but you are not, you will be
eligible for a full deduction if your combined AGI is $150,000
or less. A partial deduction is permitted if your combined
AGI is between $150,000-$160,000, and no deduction is
permitted when AGI is above $160,000.
The rules applicable to so-called "Roth IRAs" differ from
those described above.
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.
Compensation is capped at $160,000 for 1998.
Paired Defined Contribution Prototype
Corporations (including Subchapter S corporations) and non-
corporate entities may purchase shares of the Company through
the Smith Barney Prototype Paired Defined Contribution Plan
(the "Prototype"). 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).
PURCHASE OF SHARES
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, respectively, 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
Citigroup and its subsidiaries, including Salomon Smith
Barney, and Directors or Trustees of any Travelers-affiliated
funds, including the Smith Barney Mutual Funds, and their
spouses and children. The minimum initial investment for
Class Y is $15,000,000 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 a
Portfolio through the Systematic 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 fund
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 Salomon Smith
Barney and its affiliates.
Class A and Class Y shares of the Cash Portfolio and
Government Portfolio are available for purchase directly by
investors. Class L shares of the Cash Portfolio and
Government Portfolio are available for purchase only by
Participating Plans (as defined under "Purchase of Shares-
Smith Barney 401(k) and ExecChoiceTM Programs") opened prior
to June 21, 1996, either directly or as part of an exchange
privilege transaction with certain other funds sponsored by
Salomon Smith Barney. Class L shares of the Government
Portfolio that represent previously issued "Class B" shares
may only be redeemed or exchanged out of the fund.
Retirement Portfolio. Shares of the Retirement Portfolio are
offered exclusively to retirement plans under Sections 401 and
408 of the Code. To purchase these shares, a brokerage
account for your retirement plan must be established with
Salomon Smith Barney upon completion of an account application
available from your Financial Consultant. Salomon Smith
Barney has advised the fund that the minimum initial purchase
is $200 for each Retirement Portfolio account, and subsequent
investments may be $1.00 or more. Salomon 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.
Each fund's shares are sold continuously at their net asset
value next determined after a purchase order is received and
becomes effective. A purchase order becomes effective, and
income dividends begin to accrue, when the fund, Salomon 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 Federal funds which is required if
shares are purchased through First Data, or are placed by an
investor with sufficient Federal funds or cash balance in the
investor's brokerage account with Salomon Smith Barney or the
Introducing Broker, the order becomes effective on the day of
receipt if received prior to 12 noon, Eastern 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 next time the net asset
value is determined. When orders for the purchase of fund
shares are paid for other than in Federal funds, Salomon Smith
Barney or the Introducing Broker, 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 fund, Salomon Smith
Barney or the Introducing Broker.
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, Salomon 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 institution
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 Salomon Smith Barney or First Data.
Additional information is available from the fund or a Salomon
Smith Barney Financial Consultant.
Smith Barney 401(k) and ExecChoiceTM Programs. Investors may
be eligible to participate in the Smith Barney 401(k) Program
or the Smith Barney ExecChoiceTM Program. To the extent
applicable, the same terms and conditions, which are outlined
below, are offered to all plans participating ("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 ExecChoiceTM 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 initial sales charge or contingent deferred sales charge
("CDSC").
Class L shares of the Cash Portfolio and Government Portfolio
are not available 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 L 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 L holdings
in all non-money market Smith Barney Mutual Funds equal at
least $500,000 as of the calendar year-end, the Participating
Plan will be offered the opportunity to exchange all of its
Class L 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 L 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 anniversary
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 L 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 Government Portfolio through the Smith Barney
401(k) Program or the Smith Barney ExecChoiceTM Program must
purchase such shares directly from First Data. For further
information regarding these Programs, investors should contact
a Salomon Smith Barney Financial Consultant.
Letter of Intent - Class Y Shares. A Letter of Intent may be
used as a way for investors to meet the minimum investment
requirement for Class Y shares. Such investors must make an
initial minimum purchase of $5,000,000 in Class Y shares of
the Fund and agree to purchase a total of $15,000,000 of Class
Y Shares of the Fund within 13 months from the date of the
Letter. If a total investment of $15,000,000 is not made
within the 13-month period, all Class Y shares purchased
during such period will be transferred to Class A shares,
where they will be subject to all fees (including a service
fee of 0.25%) and expenses applicable to the Fund's Class A
shares, which may include a CDSC of 1.00%. Please contact a
Salomon Smith Barney Financial Consultant or the Transfer
Agent for further information.
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any day
a fund calculates its net asset value. See "Valuation of
Shares and Amortized Cost Valuation." Redemption requests
received in proper form before 12 noon, Eastern time, are
priced at the net asset value as next determined on that day.
Redemption requests received after 12 noon, Eastern time, are
priced at the net asset value next determined. Redemption
requests must be made through a Salomon Smith Barney Financial
Consultant or dealer representative 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 a Salomon Smith Barney Financial Consultant, dealer
representative or First Data endorsed for transfer (or
accompanied 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.
Each fund normally transmits redemption proceeds on the
business day following receipt of a redemption request but, in
any event, payment will be made within three days thereafter,
exclusive of days on which the NYSE is closed and the
settlement of securities does not otherwise occur, or as
permitted under the 1940 Act in extraordinary circumstances.
Generally, if the redemption proceeds are remitted to a
Salomon Smith Barney brokerage account, these funds will not
be invested for the shareholder's benefit without specific
instruction and Salomon Smith Barney will benefit from the use
of temporarily uninvested funds. A shareholder 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
cashier's check.
Fund shareholders who purchase securities through a Salomon
Smith Barney Financial Consultant or dealer representative may
take advantage of special redemption procedures under which
Class A shares of the fund will be redeemed automatically to
the extent necessary to satisfy debit balances arising in the
shareholder's account with a Salomon Smith Barney Financial
Consultant or dealer representative. 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 the 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
redemption and will only be redeemed upon specific request.
If the shareholder does not request redemption of such
shares, the shareholder's account with a Salomon Smith Barney
Financial Consultant or dealer representative may be margined
to satisfy debit balances if sufficient fund shares that are
not subject to any applicable CDSC are unavailable. No fee is
currently charged with respect to these automatic
transactions. Shareholders not wishing to participate in
these arrangements should notify their Salomon Smith Barney
Financial Consultant or dealer representative.
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 registered. If the
shares to be redeemed were issued in certificate form, the
certificates 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
$10,000, 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
$10,000 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 confirmed, 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 a 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. (Eastern
time) on any day the NYSE is open. Requests received after the
close of regular trading on the NYSE are priced at the net
asset value next determined. Redemptions of shares (i) by
retirement plans or (ii) for which certificates have been
issued are not permitted 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 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 4:00 p.m. (Eastern 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 funds nor their agents will be
liable for following instructions communicated by telephone
that are reasonably believed to be genuine. Each 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). Each 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 L shares of the Government Portfolio that represent
previously issued "Class B" 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 CDSC, continue to be subject to any
applicable CDSC of the original fund. Therefore, such Class A
and Class L 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 Salomon Smith Barney. The CDSC will be assessed based on
an amount equal to the account value at the time of
redemption, and will not be imposed on increases in value
above the initial purchase price in the original fund. In
addition, no charge will be assessed on shares derived from
reinvestment 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 distributions and
finally of other shares held by the shareholder for the
longest period of time. The length of time that Class A and
Class L 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 the amount of shares being
redeemed will be considered to represent, as applicable, the
value of 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 (if any) or increase the loss (if any), as the case may
be, on redemption.
The CDSC on Class A and Class L 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) redemption 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
Salomon Smith Barney in the case of shareholders who are also
Salomon 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 L shares acquired through the Smith Barney 401(k) or
ExecChoiceTM Program, see "Purchase of Shares."
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each class may be
exchanged for shares of the same class in any 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 L shares are subject to minimum investment
requirements and all shares are subject to other terms or
requirements of the fund into which exchanges are made and a
sales charge may apply.
Class A Exchanges. Class A shares of each fund will be
subject to the applicable 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 fund 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.
Additional Information Regarding the Exchange Privilege.
Excessive exchange transactions may be detrimental to each
fund'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 a fund's other
shareholders. In this event the fund may, at its discretion,
decide to limit additional purchases and/or exchanges by the
shareholder. Upon such a determination the fund will provide
notice in writing or by telephone 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 fund 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. 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 Company reserves the right to modify or
discontinue exchange privileges upon 60 days' prior notice to
shareholders.
TAXES
The following is a general summary of selected federal income
tax considerations that may affect the funds and their
shareholders. In addition to the considerations described
below, there may be other federal, state, local, or foreign
tax applications to consider. The summary does not address
all of the federal income tax consequences potentially
applicable to the funds, or to all categories of investors,
some of which may be subject to special tax rules. The
summary is not intended as a substitute for individual tax
advice and investors are urged to consult their own tax
advisors as to the tax consequences of an investment in a
fund.
