<PAGE>
[PHOTO]
[PHOTO]
Smith Barney Hansberger
Global Value Fund
[PHOTO]
Smith Barney Hansberger
Global Small Cap
Value Fund
ANNUAL REPORT
April 30, 1998
[LOGO] [LOGO]
Hansberger Smith Barney
Global Mutual Funds
Investors, Inc. Investing for yor future.
Every day.(SM)
<PAGE>
Smith Barney
Hansberger Funds
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"Our shareholders are willing to look beyond national borders. They've employed
us to look for value wherever it can be found. Our clients are willing to take
the long view, undistracted by the ups and downs of local markets."
Thomas Hansberger, CFA, CIC
Chairman and Chief Executive Officer
Hansberger Global Investors, Inc.
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The Smith Barney Hansberger Global Value Fund's investment objective is
long-term capital growth. The Fund seeks to achieve its objective by investing
primarily in equity securities of U.S. and foreign issuers, which in the opinion
of Mutual Management Corp., the Fund's investment manager, and Hansberger Global
Investors, Inc., the Fund's sub-investment adviser, are undervalued.
NASDAQ SYMBOL
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Class A SGLAX
Class B SGLBX
The Smith Barney Hansberger Global Small Cap Value Fund's investment objective
is long-term capital growth. The Fund seeks to achieve this objective by
investing primarily in equity securities of U.S. and foreign issuers with
relatively small market capitalizations (i.e., under normal market conditions
the Fund will invest at least 65% of the value of its total assets in companies
with market capitalizations of $1.4 billion or less at the time of purchase).
These are equity securities which, in the opinion of Mutual Management Corp.,
the Fund's investment manager, and Hansberger Global Investors, Inc., the Fund's
sub-investment adviser, are undervalued.
NASDAQ SYMBOL
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Class B SCVBX
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WHAT'S INSIDE
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Shareholder Letter .......................................................... 1
Smith Barney Hansberger Global Value Fund
Portfolio Manager Commentary ............................................. 4
Historical Performance.................................................... 6
Smith Barney Hansberger Global Small Cap
Value Fund
Portfolio Manager Commentary ............................................. 7
Historical Performance ................................................... 9
Schedules of Investments .................................................... 10
Statements of Assets and Liabilities ........................................ 19
Statements of Operations .................................................... 20
Statements of Changes in Net Assets ......................................... 21
Notes to Financial Statements ............................................... 22
Financial Highlights ........................................................ 28
Independent Auditors' Report ................................................ 30
Tax Information ............................................................. 31
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Shareholder Letter
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[PHOTO OMITTED] [PHOTO OMITTED]
Heath B. Thomas L.
McLendon Hansberger
CFA, CIC
Chairman
Chairman and Chief
Executive Officer
Hansberger Global
Investors, Inc.
Dear Shareholder:
We are proud to present the first annual shareholder report for the Smith Barney
Hansberger Global Value Fund and the Smith Barney Hansberger Global Small Cap
Value Fund ("Funds") for the period ended April 30, 1998. As you know, Smith
Barney formed an affiliation with Hansberger Global Investors, Inc. ("HGI")
because of its leadership in global investing, and these two global funds were
introduced in early November 1997. We are also pleased to report that the
International Society of Financial Analysts ("ISFA") has named Thomas L.
Hansberger, CFA, Chairman and Chief Executive Officer of HGI, as the recipient
of an ISFA award which now carries his name -- the Thomas L. Hansberger Award
for Leadership in Global Investing. ISFA is a member society of the Association
for Investment Management and Research.
In this letter, we discuss HGI's investment philosophy and update you on global
market conditions during the reporting period. Individual commentaries and an
explanation of the investment strategies pursued by each Fund follows.
HGI is made up of experienced value managers. We emphasize thorough, hands-on
fundamental research, a team approach to investing and an extensive global
network supported by knowledgeable local contacts. Market trends and the
opinions of market observers are typically not factors in our investment
decision-making process.
As bottom-up investors, we look for outstanding performance potential from
individual stocks before considering the impact of economic trends. (Top-down
investors first look at general economic trends, then select those industries
and companies that should benefit from these trends.) We perform rigorous
analysis of companies and the global industries in which they operate. This is
accomplished through analysis of financial statements, especially the balance
sheets and income statements, which are important elements of our investment
decision making process. We at HGI search for stocks that are selling for what
we believe are less than their true, intrinsic worth in the expectation that the
markets will eventually recognize their values and cause their share prices to
rise.
Once we have determined that a stock warrants further consideration, we
construct pro forma financial statements for each company going out
approximately five to seven years. This includes evaluation of the company's
revenues, pricing, capacity and margins. We also look at its financial condition
and debt structure, and visit with its management. Our goal is to project the
earnings for the stock over an economic cycle.
If the stock price appears low versus its projected potential, we submit the
security to HGI's entire investment group for consideration. Only those stocks
which everyone in the investment group agrees are worthy are added to the "Value
List" and become eligible for purchase by the Funds.
Our global network consists of analysts in offices throughout the world as well
as extensive local contacts
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Smith Barney Hansberger Funds 1
<PAGE>
that have been developed over the past 35 years. As analysts, we represent 11
different nationalities and speak a combined total of 17 languages.
Global Markets Update
World stock markets rebounded strongly in the first quarter of 1998 following
the dismal performance brought on by the Asian crisis during the last quarter of
1997. Strong fourth quarter corporate earnings, increased merger and acquisition
activity and Europe's relative attractiveness have overshadowed the remnants of
the Asian crisis' fallout. New Zealand was the only developed market to post a
negative return, in U.S. dollar terms, in the first quarter of 1998, with
fifteen global stock markets outpacing the U.S. stock market's strong returns.
Several of the Asian stock markets that were hardest hit in the fourth quarter
of 1997 came back powerfully in the first quarter of 1998 with many markets and
currencies strengthening due to renewed investor confidence that reform programs
would be implemented. Resource-oriented markets including Australia, Russia and
Venezuela faced pressure as commodity prices fell, largely in response to weaker
Asian demand.
Investors need to remember that Eastern Asia averaged roughly an 8.5% growth
rate in annual Gross Domestic Product ("GDP") over the last thirty years, a feat
never before achieved by any other economy or region for such a long period of
time. This strong economic growth was taken for granted by many investment
professionals, and many company shares in Asia were rewarded with above average
price-to-earnings ("P/E") multiples. (The P/E ratio, is a common method used by
investors to determine a stock's relative value. The P/E ratio compares a
stock's price to its earnings per share.)
Even U.S.-based multinationals that put Asian expansion on their corporate
agenda were afforded a higher earnings multiple for the potential growth
opportunity believed to exist in Asia. Many of the multinationals that had a
limited Asian presence have lately been touting their low exposure to the
region, and many U.S.-based multinationals with substantial exposure have
rethought their commitments. We believe this is a shortsighted view and
companies that are making additional investments in Asia should ultimately be
rewarded.
While much of Asia's maladies have been chronicled in the media recently, little
attention has been paid to the opportunities that have been created in the
region for patient investors. While we do not believe that the effects, both
direct and indirect, from the Asian crisis are over, we do believe that current
valuations in many markets have not been this attractive in at least a decade.
After much fiscal maneuvering during the past several years, Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal
and Spain will be founding members of the European Monetary Union ("EMU"). These
countries will hand over control of their monetary policy to the European
Central Bank ("ECB") at the end of 1998 and the Euro will become their common
currency. This will be a grand experiment given the diversity of economies and
cultures involved.
On the one hand, there is Ireland, the Celtic tiger, with a strong economy
(e.g., an annual GDP growth rate of roughly 7.5% in 1997) and low unemployment.
On the other hand is Germany, which had an annual GDP growth rate of
approximately 2.2% in 1997 and high unemployment. The challenge will be how to
balance the needs of lowering unemployment in several of the larger European
economies while preventing runaway inflation in the region's stronger economies.
Although there remain many obstacles to be overcome in Europe (e.g., labor
mobility, underfunded pensions, deep-rooted socialist tendencies), change at the
corporate level is rapidly taking place. European companies are continuing to
focus on improved efficiencies, profits and shareholder rights; all of which
should benefit the stock market.
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2 1998 Annual Report to Shareholders
<PAGE>
With the Dow Jones Industrial Average ("DJIA") continuing to climb, it is
difficult to see how much better the picture can get for the U.S. stock market
from the perspectives of both future corporate earnings growth and current
expansion of multiple valuations over the past two years. (The DJIA is a
price-weighted average of the 30 most actively traded blue chip stocks,
primarily industrials.) Although the ongoing consolidation in the financial
services industry has also helped to propel the U.S. stock market to even higher
levels, we question whether the U.S. stock market can continue to post
competitive returns at current valuation levels.
We continue to identify value in selected middle- and smaller-market
capitalization companies in the U.S. (Market capitalization is the value of a
company's outstanding shares of common stock, determined by multiplying the
number of shares outstanding by the share price.) Yet, because of the high
valuation of many U.S. stocks, the U.S. weightings in our Funds have been
somewhat modest.
