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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3275
Smith Barney Investment Funds Inc.
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(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
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(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
Smith Barney Fund Management LLC
300 First Stamford Place
Stamford, CT 06902
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(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, 2004
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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, 2004
[LOGO]
[LOGO] Smith HANSBERGER
Barney GLOBAL
Mutual Funds 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.
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NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
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WHAT'S INSIDE
Letter from the Chairman............................................ 1
Manager Overview.................................................... 3
Fund Performance.................................................... 6
Historical Performance.............................................. 7
Schedule of Investments............................................. 8
Statement of Assets and Liabilities................................. 12
Statement of Operations............................................. 13
Statements of Changes in Net Assets................................. 14
Notes to Financial Statements....................................... 15
Financial Highlights................................................ 21
Report of Independent Registered Public Accounting Firm............. 23
Additional Information.............................................. 24
Tax Information..................................................... 26
LETTER FROM THE CHAIRMAN
[PHOTO]
R. Jay Gerken
R. JAY GERKEN, CFA
Chairman, President and
Chief Executive Officer
Dear Shareholder,
Over the 12 months ended April 30, 2004, most broad U.S. stock and bond market
indexes posted moderate gains. Stocks generally continued to outpace bonds,
with large-capitalization stocks typically outperforming small- and mid-cap
stocks and international stock markets generally outperforming the U.S. stock
market. The economic environment was dominated by uncertainty surrounding the
sustainability of the domestic economic recovery, a continued focus on new job
growth and a geopolitical environment centering on news from Iraq and new acts
of terrorism.
Since the start of 2004, markets have been in a holding pattern -- volatility
declined, and returns were relatively muted. Equity markets seem to have priced
in prospects of continued economic recovery and, in general, they were not
disappointed. Both bond market and stock market participants were a bit
unnerved by prospects for U.S. Federal Reserve Board ("Fed") tightening of key
interest rates at some unknown future date, the continuing turmoil in Iraq, and
the March 2004 train bombings in Spain. Each of these elements had a negative
influence on the stock market. Despite these concerns, however, the underlying
economic and financial fundamentals continued to improve through the end of the
period.
So far this year, the economy overall has appeared to be growing at a pace
similar to last year's rate. The ongoing recovery has been broad-based, with
strength in the consumer sector, exports and business investment. Soaring
corporate profit growth has led to vastly improved balance-sheet fundamentals
in general, while highly stimulative monetary and fiscal policy continued to
provide support, although the stimulative effects of fiscal policy could wane
after tax-refund season ends this spring. Following a period of mixed
employment news through the end of last year, job growth picked up
substantially in the first calendar quarter of 2004.
Signs of increasing inflation have begun to mount in recent weeks. Fiscal and
monetary policymakers have been stimulating the economy since 2000. The Fed has
more or less said it prefers inflation to deflation in the current environment.
However, we believe the recent pick-up in inflationary signals has increased
the possibility that the Fed may raise interest rates sooner than anticipated,
perhaps as early as this summer. Accordingly, the recent debate in the market
has focused on the timing and magnitude of prospective rate increases.
Please read on for a more detailed look at prevailing economic and market
conditions during the fund's fiscal year and to learn how those conditions and
changes made to the portfolio during this time may have affected fund
performance.
Information About Your Fund
In recent months several issues in the mutual fund industry have come under the
scrutiny of federal and state regulators. The fund's Adviser and some of its
affiliates have received requests for information from various government
regulators regarding market timing, late trading, fees and other mutual fund
issues in connection with various investigations. The regulators appear to be
examining, among other things, the fund's response to market timing and
shareholder exchange activity, including compliance with prospectus disclosure
related to these subjects. The fund has been informed that the Adviser and its
affiliates are responding to those information requests, but are not in a
position to predict the outcome of these requests and investigations.
1 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
As always, thank you for your confidence in our stewardship of your assets. We
look forward to helping you continue to meet your financial goals.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
May 13, 2004
2 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
MANAGER OVERVIEW
Special Shareholder Notice
Effective April 29, 2004, Smith Barney Class L shares were renamed Class C
shares. On February 2, 2004, initial sales charges on these shares were
eliminated.
Performance Review
For the 12 months ended April 30, 2004, Class A shares of the Smith Barney
Hansberger Global Value Fund, excluding sales charges, returned 36.11%. These
shares outperformed the fund's unmanaged benchmark, the MSCI ACWI (All Country
World Index) Free Index,/i/ which returned 30.36% for the same period. The fund
also outperformed its Lipper global funds category average, which returned
30.71% for the same period./1/
Market Overview
The year ended April 30, 2004, witnessed a remarkable recovery in global equity
prices. As the period began, however, investors were confronted with a range of
challenges including the ongoing armed conflict in Iraq, threats of terrorism,
uncertainty related to North Korea's nuclear ambitions and the sudden and rapid
spread of Severe Acute Respiratory Syndrome ("SARS"). Signs of a strong
recovery in the global economy and a subsequent recovery in corporate earnings
eventually overcame these negative issues. These positive factors led to a
strong rally in equity markets that was broad-based in nature, as witnessed by
the double-digit gains in many of the major developed and emerging markets
around the world.
While the U.S. continued to be the primary engine for world economic growth,
international equity markets, led by Japan and emerging markets, turned in the
best performance over the period. Shares of Japanese companies rallied strongly
following positive news that led many investors to believe that a long-awaited
economic recovery and an end to deflation may finally be taking hold in the
country. Emerging market countries, in general, were key beneficiaries, not
only of increasing economic activity globally, but also of positive consumption
trends at home. Finally, even while the economies of Europe lagged in terms of
performance, European multi-national companies benefited from the global
economic rebound.
What Affected Fund Performance
The fund's outperformance was largely the result of positive stock selection
and an overweight allocation to economically sensitive sectors, such as
consumer discretionary, industrials and materials. Generally, companies in
these sectors benefited as the global economy recovered, and U.S. consumers
benefited from lower taxes and continued low interest rates.
In addition, rising merger and acquisition activity globally positively
impacted the fund. Three of the fund's holdings rose sharply following merger
and acquisition news. These included AT&T Wireless Services Inc., whose
purchase by rival Cingular is currently undergoing regulatory review;
U.K.-based medical products company Amersham PLC, which was acquired by GE's
medical products division; and Aventis S.A., the French-
German drug company, which is being acquired by another French pharmaceutical
firm, Sanofi-Synthelabo. Partially due to the strong performance of these
stocks, the fund's holdings outperformed the benchmark index in the
telecommunications services and health care sectors, as well.
[PHOTO]
Thomas L. Hansberger
THOMAS L. HANSBERGER, CFA, CIC
Chairman and Chief Executive Officer, Hansberger Global Investors, Inc.
/1/Lipper, Inc. is a major independent mutual-fund tracking organization.
Average annual returns are based on the 12-month period ended April 30,
2004, calculated among the 322 funds in the fund's Lipper category including
the reinvestment of dividends and capital gains, if any, and excluding sales
charges.
3 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
Finally, the fund's overweight position in emerging markets continued to act as
a major positive influence on performance. In the aggregate, the fund's
emerging market holdings turned in the best regional performance over the year,
as we believe these high growth countries generally benefited from increased
demand, low interest rates and declining risk aversion by global investors.
