SMITH BARNEY SHEARSON INVESTMENT FUNDS INC, 485BPOS, 1999-08-27

SMITH BARNEY SHEARSON INVESTMENT FUNDS INC
485BPOS, 1999-08-27

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- ------------------------------------------------------
- -----------------------
Registration No. 2-74288
811-3275

U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933

[ ] Pre-Effective Amendment No.

[X] Post-Effective Amendment No. 66

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940,
Amendment No. 68

SMITH BARNEY INVESTMENT FUNDS INC.
(Exact name of Registrant as Specified in Charter)
388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Offices) (Zip Code)
(800)-451-2010
(Registrant's Telephone Number, including Area Code:)
Christina T. Sydor
388 Greenwich Street, New York, New York 10013(22nd
Floor)
(Name and Address of Agent For Service)
Continuous
(Approximate Date of Proposed Public Offering)

It is proposed that this filing will become effective:
immediately upon filing pursuant to Paragraph (b) of
Rule 485
XXX On August 30, 1999 pursuant to paragraph (b) of Rule
485
60 days after filing pursuant to paragraph (a)(1) of
Rule 485
On (date) pursuant to paragraph (a)(1) of Rule 485
75 days after filing pursuant to paragraph (a)(2) of
Rule 485
On (date) pursuant to paragraph (a)(2) of rule 485

If appropriate, check the following box:

This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.

Title of Securities Being Registered: Shares of Common
Stock

SMITH BARNEY INVESTMENT FUNDS
PART A

<PAGE>

[LOGO] Smith Barney
Mutual Funds

[LOGO]
HANSBERGER
GLOBAL
INVESTORS, INC.

P R O S P E C T U S

Smith Barney
Hansberger
Global Value
Fund

Class A, B, L and Y Shares
------------------------------------------------------------
August 30, 1999

The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete.
Any statement to the contrary is a crime.
<PAGE>

Smith Barney Hansberger
Global Value Fund

Contents

<TABLE>
<S> <C>
Investments, risks and performance.......................................... 2

More on the fund's investments.............................................. 6

Management.................................................................. 7

Choosing a class of shares to buy........................................... 9

Comparing the fund's classes................................................ 10

Sales charges............................................................... 11

More about deferred sales charges........................................... 14

Buying shares............................................................... 15

Exchanging shares........................................................... 16

Redeeming shares............................................................ 18

Other things to know about share transactions............................... 20

Smith Barney 401(k) and ExecChoice(TM) programs............................. 22

Dividends, distributions and taxes.......................................... 23

Share price................................................................. 24

Financial highlights........................................................ 25
</TABLE>

You should know: An investment in the fund is not a bank deposit and is not
insured or guaranteed by the FDIC or any other government agency.

Smith Barney Mutual Funds

1
<PAGE>

Investments, risks and performance

Investment objective
The fund seeks long-term capital growth.

Principal investment strategies

Key investments The fund invests primarily in common stocks and other equity
securities of U.S. and foreign companies, including those of emerging market
issuers. Equity securities include exchange traded and over-the-counter common
stocks and preferred shares, debt securities convertible into equity securities
and warrants and rights relating to equity securities. The fund may purchase
foreign securities in the form of sponsored and unsponsored American Depositary
Receipts (ADRs), European Depositary Receipts (EDRs), Global Depositary
Receipts (GDRs) or other securities representing underlying shares of foreign
companies.

Selection process The subadviser uses a "bottom-up" approach to security selec-
tion, focusing primarily on identifying individual securities that meet the
fund's value criteria. The fund seeks to invest in companies with low share
prices relative to their earnings, cash flow and/or net asset value.

First, the subadviser uses fundamental analysis to identify a universe of secu-
rities of companies the subadviser believes are undervalued. Specifically, the
subadviser uses proprietary valuation screens, internal and external research
sources and other fundamental analysis to identify these undervalued securi-
ties. The subadviser considers companies in various industries and sectors, and
searches a wide variety of countries and regions.

Once the subadviser has identified a range of securities that appear underval-
ued, the subadviser further analyzes each security to determine whether it
meets the fund's strict value criteria. For each security, the subadviser con-
siders economic and other fundamental factors, including:

.Sales and earnings growth
.New product development
.Cash flow
.Track record and structure of management

The subadviser will consider a security for investment in the fund only if it
meets the fund's strict value criteria.

Global Value Fund

2
<PAGE>

Principal risks of investing in the fund
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if:

.U.S. or foreign stock prices decline

.Adverse governmental action or political, economic or market instability
affects a foreign country or region, which risks may be greater in emerging
markets as described below.
.Foreign companies fall out of favor with investors

Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some foreign countries,
less information is available about foreign issuers and markets because of less
rigorous accounting and regulatory standards than in the U.S. Currency fluctua-
tions could erase investment gains or add to investment losses.

Emerging markets investments involve greater risks than investing in more
developed countries. Political or economic stability, lack of market liquidity
and government actions such as currency controls or seizure of private business
or property may be more likely in emerging markets. Accordingly, the prices of
securities of emerging market companies and the relative prices of emerging
market currencies can be more volatile than those of developed countries.

Who may want to invest The fund may be an appropriate investment if you:

.Are seeking to invest for long-term capital appreciation in the global market
.Currently have exposure to domestic equity investments or fixed income invest-
ments and wish to broaden your investment portfolio

.Are willing to accept the risks of the stock market and the special risks of
investing in foreign markets including emerging markets

Smith Barney Mutual Funds

3
<PAGE>

Risk return bar chart

This bar chart indicates the risks of investing in the fund by showing the
fund's performance. Past performance does not necessarily indicate how the fund
will perform in the future. The bar chart shows the performance of the fund's
Class A shares for the past year (the fund's only full calendar year since
inception). Class B, L and Y shares would have different performance because of
their different expenses. The performance information in the chart does not
reflect sales charges, which would reduce your return.

Total Return for Class A Shares

[BAR GRAPH]

(7.78)%
---------------
98

Calendar year ended December 31

Quarterly returns:

Highest: 16.89% in 4th quarter 1998; Lowest: (20.07)% in 3rd quarter 1998 Year
to date: 18.22% through June 30, 1999

Risk return table
This table indicates the risks of investing in the fund by comparing the aver-
age annual total return of each class for the periods shown with that of the
MSCI All Country World Free Index, an unmanaged index of global common stocks.
This table assumes imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of dis-
tributions and dividends.

Average Annual Total Returns
Calendar Years Ended December 31, 1998
<TABLE>
<CAPTION>
Class 1 year 5 years 10 years Since Inception Inception Date
<S> <C> <C> <C> <C> <C>
A (12.40) n/a n/a (10.69) 12/19/97

B (13.02) n/a n/a (10.40) 12/19/97
L (10.30) n/a n/a (7.75) 12/19/97
Y n/a n/a n/a (16.82) 3/10/99
MSCI All Country World
Free Index 21.97 n/a n/a 21.97 *
</TABLE>

* Index comparison begins on 12/31/97.

Global Value Fund

4
<PAGE>

Fee table
This table sets forth the fees and expenses you will pay if you invest in fund
shares.

Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a % of offering price) 5.00% None 1.00% None
Maximum deferred sales charge (load) (as a %
of the lower of net asset value at purchase or
redemption) None* 5.00% 1.00% None
Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Management fee 0.95% 0.95% 0.95% 0.95%
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None
Other expenses 0.35% 0.35% 0.35% 0.15%
Total annual fund operating expenses 1.55% 2.30% 2.30% 1.10%
</TABLE>
*You may buy Class A shares in amounts of $500,000 or more at net asset value
(without an initial sales charge) but if you redeem those shares within 12
months of their purchase, you will pay a deferred sales charge of 1.00%.

Example
This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
.You invest $10,000 in the fund for the period shown

.You redeem all your shares at the end of the period
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a sales charge
.The fund's operating expenses remain the same

Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A (with or without redemption) $650 $ 965 $1,302 $2,253
Class B (redemption at end of period) $733 $1,018 $1,330 $2,448
Class B (no redemption) $233 $ 718 $1,230 $2,448
Class L (redemption at end of period) $431 $ 811 $1,318 $2,708
Class L (no redemption) $331 $ 811 $1,318 $2,708
Class Y (with or without redemption) $112 $ 350 $ 606 $1,340
</TABLE>

Smith Barney Mutual Funds

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<PAGE>

More on the fund's investments

Global Small Cap Value Fund

8
<PAGE>

Management

The fund's subadviser, Hansberger Global Investors, Inc., is located at 515
East Las Olas Blvd., Suite 1300, Fort Lauderdale, Florida 33301. As of December
31, 1998, the subadviser had approximately $2.1 billion under management. Lau-
retta (Retz) Reeves, Vladimir Tyurenkov, Charles F. Gulden and Ronald W. Holt
are responsible for the day-to-day management of the fund's portfolio. Ms.
Reeves has been a portfolio manager and managing director of the subadviser
since 1996. In addition, she has been the director of research of the
subadviser since 1997. Prior thereto, she was senior vice president of Temple-
ton Worldwide Inc. Mr. Tyurenkov has been a managing director of the subadviser
since 1995. Prior thereto, he spent several years working for the Russian gov-
ernment and worked extensively on the Pepperdine University Russian Conversion
and Privatization Program. Mr. Gulden has been a managing director of the
subadviser since 1996. Prior thereto, he was vice president and director of
Templeton Worldwide Inc. Mr. Holt has been a research analyst for the
subadviser since 1997. Prior thereto, he was a vice president in the corporate
and institutional client group at Merrill Lynch.

Management fee For its services, the manager received a fee during the fund's
last fiscal year equal to 0.64% of the fund's average daily net assets.

Year 2000 issue Information technology experts are concerned about computer
systems' ability to process date-related information on and after

Smith Barney Mutual Funds

9
<PAGE>

January 1, 2000. This situation, commonly known as the "Year 2000" issue, could
have an adverse impact on the fund. The cost of addressing the Year 2000 issue,
if substantial, could adversely affect companies and governments that issue
securities held by the fund. The manager, the subadviser and Salomon Smith Bar-
ney are addressing the Year 2000 issue for their systems. The fund has been
informed by other service providers that they are taking similar measures.
Although the fund does not expect the Year 2000 issue to adversely affect it,
the fund cannot guarantee the efforts of the fund, which are limited to
requesting and receiving reports from its service providers, or the efforts of
its service providers to correct the problem will be successful.

Global Small Cap Value Fund

10
<PAGE>

Choosing a class of shares to buy

.If you plan to invest regularly or in large amounts, buying Class A shares may
help you reduce sales charges and ongoing expenses.

Investment minimums Minimum initial and additional investment amounts vary
depending on the class of shares you buy and the nature of your investment
account.

<TABLE>
<CAPTION>
Initial Additional
Classes A, B, L Class Y All Classes
<S> <C> <C> <C>
General $1,000 $15 million $50

IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts $250 $15 million $50
Qualified Retirement Plans* $25 $15 million $25

Simple IRAs $1 n/a $1
Monthly Systematic Investment Plans $25 n/a $25

Quarterly Systematic Investment Plans $50 n/a $50
</TABLE>

*Qualified Retirement Plans are retirement plans qualified under Section
403(b)(7) or Section 401(a) of the Internal Revenue Code, including 401(k)
plans.

Smith Barney Mutual Funds

11
<PAGE>

Comparing the fund's classes

Initial sales charge Up to None 1.00% None
5.00%;
reduced for
large pur-
chases and
waived for
certain
investors.
No charge
for pur-
chases of
$500,000 or
more
- ------------------------------------------------------------------------

Deferred sales charge 1% on pur- Up to 5.00% 1% if you None
chases of charged redeem
$500,000 or when you within 1
more if you redeem year of
redeem shares. The purchase
within 1 charge is
year of reduced
purchase over time
and there
is no
deferred
sales
charge
after 6
years
- ------------------------------------------------------------------------

Annual distribution and 0.25% of 1% of aver- 1% of aver- None
service fees average age daily age daily
daily net net assets net assets
assets
- ------------------------------------------------------------------------

Exchangeable into* Class A Class B Class L Class Y
shares of shares of shares of shares of
most Smith most Smith most Smith most Smith
Barney Barney Barney Barney
funds funds funds funds
- ------------------------------------------------------------------------
</TABLE>
*Ask your Salomon Smith Barney Financial Consultant or dealer representative or
visit the web site for the Smith Barney funds available for exchange.

Global Small Cap Value Fund

12
<PAGE>

Sales charges

<TABLE>
<CAPTION>
Sales Charge as a % of
Offering Net amount
Amount of purchase price (%) invested (%)
<S> <C> <C>
Less than $25,000 5.00 5.26
$25,000 but less than $50,000 4.00 4.17

$50,000 but less than $100,000 3.50 3.63
$100,000 but less than $250,000 3.00 3.09

$250,000 but less than $500,000 2.00 2.04
$500,000 or more -0- -0-
</TABLE>

.Accumulation privilege - lets you combine the current value of Class A shares
owned

.by you, or
.by members of your immediate family,

.Letter of intent - lets you purchase Class A shares of the fund and other
Smith Barney funds over a 13-month period and pay the same sales

Smith Barney Mutual Funds

13
<PAGE>

charge, if any, as if all shares had been purchased at once. You may include
purchases on which you paid a sales charge within 90 days before you sign the
letter.

Waivers for certain Class A investors Class A initial sales charges are waived
for certain types of investors, including:

<TABLE>
<CAPTION>
Year after purchase 1st 2nd 3rd 4th 5th 6th through 8th
<S> <C> <C> <C> <C> <C> <C>
Deferred sales charge 5% 4% 3% 2% 1% 0%
</TABLE>

Class B conversion After 8 years, Class B shares automatically convert into
Class A shares. This helps you because Class A shares have lower annual
expenses. Your Class B shares will convert to Class A shares as follows:

<TABLE>
<CAPTION>
Shares issued: Shares issued:
At initial Shares issued: Upon exchange from
purchase On reinvestment of another Smith
dividends and Barney
distributions fund

<S> <C> <C>
Eight years after the date of purchase In same proportion On the date the
as the number of shares originally
Class B shares acquired would
converting is to have converted
total Class B into Class A
shares you own shares
(excluding shares
issued as a divi-
dend)
</TABLE>

Global Small Cap Value Fund

14
<PAGE>

Class Y shares

More about deferred sales charges

In addition, you do not pay a deferred sales charge on:

.Shares exchanged for shares of another Smith Barney fund
.Shares representing reinvested distributions and dividends
.Shares no longer subject to the deferred sales charge

Deferred sales charge waivers
The deferred sales charge for each share class will generally be waived:

.On payments made through certain systematic withdrawal plans
.On certain distributions from a retirement plan

Smith Barney Mutual Funds

15
<PAGE>

.For involuntary redemptions of small account balances
.For 12 months following the death or disability of a shareholder

If you want to learn more about additional waivers of deferred sales charges,
contact your Salomon Smith Barney Financial Consultant or dealer representative
or consult the SAI.

Buying shares

If you do not provide the following information, your order
will be rejected:
.Class of shares being bought
.Dollar amount or number of shares being bought

You should pay for your shares through your brokerage account
no later than the third business day after you place your
order. Salomon Smith Barney or your dealer representative may
charge an annual account maintenance fee.
- --------------------------------------------------------------------------------
Through the Qualified retirement plans and certain other investors who
fund's are clients of the selling group are eligible to buy shares
transfer directly from the fund.
agent

.Write the transfer agent at the following address:

Smith Barney Investment Funds Inc.
Smith Barney Hansberger Global Small Cap Value Fund
(Specify class of shares)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
.Enclose a check to pay for the shares. For initial
purchases, complete and send an account application.
.For more information, call the transfer agent at 1-800-451-
2010.

Global Small Cap Value Fund

16
<PAGE>

Through a You may authorize Salomon Smith Barney, your dealer represen-
systematic tative or the transfer agent to transfer funds automatically
investment from a regular bank account, cash held in a Salomon Smith
plan Barney brokerage account or Smith Barney money market fund to
buy shares on a regular basis.

.Amounts transferred should be at least: $25 monthly or $50
quarterly
.If you do not have sufficient funds in your account on a
transfer date, Salomon Smith Barney, your dealer represen-
tative or the transfer agent may charge you a fee

For more information, contact your Salomon Smith Barney
Financial Consultant, dealer representative or the transfer
agent or consult the SAI.

Exchanging shares

Smith Barney You should contact your Salomon Smith Barney Financial Con-
offers a sultant or dealer representative to exchange into other Smith
distinctive Barney funds. Be sure to read the prospectus of the Smith
family of Barney fund you are exchanging into. An exchange is a taxable
funds transaction.
tailored to
help meet the
varying needs
of both large
and small
investors.

.You may exchange shares only for shares of the same class of
another Smith Barney fund. Not all Smith Barney funds offer
all classes.

.Not all Smith Barney funds may be offered in your state of
residence. Contact your Salomon Smith Barney Financial
Consultant, dealer representative or the transfer agent.

.You must meet the minimum investment amount for each fund.
.If you hold share certificates, the transfer agent must
receive the certificates endorsed for transfer or with
signed stock powers (documents transferring ownership of
certificates) before the exchange is effective.
.The fund may suspend or terminate your exchange privilege if
you engage in an excessive pattern of exchanges.

Smith Barney Mutual Funds

17
<PAGE>

Waiver of Your shares will not be subject to an initial sales charge at
additional the time of the exchange.
sales charges

Your deferred sales charge (if any) will continue to be mea-
sured from the date of your original purchase. If the fund
you exchange into has a higher deferred sales charge, you
will be subject to that charge. If you exchange at any time
into a fund with a lower charge, the sales charge will not be
reduced.
- --------------------------------------------------------------------------------
By telephone If you do not have a brokerage account, you may be eligible
to exchange shares through the transfer agent. You must com-
plete an authorization form to authorize telephone transfers.
If eligible, you may make telephone exchanges on any day the
New York Stock Exchange is open. Call the transfer agent at
1-800-451-2010 between 9:00 a.m. and 5:00 p.m. (Eastern
time). Requests received after the close of regular trading
on the Exchange are priced at the net asset value next deter-
mined.

Global Small Cap Value Fund

18
<PAGE>

Redeeming shares

Generally Contact your Salomon Smith Barney Financial Consultant or
dealer representative to redeem shares of the fund.

If you hold share certificates, the transfer agent must
receive the certificates endorsed for transfer or with signed
stock powers before the redemption is effective.

If the shares are held by a fiduciary or corporation, other
documents may be required.

Your written request must provide the following:

.Your account number
.The class of shares and the dollar amount or number of
shares to be redeemed
.Signatures of each owner exactly as the account is regis-
tered

Smith Barney Mutual Funds

19
<PAGE>

The following conditions apply:

.Your shares must not be represented by certificates
.All dividends and distributions must be reinvested

For more information, contact your Salomon Smith Barney
Financial Consultant or dealer representative or consult the
SAI.

Global Small Cap Value Fund

20
<PAGE>

Other things to know about share transactions

When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information, without which your
request will not be processed:

Signature guarantees To be in good order, your redemption request must include
a signature guarantee if you:

You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loan institutions, but not from a notary public.

The fund has the right to:

Smith Barney Mutual Funds

21
<PAGE>

.Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the Securi-
ties and Exchange Commission
.Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities

Global Small Cap Value Fund

22
<PAGE>

Smith Barney 401(k) and ExecChoice(TM) programs

.Class A shares may be purchased by plans investing at least $1 million.

.Class L shares may be purchased by plans investing less than $1 million.
Class L shares are eligible to exchange into Class A shares not later than 8
years after the plan joined the program. They are eligible for exchange
sooner in the following circumstances:

If the account was opened on or after June 21, 1996 and a total of $1 mil-
lion is invested in Smith Barney Funds Class L shares (other than money mar-
ket funds), all Class L shares are eligible for exchange after the plan is
in the program 5 years.

If the account was opened before June 21, 1996 and a total of $500,000 is
invested in Smith Barney Funds Class L shares (other than money market
funds) on December 31 in any year, all Class L shares are eligible for
exchange on or about March 31 of the following year.

For more information, call your Salomon Smith Barney Financial Consultant or
the transfer agent, or consult the SAI.

Smith Barney Mutual Funds

23
<PAGE>

Dividends, distributions and taxes

Taxes In general, redeeming shares, exchanging shares and receiving distribu-
tions (whether in cash or additional shares) are all taxable events.

<TABLE>
<CAPTION>
Transaction Federal tax status
<S> <C>
Redemption or exchange of shares Usually capital gain or loss;
long-term only if shares owned
more than one year
Long-term capital gain distributions Long-term capital gain

Short-term capital gain distributions Ordinary income
Dividends Ordinary income
</TABLE>

Global Small Cap Value Fund

24
<PAGE>

Share price

International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when you
cannot buy or redeem shares.

Salomon Smith Barney or members of the selling group must transmit all orders
to buy, exchange or redeem shares to the fund's agent before the agent's close
of business.

Smith Barney Mutual Funds

25
<PAGE>

Financial highlights

For a Class A share of capital stock outstanding throughout each year ended
April 30, except where noted :
<TABLE>
<CAPTION>
1999(1) 1998(/2/)
- ---------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $12.37 $11.40
- ---------------------------------------------------------------
Income (loss) from operations:
Net investment income(3) 0.11 0.05
Net realized and unrealized gain (loss) (2.10) 0.93
- ---------------------------------------------------------------
Total income (loss) from operations (1.99) 0.93
- ---------------------------------------------------------------
Less distributions from:
Net investment income (0.16) (0.01)
Net realized gains (0.03) --
- ---------------------------------------------------------------
Total distributions (0.19) (0.01)
- ---------------------------------------------------------------
Net asset value, end of year $10.19 $12.37
- ---------------------------------------------------------------
Total return (15.95)% 8.64%++
- ---------------------------------------------------------------
Net assets, end of year (000)'s $5,414 $9,296
- ---------------------------------------------------------------
Ratios to average net assets:
Expenses(3) 1.92% 1.95%+
Net investment income 1.06 1.28+
- ---------------------------------------------------------------
Portfolio turnover rate 27% 2%
- ---------------------------------------------------------------
</TABLE>

(/1/) Per share amounts have been calculated using the monthly average shares
method.

(/2/) For the period from December 19,1997 (inception date) to April 30, 1998.

(/3/) The Manager waived all of its fees for the period ended April 30, 1998
and a portion of its fees for the year ended April 30, 1999. 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
1999 1998(/2/) 1999 1998(/2/)
- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.04 $0.05 2.33% 3.25%+
- ----------------------------------------------------------
</TABLE>

++Total returns are not annualized, as it may not be representative of the
total return for the year.

+ Annualized

Global Small Cap Value Fund

26
<PAGE>

For a Class B share of capital stock outstanding throughout each year ended
April 30:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
1999(/1/) 1998(/2/)
- -----------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $12.34 $ 11.40
- -----------------------------------------------------------------
Income (loss) from operations:
Net investment income(/3/) 0.03 0.02
Net realized and unrealized gain (loss) (2.09) 0.93
- -----------------------------------------------------------------
Total income (loss) from operations (2.06) 0.95
- -----------------------------------------------------------------
Less distributions from:
Net investment income (0.09) (0.01)
Net realized gains (0.03) --
- -----------------------------------------------------------------
Total distributions (0.12) (0.01)
- -----------------------------------------------------------------
Net asset value, end of year $10.16 $ 12.34
- -----------------------------------------------------------------
Total return (16.61)% 8.38%++
- -----------------------------------------------------------------
Net assets, end of year (000)'s $7,819 $11,606
- -----------------------------------------------------------------
Ratios to average net assets:
Expenses(/3/) 2.74% 2.68%+
Net investment income 0.27 0.58+
- -----------------------------------------------------------------
Portfolio turnover rate 27% 2%
- -----------------------------------------------------------------
</TABLE>

(/1/) Per share amounts have been calculated using the monthly average shares
method.

