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 811-3275
Smith Barney Investment Funds Inc.
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Christina T. Sydor, Esq.
300 First Stamford Place
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: April 30
Date of reporting period: April 30, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The Annual Report to Stockholders is filed herewith.
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SMITH BARNEY
HANSBERGER
GLOBAL VALUE FUND
- --------------------------------------------------------------------------------
CLASSIC SERIES | ANNUAL REPORT | APRIL 30, 2003
[LOGO]
[LOGO] Smith Barney HANSBERGER
Mutual Funds GLOBAL
INVESTORS, INC.
Your Serious Money. Professionally Managed/R/
[LOGO] Your Serious Money. Professionally Mangaed./R/ is a registered service
mark of Citigroup Global Markets Inc.
---------------------------------------------------------------
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
---------------------------------------------------------------
Smith Barney
Hansberger Global Value Fund
The Smith Barney Hansberger Global Value Fund seeks long-term capital growth.
It seeks to achieve this objective by investing primarily in the common stocks
and other equity securities of U.S. and foreign companies, including those of
emerging market issuers.
WHAT'S INSIDE
Letter From the Chairman.......................... 1
Manager Overview.................................. 2
Fund Performance.................................. 4
Fund at a Glance.................................. 5
Schedule of Investments........................... 6
Statement of Assets and Liabilities............... 9
Statement of Operations........................... 10
Statements of Changes in Net Assets............... 11
Notes to Financial Statements..................... 12
Financial Highlights.............................. 17
Independent Auditors' Report...................... 19
Additional Information............................ 20
Tax Information................................... 22
LETTER FROM THE CHAIRMAN
[PHOTO]
R. Jay Gerken
R. JAY GERKEN
Chairman, President and Chief Executive Officer
Dear Shareholder,
The philosopher Bertrand Russell famously remarked that, "Change is one thing,
progress is another." You will notice in the following pages that we have begun
to implement some changes to your shareholder report. Our aim is to make
meaningful improvements in reporting on the management of your Fund and its
performance, not just to enact change for change's sake. Please bear with us
during this transition period.
We know that you have questions about Fund managers' decisions and plans, and
we want to be sure that you have easy access to the information you need.
Keeping investors informed is, and always will be, one of my top priorities as
Chairman of your Fund. To that end, we encourage you to go to our website:
www.smithbarneymutualfunds.com* where you can find performance and distribution
information as well as portfolio-specific insight on your Fund.
I invite you to read this report in full. Please take the opportunity to talk
to your financial adviser about this report or any other questions or concerns
you have about your Fund and your financial future. As always, thank you for
entrusting your assets to us. We look forward to helping you continue to meet
your financial goals. Please read on to learn more about your Fund's
performance and the Manager's strategy.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken
Chairman, President and Chief Executive Officer
May 15, 2003
- --------
*Matters referenced are not incorporated by reference unless otherwise stated.
1 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
MANAGER OVERVIEW
[PHOTO]
Thomas L. Hansberger
THOMAS L. HANSBERGER, CFA, CIC
Chairman and Chief Executive Officer, Hansberger Global Investors, Inc.
Performance Review
For the 12 months ended April 30, 2003, Class A shares of the Smith Barney
Hansberger Global Value Fund ("Fund"), without sales charges, returned -19.71%.
The Fund performed worse than its unmanaged benchmark the MSCI ACWI (All
Country World Index) Free Index,/i/ which returned -14.17% for the same period.
It also underperformed its Lipper peer group of global funds, which returned
- -16.75% for the same period./1/ The Fund's underperformance was mainly
attributable to its underweight of the U.S. issuers and its overweight of
European issuers.
Overview
The period proved to be another tough one for global equities. For the period,
the MSCI ACWI Free Index marked the third consecutive year of negative returns
for global equities. During this period, a number of issues plagued global
equity markets including: rising tensions and an eventual armed conflict
between U.S.-led coalition forces and Iraq; concerns about North Korea and its
nuclear capability; the sudden and rapid spread of Severe Acute Respiratory
Syndrome ("SARS"); ongoing revelations of misdeeds by a number of corporations
and their officers; and other concerns related to corporate governance. Each of
these issues had a profoundly negative impact on business, consumer and
investor confidence and on an already fragile global economy. The end result
was a significant and broad-based decline in global stock markets that left
many investors without effective sanctuary.
To put the broad nature of this decline into perspective, consider that each of
the six geographic regions/ii/ that are represented in the benchmark index
posted negative returns during this period, with five of the six posting
double-digit losses. Moreover, all 10 of the global economic sectors/iii/
represented in the benchmark posted negative returns during the period, with
nine of those posting double-digit losses.
Over the period, our disciplined, bottom-up investment process has led us to
overweight allocations vis-a-vis the benchmark to the Pacific region excluding
Japan, Europe excluding the United Kingdom and Emerging Market regions, and an
underweight allocation to the North American region. Many of the Fund's
investments in the Pacific and Emerging Market regions were battered during the
first quarter of 2003 following the revelation of the SARS outbreak. With
respect to Europe and the U.S., we have been wrong. Despite valuation levels
that we believe are some 20%-25% lower than those of the U.S. market, European
stocks continued to underperform U.S. equities last year. Clearly, being
underweight the U.S. market and overweight Europe negatively impacted
performance this past year.
Late 2002 additions in battered retail stocks contributed positively to returns
as stocks such as Best Buy Co., Inc., The Home Depot, Inc. and The Gap, Inc.
have recovered sharply in early 2003. The other two top contributors were
Thailand-based Advanced Info Service Public Co. Ltd. (telecommunications) and
Russia-based Surgutneftegaz (energy). Investments that detracted from
performance include The AES Corp. (utilities), Alstom (industrials) and
Electronic Data Systems Corp. ("EDS") (information technology). The Fund sold
AES and Alstom during 2002 while it still maintains an investment in EDS.
