Smith Barney
DISCIPLINED SMALL CAP FUND, INC.

388 Greenwich Street
New York, New York 10013
(800)-451-2010


Statement of Additional 
Information

June 23 , 
1997


	This Statement of Additional Information expands upon and 
supplements the information contained in the current Prospectus of Smith 
Barney Disciplined Small Cap Fund, Inc. (formerly The Inefficient-Market 
Fund, Inc. (the "Fund"), dated June 23 , 1997, as amended or supplemented 
from time to time, and should be read in conjunction with the Fund's 
Prospectus.  The Fund's Prospectus may be obtained from any Smith Barney 
Financial Consultant, or by writing or calling the Fund at the address or 
telephone number set forth above.  This Statement of Additional 
Information, although not in itself a prospectus, is incorporated by 
reference into the Prospectus in its entirety.

TABLE OF CONTENTS
For ease of reference, the same section headings are used in both the 
Prospectus and this Statement of Additional Information, except where 
shown below:
Management of the Fund		 1
Administration of the Fund		 3
Investment Objective and Management Policies		 4
Purchase of Shares		 9
Redemption of Shares		 9
Distributor		10
Valuation of Shares		11
Exchange 
Privilege.............................................................
 ..................		11
Performance Data (See in the Prospectus "Performance'')		12
Taxes (See in the Prospectus "Dividends, Distributions and Taxes'')	
	14
Additional Information.	 	15
Financial Statements..		15


MANAGEMENT OF THE FUND
The executive officers of the Fund are employees of certain of the 
organizations that provide services to the Fund.  These organizations are 
as follows:
Name		Service
Smith Barney Inc.
  ("Smith Barney'')		Distributor
Travelers Investment Management Company
  ("TIMCO")		Investment Adviser
Smith Barney Funds Management Inc.
  ("SBMFM")		Administrator
PNC Bank, National Association ("PNC")		Custodian
First Data Investor Services Group, Inc. ("First Data").....	
	Transfer Agent

	These organizations and the functions they perform for the Fund are 
discussed in the Prospectus and in this Statement of Additional 
Information.



Directors and Executive Officers of the Fund
	The Directors and executive officers of the Fund, together with 
information as to their principal business occupations during the past 
five years, are shown below. Each Director who is an "interested person" 
of the Fund, as defined in the Investment Company Act of 1940, as amended 
(the "1940 Act"), is indicated by an asterisk.
Joseph H. Fleiss

Retired; Director of ten investment companies 
associated with Smith Barney.  Formerly Senior Vice 
President of Citibank, Manager of Citibank's Bond 
Investment Portfolio and Money Desk, and a Director of 
Citicorp Securities Co., Inc.; 79.


Donald R. Foley

Retired; Director of ten investment companies 
associated with Smith Barney.  Formerly Vice President 
of Edwin Bird Wilson, Incorporated (advertising);74


Paul Hardin

Interim President of University of Alabama at 
Birmingham; Professor of Law at the University of North 
Carolina at Chapel Hill; Director of twelve investment 
companies associated with Smith Barney and a Director 
of The Summit Bancorporation.  Formerly, Chancellor of 
the University of North Carolina at Chapel Hill; 65.


Francis P. 
Martin

Practicing physician; Director of ten investment 
companies associated with Smith Barney; formerly 
President of the Nassau Physicians' Fund, Inc.; 72


Heath B. 
McLendon*


Managing Director of Smith Barney; Director of forty 
two investment companies associated with Smith Barney; 
Chairman of the Board of Smith Barney Strategy Advisers 
Inc.: and President of SBMFM and Director of TIMCO.  
Prior to July 1993, Senior Executive Vice President of 
Shearson Lehman Brothers Inc.; Vice Chairman of 
Shearson Asset Management; 63


John P. Toolan

Retired; Director of ten investment companies 
associated with Smith Barney.  Director of John Hancock 
Funds.  Formerly Director and Chairman of the Smith 
Barney Trust Company, Director of Smith Barney Inc. and 
the Manager.  Prior to 1992, Senior Executive Vice 
President, Director and Member of the Executive 
Committee of Smith Barney; 66


Roderick C. 
Rasmussen

Investment Counselor; Director of ten investment 
companies associated with Smith Barney. Formerly Vice 
President of Dresdner and Company Inc. (investment 
counselors); 70


Bruce D. 
Sargent*


Managing Director of Smith Barney, and Vice President 
and Director of SBMFM, Smith Barney Funds, Inc., and 
Smith Barney World Funds, Inc.; 53


Christina T. 
Sydor

Secretary.  Managing Director of Smith Barney; General 
Counsel and Secretary of SBMFM and Secretary of the 
other investment companies associated with Smith 
Barney; 46.


Lewis Daidone

Senior Vice President and Treasurer.  Managing Director 
of Smith Barney; Director and Senior Vice President of 
SBMFM; Senior Vice President and Treasurer of the other 
investment companies associated with Smith Barney; 40


Thomas M. 
Reynolds
Controller and Assistant Secretary.  Director of Smith 
Barney in the Asset Management  Division and Controller 
of and Assistant Controller of certain other investment 
companies associated with Smith Barney ; 36.


	As of February 10, 1997, the Directors and Officers of the Fund owned 
in the aggregate less than 1% of the outstanding shares of the Fund.  No 
officer, director or employee of Smith Barney or any parent or subsidiary 
receives any compensation from the Fund for serving as an officer or 
Director of the Fund. The Fund pays each Director who is not an officer, 
director or employee of Smith Barney or any of its affiliates a fee of 
$42,000 per annum plus $100 per meeting attended and reimburses them for 
travel and out-of-pocket expenses. For the Fund's fiscal year ended 
December 31, 1996, such fees and expenses totaled $5,000.  Upon the 
attainment of age 72 the Fund's current Directors may elect to change to 
emeritus status.  Any directors elected or appointed to the Board in the 
future will be required to change to emeritus status upon attainment of 
age 80.  Directors Emeritus are entitled to serve in emeritus status for 
a maximum of 10 years during which time they are paid 50% of the annual 
retainer fee and meeting fees otherwise applicable to the Fund Directors, 
together with reasonable out-of-pocket expenses for each meeting 
attended.

