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.
- --------------------------------------------------------------------------------
SMITH BARNEY
PREMIER SELECTIONS
GLOBAL GROWTH FUND
- --------------------------------------------------------------------------------
PREMIER SELECTIONS SERIES | ANNUAL REPORT | APRIL 30, 2003
[LOGO] Smith Barney
Mutual Funds
Your Serious Money. Professionally Managed.(R)
Your Serious Money. Professionally Managed.(R) is a registered service mark of
Citigroup Global Markets Inc.
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
[PHOTO] RICHIE FREEMAN,
JEFFREY J. RUSSELL
PORTFOLIO MANAGERS
Premier Selections Series
[LOGO]
Annual Report . April 30, 2003
SMITH BARNEY PREMIER SELECTIONS GLOBAL GROWTH FUND
RICHIE FREEMAN, CFA
Richie Freeman, CFA, has more than 27 years of securities business
experience and has been co-managing the Fund since its inception.
Education: BS from Brooklyn College, MBA from New York University
JEFFREY J. RUSSELL, CFA
Jeffrey J. Russell, CFA, has more than 21 years of securities business
experience and has been co-managing the Fund since its inception.
Education: BS from the Massachusetts Institute of Technology, MBA from
the University of Pennsylvania's Wharton School of Finance.
FUND OBJECTIVE
The Fund seeks long-term capital growth. It seeks to achieve this goal by
investing in two different areas: U.S. and international equities. The
U.S. equity segment of the Fund invests primarily in common stocks of
companies that the segment manager believes are experiencing, or will
experience, growth in earnings that exceeds the average rate of earnings
growth of the companies that comprise the Russell 2500 Growth Index. The
international equity segment of the Fund invests primarily in equity
securities of foreign companies.
FUND FACTS
FUND INCEPTION
-----------------
June 30, 2000
COMBINED INVESTMENT
INDUSTRY EXPERIENCE
-----------------
48 Years
What's Inside
Letter From the Chairman........... 1
Manager Overview................... 2
Fund Performance................... 6
Historical Performance............. 7
Schedule of Investments............ 8
Statement of Assets and Liabilities 11
Statement of Operations............ 12
Statements of Changes in Net Assets 13
Notes to Financial Statements...... 14
Financial Highlights............... 18
Independent Auditors' Report....... 21
Additional Information............. 22
[LOGO] Smith Barney
Mutual Funds
Your Serious Money. Professionally Managed.(R)
Your Serious Money. Professionally Managed.(R) is a registered
service mark of Citigroup Global Markets Inc.
Investment Products: Not FDIC Insured . Not Bank Guaranteed . May Lose Value
LETTER FROM THE CHAIRMAN
[PHOTO]
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 and we will be reflecting
other changes in future reports. 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/1/ where you can find additional 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 9, 2003
- --------
/1/Matters referenced are not incorporated by reference unless otherwise stated.
1 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
MANAGER OVERVIEW
Performance Review
For the 12 months ended April 30, 2003, Class A shares of the Smith Barney
Premier Selections Global Growth Fund ("Fund"), without sales charges, returned
- -17.02%. The Fund performed better than one of its unmanaged benchmarks, the
Russell 2500 Growth Index,/i/ which returned -20.47% for the same period, and
slightly underperformed its other unmanaged benchmark, the MSCI EAFE Index,/ii/
which returned -16.27% for the same period.
International Equity Markets
The fiscal year encompassed a plethora of negative factors. Global economic
growth was reduced by a number of concerns including:
. international disagreement regarding the U.S.-led military action in Iraq
. the pre-war increase of energy prices, which pressured corporate profits
and consumer spending
. the Severe Acute Respiratory Syndrome ("SARS") breakout in Asia, which
slowed regional economic activity significantly
. the financial collapse of Argentina and contagion in Brazil
. capital rationing and cutbacks in spending from a number of industries
. aggressive accounting deceptions and a loss of confidence in financial
statements and businesses
Continental European equity markets were especially poor performers, as the
financial services stocks are heavily represented in local market indices. Many
insurance stocks suffered brutal stock price declines as balance sheet strength
was tested by the substantial decline of equity markets and corporate defaults
increased. The Japanese stock market also plumbed new depths, as that economy
struggled with restructuring and lingering structural challenges.
The Fund's International Equity Segment
The persistent downturn in the international equity markets continued to
negatively affect the international equity portion of the Fund. Performance of
the international equity portion of the Fund's portfolio was hurt by sector
allocation and currency factors, while individual stock selection had a
positive impact on performance. Holdings in the industrials and consumer
discretionary sectors had the biggest negative impact on performance, while
stocks of companies in the telecommunications services and consumer staples
sectors made the greatest positive contributions to performance.
Our top holdings in the international portion of the Fund reflect an eclectic
mix of investment themes and portfolio emphasis. They are illustrative of our
growth-oriented stock selection criteria, which include strong financial
structures, large business opportunities and stable, visionary management.
Among the Fund's international holdings, the largest contributor to Fund
performance during the period was Vodafone Group PLC of the U.K. in the
Telecommunications Services sector. The company is a global leader in the
wireless communications network operator industry. The second largest positive
contributor to performance during the period was Novo Nordisk A/S of Denmark,
the biggest European factor in diabetes care through the production of insulin
and a range of application products. Novo Nordisk also has an innovative
therapeutic agent for treatment of selected blood disorders.