Dividends and Automatic Reinvestment. 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. If a shareholder
redeems in full an account between payment days, 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 L 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 L shares. Long-term capital gains, if any,
will be in the same per share amount for each class and will
be distributed annually.
Each fund has qualified and intends to qualify each year as a
regulated investment company under Subchapter M of the Code by
complying with certain requirements regarding the sources and
distribution of its income and the diversification of its
assets. As a regulated investment company, each fund will not
be subject to Federal income taxes to the extent that it
distributes its investment company taxable income and, if any,
net capital gain in accordance with the Code's timing and
other requirements. For Federal income tax purposes,
dividends and capital gains distributions, if any, whether in
shares or cash, are taxable to shareholders of each fund that
are not tax-exempt or tax deferred retirement plans, accounts
or entities. Each fund anticipates that all or substantially
all of its distributions will be taxable as ordinary income
under the Code. Under the Internal Revenue Code, no portion
of the Fund's distributions will be eligible for the dividends
received deduction for corporations.
Dividends and other distributions by the funds are generally
treated under the Code as received by the shareholders at the
time the dividend or distribution is made. However, any
dividends or other distributions declared by a fund in
October, November or December and made payable to shareholders
of record in such a month would be treated under the Code as
if received by shareholders on December 31 of the year in
which they are declared if they are paid in the following
January.
Dividends to shareholders who are nonresident aliens or
foreign entities may be subject to nonresident alien
withholding (which differs from the backup withholding
described in the Prospectus) of federal income tax at a
maximum rate of 30%, subject to possible reduction under an
applicable income tax treaty (if any). Other distributions to
these shareholders may be subject to backup withholding unless
their foreign status is properly certified in the manner
required under the Code. Nonresident aliens and foreign
entities should consult their own tax advisers regarding these
and other possible tax consequences of investing in the funds.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Manager. SSBC manages the day to day operations of each fund
pursuant to management agreements entered into by the Company
on behalf of each fund. Under the management agreements, the
Manager offers each fund 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 fund. It also furnishes each fund 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 funds. SSBC is a subsidiary of Salomon Smith Barney
Holdings, Inc., which is a subsidiary of Citigroup, a publicly
owned financial services company. SSBC is an investment
manager to investment companies that had assets under
management as of March 31, 1999 in excess of $114 billion.
For the years 1996, 1997 and 1998, the funds paid management
fees as shown below:
Fund
Management Fee
1996
1997
1998
Cash Portfolio
$103,013,084
$117,380,871
138,431,850
Government Portfolio
18,688,740
19,475,520
21,476,822
Retirement Portfolio
5,588,496
5,982,179
6,375,587
The respective funds' management agreements, which were
approved by their shareholders on September 16, 1994 and
became effective on November 21, 1994, provide for daily
compensation of the Manager at the following annual rates:
Fund
Fund Asset Breakpoints
Management Fee
as a Percentage
of Average Daily
Net Assets
Cash Portfolio
First $6 billion
0.45%
Over $6 billion up to
$12 billion
0.425%
Over $12 billion up to
$18 billion
0.40%
Over $18 billion
0.35%
Government Portfolio
First $2.5 billion
0.45%
Over $2.5 billion up to
$5 billion
0.40%
Over $5 billion
0.35%
Retirement Portfolio
First $1 billion
0.45%
Over $1 billion up to
$2 billion
0.40%
Over $2 billion
0.35%
Each fund's management agreement further provides that all
other expenses not specifically assumed by the Manager under
the agreement are borne by the Company. Expenses payable by
the Company 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 Company) and shareholder servicing
agents, filing fees and expenses relating to the registration
and qualification of the Company's shares under Federal or
state securities laws and maintaining such registrations and
qualifications (including the printing of the Company'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 1940 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 Company's corporate
existence and extraordinary expenses such as litigation and
indemnification expenses. Direct expenses are charged to the
relevant fund; general corporate expenses of the Company are
allocated among all the funds 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 Company's shares are not deemed sales
or promotion expenses.
The Manager has agreed that if in any fiscal year the total
expenses of any fund, exclusive of taxes, brokerage, interest
and extraordinary expenses, exceed 0.70% of the average daily
net assets for that fiscal year of the fund, the Manager will
reduce its fee to the extent of such excess, or reimburse any
such excess amount to the relevant fund. The 0.70% 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 fund's management agreement will continue in effect if
specifically approved annually by a majority of the directors
of the Company, including a majority of the directors who are
not parties to such contract or "interested persons" of any
such parry. 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 fund as
defined in the 1940 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.
The term "Smith Barney" in the title of the Company has been
adopted by permission of Salomon Smith Barney and is subject
to the right of Salomon Smith Barney to elect that the Company
stop using the term in any form or combination of its name.
Distributor. CFBDS, Inc., located at 20 Milk Street, Boston,
MA 02109-5408, serves as the fund's distributor on a best
efforts basis pursuant to a distribution agreement dated
October 8, 1998 (the "Distribution Agreement"), which was
approved by the fund's board of directors. Prior to the
merger of Travelers Group, Inc. and Citicorp on October 8,
1998, Salomon Smith Barney served as the fund's distributor.
To compensate Salomon Smith Barney and PFS Distributors, Inc.
("PFS") for the service they provide and for the expense they
bear under the Distribution Agreement, the fund has adopted a
services and distribution plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Plan, the fund pays
Salomon Smith Barney a service fee, accrued daily and paid
monthly, calculated at the annual rate of 0.10% of the value
of the fund's average daily net assets attributable to the
Class A and Class L shares. The fund also pays PFS a service
fee of 0.10% for each Class A share held in accounts
attributable to PFS.
Brokerage. The Manager places orders for the purchase and
sale of securities for the funds of the Company. All of the
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 Salomon Smith Barney.
ADDITIONAL INFORMATION ABOUT THE FUNDS
The Company, an open-end, diversified management investment
company, was incorporated under Maryland law on May 28, 1974.
The Company currently has outstanding three series of shares,
representing shares in separate Funds - the Cash Portfolio,
the Government Portfolio and the Retirement Portfolio - and
the Company's Board of Directors may authorize the creation of
additional series of shares. Each share of a fund or class
represents an equal proportionate interest in the net assets
of that fund or class with each other share of the same fund
or class and is entitled to such dividends and distributions
out of the net income of that fund or class as are declared in
the discretion of the Board. Shareholders are entitled to one
vote for each share held and will vote in the aggregate and
not by fund or class except as otherwise required by the 1940
Act or Maryland law. In the event of the liquidation or
dissolution of a fund or of the Company, shares of a fund are
entitled to receive the assets belonging to that fund and a
proportionate distribution of any general assets not belonging
to any particular fund that are available for distribution
based upon the relative net assets of the respective funds.
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 Company. 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 Company 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 1940 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 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 fund or class affected
by the matter. Rule 18f-2 further provides that a fund or
class shall be deemed to be affected by a matter unless it is
clear that the interests of each fund or class in a matter are
identical or that the matter does not affect any interest of
the fund 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 fund
only if approved by a majority of the outstanding voting
securities of the fund 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 Company shares voting without
regard to fund.
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 Company (or the
affected fund or class) or (b) 67% or more of such shares
present at a meeting if more than 50% of the outstanding
shares of the Company (or the affected fund 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 Company to
own of record of beneficially 5% or more of any Class of a
fund as of April 9, 1999:
Cash Portfolio Class L Shares
Frontier Trust Company TTEE, Sioux City Tent & Awning Co Inc.,
DBA Mullin Awning & Siding, 401k Plan, 811 Stuben Street,
Sioux City, IA 51101-2099, owned of record 139,095.995 shares
(27.99%); Frontier Trust Company TTEE, Laser Technologies
Employees 401k Plan, P.O. Box 190, Exton, PA 19341-0198, owned
of record 95,677.160 shares (19.25%); Frontier Trust Company
TTEE, Greenhill & Co 401k Plan, 31 West 52nd Street, New York,
NY 10101, owned of record 77,940.870 shares 15.69%; Frontier
Trust Company TTEE, HB Machine/Medtex, 401k Profit Sharing
Plan, P.O. Box 87687, Phoenix, AZ 85080-7687, owned of record
66,502.30 shares 13.38%; Frontier Trust Company TTEE, Peer
Bearing Company Union, Employees Money Purchase Plan, 241 W
Palatine Road, Wheeling, IL 60090, owned of record 35,048.27
shares 7.05%; TANCO Engineering Inc., C/O Leggette & Company,
Attn. Mary Virginia Boggs, 4131 N Central Expressway, Suite
1100, Dallas, TX 75204, owned of record 32,259.920 shares
6.49%; Frontier Trust Company TTEE, Northstar Sportswear
Company, 401k Plan, P.O. Box 569, Kingston, WA 98346, owned of
record 31,555.668 shares 6.35%.
