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)
Robert I. Frenkel, Esq.
Smith Barney Fund Management LLC
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, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
The Annual Report to Stockholders is filed herewith.
SMITH BARNEY
MULTIPLE DISCIPLINE FUNDS ALL CAP GROWTH AND VALUE FUND
MULTIPLE DISCIPLINE SERIES | ANNUAL REPORT | APRIL 30, 2004
[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
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.................................................. 20
Report of Independent Registered Public Accounting Firm............... 22
Additional Information................................................ 23
LETTER FROM THE CHAIRMAN
[PHOTO]
R. Jay Gerken
R. Jay Gerken, CFA
Chairman, President and
Chief Executive Officer
Dear Shareholder,
Over the twelve-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
domestic 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 tightening of key interest rates
at some unknown future date, the continuing turmoil in Iraq, and the March 2004
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, 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 Multiple Discipline Funds -- All Cap Growth and 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 20, 2004
2 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
MANAGER OVERVIEW
Special Shareholder Notice
On January 21, 2004, many changes took place affecting the fund's name,
investment strategy, portfolio management team and performance benchmarks. The
fund's name changed from Smith Barney Premier Selections All Cap Growth Fund to
Smith Barney Multiple Discipline Funds -- All Cap Growth and Value Fund. In
addition, the new target allocations are 50% to an All Cap Growth segment and
50% to an All Cap Value segment. Alan J. Blake and Richard Freeman co-manage
the All Cap Growth segment, and John Goode and Peter J. Hable co-manage the All
Cap Value segment. The fund is coordinated by overlay portfolio managers who
purchase and sell securities for the fund on the basis of recommendations
received from each segment's portfolio managers. These overlay portfolio
managers essentially utilize the underlying recommendations of the segment
managers in a manner that is appropriate for the fund. For instance, they
identify and analyze duplicate positions that may occur if different segment
managers recommend the same security for their respective segment, and they
determine whether the size of each position is appropriate for the fund. Upon
consultation with a fund's segment managers, the overlay portfolio managers may
make adjustments if one or more segments become over- or underweighted as a
result of market appreciation or depreciation. The overlay portfolio managers
of the fund are Roger Paradiso and Kirstin Mobyed. Lastly, the fund's benchmark
was changed from the Russell 1000 Growth Index, Russell 2000 Growth Index and
the S&P MidCap 400 Index to the Russell 3000 Index.
In addition, 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.
Market Overview
With monetary and fiscal policy more stimulative now than at any time in the
recent past, the economy strengthened over the last 12 months. In general,
equity markets were buoyant even thought they experienced a
PERFORMANCE SNAPSHOT
AS OF APRIL 30, 2004*
(excluding sales charges)
6 Months 12 Months
Class A Shares 1.92% 25.95%
Russell 3000 Index 6.14% 25.11%
Russell 1000 Growth Index 4.14% 21.65%
Russell 2000 Growth Index 4.01% 41.57%
S&P MidCap 400 Index 6.93% 34.45%
Lipper Multi-Cap Growth Funds Category
Average 2.49% 25.39%
*Prior to January 21, 2004, the fund followed different investment strategies
under the name "Premier Selections All Cap Growth Fund".
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 1.44% and Class C shares returned 1.57% over the six months ended
April 30, 2004. Excluding sales charges, Class B shares returned 25.08% and
Class C shares returned 25.04% 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
Russell 3000 Index measures the performance of the 3,000 largest U.S.
companies based on total market capitalization, which represent approximately
98% of the U.S. equity market. The Russell 1000 Growth Index measures the
performance of those Russell 1000 companies with higher price-to-book ratios
and higher forecasted growth values. The Russell 2000 Growth Index measures
the performance of those Russell 2000 companies with higher price-to-book
ratios and higher forecasted growth values. The S&P MidCap 400 Index is a
market-value weighted index which consists of 400 domestic stocks chosen for
market size, liquidity, and industry group representation. Please note that
an investor cannot invest directly in an index.
Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the period ended April 30, 2004, calculated among the
427 funds for the six-month period and among the 417 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.
3 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
mild correction in March and April, perhaps due to extended valuations in some
sectors. Nevertheless, it is important to note that after three consecutive
calendar years of negative returns (2000-2002) followed by one positive year,
the markets are returning to historic positive trend lines.
Performance Review
For the 12 months ended April 30, 2004, Class A shares of the Smith Barney
Multiple Discipline Funds -- All Cap Growth and Value Fund, excluding sales
charges, returned 25.95%. These shares performed approximately in line with the
fund's new unmanaged benchmark, the Russell 3000 Index,/i/ which returned
25.11% for the same period. The previous benchmarks, the Russell 1000 Growth
Index,/ii/ Russell 2000 Growth Index/iii/ and the S&P Mid Cap 400 Index/iv/
returned 21.65%, 41.57% and 34.45%, respectively. The fund also performed
approximately in line with its Lipper multi-cap growth funds category average,
which returned 25.39% for the same period./1 /
Factors that Affected Fund Performance
The fund's performance during the period was fueled by positive returns from a
number of holdings in a range of sectors, including the consumer staples,
energy, telecommunication service and utilities sectors. Sectors that detracted
from overall performance included the consumer discretionary, financial,
healthcare, information technology, industrial, and materials sectors.
Consumer staples stocks contributed positively overall to returns as earnings
growth of companies such as The Gillette Co. and PepsiCo, Inc. benefited from
the continued strength in consumer spending and by a weaker U.S. dollar, which
helped boost sales in overseas markets. The energy sector contributed
positively overall to the performance of the portfolio during the period.