The fund employs a bottom-up stock selection investment process. This process
led to an underweight in North America and Japan, and an overweight in emerging
markets, the Pacific ex-Japan, Europe and the United Kingdom. The fund's
overweight in emerging markets and underweight position in North America
positively impacted the fund's performance. Moreover, the fund's holdings in
these regions outperformed the benchmark index.
The most significant negative geographic allocation in the fund was the
underweight in Japan. Japan was one of the strongest markets globally last
year, as investors bet that the long-awaited cyclical recovery was underway and
that deflation may have finally ended. Poor stock selection in Japan also hurt
performance over the year. The fund's holdings, which are largely blue chip
export-related companies, underperformed the domestic-led rally in Japan last
year.
Portfolio Update
The fund's three biggest individual contributors to positive performance during
the period were its holdings in AT&T Wireless, European Aeronautic Defence and
Space Co., and Teradyne, Inc. U.S.-based telecommunications company AT&T
Wireless' share price rose following news that rival Cingular was acquiring it.
Shares of European Aeronautic Defence & Space Co., the France-based
manufacturer of Airbus airplanes, rose sharply as it continued to report
increasing orders and rising market share. Shares of Teradyne, a U.S. maker of
semiconductor equipment, rallied during the period, as many investors expected
that rising prices and volumes seen broadly in semiconductor manufacturers
would lead to rising demand for Teradyne's products. At the close of the
period, the fund's holdings in AT&T Wireless had been sold out completely.
Shares of European Aeronautic Defense & Space Co. continued to be held in the
fund, but the position was trimmed during the year. Similarly,
PERFORMANCE SNAPSHOT
AS OF APRIL 30, 2004
(excluding sales charges)
6 Months 12 Months
Class A Shares 8.76% 36.11%
MSCI ACWI Free Index 8.46% 30.36%
Lipper Global Funds Category Average 7.90% 30.71%
The performance shown represents past performance. Past performance is no
guarantee of future results and current performance may be higher or lower
than the performance shown above. Principal value and investment returns will
fluctuate and investors' shares, when redeemed may be worth more or less than
their original cost. To obtain performance data current to the most recent
month-end, please visit our website at www.smithbarneymutualfunds.com.
Class A share returns assume the reinvestment of income dividends and capital
gains distributions at net asset value and the deduction of all fund
expenses. Returns have not been adjusted to include sales charges that may
apply when shares are purchased or the deduction of taxes that a shareholder
would pay on fund distributions. Excluding sales charges, Class B shares
returned 8.31%, Class C shares returned 8.42% and Class Y shares returned
9.11% over the six months ended April 30, 2004. Excluding sales charges,
Class B shares returned 35.10%, Class C shares returned 34.98% and Class Y
shares returned 36.86% over the 12 months ended April 30, 2004.
Effective April 29, 2004, Smith Barney Class L shares were renamed Class C
shares. On February 2, 2004, initial sales charges on these shares were
eliminated.
All index performance reflects no deduction for fees, expenses or taxes. 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.
Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the period ended April 30, 2004, calculated among the
336 funds for the six-month period and among the 322 funds for the 12-month
period, in the fund's Lipper category including the reinvestment of dividends
and capital gains, if any, and excluding sales charges.
Teradyne continued to be held in the fund's portfolio, but the position was
also trimmed during the year.
While the fund's performance was strong for the period, outperforming its
benchmark index, some fund holdings detracted from performance. U.S. telecom
equipment company Tellabs, Inc., which was recently added to the portfolio, was
among the holdings that performed poorly over the past year. U.S.-based local
and wireless telecom service provider, Verizon Communications Inc., posted a
negative return for the fund during the year
4 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
due to concerns about the continued erosion of its local telephone business.
Unilever PLC, the Anglo-Dutch food company, was down slightly over the period
as the company continued to miss management's stated sales and earnings
expectations. In terms of industry sectors, while the fund's holdings in the
consumer staples and information technology sectors posted positive absolute
returns, performance lagged the MSCI ACWI Index over the past year. As of April
30th, shares of Tellabs were still owned by the fund, as was the position in
Unilever. However, the fund's position in Verizon was completely sold out
during the twelve-month period.
Thank you for your investment in the Smith Barney Hansberger Global Value Fund.
We appreciate that you have entrusted us to manage your money and value our
relationship with you.
Sincerely,
/s/ Thomas L. Hansberger
Thomas L. Hansberger, CFA, CIC
Chairman and Chief Executive Officer, Hansberger Global Investors, Inc.
May 13, 2004
The information provided 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, 2004 and are subject to
change and may not be representative of the portfolio manager's current or
future investments. The fund's top ten holdings as of this date were: American
International Group, Inc. (2.16%), Samsung Electronics Co., Ltd. (2.15%), HSBC
Holdings PLC (2.03%), J.P. Morgan Chase & Co. (1.93%), GlaxoSmithKline PLC
(1.93%), Total Fina Elf S.A. (1.91%), The Sumitomo Trust & Banking Co., Ltd.
(1.90%), Baxter International Inc. (1.90%), Sony Corp., (1.90%), DBS Group
Holdings Ltd. (1.87%). Please refer to pages 8 through 11 for a list and
percentage breakdown of the fund's holdings.
The mention of country breakdowns is for informational purposes only and should
not be construed as a recommendation to purchase or sell any securities. The
information provided regarding such countries is not a sufficient basis upon
which to make an investment decision. Investors seeking financial advice
regarding the appropriateness of investing in any securities or investment
strategies discussed should consult their financial professional. Portfolio
holdings are subject to change at any time and may not be representative of the
portfolio manager's current or future investments. The fund's top five country
holdings as of April 30, 2004 were: United States (40.1%); France (11.4%);
United Kingdom (11.1%); Japan (9.5%) and South Korea (6.1%). The fund's
portfolio composition is subject to change at any time.
RISKS: Keep in mind, the fund is subject to certain risks of overseas investing
typically not associated with domestic investing, including currency
fluctuations, changes in political and economic conditions, differing
securities regulations and periods of illiquidity, which could result in
significant market fluctuations. These risks are magnified in emerging or
developing markets. The fund may use derivatives, such as options and futures,
which can become illiquid, may disproportionately increase losses, and have a
potentially large impact on fund performance.
All index performance reflects no deduction for fees, expenses or taxes. Please
note that an investor cannot invest directly in an index.
/i/The MSCI (All Country World Index) 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.
5 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
AVERAGE ANNUAL TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
----------------------------------
Class A Class B Class C/(2)/ Class Y
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Twelve Months Ended 4/30/04 36.11% 35.10% 34.98% 36.86%
- ----------------------------------------------------------------------
Five Years Ended 4/30/04 (0.08) (0.85) (0.87) 0.39
- ----------------------------------------------------------------------
Inception* through 4/30/04 0.95 0.18 0.17 (0.12)
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With Sales Charges/(3)/
----------------------------------
Class A Class B Class C/(2)/ Class Y
- ------------------------------------------------------------------------
Twelve Months Ended 4/30/04 29.25% 30.10% 33.98% 36.86%
- ----------------------------------------------------------------------
Five Years Ended 4/30/04 (1.09) (1.05) (0.87) 0.39
- ----------------------------------------------------------------------
Inception* through 4/30/04 0.14 0.18 0.17 (0.12)
- ----------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
- --------------------------------------------------------------
Class A (Inception* through
4/30/04) 6.23%
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Class B (Inception* through
4/30/04) 1.18
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Class C (Inception* through
4/30/04)/(2)/ 1.09
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Class Y (Inception* through
4/30/04) (0.72)
- ------------------------------------------------------------
(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 charge with respect to Class A shares or the applicable contingent
deferred sales charges ("CDSC") with respect to Class B and C shares.
