<PAGE>
SMITH BARNEY
PREMIER SELECTIONS
LARGE CAP FUND
PREMIER SELECTIONS SERIES | SEMI-ANNUAL REPORT | OCTOBER 31, 2000
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
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NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
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<PAGE>
[PHOTOS]
ALAN BLAKE AND
FRANCES ROOT
Portfolio Managers
[GRAPHIC] Premier Selections Series
Semi-Annual Report . October 31, 2000
SMITH BARNEY PREMIER
SELECTIONS LARGE CAP FUND
ALAN J. BLAKE
Alan Blake has more than 22 years experience and has managed the Portfolio since
its inception in 1999.
Education: BS from Lehigh University, MS from the State University of New York.
FRANCES A. ROOT, CFA
Frances Root has more than 20 years experience and has managed the Portfolio
since its inception in 1999.
Education: BA from Sweet Briar College.
FUND OBJECTIVE
The Portfolio seeks long-term capital growth by investing in companies with
large market capitalizations--those with total market capitalizations of $5
billion or more at the time of investment. The Portfolio's holdings will be
comprised of stocks of approximately 40 companies. The Portfolio's strategy is
to combine the efforts of two segment managers with different styles (value and
growth) and to invest in the stock selections considered most attractive in the
opinion of each segment manager.
FUND FACTS
FUND INCEPTION
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August 31, 1999
MANAGER TENURE
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Since Inception
MANAGER INVESTMENT INDUSTRY EXPERIENCE
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22 Years (Alan Blake)
20 Years (Frances Root)
CLASS A CLASS B CLASS L
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NASDAQ SPSAX SPSBX SPSLX
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INCEPTION 8/31/99 8/31/99 8/31/99
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Average Annual Total Returns as of October 31, 2000
Without Sales Charges(1)
Class A Class B Class L
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Six-Month+ 0.16% (0.24)% (0.24)%
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Since Inception+++ 7.16 6.34 6.34
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With Sales Charges(2)
Class A Class B Class L
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Six-Month+ (4.85)% (5.23)% (2.20)%
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Since Inception+++ 2.56 2.95 5.39
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(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to Class
B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase . Thereafter,
the CDSC declines by 1.00% per year until no CDSC is incurred. Class L
shares also reflect the deduction of a 1.00% CDSC which applies if shares
are redeemed within the first year of purchase.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception date for Class A, B and L shares is August 31, 1999.
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What's Inside
Your Investment in the Smith Barney
Premier Selections Large Cap Fund ..........................................1
A Message from the Chairman ...................................................2
Fund at a Glance ..............................................................3
Letter from the Portfolio Managers ............................................4
Historical Performance ........................................................8
Growth of $10,000 .............................................................9
Schedule of Investments ......................................................10
Statement of Assets and Liabilities ..........................................12
Statement of Operations ......................................................13
Statements of Changes in Net Assets ..........................................14
Notes to Financial Statements ................................................15
Financial Highlights .........................................................19
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
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Investment Products: Not FDIC Insured . Not Bank Guaranteed . May Lose Value
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<PAGE>
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YOUR INVESTMENT IN THE SMITH BARNEY PREMIER SELECTIONS
LARGE CAP FUND
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Portfolio manager Alan Blake focuses on identifying those high-quality,
large-company growth stocks and portfolio manager Frances Root focuses on
selecting established companies with compelling valuations. The result is a
portfolio of approximately 40 of their best stock ideas. Your investment in the
Smith Barney Premier Selections Large Cap Fund represents an opportunity for
you, the serious investor, to invest in dynamic, large-cap growth and value
companies.
[GRAPHIC] Quality Companies Positioned for the Long Term
Alan and Frances look to identify large-capitalized companies
that they believe offer the strongest potential for substantial,
long-term capital appreciation. Both Alan and Frances focus on
the "best ideas" from their senior growth and value teams, and
manage them as a concentrated portfolio.
[GRAPHIC] Leadership in Both Growth and Value Disciplines
Your investment in the Portfolio offers you the opportunity to
participate in some of the major companies across the large-
capitalization spectrum: growth stocks--those companies that have
exhibited higher-than average gains in earnings--and value
stocks--those companies that are undervalued by the market or out
of favor with investors. Historically, the stock market has
favored growth and value investment approaches at different
times. Therefore, an investment approach combining growth and
value may be a prudent way to expand your large cap stock
opportunities.
[GRAPHIC] The "Best of the Best"--the Premier Selections Series
The Premier Selections Series is a selection of Smith Barney
mutual funds showcasing our best investment ideas managed by
our most experienced and proven managers. This series of funds is
built on a unique strategy of combining complimentary investment
management styles to create broader, multi-class and multi-cap
options that are distinguished by a highly concentrated focus.
[GRAPHIC] A Distinguished History of Managing Your Serious Money
Founded in 1873 and 1892, respectively, the firms of Charles D.
Barney and Edward B. Smith were among the earliest providers of
securities information, research and transactions. Merged in
1937, Smith Barney & Co. offered its clients a powerful,
blue-chip investment capability able to provide timely
information, advice and insightful asset management. Today, SSB
Citi Fund Management LLC ("SSB Citi") unites the distinguished
history of Smith Barney with the unparalleled global reach of its
parent, Citigroup.
At SSB Citi, you gain access to blue-chip management delivered
professionally. We are proud to offer you, the serious investor,
a variety of managed solutions.
1 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
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A MESSAGE FROM THE CHAIRMAN
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[PHOTO]
HEATH B. MCLENDON
CHAIRMAN
---------------------
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $398. 6 billion in assets under management,
/1/ SSB Citi Fund Management LLC ("SSB Citi") offers choices and solutions,
uniting the distinguished history of Smith Barney with the unparalleled global
reach of its parent, Citigroup.
The Smith Barney family of funds represents a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney mutual funds and the investment professionals who manage them.
The Smith Barney Premier Selections Large Cap Fund ("Portfolio") seeks long-term
capital growth by investing primarily in large capitalization companies. The
Portfolio focuses on the "best ideas" of two of our most distinguished
managers--Alan Blake and Frances Root. Alan and Frances employ classic growth
and value investment styles, respectively, in order to maintain a concentrated
portfolio of about 40 stocks (i.e., 20 growth/20 value) that they believe may
offer superior total return potential./2/
Growth manager Alan Blake seeks to invest in high-quality, large company growth
stocks that are global in scope with superior balance sheets and have long-term,
consistent operating histories and exceptional management. Value manager Frances
Root seeks to buy established companies paying dividends or companies with a
three year average free cash flow at or above the market.
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
November 27, 2000
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1 As of October 31, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
2 Please note investing in a non-diversified fund may entail greater risk
than is normally associated with more widely diversified funds.
2 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
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Smith Barney Premier Selections Large Cap Fund at a Glance
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Top Ten Holdings+*
1. Pfizer Inc. ........................................................... 4.3%
2. Kimberly-Clark Corp. .................................................. 3.7
3. The Walt Disney Co. ................................................... 3.7
4. Cisco Systems, Inc. ................................................... 3.6
5. Marsh & McLennan Cos., Inc. ........................................... 3.5
6. Exxon Mobil Corp. ..................................................... 3.4
7. SBC Communications Inc. ............................................... 3.4
8. Merrill Lynch & Co., Inc. ............................................. 3.3
9. Mellon Financial Corp. ................................................ 3.1
10. General Electric Co. .................................................. 3.0
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Industry Diversification of Common Stock+* Investment Breakdown++*
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[GRAPH] [GRAPH]
8.2% Consumer Products 0.3% Repurchase Agreement
5.0% Diversified/Conglomerate 99.7% Common Stock
6.4% Entertainment & Leisure
16.3% Financial Services
12.2% Health Care/Drugs/Hospital Supplies
7.5% Insurance
10.5% Oil & Gas
10.9% Technology
6.8% Telecommunications
16.2% Other
+ As a percentage of total common stock.
++ As a percentage of total investments.
* All information is as of October 31, 2000. Please note that the Portfolio's
holdings are subject to change.
3 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
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Dear Shareholder,
We are pleased to provide the semi-annual report for the Smith Barney Premier
Selections Large Cap Fund ("Portfolio") for the period ended October 31, 2000.
In this report we have summarized the period's prevailing economic and market
conditions and outlined our investment strategy. A detailed summary of the
Portfolio's performance can be found in the appropriate sections that follow. We
hope that you find this report to be useful and informative.
Performance Update
For the six months ended October 31, 2000, the Portfolio's Class A shares,
without and with sales charges, returned 0.16% and a negative 4.85%,
respectively. In comparison, the Russell 1000 Index ("Russell 1000")/1/ returned
a negative 0.60% for the same period.
Investment Objective
The Portfolio's investment strategy is to combine two complementary, but
different investment styles (value and growth) and to invest in what we believe
are the most attractive stocks. Our value discipline seeks to identify companies
whose stock prices do not currently reflect the underlying value of corporate
assets or earnings potential. Factors such as price-to-earnings/2/ and
price-to-sales/3/ ratios, among others, are used to target stocks selling at a
discount to their underlying intrinsic value. Our growth discipline seeks to
identify companies that have an anticipated above-average rate of earnings
growth.
The Portfolio invests in established, large-capitalized companies, many of which
are dominant in their respective sector globally as well as domestically. The
Portfolio seeks to build a portfolio based on our best stock-picking ideas,
companies that we believe offer superior total return potential over time.
Within the large-cap universe, we look for world-class companies that possess
industry dominance, innovation and offer top products and services. We believe
our investment process enables our shareholders to participate in a concentrated
portfolio of quality, larger-capitalization growth and value companies.
In the growth style portion of the portfolio, we emphasize individual security
selection. We specifically consider large-capitalization companies that have
above-average growth prospects, technological innovation, industry dominance,
competitive products and services, high return on capital and an overall strong
financial condition.
In the value portion of the portfolio, we search for undervalued stocks of
established, well-recognized but temporarily out-of-favor companies. We
specifically consider companies that have low market valuations as measured by
our valuation models, above-market dividend yields and established dividend
records, positive changes in earnings prospects, improving returns on invested
capital, cash flow and liquidity.
Please note that investing in a non-diversified fund such as the Smith Barney
Premier Selections Large Cap Fund that may invest in the securities of only 40
companies may entail greater risk than is normally associated with more widely
diversified funds.
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1 The Russell 1000 measures the performance of the 1,000 largest companies in
the Russell 3000 Index, which represents approximately 92% of the total
market capitalization of the Russell 3000 Index. Please note an investor
cannot invest directly in an index.
2 Price of a stock divided by its earnings per share.
3 Price of a stock dividend by current revenue per share (adjusted for stock
splits). Revenue per share is determined by dividing revenue for past 12
months by the number of shares outstanding.
4 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
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Market Update and Outlook
After four consecutive years of greater than 20% gains, the major stock market
indices entered the final quarter of the year with a reasonable chance of
registering among the weakest annual returns for each major index since 1991.
While many investors have gained comfort that monetary policymakers may have
finished tightening rates for a while, we believe interest rate fears have
been displaced by uncertainty about global and domestic growth next year,
profits becoming scarcer and energy prices remaining at high levels far longer
than currently assumed.
As a result, earnings sustainability in the face of a cooling economy has become
an issue after several companies pre-announced third quarter earnings which
fell below analyst expectations. The variety of hurdles include moderating
global growth, negative currency effects, and higher costs of doing business
related to energy, wages, and interest rates. Such operational challenges seem
unlikely to be quickly resolved and therefore have generally colored our outlook
and investment strategy in the intermediate term.
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OUR VALUE DISCIPLINE SEEKS TO IDENTIFY
COMPANIES WHOSE STOCK PRICES DO NOT
CURRENTLY REFLECT THE UNDERLYING VALUE OF
CORPORATE ASSETS OR EARNINGS POTENTIAL.
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Considering estimates of growth in corporate profits for next year that may
range from 6% to 8% versus the 14% to 16% expected gains in 2000, we believe
identifying companies with attractive valuations and sustainable earnings will
become a harder task with respect to the Portfolio's holdings. If the recent
flood of profit warnings is a sign of what lies ahead, many stocks with high
earnings visibility are likely to gain favor while those with high expectations
and decelerating growth may be good candidates for underperformance. As cyclical
challenges continue frustrating earnings beyond simply the industrial sector, we
suspect many investors may continue showing more discernment of stocks with
extreme valuations and the appeal of companies with solid earnings growth.
We believe the wildcard in the economic outlook relates to oil prices and
whether Middle East tensions can be resolved without supply disruptions.
Clearly, any resolution removing the threat of an "oil shock" would be favorable
for the stock market, as aside from energy, inflation remains benign. From these
levels we believe stocks can advance against the anticipated backdrop of
moderating yet solid economic growth, slowing but respectable profits and stable
to declining interest rates.
Large Cap Value
For our view about recent market conditions and how it relates to the
Portfolio's growth holdings, please refer to the section "Large Cap Growth" for
more information.
Although global growth is expected to cool, we think investing in companies with
international franchises leveraged to grow in new markets remains a sound
investment theme. As earnings growth becomes more difficult to find, we expect
companies that we own in the portfolio leveraged to the price of oil should
continue to show relatively solid earnings visibility and the potential for
upward revisions.
In anticipation of strengthening global growth we raised our exposure to
international oil companies over a year ago. The subsequent tripling in the
price of crude oil since early 1999, when a barrel of it sold for just $12, led
to exceptional earnings gains across the industry and steady positive earnings
revisions as oil prices eventually settled into a range below present levels but
higher than prices currently found in most earnings estimates.
5 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
Communications companies are well represented in the Portfolio's value holdings
and we remain optimistic that companies in this sector should be able to
successfully shift their revenue and earnings mix away from traditional markets
toward faster growing products that may potentially create value over time.
Moreover, accelerating demand for broadband connections, data services and
wireless usage should ultimately drive faster earnings growth for companies that
are able to skillfully manage their evolution.
Notably, during the period we maintained the greatest exposure to regional bell
operating companies (RBOCs) relative to the hyper competitive consumer long
distance segment of the industry. In our opinion, the RBOCs should be able to
generate relatively strong earnings growth with potential upside as they enter
deregulated markets, attract new customers from existing providers and faster
growing revenues become a larger part of their overall business mix.
Our outlook for certain segments of the financial services industry remains
favorable. We have selectively increased our exposure to the sector in the value
portion of the Portfolio's holdings throughout the year. Domestic and
international trends driving demand for retirement products, improving domestic
pricing for property and casualty insurers and the steady evolution of more
robust capital markets abroad should drive above-average revenue and earnings
growth for well-positioned banks, insurers and securities brokerage companies.
------------------------------------------------------
IN ANTICIPATION OF STRENGTHENING GLOBAL
GROWTH WE RAISED OUR EXPOSURE TO
INTERNATIONAL OIL COMPANIES OVER A YEAR AGO.
THE SUBSEQUENT TRIPLING IN THE PRICE OF CRUDE
OIL SINCE EARLY 1999, WHEN A BARREL OF IT SOLD
FOR JUST $ 12, LED TO EXCEPTIONAL EARNINGS
GAINS ACROSS THE INDUSTRY.
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Large Cap Growth
At the risk of stating the obvious, the historic levels of volatility that the
U.S. financial markets experienced so far in 2000 continued to affect several
market sectors during the period. Largely the result of the technology sector's
performance and unusual levels of speculative investing, we believe general
activity in large capitalization growth stocks reflects a natural breather for
the asset class. These difficult conditions, in turn, demonstrate the necessity
of favorable stock selection. We believe the corporate earnings outlook may be
the single most important factor in determining the behavior of
large-capitalization growth stocks; consequently, we tend to view short-term
political and economic events as background noise and remain more firmly
committed than ever in our long-term focus of investing in companies with strong
balance sheets, excellent products and experienced management.
6 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
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IF THE RECENT FLOOD OF PROFIT WARNINGS IS A
SIGN OF WHAT LIES AHEAD, MANY STOCKS WITH
HIGH EARNINGS VISIBILITY ARE LIKELY TO GAIN
FAVOR WHILE THOSE WITH HIGH EXPECTATIONS
AND DECELERATING GROWTH MAY BE GOOD
CANDIDATES FOR UNDERPERFORMANCE.
------------------------------------------------------
At the Portfolio's inception in August 1999, we stated that our emphasis was to
invest in companies that can, over time, deliver above-average unit growth in a
low inflation environment. Our focus has remained constant: to seek to invest in
promising companies with the financial strength to raise dividends where
applicable, buy back shares and make strategic acquisitions.
Thank you for your investment in the Smith Barney Premier Selections Large Cap
Fund. We look forward to continuing to help you pursue your financial goals in
the future.
Sincerely,
/s/ Alan J. Blake /s/ Frances A. Root
Alan J. Blake Frances A. Root
Vice President and Vice President and
Investment Officer Investment Officer
November 27, 2000
The information provided in this letter represents the opinion of the managers
and is not intended to be a forecast of future events, a guarantee of future
results nor investment advice. Further, there is no assurance that certain
securities will remain in or out of the Portfolio. Please refer to pages 10 and
11 for a list and percentage breakdown of the Portfolio's holdings. Also, please
note any discussion of the Portfolio's holdings is as of October 31, 2000 and is
subject to change.
7 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
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Historical Performance -- Class A Shares
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<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return+/(1)/
==================================================================================================
<S> <C> <C> <C> <C> <C>
10/31/00 $12.34 $12.36 $0.00 $0.00 0.16%
--------------------------------------------------------------------------------------------------
Inception* -- 4/30/00 11.40 12.34 0.00 0.00 8.25
==================================================================================================
Total $0.00 $0.00
==================================================================================================
--------------------------------------------------------------------------------------------------
Historical Performance -- Class B Shares
--------------------------------------------------------------------------------------------------
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return+/(1)/
==================================================================================================
<S> <C> <C> <C> <C> <C>
10/31/00 $12.28 $12.25 $0.00 $0.00 (0.24)%
--------------------------------------------------------------------------------------------------
Inception* -- 4/30/00 11.40 12.28 0.00 0.00 7.72
==================================================================================================
Total $0.00 $0.00
==================================================================================================
--------------------------------------------------------------------------------------------------
Historical Performance -- Class L Shares
--------------------------------------------------------------------------------------------------
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return+/(1)/
==================================================================================================
<S> <C> <C> <C> <C> <C>
10/31/00 $12.28 $12.25 $0.00 $0.00 (0.24)%
--------------------------------------------------------------------------------------------------
Inception*-- 4/30/00 11.40 12.28 0.00 0.00 7.72
==================================================================================================
Total $0.00 $0.00
==================================================================================================
</TABLE>
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Average Annual Total Returns
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Without Sales Charges/(1)/
------------------------------------
Class A Class B Class L
===========================================================================
Six Months Ended 10/31/00+ 0.16% (0.24)% (0.24)%
---------------------------------------------------------------------------
Year Ended 10/31/00 9.28 8.50 8.50
---------------------------------------------------------------------------
Inception* through 10/31/00 7.16 6.34 6.34
===========================================================================
With Sales Charges/(2)/
------------------------------------
Class A Class B Class L
===========================================================================
Six Months Ended 10/31/00+ (4.85)% (5.23)% (2.20)%
---------------------------------------------------------------------------
Year Ended 10/31/00 3.78 3.50 6.46
---------------------------------------------------------------------------
Inception* through 10/31/00 2.56 2.95 5.39
===========================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase. Thereafter,
the CDSC declines by 1.00% per year until no CDSC is incurred. Class L
shares also reflect the deduction of a 1.00% CDSC which applies if shares
are redeemed within the first year of purchase.
* Inception date for Class A, B and L shares is August 31, 1999.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
8 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
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Historical Performance (unaudited)
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Growth of $10,000 Invested in Class A, B and L Shares of the
Smith Barney Premier Selections Large Cap Fund vs. Russell 1000 Index+
--------------------------------------------------------------------------------
August 1999 -- October 2000
[GRAPH]
<TABLE>
<CAPTION>
Smith Barney Smith Barney Smith Barney
Premier Selections\ Premiere Selections\ Premier Selections\
Large Cap Fund Large Cap Fund Large Cap Fund
-- Class A Shares -- Class B Shares -- Class L Shares Russell 1000 Index
<S> <C> <C> <C> <C>
8/31/99 9,500 10,000 9,896 10,000
Oct-99 9,425 9,408 9,702 10,379
Jan-00 10,108 10,105 10,395 10,826
Apr-00 10,283 10,272 10,560 11,388
Jul-00 9,933 9,877 10,169 11,187
10/31/00 10,300 10,346 10,634 11,522
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A, B and L shares on
August 31, 1999 (inception date), assuming deduction of the maximum 5.00%
and 1.00% sales charge at the time of investment for Class A and L shares,
respectively; and the deduction of the maximum 5.00% and 1.00% CDSC for
Class B and L shares, respectively. It also assumes reinvestment of
dividends and capital gains, if any, at net asset value through October 31,
2000. The Russell 1000 Index is a capitalization weighted total return
index which is comprised of 1,000 of some of the larger-capitalized
U.S.-domiciled companies whose common stock is traded in the United States
on the New York Stock Exchange, American Stock Exchange and Nasdaq. This
Index is unmanaged and is not subject to the same management and trading
expenses as a mutual fund. An investor cannot invest directly in an index.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
--------------------------------------------------------------------------------
Cumulative Total Returns
--------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 10/31/00) 8.42%
--------------------------------------------------------------------------------
Class B (Inception* through 10/31/00) 7.46
--------------------------------------------------------------------------------
Class L (Inception* through 10/31/00) 7.46
--------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
* Inception date for Class A, B and L shares is August 31, 1999.
9 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) October 31, 2000
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SHARES SECURITY VALUE
================================================================================
COMMON STOCK -- 99.7%
Aluminum -- 1.9%
475,000 Alcoa Inc. $ 13,626,562
--------------------------------------------------------------------------------
Beverage -- 3.0%
359,700 The Coca-Cola Co. 21,716,887
--------------------------------------------------------------------------------
Chemical -- 1.7%
400,000 The Dow Chemical Co. 12,250,000
--------------------------------------------------------------------------------
Computer Software -- 2.8%
197,800 Microsoft Corp.* 13,623,475
811,100 Novell, Inc.* 7,299,900
--------------------------------------------------------------------------------
20,923,375
--------------------------------------------------------------------------------
Consumer Products -- 8.2%
467,800 The Gillette Co. 16,314,525
410,000 Kimberly-Clark Corp. 27,060,000
210,000 Wm. Wrigley Jr. Co. 16,629,375
--------------------------------------------------------------------------------
60,003,900
--------------------------------------------------------------------------------
Diversified/Conglomerate -- 5.0%
400,000 General Electric Co. 21,925,000
232,000 McGraw-Hill Co., Inc. 14,891,500
--------------------------------------------------------------------------------
36,816,500
--------------------------------------------------------------------------------
Entertainment & Leisure -- 6.4%
391,400 America Online, Inc.* 19,738,302
750,000 The Walt Disney Co. 26,859,375
--------------------------------------------------------------------------------
46,597,677
--------------------------------------------------------------------------------
Financial Services -- 16.3%
200,000 Bank of America Corp. 9,612,500
480,000 The Chase Manhattan Corp. 21,840,000
200,000 Fannie Mae 15,400,000
195,000 Marsh & McLennan Cos., Inc. 25,496,250
475,000 Mellon Financial Corp. 22,918,750
340,000 Merrill Lynch & Co., Inc. 23,800,000
--------------------------------------------------------------------------------
119,067,500
--------------------------------------------------------------------------------
Health Care/Drugs/Hospital Supplies -- 12.2%
320,000 Bristol-Myers Squibb Co. 19,500,000
187,500 Eli Lilly & Co. 16,757,812
239,300 Merck & Co., Inc. 21,522,044
727,000 Pfizer Inc. 31,397,312
--------------------------------------------------------------------------------
89,177,168
--------------------------------------------------------------------------------
Insurance -- 7.5%
200,000 American International Group, Inc. 19,600,000
250 Berkshire Hathaway Inc., Class A Shares* 15,925,000
230,000 The Chubb Corp. 19,420,625
--------------------------------------------------------------------------------
54,945,625
--------------------------------------------------------------------------------
Machinery/Industrial -- 2.6%
350,000 Honeywell International Inc. 18,834,375
--------------------------------------------------------------------------------
See Notes to Financial Statements.