Earnings growth of companies such as BP PLC and Exxon Mobil Corp. continued to
improve as the price of oil increased during the period.
Investments that detracted from performance included information technology,
including stocks such as Intel Corp. and Texas Instruments Inc. We continue to
believe that there is a broad-based recovery under way in network technology
spending in these stocks. Additionally, the consumer services sector negatively
impacted the performance of the portfolio as investors focusing on the
lackluster growth in the labor market grew increasingly concerned about the
sustainability of consumer spending. We continued to add strategically to
positions in this sector because we believe that accelerating job growth will
support consumer spending in months ahead.
Our positions in some financials, such as Berkshire Hathaway Inc. and Merrill
Lynch & Co., detracted from performance. Weakness in this sector was due in
part to investors focusing on the direction of interest rates and a growing
concern regarding the sustainable long-term growth of the economy. We continued
to add to our position in Merrill Lynch and increased our weighting in the
brokerage industry based on current market valuations and prospects we see for
stronger earnings growth.
Thank you for your investment in the Smith Barney Multiple Discipline Funds --
All Cap Growth and Value Fund. We appreciate that you have entrusted us to
manage your money and value our relationship with you.
Sincerely,
/s/ Roger Paradiso /s/ Kirstin Mobyed
Roger Paradiso Kirstin Mobyed
Co-coordinating Co-coordinating
Portfolio Manager Portfolio Manager
May 20, 2004
/1/Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the 12-month period ended April 30, 2004, calculated
among the 417 funds in the fund's Lipper category including the reinvestment
of dividends and capital gains, if any, and excluding sales charges.
4 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
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. Please refer to pages 8 through 11 for a list and percentage breakdown
of the fund's holdings.
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: Berkshire
Hathaway Inc. (3.07%), PepsiCo, Inc. (2.63%), Pfizer Inc. (2.56%), American
International Group Inc. (2.55%), Merck & Co. Inc. (2.35%), Intel Corp.
(2.29%), Johnson & Johnson (2.24%), Texas Instruments Inc. (2.09%), Microsoft
Corp. (1.95%), Liberty Media Corp. (1.91%). Please refer to pages 8 through 11
for a list and percentage breakdown of the fund's holdings.
The mention of sector 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 sectors 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 sector
holdings as of April 30, 2004 were: Healthcare (21.96%); Information Technology
(15.74%); Financials (15.01%); Consumer Discretionary (11.89%); Industrials
(11.89%). The fund's portfolio composition is subject to change at any time.
RISKS: The fund may invest in small- and mid-cap companies that may involve a
higher degree of risk and volatility than investments in large-cap companies.
The fund may use derivatives, such as options and futures, which can be
illiquid, may disproportionately increase losses, and have a potentially large
impact on fund performance. Foreign stocks are subject to certain risks of
overseas investing not associated with domestic investing such as currency
fluctuations and changes in political and economic conditions, which could
result in significant market fluctuations. These risks are magnified in
emerging markets.
All index performance reflects no deduction for fees, expenses or taxes. Please
note that an investor cannot invest directly in an index.
/i/The Russell 3000 Index measures the performance of the 3,000 largest U.S.
companies based on total market capitalization, which represent
approximately 98% of the U.S. equity market.
/ii/The Russell 1000 Growth Index measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values.
/iii/The Russell 2000 Growth Index measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted
growth values.
/iv/The S&P MidCap 400 Index is a market-value weighted index which consists of
400 domestic stocks chosen for market size, liquidity, and industry group
representation.
5 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
AVERAGE ANNUAL TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
---------------------------
Class A Class B Class C/(2)/
- -------------------------------------------------------------------------------
Twelve Months Ended 4/30/04 25.95% 25.08% 25.04%
- -----------------------------------------------------------------------------
Inception* through 4/30/04 (8.95) (9.64) (9.61)
- -------------------------------------------------------------------------------
With Sales Charges/(3)/
---------------------------
Class A Class B Class C/(2)/
- -------------------------------------------------------------------------------
Twelve Months Ended 4/30/04 19.70% 20.08% 24.04%
- -----------------------------------------------------------------------------
Inception* through 4/30/04 (10.16) (10.11) (9.61)
- -------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/
- --------------------------------------------------------------------------------------
Class A (Inception* through 4/30/04) (30.18)%
- -----------------------------------------------------------------------------------
Class B (Inception* through 4/30/04) (32.19)
- -----------------------------------------------------------------------------------
Class C (Inception* through 4/30/04)/(2)/ (32.11)
- --------------------------------------------------------------------------------------
+ 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.
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A 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 charges 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, the 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.
* Inception date for Class A, B and C shares is June 30, 2000.