Nokia Oyj of Finland was the third largest positive contributor to the Fund's
international segment performance for the period. Nokia is a leader in the
manufacture of wireless handsets, and a strong contender in wireless
infrastructure. Nokia gained significant market share over the past decade by
introducing innovative, low cost product.
2 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
The primary detractor from the Fund's international segment performance for the
period was Sweden's Securitas AB in the Industrials sector, one of the largest
private security firms in the world. The company's operations include
Pinkerton's, Inc. in the U.S., and various security firms serving corporate and
consumer needs, mainly in Europe and North America. The second largest
detractor for the period was Hutchison Whampoa Ltd. of Hong Kong, also in the
Industrials sector. Hutchison Whampoa is a conglomerate with special strengths
in telecommunications, property development and port operation.
Amdocs Ltd. of Israel, in the Information Technology sector, was the third
biggest detractor in the international segment for the period. The company is a
leading provider of operations software and related support services for
telecommunications service providers.
At the close of the period, the largest weight in the international equity
segment was assigned to Mettler-Toledo International Inc. of Switzerland, in
the Information Technology sector. The company makes computerized scales,
analytical balances, and other weighing instruments. Mettler-Toledo's other
scientific equipment includes pH meters, thermal and moisture-measurement
systems, drug purification equipment, and metal-detection systems used to
maintain product quality, increase yields, and comply with industry
regulations. Vodafone Group held the second largest weight, followed by
Singapore Press Holdings Ltd., a dominant publisher in Singapore, in the
Consumer Discretionary sector.
U.S. Equity Markets
The year 2002 went down as the third consecutive year of negative stock market
returns in the U.S. for only the third time since the Great Depression. At its
low point in October, the S&P 500 Index/iii/ had declined nearly 50% from its
high reached in March 2000, which put the decline on par with the severe bear
market of 1973-74. The Nasdaq Composite Index ("Nasdaq")/iv/ suffered an even
worse fate, having recorded a three-year cumulative decline of nearly 80% to
its October low. The Nasdaq's fall represents the third most severe decline
ever recorded by a major U.S. market average, exceeded only by the drop of Dow
Jones Industrial Average/v/ and the S&P 500 Index during the Great Depression
years of 1929-32.
Following the intense selling pressure witnessed during the early summer (which
climaxed in late July), due to growing questions about corporate governance and
national security, the market averages rallied strongly for about a month, only
to once again reverse and revisit the market's lows set in early October. The
pattern repeated itself as the market staged a strong recovery following the
October lows. Yet this second rally proved short-lived as well, as fears about
geopolitical events led to a sharp decline during the first quarter of 2003
that saw the market return near the lows reached in July and October 2002.
Importantly, while the market averages have made little forward progress in the
months since the July lows, some market indicators had improved as of this
writing. For example, fewer stocks recorded new 52-week-lows at the October
trough than were seen in July, and fewer still recorded new lows on the most
recent decline.
Each time that the broad equity market has reached the lows set over the last
year, pension funds raised their bond allocations to levels that we believe,
given today's low interest rates, would not allow them to reach their actuarial
assumptions. The considerable decline in equities, combined with the dramatic
increase in bond prices, left many pension funds underweight in stocks and in
need of rebalancing by increasing the proportion of assets to equities.
3 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
The factor that we believe had the greatest psychological impact on the
equities market during the past 12 months was the focus of the U.S. mission in
Iraq and the negative fallout that it has had on corporate decision-making and
consumer confidence. The economy and stock market were more adversely affected
by the uncertainties that this situation created than concerns or doubts of a
U.S. victory in an armed conflict. A rise in the price of oil has also had a
negative impact on economic growth, but this tax on the consumer has recently
abated somewhat.
The Fund's U.S. Equity Segment
Despite a weak broad market in the U.S. over the most recent 12-month period,
we witnessed strong returns in some of the Fund's long-standing healthcare and
broadcasting/cable industry holdings.
The biggest positive contributor to performance in the U.S. portion of the
Fund's portfolio during the period was pharmaceutical firm Forest Laboratories,
Inc., in the Health Care sector, whose stock price was buoyed by solid earnings
due to strength in its industry-leading anti-depressant franchise.
Also in the Health Care sector, Amgen Inc. was the second largest positive
contributor to Fund performance in the U.S. equity segment. Amgen, a leader in
the biotechnology field, targets nephrology, cancer, inflammatory disorders,
and metabolic and neurodegenerative diseases.
Following weak performance during early 2002, cable stocks rebounded during the
period, after reporting good growth in digital subscribers and a rise in
customers accessing the internet over their high-speed cable lines. Cablevision
Systems New York Group (in the Consumer Discretionary sector) was the third
biggest positive contributor to Fund performance among the Fund's U.S. holdings
for the period.
During the 12 months in question, shares of certain holdings in the Fund were
lower, negatively affecting Fund performance. The biggest detractor from the
U.S. equity segment performance during the period was Alkermes, Inc., in the
Health Care sector. The company develops drug-delivery systems for fragile
biotech compounds or drugs with molecular chemistry too large for traditional
delivery methods.