Cash Portfolio Class Y Shares
San Diego County Employees, Retirement Association, Account #
1, Attn: Robert Shigaroff, 1495 Pacific Highway, Suite 350,
San Diego, CA 92101-2473, owned of record 36,107,268.29 shares
38.73%; Thomas C Lund, Carol A Lund, JTWROS, 411 Hamilton
Blvd. #2002, Peoria, IL 61602-1104, owned of record
14,857,702.770 shares 15.94%; Mr. Kevin J. Maher Exec., Mr.
Jerard F. Maher Exec., For the Estate of Joseph Maher, Miller
Road, New Vernon, NJ 07976, owned of record 10,325,772.630
shares 11.08; Cogen Technologies Linden Ltd., Attn: Dick
Lydecker, 711 Louisiana, 33rd Floor, Houston, TX 77002-2716,
owned of record 10,131,028.690 shares 10.87%; Rooke Corp,
D/B/A Aviation Equipment Inc., Attn: Jim Shaw - V.P./CFO, 7230
Fulton Avenue, North Hollywood, CA 91605-4110, owned of record
8,966,378.960 shares 9.62%.
Cash Portfolio Class Z Shares
State Street Bank & Trust Custodian, The Travelers Group 401k,
Savings Plan, Attn: Rick Vest, 225 Franklin Street, Boston, MA
02101, owned of record 94,286,764.300 shares 99.99%.
Government Portfolio Class L Shares
Jerry L. Calkins, SSB IRA Rollover Custodian, 2844 West 111th
Terrace, Leawood, KS 66211-3089, owned of record 64,959.230
shares 34.58%; Frontier Trust Company as TTEE, Southern
Floral Company, P.O. Box 1313, Houston, Texas 77251-1313,
owned of record 47,237.220 shares 25.14%; Terry Donofrio,
Smith Barney Inc. IRA Custodian, 25 Glenair Avenue, Waldwick,
NJ 07463-1214, owned of record 23,678.420 shares 12.60%;
James F. Burgess Jr., M. Kathleen Burgess JTWROS, 5901
Lakeshore Dr., Columbia, SC 29206-4327, owned of record
17,626.010 shares 9.38%; Ward G. Pennebaker, SSB SEP IRA
Custodian, 7510 Inwood, Houston, TX 77063-1802, owned of
record 17,043.040 shares 9.07%.
Government Portfolio Class Y Shares
CSEA Employee Benefit Fund, A Non-Profit Organization, Attn:
Karl Bellinger/Director of Internal Operations, 1 Lear Jet
Lane, Suite 41, Latham, NY 12110-2313, owned of record
13,980,723.770 shares 61.96%; News Liquidation LLC, Attn:
Joseph Desiderio, 305 Spruce Bank Road, Haxden, CT 06518-2213,
owned of record 5,078,535.060 shares 22.51%; Michael P.
Churra and, Malcolm George Smith TTEES of the Frederick R.
Weisman Trust of 1991 UTD 03/04/91, 1875 Century Park East
#1790, Los Angeles, CA 90067-2529, owned of record
3,115,921.840 shares 13.81%.
Custodian. 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.
Transfer and Dividend Disbursing Agent. First Data Investor
Services Group, Inc., Exchange Place, Boston, Massachusetts
02109 serves as the Fund's transfer and dividend disbursing
agent.
Independent Auditors. KPMG LLP, 345 Park Avenue, New York,
New York 10154, has been selected as independent auditors for
each fund for its fiscal year ending December 31, 1999 to
examine and report on each fund's financial statements and
financial highlights.
Annual and Semi-Annual Reports. The Company sends its
shareholders a semi-annual report and an audited annual
report, which include listings of the investment securities
held by each fund at the end of the period covered. In an
effort to reduce the funds' printing and mailing costs, the
funds plans to consolidate the mailing of their 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 accounts should contact their Salomon Smith Barney
Financial Consultant or the transfer agent.
Minimum Account Size. The Company reserves the right to
redeem involuntarily any shareholder's account in Cash
Portfolio or Government Portfolio if the aggregate net asset
value of the shares held in the account in either fund is less
than $500, and to redeem involuntarily any shareholder's
account in Retirement Portfolio if the aggregate net asset
value of the shares held in the account is less than $100.
With respect to Cash Portfolio and Government Portfolio, any
applicable CDSC will be deducted from the proceeds of this
redemption. (If a shareholder has more than one account in
these funds, each account must satisfy the minimum account
size.) Before the Board of Directors of the Company 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.
FINANCIAL STATEMENTS
The Company's Annual Report for the fiscal year ended December
31, 1998 is incorporated herein by reference in its entirety.
The Annual Report was filed on March 15, 1999, accession
number 91155-99-000151.
APPENDIX A - 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 rating of "AA" 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&Ps receipt of closing
documentation confirming investments and cash flow.
* - Continuance of the rating is contingent upon S&Ps receipt of an
executed copy of the escrow agreement.
Fitch IBCA, Inc.
AAA - Bonds rated AAA by Fitch have the lowest expectation of credit risk.
The obligor has an exceptionally strong capacity for timely payment of
financial commitments which is highly unlikely to be adversely affected by
foreseeable events.
AA - Bonds rated AA by Fitch have a very low expectation of credit risk.
They indicate very strong capacity for timely payment of financial commitments.
This capacity is not significantly vulnerable to foreseeable events.
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.
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.
Issuers rated "Prime-2" (or related supporting institutions) have strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage rations, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
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.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
Fitch IBCA, Inc.
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet financial commitment in a timely
manner.
Fitch's short-term ratings are as follows:
F1+ - Issues assigned this rating are regarded as having the strongest
capacity for timely payments of financial commitments. The "+" denotes an
exceptionally strong credit feature.
Fl - Issues assigned this rating are regarded as having the strongest
capacity for timely payment of financial commitments.
F2 - Issues assigned this rating have a satisfactory capacity for timely
payment of financial commitments, but the margin of safety is not as great as
in the case of the higher ratings.
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.
Duff 1 - Indicates a high certainty of timely payment.
Duff 2 - Indicates a good certainty of timely payment liquidity factors
and company fundamentals are sound.
Thompson BankWatch ("TBW")
TBW-1 - Indicates a very high degree of likelihood that principal and
interest will be paid on a timely basis.
TBW-2 - while the degree of safety regarding timely repayment of principal
and interest is strong, the relative degree of safety is not as high as for
issues rated TBW- 1.
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PART C - OTHER INFORMATION
Item 23. Exhibits
(a) (1) 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.
(2) 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.
(3) 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.
(4) Certificate of Correction dated July 15, 1994 is
incorporated by reference to Post-Effective
Amendment No. 51 filed on March 1, 1999.
(5) Articles Supplementary to the Articles of
Incorporation dated July 19, 1994 is incorporated
by reference to Post-Effective Amendment No. 51
filed on March 1, 1999.
(6) Articles of Amendment to Articles of Incorporation
dated November 3, 1994 is incorporated by reference
to Post-Effective Amendment No. 51 filed on March
1, 1999.
(7) Articles Supplementary to Articles of Incorporation
dated November 3, 1994 is incorporated by reference
to Post-Effective Amendment No. 51 filed on March
1, 1999.
(8) Articles Supplementary to Articles of Incorporation
dated November 3, 1994 is incorporated by reference
to Post-Effective Amendment No. 51 filed on March
1, 1999.
(9) Articles Supplementary to Articles of Incorporation
dated January 16, 1996 is incorporated by reference
to Post-Effective Amendment No. 51 filed on March
1, 1999.
(10) Articles Supplementary to Articles of Incorporation
dated January 30, 1998 is incorporated by reference
to Post-Effective Amendment No. 51 filed on March
1, 1999.
(11) Articles of Amendment to Articles of Incorporation
dated June 1998 is incorporated by reference to
Post-Effective Amendment No. 51 filed on March 1,
1999.
(b) (1) Bylaws are incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 32.
(2) Restated By-Laws are incorporated by reference
to Post-Effective Amendment No. 51 filed on March 1,
1999.
(c) 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.
(d) (1) Management Agreement - U.S. Treasury Portfolio is
incorporated by reference to Exhibit 5(a) to Post-
Effective Amendment No. 34.
(2) Management Agreement for the Cash Portfolio is
incorporated by reference to Exhibit 5(b) to Post-
Effective Amendment No. 44.
(3) Management Agreement for the Government Portfolio is
incorporated by reference to Exhibit 5(c) to Post-
Effective Amendment No. 44.
(4) Management Agreement for the Retirement Portfolio is
incorporated by reference to Exhibit 5(d) to Post-
Effective Amendment No. 44.