6 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
HISTORICAL PERFORMANCE (UNAUDITED)
Value of $10,000 Invested in Class A, B and C Shares of the Smith Barney
Multiple Discipline Funds -- All Cap Growth and Value Fund vs. Russell 1000
Growth Index, Russell 2000 Growth Index, S&P MidCap 400 Index and Russell 3000
Index+
- --------------------------------------------------------------------------------
June 2000 -- April 2004
[CHART]
All Cap All Cap All Cap
Growth and Growth and Growth and Russell 1000 Russell 2000 S&P
Value Fund -- Value Fund -- Value Fund -- Growth Growth MidCap Russell 3000
Class A Shares Class B Shares Class C Shares Index++ Index++ 400 Index++ Index++
-------------- -------------- -------------- ------------ ------------- ----------- -------------
Jun 30, 2000 $9,500 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Apr 2001 7,692 8,053 8,053 6,632 7,293 10,684 7,724
Apr 2002 6,575 6,825 6,825 5,298 6,671 11,388 6,356
Apr 2003 5,267 5,421 5,430 4,538 5,104 9,395 7,493
Apr 30, 2004 6,633 6,645 6,789 5,520 7,226 12,631 9,374
+ Hypothetical illustration of $10,000 invested in Class A, B and C shares on
June 30, 2000 (inception date), assuming deduction of the maximum 5.00% sales
charge at the time of investment for Class A shares and the deduction of the
maximum 5.00% CDSC for Class B shares, respectively. It also assumes
reinvestment of dividends and capital gains, if any, at net asset value
through April 30, 2004. The Russell 1000 Growth Index is a capitalization
weighted total return index which is comprised of 1,000 of some of the
larger-capitalized U.S.-domiciled companies whose common stock is traded in
the United States on the New York Stock Exchange, American Stock Exchange and
NASDAQ National Market. The Russell 2000 Growth Index is a capitalization
weighted total return index which is compromised of 2,000 of the smallest
capitalized U.S. domiciled companies with less than average growth
orientation whose common stock is traded in the United States on the New York
Stock Exchange, American Stock Exchange and NASDAQ National Market. The S&P
MidCap 400 Index is a widely recognized index of 400 medium-capitalization
stocks. The Russell 3000 Index measures the performance of the 3,000 largest
U.S. companies based on total market capitalization, which represent
approximately 98% of the U.S. equity market. Figures for the Russell 1000
Growth, Russell 2000 Growth, S&P MidCap 400 and Russell 3000 Indices include
the reinvestment of dividends. 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.
++It is the opinion of management that the Russell 3000 Index more accurately
reflects the current composition of the Fund than the Russell 1000 Growth
Index, Russell 2000 Growth and the S&P MidCap 400 Index. In future reports,
the Russell 3000 Index will be used as the basis of comparison of total
returns for all periods shown.
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 Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
SCHEDULE OF INVESTMENTS APRIL 30, 2004
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------
COMMON STOCK -- 93.3%
CONSUMER DISCRETIONARY -- 11.9%
Hotels, Restaurants and Leisure -- 0.6%
73,630 McDonald's Corp. $ 2,004,945
- -----------------------------------------------------------------------------
Internet and Catalog Retail -- 1.2%
118,300 InterActiveCorp* 3,770,221
- -----------------------------------------------------------------------------
Leisure Equipment and Products -- 0.7%
120,590 Hasbro, Inc. 2,277,945
- -----------------------------------------------------------------------------
Media -- 7.1%
110,825 Cablevision Systems Corp. -- NY Group Class A Shares* 2,419,310
161,390 Comcast Corp., Special Class A Shares* 4,678,696
559,400 Liberty Media Corp., Series A Shares* 6,119,836
60,210 The News Corp. Ltd., Sponsored ADR 2,201,278
225,700 Time Warner Inc.* 3,796,274
156,000 The Walt Disney Co. 3,592,680
- -----------------------------------------------------------------------------
22,808,074
- -----------------------------------------------------------------------------
Specialty Retail -- 2.3%
312,040 Charming Shoppes, Inc.* 2,203,002
141,400 The Home Depot, Inc. 4,975,866
- -----------------------------------------------------------------------------
7,178,868
- -----------------------------------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 38,040,053
- -----------------------------------------------------------------------------
CONSUMER STAPLES -- 7.8%
Beverages -- 4.4%
112,700 The Coca-Cola Co. 5,699,239
154,305 PepsiCo, Inc. 8,408,079
- -----------------------------------------------------------------------------
14,107,318
- -----------------------------------------------------------------------------
Food and Drug Retailing -- 0.5%
66,830 Safeway Inc.* 1,533,748
- -----------------------------------------------------------------------------
Food Products -- 1.1%
41,710 Archer-Daniels-Midland Co. 732,428
45,470 Wm. Wrigley Jr. Co. 2,805,499
- -----------------------------------------------------------------------------
3,537,927
- -----------------------------------------------------------------------------
Personal Products -- 1.8%
142,000 The Gillette Co. 5,810,640
- -----------------------------------------------------------------------------
TOTAL CONSUMER STAPLES 24,989,633
- -----------------------------------------------------------------------------
ENERGY -- 5.4%
Energy Equipment and Services -- 2.0%
61,600 GlobalSantaFe Corp. 1,624,392
88,540 Grant Prideco, Inc.* 1,350,235
77,330 Weatherford International Ltd.* 3,362,308
- -----------------------------------------------------------------------------
6,336,935
- -----------------------------------------------------------------------------
Oil and Gas -- 3.4%
29,000 Anadarko Petroleum Corp. 1,553,820
46,420 BP PLC, Sponsored ADR 2,455,618
22,100 ConocoPhillips 1,575,730
91,650 Exxon Mobil Corp. 3,899,708
22,000 Murphy Oil Corp. 1,507,000
- -----------------------------------------------------------------------------
10,991,876
- -----------------------------------------------------------------------------
TOTAL ENERGY 17,328,811
- -----------------------------------------------------------------------------
See Notes to Financial Statements.