The portfolio managers at Hansberger Global Investors strongly believe that
diversifying globally, as opposed to investing solely in U.S. markets, can
potentially increase opportunities while helping to minimize risk. Global
diversification can provide investors access to stocks not found in the U.S., in
markets that frequently have lower valuations and in companies that may have a
competitive advantage over their U.S. counterparts. More importantly, global
diversification makes sense for many investors because the performance of the
international markets and the U.S. market are not highly correlated; that is,
they don't move together in unison. Over time, we believe a globally diversified
portfolio can help to smooth out returns.
In closing, thank you for your confidence in our investment management approach.
We at HGI and Smith Barney Mutual Funds look forward to continuing to help you
take advantage of value investment opportunities wherever they can be found,
worldwide.
Sincerely,
/s/ HEATH B. MCLENDON /s/ THOMAS L. HANSBERGER
Heath B. McLendon Thomas L. Hansberger
Chairman CFA, CIC
Chairman and
Chief Executive Officer
Hansberger Global
Investors, Inc.
May 18, 1998
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Smith Barney Hansberger Funds 3
<PAGE>
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Smith Barney Hansberger Global Value Fund
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Current Team Members
Thomas L.Hansberger, CFA, CIC, Chairman and Chief Executive Officer of
Hansberger Global Investors, Inc. ("HGI") Mr. Hansberger is responsible for the
management of various separate accounts and mutual funds. Before forming HGI,
Mr. Hansberger served as Chairman, President and Chief Executive Officer of
Templeton Worldwide, Inc., the parent holding company of the Templeton group of
companies. Mr. Hansberger graduated from Miami University (Oxford, OH) in 1955
and served in the U.S. Air Force.
James E. Chaney, Chief Investment Officer of HGI
Mr. Chaney serves as Portfolio Manager for the Hansberger Institutional Fund and
separate institutional accounts. Prior to joining HGI, Mr. Chaney was Executive
Vice President for the Templeton organization and a senior member of the
Portfolio Management/Strategy Committee. Mr. Chaney holds a Bachelor of Science
- - Civil Engineering degree from the University of Massachusetts - Amherst, a
Masters of Science degree from Northeastern University, an MBA from Columbia
University and is a member of the Beta Gamma Sigma Honor Society.
John Hock, CFA, Senior Vice President of Research of HGI
Mr. Hock is a research analyst and assistant portfolio manager. His research
responsibilities include the coverage of several global industries and
geographic responsibility for Southern Europe. Prior to joining HGI, Mr. Hock
was a Vice President and Senior Analyst in the Global Securities Research and
Economic Group at Merrill Lynch. Mr. Hock received his Bachelors of Science in
Applied Economics from Cornell University and his MBA in Finance from New York
University. He is a Chartered Financial Analyst and a member of the Association
for Investment Management and Research.
Francisco Alzuru, Managing Director of HGI,
Latin America
Mr. Alzuru is a portfolio manager and research analyst. His research
responsibilities include several global industries and geographic responsibility
for Mexico and most South American countries. Prior to joining HGI, Mr. Alzuru
was a Vice President and Senior Research Analyst at Vestcorp Partners, a Latin
American-based investment bank, covering Latin America. Mr. Alzuru received a
Bachelors of Science in Urban Planning from the Universidad Simon de Bolivar in
Caracas, Venezuela and a Masters in Finance from Oklahoma City University in
Oklahoma. He is a member of the Association for Investment Management and
Research and the Financial Analysts Society of South Florida.
Performance Update
For the period December 19, 1997 through April 30, 1998, the Smith Barney
Hansberger Global Value Fund's ("Fund") Class A, Class B and Class C shares
(excluding sales charges) had returns of 14.13%, 13.87% and 13.87%,
respectively. A comparative benchmark's gross return is 16.86% for the Morgan
Stanley Capital International ("MSCI") All-Country World Free Index over the
same period. (MSCI All Country World Free Index represents market performance in
both the developed and the emerging markets in Africa, Asia, Australia, Europe,
North America and South America.) As of April 30, 1998, the Fund owned
securities of 126 issuers in 39 countries.
Asia and the Pacific Rim
As noted in the global markets commentary at the start of this report, the
crisis in Asia was one of the most significant events that took place during the
reporting period. However, Asia's strong work ethic, true competitiveness,
relatively low wage rates and economic dynamism should return many Asian
companies back to the growth and profitability seen after the previous crisis in
the 1980s.
The challenges in Asia should be addressed and the problems fixed, but this may
take some time in several markets, although we would not be surprised to see a
quicker turnaround than most investment professionals anticipate. In our
opinion, improvements in three areas that would help to rebuild confidence in
- --------------------------------------------------------------------------------
4 1998 Annual Report to Shareholders
<PAGE>
Asia are better accounting disclosure and transparency (especially in the
financial services industry), more modern and concrete bankruptcy laws and the
elimination of crony capitalistic practices.
Europe
Europe has been an overweighted position for the Fund during the reporting
period and we have uncovered some excellent companies selling at very reasonable
prices throughout Europe. Since the Fund was launched, many European markets
have performed well. In fact, multiples are rising in Europe and many valuations
have gotten a little stretched compared to their historic levels.
There are significant structural changes taking place in Europe that have
benefited stock investors in the region. Corporate restructuring, strengthening
earnings, mergers and acquisitions, and the development of equity cultures are
secular trends that we believe are compelling. Moreover, interest rates in
Europe have fallen, which, in turn, has lowered the cost of doing business in
Europe and further added to the appeal of stock valuations.
With the introduction of the Euro, established European markets, especially
Italy and Spain, posted some of their better performances of recent years.
However, the ebullience was limited to the larger- market capitalization issues,
leaving a large valuation gap between them and the mid to smaller-market
capitalization stocks. We think that valuations in the larger-market
capitalization continental European stocks may have gotten ahead of themselves,
but we continue to find value in the mid- to small-market capitalization
companies on the continent, as well as in United Kingdom companies that have
been punished by the strong pound.
During the first quarter of 1998, the Fund's overweighted exposure to Europe
(and our underweighting in Japan) benefited the Fund's performance compared to
the indices, while our overexposure to Asia (excluding Japan) and Eastern Europe
detracted from our relative performance.
Latin America
Investor concerns about the crisis in Asia spread to Latin America. However,
when you look at current valuations in the region, compared to the growth
prospects of select companies, we think that many of these countries offer
tremendous value, especially because the underlying economies have done well. In
fact, even though Brazil was hit hard by the crisis in Asia, the country has
stepped up its efforts to implement radical reforms and should benefit over the
long run.
Please see page six for additional Fund performance information.
<TABLE>
<CAPTION>
================================================================================
Top Ten Holdings* April 30, 1998
================================================================================
<S> <C>
1. Lafarge SA 1.8%
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2. Compagnie de Saint Gobain 1.7
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3. Broken Hill Proprietary Co. Ltd. 1.6
- --------------------------------------------------------------------------------
4. Komercni Banka AS GDR 1.5
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5. Boehler - Uddeholm AG 1.4
- --------------------------------------------------------------------------------
6. American Standard Cos. Inc. 1.4
- --------------------------------------------------------------------------------
7. Roper Industries Inc. 1.4
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8. Alcan Aluminium Ltd. 1.4
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9. Orica Ltd. 1.4
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10. The Geon Co. 1.4
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</TABLE>
* As a percentage of total stocks.
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Smith Barney Hansberger Funds 5
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
Historical Performance - Class A Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $11.40 $12.99 $0.02 14.13%+
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================================================
Historical Performance - Class B Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $11.40 $12.96 $0.02 13.87%+
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================================================
Historical Performance - Class C Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $11.40 $12.96 $0.02 13.87%+
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================================================
Historical Performance - Class Y Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $12.44 $13.00 $0.00 4.50%+
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It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
<CAPTION>
=================================================================================================================================
Average Annual Total Return
=================================================================================================================================
Without Sales Charge(1)
---------------------------------------------------------
Class A Class B Class C Class Y
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<S> <C> <C> <C> <C>
Inception* through 4/30/98+ 14.13% 13.87% 13.87% 4.50%
- ---------------------------------------------------------------------------------------------------------------------------------
With Sales Charge(2)
---------------------------------------------------------
Class A Class B Class C Class Y
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception* through 4/30/98+ 8.42% 8.87% 12.87% 4.50%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 charge ("CDSC") with respect to Class B and C
shares.
(2) 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 initial purchase. Thereafter, this CDSC declines by 1.00% per
year until no CDSC is incurred. Class C shares reflect the deduction of a
1.00% CDSC, which applies if shares are redeemed within the first year of
purchase.
