As filed with the Securities and Exchange Commission on September 12, 1997
                                                                              
                                                  
Registration No.   333-31761
                                                                              
                                                   
U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

	FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
	
[X] Pre-Effective Amendment No. 1                
[  ] Post-Effective Amendment No.
	

	SMITH BARNEY MONEY FUNDS, INC.        
(Exact name of Registrant as specified in the Articles of 
Incorporation)

	Area Code and Telephone Number:  (800) 224-7523
	388 Greenwich Street, New York, New York 10013
	(Address of principal executive offices)   (Zip Code)

	Christina T. Sydor, Esq.
	Smith Barney Inc.
	388 Greenwich Street New York, New York  10013 (22nd floor)
	(Name and address of agent for service)

	copy to:

John E. Baumgardner, Jr., Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
	
Approximate date of proposed public offering:  As soon as possible after 
the effective date of this Registration Statement.
 
Registrant has registered an indefinite amount of securities pursuant to 
Rule 24f-2 under the Investment Company Act of 1940, as amended; 
accordingly, no fee is payable herewith.  Registrant's Rule 24f-2 Notice 
for the fiscal period ended December 31, 1996 was filed with the 
Securities and Exchange Commission on February 18, 1997.

Registrant hereby amends this Registration Statement on such date or 
dates as may be necessary to delay its effective date until the 
Registrant shall file a further amendment which specifically states that 
this Registration Statement shall thereafter become effective in 
accordance with Section 8(a) of the Securities Act of 1933 or until the 
Registration Statement shall become effective on such date as the 
Commission, by action pursuant to said Section 8(a), may determine.

Total Number of Pages:           






	SMITH BARNEY MONEY FUNDS, INC. 

	CONTENTS OF
	REGISTRATION STATEMENT

This Registration Statement contains the following pages and documents:

	Front Cover 

	Contents Page

	Cross-Reference Sheet

	Letter to Shareholders

	Notice of Special Meeting

	Instructions for Signing Proxy Cards

	Part A - Prospectus/Proxy Statement

	Part B - Statement of Additional Information

	Part C - Other Information

	Signature Page

	Exhibits



	SMITH BARNEY MONEY FUNDS, INC.

	FORM N-14 CROSS REFERENCE SHEET
	Pursuant to Rule 481(a) Under the Securities Act of 1933

						Prospectus/Proxy
Part A Item No. and Caption			Statement Caption

Item 1.	Beginning of Registration		Cover Page; Cross Reference
	Statement and Outside Front		Sheet
	Cover Page of Prospectus

Item 2.	Beginning and Outside Back		Table of Contents
	Cover Page of Prospectus

Item 3.	Synopsis Information and		Fee Table; Summary; Risk Factors; 
                                        Comparison of 
	Risk Factors				                 Investment Objectives and Policies

Item 4.	Information About the Transaction	Summary: Reasons for the 
Reorganization; 
						Information about the Reorganization; 
						Information on Shareholders' Rights; 
						Exhibit A (Agreement and Plan of 
        Reorganization)

Item 5.	Information About the Registrant	Cover Page; Summary; 
Information about 
					the Reorganization; Comparison of Investment 
					Objectives and Policies; Information on Shareholders'
					Rights; Additional Information about  Smith Barney 
					Money Funds, Inc. - Cash Portfolio and Smith 
					Barney Funds, Inc. - Income Return 
                       Account Portfolio

Item 6.	Information About the		Summary; Information About the 
	Company Being Acquired		Reorganization; Comparison of  Investment 
					Objectives and  Policies; Information 
					on Shareholder's
					Rights; Additional Information about Smith Barney 
					Money Funds, Inc. - Cash Portfolio 
					and Smith Barney
					Funds, Inc. - Income Return Account Portfolio

Item 7.	Voting Information		Summary; Information About the Reorganization;
					Information on Shareholders' Rights; 
					Voting Information

Item 8.	Interest of Certain Persons	Financial Statements and Experts; 
                                          Legal Matters and Experts	

Item 9.	Additional Information			Not Applicable
	Required for Reoffering By
	Persons Deemed to be Underwriters

Part B Item No. and Caption				Statement of Additional
							Information Caption 

Item 10.	Cover Page					Cover Page

Item 11.	Table of Contents 				Cover Page

Item 12.	Additional Information			Cover Page; Statement of 	Additional 
	About the Registrant			Information of Smith 
						Barney Money 
						Funds, Inc. dated April 30, 1997

Item 13	Additional Information 			Cover Page; Statement of Additional 
	About the Company Being		Information of Smith Barney 
	Acquired				Funds, Inc. dated April 30, 1997

Item 14.	Financial Statements			Cover Page; Annual Report and Semi-Annual 
						Report of Smith Barney Money Funds, Inc.  
						dated December 31, 1996 and June 30, 1997, 
						respectively, and Annual Report and Semi-
						Annual Report of Smith Barney Funds, Inc.
						dated December 31, 1996 and June 30, 1997, 
						respectively

Part C Item No. and Caption				Other Information Caption 

Item 15.	Indemnification				Indemnification 

Item 16.	Exhibits					Exhibits 

Item 17.	Undertakings					Undertakings 


   
TO SHAREHOLDERS OF
SMITH BARNEY FUNDS, INC. - INCOME RETURN ACCOUNT PORTFOLIO
    
Your Vote is Important
Dear Shareholder: 

	The Board of Directors of Smith Barney Funds, Inc. - Income Return 
Account Portfolio ("Income Return Account Portfolio") has recently 
reviewed and unanimously endorsed a proposal for a reorganization of 
Income Return Account Portfolio which it judges to be in the best 
interests of Income Return Account Portfolio shareholders.

   	Under the terms of the proposal, the Cash Portfolio ("Cash 
Portfolio") of Smith Barney Money Funds, Inc. would acquire all or 
substantially all of the assets and liabilities of Income Return Account 
Portfolio.  After the transaction, the Income Return Account Portfolio 
would be liquidated and you would become a shareholder of Cash Portfolio, 
having received Class A shares of an aggregate value equivalent to the 
aggregate value of your investment in Income Return Account Portfolio at 
the time of the transaction.  No sales charge would be imposed in the 
transaction.  The transaction will be subject to Federal income taxes.

	The Board of Directors of Income Return Account Portfolio believes 
that the proposed reorganization is in the best interests of the Income 
Return Account Portfolio shareholders due, in large part, to the fact 
that the minimal assets of the Income Return Account Portfolio do not 
justify maintenance of the Income Return Account Portfolio as a separate 
portfolio.  Income Return Account Portfolio assets have been declining 
since 1993 while its fixed costs have remained constant.  As a result, 
the Portfolio's investment style has been significantly inhibited for a 
number of years and it has become increasingly difficult to provide 
competitive returns  In fact to maintain a competitive yield, Smith 
Barney Mutual Funds Management Inc. (the"Manager") has been waiving its 
management fees and has been reimbursing the expenses of the Income 
Return Account Portfolio.
    
	To consider this transaction, we have called a Special Meeting of 
Shareholders to be held October  17, 1997.  We strongly invite your 
participation by asking you to review, complete and return your proxy 
promptly in the postage paid envelope provided. 

	Detailed information about the proposed transaction is described in 
the enclosed prospectus/proxy statement.  If you sign and date your proxy 
card but do not provide voting instructions, your shares will be voted 
FOR the proposal.

	We thank you for your timely response and look forward to 
continuing to serve your investment needs. If you have any questions 
regarding the proposed transaction, please call your Financial 
Consultant, who will be pleased to assist you.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED PROMPTLY. 
		
							Sincerely,
Heath B. McLendon
Chairman of the Board
September 15, 1997


SMITH BARNEY FUNDS, INC. -  INCOME RETURN ACCOUNT PORTFOLIO
388 Greenwich Street
New York, New York 10013
__________________

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on October 17, 1997
__________________

	Notice is hereby given that a Special Meeting of Shareholders (the 
"Meeting") of Smith Barney Funds, Inc. - Income Return Account Portfolio 
("Income Return Account Portfolio") will be held at 388 Greenwich Street, 
22nd Floor, New York, New York, on October 17, 1997, commencing at 10:00 
a.m.  for the following purposes:  

   1. 	To consider and act upon the Agreement and Plan of 
Reorganization (the "Plan") dated as of June 25, 1997, 
providing for (i) the acquisition of all or substantially all 
of the assets of Income Return Account Portfolio by Smith 
Barney Money Funds, Inc. on behalf of its Cash Portfolio 
("Cash Portfolio") in exchange for Class A shares of Cash 
Portfolio and the assumption by Cash Portfolio of all stated 
liabilities of Income Return Account Portfolio; (ii) the 
distribution of such shares of the Cash Portfolio to 
shareholders of Income Return Account Portfolio in 
liquidation of Income Return Account Portfolio; and (iii) the 
subsequent termination of Income Return Account Portfolio. 
    
2.	To transact such other business as may properly come before 
the Meeting or any adjournment or adjournments thereof.
	The Directors of Income Return Account Portfolio have fixed the 
close of business on July 22, 1997 as the record date for the 
determination of shareholders of Income Return Account Portfolio entitled 
to notice of and to vote at the Meeting and any adjournment or 
adjournments thereof.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO 
NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE URGED TO SIGN AND RETURN 
WITHOUT DELAY THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH 
REQUIRES NO POSTAGE, SO THAT THEIR SHARES MAY BE REPRESENTED AT THE 
MEETING.   INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXY CARDS ARE SET 
FORTH ON THE FOLLOWING PAGE.

By Order of the Board of  Directors

Christina T.  Sydor
Secretary
   September 15, 1997    

YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY WILL  HELP TO AVOID THE 
EXPENSE OF FURTHER SOLICITATION.  


INSTRUCTIONS FOR SIGNING PROXY CARDS 

The following general rules for signing proxy cards may be of assistance 
to you and avoid the time and expense involved in validating your vote if 
you fail to sign your proxy card properly. 
1.   Individual Accounts: Sign your name exactly as it appears in 
the registration on the proxy card.    
2.   Joint Accounts: Either party may sign, but the name of the 
party signing should conform exactly to the name shown in the 
registration on the proxy card.    
3.   All Other Accounts: The capacity of the individual signing the 
proxy card should be indicated unless it is reflected in the form of 
registration.   For example:  
Registration 							Valid Signatures
Corporate Accounts
	(1)  ABC Corp. 		ABC Corp.
	(2)  ABC Corp. 		John Doe, Treasurer
	(3)  ABC Corp. 
		c/o John Doe, Treasurer 		John Doe
	(4)  ABC Corp. 
		Profit Sharing Plan 		John Doe, Trustee
Trust Accounts
	(1)  ABC Trust 		Jane B. Doe, Trustee
	(2)  Jane B. Doe, 
	Trustee u/t/d 12/28/78		Jane B. Doe
Custodial or Estate Accounts
	(1)  John B. Smith, 
		Cust. f/b/o John B. Smith, Jr. UGMA		John B. Smith 
	(2) John B. Smith 		John B. Smith, Jr., 
Executor


   PROSPECTUS/PROXY STATEMENT dated September 15, 1997
    
CASH PORTFOLIO
a separate investment portfolio of
SMITH BARNEY MONEY FUNDS, INC.
388 Greenwich Street
New York, New York 10013
(800) 224-7523

INCOME RETURN ACCOUNT PORTFOLIO
a separate investment portfolio of
SMITH BARNEY FUNDS, INC.
388 Greenwich Street
New York, New York 10013
(800) 224-7523

This Prospectus/Proxy Statement is being furnished to shareholders 
of Smith Barney Funds, Inc.- Income Return Account Portfolio (the 
"Acquired Fund") in connection with a proposed Agreement and Plan of 
Reorganization dated June 25, 1997 (the "Plan") to be submitted to 
shareholders of the Acquired Fund for consideration at a Special Meeting 
of Shareholders to be held on October 17, 1997 at 10:00 a.m. (the 
"Meeting") at 388 Greenwich Street, 22nd Floor, New York, New York or any 
adjournment or adjournments thereof.
   
The Plan provides for all or substantially all of the assets of the 
Acquired Fund to be acquired by Smith Barney Money Funds, Inc. - Cash 
Portfolio (the "Acquiring Fund") in exchange for Class A shares of the 
Acquiring Fund and the assumption by the Acquiring Fund of all stated 
liabilities of the Acquired Fund (the Acquiring Fund and the Acquired 
Fund are sometimes referred to hereinafter collectively as the "Funds" 
and individually as a "Fund").  Upon completion of the reorganization, 
shares of the Acquiring Fund would be distributed to shareholders of the 
Acquired Fund in liquidation of the Acquired Fund.  As a result of the 
reorganization, each shareholder of the Acquired Fund would receive that 
number of shares of the Acquiring Fund having an aggregate value equal to 
the aggregate value of such shareholder's shares of the Acquired Fund.  
All shareholders of the Acquired Fund would receive Class A shares of the 
Acquiring Fund. This transaction will be subject to Federal income taxes.
The Acquiring Fund is a money market fund that invests in high 
quality money market instruments.  Other portfolios of Smith Barney Money 
Funds, Inc. are the Government Portfolio and the Retirement Portfolio.  
Smith Barney Mutual Funds Management Inc. ("SBMFM" or the "Manager") 
manages the day-to-day operations of the Acquiring Fund.  SBMFM is a 
subsidiary of Smith Barney Holdings Inc., which is a subsidiary of 
Travelers Group Inc., a financial services holding company engaged, 
through its subsidiaries, principally in the business of life and 
property and casualty insurance services, investment services and 
consumer finance services.
    
   Although the Acquiring Fund is a money market fund and the 
Acquired Fund is not, the investment objectives of the Acquiring Fund are 
substantially similar to those of the Acquired Fund.  The Acquiring 
Fund's investment objective is maximum current income and preservation of 
capital.  The Acquired Fund seeks high current income from a portfolio of 
high quality debt obligations while employing an immunization strategy to 
minimize the risk of loss of account value.  Certain differences in the 
investment policies of the Acquiring Fund and the Acquired Fund are 
described under "Comparison of Investment Objectives and Policies" in 
this Prospectus/Proxy Statement.
This Prospectus/Proxy Statement, which should be retained for 
future reference, sets forth concisely the information about the 
Acquiring Fund that a prospective investor should know before investing.  
Certain relevant documents listed below, which have been filed with the 
Securities and Exchange Commission ("SEC"), are incorporated in whole or 
in part by reference.  A Statement of Additional Information dated 
September 15, 1997, relating to this Prospectus/Proxy Statement and the 
reorganization described herein, has been filed with the SEC and is 
incorporated by reference into this Prospectus/Proxy Statement.   A copy 
of such Statement of Additional Information is available upon request and 
without charge by writing to the Acquired Fund at the address listed on 
the cover page of this Prospectus/Proxy Statement or by contacting a 
Smith Barney Financial Consultant, or by calling (800) 224-7523.  The 
Prospectus of Smith Barney Money Funds, Inc. dated April 30, 1997 is 
incorporated by reference in its entirety and a copy is included herein.
    
Also accompanying this Prospectus/Proxy Statement as Exhibit A is a 
copy of the Plan for the proposed transaction.
    
The shares of the Acquiring Fund are not insured or guaranteed by 
the U.S. Government.  There is no assurance that the Acquiring Fund will 
be able to maintain a stable net asset value of $1.00 per share.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR 
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY 
STATEMENT.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.    


TABLE OF CONTENTS
   	Page
Additional Materials		
Fee Tables		
Summary		
Risk Factors		
Reasons for the Reorganization		
Information about the Reorganization		
Information about the Acquiring Fund		
Information about the Acquired Fund		
Comparison of Investment Objectives and Policies		
Information on Shareholders' Rights		
Additional Information about Smith Barney Money Funds, Inc. and
Smith Barney Funds, Inc. - Income Return Account Portfolio .		
Other Business		
Voting Information		
Financial Statements and Experts		
Legal Matters		
Exhibit A: Agreement and Plan of Reorganization		

    


ADDITIONAL MATERIALS
   
The following additional materials, which have been incorporated by 
reference into the Statement of Additional Information dated September 
15, 1997 relating to this Prospectus/Proxy Statement and the 
Reorganization, will be sent to all shareholders requesting a copy of 
such Statement of Additional Information.
    
1.	Statement of Additional Information of Smith Barney Money 
Funds, Inc. dated April 30, 1997.

2.	Statement of Additional Information of Smith Barney Funds, 
Inc. dated April 30, 1997.

3.	Annual Report of Smith Barney Money Funds, Inc. for the 
fiscal year ended December 31, 1996. 

4.	Annual Report of Smith Barney Funds, Inc. for the fiscal year 
ended December 31, 1996. 

5.	   Semi-Annual Report of Smith Barney Money Funds, Inc. for 
the six month period ended June 30, 1997.

6. 	Semi-Annual  Report of Smith Barney Funds, Inc. for the six 
month period ended June 30, 1997.     


FEE TABLES

	Followings are tables showing the current costs and expenses of the 
Class A and Class C shares of the Acquired Fund and the Class A shares of 
the Acquiring Fund, and the Pro Forma costs and expenses expected to be 
incurred by the Acquiring Fund after giving effect to the reorganization, 
each based on the maximum sales charge or maximum contingent deferred 
sales charge ("CDSC") that may be incurred at the time of purchase or 
redemption:

					Class A 		Class A
					Shares		Shares
					Cash 		Income Return 	Pro Forma**
					Portfolio		Account Portfolio	
Shareholder Transaction Expenses
	Maximum sales charge 
imposed on purchases 			  None		 2.00%	   	None
		(as a percentage of 
		offering price)
	Maximum CDSC
		(as a percentage of  	  None  		None*		     None
		original cost or redemption 
		proceeds, whichever is lower)	





Annual Portfolio Operating Expenses
		(as a percentage of average 
		net assets)
	Management fees			  0.40%		 0.45%		0.40%
	12b-1 fees			  0.10		  None		0.10
	Other expenses 			  0.12		  0.81 		0.12

									
Total Portfolio Operating Expenses		  0.62%		 1.26%		 0.62%

______________________

*Purchases of Class A shares, which equal or exceed $500,000 in the 
aggregate, will be made at net asset value with no sales charge, but will 
be subject to a CDSC of 1.00% on redemptions made within 12 months of 
purchase.

