Smith Barney Money Funds

N-CSRS 1 dncsrs.htm SMITH BARNEY MONEY FUNDS Smith Barney Money Funds

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-2490

Smith Barney Money Funds, Inc.

(Exact name of registrant as specified in charter)


125 Broad Street, New York, NY		10004

(Address of principal executive offices)		(Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place, 4^th Floor

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 451-2010

Date of fiscal year end: December 31

Date of reporting period: June 30, 2006

ITEM 1. REPORT TO STOCKHOLDERS.

The Semi-Annual Report to Stockholders is filed herewith.

SEMI-ANNUAL

REPORT

JUNE 30, 2006

LOGO

Smith Barney

Money Funds, Inc.

Cash Portfolio

Government Portfolio

INVESTMENT PRODUCTS • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Smith Barney

Money Funds, Inc.

Cash Portfolio

Government Portfolio

Semi-Annual Report • June 30, 2006

What’s

Inside

Funds’ Objective

Each Fund seeks maximum current income and preservation of capital.



Letter from the Chairman		I

Fund at a Glance:

Cash Portfolio		1

Government Portfolio		2

Fund Expenses		3

Schedules of Investments		5

Statements of Assets and Liabilities		16

Statements of Operations		17

Statements of Changes in Net Assets		18

Financial Highlights		20

Notes to Financial Statements		26

Board Approval of Management and Subadvisory Agreements		34

“Smith Barney”, “Salomon Brothers” and “Citi” are service marks of Citigroup, licensed for use by Legg Mason as the names of funds and investment managers. Legg Mason and its affiliates, as well as the Fund’s investment manager, are not affiliated with Citigroup.

Letter from the Chairman

LOGO

R. JAY GERKEN, CFA

Chairman, President and Chief Executive Officer

Dear Shareholder,

The U.S. economy appeared to be on solid footing during the six-month reporting period. After gross domestic product (“GDP”)ⁱ rose 1.7% in the fourth quarter of 2005—the first quarter in which GDP growth did not surpass 3.0% in nearly three years—the economy rebounded sharply in the first quarter of 2006. During this time, GDP rose 5.6%, its best showing since the third quarter of 2003. Both strong consumer and business spending prompted the economic turnaround. In the second quarter of 2006, GDP growth was a more modest 2.5%, according to the Commerce Department’s initial reading for the period. The decline was largely attributed to lower consumer spending, triggered by higher interest rates and oil prices, as well as a cooling housing market. In addition, business spending fell during the quarter.

The Federal Reserve Board (“Fed”)ⁱⁱ continued to raise interest rates during the reporting period. Despite the “changing of the guard” from Fed Chairman Alan Greenspan to Ben Bernanke in early 2006, it was “business as usual” for the Fed, as it raised short-term interest rates four times during the period. Since it began its tightening campaign in June 2004, the Fed has increased rates 17 consecutive times, bringing the federal funds rateⁱⁱⁱfrom 1.00% to 5.25%. Coinciding with its latest rate hike in June 2006, the Fed said: “The extent and timing of any additional firming…will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.”

Both short- and long-term yields rose over the reporting period. During the six months ended June 30, 2006, two-year Treasury yields increased from 4.41% to 5.16%. Over the same period, 10-year Treasury yields moved from 4.39% to 5.15%. Short-term rates rose in concert with the Fed’s repeated rate hikes, while long-term rates rose on fears

Smith Barney Money Funds, Inc. I

of mounting inflationary pressures. Given the increase in short-term rates, the yields available from money market instruments rose over the six-month reporting period.

Performance Review

As of June 30, 2006, the seven-day current yield for Class A shares of the Smith Barney Money Funds, Inc.—Cash Portfolio was 4.66% and its seven-day effective yield, which reflects compounding, was 4.77%.¹ As of June 30, 2006, the seven-day current yield for Class A shares of the Smith Barney Money Funds, Inc.—Government Portfolio was 4.40% and its seven-day effective yield, which reflects compounding, was 4.50%.¹


Smith Barney Money Funds, Inc. Yields as of June 30, 2006 (unaudited)

	Cash Portfolio¹	Government Portfolio¹
Class A Shares

Seven-Day Current Yield	4.66%	4.40%

Seven-Day Effective Yield	4.77%	4.50%

Class C Shares

Seven-Day Current Yield	4.42%	4.57%

Seven-Day Effective Yield	4.51%	4.67%

Class Y Shares

Seven-Day Current Yield	4.80%	4.53%

Seven-Day Effective Yield	4.91%	4.63%

The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Yields will fluctuate. To obtain performance data current to the most recent month-end for Smith Barney Money Funds, Inc.—Cash Portfolio, please visit our website at www.leggmason.com/InvestorServices.



An investment in the Funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency. Although the Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Funds.

The seven-day current yield reflects the amount of income generated by the investment during that seven-day period and assumes that the income is generated each week over a 365-day period. The yield is shown as a percentage of the investment. The seven-day effective yield is calculated similarly to the seven-day current yield but, when annualized, the income earned by an investment in the Fund is assumed to be reinvested. The effective yield typically will be slightly higher than the current yield because of the compounding effect of the assumed reinvestment.

II Smith Barney Money Funds, Inc.

Special Shareholder Notices

As part of the continuing effort to integrate investment products managed by the advisers acquired with Citigroup’s asset management business, Legg Mason, Inc. (“Legg Mason”) has recommended various Fund actions in order to streamline product offerings, eliminate redundancies and improve efficiencies within the organization. At Board meetings held during June and July 2006, the Funds’ Board reviewed and approved these recommendations, and provided authorization to move ahead with proxy solicitations for those matters needing shareholder approval.

The Funds’ Board has approved the appointment of Legg Mason Partners Fund Advisor, LLC (“LMPFA”) as the Funds’ investment manager effective August 1, 2006. The Funds’ Board has also approved the appointment of Western Asset Management Company (“Western Asset”) as the Funds’ subadviser effective August 1, 2006. The portfolio managers who are responsible for the day-to-day management of the Funds remain the same immediately prior to and immediately after the date of these changes. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason.

Information About Your Funds

As you may be aware, several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. Affiliates of the Funds’ Manager have, in recent years, received requests for information from various government regulators regarding market timing, late trading, fees, and other mutual fund issues in connection with various investigations. The regulators appear to be examining, among other things, the Funds’ response to market timing and shareholder exchange activity, including compliance with prospectus disclosure related to these subjects. The Funds are not in a position to predict the outcome of these requests and investigations.

Important information with regard to recent regulatory developments that may affect the Funds is contained in the Notes to Financial Statements included in this report.

Smith Barney Money Funds, Inc. III

As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you meet your financial goals.

Sincerely,

LOGO

R. Jay Gerken, CFA

Chairman, President and Chief Executive Officer

July 28, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

RISKS: An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Although the Funds seek to preserve the value of your investment at one dollar per share. It is possible to lose money by investing in the Funds. Please see the Funds’ prospectus for more information on these and other risks.

ⁱ

Gross domestic product is a market value of goods and services produced by labor and property in a given country.

ⁱⁱ

The Federal Reserve Board is responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

ⁱⁱⁱ

The federal funds rate is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans.

IV Smith Barney Money Funds, Inc.

Fund at a Glance (unaudited)

Cash Portfolio

LOGO

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 1

Fund at a Glance (unaudited) (continued)

Government Portfolio

2 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on January 1, 2006 and held for the six months ended June 30, 2006.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”


Based on Actual Total Return⁽¹⁾

	Actual Total Return⁽²⁾		Beginning Account Value		Ending Account Value		Annualized Expense Ratio		Expenses Paid During the Period⁽³⁾
Cash Portfolio:
Class A	2.13	%	$	1,000.00	$	1,021.30	0.48	%	$	2.41

Class C	2.05			1,000.00		1,020.50	0.58			2.91

Class Y	2.18			1,000.00		1,021.80	0.37			1.85

Government Portfolio:
Class A	2.03			1,000.00		1,020.30	0.55			2.76

Class C	2.06			1,000.00		1,020.60	0.69			3.46

Class Y	2.08			1,000.00		1,020.80	0.44			2.20

⁽¹⁾

For the six months ended June 30, 2006.

⁽²⁾

Assumes reinvestment of all distributions, including returns of capital, if any, at net asset value. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower.

⁽³⁾

Expenses (net of fee waivers and/or expense reimbursements) are equal to each class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 3

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.


Based on Hypothetical Total Return⁽¹⁾

	Hypothetical Annualized Total Return		Beginning Account Value		Ending Account Value		Annualized Expense Ratio		Expenses Paid During the Period⁽²⁾
Cash Portfolio:
Class A	5.00	%	$	1,000.00	$	1,022.41	0.48	%	$	2.41

Class C	5.00			1,000.00		1,021.92	0.58			2.91

Class Y	5.00			1,000.00		1,022.96	0.37			1.86

Government Portfolio:
Class A	5.00			1,000.00		1,022.07	0.55			2.76

Class C	5.00			1,000.00		1,021.37	0.69			3.46

Class Y	5.00			1,000.00		1,022.61	0.44			2.21

⁽¹⁾

For the six months ended June 30, 2006.