* 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.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
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6 1998 Annual Report to Shareholders
<PAGE>
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Smith Barney Hansberger Global Small Cap Value Fund
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Current Team Members
Lauretta Reeves, CFA, Managing Director of
Research of HGI
Ms. Reeves' research responsibilities include several global industries and
coverage of the United Kingdom and Central European markets. Prior to joining
HGI, Ms. Reeves was Senior Vice President at Templeton in the research and
portfolio management group. Ms. Reeves received her MBA from Nova-Southeastern
University and her undergraduate degree in business management from Florida
International University. Ms. Reeves is a Chartered Financial Analyst and a
member of the Association for Investment Management and Research.
Vladimir Tyurenkov, Managing Director of HGI,
Eastern Europe and Russia
Prior to joining HGI, Mr. Tyurenkov spent several years working for the Russian
Government and on the Pepperdine University Russian Conversion and Privatization
Program. Mr. Tyurenkov has an MBA specializing in Finance from Pepperdine
University in California. Additionally, he holds a Masters in Computer Science
from Moscow State Technical University.
Robert Mazuelos, Senior Vice President of Research of HGI
Mr. Mazuelos is a research analyst and assistant portfolio manager. His research
responsibilities include several global industries and geographic responsibility
for Central America, Peru and Chile. Prior to joining HGI, Mr. Mazuelos was a
performance analyst at Templeton Investment Counsel, Inc. where he was
responsible for return analysis on separate accounts and mutual funds. Mr.
Mazuelos received a Bachelors of Science in Business Administration from the
University of Florida. He is a member of the Association for Investment
Management and Research and the Financial Analysts Society of South Florida.
Victoria Gretsky, Vice President of Research of HGI
Ms. Gretsky is a research analyst. Her responsibilities include the analysis of
key markets in Eastern Europe and Russia, as well as global industries. Prior to
joining HGI, she was a research analyst for Optimum Consulting, a Russia-based
firm that specialized in restructuring Russian companies during privatization.
Ms. Gretsky holds a Masters in Computer Science from Moscow State Technical
University.
Performance Update
For the period December 19, 1997 through April 30, 1998, the Smith Barney
Hansberger Global Small Cap Value Fund's ("Fund") Class A, Class B and Class C
shares (excluding sales charges) had a return of 8.64%, 8.38% and 8.38%,
respectively. A comparative benchmark's gross return is 15.62% for the Salomon
Smith Barney World EMI Index (Small-Cap). As of April 30, 1998, the Fund owned
securities of 91 issuers in 29 countries.
We believe that, over the long run, small-cap stocks offer the greatest
potential for capital appreciation and can help diversify a portfolio of
large-cap stocks. Since there is usually less information available on foreign
small market capitalization companies, investing in a professionally managed
global small-cap mutual fund can help manage some of the additional risks
associated with overseas markets and particularly small-cap stocks. Moreover, a
mutual fund is one of the only ways for individual investors to gain access to
certain developing markets.
It is fair to say that there is more risk in investing in small-cap stocks than
larger-cap stocks, which risks are outlined in the Fund's prospectus. These
risks include increased susceptibility to losses by smaller-market capitalized
companies due to limited product lines, markets or financial resources. We
believe, however, that with our investment style--which actually involves
visiting the companies, talking with management, sitting down and doing our
homework when we make our earnings projections, as well as discussions with the
rest of our team members who have expertise in markets and industries--the risk
of investing in smaller-cap companies is to some extent discounted.
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 7
<PAGE>
The bull market in U.S. stocks has continued and, since the last quarter of
1997, there has been a large gap between the valuations of small-market
capitalization and large-market capitalization companies. And while small-cap
stocks have recovered somewhat during the reporting period, the valuation gap
still exists. We, therefore, have a larger weighting in the U.S. in the Smith
Barney Hansberger Global Small Cap Value Fund compared to the Smith Barney
Hansberger Global Value Fund. However, relative to most global small-cap
indices, we are underweighted in the U.S.
While the fiscal policies pursued by many European countries remain tight in
anticipation of the Maastricht deadline for the European Monetary Union ("EMU"),
falling interest rates and weaker currencies are lending support to an expansion
of economic growth. There is also a valuation gap between small-cap stocks and
large-cap stocks in Europe. We have identified some good values in selected
European companies and the Fund was overweighted in Europe during the reporting
period.
For example, Koninklijke Ahrend Groep NV ("Ahrend"), a Netherlands distributor
of office products and an assembler of desks and chairs, is a recent purchase
that illustrates the Fund's value investment approach. Ahrend distributes
ergonomic furniture and its stock price was depressed because of poor business
conditions in Europe. Additionally, we bought Ahrend because its decision to
become an assembler, rather than a manufacturer, of furniture lowered its
capital expenditure requirements and raised margins. With that excess cash flow,
Ahrend was then able to acquire companies and expand its geographic reach. We
thought Ahrend was an excellent long-term opportunity and we bought the stock at
less than six times its prospective earnings.
A lot of smaller-sized U.S. companies are in health care and technology
industries, which tend to be volatile because of product obsolescence or
regulatory hurdles. However, the majority of the smaller-sized companies our
research covers outside the U.S. are in a diverse range of industries, from
office products to metals. Many of these international companies are raising
capital through their stock markets for the first time, and they are not
necessarily volatile. It just takes time for the market to recognize their
underlying potential.
On the other hand, smaller companies outside the U.S. do not have the reporting
transparency of U.S. firms and, also, sometimes suffer from a lack of liquidity.
We think HGI's global network of analysts and knowledgeable local contacts give
us an edge here. Moreover, we think the Fund's broad diversification helps to
minimize the impact that any one underperforming company has on the entire
portfolio.
Please see page nine for additional Fund performance information.
<TABLE>
<CAPTION>
================================================================================
Top Ten Holdings* April 30, 1998
================================================================================
<S> <C>
1. Tarrant Apparel Group 2.2%
- --------------------------------------------------------------------------------
2. Roper Industries Inc. 2.1
- --------------------------------------------------------------------------------
3. The Geon Co. 1.8
- --------------------------------------------------------------------------------
4. BICC Group PLC 1.7
- --------------------------------------------------------------------------------
5. Kyudenko Corp. 1.6
- --------------------------------------------------------------------------------
6. Tecumseh Products Co., Class A Shares 1.6
- --------------------------------------------------------------------------------
7. Tarkett Sommer AG 1.6
- --------------------------------------------------------------------------------
8. Fimalac 1.6
- --------------------------------------------------------------------------------
9. Moore Corp. Ltd. 1.6
- --------------------------------------------------------------------------------
10. Azienda Mediterranea Gas e Acqua S.p.A. 1.5
- --------------------------------------------------------------------------------
</TABLE>
* As a percentage of total stocks.
- --------------------------------------------------------------------------------
8 1998 Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
Historical Performance - Class A Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $11.40 $12.37 $0.01 8.64%+
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================================================
Historical Performance - Class B Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $11.40 $12.34 $0.01 8.38%+
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================================================
Historical Performance - Class C Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $11.40 $12.34 $0.01 8.38%+
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================================================
Historical Performance - Class Y Shares
=================================================================================================================================
Net Asset Value
------------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception*-- 4/30/98 $11.74 $12.37 $0.00 5.37%+
- ---------------------------------------------------------------------------------------------------------------------------------
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
<CAPTION>
=================================================================================================================================
Average Annual Total Return
=================================================================================================================================
Without Sales Charge(1)
---------------------------------------------------------
Class A Class B Class C Class Y
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception* through 4/30/98+ 8.64% 8.38% 8.38% 5.37%
- ---------------------------------------------------------------------------------------------------------------------------------
With Sales Charge(2)
---------------------------------------------------------
Class A Class B Class C Class Y
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception* through 4/30/98+ 3.21% 3.38% 7.38% 5.37%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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) 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 initial purchase. Thereafter, this CDSC declines by 1.00% per
year until no CDSC is incurred. Class C shares reflect the deduction of a
1.00% CDSC, which applies if shares are redeemed within the first year of
purchase.