- --------
/1/Lipper is a major independent mutual-fund tracking organization. Average
annual returns are based on the 12-month period ended April 30, 2003,
calculated among 315 funds in the global funds category with reinvestment of
dividends and capital gains excluding sales charges.
2 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
Over the past three years, many companies, good and bad, have seen their share
prices collapse. In accordance with the Fund's investment objectives, we have
used this generally negative period for stocks as an opportunity to invest in a
roster of companies that were trading at a discount to our assessment of their
intrinsic value at the time of purchase. Importantly, many of these companies
are leaders in their respective industries, sectors or geographical regions.
Thank you for your investment in the Smith Barney Hansberger Global Value Fund.
We look forward to continuing to help you meet your investment objectives.
Sincerely,
/s/ Thomas L. Hansberger
Thomas L. Hansberger, CFA, CIC
Chairman and Chief Executive Officer, Hansberger Global Investors, Inc.
May 15, 2003
The information provided in this letter by the Subadviser 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 Manager.
Portfolio holdings and breakdowns are as of April 30, 2003 and are subject to
change. Please refer to pages 6 through 8 for a list and percentage breakdown
of the Fund's holdings.
- --------
/i/The MSCI ACWI Free Index represents the performance of 47 markets in both
the developed and the emerging markets in Africa, Asia, Australia, Europe,
North America and South America. Please note that an investor cannot
invest directly in an index.
iiRegions followed are North America, Europe Ex UK, United Kingdom, Japan,
Pacific Ex Japan and Emerging Markets.
/iii/Sectors are those included in the MSCI/S&P Global Industry Classification.
3 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
AVERAGE ANNUAL TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
-----------------------------------
Class A Class B Class L Class Y
- ------------------------------------------------------------------
Twelve Months Ended 4/30/03 (19.71)% (20.36)% (20.28)% (19.30)%
- -----------------------------------------------------------------
Five Years Ended 4/30/03 (7.32) (8.04) (8.04) (6.91)
- -----------------------------------------------------------------
Inception* through 4/30/03 (4.52) (5.25) (5.25) (6.05)
- -----------------------------------------------------------------
With Sales Charges/(2)/
-----------------------------------
Class A Class B Class L Class Y
- ------------------------------------------------------------------
Twelve Months Ended 4/30/03 (23.72)% (24.34)% (21.89)% (19.30)%
- -----------------------------------------------------------------
Five Years Ended 4/30/03 (8.26) (8.22) (8.22) (6.91)
- -----------------------------------------------------------------
Inception* through 4/30/03 (5.43) (5.25) (5.43) (6.05)
- -----------------------------------------------------------------
CUMULATIVE TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
- -------------------------------------------------------------------
Class A (Inception* through 4/30/03) (21.95)%
- -----------------------------------------------------------------
Class B (Inception* through 4/30/03) (25.11)
- -----------------------------------------------------------------
Class L (Inception* through 4/30/03) (25.11)
- -----------------------------------------------------------------
Class Y (Inception* through 4/30/03) (27.46)
- -----------------------------------------------------------------
(1)Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
(2)Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from initial purchase.
Thereafter, this CDSC declines by 1.00% per year until no CDSC is incurred.
Class L shares also reflect the deduction of a 1.00% CDSC, which applies if
shares are redeemed within the first year of purchase.
+ The returns shown do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
* The inception date for Class A, B and L shares is December 19, 1997 and the
inception date for Class Y shares is March 10, 1998.
4 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND AT A GLANCE (UNAUDITED)
Value of $10,000 Invested in Class A, B and L Shares of the
Smith Barney Hansberger Global Value Fund vs. MSCI ACWI (All Country World
Index) Free Index+
- --------------------------------------------------------------------------------
December 1997 -- April 2003
[CHART]
Smith Barney Smith Barney Smith Barney
Hansberger Hansberger Hansberger
Global Value Global Value Global Value MSCI
Fund -- Fund -- Fund -- ACWI
Class A Class B Class L Free
Shares Shares Shares Index
------------ ------------- ------------- ---------
Dec 19, 1997 $ 9,500 $10,000 $ 9,896 $10,000
Apr 1998 10,843 11,387 11,268 11,492
Apr 1999 10,131 10,559 10,449 13,226
Apr 2000 11,119 11,494 11,366 14,946
Apr 2001 9,996 10,250 10,144 12,508
Apr 2002 9,235 9,404 9,297 10,937
Apr 30, 2003 7,415 7,489 7,411 9,387
+Hypothetical illustration of $10,000 invested in Class A, B and L shares at
inception on December 19, 1997, assuming deduction of the maximum initial
sales charges of 5.00% and 1.00% for Class A and L shares, respectively. It
also assumes the deduction of the maximum 5.00% and 1.00% CDSCs for Class B
and L shares, respectively, and the reinvestment of dividends and capital
gains, if any, at net asset value through April 30, 2003. The MSCI ACWI Free
Index includes 47 markets, of which emerging markets represent approximately
9.5% and excludes shares which are not readily purchased by non-local
investors. The Index is unmanaged and is not subject to the same management
and trading expenses as a mutual fund. The performance of the Fund's other
class may be greater or less than the shares' performance indicated on this
chart, depending on whether greater or lesser sales charges and fees were
incurred by shareholders investing in the other class. The returns shown do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
All figures represent past performance and are not a guarantee of future
results. The performance data represents past performance including the
investment return and principal value of an investment, which will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost.