(2)On April 29, 2004, Class L shares were renamed as Class C shares.
(3)Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 5.00%; Class B shares reflect the
deduction of a 5.00% CDSC, which applies if shares are redeemed within one
year from purchase payment. Thereafter, this CDSC declines by 1.00% per year
until no CDSC is incurred. Class C shares also reflect the deduction of a
1.00% CDSC, which applies if shares are redeemed within one year from
purchase payment. The 1.00% initial sales charge on Class C shares is no
longer imposed, effective February 2, 2004.
+ All figures represent past performance and are not a guarantee of future
results. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. 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 C shares is December 19, 1997 and the
inception date for Class Y shares is March 10, 1998.
6 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
HISTORICAL PERFORMANCE (UNAUDITED)
Value of $10,000 Invested in Class A, B and C Shares of the
Smith Barney Hansberger Global Value Fund vs. MSCI ACWI (All Country World
Index) Free Index+
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December 1997 -- April 2004
[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 C Free
Shares Shares Shares Index
------------ ------------- ------------- ---------
Dec 19, 1997 $ 9,500 $10,000 $10,000 $10,000
Apr 1998 10,843 11,387 11,387 11,492
Apr 1999 10,131 10,559 10,559 13,226
Apr 2000 11,119 11,494 11,485 14,946
Apr 2001 9,996 10,250 10,250 12,508
Apr 2002 9,235 9,404 9,395 10,937
Apr 2003 7,415 7,489 7,489 9,387
Apr 30, 2004 10,092 10,118 10,109 12,237
+Hypothetical illustration of $10,000 invested in Class A, B and C shares at
inception on December 19, 1997, assuming deduction of the maximum sales charge
of 5.00% for Class A shares at the time of investment and reinvestment of
dividends and capital gains, if any, at net asset value through April 30,
2004. 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. Emerging markets represent
approximately 9.5% and exclude 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.
All figures represent past performance and are not a guarantee of future
results. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The returns shown do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares.
7 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
SCHEDULE OF INVESTMENTS APRIL 30, 2004
SHARES SECURITY VALUE
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STOCK -- 98.7%
Brazil -- 1.1%
65,000 Petroleo Brasileiro S.A., ADR $ 1,878,500
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France -- 11.5%
94,000 Arcelor (a) 1,560,347
26,000 Aventis S.A. (a) 1,978,878
128,000 AXA (a) 2,693,468
25,200 BNP Paribas S.A. 1,512,058
71,000 European Aeronautic Defence and Space Co. (a) 1,794,201
14,000 Groupe Danone (a) 2,344,042
41,000 Schneider Electric S.A. (a) 2,759,627
92,000 Suez S.A. (a) 1,842,274
18,100 Total Fina Elf S.A. (a) 3,344,835
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19,829,730
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Germany -- 2.9%
32,000 E.On AG (a) 2,119,363
29,000 Linde AG (a) 1,584,468
28,000 Volkswagen AG (a) 1,232,383
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4,936,214
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Hong Kong -- 3.1%
243,581 HSBC Holdings PLC (a) 3,560,167
262,600 Hutchison Whampoa Ltd. 1,767,568
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5,327,735
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Italy -- 1.8%
155,000 ENI S.p.A (a) 3,148,384
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Japan -- 9.7%
200,000 Asahi Glass Co., Ltd. (b) 2,116,613
56,000 Canon Inc. 2,937,888
750,000 Mazda Motor Corp. (a) 2,385,267
11,000 Rohm Co. Ltd. 1,372,446
86,000 Sony Corp. (a) 3,327,323
555,000 The Sumitomo Trust & Banking Co., Ltd. 3,339,102
63,000 Tostem Inax Holding Corp. 1,198,750
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16,677,389
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Mexico -- 1.7%
63,679 CEMEX S.A. de C.V., ADR (a) 1,875,347
33,000 Telefonos de Mexico, S.A. de C.V., ADR (a) 1,126,620
- ----------------------------------------------------------------------
3,001,967
- ----------------------------------------------------------------------
The Netherlands -- 2.5%
51,200 Akzo Nobel N.V. 1,864,119
117,521 ING Groep N.V. 2,516,594
- ----------------------------------------------------------------------
4,380,713
- ----------------------------------------------------------------------
Singapore -- 2.9%
390,000 DBS Group Holdings Ltd. 3,277,792
285,000 Singapore Airlines Ltd. 1,809,045
- ----------------------------------------------------------------------
5,086,837
- ----------------------------------------------------------------------
See Notes to Financial Statements.
8 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2004
SHARES SECURITY VALUE
- ---------------------------------------------------------------------
South Korea -- 6.1%
76,600 Kookmin Bank, ADR (a)(b) $ 2,841,860
57,500 LG Chem Ltd. 2,322,836
16,000 Samsung Electronics Co., Ltd., GDR (c) 3,764,000
84,000 SK Telecom Co., Ltd., ADR (a) 1,696,800
- ---------------------------------------------------------------------
10,625,496
- ---------------------------------------------------------------------
Switzerland -- 3.5%
11,800 Nestle S.A., Registered B Shares (a) 2,981,474
39,000 Novartis AG 1,736,471
4,100 Swisscom AG (a) 1,271,232
- ---------------------------------------------------------------------
5,989,177
- ---------------------------------------------------------------------
United Kingdom -- 11.2%
244,000 Amvescap PLC 1,609,324
163,172 GlaxoSmithKline PLC 3,378,470
130,913 GUS PLC 1,813,997
406,000 Kesa Electricals PLC 2,031,318
469,820 Kingfisher PLC 2,361,045
210,557 Lloyds TSB Group PLC 1,574,599
100,000 Standard Chartered PLC 1,532,910
237,000 Unilever PLC 2,236,984
1,170,176 Vodafone Group PLC 2,844,295
- ---------------------------------------------------------------------
19,382,942
- ---------------------------------------------------------------------
United States -- 40.7%
122,000 Albertson's Inc. (a) 2,849,920
69,000 Alliance Capital Management Holding L.P. (a) 2,301,150
52,800 American International Group, Inc. 3,783,120
24,000 Bank of America Corp. 1,931,760
105,500 Baxter International Inc. 3,339,075
46,000 Best Buy Co., Inc. 2,495,500
21,000 Caterpillar, Inc. 1,632,330
26,300 Deere & Co. 1,789,452
68,000 Eastman Kodak Co. 1,753,720
113,000 Electronic Data Systems Corp. 2,066,770
127,000 The Gap, Inc. 2,795,270
94,763 General Electric Co. 2,838,139
63,200 HCA Inc. 2,567,816
83,000 The Home Depot, Inc. 2,920,770
34,000 International Business Machines Corp. 2,997,780
90,000 J.P. Morgan Chase & Co. 3,384,000
74,000 Jones Apparel Group, Inc. 2,708,400
63,000 McDonald's Corp. 1,715,490
38,600 Merck & Co., Inc. 1,814,200
45,000 Merrill Lynch & Co., Inc. 2,440,350
83,000 MetLife, Inc. 2,863,500
80,000 Microsoft Corp. 2,077,600
63,000 Pfizer Inc. 2,252,880
272,000 Tellabs, Inc. (b) 2,374,560
98,000 Teradyne, Inc. (b) 1,997,240
105,000 Tyco International Ltd. 2,882,250
See Notes to Financial Statements.