⁽²⁾

4 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Schedules of Investments (June 30, 2006) (unaudited)

CASH PORTFOLIO



Face Amount		Security	Value

	SHORT-TERM INVESTMENTS — 100.1%
	Commercial Paper — 56.5%
		ABN AMRO North America Finance:
$	20,058,000	5.272% due 7/14/06 (a)	$	20,019,901
	28,000,000	5.212% due 7/19/06 (a)		27,927,340
		Amstel Funding Corp.:
	130,811,000	4.901% due 8/18/06 (a)(b)		129,976,426
	182,473,000	4.938% due 8/25/06 (a)(b)		181,129,289
	101,308,000	5.138% due 10/6/06 (a)(b)		99,940,426
	74,232,000	5.209% due 10/27/06 (a)(b)		72,995,955
	67,500,000	ANZ Delaware Inc., 5.345% due 12/5/06 (a)		65,967,778
		Aquinas Funding LLC:
	49,231,000	5.324% due 7/24/06 (a)(b)		49,064,298
	35,650,000	5.403% due 12/11/06 (a)(b)		34,800,956
	40,000,000	5.530% due 12/18/06 (a)(b)		38,983,778
		Atomium Funding Corp.:
	50,000,000	5.180% due 7/10/06 (a)(b)		49,935,500
	85,000,000	5.274% due 7/20/06 (a)(b)		84,764,479
	100,000,000	5.324% due 7/24/06 (a)(b)		99,661,389
	100,000,000	Barton Capital Corp., 5.285% due 8/3/06 (a)(b)		99,518,750
		Bavaria TRR Corp.:
	40,740,000	5.139% due 7/5/06 (a)(b)		40,716,823
	100,000,000	5.321% due 7/7/06 (a)(b)		99,911,500
	37,000,000	5.329% due 7/7/06 (a)(b)		36,967,193
	86,200,000	5.181% due 7/10/06 (a)(b)		86,088,802
	32,000,000	5.212% due 7/12/06 (a)(b)		31,949,253
	181,700,000	5.303% due 7/20/06 (a)(b)		181,193,663
	111,500,000	5.363% due 7/28/06 (a)(b)		111,053,443
	98,250,000	Bear Stearns Co., 5.393% due 7/3/06 (c)		98,250,000
		Beethoven Funding Corp.:
	59,933,000	5.292% due 7/17/06 (a)(b)		59,792,624
	106,785,000	5.263% due 7/21/06 (a)(b)		106,474,434
	80,000,000	5.334% due 7/27/06 (a)(b)		79,693,200
	150,000,000	5.346% due 7/31/06 (a)(b)		149,335,000
		Belmont Funding LLC:
	150,000,000	5.283% due 7/20/06 (a)(b)		149,583,583
	98,000,000	5.334% due 7/28/06 (a)(b)		97,609,715
		Berkeley Square Finance LLC:
	100,441,000	5.278% due 7/20/06 (a)(b)		100,162,430
	116,483,000	5.304% due 7/20/06 (a)(b)		116,158,401
	70,000,000	5.346% due 7/24/06 (a)(b)		69,761,854
	100,000,000	5.087% due 12/5/06 (b)		99,982,747
		Brahms Funding Corp.:
	50,258,000	5.126% due 7/5/06 (a)(b)		50,229,520
	94,870,000	5.192% due 7/11/06 (a)(b)		94,733,756
	87,000,000	5.392% due 7/14/06 (a)(b)		86,830,978

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 5

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	Commercial Paper — 56.5% (continued)
		Chesham Finance LLC:
$	100,000,000	5.273% due 7/24/06 (a)(b)	$	99,997,954
	25,303,000	5.118% due 10/2/06 (a)(b)		24,976,823
	44,000,000	5.171% due 10/16/06 (a)(b)		43,340,880
	49,000,000	5.050% due 11/20/06 (b)		48,994,396
	104,780,000	Clipper Receivables Co. LLC, 5.317% due 7/27/06 (a)		104,379,682
		Cobbler Funding LLC:
	57,477,000	5.333% due 7/25/06 (a)(b)		57,273,531
	77,150,000	5.330% due 9/11/06 (a)(b)		76,338,382
	11,770,000	5.296% due 9/15/06 (a)(b)		11,640,295
	84,250,000	5.408% due 9/15/06 (a)(b)		83,301,111
	31,254,000	5.441% due 9/15/06 (a)(b)		30,899,684
	156,620,000	Concord Minuteman Capital Co., 5.181% due 7/14/06 (a)(b)		156,328,448
	85,000,000	Crown Point Capital Co., 4.705% due 7/18/06 (a)(b)		84,815,361
		Cullinan Finance Corp.:
	100,000,000	5.333% due 7/28/06 (a)(b)		99,601,750
	82,000,000	5.208% due 8/30/06 (a)(b)		81,297,533
	50,000,000	5.176% due 9/21/06 (a)(b)		49,422,583
	27,285,000	5.270% due 11/20/06 (a)(b)		26,732,888
		Curzon Funding LLC:
	90,000,000	5.272% due 7/18/06 (a)(b)		89,776,875
	45,000,000	5.334% due 7/28/06 (a)(b)		44,820,788
	51,000,000	Danske Corp., 5.016% due 9/29/06 (a)		50,376,525
	250,000,000	Dexia Delaware LLC, 5.316% due 7/31/06 (a)		248,897,917
	30,000,000	East-Fleet Finance LLC, 5.303% due 7/21/06 (a)(b)		29,912,000
		Ebury Finance LLC:
	115,000,000	5.186% due 7/5/06 (a)(b)		114,933,939
	100,000,000	5.366% due 7/6/06 (a)(b)		99,925,556
	40,000,000	4.658% due 7/7/06 (a)(b)		39,969,667
	80,000,000	5.181% due 10/16/06 (a)(b)		78,799,222
	82,000,000	5.214% due 10/27/06 (a)(b)		80,634,609
	229,600,000	5.236% due 11/16/06 (a)(b)		225,111,320
	100,000,000	Eramus Capital Corp., 5.311% due 7/20/06 (a)(b)		99,720,806
		Fenway Funding LLC:
	39,726,000	5.452% due 7/3/06 (a)(b)		39,713,972
	100,000,000	5.321% due 7/17/06 (a)(b)		99,764,444
	100,000,000	Gemini Securitization LLC, 5.335% due 7/31/06 (a)(b)		99,557,500
	50,000,000	General Electric Capital Corp., 4.868% due 7/7/06 (a)		49,960,083
		Georgetown Funding Co. LLC:
	134,740,000	5.301% due 7/25/06 (a)(b)		134,266,164
	110,000,000	5.347% due 7/27/06 (a)(b)		109,577,356
		Giro Balanced Funding Corp.:
	87,886,000	5.140% due 7/5/06 (a)(b)		87,836,003
	87,868,000	5.232% due 7/13/06 (a)(b)		87,715,403
	100,000,000	5.303% due 7/20/06 (a)(b)		99,721,333

See Notes to Financial Statements.

6 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	Commercial Paper — 56.5% (continued)
		Grampian Funding LLC:
$	65,000,000	4.624% due 7/3/06 (a)(b)	$	64,983,678
	100,000,000	5.002% due 9/12/06 (a)(b)		99,010,444
	39,500,000	5.175% due 10/16/06 (a)(b)		38,907,116
	88,000,000	5.207% due 10/17/06 (a)(b)		86,656,240
	55,000,000	5.165% due 10/25/06 (a)(b)		54,107,686
	91,250,000	5.497% due 12/13/06 (a)(b)		89,012,474
	50,000,000	Hannover Funding Co. LLC, 5.315% due 7/25/06 (a)(b)		49,823,667
		Harwood Street Funding II:
	150,000,000	5.370% due 7/11/06 (a)(b)		149,776,667
	160,362,000	5.390% due 7/11/06 (a)(b)		160,122,348
	50,000,000	Indymac Bank FSB, 5.222% due 7/11/06 (a)		49,927,778
		ING U.S. Funding LLC:
	74,000,000	5.194% due 10/27/06 (a)		72,772,669
	68,000,000	5.196% due 10/30/06 (a)		66,843,509
	30,460,000	Legacy Capital Co., 5.338% due 7/19/06 (a)(b)		30,378,976
		Liberty Street Funding Corp.:
	80,000,000	5.321% due 7/10/06 (a)(b)		79,893,800
	75,000,000	5.244% due 7/17/06 (a)(b)		74,826,000
	80,981,000	5.265% due 7/19/06 (a)(b)		80,768,830
	24,250,000	Main Street Warehouse Funding, 5.334% due 7/17/06 (a)(b)		24,192,770
		Mane Funding Corp.:
	100,461,000	5.314% due 7/24/06 (a)(b)		100,121,470
	78,642,000	5.333% due 7/27/06 (a)(b)		78,340,408
		Mica Funding LLC:
	165,000,000	5.233% due 7/6/06 (a)(b)		164,880,375
	106,400,000	5.173% due 7/10/06 (a)(b)		106,263,010
	170,000,000	5.352% due 7/25/06 (a)(b)		169,395,933
		Morrigan TRR Funding LLC:
	75,000,000	5.159% due 7/3/06 (a)(b)		74,978,583
	90,000,000	5.213% due 7/12/06 (a)(b)		89,857,275
	30,000,000	5.318% due 7/13/06 (a)(b)		29,947,000
	70,000,000	5.314% due 7/17/06 (a)(b)		69,835,422
	100,000,000	5.366% due 7/17/06 (a)(b)		99,762,222
	85,000,000	5.371% due 7/24/06 (a)(b)		84,709,465
	90,292,000	Nyala Funding LLC, 5.266% due 7/17/06 (a)(b)		90,081,519
		Old Line Funding Corp.:
	57,324,000	5.309% due 7/10/06 (a)		57,248,046
	37,000,000	5.293% due 8/2/06 (a)		36,827,004
	50,000,000	5.285% due 8/3/06 (a)		49,759,375
		Ormond Quay Funding LLC:
	75,000,000	5.168% due 7/7/06 (a)(b)		74,935,625
	100,000,000	5.272% due 7/18/06 (a)(b)		99,752,083
	100,000,000	5.314% due 7/24/06 (a)(b)		99,662,028