(/2/) For the period from December 19, 1997 (inception date) to April 30, 1998.

(/3/) The Manager waived all of its fees for the period ended April 30, 1998
and a portion of its fees for the year ended April 30, 1999. 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
expensed ratios would have been as follows:

<TABLE>
<CAPTION>
Expense Ratios
Net Investment Income Without Fee Waivers
Per Share Decreases and Reimbursement
1999 1998(/2/) 1999 1998(/2/)
- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.04 $0.04 3.14% 3.96%+
- ----------------------------------------------------------
</TABLE>

++Total returns are not annualized, as it may not be representative of the
total return for the year.

+ Annualized.

Smith Barney Mutual Funds

27
<PAGE>

For a Class L(/2/) share of capital stock outstanding throughout each year
ended April 30:
<TABLE>
<CAPTION>
1999(/1/) 1998(/3/)
- ----------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $12.34 $11.40
- ----------------------------------------------------------------
Income (loss) from operations:
Net investment income(/4/) 0.02 0.02
Net realized and unrealized gain (loss) (2.10) 0.93
- ----------------------------------------------------------------
Total income (loss) from operations (2.08) 0.95
- ----------------------------------------------------------------
Less distributions from:
Net investment income (0.09) (0.01)
Net realized gains (0.03) --
- ----------------------------------------------------------------
Total distributions (0.12) (0.01)
- ----------------------------------------------------------------
Net assets value, end of year $10.14 $12.34
- ----------------------------------------------------------------
Total return (16.77)% 8.38%++
- ----------------------------------------------------------------
Net assets, end of year (000)'s $1,626 $2,682
- ----------------------------------------------------------------
Ratio to average net assets:
Expenses(/4/) 2.83% 2.71%+
Net investment income 0.19 0.58+
- ----------------------------------------------------------------
Portfolio turnover rate 27% 2%
- ----------------------------------------------------------------
</TABLE>

(/1/) Per share amounts have been calculated using the monthly average shares
method.

(/2/) On June 12, 1998, Class C shares were renamed Class L shares.

(/3/) For the period from December 19, 1997 (inception date) to April 30, 1998.

(/4/) The Manager waived part of its fees for the period ended April 30, 1998,
and a portion of its fees for the year ended April 30, 1999. 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>
Expenses Ratios
Net Investment Income Without Fee Waivers
Per Share Decreases and Reimbursement
1999 1998(/3/) 1999 1998(/3/)
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
$0.04 $0.04 3.24% 4.02%+
- ---------------------------------------------------------------
</TABLE>

++Total returns are not annualized, as it may not be representative of the
total return for the years.

+ Annualized.

Global Small Cap Value Fund

28
<PAGE>

For a Class Y share of capital stock outstanding throughout each year ended
April 30:
<TABLE>
<CAPTION>
1999(/1/) 1998(/2/)
- ----------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $12.37 $11.74
- ----------------------------------------------------------------
Income (loss) from operations:
Net investment income(/3/) 0.16 0.00*
Net realized and unrealized gain (loss) (2.09) 0.63
- ----------------------------------------------------------------
Total income (loss) from operations (1.93) 0.63
- ----------------------------------------------------------------
Less distributions from:
Net investment income (0.19) --
Net realized gain (0.03) --
- ----------------------------------------------------------------
Total distributions (0.22) --
- ----------------------------------------------------------------
Net asset value, end of year $10.22 $12.37
- ----------------------------------------------------------------
Total return (15.49)% 5.37%++
- ----------------------------------------------------------------
Net assets, end of year (000)'s $2,481 $234
- ----------------------------------------------------------------
Ratio to average net assets:
Expenses(/3/) 1.23% 1.73%+
Net investment income 1.71 2.42+
- ----------------------------------------------------------------
Portfolio turnover rate 27% 2%
- ----------------------------------------------------------------
</TABLE>

(/1/) Per share amounts have been calculated using the monthly average shares
method.

(/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,
and a portion of its fees for the year ended April 30, 1999. 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
1999 1998(/2/) 1999 1998(/2/)
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
$0.04 $0.00* $1.64 3.05+
- ---------------------------------------------------------
</TABLE>

* Amount represents less than $0.01 per share.

++Total returns are not annualized, as it may not be representative of the
total return for the year.

+ Annualized.

Smith Barney Mutual Funds

29
<PAGE>

(This page is intentionally left blank.)
<PAGE>

SalomonSmithBarney
----------------------------
A member of citigroup [LOGO]

Smith Barney
Hansberger
Global Small Cap Value Fund

An investment portfolio of Smith Barney Investment Funds Inc.

Visit our web site. Our web site is located at www.smithbarney.com

SMSalomon Smith Barney is a service mark of Salomon Smith Barney Inc.

(Investment Company Act file
no. 811-03275)

[FD01336 8/99]

PART B

Smith Barney
Investment Funds Inc.
388 Greenwich Street
New York, New York 10013
800-451-2010

Statement of Additional Information
August 30, 1999

This Statement of Additional Information expands upon and supplements the
information contained in the current prospectuses each dated August 30,
1999, as amended or supplemented from time to time, of Smith Barney
Hansberger Global Value Fund ("Global Value Fund") and Smith Barney
Hansberger Global Small Cap Value Fund ("Global Small Cap Value Fund")
(each a "Fund" and collectively the "Funds"), each a separate series of
Smith Barney Investment Funds Inc. (the "Company"), and should be read in
conjunction with the Funds' prospectuses. Each Fund's prospectus may be
obtained from a Salomon Smith Barney Financial Consultant, or by writing or
calling the Company at the address or telephone number listed above. This
Statement of Additional Information, although not in itself a prospectus,
is incorporated by reference into the Funds' prospectuses in its entirety.

CONTENTS

Directors and Executive Officers of the Funds 2
Investment Objectives and Management Policies 4
Additional Risk Factors 19
Investment Restrictions 24
Brokerage and Portfolio Transactions 25
Purchase of Shares 29
Redemption of Shares 35
Exchange Privilege 37
Distributor 39 Valuation of Shares 40
Performance Data 41
Dividends and Distributions 45
Taxes 45
Minimum Account Size 47
Financial Statements 47
Additional Information 47
Appendix A-1

Directors and Executive Officers of the Company. The names of the
Directors and executive officers of the Company, together with information
as to their principal business occupations during the past five years, are
shown below. Each Director who is an "interested person" of the Company,
as defined in the Investment Company Act of 1940, as amended (the "1940
Act"), is indicated by an asterisk.

Paul R. Ades, Director (Age 59). Partner in the law firm of Murov & Ades.
His address is 272 South Wellwood Avenue, P.O. Box 504, Lindenhurst, New
York 11757.
Herbert Barg, Director (Age 76). Private investor. His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.

Dwight B. Crane, Director (Age 62). Professor, Graduate School of Business
Administration, Harvard University. His address is Graduate School of
Business Administration, Harvard University, Boston, Massachusetts 02163.

Frank G. Hubbard, Director (Age 62). Vice President, S&S Industries;
Former Corporate Vice President, Materials Management and Marketing
Services of Huls America, Inc. His address is 80 Centennial Avenue P.O.
Box 456, Piscataway, New Jersey 08855-0456.

*Heath B. McLendon, Chairman of the Board, President and Chief Executive
Officer (Age 66). Managing Director of Salomon Smith Barney Inc. ("Salomon
Smith Barney) and President if SSBC Fund Management Inc. ("SSBC")(formerly
known as Mutual Management Corp.) and Travelers Investment Advisers, Inc.
("TIA"); Chairman and Co-Chairman of the Board of 64 investment companies
associated with Citigroup, Inc. ("Citigroup") formerly Chairman of the
Board of Smith Barney Strategy Advisers Inc.

Jerome Miller, Director (Age 60). Retired, Former President, Asset
Management Group of Shearson Lehman Brothers. His address is 27 Hemlock
Road, Manhasset, New York, NY 11030.

Ken Miller, Director (Age 57). President of Young Stuff Apparel Group, Inc.
His address is 1411 Broadway, New York, New York 10018.

Lewis E. Daidone, Senior Vice President and Treasurer (Age 42). Managing
Director of Smith Barney; Director and Senior Vice President of MMC and
TIA. Mr. Daidone serves as Senior Vice President and Treasurer of 42 Smith
Barney Mutual Funds. His address is 388 Greenwich Street, New York, New
York 10013.

Paul Brook, Controller (Age 45), Director, Salomon Smith Barney; Managing
Director of AMT Capital Services Inc. from 1997-1998; Prior to 1997,
Partner, Ernest & Young LLP.

Christina T. Sydor, Secretary (Age 48). Managing Director of Smith Barney;
General Counsel and Secretary of MMC and TIA. Ms. Sydor also serves as
Secretary of 42 Smith Barney Mutual Funds. Her address is 388 Greenwich
Street, New York, New York 10013.

Each Director also serves as a director, trustee and/or general partner of
certain other mutual funds for which Smith Barney serves as distributor.
As of August 16, 1999, the Directors and officers of the Company, as a
group, owned less than 1.00% of the outstanding common stock of the
Company.

As of August 16, 1999 to the knowledge of the Funds and the Board of
Directors, no single shareholder or group (as the term is used in Section
13(d) of the Securities Act of 1934) beneficially owned more than 5% of the
outstanding shares with the exception of the following:

Fund
Class
Percent
Name
Address
Global Small Cap Value Fund
A
14.2309
Philip S. Zettler
1079 Country Club Circle
Birmingham AL 35244-1483

Global Small Cap Value Fund
A
9.5069
The Marital TR under the Last will & Testament of Elliot T Williams Jr.
Deceased Alabama E Williams TTEE

2964 Briarcliff Road
Birmingham AL 35223-2605
Global Small Cap Value Fund
Y
100.00
Smith Barney
Concert Series, Inc.
Global Portfolio
PNC Bank
Attn: Beverly Timson

200 Stevens Drive
Suite 440
Lester PA 19113-1522
Global Value Fund
A
5.0317
RSM, LP
A Limited Partnership
17 Westover Road
Slingerlands NY 12159-3648

Global Value Fund
Y
46.8466
Smith Barney
Concert Series, Inc.
High Growth Portfolio
PNC Bank
Attn: Beverly Timson

200 Stevens Drive
Suite 440
Lester PA 19113-1522
Global Value Fund
Y
30.7057
Smith Barney
Concert Series, Inc.
Growth Portfolio
PNC Bank
Attn: Beverly Timson

200 Stevens Drive
Suite 440
Lester PA 19113-1522
Global Value Fund
Y
6.213
Smith Barney
Concert Series, Inc.
Select High Growth Portfolio
PNC Bank
Attn: Beverly Timson

200 Stevens Drive
Suite 440
Lester PA 19113-1522
Global Value Fund
Y
5.57
Smith Barney
Concert Series, Inc.
Select Growth Portfolio
PNC Bank
Attn: Beverly Timson

200 Stevens Drive
Suite 440
Lester PA 19113-1522
Global Value Fund
Y
5.0711
Smith Barney
Concert Series, Inc.
Conservative Portfolio
PNC Bank
Attn: Beverly Timson

200 Stevens Drive
Suite 440
Lester PA 19113-1522

No officer, director or employee of Salomon Smith Barney or any parent or
subsidiary receives any compensation from the Company for serving as an
officer or director of the Company. The Company pays each director who is
not an officer, director or employee of Salomon Smith Barney or any of its
affiliates a fee of $16,000 per annum plus $2,500 per meeting attended and
reimburses travel and out-of-pocket expenses which expenses, for the fiscal
year ended April 30, 1999 totaled $9,444. For the fiscal year ended April
30, 1998, the Directors of the Company were paid the following
compensation:

Name of Person

Aggregate Compensation
from Funds*
Total Pension or Retirement Benefits Accrued as part of Fund Expenses
Compensation from Funds and Fund Complex Paid to Directors
Number of Funds for Which Director Serves Within Fund Complex

Paul R. Ades
$6,261
0
$54,225
5
Herbert Barg
6,321
0
105,425
16
Dwight B. Crane
5,304
0
139,975
22
Frank G. Hubbard
6,161
0
54,125
5
Heath B. McLendon
- ---
- ---
- ---
64
Jerome Miller
5,333
0
44,925
5
Ken Miller
5,304
0
53,625
5

*Upon attainment of age 80 Directors are required to change to emeritus
status. Directors Emeritus are entitled to serve in emeritus status for a
maximum of 10 years during which time they are paid 50% of the annual
retainer fee and meeting fees otherwise applicable to the Fund Directors
together with reasonable out-of-pocket expenses for each meeting attended.

Investment Manager and Sub-Adviser. SSBC serves as investment adviser to
the Funds pursuant to separate investment management agreements (the
"Management Agreements"). SSBC is an affiliate of Salomon Smith Barney and
an indirect, wholly owned subsidiary of Citigroup. Hansberger Global
Investors, Inc. ("Hansberger") serves as sub-adviser to the Funds pursuant
to separate sub-advisory agreements (the "Sub-Advisory Agreements"). The
Management Agreements and the Sub-Advisory Agreements were most recently
approved by the Board of Directors, including a majority of the Directors
who are not "interested persons" of the Company or the investment advisers
(the "Independent Directors"), and by shareholders of the respective Funds
on July 22, 1999. SSBC provides investment advisory and management
services to investment companies affiliated with Salomon Smith Barney.

As compensation for investment management services rendered to Global Value
Fund and Global Small Cap Value Fund, each Fund pays SSBC a fee computed
daily and paid monthly at the annual rates of 0.95% and 1.05%,
respectively, of the value of their average daily net assets. As
compensation for sub-advisory services rendered to Global Value Fund and
Global Small Cap Value Fund, SSBC pays Hansberger a fee, computed daily and
paid monthly, at the annual rates of 0.50% and 0.60%, respectively, of the
value of the respective Fund's average daily net assets. SSBC and
Hansberger bear all expenses in connection with the performance of their
services. For the period ended April 30, 1999 SSBC waived all or part of
its fee in the amount of $80,863 the Global Small Cap Value Fund.

Counsel and Auditors. Willkie Farr & Gallagher serves as counsel to the
Company. The Independent Directors have selected Stroock & Stroock & Lavan
LLP as their legal counsel. KPMG LLP, 345 Park Avenue, New York, New York
10154, has been selected as each Fund's independent auditor to examine and
report on the Fund's financial statements and highlights for the fiscal
year ending April 30, 2000.

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

Each of the following investment policies, strategies and techniques is
subject to the limitations set forth under "Investment Restrictions." Except
as described under " Investment Restrictions," the investment policies
described in the prospectuses and in this statement of additional
information are not fundamental and the Board of Directors may change such
policies without shareholder approval.

General. Each Fund's investment objective is long-term capital growth.
Global Value Fund seeks to achieve this objective by investing primarily in
equity securities of U.S. and foreign issuers which, in the opinion of SSBC
and Hansberger, are undervalued. Global Small Cap Value Fund seeks to
achieve this objective by investing primarily in equity securities of U.S.
and foreign issuers with relatively small market capitalizations (share
price times number of equity securities outstanding) which, in the opinion
of SSBC and Hansberger, are undervalued. For each Fund, income will be an
incidental consideration.

In making investment decisions for the Funds, Hansberger relies heavily on
a fundamental analysis of securities with a long-term investment
perspective. Hansberger's valuation methods focus on a company's share
price in relation to earnings, dividends, assets, sales and a variety of
other criteria. Both Funds seek to invest in companies whose securities
are trading at the greatest discount to future earnings, cash flow and/or
net asset value, and Hansberger utilizes proprietary valuation screens,
internal and external research sources and other fundamental analysis to
identify those securities that appear to be undervalued. Once undervalued
securities are identified, Hansberger analyzes each security, concentrating
on a variety of fundamental issues, including sales growth, cash flow, new
product development, management structure and other economic factors. This
fundamental analysis results in a list of securities meeting a strict value
discipline, which are reviewed by Hansberger for inclusion in each Fund's
portfolio.

Hansberger seeks to increase the scope and effectiveness of this
fundamental investment approach by extending the search for value into many
countries around the world. This global search provides Hansberger with
more diverse opportunities and flexibility to shift portfolio investments
not only from company to company and industry to industry, but also country
to country, in search of undervalued securities.

Under normal market conditions, the Global Small Cap Value Fund will invest
at least 65% of the value of its total assets in companies with individual
market capitalizations of $1.4 billion U.S. dollars or less (at the time of
purchase). Under normal market conditions each Fund will invest its assets
in at least three countries, which may include the United States.

Although the Funds generally invest in common stocks, they may also invest
in preferred stocks and certain debt securities, rated or unrated, such as
convertible bonds and bonds selling at a discount, when Hansberger believes
the potential for appreciation will equal or exceed that available from
investments in common stock. Each fund may also invest in warrants or
rights to subscribe to or purchase such securities, and sponsored or
unsponsored American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and other depository
receipts (collectively, "Depositary Receipts"). Each fund may also lend
its portfolio securities and borrow money for investment purposes (i.e.,
"leverage" its portfolio). In addition, each Fund may invest in closed-end
investment companies holding foreign securities, and enter into
transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, and futures contracts and
related options. When deemed appropriate by SSBC or Hansberger, each Fund
may invest cash balances in repurchase agreements and other money market
investments to maintain liquidity in an amount sufficient to meet expenses
or for day-to day operating purposes. Whenever, in the judgment of
Hansberger, market or economic conditions warrant, a Fund may adopt a
temporary defensive position and may invest without limit in money market
securities denominated in U.S. dollars or in the currency of any foreign
country, as described below.

See "Additional Risk Factors" below for more information on the special
risks involved with investing in foreign securities.

Repurchase Agreements. Each Fund may enter into repurchase agreements. A
repurchase agreement is a contract under which a Fund acquires a security
for a relatively short period (usually not more than one week) subject to
the obligation of the seller to repurchase and the Fund to resell such
security at a fixed time and price (representing the Fund's cost plus
interest). It is each Fund's present intention to enter into repurchase
agreements only upon receipt of fully adequate collateral and only with
commercial banks (whether U.S. or foreign) and registered broker-dealers.
Repurchase agreements may also be viewed as loans made by a Fund which are
collateralized primarily by the securities subject to repurchase. A Fund
bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations and the Fund is delayed or prevented
from exercising its rights to dispose of the collateral securities.
Pursuant to policies established by the Board of Directors, SSBC and
Hansberger monitor the creditworthiness of all issuers with which each Fund
enters into repurchase agreements.

Reverse Repurchase Agreements. Each Fund currently does not intend to
commit more than 5% of its Fund's net assets to reverse repurchase
agreements. The Fund may enter into reverse repurchase agreements with
broker/dealers and other financial institutions. Such agreements involve
the sale of Fund securities with an agreement to repurchase the securities
at an agreed-upon price, date and interest payment and are considered to be
borrowings by a Fund and are subject to the borrowing limitations set forth
under "Investment Restrictions." Since the proceeds of reverse repurchase
agreements are invested, this would introduce the speculative factor known
as "leverage." The securities purchased with the funds obtained from the
agreement and securities collateralizing the agreement will have maturity
dates no later than the repayment date. Such transactions are only
advantageous if the Fund has an opportunity to earn a greater rate of
interest on the cash derived from the transaction than the interest cost of
obtaining that cash. Opportunities to realize earnings from the use of the
proceeds equal to or greater than the interest required to be paid may not
always be available, and the Fund intends to use the reverse repurchase
technique only when SSBC and Hansberger believe it will be advantageous to
the Fund. The use of reverse repurchase agreements may exaggerate any
interim increase or decrease in the value of the participating Fund's
assets. The Fund's custodian bank will maintain a separate account for the
Fund with securities having a value equal to or greater than such
commitments.

Securities Lending. Each Fund is authorized to lend up to 33 1/3% of the
total market value of its portfolio securities to brokers, dealers, domestic
and foreign banks or other financial institutions for the purpose of
increasing its net investment income. Any loan of securities must be
callable at any time and are continuously secured by cash or U.S. Government
Obligations equal to no less than the market value, determined daily, of the
securities loaned. There may, however, be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrowers of
the securities fail financially. Apart from lending its securities and
acquiring debt securities of a type customarily purchased by financial
institutions, no Fund will make loans to other persons.

Each Fund will receive amounts equal to dividends or interest on the
securities loaned. It will also earn income for having made the loan
because cash collateral pursuant to these loans will be invested in short-
term money market instruments. In connection with lending of securities the
Fund may pay reasonable finders, administrative and custodial fees. Where
voting or consent rights with respect to loaned securities pass to the
borrower, management will follow the policy of calling the loan, in whole or
in part as may be appropriate, to permit the exercise of such voting or
consent rights if the issues involved have a material effect on the Fund's
investment in the securities loaned.

Commercial Bank Obligations. For the purposes of each Fund's investment
policies with respect to bank obligations, obligations of foreign branches
of U.S. banks and of foreign banks may be general obligations of the parent
bank in addition to the issuing bank, or may be limited by the terms of a
specific obligation and by government regulation. As with investment in
non-U.S. securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject the Funds to
investment risks that are different in some respects from those of
investments in obligations of domestic issuers. Although a Fund will
typically acquire obligations issued and supported by the credit of U.S. or
foreign banks having total assets at the time of purchase in excess of U.S.
$1 billion (or the equivalent thereof), this is not a fundamental investment
policy or restriction of the Fund. For calculation purposes with respect to
the U.S. $1 billion figure, the assets of a bank will be deemed to include
the assets of its U.S. and non-U.S. branches.

When-Issued and Delayed Delivery Securities. Each Fund may purchase
securities on a when-issued or delayed delivery basis. The price of debt
obligations purchased on a when-issued basis is fixed at the time a Fund
commits to purchase, but delivery and payment for the securities
("settlement") takes place at a later date. The price of these securities
may be expressed in yield terms. A Fund will enter into these transactions
in order to lock in the yield (price) available at the time of commitment.
Between purchase and settlement, a Fund assumes the ownership risk of the
when-issued securities, including the risk of fluctuations in the securities
market value due to, among other factors, a change in the general level of
interest rates. However, no interest accrues to the Fund during this
period.

Commercial Paper. Commercial paper consists of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note
(which is a type of commercial paper) represents a direct borrowing
arrangement involving periodically fluctuating rates of interest under a
letter agreement between a commercial paper issuer and an institutional
lender, such as one of the Funds, pursuant to which the lender may determine
to invest varying amounts. Transfer of such notes is usually restricted by
the issuer, and there is no secondary trading market for such notes. Each
Fund, therefore, may not invest in a master demand note, if as a result more
than 15% of the value of the Fund's total assets would be invested in such
notes and other illiquid securities.

Temporary Investments. Each Fund may make money market investments pending
other investments or settlement for liquidity, or in adverse market
conditions. These money market investments include obligations of the U.S.
Government and its agencies and instrumentalities, obligations or foreign
sovereignties, other debt securities, commercial paper including bank
obligations, certificates of deposit (including Eurodollar certificates of
deposit) and repurchase agreements.