9 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2004
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
United States -- 40.7% (continued)
250,000 Unisys Corp. (b) $ 3,257,500
110,000 The Walt Disney Co. 2,533,300
- ------------------------------------------------------------------------------------------------------------------
70,363,842
- ------------------------------------------------------------------------------------------------------------------
TOTAL STOCK
(Cost -- $143,579,691) 170,628,926
- ------------------------------------------------------------------------------------------------------------------
WARRANTS SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
WARRANTS (b) -- 0.0%
1,307 TIMCO Aviation Services, Inc., Expire 2/27/07 (Cost -- $1) 1
- ------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS AND NOTES -- 0.1%
France -- 0.1%
$ 956,200 AXA, Redeemable Notes, zero coupon due 12/21/04 191,476
- ------------------------------------------------------------------------------------------------------------------
United States -- 0.0%
1,364 TIMCO Aviation Services, Inc., Jr. Sub. Notes, 8.000% due 1/2/07 (d) 14
- ------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS AND NOTES
(Cost -- $141,501) 191,490
- ------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.2%
2,059,000 State Street Bank and Trust Co. dated 4/30/04, 0.870% due 5/3/04; Proceeds at maturity --
$2,059,149; (Fully collateralized by U.S. Treasury Bonds, 6.000% due 2/15/26;
Market value -- $2,100,693) (Cost -- $2,059,000) 2,059,000
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $145,780,193*) $172,879,417
- ------------------------------------------------------------------------------------------------------------------
LOANED SECURITIES COLLATERAL
45,688,028 State Street Navigator Securities Lending Trust Prime Portfolio (Cost -- $45,688,028) $ 45,688,028
- ------------------------------------------------------------------------------------------------------------------
(a)All or a portion of this security is on loan (See Note 7).
(b)Non-income producing security.
(c)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. This security has
been deemed liquid pursuant to guidelines approved by the Board of Directors.
(d)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
See Notes to Financial Statements.
10 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
SUMMARY OF INVESTMENTS BY SECTOR* APRIL 30, 2004
Financials 24.2%
Consumer Discretionary 17.6
Information Technology 13.4
Industrials 13.0
Healthcare 10.0
Consumer Staples 6.1
Energy 4.9
Materials 4.4
Telecommunications Services 4.1
Utilities 2.3
----------------------------------
100.0%
----------------------------------
* As a percentage of long-term investments. Please note that Fund holdings are
as of April 30, 2004 and are subject to change.
11 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2004
ASSETS:
Investments, at value (Cost -- $145,780,193) $172,879,417
Loaned securities collateral, at value (Cost --
$45,688,028) (Note 7) 45,688,028
Foreign currency, at value (Cost -- $102,560) 103,068
Cash 254
Receivable for securities sold 1,966,584
Dividends and interest receivable 636,727
Receivable for Fund shares sold 28,737
Prepaid expenses 27,217
- --------------------------------------------------------------------------
Total Assets 221,330,032
- --------------------------------------------------------------------------
LIABILITIES:
Payable for loaned securities collateral (Note 7) 45,688,028
Management fee payable 141,372
Distribution plan fees payable 7,228
Payable for Fund shares reacquired 3,731
Payable for open forward foreign currency contracts (Note
5) 214
Accrued expenses 64,671
- --------------------------------------------------------------------------
Total Liabilities 45,905,244
- --------------------------------------------------------------------------
Total Net Assets $175,424,788
- --------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 14,944
Capital paid in excess of par value 191,019,542
Undistributed net investment income 94,797
Accumulated net realized loss from investment transactions (42,806,767)
Net unrealized appreciation of investments and foreign
currencies 27,102,272
- --------------------------------------------------------------------------
Total Net Assets $175,424,788
- --------------------------------------------------------------------------
Shares Outstanding:
Class A 654,464
- --------------------------------------------------------------------------
Class B 953,605
- --------------------------------------------------------------------------
Class C 383,122
- --------------------------------------------------------------------------
Class Y 12,952,986
- --------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $11.73
- --------------------------------------------------------------------------
Class B * $11.47
- --------------------------------------------------------------------------
Class C * $11.46
- --------------------------------------------------------------------------
Class Y (and redemption price) $11.77
- --------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value
per share) $12.35
- --------------------------------------------------------------------------
* Redemption price is NAV of Class B and C shares reduced by a 5.00% and 1.00%
CDSC, respectively, if shares are redeemed within one year from purchase
payment (See Note 2).
See Notes to Financial Statements.
12 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2004
INVESTMENT INCOME:
Dividends $ 3,543,839
Interest (Note 7) 137,286
Less: Foreign withholding tax (557,412)
- ------------------------------------------------------------------------
Total Investment Income 3,123,713
- ------------------------------------------------------------------------
EXPENSES:
Management fee (Note 2) 1,577,070
Distribution plan fees (Note 8) 158,542
Custody 70,302
Audit and legal 35,358
Shareholder communications (Note 8) 34,685
Registration fees 30,997
Transfer agency services (Note 8) 24,629
Directors' fees 12,968
Pricing fees 6,417
Other 5,401
- ------------------------------------------------------------------------
Total Expenses 1,956,369
- ------------------------------------------------------------------------
Net Investment Income 1,167,344
- ------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES (NOTES 3 AND 5):
Realized Gain (Loss) From:
Investment transactions 11,881,706
Foreign currency transactions (55,547)
- ------------------------------------------------------------------------
Net Realized Gain 11,826,159
- ------------------------------------------------------------------------
Change in Net Unrealized Appreciation From:
Investments 36,065,072
Foreign currencies 5,695
- ------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 36,070,767
- ------------------------------------------------------------------------
Net Gain on Investments and Foreign Currencies 47,896,926
- ------------------------------------------------------------------------
Increase in Net Assets From Operations $49,064,270
- ------------------------------------------------------------------------
See Notes to Financial Statements.