For the fiscal year ended December 31, 1996, the Directors of the Fund 
were paid the following compensation: 

Compensation Table




Name of Person

Aggregate
Compensat
ion
from Fund

Pension or 
Retirement 
Benefits Accrued 
as part
of Fund Expenses
Total 
Compensation
from Fund and
Fund Complex
Paid to 
Directors
Number of
Funds for Which 
Director Serves
Within Fund 
Complex

Joseph H. 
Fleiss+
	828
0
58,500
10

Donald R. 
Foley+
	828
0
58,300
10

Paul Hardin+
	956
0
76,850
12

Heath B. 
McLendon*
	   0
0
        0
42

Francis P. 
Martin
	856
0
58,300
10

Roderick C. 
Rasmussen
	856
0
58,500
10

Bruce D. 
Sargent*
	    0
0
         0
  3

John P. 
Toolan+
	856
0
58,500
10

C. Richard 
Youngdahl
	856
0
58,500
10

* Designates an interested director".
+ Pursuant to the Fund's deferred compensation plan, the indicated 
Directors have elected to defer the following payment of some or all of 
their compensation:  Joseph H. Fleiss:  $828,  Donald P. Foley : $828, 
Paul Hardin:  $956 and  John P. Toolan:  $856.

Investment Adviser -TIMCO
	Travelers Investment Management Company ("TIMCO") serves as investment 
adviser to the Fund pursuant to a written agreement (the "Advisory 
Agreement").  The services provided by TIMCO under the Advisory Agreement 
are described in the Prospectus under "Management of the Fund."  TIMCO 
bears all of it's expenses of it's employees and overhead in connection 
with it's duties under the Advisory Agreement.  TIMCO is a wholly owned 
subsidiary of Smith Barney Holdings Inc. ("Holdings"), which is in turn a 
wholly owned subsidiary of Travelers Group Inc. ("Travelers").
	As compensation for investment advisory services, the Fund pays TIMCO 
a fee computed daily and paid monthly at the annual rate of 0.65% of the 
value of the Fund's average daily net assets. For the 1996, 1995 and 1994 
fiscal years, the Fund paid $416,000, $418,000 and $402,000, 
respectively, in investment advisory fees.
	Administrator - SBMFM serves as administrator to the Fund pursuant to 
a written agreement (the "Administration Agreement").  The services 
provided by SBMFM under the Administration Agreement are described in the 
Prospectus under "Management of the Fund." SBMFM pays the salary of any 
officer and employee who is employed by both it and the Fund and bears 
all expenses in connection with the performance of its services.
	As compensation for administration services rendered to the Fund, 
SBMFM receives a fee at the annual rate of 0.10% of the value of the 
Fund's average daily net assets. For the 1996, 1995 and 1994 fiscal 
period, the Fund paid SBMFM $138,000 , $139,000 and $134,000 in 
administration fees.
	The Investment Advisory Agreement provides that except for the 
expenses specifically assumed by TIMCO, the Fund bears expenses incurred 
in its operation, including: fees of the directors not affiliated with 
the Adviser or its affiliates and board meeting expenses; fees of the 
Adviser and of Smith Barney Mutual Funds Management Inc. (or any 
successor) as the Administrator; interest charges; taxes; charges and 
expenses of the Fund's legal counsel and independent accountants, and of 
the transfer agent, registrar and dividend disbursing agent of the Fund; 
expenses of issue, repurchase or redemption of Shares; expenses of 
printing and mailing stockholder reports, notices, proxy statements and 
reports to governmental offices; brokerage and other expenses connected 
with the execution, recording and settlement of portfolio security 
transactions; expenses connected with negotiating, effecting purchases or 
sales or registering privately issued portfolio securities; fees and 
expenses of the Fund's custodians for all services to the Fund, including 
safekeeping of funds and securities and maintaining required books and 
accounts; expenses of fidelity bonding and other insurance premiums; 
expenses of stockholder's meetings; filing fees and expenses related to 
the registration and qualification of the Fund's shares and the Fund 
under Federal of State Securities laws and maintaining such registrations 
and qualifications (including the printing of the Funds registration 
statements and prospectuses); fees payable to the National Association of 
Securities Dealers, Inc. in connection with this offering; and its other 
business and operating expenses.
	TIMCO has agreed that if in any fiscal year the aggregate expenses of 
the Fund (including fees paid pursuant to the Advisory and Agreements, 
but excluding interest, taxes, brokerage, fees paid pursuant to the 
Fund's services and distribution plan, and, with the prior written 
consent of the necessary state securities commissions, extraordinary 
expenses) exceed the expense limitation of any state having jurisdiction 
over the Fund, TIMCO will, to the extent required by state law, reduce 
its management fee by such excess expense. Such a fee reduction, if any, 
will be reconciled on a monthly basis. The most restrictive state 
limitation applicable to the Fund would require TIMCO to reduce its fees 
in any year that such excess expenses exceed 2.5% of the first $30 
million of average net assets, 2% of the next $70 million of average net 
assets and 1.5% of the remaining average net assets.
Counsel and Auditors
	Sullivan & Cromwell serves as counsel to the Fund. The Directors who 
are not "interested persons" of the Fund have selected  Sullivan & 
Cromwell as their legal counsel.
	KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154, has 
been selected as the Fund's independent auditor to examine and report on 
the Fund's financial statements and highlights for the fiscal year ending 
December 31, 1997. 
Investment Objective and Management Policies

	The Prospectus discusses the Fund's investment objective and the 
policies it employs to achieve its objective. The following discussion 
supplements the description of the Fund's investment objective and 
management policies in the Prospectus.

Leveraging
	The Fund may from time to time leverage its investments by purchasing 
securities with borrowed money. The Fund may borrow money only from banks 
and in an amount not to exceed 33 1/3% of the total value of its assets 
less its liabilities. The amount of the Fund's borrowings also may be 
limited by the availability and cost of credit and by restrictions 
imposed by the Federal Reserve Board.
	The Fund is required under the 1940 Act to maintain at all times an 
asset coverage of 300% of the amount of its borrowings. If, as a result 
of market fluctuations or for any other reason, the Fund's asset coverage 
drops below 300%, the Fund must reduce its outstanding bank debt within 
three business days so as to restore its asset coverage to the 300% 
level.