For temporary defensive purposes, during periods in which SSBC or
Hansberger believes changes in economic, financial or political conditions
make it advisable, each Fund may reduce its holdings in equity and other
securities and may invest up to 100% of its assets in certain short-term
(less than twelve months to maturity) and medium-term (not greater than
five years to maturity) debt securities and in cash (U.S. dollars, foreign
currencies, multicurrency units). These short-term and medium-term debt
securities consist of (a) obligations of governments, agencies or
instrumentalities of any member state of the Organization for Economic
Cooperation and Development ("OECD"), (b) bank deposits and bank
obligations (including certificates of deposit, time deposits and banker's
acceptances) of banks organized under the laws of any member state of the
OECD, denominated in any currency: (c) floating rate securities and other
instruments denominated in any currency issued by international development
agencies: (d) finance company and corporate commercial paper and other
short-term corporate debt obligations of corporations organized under the
laws of any member state of the OECD meeting the Fund's credit quality
standards: and (e) repurchase agreements with banks and broker-dealers
covering any of the foregoing securities. The short-term and medium-term
debt securities in which a Fund may invest for temporary defensive purposes
will be those that SSBC and Hansberger believe to be of high quality, i.e.,
subject to relatively low risk of loss of interest or principal. There is
currently no rating system for debt securities in most emerging countries.
If rated, these securities will be rated in one of the three highest rating
categories by rating services such as Moody's Investors Services, Inc. or
Standard & Poor's Ratings Group (i.e., rated at least A).

Non-Publicly Traded Securities. Each Fund may invest in securities that
are neither listed on a stock exchange nor traded over the counter,
including privately placed securities. These securities may present a
higher degree of business and financial risk, which can result in
substantial losses. In the absence of a public trading market for these
securities, they may be less liquid than publicly traded securities.
Although these securities may be resold in privately negotiated
transactions, the prices realized from these sales could be less than those
originally paid by the Fund or less than what the Fund may consider the
fair value of such securities. Further, companies whose securities are not
publicly traded may not be subject to disclosure and other investor
protection requirements that might apply if their securities were publicly
traded. If such securities are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Fund
may be required to bear the costs of registration. A Fund may not invest
more than 15% of its net assets in illiquid securities, including
securities for which there is no readily available secondary market. A
Fund may invest in securities that can be offered and sold to qualified
institutional buyers under Rule 144A under the 1933 Act ("Rule 144A
Securities"). The Board of Directors has delegated to SSBC and Hansberger,
subject to the Board's supervision, the daily function of determining and
monitoring the liquidity of Rule 144A Securities. Rule 144A Securities
held by the Fund which have been determined to be liquid will not be
subject to the 15% limitation described above. However, Rule 144A
Securities may become illiquid if qualified institutional buyers are not
interested in acquiring them.

Short Sales. Each Fund may sell securities short "against the box", that
is, sell a security that the Fund owns or has the right to acquire, for
delivery at a specified date in the future.

Depositary Receipts (including ADRs, EDRs and GDRs). Each Fund may purchase
ADRs, EDRs, GDRs and other depositary receipts or other securities
representing underlying shares of foreign companies. Depositary Receipts
are typically issued by a financial institution ("depository") and evidence
ownership interests in a security or a pool of securities ("underlying
securities") that have been deposited with the depository. . ADRs are
publicly traded on exchanges or over-the-counter in the United States and
are issued through "sponsored" or "unsponsored" arrangements. In a
sponsored ADR arrangement, the foreign issuer assumes the obligation to pay
some or all of the depository's transaction fees, whereas under an
unsponsored arrangement, the foreign issuer assumes no such obligation and
the depository's transaction fees are paid by the ADR holders. In addition,
less information is available in the United States about an unsponsored ADR
than about a sponsored ADR, and the financial information about a company
may not be as reliable for an unsponsored ADR as it is for a sponsored ADR.
The Funds may invest in ADRs through both sponsored and unsponsored
arrangements.

The depository for ADRs is typically a U.S. financial institution and the
underlying securities are issued by a foreign issuer. For other Depositary
Receipts, the depository may be a foreign or a U.S. entity, and the
underlying securities may have a foreign or a U.S. issuer. For purposes of
a Fund's investment policies, investments in Depositary Receipts will be
deemed to be investments in the underlying securities. Thus, a Depositary
Receipt representing ownership of common stock will be treated as common
stock.

Real Estate Investment Trusts ("REITs"). Each Fund may invest up to 10% of
its assets in Real Estate Investment Trusts. REITs are pooled investment
vehicles that invest primarily in either real estate or real estate related
loans. The value of a REIT is affected by changes in the value of the
properties owned by the REIT or securing mortgage loans held by the REIT.
A REIT is dependent upon cash flow from its investments to repay financing
costs and the ability of the REIT's manager. REITs are also subject to
risks generally associated with investments in real estate.

Borrowing. Each Fund may borrow money from U.S.-regulated banks in an
amount not to exceed 33 1/3% of the value of the Fund's total assets
(including the amount borrowed valued at market) less liabilities other
than the borrowing. If a Fund borrows and uses the proceeds to make
additional investments, income and appreciation from such investments will
improve its performance if they exceed the associated borrowing costs but
impair its performance if they are less than such borrowing costs. This
speculative factor is known as "leverage."

Leverage creates an opportunity for increased returns to shareholders of a
Fund but, at the same time, creates special risk considerations. For
example, leverage may exaggerate changes in the net asset value of the
Fund's shares and in the Fund's yield. Although the principal or stated
value of such borrowings will be fixed, the Fund's assets may change in
value during the time the borrowing is outstanding. Leverage will create
interest or dividend expenses for the Fund which can exceed the income from
the assets retained. To the extent the income or other gain derived from
securities purchased with borrowed funds exceeds the interest or dividends
the Fund will have to pay in respect thereof, the Fund's net income or
other gain will be greater than if leverage had not been used. Conversely,
if the income or other gain from the incremental assets is not sufficient
to cover the cost of leverage, the net income or other gain of the Fund
will be less than if leverage had not been used. If the amount of income
from the incremental securities is insufficient to cover the cost of
borrowing, securities might have to be liquidated to obtain required funds.
Depending on market or other conditions, such liquidations could be
disadvantageous to the Fund.

Other Investment Companies. Some emerging countries have laws and
regulations that preclude direct foreign investment in the securities of
companies located there. However, indirect foreign investment in the
securities of companies listed and traded on the stock exchanges in these
countries is permitted by certain emerging countries through specifically
authorized investment funds. Each Fund may invest in these investment
funds, as well as other closed-end investment companies up to 10% of its
assets, as permitted by the 1940 Act.

Forward Roll Transactions. In order to enhance current income, each Fund
may enter into forward roll transactions. In a forward roll transaction, a
Fund sells a security to a financial institution, such as a bank or broker-
dealer, and simultaneously agrees to repurchase a similar security from the
institution at a later date at an agreed-upon price. During the period
between the sale and repurchase, the Fund will not be entitled to receive
interest and principal payments on the securities sold. Proceeds of the
sale will be invested in short-term instruments, particularly repurchase
agreements, and the income from these investments, together with any
additional fee income received on the sale will generate income for the
Fund exceeding the yield on the securities sold. Forward roll transactions
involve the risk that the market value of the securities sold by the Fund
may decline below the repurchase price of those securities. At the time
the Fund enters into forward roll transactions, it will place in a
segregated account on the books of the Fund, or with The Chase Manhattan
Bank ("Chase'), cash or liquid assets having a value equal to the
repurchase price (including accrued interest) and will subsequently monitor
the account to insure that such equivalent value is maintained.

Forward Foreign Currency Exchange Contracts and Options on Foreign
Currencies. Each Fund may enter into forward foreign currency exchange
contracts ("forward contracts"), providing for the purchase of or sale of
an amount of a specified currency at a future date. A Fund may use forward
contracts to protect against a foreign currency's decline against the U.S.
dollar between the trade date and settlement date for a securities
transaction, or to lock in the U.S. dollar value of dividends declared on
securities it holds, or generally to protect the U.S. dollar value of the
securities it holds against exchange rate fluctuations. A Fund may also
use forward contracts to protect against fluctuating exchange rates and
exchange control regulations. Forward contracts may limit the Fund's
losses due to exchange rate fluctuation, but they will also limit any gains
that the Fund might otherwise have realized. A Fund may also enter into
foreign currency futures contracts ("currency futures").

Except where segregated accounts are not required by the 1940 Act, when a
Fund enters into a forward contract or currency future, it will place in a
segregated account maintained on the books of the Fund, or with Chase, cash
or liquid securities in an amount equal to the value of the Fund's total
assets committed to consummation of forward contracts and currency futures.
If the value of these segregated securities declines, additional cash or
securities will be placed in the account on a daily basis so that the
account value is at least equal to the Fund's commitments to such
contracts.

A Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against
declines in the U.S. dollar value of foreign currency denominated portfolio
securities and against increases in the U.S. dollar cost of such securities
to be acquired. As in the case of other kinds of options, however, the
writing of an option on a foreign currency constitutes only a partial
hedge, up to the amount of the premium received, and the Fund could be
required to purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses. The purchase of an option on a foreign
currency may constitute an effective hedge against fluctuations in exchange
rates although, in the event of rate movements adverse to the Fund's
position, it may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be written or
purchased by the Fund are traded on U.S. and foreign exchanges or over-the-
counter.

Option Transactions. In addition to options on currencies described above,
each Fund may seek to hedge all or a portion of its investments through
options on other securities in which it may invest. Options which each
Fund may purchase or sell will be traded on a recognized securities or
futures exchange or over the counter ("OTC"). Options markets in emerging
countries are currently limited and the nature of the strategies adopted by
Hansberger and the extent to which those strategies are used will depend on
the development of such markets.

The primary risks associated with the use of options on securities are (i)
imperfect correlation between the change in market value of the securities
a Fund holds and the prices of options relating to the securities purchased
or sold by the Fund; and (ii) possible lack of a liquid secondary market
for an option. Options not traded on an exchange (OTC options) are
generally considered illiquid and may be difficult to value. Hansberger
believes that the Fund will minimize its risk of being unable to close out
an option contract by transacting in options only if there appears to be a
liquid secondary market for those options.

Writing Covered Call Options. Each Fund may write (sell) covered call
options for hedging purposes. Covered call options will generally be
written on securities and currencies which, in the opinion of the
subadviser, are not expected to make any major price moves in the near
future but which, over the long term, are deemed to be attractive
investments for the Fund.

A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until a
certain date (the expiration date). So long as the obligation of the writer
of a call option continues, he may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring him to deliver
the underlying security or currency against payment of the exercise price.
This obligation terminates upon the expiration of the call option, or such
earlier time at which the writer effects a closing purchase transaction by
purchasing an option identical to that previously sold. A call is "covered"
if the Fund (i) owns the securities underlying the option or securities
convertible or exchangeable (without the payment of any consideration) into
the securities underlying the option, (ii) maintains in a segregated
account on the Fund's books, or with Chase, the Fund's custodian, cash or
on the Fund's books, or liquid securities provided such securities have
been determined by SSBC and Hansberger to be unencumbered pursuant to
guidelines established by the Board of Directors ("eligible segregated
assets") with a value sufficient to meet the Fund's obligations under the
call, or (iii) owns an offsetting call option.

Fund securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with
each Fund's investment objective. When writing a covered call option, the
Fund, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security or currency above the exercise
price and retains the risk of loss should the price of the security or
currency decline. Unlike one who owns securities or currencies not subject
to an option, the Fund has no control over when it may be required to sell
the underlying securities or currencies, since the option may be exercised
at any time prior to the option's expiration. If a call option which the
Fund has written expires, the Fund will realize a gain in the amount of the
premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the
call option is exercised, the Fund will realize a gain or loss from the sale
of the underlying security or currency. The security or currency covering
the call option will be maintained in a segregated account of the Fund's
custodian. The Fund does not consider a security or currency covered by a
call option to be "pledged" as that term is used in the Fund's policy which
limits the pledging or mortgaging of its assets.

The premium the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive
from writing a call option will reflect, among other things, the current
market price of the underlying security or currency, the relationship of the
exercise price to such market price, the implied price volatility of the
underlying security or currency, and the length of the option period. In
determining whether a particular call option should be written on a
particular security or currency, Hansberger will consider the reasonableness
of the anticipated premium and the likelihood that a liquid secondary market
will exist for those options. The premium received by the Fund for writing
covered call options will be recorded as a liability in the Fund's statement
of assets and liabilities. This liability will be adjusted daily to the
option's current market value, which will be calculated as described in
"Determination of Net Asset Value" in the Prospectus. The liability will be
extinguished upon expiration of the option or delivery of the underlying
security or currency upon the exercise of the option. The liability with
respect to a listed option will also be extinguished upon the purchase of an
identical option in a closing transaction.

Closing transactions will be effected in order to realize a profit or to
limit losses on an outstanding call option, to prevent an underlying
security or currency from being called, or to permit the sale of the
underlying security or currency. Furthermore, effecting a closing
transaction will permit the Fund to write another call option on the
underlying security or currency with either a different exercise price,
expiration date or both. If the Fund desires to sell a particular security
or currency from its Fund on which it has written a call option or purchases
a put option, it will seek to effect a closing transaction prior to, or
concurrently with, the sale of the security or currency. There is no
assurance that the Fund will be able to effect such closing transactions at
a favorable price. If the Fund cannot enter into such a transaction, it may
be required to hold a security or currency that it might otherwise have
sold, in which case it would continue to be at market risk with respect to
the security or currency.

Each Fund will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity are normally higher than those applicable to
purchases and sales of Fund securities.

Call options written by each Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the
options may be below, equal to or above the current market values of the
underlying securities or currencies at the time the options are written.
From time to time, the Fund may purchase an underlying security or currency
for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its Fund. In such cases,
additional costs will be incurred.

Each Fund will realize a profit or loss from a closing purchase transaction
if the cost of the transaction is less or more, respectively, than the
premium received from the writing of the option. Because increases in the
market price of a call option will generally reflect increases in the market
price of the underlying security or currency, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security or currency owned by the Fund.

Writing Put Options. Each Fund may also write (i.e., sell) covered put
options. The writer of a put incurs an obligation to buy the security
underlying the option from the put's purchaser at the exercise price at any
time on or before the termination date, at the purchaser's election
(certain options the Fund writes will be exercisable by the purchaser only
on a specific date). Generally, a put is "covered" if the Fund maintains
eligible segregated assets equal to the exercise price of the option or if
the Fund holds a put on the same underlying security with a similar or
higher exercise price.

Purchasing Put Options. Each Fund may purchase put options. As the holder
of a put option, the Fund has the right to sell the underlying security or
currency at the exercise price at any time during the option period. The
Fund may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.

Each Fund may purchase a put option on an underlying security or currency (a
"protective put") owned by the Fund as a hedging technique in order to
protect against an anticipated decline in the value of the security or
currency. Such hedge protection is provided only during the life of the put
option when the Fund, as the holder of the put option, is able to sell the
underlying security or currency at the put exercise price regardless of any
decline in the underlying security's market price or currency's exchange
value. The premium paid for the put option and any transaction costs would
reduce any capital gain otherwise available for distribution when the
security or currency is eventually sold.

Each Fund may also purchase put options at a time when the Fund does not own
the underlying security or currency. By purchasing put options on a
security or currency it does not own, the Fund seeks to benefit from a
decline in the market price of the underlying security or currency. If the
put option is not sold when it has remaining value, and if the market price
of the underlying security or currency remains equal to or greater than the
exercise price during the life of the put option, the Fund will lose its
entire investment in the put option. In order for the purchase of a put
option to be profitable, the market price of the underlying security or
currency must decline sufficiently below the exercise price to cover the
premium and transaction costs, unless the put option is sold in a closing
sale transaction.

The premium paid by a Fund when purchasing a put option will be recorded as
an asset in the Fund's statement of assets and liabilities. This asset will
be adjusted daily to the option's current market value, which will be
calculated as described in "Determination of Net Asset Value" in the
Prospectus. The asset will be extinguished upon expiration of the option or
the delivery of the underlying security or currency upon the exercise of the
option. The asset with respect to a listed option will also be extinguished
upon the writing of an identical option in a closing transaction.

Purchasing Call Options. Each Fund may purchase call options. As the
holder of a call option, a Fund has the right to purchase the underlying
security or currency at the exercise price at any time during the option
period. The Fund may enter into closing sale transactions with respect to
such options, exercise them or permit them to expire. Call options may be
purchased by the Fund for the purpose of acquiring the underlying security
or currency for its Fund. Utilized in this fashion, the purchase of call
options enables the Fund to acquire the security or currency at the exercise
price of the call option plus the premium paid. At times the net cost of
acquiring the security or currency in this manner may be less than the cost
of acquiring the security or currency directly. This technique may also be
useful to the Fund in purchasing a large block of securities that would be
more difficult to acquire by direct market purchases. So long as it holds
such a call option rather than the underlying security or currency itself,
the Fund is partially protected from any unexpected decline in the market
price of the underlying security or currency and in such event could allow
the call option to expire, incurring a loss only to the extent of the
premium paid for the option.

Each Fund may also purchase call options on underlying securities or
currencies it owns in order to protect unrealized gains on call options
previously written by it. A call option would be purchased for this purpose
where tax considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options may also be purchased at times
to avoid realizing losses that would result in a reduction of the Fund's
current return.

Futures Contracts and Related Options. Each Fund may buy and sell
financial futures contracts, stock and bond index futures contracts,
interest rate futures contracts, foreign currency futures contracts
(collectively, "Futures Contracts") and options on Futures Contracts for
hedging purposes only. A Futures Contract is an agreement between two
parties to buy or sell a specified debt security at a set price on a future
date. An index futures contract is an agreement to take or make delivery
of an amount of cash based on the difference between the value of the index
at the beginning and at the end of the contract period. A futures contract
on a foreign currency is an agreement to buy or sell a specified amount of
a currency for a set price on a future date. Each Fund may enter into
Futures Contracts as a hedge against changes in prevailing levels of
interest rates, currency exchange rates, securities indices or individual
securities, in order to establish more definitely the effective return on
securities or currencies held or committed to be acquired by the Fund. A
Fund may enter into Futures Contracts based on financial indices including
any index of U.S. Government securities, foreign government securities or
corporate debt securities.

A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument or
currency for a specified price at a designated date, time and place. The
purchaser of a Futures Contract on an index agrees to take or make delivery
of an amount of cash equal to the difference between a specified dollar
multiple of the value of the index on the expiration date of the contract
("current contract value") and the price at which the contract was
originally struck. No physical delivery of the debt securities underlying
the index is made. Brokerage fees are incurred when a Futures Contract is
bought or sold, and margin deposits must be maintained at all times that the
Futures Contract is outstanding.

Although techniques other than sales and purchases of Futures Contracts
could be used to reduce the Fund's exposure to interest rate and currency
exchange rate fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.

Although Futures Contracts typically require future delivery of and payment
for financial instruments or currencies, Futures Contracts are usually
closed out before the delivery date. Closing out an open Futures Contract
sale or purchase is effected by entering into an offsetting Futures Contract
purchase or sale, respectively, for the same aggregate amount of the
identical financial instrument or currency and the same delivery date. If
the offsetting purchase price is less than the original sale price, the Fund
realizes a gain; if it is more, the Fund realizes a loss. Conversely, if
the offsetting sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss. The transaction
costs must also be included in these calculations. There can be no
assurance, however, that the Fund will be able to enter into an offsetting
transaction with respect to a particular Futures Contract at a particular
time. If the Fund is not able to enter into an offsetting transaction, the
Fund will continue to be required to maintain the margin deposits of the
underlying financial instrument or currency on the relevant delivery date.
The Fund intends to enter into Futures transactions only on exchanges or
boards of trade where there appears to be a liquid secondary market.
However, there can be no assurance that such a market will exist for a
particular contract at a particular time.

As an example of an offsetting transaction, the contractual obligations
arising from the sale of one Futures Contract of September Treasury Bills on
an exchange may be fulfilled at any time before delivery under the Futures
Contract is required (i.e., on a specific date in September, the "delivery
month") by the purchase of another Futures Contract of September Treasury
Bills on the same exchange. In such instance the difference between the
price at which the Futures Contract was sold and the price paid for the
offsetting purchase, after allowance for transaction costs, represents the
profit or loss to the Fund.

Persons who trade in Futures Contracts may be broadly classified as
"hedgers" and "speculators." Hedgers, whose business activity involves
investment or other commitment in securities or other obligations, use the
Futures markets to offset unfavorable changes in value that may occur
because of fluctuations in the value of the securities and obligations held
or committed to be acquired by them or fluctuations in the value of the
currency in which the securities or obligations are denominated. Debtors
and other obligors may also hedge the interest cost of their obligations.
The speculator, like the hedger, generally expects neither to deliver nor to
receive the financial instrument underlying the Futures Contract, but,
unlike the hedger, hopes to profit from fluctuations in prevailing interest
rates or currency exchange rates.

Each Fund's Futures transactions will be entered into for traditional
hedging purposes; that is, Futures Contracts will be sold to protect against
a decline in the price of securities or currencies that a Fund owns, or
Futures Contracts will be purchased to protect a Fund against an increase in
the price of securities or currencies it has committed to purchase or
expects to purchase.

"Margin" with respect to Futures Contracts is the amount of money that must
be deposited by the Fund with a broker in order to initiate Futures trading
and to maintain the Fund's open positions in Futures Contracts. A margin
deposit made when the Futures Contract is entered into ("initial margin") is
intended to assure the Fund's performance of the Futures Contract. The
margin required for a particular Futures Contract is set by the exchange on
which the Futures Contract is traded, and may be significantly modified from
time to time by the exchange during the term of the Futures Contract. As
the value of the security, index or currency fluctuates, either party to
the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under
the contract. In addition, when a Fund enters into a Futures Contract, it
will segregate assets or "cover" its position in accordance with the 1940
Act. With respect to positions in futures and related options that do not
constitute "bona fide hedging" positions as defined in regulations of the
Commodity Futures Trading Commission, a Fund will not enter into a futures
contract or related option contract if, immediately thereafter, the
aggregate initial margin deposits relating to such positions plus premiums
paid by it for open futures option positions, less the amount by which any
such options are "in-the-money," would exceed 5% of the Fund's total
assets. The value of the underlying securities on which Futures Contracts
will be written at any one time will not exceed 25% of the total assets of
the Fund.

If the price of an open Futures Contract changes (by increase in the case of
a sale or by decrease in the case of a purchase) so that the loss on the
Futures Contract reaches a point at which the margin on deposit does not
satisfy margin requirements, the broker will require an increase in the
margin deposit ("variation margin"). If, however, the value of a position
increases because of favorable price changes in the Futures Contract so that
the margin deposit exceeds the required margin, it is anticipated that the
broker will pay the excess to the Fund. In computing daily net asset
values, the Fund will mark to market the current value of its open Futures
Contracts. Each Fund expects to earn interest income on its margin
deposits.

See "Additional Risk Factors" below for more information on the special
risks associated with Futures Contracts.

Options on Futures Contracts. Options on Futures Contracts are similar to
options on securities or currencies except that options on Futures Contracts
give the purchaser the right, in return for the premium paid, to assume a
position in a Futures Contract (a long position if the option is a call and
a short position if the option is a put), rather than to purchase or sell
the Futures Contract, at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the
Futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
Futures margin account which represents the amount by which the market price
of the Futures Contract, at exercise, exceeds (in the case of a call) or is
less than (in the case of a put) the exercise price of the option on the
Futures Contract. If an option is exercised on the last trading day prior
to the expiration date of the option, the settlement will be made entirely
in cash equal to the difference between the exercise price of the option and
the closing level of the securities or currencies upon which the Futures
Contracts are based on the expiration date. Purchasers of options who fail
to exercise their options prior to the exercise date suffer a loss of the
premium paid.