**The pro forma financial figures are intended to provide shareholders 
information about the continuing impact of the reorganization as if the 
reorganization had taken place as of January 1, 1997.

					Class A 		Class A
					Shares		Shares
					Cash 		Income Return 	Pro Forma **
					Portfolio		Account Portfolio	
Shareholder Transaction Expenses
	Maximum sales charge 
	imposed on purchases  		  None		   None		  None
		(as a percentage of 
		offering price)
	Maximum CDSC
		(as a percentage of 	  None		   1.00%		  None
		original cost or redemption 
		proceeds, whichever is lower)	


Annual Portfolio Operating Expenses
		(as a percentage of average 
		net assets)
	Management fees 		  0.40%		   0.45%		.40%
	12b-1 fees			  0.10		   0.35*		  .10
	Other expenses 			  0.12		   0.80	  	  .12	

   
Total Portfolio Operating Expenses		    .62%		  1.60%		  .62%
    
______________________
*Class C shares do not have a conversion feature and, therefore, are 
subject to an ongoing distribution fee.  As a result, long-term 
shareholders of Class C shares may pay more than the economic equivalent 
of the maximum front-end sales charge permitted by the National 
Association of Securities Dealers, Inc.

**The pro forma financial figures are intended to provide shareholders 
information about the continuing impact of the reorganization as if the 
reorganization had taken place as of  January 1, 1997.

Examples

	The following examples are intended to assist an investor in 
understanding the various costs that an investor will bear directly or 
indirectly.  The examples assume payment of operating expenses at the 
levels set forth in the tables above.

					1 Year	3 Years	5 Years	10 Years
An investor would pay the following 
expenses on a $1,000 investment, 
assuming (1) 5.00% annual return 
and (2) redemption at the end of 
each time period:

Cash Portfolio	Class A			$ 6	$ 20	$ 35	$ 77
Income Return Account Portfolio Class A	33	59	88	169
Income Return Account Portfolio Class C	26	50	87 	190
Pro Forma				6	20	35	77


					1 Year	3 Years	5 Years	10 Years
An investor would pay the following
expenses on the same annual return 
and no redemption:


Cash Portfolio Class A			$ 6	$ 20	$ 35	$ 77
Income Return Account Portfolio Class A	33	59	88	169
Income Return Account Portfolio Class C	16	50	87	190
Pro Forma				6	20	35	77

	The examples also provide a means for the investor to compare 
expense levels of funds with different fee structures over varying 
investment periods.  To facilitate such comparison, all funds are 
required to utilize a 5.00% annual return assumption.  However, a fund's 
actual return will vary and may be greater or less than 5.00%.  These 
examples should not be considered representations of past or future 
expenses and actual expenses may be greater or less than those shown.



SUMMARY
This summary is qualified in its entirety by reference to the 
additional information contained elsewhere in this Prospectus/Proxy 
Statement, the Agreement and Plan of Reorganization, a copy of which is 
attached to this Prospectus/Proxy Statement as Exhibit A, the 
accompanying Prospectus of the Acquiring Fund dated April 30, 1997 and 
the Prospectus of the Acquired Fund dated April 30, 1997.    
   
Proposed Reorganization.  The Plan provides for the transfer of all 
or substantially all of the assets of the Acquired Fund to the Acquiring 
Fund in exchange for Class A shares of the Acquiring Fund and the 
assumption by the Acquiring Fund of all stated liabilities of the 
Acquired Fund.  The Plan also calls for the distribution of Class A 
shares of the Acquiring Fund to the Acquired Fund's shareholders in 
liquidation of the Acquired Fund.  (The foregoing proposed transaction is 
referred to in this Prospectus/Proxy Statement as the "Reorganization.").  
As a result of the Reorganization, each shareholder of the Acquired Fund 
will become the owner of that number of full and fractional Class A 
shares of the Acquiring Fund having an aggregate value equal to the 
aggregate value of the shareholder's shares of the Acquired Fund as of 
the close of business on the date that the Acquired Fund's assets are 
exchanged for shares of the Acquiring Fund.  Shareholders of the Acquired 
Fund will receive Class A shares of the Acquiring Fund, whether they 
currently own Class A or Class C shares of the Acquired Fund.
    
   For the reasons set forth below under "Reasons for the 
Reorganization," the Board of Directors of the Acquired Fund, including 
the "Independent Directors" (the Board members who are not "interested 
persons" as that term is defined in the Investment Company Act of 1940, 
as amended (the "1940 Act")), has unanimously concluded that the 
Reorganization would be in the best interests of the shareholders of the 
Acquired Fund and that the interests of the Acquired Fund's shareholders 
will not be diluted as a result of the transaction contemplated by the 
Reorganization, and the Board therefore has submitted the Plan for 
approval by the Acquired Fund's shareholders.  The Board of Directors of 
the Acquiring Fund has reached similar conclusions with respect to the 
Acquiring Fund and its shareholders, and has also approved the 
Reorganization with respect to the Acquiring Fund.  
Approval of the Reorganization will require the vote of a majority 
of the outstanding shares of the Acquired Fund at a meeting of 
shareholders at which a quorum is present, by the holders of shares 
present in person or represented by proxy and entitled to vote on such 
action.   The presence in person or by proxy of the holders of record of 
a majority of the shares of the capital stock of the Acquired Fund issued 
and outstanding and entitled to vote will constitute a quorum at the 
Meeting.  See "Voting Information."      
Tax Consequences. This transaction will be subject to Federal 
income taxes.  See "Information About the Reorganization- Federal Income 
Tax Consequences."
   Investment Objectives and Policies. The Acquired Fund and the 
Acquiring Fund have substantially similar investment objectives, policies 
and restrictions.  The Acquired Fund seeks high current income for its 
shareholders and employs an immunization policy to minimize the loss of 
account value, whereas the Acquiring Fund seeks maximum current income 
and preservation of capital.  
As a money market fund, the Acquiring Fund operates in accordance 
with Rule 2a-7 under the 1940 Act.  Rule 2a-7 imposes specific 
requirements with respect to diversification, concentration and quality 
of portfolio assets, as well as the maturity of specific portfolio 
securities and the average maturity of the portfolio in the aggregate.  
Under Rule 2a-7, the Acquiring Fund must maintain a dollar weighted 
average portfolio maturity of less than 90 days; not purchase any assets 
having a remaining maturity of more than 397 days; and invest in U.S. 
dollar-denominated instruments which the Board determines present minimal 
credit risks.  Rule 2a-7 provides that money market funds may invest only 
in "eligible securities," which are securities rated by at least two 
ratings agencies (or by the only rating agency that has rated the 
security) in one of the two highest short-term rating categories, or 
comparable unrated securities.  The Acquiring Fund employs the amortized 
cost method of valuing portfolio securities, and the extent of any 
deviation in the net asset value per share calculated based upon the 
amortized cost method from values based upon market quotations is 
determined at reasonable intervals.  In the event any such deviation 
exceeds 1/2 of 1% ($0.005), certain stabilization procedures would be 
promptly considered. This method of operating is intended to provide 
safety and liquidity for the Acquiring Fund's portfolio, and to minimize 
the potential for fluctuations in the net asset value of the Acquiring 
Fund's shares. 
The Acquired Fund is not a money market fund and therefore does not 
operate under Rule 2a-7.  It is permitted to invest in U.S. Government 
Obligations, bankers' acceptances, certificates of deposit, securities 
backed by letters of credit, commercial paper rated A-1 by Standard & 
Poor's Corporation ("S&P") or Prime-1 by Moody's Investors Service, Inc. 
("Moody's") and notes and bonds, including floating rate issues, rated A 
or better by S&P or Moody's (or, if not rated, of comparable quality as 
determined by the Manager).  The Acquired Fund's investments in U.S. 
Government Obligations may be in obligations with remaining maturities of 
five years or less, and its investments in corporate debt obligations may 
be in obligations with remaining maturities of three years or less.  
Normally, approximately one-third of the Acquired Fund consists of 
obligations that have remaining maturities of less than one year; however 
there may be occasions when up to 100% of the Acquired Fund is invested 
in securities maturing within one year. This portfolio composition is 
intended to achieve a higher level of income than would otherwise be 
available from an exclusively short-term portfolio (or that might be 
obtained from a money market fund) with less risk than that of a 
conventional bond or note portfolio. 
For a discussion of the differences between the investment policies 
of the Acquiring Fund and the Acquired Fund, see "Comparison of 
Investment Objectives and Policies."  
At the time of the Reorganization, it is anticipated that the 
investments held by the Acquired Fund will be compatible with the 
investment policies of the Acquiring Fund, and it is anticipated that 
there will not be any material expenses incurred by the Acquiring Fund in 
aligning its portfolio in preparation for the Reorganization.
    
	Exchange Privileges.  Shareholders of both Funds are entitled to 
exchange their shares for shares of the same class of certain funds of 
the Smith Barney Mutual Funds to the extent shares are offered for sale 
in the shareholder's state of residence. As part of the Reorganization, 
each shareholder of the Acquired Fund will become the owner of Class A 
shares of the Acquiring Fund and will be entitled to exchange such shares 
for Class A shares of other funds of the Smith Barney Mutual Funds. Any 
exchange will be a taxable event for which a shareholder may have to 
recognize a gain or loss under federal income tax provisions.
Dividends.  The Acquiring Fund declares a dividend of substantially 
all of its net investment income dividends daily and pays income 
dividends monthly.  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.   Long-
term capital gains, if any, are distributed annually.  The Acquired Fund 
declares monthly income dividends and makes annual distributions of 
capital gains, if any.
   Unless a shareholder of the Acquired Fund has elected to receive 
dividends and capital gains distributions in cash, dividends and capital 
gains distributions are reinvested automatically in additional shares of 
the Acquired Fund.  Similarly, income dividends paid by the Acquiring 
Fund are automatically reinvested in shares of the Acquiring Fund unless 
a shareholder has elected to receive distributions in cash.  Acquired 
Fund shareholders who have elected to receive dividends and distributions 
in cash will continue to receive distributions in such manner from the 
Acquiring Fund.   Subsequent to the Reorganization, such Acquired Fund 
shareholders may elect at any time to have their dividends and 
distributions reinvested automatically in additional shares of the 
Acquiring Fund by contacting their Financial Consultant.  See "Dividends, 
Automatic Reinvestment and Taxes" in the accompanying Prospectus of the 
Acquiring Fund.      
   Purchase and Redemption Procedures.   Purchases of shares of the 
Acquiring Fund may be made through a brokerage account maintained with 
Smith Barney or with a broker that clears securities transactions through 
Smith Barney on a fully disclosed basis. Class A shares of the Acquiring 
Fund are sold without an initial sales charge.  Class A shares of the 
Acquired Fund are sold subject to a maximum initial sales charge of 2.00% 
of the public offering price.  Purchases of Class A shares of the 
Acquired Fund which equal or exceed $500,000 in the aggregate are made at 
net asset value with no sales charge, but are subject to a CDSC of 1.00% 
on redemptions within 12 months.  Class C shares of the Acquired Fund are 
sold without an initial sales charge but are subject to higher ongoing 
expenses than Class A shares, and a CDSC payable upon certain 
redemptions.     
Class A shares of both Funds, except as set forth in the preceding 
paragraph, may be redeemed, at their respective net asset values per 
share next determined without charge.  Class C shares of the Acquired 
Fund may be redeemed at their net asset value per share, subject to a 
CDSC of 1.00% if such shares are redeemed during the first 12 months 
following their purchase. Shareholders of either Fund may redeem their 
shares on any day such Fund calculates its net asset value.  Redemption 
requests received prior to the close of regular trading on the New York 
Stock Exchange ("NYSE") with respect to the Acquired Fund, or before 12 
noon New York City time with respect to the Acquiring Fund, are priced at 
the net asset value per share determined on that day; otherwise, 
redemption requests are priced at the net asset value as next determined.  
See "How to Redeem Shares" in the accompanying Prospectus of the 
Acquiring Fund. 
Shares of both Funds held by Smith Barney as custodian must be 
redeemed by submitting a written request to a Smith Barney Financial 
Consultant. All other shares may be redeemed through a Smith Barney 
Financial Consultant, Introducing Broker or dealer in the selling group 
or by forwarding a written request for redemption to the transfer agent, 
First Data Investor Services Group, Inc. ("First Data").  See "Redemption 
of Shares" in the accompanying Prospectus of the Acquiring Fund.
Shareholders' Voting Rights. Shareholders of the Acquired Fund and 
the Acquiring Fund have similar voting rights.  For example, neither 
Smith Barney Funds, Inc. nor Smith Barney Money Funds, Inc. holds 
meetings of shareholders annually, and there is normally no meeting 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.  In addition, under the laws of the State of 
Maryland, shareholders of the Acquired Fund do not have appraisal rights 
in connection with a combination or acquisition of the assets of the 
Acquired Fund by another entity.  Shareholders of the Acquired Fund may, 
however, continue to redeem their shares at net asset value prior to the 
date of Reorganization.   See "Information on Shareholder Rights."
RISK FACTORS
Due to the similarities of investment objectives and policies of 
the Acquiring Fund and the Acquired Fund, an investment in the Acquiring 
Fund involves investment risks that are substantially similar to those of 
the Acquired Fund.   For a full description of the risks involved in 
investing in the Acquiring Fund, refer to "Investment Objectives and 
Policies" in the accompanying Prospectus of the Acquiring Fund.  

REASONS FOR THE REORGANIZATION

The Board of Directors of the Acquired Fund has determined that it 
is advantageous to combine the Acquired Fund with the Acquiring Fund.  
The Funds have substantially similar investment objectives, substantially 
similar investment policies and the same Manager and shareholder 
servicing agent.  In reaching this conclusion, the Board considered a 
number of factors as described below.

The Directors considered the fact that the Acquired Fund's assets 
have been declining since 1993 which has resulted in the Acquired Fund 
not having sufficient assets to justify maintaining it as a separate 
fund.  Specifically, while much of the Acquired Fund's fixed costs have 
remained constant since 1993, the Acquired Fund's assets (for all classes 
of shares) have declined from over $60 million at year end 1993, to 
approximately $25 million at year end 1994, to under $20 million at year 
end 1995, and to under $18 million at year end 1996.  This is in contrast 
to the assets of the Acquiring Fund which were over $27 billion at the 
end of 1996.

	   The Manager also informed the Directors that since 1993, when 
the Acquired Fund assets began to decline, the Acquired Fund's investment 
style has been significantly inhibited and it has become increasingly 
difficult to provide competitive returns. The Board considered that the 
Reorganization would permit the shareholders of the Acquired Fund to 
continue to pursue an investment goal involving the maximization of 
income from a short-term portfolio with limited volatility. The Board had 
been informed that with interests rates at their current levels, the 
yield on the Acquired Fund could drop below the money market fund rates, 
given the expense ratio of the Acquired Fund.  The Board considered the 
advantages to the respective Funds, including the removal of the 
impediments experienced by the Acquired Fund due to its small size.    

   	The Board members were presented with financial information as of 
the year ended December 31, 1996 which indicated that the total expenses 
of the Acquired Fund's classes were substantially higher than the total 
expenses of the Acquiring Fund (i.e., 1.26% for Class A shares of the 
Acquired Fund and 1.60% for Class C shares of the Acquired Fund as 
compared to .62% for Class A shares of the Acquiring Fund).  The Board 
considered pro forma information for the combined fund (assuming the same 
level of assets as of December 31, 1996), which reflected the same 
expense ratio as that for the Acquiring Fund.  The Board considered that 
Smith Barney has been subsidizing the Acquired Fund by waiving the 
management fee and absorbing expenses.
    
       
   	In light of the foregoing, the Board of Directors of the Acquired 
Fund, including the Independent Directors, determined that it is in the 
best interests of the Acquired Fund and its shareholders to combine the 
Acquired Fund with the Acquiring Fund.  The Board also determined that a 
combination of the Acquired Fund and the Acquiring Fund would not result 
in a dilution of the interests of the Acquired Fund's shareholders.      
	The Board of Directors also determined that it is 
advantageous to the Acquiring Fund to acquire the assets of the Acquired 
Fund.  Among other reasons, the Board considered that:  (1) the impact of 
the Reorganization on the current expenses of the Acquiring Fund will be 
minimal, and (2) the portfolio securities will be acquired without any 
cost to the Acquiring Fund.  Accordingly, the Board of the Acquiring 
Fund, including a majority of the Independent Directors, determined that 
the Reorganization is in the best interests of the Acquiring Fund's 
shareholders and that the interests of the Acquiring Fund's shareholders 
will not be diluted as a result of the Reorganization. 

INFORMATION ABOUT THE REORGANIZATION
   Plan of Reorganization.  The following summary of the Plan is 
qualified in its entirety by reference to the Plan (Exhibit A hereto).  
The Plan provides that the Acquiring Fund will acquire all or 
substantially all of the assets of the Acquired Fund in exchange for 
shares of the Acquiring Fund and the assumption by the Acquiring Fund of 
all stated liabilities of the Acquired Fund on October 24, 1997 or such 
later date as may be agreed upon by the parties (the "Closing Date"). 
    