8 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2004
SHARES SECURITY VALUE
- ----------------------------------------------------------------
FINANCIALS -- 15.0%
Banks -- 2.2%
77,800 The Bank of New York Co., Inc. $ 2,267,092
68,130 Bank One Corp. 3,363,578
23,925 Wells Fargo & Co. 1,350,806
- ----------------------------------------------------------------
6,981,476
- ----------------------------------------------------------------
Diversified Financials -- 3.3%
59,670 American Express Co. 2,920,846
40,600 Lehman Brothers Holdings Inc. 2,980,040
50,100 Merrill Lynch & Co., Inc. 2,716,923
43,210 State Street Corp. 2,108,648
- ----------------------------------------------------------------
10,726,457
- ----------------------------------------------------------------
Insurance -- 9.5%
46,100 Ambac Financial Group, Inc. 3,180,900
113,630 American International Group, Inc. 8,141,590
105 Berkshire Hathaway Inc., Class A Shares* 9,805,950
39,790 The Chubb Corp. 2,745,510
36,560 MBIA Inc. 2,153,018
52,070 MGIC Investment Corp. 3,833,393
11,150 The St. Paul Travelers Cos., Inc. 453,470
- ----------------------------------------------------------------
30,313,831
- ----------------------------------------------------------------
TOTAL FINANCIALS 48,021,764
- ----------------------------------------------------------------
HEALTHCARE -- 21.9%
Biotechnology -- 7.5%
6,945 Alkermes, Inc.* 106,467
83,800 Amgen Inc.* 4,715,426
84,750 Biogen Idec Inc.* 5,000,250
101,060 Chiron Corp.* 4,689,184
29,730 Genentech, Inc.* 3,650,844
98,640 Genzyme Corp.* 4,296,758
118,480 Millennium Pharmaceuticals, Inc.* 1,776,015
- ----------------------------------------------------------------
24,234,944
- ----------------------------------------------------------------
Healthcare Providers and Services -- 2.0%
61,630 McKesson Corp. 2,025,162
69,500 UnitedHealth Group Inc. 4,272,860
- ----------------------------------------------------------------
6,298,022
- ----------------------------------------------------------------
Pharmaceuticals -- 12.4%
82,585 Abbott Laboratories 3,635,392
113,650 Bristol-Myers Squibb Co. 2,852,615
49,595 Forest Laboratories, Inc.* 3,197,886
38,900 GlaxoSmithKline PLC, ADR 1,633,800
132,700 Johnson & Johnson 7,169,781
160,200 Merck & Co. Inc. 7,529,400
228,830 Pfizer Inc. 8,182,961
123,570 Schering-Plough Corp. 2,067,326
90,190 Wyeth 3,433,533
- ----------------------------------------------------------------
39,702,694
- ----------------------------------------------------------------
TOTAL HEALTHCARE 70,235,660
- ----------------------------------------------------------------
See Notes to Financial Statements.
9 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2004
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------
INDUSTRIALS -- 8.4%
Aerospace and Defense -- 1.6%
47,535 L-3 Communications Holdings, Inc. $ 2,934,811
70,625 Raytheon Co. 2,278,362
- -----------------------------------------------------------------------------------
5,213,173
- -----------------------------------------------------------------------------------
Commercial Services and Supplies -- 0.8%
111,410 Sabre Holdings Corp. 2,628,162
- -----------------------------------------------------------------------------------
Construction and Engineering -- 0.5%
39,000 Fluor Corp. 1,488,240
- -----------------------------------------------------------------------------------
Electrical Equipment -- 1.0%
52,320 Emerson Electric Co. 3,150,710
- -----------------------------------------------------------------------------------
Industrial Conglomerates -- 2.7%
121,500 General Electric Co. 3,638,925
66,250 Honeywell International Inc. 2,290,925
105,225 Tyco International Ltd. 2,888,426
- -----------------------------------------------------------------------------------
8,818,276
- -----------------------------------------------------------------------------------
Machinery -- 1.8%
41,525 Caterpillar Inc. 3,227,738
101,105 Pall Corp. 2,404,277
- -----------------------------------------------------------------------------------
5,632,015
- -----------------------------------------------------------------------------------
TOTAL INDUSTRIALS 26,930,576
- -----------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 15.7%
Communications Equipment -- 2.5%
119,100 Cisco Systems, Inc.* 2,485,617
183,100 Motorola, Inc. 3,341,575
168,965 Nokia Oyj, Sponsored ADR 2,367,200
- -----------------------------------------------------------------------------------
8,194,392
- -----------------------------------------------------------------------------------
Computers and Peripherals -- 2.5%
110,990 Dell Inc.* 3,852,463
15,225 Electronics for Imaging, Inc.* 386,410
15,880 International Business Machines Corp. 1,400,140
195,480 Maxtor Corp.* 1,272,575
44,700 SanDisk Corp.* 1,033,017
- -----------------------------------------------------------------------------------
7,944,605
- -----------------------------------------------------------------------------------
IT Consulting and Services -- 1.1%
61,800 SunGard Data Systems Inc.* 1,611,126
148,125 Unisys Corp.* 1,930,069
- -----------------------------------------------------------------------------------
3,541,195
- -----------------------------------------------------------------------------------
Office Electronics -- 0.5%
134,630 IKON Office Solutions, Inc. 1,498,432
- -----------------------------------------------------------------------------------
Semiconductor Equipment and Products -- 6.1%
57,190 Cree, Inc.* 1,060,875
284,600 Intel Corp. 7,322,758
172,165 Micron Technology, Inc.* 2,344,887
236,165 Taiwan Semiconductor Manufacturing Co. Ltd., Sponsored ADR* 2,250,652
265,900 Texas Instruments Inc. 6,674,090
- -----------------------------------------------------------------------------------
19,653,262
- -----------------------------------------------------------------------------------
See Notes to Financial Statements.