5 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
SCHEDULE OF INVESTMENTS APRIL 30, 2003
SHARES SECURITY VALUE
- ----------------------------------------------------------------------------------
STOCK -- 97.6%
Brazil -- 1.1%
54,000 Companhia Vale do Rio Doce ADR $ 1,425,600
- -------------------------------------------------------------------------------
France -- 8.8%
104,000 Arcelor+(a) 1,179,104
28,000 Aventis S.A.+ 1,424,773
153,000 Axa+ 2,328,254
145,000 European Aeronautic Defence and Space Co.+ 1,350,498
10,000 Groupe Danone+ 1,417,751
100,000 Suez S.A.+ 1,631,309
20,000 Total Fina Elf S.A. 2,627,536
- -------------------------------------------------------------------------------
11,959,225
- -------------------------------------------------------------------------------
Germany -- 2.7%
32,000 E.On AG+ 1,534,571
22,000 Linde AG+ 830,436
35,000 Volkswagen AG+ 1,232,706
- -------------------------------------------------------------------------------
3,597,713
- -------------------------------------------------------------------------------
Hong Kong -- 4.6%
285,581 HSBC Holdings PLC+ 3,121,634
422,600 Hutchinson Whampoa Ltd. 2,351,676
260,000 Wing Hang Bank Ltd. 816,766
- -------------------------------------------------------------------------------
6,290,076
- -------------------------------------------------------------------------------
Italy -- 1.3%
125,000 ENI S.p.A.+ 1,784,768
- -------------------------------------------------------------------------------
Japan -- 6.4%
35,000 CANON INC. 1,416,695
16,000 Mabuchi Motor Co., Ltd. 1,197,178
550,000 Mazda Motor Corp.+ 969,936
79,000 Omron Corp. 1,273,766
43,000 Promise Co., Ltd. 1,408,297
11,000 Rohm Co. Ltd. 1,135,287
50,000 Sony Corp. 1,217,669
- -------------------------------------------------------------------------------
8,618,828
- -------------------------------------------------------------------------------
Mexico -- 2.1%
60,055 Cemex S.A. de C.V. ADR+ 1,372,257
49,000 Telefonos de Mexico S.A. de C.V. ADR, Class L Shares 1,480,290
- -------------------------------------------------------------------------------
2,852,547
- -------------------------------------------------------------------------------
The Netherlands -- 4.4%
60,000 Akzo Nobel N.V. 1,336,354
60,000 DSM N.V. 2,629,772
119,000 ING Groep N.V. 1,935,935
- -------------------------------------------------------------------------------
5,902,061
- -------------------------------------------------------------------------------
Russia -- 0.1%
5,331 Surgutneftegaz ADR+ 104,221
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
6 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
SHARES SECURITY VALUE
- -----------------------------------------------------------------
Singapore -- 3.0%
390,000 DBS Group Holdings Ltd. $ 1,912,573
406,000 Singapore Airlines Ltd. 2,162,679
- -----------------------------------------------------------------
4,075,252
- -----------------------------------------------------------------
South Korea -- 3.1%
52,000 Kookmin Bank ADR 1,432,600
37,000 POSCO ADR 760,350
16,000 Samsung Electronics Co., Ltd. GDR (b) 2,000,000
- -----------------------------------------------------------------
4,192,950
- -----------------------------------------------------------------
Switzerland -- 5.3%
11,800 Nestle S.A., Registered B Shares+ 2,408,341
39,000 Novartis AG+ 1,540,137
25,000 Roche Holding AG 1,592,545
5,200 Swisscom AG 1,610,186
- -----------------------------------------------------------------
7,151,209
- -----------------------------------------------------------------
Thailand -- 1.5%
1,995,000 Advanced Info Service Public Co. Ltd. 2,095,833
- -----------------------------------------------------------------
United Kingdom -- 12.1%
194,000 Amersham PLC 1,395,631
244,000 Amvescap PLC 1,326,986
77,072 GlaxoSmithKline PLC 1,545,937
153,435 GUS PLC 1,419,181
871,870 Kingfisher PLC 3,409,795
194,683 Lloyds TSB Group PLC 1,281,432
205,819 Standard Chartered PLC 2,297,939
237,000 Unilever PLC 2,331,423
690,000 Vodafone Group PLC 1,363,056
- -----------------------------------------------------------------
16,371,380
- -----------------------------------------------------------------
United States -- 41.1%
91,000 Albertson's Inc. 1,807,260
37,000 American International Group, Inc. 2,144,150
82,000 Applera Corp. -- Applied Biosystems Group 1,437,460
365,000 AT&T Wireless Services Inc. (a) 2,357,900
27,500 Bank of America Corp. 2,036,375
80,500 Baxter International Inc. 1,851,500
65,000 Best Buy Co., Inc. (a) 2,247,700
50,000 Caterpillar, Inc. 2,630,000
55,000 Deere & Co. 2,421,650
113,000 Electronic Data Systems Corp. 2,050,950
167,000 The Gap, Inc. 2,777,210
97,000 The Home Depot, Inc. 2,728,610
34,000 International Business Machines Corp. 2,886,600
99,200 J.P. Morgan Chase & Co. 2,911,520
104,000 McDonald's Corp. 1,778,400
50,000 Merrill Lynch & Co., Inc. 2,052,500
83,000 MetLife, Inc. 2,384,590
80,000 Microsoft Corp. 2,045,600
85,400 Pfizer Inc. 2,626,050
50,000 Schlumberger Ltd. 2,096,500
144,000 Teradyne, Inc. (a) 1,670,400
See Notes to Financial Statements.
7 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
SHARES SECURITY VALUE
- -------------------------------------------------------------------------------------------------------------
United States -- 41.1% (continued)
250,000 Unisys Corp. (a) $ 2,600,000
43,000 Verizon Communications Inc. 1,607,340
125,000 The Walt Disney Co. 2,332,500
51,600 Wyeth 2,246,148
- -------------------------------------------------------------------------------------------------------------
55,728,913
- -------------------------------------------------------------------------------------------------------------
TOTAL STOCK
(Cost -- $141,116,431) 132,150,576
- -------------------------------------------------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
- -------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES -- 0.0%
$ 1,261 TIMCO Aviation Services, Inc., Sr. Sub. Notes, 8.000% due 1/2/07 (c)
(Cost -- $0) 7
- -------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.4%
3,287,000 State Street Bank & Trust Co., 1.200% due 5/1/03; Proceeds at maturity -- $3,287,110;
(Fully collateralized by U.S. Treasury Notes, 1.625% due 4/30/05;
Market value -- $3,355,000) (Cost -- $3,287,000) 3,287,000
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $144,403,431*) $135,437,583
- -------------------------------------------------------------------------------------------------------------
+All or a portion of this security is on loan (See Note 6).
