Citigroup has thrown in the towel in a fight with closed-end fund shareholders over one of six funds. However, the agreement left the management change for five other funds in doubt.

The banking giant said Tuesday that it had worked out an agreement with shareholders to convert the $1.5 billion Salomon Brothers Fund into an open-end mutual fund.

Last month the bank had asked shareholders of six closed-end funds to approve a management change because of the $3.7 billion asset trade in which it sent its money management arm to Legg Mason in exchange for the Baltimore firm's broker force. That initial vote was delayed when it became apparent that Citigroup would not necessarily win the vote. In the case of the Salomon Brothers Fund, it was clear that Citigroup would lose the vote.

Two Manhattan hedge funds -- Elliott Associates LP and Elliott International LP -- had led a proxy fight opposing the change in managers and pressing instead for the fund's conversion.

The Wall Street Journal reported Tuesday that last week, Karpus Investment Management sued two of the other funds that Citigroup is seeking to send to Legg Mason. That suit involved the Salomon Brothers Municipal Partners Fund Inc. and the Salomon Brothers Municipal Partners Fund II and sought their conversion to open-end funds.  

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