10 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2004
SHARES SECURITY VALUE
- -------------------------------------------------------------------------------------------------------------------------
Software -- 3.0%
57,785 Advent Software, Inc.* $ 1,079,425
65,000 Autodesk, Inc. 2,177,500
240,200 Microsoft Corp. 6,237,994
- -------------------------------------------------------------------------------------------------------------------------
9,494,919
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 50,326,805
- -------------------------------------------------------------------------------------------------------------------------
MATERIALS -- 3.8%
Chemicals -- 0.9%
100,000 Engelhard Corp. 2,904,000
- -------------------------------------------------------------------------------------------------------------------------
Metals and Mining -- 1.9%
100,210 Alcoa Inc. 3,081,458
141,940 Allegheny Technologies Inc. 1,450,627
36,880 Newmont Mining Corp. 1,379,312
- -------------------------------------------------------------------------------------------------------------------------
5,911,397
- -------------------------------------------------------------------------------------------------------------------------
Paper and Forest Products -- 1.0%
52,930 Weyerhaeuser Co. 3,133,456
- -------------------------------------------------------------------------------------------------------------------------
TOTAL MATERIALS 11,948,853
- -------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 2.9%
Diversified Telecommunication Services -- 2.2%
92,480 Nippon Telegraph and Telephone Corp. 2,401,706
86,980 SBC Communications Inc. 2,165,802
63,700 Verizon Communications Inc. 2,404,038
- -------------------------------------------------------------------------------------------------------------------------
6,971,546
- -------------------------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 0.7%
97,410 Vodafone Group PLC, Sponsored ADR 2,390,441
- -------------------------------------------------------------------------------------------------------------------------
TOTAL TELECOMMUNICATION SERVICES 9,361,987
- -------------------------------------------------------------------------------------------------------------------------
UTILITIES -- 0.5%
Multi-Utilities -- 0.5%
157,930 The Williams Cos., Inc. 1,626,679
- -------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $316,333,769) 298,810,821
- -------------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
- -------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 6.7%
$21,521,000 UBS Securities LLC dated 4/30/04, 0.920% due 5/3/04; Proceeds at maturity -- $21,522,650; (Fully
collateralized by U.S. Treasury Inflation-Indexed Notes, 3.000% due 7/15/12; Market value --
$21,951,555) (Cost -- $21,521,000) 21,521,000
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $337,854,769**) $320,331,821
- -------------------------------------------------------------------------------------------------------------------------
* Non-income producing security.
**Aggregate cost for Federal income tax purposes is $338,096,658.
Abbreviation used in this schedule:
ADR -- American Depositary Receipt
See Notes to Financial Statements.
11 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2004
ASSETS:
Investments, at value (Cost -- $337,854,769) $ 320,331,821
Cash 254
Receivable for Fund shares sold 3,293,497
Dividends and interest receivable 246,687
Prepaid expenses 35,543
- ---------------------------------------------------------------------------
Total Assets 323,907,802
- ---------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 3,496,001
Payable for Fund shares reacquired 211,618
Management fee payable 194,621
Distribution plan fees payable 116,855
Accrued expenses 58,422
- ---------------------------------------------------------------------------
Total Liabilities 4,077,517
- ---------------------------------------------------------------------------
Total Net Assets $ 319,830,285
- ---------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 41,162
Capital paid in excess of par value 547,202,741
Accumulated net realized loss from investment transactions (209,890,670)
Net unrealized depreciation of investments (17,522,948)
- ---------------------------------------------------------------------------
Total Net Assets $ 319,830,285
- ---------------------------------------------------------------------------
Shares Outstanding:
Class A 6,075,310
- ---------------------------------------------------------------------------
Class B 7,297,170
- ---------------------------------------------------------------------------
Class C 27,789,069
- ---------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $7.96
- ---------------------------------------------------------------------------
Class B * $7.73
- ---------------------------------------------------------------------------
Class C * $7.74
- ---------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value) $8.38
- ---------------------------------------------------------------------------
* 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 Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2004
INVESTMENT INCOME:
Dividends $ 2,164,349
Interest 44,629
Less: Foreign withholding tax (12,580)
- ---------------------------------------------------------------------------------------------
Total Investment Income 2,196,398
- ---------------------------------------------------------------------------------------------
EXPENSES:
Distribution plan fees (Note 5) 2,484,172
Management fee (Note 2) 2,036,490
Transfer agency services (Note 5) 297,975
Shareholder communications (Note 5) 58,429
Audit and legal 38,059
Custody 31,499
Directors' fees 18,488
Registration fees 7,090
Other 8,883
- ---------------------------------------------------------------------------------------------
Total Expenses 4,981,085
- ---------------------------------------------------------------------------------------------
Net Investment Loss (2,784,687)
- ---------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Realized Gain From Investment Transactions (excluding short-term investments):
Proceeds from sales 335,266,268
Cost of securities sold 304,700,949
- ---------------------------------------------------------------------------------------------
Net Realized Gain 30,565,319
- ---------------------------------------------------------------------------------------------
Change in Net Unrealized Depreciation of Investments:
Beginning of year (46,455,086)
End of year (17,522,948)
- ---------------------------------------------------------------------------------------------
Decrease in Net Unrealized Depreciation 28,932,138
- ---------------------------------------------------------------------------------------------
Net Gain on Investments 59,497,457
- ---------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 56,712,770
- ---------------------------------------------------------------------------------------------
See Notes to Financial Statements.
13 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED APRIL 30,
2004 2003
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment loss $ (2,784,687) $ (2,897,793)
Net realized gain (loss) 30,565,319 (100,255,301)
Decrease in net unrealized depreciation 28,932,138 22,309,020
- --------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations 56,712,770 (80,844,074)
- --------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 83,874,991 11,811,251
Cost of shares reacquired (61,935,443) (88,493,435)
- --------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Fund Share Transactions 21,939,548 (76,682,184)
- --------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 78,652,318 (157,526,258)
NET ASSETS:
Beginning of year 241,177,967 398,704,225
- --------------------------------------------------------------------------------------------
End of year $319,830,285 $ 241,177,967
- --------------------------------------------------------------------------------------------
See Notes to Financial Statements.