L-3 Communications Holdings, Inc., in the Industrials sector is a supplier of
defense communications and was the second largest detractor, followed by IDEC
Pharmaceuticals Corp. in the Health Care sector, which was the third biggest
detractor from the U.S. equity segment's performance during the period. Both
L-3 Communications and IDEC Pharmaceuticals are examples of companies that saw
their stock prices decline during the period, even though we believe their
underlying business fundamentals remained steady or actually improved.
At the close of the period, the largest weight in the U.S. equity segment was
assigned to Chiron Corp., a leading biotechnology firm focused on three areas:
biopharmaceuticals, vaccines, and blood testing. The second largest weighting
at the close of the period was for L-3 Communications, followed by Weatherford
International Ltd., which supplies equipment and services used in the oil and
gas drilling industries.
4 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
Thank you for your investment in the Smith Barney Premier Selections Global
Growth Fund. We look forward to continuing to help you meet your investment
objectives.
Sincerely,
/s/ Richard A. Freeman /s/ Jeff Russell
Richard A. Freeman, CFA Jeffrey J. Russell, CFA
Vice President and Vice President and
Investment Officer Investment Officer
May 9, 2003
The information provided in this letter by the Manager 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 firm as a whole.
Portfolio holdings and breakdowns are as of April 30, 2003 and are subject to
change. Please refer to pages 8 through 10 for a list and percentage breakdown
of the Fund's holdings.
- --------
/i/The Russell 2500 Growth Index measures the performance of those Russell 2500
companies with higher price-to-book ratios and higher forecasted growth
values. (A price-to-book ratio is the price of a stock compared to the
difference between a company's assets and liabilities.) The Russell 2500
Growth Index measures the performance of the 2,500 smallest companies in the
Russell 3000 Index. Please note that an investor cannot invest directly in
an index.
/ii/The MSCI Europe, Australasia and Far East Index is an unmanaged index of
common stocks of companies located in Europe, Australasia and the Far East.
Please note that an investor cannot invest directly in an index.
/iii/The S&P 500 Index is a market capitalization-weighted index of 500 widely
held common stocks. Please note that an investor cannot invest directly in
an index.
/iv/The Nasdaq Composite Index is a market-value weighted index, which measures
all securities listed on The NASDAQ Stock Market. Please note that an
investor cannot invest directly in an index.
/v/The Dow Jones Industrial Average is a widely followed measurement of the
stock market. The average is comprised of 30 stocks that represent leading
companies in major industries. These stocks, widely held by both individual
and institutional investors, are considered to be blue-chip companies.
Please note that an investor cannot invest directly in an index.
5 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
AVERAGE ANNUAL TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
----------------------------------
Class A Class B Class L
- -------------------------------------------------------------------------------------
Twelve Months Ended 4/30/03 (17.02)% (17.77)% (17.63)%
- ------------------------------------------------------------------------------------
Inception* through 4/30/03 (19.16) (19.76) (19.71)
- ------------------------------------------------------------------------------------
With Sales Charges/(2)/
----------------------------------
Class A Class B Class L
- -------------------------------------------------------------------------------------
Twelve Months Ended 4/30/03 (21.21)% (21.88)% (19.32)%
- ------------------------------------------------------------------------------------
Inception* through 4/30/03 (20.61) (20.62) (20.01)
- ------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
- -------------------------------------------------------------------------------
Class A (Inception* through 4/30/03) (45.26)%
- -------------------------------------------------------------------------------
Class B (Inception* through 4/30/03) (46.40)
- -------------------------------------------------------------------------------
Class L (Inception* through 4/30/03) (46.32)
- -------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect 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 purchase. Thereafter,
the 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.
* Inception date for Class A, B and L shares is June 30, 2000.
+ The returns shown do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
6 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
HISTORICAL PERFORMANCE (UNAUDITED)
Value of $10,000 Invested in Class A, B and L Shares of the Smith Barney
Premier Selections Global Growth Fund vs. Russell 2500 Growth Index and MSCI
EAFE Index+
- --------------------------------------------------------------------------------
June 2000 -- April 2003
[CHART]
Smith Barney Smith Barney Smith Barney
Premier Premier Premier
Selections Selections Selections
Global Global Global
Growth Growth Growth Russell
Fund- Fund- Fund- 2500
Class A Class B Class L Growth MSCI EAFE
Shares Shares Shares Index Index
------------ ------------ ------------ ------- ---------
Jun 30, 2000 $9,500 $10,000 $9,896 $10,000 $10,000
Apr 2001 8,033 8,404 8,316 7,225 8,248
Apr 2002 6,267 6,518 6,450 6,550 7,104
Apr 30, 2003 5,200 5,199 5,313 5,210 5,948
+Hypothetical illustration of $10,000 invested in Class A, B and L shares at
inception on June 30, 2000, assuming deduction of the 5.00% and 1.00% maximum
initial sales charges at the time of investment for Class A and L shares and
the deduction of the maximum 5.00% and 1.00% CDSCs for Class B and L shares,
respectively. It also reflects reinvestment of dividends and capital gains, if
any, at net asset value through April 30, 2003. The Russell 2500 Growth Index
measures the performance of those Russell 2500 companies with higher
price-to-book ratios and higher forecasted growth values. The MSCI EAFE Index
is an unmanaged market capitalization weighted index of common stocks of
companies located in Europe, Australasia and the Far East. The Indexes are
unmanaged and are not subject to the same management and trading expenses as a
mutual fund. Please note that an investor cannot invest directly in an index.
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.