(a)Non-income producing security.
(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.
(c)Upon maturity notes will convert to common stock.
* Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in this schedule:
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
LOANED SECURITIES COLLATERAL APRIL 30, 2003
FACE
AMOUNT SECURITY VALUE
- ---------------------------------------------------------------------------------------
$21,560,715 State Street Securities Navigator Lending Trust Prime Portfolio
(Cost -- $21,560,715) $21,560,715
- ---------------------------------------------------------------------------------------
See Notes to Financial Statements.
8 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2003
ASSETS:
Investments, at value (Cost -- $144,403,431) $135,437,583
Loaned securities collateral, at value (Cost --
$21,560,715) (Note 6) 21,560,715
Foreign currency, at value (Cost -- $2,900) 2,948
Cash 7
Dividends and interest receivable 1,088,299
Receivable for Fund shares sold 1,099
- -------------------------------------------------------------------------
Total Assets 158,090,651
- -------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 6) 21,560,715
Management fee payable 141,178
Distribution fees payable 5,181
Payable for open forward foreign currency contracts (Note
4) 66
Payable for Fund shares purchased 20
Other liabilities 69,504
Accrued expenses 68,046
- -------------------------------------------------------------------------
Total Liabilities 21,844,710
- -------------------------------------------------------------------------
Total Net Assets $136,245,941
- -------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 15,705
Capital paid in excess of par value 199,253,704
Undistributed net investment income 633,500
Accumulated net realized loss from security transactions (54,688,473)
Net unrealized depreciation of investments and foreign
currencies (8,968,495)
- -------------------------------------------------------------------------
Total Net Assets $136,245,941
- -------------------------------------------------------------------------
Shares Outstanding:
Class A 608,723
- --------------------------------------------------------------------------
Class B 1,039,651
- --------------------------------------------------------------------------
Class L 375,719
- --------------------------------------------------------------------------
Class Y 13,680,707
- --------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $8.67
- --------------------------------------------------------------------------
Class B * $8.49
- --------------------------------------------------------------------------
Class L ** $8.49
- --------------------------------------------------------------------------
Class Y (and redemption price) $8.69
- --------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value
per share) $9.13
- --------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value
per share) $8.58
- -------------------------------------------------------------------------
*Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from the initial purchase (See Note 2).
**Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase (See Note 2).
See Notes to Financial Statements.
9 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to Shareholders
STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2003
INVESTMENT INCOME:
Dividends $ 3,350,599
Interest 104,778
Less: Foreign withholding tax (264,069)
- -------------------------------------------------------------------------
Total Investment Income 3,191,308
- -------------------------------------------------------------------------
EXPENSES:
Management fee (Note 2) 1,363,308
Distribution fees (Note 9) 154,762
Custody 56,246
Audit and legal 33,789
Shareholder communications (Note 9) 29,035
Registration fees 26,360
Shareholder servicing fees (Note 9) 25,079
Directors' fees 12,206
Other 7,235
- -------------------------------------------------------------------------
Total Expenses 1,708,020
- -------------------------------------------------------------------------
Net Investment Income 1,483,288
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES (NOTES 3 AND 4):
Realized Loss From:
Security transactions (excluding short-term securities) (23,149,556)
Foreign currency transactions (136,035)
- -------------------------------------------------------------------------
Net Realized Loss (23,285,591)
- -------------------------------------------------------------------------
Change in Net Unrealized Depreciation From:
Security transactions (12,894,906)
Foreign currency transactions 58,074
- -------------------------------------------------------------------------
Increase in Net Unrealized Depreciation (12,836,832)
- -------------------------------------------------------------------------
Net Loss on Investments and Foreign Currencies (36,122,423)
- -------------------------------------------------------------------------
Decrease in Net Assets From Operations $(34,639,135)
- -------------------------------------------------------------------------
See Notes to Financial Statements.
10 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED APRIL 30,
2003 2002
- ------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,483,288 $ 1,437,404
Net realized loss (23,285,591) (6,188,911)
Increase in net unrealized depreciation (12,836,832) (10,828,303)
- ------------------------------------------------------------------------------
Decrease in Net Assets From Operations (34,639,135) (15,579,810)
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 10):
Net investment income (1,129,964) (1,399,646)
- ------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to
Shareholders (1,129,964) (1,399,646)
- ------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 11):
Net proceeds from sale of shares 4,720,981 24,128,595
Net asset value of shares issued for
reinvestment of dividends 29,767 22,284
Cost of shares reacquired (18,445,247) (39,108,212)
- ------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share
Transactions (13,694,499) (14,957,333)
- ------------------------------------------------------------------------------
Decrease in Net Assets (49,463,598) (31,936,789)
NET ASSETS:
Beginning of year 185,709,539 217,646,328
- ------------------------------------------------------------------------------
End of year* $136,245,941 $185,709,539
- ------------------------------------------------------------------------------
* Includes undistributed net investment income of: $633,500 $416,211
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
11 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Smith Barney Hansberger Global Value Fund ("Fund"), a separate investment
fund of the Smith Barney Investment Funds Inc. ("Series"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Series
consists of this Fund and eight other separate investment funds: Smith Barney
Investment Grade Bond Fund, Smith Barney Premier Selections Large Cap Fund,
Smith Barney Premier Selections All Cap Growth Fund, Smith Barney Premier
Selections Global Growth Fund, Smith Barney Small Cap Growth Fund, Smith Barney
Small Cap Value Fund, Smith Barney Government Securities Fund and Smith Barney
Group Spectrum 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 prices on the primary
exchange on which they are traded; securities listed or traded on certain
foreign exchanges or other markets whose operations are similar to the U.S.