14 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Smith Barney Multiple Discipline Funds -- All Cap Growth and Value Fund
("Fund"), (formerly known as Smith Barney Premier Selections All Cap Growth
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
Government Securities Fund, Smith Barney Small Cap Growth Fund, Smith Barney
Small Cap Value Fund, Smith Barney Hansberger Global Value Fund, Smith Barney
Multiple Discipline Funds -- Large Cap Growth and Value Fund (formerly known as
Smith Barney Premier Selections Large Cap Fund), Smith Barney Multiple
Discipline Funds -- Global All Cap Growth and Value Fund (formerly known as
Smith Barney Premier Selections Global Growth 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, in the absence of sales, at the mean between the
closing bid and asked prices; over-the-counter securities are valued at the
mean between the bid and asked prices; 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) dividend income is recorded on the ex-dividend date and interest
income is recorded on an accrual basis; 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;
(f ) gains or losses on the sale of securities are calculated by using the
specific identification method; (g) 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; (h) dividends
and distributions to shareholders are recorded on the ex-dividend date; the
Fund distributes dividends and capital gains, if any, at least annually; (i)
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; ( 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. At April 30, 2004, reclassifications were made to the
Fund's capital accounts to reflect permanent book/tax differences and income
and gains available for distributions under income tax regulations.
Accordingly, a portion of accumulated net investment loss amounting to
$2,784,687 was reclassified to paid-in capital. Net investment income, net
realized gains and net assets were not affected by this change; and (l)
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.
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 0.75% of the
Fund's average daily net assets. This fee is calculated daily and paid monthly.
15 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as the
Fund's transfer agent. PFPC Inc. ("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, 2004, the Fund paid transfer agent
fees of $272,264 to CTB.
Citigroup Global Markets Inc. ("CGM") and PFS Distributors, Inc., both of which
are subsidiaries of Citigroup, act as the Fund's distributors. For the year
ended April 30, 2004, CGM and its affiliates received brokerage commissions of
$8,960.
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
thereafter by 1.00% per year until no CDSC is incurred. Class C shares also
have a 1.00% CDSC, which applies if redemption occurs within one year from
purchase payment. In certain cases, Class A shares have a 1.00% CDSC, 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 and its affiliates received sales
charges of approximately $549,000 and $63,000 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 and its affiliates were approximately:
Class B Class C
- -------------------------------------------------------------------------
CDSCs $119,000 $3,000
- ------------------------------------------------------------------------
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 $334,353,722
- ------------------------------------------------------------------------------
Sales 335,266,268
- ------------------------------------------------------------------------------
At April 30, 2004, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were as follows:
- -----------------------------------------------------------------------------
Gross unrealized appreciation $ 13,200,053
Gross unrealized depreciation (30,964,890)
- -----------------------------------------------------------------------------
Net unrealized depreciation $(17,764,837)
- -----------------------------------------------------------------------------
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.
16 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. 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 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 $77,049 $452,224 $1,954,899
- -----------------------------------------------
For the year ended April 30, 2004, total Transfer Agency Service expenses were
as follows:
Class A Class B Class C
- -----------------------------------------------
Transfer Agency
Service Expenses $38,241 $55,866 $203,868
- ----------------------------------------------
For the year ended April 30, 2004, total Shareholder Communication expenses
were as follows:
Class A Class B Class C
- ----------------------------------------------
Shareholder
Communication
Expenses $6,616 $12,316 $39,497
- ---------------------------------------------
6. Capital Shares
At April 30, 2004, the Company 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. Effective April 29, 2004, the Fund renamed Class L shares as Class C
shares.
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 3,037,527 $ 24,497,493 415,001 $ 2,649,325
Shares reacquired (963,088) (7,325,513) (1,151,487) (7,329,039)
- ----------------------------------------------------------------------------
Net Increase (Decrease) 2,074,439 $ 17,171,980 (736,486) $ (4,679,714)
- ----------------------------------------------------------------------------
Class B
Shares sold 2,269,778 $ 17,761,462 561,634 $ 3,537,497
Shares reacquired (1,350,876) (9,989,024) (2,109,673) (13,222,853)
- ----------------------------------------------------------------------------
Net Increase (Decrease) 918,902 $ 7,772,438 (1,548,039) $ (9,685,356)
- ----------------------------------------------------------------------------
Class C+
Shares sold 5,302,719 $ 41,616,036 888,030 $ 5,624,429
Shares reacquired (6,035,286) (44,620,906) (10,868,713) (67,941,543)
- ----------------------------------------------------------------------------
Net Decrease (732,567) $ (3,004,870) (9,980,683) $(62,317,114)
- ----------------------------------------------------------------------------
+On April 29, 2004, Class L shares were renamed as Class C shares.
7. Capital Loss Carryforward
At April 30, 2004, the Fund had, for Federal income tax purposes, approximately
$209,649,000 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 possible that the gains so offset will not be distributed.
The amount and expiration of the carryforwards are indicated below. Expiration
occurs on April 30 of the year indicated:
2009 2010 2011 2012
- -------------------------------------------------------------------------------------------------
Carryforward amounts $22,370,000 $84,149,000 $97,831,000 $5,299,000
- ------------------------------------------------------------------------------------------------
17 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. Income Tax Information and Distributions to Shareholders
The tax basis components of distributable earnings at April 30, 2004 was:
-----------------------------------------
Accumulated capital losses $(209,648,781)
-----------------------------------------
Unrealized depreciation (17,764,837)
-----------------------------------------
At April 30, 2004, the difference between book basis and tax basis unrealized
appreciation and depreciation was attributable primarily to wash sale loss
deferrals.