* Inception dates for Class A, B and C shares is December 19, 1997 and the
inception date for Class Y shares is March 10, 1998.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 9
<PAGE>
================================================================================
Schedules of Investments April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STOCKS -- 62.5%
Argentina -- 0.7%
72,000 Banco Rio de La Plata SA ADR(a) $ 992,068
- ------------------------------------------------------------------------------------------------------------------------------------
Australia -- 3.2%
150,000 Broken Hill Proprietary Co. Ltd. 1,467,002
82,000 National Australia Bank Ltd. 1,165,516
172,000 Orica Ltd. 1,266,107
350,000 Telstra Corp. Ltd. Installment Receipts 821,521
- ------------------------------------------------------------------------------------------------------------------------------------
4,720,146
- ------------------------------------------------------------------------------------------------------------------------------------
Austria -- 1.5%
11,000 Bank Austria AG, Preferred New Shares(a) 850,167
18,000 Boehler - Uddeholm AG 1,327,040
- ------------------------------------------------------------------------------------------------------------------------------------
2,177,207
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil -- 1.5%
19,000 Aracruz Celulose SA ADR 300,437
38,000 Companhia Vale do Rio Doce ADR 924,124
8,700 Telecomunicacoes Brasileiras SA Telebras ADR 1,059,768
- ------------------------------------------------------------------------------------------------------------------------------------
2,284,329
- ------------------------------------------------------------------------------------------------------------------------------------
Canada -- 2.2%
39,000 Alcan Aluminium Ltd. 1,270,126
77,000 Moore Corp. Ltd. 1,207,937
115,636 Noranda Forest Inc. 776,400
- ------------------------------------------------------------------------------------------------------------------------------------
3,254,463
- ------------------------------------------------------------------------------------------------------------------------------------
China -- 0.4%
89,290 Shangdon Huaneng Power Co. Ltd. ADR 649,400
- ------------------------------------------------------------------------------------------------------------------------------------
Colombia -- 0.5%
53,800 Bancolombia SA ADR 814,250
- ------------------------------------------------------------------------------------------------------------------------------------
Croatia -- 0.5%
38,800 Pliva D.D. GDR 702,280
- ------------------------------------------------------------------------------------------------------------------------------------
Czech Republic -- 1.3%
20,000 The Czech Power Co. (Czeske Energeticke Zavody)(a) 601,201
117,000 Komercni Banka AS GDR(a) 1,386,450
- ------------------------------------------------------------------------------------------------------------------------------------
1,987,651
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark -- 0.7%
6,600 The Codan Group (Forsikringsselskabet Codan) 1,046,975
- ------------------------------------------------------------------------------------------------------------------------------------
Finland -- 2.0%
85,000 Kemira Oyj 920,504
95,000 Metsa-Serla Oyj, Class B Shares 985,205
53,100 The Rauma Group Oyj 994,144
- ------------------------------------------------------------------------------------------------------------------------------------
2,899,853
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statement
- --------------------------------------------------------------------------------
10 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
France -- 3.4%
4,000 Bail Investissement $ 600,219
9,500 Compagnie de Saint Gobain 1,581,807
3,200 Eridania Beghin-Say SA 693,409
17,000 Lafarge SA 1,604,573
916 Lafarge SA, New Shares(a) 84,022
8,100 Scor 499,099
- ------------------------------------------------------------------------------------------------------------------------------------
5,063,129
- ------------------------------------------------------------------------------------------------------------------------------------
Germany -- 2.8%
19,400 BASF AG 864,864
31,000 Bilfinger & Berger Bau AG 1,052,047
1,885 Fuchs Petrolub AG Oel & Chemie, Preferred Shares 220,590
20,000 Hoechst AG 805,795
33,000 Tarkett Sommer AG 1,140,150
- ------------------------------------------------------------------------------------------------------------------------------------
4,083,446
- ------------------------------------------------------------------------------------------------------------------------------------
Hong Kong -- 2.0%
115,000 Cheung Kong Holdings Ltd. 764,588
350,000 Dairy Farm International Holdings Ltd.(a) 448,000
1,200,000 Giordano International Ltd. 278,853
94,000 Hutchison Whampoa Ltd. 581,280
90,000 Jardine Matheson Holdings Ltd.(a) 379,800
600,000 Swire Pacific Ltd., Class B Shares 511,231
- ------------------------------------------------------------------------------------------------------------------------------------
2,963,752
- ------------------------------------------------------------------------------------------------------------------------------------
India -- 1.4%
90,000 Gujarat Ambuja Cements Ltd.(a) 672,750
36,000 State Bank of India GDR 684,000
101,000 Tata Engineering and Locomotive Co. Ltd. GDR 722,150
- ------------------------------------------------------------------------------------------------------------------------------------
2,078,900
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia -- 0.3%
5,000,000 PT Kalbe Farma 510,835
- ------------------------------------------------------------------------------------------------------------------------------------
Italy -- 1.1%
750,000 Azienda Mediterranea Gas e Acqua S.p.A. 702,615
850,000 Montedison S.p.A. di Risp NC 775,191
33,400 Sogefi S.p.A. 128,194
- ------------------------------------------------------------------------------------------------------------------------------------
1,606,000
- ------------------------------------------------------------------------------------------------------------------------------------
Japan -- 2.4%
102,000 Daito Trust Construction Co. Ltd. 717,157
220,000 Dowa Fire & Marina Insurance Co. Ltd. 707,636
123,000 Kyudenko Corp. 889,010
365,000 Marubeni Corp. 834,254
110,000 Nippon Fire & Marine Insurance Ltd. 445,394
- ------------------------------------------------------------------------------------------------------------------------------------
3,593,451
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statement
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 11
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Malaysia -- 0.3%
170,000 O.Y.L. Industries Berhad $ 481,818
- ------------------------------------------------------------------------------------------------------------------------------------
Mexico -- 1.5%
130,000 Cemex SA de CV(a) 648,506
20,000 Grupo Industrial Durango, SA ADR(a) 287,500
11,000 Telefonos de Mexico SA ADR 622,875
82,500 Transportacion Maritima Mexicana SA de CV ADR(a) 592,949
- ------------------------------------------------------------------------------------------------------------------------------------
2,151,830
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands -- 1.8%
6,193 DSM NV 620,679
25,000 Koninklijke Ahrend Groep NV 866,122
34,800 Koninklijke Emballage Industrie Van Leer NV 887,008
9,200 Koninklijke Pakhoed NV 336,946
- ------------------------------------------------------------------------------------------------------------------------------------
2,710,755
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand -- 1.4%
1,250,000 Brierley Investments Ltd. 722,410
200,000 Fernz Corp. Ltd. 600,156
225,000 Fletcher Challenge Energy 767,700
- ------------------------------------------------------------------------------------------------------------------------------------
2,090,266
- ------------------------------------------------------------------------------------------------------------------------------------
Norway -- 2.5%
33,000 Aker RGI ASA, Class B Shares 535,391
18,000 Kvaerber ASA 798,862
15,000 Norsk Hydro ASA 748,179
43,000 Saga Petroleum ASA, Class B Shares 766,817
24,500 Sparebanken NOR 847,534
- ------------------------------------------------------------------------------------------------------------------------------------
3,696,783
- ------------------------------------------------------------------------------------------------------------------------------------
Peru -- 0.2%
63,000 Banco Wiese ADR 339,875
- ------------------------------------------------------------------------------------------------------------------------------------
Philippines -- 1.0%
108,000 Metropolitan Bank & Trust Co. 840,597
26,000 Philippines Long Distance Phone Co. 696,139
- ------------------------------------------------------------------------------------------------------------------------------------
1,536,736
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal -- 0.3%
14,100 EDP-Electricidade de Portugal SA 367,926
- ------------------------------------------------------------------------------------------------------------------------------------
Russia -- 1.2%
15,200 Lukoil Holding ADR(a) 1,010,800
3,600 Rostelecom ADR(a) 77,353
4 Rostelecom RDC(a) 142,800
71,000 Surgutneftegaz ADR 532,500
- ------------------------------------------------------------------------------------------------------------------------------------
1,763,453
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore -- 0.4%
150,000 City Developments Ltd. 648,879
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statement
- --------------------------------------------------------------------------------
12 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Slovakia -- 0.3%
32,200 Slovakofarma AS GDR(a) $ 254,985
13,000 Vychodoslvenske Zeleziarne AS(a) 158,237
- ------------------------------------------------------------------------------------------------------------------------------------
413,222
- ------------------------------------------------------------------------------------------------------------------------------------
Slovenia -- 0.2%
17,000 SKB Banka GDR 257,550
- ------------------------------------------------------------------------------------------------------------------------------------
South Africa -- 0.3%
16,000 Sappi Ltd.(a) 93,028
6,000 Standard Bank Investment Corp. Ltd. 354,790
- ------------------------------------------------------------------------------------------------------------------------------------
447,818
- ------------------------------------------------------------------------------------------------------------------------------------
South Korea -- 1.2%
30,000 Pohang Iron & Steel Co. Ltd. ADR 534,375
32,000 Samsung Electronics GDR(a) 900,800
55,000 SK Telecom Co. Ltd. ADR 412,437
- ------------------------------------------------------------------------------------------------------------------------------------
1,847,612
- ------------------------------------------------------------------------------------------------------------------------------------
Spain -- 2.0%
17,000 Banco Santander SA 897,877
23,000 Construcciones y Auxiliar de Ferrocarriles SA 1,033,690
20,000 Iberdrola SA 321,490
12,100 Repsol SA 662,894
- ------------------------------------------------------------------------------------------------------------------------------------
2,915,951
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden -- 1.7%
25,000 AssiDoman AB 671,938