	Any gain in the value of securities purchased with borrowed money that 
exceeds the interest paid on the amount borrowed would cause the net 
asset value of the Fund's shares to increase more rapidly than otherwise 
would be the case. Conversely, any decline in the value of securities 
purchased would cause the net asset value of the Fund's shares to 
decrease more rapidly than otherwise would be the case. Borrowed money 
thus creates an opportunity for greater capital gain but at the same time 
increases exposure to capital risk. The net cost of any borrowed money 
would be an expense that otherwise would not be incurred, and this 
expense could restrict or eliminate the Fund's net investment income in 
any given period.


Lending of Portfolio Securities

	As stated in the Prospectus, the Fund has the ability to lend 
securities from its portfolio to brokers, dealers and other financial 
organizations.  The Fund may not lend its portfolio securities to Smith 
Barney or its affiliates unless it has applied for and received specific 
authority from the SEC. Loans of portfolio securities by the Fund will be 
collateralized by cash, letters of credit or securities issued or 
guaranteed by the United States government, its agencies or 
instrumentality's ("U.S. government securities") which will be maintained 
at all times in an amount equal to at least 100% of the current market 
value of the loaned securities. From time to time, the Fund may return a 
part of the interest earned from the investment of collateral received 
for securities loaned to the borrower and/or a third party, which is 
unaffiliated with the Fund or with Smith Barney, and which is acting as a 
"finder."
	In lending its portfolio securities, the Fund can increase its income 
by continuing to receive interest on the loaned securities as well as by 
either investing the cash collateral in short-term instruments or 
obtaining yield in the form of interest paid by the borrower when 
government securities are used as collateral. Requirements of the SEC, 
which may be subject to future modifications, currently provide that the 
following conditions must be met whenever portfolio securities are 
loaned: (a) the Fund must receive at least 100% cash collateral or 
equivalent securities from the borrower; (b) the borrower must increase 
such collateral whenever the market value of the securities rises above 
the level of such collateral; (c) the Fund must be able to terminate the 
loan at any time; (d) the Fund must receive reasonable interest on the 
loan, as well as an amount equal to any dividends, interest or other 
distributions on the loaned securities, and any increase in market value; 
(e) the Fund may pay only reasonable custodian fees in connection with 
the loan; and (f) voting rights on the loaned securities may pass to the 
borrower; however, if a material event adversely affecting the investment 
occurs, the Fund's Board of Directors must terminate the loan and regain 
the right to vote the securities. The risks in lending portfolio 
securities, as with other extensions of secured credit, consist of 
possible delay in receiving additional collateral or in the recovery of 
the securities or possible loss of rights in the collateral should the 
borrower fail financially.
Short Term Instruments
	As stated in the Prospectus, the Fund may invest in short term and 
money market instruments.  Money market instruments in which the Fund may 
invest include: U.S. government securities; certificates of deposit, time 
deposits and bankers' acceptances issued by domestic banks (including 
their branches located outside the United States and subsidiaries located 
in Canada), domestic branches of foreign banks, savings and loan 
associations and similar institutions; high grade commercial paper; and 
repurchase agreements with respect to the foregoing types of instruments. 
The following is a more detailed description of such money market 
instruments.
	Bank Obligations. Certificates of deposits ("CDs") are short-term, 
negotiable obligations of commercial banks. Time deposits ("TDs") are 
non-negotiable deposits maintained in banking institutions for specified 
periods of time at stated interest rates. Bankers' acceptances are time 
drafts drawn on commercial banks by borrowers, usually in connection with 
international transactions.
	Domestic commercial banks organized under Federal law are supervised 
and examined by the Comptroller of the Currency and are required to be 
members of the Federal Reserve System and to be insured by the Federal 
Deposit Insurance Corporation (the "FDIC"). Domestic banks organized 
under state law are supervised and examined by state banking authorities 
but are members of the Federal Reserve System only if they elect to join. 
Most state banks are insured by the FDIC (although such insurance may not 
be of material benefit to the Fund, depending upon the principal amount 
of CDs of each bank held by the Fund) and are subject to Federal 
examination and to a substantial body of Federal law and regulation. As a 
result of governmental regulations, domestic branches of domestic banks 
are, among other things, generally required to maintain specified levels 
of reserves, and are subject to other supervision and regulation designed 
to promote financial soundness.
	Obligations of foreign branches of domestic banks, such as CDs and 
TDs, may be general obligations of the parent bank in addition to the 
issuing branch, or may be limited by the terms of a specific obligation 
and governmental regulation. Such obligations are subject to different 
risks than are those of domestic banks or domestic branches of foreign 
banks. These risks include foreign economic and political developments, 
foreign governmental restrictions that may adversely affect payment of 
principal and interest on the obligations, foreign exchange controls and 
foreign withholding and other taxes on interest income. Foreign branches 
of domestic banks are not necessarily subject to the same or similar 
regulatory requirements that apply to domestic banks, such as mandatory 
reserve requirements, loan limitations, and accounting, auditing and 
financial recordkeeping requirements. In addition, less information may 
be publicly available about a foreign branch of a domestic bank than 
about a domestic bank. CDs issued by wholly owned Canadian subsidiaries 
of domestic banks are guaranteed as to repayment of principal and 
interest (but not as to sovereign risk) by the domestic parent bank.
	Obligations of domestic branches of foreign banks may be general 
obligations of the parent bank in addition to the issuing branch, or may 
be limited by the terms of a specific obligation and by governmental 
regulation as well as governmental action in the country in which the 
foreign bank has its head office. A domestic branch of a foreign bank 
with assets in excess of $1 billion may or may not be subject to reserve 
requirements imposed by the Federal Reserve System or by the state in 
which the branch is located if the branch is licensed in that state. In 
addition, branches licensed by the Comptroller of the Currency and 
branches licensed by certain states ("State Branches") may or may not be 
required to: (a) pledge to the regulator by depositing assets with a 
designated bank within the state, an amount of its assets equal to 5% of 
its total liabilities; and (b) maintain assets within the state in an 
amount equal to a specified percentage of the aggregate amount of 
liabilities of the foreign bank payable at or through all of its agencies 
or branches within the state. The deposits of State Branches may not 
necessarily be insured by the FDIC. In addition, there may be less 
publicly available information about a domestic branch of a foreign bank 
than about a domestic bank.
	In view of the foregoing factors associated with the purchase of CDs 
and TDs issued by foreign branches of domestic banks or by domestic 
branches of foreign banks, TIMCO will carefully evaluate such investments 
on a case-by-case basis.

