File No. 33-
39564
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
POST-EFFECTIVE AMENDMENT NO.
16 TO THE
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT
OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
SMITH BARNEY WORLD FUNDS, INC. (Formerly,
Smith Barney Worldwide Funds, Inc.)
(Exact
name of Registrant as specified
in the Articles of Incorporation)
388 Greenwich Street, New York, New York 10013
(Address of principal executive offices)
(212) 816-6474
(Registrant's telephone number)
Christina T. Sydor
388 Greenwich Street, New York, New York 10013 (22nd floor)
(Name and address of agent for service)
Rule 24f-2(a)(1) Declaration:
The common stock of Smith Barney World Funds, Inc.
previously registered hereunder as an indefinite number
of shares of Common Stock is classified as Global
Government Bond Portfolio Shares, International
Equity Portfolio Shares, Pacific
Portfolio Shares, European Portfolio Shares,
International Balanced Portfolio Shares and the Emerging
Markets Portfolio Shares.
Registrant filed its Rule 24f-2 Notice on December 30,
1994 for its most recentthe fiscal year ended October
31, 1994.
Registrant expects to file its Rule 24f-2 Notice for its
most recent fiscal year ended October 31, 1995 on or
before
December 29, 1995.
It is proposed that this Post-Effective Amendment will
become effective on November 3010 , 1995 pursuant to
paragraph (b) of Rule 485.
CROSS REFERENCE SHEET
(as required by Rule 495(a))
Part A of
Form N-1A Location in Part
A
1. Cover Page cover page
2. Synopsis "Prospectus Summary"
3. Condensed Financial Information
"Financial
Highlights"
4. General Description of Registrant
"Additional
Information"
cover page
"Investment Objective
and Management Policies"
5. Management of the Fund "Management of the Fund"
"Purchase of Shares"
"Prospectus Summary"
6. Capital Stock and Other Securities
"Additional
Information"
cover page
"Dividends, Distributions
and Taxes"
7. Purchase of Securities Being Offered "Purchase
of Shares"
"Prospectus Summary"
"Management of the
Fund"
"Valuation of Shares"
"Exchange Privilege"
8. Redemption or Repurchase "Redemption of Shares"
"Minimum Account Size"
9. Pending Legal Proceedings not applicable
Part B of Statement of Additional
Form N-1A Information Caption
10. Cover Page cover page
11. Table of Contents "Table of Contents"
12. General Information and History not
applicable
13. Investment Objectives and Policies cover page
"Investment Policies"
"Investment Restrictions"
14. Management of the Fund "Directors and Officers"
CROSS REFERENCE SHEET (cont'd)
15. Control Persons and Principal
Holders of Securities See Prospectus - "Additional
Information"
16. Investment Advisory and Other
Services See Prospectus -
"Management of the Fund"
"Directors and Officers"
"Independent Auditors"
"Custodian"
17. Brokerage Allocation and Other
Practices See Prospectus -
"Management of the Fund"
"Investment Management
Agreement and other Services"
18. Capital Stock and Other Securities See Prospectus
- -
"Additional
Information"
"Voting Rights"
19. Purchase, Redemption and Pricing
of Securities Being Offered See Prospectus
"Exchange
Privilege"
See Prospectus - "Purchase of
Shares"
"Determination of Net Asset
Value"
See Prospectus - "Valuation
of Shares"
See Prospectus - "Redemption
of Shares"
"Financial Statements"
20. Tax Status See Prospectus - "Dividends,
Distributions and Taxes"
"Additional Tax Information"
21. Underwriters See Prospectus -
"Management of the Fund"
See Prospectus - "Purchase of
Shares"
"Investment Management
Agreement and Other Services"
22. Calculation of Performance Data See
Prospectus
- - "Performance"
"Performance Information"
23. Financial Statements "Financial Statements"
Part C of
Form N-1A
Information required to be included in Part C is set forth
under the appropriate item, so numbered in Part C of
this Post-
Effective Amendment to the Registration Statement.
SMITH BARNEY WORLD FUNDS, INC.
Supplement dated November 30, 1995 to Prospectus
dated January 14, 1995
for the Emerging Markets Portfolio
The Prospectus for the Emerging Markets Portfolio dated
January 14, 1995 is hereby incorporated by reference is in its entirety.
The following information supplements, and to the
extent
inconsistent therewith supersedes, the information set forth
in
the Prospectus dated January 14, 1995 for the Emerging
Markets Portfolio of Smith Barney World Funds, Inc.