   Prior to the Closing Date, the Acquired Fund will endeavor to 
discharge all of its known liabilities and obligations.  The Acquiring 
Fund will not assume any liabilities or obligations other than those 
reflected on an unaudited statement of assets and liabilities of the 
Acquired Fund prepared as of the close of regular trading on the NYSE, 
currently 4:00 p.m. New York City time, on the Closing Date.  The 
Acquiring Fund will deliver to the Acquired Fund for distribution to the 
Acquired Fund shareholders the number of Class A shares of the Acquiring 
Fund, including fractional Class A shares, determined by dividing the 
value of the Acquired Fund's net assets attributable to each class of its 
shares by the net asset value of one Class A share of the Acquiring Fund.  
The net asset value per share will be determined by dividing assets, less 
liabilities, by the total number of outstanding shares and will be 
computed as of the close of regular trading on the NYSE with respect to 
the Funds, both on the Closing Date.  If the net asset value of each 
class of shares of each Fund on the Closing Date were to be $1.00 per 
share, shareholders of the Acquired Fund would receive one Acquiring Fund 
share for each Acquired Fund share held on the Closing Date.    
The Acquired Fund and the Acquiring Fund will utilize the 
procedures set forth under "Valuation of Shares" in the Prospectus of the 
Acquiring Fund to determine the value of their respective portfolio 
securities and to determine the aggregate value of each Fund's portfolio.  
See "Comparison of Investment Objectives and Policies-Primary 
Investments" for a description of the amortized cost method of valuation 
used by the Acquiring Fund. The method of valuation employed will be 
consistent with the requirements set forth in the Prospectus of the 
Acquiring Fund, Rule 22c-1 under the 1940 Act and the interpretation of 
such rule by the SEC's Division of Investment Management.        
 At or prior to the Closing Date, the Acquired Fund will and the 
Acquiring Fund may declare a dividend or dividends which, together with 
all previous such dividends, will have the effect of distributing to 
their respective shareholders all taxable income for the period ending on 
or prior to the Closing Date.   In addition, the Acquired Fund's dividend 
will include its net capital gains realized in the period ending on or 
prior to the Closing Date (after reductions for any capital loss 
carryforward).  
   As soon after the Closing Date as conveniently practicable, the 
Acquired Fund will liquidate and distribute pro rata to shareholders of 
record as of the close of business on the Closing Date the full and 
fractional shares of the Acquiring Fund received by the Acquired Fund.   
Shareholders of the Acquired Fund will receive Class A shares of the 
Acquiring Fund.  Such liquidation and distribution will be accomplished 
by the establishment of accounts in the names of the Acquired Fund's 
shareholders on the share records of the Acquiring Fund's transfer agent.   
Each account will represent the respective pro rata number of full and 
fractional shares of the Acquiring Fund due to each of the Acquired 
Fund's shareholders.  After such distribution and the winding up of its 
affairs, the Acquired Fund will be terminated as a portfolio of Smith 
Barney Funds, Inc.     
The consummation of the Reorganization is subject to the conditions 
set forth in the Plan.   Notwithstanding approval of the Acquired Fund's 
shareholders, the Plan may be terminated at any time at or prior to the 
Closing Date by (1) mutual agreement of Smith Barney Funds, Inc. and 
Smith Barney Money Funds, Inc. or (2) by either party to the Plan upon a 
material breach by the other party of any representation, warranty or 
agreement contained therein.    
   Approval of the Reorganization will require a vote of a majority 
of the outstanding shares of the Acquired Fund.      
   Description of the Acquiring Fund 's Shares. Full and fractional 
shares of common stock of the Acquiring Fund will be issued to the 
Acquired Fund in accordance with the procedures detailed in the Plan and 
as described in the Acquiring Fund's Prospectus.   Generally, the 
Acquiring Fund does not issue share certificates to shareholders unless a 
specific request is submitted to the Acquiring Fund's transfer agent.   
See "Information on Shareholders' Rights" and the Prospectus of the 
Acquiring Fund for additional information with respect to the shares of 
the Acquiring Fund.        
Federal Income Tax Consequences
   Due to the recent significant contraction in the size of the 
Acquired Fund, the Reorganization will be treated for Federal income tax 
purposes as a taxable disposition by the Acquired Fund of its assets in 
exchange for shares of the Acquiring Fund (and the assumption by the 
Acquiring Fund of certain liabilities of the Acquired Fund), followed by 
a liquidating distribution by the Acquired Fund of shares of the 
Acquiring Fund.     
The Acquired Fund will recognize gain or loss on the taxable 
disposition of its assets, but will receive a dividends paid deduction in 
respect of the liquidating distribution and will therefore not be subject 
to Federal income tax as a result of the Reorganization.  The Acquiring 
Fund will take a fair market value basis in the assets received from the 
Acquired Fund.
   Shareholders of the Acquired Fund will recognize gain or loss on 
the liquidating distribution of shares of the Acquiring Fund equal to the 
excess of the fair market value of the Acquiring Fund Shares received 
over their basis in the Acquired Fund shares exchanged therefor.  Such 
gain or loss will be a capital gain or loss if the shareholder is treated 
as holding shares in the Acquired Fund as a capital asset, and will be 
long-term capital gain or loss if the shareholder is treated as holding 
shares in the Acquired Fund for more than one year.   Long-term capital 
gains are eligible for reduced tax rates to individuals, and such rates 
may be further reduced if the individual's holding period exceeds 18 
months.  Shareholders of the Acquired Fund will take a fair market value 
basis in the shares of the Acquiring Fund.      
Shareholders of the Acquired Fund should consult their tax advisors 
regarding the effect, if any, of the proposed Reorganization in light of 
their individual circumstances.   Since the foregoing discussion only 
relates to the Federal income tax consequences of the Reorganization, 
shareholders of the Acquired Fund should also consult their tax advisors 
as to state and local tax consequences, if any, of the Reorganization.    


   Capitalization.  The following table shows the capitalization of 
the Acquiring Fund and the Acquired Fund as of August 29, 1997, and on a 
pro forma basis as of that date, giving effect to the proposed 
acquisition of assets at net asset value.

Cash Portfolio
Income Return Account 
Portfolio

Pro Forma for
Reorganization




Class A 
Shares
(Unaudited)
Class A 
Shares
(Unaudited)
Class C Shares 
(Unaudited)

Class A 
Shares
(Unaudited)



Net assets.............
	$30,280,725,261
Net asset value                         
    per share                     
1.00
Shares
    outstanding......   
30,281,631,930
 $1,049,344

        9.44

     111,214
    380,396

       9.44

       40,317

$30,282,155,001

         1.00

   
30,283,061,670  

    
   As of July 22, 1997 (the "Record Date"), there were 127,530 
outstanding Class A shares and 41,412 outstanding Class C shares of the 
Acquired Fund and 29,679,687,925 outstanding Class A shares of the 
Acquiring Fund.  As of the Record Date, the officers and Directors of 
Smith Barney Funds, Inc. beneficially owned as a group less than 1 % of 
the outstanding shares of the Acquired Fund.  Except as set forth below, 
to the best knowledge of the Board of Directors of the Acquired Fund, as 
of the Record Date, no shareholder or "group" (as that term is used in 
Section 13(d) of the Securities Exchange Act of 1934, as amended (the 
"Exchange Act")) owned beneficially or of record 5% or more of a Class of 
shares of the Acquired Fund.  As of the Record Date, the officers and 
Directors of Smith Barney Money Funds, Inc. beneficially owned as a group 
less than 1% of the outstanding shares of the Acquiring Fund.  Except as 
set forth below, to the best knowledge of the Board of Directors of the 
Acquiring Fund, as of the Record Date, no shareholder or group (as that 
term is used in Section 13(d) of the Exchange Act) owned beneficially or 
of record more than 5% of the Acquiring Fund.        
   


Name and Address
Percentage of Class 
Owned of Record or 
Beneficially As of the 
Record Date

Upon 
Consummation of 
the 
Reorganization


Income Return Account Portfolio 
Class A




Jacque Baker
Smith Barney Inc. Rollover 
Cust.
101 Mott Avenue
Santa Cruz, CA  95062-3729

7.24%  
Less than 1%

Chicago Foundation for Women
Reserve Fund Account
Attn.: Marianne Philbin
230 W. Superior -  #408
Chicago, IL  60610-3536

6.43
Less than 1%






Name and Address
Percentage of Class 
Owned of Record or 
Beneficially As of the 
Record Date

Upon 
Consummation of 
the 
Reorganization


Income Return Account Portfolio 
Class C




Marshall E. Redding IRA
Smith Barney Inc. IRA Custodian
Suite  A
2530 Atlantic Ave.
Long Beach, CA  90806-2741

53.12
Less than 1%

Osage Hills Apt.  Ministries 
Inc.
Attn.: S. Gabrielle Kocour
P.O. Box 8014
Tulsa, OK  74101-8014
13.23
Less than 1%


Helen Fierstein
Smith Barney Inc. IRA Custodian
5158 H. Floria Way
Boynton, Beach FL  33437-5230



7.48

Less than 1%





Driven-Ware Systems Inc.
Attn.: Anthony Coppola Jr.
32 Royal County Down
Pinehurst, NC  28374-8176




5.24%



Less than 1%

Atlantic Electric Systems Inc.
401K P/S/Plan U/A/D 12/01/88
Donna L. Butterworth TTEE
77 Corporate Park
3421 A St. Vardell LN
Charlotte, NC  28217-1369

5.20
Less than 1%

Cash Portfolio Class C




Frontier Trust Company TTEE
DAS-CO of Idaho Inc. 401(k) 
Plan
411 East Karcher Rd
Nampa, ID  83687

15.69
15.69%






Name and Address
Percentage of Class 
Owned of Record or 
Beneficially As of the 
Record Date

Upon 
Consummation of 
the 
Reorganization



Frontier Trust Company As TTEE
Reynolds Brothers Inc.
Attn. Ed Snyder
1080 Airport Road
Lakewood, NJ  08701


14.58

14.58

Frontier Trust Company TTEE
United Mizrahi 401(k) and
Profit Sharing Plan
611 Wilshire Blvd. Ste. 700
Los Angeles, CA  90017

10.13
10.13

Frontier Trust Company As TTEE
Napoleon Spring Works Inc.
Attn. Patrick Glynn
Rt. 60 South
Archbold, OH  43502

7.13
7.13

Frontier Trust Company As TTEE
Pacific Western Services 
Attn. Jo Ann Glaser
3594 NW  Byron St.
STE 202/PO Box 3043
Silverdale, WA  98383
5.60
5.60

    
INFORMATION ABOUT THE ACQUIRING FUND

Management's Discussion and analysis of Market Conditions and Portfolio 
Review (through December 31, 1996) 

Performance Summary

The chart below provides the yields for the Cash Portfolio of the Smith 
Barney Money Funds for the seven-day period ended December 31, 1996.

Smith Barney Money Funds Class A Shares Yield

Portfolio
Seven  Day Yield
Effective Yield*

Cash........................
 ..........................
4.90%
5.02%

*Assumes dividends are reinvested.




	Asset Growth: Because the Federal Reserve Board (Fed) has kept the 
federal funds rate (the benchmark of short-term interest rates and the 
rate banks charge each other for overnight loans) unchanged at 5.25% 
since January 1996, the interest rate environment for the past year had 
little impact on the returns for money market funds. Nevertheless, the 
growth in 401(k) retirement plans, new money from insured, fixed-rate 
bank products and the relatively attractive returns for money funds 
compared to bond fund returns have produced another year of double-digit 
asset growth for the money fund industry. During 1996, assets under 
management in the Cash Portfolio rose 19.5%.

	Market Update and Outlook: 1996 posed a dilemma for both the Fed 
and investors because of widespread expectations that the Fed would raise 
short-term interest rates. Instead, the Fed chose to remain on the 
sidelines and left interest rates unchanged. The last Fed action came in 
January 1996 when it lowered the federal funds rate from 5.50% to 5.25%. 
However, despite making few changes to its existing policy, the Fed has 
signaled that it will not hesitate to raise interest rates should any 
signs of inflationary pressures emerge.

	During the third quarter, U.S. economic growth, as measured by 
Gross Domestic Product ("GDP"), rose at a 2.1% annual rate after the 
second quarter's 4.7% annual rate. Most of this increase in GDP came not 
from higher consumer spending but from a build-up in inventories. This 
was a departure since U.S. economic growth in recent quarters has 
primarily come from investments by businesses and consumers. The fixed 
income markets generally performed better in the fourth quarter due to 
modest U.S. economic growth, little or no inflation, positive job growth 
in line with market expectations and generally upbeat consumers.

	The yet-to-be released fourth quarter GDP is expected to show above 
average trend growth with estimates ranging from 3.3% to 4.7%. Most of 
that strength is predicted to come from exports and overall good 
Christmas sales.

	In our view, the U.S. economy appears to be operating at a 
sustainable level.  Inventories are under control and real estate prices 
are fairly stable. Although job creation remains strong, many U.S. 
consumers have started to save more and consumer spending has slowed down 
from early 1996. Given these conditions, we do not believe a recession is 
likely. However, given the fact that the U.S. economy is now in its sixth 
year of expansion, it is less likely that the economy can continue to 
post two or three quarters of 3.5% growth; a scenario which would worry 
the Fed and cause it to tighten monetary policy.

	In light of the current state of the U.S. economy, we believe 
short-term interest rates will stay in a narrow trading range over the 
next few months.  Fed Chairman Alan Greenspan's widely circulated 
comments about too much speculation in the equity market suggest to us 
that the Fed is uncomfortable with the stock market's historically high 
levels and will monitor the situation closely in the months ahead.

Investment Strategy

	During the Smith Barney Money Funds' fiscal year ended December 31, 
1996, the average life of the Cash Portfolio ranged from 70 to 85 days .
	Over the near term, we expect to maintain a 60 to 70 day average 
life for the Cash Portfolio as data regarding the pace of U.S. economic 
growth and inflation is released. In terms of the composition of the Cash 
Portfolio, we have  increased our governments and agencies exposure to 
roughly 10% and increased our holdings in asset-backed commercial paper 
from 10% to 15% since the issuance of corporate and industrial paper has 
been declining. Most corporations continue to be cash rich and mergers 
have reduced the number of names from our approved list of issuers.
   
Management Update (through July 11, 1997)

Performance Summary

The chart below provides the yields for the Cash Portfolio of the Smith 
Barney Money Funds for the seven-day period ended June 30, 1997.

Smith Barney Money Funds Class A Shares Yield

Portfolio
Seven  Day Yield
Effective Yield*

Cash........................
 ..........................
5.09%
5.22%

*Assumes dividends are reinvested.


Market Overview for the Acquiring Fund and the Acquired Fund

Over the past six months, the U.S. economy has grown vigorously. Gross 
Domestic Product, the total output of goods and services, rose at a 5.9% 
annual rate in the first quarter of 1997. This comes on the heels of a 
3.8% annual rate of growth in the fourth quarter of 1996. Much of the 
growth in the first quarter of 1997 came from higher personal consumption 
as evidenced by strong motor vehicle and durable goods sales. High 
consumer confidence and a low unemployment rate have also contributed to 
a healthy first half of the year. Absent from the picture has been any 
concrete signs of inflation. For the first five months of 1997 consumer 
prices rose only 1.4%, down from the 3.8% for the comparable period of 
1996. Nevertheless, the Federal Open Market Committee raised short-term 
interest rates by 25 basis points (0.25%) at its meeting in March 1997.

Going forward, we expect economic growth to slow down from its current 
pace.  Part of the strength in the first quarter of 1997 resulted from a 
buildup in business inventories, a factor that should detract from 
economic growth in upcoming quarters. Furthermore, reports from auto 
manufacturers and department stores suggest that retail sales have slowed 
in the second quarter of 1997. This slowdown could be the result of 
temporary factors such as autoworker strikes and April tax payments.

The overall trend indicates that both the labor market and corporate 
America  remain strong. Nevertheless, recently released economic reports 
gave the Federal Reserve Board ("Fed") the necessary leeway to leave 
interest rates unchanged at their May and July meetings, while it 
continues to closely monitor the economy for any signs of excessive 
growth and inflationary pressures.

It appears that Fed Chairman Alan Greenspan has adopted a new policy 
based on the possibility that we have entered a new economic era. 
Chairman Greenspan seems willing to allow faster economic growth because 
productivity gains are helping to keep inflation in check. In addition, 
successful deficit reduction and real high interest rates (based on our 
belief that the current rate of inflation is overstated) has resulted in 
the Fed pursuing a less restrictive monetary policy.

We believe the Fed will continue to fine tune monetary policy and there 
should be less interest rate volatility over the next several months. 
Given this scenario and barring no inflation (as reflected in recent bond 
market yield hovering below 7.0%), we will invest across the yield curve 
if we identify any
good values.

If inflation reports remain positive over the long term and the annual 
rate of economic growth slows down to a 2%-3% range in 1998, the Fed 
might lower rates to further prolong the economic expansion. In that 
case, we would expect the average maturity of the Smith Barney Money 
Funds to be targeted between 65-85 days.