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 7

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	Commercial Paper — 56.5% (continued)
		Perry Global Funding LLC:
$	75,000,000	4.982% due 7/5/06 (a)(b)	$	74,959,000
	50,157,000	5.292% due 11/10/06 (a)(b)		49,206,190
	129,600,000	Picaros Funding LLC, 4.832% due 8/3/06 (a)(b)		129,039,264
		Polonius Inc.:
	47,665,000	5.322% due 7/21/06 (a)(b)		47,524,653
	30,000,000	5.129% due 9/18/06 (a)(b)		29,669,517
	65,170,000	5.245% due 10/23/06 (a)(b)		64,109,250
	30,000,000	Rabobank USA Financial Corp., 5.183% due 7/10/06 (a)		29,961,225
		Regency Markets No. 1 LLC:
	120,000,000	5.312% due 7/21/06 (a)(b)		119,647,333
	70,000,000	5.342% due 7/24/06 (a)(b)		69,762,078
		Saint Germain Holdings Inc.:
	50,000,000	5.355% due 7/31/06 (a)(b)		49,777,917
	70,000,000	5.342% due 8/3/06 (a)(b)		69,659,275
		Sigma Finance Inc.:
	34,000,000	4.958% due 8/9/06 (a)(b)		33,820,990
	99,250,000	5.498% due 12/13/06 (a)(b)		96,816,307
		Societe Generale North America:
	11,678,000	5.302% due 7/3/06 (a)		11,674,562
	65,000,000	5.227% due 11/13/06 (a)		63,759,313
	41,051,000	5.229% due 11/13/06 (a)		40,266,669
		Solitaire Funding LLC:
	105,000,000	5.317% due 7/21/06 (a)(b)		104,690,833
	38,000,000	5.330% due 7/31/06 (a)(b)		37,832,008
	50,000,000	5.162% due 10/12/06 (a)(b)		49,280,431
	60,000,000	5.203% due 10/23/06 (a)(b)		59,034,800
		Stanfield Victoria Funding LLC:
	100,000,000	5.133% due 10/10/06 (a)(b)		98,597,222
	50,000,000	5.177% due 10/25/06 (a)(b)		49,188,000
		Strand Capital LLC:
	125,000,000	4.852% due 8/1/06 (a)(b)		124,489,792
	70,000,000	5.022% due 9/12/06 (a)(b)		69,304,472
	86,700,000	Svenska Handlesbanken Inc., 5.139% due 8/22/06 (a)		86,065,067
		Tasman Funding Inc.:
	28,250,000	5.229% due 7/10/06 (a)(b)		28,213,204
	70,000,000	5.192% due 7/12/06 (a)(b)		69,889,419
	80,000,000	5.344% due 7/26/06 (a)(b)		79,704,444
	115,000,000	5.516% due 9/29/06 (a)(b)		113,436,000
		Thames Asset Global Securitization Inc.:
	85,000,000	5.289% due 7/7/06 (a)(b)		84,925,200
	88,472,000	4.920% due 7/14/06 (a)(b)		88,317,371
	95,484,000	5.316% due 7/20/06 (a)(b)		95,216,910
	25,000,000	Thornburg Mortgage Capital Resource, 5.403% due 7/28/06 (a)(b)		24,899,125
	40,439,000	Three Pillars Funding Corp., 4.941% due 7/14/06 (a)(b)		40,368,030
	113,359,000	Tulip Funding Corp., 5.356% due 7/7/06 (a)		113,257,922

See Notes to Financial Statements.

8 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	Commercial Paper — 56.5% (continued)
		UBS Finance Delaware LLC:
$	20,300,000	5.125% due 7/5/06 (a)	$	20,288,474
	30,000,000	5.123% due 7/10/06 (a)		29,961,750
	147,000,000	5.310% due 7/31/06 (a)		146,352,588
	55,150,000	5.305% due 8/7/06 (a)		54,851,286
	23,510,000	5.311% due 8/21/06 (a)		23,334,811
	50,000,000	4.900% due 11/3/06 (a)		49,179,340
		Victory Receivable Corp.:
	100,000,000	5.250% due 7/12/06 (a)(b)		99,840,194
	57,081,000	5.233% due 7/14/06 (a)(b)		56,973,608
	50,000,000	5.332% due 7/25/06 (a)(b)		49,823,000
	85,000,000	5.283% due 8/1/06 (a)(b)		84,615,729

		Total Commercial Paper		11,951,444,035

	Bank Notes — 0.5%
		Bank of America Corp.:
	50,000,000	4.980% due 9/5/06		50,000,000
	50,000,000	5.220% due 11/15/06		50,000,000

		Total Bank Notes		100,000,000

	Certificates Of Deposit — 3.3%
	38,000,000	HSBC Bank USA, 3.990% due 7/17/06		38,000,000
	20,000,000	HSBC Bank USA, 3.995% due 7/18/06		20,000,000
		Wells Fargo Bank NA:
	86,000,000	5.160% due 7/13/06		86,000,000
	25,000,000	4.010% due 7/24/06		24,998,081
	124,000,000	5.240% due 7/24/06		123,999,212
	15,000,000	5.290% due 7/24/06		15,000,000
	150,000,000	5.310% due 7/25/06		150,000,000
	90,000,000	4.800% due 1/16/07		90,013,607
	87,000,000	4.800% due 1/29/07		86,980,470
	55,000,000	4.860% due 1/31/07		55,000,000
	10,000,000	4.865% due 1/31/07		9,999,717

		Total Certificates of Deposit		699,991,087

	Certificates Of Deposit (Euro) — 0.7%
		Societe Generale London:
	45,000,000	4.000% due 7/19/06		44,999,342
	100,000,000	5.190% due 11/20/06		99,970,589

		Total Certificates of Deposit (Euro)		144,969,931

	Certificates of Deposit (Yankee) — 24.3%
	40,000,000	ABN Amro Bank Chicago NV, 4.435% due 10/12/06		40,000,000
		Bank Nova Scotia:
	45,000,000	4.700% due 9/29/06		45,000,000
	35,000,000	4.860% due 1/30/07		34,995,923

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 9

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	Certificates of Deposit (Yankee) — 24.3% (continued)
		Bank of America NA:
$	122,000,000	5.020% due 7/21/06	$	122,000,000
	100,000,000	5.280% due 8/7/06		100,000,000
	191,000,000	4.910% due 8/23/06		191,000,000
	100,000,000	5.000% due 9/12/06		100,000,000
	94,000,000	5.090% due 10/2/06		94,000,000
		Barclays Bank PLC NY:
	98,000,000	4.900% due 7/17/06		98,000,000
	48,500,000	5.100% due 7/18/06		48,500,000
	99,000,000	5.125% due 7/24/06		99,000,000
	49,000,000	5.140% due 7/24/06		49,000,000
	100,000,000	5.200% due 8/31/06		100,000,000
		BNP Paribas NY Branch:
	100,000,000	5.000% due 9/27/06		100,000,000
	125,000,000	5.205% due 11/3/06		125,000,000
	75,000,000	5.075% due 12/8/06		75,000,000
		Calyon NY:
	100,000,000	4.815% due 7/14/06		100,000,000
	33,500,000	4.845% due 8/9/06		33,500,000
	148,000,000	5.000% due 9/27/06		148,000,000
	35,000,000	4.750% due 10/26/06		35,000,000
	63,500,000	5.200% due 3/30/07		63,486,330
		Credit Suisse New York:
	100,000,000	5.300% due 7/26/06		100,000,000
	190,000,000	5.110% due 8/8/06		190,000,000
	67,500,000	5.160% due 10/18/06		67,500,000
	65,000,000	4.700% due 11/3/06		65,000,000
		Depfa Bank PLC:
	28,000,000	5.070% due 7/17/06		28,000,000
	87,250,000	5.220% due 7/17/06		87,250,000
	45,000,000	4.020% due 7/18/06		45,000,000
	53,750,000	4.160% due 8/4/06		53,750,000
	60,800,000	4.220% due 8/11/06		60,800,000
		Deutsche Bank NY:
	75,000,000	4.625% due 7/6/06		75,000,000
	10,000,000	4.000% due 7/21/06		10,000,000
	75,000,000	4.250% due 8/9/06		75,000,000
	105,000,000	4.970% due 9/18/06		105,000,000
	75,000,000	4.730% due 11/6/06		75,000,000
	288,100,000	Dexia Credit Local NY, 5.210% due 10/5/06		288,100,000
	242,100,000	Dresdner Bank NY, 5.280% due 7/24/06		242,100,000
		Fortis Bank NY:
	144,600,000	5.080% due 7/5/06		144,600,000
	40,000,000	5.160% due 7/14/06		40,000,000
	24,000,000	5.290% due 7/31/06		24,000,000
	190,000,000	5.300% due 7/31/06		190,000,000

See Notes to Financial Statements.

10 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	Certificates of Deposit (Yankee) — 24.3% (continued)
$	100,000,000	4.140% due 8/4/06	$	100,000,000
	93,000,000	5.225% due 4/4/07		93,000,000
		HBOS Treasury Services NY:
	80,000,000	4.010% due 7/20/06		79,994,162
	50,000,000	4.700% due 9/29/06		50,000,000
	92,000,000	4.750% due 10/24/06		92,001,418
	89,200,000	5.255% due 4/5/07		89,203,270
		Nordea Bank Finland NY:
	88,500,000	4.930% due 8/28/06		88,500,000
	94,500,000	5.260% due 12/7/06		94,500,000
		Royal Bank of Canada NY:
	153,000,000	4.815% due 7/14/06		153,000,000
	74,500,000	4.030% due 7/24/06		74,496,803
		Royal Bank of Scotland NY:
	75,000,000	4.620% due 7/6/06		75,000,000
	20,000,000	4.225% due 8/15/06		20,000,000
	79,000,000	4.640% due 11/1/06		79,000,000
	32,900,000	Societe Generale London, 4.830% due 10/31/06		32,900,000
		Svenska Handelsbanken NY:
	81,100,000	5.260% due 7/24/06		81,100,000
	23,000,000	4.782% due 12/5/06		22,992,934
		Toronto Dominion Bank NY:
	77,000,000	5.300% due 7/31/06		77,000,000
	16,500,000	5.170% due 9/18/06		16,500,000
	61,500,000	5.230% due 3/30/07		61,500,000

		Total Certificates of Deposit (Yankee)		5,148,270,840

	Liquidity Notes — 2.8%
		Albis Capital Corp.:
	41,000,000	5.146% due 7/7/06 (a)(b)		40,965,150
	18,800,000	5.130% due 7/10/06 (a)(b)		18,776,171
	60,000,000	5.165% due 7/17/06 (a)(b)		59,863,467
	200,000,000	Fenway Funding LLC, 5.394% due 7/27/06 (a)		199,224,333
		Harwood Street Funding I:
	40,000,000	5.334% due 8/2/06 (a)(b)		39,811,556
	35,000,000	5.405% due 8/10/06 (a)(b)		34,791,167
	45,157,000	Harwood Street Funding II, 5.360% due 7/11/06 (a)		45,089,892
	143,050,000	Park Sienna LLC, 5.242% due 7/28/06 (a)		142,491,568