As an alternative to purchasing call and put options on Futures, each Fund
may purchase call and put options on the underlying securities or currencies
themselves (see "Purchasing Put Options" and "Purchasing Call Options"
above). Such options would be used in a manner identical to the use of
options on Futures Contracts.

To reduce or eliminate the leverage then employed by the Fund or to reduce
or eliminate the hedge position then currently held by the Fund, the Fund
may seek to close out an option position by selling an option covering the
same securities or currency and having the same exercise price and
expiration date. The ability to establish and close out positions on
options on Futures Contracts is subject to the existence of a liquid market.
It is not certain that this market will exist at any specific time.

In order to assure that the Funds will not be deemed to be "commodity pools"
for purposes of the Commodity Exchange Act, regulations of the Commodity
Futures Trading Commission ("CFTC") require that each Fund enter into
transactions in Futures Contracts and options on Futures Contracts only (i)
for bona fide hedging purposes (as defined in CFTC regulations), or (ii) for
non-hedging purposes, provided that the aggregate initial margin and
premiums on such non-hedging positions does not exceed 5% of the liquidation
value of the Fund's assets. The Funds will enter into transactions in
Futures Contracts and options on Futures Contracts only for hedging
purposes.

Supplementary Description of Interest Rate Futures Contracts and Related
Options. Currently, Futures Contracts can be purchased and sold on such
securities as U.S. Treasury bonds, U.S. Treasury notes, GNMAs and U.S.
Treasury bills. Unlike when the Fund purchases or sells a security, no
price is paid or received by the Fund upon the purchase or sales of a
Futures Contract. The Fund will initially be required to deposit with the
custodian or the broker an amount of "initial margin" of cash or U.S.
Treasury bills. The nature of initial margin in futures transactions is
different from that of margin in security transactions in that futures
contract initial margin does not involve the borrowing of funds by the
customer to finance the transaction. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Subsequent payments, called
maintenance margin, to and from the broker, will be made on a daily basis as
the price of the underlying debt security fluctuates, making the long and
short positions in the futures contract more or less valuable, a process
known as "marking-to-market." For example, when the Fund has purchased a
futures contract and the price of the underlying debt security has risen,
that position will have increased in value and the Fund will receive from
the broker a maintenance margin payment equal to that increase in value.
Conversely, when the Fund has purchased a futures contract and the price of
the underlying debt security has declined, the position would be less
valuable and the Fund would be required to make a maintenance margin payment
to the broker. At any time prior to expiration of the futures contract, the
Fund may elect to close the position by taking an opposite position which
will operate to terminate the Fund's position in the futures contract. A
final determination of maintenance margin is then made, additional cash is
required to be paid by or released to the Fund, and the Fund realizes a loss
or a gain.

While futures contracts based on debt securities do provide for the
delivery and acceptance of securities, such deliveries and acceptances are
very seldom made. Generally, the futures contract is terminated by
entering into an offsetting transaction. An offsetting transaction for a
futures contract sale is effected by the Fund entering into a futures
contract purchase for the same aggregate amount of the specific type of
financial instrument and same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the Fund pays the difference
and realizes the loss. Similarly, the closing out of a futures contract
purchase is effected by the Fund entering into a futures contract sale. If
the offsetting sale price exceeds the purchase price, the Fund realizes a
gain, and if the purchase price exceeds the offsetting price, the Fund
realizes a loss.

Forward Currency Contracts and Options on Currency. A forward currency
contract is an obligation to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. A Fund
may either accept or make delivery of the currency at the maturity of the
forward contract or, prior to maturity, enter into a closing transaction
involving the purchase or sale of an offsetting contract. Each Fund may
engage in forward currency transactions in anticipation of, or to protect
itself against, fluctuations in exchange rates. A Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in that currency but anticipates, and seeks to be protected
against, decline in the currency against the U.S. dollar. Similarly, a Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, a Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency which it anticipates purchasing.

The matching of the increase in value of a forward contract and the decline
in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund may not always be able to enter into foreign currency
forward contracts at attractive prices and this will limit the Fund's
ability to use such contracts to hedge or cross-hedge its assets. Also,
with regard to a Fund's use of cross-hedges, there can be no assurance that
historical correlations between the movement of certain foreign currencies
relative to the U.S. dollar will continue. Thus, at any time poor
correlation may exist between movements in the exchange rates of the foreign
currencies underlying the Fund's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's assets that are
the subject of such cross-hedges are denominated.

Forward contracts are traded in an interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement and is
consummated without payment of any commission. Each Fund, however, may
enter into forward contracts with deposit requirements or commissions.

A put option gives a Fund, as purchaser, the right (but not the obligation)
to sell a specified amount of currency at the exercise price until the
expiration of the option. A call option gives a Fund, as purchaser, the
right (but not the obligation) to purchase a specified amount of currency at
the exercise price until its expiration. A Fund might purchase a currency
put option, for example, to protect itself during the contract period
against a decline in the value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline, the
loss in currency value should be offset, in whole or in part, by an increase
in the value of the put. If the value of the currency instead should rise,
any gain to the Fund would be reduced by the premium it had paid for the put
option. A currency call option might be purchased, for example, in
anticipation of, or to protect against, a rise in the value of a currency in
which the Fund anticipates purchasing securities.

Each Fund's ability to establish and close out positions in foreign currency
options is subject to the existence of a liquid market. There can be no
assurance that a liquid market will exist for a particular option at any
specific time. In addition, options on foreign currencies are affected by
all of those factors that influence foreign exchange rates and investments
generally.

A position in an exchange-listed option may be closed out only on an
exchange that provides a secondary market for identical options. Exchange
markets for options on foreign currencies exist but are relatively new, and
the ability to establish and close out positions on the exchanges is subject
to maintenance of a liquid secondary market. Closing transactions may be
effected with respect to options traded in the OTC markets (currently the
primary markets for options on foreign currencies) only by negotiating
directly with the other party to the option contract or in a secondary
market for the option if such market exists. Although each Fund intends to
purchase only those options for which there appears to be an active
secondary market, there is no assurance that a liquid secondary market will
exist for any particular option at any specific time. In such event, it may
not be possible to effect closing transactions with respect to certain
options, with the result that the Fund would have to exercise those options
which it has purchased in order to realize any profit. The staff of the
U.S. Securities and Exchange Commission ("SEC") has taken the position that,
in general, purchased OTC options and the underlying securities used to
cover written OTC options are illiquid securities. However, a Fund may
treat as liquid the underlying securities used to cover written OTC options,
provided it has arrangements with certain qualified dealers who agree that
the Fund may repurchase any option it writes for a maximum price to be
calculated by a predetermined formula. In these cases, the OTC option
itself would only be considered illiquid to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the
option.

Interest Rate Swaps, Caps and Floors. Among the hedging transactions into
which the Funds may enter are interest rate swaps and the purchase or sale
of interest rate caps and floors. Each Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular
investment or portion of its Fund or to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date. Each
Fund intends to use these transactions as a hedge and not as a speculative
investment. Each Fund will not sell interest rate caps or floors that it
does not own. Interest rate swaps involve the exchange by a Fund with
another party of their respective commitments to pay or receive interest,
e.g., an exchange of floating rate payments for fixed rate payments. The
purchase of an interest rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to receive payments
of interest on a notional principal amount from the party selling such
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a notional principal
amount from the party selling such interest rate floor.

A Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending on whether it is hedging its
assets or its liabilities, and will usually enter into interest rate swaps
on a net basis, i.e., the two payment streams are netted, with the Fund
receiving or paying, as the case may be, only the net amount of the two
payments. Inasmuch as these hedging transactions are entered into for good
faith hedging purposes, the investment adviser and the Funds believe such
obligations do not constitute senior securities and, accordingly will not
treat them as being subject to its borrowing restrictions. The net amount
of the excess, if any, of a Fund's obligations over its entitlement with
respect to each interest rate swap will be accrued on a daily basis and an
amount of cash or liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in a segregated account
by a custodian that satisfies the requirements of the 1940 Act. The Funds
will not enter into any interest rate swap, cap or floor transaction unless
the unsecured senior debt or the claims-paying ability of the other party
thereto is rated in the highest rating category of at least one U.S.
nationally recognized statistical rating organization at the time of
entering into such transaction. If there is a default by the other party to
such a transaction, a Fund will have contractual remedies pursuant to the
agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing swap
documentation. As a result, the swap market has become relatively liquid.
Caps and floors are more recent innovations for which standardized
documentation has not yet been developed and, accordingly, they are less
liquid than swaps.

New options and Futures Contracts and various combinations thereof continue
to be developed and the Funds may invest in any such options and contracts
as may be developed to the extent consistent with its investment objective
and regulatory requirements applicable to investment companies.

Equity Swaps. The Funds may enter into swaps based upon the value of
various single equity securities, baskets or indices. A swap is a separate
contract that does not require ownership of the underlying stock. In a
swap, a Fund will agree with a swap dealer to make payments based upon
changes in the value of a security. A Fund can take either position in the
swap; that is, the Fund may be the party that receives a payment following
an increase in value and pays following a decrease or vice versa. In some
cases, a Fund also may be required to make (or receive) dividend payments
consistent with the underlying security or make (or receive) additional
payments on the effective date and/or termination date of the swap. One
example of a situation is which a Fund may use an equity swap is to mimic
some of the benefits of ownership of "local shares" in a country in which
the Fund, as a foreigner, is prohibited from owning local shares. The
terms of the swaps actually entered by the Fund are negotiated between the
parties and may vary significantly.

Sovereign Debt. Each Fund may invest in sovereign debt, which may trade at
a substantial discount from face value. Each Fund may hold and trade
sovereign debt of emerging market countries in appropriate circumstances and
to participate in debt conversion programs. Emerging country Sovereign Debt
involves a high degree of risk, is generally lower-quality debt, and is
considered speculative in nature. The issuer or governmental authorities
that control sovereign debt repayment ("sovereign debtors") may be unable or
unwilling to repay principal or interest when due in accordance with the
terms of the debt. A sovereign debtor's willingness or ability to repay
principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign reserves,
the availability of sufficient foreign exchange on the date a payment is
due, the relative size of the debt service burden to the economy as a whole,
the sovereign debtor's policy towards the International Monetary Fund (the
"IMF") and the political constraints to which the sovereign debtor may be
subject. Sovereign debtors may also be dependent on expected disbursements
from foreign governments, multilateral agencies and others abroad to reduce
principal and interest arrearage on their debt. The commitment of these
third parties to make such disbursements may be conditioned on the sovereign
debtor's implementation of economic reforms or economic performance and the
timely service of the debtor's obligations. The sovereign debtor's failure
to meet these conditions may cause these third parties to cancel their
commitments to provide funds to the sovereign debtor, which may further
impair the debtor's ability or willingness to timely service its debts.

Brady Bonds. Each Fund may invest in Brady Bonds as part of its investment
in Sovereign Debt of countries that have restructured or are in the process
of restructuring their Sovereign Debt pursuant to the Brady Plan (discussed
below).

Brady Bonds are issued under the framework of the Brady Plan, an initiative
announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a
mechanism for debtor nations to restructure their outstanding external
indebtedness. The Brady Plan contemplates, among other things, the debtor
nation's adoption of certain economic reforms and the exchange of
commercial bank debt for newly issued bonds. In restructuring its external
debt under the Brady Plan framework, a debtor nation negotiates with its
existing bank lenders as well as the World Bank or IMF. The World Bank or
IMF supports the restructuring by providing funds pursuant to loan
agreements or other arrangements that enable the debtor nation to
collateralize the new Brady Bonds or to replenish reserves used to reduce
outstanding bank debt. Under these loan agreements or other arrangements
with the World Bank or IMF, debtor nations have been required to agree to
implement certain domestic monetary and fiscal reforms. The Brady Plan
sets forth only general guiding principles for economic reform and debt
reduction, emphasizing that solutions must be negotiated on a case-by-case
basis between debtor nations and their creditors.

Agreements implemented under the Brady Plan are designed to achieve debt
and debt-service reduction through specific options negotiated by a debtor
nation with its creditors. As a result, each country offers different
financial packages. Options have included the exchange of outstanding
commercial bank debt for bonds issued at 100% of face value of such debt,
bonds issued at a discount of face value of such debt, and bonds bearing an
interest rate that increases over time and the advancement of the new money
for bonds. The principal of certain Brady Bonds has been collateralized by
U.S. Treasury zero coupon bonds with a maturity equal to the final maturity
of the Brady Bonds. Collateral purchase are financed by the IMF, World
Bank and the debtor nation's reserves. Interest payments may also be
collateralized in part in various ways.

Brady Bonds are often viewed as having three or four valuation components:
(i) the collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest
payment; and (iv) any uncollateralized interest and principal at maturity
(these uncollateralized amounts constitute the " residual risk"). In light
of the residual risk of Brady Bonds and, among other factors, the history
of defaults with respect to commercial bank loans by public and private
entities of countries issuing Brady Bonds, investments in Brady Bonds can
viewed as speculative.

ADDITIONAL RISK FACTORS

Risks associated with the funds and their investment strategies are
described in the prospectuses and in the above discussion of the fund's
investment objectives and management policies. The following additional
risk factors are intended to supplement the risks described in the
prospectuses and other parts of this SAI.

General. Investors should realize that risk of loss is inherent in the
ownership of any securities and that each Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of its portfolio
positions.

Below Investment Grade Fixed Income Securities. Securities which are rated
BBB by Standard & Poor's Ratings Group ("S&P') or Baa by Moody's Investor
Services, Inc. ("Moody's") are generally regarded as having adequate
capacity to pay interest and repay principal, but may have some speculative
characteristics. Securities rated below Baa by Moody's or BBB by S&P may
have speculative characteristics, including the possibility of default or
bankruptcy of the issuers of such securities, market price volatility based
upon interest rate sensitivity, questionable creditworthiness and relative
liquidity of the secondary trading market. Because high yield bonds have
been found to be more sensitive to adverse economic changes or individual
corporate developments and less sensitive to interest rate changes than
higher-rated investments, an economic downturn could disrupt the market for
high yield bonds and adversely affect the value of outstanding bonds and
the ability of issuers to repay principal and interest. In addition, in a
declining interest rate market, issuers of high yield bonds may exercise
redemption or call provisions, which may force a Fund, to the extent it
owns such securities, to replace those securities with lower yielding
securities. This could result in a decreased return.

Foreign Securities. Investments in securities of foreign issuers involve
certain risks not ordinarily associated with investments in securities of
domestic issuers. Such risks include fluctuations in foreign exchange
rates, future political and economic developments, and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions. Since each Fund will invest heavily in securities
denominated or quoted in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the value of securities in its
portfolio and the unrealized appreciation or depreciation of investments so
far as U.S. investors are concerned. In addition, with respect to certain
countries, there is the possibility of expropriation of assets,
confiscatory taxation, political or social instability or diplomatic
developments which could adversely affect investments in those countries.

There may be less publicly available information about a foreign company
than about a U.S. company, and foreign companies may not be subject to
accounting, auditing, and financial reporting standards and requirements
comparable to or as uniform as those of U.S. companies. Foreign securities
markets, while growing in volume, have, for the most part, substantially
less volume than U.S. markets, and securities of many foreign companies are
less liquid and their price more volatile than securities of comparable
U.S. companies. Transaction costs on foreign securities markets are
generally higher than in the U.S. There is generally less government
supervision and regulation of exchanges, brokers and issuers than there is
in the U.S. A Fund might have greater difficulty taking appropriate legal
action in foreign courts. Dividend and interest income from foreign
securities will generally be subject to withholding taxes by the country in
which the issuer is located and may not be recoverable by the Fund or the
investors. Capital gains are also subject to taxation in some foreign
countries.

Currency Risks. The U.S. dollar value of securities denominated in a
foreign currency will vary with changes in currency exchange rates, which
can be volatile. Accordingly, changes in the value of the currency in
which a Fund's investments are denominated relative to the U.S. dollar will
affect the Fund's net asset value. Exchange rates are generally affected
by the forces of supply and demand in the international currency markets,
the relative merits of investing in different countries and the
intervention or failure to intervene of U.S. or foreign governments and
central banks. However, currency exchange rates may fluctuate based on
factors intrinsic to a country's economy. Some emerging market countries
also may have managed currencies, which are not free floating against the
U.S. dollar. In addition, emerging markets are subject to the risk of
restrictions upon the free conversion of their currencies into other
currencies. Any devaluations relative to the U.S. dollar in the currencies
in which a Fund's securities are quoted would reduce the Fund's net asset
value per share.

Special Risks of Countries in the Asia Pacific Region. Certain of the
risks associated with international investments are heightened for
investments in these countries. For example, some of the currencies of
these countries have experienced devaluations relative to the U.S. dollar,
and adjustments have been made periodically in certain of such currencies.
Certain countries, such as Indonesia, face serious exchange constraints.
Jurisdictional disputes also exist, for example, between South Korea and
North Korea. In addition, Hong Kong reverted to Chinese administration on
July 1, 1997. The long-term effects of this reversion are not known at
this time.

Securities of Developing/Emerging Markets Countries. A developing or
emerging markets country generally is considered to be a country that is in
the initial stages of its industrialization cycle. Investing in the equity
markets of developing countries involves exposure to economic structures
that are generally less diverse and mature, and to political systems that
can be expected to have less stability, than those of developed countries.
Historical experience indicates that the markets of developing countries
have been more volatile than the markets of the more mature economies of
developed countries; however, such markets often have provided higher rates
of return to investors. The emerging market countries in which the fund
invests have markets that are less liquid than markets in the U.S. In
changing markets the fund may not be able to sell desired amounts of
securities at reasonable prices. Less information is available about these
issuers and markets because of less rigorous accounting and regulatory
standards than in the U.S.

One or more of the risks discussed above could affect adversely the economy
of a developing market or a Fund's investments in such a market. In
Eastern Europe, for example, upon the accession to power of Communist
regimes in the past, the governments of a number of Eastern European
countries expropriated a large amount of property. The claims of many
property owners against those of governments may remain unsettled. There
can be no assurance that any investments that a Fund might make in such
emerging markets would not be expropriated, nationalized or otherwise
confiscated at some time in the future. In such an event, the Fund could
lose its entire investment in the market involved. Moreover, changes in
the leadership or policies of such markets could halt the expansion or
reverse the liberalization of foreign investment policies now occurring in
certain of these markets and adversely affect existing investment
opportunities.

Many of a Fund's investments in the securities of emerging markets may be
unrated or rated below investment grade. Securities rated below investment
grade (and comparable unrated securities) are the equivalent of high yield,
high risk bonds, commonly known as "junk bonds." Such securities are
regarded as predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms of the
obligations and involve major risk exposure to adverse business, financial,
economic, or political conditions.

Fixed Income Securities. Investments in fixed income securities may
subject the Funds to risks, including the following.

Interest Rate Risk. When interest rates decline, the market value of fixed
income securities tends to increase. Conversely, when interest rates
increase, the market value of fixed income securities tends to decline.
The volatility of a security's market value will differ depending upon the
security's duration, the issuer and the type of instrument.

Default Risk/Credit Risk. Investments in fixed income securities are
subject to the risk that the issuer of the security could default on its
obligations, causing a Fund to sustain losses on such investments. A
default could impact both interest and principal payments.

Call Risk and Extension Risk. Fixed income securities may be subject to
both call risk and extension risk. Call risk exists when the issuer may
exercise its right to pay principal on an obligation earlier than
scheduled, which would cause cash flows to be returned earlier than
expected. This typically results when interest rates have declined and a
Fund will suffer from having to reinvest in lower yielding securities.
Extension risk exists when the issuer may exercise its right to pay
principal on an obligation later than scheduled, which would cause cash
flows to be returned later than expected. This typically results when
interest rates have increased, and a Fund will suffer from the inability to
invest in higher yield securities.

Securities of Small Capitalization Companies. Investing in smaller
capitalization stocks can involve greater risk than is customarily
associated with investing in stocks of larger, more established companies.
For example, smaller capitalization companies often have limited product
lines, markets, or financial resources, may be dependent for management on
one or a few key persons, and can be more susceptible to losses. Also,
their securities may be thinly traded (and therefore have to be sold at a
discount from current prices or sold in small lots over an extended period
of time), may be followed by fewer investment research analysts and may be
subject to wider price swings and thus may create a greater chance of loss
than securities of larger capitalization companies. Transaction costs in
stocks of smaller capitalization companies may be higher than those of
larger capitalization companies.

Derivative Instruments. In accordance with its investment policies, each
Fund may invest in certain derivative instruments which are securities or
contracts that provide for payments based on or "derived" from the
performance of an underlying asset, index or other economic benchmark.
Essentially, a derivative instrument is a financial arrangement or a
contract between two parties (and not a true security like a stock or a
bond). Transactions in derivative instruments can be, but are not
necessarily, riskier than investments in conventional stocks, bonds and
money market instruments. A derivative instrument is more accurately
viewed as a way of reallocating risk among different parties or
substituting one type of risk for another. Every investment by a Fund,
including an investment in conventional securities, reflects an implicit
prediction about future changes in the value of that investment. Every
Fund investment also involves a risk that the portfolio manager's
expectations will be wrong. Transactions in derivative instruments often
enable a Fund to take investment positions that more precisely reflect the
portfolio manager's expectations concerning the future performance of the
various investments available to the Fund. Derivative instruments can be a
legitimate and often cost-effective method of accomplishing the same
investment goals as could be achieved through other investment in
conventional securities.

Derivative contracts include options, futures contracts, forward contracts,
forward commitment and when-issued securities transactions, forward foreign
currency exchange contracts and interest rate, mortgage and currency swaps.
The following are the principal risks associated with derivative
instruments:

Market risk: The instrument will decline in value or that an alternative
investment would have appreciated more, but this is no different from the
risk of investing in conventional securities.

Leverage and associated price volatility: Leverage causes increased
volatility in the price and magnifies the impact of adverse market changes,
but this risk may be consistent with the investment objective of even a
conservative fund in order to achieve an average portfolio volatility that
is within the expected range for that type of fund.

Credit risk: The issuer of the instrument may default on its obligation to
pay interest and principal.

Liquidity and valuation risk: Many derivative instruments are traded in
institutional markets rather than on an exchange. Nevertheless, many
derivative instruments are actively traded and can be priced with as much
accuracy as conventional securities. Derivative instruments that are
custom designed to meet the specialized investment needs of a relatively
narrow group of institutional investors such as the Funds are not readily
marketable and are subject to a Fund's restrictions on illiquid
investments.

Correlation risk: There may be imperfect correlation between the price of
the derivative and the underlying asset. For example, there may be price
disparities between the trading markets for the derivative contract and the
underlying asset.

Each derivative instrument purchased for a Fund's portfolio is reviewed and
analyzed by the Fund's portfolio manager to assess the risk and reward of
each such instrument in relation the Fund's portfolio investment strategy.
The decision to invest in derivative instruments or conventional securities
is made by measuring the respective instrument's ability to provide value
to the Fund and its shareholders.

Special Risks of Using Futures Contracts. The prices of Futures Contracts
are volatile and are influenced by, among other things, actual and
anticipated changes in interest rates, which in turn are affected by fiscal
and monetary policies and national and international political and economic
events.

At best, the correlation between changes in prices of Futures Contracts and
of the securities or currencies being hedged can be only approximate. The
degree of imperfection of correlation depends upon circumstances such as:
variations in speculative market demand for Futures and for debt securities
or currencies, including technical influences in Futures trading; and
differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for
trading, with respect to interest rate levels, maturities, and
creditworthiness of issuers. A decision of whether, when, and how to hedge
involves skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or
interest rate trends.