	Savings and loans associations whose CDs may be purchased by the Fund 
are supervised by the Office of Thrift Supervision and are insured by the 
Savings Association Insurance Fund which is administered by the FDIC and 
is backed by the full faith and credit of the United States government. 
As a result, such savings and loan associations are subject to regulation 
and examination.

Investment Restrictions

	The Fund has adopted the following restrictions and fundamental 
policies that cannot be changed without approval by the holders of a 
majority of the Fund's outstanding shares defined as the lesser of (a) 
more than 50% of the outstanding shares of the Fund or (b) 67% or more of 
the Fund's shares present at a meeting, if the holders of more than 50% 
of the outstanding shares are present in person or by proxy. 

	1.	Invest 25% or more of the value of its total assets in any one 
industry; 

	2.	Borrow money (including borrowing through entering into reverse 
repurchase agreements) in excess of 31/3% of its total assets 
(including the amount of borrowed but excluding any liabilities and 
indebtedness constituting senior securities) except that the Fund 
may borrow up to an additional 5% of its total assets for temporary 
purposes; or pledge its assets other than to secure such borrowings 
or in connection with Hedging Transactions, short sales, when-
issued and forward commitment transaction and similar investment 
strategies. 

	3.	Issue any senior security if such issuance is specifically 
prohibited by the 1940 Act or the rules and regulations thereunder 
(for the purpose of this restriction, collateral arrangements with 
respect to options, futures contracts and options on futures 
contracts and collateral arrangements with respect to initial and 
variation margin are not deemed to be the issuance of a senior 
security); 

	4.	Make loans, except the Fund may purchase debt obligations, may 
enter into repurchase agreements and may lend its securities; 

	5.	Underwrite the securities of other issuers, except to the extent 
that in connection with the disposition of portfolio securities the 
Fund may be deemed to be an underwriter; 

	6.	Invest for the purpose of exercising control over management of any 
company; 

	7.	Purchase real estate or interests therein other than securities 
secured by real estate, participation therein or real estate 
investment trusts and similar instruments; 

	8.	Purchase or sell commodities or commodities contracts except for 
hedging purposes; or 

	9.	Make any short sale of securities except in conformity with 
applicable laws, rules and regulations and unless, giving effect to 
such sale, the market value of all securities sold short does not 
exceed 25% of the value of the Fund's total assets and the Fund's 
aggregate short sales of a particular class of an issuer's 
securities do not exceed 25%  of the then outstanding securities of 
that class of the issuer's securities. 

	10.	Purchase any security (other than U.S. obligations) such that (a) 
more than 25% of the Fund's total assets would be invested in 
securities of a single issuer or (b) as to 75% of the Fund's total 
assets (I) more than 5% of the Fund's total assets would then be 
invested in securities of a single issuer or (ii) the Fund would 
own more than 10% of the voting securities of a single issuer.

	Certain restrictions listed above permit the Fund without shareholder 
approval to engage in investment practices that the Fund does not 
currently pursue. The Fund has no present intention of altering its 
current investment practices as otherwise described in the Prospectus and 
this Statement of Additional Information and any future change in these 
practices would require Board approval. If any percentage restriction 
described above is complied with at the time of an investment, a later 
increase or decrease in percentage resulting from a change in values or 
assets will not constitute a violation of such restriction. The Fund may 
make commitments more restrictive than the restrictions listed above so 
as to permit the sale of Fund shares in certain states. Should the Fund 
determine that any such commitment is no longer in the best interests of 
the Fund and its shareholders, it will revoke the commitment by 
terminating sales of its shares in the state involved.

Portfolio Turnover

	The Fund's investment policies may result in its experiencing a 
greater portfolio turnover rate than those of investment companies that 
seek to produce income or to maintain a balanced investment position. 
Although the Fund's portfolio turnover rate cannot be predicted and will 
vary from year to year, TIMCO expects that the Fund's annual portfolio 
turnover rate may exceed 100%, but will not exceed 150%.  A 100% 
portfolio turnover rate would occur, for instance, if all securities in 
the Fund's portfolio were replaced once during a period of one year. A 
high rate of portfolio turnover in any year will increase brokerage 
commissions paid and could result in high amounts of realized investment 
gain subject to the payment of taxes by shareholders. Any realized short-
term investment gain will be taxed to shareholders as ordinary income. 
For the 1996, 1995 and 1994 fiscal years, the Fund's portfolio turnover 
rates were 151%, 177% and 45% respectively.

Portfolio Transactions and Brokerage

	Decisions to buy and sell securities for the Fund are made by TIMCO, 
subject to the overall supervision and review of the Fund's Board of 
Directors. Portfolio securities transactions for the Fund are effected by 
or under the supervision of TIMCO.

	Transactions on stock exchanges involve the payment of negotiated 
brokerage commissions. There is generally no stated commission in the 
case of securities traded in the over-the-counter markets, but the price 
of those securities includes an undisclosed commission or mark-up. The 
cost of securities purchased from underwriters includes an underwriting 
commission or concession, and the prices at which securities are 
purchased from and sold to dealers include a dealer's mark-up or mark-
down. For the 1996, 1995 and 1994 fiscal years, the Fund paid $176,000, 
$155,000 and $190,000 respectively, in brokerage commissions.