The Cash Portfolio is 50% invested in top-tier U.S. dollar-denominated 
foreign obligations and 50% in domestic obligations. The Retirement 
Portfolio is 55% in top-tier U.S. dollar-denominated foreign obligations 
and 45% in domestic obligations. A few split-rated issuers that we 
purchased for the Portfolios such as Fleet Financial, GTE and Nynex have 
had their short-term ratings upgraded by several of the nationally 
recognized statistical rating organizations. In addition, we have 
recently added several high-quality issuers such as Lucent Technologies 
and Hertz Corporation to our Portfolios.

    
INFORMATION ABOUT THE ACQUIRED FUND 

Management's Discussion and analysis of Market Conditions and Portfolio 
Review (through December 31, 1996) 

Market Overview

	In our view, one of the most important events for the market in 
1996 was the unexpected strength of the U.S. economy during the first 
half of the year and weaker economic growth during the second half. In 
addition to President Clinton's re-election and Congress maintaining its 
Republican majority, other significant market events in 1996 include the 
U.S. Treasury's plans to introduce inflation-indexed securities, the 
Boskin Report that suggests inflation may be roughly 1% lower than 
previously reported, and Russian President Boris Yeltsin surviving both 
medically and politically.

Income Return Account Portfolio
Performance and Investment Strategy (through December 31,1996)

	For the year ended December 31, 1996, the Income Return Account 
Portfolio's Class A shares had a total return of 4.08% and underperformed 
versus the 5.67% total return for the Salomon Brothers One-Year Treasury 
Index over the same period. In addition, over the past twelve months, the 
Portfolio distributed dividends totaling $0.47 per Class A share.

	The Income Return Account invests in money market instruments to 
help provide stability, and in longer-term securities (not to exceed five 
years for U.S. Government securities, and three years for corporate debt 
obligations) to provide enhanced return. For defensive purposes, the 
Portfolio also employs an immunization strategy. (The Portfolio's 
immunization strategy involves the use of proprietary technology that 
helps provide support to the manager in avoiding negative quarterly 
returns.) While minor day-to-day price fluctuations are unavoidable, this 
strategy should produce sufficient income during adverse market 
conditions to offset any potential decline in the prices of the 
Portfolio's longer term securities. In extremely uncertain or volatile 
periods of interest rates, it is possible for the Portfolio to be fully 
invested in short-term money market instruments. Unlike money market 
funds, which generally seek to maintain a stable net asset value (NAV) of 
$1.00 per share, the Income Return Account Portfolio's NAV does fluctuate 
with market conditions.


	Volatility in the market and the speed of that volatility has risen 
during the reporting period. In our view, a primary factor behind this 
higher (and faster) volatility has been the increasingly important market 
influence of hedge funds, foreign investors and central banks. In this 
type of environment, the Portfolio's immunization strategy, although 
challenged, has enabled the Portfolio to avoid quarterly negative returns 
this past year.



   
-------------------------------------------------------------------------
-------
Historical Performance -- Income Return Account Portfolio - Class A 
Shares
-------------------------------------------------------------------------
-------

<TABLE>
<CAPTION>
                                     Net Asset Value
                                   -------------------
                                Beginning       End        Income         Capital Gain        Return of           Total
Year Ended               of Year          of Year   Dividends    Distributions        Capital         Returns(1)
=========================================================================
===========================================================
<S>                             <C>               <C>              <C>       <C>                 <C>                <C>
12/31/96                         $9.60             $9.48        $0.47       $0.00             $0.03              4.08%
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/95                          9.34              9.60              0.51              0.00              0.00              8.43
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/94                          9.59              9.34              0.45              0.00              0.00              2.14
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/93                          9.68              9.59              0.47              0.00              0.00              4.00
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/92                          9.65              9.68               0.52              0.00              0.00              5.85
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/91                          9.38              9.65              0.73              0.00              0.00             11.06
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/90                          9.31              9.38              0.74              0.00              0.00              9.10
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/89                          9.12              9.31              0.75              0.00              0.00             10.67
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/88                          9.26              9.12              0.72              0.00              0.00              6.48
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/87                          9.43              9.26              0.60              0.06              0.00              5.36
=========================================================================
===========================================================
Total                                                                      $ 5.96             $0.06             $0.03
=========================================================================
===========================================================
</TABLE>

-------------------------------------------------------------------------
-------
Historical Performance -- Income Return Account Portfolio - Class C 
Shares
-------------------------------------------------------------------------
-------

<TABLE>
<CAPTION>
                                    Net Asset Value
                                  -------------------
                                Beginning          End              Income         Capital Gain        Return of           Total
Year Ended               of Year          of Year          Dividends Distributions        Capital         Returns(1)
=========================================================================
===========================================================
<S>                             <C>               <C>              <C>        <C>                 <C>                <C>
12/31/96                         $9.60             $9.48        $0.44             $0.00             $0.03              3.72%
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/95                          9.34              9.60         0.48              0.00              0.00              8.06
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/94                          9.58              9.34         0.42              0.00              0.00              1.86
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/93                          9.68              9.58         0.43              0.00              0.00              3.53
-------------------------------------------------------------------------
-----------------------------------------------------------
Inception*-12/31/92               9.69              9.68  0.04              0.00              0.00              0.31+
=========================================================================
===========================================================
Total                                                                    $1.81             $0.00             $0.03
=========================================================================
===========================================================
</TABLE>


-------------------------------------------------------------------------
-------
Historical Performance -- Income Return Account Portfolio - Class Y 
Shares
-------------------------------------------------------------------------
-------

<TABLE>
<CAPTION>
                                    Net Asset Value
                                  -------------------
                                Beginning          End            Income         Capital Gain        Return of           Total
Year Ended              of Year          of Year          Dividends    Distributions        Capital          Returns(1)
=========================================================================
===========================================================
<S>                             <C>               <C>              <C>          <C>                 <C>                <C>
12/31/96                         $9.60             $9.48             $0.48             $0.00             $0.03              4.18%
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/95                          9.34              9.60              0.51              0.00              0.00              8.43
-------------------------------------------------------------------------
-----------------------------------------------------------
12/31/94                          9.59              9.34              0.44              0.00              0.00              2.01
-------------------------------------------------------------------------
-----------------------------------------------------------
Inception*-12/31/93               9.72              9.59       0.42              0.00              0.00              3.01+
=========================================================================
===========================================================
Total                                                                         $1.85             $0.00             $0.03
=========================================================================
===========================================================
</TABLE>

IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL 
GAINS, IF
ANY, ANNUALLY.



-------------------------------------------------------------------------
-------
                        Income Return Account Portfolio
-------------------------------------------------------------------------
-------
-------------------------------------------------------------------------
-------
Average Annual Total Return
-------------------------------------------------------------------------
-------

<TABLE>
<CAPTION>
                                                 Without Sales Charge(1)
                                         --------------------------------
-------
                                         Class A         Class C       Class Y
=========================================================================
=======
<S>                                      <C>             <C>          <C>
Year Ended 12/31/96           4.08%           3.72%     4.18%
-------------------------------------------------------------------------
------
Five Years Ended 12/31/96   4.91             N/A          N/A
-------------------------------------------------------------------------
------
Ten Years Ended 12/31/96    6.82             N/A          N/A
-------------------------------------------------------------------------
------
Inception* through 12/31/96  7.17            4.30        4.48
=========================================================================
=======
</TABLE>                          

<TABLE>
<CAPTION>
                                                 Without Sales Charge(2)
                                         --------------------------------
-------
                                         Class A         Class C      Class Y
=========================================================================
=======
<S>                                      <C>             <C>         <C>
Year Ended 12/31/96        1.95%           2.72%      4.18%
-------------------------------------------------------------------------
------
Five Years Ended 12/31/96   4.48             N/A      N/A
-------------------------------------------------------------------------
------
Ten Years Ended 12/31/96   6.61             N/A    N/A
-------------------------------------------------------------------------
------
Inception* through 12/31/96  6.99            4.30  4.48
=========================================================================
=======
</TABLE>                          

-------------------------------------------------------------------------
-------
Cumulative Total Return
-------------------------------------------------------------------------
-------

<TABLE>
<CAPTION>
                                                                  Without
                                                               Sales Charge(1)
=========================================================================
=======
<S>                                                            <C>
Class A  (12/31/86 through 12/31/96)           93.40%
-------------------------------------------------------------------------
-------
Class C (Inception* through 12/31/96)            18.56
-------------------------------------------------------------------------
-------
Class Y (Inception* through 12/31/96)            18.71
=========================================================================
=======
</TABLE>                                          
(1)  Assumes reinvestment of all dividends and capital gain 
distributions, if  any, at net asset value and does not reflect the 
deduction of the
applicable sales charge with respect to Class A shares or the 
applicable  contingent deferred sales charges ("CDSC") with respect to Class C 
shares.
(2)  Assumes reinvestment of all dividends and capital gain 
distributions, if  any, at net asset value. In addition, Class A shares 
reflect the deduction  of the maximum initial sales charge of 2.00% 
and Class C shares reflect the deduction of a 1.00% CDSC, which applies 
if shares are redeemed within the  first year of purchase.
 *   Inception dates for Class A, C and Y shares are March 4, 1985, 
December 16,  1992, and February 1, 1993, respectively.
 +   Total return is not annualized, as it may not be representative of 
the  total return for the year.
         
 
-------------------------------------------------------------------------
-------
Historical Performance (unaudited)
-------------------------------------------------------------------------
-------

                 Growth of $10,000 Invested in Class A Shares of
                     the Income Return Account Portfolio vs.
                     Salomon Brothers 1-Year Treasury Index+
-------------------------------------------------------------------------
-------
                         December 1986 -- December 1996

                                  [GRAPHIC] 

<TABLE>
<CAPTION>
                   Income Return              Salomon Brothers
                      Account                 Portfolio 1-Year
                      Treasury                      Index
                   -------------              ----------------
<S>                <C>                        <C>
12/86              $   9,874                  $    10,000
12/87                 10,343                       10,574
12/88                 11,014                       11,220
12/89                 12,188                       12,350
12/90                 13,262                       13,452
12/91                 14,863                       14,634
12/92                 15,732                       15,337
12/93                 16,361                       15,925
12/94                 16,703                       16,343
12/95                 18,112                       17,664
12/96                 18,851                       18,776
</TABLE>                                      
 +   Hypothetical illustration of $10,000 invested in Class A shares on 
December 31, 1986, assuming deduction of the maximum 2.50% sales charge in 
effect at   the time of investment and the reinvestment of dividends (after 
deduction if applicable sales charge through November 7, 1994, and thereafter 
at net  asset value) and capital gains, if any, at net asset value through 
December 31, 1996. The Salomon Brothers 1-Year Treasury Index is composed of 
the most recently issued twelve month United States Treasury Bill which 
is used  to track the Treasury Bill's total return until its maturity. The 
index is unmanaged and is not subject to the same management and trading 
expenses of a mutual fund. The performance of the Portfolio's other classes may 
be  greater or less than the Class A shares' performance indicated on 
this  chart, depending on whether greater or lesser sales charges and fees 
were  incurred by shareholders investing in the other classes.

     All figures represent past performance and are not a guarantee of 
future  results. Investment return and principal value will fluctuate and
redemption values may be more or less than the original cost. No 
adjustment has been made for shareholder tax liability on dividends or capital 
gains.
    
   
Management Update (through August 5, 1997)

Market Overview

See "Information about the Acquiring Fund - Management Update (through 
July 11, 1997)".

Performance Summary

For the six months ended June 30, 1997, the Income Return Account 
Portfolio's Class A shares had a total return of 2.32% and Class C shares 
had a total return of 2.02% . Each Class slightly underperformed 
the 2.99% total return for the Salomon Brothers One-Year Treasury 
Index over the same period.      


COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES  

	The following discussion comparing investment objectives, policies 
and restrictions of the Acquiring Fund and the Acquired Fund is based 
upon and qualified in its entirety by the respective discussions in the 
prospectuses of the Acquiring Fund and the Acquired Fund.  For a full 
discussion of the investment objectives, policies and restrictions of the 
Acquiring Fund, refer to the Prospectus of the Acquiring Fund, which 
accompanies this Prospectus/Proxy Statement, under the caption 
"Investment Objectives and Policies," and for a discussion of these 
issues as they apply to the Acquired Fund, refer to the Prospectus of the 
Acquired Fund under the caption "Investment Objective and Management 
Policies."  
Investment Objectives.  The Acquired Fund and the Acquiring Fund 
have substantially similar investment objectives.  The Acquired Fund 
seeks high current income from a portfolio of high quality debt 
obligations and employs an immunization strategy to minimize the risk of 
loss of account value.  The Acquiring Fund is a money market fund that 
seeks maximum current income and preservation of capital.  There can be 
no assurance that either Fund will be able to achieve its investment 
objectives.  Both the Acquiring Fund and the Acquired Fund's investment 
objectives are considered fundamental policies which cannot be changed 
without the affirmative vote of a majority of the outstanding voting 
securities, as defined in the 1940 Act, of the respective Fund, which is 
the lesser of: (i) 67% of the voting securities of the Fund present at a 
meeting of shareholders, if the holders of more than 50% of the 
outstanding voting securities of such Fund are present or represented by 
proxy; or (ii) more than 50% of the outstanding voting securities of such 
Fund.
Primary Investments.  The Acquiring Fund seeks to achieve its 
objectives by investing in U.S. Government obligations and related 
repurchase agreements, bank obligations and high quality commercial 
paper, corporate obligations and municipal obligations (as such 
instruments are described below). The Acquiring Fund's investments are 
limited to United States dollar-denominated instruments that have 
received the highest rating from (a) any two nationally recognized 
statistical rating organizations ("NRSRO") 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 a rating at the time that the 
Fund acquires a security.

   The Acquired Fund attempts to achieve its investment objective 
by investing in U.S. Government Obligations and repurchase agreements,  
bankers' acceptances, certificates of deposit, securities backed by 
letters of credit, commercial paper rated A-1 by S&P or by Moody's, and 
notes and bonds, including floating rate issues, rated A or better by S&P 
or by Moody's, or if not rated, of comparable quality as determined by 
the Manager.  Normally, approximately one-third of the Acquired Fund 
consists of obligations that have remaining maturities of less than one 
year; however there may be occasions when up to 100% of the Acquired Fund 
is invested in securities maturing within one year. This portfolio 
composition is intended to achieve a higher level of income than would 
otherwise be available from an exclusively short-term portfolio (or that 
might be obtained from a money market fund) with less risk than that of a 
conventional bond or note portfolio.     

   The Acquiring Fund has adopted certain investment policies to 
assure that, to the extent reasonably possible, the Acquiring 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. The 
Acquiring Fund uses the "amortized cost method" for valuing securities, 
which involves valuing a security at its cost at the time of purchase and 
thereafter assuming a constant amortization to maturity of any discount 
or premium, regardless of any impact of fluctuating interest rates on the 
market value of the instrument. The purpose of such valuation method is 
to attempt to maintain a constant net asset value per share, and it is 
expected that the price of the Fund's shares will remain at $1.00.  
Although there is no assurance that at some future date there will not be 
a rapid change in interest rates, a default by an issuer or some other 
event that could cause the Acquiring Fund's price per share to change 
from $1.00, in order to minimize fluctuations in market price, the 
Acquiring Fund will not purchase a security with a remaining maturity of 
greater than 13 months or maintain a dollar weighted average portfolio 
maturity in excess of 90 days.      
The following is a description of the types of money market 
instruments in which the Funds may invest:  
U.S. Government Obligations  Both Funds may invest in U. S. 
Government Obligations.  The Acquiring Fund may invest in 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 Bank for Cooperatives, Federal Land Banks, Federal 
Intermediate Credit Banks 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 instrumentality. Similarly, the Acquired Fund invests in U.S. 
Obligations guaranteed as to payment of principal and interest by one of 
its agencies (such as the Government National Mortgage Association) or 
others (such as obligations of the Student Loan Marketing Association) 
that are supported only by the credit of the instrumentality, and direct 
obligations of the U.S. Treasury (including Treasury bills, notes and 
bonds) and others (such as obligations of the Federal Home Loan Bank) 
that are supported by the right of the issuer to borrow from the 
Treasury.

   Repurchase Agreements.   Both Funds may enter into repurchase 
agreement transactions (typically the acquisition of an underlying 
security for a relatively short period of time (usually not more than one 
week) subject to an obligation of the seller to repurchase, and the Fund 
to resell, the security at an agreed upon price and future date (normally 
the next business day) with any broker/dealer or other financial 
institution, including the Fund's custodian, that is deemed creditworthy 
by the Manager, under guidelines approved by the Funds' Board of 
Directors). The Acquiring Fund, as a matter of fundamental policy, may 
not enter into a repurchase agreement if, as a result thereof, more than 
10% of its total assets at that time would be invested in repurchase 
agreements maturing in more than seven days.  The Acquired Fund has a 
similar restriction limiting investment in repurchase agreements maturing 
in more than seven days and any other illiquid assets to 10% of total 
assets.     

Reverse Repurchase Agreements.  The Acquired Fund is permitted to 
invest up to 1/3 of its total assets in reverse repurchase agreements 
although the policy has been to limit such investments to no more than 5% 
of the Acquired Fund's net assets.