		Total Liquidity Notes		581,013,304

	Medium-Term Notes — 6.4%
		Cheyne Finance LLC:
	75,000,000	5.164% due 7/17/06 (b)(c)		74,978,486
	100,000,000	5.330% due 9/5/06 (b)(c)		99,986,069
	200,000,000	5.169% due 9/15/06 (b)(c)		199,990,645
	65,000,000	5.173% due 10/12/06 (a)(b)		64,062,700

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 11

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	Medium-Term Notes — 6.4% (continued)
$	85,000,000	Cullinan Finance Corp., 5.130% due 11/15/06 (b)(c)	$	84,989,208
	300,000,000	General Electric Capital Corp., 5.352% due 7/17/06 (c)		300,000,000
	50,000,000	Harrier Finance Funding LLC, 5.315% due 7/11/06 (b)(c)		49,986,609
		Premier Asset Collateralized Entity LLC:
	53,250,000	5.303% due 7/25/06 (b)(c)		53,243,703
	50,000,000	5.330% due 8/25/06 (b)(c)		49,995,507
	55,000,000	5.330% due 9/15/06 (b)(c)		55,000,000
		Stanfield Victoria Funding:
	100,000,000	0.000% due 7/5/06 (b)(c)		99,980,000
	50,000,000	5.159% due 7/17/06 (b)(c)		49,999,326
	25,000,000	5.283% due 7/24/06 (b)(c)		24,999,525
	50,000,000	5.320% due 12/4/06 (b)(c)		49,995,278
	100,000,000	4.780% due 1/16/07 (b)		99,991,932

		Total Medium-Term Notes		1,357,198,988

	Promissory Note — 1.0%
	200,000,000	Goldman Sachs Group Inc., 5.260% due 12/19/06 (b)		200,000,000

	U.S. Government Agencies — 4.4%
		Federal Home Loan Mortgage Corp. (FHLMC), Discount Notes:
	25,000,000	3.889% due 7/5/06 (a)		24,989,597
	80,000,000	4.605% due 9/18/06 (a)		79,220,533
	50,000,000	4.610% due 9/27/06 (a)		49,459,167
	76,000,000	4.575% due 11/1/06 (a)		74,861,362
	50,000,000	4.623% due 11/1/06 (a)		49,244,917
	75,000,000	4.669% due 12/1/06 (a)		73,578,375
	76,500,000	4.669% due 12/12/06 (a)		74,945,690
	140,000,000	4.742% due 1/17/07 (a)		136,476,667
	32,769,000	Series RB, 5.204% due 4/17/07 (a)		31,462,336
		Federal National Mortgage Association (FNMA):
		Discount Notes:
	85,000,000	4.345% due 9/29/06 (a)		84,114,937
	35,150,000	4.643% due 12/29/06 (a)		34,365,335
	50,000,000	4.821% due 1/26/07 (a)		48,664,722
	23,000,000	4.958% due 2/23/07 (a)		22,284,556
	43,000,000	5.111% due 3/6/07 (a)		41,554,436
	33,500,000	5.123% due 3/30/07 (a)		32,266,083
	75,000,000	Notes, 5.284% due 9/21/06 (c)		74,971,559

		Total U.S. Government Agencies		932,460,272

See Notes to Financial Statements.

12 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	U.S. Government Obligation — 0.2%
$	50,000,000	U.S. Treasury Bills, 4.730% due 9/14/06 (a)	$	49,518,750

		TOTAL INVESTMENTS — 100.1% (Cost — $21,164,867,207#)		21,164,867,207
		Liabilities in Excess of Other Assets — (0.1)%		(13,406,509	)

		TOTAL NET ASSETS — 100.0%	$	21,151,460,698

^(a)

Rate shown represents yield to maturity.

^(b)

Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors, unless otherwise noted.

^(c)

Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2006.

Aggregate cost for federal income tax purposes is substantially the same.

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 13

Schedules of Investments (June 30, 2006) (unaudited) (continued)

GOVERNMENT PORTFOLIO



Face Amount		Security	Value


	SHORT-TERM INVESTMENTS — 98.6%
	U.S. Government & Agency Obligations — 93.4%
	U.S. Government Agencies — 93.4%
		Federal Farm Credit Bank (FFCB):
$	12,000,000	4.999% due 8/1/06 (a)	$	12,000,100
	25,000,000	5.026% due 11/13/06 (a)		24,997,662
		Bonds:
	75,000,000	5.004% due 7/1/06 (a)		74,997,533
	55,000,000	4.981% due 7/2/06 (a)		54,989,165
	50,000,000	5.110% due 8/11/06 (a)		50,002,942
	80,000,000	5.260% due 12/27/06 (a)		79,996,080
	25,000,000	Series 1, 5.230% due 9/27/06 (a)		24,992,762
	10,000,000	Discount Notes, 4.017% due 9/13/06 (b)		9,920,656
		Series I:
	60,000,000	4.969% due 7/1/06 (a)		59,987,380
	100,000,000	5.044% due 7/14/06 (a)		99,999,278
		Federal Home Loan Bank (FHLB):
	60,000,000	Bonds, 4.860% due 7/5/06 (a)		59,982,042
	20,000,000	2.950% due 9/14/06		19,950,198
		Discount Notes:
	50,000,000	5.171% due 7/14/06 (b)		49,907,014
	59,000,000	4.973% due 7/19/06 (b)		58,854,565
	94,848,000	5.009% due 7/21/06 (b)		94,586,114
	103,366,000	5.003% due 7/26/06 (b)		103,009,962
	94,567,000	5.049% due 7/28/06 (b)		94,212,019
	40,000,000	5.002% due 8/9/06 (b)		39,785,933
	50,000,000	5.244% due 8/18/06 (b)		49,653,333
	50,000,000	Series I, 4.870% due 7/6/06 (a)		49,980,206
		Federal Home Loan Mortgage Corp. (FHLMC):
		Discount Notes:
	25,000,000	3.889% due 7/5/06 (b)		24,989,597
	40,000,000	3.930% due 7/5/06 (b)		39,983,178
	8,645,000	4.120% due 8/1/06 (b)		8,615,521
	65,000,000	4.909% due 9/19/06 (b)		64,308,111
	40,000,000	4.929% due 9/19/06 (b)		39,572,444
	15,000,000	4.610% due 9/27/06 (b)		14,837,750
	30,000,000	5.138% due 11/14/06 (b)		29,433,333
	48,200,000	4.677% due 12/1/06 (b)		47,279,199
	15,000,000	4.996% due 12/29/06 (b)		14,638,000
	15,000,000	4.655% due 1/9/07 (b)		14,644,000
	45,000,000	4.764% due 1/17/07 (b)		43,862,500
	25,000,000	4.981% due 2/16/07 (b)		24,241,319
		Series RB:
	50,000,000	4.605% due 7/25/06 (b)		49,850,000
	26,072,000	5.002% due 8/8/06 (b)		25,936,049

See Notes to Financial Statements.

14 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Schedules of Investments (June 30, 2006) (unaudited) (continued)



Face Amount		Security	Value

	U.S. Government Agencies — 93.4% (continued)
$	9,707,000	4.869% due 10/24/06 (b)	$	9,560,950
	15,000,000	5.119% due 10/31/06 (b)		14,746,342
	30,000,000	5.196% due 11/21/06 (b)		29,396,421
	6,025,000	5.173% due 2/6/07 (b)		5,842,376
	20,000,000	5.111% due 3/6/07 (b)		19,328,333
	42,474,000	5.249% due 5/1/07 (b)		40,684,240
	80,000,000	Medium-Term Note, 5.188% due 7/27/06 (a)		79,962,788
		Federal National Mortgage Association (FNMA):
		Discount Notes:
	22,500,000	4.975% due 7/17/06 (b)		22,450,700
	50,000,000	4.626% due 7/26/06 (b)		49,843,056
	40,000,000	4.085% due 7/28/06 (b)		39,882,250
	50,000,000	4.705% due 8/2/06 (b)		49,795,733
	95,000,000	5.018% due 8/16/06 (b)		94,398,493
	15,258,000	5.068% due 10/18/06 (b)		15,029,552
	20,000,000	4.619% due 10/27/06 (b)		19,709,589
	11,392,000	5.135% due 11/1/06 (b)		11,196,803
	36,415,000	5.178% due 11/15/06 (b)		35,715,175
	15,299,000	4.677% due 12/1/06 (b)		15,006,732
	50,000,000	4.901% due 12/29/06 (b)		48,819,729
	20,000,000	5.022% due 2/23/07 (b)		19,368,000
	10,094,000	5.186% due 2/23/07 (b)		9,764,397
	30,000,000	5.111% due 3/6/07 (b)		28,991,467
	25,000,000	5.345% due 3/30/07 (b)		24,031,944
		Notes:
	15,000,000	5.312% due 9/22/06 (a)		14,999,139
	34,400,000	Series 1, 5.111% due 9/7/06 (a)		34,397,002

		Total U.S. Government & Agency Obligations		2,286,917,156

	Repurchase Agreement — 5.2%
	127,117,000	Greenwich Capital Markets Inc. repurchase agreement dated 6/30/06, 5.200% due 7/3/06; Proceeds at maturity — $127,172,084; (Fully collateralized by various U.S. government agency obligations, 4.572% to 6.465% due 6/1/18 to 7/1/36; Market value — $129,666,805)		127,117,000

		TOTAL INVESTMENTS — 98.6% (Cost — $2,414,034,156#)		2,414,034,156
		Other Assets in Excess of Liabilities — 1.4%		33,805,485

		TOTAL NET ASSETS — 100.0%	$	2,447,839,641

^(a)

Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2006.

^(b)

Rate shown represents yield to maturity.

Aggregate cost for federal income tax purposes is substantially the same.