	In executing portfolio transactions and selecting brokers or dealers, 
it is the Fund's policy to seek the best overall terms available. The 
Advisory Agreement between the Fund and TIMCO provides that, in assessing 
the best overall terms available for any transaction, TIMCO shall 
consider the factors it deems relevant, including the breadth of the 
market in the security, the price of the security, the financial 
condition and execution capability of the broker or dealer, and the 
reasonableness of the commission, if any, for the specific transaction 
and on a continuing basis. In addition, the Advisory Agreement authorizes 
TIMCO, in selecting brokers or dealers to execute a particular 
transaction and in evaluating the best overall terms available, to 
consider the brokerage and research services (as those terms are defined 
in Section 28(e) of the Securities Exchange Act of 1934) provided to the 
Fund and/or other accounts over which TIMCO or an affiliate exercises 
investment discretion.
	The Fund's Board of Directors will periodically review the commissions 
paid by the Fund to determine if the commissions paid over representative 
periods of time were reasonable in relation to the benefits inuring to 
the Fund. It is possible that certain of the services received will 
primarily benefit one or more other accounts for which investment 
discretion is exercised. Conversely, the Fund may be the primary 
beneficiary of services received as a result of portfolio transactions 
effected for other accounts. TIMCO's fee under the Advisory Agreement is 
not reduced by reason of TIMCO's receiving such brokerage and research 
services.
	The Fund's Board of Directors has determined that any portfolio 
transaction for the Fund may be executed through Smith Barney if, in 
TIMCO's judgment, the use of Smith Barney is likely to result in price 
and execution at least as favorable as those of other qualified brokers, 
and if, in the transaction, Smith Barney charges the Fund a commission 
rate consistent with that charged by Smith Barney to comparable 
unaffiliated customers in similar transactions. In addition, under SEC 
rules, Smith Barney may directly execute such transactions for the Fund 
on the floor of any national securities exchange, provided (a) the Board 
of Directors has expressly authorized Smith Barney to effect such 
transactions and (b) Smith Barney annually advises the Fund of the 
aggregate compensation it earned on such transactions. Smith Barney will 
not participate in commissions from brokerage given by the Fund to other 
brokers or dealers and will not receive any reciprocal brokerage business 
resulting therefrom. Over-the-counter purchases and sales are transacted 
directly with principal market makers except in those cases in which 
better prices and executions may be obtained elsewhere. For the 1996, 
1995 and 1994 fiscal years, the Fund paid $7,375, $32,635 and $5,400, 
respectively, in brokerage commissions to Smith Barney.  For the 1996 
fiscal year, Smith Barney received 4.2% of the brokerage commissions paid 
by the Fund and effected 29% of the total dollar amount of transactions 
for the Fund involving the payment of brokerage commissions.
	Even though investment decisions for the Fund are made independently 
from those of the other accounts managed by TIMCO, investments of the 
kind made by the Fund also may be made by those other accounts. When the 
Fund and one or more accounts managed by TIMCO are prepared to invest in, 
or desire to dispose of, the same security, available investments or 
opportunities for sales will be allocated in a manner believed by TIMCO 
to be equitable. In some cases, this procedure may adversely affect the 
price paid or received by the Fund or the size of the position obtained 
for or disposed of by the Fund.
Purchase of Shares
Volume Discounts
	The schedule of sales charges on Class A shares described in the 
Prospectus applies to purchases made by any "purchaser," which is defined 
to include the following: (a) an individual; (b) an individual's spouse 
and his or her children purchasing shares for his or her own account; (c) 
a trustee or other fiduciary purchasing shares for a single trust estate 
or single fiduciary account; (d) a pension, profit-sharing or other 
employee benefit plan qualified under Section 401(a) of the Internal 
Revenue Code of 1986, as amended (the "Code"), and qualified employee 
benefit plans of employers who are "affiliated persons" of each other 
within the meaning of the 1940 Act; (e) tax-exempt organizations 
enumerated in Section 501(c)(3) or (13) of the Code; and (f) a trustee or 
other professional fiduciary (including a bank, or an investment adviser 
registered with the SEC under the Investment Advisers Act of 1940, as 
amended) purchasing shares of the Fund for one or more trust estates or 
fiduciary accounts. Purchasers who wish to combine purchase orders to 
take advantage of volume discounts should contact a Smith Barney 
Financial Consultant.
Combined Right of Accumulation
Reduced sales charges, in accordance with the schedule in the Prospectus, 
apply to any purchase of Class A shares if the aggregate investment in 
Class A shares of the Fund and in Class A shares of other funds of the 
Smith Barney Mutual Funds that are offered with a sales charge, including 
the purchase being made, of any purchaser is $25,000 or more. The reduced 
sales charge is subject to confirmation of the shareholder's holdings 
through a check of appropriate records. The Fund reserves the right to 
terminate or amend the combined rights of accumulation at any time after 
written notice to shareholders. For further information regarding the 
right of accumulation, shareholders should contact a Smith Barney 
Financial Consultant.
Determination of Public Offering Price
	The Fund offers its shares to the public on a continuous basis. The 
public offering price for a Class A and Class Y share of the Fund is 
equal to the net asset value per share at the time of purchase, plus for 
Class A shares an initial sales charge based on the aggregate amount of 
the investment. The public offering price for a Class B and Class C share 
(and Class A share purchases, including applicable rights of 
accumulation, equaling or exceeding $500,000), is equal to the net asset 
value per share at the time of purchase and no sales charge is imposed at 
the time of purchase. A contingent deferred sales charge ("CDSC"), 
however, is imposed on certain redemption's of Class B and Class C 
shares, and of Class A shares when purchased in amounts equaling or 
exceeding $500,000. The method of computation of the public offering 
price is shown in the Fund's financial statements incorporated by 
reference in their entirety into this Statement of Additional 
Information.