   Commercial Paper. Both Funds may invest in commercial paper.  
Because the Acquiring Fund is a money market fund, the Board of the 
Acquiring Fund must determine that there is limited credit risk in order 
for the Fund to invest in commercial paper.  The Acquired Fund may invest 
in commercial paper rated A-1 by S&P or Prime-1 by Moody's.  The 
Acquiring Fund may invest in promissory notes that have received the 
highest rating from the requisite NRSRO for short-term debt securities or 
comparable unrated securities and in the commercial paper of foreign 
issuers.     
   Corporate Obligations. The Acquiring Fund may invest in 
obligations of corporations (1) rated AA or better by the requisite NRSRO 
or (2) issued by an issuer that has a class of short-term debt 
obligations that are comparable in priority and security with the 
obligation and that have been rated in one of the two highest rating 
categories for short-term debt obligations. The Acquiring Fund may invest 
only in corporate obligations with remaining maturities of 13 months or 
less.     
   Bank Obligations.   Both Funds may invest in bank obligations. 
The Acquiring Fund may invest in obligations (including certificates of 
deposit ("CDs"), bankers' acceptances and fixed time deposits ("TDs")) 
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 $l billion (as reported in its most 
recently published financial statements prior to the date of investment). 
The Acquiring Fund intends to maintain at least 25% of its total assets 
in obligations of domestic and foreign banks, subject to the foregoing 
criteria.  The Acquiring Fund intends to limit its investment in fixed 
time deposits maturing from two business to seven calendar days to 10% of 
its total assets.  The Acquired Fund may also invest in bank obligations 
(including CDs, bankers' acceptances, and securities backed by letters of 
credit).     

High Quality Municipal Obligations.   The Acquiring Fund may invest 
in 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-l or Aa or better by Moody's or, 
if not rated, determined by the Manager to be of comparable quality.  At 
certain times, supply/demand imbalances in the tax-exempt market cause 
municipal obligations to yield more than taxable obligations of 
equivalent credit quality and maturity length.  The purchase of these 
securities could enhance the Acquiring Fund's yield.  The Acquiring Fund 
will not invest more than 10% of its total assets in municipal 
obligations.

   Notwithstanding the permitted investments described above, the 
Acquiring Fund is a money market fund and, as such, is subject to the 
requirements of Rule 2a-7 under the 1940 Act ("Rule 2a-7").  Under Rule 
2a-7, money market funds, other than tax-exempt money market funds which 
have separate guidelines, are also required to meet certain 
diversification tests.  Investments in the securities of any one issuer 
(other than U.S.  Government securities) generally may not exceed 5% of 
such a fund's total assets.    
Investment Restrictions. The Funds have adopted the following 
investment restrictions for the protection of shareholders.  These 
restrictions may not be changed without the approval of the holders of a 
majority, as defined in the 1940 Act, of the voting securities of the 
respective Fund. 
1.	The Acquired Fund may not purchase common stocks, 
preferred stocks, warrants, other equity securities or 
municipal obligations.
2.	Neither Fund may borrow money except from banks 
for temporary purposes, in an amount not to exceed 10% of the 
value of its total assets and may pledge up to 10% of the 
value of its assets to secure such borrowings.  The Funds 
will only borrow money to accommodate requests for redemption 
of shares while effectuating an orderly liquidation of 
portfolio securities or to clear securities transactions and 
not for leveraging purposes.  Whenever borrowings exceed 5% 
of the value of the Acquiring Fund's total assets, the 
Acquiring Fund will not make additional investments.  This 
restriction does not prohibit the Acquired Fund from entering 
into reverse repurchase agreements so long as not more than 
33 1/3 of the Acquired Fund's total assets are subject to 
such agreements.
3.	Neither Fund may sell securities short.  The 
Acquired Fund may not purchase securities on margin.
4.	Neither Fund may write or purchase put or call 
options.
5.	The Acquired Fund may not underwrite the 
securities of other issuers or knowingly purchase securities 
subject to restrictions on disposition under the Securities 
Act of 1933 ("restricted securities").
6.	Neither Fund may purchase or sell real estate 
(except the Acquired Fund may purchase mortgage related 
securities issued or guaranteed by the U.S. Government 
agencies or instrumentalities), commodities (and, with 
respect to the Acquired Fund, commodity futures contracts) or 
oil and gas interests.
7.	Neither Fund may make loans to others, except 
through the purchase of qualified debt obligations and entry 
into repurchase agreements, each as described above under 
"Comparison of Investment Objectives and Policies" except 
that each Fund may purchase and simultaneously resell for 
later delivery, obligations issued or guaranteed as to 
principal and interest by the U.S. Government its agencies or 
instrumentalities; provided that the Fund will not enter into 
such a repurchase agreement if as a result more than 10% of 
its total assets would be subject to repurchase agreements 
maturing in greater than seven days.
   8.	Neither  Fund may with respect to 75% of its 
assets invest more than 5% of its assets in the securities of 
any one issuer, except securities issued or guaranteed as to 
principal and interest by the U.S. Government, its agencies 
and instrumentalities.   In compliance with Rule 2a-7, the 
Acquiring Fund will not purchase securities, other than 
obligations of the U.S. Government or its agencies and 
instrumentalities, if, immediately after such purchase, more 
than 5% of the value of the Fund's total assets would be 
invested in securities of any one issuer.  The Acquiring 
Fund's fundamental policy would give the Fund the ability to 
invest, with respect to 25% of the Fund's assets, more than 
5% of its assets in any one issuer only in the event that 
Rule 2a-7 is amended to authorize this.      
9.	The Acquired Fund may not purchase any securities 
other than  obligations of the U.S. Government, its agencies 
and instrumentalities if more than 25% of its assets are 
invested  in the securities of issuers in any single 
industry.
   10.	The Acquiring Fund may not concentrate in 
any other industries except that it intends to invest not 
less than 25% of its assets in certain 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.     
11.	Neither Fund may invest in companies for the 
purpose of exercising control.
12.	Neither Fund may invest in securities of other 
investment companies, except as they may be acquired as part 
of a merger, consolidation or acquisition of assets.
13.	The Acquired Fund may not issue senior securities 
except as the Acquired Fund may be deemed to have issued a 
senior security by reason of (a) entering into any repurchase 
agreement or reverse repurchase agreement; or (b) permitted 
borrowings of money. 
14.	The Acquiring Fund may not purchase illiquid 
securities (such as repurchase agreements with maturities in 
excess of seven days) or other securities that are not 
readily marketable if more than 10% of the Acquiring Fund's 
assets would be invested in such securities.  The Acquired 
Fund has a similar investment restriction limiting the 
purchase of repurchase agreements maturing in more than seven 
days to 10% of its total assets (see restriction 7 above).

INFORMATION ON SHAREHOLDERS' RIGHTS

General.  Smith Barney Money Funds, Inc. and Smith Barney Funds, 
Inc. (collectively, the "Companies")  are similar in many aspects of 
corporate governance.  As Maryland corporations, both are governed by 
their Articles of Incorporation and By-laws as well as applicable 
Maryland and federal law. 

   Voting Rights.  Neither Smith Barney Funds, Inc. nor Smith 
Barney Money Funds, Inc. (each a "Company") holds meetings of 
shareholders annually, and there normally is no meeting 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.  A meeting of shareholders of either Company, for any 
purpose, must be called upon the written request of shareholders holding 
at least 25% of such Company's outstanding shares.  On each matter 
submitted to a vote of the shareholders of one of the Companies, each 
shareholder is entitled to one vote for each whole share owned and a 
proportionate, fractional vote for each fractional share outstanding in 
the shareholder's name on the Company's books.  On any matter which 
affects only the interests of a Fund, only the holders of shares of such 
Fund are entitled to vote.  Similarly, holders of shares of a Fund will 
not be entitled to vote on matters not affecting their interests (for 
example, those affecting only the interest of other portfolios of the 
Company).  Directors hold office until a successor is elected and 
qualified, and vacancies in the Board of Directors may be filled by the 
Board of Directors.     

Appraisal Rights.   Under the laws of the State of Maryland, 
shareholders of the Acquired Fund do not have appraisal rights in 
connection with a combination or acquisition of the assets of the 
Acquired Fund by another entity, such as the Reorganization. Shareholders 
of the Acquired Fund may, however, redeem their shares at net asset value 
prior to the date of the Reorganization.
   Liquidation.   In the event of a liquidation of the Acquired 
Fund or Acquiring Fund, shareholders of such liquidating Fund are 
entitled to receive, when and as declared by the Board of Directors, the 
excess of the assets belonging to such liquidating Fund over the 
liabilities belonging to such liquidating Fund.  In either case, the 
assets so distributed to shareholders will be distributed among the 
shareholders in proportion to the number of shares held by them and 
recorded in the books of the Fund.     
Shareholder Liability.  Under Maryland law, neither Company's 
shareholders have personal liability for the Company's corporate acts and 
obligations.  Shares of the Acquiring Fund issued to the shareholders of 
the Acquired Fund in the Reorganization will be fully paid and 
nonassessable when issued with no personal liability attaching to the 
ownership thereof and transferable without restrictions and will have no 
preemptive or conversion rights.

   Liability of Directors.   The Articles of Incorporation of each 
Company provide that the Company will indemnify its Directors and 
officers against liabilities and expenses incurred in connection with 
litigation in which they may be involved because of their positions with 
the Company.  Nothing in the Articles of Incorporation or the By-laws of 
either Company, however, protects or indemnifies a Director or officer 
against any liability to which such person would otherwise be subject by 
reason of willful misfeasance, bad faith, gross negligence or reckless 
disregard of the duties involved in the conduct of such person's office.  
    

   Rights of Inspection.  Maryland law permits any shareholder of 
the either Fund or any agent of such shareholder to inspect and copy 
during the Fund's usual business hours the Company's By-laws, minutes of 
shareholder proceedings, annual statements of the Company's affairs and 
voting trust agreements on file at its principal office.     

   The foregoing is only a summary of certain characteristics of 
the operations of the Companies, their respective Articles of 
Incorporation and By-laws, and Maryland law.  The foregoing is not a 
complete description of the documents cited.   Shareholders should refer 
to the provisions of such Articles of Incorporation, By-laws and Maryland 
law directly for a more thorough description.     

ADDITIONAL INFORMATION ABOUT
SMITH BARNEY MONEY FUNDS, INC. -CASH PORTFOLIO AND
SMITH BARNEY FUNDS, INC. - INCOME RETURN ACCOUNT PORTFOLIO 

Smith Barney Funds, Inc.  Information about the Acquired Fund is 
included in its current Prospectus dated April 30, 1997, and in the 
Statement of Additional Information dated April 30, 1997 that has been 
filed with the SEC, both of which are incorporated herein by reference.  
A copy of the Prospectus and the Statement of Additional Information is 
available upon request and without charge by writing the Acquired Fund at 
the address listed on the cover page of this Prospectus/Proxy Statement 
or by calling toll-free 1-800-224-7523.

   Smith Barney Money Funds, Inc.  Information about the Acquiring 
Fund is incorporated herein by reference from its current Prospectus 
dated April 30, 1997, and Statement of Additional Information dated April 
30, 1997.  A copy of such Statement of Additional Information has been 
filed with the SEC and is available upon request and without charge by 
writing the Acquiring Fund at the address listed on the cover page of 
this Prospectus/Proxy Statement or by calling toll-free 1-800-224-7523. 
    
Both the Acquiring Fund and the Acquired Fund are subject to the 
informational requirements of the Exchange Act and in accordance 
therewith file reports and other information including proxy material, 
reports and charter documents with the SEC.  These materials can be 
inspected and copies obtained at the Public Reference Facilities 
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.  20549 
and at the New York Regional Office of the SEC at 75 Park Place, New 
York, New York 10007.  Copies of such material can also be obtained from 
the Public Reference Branch, Office of Consumer Affairs and Information 
Services, SEC, Washington, D.C. 20549 at prescribed rates.

OTHER BUSINESS

   The Board of Directors of the Acquired Fund does not intend to 
present any other business at the Meeting.  If, however, any other 
matters are properly brought before the Meeting, the persons named in the 
accompanying form of proxy will vote thereon in accordance with their 
judgment.     

VOTING INFORMATION

   This Prospectus/Proxy Statement is furnished in connection with 
a solicitation of proxies by the Board of Directors of the Acquired Fund 
to be used at the Special Meeting of Shareholders to be held at 10:00 
a.m. on October 17, 1997, at 388 Greenwich Street, 22nd Floor, New York, 
New York 10013, and at any adjournment thereof.  This Prospectus/Proxy 
Statement, along with a Notice of the Meeting and a proxy card, is first 
being mailed to shareholders of the Acquired Fund on or about September 
15, 1997.  Only shareholders of record as of the close of business on the 
Record Date will be entitled to notice of, and to vote at, the Meeting or 
any adjournment thereof.  For purposes of determining a quorum for 
transacting business at the Meeting, abstentions and broker "non-votes" 
(that is, proxies from brokers or nominees indicating that such persons 
have not received instructions from the beneficial owner or other persons 
entitled to vote shares on a particular matter with respect to which the 
brokers or nominees do not have discretionary power) will be treated as 
shares that are present but which have not been voted.  For this reason, 
abstentions and broker non-votes will have the effect of "no" votes for 
purposes of obtaining the requisite approval of the Plan.  If the 
enclosed form of proxy is properly executed and returned in time to be 
voted at the Meeting, the proxies named therein will vote the shares 
represented by the proxy in accordance with the instructions marked 
thereon.  Unmarked proxies will be voted FOR the proposed Reorganization 
and FOR any other matters deemed appropriate.  A proxy may be revoked at 
any time on or before the Meeting by written notice to the Secretary of 
the Acquired Fund, 388 Greenwich Street, New York, New York 10013.  
Unless revoked, all valid proxies will be voted in accordance with the 
specifications thereon or, in the absence of such specifications, for 
approval of the Plan and the Reorganization contemplated thereby.     
Approval of the Plan will require the vote of a majority of the 
outstanding shares of the Acquired Fund.  Shareholders of the Acquired 
Fund are entitled to one vote for each share.  Fractional shares are 
entitled to proportional voting rights.

   Proxy solicitations will be made primarily by mail, but proxy 
solicitations also may be made by telephone, telegraph or personal 
interviews conducted by officers and employees of  Smith Barney, Inc. 
("Smith Barney") and/or First Data, transfer agent of the Acquired Fund.  
The aggregate cost of solicitation of the shareholders of the Acquired 
Fund is expected to be approximately $3,000.  Expenses of the 
Reorganization, including the costs of the proxy solicitation and the 
preparation of enclosures to the Prospectus/Proxy Statement, 
reimbursement of expenses of forwarding solicitation material to 
beneficial owners of shares of the Acquired Fund and expenses incurred in 
connection with the preparation of this Prospectus/Proxy Statement will 
be borne by Smith Barney, the Funds' distributor.     
In the event that sufficient votes to approve the Reorganization 
are not received by October 17, 1997, the persons named as proxies may 
propose one or more adjournments of the Meeting to permit further 
solicitation of proxies.  In determining whether to adjourn the Meeting, 
the following factors may be considered: the percentage of votes actually 
cast, the percentage of negative votes actually cast, the nature of any 
further solicitation and the information to be provided to shareholders 
with respect to the reasons for the solicitation.  Any such adjournment 
will require an affirmative vote by the holders of a majority of the 
shares present in person or by proxy and entitled to vote at the Meeting.  
The persons named as proxies will vote upon a decision to adjourn the 
Meeting.

The votes of the shareholders of the Acquiring Fund are not being 
solicited by this Prospectus/Proxy Statement.  

FINANCIAL STATEMENTS AND EXPERTS

KPMG Peat Marwick LLP has rendered an opinion on the statements of 
assets and liabilities, including the schedules of investments, of the 
Acquired Fund and the Acquiring Fund as of December  31, 1996, and the 
related statements of operations for the year then ended, changes in net 
assets for each of the years in the two-year period then ended and 
financial highlights for each of the years in the five-year period then 
ended.  These financial statements have been incorporated by reference 
herein and and into the Statement of Additional Information relating to 
this Prospectus/Proxy Statement in reliance upon the report of KPMG Peat 
Marwick LLP, independent certified public accountants, incorporated by 
reference herein, and upon  the authority of such firm as experts in 
accounting and auditing.
   
VALIDITY OF SHARES

The validity of shares of the Acquired Fund will be passed upon by 
Sullivan & Cromwell, 125 Broad Street, New York, NY 10004.  In rendering 
such opinion, Sullivan & Cromwell may rely on an opinion of  Maryland
counsel.  
    
   THE BOARD OF DIRECTORS OF THE ACQUIRED FUND, INCLUDING THE 
INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMEND APPROVAL OF THE PLAN, AND 
ANY UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED 
IN FAVOR OF APPROVAL OF THE PLAN.     


Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
   
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of 
this 25th day of June, 1997, by and between SMITH BARNEY MONEY FUNDS, 
INC.  ("Smith Barney Money Funds"), a Maryland corporation with its 
principal place of business at 388 Greenwich Street, New York, New York 
10013, on behalf of the CASH PORTFOLIO (the "Acquiring Fund"), an 
investment portfolio of Smith Barney Money Funds, and SMITH BARNEY FUNDS, 
INC. ("Smith Barney Funds"), a Maryland corporation with its principal 
place of business at 388 Greenwich Street New York, New York 10013, on 
behalf of the INCOME RETURN ACCOUNT PORTFOLIO (the "Acquired Fund"). The 
reorganization (the "Reorganization") will consist of the transfer of all 
or substantially all of the assets of the Acquired Fund in exchange for 
Class A shares of common stock of the Acquiring Fund (collectively, the 
"Acquiring Fund Shares" and each, an "Acquiring Fund Share") and the 
assumption by the Acquiring Fund of certain liabilities of the Acquired 
Fund and the distribution, after the Closing Date herein referred to, of 
Acquiring Fund Shares to the shareholders of the Acquired Fund in 
liquidation of the Acquired Fund and the liquidation of the Acquired 
Fund, all upon the terms and conditions hereinafter set forth in this 
Agreement.     