7 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
SCHEDULE OF INVESTMENTS APRIL 30, 2003
SHARES SECURITY VALUE
- -------------------------------------------------------------------------
COMMON STOCK -- 100.0%
U.S. EQUITY SEGMENT -- 61.7%
Biotechnology -- 12.5%
33,700 Amgen Inc.* $ 2,066,147
58,500 Chiron Corp.* 2,388,555
54,300 Genzyme Corp. -- General Division* 2,187,204
56,132 ImClone Systems Inc.* 1,023,848
150,000 Isis Pharmaceuticals, Inc.* 829,500
75,000 Nanogen, Inc.* 109,500
- -------------------------------------------------------------------------
8,604,754
- -------------------------------------------------------------------------
Broadcasting/Cable -- 13.7%
88,300 AOL Time Warner Inc.* 1,207,944
86,650 Cablevision Systems New York Group, Class A Shares* 1,942,693
69,900 Comcast Corp., Class A Special Shares* 2,101,194
174,300 Liberty Media Corp., Class A Shares* 1,917,300
51,100 Viacom Inc., Class B Shares* 2,218,251
- -------------------------------------------------------------------------
9,387,382
- -------------------------------------------------------------------------
Computer Hardware -- 2.8%
353,600 Maxtor Corp.* 1,944,800
- -------------------------------------------------------------------------
Drug Delivery/Testing -- 0.7%
50,000 Alkermes, Inc.* 499,000
- -------------------------------------------------------------------------
Electronics - Military -- 3.4%
53,300 L-3 Communications Holdings, Inc.* 2,366,520
- -------------------------------------------------------------------------
Energy -- 3.4%
57,500 Weatherford International Ltd.* 2,313,225
- -------------------------------------------------------------------------
Financial Services -- 7.7%
35,000 Lehman Brothers Holdings Inc. 2,203,950
30,500 Merrill Lynch & Co., Inc. 1,252,025
96,600 Roslyn Bancorp, Inc. 1,843,128
- -------------------------------------------------------------------------
5,299,103
- -------------------------------------------------------------------------
Healthcare - Miscellaneous -- 2.6%
48,400 IGEN International, Inc.* 1,759,340
- -------------------------------------------------------------------------
Managed Healthcare Providers -- 3.0%
22,000 UnitedHealth Group Inc. 2,026,860
- -------------------------------------------------------------------------
Multi-Industry -- 2.2%
98,800 Tyco International Ltd. 1,541,280
- -------------------------------------------------------------------------
Pharmaceuticals -- 6.6%
40,000 Forest Laboratories, Inc.* 2,068,800
65,200 IDEC Pharmaceuticals Corp.* 2,135,300
30,098 Millennium Pharmaceuticals, Inc.* 331,078
- -------------------------------------------------------------------------
4,535,178
- -------------------------------------------------------------------------
Semiconductors -- 2.7%
79,000 Intel Corp. 1,453,600
49,250 Micron Technology, Inc.* 418,625
- -------------------------------------------------------------------------
1,872,225
- -------------------------------------------------------------------------
See Notes to Financial Statements.
8 Smith Barney Premier Selections Global Growth Fund
| 2003 Annual Report to Shareholders
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
SHARES SECURITY VALUE
- --------------------------------------------------------------------
Telecommunications -- 0.4%
75,000 C-COR.net Corp.* $ 255,750
- --------------------------------------------------------------------
TOTAL U.S. EQUITY SEGMENT
(Cost -- $64,878,193) 42,405,417
- --------------------------------------------------------------------
INTERNATIONAL EQUITY SEGMENT -- 38.3%
Canada -- 0.5%
30,000 Celestica Inc.* 345,188
- --------------------------------------------------------------------
Denmark -- 2.6%
50,000 Novo Nordisk A/S, Class B Shares 1,814,131
- --------------------------------------------------------------------
Finland -- 1.9%
73,000 Nokia Oyj 1,211,887
7,000 Nokia Oyj, Sponsored ADR 115,990
- --------------------------------------------------------------------
1,327,877
- --------------------------------------------------------------------
France -- 3.8%
80,000 Axa 1,217,388
10,000 Groupe Danone* 1,417,751
- --------------------------------------------------------------------
2,635,139
- --------------------------------------------------------------------
Hong Kong -- 4.2%
83,023 HSBC Holdings PLC 907,509
251,000 Hutchison Whampoa Ltd. 1,396,760
500,000 Li & Fung Ltd. 560,966
- --------------------------------------------------------------------
2,865,235
- --------------------------------------------------------------------
Ireland -- 1.5%
266,000 Grafton Group PLC, Units 1,046,900
- --------------------------------------------------------------------
Japan -- 0.8%
92,000 Dowa Mining Co., Ltd. 305,173
110 NTT DoCoMo, Inc. 227,242
- --------------------------------------------------------------------
532,415
- --------------------------------------------------------------------
Mexico -- 2.1%
558,933 Wal-Mart de Mexico S.A. de CV, Series C Shares 1,420,029
- --------------------------------------------------------------------
Norway -- 1.4%
200,000 Tomra Systems ASA* 946,654
- --------------------------------------------------------------------
Singapore -- 4.7%
202,000 Singapore Press Holdings Ltd. 1,878,752
160,000 Venture Corp. Ltd. 1,334,799
- --------------------------------------------------------------------
3,213,551
- --------------------------------------------------------------------
Sweden -- 1.0%
61,000 Securitas AB, Class B Shares* 716,444
- --------------------------------------------------------------------
Switzerland -- 5.9%
70,000 Mettler-Toledo International Inc.* 2,485,000
40,000 Novartis AG 1,579,627
- --------------------------------------------------------------------
4,064,627
- --------------------------------------------------------------------
See Notes to Financial Statements.