Redemption of Shares

	The right of redemption may be suspended or the date of payment 
postponed (a) for any period during which the NYSE is closed (other than 
for customary weekend or holiday closings), (b) when trading in markets 
the Fund normally utilizes is restricted, or an emergency exists, as 
determined by the SEC, so that disposal of the Fund's investments or 
determination of net asset value is not reasonably practicable or (c) for 
such other periods as the SEC by order may permit for the protection of 
the Fund's shareholders.
Distributions in Kind
If the Board of Directors of the Fund determines that it would be 
detrimental to the best interests of the remaining shareholders of the 
Fund to make a redemption payment wholly in cash, the Fund may pay, in 
accordance with SEC rules, any portion of a redemption in excess of the 
lesser of $250,000 or 1% of the Fund's net assets by distribution in kind 
of portfolio securities in lieu of cash. Securities issued as a 
distribution in kind may incur brokerage commissions when shareholders 
subsequently sell those securities.
Automatic Cash Withdrawal Plan
An automatic cash withdrawal plan (the "Withdrawal Plan") is available to 
shareholders who own shares with a value of at least $10,000 ($5,000 for 
retirement plan accounts) and who wish to receive specific amounts of 
cash monthly or quarterly. Withdrawals of at least $100 may be made under 
the Withdrawal Plan by redeeming as many shares of the Fund as may be 
necessary to cover the stipulated withdrawal payment. Any applicable CDSC 
will not be waived on amounts withdrawn by shareholders that exceed 1.00% 
per month of the value of a shareholder's shares at the time the 
Withdrawal Plan commences. (With respect to Withdrawal Plans in effect 
prior to November 7, 1994 any applicable CDSC will be waived on amounts 
withdrawn that do not exceed 2.00% per month of the value of a 
shareholder's shares at the time the Withdrawal Plan commences.) To the 
extent withdrawals exceed dividends, distributions and appreciation of a 
shareholder's investment in the Fund, there will be a reduction in the 
value of the shareholder's investment and continued withdrawal payments 
will reduce the shareholder's investment and ultimately may exhaust it. 
Withdrawal payments should not be considered as income from investment in 
the Fund. Furthermore, as it generally would not be advantageous to a 
shareholder to make additional investments in the Fund at the same time 
that he or she is participating in the Withdrawal Plan, purchases by such 
shareholders in amounts of less than $5,000 ordinarily will not be 
permitted.
	Shareholders who wish to participate in the Withdrawal Plan and who 
hold their shares in certificate form must deposit their share 
certificates with First Data as agent for Withdrawal Plan members. All 
dividends and distributions on shares in the Withdrawal Plan are 
reinvested automatically at net asset value in additional shares of the 
Fund.  A shareholder who purchases shares directly through First Data may 
continue to do so and applications for participation in the Withdrawal 
Plan must be received by First Data no later than the eighth day of the 
month to be eligible for participation beginning with that month's 
withdrawal. For additional information, shareholders should contact a 
Smith Barney Financial Consultant.

Distribution
	To compensate Smith Barney for the services it provides and for the 
expense it bears under the Distribution Agreement, the Fund has adopted a 
services and distribution plan (the "Plan") pursuant to Rule 12b-1 under 
the 1940 Act.  See "Distribution" in the Prospectus.  Under the Plan, the 
Fund pays Smith Barney a service fee, accrued daily and paid monthly, 
calculated at the annual rate of 0.25% of the value of the Fund's average 
daily net assets attributable to the Class A, Class B and Class C shares. 
In addition, the Fund pays Smith Barney a distribution fee with respect 
to Class B and Class C shares primarily intended to compensate Smith 
Barney for its initial expense of paying Financial Consultants a 
commission upon sales of those shares. The Class B and Class C 
distribution fee is calculated at the annual rate of 0.75% of the value 
of the Fund's average net assets attributable to the shares of the 
respective Class.
	Under its terms, the Plan continues from year to year, provided such 
continuance is approved annually by vote of the Board of Directors, 
including a majority of the Directors who are not interested persons of 
the Fund and who have no direct or indirect financial interest in the 
operation of the Plan or in the Distribution Agreement (the "Independent 
Directors"). The Plan may not be amended to increase the amount of the 
service and distribution fees without shareholder approval, and all 
material amendments of the Plan also must be approved by the Directors 
and Independent Directors in the manner described above. The Plan may be 
terminated with respect to a Class of the Fund at any time, without 
penalty, by vote of a majority of the Independent Directors or by vote of 
a majority of the outstanding voting securities of the Class (as defined 
in the 1940 Act). Pursuant to the Plan, Smith Barney will provide the 
Fund's Board of Directors with periodic reports of amounts expended under 
the Plan and the purpose for which such expenditures were made.
Valuation of Shares

	Each Class' net asset value per share is calculated on each day, 
Monday through Friday, except days on which the NYSE is closed. The NYSE 
currently is scheduled to be closed on New Year's Day, Presidents' Day, 
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and 
Christmas, and on the preceding Friday or subsequent Monday when one of 
these holidays falls on a Saturday or Sunday, respectively. Because of 
the differences in distribution fees and Class-specific expenses, the per 
share net asset value of each Class may differ. The following is a 
description of the procedures used by the Fund in valuing its assets.
	Securities listed on a national securities exchange will be valued on 
the basis of the last sale on the date on which the valuation is made or, 
in the absence of sales, at the mean between the closing bid and asked 
prices. Over-the-counter securities will be valued on the basis of the 
bid price at the close of business on each day, or, if market quotations 
for those securities are not readily available, at fair value, as 
determined in good faith by the Fund's Board of Directors. Short-term 
obligations with maturities of 60 days or less are valued at amortized 
cost, which constitutes fair value as determined by the Fund's Board of 
Directors. Amortized cost involves valuing an instrument at its original 
cost to the Fund and thereafter assuming a constant amortization to 
maturity of any discount or premium, regardless of the effect of 
fluctuating interest rates on the market value of the instrument. All 
other securities and other assets of the Fund will be valued at fair 
value as determined in good faith by the Fund's Board of Directors.

Exchange Privilege

Except as noted below, shareholders of any fund of the Smith Barney 
Mutual Funds may exchange all or part of their shares for shares of the 
same class of other funds of the Smith Barney Mutual Funds, to the extent 
such shares are offered for sale in the shareholder's state of residence, 
on the basis of relative net asset value per share at the time of 
exchange, except that Class B shares of the Fund exchanged for Class B 
shares of another fund will be subject to the higher applicable CDSC of 
the two funds and, for purposes of calculating CDSC rates and conversion 
periods, will be deemed to have been held since the date the shares being 
exchanged were deemed to be purchased. 

	The exchange privilege enables shareholders to acquire shares of the 
same Class in a fund with different investment objectives when they 
believe that a shift between funds is an appropriate investment decision. 
This privilege is available to shareholders residing in any state in 
which the fund shares being acquired may legally be sold. Prior to any 
exchange, the shareholder should obtain and review a copy of the current 
prospectus of each fund into which an exchange is being considered. 
Prospectuses may be obtained from a Smith Barney Financial Consultant.