(e) (1) Underwriting Agreement is incorporated by reference
to Exhibit 6 to Post-Effective Amendment No. 32.
(2) Distribution Agreement between the Registrant
and CFBDS Inc. dated October 8, 1998 is
incorporated by reference to Post-Effective
Amendment No. 51 filed on March 1, 1999.
(3) Selling Group Agreement between Registrant and
CFBDS, Inc. is filed herewith.
(f) Not applicable.
(g) Custodian Agreement is incorporated by reference to
Exhibit 8 to Post-Effective Amendment No. 32.
(h) (1) Form of Transfer Agency Agreement is incorporated by
reference to Exhibit 9 to Post-Effective Amendment No. 49.
(2) Form of Sub-Transfer Agency Agreement between Registrant
and PFS Shareholder Services is filed herewith.
(i) Opinion and Consent of Sullivan & Cromwell as to
legality of the series of shares being registered is
incorporated by reference to the Registration Statement
and Post-Effective Amendment No. 31.
(j) (1) Auditors' Report (see the Annual Report to
Shareholders which is incorporated by reference in the
Statement of Additional Information).
(2) Auditors' Consent is filed herewith.
(k) Not applicable.
(l) Not applicable.
(m) (1) 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.
(2) 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.
(3) 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.
(4) Form of Amended and Restated Plan of Distribution pursuant
to Rule 12b-1 for the Registrant is incorporated by reference to
Post-Effective Amendment No. 51 filed on March 1, 1999.
(5) Form of Amended Plan of Distribution pursuant to Rule 12b-1
between the Registrant and PFS Distributors, Inc. is filed herewith.
(n) Financial Data Schedule is filed herewith.
(o) (1) Plan pursuant to Rule 18f-3 is incorporated by
reference to Exhibit 18 to Post-Effective Amendment
No. 47.
(2) Plan pursuant to Rule 18f-3 is incorporated by
reference to Post-Effective Amendment No. 51 filed
on March 1, 1999.
Item 24. Persons Controlled by or under Common Control with
Registrant
(None)
Item 25. 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 SSBC Fund Management Inc.
(formerly Mutual Management Corp.) (Registrant's Manager)
and affiliated investment companies.
Item 26. Business and other Connections of Investment Adviser
Information as to the Directors and Officers of SSBC Fund
Management Inc. (formerly Mutual Management Corp.) is
included in its Form ADV (File No. 801-8314), filed with
the Commission, which is incorporated herein by reference
thereto.
Item 27. Principal Underwriters
(a) CFBDS, Inc., ("CFBDS") the Registrant's Distributor, is also
the distributor for the following Smith Barney funds: Concert
Investment Series, Consulting Group Capital Markets Funds,
Greenwich Street Series Fund, Smith Barney Adjustable Rate
Government Income Fund, Smith Barney Aggressive Growth Fund
Inc., Smith Barney Appreciation Fund Inc., Smith Barney Arizona
Municipals Fund Inc., Smith Barney California Municipals Fund
Inc., Smith Barney Concert Allocation Series Inc., Smith Barney
Equity Funds, Smith Barney Fundamental Value Fund Inc., Smith
Barney Funds, Inc., Smith Barney Income Funds, Smith Barney
Institutional Cash Management Fund, Inc., Smith Barney
Investment Funds Inc., Smith Barney Investment Trust, Smith
Barney Managed Governments Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney Massachusetts Municipals
Fund, Smith Barney Muni Funds, Smith Barney Municipal Money
Market Fund, Inc., Smith Barney Natural Resources Fund Inc.,
Smith Barney New Jersey Municipals Fund Inc., Smith Barney
Oregon Municipals Fund Inc., Smith Barney Principal Return
Fund, Smith Barney Small Cap Blend Fund, Inc., Smith Barney
Telecommunications Trust, Smith Barney Variable Account Funds,
Smith Barney World Funds, Inc., Travelers Series Fund Inc., and
various series of unit investment trusts.
CFBDS also serves as the distributor for the following funds:
The Travelers Fund UL for Variable Annuities, The Travelers Fund
VA for Variable Annuities, The Travelers Fund BD for Variable
Annuities, The Travelers Fund BD II for Variable Annuities, The
Travelers Fund BD III for Variable Annuities, The Travelers Fund
BD IV for Variable Annuities, The Travelers Fund ABD for
Variable Annuities, The Travelers Fund ABD II for Variable
Annuities, The Travelers Separate Account PF for Variable
Annuities, The Travelers Separate Account PF II for Variable
Annuities, The Travelers Separate Account QP for Variable
Annuities, The Travelers Separate Account TM for Variable
Annuities, The Travelers Separate Account TM II for Variable
Annuities, The Travelers Separate Account Five for Variable
Annuities, The Travelers Separate Account Six for Variable
Annuities, The Travelers Separate Account Seven for Variable
Annuities, The Travelers Separate Account Eight for Variable
Annuities, The Travelers Fund UL for Variable Annuities, The
Travelers Fund UL II for Variable Annuities, The Travelers
Variable Life Insurance Separate Account One, The Travelers
Variable Life Insurance Separate Account Two, The Travelers
Variable Life Insurance Separate Account Three, The Travelers
Variable Life Insurance Separate Account Four, The Travelers
Separate Account MGA, The Travelers Separate Account MGA II, The
Travelers Growth and Income Stock Account for Variable
Annuities, The Travelers Quality Bond Account for Variable
Annuities, The Travelers Money Market Account for Variable
Annuities, The Travelers Timed Growth and Income Stock Account
for Variable Annuities, The Travelers Timed Short-Term Bond
Account for Variable Annuities, The Travelers Timed Aggressive
Stock Account for Variable Annuities, The Travelers Timed Bond
Account for Variable Annuities.
In addition, CFBDS, the Registrant's Distributor, is also the
distributor for CitiFunds Multi-State Tax Free Trust, CitiFunds
Premium Trust, CitiFunds Institutional Trust, CitiFunds Tax
Free Reserves, CitiFunds Trust I, CitiFunds Trust II, CitiFunds
Trust III, CitiFunds International Trust, CitiFunds Fixed
Income Trust, CitiSelect VIP Folio 200, CitiSelect VIP Folio
300, CitiSelect VIP Folio 400, CitiSelect VIP Folio 500,
CitiFunds Small Cap Growth VIP Portfolio. CFBDS is also the
placement agent for Large Cap Value Portfolio, Small Cap Value
Portfolio, International Portfolio, Foreign Bond Portfolio,
Intermediate Income Portfolio, Short-Term Portfolio, Growth &
Income Portfolio, U.S. Fixed Income Portfolio, Large Cap Growth
Portfolio, Small Cap Growth Portfolio, International Equity
Portfolio, Balanced Portfolio, Government Income Portfolio, Tax
Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio.
In addition, CFBDS is also the distributor for the following
Salomon Brothers funds: Salomon Brothers Opportunity Fund Inc.,
Salomon Brothers Investors Fund Inc., Salomon Brothers Capital
Fund Inc., Salomon Brothers Series Funds Inc., Salomon Brothers
Institutional Series Funds Inc., Salomon Brothers Variable
Series Funds Inc.
In addition, CFBDS is also the distributor for the Centurion
Funds, Inc.
(b) The information required by this Item 27 with respect to
each director and officer of CFBDS is incorporated by reference
to Schedule A of Form BD filed by CFBDS pursuant to the
Securities and Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. 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) of the 1940 Act.
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) of the 1940 Act.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 30th day of April 1999.
SMITH BARNEY MONEY FUNDS, INC.
By: /s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board, President 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 30, 1999
(Heath B. McLendon) President and Chief
Executive Officer
/s/Donald R. Foley* Director April 30, 1999
(Donald R. Foley)
/s/ Paul Hardin* Director April 30, 1999
(Paul Hardin)
/s/Roderick C. Rasmussen* Director April 30, 1999
(Roderick C. Rasmussen)
/s/John P. Toolan* Director April 30, 1999
(John P. Toolan)
/s/Lewis E. Daidone Treasurer April 30, 1999
(Lewis E. Daidone) (Principal
Financial and
Accounting Officer)
*By: /s/ Christina T. Sydor April 30, 1999
Christina T. Sydor
Pursuant to Power of Attorney
EXHIBIT INDEX
Exhibit No. Exhibit
(e) (3) Selling Group Agreement between Registrant and
CFBDS, Inc.
(j) (2) Auditor's Consent
(n) Financial Data Schedule
SMITH BARNEY MUTUAL FUNDS
BROKER DEALER CONTRACT
CFBDS, Inc.