WHEREAS, Smith Barney Money Funds and Smith Barney Funds are 
registered investment companies of the management type, and the Acquired 
Fund owns securities that generally are assets of the character in which 
the Acquiring Fund is permitted to invest; 

WHEREAS, both Smith Barney Money Funds and Smith Barney Funds are 
authorized to issue shares of common stock; 

WHEREAS, the Board of Directors of Smith Barney Funds has 
determined that the exchange of all or substantially all of the assets 
and certain of the liabilities of the Acquired Fund for Acquiring Fund 
Shares and the assumption of such liabilities by Smith Barney Money Funds 
on behalf of the Acquiring Fund is in the best interests of the Acquired 
Fund's shareholders and that the interests of the existing shareholders 
of the Acquired Fund would not be diluted as a result of this 
transaction; 

WHEREAS, the Board of Directors of Smith Barney Money Funds has 
determined that the exchange of all or substantially all of the assets of 
the Acquired Fund for Acquiring Fund Shares is in the best interests of 
the Acquiring Fund's shareholders and that the interests of the existing 
shareholders of the Acquiring Fund would not be diluted as a result of 
this transaction.    

NOW, THEREFORE, in consideration of the premises and of the 
covenants and agreements hereinafter set forth, the parties hereto 
covenant and agree as follows:  
1.	Transfer of Assets of the Acquired Fund in Exchange for the 
Acquiring Fund Shares and Assumption of the Acquired Fund's 
Scheduled Liabilities and Liquidation of the Acquired Fund  
1.1.	Subject to the terms and conditions herein set forth and on 
the basis of the representations and warranties contained herein, 
the Acquired Fund agrees to transfer the Acquired Fund's assets as 
set forth in paragraph 1.2 to Smith Barney Money Funds on behalf of 
the Acquiring Fund, and Smith Barney Money Funds on behalf of the 
Acquiring Fund agrees in exchange therefor: (i) to deliver to the 
Acquired Fund the number of Class A Acquiring Fund Shares, 
including fractional Class A Acquiring Fund Shares, determined by 
dividing the value of the Acquired Fund's net assets attributable 
to shares of the Acquired Fund held by shareholders, computed in 
the manner and as of the time and date set forth in paragraph 2.1, 
by the net asset value of one Class A Acquiring Fund Share, 
computed in the manner and as of the time and date set forth in 
paragraph 2.2; and (ii) to assume certain liabilities of the 
Acquired Fund, as set forth in paragraph 1.3.  Such transactions 
shall take place at the closing provided for in paragraph 3.1 (the 
"Closing").  Smith Barney Money Funds on behalf of the Acquiring 
Fund and  the Acquired Fund agrees to file, effective at the 
Closing, Articles of Transfer with the State of Maryland Department 
of Assessments and Taxation.
1.2.	(a)	The assets of the Acquired Fund to be acquired by Smith 
Barney Money Funds on behalf of the Acquiring Fund shall consist of 
all or substantially all of its property, including, without 
limitation, all cash, securities and dividends or interest 
receivables which are owned by the Acquired Fund and any deferred 
or prepaid expenses shown as an asset on the books of the Acquired 
Fund on the closing date provided in paragraph 3.1 (the "Closing 
Date"). 
(b)	The Acquired Fund has provided the Acquiring Fund with 
a list of all of the Acquired Fund's assets as of the date of 
execution of this Agreement.  The Acquired Fund reserves the right 
to sell any of these securities but will not, without the prior 
approval of the Acquiring Fund, acquire any additional securities 
other than securities of the type in which the Acquiring Fund is 
permitted to invest.   The Acquiring Fund will, within a reasonable 
time prior to the Closing Date, furnish the Acquired Fund with a 
statement of the Acquiring Fund's investment objectives, policies 
and restrictions and a list of the securities, if any, on the 
Acquired Fund's list referred to in the first sentence of this 
paragraph which do not conform to the Acquiring Fund's investment 
objectives, policies and restrictions.   In the event that the 
Acquired Fund holds any investments which the Acquiring Fund may 
not hold, the Acquired Fund will dispose of such securities prior 
to the Closing Date.  In addition, if it is determined that the 
portfolios of the Acquired Fund and the Acquiring Fund, when 
aggregated, would contain investments exceeding certain percentage 
limitations imposed upon the Acquiring Fund with respect to such 
investments, the Acquired Fund, if requested by the Acquiring Fund, 
will dispose of and/or reinvest a sufficient amount of such 
investments as may be necessary to avoid violating such limitations 
as of the Closing Date.
1.3.	The Acquired Fund will endeavor to discharge all the 
Acquired Fund's known liabilities and obligations prior to the 
Closing Date.   Smith Barney Money Funds on behalf of the Acquiring 
Fund shall assume all liabilities, expenses, costs, charges and 
reserves reflected on an unaudited Statement of Assets and 
Liabilities of the Acquired Fund prepared by Smith Barney Mutual 
Funds Management (the "Manager"), as of the Valuation Date (as 
defined in paragraph 2.1), in accordance with generally accepted 
accounting principles consistently applied from the prior audited 
period.   Smith Barney Money Funds on behalf of the Acquiring Fund 
shall assume only those liabilities of the Acquired Fund reflected 
in that unaudited Statement of Assets and Liabilities and shall not 
assume any other liabilities, whether absolute or contingent, not 
reflected thereon. 
1.4.	As provided in paragraph 3.4, as soon after the Closing 
Date as is conveniently practicable (the "Liquidation Date"), the 
Acquired Fund will liquidate and distribute pro rata to the 
Acquired Fund's shareholders of record determined as of the close 
of business on the Closing Date (the "Acquired Fund Shareholders"), 
the Acquiring Fund Shares it receives pursuant to paragraph 1.1.   
Shareholders of the Acquired Fund shall receive Class A Acquiring 
Fund Shares. Such liquidation and distribution will be accomplished 
by the transfer of the Acquiring Fund Shares then credited to the 
account of the Acquired Fund on the books of the Acquiring Fund to 
open accounts on the share records of the Acquiring Fund in the 
name of the Acquired Fund's shareholders and representing the 
respective pro rata number of the Acquiring Fund Shares due such 
shareholders.  All issued and outstanding shares of the Acquired 
Fund will simultaneously be canceled on the books of Smith Barney 
Funds, although share certificates representing interests in the 
Acquired Fund will represent a number of Acquiring Fund Shares 
after the Closing Date as determined in accordance with paragraph 
1.1.   Smith Barney Funds shall not issue certificates representing 
the Acquiring Fund Shares in connection with such exchange. 
1.5.	Ownership of Acquiring Fund Shares will be shown on the 
books of the Acquiring Fund's transfer agent.   Acquiring Fund 
Shares will be issued in the manner described in the Acquiring 
Fund's current prospectus and statement of additional information.
1.6.	Any transfer taxes payable upon issuance of the Acquiring 
Fund Shares in a name other than the registered holder of the 
Acquired Fund shares on the books of Smith Barney  Funds as of that 
time shall, as a condition of such issuance and transfer, be paid 
by the person to whom such Acquiring Fund Shares are to be issued 
and transferred. 
1.7.	Any reporting responsibility of the Acquired Fund is and 
shall remain  the responsibility of Smith Barney Funds up to and 
including the Closing Date.   
2.	Valuation
2.1.	The value of the Acquired Fund's assets to be acquired by 
the Acquiring Fund hereunder shall be the value of such assets 
computed as of the close of regular trading on the New York Stock 
Exchange, Inc. (the "NYSE") on the Closing Date (such time and date 
being hereinafter called the "Valuation Date"), using the valuation 
procedures set forth in the Acquiring Fund's then current 
prospectus or statement of additional information. 
2.2.	The net asset value of Acquiring Fund Shares shall be the 
net asset value per share computed as of the close of regular 
trading on the NYSE on the Valuation Date, using the valuation 
procedures set forth in the Acquiring Fund's then current 
prospectus or statement of additional information.
2.3.	All computations of value shall be made by the Manager in 
accordance with its regular practice as pricing agent for the 
Acquired Fund and the Acquiring Fund, respectively.
3.	Closing and Closing Date
3.1.	The Closing Date shall be October 24, 1997, or such later 
date as the parties may agree to in writing.   All acts taking 
place at the Closing shall be deemed to take place simultaneously 
as of the close of business on the Closing Date unless otherwise 
provided. The Closing shall be held as of 5:00 p.m. at the offices 
of Smith Barney Inc., 388 Greenwich Street, New York, New York 
10013, or at such other time and/or place as the parties may agree.
3.2.	The custodian for the Acquiring Fund (the "Custodian") 
shall deliver at the Closing a certificate of an authorized officer 
stating that: (a) the Acquired Fund's portfolio securities, cash 
and any other assets shall have been delivered in proper form to 
the Acquiring Fund within two business days prior to or on the 
Closing Date and (b) all necessary transfer taxes including all 
applicable federal and state stock transfer stamps, if any, shall 
have been paid, or provision for payment shall have been made, in 
conjunction with the delivery of portfolio securities.
3.3.	In the event that on the Valuation Date (a) the NYSE or 
another primary trading market for portfolio securities of the 
Acquiring Fund or the Acquired Fund shall be closed to trading or 
trading thereon shall be restricted or (b) trading or the reporting 
of trading on the NYSE or elsewhere shall be disrupted so that 
accurate appraisal of the value of the net assets of the Acquiring 
Fund or the Acquired Fund is impracticable, the Closing Date shall 
be postponed until the first business day after the day when 
trading shall have been fully resumed and reporting shall have been 
restored.
	3.4.	The Acquired Fund shall deliver at the Closing a list of 
the names and addresses of the Acquired Fund's shareholders and the 
number and percentage ownership of outstanding shares owned by each 
such shareholder immediately prior to the Closing, certified on 
behalf of the Acquired Fund by its President.   The Acquiring Fund 
shall issue and deliver a confirmation evidencing the Acquiring 
Fund Shares to be credited to the Acquired Fund's account on the 
Closing Date to the Secretary of Smith Barney Funds, or provide 
evidence satisfactory to the Acquired Fund that such Acquiring Fund 
Shares have been credited to the Acquired Fund's account on the 
books of the Acquiring Fund.   At the Closing, each party shall 
deliver to the other such bills of sale, checks, assignments, share 
certificates, if any, receipts or other documents as such other  
party or its counsel may reasonably request. 
4.	Representations and Warranties  
	4.1.	Smith Barney Funds represents and warrants to Smith Barney 
Money Funds as follows:
(a)	The Acquired Fund is a portfolio of Smith Barney Funds, 
which is a corporation, duly organized, validly existing and in 
good standing under the laws of the State of Maryland; 
(b)	Smith Barney Funds is a registered investment company 
classified as a management company of the open-end type, and its 
registration with the Securities and Exchange Commission (the 
"Commission") as an investment company under the Investment Company 
Act of 1940, as amended (the "1940 Act") is in full force and 
effect; 
(c)	Smith Barney Funds is not, and the execution, delivery 
and performance of this Agreement on behalf of the Acquired Fund 
will not result, in a material violation of its Articles of 
Incorporation or By-laws or of any agreement, indenture, 
instrument, contract, lease or other undertaking to which Smith 
Barney Funds is a party or by which it is bound; 
(d)	Smith Barney Funds has no material contracts or other 
commitments (other than this Agreement) which will be terminated 
with liability to Smith Barney Funds prior to the Closing Date; 
(e)	No material litigation or administrative proceeding or 
investigation of or before any court or governmental body is 
presently pending or to its knowledge threatened against Smith 
Barney Funds with respect to the Acquired Fund or any of the 
Acquired Fund's properties or assets, except as previously 
disclosed to the Acquiring Fund. Smith Barney Funds knows of no 
facts which might form the basis for the institution of such 
proceedings and neither Smith Barney Funds nor the Acquired Fund is 
a party to or subject to the provisions of any order, decree or 
judgment of any court or governmental body which materially and 
adversely affects the Acquired Fund's business or Smith Barney 
Funds' ability on behalf of the Acquired Fund to consummate the 
transactions herein contemplated; 
   (f)	The Statements of Assets and Liabilities of the 
Acquired Fund for each of the fiscal years ended December 31, 1996, 
1995, 1994, 1993 and 1992, and for the period December 16, 1992 
(inception of Class C shares) to December 31, 1992, with respect to 
Class C shares, have been audited by KPMG Peat Marwick LLP, 
independent certified public accountants, and are in accordance 
with generally accepted accounting principles consistently applied, 
and such statements (copies of which have been furnished to the 
Acquiring Fund) fairly reflect the financial condition of the 
Acquired Fund as of such dates, and there are no known contingent 
liabilities of the Acquired Fund as of such dates not disclosed 
therein;      
(g)	At the Closing Date, all federal and other tax returns 
and reports of the Acquired Fund required by law then to have been 
filed by such dates shall have been filed, and all federal and 
other taxes shown as due on such returns shall have been paid so 
far as due, or provision shall have been made for the payment 
thereof and, to the best of the Acquired Fund's knowledge, no such 
return is currently under audit and no assessment has been asserted 
with respect to such returns; 
(h)	For the most recent fiscal year of its operation, the 
Acquired Fund has met the requirements of Subchapter M of the Code 
for qualification and treatment as a regulated investment company; 
(i)	All issued and outstanding shares of the Acquired Fund 
are, and at the Closing Date will be, duly and validly issued and 
outstanding, fully paid and non-assessable.  All of the issued and 
outstanding shares of the Acquired Fund will, at the time of 
Closing, be held by the persons and in the amounts set forth in the 
records of the transfer agent as provided in paragraph 3.4. The 
Acquired Fund does not have outstanding any options, warrants or 
other rights to subscribe for or purchase any shares of the 
Acquired Fund, nor is there outstanding any security convertible 
into any shares of the Acquired Fund; 
(j)	At the Closing Date, the Acquired Fund will have good 
and marketable title to its assets to be transferred to the 
Acquiring Fund pursuant to paragraph 1.2 and full right, power and 
authority to sell, assign, transfer and deliver such assets 
hereunder and, upon delivery and payment for such assets, the 
Acquiring Fund will acquire good and marketable title thereto, 
subject to no restrictions on the full transfer thereof, including 
such restrictions as might arise under the Securities Act of 1933, 
as amended (the "1933 Act"), other than as disclosed to the 
Acquiring Fund; 
(k)	The execution, delivery and performance of this 
Agreement has been duly authorized by all necessary action on the 
part of  Smith Barney Fund's Board of Directors and, subject to the 
approval of the Acquired Fund's shareholders, assuming due 
authorization, execution and delivery by the Acquiring Fund, this 
Agreement will constitute a valid and binding obligation of Smith 
Barney Fund's on behalf of the Acquired Fund, enforceable in 
accordance with its terms, subject as to enforcement, to 
bankruptcy, insolvency, reorganization, moratorium and other laws 
relating to or affecting creditors' rights and to general equity 
principles; 
(l)	The information to be furnished by the Acquired Fund 
for use in no-action letters, applications for exemptive orders, 
registration statements, proxy materials and other documents which 
may be necessary in connection with the transactions contemplated 
hereby shall be accurate and complete in all material respects and 
shall comply in all material respects with federal securities and 
other laws and regulations thereunder applicable thereof; 
(m)	The proxy statement of Smith Barney Funds on behalf of 
the Acquired Fund (the "Proxy Statement") to be included in the 
Registration Statement referred to in paragraph 5.7 (other than 
information therein that relates to the Acquiring Fund) will, on 
the effective date of the Registration Statement and on the Closing 
Date, not contain any untrue statement of a material fact or omit 
to state a material fact required to be stated therein or necessary 
to make the statements therein, in light of the circumstances under 
which such statements were made, not materially misleading. 
	4.2.	   Smith Barney Money Funds represents and warrants to 
Smith Barney Funds as follows     : 
(a)	The Acquiring Fund is a portfolio of Smith Barney Money 
Funds, which is a corporation, duly organized, validly existing and 
in good standing under the laws of the State of Maryland; 
(b)	Smith Barney Money Funds is a registered investment 
company classified as a management company of the open-end type and 
its registration with the Commission as an investment company under 
the 1940 Act is in full force and effect; 
(c)	The current prospectus of and statement of additional 
information of Smith Barney Money Funds conform in all material 
respects to the applicable requirements of the 1933 Act and the 
1940 Act and the rules and regulations of the Commission thereunder 
and do not include any untrue statement of a material fact or omit 
to state any material fact required to be stated therein or 
necessary to make the statements therein, in light of the 
circumstances under which they were made, not materially 
misleading; 
(d)	At the Closing Date, Smith Barney Money Funds will have 
good and marketable title to the Acquiring Fund's assets; 
(e)	Smith Barney Money Funds is not, and the execution, 
delivery and performance of this Agreement on behalf of the 
Acquiring Fund will not result, in a material violation of its 
Articles of Incorporation or By-laws or of any agreement, 
indenture, instrument, contract, lease or other undertaking with 
respect to the Acquiring Fund to which Smith Barney Money Funds is 
a party or by which it is bound; 
(f)	No material litigation or administrative proceeding or 
investigation of or before any court or governmental body is 
presently pending or to its knowledge threatened against Smith 
Barney Money Funds with respect to the Acquiring Fund or any of the 
Acquiring Fund's properties or assets, except as previously 
disclosed in writing to Smith Barney Funds.  Smith Barney Money 
Funds and the Acquiring Fund know of no facts which might form the 
basis for the institution of such proceedings and neither Smith 
Barney Money Funds nor the Acquiring Fund is a party to or subject 
to the provisions of any order, decree or judgment of any court or 
governmental body which materially and adversely affects the 
Acquiring Fund's business or Smith Barney Money Funds' ability on 
behalf of the Acquiring Fund to consummate the transactions 
contemplated herein; 
   (g)	The Statements of Assets and Liabilities of the 
Acquiring Fund for each of the fiscal years ended December 31, 
1996, 1995, 1994, 1993 and 1992 have been audited by KPMG Peat 
Marwick, independent certified public accountants, and are in 
accordance with generally accepted accounting principles 
consistently applied, and such statements (copies of which have 
been furnished to the Acquired Fund) fairly reflect the financial 
condition of the Acquiring Fund as of such dates, and there are no 
known contingent liabilities of the Acquiring Fund as of such dates 
not disclosed therein;     
(h)	At the Closing Date, all federal and other tax returns 
and reports of the Acquiring Fund required by law then to have been 
filed by such dates shall have been filed, and all federal and 
other taxes shown as due on said returns and reports shall have 
been paid so far as due, or provision shall have been made for the 
payment thereof and, to the best of the Acquiring Fund's knowledge, 
no such return is currently under audit and no assessment has been 
asserted with respect to such returns; 
(i)	For the most recent fiscal year of its operation, the 
Acquiring Fund has met the requirements of Subchapter M of the Code 
for qualification and treatment as a regulated investment company 
and the Acquiring Fund intends to do so in the future; 
(j)	At the date hereof, all issued and outstanding shares 
of the Acquiring Fund are, and at the Closing Date will be, duly 
and validly issued and outstanding, fully paid and non-assessable, 
with no personal liability attaching to the ownership thereof.  The 
Acquiring Fund does not have outstanding any options, warrants or 
other rights to subscribe for or purchase any shares of the 
Acquiring Fund, nor is there outstanding any security convertible 
into shares of the Acquiring Fund; 
(k)	The execution, delivery and performance of this 
Agreement has been duly authorized by all necessary action, if any, 
on the part of Smith Barney Money Funds' Board of Directors and, 
assuming due authorization, execution and delivery by the Acquired 
Fund, this Agreement constitutes a valid and binding obligation of 
Smith Barney Money Funds on behalf of the Acquiring Fund, 
enforceable in accordance with its terms, subject as to 
enforcement, to bankruptcy, insolvency, reorganization, moratorium 
and other laws relating to or affecting creditors' rights and to 
general equity principles; 
(l)	The Acquiring Fund Shares to be issued and delivered to 
Smith Barney Funds for the account of the Acquired Fund 
Shareholders, pursuant to the terms of this Agreement, will at the 
Closing Date have been duly authorized and, when so issued and 
delivered, will be duly and validly issued Acquiring Fund Shares, 
and will be fully paid and non-assessable with no personal 
liability attaching to the ownership thereof; 
(m)	The information to be furnished by the Acquiring Fund 
for use in no-action letters, applications for exemptive orders, 
registration statements, proxy materials and other documents which 
may be necessary in connection with the transactions contemplated 
hereby shall be accurate and complete in all material respects and 
shall comply in all material respects with federal securities and 
other laws and regulations applicable thereto; 
(n)	The Proxy Statement to be included in the Registration 
Statement (only insofar as it relates to the Acquiring Fund and 
Smith Barney Money Funds) will, on the effective date of the 
Registration Statement and on the Closing Date, not contain any 
untrue statement of a material fact or omit to state a material 
fact required to be stated therein or necessary to make the 
statements therein, in light of the circumstances under which such 
statements were made, not materially misleading; and 
   (o)	Smith Barney Money Funds, on behalf of the 
Acquiring Fund, agrees to use all reasonable efforts to obtain the 
approvals and authorizations required by the 1933 Act and the 1940 
Act, and to file notices with state securities commissions as it 
may deem appropriate in order to continue the Acquiring Fund's 
operations after the Closing Date.      