To compensate for the imperfect correlation of movements in the price of
debt securities being hedged and movements in the prices of the futures
contracts, a Fund may buy or sell futures contracts in a greater dollar
amount of the securities being hedged if the historical volatility of the
prices of such securities has been greater than the historical volatility
of the futures contracts. Conversely, a Fund may buy or sell fewer futures
contracts if the historical volatility of the price of the securities being
hedged is less than the historical volatility of the futures contracts. It
is also possible that, where a Fund has sold futures to hedge its portfolio
against a decline in the market, the market may advance and the value of
securities held in that Fund's portfolio may decline. If this occurred,
the Fund would lose money on the futures contracts and also experience a
decline in value in its portfolio securities. However, while this could
occur for a very brief period or to a very small degree, over time the
value of a diversified portfolio will tend to move in the same direction as
the futures contracts. Where futures are purchased to hedge against a
possible increase in prices of securities before a Fund is able to invest
its cash (or cash equivalents) in U.S. government securities (or options)
in an orderly fashion, it is possible that the market may decline instead;
if the Fund then concludes not to invest in U.S. government securities or
options at that time because of concern as to possible further market
decline or for other reasons, the Fund will realize a loss on the futures
contract that is not offset by a reduction in the price of securities
purchased.

Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial
loss, as well as gain, to the fund. For example, if at the time of
purchase, 10% of the value of the Futures Contract is deposited as margin,
a subsequent 10% decrease in the value of the Futures Contract would result
in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease
would result in a loss equal to 150% of the original margin deposit, if the
Futures Contract were closed out. Thus, a purchase or sale of a Futures
Contract may result in losses in excess of the amount invested in the
Futures Contract. A Fund, however, would presumably have sustained
comparable losses if, instead of the Futures Contract, it had invested in
the underlying financial instrument and sold it after the decline. Where a
Fund enters into Futures transactions for non-hedging purposes, it will be
subject to greater risks and could sustain losses which are not offset by
gains on other of the Fund's assets.

Furthermore, in the case of a Futures Contract purchase, in order to be
certain that each Fund has sufficient assets to satisfy its obligations
under a Futures Contract, each Fund will segregate and commit to back the
Futures Contract with an amount of cash and liquid securities equal in
value to the current value of the underlying instrument less the margin
deposit.

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures contracts and
the portion of the portfolio being hedged, the market prices of futures
contracts may be affected by certain factors. First, all participants in
the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts though offsetting transactions which
could distort the normal relationship between the debt securities and
futures markets; second, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation
by speculators in the futures market may also cause temporary price
distortions. Due to the possibility of price distortion in the futures
market and because of the imperfect correlation between movements in the
debt securities and movements in the prices of futures contracts, a correct
forecast of interest rate trends by the investment advisor or sub-advisor
may still not result in a successful hedging transaction over a very short
time frame.

Positions in futures contracts may be closed out only on an exchange or
board of trade which provides a secondary market for such futures.
Although each Fund intends to purchase or sell futures only on exchanges or
boards of trade where there appears to be an active secondary market, there
is no assurance that a liquid secondary market on an exchange or board of
trade will exist for any particular contract or at any particular time. In
such event, it may not be possible to close a futures position, and in the
event of adverse price movements, the Fund would continue to be required to
make daily cash payments of variation margin. However, in the event that
the futures contracts have been used to hedge portfolio securities, such
securities will not be sold until the futures contracts can be terminated.
In such circumstances, an increase in the price of the securities, if any,
may partially or completely offset losses on the futures contracts.
However, as described above, there is no guarantee that the price of the
securities will, in fact, correlate with the price movements of the futures
contracts and thus provide an offset to losses on futures contracts.
Successful use of futures contracts by the Fund is also subject to the
investment adviser's and/or sub-advisors ability to predict correctly
movements in the direction of interest rates and other factors affecting
markets of debt securities. For example, if the Fund has hedged against
the possibility of an increase in interest rates which would adversely
affect debt securities held in its portfolio and prices of such securities
increase instead, the Fund will lose part or all of the benefit of the
increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. Such sale of
securities may be, but will not necessarily be, at increased prices which
reflect the rising market. The Fund may have to sell securities at a time
when it may be disadvantageous to do so.

Most U.S. Futures exchanges limit the amount of fluctuation permitted in
Futures Contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a Futures Contract may
vary either up or down from the previous day's settlement price at the end
of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract, no additional trades may be made on
that day at a price beyond that limit. The daily limit governs only price
movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures Contract prices have occasionally moved to
the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of Futures positions and
subjecting some Futures traders to substantial losses.

In addition to the risks which apply to all options transaction, there are
several special risks relating to options on futures contracts. The
ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid secondary market.
It is not certain that this market will develop. The Fund will not
purchase options on futures contracts on any exchange unless and until, in
the investment advisor's opinion, the market for such options had developed
sufficiently that the risks in connection with options on futures contracts
are not greater than the risks in connection with futures contracts.
Compared to the use of futures contracts, the purchase of options on
futures contracts involves less potential risk to the Funds because the
maximum amount of risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the use of an
option on a futures contract would result in a loss to a Fund when the use
of a futures contract would not, such as when there is no movement in the
prices of debt securities. Writing an option on a futures contract
involves risks similar to those arising in the sale of futures contracts,
as described above.

Economic and Monetary Union (EMU). EMU began in January, 1999, when 11
European countries adopt a single currency - the euro. For participating
countries, EMU means sharing a single currency and single official interest
rate and adhering to agreed upon limits on government borrowing. Budgetary
decisions remain in the hands of each participating country, but are
subject to each country's commitment to avoid "excessive deficits" and
other more specific budgetary criteria. A European Central Bank is
responsible for setting the official interest rate to maintain price
stability within the euro zone. EMU is driven by the expectation of a
number of economic benefits, including lower transaction costs, reduced
exchange risk, greater competition, and a broadening and deepening of
European financial markets. However, there are a number of significant
risks associated with EMU. Monetary and economic union on this scale has
never been attempted before. There is a significant degree of uncertainty
as to whether participating countries will remain committed to EMU in the
face of changing economic conditions. This uncertainty may increase the
volatility of European markets and may adversely affect the prices of
securities of European issuers in the Funds' portfolios.

Portfolio Turnover. Each Fund may purchase or sell securities without
regard to the length of time the security has been held and thus may
experience a high rate of portfolio turnover. A 100% turnover rate would
occur, for example, if all the securities in a portfolio were replaced in a
period of one year. Under certain market conditions, the Funds may
experience a high rate of portfolio turnover. This may occur, for example,
if a Fund writes a substantial number of covered call options and the
market prices of the underlying securities appreciate. The rate of
portfolio turnover is not a limiting factor when the manager deems it
desirable to purchase or sell securities or to engage in options
transactions.

INVESTMENT RESTRICTIONS

The Company has adopted the following investment restrictions with respect
to each Fund. Restrictions 1 through 8 cannot be changed for a Fund
without approval by the holders of a majority of the outstanding shares of
the respective Fund, defined as the lesser of (a) 67% or more of the Fund's
shares present at a meeting, if the holders of more than 50% of the
outstanding shares are present in person or by proxy or (b) more than 50%
of the Fund's outstanding shares. The remaining restrictions may be
changed by the Board of Directors at any time. Each Fund may not:

1. Deviate from the definition of a "diversified company" as defined
in 1940 Act.

2. Issue senior securities as defined in the 1940 Act and any rules
and orders thereunder, except as permitted under the 1940 Act.

3. Invest more than 25% of its total assets in securities, the
issuers of which conduct their principal business activities in
the same industry. For purposes of this limitation, U.S. or
foreign government securities and securities of state or municipal
governments and their political subdivisions are not considered to
be issued by members of any industry.

4. The Fund will not make loans. This restriction does not apply to:
(a) the purchase of debt obligations in which the Fund may invest
consistent with its investment objectives and policies; (b)
repurchase agreements; and (c) loans of its portfolio securities.

5. The Fund will not engage in the business of underwriting securities
issued by other persons, except to the extent that the Fund may
technically be deemed to be an underwriter under the U.S.
Securities Act of 1933, as amended (the "1933 Act"), in disposing
of portfolio securities.

6. The Fund will not purchase or sell real estate, real estate
mortgages, commodities or commodity contracts, but this restriction
shall not prevent the Fund from (a) investing in and selling
securities of issuers engaged in the real estate business and
securities which are secured by real estate or interests therein;
(b) holding or selling real estate received in connection with
securities it holds; (c) trading in futures contracts and option on
futures contracts or (d) investing in or purchasing real estate
investment trust securities.

7. The Fund will not purchase any securities on margin (except for
such short-term credits as are necessary for the clearance of
purchases and sales of portfolio securities) or sell any securities
short (except against the box). For purposes of this restriction,
the deposit or payment by the Fund of underlying securities and
other assets in escrow and collateral agreements with respect to
initial or maintenance margin in connection with futures contracts
and related options and options on securities, indexes or similar
items is not considered to be the purchase of a security on margin.

8. The Fund will not borrow money, except that (a) the Fund may borrow
from banks in an amount not exceeding 33 1/3% of the value of the
Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) made
and (b) the Fund may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements, forward roll
transactions and similar investment strategies and techniques.

9. The Fund will not purchase or otherwise acquire any security if, as
a result, more than 15% of its net assets would be invested in
securities that are illiquid.

10. Invest in companies for the purpose of exercising management or
control.

11. Invest in securities of other investment companies, except as part
of a merger, consolidation, or acquisition of assets or as
permitted by Section 12d-1(A) through (E) the 1940 Act.

BROKERAGE AND PORTFOLIO TRANSACTIONS

Hansberger is responsible for allocating the Fund's brokerage. Twice a
year, Hansberger, through a committee of its securities analysts, will
consider the amount and nature of research and research services provided by
brokers, as well as the extent to which such services are relied upon, and
attempt to allocate a portion of the brokerage business of the Funds and
other advisory clients on the basis of that consideration. In addition,
brokers may suggest a level of business they would like to receive in order
to continue to provide such services. The actual brokerage business
received by a broker may be more or less than the suggested allocations,
depending upon the Hansberger's evaluation of all applicable
considerations. Orders may be directed to any broker including, to the
extent and in the manner permitted by applicable law, Salomon Smith Barney .
No Fund will deal with Salomon Smith Barney in any transaction in which
Salomon Smith Barney acts as principal.

The Fund attempts to obtain the most favorable execution of each Fund's
transaction, that is, the best combination of net price and prompt reliable
execution. In the opinion of Hansberger; however, it is not possible to
determine in advance that any particular broker will actually be able to
effect the most favorable execution because, in the context of a constantly
changing market, order execution involves judgments as to price, commission
rates, volume, the direction of the market and the likelihood of future
change. In making its decision as to which broker or brokers are most
likely to provide the most favorable execution, Hansberger takes into
account the relevant circumstances. These include, in varying degrees, the
size of the order, the importance of prompt execution, the breadth and
trends of the market in the particular security, anticipated commission
rates, the broker's familiarity with such security including its contacts
with possible buyers and sellers and its level of activity in the security,
the possibility of a block transaction and the general record of the broker
for prompt, competent and reliable service in all aspects of order
processing, execution and settlement.

Commissions are negotiated and take into account the difficulty involved in
execution of a transaction, the time it took to conclude, the extent of the
broker's commitment of its own capital, if any, and the price received.
Anticipated commission rates are an important consideration in all trades
and are weighed along with the other relevant factors affecting order
execution set forth above. In allocating brokerage among those brokers who
are believed to be capable of providing equally favorable execution, the
Fund takes into consideration the fact that a particular broker may, in
addition to execution capability, provide other services to the Fund such as
research and statistical information. It is not possible to place a dollar
value on such services nor does their availability reduce Hansberger's
expenses in a determinable amount. These various services may, however, be
useful to Hansberger in connection with its services rendered to other
advisory clients and not all such services may be used in connection with
the Fund.

Fund transactions and brokerage

Hansberger is responsible for decisions to buy and sell securities
for each Fund and for the placement of a Fund's investment business and the
negotiation of the commissions to be paid on such transactions. It is the
policy of Hansberger to seek the best execution at the best security price
available with respect to each transaction, in light of the overall quality
of brokerage and research services provided to Hansberger or the Fund. In
over-the-counter transactions, orders are placed directly with a principal
market maker unless it is believed that better price and execution can be
obtained using a broker. In determining the abilities of a broker or
dealer to obtain best execution, Hansberger considers relevant factors
including: the ability and willingness of the broker or dealer to
facilitate the Fund's portfolio transaction by participating therein for
its own account; speed, efficiency and confidentiality; familiarity with
the market for a particular security; and the reputation and perceived
soundness of the broker. The best price to a Fund means the best net price
without regard to the mix between purchase or sale price and commissions,
if any. In selecting broker- dealers and in negotiating commissions,
Hansberger considers a variety of factors, including best price and
execution, the full range of brokerage services provided by the broker, as
well as its capital strength and stability, and the quality of the research
and research services provided by the broker. Consistent with the foregoing
primary considerations, the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD") and such other policies as the
Trustees may determine, Hansberger may consider sales of shares of the
Funds as a factor in the selection of broker-dealers to execute the Funds'
portfolio transactions. However, since shares of the Funds are not
marketed through intermediary brokers or dealers, it is not the Fund's
practice to allocate brokerage or principal business on the basis of sales
of shares which may be made through such firms.

Section 28(e) of the Securities Exchange Act of 1934 ("Section
28(e)") permits an investment adviser, under certain circumstances, to
cause an account to pay a broker or dealer a commission for effecting a
transaction in excess of the amount of commission another broker or dealer
would have charged for effecting the transaction in recognition of the
value of the brokerage and research services provided by the broker or
dealer. Brokerage and research services include (a) furnishing advice as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or
sellers of securities; (b) furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts; and (c) effecting securities
transactions and performing functions incidental thereto (such as
clearance, settlement, and custody).

In carrying out the provisions of the Sub-Advisory Agreement,
Hansberger may cause a Fund to pay, to a broker that provides brokerage and
research services to Hansberger, a commission for effecting a securities
transaction in excess of the amount another broker would have charged for
effecting the transaction. Hansberger believes it is important to its
investment decision-making process to have access to independent research.
The Sub-Advisory Agreements provide that such higher commissions will not
be paid by a Fund unless Hansberger determines in good faith that such
amount of commission is reasonable in relation to the value of the
brokerage or research services provided by such broker or dealer, viewed in
terms of either that particular transaction or Hansberger's overall
responsibilities with respect to the accounts as to which it exercises
investment discretion.

Generally, research services provided by brokers may include
information on the economy, industries, groups of securities, individual
companies, statistical information, accounting and tax law interpretations,
political developments, legal developments affecting portfolio securities,
technical market action, pricing and appraisal services, credit analysis,
risk measurement analysis, performance analysis, and analysis of corporate
responsibility issues. Such research services are primarily in the form of
written reports, telephone contacts, and personal meetings with security
analysts. In addition, such research services may be provided in the form
of access to various computer- generated data, computer hardware and
software, and meetings arranged with corporate and industry spokesperson,
economists, academicians, and government representatives. In some cases,
research services are generated by third parties but are provided to
Hansberger by or through brokers. Such brokers may pay for all or a
portion of computer hardware and software costs relating to the pricing of
securities.

Where Hansberger itself receives both administrative benefits and
research and brokerage services from the services provided by brokers, it
makes a good faith allocation between the administrative benefits and the
research and brokerage services, and will pay for any administrative
benefits with cash. In making good faith allocations of costs between
administrative benefits and research and brokerage services, a conflict of
interest may exist by reason of Hansberger's allocation of the costs of
such benefits and services between those that primarily benefit Hansberger
and those that primarily benefit the Funds and other advisory clients.

From time to time, Hansberger may purchase securities for a Fund in
a fixed price offering. In these situations, the seller may be a member of
the selling group that will, in addition to selling the securities to the
Funds and other advisory clients, provide Hansberger with research. The
NASD has adopted rules expressly permitting these types of arrangements
under certain circumstances. Generally, the seller will provide research
"credits" in these situations at a rate that is higher than the rate
available for typical secondary market transactions. These arrangements
may not fall within the safe harbor of Section 28(e).

Twice a year, Hansberger, through a committee of its securities
analysts, will consider the amount and nature of research and research
services provided by brokers, as well as the extent to which such services
are relied upon, and attempt to allocate a portion of the brokerage
business of the Fund and other advisory clients on the basis of that
consideration. In addition, brokers may suggest a level of business they
would like to receive in order to continue to provide such services. The
actual brokerage business received by a broker may be more or less than the
suggested allocations, depending upon Hansberger's evaluation of all
applicable considerations.

Hansberger may direct the purchase of securities on behalf of each
Fund and other advisory clients in secondary market transactions, in public
offerings directly from an underwriter, or in privately negotiated
transactions with an issuer. When Hansberger believes the circumstances so
warrant, securities purchased in public offerings may be resold shortly
after acquisition in the immediate aftermarket for the security in order to
take advantage of price appreciation from the public offering price or for
other reasons. Short-term trading of securities acquired in public
offerings, or otherwise, may result in higher portfolio turnover and
associated brokerage expenses.

Hansberger is responsible for selecting brokers in connection with
foreign securities transactions. The fixed commissions paid in connection
with most foreign stock transactions are usually higher than negotiated
commissions on U.S. stock transactions. Foreign stock exchanges and
brokers are subject to less government supervision and regulation as
compared with the U.S. exchanges and brokers. In addition, foreign
security settlements may in some instances be subject to delays and related
administrative uncertainties.

Hansberger places portfolio transactions for other advisory
accounts, including other mutual funds managed by Hansberger. Research
services furnished by firms through which each Fund effects its securities
transactions may be used by Hansberger in servicing all of its accounts;
not all of such services may be used by Hansberger in connection with each
Fund. In the opinion of Hansberger, it is not possible to measure
separately the benefits from research services to each of the accounts
(including the Funds) managed by Hansberger. Because the volume and nature
of the trading activities of the accounts are not uniform, the amount of
commissions in excess of those charged by another broker paid by each
account for brokerage and research services will vary. However, in the
opinion of Hansberger, such costs to each Fund will not be disproportionate
to the benefits received by it on a continuing basis.

If purchase or sale of securities consistent with the investment
policies of the Fund and one or more of these other clients served by
Hansberger is considered at or about the same time, transactions in such
securities will be allocated among the Fund and such other clients pursuant
to guidelines deemed fair and reasonable by Hansberger. Generally, under
those guidelines, the Funds and other participating clients will be
allocated at least $25,000 of the relevant security, with any remaining
shares allocated on a pro rata basis. In the event that there are not
enough securities available to allocate each participating client $25,000
worth of the security, Hansberger will use a random allocation procedure,
randomly selecting one participating client to commence allocation.

The board of directors of the Fund has adopted certain policies and
procedures incorporating the standard of Rule 17e-1 issued by the SEC under
the 1940 Act which requires that the commissions paid to Smith Barney must
be "reasonable and fair compared to the commission fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of
time." The Rule and the policy and procedures also contain review
requirements and require SSBC and Hansberger to furnish reports to the board
of directors and to maintain records in connection with such reviews.

The following table sets forth certain information regarding each Fund's
payment of brokerage commissions to Salomon Smith Barney:

Period
Ended
April 30,
Global
Small Cap
Value Fund
Global
Value
Fund
Total Brokerage Commissions

1999
$34,500
$712,982

1998
$68,021
$248,109

Commissions paid to Salomon Smith Barney

1999

12,576

25,314

1998
6,139
4,302
% of Total Brokerage
Commissions paid to
Salomon Smith Barney

1999

19.26%

3.55%

1998
9.03%
1.73%

% of Total Transactions
Involving Commissions paid
to Salomon Smith Barney

1999

18.66%

5.36%
_____________________
1998
8.77
1.68

PURCHASE OF SHARES

Sales Charge Alternatives

The following classes of shares are available for purchase. See the
Prospectus for a discussion of factors to consider in selecting which Class
of shares to purchase.

Class A Shares. Class A shares are sold to investors at the public
offering price, which is the net asset value plus an initial sales charge
as follows:

Sales Charge

Amount of Investment
% of Offering Price
% of Amount Invested
Dealers' Reallowance as % of Offering Price
Less than $25,000
5.00%
5.26%
4.50%
$25,000 - 49,999
4.00
4.17
3.60
50,000 - 99,999
3.50
3.63
3.15
100,000-249,999
3.00
3.09
2.70
250,000-499,999
2.00
2.04
1.80
500,000 - and over
*
*
*

* Purchases of Class A shares of $500,000 or more will be made at net
asset value without any initial sales charge, but will be subject
to a CDSC of 1.00% on redemptions made within 12 months of
purchase. The CDSC on Class A shares is payable to Smith Barney,
which compensates Salomon Smith Barney Financial Consultants and
other dealers whose clients make purchases of $500,000 or more.
The CDSC is waived in the same circumstances in which the CDSC
applicable to Class B and Class L shares is waived. See "Deferred
Sales Charge Alternatives" and "Waivers of CDSC."

Members of the selling group may receive up to 90% of the sales charge and
may be deemed to be underwriters of the fund as defined in the 1933 Act.
The reduced sales charges shown above apply to the aggregate of purchases
of Class A shares of the fund made at one time by "any person," which
includes an individual and his or her immediate family, or a trustee or
other fiduciary of a single trust estate or single fiduciary account.

Class B Shares. Class B shares are sold without an initial sales charge
but are subject to a deferred sales charge payable upon certain
redemptions. See "Deferred Sales Charge Provisions" below.

Class L Shares. Class L shares are sold with an initial sales charge of
1.00% (which is equal to 1.01% of the amount invested) and are subject to a
deferred sales charge payable upon certain redemptions. See "Deferred
Sales Charge Provisions" below. Until June 22, 2001 purchases of Class L
shares by investors who were holders of Class C shares of the fund on June
12, 1998 will not be subject to the 1% initial sales charge.

Class Y Shares. Class Y shares are sold without an initial sales charge or
deferred sales charge and are available only to investors investing a
minimum of $15,000,000 (except for purchases of Class Y shares (i) of the
International Equity Portfolio, for which the minimum initial investment is
$5,000,000 and (ii) by
Smith Barney Concert Allocation Series Inc., for which there is no minimum
purchase amount).

General

Investors may purchase shares from a Salomon Smith Barney Financial
Consultant or a broker that clears through Salomon Smith Barney ("Dealer
Representative"). In addition, certain investors, including qualified
retirement plans purchasing through certain Dealer Representatives, may
purchase shares directly from the fund. When purchasing shares of the
fund, investors must specify whether the purchase is for Class A, Class B,
Class L or Class Y shares. Salomon Smith Barney and Dealer Representatives
may charge their customers an annual account maintenance fee in connection
with a brokerage account through which an investor purchases or holds
shares. Accounts held directly at First Data Investor Services Group, Inc.
("First Data" or "transfer agent") are not subject to a maintenance fee.