41,000 BT Industries AB 821,186
34,500 Kalmar Industries AB 557,256
25,000 SKF AB, Class B Shares 503,954
- ------------------------------------------------------------------------------------------------------------------------------------
2,554,334
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland -- 1.2%
620 ABB AG, Bearer Shares 1,016,867
700 Holderbank Financiere Glarus AG, Bearer Shares 741,116
- ------------------------------------------------------------------------------------------------------------------------------------
1,757,983
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand -- 0.6%
180,000 Bangkok Bank Public Co. Ltd. 451,454
160,000 Thai Farmers Bank Public Co. Ltd. 366,127
- ------------------------------------------------------------------------------------------------------------------------------------
817,581
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom -- 5.7%
1,400,000 Albert Fisher Group PLC 672,975
250,000 The BICC Group 702,235
65,000 British Telecommunications PLC 706,415
140,000 BTR PLC 466,986
60,000 Cable & Wireless PLC 689,695
230,000 Caradon PLC 744,118
</TABLE>
See Notes to Financial Statement
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 13
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Kingdom -- 5.7% (continued)
75,000 De La Rue PLC $ 359,268
260,000 Hillsdown Holdings PLC 773,796
225,000 Lucas Varity PLC 1,009,149
40,000 National Westminster Bank PLC 800,548
340,000 Pilkington PLC 713,437
183,000 Rolls-Royce PLC 860,551
- ------------------------------------------------------------------------------------------------------------------------------------
8,499,173
- ------------------------------------------------------------------------------------------------------------------------------------
United States -- 10.6%
27,000 American Standard Cos. Inc.(a) 1,314,562
56,000 Archer-Daniels-Midland Co. 1,204,000
25,000 Flour Corp. 1,181,250
53,000 The Geon Co. 1,265,375
46,000 Georgia Pacific Corp. 1,178,750
20,000 GTE Corp. 1,168,750
56,000 IBP Inc. 1,155,000
30,000 Nabors Industries, Inc. 755,625
14,000 Owens Corning 581,875
58,000 Paxar Corp.(a) 859,125
20,500 Pharmacia & Upjohn Inc. 861,081
41,000 Roper Industries Inc. 1,271,000
21,000 Tecumseh Products Co., Class A Shares 1,056,625
26,000 Waste Management Inc. 871,000
25,000 Willamette Industries Inc. 972,212
- ------------------------------------------------------------------------------------------------------------------------------------
15,696,230
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela -- 0.2%
40,000 Mavesa SA ADR 160,000
14,166 Siderurgica Venezolana SA CA ADR 176,189
- ------------------------------------------------------------------------------------------------------------------------------------
336,189
- ------------------------------------------------------------------------------------------------------------------------------------
Total StockS
(Cost-- $84,401,390) 92,760,099
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement -- 37.5%
$ 55,733,000 CIBC Wood Gundy Securities Inc., 5.400% due 5/1/98;
Proceeds at maturity $55,741,360; (Fully collateralized
by U.S. Treasury Notes, 6.000% due 8/15/99;
Market value-- $56,850,779) (Cost-- $55,733,000) 55,733,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments -- 100%
(Cost-- $140,134,390*) $148,493,099
====================================================================================================================================
</TABLE>
(a) Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL SMALL CAP VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STOCKS -- 90.2%
Austria -- 1.3%
4,400 Boehler - Uddeholm AG $ 324,388
- ------------------------------------------------------------------------------------------------------------------------------------
Canada -- 2.3%
22,800 Moore Corp. Ltd. 357,676
32,851 Noranda Forest Inc. 220,476
- ------------------------------------------------------------------------------------------------------------------------------------
578,152
- ------------------------------------------------------------------------------------------------------------------------------------
China -- 1.4%
24,000 Shangdon Huaneng Power Co. Ltd. ADR 174,000
1,300,000 Shanghai Petrochemical Co. Ltd.(a) 172,864
- ------------------------------------------------------------------------------------------------------------------------------------
346,864
- ------------------------------------------------------------------------------------------------------------------------------------
Czech Republic -- 1.1%
14,000 Komercni Banka AS GDR 165,900
9,700 Skoda Plzen AS(a) 101,227
- ------------------------------------------------------------------------------------------------------------------------------------
267,127
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark -- 0.8%
1,300 The Codan Group (Forsikringsselskabet Codan) 205,167
- ------------------------------------------------------------------------------------------------------------------------------------
Finland -- 4.7%
27,000 Kemira Oyj 292,396
23,000 Metsa-Serla Oyj, Class B Shares 238,524
16,500 Rauma Group Oyj 308,916
47,200 Tamro Oyj 337,879
- ------------------------------------------------------------------------------------------------------------------------------------
1,177,715
- ------------------------------------------------------------------------------------------------------------------------------------
France -- 2.6%
2,000 Bail Investissement 300,109
3,200 Fimalac 366,912
- ------------------------------------------------------------------------------------------------------------------------------------
667,021
- ------------------------------------------------------------------------------------------------------------------------------------
Germany -- 6.2%
960 Fuchs Petrolub AG Oel & Chemie, Preferred 112,343
18,500 Hans Einhell AG 255,670
13,300 Lindner Holding KGaA 227,535
6,800 Moebel Walther AG 287,991
3,700 Strabag AG(a) 309,279
10,700 Tarkett Sommer AG 369,686
- ------------------------------------------------------------------------------------------------------------------------------------
1,562,504
- ------------------------------------------------------------------------------------------------------------------------------------
Hong Kong -- 4.9%
1,200,000 Cafe de Coral Holdings 295,895
800,000 CDL Hotels International Ltd. 245,288
800,000 Giordano International Ltd. 185,902
1,230,000 Pacific Ports Co. Ltd.(a) 314,407
320,000 South China Morning Post Holdings Ltd. 192,099
- ------------------------------------------------------------------------------------------------------------------------------------
1,233,591
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statement
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 15
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hungary -- 0.6%
4,000 Borsod Chem RT $ 149,320
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia -- 1.0%
680,000 Pabrik Kertas Tjiwi Kimia 170,527
905,000 PT Kalbe Farma 92,461
- ------------------------------------------------------------------------------------------------------------------------------------
262,988
- ------------------------------------------------------------------------------------------------------------------------------------
Italy -- 2.1%
375,000 Azienda Mediterranea Gas e Acqua S.p.A. 351,308
44,900 Sogefi S.p.A. 172,333
- ------------------------------------------------------------------------------------------------------------------------------------
523,641
- ------------------------------------------------------------------------------------------------------------------------------------
Japan -- 3.3%
55,000 Ataka Construction & Engineering Co. 193,560
38,000 Daito Trust Construction Co. Ltd. 267,177
52,000 Kyudenko Corp. 375,842
- ------------------------------------------------------------------------------------------------------------------------------------
836,579
- ------------------------------------------------------------------------------------------------------------------------------------
Mexico -- 0.7%
12,600 Grupo Industrial Durango, SA ADR(a) 181,125
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands -- 4.5%
3,700 Eriks Holdings NV 252,709
15,100 European Vinyls Corp. International NV 295,199
8,200 Koninklijke Ahrend Groep NV 284,089
12,000 Koninklijke Emballage Industrie Van Leer NV 305,865
- ------------------------------------------------------------------------------------------------------------------------------------
1,137,862
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand -- 4.6%
115,300 Air New Zealand Ltd. 163,384
99,000 Fernz Corp. Ltd. 297,078
83,000 Fisher & Paykel Industries Ltd. 246,759
348,248 Fletcher Challenge Forests(a) 226,420
68,800 Tranz Rail Holdings Ltd. 241,246
- ------------------------------------------------------------------------------------------------------------------------------------
1,174,887
- ------------------------------------------------------------------------------------------------------------------------------------
Norway -- 3.1%
15,400 Aker RGI ASA, Class B Shares 249,849
19,300 Elkem ASA 292,420
7,100 Sparebanken NOR 245,612
- ------------------------------------------------------------------------------------------------------------------------------------
787,881
- ------------------------------------------------------------------------------------------------------------------------------------
Peru -- 1.5%
33,400 Banco Wiese ADR 179,525
12,600 Southern Peru Copper Corp. 191,362
- ------------------------------------------------------------------------------------------------------------------------------------
370,887
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statement
- --------------------------------------------------------------------------------
16 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Poland -- 1.3%
8,300 Agros Holding SA(a) $ 183,276
63,000 Mostostal-Export SA ADR 146,531
- ------------------------------------------------------------------------------------------------------------------------------------
329,807
- ------------------------------------------------------------------------------------------------------------------------------------
Russia -- 1.3%
17,000 Irkutskenergo ADR 170,000
24,000 Nizhnovsvyazinform 148,881
- ------------------------------------------------------------------------------------------------------------------------------------
318,881
- ------------------------------------------------------------------------------------------------------------------------------------
Slovakia -- 1.0%
1,400 Slovakofarma AS 167,975
7,800 Vychodoslvenske Zeleziarne AS(a) 94,942
- ------------------------------------------------------------------------------------------------------------------------------------
262,917
- ------------------------------------------------------------------------------------------------------------------------------------
Slovenia -- 0.6%
9,800 SKB Banka GDR 148,470
- ------------------------------------------------------------------------------------------------------------------------------------
South Africa -- 1.3%
115,000 Murray & Roberts Holdings Ltd. 213,784
20,700 Sappi Ltd.(a) 120,355
- ------------------------------------------------------------------------------------------------------------------------------------
334,139
- ------------------------------------------------------------------------------------------------------------------------------------
Spain -- 2.9%
1,600 Banco Pastor SA 182,135