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 15

Statements of Assets and Liabilities (June 30, 2006) (unaudited)



	Cash Portfolio			Government Portfolio
ASSETS:
Investments, at amortized cost	$	21,164,867,207		$	2,414,034,156
Cash		338			449
Receivable for Fund shares sold		591,052,791			73,141,805
Interest receivable		92,011,485			2,995,692
Deferred compensation		624,368			86,416
Prepaid expenses		420,641			202,838

Total Assets		21,848,976,830			2,490,461,356

LIABILITIES:
Payable for Fund shares repurchased		587,606,706			41,207,433
Payable for securities purchased		99,980,000			—
Investment management fee payable		6,657,917			850,217
Distributions payable		1,107,337			274,917
Deferred compensation payable		624,368			86,416
Distribution fees payable		586,902			64,965
Directors’ fees payable		5,965			4,495
Accrued expenses		946,937			133,272

Total Liabilities		697,516,132			42,621,715

Total Net Assets	$	21,151,460,698		$	2,447,839,641

NET ASSETS:
Par value (Note 5)	$	211,517,343		$	24,479,585
Paid-in capital in excess of par value		20,940,464,776			2,423,495,567
Undistributed net investment income		17,232			31,789
Accumulated net realized loss on investments		(538,653	)		(167,300	)

Total Net Assets	$	21,151,460,698		$	2,447,839,641

Shares Outstanding:
Class A		21,010,336,145			2,441,765,892

Class C		33,381			2,841

Class Y		141,364,754			6,189,773

Net Asset Value:
Class A		$1.00			$1.00

Class C		$1.00			$1.00

Class Y		$1.00			$1.00

See Notes to Financial Statements.

16 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

S tatements of Operations (For the six months ended June 30, 2006) (unaudited)



	Cash Portfolio			Government Portfolio
INVESTMENT INCOME:
Interest	$	495,878,567		$	54,901,130

EXPENSES:
Investment management fee (Note 2)		38,813,420			5,131,169
Distribution fees (Note 3)		10,386,584			1,185,299
Transfer agent fees (Note 3)		3,686,032			151,251
Insurance		198,727			26,979
Registration fees		172,411			97,637
Shareholder reports (Note 3)		123,432			38,188
Custody fees		73,638			10,139
Directors’ fees		32,116			4,404
Audit and tax		29,645			26,834
Legal fees		20,530			19,327
Miscellaneous expenses		10,219			5,591

Total Expenses		53,546,754			6,696,818
Less: Fee waivers and/or expense reimbursements (Notes 2 and 7)		(2,993,834	)		(206,855	)

Net Expenses		50,552,920			6,489,963

Net Investment Income		445,325,647			48,411,167

REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 1):
Net Realized Loss From Investment Transactions		(520,421	)		(167,300	)

Increase in Net Assets From Operations	$	444,805,226		$	48,243,867

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 17

Statements of Changes in Net Assets


For the six months ended June 30, 2006 (unaudited) and the year ended December 31, 2005

Cash Portfolio	2006			2005
OPERATIONS:
Net investment income	$	445,325,647		$	472,369,261
Net realized loss		(520,421	)		(18,232	)

Increase in Net Assets From Operations		444,805,226			472,351,029

DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 4):
Net investment income		(445,325,647	)		(472,369,261	)

Decrease in Net Assets From Distributions to Shareholders		(445,325,647	)		(472,369,261	)

FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares		71,669,212,574			102,958,638,804
Reinvestment of distributions		429,028,312			457,134,926
Cost of shares repurchased		(68,613,833,704	)		(102,994,449,761	)

Increase in Net Assets From Fund Share Transactions		3,484,407,182			421,323,969

Increase in Net Assets		3,483,886,761			421,305,737
NET ASSETS:
Beginning of period		17,667,573,937			17,246,268,200

End of period*	$	21,151,460,698		$	17,667,573,937

* Includes undistributed net investment income of:		$17,232			$17,232

See Notes to Financial Statements.

18 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Statements of Changes in Net Assets (continued)


For the six months ended June 30, 2006 (unaudited) and the year ended December 31, 2005

Government Portfolio	2006			2005
OPERATIONS:
Net investment income	$	48,411,167		$	60,467,514
Net realized gain (loss)		(167,300	)		8,634

Increase in Net Assets From Operations		48,243,867			60,476,148

DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 4):
Net investment income		(48,411,171	)		(60,458,877	)
Net realized gains		—			(8,634	)

Decrease in Net Assets From Distributions to Shareholders		(48,411,171	)		(60,467,511	)

FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares		6,290,221,716			9,602,150,169
Reinvestment of distributions		45,920,641			58,143,963
Cost of shares repurchased		(5,950,563,608	)		(9,924,400,746	)

Increase (Decrease) in Net Assets From Fund Share Transactions		385,578,749			(264,106,614	)

Increase (Decrease) in Net Assets		385,411,445			(264,097,977	)
NET ASSETS:
Beginning of period		2,062,428,196			2,326,526,173

End of period*	$	2,447,839,641		$	2,062,428,196

* Includes undistributed net investment income of:		$31,789			$31,793

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 19

Financial Highlights

For a share of each class of capital stock outstanding throughout each year ended December 31, unless otherwise noted:



	Class A Shares
Cash Portfolio	2006⁽¹⁾⁽²⁾			2005⁽²⁾			2004			2003			2002			2001
Net Asset Value, Beginning of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Income from Operations:
Net investment income		0.021			0.027			0.009	⁽³⁾		0.007			0.013	⁽³⁾		0.037	⁽³⁾

Total Income from Operations		0.021			0.027			0.009	⁽³⁾		0.007			0.013	⁽³⁾		0.037	⁽³⁾

Less Distributions From:
Net investment income		(0.021	)		(0.027	)		(0.009	)⁽³⁾		(0.007	)		(0.013	)		(0.037	)

Total Distributions		(0.021	)		(0.027	)		(0.009	)⁽³⁾		(0.007	)		(0.013	)		(0.037	)

Net Asset Value, End of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Total Return⁽⁴⁾		2.13	%		2.75	%		0.90	%		0.67	%		1.28	%		3.78	%

Net Assets, End of Period (billions)		$21			$18			$17			$20			$23			$32

Ratios to Average Net Assets:
Gross expenses		0.51	%⁽⁵⁾		0.58	%		0.59	%		0.56	%		0.62	%		0.59	%
Net expenses⁽⁶⁾		0.48	⁽⁵⁾⁽⁷⁾		0.58			0.54	⁽⁷⁾		0.56			0.62			0.59
Net investment income		4.26	⁽⁵⁾		2.72			0.88			0.68			1.27			3.93

⁽¹⁾

For the six months ended June 30, 2006 (unaudited).

⁽²⁾

Per share amounts have been calculated using the average shares method.

⁽³⁾

Includes short-term capital gains.

⁽⁴⁾

Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized.

⁽⁵⁾

Annualized.

⁽⁶⁾

As a result of an expense limitation, the ratio of expenses to average net assets will not exceed 0.70%.

⁽⁷⁾

Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

20 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Financial Highlights (continued)

For a share of each class of capital stock outstanding throughout each year ended December 31, unless otherwise noted:



	Class C Shares
Cash Portfolio	2006⁽¹⁾⁽²⁾			2005⁽²⁾			2004			2003			2002			2001
Net Asset Value, Beginning of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Income from Operations:
Net investment income		0.020			0.027			0.009	⁽³⁾		0.007			0.013	⁽³⁾		0.037	⁽³⁾

Total Income from Operations		0.020			0.027			0.009	⁽³⁾		0.007			0.013	⁽³⁾		0.037	⁽³⁾

Less Distributions From:
Net investment income		(0.020	)		(0.027	)		(0.009	)⁽³⁾		(0.007	)		(0.013	)		(0.037	)

Total Distributions		(0.020	)		(0.027	)		(0.009	)⁽³⁾		(0.007	)		(0.013	)		(0.037	)

Net Asset Value, End of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Total Return⁽⁴⁾		2.05	%		2.71	%		0.90	%		0.67	%		1.29	%		3.81	%

Net Assets, End of Period (000s)		$33			$152			$166			$381			$347			$304

Ratios to Average Net Assets:
Gross expenses		0.59	%⁽⁵⁾		0.63	%		0.59	%		0.55	%		0.61	%		0.56	%
Net expenses⁽⁶⁾		0.58	⁽⁵⁾⁽⁷⁾		0.63			0.55	⁽⁷⁾		0.55			0.61			0.56
Net investment income		4.03	⁽⁵⁾		2.65			0.79			0.67			1.28			3.53

⁽¹⁾

For the six months ended June 30, 2006 (unaudited).

⁽²⁾

Per share amounts have been calculated using the average shares method.

⁽³⁾

Includes short-term capital gains.

⁽⁴⁾

⁽⁵⁾

Annualized.

⁽⁶⁾

As a result of an expense limitation, the ratio of expenses to average net assets will not exceed 0.70%.

⁽⁷⁾

Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 21

Financial Highlights (continued)

For a share of each class of capital stock outstanding throughout each year ended December 31, unless otherwise noted:



	Class Y Shares
Cash Portfolio	2006⁽¹⁾⁽²⁾			2005⁽²⁾			2004			2003			2002			2001
Net Asset Value, Beginning of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Income from Operations:
Net investment income		0.022			0.029			0.010	⁽³⁾		0.008			0.014	⁽³⁾		0.039	⁽³⁾

Total Income from Operations		0.022			0.029			0.010	⁽³⁾		0.008			0.014	⁽³⁾		0.039	⁽³⁾

Less Distributions From:
Net investment income		(0.022	)		(0.029	)		(0.010	)⁽³⁾		(0.008	)		(0.014	)		(0.039	)

Total Distributions		(0.022	)		(0.029	)		(0.010	)⁽³⁾		(0.008	)		(0.014	)		(0.039	)

Net Asset Value, End of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Total Return⁽⁴⁾		2.18	%		2.91	%		1.00	%		0.78	%		1.45	%		3.94	%

Net Assets, End of Period (millions)		$141			$121			$86			$128			$63			$60

Ratios to Average Net Assets:
Gross expenses		0.38	%⁽⁵⁾		0.43	%		0.49	%		0.44	%		0.45	%		0.40	%
Net expenses⁽⁶⁾		0.37	⁽⁵⁾⁽⁷⁾		0.43			0.43	⁽⁷⁾		0.44			0.45			0.40
Net investment income		4.37	⁽⁵⁾		2.93			0.98			0.76			1.44			3.96

⁽¹⁾

For the six months ended June 30, 2006 (unaudited).

