SMITH BARNEY FUNDS, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
(the "Portfolio")
Supplement to
April 1, 1996 Portfolio Prospectus
In order to provide more flexibility in the management of the Portfolio's
investments, on July 15, 1996, the Board of Directors of Smith Barney Funds,
Inc. approved the addition of Federal National Mortgage Association ("FNMA")
and Federal Home Loan Mortgage Corporation ("FHMLC") issued certificates to
the list of mortgage-backed U.S. Government securities in which the Portfolio
is permitted to primarily invest. Although the Portfolio was previously
authorized to invest in both FNMA's and FHLMC's, this change will permit the
Portfolio to invest substantially more of the Portfolio's assets in these
securities. FHLMC is a U.S. Government-created entity controlled by the
Federal Home Loan Banks. FNMA is a government-chartered corporation owned
entirely by private stockholders, which is subject to general regulation by
the Secretary of Housing and Urban Development. Timely payment of principal
and interest on these mortgage participation certificates is guaranteed solely
by the issuer of the certificates.
Investment policy related disclosure found in the first sentence of the
second paragraph under "Investment Objectives and Management Policies" of the
Portfolio Prospectus has been revised as follows to reflect the action taken
by the Board of Directors of Smith Barney Funds, Inc. on July 15,1996:
The U.S. Government Securities Portfolio invests primarily in Government
National Mortgage Association ("GNMA") Certificates of the modified pass-
through type and in mortgage participation certificates issued by the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC") and will also normally include other "U.S. Government
Obligations," i.e., obligations issued or guaranteed by the United States, its
agencies or its instrumentalities and related repurchase and reverse
repurchase agreements (reverse repurchase agreement transactions are limited
to no more than 5% of the Portfolio's net assets).
__________________________
Supplement Dated: July 30, 1996
FD 01163
g/funds/sbfi/misc./stickr3.doc