21 Milk Street
Boston, Massachusetts 02109
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We, CFBDS, Inc. ("CFBDS"), have agreements
with certain investment companies for which Mutual
Management Corp. serves as investment adviser and/or
administrator (each a "Fund") pursuant to which we act
as nonexclusive principal underwriter and distributor
for the sale of shares of capital stock ("shares") of
the various series of such Funds, and as such have the
right to distribute shares for resale. Each Fund is
an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940
Act") and the shares being offered to the public are
registered under the Securities Act of 1933, as
amended (the "1933 Act"). Each series of each Fund
covered by a Distribution Agreement from time to time
is referred to in this agreement as a "Series" and
collectively as the "Series." The term "Prospectus",
as used herein, refers to the prospectus and related
statement of additional information (the "Statement of
Additional Information") incorporated therein by
reference (as amended or supplemented) on file with
the Securities and Exchange Commission at the time in
question. As a broker in the capacity of principal
underwriter and distributor for the Trust, we offer to
sell to you, as a broker or dealer, shares of each
Fund upon the following terms and conditions:
1. In all sales to the public
you shall act as broker for your customers or as
dealer for your own account, and in no transaction
shall you have any authority to act as agent for the
Trust, for us or for any other dealer. tc " In all
sales to the public you shall act as dealer for your
own account, and in no transaction shall you have any
authority to act as agent for the Fund, for us or for
any other dealer."
2. Orders received from you
will be accepted through us only at the public
offering price per share (i.e. the net asset value per
share plus the applicable front-end sales charge, if
any) applicable to each order, and all orders for
redemption of any shares shall be executed at the net
asset value per share less any contingent deferred
sales charge, if any, in each case as set forth in the
Prospectus. You will be entitled to receive and
retain any contingent deferred sales charge amounts in
partial consideration of your payment to financial
consultants of commission amounts at the time of sale
and we will obligate any other brokers with whom we
enter into similar agreements to pay such amounts
directly to you. The procedure relating to the
handling of orders shall be subject to paragraph 4
hereof and instructions which we or the Fund shall
forward from time to time to you. All orders are
subject to acceptance or rejection by the applicable
Fund or us in the sole discretion of either. The
minimum initial purchase and the minimum subsequent
purchase of any shares shall be as set forth in the
Prospectus pertaining to the relevant Series. tc "
Orders received from you will be accepted through us
only at the public offering price per share (i.e. the
net asset value per share plus the applicable sales
charge, if any) applicable to each order, and all
orders for redemption of any Fund shares shall be
executed at the net asset value per share less any
contingent deferred sales charge, if any, in each case
as set forth in the Prospectus. The procedure
relating to the handling of orders shall be subject to
paragraph 4 hereof and instructions which we or the
Fund shall forward from time to time to you. All
orders are subject to acceptance or rejection by
Salomon or the Fund in the sole discretion of either.
The minimum initial purchase and the minimum
subsequent purchase shall be as set forth in the
Prospectus of the Fund."
3. You shall not place orders
for any shares unless you have already received
purchase orders for those shares at the applicable
public offering price and subject to the terms hereof.
You agree that you will not offer or sell any shares
except under circumstances that will result in
compliance with the applicable Federal and state
securities laws, the applicable rules and regulations
thereunder and the rules and regulations of applicable
regulatory agencies or authorities and that in
connection with sales and offers to sell shares you
will furnish to each person to whom any such sale or
offer is made, a copy of the Prospectus and, upon
request, the Statement of Additional Information, and
will not furnish to any person any information
relating to shares which is inconsistent in any
respect with the information contained in the
Prospectus or Statement of Additional Information (as
then amended or supplemented). You shall not furnish
or cause to be furnished to any person or display or
publish any information or materials relating to the
shares (including, without limitation, promotional
materials and sales literature, advertisements, press
releases, announcements, statements, posters, signs or
other similar material), except such information and
materials as may be furnished to you by or on behalf
of us or the Funds, and such other information and
materials as may be approved in writing by or on
behalf of us or the Funds. tc " You shall not place
orders for any shares unless you have already received
purchase orders for those shares at the applicable
public offering price and subject to the terms hereof
and of the Distribution Contract. You agree that you
will not"
4. As a broker dealer, you are
hereby authorized (i) to place orders directly with
the applicable Fund or Series for shares subject to
the applicable terms and conditions governing the
placement of orders by us set forth in the Prospectus
and (ii) to tender shares directly to each Fund or its
agent for redemption subject to the applicable terms
and conditions governing the redemption of shares
applicable to us set forth in the Prospectus. tc " As
a dealer, you are hereby authorized (i) to place
orders directly with the Fund for shares to be resold
by us to you subject to the applicable terms and
conditions governing the placement of orders by us set
forth in the Prospectus and the Distribution Contract
and (ii) to tender shares directly to the Fund or its
agent for redemption subject to the applicable terms
and conditions governing the redemption of shares
applicable to us set forth in the Prospectus and the
Distribution Agreement."
5. You shall not withhold
placing orders received from your customers so as to
profit yourself as a result of such withholding, e.g.,
by a change in the "net asset value" from that used in
determining the offering price to your customers. tc "
You shall not withhold placing orders received from
your customers so as to profit yourself as a result of
such withholding, e.g., by a change in the \"net asset
value\" from that used in determining the offering
price to your customers."
6. In determining the amount
of any sales concession payable to you hereunder, we
reserve the right to exclude any sales which we
reasonably determine are not made in accordance with
the terms of the Prospectus and the provisions of this
Agreement. Unless at the time of transmitting an
order we advise you or the transfer agent to the
contrary, the shares ordered will be deemed to be the
total holdings of the specified investor. tc " In
determining the amount of any sales concession payable
to you hereunder, we reserve the right to exclude any
sales which we reasonably determine are not made in
accordance with the terms of the Prospectus and the
provisions of this Agreement. Unless at the time of
transmitting an order we advise you or the transfer
agent to the contrary, the shares ordered will be
deemed to be the total holdings of the specified
investor."
7. (a) You agree that payment
for orders from you for the purchase of shares will be
made in accordance with the terms of the Prospectus.
On or before the business day following the settlement
date of each purchase order for shares, you shall
transfer same day funds to an account designated by us
with the transfer agent in an amount equal to the
public offering price on the date of purchase of the
shares being purchased less your sales concession, if
any, with respect to such purchase order determined in
accordance with the Prospectus. If payment for any
purchase order is not received in accordance with the
terms of the Prospectus, we reserve the right, without
notice, to cancel the sale and to hold you responsible
for any loss sustained as a result thereof. tc " (a)
You agree that payment for orders from you for the
purchase of shares will be made in accordance with the
terms of the Prospectus. On or before the business
day following the settlement date of each purchase
order for shares, you shall transfer same day funds to
an account designated by us with the transfer agent an
amount equal to the public offering price on the date
of purchase of the shares being purchased less your
sales concession, if any, with respect to such
purchase order determined in accordance with the
Prospectus. If payment for any purchase order is not
received in accordance with the terms of the
Prospectus, we reserve the right, without notice, to
cancel the sale and to hold you responsible for any
loss sustained as a result thereof."
(b) If any shares sold under the
terms of this Agreement are sold with a sales charge
and are redeemed or are tendered for redemption within
seven (7) business days after confirmation of your
purchase order for such shares: (i) you shall
forthwith refund to us the full sales concession
received by you on the sale; and (ii) we shall
forthwith pay to the applicable Series our portion of
the sales charge on the sale which has been retained
by us, if any, and shall also pay to the applicable
Series the amount refunded by you. tc " If any shares
sold under the terms of this Agreement are sold with a
sales charge and are redeemed or are tendered for
redemption within seven (7) business days after
confirmation of your purchase order for such shares\:
(i) you shall forthwith refund to us the full sales
concession received by you on the sale; and (ii) we
shall forthwith pay to the applicable Series our
portion of the sales charge on the sale which has been
retained by us, if any, and shall also pay to the
Series the amount refunded by you."
(c) We will not be obligated to
pay or cause to be paid to you any ongoing trail
commission or shareholder service fees with respect to
shares of the Series purchased through you and held by
or for your customers, which you shall collect
directly from the Funds. tc " We will pay you an
ongoing trail commission with respect to holdings by
you of shares of the Funds at such rates and in such
manner as may be described in the Prospectus."
(d) Certificates evidencing
shares shall be available only upon request. Upon
payment for shares in accordance with paragraph 7(a)
above, the transfer agent will issue and transmit to
you or your customer a confirmation statement
evidencing the purchase of such shares. Any
transaction in uncertificated shares, including
purchases, transfers, redemptions and repurchases,
shall be effected and evidenced by book-entry on the
records of the transfer agent. tc " Certificates
evidencing shares shall be available only upon
request. Upon payment for shares in accordance with
paragraph 7(a) above, the transfer agent will issue
and transmit to you a confirmation statement
evidencing the purchase of such shares. Any
transaction in uncertificated shares, including
purchases, transfers, redemptions and repurchases,
shall be effected and evidenced by book-entry on the
records of the transfer agent."