9 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
SHARES SECURITY VALUE
- --------------------------------------------------------
United Kingdom -- 7.9%
70,502 BP PLC $ 447,139
348,500 Capita Group PLC 1,413,118
41,000 Lloyds TSB Group PLC 269,868
434,203 Serco Group PLC 1,083,465
100,000 Taylor Nelson Sofres PLC 213,540
1,002,766 Vodafone Group PLC 1,980,908
- --------------------------------------------------------
5,408,038
- --------------------------------------------------------
TOTAL INTERNATIONAL EQUITY SEGMENT
(Cost -- $45,865,757) 26,336,228
- --------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $110,743,950**) $68,741,645
- --------------------------------------------------------
*Non-income producing security.
**Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviation used in this schedule:
ADR -- American Depositary Receipt
See Notes to Financial Statements.
10 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2003
ASSETS:
Investments, at value (Cost -- $110,743,950) $ 68,741,645
Foreign currency, at value (Cost -- $44,298) 44,407
Receivable for securities sold 759,622
Dividends and interest receivable 145,872
Receivable for Fund shares sold 40,986
- -------------------------------------------------------------------------
Total Assets 69,732,532
- -------------------------------------------------------------------------
LIABILITIES:
Bank overdraft 705,300
Payable for Fund shares purchased 57,962
Management fee payable 43,862
Distribution fees payable 22,376
Payable for open forward foreign currency contracts (Note
6) 5,364
Accrued expenses 111,669
- -------------------------------------------------------------------------
Total Liabilities 946,533
- -------------------------------------------------------------------------
Total Net Assets $ 68,785,999
- -------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 11,223
Capital paid in excess of par value 166,481,977
Accumulated net realized loss from security transactions (55,712,553)
Net unrealized depreciation of investments and foreign
currencies (41,994,648)
- -------------------------------------------------------------------------
Total Net Assets $ 68,785,999
- -------------------------------------------------------------------------
Shares Outstanding:
Class A 1,016,565
- --------------------------------------------------------------------------
Class B 1,681,538
- --------------------------------------------------------------------------
Class L 8,525,237
- --------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $6.24
- --------------------------------------------------------------------------
Class B * $6.11
- --------------------------------------------------------------------------
Class L ** $6.12
- --------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value
per share) $6.57
- --------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value
per share) $6.18
- -------------------------------------------------------------------------
*Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from initial purchase (See Note 2).
**Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within one year from initial purchase (See Note 2).
See Notes to Financial Statements.
11 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2003
INVESTMENT INCOME:
Dividends $ 885,083
Interest 13,113
Less: Foreign withholding tax (91,502)
- -------------------------------------------------------------------------
Total Investment Income 806,694
- -------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 9) 733,238
Management fee (Note 2) 633,406
Shareholder servicing fees (Note 9) 114,743
Custody 51,359
Shareholder communications (Note 9) 38,500
Registration fees 27,514
Audit and legal 25,894
Directors' fees 13,600
Other 5,749
- -------------------------------------------------------------------------
Total Expenses 1,644,003
- -------------------------------------------------------------------------
Net Investment Loss (837,309)
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES (NOTES 3 AND 6):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) (23,286,557)
Foreign currency transactions 7,286
- -------------------------------------------------------------------------
Net Realized Loss (23,279,271)
- -------------------------------------------------------------------------
Change in Net Unrealized Depreciation From:
Security transactions 2,594,096
Foreign currency transactions 6,193
- -------------------------------------------------------------------------
Decrease in Net Unrealized Depreciation 2,600,289
- -------------------------------------------------------------------------
Net Loss on Investments and Foreign Currencies (20,678,982)
- -------------------------------------------------------------------------
Decrease in Net Assets From Operations $(21,516,291)
- -------------------------------------------------------------------------
See Notes to Financial Statements.
12 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED APRIL 30,
2003 2002
------------------------------------------------------------------------------
OPERATIONS:
Net investment loss $ (837,309) $ (2,335,733)
Net realized loss (23,279,271) (26,004,390)
(Increase) decrease in net unrealized
depreciation 2,600,289 (11,743,499)
-----------------------------------------------------------------------------
Decrease in Net Assets From Operations (21,516,291) (40,083,622)
-----------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 2,791,328 9,019,527
Cost of shares reacquired (29,473,483) (55,568,833)
-----------------------------------------------------------------------------
Decrease in Net Assets From Fund Share
Transactions (26,682,155) (46,549,306)
-----------------------------------------------------------------------------
Decrease in Net Assets (48,198,446) (86,632,928)
NET ASSETS:
Beginning of year 116,984,445 203,617,373
-----------------------------------------------------------------------------
End of year* $ 68,785,999 $116,984,445
-----------------------------------------------------------------------------
* Includes accumulated net investment loss of: -- $(4,435)
-----------------------------------------------------------------------------
See Notes to Financial Statements.