Investors in Class A, Class B and Class L shares may open an account in the
fund by making an initial investment of at least $1,000 for each account,
or $250 for an IRA or a Self-Employed Retirement Plan, in the fund.
Investors in Class Y shares may open an account by making an initial
investment of $15,000,000. Subsequent investments of at least $50 may be
made for all Classes. For participants in retirement plans qualified under
Section 403(b)(7) or Section 401(c) of the Code, the minimum initial
investment required for Class A, Class B and Class L shares and the
subsequent investment requirement for all Classes in the fund is $25. For
shareholders purchasing shares of the fund through the Systematic
Investment Plan on a monthly basis, the minimum initial investment
requirement for Class A, Class B and Class L shares and subsequent
investment requirement for all Classes is $25. For shareholders purchasing
shares of the fund through the Systematic Investment Plan on a quarterly
basis, the minimum initial investment required for Class A, Class B and
Class L shares and the subsequent investment requirement for all Classes is
$50. There are no minimum investment requirements for Class A shares for
employees of Citigroup Inc. ("Citigroup") and its subsidiaries, including
Salomon Smith Barney, unitholders who invest distributions from a Unit
Investment Trust ("UIT") sponsored by Salomon Smith Barney, and
Directors/Trustees of any of the Smith Barney Mutual Funds, and their
spouses and children. The fund reserves the right to waive or change
minimums, to decline any order to purchase its shares and to suspend the
offering of shares from time to time. Shares purchased will be held in the
shareholder's account by First Data. Share certificates are issued only
upon a shareholder's written request to First Data.

Purchase orders received by the fund or a Salomon Smith Barney Financial
Consultant prior to the close of regular trading on the New York Stock
Exchange ("NYSE"), on any day the fund calculates its net asset value, are
priced according to the net asset value determined on that day (the ''trade
date''). Orders received by a Dealer Representative prior to the close of
regular trading on the NYSE on any day the fund calculates its net asset
value, are priced according to the net asset value determined on that day,
provided the order is received by the fund or the fund's agent prior to its
close of business. For shares purchased through Salomon Smith Barney or a
Dealer Representative purchasing through Salomon Smith Barney, payment for
shares of the fund is due on the third business day after the trade date.
In all other cases, payment must be made with the purchase order.

Systematic Investment Plan. Shareholders may make additions to their
accounts at any time by purchasing shares through a service known as the
Systematic Investment Plan. Under the Systematic Investment Plan, Salomon
Smith Barney or First Data is authorized through preauthorized transfers of
at least $25 on a monthly basis or at least $50 on a quarterly basis to
charge the shareholder's account held with a bank or other financial
institution on a monthly or quarterly basis as indicated by the
shareholder, to provide for systematic additions to the shareholder's fund
account. A shareholder who has insufficient funds to complete the transfer
will be charged a fee of up to $25 by Salomon Smith Barney or First Data.
The Systematic Investment Plan also authorizes Salomon Smith Barney to
apply cash held in the shareholder's Salomon Smith Barney brokerage account
or redeem the shareholder's shares of a Smith Barney money market fund to
make additions to the account. Additional information is available from the
fund or a Salomon Smith Barney Financial Consultant or a Dealer
Representative.

Sales Charge Waivers and Reductions

Initial Sales Charge Waivers. Purchases of Class A shares may be made at
net asset value without a sales charge in the following circumstances: (a)
sales to (i) Board Members and employees of Citigroup and its subsidiaries
and any Citigroup affiliated funds including the Smith Barney Mutual Funds
(including retired Board Members and employees); the immediate families of
such persons (including the surviving spouse of a deceased Board Member or
employee); and to a pension, profit-sharing or other benefit plan for such
persons and (ii) employees of members of the National Association of
Securities Dealers, Inc., provided such sales are made upon the assurance
of the purchaser that the purchase is made for investment purposes and that
the securities will not be resold except through redemption or repurchase;
(b) offers of Class A shares to any other investment company to effect the
combination of such company with the fund by merger, acquisition of assets
or otherwise; (c) purchases of Class A shares by any client of a newly
employed Salomon Smith Barney Financial Consultant (for a period up to 90
days from the commencement of the Financial Consultant's employment with
Salomon Smith Barney), on the condition the purchase of Class A shares is
made with the proceeds of the redemption of shares of a mutual fund which
(i) was sponsored by the Financial Consultant's prior employer, (ii) was
sold to the client by the Financial Consultant and (iii) was subject to a
sales charge; (d) purchases by shareholders who have redeemed Class A
shares in the fund (or Class A shares of another Smith Barney Mutual Fund
that is offered with a sales charge) and who wish to reinvest their
redemption proceeds in the fund, provided the reinvestment is made within
60 calendar days of the redemption; (e) purchases by accounts managed by
registered investment advisory subsidiaries of Citigroup; (f) direct
rollovers by plan participants of distributions from a 401(k) plan offered
to employees of Citigroup or its subsidiaries or a 401(k) plan enrolled in
the Smith Barney 401(k) Program (Note: subsequent investments will be
subject to the applicable sales charge); (g) purchases by a separate
account used to fund certain unregistered variable annuity contracts; (h)
investments of distributions from a UIT sponsored by Salomon Smith Barney;
(i) purchases by investors participating in a Salomon Smith Barney fee-
based arrangement; and (j) purchases by Section 403(b) or Section 401(a) or
(k) accounts associated with Copeland Retirement Programs. In order to
obtain such discounts, the purchaser must provide sufficient information at
the time of purchase to permit verification that the purchase would qualify
for the elimination of the sales charge.

Right of Accumulation. Class A shares of the fund may be purchased by
''any person'' (as defined above) at a reduced sales charge or at net asset
value determined by aggregating the dollar amount of the new purchase and
the total net asset value of all Class A shares of the fund and of most
other Smith Barney Mutual Funds that are offered with a sales charge then
held by such person and applying the sales charge applicable to such
aggregate. In order to obtain such discount, the purchaser must provide
sufficient information at the time of purchase to permit verification that
the purchase qualifies for the reduced sales charge. The right of
accumulation is subject to modification or discontinuance at any time with
respect to all shares purchased thereafter.

Letter of Intent - Class A Shares. A Letter of Intent for an amount of
$50,000 or more provides an opportunity for an investor to obtain a reduced
sales charge by aggregating investments over a 13 month period, provided
that the investor refers to such Letter when placing orders. For purposes
of a Letter of Intent, the ''Amount of Investment'' as referred to in the
preceding sales charge table includes (i) all Class A shares of the fund
and other Smith Barney Mutual Funds offered with a sales charge acquired
during the term of the letter plus (ii) the value of all Class A shares
previously purchased and still owned. Each investment made during the
period receives the reduced sales charge applicable to the total amount of
the investment goal. If the goal is not achieved within the period, the
investor must pay the difference between the sales charges applicable to
the purchases made and the charges previously paid, or an appropriate
number of escrowed shares will be redeemed. The term of the Letter will
commence upon the date the Letter is signed, or at the options of the
investor, up to 90 days before such date. Please contact a Salomon Smith
Barney Financial Consultant or First Data to obtain a Letter of Intent
application.

Letter of Intent - Class Y Shares. A Letter of Intent may also be used as
a way for investors to meet the minimum investment requirement for Class Y
shares (except purchases of Class Y shares by Smith Barney Concert
Allocation Series Inc., for which there is no minimum purchase amount).
For International Equity Portfolio, investors must make an initial minimum
purchase of $1,000,000 in Class Y shares of the fund and agree to purchase
a total of $5,000,000 of Class Y of the fund within 6 months of the date of
the Letter. For all of the other funds, investors must make an initial
minimum purchase of $5,000,000 in Class Y shares of the fund and agree to
purchase a total of $15,000,000 of Class Y shares of the fund within 13
months from the date of the Letter. If a total investment of $15,000,000 is
not made within the 13-month period, or $5 million is not made within 6
months for the International Equity Portfolio, all Class Y shares purchased
to date will be transferred to Class A shares, where they will be subject
to all fees (including a service fee of 0.25%) and expenses applicable to
the fund's Class A shares, which may include a deferred sales charge of
1.00%. Please contact a Salomon Smith Barney Financial Consultant or First
Data for further information.

Deferred Sales Charge Provisions

''Deferred Sales Charge Shares'' are: (a) Class B shares; (b) Class L
shares; and (c) Class A shares that were purchased without an initial sales
charge but are subject to a deferred sales charge. A deferred sales charge
may be imposed on certain redemptions of these shares.

Any applicable deferred sales charge will be assessed on an amount equal to
the lesser of the original cost of the shares being redeemed or their net
asset value at the time of redemption. Deferred Sales Charge Shares that
are redeemed will not be subject to a deferred sales charge to the extent
that the value of such shares represents: (a) capital appreciation of fund
assets; (b) reinvestment of dividends or capital gain distributions; (c)
with respect to Class B shares, shares redeemed more than five years after
their purchase; or (d) with respect to Class L shares and Class A shares
that are Deferred Sales Charge Shares, shares redeemed more than 12 months
after their purchase.

Class L shares and Class A shares that are Deferred Sales Charge Shares are
subject to a 1.00% deferred sales charge if redeemed within 12 months of
purchase. In circumstances in which the deferred sales charge is imposed on
Class B shares, the amount of the charge will depend on the number of years
since the shareholder made the purchase payment from which the amount is
being redeemed. Solely for purposes of determining the number of years
since a purchase payment, all purchase payments made during a month will be
aggregated and deemed to have been made on the last day of the preceding
Salomon Smith Barney statement month. The following table sets forth the
rates of the charge for redemptions of Class B shares by shareholders,
except in the case of Class B shares held under the Smith Barney 401(k)
Program, as described below. See ''Purchase of Shares-Smith Barney 401(k)
and ExecChoiceTM Programs.''

Year Since Purchase Payment Was Made

CDSC

First

5.00%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

0.00

Class B shares will convert automatically to Class A shares eight years
after the date on which they were purchased and thereafter will no longer
be subject to any distribution fees. There will also be converted at that
time such proportion of Class B Dividend Shares (Class B shares that were
acquired through the reinvestment of dividends and distributions) owned by
the shareholder as the total number of his or her Class B shares converting
at the time bears to the total number of outstanding Class B shares (other
than Class B Dividend Shares) owned by the shareholder.

The length of time that Deferred Sales Charge Shares acquired through an
exchange have been held will be calculated from the date that the shares
exchanged were initially acquired in one of the other Smith Barney Mutual
Funds, and fund shares being redeemed will be considered to represent, as
applicable, capital appreciation or dividend and capital gain distribution
reinvestments in such other funds. For Federal income tax purposes, the
amount of the deferred sales charge will reduce the gain or increase the
loss, as the case may be, on the amount realized on redemption. The amount
of any deferred sales charge will be paid to Salomon Smith Barney.

To provide an example, assume an investor purchased 100 Class B shares of
the fund at $10 per share for a cost of $1,000. Subsequently, the investor
acquired 5 additional shares of the fund through dividend reinvestment.
During the fifteenth month after the purchase, the investor decided to
redeem $500 of his or her investment. Assuming at the time of the
redemption the net asset value had appreciated to $12 per share, the value
of the investor's shares would be $1,260 (105 shares at $12 per share). The
deferred sales charge would not be applied to the amount which represents
appreciation ($200) and the value of the reinvested dividend shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would be
charged at a rate of 4.00% (the applicable rate for Class B shares) for a
total deferred sales charge of $9.60.

Waivers of Deferred Sales Charge

The deferred sales charge will be waived on: (a) exchanges (see ''Exchange
Privilege''); (b) automatic cash withdrawals in amounts equal to or less
than 1.00% per month of the value of the shareholder's shares at the time
the withdrawal plan commences (see ''Automatic Cash Withdrawal Plan'')
(provided, however, that automatic cash withdrawals in amounts equal to or
less than 2.00% per month of the value of the shareholder's shares will be
permitted for withdrawal plans that were established prior to November 7,
1994); (c) redemptions of shares within 12 months following the death or
disability of the shareholder; (d) redemptions of shares made in connection
with qualified distributions from retirement plans or IRAs upon the
attainment of age 591/2; (e) involuntary redemptions; and (f) redemptions of
shares to effect a combination of the fund with any investment company by
merger, acquisition of assets or otherwise. In addition, a shareholder who
has redeemed shares from other Smith Barney Mutual Funds may, under certain
circumstances, reinvest all or part of the redemption proceeds within 60
days and receive pro rata credit for any deferred sales charge imposed on
the prior redemption.

Deferred sales charge waivers will be granted subject to confirmation (by
Salomon Smith Barney in the case of shareholders who are also Salomon Smith
Barney clients or by First Data in the case of all other shareholders) of
the shareholder's status or holdings, as the case may be.

Smith Barney 401(k) and ExecChoiceTM Programs

Investors may be eligible to participate in the Smith Barney 401(k) Program
or the Smith Barney ExecChoiceTM Program. To the extent applicable, the
same terms and conditions, which are outlined below, are offered to all
plans participating (''Participating Plans'') in these programs.

The fund offers to Participating Plans Class A and Class L shares as
investment alternatives under the Smith Barney 401(k) and ExecChoiceTM
Programs. Class A and Class L shares acquired through the Participating
Plans are subject to the same service and/or distribution fees as the Class
A and Class L shares acquired by other investors; however, they are not
subject to any initial sales charge or deferred sales charge. Once a
Participating Plan has made an initial investment in the fund, all of its
subsequent investments in the fund must be in the same Class of shares,
except as otherwise described below.

Class A Shares. Class A shares of the fund are offered without any sales
charge or deferred sales charge to any Participating Plan that purchases
$1,000,000 or more of Class A shares of one or more funds of the Smith
Barney Mutual Funds.

Class L Shares. Class L shares of the fund are offered without any sales
charge or deferred sales charge to any Participating Plan that purchases
less than $1,000,000 of Class L shares of one or more funds of the Smith
Barney Mutual Funds.

401(k) and ExecChoiceTM Plans Opened On or After June 21, 1996. If, at the
end of the fifth year after the date the Participating Plan enrolled in the
Smith Barney 401(k) Program or the Smith Barney ExecChoiceTM Program, a
Participating Plan's total Class L and Class O holdings in all non-money
market Smith Barney Mutual Funds equal at least $1,000,000, the
Participating Plan will be offered the opportunity to exchange all of its
Class L shares for Class A shares of the fund. For Participating Plans that
were originally established through a Salomon Smith Barney retail brokerage
account, the five-year period will be calculated from the date the retail
brokerage account was opened. Such Participating Plans will be notified of
the pending exchange in writing within 30 days after the fifth anniversary
of the enrollment date and, unless the exchange offer has been rejected in
writing, the exchange will occur on or about the 90th day after the fifth
anniversary date. If the Participating Plan does not qualify for the five-
year exchange to Class A shares, a review of the Participating Plan's
holdings will be performed each quarter until either the Participating Plan
qualifies or the end of the eighth year.

401(k) Plans Opened Prior to June 21, 1996. In any year after the date a
Participating Plan enrolled in the Smith Barney 401(k) Program, if a
Participating Plan's total Class L holdings in all non-money market Smith
Barney Mutual Funds equal at least $500,000 as of the calendar year-end,
the Participating Plan will be offered the opportunity to exchange all of
its Class L and Class O shares for Class A shares of the fund. Such Plans
will be notified in writing within 30 days after the last business day of
the calendar year and, unless the exchange offer has been rejected in
writing, the exchange will occur on or about the last business day of the
following March.

Any Participating Plan in the Smith Barney 401(k) or the Smith Barney
ExecChoiceTM Programs, whether opened before or after June 21, 1996, that
has not previously qualified for an exchange into Class A shares will be
offered the opportunity to exchange all of its Class L shares for Class A
shares of the fund, regardless of asset size, at the end of the eighth year
after the date the Participating Plan enrolled in the Smith Barney 401(k)
Program. Such Plans will be notified of the pending exchange in writing
approximately 60 days before the eighth anniversary of the enrollment date
and, unless the exchange has been rejected in writing, the exchange will
occur on or about the eighth anniversary date. Once an exchange has
occurred, a Participating Plan will not be eligible to acquire additional
Class L shares of the fund, but instead may acquire Class A shares of the
fund. Any Class L shares not converted will continue to be subject to the
distribution fee.

Participating Plans wishing to acquire shares of the fund through the Smith
Barney 401(k) Program or the Smith Barney ExecChoiceTM Program must
purchase such shares directly from the transfer agent. For further
information regarding these Programs, investors should contact a Salomon
Smith Barney Financial Consultant.

REDEMPTION OF SHARES

General. Each fund is required to redeem the shares tendered to it, as
described below, at a redemption price equal to their net asset value per
share next determined after receipt of a written request in proper form at
no charge other than any applicable CDSC. Redemption requests received
after the close of regular trading on the NYSE are priced at the net asset
value next determined.

If a shareholder holds shares in more than one Class, any request for
redemption must specify the Class being redeemed. In the event of a
failure to specify which Class, or if the investor owns fewer shares of the
Class than specified, the redemption request will be delayed until First
Data receives further instructions from Salomon Smith Barney, or if the
shareholder's account is not with Smith Barney, from the shareholder
directly. The redemption proceeds will be remitted on or before the third
business day following receipt of proper tender, except on days on which
the NYSE is closed or as permitted under the 1940 Act, in extraordinary
circumstances. Generally, if the redemption proceeds are remitted to a
Salomon Smith Barney brokerage account, these funds will not be invested
for the shareholder' s benefit without specific instruction and Smith
Barney will benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check, other than a certified
or official bank check, will be remitted upon clearance of the check, which
may take up to fifteen days or more.

Shares held by Salomon Smith Barney as custodian must be redeemed by
submitting a written request to a Salomon Smith Barney Financial
Consultant. Shares other than those held by Smith Barney as custodian may
be redeemed through an investor's Financial Consultant, Introducing Broker
or dealer in the selling group or by submitting a written request for
redemption to:

Smith Barney Hansberger Value Fund or Smith Barney Hansberger
Small Cap
Value Fund (please specify)
Class A, B, L or Y (please specify)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128

A written redemption request must (a) state the name of the Fund for which
you are redeeming shares, (b) state the Class and number or dollar amount
of shares to be redeemed, (c) identify the shareholder' s account number
and (d) be signed by each registered owner exactly as the shares are
registered. If the shares to be redeemed were issued in certificate form,
the certificates must be endorsed for transfer (or be accompanied by an
endorsed stock power) and must be submitted to First Data together with the
redemption request. Any signature appearing on a share certificate, stock
power or written redemption request in excess of $2,000 must be guaranteed
by an eligible guarantor institution such as a domestic bank, savings and
loan institution, domestic credit union, member bank of the Federal Reserve
System or member firm of a national securities exchange. Written
redemption requests of $2,000 or less do not require a signature guarantee
unless more than one such redemption request is made in any 10-day period.
Redemption proceeds will be mailed to an investor's address of record.
First Data may require additional supporting documents for redemptions made
by corporations, executors, administrators, trustees or guardians. A
redemption request will not be deemed properly received until First Data
receives all required documents in proper form.

Automatic Cash Withdrawal Plan. An automatic cash withdrawal plan (the
"Withdrawal Plan") is available to shareholders who own shares with a value
of at least $10,000 ($5,000 for retirement plan accounts) and who wish to
receive specific amounts of cash monthly or quarterly. Withdrawals of at
least $50 may be made under the Withdrawal Plan by redeeming as many shares
of a Fund as may be necessary to cover the stipulated withdrawal payment.
Any applicable CDSC will not be waived on amounts withdrawn by shareholders
that exceed 1.00% per month of the value of a shareholder's shares at the
time the Withdrawal Plan commences. To the extent withdrawals exceed
dividends, distributions and appreciation of a shareholder's investment in
a Fund, there will be a reduction in the value of the shareholder's
investment and continued withdrawal payments may reduce the shareholder's
investment and ultimately exhaust it. Withdrawal payments should not be
considered as income from investment in the Fund. Furthermore, as it
generally would not be advantageous to a shareholder to make additional
investments in the Fund at the same time that he or she is participating in
the Withdrawal Plan, purchases by such shareholders in amounts of less than
$5,000 will not ordinarily be permitted. The withdrawal plan will be
carried over on exchanges between funds or classes of a Fund.

Shareholders who wish to participate in the Withdrawal Plan and who hold
their shares in certificate form must deposit their share certificates with
First Data as agent for Withdrawal Plan members. All dividends and
distributions on shares in the Withdrawal Plan are automatically reinvested
at net asset value in additional shares of the Company. Withdrawal Plans
should be set up with a Salomon Smith Barney Financial Consultant. A
shareholder who purchases shares directly through First Data may continue
to do so and applications for participation in the Withdrawal Plan must be
received by First Data no later than the eighth day of the month to be
eligible for participation beginning with that month's withdrawal. For
further information regarding the automatic cash withdrawal plan,
shareholders should contact a Salomon Smith Barney Financial Consultant.

Telephone Redemption And Exchange Program. Shareholders who do not have a
Salomon Smith Barney brokerage account may be eligible to redeem and
exchange Fund shares by telephone. To determine if a shareholder is
entitled to participate in this program, he or she should contact First
Data at 1-800-451-2010. Once eligibility is confirmed, the shareholder
must complete and return a Telephone/Wire Authorization Form, along with a
signature guarantee that will be provided by First Data upon request.
(Alternatively, an investor may authorize telephone redemptions on the new
account application with the applicant's signature guarantee when making
his/her initial investment in a Fund.)

Redemptions. Redemption requests of up to $10,000 of any class or classes
of a Fund's shares may be made by eligible shareholders by calling First
Data at 1-800-451-2010. Such requests may be made between 9:00 a.m. and
5:00 p.m. (New York City time) on any day the NYSE is open. Redemption
requests received after the close of regular trading on the NYSE are priced
at the net asset value next determined. Redemptions of shares (i) by
retirement plans or (ii) for which certificates have been issued are not
permitted under this program.

A shareholder will have the option of having the redemption proceeds mailed
to his/her address of record or wired to a bank account predesignated by
the shareholder. Generally, redemption proceeds will be mailed or wired,
as the case may be, on the next business day following the redemption
request. In order to use the wire procedures, the bank receiving the
proceeds must be a member of the Federal Reserve System or have a
correspondent relationship with a member bank. Each fund reserves the
right to charge shareholders a nominal fee for each wire redemption. Such
charges, if any, will be assessed against the shareholder's account from
which shares were redeemed. In order to change the bank account designated
to receive redemption proceeds, a shareholder must complete a new
Telephone/Wire Authorization Form and, for the protection of the
shareholder's assets, will be required to provide a signature guarantee and
certain other documentation.

Exchanges. Eligible shareholders may make exchanges by telephone if the
account registration of shares of the fund being acquired is identical to
the registration of the shares of the fund exchanged. Such exchange
requests may be made by calling First Data at 1-800-451-2010 between 9:00
a.m. and 5:00 p.m. (New York City time) on any day on which the NYSE is
open. Exchange requests received after the close of regular trading on the
NYSE are processed at the net asset value next determined.

Additional Information regarding Telephone Redemption and Exchange Program.
Neither a Fund nor its agents will be liable for following instructions
communicated by telephone that are reasonably believed to be genuine. Each
fund and its agents will employ procedures designed to verify the identity
of the caller and legitimacy of instructions (for example, a shareholder's
name and account number will be required and phone calls may be recorded).
Each fund reserves the right to suspend, modify or discontinue the
telephone redemption and exchange program or to impose a charge for this
service at any time following at least seven (7) days' prior notice to
shareholders.

The right of redemption may be suspended or the date of payment postponed
(a) for any period during which the NYSE is closed (other than for
customary weekend and holiday closings), (b) when trading in markets a Fund
normally utilizes is restricted, or an emergency as determined by the SEC
exists, so that disposal of the Fund's investments or determination of net
asset value is not reasonably practicable or (c) for such other periods as
the SEC by order may permit for the protection of the Fund's shareholders.

