Notes to Financial Statements
1. Significant Accounting Policies
The Smith Barney Total Return Bond Fund ("Fund"), a separate investment fund of the Smith Barney Income
Funds ("Trust"), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust consists of this Fund and seven
other separate investment funds: Smith Barney Diversified Strategic Income Fund, Smith Barney Exchange
Reserve Fund, Smith Barney Convertible Fund, Smith Barney High Income Fund, Smith Barney Municipal High
Income Fund, Smith Barney Premium Total Return Fund and Smith Barney Balanced Fund. The financial
statements and financial highlights for the other funds are presented in separate shareholder reports.
The significant accounting policies consistently followed by the Fund are: (a) security transactions are accounted
for on trade date; (b) securities traded on national securities markets are valued at the closing price on such
markets; securities for which no sales price were reported are valued at bid price, or in the absence of a recent
bid price, at the bid equivalent obtained from one or more of the major market makers; (c) securities for which
market quotations are not available will be valued in good faith at fair value by or under the direction of the Board
of Trustees; (d) securities that have a maturity of more than 60 days are valued at prices based on market
quotations for securities of similar type, yield and maturity; (e) securities maturing within 60 days are valued at
cost plus accreted discount, or minus amortized premium, which approximates value; (f) dividend income is
recorded on ex-dividend date and interest income is recorded on an accrual basis; (g) gains or losses on the sale
of securities are calculated by using the specific identification method; (h) dividends and distributions to
shareholders are recorded on the ex-dividend date; (i) direct expenses are charged to each class; management