13 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED APRIL 30,
2004 2003
- ------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,167,344 $ 1,483,288
Net realized gain (loss) 11,826,159 (23,285,591)
Increase (decrease) in net unrealized
appreciation 36,070,767 (12,836,832)
- ------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Operations 49,064,270 (34,639,135)
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 9):
Net investment income (1,650,500) (1,129,964)
- ------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to
Shareholders (1,650,500) (1,129,964)
- ------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 5,322,459 4,720,981
Net asset value of shares issued for
reinvestment of dividends 37,616 29,767
Cost of shares reacquired (13,594,998) (18,445,247)
- ------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share
Transactions (8,234,923) (13,694,499)
- ------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 39,178,847 (49,463,598)
NET ASSETS:
Beginning of year 136,245,941 185,709,539
- ------------------------------------------------------------------------------
End of year* $175,424,788 $136,245,941
- ------------------------------------------------------------------------------
* Includes undistributed net investment income of: $94,797 $633,500
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
14 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Smith Barney Hansberger Global Value Fund ("Fund"), a separate diversified
investment fund of the Smith Barney Investment Funds Inc. ("Company"), a
Maryland corporation, is registered under the Investment Company Act of 1940,
as amended, as an open-end management investment company. The Company consists
of this Fund and eight other separate investment funds: Smith Barney Investment
Grade Bond Fund, Smith Barney Multiple Discipline Funds -- All Cap Growth and
Value Fund (formerly known as Smith Barney Premier Selections All Cap Growth
Fund), Smith Barney Multiple Discipline Funds -- Global All Cap Growth and
Value Fund (formerly known as Smith Barney Premier Selections Global Growth
Fund), Smith Barney Multiple Discipline Funds -- Large Cap Growth and Value
Fund (formerly known as Smith Barney Premier Selections Large Cap 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 following are significant accounting policies consistently followed by the
Fund and are in conformity with generally accepted accounting principles
("GAAP"): (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, if there were no sales during the day, at the mean
between the bid and asked prices; securities primarily traded on foreign
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except that when a significant event,
subsequent to the time a value was so established, is likely to have
significantly changed the value, then the fair value of those securities will
be determined by consideration of other factors by or under the direction of
the Board of Directors or its delegates; over-the-counter securities are valued
on the basis of the bid price at the close of business on each day; U.S.
government and agency obligations are valued at the average between bid and
asked prices in the over-the-counter market; 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; (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) class specific expenses are charged to
each class; management fees and general fund expenses are allocated on the
basis of relative net assets of each class or on another reasonable basis; (i)
dividends and distributions to shareholders are recorded on the ex-dividend
date; the Fund distributes dividends and capital gains, if any, at least
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 is determined in accordance with income tax regulations which may
differ from U.S. generally accepted accounting principles; (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.
15 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 or offset by entering into another
forward exchange contract.
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
Fund's average daily net assets. This fee is calculated daily and paid monthly.
SBFM has entered into a sub-advisory agreement with Hansberger Global
Investors, Inc. ("Hansberger"). Pursuant to the sub-advisory 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
Fund's average daily net assets for the services Hansberger provides as
sub-adviser.
Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as the
Fund's transfer agent. PFPC Inc. ("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, 2004, the Fund paid transfer agent fees of $20,824 to
CTB.
Citigroup Global Markets Inc. ("CGM"), another indirect wholly-owned subsidiary
of Citigroup, acts as the Fund's distributor.
On April 29, 2004, the Fund's Class L shares were renamed as Class C shares. On
February 2, 2004, initial sales charges on these shares were eliminated.
There is a maximum initial sales charge of 5.00% for Class A shares. There is a
contingent deferred sales charge ("CDSC") of 5.00% on Class B shares, which
applies if redemption occurs within one year from purchase payment and declines
by 1.00% per year until no CDSC is incurred. Class C shares have a 1.00% CDSC,
which applies if redemption occurs within one year from purchase payment. There
is also a CDSC of 1.00% on Class A shares, which applies if redemption occurs
within one year from purchase payment. 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, 2004, CGM received sales charges of approximately
$17,000 and $3,000 on sales of the Fund's Class A and C shares, respectively.
In addition, for the year ended April 30, 2004, CDSCs paid to CGM were
approximately $5,000 for Class B shares.
For the year ended April 30, 2004, CGM and its affiliates did not receive any
brokerage commissions.
All officers and one Director of the Company are employees of Citigroup or its
affiliates.
3. Investments
During the year ended April 30, 2004, the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
investments, but excluding short-term investments) were as follows:
- ----------------------------------------------
Purchases $43,025,642
- ----------------------------------------------
Sales 52,272,688
- ----------------------------------------------
16 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At April 30, 2004, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
- -----------------------------------------------
Gross unrealized
appreciation $32,213,006
Gross unrealized depreciation (5,113,782)
- -----------------------------------------------
Net unrealized appreciation $27,099,224
- -----------------------------------------------
4. Repurchase Agreements
When entering into repurchase agreements, it is the Fund's policy that a
custodian takes possession of the underlying collateral securities, the value
of which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market to
ensure the adequacy of the collateral. If the seller defaults and the value of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
5. 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, 2004, the Fund had open forward foreign currency contracts as
described below. The unrealized loss on the open contracts reflected in the
accompanying financial statements was as follows:
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Loss
---------------------------------------------------------
Contracts to Sell:
Euro 55,224 $42,541 5/3/04 $(214)
---------------------------------------------------------
6. 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.
7. 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.
17 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Fund
maintains exposure for the risk of any losses in the investment of amounts
received as collateral.
At April 30, 2004, the Fund loaned securities having a market value of
$43,466,155. The Fund received cash collateral amounting to $45,688,028, 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,
2004 was $108,218.
8. Class Specific Expenses
Pursuant to a Rule 12b-1 Distribution Plan, the Fund pays a service fee with
respect to its Class A, B and C 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 C 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, 2004, total Rule 12b-1 Distribution
Plan fees, which are accrued daily and paid monthly, were as follows:
Class A Class B Class C
- ------------------------------------------------------------
Rule 12b-1 Distribution Plan Fees $16,374 $103,139 $39,029
- ------------------------------------------------------------
For the year ended April 30, 2004, total Transfer Agency Service expenses were
as follows:
Class A Class B Class C Class Y
- -------------------------------------------------------------------
Transfer Agency Service Expenses $7,601 $12,013 $4,905 $110
- ------------------------------------------------------------------
For the year ended April 30, 2004, total Shareholder Communication expenses
were as follows:
Class A Class B Class C Class Y
- -------------------------------------------------------------------
Shareholder Communication Expenses $9,067 $17,795 $7,724 $99
- ------------------------------------------------------------------
9. Distributions Paid to Shareholders by Class
Year Ended Year Ended
April 30, 2004 April 30, 2003
- -----------------------------------------------------------------
Net Investment Income
Class A $ 39,598 $ 30,945
Class B -- --
Class C -- --
Class Y 1,610,902 1,099,019
- ----------------------------------------------------------------
Total $1,650,500 $1,129,964
- ----------------------------------------------------------------
10.Capital Shares
At April 30, 2004, the Company 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, including those specifically related to the
distribution of its shares. Effective April 29, 2004, the Fund renamed Class L
shares as Class C shares.
18 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Transactions in shares of each class were as follows:
Year Ended Year Ended
April 30, 2004 April 30, 2003
--------------------- ------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------
Class A
Shares sold 174,767 $ 2,008,998 199,633 $ 2,087,589
Shares issued on reinvestment 3,237 37,616 3,490 29,767
Shares reacquired (132,263) (1,421,677) (303,968) (2,975,607)
------------------------------------------------------------------------------
Net Increase (Decrease) 45,741 $ 624,937 (100,845) $ (858,251)
------------------------------------------------------------------------------
Class B
Shares sold 182,241 $ 2,086,870 28,591 $ 263,945
Shares reacquired (268,287) (2,891,818) (302,075) (2,628,144)
------------------------------------------------------------------------------
Net Decrease (86,046) $ (804,948) (273,484) $ (2,364,199)
------------------------------------------------------------------------------
Class C+
Shares sold 86,719 $ 958,925 64,573 $ 599,491
Shares reacquired (79,316) (837,326) (128,311) (1,133,165)
------------------------------------------------------------------------------
Net Increase (Decrease) 7,403 $ 121,599 (63,738) $ (533,674)
------------------------------------------------------------------------------
Class Y
Shares sold 21,788 $ 267,666 204,465 $ 1,769,956
Shares reacquired (749,509) (8,444,177) (1,183,404) (11,708,331)
------------------------------------------------------------------------------
Net Decrease (727,721) $(8,176,511) (978,939) $ (9,938,375)
------------------------------------------------------------------------------
+ On April 29, 2004, Class L shares were renamed as Class C shares.