13 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Smith Barney Premier Selections Global Growth 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 non-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 Government Securities Fund,
Smith Barney Small Cap Growth Fund, Smith Barney Group Spectrum Fund, Smith
Barney Hansberger Global Value Fund, Smith Barney Small Cap Value Fund, Smith
Barney Premier Selections All Cap Growth Fund and Smith Barney Premier
Selections Large Cap 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 such markets
or, in the absence of sales, at the mean between the closing 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;
over-the-counter securities are valued at the mean between the bid and asked
prices. Investments in securities for which market quotations are not available
are valued at fair value as determined in good faith by the Board of Directors;
(c) securities maturing within 60 days are valued at cost plus accreted
discount, or minus amortized premium, which approximates value; (d) dividend
income is recorded on the ex-dividend date and interest income, adjusted for
amortization of premium and accretion of discount, is recorded on an accrual
basis; (e) gains or losses on the sale of securities are calculated by using
the specific identification method; (f ) direct expenses are charged to each
class; management fee and general Fund expenses are allocated on the basis of
relative net assets by class; (g) dividends and distributions to shareholders
are recorded on the ex-dividend date; the Fund distributes dividends and
capital gains, if any, annually; (h) 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 it from substantially all Federal income
and excise taxes; (i) 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. At
April 30, 2003, reclassifications were made to the Fund's capital accounts to
reflect permanent book/tax differences and income and gains available for
distribution under income tax regulations. Accordingly, accumulated net
investment loss amounting to $834,458 was reclassified to paid-in capital. Net
investment loss, net realized loss and net assets were not affected by these
changes; and ( j) 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.
Also, the Fund may enter into forward foreign 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.
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 to the Fund. The
Fund pays SBFM a management fee calculated at an annual rate of 0.80% of the
average daily net assets. This fee is calculated daily and paid monthly.
14 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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") and Primerica Shareholder Services ("PSS"),
another subsidiary of Citigroup, act as the Fund's sub-transfer agents. CTB
receives account fees and asset-based fees that vary according to the size and
type of account. PFPC and PSS are responsible for shareholder recordkeeping and
financial processing for all shareholder accounts and are paid by CTB. For the
year ended April 30, 2003, the Fund paid transfer agent fees of $80,439 to CTB.
Citigroup Global Markets Inc. ("CGM"), formerly known as Salomon Smith Barney
Inc., and PFS Distributors, Inc., both of which are subsidiaries of Citigroup,
act as the Fund's distributors. 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 and declines thereafter by 1.00% per year until no CDSC
is incurred. Class L shares also have a 1.00% CDSC, which applies if redemption
occurs within the first year of purchase. In certain cases, Class A shares have
a 1.00% CDSC, 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, CGM and its affiliates received sales
charges of approximately $13,000 and $3,000 on sales of the Fund's Class A and
L shares, respectively. In addition, for the year ended April 30, 2003, CDSCs
paid to CGM and its affiliates for Class B shares were approximately $51,000.
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 $ 5,877,342
- ----------------------------------------------
Sales 32,474,622
- ----------------------------------------------
At April 30, 2003, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
- ------------------------------------------------
Gross unrealized appreciation $ 6,160,309
Gross unrealized depreciation (48,162,614)
- ------------------------------------------------
Net unrealized depreciation $(42,002,305)
- ------------------------------------------------
4. Repurchase Agreements
The Fund purchases (and its custodian takes possession of ) U.S. government
securities from securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day),
at an agreed-upon higher repurchase price. The Fund requires continual
maintenance of the market value (plus accrued interest) of the collateral in
amounts at least equal to the repurchase price.
At April 30, 2003, the Fund did not have any repurchase agreements outstanding.
15 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 these 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. 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 contracts reflected in the
accompanying financial statements were as follows:
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Loss
- --------------------------------------------------------------
Contracts to Sell:
Japanese Yen 58,501,296 $491,295 5/1/03 $(5,364)
- -------------------------------------------------------------
7. Capital Loss Carryforward
At April 30, 2003, the Fund had, for Federal income tax purposes, approximately
$51,685,000 of unused capital loss carryforwards available to offset future
capital gains. 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 year of expiration for each carryforward loss is indicated
below. Expiration occurs on April 30 of the year indicated:
2009 2010 2011
- ----------------------------------------------------------------------
Carryforward Amounts $2,213,000 $13,947,000 $35,525,000
- ---------------------------------------------------------------------
In addition, the Fund had $4,033,130 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:
- ------------------------------------------------
Accumulated capital losses $(51,684,787)
- ------------------------------------------------
Unrealized depreciation (41,989,284)
- ------------------------------------------------
16 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The difference between book basis and tax basis unrealized depreciation is
attributable primarily to mark to market of foreign currency contracts.
For the year ended April 30, 2003, the Fund did not make any distributions.