For the years ended April 30, 2004 and 2003, the Fund did not make any
distributions.
9. 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.
10.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 draw-
18 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ing 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.
19 Smith Barney Multiple Discipline Funds -- All Cap Growth and 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)(2)/
- -----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $6.32 $7.89 $9.23 $11.40
- -----------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.03) (0.02) (0.05) (0.05)
Net realized and unrealized gain (loss) 1.67 (1.55) (1.29) (2.12)
- -----------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.64 (1.57) (1.34) (2.17)
- -----------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.96 $6.32 $7.89 $ 9.23
- -----------------------------------------------------------------------------------------
Total Return 25.95% (19.90)% (14.52)% (19.04)%++
- -----------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $48,352 $25,273 $37,371 $49,450
- -----------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.19% 1.20% 1.21% 1.18%+
Net investment loss (0.36) (0.37) (0.64) (0.55)+
- -----------------------------------------------------------------------------------------
Portfolio Turnover Rate 125% 47% 35% 53%
- -----------------------------------------------------------------------------------------
Class B Shares 2004/(1)/ 2003/(1)/ 2002/(1)/ 2001/(1)(2)/
- -----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $6.18 $7.78 $9.18 $11.40
- -----------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.08) (0.07) (0.11) (0.11)
Net realized and unrealized gain (loss) 1.63 (1.53) (1.29) (2.11)
- -----------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.55 (1.60) (1.40) (2.22)
- -----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.73 $6.18 $7.78 $ 9.18
- -----------------------------------------------------------------------------------------------
Total Return 25.08% (20.57)% (15.25)% (19.47)%++
- -----------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $56,434 $39,445 $61,693 $82,069
- -----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.94% 1.97% 1.93% 1.94%+
Net investment loss (1.13) (1.14) (1.36) (1.32)+
- -----------------------------------------------------------------------------------------------
Portfolio Turnover Rate 125% 47% 35% 53%
- -----------------------------------------------------------------------------------------------
(1)Per share amounts have been calculated using the monthly average shares
method.
(2)For the period 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 Multiple Discipline Funds -- All Cap Growth and 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)(3)/
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $6.19 $7.78 $9.18 $11.40
--------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.08) (0.07) (0.11) (0.11)
Net realized and unrealized gain (loss) 1.63 (1.52) (1.29) (2.11)
--------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.55 (1.59) (1.40) (2.22)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $7.74 $6.19 $7.78 $ 9.18
--------------------------------------------------------------------------------------------------
Total Return 25.04% (20.44)% (15.25)% (19.47)%++
--------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $215,044 $176,460 $299,640 $435,913
--------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.91% 1.93% 1.93% 1.94%+
Net investment loss (1.11) (1.10) (1.36) (1.29)+
--------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 125% 47% 35% 53%
--------------------------------------------------------------------------------------------------
(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.
(3)For the period 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.
21 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To 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 the Smith Barney Multiple Discipline Funds --
All Cap Growth and Value Fund ("Fund") (formerly known as Smith Barney Premier
Selections All Cap Growth 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 three-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 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 and broker. As to securities purchased but
not received, 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
three-year period then ended and for the period from June 30, 2000 to April 30,
2001, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
June 18, 2004
22 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
ADDITIONAL INFORMATION (UNAUDITED)
Information about Directors and Officers
The business and affairs of the Smith Barney Multiple Discipline Funds -- All
Cap Growth and Value Fund ("Fund") are managed under the direction of the Board
of Directors of Smith Barney Investment Funds Inc. ("Company"). Information
pertaining to the Directors and certain officers of the Company is set forth
below. The Statement of Additional Information includes additional information
about Company 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
Term of Portfolios in the Other
Office* and Fund Complex Board
Position(s) Held Length of Principal Occupation(s) Overseen Memberships
Name, Address and Age with Fund Time Served During Past Five Years by Director Held by Director
- ----------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors:
Paul R. Ades Director Since Law Firm of Paul R. Ades, 15 None
Paul R. Ades, PLLC 1994 PLLC (April 2000 to present);
181 West Main Partner in Law Firm of Murov &
Street, Suite C Ades, Esqs. (from November
Babylon, NY 11702 1970 to March 2000)
Age 63
Dwight B. Crane Harvard Director Since Professor, Harvard 49 None
Business School Soldiers 1981 Business School
Field Morgan Hall
#375 Boston, MA
02163 Age 66
Frank G. Hubbard Avatar Director Since President of Avatar International, 15 None
International Inc. 87 1993 Inc. (business development)
Whittredge Road Summit, (since 1998); Vice President
NJ 07901 Age 66 of S&S Industries (chemical
distribution) (from 1995-1998)
Jerome H. Miller c/o R. Director Since Retired 15 None
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 Stuff Apparel 15 None
Young Stuff Apparel 1994 Group, Inc. (since 1963)
Group, Inc.