FEE TABLE
The Emerging Markets Portfolio's Expenses. The following
expense table lists the costs and expenses an investor
currently incurs
directly or indirectly as a shareholder of the Emerging
Markets Portfolio, based on the maximum sales charge or maximum
CDSC that may be incurred at the time of purchase or redemption:
Class A Class B Class C
Class Y
Shareholder Transaction Expenses
Maximum sales charge imposed
on purchases 5.00% None None None
(as a percentage of
offering price)
Maximum CDSC
(as a percentage of None* 5.00% 1.00%
None original cost or redemption
proceeds, whichever is lower)
Annual Portfolio Operating Expenses
(as a percentage of average
net assets)
Management fees 1.00% 1.00% 1.00%
1.00%
12b-1 fees** 0.25 1.00 1.00 -
Other expenses*** 0.58 0.58 0.58 0.58
Total Portfolio Operating
Expenses 1.83% 2.58% 2.58% 1.58%
*Purchases of Class A shares, which when combined with
current holdings of Class A shares
offered with a sales charge equal or
exceed $500,000 in the aggregate, will be made at net asset
value with no sales charge, but will be subject to a CDSC of
1.00% on redemptions made within 12 months.
**Upon conversion of Class B shares to Class A shares,
such shares will no longer be subject to a distribution fee.
Class C shares do not have a conversion feature and,
therefore, are
subject to an ongoing distribution fee. As a result, long-
term shareholders of Class C shares may pay more than the
economic equivalent of the maximum front-end sales charge
permitted by the
National Association of Securities Dealers, Inc.
***These expenses for Class A, Class B and Class C shares
are
based on amounts for the fiscal period ended August 31,
1995.
For Class Y shares, these expenses have been estimated based
on
expenses incurred by Class A shares because Class Y shares
were
not purchased for the period ended August 31, 1995.
Example
The following example is intended to assist an investor
in
understanding the various costs that a current investor in
the
Emerging Markets Portfolio will bear directly or indirectly.
The
example assumes payment by the Portfolio of operating expenses
at the levels set forth in the table above.
1 Year 3 Years 5 Years
10
Years*
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5.00% annual return
and (2) redemption at the end of
each time period:
Class A $68 $105 $144 $254
Class B 77 110 147 273
Class C 36 80 137 291
Class Y 16 50 86 188
1 Year 3 Years 5 Years 10
Years*
An investor would pay the following
expenses on the same investment,
assuming the same annual return
and no redemption:
Class A $68 $105 $144 $254
Class B 26 80
137
273
Class C 26 80
137
291
Class Y 16 50 86 188
*Ten-year figures assume conversion of Class B shares to Class
A
shares at the end of the eighth year following the date
of
purchase.
The example also provides a means for the investor
to compare expense levels of funds with different fee
structures
over varying investment periods. To facilitate such
comparison,
all funds are required to utilize a 5.00% annual
return
assumption. However, the Portfolio's actual return will vary
and may be greater or less than 5.00%. This example
should not be
considered a representation of past or future expenses and
actual expenses may be greater or less than those shown.
FINANCIAL HIGHLIGHTS
The following schedule sets forth certain information
concerning the Portfolio's investment results for the period
from May 12, 1995 (commencement of operations) to August 31,
1995. No information is presented for Class Y shares since
none were purchased during the period indicated. This information
has not been audited.
Class A(a)
(B)(a)
(C)(a)
Net Asset Value, Beginning of Period $12.00 $12.00 $12.00
Loss from Investment Operations:
Net Investment Loss (0.069) (0.075)
(0.075)
Net Realized and Unrealized Loss on Investments (0.281)
(0.305) (0.305)
Total Loss from Investment Operations (0.350) (0.380) (0.380)
Less Distributions:
Dividends from Net Investment Income 0.000 0.000 0.000
Distribution from Net Realized Gains 0.000 0.000 0.000
Total Distributions 0.000 0.000 0.000
Net Asset Value, End of Period $11.65 $11.62 $11.62
Total Return(c) (9.59%)
(10.41%)
(10.41%)
Net Assets, End of Period(000s) $6,887 $7,676 $1,410
Ratios to Average Net Assets:
Expenses( (b) 1.583%
2.3358% 2.3358%
Net Investment Loss(b) (2.12%)
(2.87%) (2.87%)
Portfolio Turnover Rate 7.16% 7.16% 7.16%
(a) For the period May 12, 1995(commencement of operations)
to
August 31,1995.
(b) Annualized.
(c) Total return is not annualized as it may not be
representative of the total return for the year.
<PAGE>
SMITH BARNEY
WORLD FUNDS, INC.
EMERGING
MARKETS
PORTFOLIO
JANUARY 14, 1995
PROSPECTUS BEGINS ON PAGE ONE
P R O S P E C T U S
[LOGO]
Smith Barney Mutual Funds
INVESTING FOR YOUR FUTURE.
EVERY DAY.
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS
JANUARY 14, 1995
388 Greenwich Street
New York, New York 10013
(212) 723-9218
The Emerging Markets Portfolio (the "Portfolio") is one of the
investment
portfolios that currently comprise Smith Barney World Funds,
Inc. (the "Fund").