3,500 Catalana Occidente SA(a) 240,429
7,000 Construcciones y Auxiliar de Ferrocarriles SA 314,602
- ------------------------------------------------------------------------------------------------------------------------------------
737,166
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden -- 4.8%
8,600 BT Industries AB 172,249
12,600 Esselte AB, Class B Shares 288,185
15,750 Getinge Industrier AB 350,054
11,300 Kalmar Industries 182,521
12,100 PLM AB 218,116
- ------------------------------------------------------------------------------------------------------------------------------------
1,211,125
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland -- 1.2%
600 Forbo Holding AG 308,020
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand -- 0.6%
247,400 Precious Shipping Public Co. Ltd. 159,922
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom -- 10.1%
412,000 Albert Fisher Group PLC 198,047
140,000 BICC Group PLC 393,251
157,000 Coats Viyella PLC 244,127
108,000 Concentric PLC 195,020
79,000 David S. Smith Holdings PLC 300,498
70,000 Dorling Kindersley Holdings PLC 302,547
480,000 Sherwood Group PLC 321,022
</TABLE>
See Notes to Financial Statement
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 17
<PAGE>
================================================================================
Schedules of Investments (continued) April 30, 1998
================================================================================
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Kingdom -- 10.1% (continued)
58,333 Somerfield PLC $ 330,149
152,000 TLG PLC 275,745
- ------------------------------------------------------------------------------------------------------------------------------------
2,560,406
- ------------------------------------------------------------------------------------------------------------------------------------
United States -- 18.4%
27,100 American Residential Services, Inc.(a) 296,407
7,700 Aviation Sales Co.(a) 274,312
16,200 Broderbund Software, Inc.(a) 289,575
22,800 Chiquita Brands International(a) 309,226
47,500 Einstein/Noah Bagel Corp.(a) 166,250
16,900 The Geon Co. 403,488
30,700 Hoenig Group, Inc.(a) 212,981
15,700 Paxar Corp.(a) 232,556
8,000 Penn Treaty American Corp.(a) 244,000
16,000 Petco Animal Supplies, Inc.(a) 316,000
15,300 Roper Industries Inc. 474,300
34,000 Seattle Filmworks, Inc.(a) 340,000
16,200 Tarrant Apparel Group(a) 500,176
7,400 Tecumseh Products Co., Class A Shares 372,775
18,100 Unisource Worldwide, Inc. 229,643
- ------------------------------------------------------------------------------------------------------------------------------------
4,661,689
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKS
(Cost-- $21,252,283) 22,820,241
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 9.8%
$ 2,485,000 CIBC Wood Gundy Securities Inc., 5.400% due 5/1/98;
Proceeds at maturity-- $2,485,373; (Fully collateralized
by U.S. Treasury Notes, 6.000% due 8/15/99;
Market value-- $2,535,686) (Cost-- $2,485,000) 2,485,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $23,737,283*) $25,305,241
====================================================================================================================================
</TABLE>
(a) Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Statements of Assets and Liabilities April 30, 1998
================================================================================
<TABLE>
<CAPTION>
Smith Barney
Smith Barney Hansberger
Hansberger Global Small
Global Value Cap Value
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments -- Cost $ 84,401,390 $21,252,283
Repurchase agreements -- Cost 55,733,000 2,485,000
====================================================================================================================================
Investments, at value $ 92,760,099 $22,820,241
Repurchase agreements, at value 55,733,000 2,485,000
Cash 282 --
Receivable for Fund shares sold 8,618,589 154,942
Receivable from manager 26,628 71,529
Receivable for securities sold 4,834 --
Dividend and interest receivable 281,436 76,677
Receivable for open forward foreign currency contracts (Note 4) -- 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 157,424,868 25,608,391
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 16,733,346 1,722,177
Foreign currency payable to bank, at value 68,586 885
Distribution fees payable 24,593 6,561
Payable for Fund shares purchased 1,560 --
Payable to bank -- 15,492
Payable for open forward foreign currency contracts (Note 4) -- 103
Accrued expenses 118,388 44,971
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 16,946,473 1,790,189
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $140,478,395 $23,818,202
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 10,820 $ 1,928
Capital paid in excess of par value 131,731,761 22,088,030
Undistributed net investment income 510,503 143,223
Accumulated net realized gain (loss) from
security transactions and foreign currencies (150,225) 19,406
Net unrealized appreciation of investments and foreign currencies 8,375,536 1,565,615
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $140,478,395 $23,818,202
====================================================================================================================================
Shares Outstanding:
Class A 2,114,753 751,449
-------------------------------------------------------------------------------------------------------------------------------
Class B 3,513,268 940,717
-------------------------------------------------------------------------------------------------------------------------------
Class C 853,516 217,413
-------------------------------------------------------------------------------------------------------------------------------
Class Y 4,338,907 18,881
-------------------------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $12.99 $12.37
-------------------------------------------------------------------------------------------------------------------------------
Class B * $12.96 $12.34
-------------------------------------------------------------------------------------------------------------------------------
Class C ** $12.96 $12.34
-------------------------------------------------------------------------------------------------------------------------------
Class Y (and redemption price) $13.00 $12.37
-------------------------------------------------------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 5.26% of net asset value per share) $13.67 $13.02
====================================================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from initial purchase (See Note 2).
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase (See Note 2).
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 19
<PAGE>
================================================================================
Statements of Operations For the Period Ended April 30, 1998(a)
================================================================================
<TABLE>
<CAPTION>
Smith Barney
Smith Barney Hansberger
Hansberger Global Small
Global Value Cap Value
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend $ 594,008 $ 194,412
Interest 246,503 67,571
Less: Foreign withholding tax (80,833) (31,754)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 759,678 230,229
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 237,265 74,043
Distribution fees (Note 2) 181,546 50,398
Registration fees 74,563 43,785
Shareholder communications 59,361 39,588
Custody 36,971 16,585
Audit and Legal 29,924 21,678
Shareholder and system servicing fees 27,069 10,170
Directors' fees 3,525 2,794
Other 3,786 2,581
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 654,010 261,622
Less: Management fee waiver and expense reimbursement (Note 2) 97,265 91,345
- ------------------------------------------------------------------------------------------------------------------------------------
Net Expenses 556,745 170,277
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 202,933 59,952
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES
(NOTES 3 AND 4):
Net Realized Gain (Loss) From:
Security transactions (150,225) 19,406
Foreign currency transactions 351,129 90,871
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain 200,904 110,277
- ------------------------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
of Investments and Foreign Currencies:
Beginning of period -- --
End of period 8,375,536 1,565,615
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 8,375,536 1,565,615
- ------------------------------------------------------------------------------------------------------------------------------------
Net Gain on Investments and Foreign Currencies 8,576,440 1,675,892
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $8,779,373 $1,735,844
====================================================================================================================================
</TABLE>
(a) For the period from December 19, 1997 (commencement of operations) to April
30, 1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Statements of Changes in Net Assets For the Period Ended April 30, 1998(a)
================================================================================
<TABLE>
<CAPTION>
Smith Barney
Smith Barney Hansberger
Hansberger Global Small
Global Value Cap Value
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 202,933 $ 59,952
Net realized gain 200,904 110,277
Increase in net unrealized appreciation 8,375,536 1,565,615
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 8,779,373 1,735,844
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (85,869) (20,614)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (85,869) (20,614)
- ------------------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 132,967,684 22,450,956
Net asset value of shares issued
for reinvestment of dividends 83,205 20,354
Cost of shares reacquired (1,265,998) (368,338)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 131,784,891 22,102,972
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets 140,478,395 23,818,202
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period -- --
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $140,478,395 $23,818,202
====================================================================================================================================
* Includes undistributed net investment income of: $510,503 $143,223
====================================================================================================================================
</TABLE>
(a) For the period from December 19, 1997 (commencement of operations) to April
30, 1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 21
<PAGE>
================================================================================
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies
The Smith Barney Hansberger Global Value Fund and Smith Barney Hansberger Global
Small Cap Value Fund ("Portfolios") are separate investment portfolios of the
Smith Barney Investment Funds Inc. ("Fund"). The Fund, a Maryland corporation,
is registered under the Investment Company Act of 1940, as amended, as an
open-end investment management company. The Fund consists of these Portfolios
and five other separate investment portfolios: Concert Peachtree Growth Fund,
Smith Barney Investment Grade Bond Fund, Smith Barney Special Equities Fund,
Smith Barney Contrarian Fund (formerly known as Smith Barney Managed Growth
Fund) and Smith Barney Government Securities Fund. The financial statements and
financial highlights for the other portfolios are presented in separate annual
reports dated December 31, 1997.