5.	Covenants of the Acquired Fund, Smith Barney Funds, the 
Acquiring Fund and Smith Barney Money Funds
	5.1.	Smith Barney Money Funds on behalf of the Acquiring Fund 
and Smith Barney Funds on behalf of the Acquired Fund each will 
operate its business in the ordinary course between the date hereof 
and the Closing Date.  It is understood that such ordinary course 
of business will include the declaration and payment of customary 
dividends and distributions and any other dividends and 
distributions deemed advisable, in each case payable either in cash 
or in additional shares. 
	5.2.	Smith Barney Funds will call a meeting of Acquired Fund 
shareholders to consider and act upon this Agreement and to take 
all other action necessary to obtain approval of the transactions 
contemplated herein. 
	5.3.	Smith Barney Funds covenants that the Acquiring Fund Shares 
to be issued hereunder are not being acquired for the purpose of 
making any distribution thereof other than in accordance with the 
terms of this Agreement. 
	5.4.	Smith Barney Funds will assist the Acquiring Fund in 
obtaining such information as the Acquiring Fund reasonably 
requests concerning the beneficial ownership of the Acquired Fund's 
shares. 
	5.5.	Subject to the provisions of this Agreement, Smith Barney 
Funds on behalf the Acquired Fund and Smith Barney Money Funds on 
behalf of the Acquiring Fund each will take, or use to be taken, 
all action, and do or cause to be done, all things reasonably 
necessary, proper or advisable to consummate and make effective the 
transactions contemplated by this Agreement. 
	5.6.	As promptly as practicable, but in any case within sixty 
days after the Closing Date, Smith Barney Funds shall furnish the 
Acquiring Fund, in such form as is reasonably satisfactory to the 
Acquiring Fund, a statement of the earnings and profits of the 
Acquired Fund for federal income tax purposes which will be carried 
over to the Acquiring Fund as a result of Section 381 of the Code, 
and which will be certified by the Chairman and Treasurer or 
Assistant Treasurer of the Acquired Fund. 
	5.7.	Smith Barney Funds will provide the Acquiring Fund with 
information reasonable necessary for the preparation of a 
prospectus (the "Prospectus") which will include the Proxy 
Statement, referred to in paragraph 4.1(m), all to be included in a 
Registration Statement on Form N-14 of the Acquiring Fund (the 
"Registration Statement"), in compliance with the 1933 Act, the 
Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act 
in connection with the meeting of the Acquired Fund's shareholders 
to consider approval of this Agreement and the transactions 
contemplated herein. 



6.	Conditions Precedent to Obligations of Smith Barney Funds in 
respect of the Acquired Fund
	The obligations of Smith Barney Funds to consummate the 
transactions provided for herein shall be subject, at its election, 
to the performance by Smith Barney Money Funds and the Acquiring 
Fund of all of the obligations to be performed by them hereunder on 
or before the Closing Date and, in addition thereto, the following 
further conditions: 
   	6.1.	All representations and warranties of Smith Barney 
Money Funds and the Acquiring Fund contained in this Agreement 
shall be true and correct in all material respects as of the date 
hereof and, except as they may be affected by the transactions 
contemplated by this Agreement, as of the Closing Date with the 
same force and effect as if made on and as of the Closing Date; 
    
	6.2.	Smith Barney Money Funds on behalf of the Acquiring Fund 
shall have delivered to the Acquired Fund a certificate executed in 
its name by its Chairman and its Treasurer or Assistant Treasurer, 
in a form reasonably satisfactory to the Acquired Fund and dated as 
of the Closing Date, to the effect that the representations and 
warranties of Smith Barney Money Funds and the Acquiring Fund made 
in this Agreement are true and correct at and as of the Closing 
Date, except as they may be affected by the transactions 
contemplated by this Agreement; and
	6.3.	Smith Barney Funds shall have received on the Closing Date 
a favorable opinion from Sullivan & Cromwell, counsel to Smith 
Barney Money Funds, dated as of the Closing Date, in a form 
reasonably satisfactory to Christina T. Sydor, Esq., Secretary of 
the Acquired Fund, covering the following points: 
That (a) Smith Barney Money Funds is duly organized and validly 
existing under the laws of the State of Maryland; (b) Smith 
Barney Money Funds is an open-end management investment company 
registered under the 1940 Act; (c) this Agreement, the 
Reorganization provided for hereunder and the execution of this 
Agreement have been duly authorized and approved by all 
requisite action of Smith Barney Money Funds, and this Agreement 
has been duly executed and delivered by Smith Barney Money Funds 
and is a valid and binding obligation of Smith Barney Money 
Funds with respect to the Acquiring Fund enforceable in 
accordance with its terms against the assets of the Acquiring 
Fund, subject to bankruptcy, insolvency, fraudulent transfer, 
reorganization, moratorium and similar laws of general 
applicability relating to or affecting creditors' rights and to 
general equity principles; and (d) the Class A Acquiring Fund 
Shares to be issued to the Acquired Fund for distribution to its 
shareholders pursuant to this Agreement have been duly 
authorized and, subject to the receipt by Smith Barney Money 
Funds on behalf of the Acquiring Fund of consideration equal to 
the net asset value thereof (but in no event less than the par 
value thereof), such Class A Acquiring Fund Shares, when issued 
in accordance with this Agreement, will be validly issued, fully 
paid and nonassessable.  
	Such opinion may state that it is solely for the benefit of 
Smith Barney  Funds, its directors and its officers.  Such counsel 
may rely, as to matters governed by the laws of the State of 
Maryland, on an opinion of Maryland counsel. 

7.	Conditions Precedent to Obligations of Smith Barney Money Funds 
in Respect of the 
	Acquiring Fund 
	The obligations of Smith Barney Money Funds on behalf of the 
Acquiring Fund to complete the transactions provided for herein 
shall be subject, at its election, to the performance by Smith 
Barney Funds of all the obligations to be performed by it hereunder 
on or before the Closing Date and, in addition thereto, the 
following conditions: 
	7.1.	All representations and warranties of  Smith Barney Funds 
contained in this Agreement shall be true and correct in all 
material respects as of the date hereof and, except as they may be 
affected by the transactions contemplated by this Agreement, as of 
the Closing Date with the same force and effect as if made on and 
as of the Closing Date; 
	7.2.	Smith Barney Funds on behalf of the Acquired Fund shall 
have delivered to the Acquiring Fund a statement of the Acquired 
Fund's assets and liabilities, together with a list of the Acquired 
Fund's portfolio securities showing the tax costs of such 
securities by lot and the holding periods of such securities, as of 
the Closing Date, certified by the Treasurer or Assistant Treasurer 
of the Acquired Fund; 
	7.3.	Smith Barney Funds shall have delivered to the Acquiring 
Fund on the Closing Date a certificate executed in its name by its 
Chairman and its Treasurer or Assistant Treasurer, in form and 
substance satisfactory to the Acquiring Fund and dated as of the 
Closing Date, to the effect that the representations and warranties 
of the Smith Barney Funds and the Acquired Fund made in this 
Agreement are true and correct at and as of the Closing Date, 
except as they may be affected by the transactions contemplated by 
this Agreement; and
	7.4.	The Acquiring Fund shall have received on the Closing Date 
a favorable opinion of Sullivan & Cromwell, counsel to the Smith 
Barney Funds, in a form satisfactory to Christina T.  Sydor, Esq., 
Secretary of Smith Barney Money Funds, covering the following 
points: 
That (a) the Smith Barney Funds is duly organized and validly 
existing under the laws of the State of Maryland; (b) Smith 
Barney Funds is an open-end management investment company 
registered under the 1940 Act; and (c) this Agreement, the 
Reorganization provided for hereunder and the execution of this 
Agreement have been duly authorized and approved by all 
requisite action of Smith Barney Funds , and this Agreement has 
been duly executed and delivered by Smith Barney Funds and is a 
valid and binding obligation of Smith Barney Funds enforceable 
in accordance with its terms against the assets of the Acquired 
Fund, subject to bankruptcy, insolvency, fraudulent transfer, 
reorganization, moratorium and similar laws of general 
applicability relating to or affecting creditors' rights and to 
general equity principles.
	Such opinion may state that it is solely for the benefit of 
Smith Barney Money Funds, its directors and its officers.  Such 
counsel may rely, as to matters governed by the laws of the State 
of Maryland, on an opinion of Maryland counsel. 

8.	Further Conditions Precedent to Obligations of the Acquired 
Fund,  Smith Barney Funds, the Acquiring Fund and Smith Barney 
Money Funds
	If any of the conditions set forth below do not exist on or 
before the Closing Date with respect to Smith Barney Money Funds on 
behalf of the Acquiring Fund, or the Acquired Fund, the other party 
to this Agreement shall, at its option, not be required to 
consummate the transactions contemplated by this Agreement: 
	8.1.	This Agreement and the transactions contemplated herein 
shall have been approved by the requisite vote of the holders of 
the outstanding shares of the Acquired Fund in accordance with the 
provisions of Smith Barney Fund's Articles of Incorporation and by-
laws and certified copies of the votes evidencing such approval 
shall have been delivered to the Acquiring Fund.  Notwithstanding 
anything herein to the contrary, neither Smith Barney Money Funds 
on behalf of the Acquiring Fund nor Smith Barney Funds on behalf of 
the Acquired Fund may waive the conditions set forth in this 
paragraph 8.1; 
	8.2.	On the Closing Date, no action, suit or other proceeding 
shall be pending before any court or governmental agency in which 
it is sought to restrain or prohibit, or obtain damages or other 
relief in connection with, this Agreement or the transactions 
contemplated herein; 
	8.3.	All consents of other parties and all other consents, 
orders and permits of federal and if applicable state and local, 
regulatory authorities (including those of the Commission and of 
state Blue Sky and securities authorities, including "no-action" 
positions of and exemptive orders from such federal and state 
authorities) deemed necessary by the Acquiring Fund or the Acquired 
Fund to permit consummation, in all material respects, of the 
transactions contemplated hereby shall have been obtained, except 
where failure to obtain any such consent, order or permit would not 
involve a risk of a material adverse effect on the assets or 
properties of the Acquiring Fund or the Acquired Fund, provided 
that either party hereto may for itself waive any of such 
conditions; 
	8.4.	The Registration Statement shall have become effective 
under the 1933 Act and no stop orders suspending the effectiveness 
thereof shall have been issued and, to the best knowledge of the 
parties hereto, no investigation or proceeding for that purpose 
shall have been instituted or be pending, threatened or 
contemplated under the 1933 Act; 
	8.5.	The Acquired Fund shall have declared and paid a dividend 
or dividends on the outstanding shares of the Acquired Fund, which, 
together with all previous such dividends, shall have the effect of 
distributing to the shareholders of the Acquired Fund all of the 
investment company taxable income of the Acquired Fund for all 
taxable years ending on or prior to the Closing Date.  The dividend 
declared and paid by the Acquired Fund shall also include all of 
such fund's net capital gain realized in all taxable years ending 
on or prior to the Closing Date (after reduction for any capital 
loss carry forward); 
9.	Brokerage Fees and Expenses
	9.1.	Smith Barney Money Funds on behalf of the Acquiring Fund 
represents and warrants to the Acquired Fund, and Smith Barney 
Funds on behalf of the Acquired Fund hereby represents and warrants 
to Smith Barney Money Funds on behalf of the Acquiring Fund, that 
there are no brokers or finders entitled to receive any payments in 
connection with the transactions provided for herein. 
	9.2.	(a)	Except as may be otherwise provided herein, Smith 
Barney Inc., the Funds' distributor shall be liable for the 
expenses incurred in connection with entering into and carrying out 
the provisions of this Agreement, including the expenses of: (i) 
counsel and independent accountants associated with the 
Reorganization; (ii) printing and mailing the Prospectus/Proxy 
Statement and soliciting proxies in connection with the meeting of 
shareholders of the Acquired Fund referred to in paragraph 5.2 
hereof; (iii) any special pricing fees associated with the 
valuation of the Acquired Funds or the Acquiring Funds portfolio on 
the Closing Date; (iv) expenses associated with preparing this 
Agreement and preparing and filing the Registration Statement under 
the 1933 Act covering the Acquiring Fund Shares to be issued in the 
Reorganization; (v) registration or qualification fees and expenses 
of preparing and filing such forms, if any, necessary under 
applicable state securities laws to qualify the Acquiring Fund 
Shares to be issued in connection with the Reorganization.  The 
Acquired Fund shall be liable for: (i) all fees and expenses 
related to the liquidation of the Acquired Fund; and (ii) fees and 
expenses of the Acquired Fund's custodian and transfer agent 
incurred in connection with the Reorganization.  The Acquiring Fund 
shall be liable for any fees and expenses of the Acquiring Fund's 
transfer agent incurred in connection with the Reorganization. 
	(b)	Consistent with the provisions of paragraph 1.3, the 
Acquired Fund, prior to the Closing, shall pay for or include in 
the unaudited Statement of Assets and Liabilities prepared pursuant 
to paragraph 1.3 all of its known and reasonably estimated expenses 
associated with the transactions contemplated by this Agreement. 
10.	Entire Agreement; Survival of Warranties
	10.1.	The parties hereto agree that no party has made any 
representation, warranty or covenant not set forth herein and that 
this Agreement constitutes the entire agreement between the 
parties. 
	10.2.	The representations, warranties and covenants contained 
in this Agreement or in any document delivered pursuant hereto or 
in connection herewith shall survive the consummation of the 
transactions contemplated hereunder. 
	11.	Termination
	11.1.	This Agreement may be terminated at any time prior to 
the Closing Date by: (1) the mutual agreement of Smith Barney Funds 
on behalf of the Acquired Fund and Smith Barney Money Funds on 
behalf of the Acquiring Fund; (2) Smith Barney Funds in respect of 
the Acquired Fund in the event that Smith Barney Money Funds in 
respect of the Acquiring Fund shall, or Smith Barney Money Funds in 
respect of the Acquiring Fund in the event that Smith Barney Funds 
in respect of the Acquired Fund shall, materially breach any 
representation, warranty or agreement contained herein to be 
performed at or prior to the Closing Date; or (3) a condition 
herein expressed to be precedent to the obligations of the 
terminating party has not been met and it reasonably appears that 
it will not or cannot be met. 
	11.2.	In the event of any such termination, there shall be no 
liability for damages on the part of either Smith Barney Funds on 
behalf of the Acquired Fund or Smith Barney Money Funds on behalf 
of the Acquiring Fund or their respective directors or officers to 
the other party, but each shall bear the expenses incurred by it 
incidental to the preparation and carrying out of this Agreement as 
provided in paragraph 9.2. 
12.	Amendments 
	This Agreement may be amended, modified or supplemented in such 
manner as may be mutually agreed upon in writing by the authorized 
officers of Smith Barney Funds and Smith Barney Money Funds; 
provided, however, that following the meeting of the Acquired Fund 
shareholders called by Smith Barney Funds pursuant to paragraph 5.2 
of this Agreement, no such amendment may have the effect of 
changing the provisions for determining the number of the Acquiring 
Fund Shares to be issued to the Acquired Fund's shareholders under 
this Agreement to the detriment of such shareholders without their 
further approval.