930 Fifth Avenue
Suite 610
New York, NY 10021
Age 62
23 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Number of
Term of Portfolios in the Other
Office* and Fund Complex Board
Position(s) Held Length of Principal Occupation(s) Overseen Memberships
Name, Address and Age with Fund Time Served During Past Five Years by Director Held by Director
- ---------------------------------------------------------------------------------------------------------------------------------
Interested Director:
R. Jay Gerken, CFA** Chairman, Since Managing Director of Citigroup 221 None
CAM President and 2002 Global Markets Inc. ("CGM");
399 Park Avenue, 4th Floor Chief Executive Chairman, President and Chief
New York, NY 10022 Officer Executive Officer of Smith Barney
Age 52 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)
Officers:
Andrew B. Shoup Senior Vice Since Director of CAM; Senior Vice N/A N/A
CAM President 2003 President and Chief
125 Broad Street, 11th Floor and Chief Administrative Officer of mutual
New York, NY 10004 Administrative funds associated with Citigroup;
Age 47 Officer 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)
Alan J. Blake Vice President Since Managing Director of CGM; N/A N/A
CAM and 2000 Investment Officer of SBFM
399 Park Avenue, 4th Floor Investment
New York, NY 10022 Officer
Age 55
Richard A. Freeman Vice President Since Managing Director of CGM; N/A N/A
CAM and 2004 Investment Officer of SBFM
399 Park Avenue, 4th Floor Investment
New York, NY 10022 Officer
Age 50
John G. Goode Vice President Since Managing Director of CGM; N/A N/A
CAM and 2004 Chairman and Chief Investment
One Sansome Street, 36th Floor Investment Officer of Davis Skaggs
San Francisco, CA 94104 Officer Investment Management ("Davis
Age 58 Skaggs"), a division of Citigroup
Asset Management
24 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Number of
Term of Portfolios in the Other
Office* and Fund Complex Board
Position(s) Held Length of Principal Occupation(s) Overseen Memberships
Name, Address and Age with Fund Time Served During Past Five Years by Director Held by Director
- --------------------------------------------------------------------------------------------------------------------------------
Peter J. Hable Vice President Since Managing Director of CGM; N/A N/A
CAM and 2004 President of Davis Skaggs
One Sansome Street, 36th Floor Investment
San Francisco, CA 94104 Officer
Age 44
Kirstin Mobyed Vice President Since Director of CGM; Investment N/A N/A
CAM and 2004 Officer of SBFM
399 Park Avenue, 4th Floor Investment
New York, NY 10022 Officer
Age 34
Roger Paradiso Vice President Since Managing Director of CGM; N/A N/A
CAM and 2004 Investment Officer of SBFM
399 Park Avenue, 4th Floor Investment
New York, NY 10022 Officer
Age 37
Andrew Beagley Chief Anti-Money Since Director of CGM (since 2000); N/A N/A
CAM Laundering 2002 Director of Compliance, North
399 Park Avenue, 4th Floor Compliance America, CAM (since 2000);
New York, NY 10022 Officer Chief Anti-Money Laundering
Age 41 Compliance Officer and Vice
President of certain mutual funds
associated with Citigroup;
Director of Compliance, Europe,
the Middle East and Africa,
Citigroup Asset Management
(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 CGM; N/A N/A
CAM 2002 Controller of certain mutual
125 Broad Street, 11th Floor funds associated with Citigroup
New York, NY 10004
Age 38
Robert I. Frenkel Secretary and Since Managing Director and General N/A N/A
CAM Chief Legal 2003 Counsel of Global Mutual Funds
300 First Stamford Place, 4th Officer for CAM and its predecessor
Floor (since 1994); Secretary of CFM
Stamford, CT 06902 (from 2001 to 2004); Secretary
Age 48 and Chief Legal Officer of 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 Fund as defined in the Investment
Company Act of 1940, as amended, because Mr. Gerken is an officer of SBFM and
of certain of its affiliates.
25 Smith Barney Multiple Discipline Funds -- All Cap Growth and Value
Fund | 2004 Annual Report
SMITH BARNEY
MULTIPLE DISCIPLINE FUNDS
ALL CAP GROWTH AND VALUE FUND
DIRECTORS OFFICERS (continued)
Paul R. Ades Andrew Beagley
Dwight B. Crane Chief Anti-Money Laundering
R. Jay Gerken, CFA Compliance Officer
Chairman
Frank G. Hubbard Kaprel Ozsolak
Jerome H. Miller Controller
Ken Miller
Robert I. Frenkel
OFFICERS Secretary and Chief
R. Jay Gerken, CFA Legal Officer
President and Chief
Executive Officer INVESTMENT MANAGER
Smith Barney Fund
Andrew B. Shoup Management LLC
Senior Vice President and Chief
Administrative Officer DISTRIBUTORS
Citigroup Global Markets Inc.
Alan J. Blake PFS Distributors, Inc.
Vice President and
Investment Officer CUSTODIAN
State Street Bank and
Richard A. Freeman Trust Company
Vice President and
Investment Officer TRANSFER AGENT
Citicorp Trust Bank, fsb.
John G. Goode 125 Broad Street, 11th Floor
Vice President and New York, New York 10004
Investment Officer
SUB-TRANSFER AGENTS
Peter J. Hable PFPC Inc.
Vice President and P.O. Box 9699
Investment Officer Providence, Rhode Island
02940-9699
Kirstin Mobyed
Vice President and Primerica Shareholder Services
Investment Officer P.O. Box 9662
Providence, Rhode Island
Roger Paradiso 02940-9662
Vice President and
Investment Officer
Smith Barney Investment Funds Inc.
Smith Barney Multiple Discipline Funds
All Cap Growth and 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 shareholders of Smith
Barney Investment Funds Inc. -- Smith Barney Multiple Discipline Funds -- All
Cap Growth and Value Fund, but it may also be used as sales literature when
preceded or accompanied by the current Prospectus.
SMITH BARNEY MULTIPLE DISCIPLINE FUNDS
ALL CAP GROWTH AND 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
FD02330 6/04 04-6769
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 9, 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 9, 2004
By: /s/ Andrew B. Shoup
(Andrew B. Shoup)
Chief Administrative Officer of
Smith Barney Investment Funds Inc.
Date: July 9, 2004