⁽²⁾

Per share amounts have been calculated using the average shares method.

⁽³⁾

Includes short-term capital gains.

⁽⁴⁾

⁽⁵⁾

Annualized.

⁽⁶⁾

As a result of an expense limitation, the ratio of expenses to average net assets will not exceed 0.70%.

⁽⁷⁾

Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

22 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Financial Highlights (continued)

For a share of each class of capital stock outstanding throughout each year ended December 31, unless otherwise noted:



	Class A Shares
Government Portfolio	2006⁽¹⁾⁽²⁾			2005⁽²⁾			2004			2003			2002			2001
Net Asset Value, Beginning of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Income from Operations:
Net investment income		0.020			0.027	⁽³⁾		0.009	⁽³⁾		0.006	⁽³⁾		0.012	⁽³⁾		0.036	⁽³⁾

Total Income from Operations		0.020			0.027	⁽³⁾		0.009	⁽³⁾		0.006	⁽³⁾		0.012	⁽³⁾		0.036	⁽³⁾

Less Distributions From:
Net investment income		(0.020	)		(0.027	)⁽³⁾		(0.009	)⁽³⁾		(0.006	)⁽³⁾		(0.012	)		(0.036	)

Total Distributions		(0.020	)		(0.027	)⁽³⁾		(0.009	)⁽³⁾		(0.006	)⁽³⁾		(0.012	)		(0.036	)

Net Asset Value, End of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Total Return⁽⁴⁾		2.03	%		2.69	%		0.85	%		0.62	%		1.22	%		3.67	%

Net Assets, End of Period (billions)		$2			$2			$2			$3			$3			$4

Ratios to Average Net Assets:
Gross expenses		0.56	%⁽⁵⁾		0.59	%		0.57	%		0.56	%		0.61	%		0.56	%
Net expenses⁽⁶⁾		0.55	⁽⁵⁾⁽⁷⁾		0.59			0.54	⁽⁷⁾		0.56			0.61			0.56
Net investment income		4.07	⁽⁵⁾		2.63			0.82			0.63			1.21			3.74

⁽¹⁾

For the six months ended June 30, 2006 (unaudited).

⁽²⁾

Per share amounts have been calculated using the average shares method.

⁽³⁾

Includes short-term capital gains.

⁽⁴⁾

⁽⁵⁾

Annualized.

⁽⁶⁾

As a result of an expense limitation, the ratio of expenses to average net assets will not exceed 0.70%.

⁽⁷⁾

Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 23

Financial Highlights (continued)

For a share of each class of capital stock outstanding throughout each year ended December 31, unless otherwise noted:



	Class C Shares
Government Portfolio	2006⁽¹⁾⁽²⁾			2005⁽²⁾			2004			2003			2002			2001
Net Asset Value, Beginning of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Income from Operations:
Net investment income		0.020			0.025	⁽³⁾		0.007	⁽³⁾		0.006	⁽³⁾		0.012	⁽³⁾		0.036	⁽³⁾

Total Income from Operations		0.020			0.025	⁽³⁾		0.007	⁽³⁾		0.006	⁽³⁾		0.012	⁽³⁾		0.036	⁽³⁾

Less Distributions From:
Net investment income		(0.020	)		(0.025	)⁽³⁾		(0.007	)⁽³⁾		(0.006	)⁽³⁾		(0.012	)		(0.036	)

Total Distributions		(0.020	)		(0.025	)⁽³⁾		(0.007	)⁽³⁾		(0.006	)⁽³⁾		(0.012	)		(0.036	)

Net Asset Value, End of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Total Return⁽⁴⁾		2.06	%		2.57	%		0.73	%		0.58	%		1.21	%		3.68	%

Net Assets, End of Period (000s)		$3			$3			$6			$14			$131			$123

Ratios to Average Net Assets:
Gross expenses		0.73	%⁽⁵⁾		0.79	%		0.76	%		0.61	%		0.61	%		0.63	%
Net expenses⁽⁶⁾		0.69	⁽⁵⁾⁽⁷⁾		0.65	⁽⁷⁾		0.65	⁽⁷⁾		0.61			0.61			0.63
Net investment income		3.89	⁽⁵⁾		2.49			0.69			0.65			1.21			3.53

⁽¹⁾

For the six months ended June 30, 2006 (unaudited).

⁽²⁾

Per share amounts have been calculated using the average shares method.

⁽³⁾

Includes short-term capital gains.

⁽⁴⁾

⁽⁵⁾

Annualized.

⁽⁶⁾

As a result of an expense limitation, the ratio of expenses to average net assets will not exceed 0.70%.

⁽⁷⁾

Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

24 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Financial Highlights (continued)

For a share of each class of capital stock outstanding throughout each year ended December 31, unless otherwise noted:



	Class Y Shares
Government Portfolio	2006⁽¹⁾⁽²⁾			2005⁽²⁾			2004			2003			2002			2001
Net Asset Value, Beginning of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Income from Operations:
Net investment income		0.021			0.028	⁽³⁾		0.010	⁽³⁾		0.007	⁽³⁾		0.013	⁽³⁾		0.037	⁽³⁾

Total Income from Operations		0.021			0.028	⁽³⁾		0.010	⁽³⁾		0.007	⁽³⁾		0.013	⁽³⁾		0.037	⁽³⁾

Less Distributions From:
Net investment income		(0.021	)		(0.028	)⁽³⁾		(0.010	)⁽³⁾		(0.007	)⁽³⁾		(0.013	)		(0.037	)

Total Distributions		(0.021	)		(0.028	)⁽³⁾		(0.010	)⁽³⁾		(0.007	)⁽³⁾		(0.013	)		(0.037	)

Net Asset Value, End of Period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000

Total Return⁽⁴⁾		2.08	%		2.83	%		0.98	%		0.75	%		1.35	%		3.78	%

Net Assets, End of Period (millions)		$6			$13			$3			$1			$2			$21

Ratios to Average Net Assets:
Gross expenses		0.45	%⁽⁵⁾		0.45	%		0.43	%		0.44	%		0.48	%		0.44	%
Net expenses⁽⁶⁾		0.44	⁽⁵⁾⁽⁷⁾		0.45			0.41	⁽⁷⁾		0.44			0.48			0.44
Net investment income		4.09	⁽⁵⁾		2.77			1.05			0.76			1.38			3.69

⁽¹⁾

For the six months ended June 30, 2006 (unaudited).

⁽²⁾

Per share amounts have been calculated using the average shares method.

⁽³⁾

Includes short-term capital gains.

⁽⁴⁾

⁽⁵⁾

Annualized.

⁽⁶⁾

As a result of an expense limitation, the ratio of expenses to average net assets will not exceed 0.70%.

⁽⁷⁾

Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 25

Notes to Financial Statements (unaudited)

1.	Organization and Significant Accounting Policies

The Cash Portfolio (“Cash”) and Government Portfolio (“Government”) (the “Funds”) are separate diversified investment funds of the Smith Barney Money Funds, Inc. (“Company”). The Company, a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company.

The following are significant accounting policies consistently followed by the Funds and are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ.

(a) Investment valuation. Money market instruments are valued at amortized cost, in accordance with Rule 2a-7 under the 1940 Act, which approximates market value. This method involves valuing portfolio securities at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. The Funds’ use of amortized cost is subject to their compliance with certain conditions as specified under Rule 2a-7 of the 1940 Act.

(b) Repurchase Agreements. When entering into repurchase agreements, it is the Funds’ policy that their custodian or a third party custodian take possession of the underlying collateral securities, the market value of which at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Funds may be delayed or limited.

(c) Security Transactions and Investment Income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. The cost of investments sold is determined by use of the specific identification method.

(d) Distributions to Shareholders. Distributions from net investment income on the shares of each of the Funds are declared each business day to shareholders of record, and are paid monthly. Distributions of net realized gains, if any, are declared at least annually. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.

(e) Class Accounting. Investment income, common expenses and realized/unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that class.

(f) Federal and Other Taxes. It is the Funds’ policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Funds intend to distribute substantially all of its income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Funds’ financial statements.

26 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

(g) Reclassification. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.

2.	Investment Management Agreement and Other Transactions with Affiliates

For the period of this report, Smith Barney Fund Management LLC (“SBFM”), an indirect wholly-owned subsidiary of Legg Mason, Inc. (“Legg Mason”), acted as the investment manager of the Funds. Under the investment management agreement, each Fund paid an investment management fee calculated daily and paid monthly, in accordance with the following breakpoint schedule:



Average Daily Net Assets	Annual Rate
First $1.0 billion	0.450	%

Next $1.0 billion	0.425

Next $3.0 billion	0.400

Next $5.0 billion	0.375

Over $10.0 billion	0.350

During the six months ended June 30, 2006, each class of both the Cash Portfolio and the Government Portfolio had an expense limitation in place of 0.70%. This expense limitation can be terminated at any time.

During the six months ended June 30, 2006, SBFM waived a portion of its investment management fee in the amount of $398,608 and $45,625 for the Cash Portfolio and Government Portfolio, respectively. In addition, during the six months ended June 30, 2006, the Cash Portfolio and Government Portfolio were reimbursed for expenses in the amounts of $2,595,226 and $161,230, respectively.

Citigroup Global Markets Inc. (“CGM”), PFS Investments Inc. (“PFS”), and Legg Mason Investor Services, LLC (“LMIS”), a wholly-owned broker-dealer subsidiary of Legg Mason, serve as co-distributors of the Funds.

The Funds have adopted an unfunded, non-qualified deferred compensation plan (the “Plan”) which allows non-interested directors (“Directors”) to defer the receipt of all or a portion of the directors’ fees earned until a later date specified by the Directors. The deferred fees earn a return based on notional investments selected by the Directors. The balance of the deferred fees payable may change depending upon the investment performance. Any gains or losses incurred in the deferred balances are reported in the Statements of Operations under Directors’ fees. Under the Plan, deferred fees are considered a general obligation of the Funds and any payments made pursuant to the Plan will be made from the Funds’ general assets. The Board of Directors voted to discontinue offering the Plan to its members, effective January 1, 2006. This change will have no effect on fees previously deferred. As of June 30, 2006, the Funds had accrued $624,368 and $86,416 for the Cash Portfolio and Government Portfolio respectively, as deferred compensation payable.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 27

Notes to Financial Statements (unaudited) (continued)

Certain officers and one Director of the Company are employees of Legg Mason or its affiliates and do not receive compensation from the Company.