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 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 $19,507 $110,105 $603,626
- ------------------------------------------------------------
For the year ended April 30, 2003, total Shareholder Servicing fees were as
follows:
Class A Class B Class L
- -----------------------------------------------------------
Shareholder Servicing Fees $18,371 $23,579 $72,793
- ----------------------------------------------------------
For the year ended April 30, 2003, total Shareholder Communication expenses
were as follows:
Class A Class B Class L
- -----------------------------------------------------------
Shareholder Communication Expenses $5,500 $8,001 $24,999
- ----------------------------------------------------------
10. Capital Shares
At April 30, 2003, the Series had 10 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
interest and has the same rights, except that each class bears certain
expenses, including those 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 153,359 $ 923,083 397,778 $ 3,423,430
Shares reacquired (567,887) (3,320,409) (803,005) (6,863,141)
- -----------------------------------------------------------------------
Net Decrease (414,528) $ (2,397,326) (405,227) $ (3,439,711)
- -----------------------------------------------------------------------
Class B
Shares sold 177,183 $ 1,056,029 308,653 $ 2,649,836
Shares reacquired (563,736) (3,307,132) (680,668) (5,720,786)
- -----------------------------------------------------------------------
Net Decrease (386,553) $ (2,251,103) (372,015) $ (3,070,950)
- -----------------------------------------------------------------------
Class L
Shares sold 136,601 $ 812,216 341,038 $ 2,946,261
Shares reacquired (3,842,969) (22,845,942) (5,072,524) (42,984,906)
- -----------------------------------------------------------------------
Net Decrease (3,706,368) $(22,033,726) (4,731,486) $(40,038,645)
- ------------------------------------------------------------------------
17 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
FINANCIAL HIGHLIGHTS
For a share of each class of capital stock outstanding throughout the year
ended April 30, unless otherwise noted:
Class A Shares 2003/(1)/ 2002/(1)/ 2001/(1)(2)/
- --------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.52 $9.64 $11.40
- -----------------------------------------------------------------------
Loss From Operations:
Net investment loss (0.03) (0.07) (0.06)
Net realized and unrealized loss (1.25) (2.05) (1.70)
- -----------------------------------------------------------------------
Total Loss From Operations (1.28) (2.12) (1.76)
- -----------------------------------------------------------------------
Net Asset Value, End of Year $6.24 $7.52 $ 9.64
- -----------------------------------------------------------------------
Total Return (17.02)% (21.99)% (15.44)%++
- -----------------------------------------------------------------------
Net Assets, End of Year (000s) $6,339 $10,768 $17,701
- -----------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.63% 1.35% 1.37%+
Net investment loss (0.54) (0.84) (0.69)+
- -----------------------------------------------------------------------
Portfolio Turnover Rate 7% 2% 11%
- -----------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 30, 2000 (inception date) to April 30, 2001.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
18 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of each class of capital stock outstanding throughout the year
ended April 30, unless otherwise noted:
Class B Shares 2003/(1)/ 2002/(1)/ 2001/(1)(2)/
- --------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.43 $9.58 $11.40
- -----------------------------------------------------------------------
Loss From Operations:
Net investment loss (0.07) (0.13) (0.13)
Net realized and unrealized loss (1.25) (2.02) (1.69)
- -----------------------------------------------------------------------
Total Loss From Operations (1.32) (2.15) (1.82)
- -----------------------------------------------------------------------
Net Asset Value, End of Year $6.11 $7.43 $ 9.58
- -----------------------------------------------------------------------
Total Return (17.77)% (22.44)% (15.96)%++
- -----------------------------------------------------------------------
Net Assets, End of Year (000s) $10,274 $15,359 $23,375
- -----------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 2.40% 2.04% 2.12%+
Net investment loss (1.31) (1.54) (1.45)+
- -----------------------------------------------------------------------
Portfolio Turnover Rate 7% 2% 11%
- -----------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 30, 2000 (inception date) to April 30, 2001.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
19 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of each class of capital stock outstanding throughout the year
ended April 30, unless otherwise noted:
Class L Shares 2003/(1)/ 2002/(1)/ 2001/(1)(2)/
- -------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.43 $9.58 $11.40
- -----------------------------------------------------------------------
Loss From Operations:
Net investment loss (0.07) (0.13) (0.12)
Net realized and unrealized loss (1.24) (2.02) (1.70)
- -----------------------------------------------------------------------
Total Loss From Operations (1.31) (2.15) (1.82)
- -----------------------------------------------------------------------
Net Asset Value, End of Year $6.12 $7.43 $ 9.58
- -----------------------------------------------------------------------
Total Return (17.63)% (22.44)% (15.96)%++
- -----------------------------------------------------------------------
Net Assets, End of Year (000s) $52,173 $90,857 $162,541
- -----------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 2.27% 2.04% 2.08%+
Net investment loss (1.18) (1.54) (1.39)+
- -----------------------------------------------------------------------
Portfolio Turnover Rate 7% 2 % 11%
- -----------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 30, 2000 (inception date) to April 30, 2001.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
20 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors of
Smith Barney Investment Funds Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Smith Barney Premier Selections Global Growth
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 financial highlights for each of the years in the two-year period then
ended and for the period from June 30, 2000 (commencement of operations) to
April 30, 2001. 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. As to securities sold but not yet delivered,
we performed other appropriate auditing procedures. 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 financial highlights for each of the years in the
two-year period then ended and for the period from June 30, 2000 to April 30,
2001, in conformity with accounting principles generally accepted in the United
States of America.
/s/ KPMG
New York, New York
June 13, 2003
21 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
ADDITIONAL INFORMATION (UNAUDITED)
Information about Directors and Officers
The business and affairs of the Smith Barney Premier Selections Global Growth
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 the Series
Directors and is available, without charge, upon request by calling the Fund's
transfer agent (Citicorp Trust Bank, fsb. at 1-800-451-2010) or the Fund's
sub-transfer agent (Primerica Shareholder Services at 1-800-544-5445).