over-the-counter market (including securities listed on exchanges where the
primary market is believed to be over-the-counter) and securities for which no
sales price was reported on that date are valued at the mean between the bid
and asked price; securities listed on the NASDAQ National Market System for
which market quotations are available are valued at the official closing price
or, if there is no official closing price on that day, at the last sale price;
securities which are listed or traded on more than one exchange or market are
valued at the quotations on the exchange or market determined to be the primary
market for such securities; (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 Directors; (d) securities maturing within 60 days are valued at
cost plus accreted discount, or minus amortized premium, which approximates
value; (e) gains or losses on the sale of securities are calculated by using
the specific identification method; (f ) interest income, adjusted for
amortization of premium and accretion of discount, is recorded on an accrual
basis; (g) dividend income is recorded on the ex-dividend date; foreign
dividend income is recorded on the ex-dividend date or as soon as practical
after the Fund determines the existence of a dividend declaration after
exercising reasonable due diligence; (h) direct expenses are charged to each
class; management fee and general Fund expenses are allocated on the basis of
relative net assets by class; (i) dividends and distributions to shareholders
are recorded on the ex-dividend date; the Fund distributes dividends and
capital gains, if any, annually; (j) the accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in foreign
currencies are translated into U.S. dollars on the date of valuation. Purchases
and sales of securities, and income and expenses are translated at the rate of
exchange quoted on the respective date that such transactions are recorded.
Differences between income or expense amounts recorded and collected or paid
are adjusted when reported by the custodian; (k) the character of income and
gains to be distributed are determined in accordance with income tax
regulations which may differ from accounting principles generally accepted in
the United States of America; (l) the Fund intends to comply with the
applicable provisions of the Internal Revenue Code of 1986, as amended,
pertaining to regulated investment companies and to make distributions of
taxable income sufficient to relieve the Fund from substantially all Federal
income and excise taxes; and (m) 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.
In addition, the Fund may enter into forward exchange contracts in order to
hedge against foreign currency risk. These contracts are marked-to-market daily
by recognizing the difference between the contract exchange rate and the
current market rate as an unrealized gain or loss. Realized gains or losses are
recognized when contracts are settled.
12 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. Management Agreement and Other Transactions
Smith Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary
of Citigroup Inc. ("Citigroup"), acts as investment manager of the Fund. The
Fund pays SBFM a management fee calculated at an annual rate of 0.95% of the
average daily net assets. This fee is calculated daily and paid monthly.
SBFM has entered into a subadvisory agreement with Hansberger Global Investors,
Inc. ("Hansberger"). Pursuant to the subadvisory agreement, Hansberger is
responsible for the day-to-day portfolio operations and investment decisions of
the Fund. SBFM pays Hansberger a fee of 0.50% of the average daily net assets
of the Fund for the services Hansberger provides as subadviser.
Citicorp Trust Bank, fsb. ("CTB"), formerly known as Travelers Bank & Trust,
fsb., another subsidiary of Citigroup, acts as the Fund's transfer agent. PFPC
Global Fund Services ("PFPC") acts as the Fund's sub-transfer agent. CTB
receives account fees and asset-based fees that vary according to the size and
type of account. PFPC is responsible for shareholder recordkeeping and
financial processing for all shareholder accounts and is paid by CTB. For the
year ended April 30, 2003, the Fund paid transfer agent fees of $20,061 to CTB.
Citigroup Global Markets Inc. ("CGM"), formerly known as Salomon Smith Barney
Inc., another indirect wholly-owned subsidiary of Citigroup, acts as the Fund's
distributor. In addition, CGM and certain other broker-dealers continue to sell
Fund shares to the public as members of the selling group. For the year ended
April 30, 2003, CGM and its affiliates did not receive any brokerage
commissions.
There are maximum initial sales charges of 5.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
5.00% on Class B shares, which applies if redemption occurs within one year
from initial purchase. Thereafter this CDSC declines by 1.00% per year until no
CDSC is incurred. Class L shares have a 1.00% CDSC, which applies if redemption
occurs within the first year of purchase. There is also a CDSC of 1.00% on
Class A shares, which applies if redemption occurs within the first year of
purchase. This CDSC only applies to those purchases of Class A shares, which,
when combined with current holdings of Class A shares, equal or exceed
$1,000,000 in the aggregate. These purchases do not incur an initial sales
charge.
For the year ended April 30, 2003, CDSC's paid to CGM and sales charges
received by CGM were approximately:
Class A Class B Class L
- -----------------------------------------------------------
CDSCs -- $13,000 --
- -----------------------------------------------------------
Sales charges $4,000 -- $2,000
- -----------------------------------------------------------
All officers and one Director of the Series are employees of Citigroup or its
affiliates.
3. Investments
During the year ended April 30, 2003, the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
securities, but excluding short-term securities) were as follows:
- ----------------------------------------------
Purchases $50,578,817
- ----------------------------------------------
Sales 64,099,400
- ----------------------------------------------
13 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At April 30, 2003, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
- ------------------------------------------------
Gross unrealized
appreciation $ 7,821,179
Gross unrealized depreciation (16,787,027)
- ------------------------------------------------
Net unrealized depreciation $ (8,965,848)
- ------------------------------------------------
4. Forward Foreign Currency Contracts
A forward foreign currency contract is an agreement between two parties to buy
and sell a currency at a set price on a future date. The contract is
marked-to-market daily and the change in value is recorded by the Fund as an
unrealized gain or loss. When a forward foreign currency contract is
extinguished, through either delivery or offset by entering into another
forward foreign currency contract, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value of the contract at the time it was extinguished or offset.
The Fund bears the market risk that arises from changes in foreign currency
exchange rates and the credit risk should a counterparty be unable to meet the
terms of such contracts.
At April 30, 2003, the Fund had open forward foreign currency contracts as
described below. The unrealized loss on the open contracts reflected in the
accompanying financial statements were as follows:
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Loss
------------------------------------------------------
To Sell:
Euro 2,637 $2,948 5/2/03 $(66)
------------------------------------------------------
5. Concentration of Risk
The Fund's investments in foreign securities may involve risks not present in
domestic investments.