The significant accounting policies consistently followed by the Portfolios are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on the primary
exchange on which they are traded; securities listed or traded on certain
foreign exchanges or other markets whose operations are similar to the U.S.
over-the-counter market (including securities listed on exchanges where the
primary market is believed to be over-the-counter) and securities for which no
sales price was reported on that date are valued at the mean between the bid and
ask prices. Securities which are listed or traded on more than one exchange or
market are valued at the quotations on the exchange or market determined to be
the primary market for such securities; (c) securities maturing within 60 days
are valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (d) gains or losses on the sale of securities are calculated
by using the specific identification method; (e) interest income, adjusted for
amortization of premium and accretion of discount, is recorded on an accrual
basis; (f) 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
Portfolios determine the existence of a dividend declaration after exercising
reasonable due diligence; (g) direct expenses are charged to each Portfolio and
class; management fees and general expenses are allocated on the basis of
relative net assets by class; (h) dividends and distributions to shareholders
are recorded on the ex-dividend date; (i) the accounting records of each
Portfolio 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; (j) the character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles. At
April 30, 1998, reclassifications were made to the capital accounts of the
Portfolios to reflect permanent book/tax differences and income and gains
available for distributions under tax regulations. Accordingly, net investment
losses of $42,310 and $13,014 were reclassed to paid-in capital for the Smith
Barney Hansberger Global Value Fund and the Smith Barney Hansberger Global Small
Cap Value Fund, respectively. Net investment income, net realized gains and net
assets were not affected by these adjustments; (k) each Portfolio 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 each Portfolio from substantially all
Federal income and excise taxes; 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.
- --------------------------------------------------------------------------------
22 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ.
In addition, the Portfolios 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.
2. Management Agreement and Other Transactions
Mutual Management Corp. ("MMC"), a subsidiary of Salomon Smith Barney Holdings
Inc. ("SSBH"), acts as investment manager of the Fund. The Smith Barney
Hansberger Global Value Fund ("Global Value") and Smith Barney Hansberger Global
Small Cap Value Fund ("Global Small Cap") pay MMC a management fee calculated at
the annual rate of 0.95% and 1.05%, respectively, of the average daily net
assets of each Portfolio. These fees are calculated daily and paid monthly.
MMC 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 Portfolios. MMC pays Hansberger a fee of 0.50% and 0.60% of the average
daily net assets of Global Value and Global Small Cap, respectively, for the
services Hansberger provides as sub-investment adviser. These fees are
calculated daily and paid monthly.
For the period ended April 30, 1998, MMC waived all or part of its fees in the
amounts of $97,265 and $74,043 for Global Value and Global Small Cap,
respectively, and agreed to reimburse Global Small Cap for expenses in the
amount of $17,302.
Smith Barney Inc. ("SB"), another subsidiary of SSBH, acts as distributor of the
Fund's shares. SB received sales charges of approximately $523,000 on sales of
the Portfolios' Class A shares and broker commissions of $10,441 for the period
ended April 30, 1998.
There is a contingent deferred sales charge ("CDSC") of 5.00% on Class B shares,
which applies if redemption occurs within one year from initial purchase.
Thereafter this CDSC declines by 1.00% per year until no CDSC is incurred. Class
C shares have a 1.00% CDSC, which applies if redemption occurs within the first
year of purchase.
For the period ended April 30, 1998, CDSCs paid to SB were approximately:
<TABLE>
<CAPTION>
Portfolio Class B Class C
- --------------------------------------------------------------------------------
<S> <C> <C>
Global Value $8,000 $1,000
- --------------------------------------------------------------------------------
Global Small Cap 2,000 --
- --------------------------------------------------------------------------------
</TABLE>
Pursuant to a Distribution Plan, the Portfolios pay a service fee with respect
to Class A, B and C shares calculated at the annual rate of 0.25% of the average
daily net assets of each respective class' shares. The Portfolios also pay 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 for each respective Portfolio and
class. For the period ended April 30, 1998, total Distribution Plan fees
incurred by the Portfolios were:
<TABLE>
<CAPTION>
Portfolio Class A Class B Class C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Value $20,329 $130,729 $30,488
- --------------------------------------------------------------------------------
Global Small Cap 6,679 36,118 7,601
- --------------------------------------------------------------------------------
</TABLE>
All officers and one Director of the Fund are employees of SB.
- --------------------------------------------------------------------------------
Smith barney Hansberger Funds 23
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
3. Investments
During the period ended April 30, 1998, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
<S> <C> <C>
Global Value $84,816,352 $552,233
- --------------------------------------------------------------------------------
Global Small Cap 21,427,648 281,172
- --------------------------------------------------------------------------------
</TABLE>
At April 30, 1998, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
<TABLE>
<CAPTION>
Net Unrealized
Portfolio Appreciation Depreciation Appreciation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Value $9,916,226 $1,557,517 $8,358,709
- ------------------------------------------------------------------------------------------------------------------------------------
Global Small Cap 2,530,198 962,240 1,567,958
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. Forward Foreign Currency Contracts
At April 30, 1998, Global Small Cap had open forward foreign currency contracts
as described below. The Portfolio bears the market risk that arises from changes
in foreign currency exchange rates. The unrealized gain (loss) on the contracts
reflected in the accompanying financial statements were as follows:
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
To Buy:
<S> <C> <C> <C> <C>
Finnish Markka 519,299 $95,340 5/4/98 $(102)
Japanese Yen 464,985 3,520 5/1/98 (1)
Japanese Yen 462,301 3,502 5/6/98 2
- ------------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Loss on
Forward Foreign Currency Contracts $(101)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
At April 30, 1998, Global Value had no open forward foreign currency contracts.
- --------------------------------------------------------------------------------
24 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
5. Option Contracts
Premiums paid when put or call options are purchased by the Portfolios represent
investments, which are marked-to-market daily. When a purchased option expires,
the Portfolio will realize a loss in the amount of the premium paid. When the
Portfolio enters into a closing sales transaction, the Portfolio will realize a
gain or loss depending on whether the proceeds from the closing sales
transaction are greater or less than the premium paid for the option. When the
Portfolio exercises a put option, it will realize a gain or loss from the sale
of the underlying security and the proceeds from such sale will be decreased by
the amount of the premium originally paid. When the Portfolio exercises a call
option, the cost of the security that the Portfolio purchases upon exercise will
be increased by the premium originally paid.
At April 30, 1998, the Portfolios had no open purchased call or put options.
When a Portfolio writes a covered call or put option, an amount equal to the
premium received by the Portfolio is recorded as a liability, the value of which
is marked-to-market daily. When a written option expires, the Portfolio realizes
a gain equal to the amount of the premium received. When the Portfolio enters
into a closing purchase transaction, the Portfolio realizes a gain or loss
depending upon whether the cost of the closing transaction is greater or less
than the premium originally received without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
eliminated. When a written call option is exercised the cost of the security
sold will be decreased by the premium originally received. When a written put
option is exercised, the amount of the premium originally received will reduce
the cost of the security that the Portfolio purchased upon exercise. When
written index options are exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Portfolio enters into options for hedging purposes. The risk in
writing a covered call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price. The risk in writing a covered put option is that the Portfolio
is exposed to the risk of loss if the market price of the underlying security
declines.
During the period ended April 30, 1998, the Portfolios did not write any covered
call or put options.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contract. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are made or received and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Portfolio records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract. The Portfolio enters
into such contracts to hedge a portion of its portfolio. The Portfolio bears the
market risk that arises from changes in the value of the financial instruments
and securities indices (futures contracts).
At April 30, 1998, the Portfolios had no open futures contracts.
- --------------------------------------------------------------------------------
Smith barney Hansberger Funds 23
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
7. Concentration of Risk
The Portfolios' 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 each of the Portfolios. Foreign investments may also
subject the Portfolios 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.
In addition to the risks described above, risks may arise from forward foreign
currency contracts with respect to the potential inability of counterparties to
meet the terms of their contracts.
8. Lending of Portfolio Securities
The Portfolios have an agreement with their custodian whereby the custodian may
lend securities owned by the Portfolios to brokers, dealers and other financial
organizations. Fees earned by the Portfolios on securities lending are recorded
as interest income. Loans of securities by the Portfolios are collateralized by
cash, U.S. government securities or high quality money market instruments that
are maintained at all times in an amount at least equal to the current market
value of the loaned securities, plus a margin depending on the type of
securities loaned. The custodian establishes and maintains the collateral in a
segregated account. The Portfolios maintain exposure for the risk of any losses
in the investment of amounts received as collateral.
At April 30, 1998, the Portfolios had no securities on loan.
9. Capital Shares
At April 30, 1998, the Fund had ten billion shares of capital stock authorized
with a par value of $0.001 per share. The Portfolios have the ability to issue
multiple classes of shares. Each share of a class represents an identical legal
interest in a Portfolio and has the same rights, except that each class bears
certain expenses specifically related to the distribution of its shares.