Distributions in Kind. If the board of directors of the Company determines
that it would be detrimental to the best interests of the remaining
shareholders of a Fund to make a redemption payment wholly in cash, the
Fund may pay, in accordance with the SEC rules, any portion of a redemption
in excess of the lesser of $250,000 or 1% of the Fund's net assets by a
distribution in kind of portfolio securities in lieu of cash. Shareholders
should expect to incur brokerage costs when subsequently selling shares
redeemed in kind.

EXCHANGE PRIVILEGE

General. Except as noted below, shareholders of any fund of the Smith
Barney mutual funds may exchange all or part of their shares for shares of
the same class of other funds of the Smith Barney mutual funds, to the
extent such shares are offered for sale in the shareholder's state of
residence and provided your registered representative or your investment
dealer is authorized to distribute shares of the fund, on the basis of
relative net asset value per share at the time of exchange. Class B shares
of any fund may be exchanged without a CDSC. Class B shares of the Fund
exchanged for Class B shares of another fund will be subject to the higher
applicable CDSC of the two funds and, for the purposes of calculating CDSC
rates and conversion periods, will be deemed to have been held since the
date the shares being exchanged were deemed to be purchased. Exchanges of
Class A, Class B and Class L shares are subject to minimum investment
requirements and all shares are subject to the other requirements of the
fund into which exchanges are made.

The exchange privilege enables shareholders to acquire shares of the same
class in a fund with different investment objectives when they believe that
a shift between funds is an appropriate investment decision. This
privilege is available to shareholders residing in any state in which the
fund shares being acquired may legally be sold. Prior to any exchange, the
shareholder should obtain and review a copy of the current prospectus of
each fund into which an exchange is being considered. Prospectuses may be
obtained from a Salomon Smith Barney Financial Consultant.

Upon receipt of proper instructions and all necessary supporting documents,
shares submitted for exchange are redeemed at the then-current net asset
value and, subject to any applicable CDSC, the proceeds are immediately
invested at a price as described above, in shares of the fund being
acquired. Salomon Smith Barney reserves the right to reject any exchange
request. The exchange privilege may be modified or terminated at any time
after written notice to shareholders.

Class B Exchanges. In the event a Class B shareholder wishes to exchange
all or a portion of his or her shares into any of the funds imposing a
higher CDSC than that imposed by the Funds, the exchanged Class B shares
will be subject to the higher applicable CDSC. Upon an exchange, the new
Class B shares will be deemed to have been purchased on the same date as
the Class B shares of the Fund that have been exchanged.

Class L Exchanges. Upon an exchange, the new Class L shares will be deemed
to have been purchased on the same date as the Class L shares of the Fund
that have been exchanged.

Class A and Class Y Exchanges. Class A and Class Y shareholders of a Fund
who wish to exchange all or a portion of their shares for shares of the
respective class in any of the funds identified above may do so without
imposition of any charge.

Additional Information Regarding the Exchange Privilege. Although the
exchange privilege is an important benefit, excessive exchange transactions
can be detrimental to a Fund' s performance and its shareholders. SSBC may
determine that a pattern of frequent exchanges is excessive and contrary to
the best interests of the Fund's other shareholders. In this event, SSBC
will notify Smith Barney and Smith Barney may, at its discretion, decide to
limit additional purchases and/or exchanges by the shareholder. Upon such
a determination, Smith Barney will provide notice in writing or by
telephone to the shareholder at least 15 days prior to suspending the
exchange privilege and during the 15-day period the shareholder will be
required to (a) redeem his or her shares in the Fund or (b) remain invested
in the Fund or exchange into any of the funds of the Smith Barney Mutual
Funds listed above, which position the shareholder would be expected to
maintain for a significant period of time. All relevant factors will be
considered in determining what constitutes an abusive pattern of exchanges.

Certain shareholders may be able to exchange shares by telephone. See
"Redemption of Shares-Telephone Redemption and Exchange Program" .
Exchanges will be processed at the net asset value next determined.
Redemption procedures discussed below are also applicable for exchanging
shares, and exchanges will be made upon receipt of all supporting documents
in proper form. If the account registration of the shares of the fund
being acquired is identical to the registration of the shares of the fund
exchanged, no signature guarantee is required. A capital gain or loss for
tax purposes will be realized upon the exchange, depending upon the cost or
other basis of shares redeemed. Before exchanging shares, investors should
read the current prospectus describing the shares to be acquired. The
Company reserves the right to modify or discontinue exchange privileges
upon 60 days' prior notice to shareholders.

DISTRIBUTOR

CFBDS, Inc. ("CFBDS or the "distributor"), located at 20 Milk Street,
Boston, Massachusetts 02109-5408, serves as the Company's distributor on a
best efforts basis pursuant to a distribution agreement (the "Distribution
Agreement").

When payment is made by the investor before the settlement date, unless
otherwise directed by the investor, the funds will be held as a free credit
balance in the investor's brokerage account, and Salomon Smith Barney may
benefit from the temporary use of the funds. The investor may designate
another use for the funds prior to settlement date, such as investment in a
money market fund (other than Salomon Smith Barney Exchange Reserve Fund)
of the Smith Barney mutual funds. If the investor instructs Salomon Smith
Barney to invest the funds in a Smith Barney money market fund, the amount
of the investment will be included as part of the average daily net assets
of both the Company and the money market fund, and affiliates of Salomon
Smith Barney that serve the funds in an investment advisory capacity will
benefit from the fact that they are receiving fees from both such
investment companies for managing these assets computed on the basis of
their average daily net assets. The Company's board of directors has been
advised of the benefits to Salomon Smith Barney resulting from these
settlement procedures and will take such benefits into consideration when
reviewing the Management and Distribution Agreements for continuance.

Class A share sales charges paid to Salomon Smith Barney:

Name of Fund
Inception*
Through April 30, 1998
For The Fiscal Year
Ended April 30, 1999
Global Value Fund
$414,000
$52,000
Global Small Cap Value Fund
109,000
18,000
* For the period from December 19, 1997 (inception date) to April
30, 1998.

Class L sales charges paid to Salomon Smith Barney:

Name of Fund
Inception*
Through April 30, 1998
For The Fiscal Year
Ended April 30, 1999
Global Value Fund
- ---
$16,000
Global Small Cap Value Fund
- ---
2,000
* For the period from December 19, 1997 (inception date) to April
30, 1998.

Class B share CDSC paid to Salomon Smith Barney:

Name of Fund
Inception*
Through April 30, 1998
For The Fiscal Year
Ended April 30, 1999
Global Value Fund
$8,000
$170,000
Global Small Cap Value Fund
2,000
44,000
* For the period from December 19, 1997 (inception date) to April
30, 1998.

Class L share CDSC paid to Salomon Smith Barney:

Name of Fund
Inception*
Through April 30, 1998
For The Fiscal Year
Ended April 30, 1999
Global Value Fund
$1,000
$7,000
Global Small Cap Value Fund
- ---
4,000
* For the period from December 19, 1997 (inception date) to
April 30, 1998.

Distribution Arrangements

To compensate Salomon Smith Barney for the services it provides and for the
expense it bears under the Distribution Agreement, the Company has adopted
a services and distribution plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act. Under the Plan, each Fund pays Salomon Smith Barney a
service fee, accrued daily and paid monthly, calculated at the annual rate
of 0.25% of the value of each Fund's average daily net assets attributable
to the Class A, Class B and Class L shares. In addition, the Fund pays
Salomon Smith Barney a distribution fee, with respect to the Class B and
Class L shares primarily intended to compensate Salomon Smith Barney for
its initial expense of paying its Financial Consultants a commission upon
sales of those shares. Such shares' distribution fees, which are accrued
daily and paid monthly, are calculated at the annual rate of 0.75% of the
value of average daily net assets attributable to the Class B and Class L
shares.

Under its terms, the Plan continues from year to year, provided such
continuance is approved annually by vote of the board of directors,
including a majority of the Independent Directors. The Plan may not be
amended to increase the amount to be spent for the services provided by
Salomon Smith Barney without shareholder approval, and all amendments of
the Plan also must be approved by the directors in the manner described
above. The Plan may be terminated at any time, without penalty, by vote of
a majority of the Independent Directors or by vote of a majority of the
outstanding voting securities of the Company (as defined in the 1940 Act).
Pursuant to the Plan, Salomon Smith Barney will provide the board of
directors periodic reports of amounts expended under the Plan and the
purpose for which such expenditures were made.

Total Service and Distribution Plan fees incurred by the Funds for the
period ended April 30, 1998 and the fiscal year ended April 30, 1999 were:

1998
Name Of Fund

Class A Shares

Class B Shares

Class L Shares
Global Value Fund*
$20,329
$130,729
$30,488
Global Small Cap Value Fund*
6,679
36,118
7,601

* For the period from December 19, 1997 (inception date) to
April 30, 1998.

1999
Name Of Fund

Class A Shares

Class B Shares

Class L Shares
Global Value Fund
$51,299
$362,453
$94,361
Global Small Cap Value Fund
18,295
91,799
20,348

For the fiscal year ended April 30, 1999, [CFBDS and its predecessor,
Salomon Smith Barney,] incurred distribution expenses totaling
approximately $1,196,856 consisting of approximately $44,201 for
advertising, $3,867 for printing and mailing of Prospectuses, $338,645 for
support services, $777,891 to Salomon Smith Barney Financial Consultants,
and $32,252 in accruals for interest on the excess of Smith Barney expenses
incurred in distributing the Fund's shares over the sum of the distribution
fees and CDSC received by CFBDS and Salomon Smith Barney from the Fund.

VALUATION OF SHARES

Each Fund's net asset value per share is determined as of the close of
regular trading on the NYSE on each day that the NYSE is open, by dividing
the value of the Fund's net assets attributable to each Class by the total
number of shares of the Class outstanding. Each Class' net asset value per
share is calculated on each day, Monday through Friday, except days on
which the NYSE is closed. The NYSE currently is scheduled to be closed on
New Year's Day, President's Day, Good Friday, Martin Luther King Jr. Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and
on the preceding Friday or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively. Because of the differences in
distribution fees and class-specific expenses, the per share net asset
value of each class may differ. The following is a description of the
procedures used by the Funds in valuing its assets.

Generally, each Fund's investments are valued at market value, or, in the
absence of a market value with respect to any securities, at fair value.
Securities listed on an exchange are valued on the basis of the last sale
prior to the time the valuation is made. If there has been no sale since
the immediately previous valuation, then the current bid price is used.
Quotations are taken from the exchange where the security is primarily
traded. Portfolio securities which are primarily traded on foreign
exchanges may be valued with the assistance of a pricing service and are
generally valued at the preceding closing values of such securities on
their respective exchange, except that when an occurrence subsequent to the
time a foreign security is valued is likely to have changed such value,
then the fair value of those securities will be determined by consideration
of, other factors by or under the direction of the board of directors.
Over-the-counter securities are valued on the basis of the bid price at the
close of business on each day. Unlisted foreign securities are valued at
the mean between the last available bid and offer price prior to the time
of valuation. Any assets or liabilities initially expressed in terms of
foreign currencies will be converted into U.S. dollar values at the mean
between the bid and offered quotations of such currencies against U.S.
dollars as last quoted by any recognized dealer. Securities for which
market quotations are not readily available are valued at fair value.
Notwithstanding the above, bonds and other fixed-income securities are
valued by using market quotations and may be valued on the basis of prices
provided by a pricing service approved by the board of directors.

A security which is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary market for such
security. All assets and liabilities initially expressed in foreign
currency values will be converted into U.S. dollar values at the mean
between the bid and offered quotations of such currencies against U.S.
dollars as last quoted by any recognized dealer. If such quotations are not
available, the rate of exchange will be determined in good faith by the
board of directors. In carrying out the board of directors' valuation
policies, SSBC, as administrator, may consult with an independent pricing
service.

Debt securities of U.S. issuers (other than U.S. government securities and
short-term investments) are valued by SSBC, as administrator, after
consultation with a pricing service approved by the board of directors.
When, in the judgment of the pricing service, quoted bid prices for
investments are readily available and are representative of the bid side of
the market, these investments are valued at the mean between the quoted bid
prices and asked prices. Investments for which, in the judgment of the
pricing service, there are not readily obtainable market quotations are
carried at fair value as determine by the pricing service. The procedures
of the pricing service are reviewed periodically by the officers of the
Company under the general supervision and responsibility of the board of
directors.

PERFORMANCE DATA

From time to time, a Fund may quote its yield, average annual total return
or total return in advertisements or in reports and other communications to
shareholders. The Fund may include comparative performance information in
advertising or marketing the Fund's shares Such performance information may
include data from Lipper Analytical Services, Inc., Morningstar, Inc. and
other financial publications, and may be included in various industry and
financial publications, such as: Barron's, Business Week, CDA Investment
Technologies, Inc., Changing Times, Forbes, Fortune, Institutional
Investor, Investors Daily, Money, Morningstar Mutual Fund Values, The New
York Times, USA Today and The Wall Street Journal. To the extent any
advertisement or sales literature of a Fund describes the expenses or
performance of a class, it will also disclose such information for the
other classes.

Yield. A Fund's 30-day yield figure described below is calculated
according to a formula prescribed by the SEC. The formula can be expressed
as follows:

YIELD = 2[(a-b/cd + 1)6 - 1]

Where:
a =
Dividends and interest earned during the period.

b =
Expenses accrued for the period (net of reimbursement).

c =
The average daily number of shares outstanding during the period that were
entitled to receive dividends.

d =
The maximum offering price per share on the last day of the period.

For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations purchased by the Fund at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect
changes in the market values of the debt obligations.

Investors should recognize that in periods of declining interest rates a
Fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the Fund's yield will tend to be
somewhat lower. In addition, when interest rates are falling, the inflow
of net new money to the Fund from the continuous sales of its shares will
likely be invested in portfolio instruments producing lower yields than the
balance of the Fund's investments, thereby reducing the current yield of
the Fund. In periods of rising interest rates, the opposite can be
expected to occur.

Average Annual Total Return. "Average annual total return" figures, as
described below, are computed according to a formula prescribed by the SEC.
The formula can be expressed as follows:

P(1+T)n = ERV

Where:
P =
a hypothetical initial payment of $1,000.

T =
Average annual total return.

n =
Number of years.

ERV =
Ending Redeemable Value of a hypothetical $1,000 investment made at the
beginning of a 1-, 5- or 10-year period at the end of the 1-, 5- or 10-
year period (or fractional portion thereof), assuming reinvestment of all
dividends and distributions. A Class' total return figures calculated in
accordance with the above formula assume that the maximum applicable sales
charge or maximum applicable CDSC, as the case may be, has been deducted
from the hypothetical $1,000 initial investment at the time of purchase or
redemption, as applicable.

Aggregate Total Return. Aggregate total return, as described below,
represents the cumulative change in the value of an investment in the Class
for the specified period and are computed by the following formula:

AGGREGATE TOTAL RETURN = ERV-P
P

Where:
P =
a hypothetical initial payment of $1,000.

ERV =
Ending Redeemable Value of a hypothetical $10,000 investment made at the
beginning of a 1-, 5- or 10-year period (a fractional portion thereof) at
the end of the 1-, 5- or 10- year period (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.

The total returns below show what an investment in the fund would have
earned over a specified period of time (one, five or ten years or since
inception) without assuming the payment of the maximum sales load when the
investment was first made and that all distributions and dividends by the
fund were invested on the reinvestment dates during the period, less all
recurring fees. The following chart reflects the financial performance of
the funds through the period ended April 30, 1999 for the one year period
and since inception:

Total Returns

Since Inception

Since

Class

1 Year
Average Annual
Inception
Cumulative
Global Value Fund

Inception: 12/19/97
A
(6.56)%
4.84%
6.64%
Inception: 12/19/97
B
(7.27)
4.08
5.59
Inception: 12/19/97
L
(7.27)
4.08
5.59
Inception: 3/10/98
Y
(6.17)
(2.33)
(2.65)
Global Small Cap Value Fund

Inception: 12/19/97
A
(15.95)
(6.45)
(8.68)
Inception: 12/19/97
B
(16.61)
(7.16)
(9.62)
Inception: 12/19/97
L
(16.77)
(7.29)
(9.80)
Inception: 3/10/98
Y
(15.49)
(10.08)
(11.41)

The total returns below show what an investment in the fund would have
earned over a specified period of time (one, five or ten years or since
inception) assuming the payment of the maximum sales load when the
investment was first made and that all distributions and dividends by the
fund were invested on the reinvestment dates during the period, less all
recurring fees. The average annual total return is derived from this total
return, which provides the ending redeemable value. The following chart
reflects the financial performance of the funds through the period ended
April 30, 1999 for the one year period and since inception:
Total Returns
Since Inception
Since

Class
1 Year Average Annual Inception
Cumulative
Global Value Fund
Inception: A (11.21)% 0.96%
1.31%
Inception: B (11.89) 1.17
1.59
Inception: L (9.10) 3.28
4.49
Inception: Y (6.17) (2.33)
(2.65)
Global Small Cap Value Fund
Inception: A (20.14) (9.91)
(13.25)
Inception: B (20.72) (9.86)
(13.19)
Inception: L (18.38) (8.00)
(10.74)
Inception: Y (15.49) (10.08)
(11.41)

It is important to note that the yield and total return formulas set forth
above are based on historical earnings and are not intended to indicate
future performance. A class' performance will vary from time to time
depending upon market conditions, the composition of the Fund's investment
portfolio and operating expenses and the expenses exclusively attributable
to the class. Consequently, any given performance quotation should not be
considered representative of the class' performance for any specified
period in the future. Because performance will vary, it may not provide a
basis for comparing an investment in the class with certain bank deposits
or other investments that pay a fixed yield for a stated period of time.
Investors comparing the class' performance with that of other mutual funds
should give consideration to the quality and maturity of the respective
investment companies' portfolio securities.

Current Dividend Return. Each fund calculates current dividend return for
each class by annualizing the most recent monthly distribution and dividing
by the net asset value or the maximum public offering price (including
sales charge) on the last day of the period for which current dividend
return is presented. The current dividend return for each Class may vary
from time to time depending on market conditions, the composition of its
investment portfolio and operating expenses. These factors and possible
differences in the methods used in calculating current dividend return
should be considered when comparing a Class' current return to yields
published for other investment companies and other investment vehicles.
Each fund may also include comparative performance information in
advertising or marketing its shares.

Performance Information. Performance information may be useful in
evaluating a Fund and for providing a basis for comparison with other
financial alternatives. Since the performance of the Fund changes in
response to fluctuations in market conditions, interest rates and Fund
expenses, no performance quotation should be considered a representation as
to the Fund's performance for any future period.

A Fund may from time to time compare its investment results with the
following:

(1) The Consumer Price Index, which is a measure of the
average change in prices over time in a fixed market basket
of goods and services (e.g., food, clothing, shelter, fuels,
transportation fares, charges for doctors' and dentists'
services, prescription medicines, and other goods and
services that people buy for day-to-day living).

(2) Data and mutual fund rankings published or prepared by
Lipper Analytical Services, Inc., which ranks mutual funds by
overall performance, investment objectives and assets.

(3) Dow Jones Industrial Average which is a price-weighted
average of 30 actively traded stocks of highly reputable
companies prepared by Dow Jones & Co.

(4) Financial News Composite Index.

(5) Morgan Stanley Capital International World Indices,
including, among others, the Morgan Stanley Capital
International Europe, Australia, Far East Index ("EAFE
Index"). The EAFE Index is an unmanaged index of more than
800 companies of Europe, Australia and the Far East.

(6) Data and comparative performance rankings published or
prepared by CDA Investment Technologies, Inc.

(7) Data and comparative performance rankings published or
prepared by Wiesenberger Investment Company Service.

Indices prepared by the research departments of such financial organizations
as Salomon Brothers, Inc., Merrill Lynch, Bear Stearns & Co., Inc., Morgan
Stanley, and Ibbottson Associates may be used, as well as information
provided by the Federal Reserve Board. In addition, performance rankings
and ratings reported periodically in national financial publications,
including but not limited to Money Magazine, Forbes, Business Week, The Wall
Street Journal and Barron's may also be used.

DIVIDENDS AND DISTRIBUTIONS

Each Fund's policy is to distribute substantially all its investment income
(that is, its income other than its net realized capital gains) and net
realized capital gains, if any, once a year, normally at the end of the
year in which earned or at the beginning of the next year.

If a shareholder does not otherwise instruct, dividends and capital gain
distributions will be reinvested automatically in additional shares of the
same Class at net asset value, subject to no sales charge or CDSC. In
order to avoid the application of a 4.00% non-deductible excise tax on
certain undistributed amounts of ordinary income and capital gains, a Fund
may make an additional distribution shortly before December 31 in each year
of any undistributed ordinary income or capital gains and expects to pay
any other dividends and distributions necessary to avoid the application of
this tax.

The per share dividends on Class B and Class L shares of a Fund may be
lower than the per share dividends on Class A and Class Y shares
principally as a result of the distribution fee applicable with respect to
Class B and Class L shares. The per share dividends on Class A shares of a
Fund may be lower than the per share dividends on Class Y shares
principally as a result of the service fee applicable to Class A shares.
Distributions of capital gains, if any, will be in the same amount for
Class A, Class B, Class L and Class Y shares.

TAXES

The following summary addresses the principal United States income tax
considerations regarding the purchase, ownership and disposition of shares
in a Fund.

General. Each Fund intends to qualify and elect to be treated for each
taxable year as a "regulated investment company" under Sections 851-855 of
the Internal Revenue Service Code of 1986, as amended ("the Code"). To so
qualify, a Fund must, among other things, (i) derive at least 90% of its
gross income in each taxable year from dividends, interest, proceeds from
loans of stock and securities, gains from the sale or other disposition of
stock, securities or foreign currency, or certain other income (including
but not limited to gains from options, Futures and forward contracts)
derived from its business of investing in stock, securities or currency;
and (ii) diversify its holdings so that, at the end of each quarter of its
taxable year, the following two conditions are met: (a) at least 50% of the
market value of the Fund's total assets is represented by cash, U.S.
Government securities, securities of other regulated investment companies
and other securities, with such other securities limited, in respect of
any one issuer, to an amount not greater than 5% of the Fund's assets and
not more than 10% of the outstanding voting securities of such issuer; and
(b) not more than 25% of the value of the Fund's assets is invested in
securities of any one issuer (other than U.S. Government securities or
securities of other regulated investment companies). The diversification
requirements described above may limit the Fund's ability to engage in
hedging transactions by writing or buying options or by entering into
Futures or forward contracts.

Foreign currency gains that are not directly related to a Fund's principal
business of investing in stock or securities, or options or forward
contracts thereon, might be excluded by regulations from income that counts
toward the 90% gross income requirement described above.

As a regulated investment company, each Fund will not be subject to U.S.
federal income tax on net investment income and net long-term capital gains
distributed to shareholders if, as is intended, the Fund distributes at
least 90% of its ordinary income and net short-term capital gains to the
Fund's shareholders each year.

Each Fund, however, will generally be subject to a nondeductible excise tax
of 4% to the extent that it does not meet certain minimum distribution
requirements as of the end of each calendar year. Each Fund intends to make
timely distributions of its income (including any net capital gains) in
compliance with these requirements. As a result, it is anticipated that
each Fund will not be subject to the excise tax.

For federal income tax purposes, dividends declared by each Fund in October,
November or December as of a record date in such month and which are
actually paid in January of the following year will be treated as if they
were paid on December 31. These dividends will be taxable to shareholders
in the year declared, and not in the year in which shareholders actually
receive the dividend.