Since securities may be denominated in a foreign currency and may require
settlement in foreign currencies and pay interest or dividends in foreign
currencies, changes in the relationship of these foreign currencies to the U.S.
dollar can significantly affect the value of the investments and earnings of
the Fund. Foreign investments may also subject the Fund to foreign government
exchange restrictions, expropriation, taxation or other political, social or
economic developments, all of which could affect the market and/or credit risk
of the investments.
6. Lending of Portfolio Securities
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations. Fees earned by the Fund on securities lending are recorded as
interest income. Loans of securities by the Fund are collateralized by cash,
U.S. government securities or high quality money market instruments that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities, plus a margin depending on the type of securities
loaned. The custodian establishes and maintains the collateral in a segregated
account. The Fund maintains exposure for the risk of any losses in the
investment of amounts received as collateral.
At April 30, 2003, the Fund loaned stocks having a market value of $20,832,191.
The Fund received cash collateral amounting to $21,560,715, which was invested
into the State Street Navigator Securities Lending Trust Prime Portfolio.
Income earned by the Fund from securities lending for the year ended April 30,
2003 was $43,663.
14 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. Capital Loss Carryforward
At April 30, 2003, the Fund had, for Federal income tax purposes, approximately
$48,073,000 of unused capital loss carryforwards available to offset future
capital gains, if any. To the extent that these carryforward losses are used to
offset capital gains, it is probable that the gains so offset will not be
distributed. The amount and date of expiration of the carryforward losses for
the Fund is indicated below. Expiration occurs on April 30 of the year
indicated:
2006 2007 2008 2010 2011
- ------------------------------------------------------------------------------------------
Carryforward
Amounts $547,000 $1,490,000 $3,985,000 $25,517,000 $16,534,000
- -----------------------------------------------------------------------------------------
In addition, the Fund had $6,615,874 of capital losses realized after October
31, 2002, which were deferred for tax purposes to the first day of the
following fiscal year.
8. Income Tax Information and Distributions to Shareholders
At April 30, 2003, the tax basis components of distributable earnings were:
- ------------------------------------------------
Undistributed ordinary income $ 660,543
- ------------------------------------------------
Accumulated capital losses (48,072,599)
- ------------------------------------------------
Unrealized depreciation (8,968,429)
- ------------------------------------------------
The difference between book basis and tax basis unrealized depreciation is
attributable primarily to mark to market of foreign currency contracts.
The tax character of distributions paid during the year ended April 30, 2003
was:
- ---------------------------------------------
Ordinary income $1,129,964
- ---------------------------------------------
9. Class Specific Expenses
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
its Class A, B and L shares calculated at the annual rate of 0.25% of the
average daily net assets of each respective class. The Fund also pays a
distribution fee with respect to its Class B and L shares calculated at the
annual rate of 0.75% of the average daily net assets of each class,
respectively. For the year ended April 30, 2003, total Distribution Plan fees
incurred, which are accrued daily and paid monthly, were as follows:
Class A Class B Class L
- --------------------------------------------------------------------
Distribution Plan Fees $14,806 $103,761 $36,195
- --------------------------------------------------------------------
For the year ended April 30, 2003, total Shareholder
Servicing fees were as follows:
Class A Class B Class L Class Y
- --------------------------------------------------------------------
Shareholder Servicing Fees $7,281 $12,777 $4,912 $109
- -------------------------------------------------------------------
For the year ended April 30, 2003, total Shareholder Communication expenses
were as follows:
Class A Class B Class L Class Y
- -------------------------------------------------------------------
Shareholder Communication Expenses $7,681 $15,416 $5,845 $93
- ------------------------------------------------------------------
15 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10.Distributions Paid to Shareholders by Class
Year Ended Year Ended
April 30, 2003 April 30, 2002
- -----------------------------------------------------------------
Net Investment Income
Class A $ 30,945 $ 23,286
Class B -- --
Class L -- --
Class Y 1,099,019 1,376,360
- ----------------------------------------------------------------
Total $1,129,964 $1,399,646
- ----------------------------------------------------------------
11.Capital Shares
At April 30, 2003, the Series had ten billion shares of capital stock
authorized with a par value of $0.001 per share. The Fund has the ability to
issue multiple classes of shares. Each share of a class represents an identical
legal interest in the Fund and has the same rights, except that each class
bears certain expenses specifically related to the distribution of its shares.