10 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
==========================================================================================================================
<S> <C> <C>
Office Equipment & Supplies -- 1.6%
395,000 Pitney Bowes Inc. $ 11,726,563
--------------------------------------------------------------------------------------------------------------------------
Oil & Gas -- 10.5%
350,000 BP Amoco PLC ADR 17,828,125
251,500 El Paso Energy Corp. 15,765,906
275,000 Exxon Mobil Corp. 24,526,563
450,000 The Williams Cos., Inc. 18,815,625
--------------------------------------------------------------------------------------------------------------------------
76,936,219
--------------------------------------------------------------------------------------------------------------------------
Paper -- 1.7%
335,000 International Paper Co. 12,269,375
--------------------------------------------------------------------------------------------------------------------------
Retail -- 0.7%
150,000 Amazon.com, Inc. 5,493,750
--------------------------------------------------------------------------------------------------------------------------
Technology -- 10.8%
484,400 Cisco Systems, Inc.* 26,097,050
446,200 Intel Corp. 20,079,000
545,400 Motorola, Inc. 13,600,913
402,000 Texas Instruments Inc. 19,723,125
--------------------------------------------------------------------------------------------------------------------------
79,500,088
--------------------------------------------------------------------------------------------------------------------------
Telecommunications -- 6.8%
400,000 AT&T Corp. 9,275,000
330,000 BellSouth Corp. 15,943,125
425,000 SBC Communications Inc. 24,517,188
--------------------------------------------------------------------------------------------------------------------------
49,735,313
--------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $681,757,557) 729,620,877
==========================================================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
==========================================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT -- 0.3%
$2,075,000 Morgan Stanley Dean Witter & Co., 6.500% due 11/1/00; Proceeds at maturity -- $2,075,375;
(Fully collateralized by U.S. Treasury Notes, 4.750% to 7.875% due 2/28/03 to 11/15/04;
Market value -- $2,126,801) (Cost -- $2,075,000) 2,075,000
==========================================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $683,832,557**) $731,695,877
==========================================================================================================================
</TABLE>
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
11 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $683,832,557) $731,695,877
Cash 276
Receivable for Fund shares sold 216,723
Dividends and interest receivable 856,563
------------------------------------------------------------------------------------------
Total Assets 732,769,439
------------------------------------------------------------------------------------------
LIABILITIES:
Investment advisory fees payable 457,553
Distribution fees payable 191,931
Payable for Fund shares purchased 31,588
Accrued expenses 56,151
------------------------------------------------------------------------------------------
Total Liabilities 737,223
------------------------------------------------------------------------------------------
Total Net Assets $732,032,216
==========================================================================================
NET ASSETS:
Par value of capital shares $ 59,620
Capital paid in excess of par value 675,306,165
Accumulated net investment loss (1,487,622)
Accumulated net realized gain from security transactions 10,290,733
Net unrealized appreciation of investments 47,863,320
------------------------------------------------------------------------------------------
Total Net Assets $732,032,216
==========================================================================================
Shares Outstanding:
Class A 12,779,842
---------------------------------------------------------------------------------------
Class B 26,850,379
---------------------------------------------------------------------------------------
Class L 19,989,700
---------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $12.36
---------------------------------------------------------------------------------------
Class B * $12.25
---------------------------------------------------------------------------------------
Class L ** $12.25
---------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $13.01
---------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $12.37
==========================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from initial purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
12 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 4,891,181
Interest 188,595
Less: Foreign withholding tax (23,100)
-----------------------------------------------------------------------------------------------
Total Investment Income 5,056,676
-----------------------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 2) 3,180,199
Investment advisory fees (Note 2) 2,846,509
Shareholder and system servicing fees 378,523
Registration fees 50,958
Shareholder communications 31,339
Trustees' fees 20,384
Custody 16,511
Audit and legal 14,268
Other 5,607
----------------------------------------------------------------------------------------------
Total Expenses 6,544,298
----------------------------------------------------------------------------------------------
Net Investment Loss (1,487,622)
----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized Gain From Security Transactions (excluding short-term securities):
Proceeds from sales 87,952,145
Cost of securities sold 83,234,959
----------------------------------------------------------------------------------------------
Net Realized Gain 4,717,186
----------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 53,271,735
End of period 47,863,320
----------------------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (5,408,415)
----------------------------------------------------------------------------------------------
Net Loss on Investments (691,229)
----------------------------------------------------------------------------------------------
Decrease in Net Assets From Operations $(2,178,851)
==============================================================================================
</TABLE>
See Notes to Financial Statements.
13 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Six Months Ended October 31, 2000 (unaudited)
and the Period Ended April 30, 2000(a)
<TABLE>
<CAPTION>
October 31 April 30
===============================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment loss $ (1,487,622) $ (1,569,592)
Net realized gain 4,717,186 7,143,139
Increase (decrease) in net unrealized appreciation (5,408,415) 53,271,735
---------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (2,178,851) 58,845,282
---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- --
---------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions To Shareholders -- --
---------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 33,241,211 828,612,712
Net asset value of shares issued for reinvestment of dividends -- --
Cost of shares reacquired (82,907,727) (103,580,411)
---------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Fund Share Transactions (49,666,516) 725,032,301
---------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (51,845,367) 783,877,583
NET ASSETS:
Beginning of period 783,877,583 --
---------------------------------------------------------------------------------------------------------------
End of period* $ 732,032,216 $ 783,877,583
===============================================================================================================
* Includes accumulated net investment loss of: $(1,487,622) --
===============================================================================================================
</TABLE>
(a) For the period from August 31, 1999 (commencement of operations) to April
30, 2000.
See Notes to Financial Statements.
14 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Premier Selections Large Cap Fund ("Portfolio"), formerly known
as Smith Barney Premier Selections Fund, a separate investment portfolio of the
Smith Barney Investment Funds, Inc. ("Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company. The Fund consists of
this Portfolio and ten other separate investment portfolios: Smith Barney
Investment Grade Bond Fund, Smith Barney Government Securities Fund, Smith
Barney Small Cap Growth Fund, Smith Barney Peachtree Growth Fund (formerly
known as Concert Peachtree Growth Fund), Smith Barney Hansberger Global Value
Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith Barney Small
Cap Value Fund, Smith Barney Premier Selections All Cap Growth Fund, Smith
Barney Premier Selections Global Growth Fund and Smith Barney Group Spectrum
Fund. The financial statements and financial highlights for the other portfolios
are presented in separate shareholder reports.
The significant accounting policies consistently followed by the Portfolio are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on such markets
or, in the absence of sales, at the mean between the closing bid and asked
prices; over-the-counter securities are valued at the mean between the bid and
asked prices. Investments in securities for which market quotations are not
available are valued at fair value as determined in good faith by the Board of
Directors; (c) securities maturing within 60 days are valued at cost plus
accreted discount, or minus amortized premium, which approximates value; (d)
dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) direct expenses are
charged to each class; investment advisory fees and general Portfolio expenses
are allocated on the basis of relative net assets by class; (g) dividends and
distributions to shareholders are recorded on the ex-dividend date; (h) the
Portfolio intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; (i) the character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles. At
April 30, 2000, reclassifications were made to the capital accounts of the
Portfolio to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Net investment income,
net realized gains and net assets were not affected by this change; and (j)
estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ.
2. Investment Advisory Agreement and Other Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment adviser to the Portfolio. The Portfolio pays
SSBC an advisory fee calculated at an annual rate of 0.75% of the average daily
net assets. This fee is calculated daily and paid monthly.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Portfolio's transfer agent and PFPC Global Fund Services ("PFPC") acts as
the Portfolio's sub-transfer agent. CFTC receives account fees and asset-based
fees that vary according to the size and type of account. PFPC is responsible
for shareholder recordkeeping and financial processing for all shareholder
accounts and is paid by CFTC. During the six months ended October 31, 2000, the
Portfolio paid transfer agent fees of $35,081 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, acts as the Portfolio's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Portfolio's agency
transactions. Certain other broker-dealers, continue to sell Portfolio shares to
the public as members of the selling group.
15 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
SSB acts as the primary broker for its portfolio agency transactions. For the
six months ended October 31, 2000, SSB received brokerage commissions of $6,930.
There are maximum initial sales charges of 5.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
5.00% on Class B shares, which applies if redemption occurs within one year from
initial purchase and declines thereafter by 1.00% per year until no CDSC is
incurred. Class L shares also have a 1.00% CDSC, which applies if redemption
occurs within the first year of purchase. In certain cases, Class A shares have
a 1.00% CDSC, which applies if redemption occurs within the first year of
purchase. This CDSC only applies to those purchases of Class A shares, which,
when combined with current holdings of Class A shares, equal or exceed
$1,000,000 in the aggregate. These purchases do not incur an initial sales
charge.
For the six months ended October 31, 2000, SSB and CFBDS received sales charges
of $130,000 and $147,000 on sales of the Portfolio's Class A and L shares,
respectively. In addition, CDSCs paid to SSB were approximately:
Class A Class B Class L
================================================================================
CDSCs $16,000 $535,000 $77,000
================================================================================
Pursuant to a Distribution Plan, the Portfolio pays a service fee with respect
to its Class A, B and L shares calculated at the annual rate of 0.25% of the
average daily net assets of each respective class. The Portfolio also pays a
distribution fee with respect to Class B and L shares calculated at the annual
rate of 0.75% of the average daily net assets of each class, respectively. For
the six months ended October 31, 2000, total Distribution Plan fees were as
follows:
Class A Class B Class L
================================================================================
Distribution Plan Fees $205,048 $1,694,291 $1,280,860
================================================================================
All officers and one Director of the Fund are employees of SSB.
3. Investments
During the six months ended October 31, 2000, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $49,207,596
--------------------------------------------------------------------------------
Sales 87,952,145
================================================================================
At October 31, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $116,903,071
Gross unrealized depreciation (69,039,751)
--------------------------------------------------------------------------------
Net unrealized appreciation $47,863,320
================================================================================
4. Repurchase Agreements
The Portfolio purchases (and its custodian takes possession of) U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day),
at an agreed-upon higher repurchase price. The Portfolio requires continual
maintenance of the market value (plus accrued interest) of the collateral in
amounts at least equal to the repurchase price.
5. Reverse Repurchase Agreements
The Portfolio may enter into reverse repurchase agreement transactions for
leveraging purposes. A reverse repurchase agreement involves a sale by the
Portfolio of securities that it holds with an agreement by the Portfolio to
repurchase the same securities at an agreed upon price and date. A reverse
repurchase agreement involves the risk that the market value of the securities
sold by the Portfolio may decline below the repurchase price of the securities.
The Portfolio will establish a segregated account with its custodian, in which
the Portfolio will maintain cash, U.S. government securities or other liquid
high grade debt obligations equal in value to its obligations with respect to
reverse repurchase agreements.
During the six months ended October 31, 2000, the Portfolio did not enter into
any reverse repurchase agreement transactions.
16 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are received or made and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Portfolio records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract. The Portfolio enters
into such contracts to hedge a portion of its portfolio. The Portfolio bears the
market risk that arises from changes in the value of the financial instruments
and securities indices (futures contracts) and the credit risk should a
counterparty fail to perform under such contracts.
At October 31, 2000, the Portfolio had no open futures contracts.
7. Lending of Portfolio Securities
The Portfolio has an agreement with its custodian whereby the custodian may lend
securities owned by the Portfolio to brokers, dealers and other financial
organizations. Fees earned by the Portfolio on securities lending are recorded
as interest income. Loans of securities by the Portfolio are collateralized by
cash, U.S. government securities or high quality money market instruments that
are maintained at all times in an amount at least equal to the current market
value of the loaned securities, plus a margin which may vary depending on the
type of securities loaned. The custodian establishes and maintains the
collateral in a segregated account. The Portfolio maintains exposure for the
risk of any losses in the investment of amounts received as collateral.
At October 31, 2000, the Portfolio had no securities on loan.
8. Option Contracts
Premiums paid when call options are purchased by the Portfolio represent
investments which are marked-to-market daily. When a purchased option expires,
the Portfolio will realize a loss in the amount of the premium paid. When the
Portfolio enters into a closing sales transaction, the Portfolio will realize a
gain or loss depending on whether the proceeds from the closing sales
transactions are greater or less than the premium paid for the option. When the
Portfolio exercises a call option, the cost of the security which the Portfolio
purchases upon exercise will be increased by the premium originally paid.
At October 31, 2000, the Portfolio held no purchased call or put option
contracts.
When a Portfolio writes a call option, an amount equal to the premium received
by the Portfolio is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Portfolio realizes a
gain equal to the amount of the premium received. When the Portfolio enters into
a closing purchase transaction, the Portfolio realizes a gain or loss depending
upon whether the cost of the closing transaction is greater or less than the
premium originally received without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a call option is exercised the proceeds of the security sold will be
increased by the premium originally received.
The risk associated with purchasing options is limited to the premium originally
paid. The Portfolio enters into options for hedging purposes. The risk in
writing a call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price.
During the six months ended October 31, 2000, the Portfolio did not enter into
any written covered call or put option contracts.
9. Capital Shares
At October 31, 2000, the Fund had 10 billion shares of capital stock authorized
with a par value of $0.001 per share. The
17 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
Portfolio has the ability to issue multiple classes of shares. Each share of a
class represents an identical interest and has the same rights, except that each
class bears certain expenses, including those specifically related to the
distribution of its shares.
At October 31, 2000, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $144,063,622 $304,566,745 $226,735,418
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Period Ended
October 31, 2000 April 30, 2000*
----------------------------- --------------------------------
Shares Amount Shares Amount
=============================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 568,537 $ 6,890,728 16,500,035 $ 188,811,411
Shares reacquired (1,733,809) (20,976,066) (2,554,921) (30,662,451)
---------------------------------------------------------------------------------------------
Net Increase (Decrease) (1,165,272) $ (14,085,338) 13,945,114 $ 158,148,960
=============================================================================================
Class B
Shares sold 907,174 $ 10,920,897 31,829,233 $ 364,003,931
Shares reacquired (2,471,952) (29,657,306) (3,414,076) (40,700,777)
---------------------------------------------------------------------------------------------
Net Increase (Decrease) (1,564,778) $ (18,736,409) 28,415,157 $ 323,303,154
=============================================================================================
Class L
Shares sold 1,280,322 $ 15,429,586 24,095,584 $ 275,797,370
Shares reacquired (2,683,996) (32,274,355) (2,702,210) (32,217,183)
---------------------------------------------------------------------------------------------
Net Increase (Decrease) (1,403,674) $ (16,844,769) 21,393,374 $ 243,580,187
=============================================================================================
</TABLE>
* For the period from August 31, 1999 (inception date) to April 30, 2000.
18 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout the period
ended April 30, except where noted:
Class A Shares 2000/(1)//(2)/ 2000/(2)//(3)/
================================================================================
Net Asset Value, Beginning of Period $12.34 $11.40
--------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.01 0.02
Net realized and unrealized gain 0.01 0.92
--------------------------------------------------------------------------------
Total Income From Operations 0.02 0.94
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
--------------------------------------------------------------------------------
Total Distributions -- --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $12.36 $12.34
--------------------------------------------------------------------------------
Total Return++ 0.16% 8.25%
--------------------------------------------------------------------------------
Net Assets, End of Period (000s) $158,022 $172,141
--------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 1.14% 1.17%
Net investment income 0.22 0.29
--------------------------------------------------------------------------------
Portfolio Turnover Rate 7% 15%
================================================================================
Class B Shares 2000/(1)//(2)/ 2000/(2)//(3)/
================================================================================
Net Asset Value, Beginning of Period $12.28 $11.40
--------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.03) (0.04)
Net realized and unrealized gain 0.00* 0.92
--------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.03) 0.88
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
--------------------------------------------------------------------------------
Total Distributions -- --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $12.25 $12.28
--------------------------------------------------------------------------------
Total Return++ (0.24)% 7.72%
--------------------------------------------------------------------------------
Net Assets, End of Period (000s) $329,040 $348,987
--------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 1.91% 1.94%
Net investment loss (0.56) (0.48)
--------------------------------------------------------------------------------
Portfolio Turnover Rate 7% 15%
================================================================================
(1) For the six months ended October 31, 2000 (unaudited).
(2) Per share amounts have been calculated using the average shares method.
(3) For the period from August 31, 1999 (inception date) to April 30, 2000.
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
19 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout the period
ended April 30, except where noted:
Class L Shares 2000/(1)//(2)/ 2000/(2)//(3)/
================================================================================
Net Asset Value, Beginning of Period $12.28 $11.40
--------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.03) (0.04)
Net realized and unrealized gain 0.00* 0.92
--------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.03) 0.88
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
--------------------------------------------------------------------------------
Total Distributions -- --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $12.25 $12.28
--------------------------------------------------------------------------------
Total Return++ (0.24)% 7.72%
--------------------------------------------------------------------------------
Net Assets, End of Period (000s) $244,970 $262,750
--------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 1.91% 1.93%
Net investment loss (0.56) (0.48)
--------------------------------------------------------------------------------
Portfolio Turnover Rate 7% 15%
================================================================================
(1) For the six months ended October 31, 2000 (unaudited).
(2) Per share amounts have been calculated using the average shares method.
(3) For the period from August 31, 1999 (inception date) to April 30, 2000.
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
20 Smith Barney Premier Selections Large Cap Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
SMITH BARNEY
PREMIER SELECTIONS LARGE CAP FUND
TRUSTEES INVESTMENT ADVISER
Paul R. Ades SSB Citi Fund Management LLC
Herbert Barg
Dwight B. Crane DISTRIBUTOR
Frank Hubbard Salomon Smith Barney Inc.
Heath B. McLendon, Chairman
Jerome Miller
Ken Miller CUSTODIAN
PFPC Trust Company
OFFICERS TRANSFER AGENT
Heath B. McLendon Citi Fiduciary Trust Company
President and 125 Broad Street, 11th Floor
Chief Executive Officer New York, New York 10004
Lewis E. Daidone SUB-TRANSFER AGENT
Senior Vice President PFPC Global Fund Services
and Treasurer P.O. Box 9699
Providence, Rhode Island
Alan J. Blake 02940-9699
Vice President and
Investment Officer
Frances A. Root
Vice President and
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
<PAGE>
Smith Barney Premier Selections Large Cap Fund
--------------------------------------------------------------------------------
This report is submitted for the general information of shareholders of Smith
Barney Premier Selections Large Cap Fund, but it may also be used as sales
literature when proceeded or accompanied by the current Prospectus, which gives
details about charges, expenses, investment objectives and operating policies of
the Fund. If used as sales material after January 31, 2001, this report must be
accompanied by performance information for the most recently completed calendar
quarter.
SMITH BARNEY PREMIER SELECTIONS LARGE CAP FUND
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
For complete information on any Smith Barney Mutual Funds, including management
fees and expenses, call or write your financial professional for a free
prospectus. Read it carefully before you invest or send money.
www.smithbarney.com/mutualfunds
[LOGO OF SALOMON SMITH BARNEY]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
FD01760 12/00
<PAGE>
--------------------------------------------------------------------------------
SMITH BARNEY
PREMIER SELECTIONS
ALL CAP GROWTH FUND
--------------------------------------------------------------------------------
PREMIER SELECTIONS SERIES | SEMI-ANNUAL REPORT | OCTOBER 31, 2000
[LOGO OF SMITH BARNEY]
--------------------------------------------------------------------------------
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
--------------------------------------------------------------------------------
<PAGE>
[PHOTO OF ALAN BLAKE, LARRY WEISSMAN, AND TIM WOODS]
ALAN BLAKE, LARRY
WEISSMAN, TIM WOODS
Portfolio Managers
[GRAPHIC]
Premier Selections Series
Semi-Annual Report . October 31, 2000
SMITH BARNEY PREMIER
SELECTIONS ALL CAP GROWTH FUND
--------------------------------------------------------------------------------
ALAN BLAKE
--------------------------------------------------------------------------------
Alan Blake has more than 22 years of securities business experience.
Education: BS from Lehigh University, MS from the State University of New York.
--------------------------------------------------------------------------------
LARRY WEISSMAN
--------------------------------------------------------------------------------
Larry Weissman, CFA, has more than 16 years of securities business experience.
Education: BS in Economics from Cornell University, MBA in Finance from Columbia
University.
--------------------------------------------------------------------------------
TIM WOODS
--------------------------------------------------------------------------------
Tim Woods, CFA, has more than 15 years of securities business experience.
Education: BS in Accounting from Florida A&M, MBA in Finance from University of
Pennsylvania's Wharton School of Business.
--------------------------------------------------------------------------------
FUND OBJECTIVE
--------------------------------------------------------------------------------
The Portfolio seeks long-term capital growth by investing in three different
areas: large cap growth stocks, mid cap growth stocks and small cap growth
stocks.
--------------------------------------------------------------------------------
FUND FACTS
--------------------------------------------------------------------------------
FUND INCEPTION
--------------------------------------------------------------------------------
June 30, 2000
MANAGER TENURE
--------------------------------------------------------------------------------
Since Inception
MANAGER INVESTMENT
INDUSTRY EXPERIENCE
--------------------------------------------------------------------------------
22 Years (Alan Blake)
16 Years (Larry Weissman)
15 Years (Tim Woods)
CLASS A CLASS B CLASS L
--------------------------------------------------------------------------------
NASDAQ SPAAX SPBBX SPBLX
--------------------------------------------------------------------------------
INCEPTION 6/30/00 6/30/00 6/30/00
--------------------------------------------------------------------------------
Average Annual Total Returns as of October 31, 2000
Without Sales Charges(1)
Class A Class B Class L
--------------------------------------------------------------------------------
Since Inception+++ (3.07)% (3.25)% (3.25)%
--------------------------------------------------------------------------------
With Sales Charges(2)
Class A Class B Class L
--------------------------------------------------------------------------------
Since Inception+++ (7.92)% (8.08)% (5.21)%
--------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of all applicable
sales charges with respect to Class A and L shares of the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum sales charge of 5.00% and 1.00%, respectively; and
Class B shares reflect the deduction of a 5.00% CDSC, which applies if
shares are redeemed within one year from initial purchase. Thereafter, this
CDSC declines by 1.00% per year until no CDSC is incurred. Class L shares
also reflect the deduction of a 1.00% CDSC, which applies if shares are
redeemed within the first year of purchase.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Inception date for Class A, B and L shares is June 30, 2000.
++ Total return is not annualized,as it may not be representative of the total
return for the year.
--------------------------------------------------------------------------------
What's Inside
Your Investment in the Smith Barney
Premier Selections All Cap Growth Fund ...................................1
A Message from the Chairman ...................................................2
Fund at a Glance ..............................................................3
Letter from the Portfolio Managers ............................................4
This is the Story of The Three Bulls ..........................................7
Historical Performance ........................................................8
Schedule of Investments .......................................................9
Statement of Assets and Liabilities ..........................................12
Statement of Operations ......................................................13
Statement of Changes in Net Assets ...........................................14
Notes to Financial Statements ................................................15
Financial Highlights .........................................................19
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
--------------------------------------------------------------------------------
Investment Products: Not FDIC Insured . Not Bank Guaranteed . May Lose Value
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
YOUR INVESTMENT IN THE SMITH BARNEY PREMIER SELECTIONS
ALL CAP GROWTH FUND
--------------------------------------------------------------------------------
Portfolio managers Alan Blake, Larry Weissman and Tim Woods bring their
experience of identifying quality companies in the small-, mid- and large-cap
areas of the market into one portfolio. Your investment in the All Cap Growth
Fund represents an opportunity for you, the serious investor, to take advantage
of the potential growth of companies of all sizes across a wide range of
industries.
[GRAPHIC]
Potential for Rapid Earnings Growth
Alan, Larry and Tim seek to identify what they deem to be dynamic businesses
with the capability for above-average growth in industries poised for long-term
success. Alan, Larry and Tim look to invest in companies that are leaders in
their industries with superior financials and sound management teams.
[GRAPHIC]
Three Equity Strategies in One Fund
The combination of Alan, Larry and Tim's investment styles in one fund offers
investors the advantages of investing in companies of all sizes in select
industries and businesses. Together, Alan, Larry and Tim have created a
portfolio that they believe may be well positioned with solid long-term capital
growth potential.
[GRAPHIC]
The "Best of the Best"--the Premier Selections Series
The Premier Selections Series is a selection of Smith Barney mutual funds
showcasing our best investment ideas managed by our most experienced and proven
managers. This series of funds is built on a unique strategy of combining
complementary investment management styles to create broader, multi-class and
multi-cap options.
[GRAPHIC]
A Distinguished History of Managing Your Serious Money
Founded in 1873 and 1892, respectively, the firms of Charles D. Barney and
Edward B. Smith were among the earliest providers of securities information,
research and transactions. Merged in 1937, Smith Barney & Co. offered its
clients a powerful, blue-chip investment capability able to provide timely
information, advice and insightful asset management. Today, SSB Citi Fund
Management LLC ("SSB Citi") unites the distinguished history of Smith Barney
with the unparalleled global reach of its parent, Citigroup.
At SSB Citi, you gain access to blue-chip management delivered professionally.
We are proud to offer you, the serious investor, a variety of managed solutions.
1 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
A MESSAGE FROM THE CHAIRMAN
--------------------------------------------------------------------------------
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $398.6 billion in assets under management,/1/
SSB Citi Fund Management LLC ("SSB Citi") offers choices and solutions, uniting
the distinguished history of Smith Barney with the unparalleled global reach of
its parent, Citigroup.
The Smith Barney family of funds represents a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney mutual funds and the investment professionals who manage them.
[PHOTO OF HEATH B. MCLENDON]
HEATH B. MCLENDON
CHAIRMAN
-----------------
The Smith Barney Premier Selections All Cap Growth Fund ("Portfolio") combines
the complimentary strategies of three of our top growth managers--Alan Blake,
Larry Weissman and Tim Woods. The Portfolio seeks long-term capital growth by
investing in potentially some of today's most promising companies. Their
investments run the gamut from companies in their early stages of development
(small- and mid-caps)/2/ to more established companies in their respective
markets (large-caps).
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
November 28, 2000
---------
/1/ As of October 31, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
---------
/2/ Please note that investments in securities of smaller, less-known companies
may be more volatile than those of larger companies.
2 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Smith Barney Premier Selections All Cap Growth Fund at a Glance
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Industry Diversification of Common Stock+*
--------------------------------------------------------------------------------
[GRAPH]
12.1% Computer Software
5.3% Diversified/Conglomerate
8.0% Electronics
5.3% Entertainment & Leisure
6.5% Financial Services
12.2% Health Care/Drugs/Hospital Supplies
6.3% Retail
8.9% Technology
6.8% Telecommunications
28.6% Other
--------------------------------------------------------------------------------
Investment Breakdown++*
--------------------------------------------------------------------------------
[GRAPH]
1.3% Repurchase Agreement
98.7% Common Stock
+ As a percentage of total common stock.
++ As a percentage of total investments.
* All information is as of October 31, 2000. Please note that the Portfolio's
holdings are subject to change.
3 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
Dear Shareholder,
We are pleased to present the first shareholder report for the Smith Barney
Premier Selections All Cap Growth Fund ("Portfolio") for the period from June
30, 2000 (commencement of operations) through October 31, 2000. In this report
we have summarized the period's prevailing economic and market conditions and
outlined our investment strategy. A detailed summary of the Portfolio's
performance can be found in the appropriate sections that follow. We hope you
find this report to be useful and informative.
Performance Update
For the period since the Portfolio's inception, the Portfolio's Class A shares,
without and with sales charges, reported negative total returns of 3.07% and
7.92%, respectively. In comparison, the Russell 1000 Growth Index ("Russell 1000
Growth"),/1/ the Standard & Poor's MidCap 400 Index ("S&P MidCap 400")/2/ and
the Russell 2000 Growth Index ("Russell 2000 Growth")3 returned a negative
9.86%, 8.34% and a negative 11.77%, respectively, for the same period.