11.Capital Loss Carryforward
At April 30, 2004, the Fund had, for Federal income tax purposes, approximately
$42,807,000 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:
2008 2010 2011
- -------------------------------------------------------
Carryforward Amounts $1,698,000 $24,575,000 $16,534,000
- -------------------------------------------------------
12.Income Tax Information and Distributions to Shareholders
At April 30, 2004, the tax basis components of distributable earnings were:
- ------------------------------------------------
Undistributed ordinary income $ 118,600
- ------------------------------------------------
Accumulated capital losses (42,806,767)
- ------------------------------------------------
Unrealized appreciation 27,102,486
- ------------------------------------------------
At April 30, 2004, the difference between book basis and tax basis unrealized
appreciation and depreciation was attributable primarily to mark-to-market of
derivative contracts.
The tax character of distributions paid during the years ended April 30, 2004
and 2003 was:
2004 2003
- ---------------------------------------------------------
Ordinary income $1,650,500 $1,129,964
- --------------------------------------------------------
19 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13.Additional Information
The Fund has received the following information from Citigroup Asset Management
("CAM"), the Citigroup business unit which includes the Fund's Investment
Manager and other investment advisory companies, all of which are indirect,
wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an
affiliate, into the transfer agent business in the period 1997-1999. As CAM
currently understands the facts, at the time CAM decided to enter the transfer
agent business, CAM sub-contracted for a period of five years certain of the
transfer agency services to a third party and also concluded a revenue
guarantee agreement with this sub-contractor providing that the sub-contractor
would guarantee certain benefits to CAM or its affiliates (the "Revenue
Guarantee Agreement"). In connection with the subsequent purchase of the
sub-contractor's business by an affiliate of the current sub-transfer agent
(PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee
Agreement was amended eliminating those benefits in exchange for arrangements
that included a one-time payment from the sub-contractor.
The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue
Guarantee Agreement with the sub-contractor at the time the Boards considered
and approved the transfer agent arrangements. Nor were the Boards informed of
the subsequent amendment to the Revenue Guarantee Agreement when that occurred.
CAM has begun to take corrective actions. CAM will pay to the applicable funds
approximately $17 million (plus interest) that CAM and its affiliates received
from the Revenue Guarantee Agreement and its amendment. CAM also plans an
independent review to verify that the transfer agency fees charged by CAM were
fairly priced as compared to competitive alternatives. CAM is instituting new
procedures and making changes designed to ensure no similar arrangements are
entered into in the future.
CAM has briefed the SEC, the New York State Attorney General and other
regulators with respect to this matter, as well as the U.S. Attorney who is
investigating the matter. CAM is cooperating with governmental authorities on
this matter, the ultimate outcome of which is not yet determinable.
14.Legal Matters
Class action lawsuits have been filed against Citigroup Global Markets Inc.
(the "Distributor") and a number of its affiliates, including Smith Barney Fund
Management LLC and Salomon Brothers Asset Management Inc (the "Advisers"),
substantially all of the mutual funds managed by the Advisers (the "Funds"),
and directors or trustees of the Funds. The complaints allege, among other
things, that the Distributor created various undisclosed incentives for its
brokers to sell Smith Barney and Salomon Brothers funds. In addition, according
to the complaints, the Advisers caused the Funds to pay excessive brokerage
commissions to the Distributor for steering clients towards proprietary funds.
The complaints also allege that the defendants breached their fiduciary duty to
the Funds by improperly charging Rule 12b-1 fees and by drawing on Fund assets
to make undisclosed payments of soft dollars and excessive brokerage
commissions. The complaints seek injunctive relief and compensatory and
punitive damages, rescission of the Funds' contracts with the Advisers,
recovery of all fees paid to the Advisers pursuant to such contracts and an
award of attorneys' fees and litigation expenses. Citigroup Asset Management
believes that the suits are without merit and intends to defend the cases
vigorously.
Additional lawsuits arising out of these circumstances and presenting similar
allegations and requests for relief may be filed against the defendants in the
future. Neither Citigroup Asset Management nor the Funds believe that any of
the pending actions will have a material adverse effect on the Funds or the
ability of the Distributor or the Advisers to perform under their respective
contracts with the Funds.
20 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
FINANCIAL HIGHLIGHTS
For a share of each class of capital stock outstanding throughout each year
ended April 30, unless otherwise noted:
Class A Shares 2004/(1)/ 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/
- ----------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $ 8.67 $10.86 $11.79 $13.14 $12.00
- ----------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.04 0.06 0.04 0.05 0.06
Net realized and unrealized gain (loss) 3.09 (2.20) (0.94) (1.38) 1.11
- ----------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 3.13 (2.14) (0.90) (1.33) 1.17
- ----------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.07) (0.05) (0.03) (0.02) (0.03)
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.07) (0.05) (0.03) (0.02) (0.03)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $11.73 $ 8.67 $10.86 $11.79 $13.14
- ----------------------------------------------------------------------------------------------------
Total Return 36.11% (19.71)% (7.61)% (10.10)% 9.75%
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $7,679 $5,280 $7,704 $10,367 $18,339
- ----------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 1.55% 1.54% 1.56% 1.49% 1.42%
Net investment income 0.33 0.65 0.35 0.39 0.48
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27% 36% 43% 74 % 50%
- ----------------------------------------------------------------------------------------------------
Class B Shares 2004/(1)/ 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/
- ----------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $ 8.49 $10.66 $11.62 $13.03 $11.97
- ----------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.05) (0.01) (0.04) (0.05) (0.04)
Net realized and unrealized gain (loss) 3.03 (2.16) (0.92) (1.36) 1.10
- ----------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 2.98 (2.17) (0.96) (1.41) 1.06
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $11.47 $ 8.49 $10.66 $11.62 $13.03
- ----------------------------------------------------------------------------------------------------
Total Return 35.10% (20.36)% (8.26)% (10.82)% 8.86%
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $10,937 $8,831 $13,993 $20,476 $32,024
- ----------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 2.34% 2.31% 2.31% 2.29% 2.19%
Net investment loss (0.45) (0.13) (0.33) (0.39) (0.32)
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27% 36% 43% 74% 50%
- ----------------------------------------------------------------------------------------------------
(1)Per share amounts have been calculated using the monthly average shares
method.