8. No person is authorized to
make any representations concerning shares except
those contained in the current Prospectus and
Statement of Additional Information and in printed
information subsequently issued by us or the Funds as
information supplemental to the Prospectus and the
Statement of Additional Information. In purchasing or
offering shares pursuant to this Agreement you shall
rely solely on the representations contained in the
Prospectus, the Statement of Additional Information
and the supplemental information above mentioned. tc "
No person is authorized to make any representations
concerning shares except those contained in the
current Prospectus and Statement of Additional
Information and in printed information subsequently
issued by us or the Fund as information supplemental
to the Prospectus and the Statement of Additional
Information. In purchasing sor offering shares
pursuant to this Agreement you shall rely solely on
the representations contained in the Prospectus, the
Statement of Additional Information and the
supplemental information above mentioned."
9. PRIVATE You agree to deliver to
each purchaser making a purchase of shares from or
through you a copy of the Prospectus at or prior to
the time of offering or sale, and, upon request, the
Statement of Additional Information. You may instruct
the transfer agent to register shares purchased in
your name and account as nominee for your customers.
You agree thereafter to deliver to any purchaser whose
shares you or your nominee are holding as record
holder copies of the annual and interim reports and
proxy solicitation materials and any other information
and materials relating to the Trust and prepared by or
on behalf of us, the Funds or the investment adviser,
custodian, transfer agent or dividend disbursing agent
for distribution to beneficial holders of shares. The
Funds shall be responsible for the costs associated
with forwarding such reports, materials and other
information and shall reimburse you in full for such
costs. You further agree to make reasonable efforts
to endeavor to obtain proxies from such purchasers
whose shares you or your nominee are holding as record
holder. You further agree to obtain from each
customer to whom you sell shares any taxpayer
identification number certification required under
Section 3406 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated
thereunder, and to provide us or our designee with
timely written notice of any failure to obtain such
taxpayer identification number certification in order
to enable the implementation of any required backup
withholding in accordance with Section 3406 of the
Code and the regulations thereunder. Additional
copies of the Prospectus, Statement of Additional
Information, annual or interim reports, proxy
solicitation materials and any such other information
and materials relating to the Trust will be supplied
to you in reasonable quantities upon request. tc "
You agree to deliver to each purchaser making a
purchase of shares from you a copy of the Prospectus
at or prior to the time of offering or sale, and, upon
request, the Statement of Additional Information. You
may instruct the transfer agent to register shares
purchased in your name and account as nominee for your
customers. You agree thereafter to deliver to any
purchaser whose shares you are holding as record
holder copies of the annual and interim reports and
proxy solicitation materials and any other information
and materials relating to the Fund and prepared by or
on behalf of us, the Fund or its investment adviser,
custodian, transfer agent or dividend disbursing agent
for distribution to such customer. The Fund shall be
responsible for the costs associated with forwarding
such reports, materials and other information and
shall reimburse you in full for such costs. You
further agree to make reasonable efforts to endeavor
to obtain proxies from such purchasers whose shares
you are holding as record holder. You further agree
to obtain from each customer to whom you sell shares
any taxpayer identification number certification
required under Section 3406 of the Internal Revenue
Code of 1986, as amended (the \"Code\"), and the
regulations promulgated thereunder, and to provide us
or our designee with timely written notice of any
failure to obtain such taxpayer identification number
certification in order to enable the implementation of
any required backup withholding in accordance with
Section 3406 of the Code and the regulations
thereunder. Additional copies of the Prospectus,
Statement of Additional Information, annual or interim
reports, proxy solicitation materials and any such
other information and materials relating to the Fund
will be supplied to you in reasonable quantities upon
request."
10. PRIVATE (a) In accordance with the
terms of the Prospectus, a reduced sales charge may be
available to customers, depending on the amount of the
investment or proposed investment. In each case where
a reduced sales charge is applicable, you agree to
furnish to the transfer agent sufficient information
to permit confirmation of qualification for a reduced
sales charge, and acceptance of the purchase order is
subject to such confirmation. Reduced sales charges
may be modified or terminated at any time in the sole
discretion of each Fund. tc " (a) In accordance
with the terms of the Prospectus, a reduced sales
charge may be available to customers, depending on the
amount of the investment. In each case where a
reduced sales charge is applicable, you agree to
furnish to the transfer agent sufficient information
to permit confirmation of qualification for a reduced
sales charge, and acceptance of the purchase order is
subject to such confirmation. Reduced sales charges
may be modified or terminated at any time in the sole
discretion of the Fund."
(b) You acknowledge that
certain classes of investors may be entitled to
purchase shares at net asset value without a sales
charge as provided in the Prospectus and Statement of
Additional Information. tc " You acknowledge that
certain classes of investors may be entitled to
purchase shares at net asset value without a sales
charge as provided in the Prospectus and Statement of
Additional Information."
(c) You agree to advise us
promptly as to the amount of any and all sales by you
qualifying for a reduced sales charge or no sales
charge. tc " You agree to advise us promptly as to
the amount of any and all sales by you qualifying for
a reduced sales charge or no sales charge."
(d) Exchanges (i.e., the
investment of the proceeds from the liquidation of
shares of one Series in the shares of another Series,
each of which is managed by the same or an affiliated
investment adviser) shall, where available, be made in
accordance with the terms of each Prospectus. tc "
Exchanges (i.e., the investment of the proceeds from
the liquidation of shares of one fund in the shares of
another fund, each of which is managed by the Fund's
investment adviser) shall, where available, be made in
accordance with the terms of each Prospectus."
11. We and each Fund reserve
the right in our discretion, without notice, to
suspend sales or withdraw the offering of any shares
entirely. Each party hereto has the right to cancel
the portions of this Agreement to which it is party
upon notice to the other parties; provided, however,
that no cancellation shall affect any party's
obligations hereunder with respect to any transactions
or activities occurring prior to the effective time of
cancellation. We reserve the right to amend this
Agreement in any respect effective on notice to
you. tc " We reserve the right in our discretion,
without notice, to suspend sales or withdraw the
offering of shares entirely. Each party hereto has
the right to cancel this agreement upon notice to the
other part parties; provided; however, that no
cancellation shall affect any party's obligations
hereunder with respect to any transactions or
activities occurring prior to the effective time of
cancellation. We reserve the right to amend this
Agreement in any respect effective on notice to you."
12. We shall have full authority
to take such action as we may deem advisable in respect
of all matters pertaining to the continuous offering of
shares. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed
by us herein. Nothing contained in this paragraph 12 is
intended to operate as, and the provisions of this
paragraph 12 shall not in any way whatsoever constitute a
waiver by you of compliance with, any provisions of the
1933 Act or of the rules and regulations of the
Securities and Exchange Commission issued thereunder.
tc " We shall have full authority to take such action
as we may deem advisable in respect of all matters
pertaining to the continuous offering of shares. We
shall be under no liability to you except for lack of
good faith and for obligations expressly assumed by us
herein. Nothing contained in this paragraph 12 is
intended to operate as, and the provisions of this
paragraph 12 shall not in any way whatsoever constitute a
waiver by you of compliance with, any provisions of the
1933 Act or of the rules and regulations of the
Securities and Exchange Commission issued thereunder."
13. You agree that: (a) you
shall not effect any transactions (including, without
limitation, any purchases and tc " You agree that\:
(a) you shall not effect any transactions (including,
without limitation, any purchases and" redemptions)
in any shares registered in the name of, or
beneficially owned by, any customer unless such
customer has granted you full right, power and
authority to effect such transactions on his behalf,
(b) we shall have full authority to act upon your
express instructions to sell, repurchase or exchange
shares through us on behalf of your customers under
the terms and conditions provided in the Prospectus
and (c) we, the Funds, the investment adviser, the
administrator, the transfer agent and our and their
respective officers, directors or trustees, agents,
employees and affiliates shall not be liable for, and
shall be fully indemnified and held harmless by you
from and against, any and all claims, demands,
liabilities and expenses (including, without
limitation, reasonable attorneys' fees) which may be
incurred by us or any of the foregoing persons
entitled to indemnification from you hereunder arising
out of or in connection with (i) the execution of any
transactions in shares registered in the name of, or
beneficially owned by, any customer in reliance upon
any oral or written instructions believed to be
genuine and to have been given by or on behalf of you,
(ii) any statements or representations that you or
your employees or representatives make concerning the
Funds that are inconsistent with the applicable Fund's
Prospectus, (iii) any written materials used by you or
your employees or representatives in connection with
making offers or sales of shares that were not
furnished by us, the Funds or the investment adviser
or an affiliate thereof and (iv) any sale of shares of
a Fund where the Fund or its shares were not properly
registered or qualified for sale in any state, any
U.S. territory or the District of Columbia, when we
have indicated to you that the Fund or its shares were
not properly registered or qualified. The
indemnification agreement contained in this Paragraph
13 shall survive the termination of this Agreement.