Investment Strategy
The Portfolio seeks long-term capital growth by investing in three different
areas of the market: large-cap growth, mid-cap growth and small-cap growth.
Large-Cap Growth
The large-cap growth portion of the Portfolio invests primarily in stocks of
companies that possess a market capitalization within the market capitalization
range of companies in the Russell 1000 Growth at the time of investment.
We look to invest in a core group of large-capitalization growth stocks that
share a number of characteristics. Chief among them are strong financials (i.e.,
consistent and sustainable earnings growth, significant free cash flow and very
high returns on equity), companies delivering world-class products or services
into the global marketplace, dominant companies within growth industries where
we think the barriers to entry are extremely high and companies with strong
management teams. In our view, strong management is just as important as a
company's financial condition or the quality of its products or services.
Mid-Cap Growth
The mid-cap growth portion of the Portfolio looks to invest primarily in equity
securities that possess a market capitalization within the market capitalization
range of companies in the S&P MidCap 400 at the time of investment.
We look to invest in mid-cap stocks that offer significant competitive
advantages in the marketplace. In our view, many of these companies are leaders
in their respective fields and are poised to take advantage of their leadership
position. We also look for consistent growth, products with leadership
positions, strong management, positive cash flow and high return on equity as
factors in determining whether to invest in a prospective company.
Small-Cap Growth
The small-cap growth portion of the Portfolio looks to invest primarily in stock
of companies that possess a market capitalization within the market
capitalization range of companies in the Russell 2000 Growth at the time of
investment.
---------
/1/ The Russell 1000 Growth measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth
values. (A price-to-book ratio is the price of a stock compared to the
difference between a company's assets and liabilities.) Please note an
investor cannot invest directly in an index.
/2/ The S&P MidCap 400 is a market-value weighted index, consisting of 400
domestic stocks chosen for market size liquidity and industry group
representation. Please note an investor cannot invest directly in an index.
/3/ The Russell 2000 Growth measures the performance of those Russell 2000
companies with higher price-to-book ratios and higher forecasted growth
values. (A price-to-book ratio is the price of a stock compared to the
difference between a company's assets and liabilities.) Please note an
investor cannot invest directly in an index.
4 Smith Barney Premier Selections All Cap Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
We utilize a bottom-up/4/ investment strategy to target relatively unknown and
financially sound companies that, we believe, demonstrate the potential to
possibly become large and more mature mid-cap companies. Elements of our method
include fundamental research, evaluation of key management and screening
techniques. In selecting individual stocks some of the things we look for are
entrepreneurial managements that are committed to long-term growth, positive
historical sales and earnings growth and product and services that may give the
company a competitive advantage.
Market Overview
In our view, the broad markets recent lackluster performance relative to
previous periods is due to increased competitive pressures, higher energy
prices, a strong dollar and slowing consumer spending.
After four consecutive years of greater than 20% gains, the major stock market
indices entered the final quarter of the year with a reasonable chance of
registering among the weakest annual returns for each major index since 1991.
While many investors have gained comfort that monetary policymakers may have
finished tightening rates for awhile, we believe interest rate fears have been
displaced by uncertainty about global and domestic growth next year, profits
becoming scarcer and energy prices remaining at high levels far longer than
currently assumed.
--------------------------------------------------------------------------------
AS A RESULT, EARNINGS SUSTAINABILITY IN THE FACE OF A COOLING ECONOMY HAS BECOME
AN ISSUE AFTER SEVERAL COMPANIES PRE-ANNOUNCED AHEAD OF THE THIRD QUARTER
EARNINGS SEASON. THE VARIETY OF HURDLES INCLUDE MODERATING GLOBAL GROWTH,
NEGATIVE CURRENCY EFFECTS, AND HIGHER COSTS OF DOING BUSINESS RELATED TO ENERGY,
WAGES, AND INTEREST RATES. SUCH OPERATIONAL CHALLENGES SEEM UNLIKELY TO BE
QUICKLY RESOLVED AND THEREFORE HAVE GENERALLY COLORED OUR OUTLOOK AND
INVESTMENT STRATEGY IN THE INTERMEDIATE TERM.
--------------------------------------------------------------------------------
Considering estimates of growth in corporate profits for next year that may
range from 6% to 8% versus the 14% to 16% expected gains in 2000, we believe
identifying companies with attractive valuations and sustainable earnings may
become a harder task with respect to the Portfolio's holdings. If the recent
flood of profit warnings is a sign of what lies ahead, many stocks with high
earnings visibility are likely to gain favor while those with high expectations
and decelerating growth may be good candidates for underperformance. As cyclical
challenges continue frustrating earnings beyond simply the industrial sector, we
suspect many investors may continue showing more discernment of stocks with
extreme valuations and the appeal of companies with solid earnings growth.
We continue to believe that going forward many investors may be looking towards
the growth sector of the market for companies that demonstrate strong sales and
earnings growth. In light of favorable growth valuations and economic
fundamentals, we remain confident that there still is further upside potential
in the growth sector of the market. In our opinion, investors may continue to
focus on companies that demonstrate growth at what they deem to be reasonable
valuations relative to the overall market. (Of course, there are no guarantees
that our expectations will be met.)
---------
/4/ Bottom-up investing is a search for outstanding performance of individual
stocks before considering the impact of economic trends.
5 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
Thank you for your investment in the Smith Barney Premier Selections All Cap
Growth Fund. We look forward to continuing to help you pursue your financial
goals in the future.
Sincerely,
/s/ Alan J. Blake
Alan J. Blake
Vice President and
Investment Officer
/s/ Lawrence Weissman
Lawrence Weissman, CFA
Vice President and
Investment Officer
/s/ Timothy Woods
Timothy Woods, CFA
Vice President and
Investment Officer
November 28, 2000
The information provided in this letter represents the opinion of the managers
and is not intended to be a forecast of future events, a guarantee of future
results nor investment advice. Further, there is no assurance that certain
securities will remain in or out of the Portfolio. Please refer to pages 9
through 11 for a list and percentage breakdown of the Portfolio's holdings.
Also, please note any discussion of the Portfolio's holdings is as of October
31, 2000 and is subject to change.
6 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
Portfolio managers Alan Blake, Larry Weissman and Tim Woods as featured in our
new national advertising campaign appearing in The Wall Street Journal, Barron's
and The New York Times.
[PHOTO OF ALAN BLAKE, LARRY WEISSMAN, AND TIM WOODS]
LARGE CAP MID CAP SMALL CAP
ALAN BLAKE LARRY WEISSMAN TIM WOODS
--------------------------------------------------------------------------------
THIS IS THE STORY OF
THE
THREE BULLS.
--------------------------------------------------------------------------------
SMITH BARNEY PREMIER SELECTIONS ALL CAP GROWTH FUND
While many fund managers search for companies that are not too big or not too
small, these three bulls believe a growth strategy is unlimited by market
capitalization. In our Premier Selections All Cap Growth Fund, managers Tim
Woods, Larry Weissman and Alan Blake join forces to create a selective but
wide-ranging portfolio: innovative small caps, franchise-building mid caps and
large caps benefiting from globalization. With 52 years of combined experience,
these managers know that the bigger your universe, the more opportunity you're
likely to find in it. The Premier Selections Series--learn more about it. Call
us at 1-888-SEROUS, ext. 1776 or visit us at www.smithbarney.com/mutualfunds for
a free prospectus. The prospectus contains more information, including fees and
expenses. Please read it carefully before you invest or send money. The
securities of smaller, lesser-known companies may be more volatile than those of
larger companies. Also, investments in foreign securities involve greater risks
than U.S. investments.
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
1-888-SERIOUS, EXT. 1776 OR WWW.SMITHBARNEY.COM/MUTUALFUNDS
--------------------------------------------------------------------------------
Investment Products: Not FDIC Insured . Not Bank Guaranteed . May Lose Value
--------------------------------------------------------------------------------
60598 10/00
(C)2000 SALOMON SMITH BARNEY INC. MEMBER NASD, SIPC. YOUR SERIOUS MONEY.
PROFESSIONALLY MANAGED. IS A SERVICE MARK OF SALOMON SMITH BARNEY INC.
7 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Historical Performance -- Class A Shares
--------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return(1)
================================================================================
Inception*-- 10/31/00 $11.40 $11.05 $0.00 $0.00 (3.07)%+
================================================================================
--------------------------------------------------------------------------------
Historical Performance -- Class B Shares
--------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return(1)
================================================================================
Inception*-- 10/31/00 $11.40 $11.03 $0.00 $0.00 (3.25)%+
================================================================================
--------------------------------------------------------------------------------
Historical Performance -- Class L Shares
--------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return(1)
================================================================================
Inception*-- 10/31/00 $11.40 $11.03 $0.00 $0.00 (3.25)%+
================================================================================
--------------------------------------------------------------------------------
Average Annual Total Returns+
--------------------------------------------------------------------------------
Without Sales Charges(1)
---------------------------------
Class A Class B Class L
================================================================================
Inception* through 10/31/00 (3.07)% (3.25)% (3.25)%
================================================================================
With Sales Charges(2)
---------------------------------
Class A Class B Class L
================================================================================
Inception* through 10/31/00 (7.92)% (8.08)% (5.21)%
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase. Thereafter,
the CDSC declines by 1.00% per year until no CDSC is incurred. Class L
shares also reflect the deduction of a 1.00% CDSC which applies if shares
are redeemed within the first year of purchase.
* Inception date for Class A, B and L shares is June 30, 2000.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
8 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) October 31, 2000
--------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
COMMON STOCK -- 98.7%
Automotive -- 1.1%
152,000 Harley-Davidson, Inc. $ 7,324,500
--------------------------------------------------------------------------------
Beverage -- 4.0%
300,000 The Coca-Cola Co. 18,112,500
251,250 The Pepsi Bottling Group, Inc. 8,699,531
--------------------------------------------------------------------------------
26,812,031
--------------------------------------------------------------------------------
Biomedical/Genetics -- 4.8%
97,800 Affymetrix, Inc.* 5,415,675
200,000 Amgen Inc.* 11,587,500
82,800 Cytyc Corp.* 4,916,250
82,400 Medarex, Inc.* 5,036,700
44,700 Myriad Genetics, Inc. 5,364,000
--------------------------------------------------------------------------------
32,320,125
--------------------------------------------------------------------------------
Computer Software -- 12.0%
84,300 Advent Software, Inc.* 5,042,194
164,200 Electronic Arts Inc.* 8,210,000
62,700 Informatica Corp.* 5,925,150
79,200 Interwoven, Inc.* 7,979,400
166,600 J.D. Edwards & Co.* 4,310,775
20,000 Manugistics Group, Inc.* 2,278,750
67,000 Mercury Interactive Corp.* 7,437,000
43,400 Micromuse, Inc.* 7,364,438
250,000 Microsoft Corp.* 17,218,750
54,200 NetIQ Corp.* 4,667,975
91,400 Siebel Systems, Inc.* 9,591,288
--------------------------------------------------------------------------------
80,025,720
--------------------------------------------------------------------------------
Consumer Products -- 3.6%
700,000 The Gillette Co. 24,412,500
--------------------------------------------------------------------------------
Diversified/Conglomerate -- 5.2%
210,000 General Electric Co. 11,510,625
159,480 Keebler Foods Co. 6,458,940
300,000 Tyco International Ltd. 17,006,250
--------------------------------------------------------------------------------
34,975,815
--------------------------------------------------------------------------------
Electronics -- 7.9%
129,095 AES Corp.* 7,293,868
100,000 The Exar Corp.* 4,468,750
131,100 Jabil Circuit, Inc.* 7,480,894
95,256 Maxim Integrated Products, Inc.* 6,316,663
98,900 Micrel, Inc.* 4,475,225
159,276 National Semiconductor Corp.* 4,141,176
20,000 Newport Corp. 2,284,063
73,600 Plexus Corp.* 4,641,400
110,700 Stratos Lightwave, Inc.* 2,926,631
157,600 TranSwitch Corp.* 9,101,400
--------------------------------------------------------------------------------
53,130,070
--------------------------------------------------------------------------------
See Notes to Financial Statements.
9 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Entertainment & Leisure -- 5.2%
310,000 America Online, Inc.* $15,633,300
143,991 IMAX Corp.* 701,956
203,800 Univision Communications Inc., Class A Shares* 7,795,350
300,000 The Walt Disney Co. 10,743,750
--------------------------------------------------------------------------------
34,874,356
--------------------------------------------------------------------------------
Financial Services -- 6.4%
114,190 Ambac Financial Group, Inc. 9,113,789
270,000 Bank One Corp. 9,855,000
48,700 Lehman Brothers Holdings Inc. 3,141,150
150,000 Merrill Lynch & Co., Inc. 10,500,000
200,800 Metris Co., Inc. 6,500,900
34,670 Providian Financial Corp. 3,605,680
--------------------------------------------------------------------------------
42,716,519
--------------------------------------------------------------------------------
Health Care/Drugs/Hospital Supplies -- 12.1%
100,400 Alpharma Inc., Class A Shares 3,896,775
205,400 Amerisource Health Corp., Class A Shares* 8,922,063
125,700 Biovail Corp.* 5,287,256
112,600 Dura Pharmaceuticals, Inc.* 3,877,662
110,000 Johnson & Johnson 10,133,750
200,000 Merck & Co., Inc. 17,987,500
250,000 Pfizer Inc. 10,796,875
74,000 Priority Healthcare Corp., Class B Shares* 3,977,500
72,700 Sepracor Inc.* 4,952,687
135,600 Triad Hospitals, Inc.* 3,762,900
98,800 Trigon Healthcare, Inc.* 7,082,725
--------------------------------------------------------------------------------
80,677,693
--------------------------------------------------------------------------------
Human Resources -- 0.1%
23,200 Administaff, Inc.* 823,600
--------------------------------------------------------------------------------
Insurance -- 4.3%
135,000 American International Group, Inc. 13,230,000
103,382 Arthur J. Gallagher & Co. 6,525,989
113,800 XL Capital Ltd., Class A Shares 8,748,375
--------------------------------------------------------------------------------
28,504,364
--------------------------------------------------------------------------------
Investment Management/Services -- 2.8%
138,200 Eaton Vance Corp. 6,884,088
109,050 FactSet Research Systems Inc. 4,129,724
144,000 Fiserv, Inc.* 7,551,000
--------------------------------------------------------------------------------
18,564,812
--------------------------------------------------------------------------------
Machinery -- 1.6%
120,950 Lexmark International, Inc.* 4,958,950
49,250 SPX Corp. 6,088,531
--------------------------------------------------------------------------------
11,047,481
--------------------------------------------------------------------------------
Marketing/Commercial Services -- 2.1%
154,000 Catalina Marketing Corp.* 6,044,500
177,560 Convergys Corp.* 7,734,957
--------------------------------------------------------------------------------
13,779,457
--------------------------------------------------------------------------------
See Notes to Financial Statements.
10 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Oil & Gas -- 3.9%
102,900 Cooper Cameron Corp.* $ 5,608,050
227,600 Marine Drilling Cos., Inc.* 5,433,950
84,700 Smith International, Inc.* 5,971,350
82,600 Stone Energy Corp.* 4,229,120
239,300 UIT Energy Corp.* 4,800,956
--------------------------------------------------------------------------------
26,043,426
--------------------------------------------------------------------------------
Retail -- 6.2%
400,000 Amazon.com, Inc.* 14,650,000
116,600 Best Buy Co., Inc.* 5,851,863
300,000 The Home Depot, Inc. 12,900,000
103,100 The Talbots, Inc. 8,151,344
--------------------------------------------------------------------------------
41,553,207
--------------------------------------------------------------------------------
Technology -- 8.7%
180,000 Cisco Systems, Inc.* 9,697,500
300,000 Intel Corp. 13,500,000
450,000 Motorola, Inc. 11,221,875
195,600 Symbol Technologies, Inc. 8,887,575
310,000 Texas Instruments Inc. 15,209,375
--------------------------------------------------------------------------------
58,516,325
--------------------------------------------------------------------------------
Telecommunications -- 6.7%
204,550 ADC Telecommunications, Inc.* 4,372,256
73,300 Aeroflex Inc.* 4,361,350
58,200 Amdocs Ltd.* 3,772,087
39,800 Anaren Microwave, Inc.* 4,139,200
85,900 AudioCodes Ltd.* 3,398,418
82,600 Comverse Technology, Inc.* 9,230,550
97,200 MRV Communications, Inc.* 3,839,400
84,700 Natural MicroSystems Corp.* 3,827,381
62,601 Time Warner Telecom Inc., Class A Shares* 3,732,585
43,300 Tollgrade Communications, Inc.* 4,145,975
--------------------------------------------------------------------------------
44,819,202
--------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- 660,738,332) 660,921,203
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
REPURCHASE AGREEMENT -- 1.3%
$8,674,000 J.P. Morgan Securities, Inc., 6.550% due 11/1/00;
Proceeds at maturity -- $8,675,578; (Fully
collateralized by U.S. Treasury Notes & Bonds,
4.500% to 9.375% due 1/31/01 to 2/15/29;
Market value -- $8,847,496) (Cost -- $8,674,000) 8,674,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $669,412,332**) $669,595,203
================================================================================
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
11 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) October 31, 2000
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $669,412,332) $669,595,203
Cash 436
Receivable for Fund shares sold 1,486,049
Dividends and interest receivable 142,250
--------------------------------------------------------------------------------
Total Assets 671,223,938
--------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 2,114,204
Investment advisory fees payable 441,625
Distribution fees payable 215,595
Accrued expenses 289,195
--------------------------------------------------------------------------------
Total Liabilities 3,060,619
--------------------------------------------------------------------------------
Total Net Assets $668,163,319
================================================================================
NET ASSETS:
Par value of capital shares $ 60,587
Capital paid in excess of par value 692,776,681
Accumulated net investment loss (2,462,589)
Accumulated net realized loss from security transactions (22,394,231)
Net unrealized appreciation of investments 182,871
--------------------------------------------------------------------------------
Total Net Assets $668,163,319
================================================================================
Shares Outstanding:
Class A 4,854,260
------------------------------------------------------------------------------
Class B 8,245,708
------------------------------------------------------------------------------
Class L 47,486,727
------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $11.05
------------------------------------------------------------------------------
Class B * $11.03
------------------------------------------------------------------------------
Class L ** $11.03
------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $11.63
------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $11.14
================================================================================
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from initial purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within one year from initial purchase.
See Notes to Financial Statements.
12 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Period Ended October 31, 2000(a)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 695,260
Interest 959,844
--------------------------------------------------------------------------------
Total Investment Income 1,655,104
--------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 2) 2,055,055
Investment advisory fees (Note 2) 1,627,544
Shareholder and system servicing fees 203,874
Registration fees 141,675
Shareholder communications 36,987
Custody 18,353
Directors' fees 16,205
Audit and legal 15,300
Other 2,700
--------------------------------------------------------------------------------
Total Expenses 4,117,693
--------------------------------------------------------------------------------
Net Investment Loss (2,462,589)
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 66,557,669
Cost of securities sold 88,951,900
--------------------------------------------------------------------------------
Net Realized Loss (22,394,231)
--------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period --
End of period 182,871
--------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 182,871
--------------------------------------------------------------------------------
Net Loss on Investments (22,211,360)
--------------------------------------------------------------------------------
Decrease in Net Assets From Operations $(24,673,949)
================================================================================
(a) For the period from June 30, 2000 (commencement of operations) to October
31, 2000.
See Notes to Financial Statements.
13 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (unaudited)
For the Period Ended October 31, 2000(a)
--------------------------------------------------------------------------------
OPERATIONS:
Net investment loss $ (2,462,589)
Net realized loss (22,394,231)
Increase in net unrealized appreciation 182,871
--------------------------------------------------------------------------------
Decrease in Net Assets From Operations (24,673,949)
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains --
--------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders --
--------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 721,741,735
Net asset value of shares issued for reinvestment of dividends --
Cost of shares reacquired (28,904,467)
--------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 692,837,268
--------------------------------------------------------------------------------
Increase in Net Assets 668,163,319
NET ASSETS:
Beginning of period --
--------------------------------------------------------------------------------
End of period* $668,163,319
================================================================================
* Includes accumulated net investment loss of: $ (2,462,589)
================================================================================
(a) For the period from June 30, 2000 (commencement of operations) to October
31, 2000.
See Notes to Financial Statements.
14 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Premier Selections All Cap Growth Fund ("Portfolio"), a
separate investment fund of the Smith Barney Investment Funds, Inc. ("Fund"), a
Maryland corporation, is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management investment company. The
Fund consists of this Portfolio and ten other separate investment portfolios:
Smith Barney Investment Grade Bond Fund, Smith Barney Government Securities
Fund, Smith Barney Small Cap Growth Fund, Smith Barney Peachtree Growth Fund,
(formerly known as Concert Peachtree Growth Fund), Smith Barney Hansberger
Global Value Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith
Barney Premier Selections Large Cap Fund, (formerly known as Smith Barney
Premier Selections Fund), Smith Barney Small Cap Value Fund, Smith Barney
Premier Selections Global Growth Fund and Smith Barney Group Spectrum Fund. The
financial statements and financial highlights for the other portfolios are
presented in separate shareholder reports.
The significant accounting policies consistently followed by the Portfolio are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on such markets
or, in the absence of sales, at the mean between the closing bid and asked
prices; over-the-counter securities are valued at the mean between the bid and
asked prices. Investments in securities for which market quotations are not
available are valued at fair value as determined in good faith by the Board of
Directors; (c) securities maturing within 60 days are valued at cost plus
accreted discount, or minus amortized premium, which approximates value; (d)
dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) direct expenses are
charged to each class; investment advisory fees and general Portfolio expenses
are allocated on the basis of relative net assets by class; (g) dividends and
distributions to shareholders are recorded on the ex-dividend date; (h) the
Portfolio intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; (i) the character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles; and
(j) estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ.
2. Investment Advisory Agreement and Other Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment advisor to the Portfolio. The Portfolio pays
SSBC an advisory fee calculated at an annual rate of 0.75% of the average daily
net assets. This fee is calculated daily and paid monthly.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts
as the Portfolio's transfer agent and PFPC Global Fund Services ("PFPC") acts as
the Portfolio's sub-transfer agent. CFTC receives fees and asset-based fees that
vary according to the account size and type of account. PFPC is responsible for
shareholder recordkeeping and financial processing for all shareholder accounts
and is paid by CFTC. For the period ended October 31, 2000, the Portfolio paid
transfer agent fees of $204,383 to CFTC.
Salomon Smith Barney Inc. ("SSB"), another subsidiary of SSBH, acts as the
Portfolio's distributor. In addition, SSB acts as the primary broker for its
Portfolio's agency transactions. Certain other broker-dealers, continue to sell
Portfolio shares to the public as a member of the selling group. For the period
ended October 31, 2000, SSB received total brokerage commissions of $33,611.
There are maximum initial sales charges of 5.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
5.00% on Class B shares, which applies if redemption occurs within one year from
15 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
initial purchase and declines thereafter by 1.00% per year until no CDSC is
incurred. Class L shares also have a 1.00% CDSC, which applies if redemption
occurs within the first year of purchase.
For the period ended October 31, 2000, SSB received sales charges of $1,137,000
and $833,000 on sales of the Portfolio's Class A and L shares, respectively. In
addition, CDSCs paid to SSB were approximately:
Class B Class L
================================================================================
CDSCs $35,000 $65,000
================================================================================
Pursuant to a Distribution Plan, the Portfolio pays a service fee with respect
to its Class A, B and L shares calculated at the annual rate of 0.25% of the
average daily net assets of each respective class. The Portfolio also pays a
distribution fee with respect to Class B and L shares calculated at the annual
rate of 0.75% of the average daily net assets of each class, respectively. For
the period ended October 31, 2000, total Distribution Plan fees were as follows:
Class A Class B Class L
================================================================================
Distribution Plan Fees $40,138 $263,728 $1,751,189
================================================================================
All officers and one Director of the Fund are employees of SSB.
3. Investments
During the period ended October 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $749,690,231
--------------------------------------------------------------------------------
Sales 66,557,669
================================================================================
At October 31, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 63,258,421
Gross unrealized depreciation (63,075,550)
--------------------------------------------------------------------------------
Net unrealized appreciation $ 182,871
================================================================================
4. Repurchase Agreements
The Portfolio purchases (and its custodian takes possession of) U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day),
at an agreed-upon higher repurchase price.The Portfolio requires continual
maintenance of the market value of the collateral (plus accrued interest) in
amounts at least equal to the repurchase price.
5. Reverse Repurchase Agreements
The Portfolio may enter into reverse repurchase agreement transactions for
leveraging purposes. A reverse repurchase agreement involves a sale by the
Portfolio of securities that it holds with an agreement by the Portfolio to
repurchase the same securities at an agreed upon price and date. A reverse
repurchase agreement involves the risk that the market value of the securities
sold by the Portfolio may decline below the repurchase price of the securities.
The Portfolio will establish a segregated account with its custodian, in which
the Portfolio will maintain cash, U.S. government securities or other liquid
high grade debt obligations equal in value to its obligations with respect to
reverse repurchase agreements.
During the period ended October 31, 2000, the Portfolio did not enter into any
reverse repurchase agreement transactions.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are
recognized as assets. Securities equal to the initial margin amount are
segregated by the custodian in the name of the broker. Additional securities are
also segregated up to the current market value of the futures contracts. During
the period the futures contract is open, changes in the value of the contract
are recognized as unrealized gains or losses by "marking-to-market" on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments are received or made and recog-
16 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
nized as assets due from or liabilities due to broker, depending upon whether
unrealized gains or losses are incurred. When the contract is closed, the
Portfolio records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transactions and the Portfolio's basis in
the contract. The Portfolio enters into such contracts to hedge a portion of its
portfolio. The Portfolio bears the market risk that arises from changes in the
value of the financial instruments and securities indices (futures contracts)
and the credit risk should a counterparty fail to perform under such
contracts.
At October 31, 2000, the Portfolio did not have any open futures contracts.