21 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of each class of capital stock outstanding throughout each year
ended April 30, unless otherwise noted:
Class C Shares/(1)/ 2004/(2)/ 2003/(2)/ 2002/(2)/ 2001/(2)/ 2000/(2)/
- ------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $ 8.49 $10.65 $11.62 $13.02 $11.97
- ------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.05) (0.01) (0.04) (0.05) (0.04)
Net realized and unrealized gain (loss) 3.02 (2.15) (0.93) (1.35) 1.09
- ------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 2.97 (2.16) (0.97) (1.40) 1.05
- ------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $11.46 $ 8.49 $10.65 $11.62 $13.02
- ------------------------------------------------------------------------------------------------
Total Return 34.98% (20.28)% (8.35)% (10.75)% 8.77%
- ------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $4,389 $3,189 $4,680 $6,094 $8,886
- ------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 2.37% 2.34% 2.35% 2.29% 2.21%
Net investment loss (0.49) (0.14) (0.37) (0.44) (0.34)
- ------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27% 36% 43% 74% 50%
- ------------------------------------------------------------------------------------------------
Class Y Shares 2004/(2)/ 2003/(2)/ 2002/(2)/ 2001/(2)/ 2000/(2)/
- ------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $ 8.69 $10.87 $11.81 $13.16 $12.03
- ------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.09 0.11 0.10 0.10 0.11
Net realized and unrealized gain (loss) 3.11 (2.21) (0.95) (1.37) 1.10
- ------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 3.20 (2.10) (0.85) (1.27) 1.21
- ------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.12) (0.08) (0.09) (0.08) (0.08)
- ------------------------------------------------------------------------------------------------
Total Distributions (0.12) (0.08) (0.09) (0.08) (0.08)
- ------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $11.77 $ 8.69 $10.87 $11.81 $13.16
- ------------------------------------------------------------------------------------------------
Total Return 36.86% (19.30)% (7.16)% (9.64)% 10.07%
- ------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $152,420 $118,946 $159,333 $180,709 $185,122
- ------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses 1.05% 1.05% 1.04% 1.06% 1.06%
Net investment income 0.83 1.18 0.92 0.81 0.81
- ------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27% 36% 43% 74% 50%
- -----------------------------------------------------------------------------------------------
(1)On April 29, 2004, Class L shares were renamed as Class C shares.
(2)Per share amounts have been calculated using the monthly average shares
method.
22 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004, 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004, by
correspondence with the custodian or broker. 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, 2004, 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 U.S. generally accepted
accounting principles.
/s/ KPMG LLP
New York, New York
June 18, 2004
23 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
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 Smith Barney Investment Funds
Inc.'s ("Company") Board of Directors. Information pertaining to the Directors
and certain officers of the Company is set forth below. The Statement of
Additional Information includes additional information about the Company's
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
Portfolios in the
Term of Office* Fund Complex Other
Position(s) Held and Length of Principal Occupation(s) Overseen by Board Memberships
Name, Address and Age with Fund Time Served During Past Five Years Director Held by Director
- --------------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors:
Paul R. Ades Director Since Law Firm of Paul R. 15 None
Paul R. Ades, PLLC 1994 Ades, PLLC (from
181 West Main Street April 2000 to
Suite C Present); Partner in
Babylon, NY 11702 Law Firm of Murov &
Age 63 Ades, Esqs. (from
November 1970 to
March 2000)
Dwight B. Crane Director Since Professor, Harvard 49 None
Harvard Business School 1981 Business School
Soldiers Field
Morgan Hall #375
Boston, MA 02163
Age 66
Frank G. Hubbard Director Since President of Avatar 15 None
Avatar International, Inc. 1993 International, Inc.
87 Whittredge Road (Business
Summit, NJ 07901 Development) (since
Age 66 1998); Vice President
of S&S Industries
(Chemical
Distribution) (from
1995 to 1998)
Jerome H. Miller Director Since Retired 15 None
c/o R. Jay Gerken 1998
Citigroup Asset Management ("CAM")
399 Park Avenue, 4th Floor
New York, NY 10022
Age 65
Ken Miller Director Since President of Young 15 None
Young Stuff Apparel Group, Inc. 1994 Stuff Apparel Group,
930 Fifth Avenue Inc. (since 1963)
Suite 610
New York, NY 10021
Age 62
Interested Director:
R. Jay Gerken, CFA** Chairman, Since Managing Director of 221 None
CAM President 2002 Citigroup Global
399 Park Avenue, 4th Floor and Chief Markets Inc. ("CGM");
New York, NY 10022 Executive Officer Chairman, President
Age 52 and Chief Executive
Officer of Smith
Barney Fund
Management LLC
("SBFM"), Travelers
Investment Adviser,
Inc. ("TIA") and Citi
Fund Management Inc.
("CFM"); President
and Chief Executive
Officer of certain
mutual funds
associated with
Citigroup Inc.
("Citigroup");
Formerly, Portfolio
Manager of Smith
Barney Allocation
Series Inc. (from
1996 to 2001) and
Smith Barney Growth
and Income Fund (from
1996 to 2000)
24 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Number of
Portfolios in the
Term of Office* Principal Occupation(s) Fund Complex Other
Position(s) Held and Length of During Past Five Overseen by Board Memberships
Name, Address and Age with Fund Time Served Years Director Held by Director
- ----------------------------------------------------------------------------------------------------------------------------
Officers:
Andrew B. Shoup Senior Vice Since Director of CAM; N/A N/A
CAM President 2003 Senior Vice
125 Broad Street, 11th Floor and Chief President and Chief
New York, NY 10004 Administrative Administrative
Age 47 Officer Officer of mutual
funds associated
with Citigroup;
Treasurer of
certain mutual
funds associated
with Citigroup;
Head of
International Funds
Administration of
CAM (from 2001 to
2003); Director of
Global Funds
Administration of
CAM (from 2000 to
2001); Head of U.S.
Citibank Funds
Administration of
CAM (from 1998 to
2000)
Andrew Beagley Chief Anti-Money Since Director of CGM N/A N/A
CAM Laundering 2002 (since 2000);
399 Park Avenue, 4th Floor Compliance Director of
New York, NY 10022 Officer Compliance, North
Age 41 America, CAM (since
2000); Chief
Anti-Money
Laundering
Compliance Officer
and Vice President
of certain mutual
funds associated
with Citigroup;
Director of
Compliance, Europe,
the Middle East and
Africa, CAM (from
1999 to 2000);
Compliance Officer,
Salomon Brothers
Asset Management
Limited, Smith
Barney Global
Capital Management
Inc., Salomon
Brothers Asset
Management Asia
Pacific Limited
(from 1997 to 1999)
Kaprel Ozsolak Controller Since Vice President of N/A N/A
CAM 2002 CGM; Controller of
125 Broad Street, 11th Floor certain mutual
New York, NY 10004 funds associated
Age 38 with Citigroup
Robert I. Frenkel Secretary and Since Managing Director N/A N/A
CAM Chief Legal Officer 2003 and General Counsel
300 First Stamford Place of Global Mutual
4th Floor Funds for CAM and
Stamford, CT 06902 its predecessor
Age 48 (since 1994);
Secretary of CFM
(from 2001 to
2004); Secretary
and Chief Legal
Officer of certain
mutual funds
associated with
Citigroup
- --------
* Each Director and officer serves until his or her successor has been duly
elected and qualified.
**Mr. Gerken is an "interested person" of the Company as defined in the
Investment Company Act of 1940, as amended, because Mr. Gerken is an officer
of SBFM and certain of its affiliates.
25 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Fund hereby designates for the fiscal year ended
April 30, 2004:
. For corporate shareholders, the percentage of ordinary dividends that
qualify for the dividends received deduction is 84.29%.