Number of
Portfolios in
Term of Office* Fund Complex Other
Position(s) Held and Length of Principal Occupation(s) During Overseen Directorships Held
Name, Address and Age with Fund Time Served Past Five Years by Director by Director
- ---------------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors:
Paul R. Ades Director Since Law Firm of Paul R. Ades, 15 None
Paul R. Ades, PLLC 1994 PLLC; Partner in Law Firm of
181 West Main Street Murov & Ades, Esqs.
Suite C
Babylon, NY 11702
Age 62
Herbert Barg Director Since Retired 42 None
1460 Drayton Lane 1994
Wynnewood, PA 19096
Age 79
Dwight B. Crane Director Since Professor, Harvard 49 None
Harvard Business School 1981 Business School
Soldiers Field
Morgan Hall #375
Boston, MA 02163
Age 65
Frank G. Hubbard Director Since President of Avatar 15 None
Avatar International, Inc. 1993 International, Inc. (Business
87 Whittredge Road Development) (since 1998);
Summit, NJ 07901 Vice President S&S Industries
Age 65 (Chemical Distribution)
(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
930 Fifth Avenue 1963)
New York, NY 10021
Age 61
22 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Number of
Portfolios in
Term of Office* Fund Complex Other
Position(s) Held and Length of Principal Occupation(s) Overseen Directorships Held
Name, Address and Age with Fund Time Served During Past Five Years by Director by Director
- ---------------------------------------------------------------------------------------------------------------------------------
Interested Director:
R. Jay Gerken** Chairman, Since Managing Director of 225 None
CGM President and 2002 Citigroup Global Markets
399 Park Avenue, 4th Floor Chief Executive Inc. ("CGM"); President
New York, NY 10022 Officer and Chief Executive
Age 52 Officer of Smith Barney
Fund Management LLC
("SBFM"), Travelers
Investment Adviser, Inc.
("TIA") and Citi
Fund Management Inc.
Officers:
Lewis E. Daidone Senior Vice Since Managing Director of CGM N/A N/A
CGM President and 1993 and Director and Senior
125 Broad Street, 11th Floor Chief Vice President of SBFM
New York, NY 10004 Administrative and TIA
Age 45 Officer
Richard L. Peteka Chief Financial Since Director and Head of N/A N/A
CGM Officer and 2002 Internal Control for
125 Broad Street, 11th Floor Treasurer Citigroup Asset
New York, NY 10004 Management U.S. Mutual
Age 41 Fund Administration from
1999-2002; Vice
President, Head of
Mutual Fund
Administration and
Treasurer at Oppenheimer
Capital from 1996-1999
Richard A. Freeman, CFA Vice President and Since Managing Director of CGM N/A N/A
CGM Investment Officer 2001 and Investment Officer
399 Park Avenue, 4th Floor of SBFM
New York, NY 10022
Age 50
Jeffrey J. Russell, CFA Vice President and Since Managing Director of CGM N/A N/A
CGM Investment Officer 2001 and Investment Officer
399 Park Avenue, 4th Floor of SBFM
New York, NY 10022
Age 45
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 N/A N/A
CGM 1993 CGM; General Counsel and
300 First Stamford Place, 4th Floor Secretary of 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 a Director who is an "interested person" of the Series as
defined in the Investment Company Act of 1940, as amended, because Mr. Gerken
is an officer of SBFM and certain of its affiliates.
23 Smith Barney Premier Selections Global Growth Fund | 2003 Annual Report to
Shareholders
SMITH BARNEY
PREMIER SELECTIONS
GLOBAL GROWTH FUND
DIRECTORS INVESTMENT MANAGER
Paul R. Ades Smith Barney Fund Management LLC
Herbert Barg
Dwight B. Crane DISTRIBUTORS
R. Jay Gerken, Chairman Citigroup Global Markets Inc.
Frank G. Hubbard PFS Distributors, Inc.
Jerome H. Miller
Ken Miller CUSTODIAN
State Street Bank and
OFFICERS Trust Company
R. Jay Gerken
President and Chief TRANSFER AGENT
Executive Officer Citicorp Trust Bank, fsb.
125 Broad Street, 11th Floor
Lewis E. Daidone New York, New York 10004
Senior Vice President and
Chief Administrative Officer SUB-TRANSFER AGENTS
PFPC Global Fund Services
Richard L. Peteka P.O. Box 9699
Chief Financial Officer Providence, Rhode Island
and Treasurer 02940-9699
Richard A. Freeman, CFA Primerica Shareholder Services
Vice President and P.O. Box 9662
Investment Officer Providence, Rhode Island
02940-9662
Jeffrey J. Russell, CFA
Vice President and
Investment Officer
Kaprel Ozsolak
Controller
Christina T. Sydor
Secretary
Smith Barney Premier Selections Global Growth Fund
This report is submitted for the general information of shareholders of Smith
Barney Investment Funds Inc. -- Smith Barney Premier Selections Global Growth
Fund, but it may also be used as sales literature when proceeded 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 PREMIER SELECTIONS GLOBAL GROWTH FUND
Smith Barney Mutual Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
For complete information on any 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
FD02327 6/03
03-4967
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: July 2, 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: July 2, 2003
By: /s/ Richard Peteka
Chief Financial Officer of
Smith Barney Investment Funds Inc.
Date: July 2, 2003