7. Lending of Portfolio Securities
The Portfolio has an agreement with its custodian whereby the custodian may lend
securities owned by the Portfolio to brokers, dealers and other financial
organizations. Fees earned by the Portfolio on securities lending are recorded
as interest income. Loans of securities by the Portfolio are collateralized by
cash, U.S. government securities or high quality money market instruments that
are maintained at all times in an amount at least equal to the current market
value of the loaned securities, plus a margin which may vary depending on the
type of securities loaned. The custodian establishes and maintains the
collateral in a segregated account. The Portfolio maintains exposure for the
risk of any losses in the investment of amounts received as collateral.
At October 31, 2000, the Portfolio did not have any securities on loan.
8. Option Contracts
Premiums paid when call options are purchased by the Portfolio represent
investments which are marked-to-market daily. When a purchased option expires,
the Fund will realize a loss in the amount of the premium paid. When the
Portfolio enters into a closing sales transaction, the Portfolio will realize a
gain or loss depending on whether the proceeds from the closing sales
transactions are greater or less than the premium paid for the option. When the
Portfolio exercises a call option, the cost of the security which the Portfolio
purchases upon exercise will be increased by the premium originally paid.
At October 31, 2000, the Portfolio held no purchased call or put option
contracts.
When a Portfolio writes a call option, an amount equal to the premium received
by the Portfolio is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Portfolio realizes a
gain equal to the amount of the premium received. When the Portfolio enters into
a closing purchase transaction, the Portfolio realizes a gain or loss
depending upon whether the cost of the closing transaction is greater or less
than the premium originally received without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
eliminated. When a call option is exercised the proceeds of the security sold
will be increased by the premium originally received.
The risk associated with purchasing options is limited to the premium originally
paid. The Portfolio enters into options for hedging purposes. The risk in
writing a call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price.
During the period ended October 31, 2000, the Portfolio did not enter into any
written covered call or put option contracts.
9. Capital Shares
At October 31, 2000, the Fund had 10 billion shares of capital stock authorized
with a par value of $0.001 per share. The Portfolio has the ability to issue
multiple classes of shares. Each share of a class represents an identical
interest and has the same rights, except that each class bears certain expenses,
including those specifically related to the distribution of its shares.
17 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
At October 31, 2000, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $55,683,543 $94,692,467 $542,461,258
================================================================================
Transactions in shares of each class were as follows:
Period Ended
October 31, 2000*
-------------------------------
Shares Amount
================================================================================
Class A
Shares sold 6,102,586 $ 69,897,661
Shares issued on reinvestment -- --
Shares reacquired (1,248,326) (14,214,118)
--------------------------------------------------------------------------------
Net Increase 4,854,260 $ 55,683,543
================================================================================
Class B
Shares sold 8,371,749 $ 96,114,922
Shares issued on reinvestment -- --
Shares reacquired (126,041) (1,422,455)
--------------------------------------------------------------------------------
Net Increase 8,245,708 $ 94,692,467
================================================================================
Class L
Shares sold 48,648,634 $555,729,152
Shares issued on reinvestment -- --
Shares reacquired (1,161,907) (13,267,894)
--------------------------------------------------------------------------------
Net Increase 47,486,727 $542,461,258
================================================================================
* For the period from June 30, 2000 (inception date) to October 31, 2000.
18 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout the period:
<TABLE>
<CAPTION>
Class A(1)(2) Class B(1)(2) Class L(1)(2)
===================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $11.40 $11.40 $11.40
-----------------------------------------------------------------------------------
Loss From Operations:
Net investment loss (0.02) (0.05) (0.05)
Net realized and unrealized loss (0.33) (0.32) (0.32)
-----------------------------------------------------------------------------------
Total Loss From Operations (0.35) (0.37) (0.37)
-----------------------------------------------------------------------------------
Less Distributions From:
Net realized gains -- -- --
-----------------------------------------------------------------------------------
Total Distributions -- -- --
-----------------------------------------------------------------------------------
Net Asset Value, End of Period $11.05 $11.03 $11.03
-----------------------------------------------------------------------------------
Total Return++ (3.07)% (3.25)% (3.25)%
-----------------------------------------------------------------------------------
Net Assets, End of Period (000s) $53,657 $90,920 $523,586
-----------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 1.21% 1.96% 1.96%
Net investment loss (0.48) (1.24) (1.18)
-----------------------------------------------------------------------------------
Portfolio Turnover Rate 11% 11% 11%
===================================================================================
</TABLE>
(1) For the period from June 30, 2000 (inception date) to October 31, 2000
(unaudited).
(2) Per share amounts have been calculated using the average shares method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
19 Smith Barney Premier Selections All Cap Growth Fund |
2000 Semi-Annual Report to Shareholders
<PAGE>
(This page intentionally left blank.)
<PAGE>
SMITH BARNEY
PREMIER SELECTIONS ALL CAP GROWTH FUND
DIRECTORS
Paul R. Ades
Herbert Barg
Dwight B. Crane
Frank Hubbard
Heath B. McLendon, Chairman
Jerome Miller
Ken Miller
OFFICERS
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Alan J. Blake
Vice President and
Investment Officer
Lawrence Weissman
Vice President and
Investment Officer
Timothy Woods
Vice President and
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
INVESTMENT ADVISER
SSB Citi Fund Management LLC
DISTRIBUTOR
Salomon Smith Barney Inc.
CUSTODIAN
PFPC Trust Company
TRANSFER AGENT
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
SUB-TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island
02940-9699
<PAGE>
Smith Barney Premier Selections All Cap Growth Fund
This report is submitted for the general information of shareholders of Smith
Barney Premier Selections All Cap Growth Fund, but it may also be used as sales
literature when proceeded or accompanied by the current Prospectus,which gives
details about charges, expenses, investment objectives and operating policies of
the Fund. If used as sales material after January 31, 2001, this report must be
accompanied by performance information for the most recently completed calendar
quarter.
SMITH BARNEY PREMIER SELECTIONS ALL CAP GROWTH FUND
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
For complete information on any Smith Barney Mutual Fund, including management
fees and expenses, call or write to your financial professional for a free
prospectus. Read it carefully before you invest or send money.
www.smithbarney.com/mutualfunds
[LOGO OF SALOMON SMITH BARNEY]
Salomon Smith Barney is a service mark of Salomon
Smith Barney Inc.
FD02098 12/00
<PAGE>
SMITH BARNEY
PREMIER SELECTIONS
GLOBAL GROWTH FUND
PREMIER SELECTIONS SERIES | SEMI-ANNUAL REPORT | OCTOBER 31, 2000
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<PAGE>
[PHOTO]
RICHIE FREEMAN,
JEFFREY J. RUSSELL
Portfolio Managers
[GRAPHIC] Premier Selections Series
Semi-Annual Report . October 31, 2000
SMITH BARNEY PREMIER SELECTIONS GLOBAL GROWTH FUND
--------------------------------------------------------------------------------
RICHIE FREEMAN
--------------------------------------------------------------------------------
Richie Freeman has more than 25 years of securities business experience and has
been managing the Fund since its inception.
Education: BS from Brooklyn College,
MBA from New York University
--------------------------------------------------------------------------------
JEFFREY J. RUSSELL
--------------------------------------------------------------------------------
Jeffrey J. Russell, CFA, has more than 19 years of securities business
experience and has been co-managing the Fund since its inception.
Education: BS from the Massachusetts Institute of
Technology, MBA from the University of Pennsylvania's
Wharton School of Finance.
--------------------------------------------------------------------------------
FUND OBJECTIVE
--------------------------------------------------------------------------------
The Fund seeks long-term capital growth by investing in two different areas:
U.S. equities and international equities. The U.S. Equity segment of the Fund
invests primarily in common stocks of companies that the segment manager
believes are experiencing, or will experience, growth in earnings that exceeds
the average rating of earnings growth of the companies that comprise the Russell
2500 Growth Index. The international equity segment of the Fund invests
primarily in equity securities of foreign companies.
--------------------------------------------------------------------------------
FUND FACTS
--------------------------------------------------------------------------------
FUND INCEPTION
--------------------------------------------------------------------------------
June 30, 2000
MANAGERS' TENURE
--------------------------------------------------------------------------------
Since Inception
MANAGERS' INVESTMENT INDUSTRY EXPERIENCE
--------------------------------------------------------------------------------
25 Years (Richie Freeman)
19 Years (Jeffrey J. Russell)
CLASS A CLASS B CLASS L
--------------------------------------------------------------------------------
NASDAQ SPGAX SPGGX SPGLX
--------------------------------------------------------------------------------
INCEPTION 6/30/00 6/30/00 6/30/00
--------------------------------------------------------------------------------
Average Annual Total Returns as of October 31, 2000
Without Sales Charges/(1)/
Class A Class B Class L
--------------------------------------------------------------------------------
Since Inception+++ (2.19)% (2.46)% (2.46)%
--------------------------------------------------------------------------------
With Sales Charges/(2)/
Class A Class B Class L
--------------------------------------------------------------------------------
Since Inception+++ (7.08)% (7.33)% (4.44)%
--------------------------------------------------------------------------------
/(1)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of all applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
/(2)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from initial purchase.
Thereafter, this CDSC declines by 1.00% per year until no CDSC is
incurred. Class L shares also reflect the deduction of a 1.00% CDSC, which
applies if shares are redeemed within the first year of purchase.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception date for Class A, B and L shares is June 30, 2000.
--------------------------------------------------------------------------------
What's Inside
Your Investment in the Smith Barney Premier
Selections Global Growth Fund .................................................1
A Message from the Chairman ...................................................2
Fund at a Glance ..............................................................3
A Letter from the Portfolio Manager ...........................................4
Historical Performance ........................................................7
Schedule of Investments .......................................................8
Statement of Assets and Liabilities ..........................................12
Statement of Operations ......................................................13
Statement of Changes in Net Assets ...........................................14
Notes to Financial Statement .................................................15
Financial Highlights .........................................................19
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
Investment Products: Not FDIC Insured . Not Bank Guaranteed . May Lose Value
<PAGE>
--------------------------------------------------------------------------------
YOUR INVESTMENT IN THE SMITH BARNEY PREMIER SELECTIONS
GLOBAL GROWTH FUND
--------------------------------------------------------------------------------
Portfolio manager Richie Freeman focuses on identifying innovative companies
with the capability for growth. Portfolio manager Jeff Russell seeks companies
headquartered outside the United States with strong financials and solid
business plans. The result? A portfolio made up of global companies they believe
may be well positioned to benefit from positive and dynamic trends.
[GRAPHIC]
Solid Companies Positioned for Rapid Growth
Richie and Jeff carefully evaluate companies one by one, seeking dynamic
businesses that they believe exhibit a potential for superior, consistent
revenue and earnings growth.
[GRAPHIC]
Seeking to Capture Growth in the U.S. and Abroad
Your investment in the Fund offers you the opportunity to participate in some of
Richie and Jeff's best investment ideas. Richie looks to invest in companies
with the potential for above-average growth yet unrecognized in the marketplace.
Jeff's bottom-up approach to investing means that he emphasizes individual
companies outside the U.S. with strong financials and solid plans. An investment
approach combining investments in the U.S. and abroad in our view may be a
prudent way to expand your portfolio.
[GRAPHIC]
The "Best of the Best"--the Premier Selections Series
The Premier Selections Series is a selection of Smith Barney mutual funds
showcasing our best investment ideas managed by our most-experienced and proven
managers. This series of funds is built on a unique strategy of combining
complementary investment management styles to create broader, multi-class and
multi-cap options that are distinguished by a highly concentrated focus.
[GRAPHIC]
A Distinguished History of Managing Your Serious Money
Founded in 1873 and 1892, respectively, the firms of Charles D. Barney and
Edward B. Smith were among the earliest providers of securities information,
research and transactions. Merged in 1937, Smith Barney & Co. offered its
clients a powerful, blue-chip investment capability able to provide timely
information, advice and insightful asset management. Today, SSB Citi Asset
Management Group ("SSB Citi") unites the distinguished history of Smith Barney
with the unparalleled global reach of its parent, Citigroup.
At SSB Citi, you gain access to blue-chip management delivered professionally.
We are proud to offer you, the serious investor, a variety of managed solutions.
1 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
A MESSAGE FROM THE CHAIRMAN
--------------------------------------------------------------------------------
[PHOTO]
HEATH B. MCLENDON
CHAIRMAN
-----------------
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $398.6 billion in assets under management,/1/
SSB Citi Asset Management Group ("SSB Citi") offers choices and solutions,
uniting the distinguished history of Smith Barney with the unparalleled global
reach of its parent, Citigroup. The Smith Barney family of funds represents a
complex with a 60-year history of investment expertise.
The Smith Barney Premier Selections Global Growth Fund seeks long-term capital
growth by combining the best ideas in the U.S. and around the world of two of
our most well-known portfolio managers -- Richie Freeman and Jeff Russell.
Richie focuses on the opportunities in the U.S while Jeff focuses on investments
in select markets abroad. Both managers seek to invest in companies that are
leaders in their respective industries with outstanding management teams,
innovative products and consistent growth potential.
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
November 28, 2000
---------
/1/ As of October 31, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
2 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Smith Barney Premier Selections Global Growth Fund
at a Glance (unaudited)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Top Five Holdings -- U.S. Equity Segment*@
--------------------------------------------------------------------------------
1. IDEC Pharmaceuticals Corp. ............................................3.7%
2. Tyco International Ltd. ...............................................3.6
3. Lehman Brothers Holdings Inc. .........................................3.0
4. Comcast Corp., Class A Special Shares .................................2.4
5. UnitedHealth Group Inc. ...............................................2.3
--------------------------------------------------------------------------------
Top Five Holdings -- International Equity Segment*@
--------------------------------------------------------------------------------
1. Tomra Systems ASA .....................................................1.9%
2. Celestica Inc. ........................................................1.8
3. Julius Baer Holding Ltd. ..............................................1.7
4. HSBC Holdings PLC .....................................................1.5
5. Amdocs Ltd., Sponsored ADR. ...........................................1.5
--------------------------------------------------------------------------------
Industry Diversification*+
--------------------------------------------------------------------------------
[GRAPH]
20.1% Biotechnology
11.1% Broadcasting/Cable
11.4% Communications
4.0% Computer Hardware
3.5% Computer Software
9.8% Investment Banking Services
4.3% Managed Healthcare Providers
6.7% Multi-Industry
14.2% Pharmaceuticals
5.1% Semiconductors
9.5% Other
--------------------------------------------------------------------------------
Investment Breakdown*++
--------------------------------------------------------------------------------
[GRAPH]
4.5% Repurchase Agreement
51.7% U.S. Equity Segment
43.8% International Equity Segment
* All information is as of October 31, 2000. Please note that Portfolio
holdings are subject to change.
@ As a percentage of total common stock
+ As a percentage of total U.S. equity segment.
++ As a percentage of total investments.
3 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
Dear Shareholder,
We are pleased to present the first report for the Smith Barney Investment Funds
Inc. -- Smith Barney Premier Selections Global Growth Fund ("Fund") for the
period from June 30, 2000 (commencement of operations) to October 31, 2000. In
this report we have summarized the period's prevailing economic and market
conditions and outlined our investment strategy. A detailed summary of the
Fund's performance can be found in the appropriate sections that follow. We hope
you find this report to be useful and informative.
Performance Update
For the period since the Fund's commencement, June 30, 2000, through October 31,
2000, the Fund's Class A shares, without and with sales charges, reported
negative total returns of 2.19% and 7.08%, respectively. In comparison, the
Russell 2500 Growth Index ("Russell 2500 Growth")/1/ and the Morgan Stanley
Capital International Europe, Australasia and Far East Index ("MSCI EAFE")/2/
returned a negative 8.93% and a negative 10.16%, respectively, for the same
period.
Investment Strategy
The Fund seeks long-term capital growth. The Fund is made up of an U.S. equity
segment and an international equity segment.
U.S. Stocks Portfolio Update
In the U.S. stock portion of the Fund's portfolio we look to invest in common
stocks of companies that we believe to be experiencing or have the potential to
experience growth in earnings that exceeds the average rate of earnings growth
of companies that comprise the Russell 2500 Growth.
When selecting individual securities we employ a stock-specific approach rather
than choosing stocks based on forecasts of the strength of the U.S. economy,
direction of interest rates and inflation or other factors that are beyond the
control of the individual companies in the Fund's portfolio.
We believe that if you design a growth portfolio properly, you should be able to
find companies to buy and hold not just for one or two quarters (which, in our
view, is short-term trading) but rather for many years. We prefer to own
companies where quality managements work to build dynamic, financially strong
companies and who own meaningful equity stakes themselves.
We focus on small- and mid-cap companies with the potential to become large-cap
companies./3/ We like to see management with a big personal stake in the
company, and we look for strong, predictable cash flows, little or no debt and
products that we believe may enable companies to become leaders in their
respective fields.
International Stocks Portfolio Update
In the international stock portion of the Fund's portfolio we look to invest in
the equity securities of foreign companies./4/ Equity securities include
exchange traded and over-the-counter common stocks and preferred shares, debt
securities convertible into equity securities and warrants./5/
---------
/1/ The Russell 2500 Growth measures the performance of those Russell 2500
companies with higher price-to-book ratios and higher forecasted growth
values. (A price-to-book ratio is the price of a stock compared to the
difference between a company's assets and liabilities.) The Russell 2500
Growth Index measures the performance of the 2,500 smallest companies in
the Russell 3000 Index, which represents approximately 98% of the
investable U.S. equity market. Please note, an investor cannot invest
directly in an index.
/2/ The MSCI EAFE is an unmanaged index of common stocks of companies in
Europe, Australasia and the Far East. Please note, an investor cannot
invest directly in an index.
/3/ Please note that investments in securities of smaller, less-known companies
may be more volatile than those of larger companies.
/4/ Please note that investments in foreign securities involve greater risk
than U.S. investments, such as currency fluctuations and political and
social instability.
/5/ Warrants are a type of security, usually issued together with a bond or
preferred stock, that entitles the holder to buy a proportionate amount of
common stock at a specified price, usually higher than the market price at
the time issuance, for a period of years or to perpetuity.
4 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
We emphasize individual security selection while diversifying the portfolio's
assets across various regions and countries, which can help reduce risk. We
focus on identifying companies headquartered outside the U.S. that possess
strong financials and solid business. We seek to invest in foreign companies
that exhibit above-average earnings growth and are led by an effective
management team.
We use a rigorous process in carefully evaluating companies, seeking dynamic
businesses that we believe show a potential for consistent revenue and earnings
growth. Moreover, we also look to own companies that we believe to be
strategically positioned to capitalize on the potential growth of the global
economy.
U.S. Stock Market Overview
After witnessing almost unprecedented strength in many emerging growth stocks
represented in the Nasdaq Composite Index/6/ and Russell 2500 Growth Index in
1999 and early 2000, the U.S. stock market became quite unsettled so far in
2000. Much of the price excesses, which had been built up in many growth stocks,
began to unwind early this year with the process accelerating through the fall
with particularly hard hit sectors being the technology and telecommunications
sectors.
Interest rate increases, which were instituted by the Federal Reserve Board
("Fed") beginning last year and continuing in early 2000, following the benign
conclusion of the Y2K scare, had a dramatic effect on the U.S. stock market.
This in turn has contributed to a slowdown in overall U.S. economic growth from
the very robust levels of last year's second half and this year's first quarter.
During the past few months, investors have begun to voice growing concerns that
a possible "soft landing" engineered by the Fed might become something more
severe with negative ramifications on corporate profits. The high cost of energy
combined with the diminished wealth effect resulting from the large decline in
the NASDAQ/7/ market, have led to a slowing in the U.S. economy and in
particular, a deceleration in the rate of growth in spending on technology
capital goods.
The Nasdaq Composite Index rapidly declined in April and May and continued its
decline throughout September and October. We believe that the damage inflicted
to the prices of many growth stocks has been one of the most severe since the
NASDAQ market was established in 1971. Yet, we believe that the possibility now
exists for a meaningful recovery in that market with investor expectations
reduced significantly from early year levels.
Biotechnology stocks have been a positive performer in an otherwise difficult
period for the market and we believe that the very strong fundamentals of many
industry participants continue to make them worthwhile holdings in the U.S.
stock portion of the Fund's portfolio. Many technology stocks, particularly in
the semiconductor and telecommunications equipment areas, may reflect overly
bearish expectations and now represent good value. Going forward we also believe
that the Fed may move away from its restrictive monetary policy now that U.S.
economic growth and the stock market have become deflated. We would not be
surprised if the next interest rate move by the Fed was an interest rate
reduction.
International Stock Markets Overview
Overlooked by many during the favorable global capital markets environment of
late 1999, however, were several trends that unnerved many investors as 2000
progressed such as:
. The Fed began a series of short-term interest rate increases, designed to
break the strong growth trajectory of the U.S. economy and cool stock
market euphoria;
. The Nasdaq Composite Index rapidly declined in April and May and continued
its decline throughout September and October;
---------
/6/ The Nasdaq Composite Index is a market value-weighted index that measures
all domestic and non-U.S. based securities listed on the NASDAQ stock
market. Please note, an investor cannot invest directly in an index.
/7/ NASDAQ is a computerized system that provides brokers and dealers with
price quotations for securities traded over the counter as well as for many
New York Stock Exchange listed securities.
5 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
. The new European currency, the euro,/8/ continued the trend of weakness
established early in 1999, cascading further versus the U.S. dollar during
the period. Moreover, the euro's fall caused corporate earnings
dislocations on both sides of the Atlantic;
. Energy prices rose dramatically, especially when denominated in euros,
raising inflationary expectations in Europe and dampening consumer
sentiment; and
. Subsequent interest rate increases moderated global growth expectations, in
turn causing several rounds of earnings downgrades, especially for high
profile technology names.
Selected industry sectors incurred new challenges. The European
telecommunications operators, for example, embarked on an aggressive competitive
bidding process to secure third generation wireless communications licenses. The
victorious bids, in many nationalities, were significantly above initial
expectations, causing investor apprehension about ultimate returns on capital
invested in paying for those licenses and capital spending.
In recent months, European stock markets showed relatively solid performance
when measured in local currencies. Yet the fall of the euro dramatically lowered
returns for dollar-based investors. In addition, we think the decline of the
euro versus the U.S. dollar appears to be due to growth and interest rate
differentials favoring the U.S. currency. Global portfolio flows into the U.S.
also pressured the euro, as did inconsistent policy pronouncements from the
European Central Bank (ECB).
The Asian stock markets were relatively poor performers in recent months. In our
opinion, several factors weighed on Asian markets. First, the monetary policy of
many Asian economies is tied to the U.S. interest rate cycle through currency
links. As rates rose in the U.S., Asian stock markets were pressured. Second,
many of these markets have high representation of technology shares, such as the
Korean stock market. As global technology earnings came under question, the
Asian economies, as key manufacturers and assemblers of components and
semiconductors, were subject to forecast downgrades. Finally, political
transitions in several Asian economies (e.g. Taiwan) caused regional investor
concerns to rise.
Thank you for your investment in the Smith Barney Investment Funds Inc. -- Smith
Barney Premier Selections Global Growth Fund.
Sincerely,
/s/ Richard A. Freeman /s/ Jeffrey J. Russell
Richard A. Freeman Jeffrey J. Russell
Vice President and Vice President and
Investment Officer Investment Officer
November 28, 2000
The information provided in this letter represents the opinion of the managers
and is not intended to be a forecast of future events, a guarantee of future
results nor investment advice. Further, there is no assurance that certain
securities will remain in or out of the Fund. Please refer to pages 8 through 11
for a list and percentage breakdown of the Fund's holdings. Also, please note
any discussion of the Fund's holdings is as of October 31, 2000 and is subject
to change.
---------
/8/ The euro is the single currency of the European Monetary Union that was
adopted by Belgium, Germany, Spain, France, Ireland, Italy, Luxemburg, the
Netherlands, Austria, Portugal and Finland on January 1, 1999.
6 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Historical Performance -- Class A Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns/(1)/
===============================================================================================
<S> <C> <C> <C> <C> <C>
Inception* -- 10/31/00 $11.40 $11.15 $0.00 $0.00 (2.19)%+
===============================================================================================
</TABLE>
--------------------------------------------------------------------------------
Historical Performance -- Class B Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns/(1)/
===============================================================================================
<S> <C> <C> <C> <C> <C>
Inception* -- 10/31/00 $11.40 $11.12 $0.00 $0.00 (2.46)%+
===============================================================================================
</TABLE>
--------------------------------------------------------------------------------
Historical Performance -- Class L Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns/(1)/
===============================================================================================
<S> <C> <C> <C> <C> <C>
Inception* -- 10/31/00 $11.40 $11.12 $0.00 $0.00 (2.46)%+
===============================================================================================
</TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
--------------------------------------------------------------------------------
Average Annual Total Returns+
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charges/(1)/
-------------------------------------------
Class A Class B Class L
===============================================================================================
<S> <C> <C> <C>
Inception* through 10/31/00 (2.19)% (2.46)% (2.46)%
===============================================================================================
<CAPTION>
With Sales Charges/(2)/
-------------------------------------------
Class A Class B Class L
===============================================================================================
<S> <C> <C> <C>
Inception* through 10/31/00 (7.08)% (7.33)% (4.44)%
===============================================================================================
</TABLE>
/(1)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
/(2)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase. Thereafter,
the CDSC declines by 1.00% per year until no CDSC is incurred. Class L
shares also reflect the deduction of a 1.00% CDSC which applies if shares
are redeemed within the first year of purchase.