. For taxable non-corporate shareholders, the maximum amount allowable of
qualifying dividends for the reduced tax rate under The Jobs and Growth
Tax Relief Reconciliation Act of 2003. The amount of qualified dividend
income distributed by the Fund is provided to shareholders on their Form
1099-Div annually.
26 Smith Barney Hansberger Global Value Fund | 2004 Annual Report
SMITH BARNEY
HANSBERGER
GLOBAL VALUE FUND
DIRECTORS INVESTMENT MANAGER
Paul R. Ades Smith Barney Fund Management LLC
Dwight B. Crane
R. Jay Gerken, CFA SUB-INVESTMENT ADVISER
Chairman Hansberger Global Investors, Inc.
Frank G. Hubbard
Jerome H. Miller DISTRIBUTOR
Ken Miller Citigroup Global Markets Inc.
OFFICERS CUSTODIAN
R. Jay Gerken, CFA State Street Bank and
President and Trust Company
Chief Executive Officer
TRANSFER AGENT
Andrew B. Shoup Citicorp Trust Bank, fsb.
Senior Vice President and 125 Broad Street, 11th Floor
Chief Administrative Officer New York, New York 10004
Andrew Beagley SUB-TRANSFER AGENT
Chief Anti-Money Laundering PFPC Inc.
Compliance Officer P.O. Box 9699
Providence, Rhode Island
Kaprel Ozsolak 02940-9699
Controller
Robert I. Frenkel
Secretary and
Chief Legal Officer
Smith Barney Investment Funds Inc.
Smith Barney Hansberger Global Value Fund
The Fund is a separate investment fund of the Smith Barney Investment Funds
Inc., a Maryland corporation.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities is available without
charge, upon request, by telephoning the Fund (toll-free) at 1-800-451-2010
and by visiting the SEC's web site at www.sec.gov.
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.
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
Smith Barney Mutual Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
This document must be preceded or accompanied by a free prospectus. Investors
should consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other important
information about the fund. Please read the prospectus carefully before you
invest or send money.
www.smithbarneymutualfunds.com
(C)2004 Citigroup Global Markets Inc.
Member NASD, SIPC
FD01490 6/04 04-6476
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors of the registrant has determined that
Dwight B. Crane, a member of the Board's Audit Committee,
possesses the technical attributes identified in Instruction
2(b) of Item 3 to Form N-CSR to qualify as an "audit committee
financial expert," and has designated Mr. Crane as the Audit
Committee's financial expert. Mr. Crane is an "independent"
Director pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees for Smith Barney Investment Funds Inc. were
$100,250 and $100,250 for the years ended 4/30/04 and
4/30/03.
(b) Audit-Related Fees for Smith Barney Investment Funds
Inc. were $0 and $0 for the years ended 4/30/04
and 4/30/03.
(c) Tax Fees for Smith Barney Investment Funds Inc. were
$9,900 and $9,500 for the years ended 4/30/04 and
4/30/03. These amounts represent aggregate fees paid for
tax compliance, tax advice and tax planning services,
which include (the filing and amendment of federal,
state and local income tax returns, timely RIC
qualification review and tax distribution and analysis
planning) rendered by the Accountant to Smith Barney
Investment Funds Inc.
(d) There were no all other fees for Smith Barney Investment
Funds Inc. for the years ended 4/30/04 and 4/30/03.
(e) (1) Audit Committee's pre-approval policies and
procedures described in paragraph (c) (7) of Rule 2-01
of Regulation S-X.
The Charter for the Audit Committee (the "Committee") of
the Board of each registered investment company (the
"Fund") advised by Smith Barney Fund Management LLC or
Salomon Brothers Asset Management Inc or one of their
affiliates (each, an "Adviser") requires that the
Committee shall approve (a) all audit and permissible
non-audit services to be provided to the Fund and (b)
all permissible non-audit services to be provided by the
Fund's independent auditors to the Adviser and any
Covered Service Providers if the engagement relates
directly to the operations and financial reporting of
the Fund. The Committee may implement policies and
procedures by which such services are approved other
than by the full Committee.
The Committee shall not approve non-audit services that
the Committee believes may impair the independence of
the auditors. As of the date of the approval of this
Audit Committee Charter, permissible non-audit services
include any
professional services (including tax services), that are
not prohibited services as described below, provided to
the Fund by the independent auditors, other than those
provided to the Fund in connection with an audit or a
review of the financial statements of the Fund.
Permissible non-audit services may not include: (i)
bookkeeping or other services related to the accounting
records or financial statements of the Fund; (ii)
financial information systems design and implementation;
(iii) appraisal or valuation services, fairness opinions
or contribution-in-kind reports; (iv) actuarial
services; (v) internal audit outsourcing services; (vi)
management functions or human resources; (vii) broker or
dealer, investment adviser or investment banking
services; (viii) legal services and expert services
unrelated to the audit; and (ix) any other service the
Public Company Accounting Oversight Board determines, by
regulation, is impermissible.
Pre-approval by the Committee of any permissible
non-audit services is not required so long as: (i) the
aggregate amount of all such permissible non-audit
services provided to the Fund, the Adviser and any
service providers controlling, controlled by or under
common control with the Adviser that provide ongoing
services to the Fund ("Covered Service Providers")
constitutes not more than 5% of the total amount of
revenues paid to the independent auditors during the
fiscal year in which the permissible non-audit services
are provided to (a) the Fund, (b) the Adviser and (c)
any entity controlling, controlled by or under common
control with the Adviser that provides ongoing services
to the Fund during the fiscal year in which the services
are provided that would have to be approved by the
Committee; (ii) the permissible non-audit services were
not recognized by the Fund at the time of the engagement
to be non-audit services; and (iii) such services are
promptly brought to the attention of the Committee and
approved by the Committee (or its delegate(s)) prior to
the completion of the audit.
(f) N/A
(g) Non-audit fees billed - $100,000 and $1.2 million for
the years ended 12/31/2003 and 12/31/2002.
(h) Yes. The Smith Barney Investment Funds Inc.'s Audit
Committee has considered whether the provision of
non-audit services that were rendered to Service
Affiliates which were not pre-approved (not requiring
pre-approval) is compatible with maintaining the
Accountant's independence. All services provided by the
Accountant to the Smith Barney Investment Funds Inc. or
to Service Affiliates which were required to be
pre-approved were pre-approved as required.
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- 3(c) under the Investment Company
Act of 1940, as amended (the "1940 Act")) are effective
as of a date within 90 days of the filing date of this
report that includes the disclosure required by this
paragraph, based on their evaluation of the disclosure
controls and procedures required by Rule 30a-3(b) under
the 1940 Act and 15d-15(b) under the Securities Exchange
Act of 1934.
(b) There were no changes in the registrant's internal
control over financial reporting (as defined in Rule
30a-3(d) under the 1940 Act) that occurred during the
registrant's last fiscal half-year (the registrant's
second fiscal half-year in the case of an annual report)
that have materially affected, or are likely to
materially affect the registrant's internal control over
financial reporting.
ITEM 10. EXHIBITS.
(a) Code of Ethics attached hereto.
Exhibit 99.CODE ETH
(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 6, 2004
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 6, 2004
By: /s/ Andrew B. Shoup
-----------------------------------
(Andrew B. Shoup)
Chief Administrative Officer of
Smith Barney Investment Funds Inc.
Date: July 6, 2004