13.	Notices
Any notice, report, statement or demand required or permitted by 
any provisions of this Agreement shall be in writing and shall be 
given by prepaid telegraph, telecopy or certified mail addressed to 
Smith Barney Funds, 388 Greenwich Street, 22nd Floor, New York, New 
York 10013, Attention: Secretary; or to Smith Barney Money Funds, 
388 Greenwich Street, New York, New York 10013, Attention: 
Secretary.  
14.	Headings; Counterparts; Governing Law; Assignment; 
Limitation of Liability 
	14.1	The article and paragraph headings contained in this 
Agreement are for reference purposes only and shall not affect in 
any way the meaning or interpretation of this Agreement. 
	14.2 	This Agreement may be executed in any number of 
counterparts, each of which shall be deemed an original. 
	14.3	This Agreement shall be governed by and construed in 
accordance with the laws of the State of New York. 
	14.4	This Agreement shall bind and inure to the benefit of the 
parties hereto and their respective successors and assigns, but no 
assignment or transfer hereof or of any rights or obligations 
hereunder shall be made by any party without the written consent of 
the other party.  Nothing herein expressed or implied is intended 
or shall be construed to confer upon or give any person, firm, 
corporation or other entity, other than the parties hereto and 
their respective successors and assigns, any rights or remedies 
under or by reason of this Agreement. 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement 
to be executed by its Chairman of the Board, President or Vice President 
and attested by its Secretary or Assistant Secretary.
Attest: 

SMITH BARNEY
MONEY FUNDS, INC.
on behalf of the 
CASH PORTFOLIO


	/s/  Christina T. Sydor		
Name:	Christina T. Sydor
Title:	Secretary

By:	/s/  Heath B. McLendon	
Name:	Heath B. McLendon	
Title: 	Chairman of the Board and
	Chief Executive Officer

Attest: 

SMITH BARNEY FUNDS, INC.
on behalf of the
INCOME RETURN ACCOUNT PORTFOLIO 

/s/  Christina T. Sydor		
Name:	Christina T. Sydor
Title:	Secretary
By:	/s/  Heath B. McLendon  	
Name:	Heath B. McLendon
Title:	Chairman of the Board

27


   
STATEMENT OF ADDITIONAL INFORMATION DATED, September 15, 1997
    
Acquisition Of The Assets Of

INCOME RETURN ACCOUNT PORTFOLIO
a separate investment portfolio of SMITH BARNEY FUNDS, INC., 388 
Greenwich Street, New York, New York 10013, (800) 224-7523

By And In Exchange For Class A Shares Of 

CASH PORTFOLIO
a separate investment portfolio of SMITH BARNEY MONEY FUNDS, INC., 388 
Greenwich Street, New York, 10013, (800) 224-7523

This Statement of Additional Information, relating specifically to the 
proposed transfer of all or substantially all of the assets of the Income 
Return Account Portfolio of Smith Barney Funds, Inc., (the "Acquired 
Fund")to the Cash Portfolio of Smith Barney Money Funds, Inc., (the 
"Acquiring Fund") in exchange for Class A shares of the Acquiring Fund 
and the assumption by the Acquiring Fund of certain liabilities of the 
Acquired Fund, consists of this cover page and the following described 
documents, each of which accompanies this Statement of Additional 
Information and is incorporated herein by reference.

1.  Statement of Additional Information of Smith Barney Funds, Inc. dated 
April 30, 1997.

2. Statement of Additional Information of Smith Barney Money Funds, Inc. 
dated April 30, 1997

3.  Annual Report of Smith Barney Funds, Inc. - Income Return Account 
Portfolio for the year ended    December 31, 1996.

4.  Annual Report of Smith Barney Money Funds, Inc. - Cash Portfolio for 
the year ended December 31, 1996.

5.  Semi-Annual Report of Smith Barney Funds, Inc. - Income Return 
Account Portfolio for the six-month period ended June 30, 1997.

6.  Semi-Annual Report of Smith Barney Money Funds, Inc. - Cash Portfolio 
for the six-month period ended June 30, 1997.

This Statement of Additional Information is not a Prospectus.  A 
Prospectus/Proxy Statement dated September 15, 1997, relating to the 
above-referenced matter may be obtained without charge by calling or 
writing either the Acquiring Fund or the Acquired Fund at the telephone 
numbers or addresses set forth above, by contacting any Smith Barney 
Financial Consultant, or by calling  toll-free 1-800-224-7523.  This 
Statement of Additional Information should be read in conjunction with 
the Prospectus/Proxy Statement dated September 15, 1997.

The date of this Statement of Additional Information is September 15, 
1997



PROSPECTUS OF SMITH BARNEY MONEY FUNDS, INC. - CASH PORTFOLIO DATED APRIL 
30, 1997 IS INCORPORATED BY REFERENCE TO POST-EFFECTIVE AMENDMENT NO. 49 
TO THE SMITH BARNEY FUNDS, INC. REGISTRATION STATEMENT ON FORM N-1A FILED 
ON APRIL 23, 1997.
REFERENCE NOS. 2-51301, 811-2490
ACCESSION NUMBER: 91155-97-000209

STATEMENT OF ADDITIONAL INFORMATION OF SMITH BARNEY FUNDS, INC. DATED 
APRIL 30, 1997
REFERENCE NOS. 2-25890, 811-1464
ACCESSION NUMBER. 91155-97-000224

STATEMENT OF ADDITIONAL INFORMATION OF SMITH BARNEY MONEY FUNDS, INC. 
DATED APRIL 30, 1997
REFERENCE NOS. 2-51301, 811-2490
ACCESSION NUMBER. 91155-97-000209

ANNUAL REPORT OF SMITH BARNEY FUNDS, INC. - INCOME RETURN ACCOUNT 
PORTFOLIO FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996.
ACCESSION NUMBER: 91155-97-000132

ANNUAL REPORT OF SMITH BARNEY MONEY FUNDS, INC. - CASH PORTFOLIO FOR THE 
FISCAL YEAR ENDED DECEMBER 31, 1996.
ACCESSION NUMBER: 91155-97-000081
   
SEMI-ANNUAL REPORT OF SMITH BARNEY FUNDS, INC. - INCOME RETURN ACCOUNT 
PORTFOLIO FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997.
ACCESSION NUMBER: 91155-97-000396

SEMI-ANNUAL REPORT OF SMITH BARNEY MONEY FUNDS, INC. -CASH PORTFOLIO FOR 
THE SIX-MONTH PERIOD ENDED JUNE 30, 1997
ACCESSION NUMBER: 91155-97-000384
    



	PART C

	OTHER INFORMATION

Item 15.		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 assured include Smith 
Barney Mutual Funds Management Inc. (Registrant's Manager) and affiliated 
investment companies.

Item 16.	Exhibits

	(1)	(a)	Articles Supplementary to the Articles of 
Incorporation dated November 7, 1985, January 30, 1984, 
August 12, 1980 and May 8, 1980 are incorporated by 
reference to Exhibits (a) through (d) to Post-Effective 
Amendment No. 32.

		(b)	Articles Supplementary to the Articles of 
Incorporation dated December 5, 1990 and Articles of 
Amendment dated April 19, 1991 are incorporated by 
reference to Exhibit 1(b) and (c) to Post-Effective 
Amendment No. 35. 

		(c)	Articles of Amendment to the Articles of 
Incorporation dated October 28,1992 and Articles 
Supplementary to the Articles of Incorporation dated 
December 8, 1992 are incorporated by reference to 
Exhibit 1(c) and (d) to Post-Effective Amendment No. 
41. 

		(d)	Certificate of Correction dated July 15, 1994 
(filed herewith).

		(e)	Articles Supplementary to the Articles of 
Incorporation dated July 19, 1994 (filed herewith).

		(f)	Articles of Amendment to Articles of 
Incorporation dated November 3,1994 (filed herewith).

		(g)	Articles Supplementary to Articles of 
Incorporation dated November 3, 1994 (filed herewith).

		(h)	Articles Supplementary to Articles of 
Incorporation dated November 3, 1994(filed herewith).
	
		(i)	Articles Supplementary to Articles of 
Incorporation dated January 16, 1996 (filed herewith).
		
	(2)	Restated Bylaws (filed herewith).

	(3)	Not applicable. 

	(4)	Form of Agreement and Plan of Reorganization (filed 
herewith as Exhibit A to Registrant's Prospectus/Proxy 
Statement). 

	(5)	Specimen Stock Certificate for shares of common stock 
of the Cash Portfolio, a portfolio of the Registrant, 
is incorporated by reference to Exhibit 4(a) to Post-
Effective Amendment No. 32. 

	(6)	Management Agreement for the Cash Portfolio is 
incorporated by reference to Exhibit 5(b) to Post-
Effective Amendment No. 44. 

	(7)	Underwriting Agreement is incorporated by reference to 
Exhibit 6 to Post-Effective Amendment No. 32. 

	(8)	Not applicable. 

	(9)	(a) Custodian Agreement is incorporated by reference to 
Exhibit 8 to Post-Effective Amendment No. 32. 

		(b) Form of Transfer Agency Agreement is incorporated 
by reference to Exhibit 8 to Post-Effective Amendment 
No. 49. 

	(10)	Plan of Distribution Pursuant to Rule 12b-1 of Smith 
Barney Money Funds, Inc. is incorporated by reference 
to Exhibit 15(a) to Post-Effective Amendment No. 44. 

	(11)	Opinion and Consent of Sullivan & Cromwell with 
respect to validity of shares (filed herewith) 

		
	(12)	Not Applicable 

	(13)	Not Applicable

	(14)	 Consent of KPMG Peat Marwick L.L.P. (filed herewith)

	(15)	Not Applicable. 

	(16)	Not Applicable. 

	(17)	(a)	Revised Form of Proxy Card (filed herewith)

		(b)	Registrant's Declaration pursuant to Rule 24f-2 
is incorporated by reference to its initial 
Registration Statement. 

		(c)	Powers of Attorney are incorporated by reference 
to the Registrant's Registration Statement on Form N-14 
(Registration No. 333-31761), filed on July 22, 1997. 

Item 17. Undertakings

(1) The undersigned Registrant agrees that prior to any public reoffering 
of the securities registered through the use of a prospectus which is a 
part of this Registration Statement by any person or party who is deemed 
to be an underwriter within the meaning of Rule 145(c) of the Securities 
Act of 1933, the reoffering prospectus will contain the information 
called for by the applicable registration form for reofferings by persons 
who may be deemed underwriters, in addition to the information called for 
by the other items of the applicable form.

(2) The undersigned Registrant agrees that every prospectus that is filed 
under paragraph (1) above will be filed as a part of an amendment to the 
Registration Statement and will not be used until the amendment is 
effective, and that, in determining any liability under the Securities 
Act of 1933, each post-effective amendment shall be deemed to be a new 
registration statement for the securities offered therein, and the 
offering of the securities at that time shall be deemed to the initial 
bona fide offering of them.

	SIGNATURES

	Pursuant to the requirements of the Securities Act of 1933, as 
amended, SMITH BARNEY MONEY FUNDS, INC. has duly caused this Amendment 
No. 1 to the Registration Statement to be signed on its behalf by the 
undersigned, thereunto duly authorized, all in the City of New York, 
State of New York on the 10th day of September, 1997. 


  		SMITH BARNEY MONEY FUNDS, INC.
			                   						
		By:  \s\ Heath B. McLendon                            
             		Heath B. McLendon
		Chief Executive Officer


As required by the Securities Act of 1933, this Registration Statement 
has been signed by the following persons in the capacities and on the 
dates indicated.

Signature				Title					Date

\s\ Heath B. McLendon		Chairman of the Board,			September 10, 1997
Heath B. McLendon		Chief Executive Officer
	

\s\ Lewis E. Daidone  		Senior Vice President and		September 10, 1997
Lewis E. Daidone		Treasurer (Chief Financial
				and Accounting Officer)

/s/Joseph H. Fleiss*		Director				September 10, 1997
Joseph H. Fleiss

/s/Donald R. Foley*		Director				September 10, 1997
Donald R. Foley

/s/Paul Hardin*			Director				September 10, 1997
Paul Hardin

/s/Francis P. Martin*		Director				September 10, 1997
Francis P. Martin

/s/Roderick C. Rasmussen*	Director				September 10, 1997
Roderick C. Rasmussen

/s/John P. Toolan* 		Director				September 10, 1997
John P. Toolan


* Signed by Heath B. McLendon, their duly authorized attorney-in-fact, 
pursuant to Power of Attorney previously filed.

/s/ Heath B. McLendon
Heath B. McLendon

EXHIBIT INDEX

EXHIBIT NUMBER   	DESCRIPTION

(1) (d)*		Certificate of Correction dated July 15, 1994 

(1)(e)*		Articles Supplementary to the Articles of Incorporation dated 
July 19, 1994

(1)(f)*		Articles of Amendment to Articles of Incorporation dated 
November 3,1994

(1)(g)*		Articles Supplementary to Articles of Incorporation dated 
November 3, 1994 

(1)(h)*		Articles Supplementary to Articles of Incorporation dated 
November 3, 1994
	
(1)(i)*		Articles Supplementary to Articles of Incorporation  dated 
January 16, 1996

(2)*	Restated By-Laws

(4)*	Plan of Reorganization (included as Exhibit A to 
Registrant's Prospectus/Proxy Statement contained in 
Part A of this Registration Statement).

(11)*	Opinion and Consent of Sullivan & Cromwell with respect 
to validity of shares.

(14)*	Consent of KPMG Peat Marwick LLP

(17) (a)*	Form of Proxy Card.              



* Filed herewith.



VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS

Please fold and detach card at perforation before mailing 

SMITH BARNEY FUNDS, INC. - INCOME RETURN ACCOUNT PORTFOLIO 

PROXY SOLICITED BY THE BOARD 
OF DIRECTORS

The undersigned holder of shares of Smith Barney Funds, Inc. - 
Income Return Account Portfolio (the 
"Income Return Account Portfolio") , hereby appoints Heath B. McLendon, 
Christina T. Sydor and Marc Schuman attorneys and proxies for 
the undersigned with full powers of substitution and revocation, to 
represent the undersigned and to vote on behalf of the undersigned all 
shares of Income Return Account Portfolio that the undersigned is 
entitled to vote at the Special Meeting of Shareholders of the Income 
Return Account Portfolio to be held at the offices of the Income Return 
Account Portfolio, 388 Greenwich Street, New York, New York on 
October 17, 1997 at 10:00 a.m. New York City time and any 
adjournment or adjournments thereof.  The undersigned hereby acknowledges 
receipt of the Notice of Special Meeting and Prospectus/Proxy Statement 
dated September 15, 1997 and hereby instructs said 
attorneys and proxies to vote said shares as indicated herein.  
In their discretion, the proxies are authorized to vote upon such 
other business as may properly come before the Special Meeting.  A 
majority of the proxies present and acting at the Special Meeting in person 
or by substitute (or, if only one shall be so present, then that one) 
shall have and may exercise all of the power and authority 
of said proxies hereunder.  The undersigned hereby revokes any 
proxy previously given.

PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE

Date:  _______________________

NOTE: Please sign exactly as your 
name appears on this Proxy.  If joint 
owners, EITHER may sign this Proxy.  
When signing as attorney, executor, 
administrator, trustee, guardian or 
corporate officer, please give your 
full title.





Signature(s) (Title(s), if 
applicable)


VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS

Please fold and detach card at perforation before mailing 

Please indicate your vote by an "X" in the appropriate box below.  
This proxy, if properly executed, 
will be voted in the manner directed by the undersigned shareholder.  
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.

1.	To approve the Agreement and Plan of Reorganization dated as 
of June 25, 1997 providing for:

(i) the acquisition of all or substantially all of the assets of Smith 
Barney Funds, Inc. - 
Income Return Account Portfolio (the " Income Return Account Portfolio") by 
Smith Barney Money Funds, Inc. - Cash Portfolio (the "Cash Portfolio") 
in exchange for Class A shares of the Cash Portfolio and the assumption by 
the Cash Portfolio of all stated liabilities of the Income Return Account 
Portfolio; (ii) the distribution of such shares of the Cash Portfolio to 
shareholders of the Income Return Account Portfolio in 
liquidation of the Income Return Account Portfolio; and (iii) the subsequent 
termination of the Income Return Account Portfolio.

	FOR	AGAINST	ABSTAIN