* Inception date for Class A, B and L shares is June 30, 2000.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
7 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================
COMMON STOCK -- 95.5%
============================================================================================
<S> <C> <C>
U.S. EQUITY SEGMENT -- 51.7%
Biotechnology -- 10.4%
100,000 Alkermes, Inc.+ $ 3,706,250
42,100 Amgen Inc.+ 2,439,169
110,000 Chiron Corp.+ 4,764,375
71,000 COR Therapeutics, Inc.+ 4,011,500
24,800 Genentech, Inc.+ 2,046,000
68,100 Genzyme Corp. - General Division+ 4,835,100
72,400 ImClone Systems Inc.+ 3,959,375
--------------------------------------------------------------------------------------------
25,761,769
--------------------------------------------------------------------------------------------
Broadcasting/Cable -- 5.7%
227,100 AT&T Corp. - Liberty Media Corp., Class A Shares+ 4,087,800
60,000 Cablevision Systems Corp., Class A Shares+ 4,470,000
137,200 Comcast Corp., Class A Special Shares+ 5,590,900
--------------------------------------------------------------------------------------------
14,148,700
--------------------------------------------------------------------------------------------
Communications -- 5.9%
130,000 Adaptive Broadband Corp.+ 2,088,125
195 Advanced Switching Communications, Inc.+ 1,987
175,000 C-COR.net Corp.+ 2,734,375
150,000 TyCom, Ltd.+ 5,025,000
83,700 Viacom Inc., Class B Shares+ 4,760,437
--------------------------------------------------------------------------------------------
14,609,924
--------------------------------------------------------------------------------------------
Computer Hardware -- 2.1%
150,000 Quantum Corp. - DLT & Storage Systems+ 2,250,000
250,000 Quantum Corp. - Hard Disk Drive+ 2,859,375
--------------------------------------------------------------------------------------------
5,109,375
--------------------------------------------------------------------------------------------
Computer Software/Internet -- 1.8%
89,400 America Online, Inc.+ 4,508,442
--------------------------------------------------------------------------------------------
Drug Delivery/Testing -- 1.2%
35,400 ALZA Corp.+ 2,865,187
--------------------------------------------------------------------------------------------
Electronics - Military -- 1.4%
54,500 L-3 Communications Holdings, Inc.+ 3,593,594
--------------------------------------------------------------------------------------------
Healthcare -- 1.0%
50,000 IGEN International, Inc.+ 1,243,750
75,000 Nanogen, Inc.+ 1,162,500
--------------------------------------------------------------------------------------------
2,406,250
--------------------------------------------------------------------------------------------
Investment Banking Services -- 5.0%
110,000 Lehman Brothers Holdings Inc. 7,095,000
36,000 Merrill Lynch & Co., Inc. 2,520,000
134,400 Roslyn Bancorp, Inc. 2,914,800
--------------------------------------------------------------------------------------------
12,529,800
--------------------------------------------------------------------------------------------
Managed Healthcare Providers -- 2.2%
50,000 UnitedHealth Group Inc. 5,468,750
--------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================
<S> <C> <C>
Multi-Industry -- 3.5%
152,300 Tyco International Ltd. $ 8,633,506
--------------------------------------------------------------------------------------------
Oil Field Equipment/Services -- 1.5%
100,000 Weatherford International, Inc.+ 3,650,000
--------------------------------------------------------------------------------------------
Pharmaceuticals -- 7.3%
33,700 Forest Laboratories, Inc.+ 4,465,250
45,000 IDEC Pharmaceuticals Corp.+ 8,825,625
150,000 Isis Pharmaceuticals, Inc.+ 1,546,875
35,200 Vertex Pharmaceuticals Inc.+ 3,277,450
--------------------------------------------------------------------------------------------
18,115,200
--------------------------------------------------------------------------------------------
Semiconductors -- 2.7%
100,000 Intel Corp. 4,500,000
60,000 Micron Technology, Inc.+ 2,085,000
--------------------------------------------------------------------------------------------
6,585,000
--------------------------------------------------------------------------------------------
TOTAL U.S. EQUITY SEGMENT
(Cost -- $123,932,450) 127,985,497
============================================================================================
INTERNATIONAL EQUITY SEGMENT -- 43.8%
Australia -- 0.7%
350,000 ERG Ltd. 1,713,944
--------------------------------------------------------------------------------------------
Canada -- 4.0%
47,000 BCE Emergis Inc.+ 2,184,902
60,000 C-MAC Industries Inc.+ 3,378,511
60,000 Celestica Inc.+ 4,274,209
--------------------------------------------------------------------------------------------
9,837,622
--------------------------------------------------------------------------------------------
Finland -- 1.3%
68,000 Nokia Oyj 2,907,004
7,000 Nokia Oyj, Sponsored ADR 299,250
--------------------------------------------------------------------------------------------
3,206,254
--------------------------------------------------------------------------------------------
France -- 2.4%
20,000 Axa SA 2,644,516
24,000 Groupe Danone 3,352,433
--------------------------------------------------------------------------------------------
5,996,949
--------------------------------------------------------------------------------------------
Germany -- 1.4%
25,000 Marschollek, Lautenschlaeger und Partner AG 3,453,975
--------------------------------------------------------------------------------------------
Hong Kong -- 3.6%
284,209 HSBC Holdings PLC 3,953,876
251,000 Hutchison Whampoa Ltd. 3,113,725
1,068,000 Li & Fung Ltd. 1,985,614
--------------------------------------------------------------------------------------------
9,053,215
--------------------------------------------------------------------------------------------
Ireland -- 2.2%
736,000 Independent News & Media PLC 2,276,996
60,000 Elan Corp. PLC, Sponsored ADR+ 3,116,250
--------------------------------------------------------------------------------------------
5,393,246
--------------------------------------------------------------------------------------------
Israel -- 1.6%
60,000 Amdocs Ltd., Sponsored ADR+ 3,888,750
--------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================
<S> <C> <C>
Japan -- 6.5%
73,000 CANON Inc. $ 2,894,862
26,000 Matsushita Communication Industrial Co., Ltd. 3,405,074
20,000 MURATA MANUFACTURING CO., LTD. 2,392,160
215,000 Nippon Sheet Glass Co., Ltd. 3,268,614
33,000 SONY Corp. 2,635,406
16,000 Trend Micro Inc.+ 1,509,296
--------------------------------------------------------------------------------------------
16,105,412
--------------------------------------------------------------------------------------------
Mexico -- 1.1%
1,210,000 Wal-Mart de Mexico SA de CV+ 2,749,856
--------------------------------------------------------------------------------------------
The Netherlands -- 0.7%
100,000 United Pan-Europe Communications N.V.+ 1,750,297
--------------------------------------------------------------------------------------------
Norway -- 2.6%
155,000 Petroleum Geo-Services ASA+ 2,133,219
110,000 Tomra Systems ASA 4,411,591
--------------------------------------------------------------------------------------------
6,544,810
--------------------------------------------------------------------------------------------
Singapore -- 2.2%
202,000 Singapore Press Holdings Ltd. 2,888,180
260,000 Venture Manufacturing (Singapore) Ltd. 2,517,801
--------------------------------------------------------------------------------------------
5,405,981
--------------------------------------------------------------------------------------------
Spain -- 0.8%
241,000 Amadeus Global Travel Distribution SA 1,967,139
--------------------------------------------------------------------------------------------
Sweden -- 2.0%
157,000 Securitas AB 3,337,425
100,000 Skandia Forsakrings AB 1,691,617
--------------------------------------------------------------------------------------------
5,029,042
--------------------------------------------------------------------------------------------
Switzerland -- 4.2%
800 Julius Baer Holding Ltd. 3,959,735
75,000 Mettler-Toledo International Inc.+ 3,501,563
2,000 Novartis AG 3,033,202
--------------------------------------------------------------------------------------------
10,494,500
--------------------------------------------------------------------------------------------
United Kingdom -- 6.5%
348,500 Capita Group PLC 2,677,032
100,000 COLT Telecom Group PLC+ 3,184,445
152,500 Guardian IT PLC 2,059,434
377,000 Serco Group PLC 3,462,558
800,000 Telewest Communications PLC+ 1,327,215
788,000 Vodafone Group PLC 3,286,861
--------------------------------------------------------------------------------------------
15,997,545
--------------------------------------------------------------------------------------------
TOTAL INTERNATIONAL EQUITY SEGMENT
(Cost -- $116,387,863) 108,588,537
============================================================================================
TOTAL COMMON STOCK
(Cost -- $240,320,313) 236,574,034
============================================================================================
</TABLE>
See Notes to Financial Statements.
10 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
============================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT -- 4.5%
$11,274,000 Morgan Stanley Dean Witter & Co., 6.50% due 11/1/00;
Proceeds at maturity -- $11,276,036; (Fully collateralized
by U.S. Treasury Notes, 4.750% to 7.875% due 2/28/03 to
11/15/04; Market value -- $11,555,446)
(Cost -- $11,274,000) $ 11,274,000
============================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $251,594,313*) $247,848,034
============================================================================================
</TABLE>
+ Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
11 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $251,594,313) $ 247,848,034
Cash 1,350,381
Receivable for Fund shares sold 309,037
Dividends and interest receivable 30,360
----------------------------------------------------------------------------------------------
Total Assets 249,537,812
----------------------------------------------------------------------------------------------
LIABILITIES:
Investment advisory fees payable 176,036
Distribution fees payable 81,665
Accrued expenses 133,905
----------------------------------------------------------------------------------------------
Total Liabilities 391,606
----------------------------------------------------------------------------------------------
Total Net Assets $ 249,146,206
==============================================================================================
NET ASSETS:
Par value of capital shares $ 22,392
Capital paid in excess of par value 256,081,420
Accumulated net investment loss (998,211)
Accumulated net realized loss from security transactions (2,212,646)
Net unrealized depreciation of investments and foreign currencies (3,746,749)
----------------------------------------------------------------------------------------------
Total Net Assets $ 249,146,206
==============================================================================================
Shares Outstanding:
Class A 1,795,993
--------------------------------------------------------------------------------------------
Class B 2,446,322
--------------------------------------------------------------------------------------------
Class L 18,149,645
--------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $11.15
--------------------------------------------------------------------------------------------
Class B * $11.12
--------------------------------------------------------------------------------------------
Class L ** $11.12
--------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $11.74
--------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $11.23
==============================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from initial purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within one year from initial purchase.
See Notes to Financial Statements.
12 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Period Ended October 31, 2000(a)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 140,578
Interest 528,768
Less: Foreign withholding tax (2,692)
-----------------------------------------------------------------------------------------------
Total Investment Income 666,654
-----------------------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 2) 786,400
Investment advisory fees (Note 2) 669,307
Shareholder and system servicing fees 91,110
Registration fees 47,774
Shareholder communications 32,624
Custody 16,423
Audit and legal 12,011
Directors' fees 7,712
Other 1,504
-----------------------------------------------------------------------------------------------
Total Expenses 1,664,865
-----------------------------------------------------------------------------------------------
Net Investment Loss (998,211)
-----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCIES (NOTE 3):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 4,796,301
Cost of securities sold 7,008,947
-----------------------------------------------------------------------------------------------
Net Realized Loss (2,212,646)
-----------------------------------------------------------------------------------------------
Change in Net Unrealized Depreciation
of Investments and Foreign Currencies:
Beginning of period --
End of period (3,746,749)
-----------------------------------------------------------------------------------------------
Increase in Net Unrealized Depreciation (3,746,749)
-----------------------------------------------------------------------------------------------
Net Loss on Investments and Foreign Currencies (5,959,395)
-----------------------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (6,957,606)
===============================================================================================
</TABLE>
(a) For the period from June 30, 2000 (commencement of operations) to October
31, 2000.
See Notes to Financial Statements.
13 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Changes in Net Assets (unaudited)
For the Period Ended October 31, 2000(a)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS:
Net investment loss $ (998,211)
Net realized loss (2,212,646)
Increase in net unrealized depreciation (3,746,749)
----------------------------------------------------------------------------------------------
Decrease in Net Assets From Operations (6,957,606)
----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
----------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders --
----------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 269,411,633
Cost of shares reacquired 13,307,821)
----------------------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 256,103,812
----------------------------------------------------------------------------------------------
Increase in Net Assets 249,146,206
NET ASSETS:
Beginning of period --
----------------------------------------------------------------------------------------------
End of period* $ 249,146,206
==============================================================================================
* Includes accumulated net investment loss of: $(998,211)
==============================================================================================
</TABLE>
(a) For the period from June 30, 2000 (commencement of operations) to October
31, 2000.
See Notes to Financial Statements.
14 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Premier Selections Global Growth Fund ("Portfolio"), a separate
investment fund of the Smith Barney Investment Funds Inc. ("Fund"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as amended,
as a non-diversified, open-end management investment company. The Fund consists
of this Portfolio and ten other separate investment portfolios: Smith Barney
Investment Grade Bond Fund, Smith Barney Government Securities Fund, Smith
Barney Small Cap Growth Fund, Smith Barney Group Spectrum Fund, Smith Barney
Peachtree Growth Fund (formerly Concert Peachtree Growth Fund), Smith Barney
Hansberger Global Value Fund, Smith Barney Hansberger Global Small Cap Value
Fund, Smith Barney Small Cap Value Fund, Smith Barney Premier Selections All Cap
Growth Fund and Smith Barney Premier Selections Large Cap Fund (formerly Smith
Barney Premier Selections Fund). The financial statements and financial
highlights for the other portfolios are presented in separate shareholder
reports.
The significant accounting policies consistently followed by the Portfolio are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on such markets
or, in the absence of sales, at the mean between the closing bid and asked
prices; over-the-counter securities are valued at the mean between the bid and
asked prices. Investments in securities for which market quotations are not
available are valued at fair value as determined in good faith by the Board of
Directors; (c) securities maturing within 60 days are valued at cost plus
accreted discount, or minus amortized premium, which approximates value; (d)
dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) direct expenses are
charged to each class; investment advisory fees and general Portfolio expenses
are allocated on the basis of relative net assets by class; (g) dividends and
distributions to shareholders are recorded on the ex-dividend date; (h) the
Portfolio intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; (i) the character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles; and
(j) estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ.
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment adviser to the Fund. The Portfolio pays SSBC
an advisory fee calculated at an annual rate of 0.80% of the average daily net
assets. This fee is calculated daily and paid monthly.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Portfolio's transfer agent and PFPC Global Fund Services ("PFPC") acts as
the Portfolio's sub-transfer agent. CFTC receives account fees and asset-based
fees that vary according to the size and type of account. PFPC is responsible
for shareholder recordkeeping and financial processing for all shareholder
accounts and is paid by CFTC. For the period ended October 31, 2000, the
Portfolio paid transfer agent fees of $82,729 to CFTC.
Salomon Smith Barney Inc. ("SSB"), another subsidiary of SSBH, acts as the
Fund's distributor. In addition, SSB acts as the primary broker for the Fund's
portfolio agency transactions. Certain other broker-dealers continue to sell
Portfolio shares to the public as members of the selling group. For the period
ended October 31, 2000, SSB and its affiliates received $14,415 in brokerage
commissions.
There are maximum initial sales charges of 5.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
5.00% on Class B shares,
15 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
which applies if redemption occurs within one year from initial purchase and
declines thereafter by 1.00% per year until no CDSC is incurred. Class L shares
also have a 1.00% CDSC, which applies if redemption occurs within the first year
of purchase.
For the period ended October 31, 2000, SSB and CFBDS received sales charges of
$351,000 and $253,000 on sales of the Fund's Class A and L shares, respectively.
In addition, CDSCs paid to SSB were approximately:
Class B Class L
================================================================================
CDSCs $2,000 $8,000
================================================================================
Pursuant to a Distribution Plan, the Portfolio pays a service fee with respect
to its Class A, B and L shares calculated at the annual rate of 0.25% of the
average daily net assets of each respective class. The Portfolio also pays a
distribution fee with respect to Class B and L shares calculated at the annual
rate of 0.75% of the average daily net assets of each class, respectively. For
the period ended October 31, 2000, total Distribution Plan fees were as follows:
Class A Class B Class L
================================================================================
Distribution Plan Fees $16,745 $84,751 $684,904
================================================================================
All officers and one Director of the Fund are employees of SSB.
3. Investments
During the period ended October 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $247,329,259
--------------------------------------------------------------------------------
Sales 4,796,301
================================================================================
At October 31, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 24,574,362
Gross unrealized depreciation (28,320,641)
--------------------------------------------------------------------------------
Net unrealized depreciation $ (3,746,279)
================================================================================
4. Repurchase Agreements
The Portfolio purchases (and its custodian takes possession of) U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day),
at an agreed-upon higher repurchase price. The Portfolio requires continual
maintenance of the market value (plus accrued interest) of the collateral in
amounts at least equal to the repurchase price.
5. Reverse Repurchase Agreements
The Portfolio may enter into reverse repurchase agreement transactions for
leveraging purposes. A reverse repurchase agreement involves a sale by the
Portfolio of securities that it holds with an agreement by the Portfolio to
repurchase the same securities at an agreed upon price and date. A reverse
repurchase agreement involves the risk that the market value of the securities
sold by the Portfolio may decline below the repurchase price of the securities.
The Portfolio will establish a segregated account with its custodian, in which
the Portfolio will maintain cash, U.S. government securities or other liquid
high grade debt obligations equal in value to its obligations with respect to
reverse repurchase agreements.
During the period ended October 31, 2000, the Portfolio did not enter into any
reverse repurchase agreement transactions.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are received or made
16 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
and recognized as assets due from or liabilities due to broker, depending upon
whether unrealized gains or losses are incurred. When the contract is closed,
the Portfolio records a realized gain or loss equal to the difference between
the proceeds from (or cost of) the closing transactions and the Portfolio's
basis in the contract. The Portfolio enters into such contracts to hedge a
portion of its portfolio. The Portfolio bears the market risk that arises from
changes in the value of the financial instruments and securities indices
(futures contracts) and the credit risk should a counterparty fail to perform
under such contracts.
At October 31, 2000, the Portfolio had no open futures contracts.
7. Lending of Portfolio Securities
The Portfolio has an agreement with its custodian whereby the custodian may lend
securities owned by the Portfolio to brokers, dealers and other financial
organizations. Fees earned by the Portfolio on securities lending are recorded
as interest income. Loans of securities by the Portfolio are collateralized by
cash, U.S. government securities or high quality money market instruments that
are maintained at all times in an amount at least equal to the current market
value of the loaned securities, plus a margin which may vary depending on the
type of securities loaned. The custodian establishes and maintains the
collateral in a segregated account. The Portfolio maintains exposure for the
risk of any losses in the investment of amounts received as collateral.
At October 31, 2000, the Portfolio had no securities on loan.
8. Option Contracts
Premiums paid when call options are purchased by the Portfolio represent
investments which are marked-to-market daily. When a purchased option expires,
the Fund will realize a loss in the amount of the premium paid. When the
Portfolio enters into a closing sales transaction, the Portfolio will realize a
gain or loss depending on whether the proceeds from the closing sales
transactions are greater or less than the premium paid for the option. When the
Portfolio exercises a call option, the cost of the security which the Portfolio
purchases upon exercise will be increased by the premium originally paid.
At October 31, 2000, the Portfolio held no purchased call or put option
contracts.
When a Portfolio writes a call option, an amount equal to the premium received
by the Portfolio is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Portfolio realizes a
gain equal to the amount of the premium received. When the Portfolio enters into
a closing purchase transaction, the Portfolio realizes a gain or loss depending
upon whether the cost of the closing transaction is greater or less than the
premium originally received without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a call option is exercised the proceeds of the security sold will be
increased by the premium originally received.
The risk associated with purchasing options is limited to the premium originally
paid. The Portfolio enters into options for hedging purposes. The risk in
writing a call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price.
During the period ended October 31, 2000, the Portfolio did not enter into any
written call or put option contracts.
9. Capital Shares
At October 31, 2000, the Fund had 10 billion shares of capital stock authorized
with a par value of $0.001 per share. The Fund has the ability to issue multiple
classes of shares. Each share of a class represents an identical interest and
has the same rights, except that each class bears certain expenses, including
those specifically related to the distribution of its shares.
17 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
At October 31, 2000, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $20,575,780 $28,130,438 $207,397,594
================================================================================
Transactions in shares of each class were as follows:
Period Ended
October 31, 2000
-------------------------------
Shares Amount
================================================================================
Class A*
Shares sold 2,498,158 $ 28,873,432
Shares reacquired (702,165) (8,297,652)
--------------------------------------------------------------------------------
Net Increase 1,795,993 $ 20,575,780
================================================================================
Class B*
Shares sold 2,488,830 $ 28,615,635
Shares reacquired (42,508) (485,197)
--------------------------------------------------------------------------------
Net Increase 2,446,322 $ 28,130,438
================================================================================
Class L*
Shares sold 18,545,328 $211,922,566
Shares reacquired (395,683) (4,524,972)
--------------------------------------------------------------------------------
Net Increase 18,149,645 $207,397,594
================================================================================
* For the period from June 30, 2000 (inception date) to October 31, 2000.
18 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout the period:
<TABLE>
<CAPTION>
Class A(1)(2) Class B(1)(2) Class L(1)(2)
===============================================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $11.40 $11.40 $11.40
-------------------------------------------------------------------------------------------------------------------------------
Loss From Operations:
Net investment loss (0.02) (0.05) (0.05)
Net realized and unrealized loss (0.23) (0.23) (0.23)
-------------------------------------------------------------------------------------------------------------------------------
Total Loss From Operations (0.25) (0.28) (0.28)
-------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.15 $11.12 $11.12
-------------------------------------------------------------------------------------------------------------------------------
Total Return++ (2.19)% (2.46)% (2.46)%
-------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $20,030 $27,214 $201,902
-------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 1.30% 2.05% 2.05%
Net investment loss (0.52) (1.30) (1.24)
-------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 2% 2% 2%
===============================================================================================================================
</TABLE>
/(1)/ For the period from June 30, 2000 (inception date) to October 31, 2000
(unaudited).
/(2)/ Per share amounts have been calculated using the average shares method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
19 Smith Barney Premier Selections Global Growth Fund
| 2000 Semi-Annual Report to Shareholders
<PAGE>
(This page intentionally left blank.)
<PAGE>
SMITH BARNEY
PREMIER SELECTIONS GLOBAL GROWTH FUND
DIRECTORS
Paul R. Ades
Herbert Barg
Dwight B. Crane
Frank Hubbard
Heath B. McLendon, Chairman
Jerome Miller
Ken Miller
OFFICERS
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President and
Treasurer
Richard Freeman
Vice President and
Investment Officer
Jeffrey J. Russell
Vice President and
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
INVESTMENT ADVISER
SSB Citi Fund Management LLC
DISTRIBUTORS
Salomon Smith Barney Inc.
PFS Distributors, Inc.
CUSTODIAN
PFPC Trust Company
TRANSFER AGENT
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
SUB-TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island
02940-9699
<PAGE>
Smith Barney Premier Selections Global Growth Fund
--------------------------------------------------------------------------------
This report is submitted for the general information of shareholders of Smith
Barney Premier Selections Global Growth Fund, but it may also be used as sales
literature when proceeded or accompanied by the current Prospectus, which gives
details about charges, expenses, investment objectives and operating policies of
the Fund. If used as sales material after January 31, 2001, this report must be
accompanied by performance information for the most recently completed calendar
quarter.
SMITH BARNEY PREMIER SELECTIONS
GLOBAL GROWTH FUND
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
For complete information on any Smith Barney Mutual Funds, including management
fees and expenses, call or write your financial professional for a free
prospectus. Read it carefully before you invest or send money.
www.smithbarney.com/mutualfunds
[LOGO OF SALOMON SMITH BARNEY]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
FD02106 12/00
<PAGE>
SMITH BARNEY HANSBERGER
GLOBAL VALUE FUND
GLOBAL SMALL CAP
VALUE FUND
CLASSIC SERIES | SEMI-ANNUAL REPORT | OCTOBER 31, 2000
[LOGO OF SMITH BARNEY MUTUAL FUNDS] HANSBERGER
GLOBAL
INVESTORS, INC.
-----------------------------------------------------------
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
-----------------------------------------------------------
<PAGE>
Smith Barney
Hansberger Funds
--------------------------------------------------------------------------------
MARKET HIGHLIGHT
--------------------------------------------------------------------------------
Over the past few months, the global economy has become more balanced. While the
U.S. economy has experienced a cooling period, other countries' economies such
as Brazil and China have been strong performers. Recently, we have also seen the
rationalization of stock prices, especially in the technology sector. Investor
enthusiasm over e-commerce and "New Economy" stocks has subsided, resulting in
what we believe are generally more reasonable valuations.
--------------------------------------------------------------------------------
The Smith Barney Hansberger Global Value Fund ("Portfolio") 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 Portfolio'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
-------------
Class A SGLAX
Class B SGLBX
Class L SGLCX
The Smith Barney Hansberger Global Small Cap Value Fund's ("Portfolio")
investment objective is long-term capital growth. The Portfolio 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 Portfolio's investment
manager, and Hansberger Global Investors, Inc., the Portfolio's sub-investment
adviser, are undervalued.
NASDAQ Symbol
-------------
Class B SCVBX
--------------------------------------------------------------------------------
WHAT'S INSIDE
--------------------------------------------------------------------------------
Shareholder Letter...................................................... 1
Smith Barney Hansberger Global Value Fund
Portfolio Manager Commentary......................................... 2
Historical Performance............................................... 4
Fund at a Glance..................................................... 6
Smith Barney Hansberger Global Small Cap
Value Fund
Portfolio Manager Commentary......................................... 7
Historical Performance............................................... 9
Fund at a Glance.....................................................11
Schedules of Investments................................................12
Statements of Assets and Liabilities....................................19
Statements of Operations................................................20
Statements of Changes in Net Assets.....................................21
Notes to Financial Statements...........................................23
Financial Highlights....................................................29
<PAGE>
--------------------------------------------------------------------------------
Shareholder Letter
--------------------------------------------------------------------------------
[PHOTO] [PHOTO]
HEATH B. MCLENDON THOMAS L. HANSBERGER,
Chairman CFA, CIC
Chairman and Chief
Executive Officer
Hansberger Global
Investors, Inc.
Dear Shareholder:
The world's economies, so far in the new millenium, have faced a number of
challenges, such as the elimination of trade barriers and the deregulation of
international labor markets.
Over the past few months, the global economy has become more balanced. While the
U.S. economy has experienced a cooling period, other countries' economies such
as Brazil and China have been strong performers. Recently, we have also seen the
rationalization of stock prices, especially in the technology sector. Investor
enthusiasm over e-commerce and "New Economy"/1/ stocks has subsided, resulting
in what we believe are generally more reasonable valuations.