Gains or losses that a Fund recognizes upon the sale or other disposition of
stock or securities will be treated as long-term capital gains or losses if
the securities have been held by it for more than one year, except in
certain cases where the Fund sells the stock or security short or acquires a
put or writes a call thereon. Other gains or losses on the sale of stock or
securities will be short-term capital gains or losses. Gains and losses on
the sale, lapse or other termination of options on stock or securities will
generally be treated as gains and losses from the sale of stock or
securities. If an option written for a Fund lapses or is terminated through
a closing transaction the Fund may realize a short-term capital gain or
loss, depending on whether the premium income is greater or less than the
amount paid in the closing transaction. If a Fund sells stock or securities
pursuant to the exercise of a call option written by it, the Fund will add
the premium received to the sale price of the stock or securities delivered
in determining the amount of gain or loss on the sale.

Under the Code, gains or losses attributable to foreign currency contracts,
or to fluctuations in exchange rates between the time a Fund accrues income
or receivables or expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such income or pays such
liabilities, are treated as ordinary income or ordinary loss. Similarly,
gains or losses on the disposition of debt securities held by the Fund
denominated in foreign currency, to the extent attributable to fluctuations
in exchange rates between the acquisition and disposition dates, are also
treated as ordinary income or loss.

Forward currency contracts, options and Futures contracts entered into by a
Fund may create "straddles" for federal income tax purposes and this may
affect the character and timing of gains or losses realized by the Fund on
such contracts or options or on the underlying securities.

Certain options, Futures and foreign currency contracts held by a Fund at
the end of each fiscal year will be required to be "marked to market" for
federal income tax purposes; that is, treated as having been sold at market
value. Sixty percent of any capital gain or loss recognized on these deemed
sales and on actual dispositions will be treated as long-term capital gain
or loss, and the remainder will be treated as short-term capital gain or
loss regardless of how long the Fund has held such options or contracts.

If a Fund purchases shares in certain foreign investment entities, referred
to as "passive foreign investment companies," the Fund itself may be subject
to U.S. federal income tax and an additional charge in the nature of
interest on a portion of any "excess distribution" from such company or gain
from the disposition of such shares, even if the distribution or gain is
distributed by the Fund to its shareholders in a manner that satisfies the
requirements described above. If the Fund were able and elected to treat a
passive foreign investment company as a "qualified electing fund," in lieu
of the treatment described above, the Fund would be required each year to
include in income, and distribute to shareholders in accordance with the
distribution requirements described above, the Fund's pro rata share of the
ordinary earnings and net capital gains of the company, whether or not
actually received by the Fund.

Redemption of Shares. Any gain or loss realized on the redemption or
exchange of Fund shares by a shareholder who is not a dealer in securities
will be treated as long-term capital gain or loss if the shares have been
held for more than one year, and otherwise as short-term capital gain or
loss.

However, any loss realized by a shareholder upon the redemption or exchange
of Fund shares held six months or less will be treated as long-term capital
loss to the extent of any long-term capital gain distributions received by
the shareholder with respect to such shares. Additionally, any loss
realized on a redemption or exchange of Fund shares will be disallowed to
the extent the shares disposed of are replaced within a period of 61 days
beginning 30 days before and ending 30 days after such disposition, such as
pursuant to reinvestment of dividends in Fund shares.

Notices to Shareholders. Statements as to the tax status of each
shareholder's dividends and distributions will be mailed annually. Each
shareholder also will receive, if appropriate, various written notices
after the close of a Fund's prior taxable year as to the Federal income tax
status of his or her dividends and distributions which were received from
the Fund during the Fund's prior taxable year. Shareholders should consult
their own tax advisors about the status of a Fund's dividends and
distributions for state and local tax liabilities.

MINIMUM ACCOUNT SIZE

Each fund reserves the right to involuntarily liquidate any shareholder's
account in the Fund if the aggregate net asset value of the shares held in
the Fund account is less than $500. (If a shareholder has more than one
account in the Fund, each account must satisfy the minimum account size).
A Fund, however, will not redeem shares based solely on market reductions
in net asset value. Before the Fund exercises such right, shareholders
will receive written notice and will be permitted 60 days to bring accounts
up to the minimum to avoid involuntary liquidation.

FINANCIAL STATEMENTS

Each Fund's annual report for the fiscal year ended April 30, 1999,
including the Funds' audited financial statements, as filed with the
Securities and Exchange Commission (Accession number 0000091155-99-000454)
is incorporated by reference, in its entirety, into this statement of
additional information.

ADDITIONAL INFORMATION

The Company was incorporated on September 29, 1981 under the name Hutton
Investment Series Inc. The Company's corporate name was changed on
December 29, 1988, July 30, 1993 and October 28, 1994, to SLH Investment
Portfolios Inc., Smith Barney Shearson Investment Funds Inc., and Smith
Barney Investment Funds Inc., respectively.

Chase, located at Chase Metrotech Center, Brooklyn NY 11245, serves as the
custodian of the Company. Under its custody agreement with the Company,
Chase holds the Company's fund securities and keeps all necessary accounts
and records. For its services, Chase receives a monthly fee based upon the
month-end market value of securities held in custody and also receives
transaction charges. Chase bank is authorized to establish separate
accounts for foreign securities owned by the Company to be held with
foreign branches of other domestic banks as well as with certain foreign
banks and securities depositories. The assets of the Company are held
under bank custodianship in compliance with the 1940 Act.

First Data, located at Exchange Place, Boston, Massachusetts 02109, serves
as the Company's transfer agent. For these services, First Data receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Company during the month and is reimbursed for out-of-
pocket expenses.

APPENDIX

BOND (AND NOTE) RATINGS

Moody's Investors Service, Inc. ("Moody's")

Aaa - Bonds that are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.

Aa - Bonds that are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in "Aaa"
securities or fluctuation of protective elements may be of greater amplitude
or there may be other elements present that make the long term risks appear
somewhat larger than in "Aaa" securities.

A - Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present that suggest a susceptibility to impairment
sometime in the future.

Baa - Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Ba - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and therefor not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B - Bonds that are rated B generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

Caa - Bonds that are rated Caa are of poor standing. These issues
may be in default or present elements of danger may exist with respect to
principal or interest.

Ca - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.

C - Bonds that are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies the numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.

Standard & Poor's Ratings Group ("S&P")

AAA - Debt rated "AAA" has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small
degree.

A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB - Debt rated "BBB" is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.

BB, B and CCC - Bonds rated BB and B are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents a
lower degree if speculation than B and CCC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

C - The rating C is reserved for income bonds on which no interest is
being paid.

D - Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.

S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major rating
categories, except in the AAA category.

COMMERCIAL PAPER RATINGS

Moody's

Issuers rated "Prime-1" (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well-established industries;
high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal
cash generation; well-established access to a range of financial markets and
assured sources of alternate liquidity.

Issuers rated "Prime-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

S&P

A-1 - This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics will be denoted
with a plus (+) sign designation.

A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.

48
G:\Fund Accounting\Legal\FUNDS\SLIV\1999\hans(sai99).doc

hans(sai99).3 A-3 8/27/99 11:47 AM

PART C - OTHER INFORMATION

Item 23. Exhibits

All references are to the Registrant's registration
statement on Form N-1A (the "Registration Statement")
as filed with the SEC on October 2, 1981(File Nos. 2-
74288 and 811-3275).

(a) Articles of Restatement dated September 17, 1993
to Registrant's Articles of Incorporation dated
September 28, 1981, Articles of Amendment dated
October 14, 1994, Articles Supplementary, Articles of
Amendment dated October 14, 1994, Articles
Supplementary, Articles of Amendments and Certificates
of Correction dated November 7, 1994, are incorporated
by reference to Post-Effective Amendment No. 37 to the
Registration Statement filed on November 7, 1994.
Articles of Amendment dated October 23, 1997 are
incorporated by reference to Post-Effective Amendment
No. 46 filed on October 23, 1997("Post-Effective
Amendment No.46"). Articles of Amendment dated
February 27, 1998 are incorporated by reference
to Post-Effective Amendment No. 48 dated April 29, 1998.
Articles of Amendment dated June 1, 1998 are incorporated
by reference to Post-Effective Amendment No. 49 filed on
July
16, 1998 ("Post-Effective Amendment No. 49").

(b) Registrant's By-Laws, as amended on September 30,
1992 are incorporated by reference to Post-Effective
Amendment No. 30 to the Registration Statement filed
on April 30, 1993.

(c) Registrant's form of stock certificate for Smith
Barney Hansberger Global Value Fund ("Global Value
Fund") and Smith Barney Hansberger Global Value Small
Cap Fund ("Small Cap Fund") is incorporated by
reference to Post Effective Amendment 46.

(d)(1) Investment Advisory Agreement dated July 30,
1993, between the Registrant on behalf of Smith Barney
Investment Grade Bond Fund, Smith Barney Government
Securities Fund and Smith Barney Special Equities
Fund and Greenwich Street Advisors is incorporated by
reference to the Registration Statement filed on Form
N-14 on September 2, 1993, File No. 33-50153.

(d)(2) Investment Advisory Agreements on behalf of
Smith Barney Growth Opportunity Fund and Smith Barney
Managed Growth Fund is incorporated by reference to
Post-Effective Amendment No. 40 filed on June 27,
1995. ("Post-Effective Amendment No.40")

(d)(3) Investment Management Agreements on behalf of
Global Value Fund and Global Small Cap Fund between
Registrant and Smith Barney Mutual Funds Management
Inc. is incorporated by reference to Post-Effective
Amendment No. 46.

(d)(4) Sub-Advisory Agreement on behalf of Global
Value Fund and Global Small Cap Fund between MMC and
Hansberger Global Investors Inc. is
incorporated by reference to Post-Effective
Amendment No. 46.

(d)(5)Investment Management Agreements on behalf of
Smith Barney Small Cap Growth Fund and Smith Barney
Small Cap Value Fund between Registrant and
Mutual Management Corp. is incorporated by reference
To Post-Effective Amendment No. 49.

(e)(1) Distribution Agreement dated July 30, 1993,
between the Registrant and Smith Barney Shearson Inc.
is incorporated by reference to the registration
statement filed on Form N-14 on September 2, 1993.
File 33-50153.

(e)(2) Form of Distribution Agreement between the
Registrant and PFS Distributors on behalf of Smith
Barney Investment Funds Inc. is incorporated by
reference to Post-Effective Amendment No. 40 filed on
June 27, 1995.

(e)(3) Form of Distribution Agreement between the
Registrant and CFBDS, Inc. is incorporated by reference
to Post-Effective Amendment No. 49.

(e)(4) Selling Group Agreement
is incorporated by reference
to Post-Effective Amendment No.56 filed on
February 26, 1999.

(f) Not Applicable.

(g)(1) Custodian Agreement with PNC Bank, National
Association is incorporated by reference to Post -
Effective Amendment No. 44 filed on April 29, 1997.

(g)(2) Custodian Agreement with Chase Manhattan Bank
is incorporated by reference to Post-Effective
Amendment No. 46.

(h)(1) Transfer Agency and Registrar Agreement dated
August 5, 1993 with First Data Investor Services
Group, Inc. (formerly The Shareholder Services Group,
Inc.) is incorporated by reference to Post-Effective
Amendment No. 31 as filed on December 22, 1993 (Post-
Effective Amendment No. 31").

(h)(2)Sub-Transfer Agency Agreement between the
Registrant and PFS Shareholders Services on behalf of
Smith Barney Investment Funds Inc. is incorporated by
reference to Post-Effective Amendment No. 40.

(i) Opinion of Robert A. Vegliante, Deputy General
Counsel of Smith Barney Mutual Funds Management Inc.
filed with the Registrant's rule 24-f2 Notice
(Accession No. 000091155-97-000104) is incorporated by
reference.

(j) Auditors' Consent filed herewith

(k) Not Applicable

(l) Not Applicable

(m)(1) Amended Services and Distribution Plans
pursuant to Rule 12b-1 between the Registrant on behalf
of Smith Barney Investment Grade Bond Fund, Smith
Barney Government Securities Fund, Smith Barney Special
Equities Fund and Smith Barney European Fund and Smith
Barney, Inc. ("Smith Barney") are incorporated by
reference to Post-Effective Amendment No. 37 filed on
November 3, 1994 ("Post-Effective Amendment No. 37")

(m)(2) Form of Services and Distribution Plans
pursuant to Rule 12b-1 between the Registrant on
behalf of Smith Barney Growth Opportunity Fund and
Smith Barney Managed Growth Fund is incorporated by
reference to Post-Effective Amendment No. 40.

(m)(3) Form of Services and Distribution Plans
pursuant to Rule 12b-1 between the Registrant on
behalf of the Global Value Fund and Small Cap Fund is
incorporated by reference to Post-Effective Amendment
No. 46.

(m)(4) Form of Amended and Restated Shareholder Services
and
Distribution Plan pursuant to Rule 12b-1 between
the Registrant on behalf of each of its series
is incorporated by reference to Post-Effective Amendment
No. 49.

(n) Financial Data Schedule filed herewith.

(o) Form of Plan pursuant to Rule 18f-3 is incorporated by
reference to Post-Effective Amendment No.50 to
Registration Statement.

Item 24.

None.

Item 25. Indemnification

The response to this item is incorporated by
reference to Pre-Effective Amendment No. 1 to the
registration statement filed on Form N-14 on October
8, 1993 (File No. 33-50153).

Item 26. Business and Other Connections of
Investment Adviser

Investment Adviser -SSBC Fund Management Inc.("SSBC")
formerly Mutual Management Corp.

SSBC was incorporated in December 1968 under the laws
of the State of Delaware. SSBC is a wholly owned
subsidiary of Salomon Smith Barney Holdings Inc.
("Holdings")(formerly known as Smith Barney Holdings
Inc.), which in turn is a wholly owned subsidiary of
Citigroup Inc. SSBC is registered as an
investment adviser under the Investment Advisers Act
of 1940 (the "Advisers Act"). The list required by this
Item 26 of officers and directors of SSBC together with
information as to any other business, profession,
vocation or employment of a substantial nature engaged
in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and
D of FORM ADV filed by SSBC pursuant to the Advisers
Act (SEC File No. 801-8314).

Item 27. Principal Underwriters
(a) CFBDS, Inc. the Registrant's Distributor, is also
the distributor for
CitiFundsSM International Growth & Income Portfolio,
CitiFundsSM International Equity Portfolio, CitiFundsSM
Large Cap
Growth
Portfolio, CitiFundsSM Intermediate Income Portfolio,
CitiFundsSM Short-Term U.S. Government Income Portfolio,
CitiFundsSM Emerging Asian Markets Equity Portfolio,
CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash
Reserves,
CitiFundsSM Premium U.S. Treasury Reserves,
CitiFundsSM Premium Liquid Reserves, CitiFundsSM
Institutional U.S.
Treasury Reserves, CitiFundsSM Institutional Liquid
Reserves,
SM Institutional Cash Reserves, CitiFundsSM Tax Free
Reserves,
CitiFundsSM Institutional Tax Free Reserves,
CitiFundsSM California Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves,
CitiFundsSM New York Tax Free Reserves, CitiFundsSM
Balanced Portfolio,
CitiFundsSM Small Cap Value Portfolio, CitiFundsSM Growth &
Income
Portfolio,
CitiFundsSM Small Cap Growth Portfolio, CitiFundsSM
National
Tax Free Income Portfolio, CitiFundsSM New York Tax Free
Income
Portfolio,
CitiSelect VIP Folio 200, Citiselect VIP Folio 300,
CitiSelect (VIP Folio 400, CitiSelect (VIP Folio 500,
CitiFundsSM Small Cap Growth VIP Portfolio, CitiSelect
(Folio 200,
CitiSelect (Folio 300, CitiSelect (Folio 400, and
CitiSelect (Folio
500.
CFBDS is also the placement agent for Large Cap Value
Portfolio,
International Portfolio, Foreign Bond Portfolio,
Intermediate Income Portfolio, Short-Term Portfolio,
Growth & Income Portfolio, Large Cap Growth Portfolio,
Small Cap Growth Portfolio, International Equity Portfolio,
Balanced Portfolio, Government Income Portfolio, Emerging
Asian Markets Equity Portfolio, Tax Free Reserves
Portfolio,
Cash Reserves Portfolio and U.S. Treasury Reserves
Portfolio.

CFBDS, Inc. is also the distributor for the following
Smith Barney Mutual Fund registrants:
Concert Investment Series
Consulting Group Capital Markets Funds
Greenwich Street Series Fund
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Concert Allocation Series Inc.
Smith Barney Equity Funds
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
Smith Barney Income Funds
Smith Barney Institutional Cash Management Fund, Inc.
Smith Barney Investment Trust
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc.
Smith Barney Muni Funds
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund Inc.
Smith Barney Principal Return Fund
Smith Barney Small Cap Blend Fund, Inc.
Smith Barney Telecommunications Trust
Smith Barney Variable Account Funds
Smith Barney World Funds, Inc.
Travelers Series Fund Inc.
And various series of unit investment trusts.

CFBDS, Inc. is also the distributor for the following
Salomon Brothers funds;
Salomon Brothers Opportunity Fund Inc
Salomon Brothers Investors Fund Inc
Salomon Brothers Capital Fund Inc
Salomon Brothers Series Funds Inc
Salomon Brothers Institutional Series Funds Inc
Salomon Brothers Variable Series Funds Inc

The information required by this Item 27 with respect
to each director, officer and partner of CFBDS, Inc.
is incorporated by reference to Schedule A of Form BD
filed by CFBDS, Inc. pursuant to the Securities
Exchange Act of 1934 (SEC File No. 8-32417).

Item 28. Location of Accounts and Records

(1) Smith Barney Investment Funds Inc.
388 Greenwich Street
New York, New York 10013

(2) SSBC Fund Management Inc.
388 Greenwich Street
New York, New York 10013

(3) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA

(4) The Chase Manhattan Bank
Chase Metrotech Center
Brooklyn, New York 11245

(5) First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109

(6) CFBDS Inc.
21 Milk Street, 5th floor
Boston, Massachusetts 02109

Item 29. Management Services

Not Applicable.

Item 30. Undertakings

Not applicable

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of
1940, as amended, the Registrant, SMITH BARNEY
INVESTMENT FUNDS INC., has duly caused this Amendment
to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized,
all in the City of New York, State of New York on the
27th day of August, 1999.

SMITH BARNEY INVESTMENT FUNDS INC.

By: /s/ Heath B. McLendon*
Heath B. McLendon
Chief Executive Officer

WITNESS our hands on the date set forth below.

Pursuant to the requirements of the Securities
Act of 1933, as amended, this Post-Effective Amendment
to the Registration Statement has been signed below by
the following persons in the capacities and on the
dates indicated.

Signature Title Date

/s/ Heath B. McLendon Chairman of the Board
8/27/99
Heath B. McLendon (Chief Executive Officer)

/s/ Lewis E. Daidone Senior Vice President
Lewis E. Daidone and Treasurer
8/27/99
(Chief Financial
and Accounting Officer)

/s/ Paul R. Ades * Director
8/27/99
Paul R. Ades

/s/ Herbert Barg* Director
8/27/99
Herbert Barg

/s/ Dwight B. Crane* Director
8/27/99
Dwight B. Crane

/s/ Frank Hubbard* Director
8/27/99
Frank Hubbard

/s/ Jerome Miller** Director
8/27/99
Jerome Miller

/s/ Ken Miller* Director
8/27/99
Ken Miller

*Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant
to power of attorney dated November 3, 1994.

**Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant
to power of attorney dated April 15, 1998.

/s/ Heath B. McLendon
Heath B. McLendon

EXHIBITS

Exhibit No. Description of Exhibit

(j) Auditors Consents
(n) Financial Data Schedule
Cover

Independent Auditors' Consent

To the Shareholders and Board of Directors of
Smith Barney Hansberger Global Small Cap Value Fund:
We consent to the incorporation by reference, in this Prospectus and
Statement of Additional Information, of our report dated June 14, 1999, on
the statement of assets and liabilities of the Smith Barney Hansberger
Global Small Cap Value Fund (the Fund) as of April 30, 1999 and the related
statements of operations for the year then ended and statement of changes
in net assets and financial highlights for the year ended April 30, 1999
and for the period from December 19, 1997 (commencement of operations) to
April 30, 1998. These financial statements and financial highlights and
our report thereon are included in the Annual Report of the Fund as filed
on Form N-30D.
We also consent to the references to our firm under the headings "Financial
Highlights" in the Prospectus and "Counsel and Auditors" in the Statement
of Additional Information.

KPMG
LLP
New York, New York
August 19, 1999

Independent Auditors' Consent

To the Shareholders and Board of Directors of
Smith Barney Hansberger Global Value Fund:
We consent to the incorporation by reference, in this Prospectus and
Statement of Additional Information, of our report dated June 14, 1999, on
the statement of assets and liabilities of the Smith Barney Hansberger
Global Value Fund (the Fund) as of April 30, 1999 and the related
statements of operations for the year then ended, the statements of changes
in net assets and the financial highlights for the year ended April 30,
1999 and for the period from December 19, 1997 (commencement of operations)
to April 30, 1998. These financial statements and financial highlights and
our report thereon are included in the Annual Report of the Fund as filed
on Form N-30D.
We also consent to the references to our firm under the headings "Financial
Highlights" in the Prospectus and "Counsel and Auditors" in the Statement
of Additional Information.

KPMG
LLP
New York, New York
August 19, 1999

Page

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

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<DISTRIBUTIONS-OF-GAINS> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

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<ACCUMULATED-NET-GAINS> 0
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<ACCUM-APPREC-OR-DEPREC> (1,615,748)
<NET-ASSETS> 17,340,472
<DIVIDEND-INCOME> 520,073
<INTEREST-INCOME> 74,545
<OTHER-INCOME> 0
<EXPENSES-NET> 465,625
<NET-INVESTMENT-INCOME> 128,993
<REALIZED-GAINS-CURRENT> (1,557,068)
<APPREC-INCREASE-CURRENT> (3,181,363)
<NET-CHANGE-FROM-OPS> (4,609,438)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 103,736
<DISTRIBUTIONS-OF-GAINS> 27,530
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 189,385
<NUMBER-OF-SHARES-REDEEMED> 422,929
<SHARES-REINVESTED> 13,333
<NET-CHANGE-IN-ASSETS> (6,477,730)
<ACCUMULATED-NII-PRIOR> 143,223
<ACCUMULATED-GAINS-PRIOR> 19,406
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 208,760
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 546,488
<AVERAGE-NET-ASSETS> 7,307,618
<PER-SHARE-NAV-BEGIN> 12.37
<PER-SHARE-NII> 00.11
<PER-SHARE-GAIN-APPREC> (2.10)
<PER-SHARE-DIVIDEND> 00.16
<PER-SHARE-DISTRIBUTIONS> 00.03
<RETURNS-OF-CAPITAL> 0
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<EXPENSE-RATIO> 01.92
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

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<PERIOD-END> APR-30-1999
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<RECEIVABLES> 416,866
<ASSETS-OTHER> 5,090
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<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,519
<TOTAL-LIABILITIES> 66,519
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,528,853
<SHARES-COMMON-STOCK> 770,018
<SHARES-COMMON-PRIOR> 940,717
<ACCUMULATED-NII-CURRENT> 28,962
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
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<NAME> SMITH BARNEY INVESTMENT FUNDS INC.
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<NAME> SMITH BARNEY HANSBERGER GLOBAL SMALL CAP VALUE FUND. CLASS L

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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
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<NAME> SMITH BARNEY INVESTMENT FUNDS INC.
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<NAME> SMITH BARNEY HANSBERGER GLOBAL SMALL CAP VALUE FUND. CLASS Y

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