	Upon receipt of proper instructions and all necessary supporting 
documents, shares submitted for exchange are redeemed at the then-current 
net asset value and, subject to any applicable CDSC, the proceeds are 
immediately invested, at a price as described above, in shares of the 
fund being acquired. Smith Barney reserves the right to reject any 
exchange request. The exchange privilege may be modified or terminated at 
any time after written notice to shareholders. 



IRA AND OTHER PROTOTYPE RETIREMENT PLANS

	Copies of the following plans with custody or trust agreements have 
been approved by the Internal Revenue Service and are available from the 
Fund or Smith Barney; investors should consult with their own tax or 
retirement planning advisors prior to the establishment of a plan. 

IRA, Rollover IRA and Simplified Employee Pension - IRA

	The Small Business Job Protection Act of 1996 changed the 
eligibility requirements for participants in Individual Retirement 
Accounts ("IRAs").  Under these new provisions, if you or your spouse 
have earned income, each of you may establish an IRA and make maximum 
annual contributions equal to the lesser of earned income or $2,000.  As 
a result of this legislation, married couples where one spouse is non-
working may now contribute a total of $4,000 annually to their IRAs.

	If you or your spouse is an active participant in an employer-
sponsored retirement plan, a deduction for contributions to an IRA might 
still be allowed in full or in part, depending on your combined adjusted 
gross income.  For married couples filing jointly, a full deduction for 
contributions to an IRA will be allowed where the couples' adjusted gross 
income is below $40,001 ($25,001 for an unmarried individual); a partial 
deduction will be allowed when adjusted gross income is between $40,001 - 
$50,000 ($25,001-$35,000 for an unmarried individual);  and no deduction 
when adjusted gross income is $50,000 ($35,000 for an unmarried 
individual).

	A Rollover IRA is available to defer taxes on lump sum payments and 
other qualifying rollover amounts (no maximum) received from another 
retirement plan. 

	An employer who has established a Simplified Employee Pension - IRA 
("SEP-IRA") on behalf of eligible employees may make a maximum annual 
contribution to each participant's account of 15% (up to $24,000) of each 
participant's compensation.  Compensation is capped at $160,000 for 1997.

Performance Data

	From time to time, the Fund may quote total return of the Classes in 
advertisements or in reports and other communications to shareholders. 
The Fund may include comparative performance information in advertising 
or marketing the Fund's shares. Such performance information may include 
data from the following industry and financial publications:  Barron's, 
Business Week, CDA Investment Technologies, Inc., Changing Times, Forbes, 
Fortune, Institutional Investor, Investors Daily, Money, Morningstar 
Mutual Fund Values, The New York Times, USA Today and The Wall Street 
Journal.  To the extent any advertisement or sales literature of the Fund 
describes the expenses or performance of Class A, Class B, Class C or 
Class Y, it will also disclose such information for the other Classes.

Average Annual Total Return

	"Average annual total return" figures are computed according to a 
formula prescribed by the SEC. The formula can be expressed as follows:
			P(1 + T)n = ERV

	Where:	P	=	a hypothetical initial payment of $1,000.
	T	=	average annual total return. 
	n	= 	number of years. 
	ERV	=	Ending Redeemable Value of a hypothetical $1,000 
investment made at the beginning of a 1-, 5-, or 10-
year period at the end of the 1-, 5-, or 10-year 
period (or fractional portion thereof), assuming 
reinvestment of all dividends and distributions. 
	Average annual total return was as follows for the periods indicated:
	20.56%	for the one-year period beginning on January 1, 1996 through 
December 31, 1996;

	11.64%	per annum during the five-year period beginning on January 1, 
1992 through December 31, 1996; and

	since August 1, 1995 when TIMCO became investment adviser to the Fund 
through December 31, 1996 the Fund's Average Annual Total Return was 
22.74%.
Aggregate Total Return

	"Aggregate total return" figures represent the cumulative change in 
the value of an investment in the Class for the specified period and are 
computed by the following formula:

				ERV-P
AGGREGATE TOTAL RETURN =    P

	Where: 	P	= 	a hypothetical initial payment of $10,000. 
	ERV	=	Ending Redeemable Value of a hypothetical $10,000 
investment made at the beginning of the 1-, 5-, or 
10-year period at the end of the 1-, 5-, or 10-year 
period (or fractional portion thereof), assuming 
reinvestment of all dividends and distributions. 
	Aggregate total return was as follows for the periods indicated:
	20.56%	for the one-year period from January 1, 1996 through December 
31, 1996. 

	73.42%	for the five-year period from January 1, 1992 through 
December 31,1996; and 

	since August 1, 1995 when TIMCO became the Fund's investment adviser 
through December 31, 1996 the Fund's Aggregate Total Return was 33.83%.
	Performance will vary from time to time depending upon market 
conditions, the composition of the Fund's portfolio, operating expenses 
and the expenses exclusively attributable to the Class. Consequently, any 
given performance quotation should not be considered representative of 
the Class' performance for any specified period in the future. Because 
performance will vary, it may not provide a basis for comparing an 
investment in the Class with certain bank deposits or other investments 
that pay a fixed yield for a stated period of time. Investors comparing 
the Class' performance with that of other mutual funds should give 
consideration to the quality and maturity of the respective investment 
companies' portfolio securities.

	It is important to note that the total return figures set forth above 
are based on historical earnings and are not intended to indicate future 
performance.


Taxes

	The following is a summary of certain Federal income tax 
considerations that may affect the Fund and its shareholders. The summary 
is not intended as a substitute for individual tax advice and investors 
are urged to consult their own tax advisors as to the tax consequences of 
an investment in the Fund.
	The Fund has qualified and intends to continue to qualify each year as 
a regulated investment company under the Code. Provided that the Fund (a) 
is a regulated investment company and (b) distributes at least 90% of its 
net investment income (including, for this purpose, net realized short-
term capital gains), the Fund will not be liable for Federal income taxes 
to the extent its net investment income and its net realized long- and 
short-term capital gains, if any, are distributed to its shareholders. 
Although the Fund expects to be relieved of all or substantially all 
Federal, state, and local income or franchise taxes, depending upon the 
extent of its activities in states and localities in which its offices 
are maintained, in which its agents or independent contractors are 
located, or in which it is otherwise deemed to be conducting business, 
that portion of the Fund's income which is treated as earned in any such 
state or locality could be subject to state and local taxes. Any such 
taxes paid by the Fund would reduce the amount of income and gains 
available for distribution to shareholders. All net investment income and 
net capital gains earned by the Fund will be reinvested automatically in 
additional shares of the same Class of the Fund at net asset value, 
unless the shareholder elects to receive dividends and distributions in 
cash.