14. You represent that: (a) you
are a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"),
or, if a foreign dealer who is not eligible for
membership in the NASD, that (i) you will not make any
sales of shares in, or to nationals of, the United
States of America, its territories or its possessions,
and (ii) in making any sales of shares you will comply
with the NASD's Conduct Rules and (b) you are a member
in good standing of the Securities Investor Protection
Corporation ("SIPC"). You agree that you will provide
us with timely written notice of any change in your
NASD or SIPC status. tc " You represent that you are
a member in good standing of the National Association
of Securities Dealers, Inc. (the \"NASD\"), or, if a
foreign dealer who is not eligible for membership in
the NASD, that (a) you will not make any sales of
shares in, or to nationals of, the United States of
America, its territories or its possessions, and (b)
in making any sales of shares you will comply with the
NASD's Rules of Fair Practice."
15. We shall inform you as to
the states or other jurisdictions in which the Fund has
advised us that shares have been qualified for sale
under, or are exempt from the requirements of, the
respective securities laws of such states, but we
assume no responsibility or obligation as to your
qualification to sell shares in any jurisdiction.
16. Any claim, controversy, dispute or
deadlock arising under this Agreement (collectively, a
"Dispute") shall be settled by arbitration administered
under the rules of the American Arbitration Association
("AAA") in New York, New York. Any arbitration and
award of the arbitrators, or a majority of them, shall
be final and the judgment upon the award rendered may
be entered in any state or federal court having
jurisdiction. No punitive damages are to be awarded.
17. All communications to us
should be sent, postage prepaid, to 21 Milk Street,
Boston, Massachusetts 02109 Attention: Philip
Coolidge. Any notice to you shall be duly given if
mailed, telegraphed or telecopied to you at the
address specified by you below. Communications
regarding placement of orders for shares should be
sent, postage prepaid, to First Data Investor Services
Group, Inc., P.O. Box 5128, Westborough, Massachusetts
01581-5128. tc " All communications to us should be
sent, postage prepaid, to 7 World Trade Center, New
York, New York 10048. Attention\: Robert J. Leonard.
Any notice to you shall be duly given if mailed,
telegraphed or telecopied to you at the address
specified by you below. Communications regarding
placement of orders for shares should be sent, postage
prepaid, to The Shareholder Services Group, Inc., P.O.
Box 9109, Boston, Massachusetts 02205-9109."
18. This Agreement shall be
binding upon both parties hereto when signed by us and
accepted by you in the space provided below tc " This
Agreement shall be binding upon both parties hereto
when signed by us and accepted by you in the space
provided below until July 14, 1995 or such earlier
date upon negotiation of section 3 and 12 of this
agreement. " .
19. This Agreement and the
terms and conditions set forth herein shall be
governed by, and construed in accordance with, the
laws of the State of New York. tc " This Agreement and
the terms and conditions set forth herein shall be
governed by, and construed in accordance with, the
laws of the State of New York."
CFBDS, INC.
By:/s/
(Authorized
Signature)
Accepted:
Firm Name:
Address:
Accepted By (signature):
Name (print):
Title: Date:
g:\legal\funds\smfi\1999\secdocs\DEALAGR
FORM OF
SUB-TRANSFER AGENCY AGREEMENT
AGREEMENT made as of the 1st day of March, 1996 by and between
Smith Barney Money Funds, Inc. on behalf of the Cash Portfolio (the
"Fund") and PFS Shareholders Services (the "Sub-Transfer Agent").
WITNESSETH:
WHEREAS, the Fund desires that Sub-Transfer Agent be retained to
perform certain recordkeeping and accounting services and functions
with respect to transactions in the Fund's Class A shares
("Shares") made by those beneficial owners of Fund shares (the
"Shareholders") with respect to which the Sub-Transfer Agent
maintains record ownership as nominee with the Fund's transfer
agent ("Transfer Agent") in a single master shareholder account;
and
WHEREAS, Sub-Transfer Agent desires to provide such services on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the following premises and
mutual covenants, the parties agree as follows:
1. Services Provided by Sub-Transfer Agent
Sub-Transfer Agent agrees to perform recordkeeping and accounting
services and functions with respect to transactions in Shares made
by the Shareholders with respect to the Fund. Sub-Transfer Agent
shall maintain with the Transfer Agent a single master shareholder
account. Sub-Transfer Agent will provide the following services:
A. Maintain separate records for each Shareholder reflecting
Shares purchased, redeemed and exchanged on behalf of such
Shareholder and outstanding balances of Shares owned by or
for the benefit of such Shareholder.
B. Prepare and transmit to Shareholders periodic account
statements indicating the number of Shares of the Fund owned
for the benefit of Shareholders and purchases, redemptions
and exchanges made on behalf of Shareholders.
C. Process dividend and distribution payments from the Fund
on behalf of each Shareholder.
D. Transmit to Shareholders copies of proxy materials,
periodic reports and other materials relating to the Fund.
E. With respect to each Shareholder, aggregate all purchase,
redemption and exchange orders made on behalf of the
Shareholders and transmit instructions based on such
aggregate orders ("Instructions") to the Transfer Agent for
acceptance.
F. Transmit to the Shareholders confirmations of transactions
made in accordance with Instructions.
G. Provide to the Fund and/or other parties designated by
them such other information relating to transactions in and
holdings of Shares on behalf of the Shareholders as is
reasonably requested.
H. Arrange for the delivery to the Transfer Agent of
appropriate documentation and, in the case of purchase
orders, payment, in connection with each aggregate order
transmitted to the Transfer Agent.
I. Provide to the Fund and/or other parties designated by
them such periodic reports as they shall reasonably conclude
are necessary to enable the Fund to comply with federal or
state Blue Sky requirements.
2. Appointment as Agent for Limited Purpose
Sub-Transfer Agent shall be deemed to be agent of the Fund for the
sole and limited purpose of receiving purchase, redemption and
exchange orders from Shareholders and transmitting corresponding
Instructions to the Transfer Agent. Except as provided
specifically herein, neither Sub-Transfer Agent nor any person to
which Sub-Transfer Agent may delegate any of its duties hereunder
shall be or hold itself out as an agent of the Transfer Agent or
the Fund.
3. Delegation by Sub-Transfer Agent
With respect to any Shareholder, Sub-Transfer Agent may delegate
some or all of its duties under this Agreement to other parties
which after reasonable inquiry Sub-Transfer Agent deems to be
competent to assume such duties. In the event of any such
delegation, Sub-Transfer Agent shall enter into a written agreement
with the delegatee in which the delegatee will, among other things:
A. agree to forward Instructions to the Transfer Agent within
such time periods as are specified by the Transfer Agent, the
Fund's prospectus and applicable law and regulation; and
B. represent and warrant that it is duly registered as
required under all federal and state securities laws.
4. Records and Reporting
Sub-Transfer Agent will maintain and preserve all records as
required by law in connection with its provision of services under
this Agreement. Upon the request of the Fund or the Transfer
Agent, Sub-Transfer Agent will provide copies of: historical
records relating to transactions involving the Fund and
Shareholders; written communications regarding the Fund to or from
Shareholders; and other materials relating to the provision of
services by Sub-Transfer Agent under this Agreement. Sub-Transfer
Agent will comply with any request for such information and
documents made by the board of directors of the Fund or any
governmental body or self-regulatory organization. Sub-Transfer
Agent agrees that it will permit the Fund, the Transfer Agent or
their representatives to have access to its personnel and records
in order to facilitate the monitoring of the quality of the
services provided by Sub-Transfer Agent.
5. Sub-Transfer Agent's Ability to Provide Services
Sub-Transfer Agent agrees to notify the Fund promptly if for any
reason it is unable to perform its obligations under this
Agreement.
6. Compensation
A. In consideration of performance of the services by Sub-
Transfer Agent hereunder and the costs it will incur in
providing those services, the Fund agrees to reimburse Sub-
Transfer Agent for its costs (including payments to
delegatees) in amounts that do not exceed those indicated in
the maximum reimbursement schedule attached as Schedule A
hereto. With respect to any Shareholder, to the extent Sub-
Transfer Agent delegates any obligations hereunder to a third
party, Sub-Transfer Agent will negotiate in good faith with
such third party delegatee regarding the fees to be paid to
the delegatee. Sub-Transfer Agent, and not the Fund, will be
solely responsible for compensating such a delegatee. If as a
result of its fee negotiations with such a delegatee Sub-
Transfer Agent is required to pay the delegatee less than
would be the case if Schedule A were the delegatee's fee
schedule, Sub-Transfer Agent will reduce the amount of
compensation it receives from the Fund hereunder by the
amount of such differential.