As the global economy becomes more balanced and the U.S. markets are marked by
higher volatility and concerns that the bull market in stocks may be running out
of steam, we believe it has become more important than ever before to remain
globally diversified. Despite the tremendous returns of the U.S. stock market in
the past few years, the U.S. has yet to be the top-performing market in any one
year over the last two decades. Of course there are certain risks in
international investing, which may pose a greater risk than investing in the
U.S., such risks include currency fluctuations, different accounting standards
and less financial regulation and social and economic instability.
Overlooked by many during the favorable global capital markets environment of
late 1999, however, were several trends that unnerved many investors as 2000
progressed such as:
. The U.S. Federal Reserve Board began a series of short-term interest rate
increases, designed to break the strong growth trajectory of the U.S. economy
and cool stock market euphoria;
. The new European currency, the euro,/2/ continued its trend of weakness
established early in 1999, declining a further 19% versus the U.S. dollar over
the last year. Moreover, the euro's fall caused corporate earnings dislocations
on both sides of the Atlantic;
. Energy prices rose dramatically, especially when denominated in euros, raising
inflationary expectations in Europe and dampening consumer sentiment; and
. Subsequent interest rate increases moderated global growth expectations, in
turn causing several rounds of earnings downgrades, especially for high profile
technology names.
Many events that are shaping the world's financial markets require a sound
perspective by investors -- a balance between accepting the "new" rules without
forgetting the valuable lessons of the past and keeping a vigilant eye towards
the future. We seek to offer our shareholders the benefits of our professional
expertise in these challenging market conditions.
Thank you for your continued confidence in our investment 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.
December 4, 2000
--------------
/1/ The New Economy represents those companies in the technology,
telecommunications and Internet sectors.
/2/ 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.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 1
<PAGE>
--------------------------------------------------------------------------------
Smith Barney Hansberger Global Value Fund
--------------------------------------------------------------------------------
Performance Update
For the six months ended October 31, 2000, the Smith Barney Hansberger Global
Value Fund's ("Portfolio") Class A shares, without and with sales charges,
reported negative total returns of 9.36% and 13.88%, respectively. In comparison
the Morgan Stanley Capital International All Country World Free Index ("MSCI
World Free")/1/ returned a negative 6.61% for the same period. Past performance
is not indicative of future results.
Investment Strategy
The Portfolio seeks long-term capital growth by investing 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.
We employ a "bottom-up"/2/ approach to security selection, focusing primarily on
identifying individual securities that meet the Portfolio's value criteria. The
Portfolio seeks to invest in companies with low share prices relative to their
earnings, cash flow and/or net asset value.
Our bottom-up, value process has led us to gradually increase our exposure to
the U.S. market. While we remain substantially below neutral weighting relative
to the MSCI World Free, our exposure to the U.S. market has increased during the
period. Some of this appreciation is directly attributed to the positive price
performance from the Portfolio's U.S. industrial and pharmaceutical holdings
such as B.F. Goodrich Co., FedEx Corp., American Home Products Corp. and
Bristol-Myers Squibb Co.
However, during the period we have also added to the Portfolio's holdings in
U.S. consumer staples, materials, consumer discretionary and information
technology stocks that have recently experienced price corrections and at the
time of purchase were substantially down from their highs. In our opinion,
recently purchased investments in companies like The Gap, Inc., International
Business Machines Corp., Proctor & Gamble Co., Praxair, Inc. and McDonald's
Corp. represent high quality value investments that were trading below what we
deemed to be their intrinsic values.
Outside of the U.S., we have become increasingly positive about Europe and the
United Kingdom. In these regions we remain focused on financial, industrial,
consumer staples and health care sectors. As in the U.S., we believe this is
largely a function of valuation as many of the stocks in these sectors have been
overlooked for an extended period of time.
Supporting the timing of our investment in financials, particularly in the
United Kingdom is our belief that we may be nearing a peak in interest rates. If
our expectation proves to be correct, we believe this sector may perform well on
a relative basis. Another driver of positive performance in Europe is our
forecast that the consolidation and restructuring that started several years ago
in the region may continue. Moreover, this consolidation and restructuring may
even accelerate if recently proposed changes in tax laws and pension reform are
implemented. In our opinion, among the sectors likely to see ongoing
consolidation and rationalization in Europe are financials, industrials and
pharmaceuticals.
While we remain positive on company-specific initiatives in Japan, we believe it
is becoming apparent that once again the pace of change in Japan may be slowing
down. During the past year the Portfolio realized profits on several key
Japanese investments, as opportunities in Europe appeared to have more upside
potential over the next one to two years.
Our remaining investments in Japan are focused on companies that represent what
we think are attractively valued global franchises such as
--------------
/1/ The MSCI World Free represents the performance of 47 markets in both the
developed and the emerging markets in Africa, Asia, Australia, Europe,
North America and South America. Please note that an investor cannot invest
directly in an index.
/2/ Bottom-up investing is a search for outstanding performance of individual
stocks before considering the impact of economic trends.
--------------------------------------------------------------------------------
2 2000 Semi-Annual Report to Shareholders
<PAGE>
NEC Corp. and Hitachi, Ltd. We believe these companies are globally competitive
and should fare well regardless of what is occurring locally in Japan.
Following a substantial positive contribution to return in 1999, Asia (ex-Japan)
and emerging stock markets have performed poorly during the period. We believe
this is discouraging considering that the underlying fundamentals appear to be
recovering strongly in many of the economies and for the companies in which we
have invested. Unfortunately, the events impacting the performance in these
regions are largely due to factors outside these regions (e.g., higher global
interest rates, higher oil prices and falling stock prices in the developed
world). While our overall allocation to non-Japan Asia and emerging markets have
fallen slightly during the period, we remain convinced that as the underlying
positive fundamentals assert themselves it may eventually be reflected in the
region's stock prices.
Market and Economic Overview
The principal factors influencing performance during the period include the
substantial rise and fall of global technology, media and telecom ("TMT")
stocks, the divergence of growth/3/ and value stocks,/4/ higher global interest
rates and the continued strength of the U.S. dollar. While growth investing and
TMT stocks started the year with a substantial run up, this trend has since
reversed itself.
Following several rounds of interest rate increases by global central banks in
late 1999 and 2000, the global economy has begun to show signs of slowing growth
and investors are once again beginning to focus on valuations relative to
underlying earnings potential. During the second half of 2000 value stocks
recovered and have largely outperformed growth stocks. The Portfolio has
participated in the re-emergence of value investing with positive gains in
sectors like industrials, health care and financials.
Despite the varying degrees of economic sensitivity in these sectors (i.e.,
health care is defensive and industrials tend to be cyclical), they have been
among the best performing sectors in a slowing global economy. In our opinion,
the shared characteristic between the sectors is that they were long neglected
by a TMT-favored market and that valuations had become exceptionally compelling.
Despite the resurgence of value investing, the strength of the U.S. dollar
relative to other global currencies continues to hinder performance. We believe
this has been exacerbated by the Portfolio's relative underweight position in
the U.S. stock market and, therefore, the U.S. dollar. So far the international
portion of the Portfolio has not been able to overcome the negative impact of
currency translation. To put this into perspective, from November 1, 1999
through October 31, 2000 the U.S. dollar appreciated by nearly 20% versus
Europe's single currency, the euro./5/ Similar moves have been recorded by the
U.S. dollar relative to other global currencies over the past year.
Conclusion
We believe the current volatility in global stock markets may be followed by a
re-focus on earnings and valuation. And while no guarantees can be given, we are
encouraged by this prospect as our philosophy and style should perform well in a
"stock pickers" market. We also believe the Portfolio is well positioned to
perform well in the up coming year.
Moreover, it is our belief that the biggest drag on performance (namely, the
strong U.S. dollar), is probably behind us. Indeed, some reversal of the U.S.
dollar's strength may be a potential source of positive performance going
forward. That said, this continues to be the major source of relative risk in
the Portfolio. Another risk is a "hard landing" in the U.S. economy, which could
have a negative impact on the global economy.
--------------
/3/ Growth stocks are shares of companies with the potential for
faster-than-average growth within their industries. Growth stocks generally
provide an opportunity for more capital appreciation than fixed income
investments but are subject to greater market fluctuations.
/4/ Value stocks are the shares of those companies whose shares are considered
to be inexpensive relative to their asset values or earning power.
/5/ 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.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 3
<PAGE>
--------------------------------------------------------------------------------
Historical Performance -- Class A Shares
--------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns/(1)/
================================================================================
10/31/00 $13.14 $11.91 $0.00 (9.36)%+
--------------------------------------------------------------------------------
4/30/00 12.00 13.14 0.03 9.75
--------------------------------------------------------------------------------
4/30/99 12.99 12.00 0.12 (6.56)
--------------------------------------------------------------------------------
Inception* -- 4/30/98 11.40 12.99 0.02 14.13+
================================================================================
Total $0.17
================================================================================
--------------------------------------------------------------------------------
Historical Performance -- Class B Shares
--------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns/(1)/
================================================================================
10/31/00 $13.03 $11.77 $0.00 (9.67)%+
--------------------------------------------------------------------------------
4/30/00 11.97 13.03 0.00 8.86
--------------------------------------------------------------------------------
4/30/99 12.96 11.97 0.04 (7.27)
--------------------------------------------------------------------------------
Inception* -- 4/30/98 11.40 12.96 0.02 13.87+
================================================================================
Total $0.06
================================================================================
--------------------------------------------------------------------------------
Historical Performance -- Class L Shares
--------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns/(1)/
================================================================================
10/31/00 $13.02 $11.77 $0.00 (9.60)%+
--------------------------------------------------------------------------------
4/30/00 11.97 13.02 0.00 8.77
--------------------------------------------------------------------------------
4/30/99 12.96 11.97 0.04 (7.27)
--------------------------------------------------------------------------------
Inception* -- 4/30/98 11.40 12.96 0.02 13.87+
================================================================================
Total $0.06
================================================================================
--------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
--------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns/(1)/
================================================================================
10/31/00 $13.16 $11.96 $0.00 (9.12)%+
--------------------------------------------------------------------------------
4/30/00 12.03 13.16 0.08 10.07
--------------------------------------------------------------------------------
4/30/99 13.00 12.03 0.15 (6.17)
--------------------------------------------------------------------------------
Inception* -- 4/30/98 12.44 13.00 0.00 4.50+
================================================================================
Total $0.23
================================================================================
It is the Portfolio's policy to distribute dividends and capital gains, if any,
annually.
--------------------------------------------------------------------------------
4 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Average Annual Total Returns
--------------------------------------------------------------------------------
Without Sales Charges/(1)/
------------------------------------------------
Class A Class B Class L Class Y
================================================================================
Six Months Ended 10/31/00+ (9.36)% (9.67)% (9.60)% (9.12)%
--------------------------------------------------------------------------------
Year Ended 10/31/00 (4.58) (5.31) (5.31) (4.19)
--------------------------------------------------------------------------------
Inception* through 10/31/00 2.08 1.32 1.32 (1.00)
================================================================================
With Sales Charges/(2)/
------------------------------------------------
Class A Class B Class L Class Y
================================================================================
Six Months Ended 10/31/00+ (13.88)% (14.19)% (11.39)% (9.12)%
--------------------------------------------------------------------------------
Year Ended 10/31/00 (9.36) (10.04) (7.23) (4.19)
--------------------------------------------------------------------------------
Inception* through 10/31/00 0.27 0.29 0.95 (1.00)
================================================================================
--------------------------------------------------------------------------------
Cumulative Total Returns
--------------------------------------------------------------------------------
Without Sales Charges/(1)/
================================================================================
Class A (Inception* through 10/31/00) 6.08%
--------------------------------------------------------------------------------
Class B (Inception* through 10/31/00) 3.83
--------------------------------------------------------------------------------
Class L (Inception* through 10/31/00) 3.83
--------------------------------------------------------------------------------
Class Y (Inception* through 10/31/00) (2.62)
--------------------------------------------------------------------------------
/(1)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
/(2)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from initial purchase.
Thereafter, this CDSC declines by 1.00% per year until no CDSC is
incurred. Class L shares also reflect the deduction of a 1.00% CDSC,
which applies if shares are redeemed within the first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* The inception date for Class A, B and L shares is December 19, 1997 and
the inception date for Class Y shares is March 10, 1998.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 5
<PAGE>
--------------------------------------------------------------------------------
Global Value Fund at a Glance (unaudited)
--------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A, B and L Shares of the
Global Value Fund vs. MSCI All Country World Free Index+
--------------------------------------------------------------------------------
December 1997 -- October 2000
[GRAPH]
Class A Class B Class L Index
Dec 19, 1997 9,500 10,000 9,900 10,000
Apr. 1998 10,842 10,887 11,168 11,643
Oct. 1998 8,589 8,531 8,797 11,132
Apr. 1999 10,131 10,159 10,449 13,399
Oct. 1999 10,561 10,565 10,851 14,028
Apr. 2000 11,119 11,194 11,366 15,140
Oct 31, 2000 10,078 10,083 10,274 14,139
+ Hypothetical illustration of $10,000 invested in Class A, B and L shares at
inception on December 19, 1997, assuming deduction of the maximum initial
sales charges of 5.00% and 1.00% for Class A and L shares, respectively. It
also assumes the deduction of the maximum 5.00% and 1.00% CDSCs for Class B
and L shares, respectively, and the reinvestment of dividends and capital
gains, if any, at net asset value through October 31, 2000. The Morgan
Stanley Capital International ("MSCI") All Country World Free Index
includes 47 markets, of which emerging markets represent approximately 9.5%
and excludes shares which are not readily purchased by non-local investors.
The performance of the Portfolio's other class may be greater or less than
the shares' performance indicated on this chart, depending on whether
greater or lesser sales charges and fees were incurred by shareholders
investing in the other class. An investor cannot invest directly in an
index.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital
gains.
Top Ten Holdings* As of October 31, 2000
-------------------------------------------------------------------
1. HSBC Holdings PLC 2.3%
-------------------------------------------------------------------
2. The Gap, Inc. 2.1
-------------------------------------------------------------------
3. Compagnie de Saint-Gobain 1.9
-------------------------------------------------------------------
4. Electronic Data Systems Corp. 1.9
-------------------------------------------------------------------
5. International Business Machines Corp. 1.9
-------------------------------------------------------------------
6. American Home Products Corp. 1.8
-------------------------------------------------------------------
7. Bank of America Corp. 1.8
-------------------------------------------------------------------
8. Bristol-Myers Squibb Co. 1.8
-------------------------------------------------------------------
9. FedEx Corp. 1.8
-------------------------------------------------------------------
10. NCR Corp. 1.8
-------------------------------------------------------------------
Investment Allocation** As of October 31, 2000
-------------------------------------------------------------------
[GRAPH]
6.3% Repurchase Agreement
32.5% Europe
20.8% Asia/Pacific
36.8% North America
3.6% South America
* As a percentage of total stocks. Please note that Portfolio holdings are
subject to change.
** As a percentage of total investments. Please note that Portfolio holdings
are subject to change.
--------------------------------------------------------------------------------
6 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Smith Barney Hansberger Global Small Cap Value Fund
--------------------------------------------------------------------------------
Special Shareholder Notice
On Wednesday, November 22, 2000, the shareholders of Smith Barney Hansberger
Global Small Cap Value Fund ("Portfolio") approved a reorganization of the
Portfolio into Smith Barney Hansberger Global Value Fund. The merger occurred
Friday, December 1, 2000. Under the terms of the agreement and plan of
reorganization, the shareholders of the Portfolio will receive the same class of
shares of Smith Barney Hansberger Global Value Fund that are of equal value to
their aggregate investments in the Portfolio.
Performance Update
For the six months ended October 31, 2000, the Portfolio's Class A shares,
without and with sales charges, reported negative total returns of 12.22% and
16.63%, respectively. In comparison, the Salomon Smith Barney World Extended
Market Index/1/ returned a negative 2.07% for the same period. Past performance
is not indicative of future results.
Investment Strategy
The Portfolio seeks long-term capital growth by investing primarily in common
stocks and other equity securities of U.S. and foreign companies, including
those of emerging market issuers, with relatively small market
capitalizations./2/ These are market capitalizations of $1.4 billion or less at
the time of investment. 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.
We employ a "bottom-up"/3/ approach to security selection, focusing primarily on
identifying individual securities that meet the Portfolio's value criteria. The
Portfolio seeks to invest in companies with low share prices relative to their
earnings, cash flow and/or net asset value.
Market Update
Over the past year, conditions in global markets have been very difficult with
the small cap value sector being no exception. The boom and subsequent bust of
high technology stocks, rising interest rates and high oil prices have added
tremendous uncertainty to the markets. In addition, a slowdown in the U.S.
economy, weakness in the euro,/4/ slower than expected recovery in Japan and a
perceived delay in corporate restructuring in many developing markets has
further affected sentiment adversely. Given these unfavorable market conditions,
it is not surprising that markets, and especially the small cap sector, continue
to be volatile.
During the period, on a geographic basis, the Portfolio was overweighted in
Asia, underweighted in the U.S. and Europe relative to the Salomon Smith Barney
World Extended Market Index. The primary reason for the overweight position in
Asia was our belief that the very positive fundamentals of the Asian economies
in 1999 and 2000 were not being reflected in select stock prices. In particular,
the Asian economies (ex-Japan) have staged a remarkable recovery, averaging 5%
to 6% annual gross domestic product ("GDP")/5/ growth rates. Current account
surpluses are at historical high levels and foreign exchange reserves have
recovered to, and in some cases, surpassed pre-crisis levels.
--------------
/1/ The Salomon Smith Barney World Extended Market Index is a component of the
Broad Market Index ("BMI") which defines the small-capitalization stock
universe or remaining 20% of the capital of each country within the Index.
The BMI universe spans 22 countries and includes listed shares of countries
with a total available market capitalization of at least the local
equivalent of $100 million on the last business day of May each year.
Please note that an investor cannot invest directly in an index.
/2/ Please note that investments in securities of smaller, less-known companies
may be more volatile than those of larger companies.
/3/ Bottom-up investing is a search for outstanding performance of individual
stocks before considering the impact of economic trends.
/4/ 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.
/5/ GDP is the market value of the goods and services produced by labor and
property in the U.S. GDP is comprised of consumer and government purchases,
private domestic investments and net exports of goods and services.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 7
<PAGE>
However, the markets have not performed in line with the economies and have in
large part stayed near historical lows. We do not believe this makes sense and
we expect that the Asian markets should soon reflect economic reality, hopefully
resulting in solid performances. On a bottom-up basis, we have been able to
identify many high quality companies that have been restructuring rapidly and
focusing on improving profitability and enhancing shareholder value. Most
importantly, we were able to buy these companies at what we thought were
extremely attractive prices.
The information provided in the commentaries on pages 2 through 8 represent the
opinion of the managers and are not intended to be a forecast of future events,
a guarantee of future results nor investment advice. Further, there is no
assurance that certain securities will remain in or out of the Portfolios.
Please refer to pages 12 through 18 for a list and percentage breakdown of the
Portfolios' holdings. Also, please note any discussion of the Portfolios'
holdings is as of October 31, 2000 and is subject to change.
--------------------------------------------------------------------------------
8 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Historical Performance -- Class A Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-----------------------
Beginning End Income Capital Gain Return of Total
Period Ended of Period of Period Dividends Distributions Capital Returns/(1)/
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
10/31/00 $ 8.51 $ 7.47 $0.00 $0.00 $0.00 (12.22)%+
-----------------------------------------------------------------------------------------------------------------
4/30/00 10.19 8.51 0.05 0.00 0.00 (16.06)
-----------------------------------------------------------------------------------------------------------------
4/30/99 12.37 10.19 0.16 0.03 0.00 (15.95)
=================================================================================================================
Inception* -- 4/30/98 11.40 12.37 0.01 0.00 0.00 8.64+
=================================================================================================================
Total $0.22 $0.03 $0.00
=================================================================================================================
</TABLE>
--------------------------------------------------------------------------------
Historical Performance -- Class B Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-----------------------
Beginning End Income Capital Gain Return of Total
Period Ended of Period of Period Dividends Distributions Capital Returns/(1)/
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
10/31/00 $ 8.46 $ 7.40 $0.00 $0.00 $0.00 (12.53)%+
-----------------------------------------------------------------------------------------------------------------
4/30/00 10.16 8.46 0.00 0.00 0.00 (16.73)
-----------------------------------------------------------------------------------------------------------------
4/30/99 12.34 10.16 0.09 0.03 0.00 (16.61)
-----------------------------------------------------------------------------------------------------------------
Inception*-- 4/30/98 11.40 12.34 0.01 0.00 0.00 8.38+
=================================================================================================================
Total $0.10 $0.03 $0.00
=================================================================================================================
</TABLE>
--------------------------------------------------------------------------------
Historical Performance -- Class L Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-----------------------
Beginning End Income Capital Gain Return of Total
Period Ended of Period of Period Dividends Distributions Capital Returns/(1)/
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
10/31/00 $ 8.42 $ 7.33 $0.00 $0.00 $0.00 (12.95)%+
-----------------------------------------------------------------------------------------------------------------
4/30/00 10.14 8.42 0.00 0.00 0.00 (16.96)
-----------------------------------------------------------------------------------------------------------------
4/30/99 12.34 10.14 0.09 0.03 0.00 (16.77)
-----------------------------------------------------------------------------------------------------------------
Inception* -- 4/30/98 11.40 12.34 0.01 0.00 0.00 8.38+
=================================================================================================================
Total $0.10 $0.03 $0.00
=================================================================================================================
</TABLE>
--------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-----------------------
Beginning End Income Capital Gain Return of Total
Period Ended of Period of Period Dividends Distributions Capital Returns/(1)/
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
10/31/00 $ 8.51 $ 7.47 $0.00 $0.00 $0.00 (12.22)%+
-----------------------------------------------------------------------------------------------------------------
4/30/00 10.22 8.51 0.08 0.00 0.00 (16.05)
-----------------------------------------------------------------------------------------------------------------
4/30/99 12.37 10.22 0.19 0.03 0.00 (15.49)
-----------------------------------------------------------------------------------------------------------------
Inception* -- 4/30/98 11.74 12.37 0.00 0.00 0.00 5.37+
=================================================================================================================
Total $0.27 $0.03 $0.00
=================================================================================================================
</TABLE>
It is the Portfolio's policy to distribute dividends and capital gains, if any,
annually.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 9
<PAGE>
--------------------------------------------------------------------------------
Average Annual Total Returns
--------------------------------------------------------------------------------
Without Sales Charges/(1)/
---------------------------------------------
Class A Class B Class L Class Y
================================================================================
Six Months Ended 10/31/00+ (12.22)% (12.53)% (12.95)% (12.22)%
--------------------------------------------------------------------------------
Year Ended 10/31/00 (19.52) (20.09) (20.76) (19.63)
--------------------------------------------------------------------------------
Inception* through 10/31/00 (12.90) (13.56) (13.85) (14.88)
================================================================================
With Sales Charges/(2)/
---------------------------------------------
Class A Class B Class L Class Y
================================================================================
Six Months Ended 10/31/00+ (16.63)% (16.90)% (14.73)% (12.22)%
--------------------------------------------------------------------------------
Year Ended 10/31/00 (23.54) (24.08) (22.31) (19.63)
--------------------------------------------------------------------------------
Inception* through 10/31/00 (14.45) (14.46) (14.16) (14.88)
================================================================================
--------------------------------------------------------------------------------
Cumulative Total Returns
--------------------------------------------------------------------------------
Without Sales Charges/(1)/
================================================================================
Class A (Inception* through 10/31/00) (32.71)%
--------------------------------------------------------------------------------
Class B (Inception* through 10/31/00) (34.17)
--------------------------------------------------------------------------------
Class L (Inception* through 10/31/00) (34.80)
--------------------------------------------------------------------------------
Class Y (Inception* through 10/31/00) (34.72)
================================================================================
/(1)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
/(2)/ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from initial purchase.
Thereafter, this CDSC declines by 1.00% per year until no CDSC is
incurred. Class L shares also reflect the deduction of a 1.00% CDSC,
which applies if shares are redeemed within the first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* The inception date for Class A, B and L shares is December 19, 1997 and
the inception date for Class Y shares is March 10, 1998.
--------------------------------------------------------------------------------
10 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Global Small Cap Value Fund at a Glance (unaudited)
--------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A, B and L Shares of the
Global Small Cap Value Fund vs. Salomon Smith Barney World Extended Market
Index+
--------------------------------------------------------------------------------
December 1997 -- October 2000
[GRAPH]
Class A Class B Class L Index
Dec 19, 1997 9,500 10,000 9,900 10,000
Apr. 1998 10,321 10,338 10,625 11,659
Oct. 1998 7,734 7,685 7,924 9,933
Apr. 1999 8,675 8,682 8,926 11,299
Oct. 1999 7,943 7,912 8,143 11,668
Apr. 2000 7,282 7,303 7,412 13,431
Oct 31, 2000 6,392 6,388 6,453 13,153
+ Hypothetical illustration of $10,000 invested in Class A, B and L shares at
inception on December 19, 1997, assuming deduction of the maximum initial
sales charges of 5.00% and 1.00% for Class A and L shares, respectively. It
also assumes the deduction of the maximum 5.00% and 1.00% CDSCs for Class B
and L shares, respectively, and the reinvestment of dividends and capital
gains, if any, at net asset value through October 31, 2000. The Salomon
Smith Barney World Extended Market Index is a component of the Broad Market
Index ("BMI") which defines the small-capitalization stock universe or
remaining 20% of the capital of each country within the Index. The BMI
universe spans 22 countries and includes listed shares of countries with a
total available market capitalization of at least the local equivalent of
$100 million on the last business day of May each year. The performance of
the Portfolio's other class may be greater or less than the shares'
performance indicated on this chart, depending on whether greater or lesser
sales charges and fees were incurred by shareholders investing in the other
class. An investor cannot invest directly in an index.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital
gains.
