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Smith Barney Hansberger
Global Value Fund
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Smith Barney Hansberger
Global Small Cap
Value Fund
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SEMI-ANNUAL REPORT
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October 31, 1999
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[LOGO OF SBMF]SMITH BARNEY HANSBERGER
MUTUAL FUNDS GLOBAL
INVESTORS, INC.
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
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Smith Barney Hansberger Funds
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MARKET HIGHLIGHT
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Many of the world's markets fell a year ago, following Russia's unexpected debt
defaults, a major hedge fund debacle and a currency devaluation in Brazil.
Meanwhile, economic upheavals in Asia were also causing repercussions
internationally. Yet, by the end of the 12-month period ended October 31, 1999,
many global stock and bond markets experienced a dramatic reversal of fortunes.
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The Smith Barney Hansberger Global Value Fund seeks long-term capital growth by
investing primarily in the common stocks and other equity securities of U.S. and
foreign companies, including those of emerging market issuers. The Fund's
bottom-up approach to stock selection focuses primarily on identifying companies
with low share prices relative to their earnings, cash flow and/or net asset
value.
NASDAQ Symbol
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Class A SGLAX
Class B SGLBX
Class L SGLCX
The Smith Barney Hansberger Global Small Cap Value Fund's primary investment
objective is long-term capital growth. The Fund seeks to achieve this objective
by investing primarily in equity securities of U.S. and foreign issuers with
relatively small market capitalizations (i.e., share price times the number of
equity securities outstanding). These are equity securities which, in the
opinion of SSB Citi Fund Management LLC, the Fund's investment manager, and
Hansberger Global Investors, Inc., the Fund's sub-investment adviser, are
undervalued.
NASDAQ Symbol
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Class B SCVBX
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WHAT'S INSIDE
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Shareholder Letter........................................................... 1
Smith Barney Hansberger Global Value Fund
Portfolio Manager Commentary............................................... 2
Historical Performance..................................................... 4
Smith Barney Hansberger Global Small Cap
Value Fund
Portfolio Manager Commentary............................................... 7
Historical Performance..................................................... 9
Schedules of Investments..................................................... 12
Statements of Assets and Liabilities......................................... 21
Statements of Operations..................................................... 22
Statements of Changes in Net Assets.......................................... 23
Notes to Financial Statements................................................ 25
Financial Highlights......................................................... 31
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Shareholder Letter
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[PHOTO] [PHOTO]
HEATH B. MCLENDON THOMAS L. HANSBERGER,
CFA, CIC
Chairman
Chairman and Chief
Executive Officer
Hansberger Globel
Investors, Inc.
Dear Shareholder:
We are pleased to present the semi-annual shareholder report for the Smith
Barney Hansberger Global Value Fund and the Smith Barney Hansberger Global Small
Cap Value Fund ("Funds") for the period ended October 31, 1999. We hope you find
this report to be useful and informative. Individual commentaries for each Fund
follow.
Global Markets Update
It has been an extraordinary year in the markets. Abundant liquidity has helped
propel U.S. market indices to lofty levels, yet this particular bull market has
been concentrated in large-cap stocks and high-tech issues. Similar trends have
emerged in Europe while more encouraging and broad-based recoveries have taken
place in Japan and several developing countries.
The globalization of securities markets continues to accelerate. Economic growth
picked up in Europe and Asia, with a great deal of corporate restructuring
taking place. A year ago, a major topic of discussion and possible concern was
the introduction of the Euro. (The Euro is the single currency of the European
Monetary Union that was adopted by Belgium, Germany, Spain, France, Ireland,
Italy, Luxembourg, The Netherlands, Austria, Portugal and Finland on January 1,
1999.)
Twelve months later, the introduction of the Euro has fostered lower inflation.
Moreover, the Euro has contributed to the consolidation of businesses and the
creation of even stronger and more competitive European companies.
Last year, Asia was reeling under the impact of currency and banking problems,
and Japan was mired in economic stagnation. Today we are seeing firsthand the
amazing resiliency of these economies as Southeast Asia returns to economic
stability and growth albeit at a slower, yet more sustainable, rate.