At April 30, 1998, total paid-in capital amounted to the following for each
Portfolio:
<TABLE>
<CAPTION>
Portfolio Class A Class B Class C Class Y
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Global Value $24,444,048 $40,844,200 $9,925,643 $56,528,690
- ------------------------------------------------------------------------------------------------------------------------------------
Global Small Cap 8,615,793 10,745,678 2,496,513 231,974
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
26 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Period Ended
April 30, 1998
------------------------------------
Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney Hansberger Global Value Fund
Class A*
Shares sold 2,136,344 $24,725,211
Shares issued on reinvestment 2,413 27,893
Shares redeemed (24,004) (295,535)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 2,114,753 $24,457,569
====================================================================================================================================
Class B*
Shares sold 3,558,428 $41,419,420
Shares issued on reinvestment 3,969 45,877
Shares redeemed (49,129) (599,114)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 3,513,268 $40,866,183
====================================================================================================================================
Class C*
Shares sold 882,791 $10,292,554
Shares issued on reinvestment 816 9,435
Shares redeemed (30,091) (371,349)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 853,516 $ 9,930,640
====================================================================================================================================
Class Y**
Shares sold 4,338,907 $56,530,499
Shares issued on reinvestment -- --
Shares redeemed -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 4,338,907 $56,530,499
====================================================================================================================================
Smith Barney Hansberger Global Small Cap Value Fund
Class A*
Shares sold 755,715 $ 8,670,260
Shares issued on reinvestment 658 7,518
Shares redeemed (4,924) (57,082)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 751,449 $ 8,620,696
====================================================================================================================================
Class B*
Shares sold 955,601 $10,919,021
Shares issued on reinvestment 938 10,711
Shares redeemed (15,822) (177,383)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 940,717 $10,752,349
====================================================================================================================================
Class C*
Shares sold 229,248 $ 2,629,681
Shares issued on reinvestment 186 2,125
Shares redeemed (12,021) (133,873)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 217,413 $ 2,497,933
====================================================================================================================================
Class Y**
Shares sold 18,881 $ 231,994
Shares issued on reinvestment -- --
Shares redeemed -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase 18,881 $ 231,994
====================================================================================================================================
</TABLE>
* For the period from December 19, 1997 (inception date) to April 30, 1998.
** For the period from March 10, 1998 (inception date) to April 30, 1998.
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 27
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of each class of capital stock outstanding throughout the period:
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------------
Smith Barney Hansberger
Global Value Fund Class A Shares(1) Class B Shares(1) Class C Shares(1) Class Y Shares(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.40 $11.40 $11.40 $12.44
- ------------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income(3) 0.05 0.02 0.02 0.00*
Net realized and unrealized gain 1.56 1.56 1.56 0.56
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.61 1.58 1.58 0.56
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.02) (0.02) (0.02) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.02) (0.02) (0.02) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.99 $12.96 $12.96 $13.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return++ 14.13% 13.87% 13.87% 4.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $27,478 $45,526 $11,060 $56,414
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets+:
Expenses(3) 1.71% 2.48% 2.49% 1.47%
Net investment income 1.25 0.52 0.42 1.83
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 1% 1% 1% 1%
- ------------------------------------------------------------------------------------------------------------------------------------
Average commissions per share
on equity transactions(4) $0.01 $0.01 $0.01 $0.01
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from December 19, 1997 (inception date) to April 30, 1998.
(2) For the period from March 10, 1998 (inception date) to April 30, 1998.
(3) The Manager waived part of its fees for the period ended April 30, 1998. If
such fees were not waived, the per share effect on net investment income
and the expense ratios would have been as follows:
<TABLE>
<CAPTION>
Net Investment Income Expense Ratios
Per Share Decreases Without Fee Waivers+
--------------------- --------------------
<S> <C> <C>
Class A $0.01 2.09%
Class B 0.01 2.87
Class C 0.01 2.88
Class Y 0.00* 1.85
</TABLE>
(4) Trades executed in the United States and Canada have an average commission
rate of $0.06 per share. Commission on trades executed outside these
countries are generally executed as a percentage of cost or proceeds
ranging from 0.5% to 1.0%.
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
28 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of capital stock outstanding throughout the period:
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------------
Smith Barney Hansberger
Global Small Cap Value Fund Class A Shares(1) Class B Shares(1) Class C Shares(1) Class Y Shares(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.40 $11.40 $11.40 $11.74
- ------------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income(3) 0.05 0.02 0.02 0.00*
Net realized and unrealized gain 0.93 0.93 0.93 0.63
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.98 0.95 0.95 0.63
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.01) (0.01) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.01) (0.01) (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.37 $12.34 $12.34 $12.37
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return++ 8.64% 8.38% 8.38% 5.37%
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $9,296 $11,606 $2,682 $234
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets+:
Expenses(3) 1.95% 2.68% 2.71% 1.73%
Net investment income 1.28 0.58 0.58 2.42
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 2% 2% 2% 2%
- ------------------------------------------------------------------------------------------------------------------------------------
Average commissions per share
on equity transactions(4) $0.01 $0.01 $0.01 $0.01
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from December 19, 1997 (inception date) to April 30, 1998.
(2) For the period March 10, 1998 (inception date) to April 30, 1998.
(3) The Manager waived all of its fees for the period ended April 30, 1998. In
addition, the Manager reimbursed the Portfolio for $17,302 in expenses for
the period ended April 30, 1998. If such fees were not waived and expenses
not reimbursed, the per share effect on net investment income and the
expense ratios would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Net Investment Income Without Fee Waivers
Per Share Decreases and Reimbursement+
--------------------- -------------------
<S> <C> <C>
Class A $0.05 3.25%
Class B 0.04 3.96
Class C 0.04 4.02
Class Y 0.00* 3.05
</TABLE>
(4) Trades executed in the United States and Canada have an average commission
rate of $0.06 per share. Commission on trades executed outside these
countries are generally executed as a percentage of cost or proceeds
ranging from 0.5% to 1.0%.
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 29
<PAGE>
================================================================================
Independent Auditors' Report
================================================================================
To the Shareholders and Board of Directors of
Smith Barney Investment Funds Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Smith Barney Hansberger Global Value Fund
and Smith Barney Hansberger Global Small Cap Value Fund of Smith Barney
Investment Funds Inc. as of April 30, 1998, the related statements of
operations, the statements of changes in net assets and financial highlights for
the period from December 19, 1997 (commencement of operations) to April 30,
1998. These financial statements and financial highlights are the responsibility
of the Funds' 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 generally accepted auditing
standards. 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, 1998, by correspondence with the custodian. As to securities purchased or
sold but not yet received or 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 positions of the
Smith Barney Hansberger Global Value Fund and Smith Barney Hansberger Global
Small Cap Value Fund of Smith Barney Investment Funds Inc. as of April 30, 1998,
the results of their operations, the changes in their net assets and financial
highlights for the period from December 19, 1997 to April 30, 1998, in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
New York, New York
June 12, 1998
- --------------------------------------------------------------------------------
30 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Tax Information (unaudited)
For Federal tax purposes the Fund hereby designates for the fiscal year
ended April 30, 1998:
o Corporate dividend received deductions of:
<TABLE>
<S> <C>
Global Value Fund 3.70%
Global Small Cap Value Fund 3.81%
</TABLE>
o The total foreign sourced income received by Global Value Fund
and Global Small Cap Value Fund, respectively, are $0.0299 per
share (or a total amount of $323,343) and $0.0530 per share (or a
total amount of $102,127). The total amounts of foreign taxes
paid, again respectively, are $0.0074 per share (or a total
amount of $80,833) and $0.0165 per share (or a total amount of
$31,754).
- --------------------------------------------------------------------------------
Smith Barney Hansberger Funds 31
<PAGE>
[This page intentionally left blank]
<PAGE>
Smith Barney
Hansberger Funds
Directors Investment Manager
Paul R. Ades Mutual Management Corp.
Herbert Barg
Dwight B. Crane Sub-Investment Adviser
Frank Hubbard Hansberger Global Investors, Inc.
Heath B. McLendon, Chairman
Jerome Miller Distributor
Ken Miller
AllanR. Johnson, Emeritus Smith Barney Inc.
John F. White, Emeritus
Custodian
Officers
The Chase Manhattan Bank, N.A.
Heath B. McLendon
President and Chief Executive Officer Shareholder Servicing Agent
Lewis E. Daidone First Data Investor Services Group, Inc.
Senior Vice President P.O. Box 9134
and Treasurer Boston, MA 02205-9134
Irving P. David This report is for the information of
Controller shareholders of Smith Barney
Investment Funds Inc. -- Smith Barney
Christina T. Sydor Hansberger Global Value and Smith
Secretary Barney Hansberger Global Small Cap
Value Funds, but it may also be used
as sales literature when preceded or
accompanied by the current prospectus,
which gives details about charges,
expenses, investment objectives and
operating policies of the Fund. If
used as sales material after June 30,
1998, this report must be accompanied
by performance for the most recently
completed calendar quarter.
SMITH BARNEY
------------
A Member of TravelersGroup [LOGO]
Smith Barney
Investment Funds Inc.
Smith Barney Mutual Funds
388 Greenwich Street
New York, New York 10013
www.smithbarney.com
FD01490 6/98