Top Ten Holdings* As of October 31, 2000
-------------------------------------------------------------------
1. Wing Hang Bank Ltd. 4.7%
-------------------------------------------------------------------
2. Irkutskenergo ADR 4.3
-------------------------------------------------------------------
3. VoiceStream Wireless Corp. 3.7
-------------------------------------------------------------------
4. Daito Trust Construction Co., Ltd. 3.5
-------------------------------------------------------------------
5. NCR Corp. 3.5
-------------------------------------------------------------------
6. BE Aerospace, Inc. 3.4
-------------------------------------------------------------------
7. Grupo Iusacell S.A. de C.V. 3.3
-------------------------------------------------------------------
8. Unisys Corp. 3.2
-------------------------------------------------------------------
9. PT Ramayana Lestari Sentosa TBK 3.1
-------------------------------------------------------------------
10. Nihon Unisys, Ltd. 2.9
-------------------------------------------------------------------
Investment Allocation** As of October 31, 2000
-------------------------------------------------------------------
[GRAPH]
3.4% Repurchase Agreement
35.6% Asia/Pacific
3.3% Australia
29.9% Europe
24.6% North America
3.2% South America
* As a percentage of total stocks. Please note that Portfolio holdings are
subject to change.
** As a percentage of total investments. Please note that Portfolio holdings
are subject to change.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 11
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) October 31, 2000
--------------------------------------------------------------------------------
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
SHARES SECURITY VALUE
================================================================================
STOCK -- 93.7%
Austria -- 0.7%
39,800 VA Technologie AG $ 1,609,137
--------------------------------------------------------------------------------
Brazil -- 1.3%
62,000 Companhia Vale do Rio Doce ADR 1,449,250
85,300 Embratel Participacoes S.A. 1,380,794
--------------------------------------------------------------------------------
2,830,044
--------------------------------------------------------------------------------
Canada -- 1.1%
77,000 Alcan Aluminium Ltd. 2,430,313
--------------------------------------------------------------------------------
China -- 0.6%
13,000,000 Sinopec Shanghai Petrochemical Co., Ltd. 1,316,819
--------------------------------------------------------------------------------
Croatia -- 0.7%
154,800 Pliva DD GDR (a)(b) 1,633,140
--------------------------------------------------------------------------------
Finland -- 0.8%
87,000 TietoEnator Oyj 1,670,240
--------------------------------------------------------------------------------
France -- 2.8%
30,006 Aventis S.A. 2,161,815
30,500 Compagnie de Saint-Gobain 4,030,301
--------------------------------------------------------------------------------
6,192,116
--------------------------------------------------------------------------------
Germany -- 4.0%
45,500 Adidas-Salomon AG 2,013,137
53,000 DaimlerChrysler AG 2,464,019
32,000 E.On AG 1,616,545
17,700 Infineon Technologies AG (a) 720,872
10,000 SAP AG 1,962,196
--------------------------------------------------------------------------------
8,776,769
--------------------------------------------------------------------------------
Hong Kong -- 5.1%
255,000 China Mobile Ltd. (a) 1,642,978
341,581 HSBC Holdings PLC 4,752,028
248,600 Hutchison Whampoa Ltd. 3,083,952
1,302,936 SmarTone Telecommunications Holdings Ltd. 1,929,570
--------------------------------------------------------------------------------
11,408,528
--------------------------------------------------------------------------------
Italy -- 2.3%
470,000 ENI S.p.A. 2,533,649
1,750,000 Parmalat Finanziaria S.p.A. (a) 2,551,280
--------------------------------------------------------------------------------
5,084,929
--------------------------------------------------------------------------------
Japan -- 11.8%
353,000 Asahi Chemical Industry Co., Ltd. 2,185,438
226,000 Daiwa Securities Group Inc. 2,502,372
132,000 Fujitsu Ltd. 2,350,105
250,000 Hitachi, Ltd. 2,678,817
125,000 Marubeni Corp. 1,843,118
271 Mizuho Holdings, Inc. 2,082,324
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) October 31, 2000
--------------------------------------------------------------------------------
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
SHARES SECURITY VALUE
================================================================================
Japan -- 11.8% (continued)
144,000 NEC Corp. $ 2,743,108
206,000 Nihon Unisys, Ltd. 2,792,197
113,000 The Nippon Fire & Marine Insurance Co. Ltd. 420,167
700,000 Nishimatsu Construction Co., Ltd. 2,211,741
325,000 The Sumitomo Trust & Banking Co., Ltd. 2,500,229
350,000 The Tokai Bank, Ltd. 1,875,172
--------------------------------------------------------------------------------
26,184,788
--------------------------------------------------------------------------------
Malaysia -- 0.7%
1,850,000 Technology Resources Industries Berhad 1,499,474
--------------------------------------------------------------------------------
Mexico -- 2.3%
80,238 Cemex S.A. de C.V. 1,695,028
28,600 Grupo Televisa S.A. GDR (a) 1,547,975
33,000 Telefonos de Mexico S.A. ADR, Class L Shares 1,779,938
--------------------------------------------------------------------------------
5,022,941
--------------------------------------------------------------------------------
Netherlands -- 2.7%
33,892 ING Groep NV 2,324,581
50,350 Koninklijke KPN NV 1,018,683
121,000 Wolters Kluwer NV 2,719,885
--------------------------------------------------------------------------------
6,063,149
--------------------------------------------------------------------------------
Norway -- 1.3%
203,200 Petroleum Geo-Services ASA (a) 2,796,581
--------------------------------------------------------------------------------
Russia -- 1.4%
38,400 Lukoil Holding ADR 2,050,560
120,000 Rostelecom ADR 1,050,000
--------------------------------------------------------------------------------
3,100,560
--------------------------------------------------------------------------------
Singapore -- 0.9%
430,000 City Developments Ltd. 1,984,050
--------------------------------------------------------------------------------
Slovakia -- 0.1%
122,200 Slovakofarma A.S. GDR (b) 235,235
--------------------------------------------------------------------------------
South Korea -- 1.7%
35,000 Korea Telecom Corp. ADR (a) 1,290,625
12,848 Samsung Electronics GDR (b) 950,752
59,410 SK Telecom Co., Ltd. ADR 1,488,963
--------------------------------------------------------------------------------
3,730,340
--------------------------------------------------------------------------------
Spain -- 1.1%
198,000 Iberdrola S.A. 2,418,359
--------------------------------------------------------------------------------
Sweden -- 1.9%
100,000 Atlas Copco AB, Class B Shares 2,060,878
166,000 Electrolux AB 2,087,425
--------------------------------------------------------------------------------
4,148,303
--------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 13
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
SHARES SECURITY VALUE
================================================================================
Switzerland -- 3.1%
16,534 ABB Ltd. $ 1,468,943
360 Roche Holding AG 3,287,470
8,700 Swisscom AG 2,208,748
--------------------------------------------------------------------------------
6,965,161
--------------------------------------------------------------------------------
United Kingdom -- 9.6%
110,000 Barclays PLC 3,146,691
536,267 British Airways PLC 2,402,323
197,443 British Telecommunications PLC 2,319,452
330,000 The Great Universal Stores PLC 2,280,951
182,000 Lloyds TSB Group PLC 1,856,577
270,000 Nycomed Amersham PLC 2,430,808
553,201 Rolls-Royce PLC 1,447,949
148,776 Standard Chartered PLC 2,150,648
490,000 Unilever PLC 3,322,830
--------------------------------------------------------------------------------
21,358,229
--------------------------------------------------------------------------------
United States -- 35.7%
57,500 American Home Products Corp. 3,651,250
120,000 AT&T Corp. 2,782,500
75,000 The B.F. Goodrich Co. 3,070,313
78,000 Bank of America Corp. 3,748,875
60,000 Bristol-Myers Squibb Co. 3,656,250
223,500 CIBER, Inc. (a) 1,746,094
65,000 Deere & Co. 2,392,813
83,000 Electronic Data Systems Corp. 3,895,813
80,000 FedEx Corp. (a) 3,748,800
167,000 The Gap, Inc. 4,310,688
41,000 International Business Machines Corp. 4,038,500
18,000 Johnson & Johnson 1,658,250
92,500 Lafarge Corp. 1,745,938
150,000 Lucent Technologies Inc. 3,496,875
90,000 McDonald's Corp. 2,790,000
96,500 McKesson HBOC, Inc. 2,708,031
87,000 NCR Corp. (a) 3,751,875
75,000 NIKE, Inc., Class B Shares 2,995,313
92,000 Praxair, Inc. 3,427,000
34,000 The Procter & Gamble Co. 2,428,875
80,000 Protective Life Corp. 1,850,000
63,984 Qwest Communications International Inc. (a) 3,111,263
286,000 Unisys Corp. (a) 3,646,500
57,340 Verizon Communications 3,314,969
20,100 VoiceStream Wireless Corp. (a) 2,643,150
31,000 XL Capital, Ltd., Class A Shares (c) 2,383,125
--------------------------------------------------------------------------------
78,993,060
--------------------------------------------------------------------------------
TOTAL STOCK
(Cost -- $208,177,503) 207,452,265
================================================================================
See Notes to Financial Statements.
--------------------------------------------------------------------------------
14 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
SMITH BARNEY HANSBERGER GLOBAL VALUE FUND
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
=============================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT -- 6.3%
$13,964,000 CIBC Wood Gundy Securities Inc., 6.470% due 11/1/00;
Proceeds at maturity -- $13,966,510; (Fully collateralized by
U.S. Treasury Notes, 5.000% due 2/28/01;
Market value -- $14,243,628) (Cost -- $13,964,000) $ 13,964,000
----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $222,141,503*) $221,416,265
=============================================================================================================
</TABLE>
(a) Non-income producing security.
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers.
(c) Security is segregated for open forward foreign currency contracts.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 15
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
SMITH BARNEY HANSBERGER GLOBAL SMALL CAP VALUE FUND
SHARES SECURITY VALUE
================================================================================
STOCK -- 96.6%
Australia -- 1.5%
47,700 Mayne Nickless Ltd. $ 126,556
--------------------------------------------------------------------------------
Austria -- 2.5%
4,400 Boehler-Uddeholm AG 137,989
2,000 Mayr-Melnhof Karton AG 77,556
--------------------------------------------------------------------------------
215,545
--------------------------------------------------------------------------------
China -- 3.6%
1,450,000 China Eastern Airlines Corp. Ltd. (a) 210,088
1,000,000 Sinopec Shanghai Petrochemical Co., Ltd. 101,294
--------------------------------------------------------------------------------
311,382
--------------------------------------------------------------------------------
Czech Republic -- 2.3%
27,000 Komercni Banka A.S. ADR (a) 192,375
--------------------------------------------------------------------------------
Denmark -- 2.4%
10,200 Sophus Berendsen A/S, Class B Shares 202,116
--------------------------------------------------------------------------------
Finland -- 1.9%
8,500 TietoEnator Oyj 163,184
--------------------------------------------------------------------------------
France -- 1.8%
8,000 Neopost S.A. (a) 153,314
--------------------------------------------------------------------------------
Germany -- 3.6%
9,300 FAG Kugelfischer Georg Schaefer AG 67,318
8,600 Jenoptik AG 238,362
--------------------------------------------------------------------------------
305,680
--------------------------------------------------------------------------------
Hong Kong -- 7.5%
74,000 SmarTone Telecommunications Holdings Ltd. 109,590
220,000 South China Morning Post Holdings Ltd. 150,915
125,500 Wing Hang Bank Ltd. 382,980
--------------------------------------------------------------------------------
643,485
--------------------------------------------------------------------------------
Hungary -- 3.4%
2,300 Egis Rt. 96,996
4,000 Gedeon Richter Rt. 194,315
--------------------------------------------------------------------------------
291,311
--------------------------------------------------------------------------------
Indonesia -- 3.0%
532,000 PT Ramayana Lestari Sentosa TBK 255,769
--------------------------------------------------------------------------------
Israel -- 1.8%
25,000 Partner Communications Co. Ltd. ADR (a) 150,000
--------------------------------------------------------------------------------
Japan -- 12.3%
17,000 Daito Trust Construction Co., Ltd. 286,473
28,000 The Higo Bank, Ltd. 100,009
36,000 JGC Corp. 224,526
See Notes to Financial Statements.
--------------------------------------------------------------------------------
16 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
SMITH BARNEY HANSBERGER GLOBAL SMALL CAP VALUE FUND
SHARES SECURITY VALUE
================================================================================
Japan -- 12.3% (continued)
43,000 Koito Manufacturing Co., Ltd. $ 194,935
17,700 Nihon Unisys, Ltd. 239,912
--------------------------------------------------------------------------------
1,045,855
--------------------------------------------------------------------------------
Malaysia -- 3.5%
191,000 Technology Resources Industries Berhad 154,811
100,000 United Engineers Berhad 142,105
--------------------------------------------------------------------------------
296,916
--------------------------------------------------------------------------------
Mexico -- 3.2%
21,000 Grupo Iusacell S.A. de C.V. (a) 273,000
--------------------------------------------------------------------------------
New Zealand -- 1.8%
53,000 Fisher & Paykel Industries Ltd. 151,457
--------------------------------------------------------------------------------
Norway -- 1.7%
31,600 Merkantildata ASA 148,818
--------------------------------------------------------------------------------
Philippines -- 0.0%
6,000 Jollibee Foods Corp., Warrants expire 3/24/03 (a) 1,232
--------------------------------------------------------------------------------
Russia -- 4.8%
59,000 Irkutskenergo ADR 354,000
1,900 Mobile Telesystems ADR (a) 52,488
--------------------------------------------------------------------------------
406,488
--------------------------------------------------------------------------------
Slovakia -- 0.5%
1,400 Slovakofarma A.S. GDR (b) 42,480
--------------------------------------------------------------------------------
South Korea -- 2.8%
11,000 Hyundai Electronics Industries Co. Ltd. (a) 67,596
15,000 Kookmin Bank 171,429
--------------------------------------------------------------------------------
239,025
--------------------------------------------------------------------------------
Spain -- 1.5%
3,200 Banco Pastor S.A. 124,224
--------------------------------------------------------------------------------
Sweden -- 1.7%
26,000 Trelleborg AB 145,309
--------------------------------------------------------------------------------
Thailand -- 2.9%
20,000 Advanced Info Service Public Co. Ltd. (a) 164,602
93,000 Bangkok Bank Public Co. Ltd. (a) 79,288
--------------------------------------------------------------------------------
243,890
--------------------------------------------------------------------------------
United States -- 24.6%
12,000 AGCO Corp. 136,500
2,900 Alpharma Inc., Class A Shares 112,556
17,000 BE Aerospace, Inc. (a) 280,500
26,000 CIBER, Inc. (a) 203,125
20,700 Hoenig Group Inc. 217,350
4,400 Invacare Corp. 125,400
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 17
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) October 31, 2000
--------------------------------------------------------------------------------
SMITH BARNEY HANSBERGER GLOBAL SMALL CAP VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
========================================================================================================
<S> <C> <C>
United States -- 24.6% (continued)
35,000 Iomega Corp. (a) $ 171,850
6,700 NCR Corp. (a) 288,938
20,500 Unisys Corp. (a) 261,375
2,300 VoiceStream Wireless Corp. (a) 302,450
--------------------------------------------------------------------------------------------------------
2,100,044
--------------------------------------------------------------------------------------------------------
TOTAL STOCK
(Cost -- $10,096,674) 8,229,455
========================================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
========================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT -- 3.4%
$293,000 CIBC Wood Gundy Securities Inc., 6.470% due 11/1/00;
Proceeds at maturity -- $293,053; (Fully collateralized by
U.S. Treasury Notes, 5.000% due 2/28/01;
Market value -- $299,147) (Cost -- $293,000) 293,000
========================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $10,389,674*) $8,522,455
========================================================================================================
</TABLE>
(a) Non-income producing security.
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
18 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Smith Barney
Smith Barney Hansberger
Hansberger Global Small
Global Value Cap Value
Fund Fund
=====================================================================================================================
<S> <C> <C>
ASSETS:
Investments, at cost $ 222,141,503 $ 10,389,674
Foreign currency, at cost 9 --
=====================================================================================================================
Investments, at value $ 221,416,265 $ 8,522,455
Foreign currency, at value 9 --
Cash 604 329
Dividends and interest receivable 347,698 14,305
Receivable for Fund shares sold 161,860 --
Receivable for securities sold 117,486 --
---------------------------------------------------------------------------------------------------------------------
Total Assets 222,043,922 8,537,089
---------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Management fees payable 223,082 6,295
Distribution fees payable 12,795 1,609
Payable for open forward foreign currency contracts (Note 4) 1,304 --
Accrued expenses 68,215 41,705
---------------------------------------------------------------------------------------------------------------------
Total Liabilities 305,396 49,609
---------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 221,738,526 $ 8,487,480
=====================================================================================================================
NET ASSETS:
Par value of capital shares $ 18,591 $ 1,141
Capital paid in excess of par value 224,231,669 15,434,470
Undistributed net investment income 885,832 --
Accumulated net investment loss -- (87,106)
Accumulated net realized loss from security transactions and
foreign currencies (2,651,439) (4,992,627)
Net unrealized depreciation of investments and foreign currencies (746,127) (1,868,398)
---------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 221,738,526 $ 8,487,480
=====================================================================================================================
Shares Outstanding:
Class A 1,102,620 251,234
----------------------------------------------------------------------------------------------------------------
Class B 1,951,327 335,560
----------------------------------------------------------------------------------------------------------------
Class L 665,150 86,057
----------------------------------------------------------------------------------------------------------------
Class Y 14,872,060 468,462
----------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $11.91 $7.47
----------------------------------------------------------------------------------------------------------------
Class B * $11.77 $7.40
----------------------------------------------------------------------------------------------------------------
Class L ** $11.77 $7.33
----------------------------------------------------------------------------------------------------------------
Class Y (and redemption price) $11.96 $7.47
----------------------------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $12.54 $7.86
----------------------------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $11.89 $7.40
=====================================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from initial purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 19
<PAGE>
--------------------------------------------------------------------------------
Statements of Operations (unaudited) For the Six Months Ended October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Smith Barney
Smith Barney Hansberger
Hansberger Global Small
Global Value Cap Value
Fund Fund
=====================================================================================================================
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 2,155,443 $ 91,754
Interest 371,862 17,078
Less: Foreign withholding tax (147,618) (1,270)
---------------------------------------------------------------------------------------------------------------------
Total Investment Income 2,379,687 107,562
---------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 1,159,117 53,930
Distribution fees (Note 2) 208,386 23,712
Custody 60,436 8,250
Registration fees 44,808 27,873
Shareholder and system servicing fees 20,264 13,252
Shareholder communications 15,813 9,222
Audit and legal 13,791 10,972
Directors' fees 9,300 4,148
Other 17,164 5,208
---------------------------------------------------------------------------------------------------------------------
Total Expenses 1,549,079 156,567
Less: Management fee waiver (Note 2) -- (11,557)
---------------------------------------------------------------------------------------------------------------------
Net Expenses 1,549,079 145,010
---------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 830,608 (37,448)
---------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES (NOTES 3 AND 4):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 2,466,945 (411,333)
Foreign currency transactions (334,014) (25,003)
---------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) 2,132,931 (436,336)
---------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments and Foreign Currencies:
Beginning of period 24,687,779 (1,053,639)
End of period (746,127) (1,868,398)
---------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation) (25,433,906) (814,759)
---------------------------------------------------------------------------------------------------------------------
Net Loss on Investments and Foreign Currencies (23,300,975) (1,251,095)
---------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Operations $(22,470,367) $ (1,288,543)
=====================================================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
20 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Six Months Ended October 31, 2000 (unaudited)
and the Year Ended April 30, 2000
<TABLE>
<CAPTION>
Smith Barney Hansberger Global Value Fund October 31 April 30
=========================================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 830,608 $ 1,362,503
Net realized gain 2,132,931 14,514,785
Change in net unrealized appreciation (depreciation) (25,433,906) 6,040,645
-------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (22,470,367) 21,917,933
-------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (1,199,656)
-------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders -- (1,199,656)
-------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 108,496,699 59,522,830
Net asset value of shares issued for reinvestment of dividends -- 40,655
Cost of shares reacquired (108,658,464) (54,500,529)
-------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Fund Share Transactions (161,765) 5,062,956
-------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (22,632,132) 25,781,233
NET ASSETS:
Beginning of period 244,370,658 218,589,425
-------------------------------------------------------------------------------------------------------------------------
End of period* $ 221,738,526 $ 244,370,658
=========================================================================================================================
* Includes undistributed net investment income of: $ 885,832 $ 389,238
=========================================================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 21
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
For the Six Months Ended October 31, 2000 (unaudited)
and the Year Ended April 30, 2000
<TABLE>
<CAPTION>
Smith Barney Hansberger Global Small Cap Value Fund October 31 April 30
==================================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment loss $ (37,448) $ (20,848)
Net realized loss (436,336) (3,013,630)
Change in net unrealized appreciation (depreciation) (814,759) 562,109
------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Operations (1,288,543) (2,472,369)
------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (42,420)
Capital -- (603)
------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders -- (43,023)
------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 2,404,416 2,326,627
Net asset value of shares issued for reinvestment of dividends -- 18,976
Cost of shares reacquired (3,796,251) (6,002,825)
------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share Transactions (1,391,835) (3,657,222)
------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (2,680,378) (6,172,614)
NET ASSETS:
Beginning of period 11,167,858 17,340,472
------------------------------------------------------------------------------------------------------------------
End of period* $ 8,487,480 $ 11,167,858
==================================================================================================================
* Includes overdistributed net investment income of: -- $(24,655)
------------------------------------------------------------------------------------------------------------------
* Includes accumulated net investment loss of: $(87,106) --
==================================================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
22 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Hansberger Global Value Fund and Smith Barney Hansberger Global
Small Cap Value Fund ("Portfolios") are separate investment portfolios of the
Smith Barney Investment Funds Inc. ("Fund"). The Fund, a Maryland corporation,
is registered under the Investment Company Act of 1940, as amended, as an
open-end, diversified management investment company. The Fund consists of these
Portfolios and nine other separate investment portfolios: Peachtree Growth Fund,
Smith Barney Investment Grade Bond Fund, Smith Barney Premier Selections Large
Cap Fund, formerly known as Smith Barney Premier Selections Fund, Smith Barney
Premier Selections All Cap Growth Fund, Smith Barney Premier Selections Global
Growth Fund, Smith Barney Small Cap Growth Fund, Smith Barney Small Cap Value
Fund, Smith Barney Government Securities Fund and Smith Barney Group Spectrum
Fund. The financial statements and financial highlights for the other portfolios
are presented in separate shareholder reports.
The significant accounting policies consistently followed by the Portfolios are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on the primary
exchange on which they are traded; securities listed or traded on certain
foreign exchanges or other markets whose operations are similar to the U.S.
over-the-counter market (including securities listed on exchanges where the
primary market is believed to be over-the-counter) and securities for which no
sales price was reported on that date are valued at the mean between the bid and
ask prices. Securities which are listed or traded on more than one exchange or
market are valued at the quotations on the exchange or market determined to be
the primary market for such securities; (c) securities for which market
quotations are not available will be valued in good faith at fair value by or
under the direction of the Board of Directors; (d) securities maturing within 60
days are valued at cost plus accreted discount, or minus amortized premium,
which approximates value; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) interest income,
adjusted for amortization of premium and accretion of discount, is recorded on
an accrual basis; (g) dividend income is recorded on the ex-dividend date;
foreign dividend income is recorded on the ex-dividend date or as soon as
practical after the Portfolios determine the existence of a dividend declaration
after exercising reasonable due diligence; (h) direct expenses are charged to
each Portfolio and class; management fees and general expenses are allocated on
the basis of relative net assets by class; (i) dividends and distributions to
shareholders are recorded on the ex-dividend date; (j) the accounting records of
each Portfolio are maintained in U.S. dollars. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars on the date
of valuation. Purchases and sales of securities, and income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income or expense amounts
recorded and collected or paid are adjusted when reported by the custodian; (k)
the character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. At April 30, 2000, reclassifications were made to the capital
accounts of the Portfolios to reflect permanent book/tax differences and income
and gains available for distributions under tax income regulations. Accordingly,
for Smith Barney Hansberger Global Small Cap Value Fund, a portion of net
investment loss amounting to $44,185 was reclassified to paid-in-capital. Net
investment income, net realized gains and net assets were not affected by these
adjustments; (l) each Portfolio intends to comply with the applicable provisions
of the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies and to make distributions of taxable income sufficient to
relieve each Portfolio from substantially all Federal income and excise taxes;
and (m) estimates and assumptions are required to be made regarding assets,
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 23
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)(continued)
--------------------------------------------------------------------------------
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ.
In addition, the Portfolios may enter into forward exchange contracts in order
to hedge against foreign currency risk. These contracts are marked-to-market
daily by recognizing the difference between the contract exchange rate and the
current market rate as an unrealized gain or loss. Realized gains or losses are
recognized when contracts are settled.
2. Management Agreement and Other Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment manager of the Portfolios. The Smith Barney
Hansberger Global Value Fund ("Global Value") and Smith Barney Hansberger Global
Small Cap Value Fund ("Global Small Cap Value") pay SSBC a management fee
calculated at the annual rate of 0.95% and 1.05%, respectively, of the average
daily net assets of each Portfolio. These fees are calculated daily and paid
monthly. For the six months ended October 31, 2000, SSBC waived a portion of its
management fee for Global Small Cap Value in the amount of $11,557.
SSBC has entered into a sub-advisory agreement with Hansberger Global Investors,
Inc. ("Hansberger"). Pursuant to the sub-advisory agreement, Hansberger is
responsible for the day-to-day portfolio operations and investment decisions of
the Portfolios. SSBC pays Hansberger a fee of 0.50% and 0.60% of the average
daily net assets of Global Value and Global Small Cap Value, respectively, for
the services Hansberger provides as sub-investment adviser. These fees are
calculated daily and paid monthly.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Portfolios' transfer agent and PFPC Global Fund Services ("PFPC") acts as
the Portfolios' sub-transfer agent. CFTC receives account fees and asset-based
fees that vary according to the size and type of account. PFPC is responsible
for shareholder recordkeeping and financial processing for all shareholder
accounts and is paid by CFTC. For the six months ended October 31, 2000, the
Portfolios paid transfer agent fees of $29,946 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Portfolios' distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Portfolios' agency
transactions. Certain other broker-dealers, continue to sell Portfolio shares to
the public as members of the selling group. For the six months ended October 31,
2000, SSB and its affiliates received brokerage commissions of $20,132.