Additionally, the Japanese Government and the country's industries are taking
serious steps to rebuild the economy including corporate restructuring and
consolidation of the banking and financial services industries.
Our due diligence efforts continue to uncover what we believe are undervalued
investment opportunities on a global basis. We are particularly encouraged by
the continuation of Asia's recovery and structural changes taking place in
Europe. Although the high valuations of many large cap U.S. momentum stocks
concerns us, we believe ample opportunities continue to exist. We believe this
combination of factors presents a favorable backdrop for global investors.
In closing, your support of our investment management approach is genuinely
appreciated. We at Hansberger Global Investors ("HGI") and Smith Barney Mutual
Funds will continue to work hard to deliver competitive total returns for our
shareholders over the long term using our value investing approach.
Sincerely,
/s/ Heath B. McLendon /s/ Thomas L. Hansberger
Heath B. McLendon Thomas L. Hansberger,
Chairman CFA, CIC
Chairman and Chief
Executive Officer
Hansberger Global
Investors, Inc.
November 15, 1999
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Smith Barney Hansberger Funds 1
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Smith Barney Hansberger Global Value Fund
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Performance Update
For the period ended October 31, 1999, the Hansberger Global Value Fund's Class
A, Class B and Class L shares (excluding sales charges) had a return of 4.25%,
3.84% and 3.84%, respectively. This is in comparison to the 4.69% return of the
Morgan Stanley Capital International ("MSCI") All-Country World Free Index over
the same period. (The MSCI All-Country World Free Index represents the
performance of 47 markets in both the developed and the emerging markets in
Africa, Asia, Australia, Europe, North America and South America.)
Investment Strategy
Since the Fund began, our investment management team has remained focused on
identifying undervalued companies with favorable long-term earnings prospects.
Our experience suggests to us that fundamentals and valuations are the primary
determinants of stock price performance over the long-term.
Market & Economic Overview
In our view, the principal factors influencing Fund performance during the
period include the recovery in Asia, continued strength in U.S. stocks and a
recovery in commodity-sensitive issues. Improving conditions in Japan's economy
and corporations have proven beneficial to the Fund's performance given the
significant increase in our Japanese exposure during its fiscal year. Corporate
restructuring, most notably in banking, has had the most positive impact on the
Fund's performance. Elsewhere in Asia, stocks responded favorably as risk
premiums declined and earnings began to recover from exceedingly depressed
levels. We have seen improving performance among many of our U.S. commodity-
sensitive and telecommunications holdings; however, the Fund's lack of large-cap
U.S. growth stocks hindered its performance. Although low inflation and low
interest rates continue in the U.S., a modest increase in bond yields did put a
temporary damper on markets during the third quarter of 1999.
Portfolio Update
Our strategy continues to focus on investment opportunities at the company level
where stock prices are trading below what we think are their intrinsic values.
The ideas generated by our analysis have led us to gradually increase our
exposure in Japan, to maintain a meaningful overweight position elsewhere in
Asia, and to remain significantly underweighted in the U.S. Our European
exposure has been relatively modest given more attractive opportunities
elsewhere.
Our domestic-oriented focus in Japan contributed favorably to performance,
particularly as merger and acquisition ("M&A") activities increased in the
banking industry. Several of the Fund's Japanese financial stocks have directly
or indirectly been involved in this M&A activity. Dai-Ichi Kangyo Banks, Daiwa
Securities, Nippon Fire & Marine Insurance, Sumitomo Trust, and Toyo Trust are
all actively participating in this M&A activity. Performance was also favorably
influenced by positions in Hitachi, NEC and NTT Docomo, to name but a few. Our
previously established positions throughout the smaller Asian markets
contributed to the Fund's gains as well during the period.
Given the magnitude of the earnings upgrades and our long-term earnings forecast
for these stocks, we
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2 1999 Semi-Annual Report to Shareholders
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are committed to our overweight position in other select Asian company stocks.
