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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SMITH BARNEY INCOME FUNDS
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(Name of Registrant as Specified In Its Charter)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
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SMITH BARNEY PREMIUM TOTAL RETURN FUND -- FINANCIAL CONSULTANT'S
LETTER TO SHAREHOLDERS
May 25, 1999
Dear [insert name of shareholder]:
I am writing to inform you about some important changes that have been
approved by the Board of Trustees of the Smith Barney Income Funds regarding
the management of the Smith Barney Premium Total Return Fund (the "Fund").
I want to assure you that the objective of the Fund remains constant:
current income and secondarily, capital appreciation. The Fund is designed to
help investors gain the advantages of both income-generating securities and
overall stock market participation with less downside risk. That was one of
the reasons why you originally invested in the Fund.
Over time, the financial markets have altered the Fund's areas of
opportunities. In particular, the Fund's investment adviser no longer sees a
sufficient amount of dividend-paying stocks that have been part of the Fund's
central strategy since its inception. In fact, as you may have heard on the news
or read recently in the financial press, the average dividend yield offered by
the stocks in the S&P 500 Index is now less than 1.4%. This change in the
income-generating capability of many large-company stocks has led the Fund's
investment adviser to carefully reevaluate the Fund's core investment strategy
over the past several quarters.
Because of this and other important considerations, the Board of Trustees of
Smith Barney Income Funds voted to appoint Salomon Brothers Asset Management
as the Fund's interim sub-adviser for a period of up to 120 days. In addition,
the Trustees approved, and are presenting to shareholders, a proposal that
Salomon Brothers Asset Management continue as the Fund's sub-adviser after the
interim period pursuant to a new sub-advisory agreement that would run for two
years from the date of shareholder approval and from year to year thereafter.
Boston Partners Asset Management, L.P., the Fund's previous sub-adviser is no
longer associated with the Fund. Ross S. Margolies, a Managing Director and
Chief Investment Officer of Salomon Brothers Asset Management, has been
designated by Salomon Brothers Asset Management to serve as the Fund's interim
portfolio manager, effective April 26, 1999.
A shareholder meeting regarding the proposed change in the Fund's sub-
adviser is scheduled to take place on or about Wednesday, June 30, 1999. I ask
that you take a few moments to review the proxy materials mailed to you
separately, and if you do not plan to attend the shareholder meeting, please
complete the proxy card and return it as soon as possible in the postage-paid
envelope provided therein.
We believe that the proposed changes are appropriate for the Fund and
represent a meaningful refocusing of the Fund's direction. We consider Ross S.
Margolies as one of the premier managers in the Citigroup family of asset
management businesses.
As noted previously, the Fund will continue to be managed to achieve its
stated objective of income and, secondarily, capital appreciation. Ross S.
Margolies and his portfolio management team bring substantial talent and
capability to the Fund. This means that you should have the added confidence
that risk and reward will be balanced to provide you with competitive total
returns in the future.
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And while no guarantees can be given, I think you will agree with me that
these proposed Fund changes bode well for its future. Thank you for taking the
time to read this letter. I look forward to helping you pursue your financial
goals in the years ahead.
Sincerely,
Smith Barney Financial Consultant