	Gains or losses on the sales of securities by the Fund generally will 
be long-term capital gains or losses if the Fund has held the securities 
for more than one year. Gains or losses on the sales of securities held 
for not more than one year generally will be short-term capital gains or 
losses. If the Fund acquires a debt security at a substantial discount, a 
portion of any gain upon the sale or redemption will be taxed as ordinary 
income, rather than capital gain to the extent it reflects accrued market 
discount.

	Dividends of net investment income and distributions of net realized 
short-term capital gains will be taxable to shareholders as ordinary 
income for Federal income tax purposes, whether received in cash or 
reinvested in additional shares. Dividends received by corporate 
shareholders will qualify for the dividends-received deduction only to 
the extent that the Fund designates the amount distributed as a dividend 
and the amount so designated does not exceed the aggregate amount of 
dividends received by the Fund from domestic corporations for the taxable 
year. The Federal dividends-received deduction for corporate shareholders 
may be further reduced or disallowed if the shares with respect to which 
dividends are received are treated as debt financed or are deemed to have 
been held for less than 46 days.

	Distributions of long-term capital gains will be taxable to 
shareholders as such, whether paid in cash or reinvested in additional 
shares and regardless of the length of time that the shareholder has held 
his or her interest in the Fund. If a shareholder receives a distribution 
taxable as long-term capital gain with respect to his or her investment 
in the Fund and redeems or exchanges the shares before he or she has held 
them for more than six months, any loss on the redemption or exchange 
that is less than or equal to the amount of the distribution will be 
treated as a long-term capital loss.
	If a shareholder (a) incurs a sales charge in acquiring or redeeming 
shares of the Fund, (b) disposes of those shares within 90 days and (c) 
acquires shares in a mutual fund for which the otherwise applicable sales 
charge is reduced by reason of a reinvestment right (i.e., exchange 
privilege), the original sales charge increases the shareholder's tax 
basis in the original shares only to the extent the otherwise applicable 
sales charge for the second acquisition is not reduced. The portion of 
the original sales charge that does not increase the shareholder's tax 
basis in the original shares would be treated as incurred with respect to 
the second acquisition and, as a general rule, would increase the 
shareholder's tax basis in the newly acquired shares. Furthermore, the 
same rule also applies to a disposition of the newly acquired or redeemed 
shares made within 90 days of the second acquisition. This provision 
prevents a shareholder from immediately deducting the sales charge by 
shifting his or her investment in a family of mutual funds.
	Investors considering buying shares of the Fund on or just prior to a 
record date for a taxable dividend or capital gain distribution should be 
aware that, regardless of whether the price of the Fund shares to be 
purchased reflects the amount of the forthcoming dividend or distribution 
payment, any such payment will be a taxable dividend or distribution 
payment.
	If a shareholder fails to furnish a correct taxpayer identification 
number, fails to report dividend and interest income in full, or fails to 
certify that he or she has provided a correct taxpayer identification 
number and that he or she is not subject to such withholding, the 
shareholder may be subject to a 31% "backup withholding" tax with respect 
to (a) any taxable dividends and distributions and (b) any proceeds of 
any redemption of Fund shares. An individual's taxpayer identification 
number is his or her social security number. The backup withholding tax 
is not an additional tax and may be credited against a shareholder's 
regular Federal income tax liability.
	The foregoing is only a summary of certain tax considerations 
generally affecting the Fund and its shareholders and is not intended as 
a substitute for careful tax planning. Shareholders are urged to consult 
their tax advisors with specific reference to their own tax situations, 
including their state and local tax liabilities.

Additional Information

	The Fund, an open end management investment company, was incorporated 
on October 4 1989 in Maryland under the name The Inefficient-Market Fund 
Inc. (the "Fund") as a non-diversified closed end company and converted 
to open-end diversified status on June 23, 1997 pursuant to shareholder 
approval on April 18, 1997 and Securities and Exchange Declaration of 
Effectiveness on June 23, 1997.
	PNC Bank is located at 17th Chestnut Street, Philadelphia, PA 19103, 
and serves as the custodian of the Fund. Under its agreement with the 
Fund, PNC Bank holds the Fund's portfolio securities and keeps all 
necessary accounts and records. For its services, PNC Bank receives a 
monthly fee based upon the month-end market value of securities held in 
custody and also receives securities transaction charges. PNC Bank is 
authorized to establish separate accounts for foreign securities owned by 
the Fund to be held with foreign branches of other domestic banks as well 
as with certain foreign banks and securities depositories. The assets of 
the Fund are held under bank custodianship in compliance with the 1940 
Act.
	First Data is located at Exchange Place, Boston, Massachusetts 02109, 
and serves as the Fund's transfer agent. Under the transfer agency 
agreement, First Data maintains the shareholder account records for the 
Fund, handles certain communications between shareholders and the Fund 
and distributes dividends and distributions payable by the Fund. For 
these services, First Data receives a monthly fee computed on the basis 
of the number of shareholder accounts it maintains for the Fund during 
the month and is reimbursed for out-of-pocket expenses.

Financial Statements

	The Fund's Annual Report for the fiscal year ended December 31, 1996, 
accompanies this Statement of Additional Information and is incorporated 
herein by reference in its entirety.




						Smith Barney
						Disciplined Small
						Cap Fund, Inc.



Statement of


Additional 
Information























June 23, 1997 

















Smith Barney
Disciplined Small Cap Fund, Inc.
388 Greenwich Street
New York, NY  10013
 ...................................Fund ........................		
			SMITH BARNEY
								A Member of Travelers 
Group 

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