Transactions in shares of each class were as follows:
Year Ended Year Ended
April 30, 2003 April 30, 2002
------------------------ ------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------
Class A
Shares sold 199,633 $ 2,087,589 2,087,068 $ 21,297,374
Shares issued on reinvestment 3,490 29,767 2,067 22,284
Shares reacquired (303,968) (2,975,607) (2,258,920) (23,379,159)
- ---------------------------------------------------------------------------------
Net Decrease (100,845) $ (858,251) (169,785) $ (2,059,501)
- ---------------------------------------------------------------------------------
Class B
Shares sold 28,591 $ 263,945 42,327 $ 446,419
Shares issued on reinvestment -- -- -- --
Shares reacquired (302,075) (2,628,144) (490,881) (5,242,777)
- ---------------------------------------------------------------------------------
Net Decrease (273,484) $ (2,364,199) (448,554) $ (4,796,358)
- ---------------------------------------------------------------------------------
Class L
Shares sold 64,573 $ 599,491 56,799 $ 611,385
Shares issued on reinvestment -- -- -- --
Shares reacquired (128,311) (1,133,165) (141,803) (1,519,724)
- ---------------------------------------------------------------------------------
Net Decrease (63,738) $ (533,674) (85,004) $ (908,339)
- ---------------------------------------------------------------------------------
Class Y
Shares sold 204,465 $ 1,769,956 166,587 $ 1,773,417
Shares issued on reinvestment -- -- -- --
Shares reacquired (1,183,404) (11,708,331) (812,006) (8,966,552)
- ---------------------------------------------------------------------------------
Net Decrease (978,939) $ (9,938,375) (645,419) $ (7,193,135)
- ---------------------------------------------------------------------------------
16 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
FINANCIAL HIGHLIGHTS
For a share of each class of capital stock outstanding throughout each year
ended April 30, unless otherwise noted:
Class A Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)/
- ------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Year $10.86 $11.79 $13.14 $12.00 $12.99
- ------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.06 0.04 0.05 0.06 0.37
Net realized and unrealized gain (loss) (2.20) (0.94) (1.38) 1.11 (1.24)
- ------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (2.14) (0.90) (1.33) 1.17 (0.87)
- ------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.05) (0.03) (0.02) (0.03) (0.12)
- ------------------------------------------------------------------------------------------
Total Distributions (0.05) (0.03) (0.02) (0.03) (0.12)
- ------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 8.67 $10.86 $11.79 $13.14 $12.00
- ------------------------------------------------------------------------------------------
Total Return (19.71)% (7.61)% (10.10)% 9.75% (6.56)%
- ------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $5,280 $7,704 $10,367 $18,339 $16,974
- ------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 1.54% 1.56% 1.49% 1.42% 1.55%
Net investment income 0.65 0.35 0.39 0.48 3.42
- ------------------------------------------------------------------------------------------
Portfolio Turnover Rate 36% 43% 74 % 50% 28%
- ------------------------------------------------------------------------------------------
Class B Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)/
- ------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Year $10.66 $11.62 $13.03 $11.97 $12.96
- ------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.01) (0.04) (0.05) (0.04) 0.29
Net realized and unrealized gain (loss) (2.16) (0.92) (1.36) 1.10 (1.24)
- ------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (2.17) (0.96) (1.41) 1.06 (0.95)
- ------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- (0.04)
- ------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- (0.04)
- ------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 8.49 $10.66 $11.62 $13.03 $11.97
- ------------------------------------------------------------------------------------------
Total Return (20.36)% (8.26)% (10.82)% 8.86% (7.27)%
- ------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $8,831 $13,993 $20,476 $32,024 $33,316
- ------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 2.31% 2.31% 2.29% 2.19% 2.30%
Net investment income (loss) (0.13) (0.33) (0.39) (0.32) 2.66
- ------------------------------------------------------------------------------------------
Portfolio Turnover Rate 36% 43% 74% 50% 28%
- ------------------------------------------------------------------------------------------
(1)Per share amounts have been calculated using the monthly average shares
method.
17 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of each class of capital stock outstanding throughout each year
ended April 30, unless otherwise noted:
Class L Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)(2)/
- -------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $10.65 $11.62 $13.02 $11.97 $12.96
- -------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.01) (0.04) (0.05) (0.04) 0.29
Net realized and unrealized gain (loss) (2.15) (0.93) (1.35) 1.09 (1.24)
- -------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (2.16) (0.97) (1.40) 1.05 (0.95)
- -------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- (0.04)
- -------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- (0.04)
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 8.49 $10.65 $11.62 $13.02 $11.97
- -------------------------------------------------------------------------------------------------------
Total Return (20.28)% (8.35)% (10.75)% 8.77% (7.27)%
- -------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $3,189 $4,680 $6,094 $8,886 $8,725
- -------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 2.34% 2.35% 2.29% 2.21% 2.30%
Net investment income (loss) (0.14) (0.37) (0.44) (0.34) 2.67
- -------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 36% 43% 74% 50% 28%
- -------------------------------------------------------------------------------------------------------
Class Y Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)/
- -------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $10.87 $11.81 $13.16 $12.03 $13.00
- -------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.11 0.10 0.10 0.11 0.40
Net realized and unrealized gain (loss) (2.21) (0.95) (1.37) 1.10 (1.22)
- -------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (2.10) (0.85) (1.27) 1.21 (0.82)
- -------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.08) (0.09) (0.08) (0.08) (0.15)
- -------------------------------------------------------------------------------------------------------
Total Distributions (0.08) (0.09) (0.08) (0.08) (0.15)
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 8.69 $10.87 $11.81 $13.16 $12.03
- -------------------------------------------------------------------------------------------------------
Total Return (19.30)% (7.16)% (9.64)% 10.07% (6.17)%
- -------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $118,946 $159,333 $180,709 $185,122 $159,574
- -------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 1.05% 1.04% 1.06% 1.06% 1.10%
Net investment income 1.18 0.92 0.81 0.81 3.73
- -------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 36% 43% 74% 50% 28%
- -------------------------------------------------------------------------------------------------------
(1)Per share amounts have been calculated using the monthly average shares
method.
(2)On June 12, 1998, Class C shares were renamed Class L shares.
18 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of Smith Barney Investment Funds Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Smith Barney Hansberger Global Value Fund
("Fund") of Smith Barney Investment Funds Inc. as of April 30, 2003, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the five-year period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of April 30, 2003, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of April 30, 2003, and the results of its operations for the year then
ended, the changes in its net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in the
five-year period then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ KPMG LLP
New York, New York
June 13, 2003
19 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
ADDITIONAL INFORMATION (UNAUDITED)
Information about Directors and Officers
The business and affairs of the Smith Barney Hansberger Global Value Fund
("Fund") are managed under the direction of the Board of Directors of Smith
Barney Investment Funds Inc. ("Series"). Information pertaining to the
Directors and certain Officers of the Series is set forth below. The Statement
of Additional Information includes additional information about Directors and
is available, without charge, upon request by calling the Fund's transfer agent
(Citicorp Trust Bank, fsb. at 1-800-451-2010).