B. The Fund agrees to reimburse Sub-Transfer Agent or its
delegatees for their reasonable out-of-pocket costs, which
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.
C. Sub-Transfer Agent will permit the Fund or its
representatives (including counsel and independent
accountants) reasonable access to its records to enable the
Fund to verify that Sub-Transfer Agent's charges to the Fund
hereunder comply with the provisions of this Agreement.
7. Representations and Warranties of Sub-Transfer Agent
Sub-Transfer Agent represents and warrants to the Fund that: (i) it
is a partnership duly organized and existing and in good standing
under the laws of the State of Georgia; (ii) it is duly qualified
to carry on its business in Georgia; (iii) it is empowered under
applicable laws and by its partnership agreement to enter into and
perform this Agreement; (iv) all requisite partnership proceedings
have been taken to authorize it to enter into and perform this
Agreement; and (v) it has and will continue to have during the term
of this Agreement access to the necessary facilities, equipment and
personnel to perform its duties and obligations hereunder.
8. Representations and Warranties of the Fund
The Fund represents and warrants to the Sub-Transfer Agent that:
(i) it is duly organized and existing and in good standing under
the laws of the State of Maryland; (ii) it is empowered under
applicable laws and regulations and by its Articles of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken by its Board of
Directors to authorize it to enter into and perform this Agreement;
(iv) it is an open-end, diversified, management investment company
registered under the Investment Company Act of 1940; and (v) a
registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate
state securities laws filings have been made and will continue to
be made, with respect to all Shares being offered for sale.
9. Indemnification
Sub-Transfer Agent shall indemnify and hold harmless the Fund from
and against any and all losses and liabilities that any one or more
of them may incur, including without limitation reasonable
attorneys' fees, expenses and costs arising out of or related to
the performance or non-performance of Sub-Transfer Agent or any of
its delegatees of its responsibilities under this Agreement;
excluding, however, any such claims, suits, loss, damage or costs
caused by, contributed to or arising from any noncompliance by the
Fund with its obligations under this Agreement, as to which the
Fund shall indemnify, hold harmless and defend Sub-Transfer Agent
on the same basis as set forth above.
10. Termination
This Agreement may be terminated at any time by Sub-Transfer Agent
or the Fund upon 30 days' written notice. The provisions of
paragraphs 4 and 9 shall continue in full force and effect after
termination of this Agreement.
11. Miscellaneous
This Agreement represents the entire agreement between the parties
with regard to the matters described herein, and may not be
modified or amended except by written instrument executed by all
parties. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties. This
Agreement is made and shall be construed under the laws of the
State of New York. This Agreement supersedes all previous
agreements and understandings between the parties with respect to
its subject matter. If any provision of the Agreement shall be held
or made invalid by a statute, rule, regulation, decision of a
tribunal or otherwise, the remainder of the Agreement shall not be
affected thereby.
IN WITNESS HEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
SMITH BARNEY MONEY PFS SHAREHOLDER SERVICES
FUNDS, INC. on behalf of the Cash Portfolio
By: By:
__________________________
Title:
Title:
__________________________
Smith Barney Money Funds, Inc.
on behalf of the Cash Portfolio
Schedule A
As Amended July 1, 1996
The fees are calculated based on an annual charge of:
.102% with respect to Class A Shares
of the average daily net assets of such shares invested in the
Fund by those beneficial owners of Fund shares with respect to
which the Sub-Transfer Agent maintains record ownership as nominee
with the Fund's transfer agent.
g:\legal\funds\smfi\1999\secdocs\pfssubtr
4
Independent Auditors' Consent
To the Shareholders and Board of Directors of
Smith Barney Money Funds, Inc.:
We consent to the use of our report dated February 9, 1999, with
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 LLP
New York, New York
April 27, 1999
FORM OF
AMENDED PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
SMITH BARNEY MONEY FUNDS, INC.
This Amended Plan of Distribution (the "Plan") is adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940
(the "Act") by Smith Barney Money Funds, Inc. (the "Fund") on
behalf of the Cash Portfolio (the "Portfolio"), subject to the
following terms and conditions:
1. With respect to Class A and Class C shares, the Portfolio
shall pay to Smith Barney Inc. ("Smith Barney") a service fee at
the rate of 0.10% per annum of the average net assets of each such
class sold through Smith Barney. With respect to Class A shares,
the Portfolio shall pay to PFS Distributors, Inc. ("PFS") a service
fee at the rate of 0.10% per annum of the average net assets of
Class A shares sold through PFS. Shareholder servicing expenses
incurred in respect of Class A and Class C during any fiscal year
in excess of the foregoing limit shall not be reimbursable by such
class. Amounts payable by each class shall be calculated and
accrued daily and paid monthly or at such other intervals as the
Board of Directors shall determine. In addition, for purposes of
this paragraph, shareholder servicing expenses and the activities
carried out in respect thereof shall be interpreted in a manner
consistent with Section 26(d) of the Rules of Fair Practice of the
National Association of Securities Dealers
2. The amount set forth in paragraph 1 of the Plan may be
spent by Smith Barney on the following types of activities or
expenses: (1) compensation to Financial Consultants whose clients
are shareholders of the Portfolio; (2) the pro rata share of other
employment costs of such Financial Consultants based on their gross
production credits (e.g. FICA, employee benefits, etc.); (3)
employment expenses of home office personnel primarily responsible
for providing service to the Portfolio's shareholders; (4) the pro
rata share of branch office fixed expenses (including branch
overhead allocations); and (5) payments to other Broker/Dealers.
3. The amount set forth in paragraph 1 of the Plan may be
spent by PFS to cover payments to and expenses of Investments
Representatives of PFS Investments Inc. and other persons who
provide shareholder services.
4. The Plan shall become effective upon its execution by an
authorized officer of the Fund following its approval by votes of a
majority of both (a) the Board of Directors of the Fund and (b)
those directors of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and have no direct or indirect
financial interest in the operation of the Plan or any agreements
related to it (the "Independent Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on the Plan
or any related agreements (the "Effective Date").
5. The Plan and any related agreements shall remain in effect
for one year from its Effective Date and may be continued
thereafter if it is approved each year by the votes set forth in
the preceding paragraph.
6. Smith Barney and PFS shall each provide to the Board of
Directors of the Fund and the Board of Directors shall review, at
least quarterly, a written report of the amounts so expended and
the purposes for which such expenditures were made.
7. The Plan may be terminated at any time by vote of a
majority of the Independent Directors or by a vote of a majority of
the outstanding voting securities of Portfolio.
8. The Plan may not be amended to increase materially the
amount of shareholder servicing expenses provided for in paragraph
1 hereof unless such amendment is approved by a "vote of a majority
of the outstanding voting securities" of the Portfolio, which is
defined as the vote of the lesser of (1) 67% or more of the shares
present at the meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by
proxy; (2) more than 50% of the outstanding shares of the
Portfolio. No material amendment to the Plan shall be made unless
approved in the manner provided for initial approval in paragraph 3
hereof.
9. While the Plan is in effect, the selection and nomination
of directors who are not interested persons (as defined in the Act)
of the Fund shall be committed to the discretion of the directors
who are not interested persons.
10. The Fund shall preserve copies of the Plan and any related
agreements and all reports made pursuant to paragraph 5 hereof, for
a period of not less than six years from the date of the Plan, or
such agreement or such report, as the case may be, the first two
years in an easily accessible place.
IN WITNESS THEREOF, the Fund has executed this Amended Plan of
Distribution on the day and year set forth below in New York, New
York.
DATED: March 1, 1996
SMITH BARNEY MONEY FUNDS, INC.
By:
Heath B. McLendon,
Chairman and
Chief Executive Officer
g:\legal\funds\smfi\1999\secdocs\PFS12B1 -2-
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-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 38,879,398,937
<INVESTMENTS-AT-VALUE> 38,879,398,937
<RECEIVABLES> 310,530,832
<ASSETS-OTHER> 128
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,189,929,897
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112,304,993
<TOTAL-LIABILITIES> 112,304,993
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,078,381,669
<SHARES-COMMON-STOCK> 39,917,400,854
<SHARES-COMMON-PRIOR> 34,360,969,675
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 40,077,624,904
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,994,782,487
<OTHER-INCOME> 0
<EXPENSES-NET> 226,705,867
<NET-INVESTMENT-INCOME> 1,768,145,628
<REALIZED-GAINS-CURRENT> 69,008
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,760,974,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,760,974,875
<DISTRIBUTIONS-OF-GAINS> 68,731
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 160,978,115,930
<NUMBER-OF-SHARES-REDEEMED> 153,590,683,868
<SHARES-REINVESTED> 1,702,308,541
<NET-CHANGE-IN-ASSETS> 9,184,716,610
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 138,431,850
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 226,705,867
<AVERAGE-NET-ASSETS> 35,647,160,209
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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 L
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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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