SMITH BARNEY INCOME FUNDS - SMITH BARNEY UTILITIES FUND
Supplement dated October 14, 1997 to Prospectus dated November 28,
1996
On October 6, 1997, the Board of Trustees of Smith Barney
Income Funds, on behalf of the Smith Barney Utilities Fund (the
"Utilities Fund"), approved a proposed reorganization pursuant to
which Smith Barney Funds, Inc. - Equity Income Portfolio (the
"Equity Income Portfolio") will acquire the assets of the
Utilities Fund in exchange for shares of the Equity Income
Portfolio. Holders of the Utilities Fund's Class A, B, C, Y and Z
shares will receive Class A, B, C, Y and Z shares, respectively,
of the Equity Income Portfolio. Shareholders of the Utilities
Fund will not be charged a sales load when shares are issued to
them. Any contingent deferred sales charge ("CDSC") which is
applicable to a shareholder's investment in the Utilities Fund's
Class A, Class B or Class C shares will continue to apply after
the proposed reorganization and, in calculating the applicable
CDSC, the period during which the Utilities Fund's shareholder
held Class A, B or C shares of the Utilities Fund will be counted.
Holders of each respective class of shares would continue to have
the exchange privilege currently available to them.
As of December 1, 1997, Smith Barney Inc. will no longer be
accepting investments into the Utilities Fund.
The proposed reorganization is subject to the fulfillment of
certain conditions, including the approval of the shareholders of
the Utilities Fund. Proxy materials describing the proposed
reorganization will be mailed to shareholders of the Utilities
Fund in anticipation of a meeting of the shareholders expected to
be held in the Spring of 1998. If approved by shareholders at
that time, the transaction will occur as soon after the meeting as
practicable.
FD 01338