Number of
Term of Portfolios
Office* and Principal in the Fund Other
Position(s) Length of Occupation(s) Complex Directorships
Held with Time During Past Overseen Held by
Name, Address and Age Fund Served Five Years by Director Director
- ---------------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors:
Paul R. Ades Director Since Law Firm of Paul R. Ades, PLLC; 15 None
Paul R. Ades, PLLC 1994 Partner in Law Firm of Murov &
181 West Main Street, Suite C Ades, Esqs.
Babylon, NY 11702
Age 62
Herbert Barg Director Since Retired 42 None
1460 Drayton Lane 1994
Wynewood, PA 19096
Age 79
Dwight B. Crane Director Since Professor, Harvard Business School 49 None
Harvard Business School 1981
Soldiers Field
Morgan Hall #375
Boston, MA 02163
Age 65
Frank G. Hubbard Director Since President of Avatar International, Inc. 15 None
Avatar International, Inc. 1993 (Business Development) (since
87 Whittredge Road 1998); Vice President of S&S
Summit, NJ 07901 Industries (Chemical Distribution)
Age 65 (1995-1998)
Jerome H. Miller Director Since Retired 15 None
c/o R. Jay Gerken 1998
Citigroup Global Markets Inc.
399 Park Avenue, 4th Floor
New York, NY 10022
Age 64
Ken Miller Director Since President of Young Stuff 15 None
Young Stuff Apparel Group, Inc. 1994 Apparel Group, Inc. (since 1963)
930 Fifth Avenue
New York, NY 10021
Age 61
Interested Director:
R. Jay Gerken** Chairman, President Since Managing Director of Citigroup 225 None
CGM and Chief Executive 2002 Global Markets Inc. ("CGM");
399 Park Avenue, 4th Floor Officer President and Chief Executive
New York, NY 10022 Officer of Smith Barney Fund
Age 52 Management LLC ("SBFM"),
Travelers Investment Adviser, Inc.
("TIA") and Citi Fund
Management Inc.
20 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Number of
Term of Portfolios
Office* and Principal in the Fund Other
Position(s) Length of Occupation(s) Complex Directorships
Held with Time During Past Overseen Held by
Name, Address and Age Fund Served Five Years by Director Director
- ----------------------------------------------------------------------------------------------------------------------------
Officers:
Lewis E. Daidone Senior Vice Since Managing Director of CGM and N/A N/A
CGM President and 1993 Director and Senior Vice President
125 Broad Street, 11th Floor Chief of SBFM and TIA
New York, NY 10004 Administrative
Age 45 Officer
Richard L. Peteka Chief Financial Since Director and Head of Internal N/A N/A
CGM Officer and 2002 Control for Citigroup Asset
125 Broad Street, 11th Floor Treasurer Management U.S. Mutual Fund
New York, NY 10004 Administration from 1999-2002;
Age 41 Vice President, Head of Mutual
Fund Administration and Treasurer
at Oppenheimer Capital from
1996-1999
Kaprel Ozsolak Controller Since Vice President of CGM N/A N/A
CGM 2002
125 Broad Street, 11th Floor
New York, NY 10004
Age 37
Christina T. Sydor Secretary Since Managing Director of CGM; N/A N/A
CGM 1993 General Counsel and Secretary of
300 First Stamford Place, 4th Floor SBFM and TIA
Stamford, CT 06902
Age 52
- --------
*Each Director and Officer serves until his or her successor has been duly
elected and qualified.
**Mr. Gerken is an "interested person" of the Fund as defined in the Investment
Company Act of 1940, as amended, because Mr. Gerken is an officer of SBFM and
certain of its affiliates.
21 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates for the fiscal year ended
April 30, 2003:
. For corporate shareholders, the percentage of ordinary dividends that
qualify for the dividends received deduction is 84.74%.
22 Smith Barney Hansberger Global Value Fund | 2003 Annual Report to
Shareholders
SMITH BARNEY
HANSBERGER
GLOBAL VALUE FUND
DIRECTORS INVESTMENT MANAGER
Paul R. Ades Smith Barney Fund Management LLC
Herbert Barg
Dwight B. Crane SUB-INVESTMENT ADVISER
R. Jay Gerken, Chairman Hansberger Global Investors, Inc.
Frank G. Hubbard
Jerome H. Miller DISTRIBUTOR
Ken Miller Citigroup Global Markets Inc.
OFFICERS CUSTODIAN
R. Jay Gerken State Street Bank and
President and Chief Trust Company
Executive Officer
TRANSFER AGENT
Lewis E. Daidone Citicorp Trust Bank, fsb.
Senior Vice President 125 Broad Street, 11th Floor
and Chief Administrative New York, New York 10004
Officer
SUB-TRANSFER AGENT
Richard L. Peteka PFPC Global Fund Services
Chief Financial Officer P.O. Box 9699
and Treasurer Providence, Rhode Island
02940-9699
Kaprel Ozsolak
Controller
Christina T. Sydor
Secretary
Smith Barney Hansberger Global Value Fund
This report is submitted for the general information of the shareholders of
Smith Barney Investment Funds Inc. -- Smith Barney Hansberger Global Value
Fund, but it may also be used as sales literature when preceded or accompanied
by the current Prospectus, which gives details about charges, expenses,
investment objectives and operating policies of the Fund. If used as sales
material after July 31, 2003, this report must be accompanied by performance
information for the most recently completed calendar quarter.
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
Smith Barney Mutual Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
For complete information on any of the above Smith Barney Mutual Funds,
including management fees and expenses, call or write your
financial professional for a free prospectus. Read it carefully before you
invest or send money.
www.smithbarneymutualfunds.com
(C)2003 Citigroup Global Markets Inc.
Member NASD, SIPC
FD01490 6/03
03-4941
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. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. 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-2(c) under the Investment Company Act of 1940, as amended)
are effective based on their evaluation of the disclosure
controls and procedures as of a date within 90 days of the
filing date of this document.
(b) In the last 90 days, there have been no significant changes in
the Registrant's internal controls or in other factors that
could significantly affect these controls.
ITEM 10. 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 Investment Funds Inc.
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
Smith Barney Investment Funds Inc.
Date: June 30, 2003
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 Investment Funds Inc.
Date: June 30, 2003
By: /s/ Richard Peteka
Chief Financial Officer of
Smith Barney Investment Funds Inc.
Date: June 30, 2003