There are maximum initial sales charges of 5.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
5.00% on Class B shares, which applies if redemption occurs within one year from
initial purchase. Thereafter this CDSC declines by 1.00% per year until no CDSC
is incurred. Class L shares have a 1.00% CDSC, which applies if redemption
occurs within the first year of purchase. There is also a CDSC of 1.00% on Class
A shares, which applies if redemption occurs within the first year of purchase.
This CDSC only applies to those purchases of Class A shares, which, when
combined with current holdings of Class A shares, equal or exceed $500,000 in
the aggregate. These purchases do not incur an initial sales charge.
For the six months ended October 31, 2000, CDSC's received by SSB were
approximately:
CDSCs
--------------------------
Portfolio Class B Class L
================================================================================
Global Value $68,000 $1,000
--------------------------------------------------------------------------------
Global Small Cap Value 11,000 1,000
================================================================================
--------------------------------------------------------------------------------
24 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)(continued)
--------------------------------------------------------------------------------
For the six months ended October 31, 2000, sales charges received by SSB and
CFBDS were approximately:
Sales Charges
--------------------------
Portfolio Class A Class L
================================================================================
Global Value $12,000 $9,000
--------------------------------------------------------------------------------
Global Small Cap Value 2,000 3,000
================================================================================
Pursuant to a Distribution Plan, the Portfolios pay a service fee with respect
to Class A, B and L shares calculated at the annual rate of 0.25% of the average
daily net assets of each respective class' shares. The Portfolios also pay a
distribution fee with respect to Class B and L shares calculated at the annual
rate of 0.75% of the average daily net assets for each respective Portfolio and
class. For the six months ended October 31, 2000, total Distribution Plan fees
incurred by the Portfolios were:
Portfolio Class A Class B Class L
================================================================================
Global Value $20,104 $145,566 $42,716
--------------------------------------------------------------------------------
Global Small Cap Value 2,967 16,705 4,040
================================================================================
All officers and one Director of the Fund are employees of SSB.
3. Investments
During the six months ended October 31, 2000, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
Portfolio Purchases Sales
================================================================================
Global Value $98,826,609 $97,737,693
--------------------------------------------------------------------------------
Global Small Cap Value 2,178,457 3,862,250
================================================================================
At October 31, 2000, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
Net Unrealized
Portfolio Appreciation Depreciation Depreciation
===============================================================================
Global Value $26,471,669 $(27,196,907) $ (725,238)
-------------------------------------------------------------------------------
Global Small Cap Value 662,143 (2,529,362) (1,867,219)
===============================================================================
4. Forward Foreign Currency Contracts
At October 31, 2000, Global Value had open forward foreign currency contracts as
described below. The Portfolio bears the market risk that arises from changes in
foreign currency exchange rates. The unrealized loss on the contracts reflected
in the accompanying financial statements were as follows:
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Loss
=================================================================================================
<S> <C> <C> <C> <C>
Global Value
To Sell:
Japanese Yen 8,795,297 $80,565 11/1/00 $ (631)
Japanese Yen 4,033,043 36,950 11/2/00 (673)
-------------------------------------------------------------------------------------------------
Net Unrealized Loss on Open Forward
Foreign Currency Contracts $(1,304)
=================================================================================================
</TABLE>
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 25
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)(continued)
--------------------------------------------------------------------------------
5. Option Contracts
Premiums paid when put or call options are purchased by the Portfolios represent
investments, which are marked-to-market daily. When a purchased option expires,
the Portfolio will realize a loss in the amount of the premium paid. When the
Portfolio enters into a closing sales transaction, the Portfolio will realize a
gain or loss depending on whether the proceeds from the closing sales
transaction are greater or less than the premium paid for the option. When the
Portfolio exercises a put option, it will realize a gain or loss from the sale
of the underlying security and the proceeds from such sale will be decreased by
the amount of the premium originally paid. When the Portfolio exercises a call
option, the cost of the security that the Portfolio purchases upon exercise will
be increased by the premium originally paid.
At October 31, 2000, the Portfolios held no purchased call or put option
contracts.
When a Portfolio writes a covered call or put option, an amount equal to the
premium received by the Portfolio is recorded as a liability, the value of which
is marked-to-market daily. When a written option expires, the Portfolio realizes
a gain equal to the amount of the premium received. When the Portfolio enters
into a closing purchase transaction, the Portfolio realizes a gain or loss
depending upon whether the cost of the closing transaction is greater or less
than the premium originally received without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
eliminated. When a written call option is exercised the cost of the security
sold will be decreased by the premium originally received. When a written put
option is exercised, the amount of the premium originally received will reduce
the cost of the security that the Portfolio purchased upon exercise. When
written index options are exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Portfolio enters into options for hedging purposes. The risk in
writing a covered call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price. The risk in writing a covered put option is that the Portfolio
is exposed to the risk of loss if the market price of the underlying security
declines.
During the six months ended October 31, 2000, the Portfolios did not enter into
any written covered call or put option contracts.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contract. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are made or received and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Portfolio records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract. The Portfolio enters
into such contracts to hedge a portion of its portfolio. The Portfolio bears the
market risk that arises from changes in the value of the financial instruments
and securities indices (futures contracts).
At October 31, 2000, the Portfolios had no open futures contracts.
7. Concentration of Risk
The Portfolios' investments in foreign securities may involve risks not present
in domestic investments. Since securities may be denominated in a foreign
currency and may require settlement in foreign
--------------------------------------------------------------------------------
26 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)(continued)
--------------------------------------------------------------------------------
currencies and pay interest or dividends in foreign currencies, changes in the
relationship of these foreign currencies to the U.S. dollar can significantly
affect the value of the investments and earnings of each of the Portfolios.
Foreign investments may also subject the Portfolios to foreign government
exchange restrictions, expropriation, taxation or other political, social or
economic developments, all of which could affect the market and/or credit risk
of the investments.
In addition to the risks described above, risks may arise from forward foreign
currency contracts with respect to the potential inability of counterparties to
meet the terms of their contracts.
8. Lending of Portfolio Securities
The Portfolios have an agreement with their custodian whereby the custodian may
lend securities owned by the Portfolios to brokers, dealers and other financial
organizations. Fees earned by the Portfolios on securities lending are recorded
as interest income. Loans of securities by the Portfolios are collateralized by
cash, U.S. government securities or high quality money market instruments that
are maintained at all times in an amount at least equal to the current market
value of the loaned securities, plus a margin depending on the type of
securities loaned. The custodian establishes and maintains the collateral in a
segregated account. The Portfolios maintain exposure for the risk of any losses
in the investment of amounts received as collateral.
At October 31, 2000, the Portfolios had no securities on loan.
9. Capital Loss Carryforward
At April 30, 2000, the Global Value Fund and the Global Small Cap Value Fund
had, for Federal income tax purposes, approximately $5,113,800 and $1,311,500 of
unused capital loss carryforwards available to offset future capital gains,
respectively. To the extent that these carryforward losses are used to offset
capital gains, it is probable that the gains so offset will not be distributed.
The amount and date of expiration of the carryforward losses for each Portfolio
is indicated below:
Portfolio 4/30/07 4/30/08 Total
================================================================================
Global Value $2,964,000 $2,149,800 $5,113,800
--------------------------------------------------------------------------------
Global Small Cap Value 721,300 590,200 1,311,500
================================================================================
10. Capital Shares
At October 31, 2000, the Fund had ten billion shares of capital stock authorized
with a par value of $0.001 per share. The Portfolios have the ability to issue
multiple classes of shares. Each share of a class represents an identical legal
interest in a Portfolio and has the same rights, except that each class bears
certain expenses specifically related to the distribution of its shares.
At October 31, 2000, total paid-in capital amounted to the following for each
Portfolio:
<TABLE>
<CAPTION>
Portfolio Class A Class B Class L Class Y
======================================================================================
<S> <C> <C> <C> <C>
Global Value $12,940,592 $23,323,056 $7,975,782 $180,010,830
--------------------------------------------------------------------------------------
Global Small Cap Value 4,185,139 5,381,442 1,351,750 4,517,280
======================================================================================
</TABLE>
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 27
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
October 31, 2000 April 30, 2000
---------------------------- -----------------------------
Shares Amount Shares Amount
===========================================================================================================
<S> <C> <C> <C> <C>
Global Value Fund
Class A
Shares sold 6,942,120 $ 89,533,206 3,100,354 $ 40,917,265
Shares issued on reinvestment -- -- 2,972 40,655
Shares reacquired (7,235,681) (93,608,692) (3,121,860) (41,360,636)
-----------------------------------------------------------------------------------------------------------
Net Decrease (293,561) $ (4,075,486) (18,534) $ (402,716)
===========================================================================================================
Class B
Shares sold 20,161 $ 255,364 286,562 $ 3,619,345
Shares issued on reinvestment -- -- -- --
Shares reacquired (527,111) (6,618,802) (612,701) (7,931,183)
-----------------------------------------------------------------------------------------------------------
Net Decrease (506,950) $ (6,363,438) (326,139) $ (4,311,838)
===========================================================================================================
Class L
Shares sold 663,134 $ 8,155,444 117,436 $ 1,491,901
Shares issued on reinvestment -- -- -- --
Shares reacquired (680,184) (8,429,378) (164,426) (2,085,363)
-----------------------------------------------------------------------------------------------------------
Net Decrease (17,050) $ (273,934) (46,990) $ (593,462)
===========================================================================================================
Class Y
Shares sold 805,859 $ 10,552,686 1,028,834 $ 13,494,319
Shares issued on reinvestment -- -- -- --
Shares reacquired (121) (1,593) (231,195) (3,123,347)
-----------------------------------------------------------------------------------------------------------
Net Increase 805,738 $ 10,551,093 797,639 $ 10,370,972
===========================================================================================================
Global Small Cap Value Fund
Class A
Shares sold 199,058 $ 1,649,399 15,650 $ 152,220
Shares issued on reinvestment -- -- 1,997 18,976
Shares reacquired (280,099) (2,303,240) (216,610) (2,077,400)
-----------------------------------------------------------------------------------------------------------
Net Decrease (81,041) $ (653,841) (198,963) $ (1,906,204)
===========================================================================================================
Class B
Shares sold 7,215 $ 60,135 29,549 $ 288,373
Shares issued on reinvestment -- -- -- --
Shares reacquired (134,258) (1,082,326) (336,964) (3,150,490)
-----------------------------------------------------------------------------------------------------------
Net Decrease (127,043) $ (1,022,191) (307,415) $ (2,862,117)
===========================================================================================================
Class L
Shares sold 32,854 $ 250,948 29,803 $ 282,650
Shares issued on reinvestment -- -- -- --
Shares reacquired (54,290) (410,685) (82,656) (774,935)
-----------------------------------------------------------------------------------------------------------
Net Decrease (21,436) $ (159,737) (52,853) $ (492,285)
===========================================================================================================
Class Y
Shares sold 54,931 $ 443,934 170,668 $ 1,603,384
-----------------------------------------------------------------------------------------------------------
Net Increase 54,931 $ 443,934 170,668 $ 1,603,384
===========================================================================================================
</TABLE>
--------------------------------------------------------------------------------
28 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class A
Smith Barney Hansberger ------------------------------------------------------
Global Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)/ 1998/(3)/
===================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.14 $ 12.00 $ 12.99 $ 11.40
---------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income/(4)/ 0.04 0.06 0.37 0.05
Net realized and unrealized gain (loss) (1.27) 1.11 (1.24) 1.56
---------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.23) 1.17 (0.87) 1.61
---------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.03) (0.12) (0.02)
---------------------------------------------------------------------------------------------------
Total Distributions -- (0.03) (0.12) (0.02)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.91 $ 13.14 $ 12.00 $ 12.99
---------------------------------------------------------------------------------------------------
Total Return (9.36)%++ 9.75% (6.56)% 14.13%++
---------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $13,137 $18,339 $16,974 $27,478
---------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(4)/ 1.41%+ 1.42% 1.55% 1.71%+
Net investment income 0.58+ 0.48 3.42 1.25+
---------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 44% 50% 28% 1%
===================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(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.
If such fees were not waived, the per share effect on net investment
income and the actual expense ratio would have been as follows:
Net Investment Income Expense Ratio
Per Share Decrease Without Fee Waiver
--------------------- ------------------
1998 $0.01 2.09%+
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 29
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class B
Smith Barney Hansberger ------------------------------------------------------
Global Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)/ 1998/(3)/
===================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.03 $ 11.97 $ 12.96 $ 11.40
---------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)/(4)/ (0.01) (0.04) 0.29 0.02
Net realized and unrealized gain (loss) (1.25) 1.10 (1.24) 1.56
---------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.26) 1.06 (0.95) 1.58
---------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.04) (0.02)
---------------------------------------------------------------------------------------------------
Total Distributions -- -- (0.04) (0.02)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.77 $ 13.03 $ 11.97 $ 12.96
---------------------------------------------------------------------------------------------------
Total Return (9.67)%++ 8.86% (7.27)% 13.87%++
---------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $22,964 $32,024 $33,316 $45,526
---------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(4)/ 2.19%+ 2.19% 2.30% 2.48%+
Net investment income (loss) (0.20)+ (0.32) 2.66 0.52+
---------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 44% 50% 28% 1%
===================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(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.
If such fees were not waived, the per share effect on net investment
income and the actual expense ratio would have been as follows:
Net Investment Income Expense Ratio
Per Share Decrease Without Fee Waiver
--------------------- ------------------
1998 $0.01 2.87%+
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
30 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class L
Smith Barney Hansberger -----------------------------------------------------
Global Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)//(3)/ 1998/(4)/
================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.02 $11.97 $12.96 $11.40
------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)/(5)/ (0.01) (0.04) 0.29 0.02
Net realized and unrealized gain (loss) (1.24) 1.09 (1.24) 1.56
------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.25) 1.05 (0.95) 1.58
------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.04) (0.02)
------------------------------------------------------------------------------------------------
Total Distributions -- -- (0.04) (0.02)
------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.77 $13.02 $11.97 $ 12.96
------------------------------------------------------------------------------------------------
Total Return (9.60)%++ 8.77% (7.27)% 13.87%++
------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $7,826 $8,886 $8,725 $11,060
------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(5)/ 2.19%+ 2.21% 2.30% 2.49%+
Net investment income (loss) (0.23)+ (0.34) 2.67 0.42+
------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 44% 50% 28% 1%
================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(3)/ On June 12, 1998, Class C shares were renamed Class L shares.
/(4)/ For the period from December 19, 1997 (inception date) to April 30, 1998.
/(5)/ The Manager waived part of its fees for the period ended April 30, 1998.
If such fees were not waived, the per share effect on net investment
income and the actual expense ratio would have been as follows:
Net Investment Income Expense Ratio
Per Share Decrease Without Fee Waiver
--------------------- ------------------
1998 $0.01 2.88%+
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 31
<PAGE>
Financial Highlights (continued)
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class Y
Smith Barney Hansberger -------------------------------------------------------
Global Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)/ 1998/(3)/
======================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.16 $12.03 $13.00 $12.44
------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income/(4)/ 0.06 0.11 0.40 0.00*
Net realized and unrealized gain (loss) (1.26) 1.10 (1.22) 0.56
------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.20) 1.21 (0.82) 0.56
------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.08) (0.15) --
------------------------------------------------------------------------------------------------------
Total Distributions -- (0.08) (0.15) --
------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.96 $13.16 $12.03 $13.00
------------------------------------------------------------------------------------------------------
Total Return (9.12)%++ 10.07% (6.17)% 4.50%++
------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $177,812 $185,122 $159,574 $56,414
------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(4)/ 1.08%+ 1.06% 1.10% 1.47%+
Net investment income 0.86+ 0.81 3.73 1.83+
------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 44% 50% 28% 1%
======================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(3)/ For the period from March 10, 1998 (inception date) to April 30, 1998.
/(4)/ The Manager waived part of its fees for the period ended April 30, 1998.
If such fees were not waived, the per share effect on net investment
income and the actual expense ratio would have been as follows:
Net Investment Income Expense Ratio
Per Share Decrease Without Fee Waiver
--------------------- ------------------
1998 $0.00* 1.85%+
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
32 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class A
Smith Barney Hansberger ------------------------------------------------------------
Global Small Cap Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)/ 1998/(3)/
==============================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $8.51 $10.19 $12.37 $11.40
--------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)/(4)/ (0.02) 0.02 0.11 0.05
Net realized and unrealized gain (loss) (1.02) (1.65) (2.10) 0.93
--------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.04) (1.63) (1.99) 0.98
--------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.05) (0.16) (0.01)
Net realized gains -- -- (0.03) --
Capital -- (0.00)* -- --
--------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.05) (0.19) (0.01)
--------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.47 $8.51 $10.19 $12.37
--------------------------------------------------------------------------------------------------------------
Total Return (12.22)%++ (16.06)% (15.95)% 8.64%++
--------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $1,876 $2,827 $5,414 $9,296
--------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(4)/ 2.68%+ 2.41% 1.92% 1.95%+
Net investment income (loss) (0.51)+ 0.22 1.06 1.28+
--------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 23% 60% 27% 2%
==============================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(3)/ For the period from December 19, 1997 (inception date) to April 30, 1998.
/(4)/ The Manager waived all or a portion of its fees for the six months ended
October 31, 2000, the two years ended April 30, 2000 and the period ended
April 30, 1998. In addition, the Manager reimbursed the Portfolio for
$17,302 in expenses for the period ended April 30, 1998. If such fees
were not waived and expenses not reimbursed, the per share effect on net
investment income (loss) and the actual expense ratios would have been as
follows:
<TABLE>
<CAPTION>
Expense Ratios
Net Investment Income (Loss) Without Fee Waivers
Per Share (Increases) Decreases and Reimbursement
----------------------------------------- ------------------------------------------
2000/(1)/ 2000 1999 1998/(3)/ 2000/(1)/ 2000 1999 1998/(3)/
-------- ----- ----- --------- --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $(0.01) $0.02 $0.04 $0.05 2.90%+ 2.64% 2.33% 3.25%+
</TABLE>
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 33
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class B
Smith Barney Hansberger ------------------------------------------------------------
Global Small Cap Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)/ 1998/(3)/
===============================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $8.46 $10.16 $12.34 $11.40
---------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)/(4)/ (0.06) (0.06) 0.03 0.02
Net realized and unrealized gain (loss) (1.00) (1.64) (2.09) 0.93
---------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.06) (1.70) (2.06) 0.95
---------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.09) (0.01)
Net realized gains -- -- (0.03) --
Capital -- (0.00)* -- --
---------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.00)* (0.12) (0.01)
---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 7.40 $ 8.46 $10.16 $ 12.34
---------------------------------------------------------------------------------------------------------------
Total Return (12.53)%++ (16.73)% (16.61)% 8.38%++
---------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,483 $3,915 $7,819 $11,606
---------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(4)/ 3.51%+ 3.21% 2.74% 2.68%+
Net investment income (loss) (1.39)+ (0.61) 0.27 0.58+
---------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 23% 60% 27% 2%
===============================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(3)/ For the period from December 19, 1997 (inception date) to April 30, 1998.
/(4)/ The Manager waived all or a portion of its fees for the six months ended
October 31, 2000, the two years ended April 30, 2000 and the period ended
April 30, 1998. In addition, the Manager reimbursed the Portfolio for
$17,302 in expenses for the period ended April 30, 1998. If such fees
were not waived and expenses not reimbursed, the per share effect on net
investment income (loss) and the actual expense ratios would have been as
follows:
<TABLE>
<CAPTION>
Expense Ratios
Net Investment Income (Loss) Without Fee Waivers
Per Share (Increases) Decreases and Reimbursement
----------------------------------------- ----------------------------------------
2000/(1)/ 2000 1999 1998/(3)/ 2000/(1)/ 2000 1999 1998/(3)/
--------- ----- ----- --------- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class B $(0.01) $0.02 $0.04 $0.04 3.73%+ 3.43% 3.14% 3.96%+
</TABLE>
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
34 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class L
Smith Barney Hansberger
Global Small Cap Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)//(3)/ 1998/(4)/
==========================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 8.42 $ 10.14 $ 12.34 $11.40
----------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)/(5)/ (0.08) (0.08) 0.02 0.02
Net realized and unrealized gain (loss) (1.01) (1.64) (2.10) 0.93
----------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.09) (1.72) (2.08) 0.95
----------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.09) (0.01)
Net realized gains -- -- (0.03) --
Capital -- (0.00)* -- --
----------------------------------------------------------------------------------------------------------
Total Distributions -- (0.00)* (0.12) (0.01)
----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 7.33 $ 8.42 $ 10.14 $12.34
----------------------------------------------------------------------------------------------------------
Total Return (12.95)%++ (16.96)% (16.77)% 8.38%++
----------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $ 630 $ 906 $ 1,626 $2,682
----------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(5)/ 3.91%+ 3.45% 2.83% 2.71%+
Net investment income (loss) (1.82)+ (0.85) 0.19 0.58+
----------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 23% 60% 27% 2%
==========================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(3)/ On June 12, 1998, Class C shares were renamed Class L shares.
/(4)/ For the period from December 19, 1997 (inception date) to April 30, 1998.
/(5)/ The Manager waived all or a portion of its fees for the six months ended
October 31, 2000, the two years ended April 30, 2000 and the period ended
April 30, 1998. In addition, the Manager reimbursed the Portfolio for
$17,302 in expenses for the period ended April 30, 1998. If such fees
were not waived, and expenses not reimbursed, the per share effect on net
investment income (loss) and the actual expense ratios would have been as
follows:
<TABLE>
<CAPTION>
Expense Ratios
Net Investment Income (Loss) Without Fee Waivers
Per Share (Increases) Decreases and Reimbursement
------------------------------------------ -----------------------------------------
2000/(1)/ 2000 1999 1998/(3)/ 2000/(1)/ 2000 1999 1998/(3)/
--------- ----- ----- --------- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class L $(0.01) $0.02 $0.04 $0.04 4.14%+ 3.67% 3.24% 4.02%+
</TABLE>
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney Hansberger Funds 35
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
Class Y
Smith Barney Hansberger --------------------------------------------------------
Global Small Cap Value Fund 2000/(1)//(2)/ 2000/(2)/ 1999/(2)/ 1998/(3)/
============================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 8.51 $10.22 $12.37 $11.74
------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)/(4)/ (0.00)* 0.06 0.16 0.00*
Net realized and unrealized gain (loss) (1.04) (1.69) (2.09) 0.63
------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (1.04) (1.63) (1.93) 0.63
------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.08) (0.19) --
Net realized gains -- -- (0.03) --
Capital -- (0.00)* -- --
------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.08) (0.22) --
----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 7.47 $ 8.51 $10.22 $12.37
----------------------------------------------------------------------------------------------------------
Total Return (12.22)%++ (16.05)% (15.49)% 5.37%++
----------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $3,498 $3,520 $2,481 $ 234
----------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses/(4)/ 2.08%+ 1.88% 1.23% 1.73%+
Net investment income (loss) (0.05)+ 0.65 1.71 2.42+
------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 23% 60% 27% 2%
============================================================================================================
</TABLE>
/(1)/ For the six months ended October 31, 2000 (unaudited).
/(2)/ Per share amounts have been calculated using the monthly average shares
method.
/(3)/ For the period from March 10, 1998 (inception date) to April 30, 1998.
/(4)/ The Manager waived all or a portion of its fees for the six months ended
October 31, 2000, the two years ended April 30, 2000 and the period ended
April 30, 1998. In addition, the Manager reimbursed the Portfolio for
$17,302 in expenses for the period ended April 30, 1998. If such fees
were not waived, and expenses not reimbursed, the per share effect on net
investment income (loss) and the actual expense ratios would have been as
follows:
<TABLE>
<CAPTION>
Expense Ratios
Net Investment Income (Loss) Without Fee Waivers
Per Share (Increases) Decreases and Reimbursement
---------------------------------------- ---------------------------------------
2000/(1)/ 2000 1999 1998/(3)/ 2000/(1)/ 2000 1999 1998/(2)/
--------- ----- ----- --------- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class Y $(0.01) $0.02 $0.04 $0.00* 2.30%+ 2.10% 1.64% 3.05%+
</TABLE>
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
36 2000 Semi-Annual Report to Shareholders
<PAGE>
(This page intentionally left blank.)
<PAGE>
Smith Barney
Hansberger Funds
Directors Distributor
Paul R. Ades Salomon Smith Barney Inc.
Herbert Barg
Dwight B. Crane Custodian
Frank Hubbard The Chase Manhattan Bank, N.A.
Heath B. McLendon, Chairman
Jerome Miller Transfer Agent
Ken Miller Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
Officers
Heath B. McLendon Sub-Transfer Agent
President and Chief Executive Officer PFPC Global Fund Services
P.O. Box 9699
Lewis E. Daidone Providence, Rhode Island 02940-9699
Senior Vice President
and Treasurer This report is submitted for the
general information of the
Paul A. Brook shareholders of Smith Barney
Controller Investment Funds Inc. -- Smith
Barney Hansberger Global Value
Christina T. Sydor and Smith Barney Hansberger
Secretary Global Small Cap Value Funds,
but it may also be used as sales
literature when preceded or
Investment Manager accompanied by the current
SSB Citi Fund Management LLC Prospectus, which gives details
about charges, expenses,
investment objectives and
Sub-Investment Adviser operating policies of the
Hansberger Global Investors, Inc. Portfolios. If used as sales
material after January 31, 2001,
this report must be accompanied
by performance information for
the most recently completed
calendar quarter.
[LOGO OF SALOMON SMITH BARNEY]
Smith Barney
Investment Funds Inc.
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com/mutualfunds
FD01490 12/00