3.	Class Specific Expenses

The Funds have adopted a Rule 12b-1 distribution plan and under that plan the Funds pay a distribution fee with respect to their Class A and Class C shares calculated at the annual rate of 0.10% of the average daily net assets of each respective class. Distribution fees are accrued daily and paid monthly.

For the six months ended June 30, 2006, class specific expenses were as follows:



Cash Portfolio	Distribution Fees		Transfer Agent Fees		Shareholder Reports Expenses
Class A	$	10,386,535	$	3,686,000	$	123,359
Class C		49		19		37
Class Y		—		13		36

Total	$	10,386,584	$	3,686,032	$	123,432


Government Portfolio
Class A	$	1,185,297	$	151,221	$	38,184
Class C		2		12		4
Class Y		—		18		—

Total	$	1,185,299	$	151,251	$	38,188

4.	Distributions to Shareholders by Class



Cash Portfolio	Six Months Ended June 30, 2006		Year Ended December 31, 2005
Net Investment Income
Class A	$	442,463,359	$	469,375,138
Class C		1,995		4,185
Class Y		2,860,293		2,989,938

Total	$	445,325,647	$	472,369,261


Government Portfolio
Net Investment Income
Class A	$	48,226,394	$	60,082,453
Class C		58		92
Class Y		184,719		376,332

Total	$	48,411,171	$	60,458,877

Net Realized Gains
Class A	$	—	$	8,583
Class C		—		0	*
Class Y		—		51

Total	$	—	$	8,634

Amount represents less than $1.

28 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

5.	Capital Shares

The Company offers multiple classes of shares within the Cash and Government Portfolios. Class A and Class Y shares can be purchased directly by investors; Class C shares can only be purchased by participants in the Smith Barney 401(k) Program.

Transactions in shares of each class, each at $1.00, were as follows:



Cash Portfolio	Six Months Ended June 30, 2006		Year Ended December 31, 2005
Class A
Shares sold	71,638,436,271		102,843,224,266
Shares issued on reinvestment	428,993,791		456,973,525
Shares repurchased	(68,603,566,873	)	(102,913,306,356	)

Net Increase	3,463,863,189		386,891,435

Class C
Shares issued on reinvestment	1,856		4,159
Shares repurchased	(120,837	)	(17,516	)

Net Decrease	(118,981	)	(13,357	)

Class Y
Shares sold	30,776,303		115,414,539
Shares issued on reinvestment	32,665		157,243
Shares repurchased	(10,145,994	)	(81,125,889	)

Net Increase	20,662,974		34,445,893


Government Portfolio
Class A
Shares sold	6,289,330,808		9,575,766,056
Shares issued on reinvestment	45,735,881		57,767,451
Shares repurchased	(5,942,563,232	)	(9,908,097,594	)

Net Increase (Decrease)	392,503,457		(274,564,087	)

Class C
Shares issued on reinvestment	57		91
Shares repurchased	(376	)	(3,152	)

Net Decrease	(319	)	(3,061	)

Class Y
Shares sold	890,908		26,384,113
Shares issued on reinvestment	184,703		376,421
Shares repurchased	(8,000,000	)	(16,300,000	)

Net Increase (Decrease)	(6,924,389	)	10,460,534

6.	Capital Loss Carryforward

As of December 31, 2005, the Cash Portfolio had a net capital loss carryforward of $18,232 which expires in 2013. This amount will be available to offset any future taxable capital gains.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 29

Notes to Financial Statements (unaudited) (continued)

7.	Regulatory Matters

On May 31, 2005, the U.S. Securities and Exchange Commission (“SEC”) issued an order in connection with the settlement of an administrative proceeding against SBFM and CGM relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds (the “Funds”).

The SEC order finds that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940 (“Advisers Act”). Specifically, the order finds that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Funds’ then-existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that, at the time, included the Fund’s investment manager and other investment advisory companies, had entered into a side letter with First Data under which CAM agreed to recommend the appointment of First Data as sub-transfer agent to the affiliated transfer agent in exchange for, among other things, a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGM. The order also finds that SBFM and CGM willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Funds’ best interests and that no viable alternatives existed. SBFM and CGM do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding.

The SEC censured SBFM and CGM and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order requires Citigroup to pay $208.1 million, including $109 million in disgorgement of profits, $19.1 million in interest, and a civil money penalty of $80 million. Approximately $24.4 million has already been paid to the Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan submitted for the approval of the SEC. At this time, there is no certainty as to how the above-described proceeds of the settlement will be distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made. The order also required that transfer agency fees received from the Funds since December 1, 2004, less certain expenses, be placed in escrow and provided that a portion of such fees might be subsequently distributed in accordance with the terms of the order. On April 3, 2006, an aggregate amount of approximately $9 million was distributed to the affected Funds.

The order required SBFM to recommend a new transfer agent contract to the Fund boards within 180 days of the entry of the order; if a Citigroup affiliate submitted a proposal to serve as transfer agent or sub-transfer agent, SBFM and CGM would have been required, at their expense, to engage an independent monitor to oversee a competitive

30 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

bidding process. On November 21, 2005, and within the specified timeframe, the Fund’s Board selected a new transfer agent for the Fund. No Citigroup affiliate submitted a proposal to serve as transfer agent. Under the order, SBFM also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004.

Although there can be no assurance, SBFM does not believe that this matter will have a material adverse effect on the Funds.

On December 1, 2005, Citigroup completed the sale of substantially all of its global asset management business, including SBFM, to Legg Mason.

8.	Legal Matters

Beginning in August 2005, five class action lawsuits alleging violations of federal securities laws and state law were filed against CGM and SBFM, (collectively, the “Defendants”) based on the May 31, 2005 settlement order issued against the Defendants by the SEC as described in Note 7. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the advisor for the Smith Barney family of funds, rescission of the Funds’ management and other contracts with SBFM, recovery of all fees paid to SBFM pursuant to such contracts, and an award of attorneys’ fees and litigation expenses.

On October 5, 2005, a motion to consolidate the five actions and any subsequently filed, related action was filed. That motion contemplates that a consolidated amended complaint alleging substantially similar causes of action will be filed in the future.

As of the date of this report, the Fund’s investment manager believes that resolution of the pending lawsuit will not have a material effect on the financial position or results of operations of the Funds or the ability of the Fund’s investment manager and its affiliates to continue to render services to the Funds under their respective contracts.

* * *

Beginning in June 2004, class action lawsuits alleging violations of the federal securities laws were filed against CGM and a number of its then affiliates, including SBFM and Salomon Brothers Asset Management Inc (“SBAM”), which were then investment adviser or manager to certain of the Funds (the “Managers”), substantially all of the mutual funds then managed by the Managers (the “Defendant Funds”), and Board Members of the Defendant Funds (collectively, the “Defendants”). The complaints alleged, among other things, that CGM created various undisclosed incentives for its brokers to sell Smith Barney and Salomon Brothers funds. In addition, according to the complaints, the Managers caused the Defendant Funds to pay excessive brokerage commissions to CGM for steering clients towards proprietary funds. The complaints also alleged that the defendants breached their fiduciary duty to the Defendant Funds by improperly charging Rule 12b-1 fees and by drawing on fund assets to make undisclosed payments of soft dollars and excessive brokerage commissions. The complaints also alleged that the Defendant Funds failed to adequately disclose certain of the allegedly wrongful conduct. The complaints sought injunctive relief and compensatory and punitive damages, rescission of the Defendant Funds’ contracts with the Managers, recovery of all fees paid to the Managers pursuant to such contracts and an award of attorneys’ fees and litigation expenses.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 31

Notes to Financial Statements (unaudited) (continued)

On December 15, 2004, a consolidated amended complaint (the “Complaint”) was filed alleging substantially similar causes of action. On May 27, 2005, all of the Defendants filed motions to dismiss the Complaint. On July 26, 2006, the court issued a decision and order (1) finding that plaintiffs lacked standing to sue on behalf of the shareholders of the Funds in which none of the plaintiffs had invested (including Smith Barney Money Funds, Inc. - Cash Portfolio and Government Portfolio) and dismissing those Funds from the case (although stating that they could be brought back into the case if standing as to them could be established), and (2) other than one stayed claim, dismissing all of the causes of action against the remaining Defendants, with prejudice, except for the cause of action under Section 36(b) of the Investment Company Act, which the court granted plaintiffs leave to repeal as a derivative claim.

9.	Other Matters

On September 16, 2005, the staff of the SEC informed SBFM and SBAM that the staff is considering recommending that the SEC institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the Investment Company Act (and related Rule 19a-1). The notification is a result of an industry wide inspection by the SEC and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds. Section 19(a) and related Rule 19a-1 of the Investment Company Act generally require funds that are making dividend and distribution payments to provide shareholders with a written statement disclosing the source of the dividends and distributions, and, in particular, the portion of the payments made from each of net investment income, undistributed net profits and/or paid-in capital. In connection with the contemplated proceedings, the staff may seek a cease and desist order and/or monetary damages from SBFM or SBAM.

Although there can be no assurance, SBFM believes that this matter is not likely to have a material adverse effect on the Fund.

10.

Subsequent Events

LMPFA will provide administrative and certain oversight services to the Funds. LMPFA will delegate to the subadviser the day-to-day portfolio management of the Funds. The Funds’ investment management fee will remain unchanged. For its services, LMPFA will pay Western Asset 70% of the net management fee that it receives from the Funds.

The Funds’ Board has also approved a number of other initiatives designed to streamline and restructure the fund complex, and has authorized seeking shareholder approval for those initiatives where shareholder approval is required. As a result, each Fund’s shareholders will be asked to elect a new Board, approve matters that will result in the Funds

32 Smith Barney Money Funds, Inc. 2006 Semi-Annual Report

Notes to Financial Statements (unaudited) (continued)

being grouped for organizational and governance purposes with other funds in the fund complex, and domicile each Fund as a Maryland business trust, with all funds operating under uniform charter documents. Each Fund’s shareholders also will be asked to approve investment matters, including standardized fundamental investment policies.

Proxy materials describing these matters are expected to be sent to shareholders later in 2006. If shareholder approval is obtained, these matters generally are expected to be implemented during the first quarter of 2007.

11.

Recent Accounting Pronouncement

During June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 48 (“FIN 48” or the “Interpretation”), Accounting for Uncertainty in Income Taxes—an interpretation of FASB statement 109. FIN 48 supplements FASB Statement 109 by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. FIN 48 prescribes a comprehensive model for how a fund should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the fund has taken or expects to take on a tax return. FIN 48 requires that the tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits. Management must be able to conclude that the tax law, regulations, case law, and other objective information regarding the technical merits sufficiently support the position’s sustainability with a likelihood of more than 50 percent. FIN 48 is effective for fiscal periods beginning after December 15, 2006, which for the Funds will be January 1, 2007. At adoption, the financial statements must be adjusted to reflect only those tax positions that are more likely than not to be sustained as of the adoption date. Management of the Funds is currently evaluating the impact that FIN 48 will have on the financial statements.

Smith Barney Money Funds, Inc. 2006 Semi-Annual Report 33

Board Approval of Management and Subadvisory Agreements (unaudited)

At a meeting held in person on June 22, 2006, the Funds’ Board, including a majority of the Board Members who are not “interested persons” of the Funds or Legg Mason Partners Fund Advisor, LLC (the “Manager”) or any sub-investment adviser or proposed sub-investment adviser as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”), approved a new management agreement (the “New Management Agreement”) between the Funds and the Manager. The Funds’ Board, including a majority of the Independent Board Members, also approved one or more new subadvisory agreements between the Manager and Western Asset Management Company (the “Subadviser”) (the “New Subadvisory Agreement”). The New Management Agreement and the New Subadvisory Agreement replaced the Funds’ prior management agreement with SBFM and were entered into in connection with an internal reorganization of the Manager’s, and the prior manager’s parent organization, Legg Mason. In approving the New Management Agreement and New Subadvisory Agreement, the Board, including the Independent Board Members, considered the factors discussed below, among other things.

The Board noted that the Manager will provide administrative and certain oversight services to the Funds, and that the Manager will delegate to the Subadviser the day-to-day portfolio management of the Funds. The Board Members reviewed the qualifications, backgrounds and responsibilities of the senior personnel that will provide oversight and general management services and the portfolio management team that would be primarily responsible for the day-to-day management of the Funds. The Board Members noted that the portfolio management team was expected to be the same as then managing the Funds.

The Board Members received and considered information regarding the nature, extent and quality of services expected to be provided to the Funds by the Manager under the New Management Agreement and by the Subadviser under the New Subadvisory Agreement. The Board Members’ evaluation of the services expected to be provided by the Manager and the Subadviser took into account the Board Members’ knowledge and familiarity gained as Fund Board Members, including as to the scope and quality of Legg Mason’s investment management and other capabilities and the quality of its administrative and other services. The Board Members considered, among other things, information and assurances provided by Legg Mason as to the operations, facilities and organization of the Manager and the Subadviser and the qualifications, backgrounds and responsibilities of their senior personnel. The Board Members further considered the financial resources available to the Manager, the Subadviser and Legg Mason. The Board Members concluded that, overall, the nature, extent and quality of services expected to be provided under the New Management Agreement and the New Subadvisory Agreement were acceptable.

The Board Members also received and considered performance information for the Funds as well as comparative information with respect to a peer group of funds (the “Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board Members were provided with a description of the methodology Lipper used to determine the similarity of the Funds to the funds included in

34 Smith Barney Money Funds, Inc.

Board Approval of Management and Subadvisory Agreements (unaudited) (continued)

the Performance Universe. The Board Members noted that they had received and discussed with management, at periodic intervals, information comparing the Funds’ performance against, among other things, their benchmarks. Based on the Board Members’ review, which included careful consideration of the factors noted above, the Board Members concluded that the performance of the Funds, under the circumstances, supported approval of the New Management Agreement and New Subadvisory Agreement.

The Board Members reviewed and considered the management fee that would be payable by the Funds to the Manager in light of the nature, extent and quality of the management services expected to be provided by the Manager, including the fee waiver and/or expense reimbursement arrangements currently in place. Additionally, the Board Members received and considered information comparing the Funds’ management fee and overall expenses with those of comparable funds in both the relevant expense group and a broader group of funds, each selected and provided by Lipper. The Board Members also reviewed and considered the subadvisory fee that would be payable by the Manager to the Subadviser in light of the nature, extent and quality of the management services expected to be provided by the Subadviser. The Board Members noted that the Manager, and not the Funds, will pay the subadvisory fee to the Subadviser. The Board Members determined that the Funds’ management fee and the Funds’ subadvisory fee were reasonable in light of the nature, extent and quality of the services expected to be provided to the Fund under the New Management Agreement and the New Subadvisory Agreement.

The Board Members received and considered a pro-forma profitability analysis of Legg Mason and its affiliates in providing services to the Funds, including information with respect to the allocation methodologies used in preparing the profitability data. The Board Members recognized that Legg Mason may realize economies of scale based on its internal reorganization and synergies of operations. The Board Members noted that it was not possible to predict with a high degree of confidence how Legg Mason’s and its affiliates’ profitability would be affected by its internal reorganization and by other factors including potential economies of scale, but that based on their review of the pro forma profitability analysis, their most recent prior review of the profitability of the predecessor manager and its affiliates from their relationship with the Funds and other factors considered, they determined that the management fee was reasonable. The Board Members noted that they expect to receive profitability information on an annual basis.

In their deliberations, the Board Members also considered, and placed significant importance on, information that had been received and conclusions that had been reached by the Board in connection with the Board’s most recent approval of the Funds’ prior management agreement, in addition to information provided in connection with the Board’s evaluation of the terms and conditions of the New Management Agreement and the New Subadvisory Agreement.

The Board Members considered Legg Mason’s advice and the advice of its counsel that the New Management Agreement and the New Subadvisory Agreement were being entered into in connection with an internal reorganization within Legg Mason, that did not involve an actual change of control or management. The Board Members further

Smith Barney Money Funds, Inc. 35

Board Approval of Management and Subadvisory Agreements (unaudited) (continued)

noted that the terms and conditions of the New Management Agreement are substantially identical to those of the Funds’ previous management agreement except for the identity of the Manager, and that the initial term of the New Management Agreement (after which it will continue in effect only if such continuance is specifically approved at least annually by the Board, including a majority of the Independent Board Members) was the same as that under the prior management agreement.

In light of all of the foregoing, the Board, including the Independent Board Members, approved the New Management Agreement and the New Subadvisory Agreement. No single factor reviewed by the Board Members was identified as the principal factor in determining whether to approve the New Management Agreement and the New Subadvisory Agreement. The Independent Board Members were advised by separate independent legal counsel throughout the process. The Independent Board Members also discussed the proposed approval of the New Management Agreement and the New Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager or Subadviser were present.

36 Smith Barney Money Funds, Inc.

Smith Barney

Money Funds, Inc.

Cash Portfolio

Government Portfolio

DIRECTORS

Lee Abraham

Jane F. Dasher

Donald R. Foley

R. Jay Gerken, CFA
Chairman

Richard E. Hanson, Jr.

Paul Hardin

Roderick C. Rasmussen

John P. Toolan

INVESTMENT MANAGER

Legg Mason Partners
Fund Advisor, LLC

SUBADVISER

Western Asset Management Company

DISTRIBUTORS

Citigroup Global Markets Inc.

Legg Mason Investor Services, LLC

PFS Investments Inc.

CUSTODIAN

State Street Bank and
Trust Company

TRANSFER AGENTS

PFPC Inc.

4400 Computer Drive

Westborough, Massachusetts

01581

Boston Financial Data
Services, Inc.

2 Heritage Drive

North Quincy, Massachusetts 02171

INDEPENDENT

REGISTERED PUBLIC

ACCOUNTING FIRM

KPMG LLP

345 Park Avenue

New York, New York 10154

This report is submitted for general information of the shareholders of Smith Barney Money Funds, Inc., but it may also be used as sales literature when preceded or accompanied by the current prospectus.

This report must be preceded or accompanied by a free prospectus. Investors should consider the Funds’ investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Funds. Please read the prospectus carefully before investing.

www.leggmason.com/InvestorServices

Member NASD, SIPC


FD0622 8/06		SR06-119

Smith Barney Money Funds, Inc.

Cash Portfolio

Government Portfolio

The Funds are separate investment funds of the Smith Barney Money Funds, Inc., a Maryland corporation.

SMITH BARNEY MONEY FUNDS, INC.

125 Broad Street

10th Floor, MF-2

New York, New York 10004

The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Funds, shareholders can call 1-800-451-2010

Information on how the Funds voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year, and a description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling 1-800-451-2010, (2) on the Funds’ website at www.leggmason.com/InvestorServices and (3) on the SEC’s website at www.sec.gov.

ITEM 2. CODE OF ETHICS.

Not Applicable.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not Applicable.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

Included herein under Item 1.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 11. CONTROLS AND PROCEDURES.

(a)

The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

ITEM 12.

EXHIBITS.

(a)

Not applicable.

(b)

Attached hereto.


Exhibit 99.CERT		Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 99.906CERT		Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.

Smith Barney Money Funds, Inc.


By:		/s/ R. Jay Gerken
		(R. Jay Gerken)
		Chief Executive Officer of
		Smith Barney Money Funds, Inc.

Date: September 7, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:		/s/ R. Jay Gerken
		(R. Jay Gerken)
		Chief Executive Officer of
		Smith Barney Money Funds, Inc.

Date: September 7, 2006


By:		/s/ Robert J. Brault
		(Robert J. Brault)
		Chief Financial Officer of
		Smith Barney Money Funds, Inc.

Date: September 7, 2006