The Portfolio seeks long term capital appreciation on its
assets through a
portfolio invested primarily in securities of emerging country
issuers.
An investment in the Portfolio involves certain risks,
particularly in rela-
tion to the Portfolio's investing in emerging countries, such
as restrictions
on foreign investment and repatriation of capital, share price
volatility, lim-
ited trading liquidity and small market capitalization of the
securities mar-
kets, currency devaluations and fluctuations in currency
exchange rates, high
inflation, government regulation, government involvement in the
economy and
political uncertainty, which are not typically associated with
investments in
the United States. IN ADDITION, THE PORTFOLIO MAY INVEST UP TO
10% OF ITS
ASSETS IN HIGH YIELD, HIGH RISK CORPORATE DEBT SECURITIES AND
SOVEREIGN DEBT
OBLIGATIONS WHICH ARE CONSIDERED SPECULATIVE AND SUBJECT TO
CERTAIN RISKS. See
"Investment Objective and Management Policies." See the
Appendix for a further
discussion of the risks associated with an investment in the
Portfolio.
The initial subscription period for shares is scheduled to end
no later than
May 4, 1995, subject to extension (the "Subscription Period").
After the expi-
ration of the Subscription Period or a limited continuous
offering period, the
Portfolio will suspend the offering of shares to the public. A
continuous
offering of shares is expected to commence on or about June 5,
1995. See "Pur-
chase of Shares."
This Prospectus sets forth concisely certain information about
the Fund and
the Portfolio, including sales charges, distribution and
service fees and
expenses, that prospective investors will find helpful in
making an investment
decision. Investors are encouraged to read this Prospectus
carefully and retain
it for future reference.
Additional information about the Portfolio is contained in a
Statement of
Additional Information dated February 28, 1995, as amended or
supplemented from
time to time, that is available upon request and without charge
by calling or
writing the Fund at the telephone number or address set forth
above or by con-
tacting a Smith Barney Financial Consultant. The Statement of
Additional Infor-
mation has been filed with the Securities and Exchange
Commission (the "SEC")
and is incorporated by reference into this Prospectus in its
entirety.
SMITH BARNEY INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS
A CRIMINAL OFFENSE.
1
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
- -------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 10
- -------------------------------------------------
RISK FACTORS 12
- -------------------------------------------------
VALUATION OF SHARES 16
- -------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 18
- -------------------------------------------------
PURCHASE OF SHARES 20
- -------------------------------------------------
EXCHANGE PRIVILEGE 32
- -------------------------------------------------
REDEMPTION OF SHARES 35
- -------------------------------------------------
MINIMUM ACCOUNT SIZE 37
- -------------------------------------------------
PERFORMANCE 37
- -------------------------------------------------
MANAGEMENT OF THE FUND 38
- -------------------------------------------------
DISTRIBUTOR 40
- -------------------------------------------------
ADDITIONAL INFORMATION 41
- -------------------------------------------------
APPENDIX A-1 -------------
- ------------------------------------
</TABLE>
No person has been authorized to give any information or to
make any
representations in connection with this offering other than
those contained in
this Prospectus and, if given or made, such other information
and representations must not be relied upon as having been
authorized by the Fund
or the Distributor. This Prospectus does not constitute an
offer by the Fund or
the Distributor to sell or a solicitation of an offer to buy
any of the
securities offered hereby in any jurisdiction to any person to
whom it is
unlawful to make such offer or solicitation in such
jurisdiction. -------------------------------------------------
- ------------------------------
2
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed
information
appearing elsewhere in this Prospectus and in the Statement of
Additional
Information. Cross references in this summary are to headings
in the Prospec-
tus. See "Table of Contents."
INVESTMENT OBJECTIVE The Portfolio is an open-end, management
investment com-
pany whose investment objective is to seek long-term capital
appreciation on
its assets through a portfolio invested primarily in securities
of emerging
country issuers. See "Investment Objective and Management
Policies."
ALTERNATIVE PURCHASE ARRANGEMENTS The Portfolio offers several
classes of
shares ("Classes") to investors designed to provide them with
the flexibility
of selecting an investment best suited to their needs. The
general public is
offered three Classes of shares: Class A shares, Class B shares
and Class C
shares, which differ principally in terms of sales charges and
rate of
expenses to which they are subject. A fourth Class of shares,
Class Y shares,
is offered only to investors meeting an initial investment
minimum of
$5,000,000. See "Purchase of Shares" and "Redemption of
Shares."
Class A Shares. Class A shares are sold at net asset value plus
an initial
sales charge of up to 5.00% and are subject to an annual
service fee of 0.25%
of the average daily net assets of the Class. The initial sales
charge may be
reduced or waived for certain purchases. Purchases of Class A
shares, which
when combined with current holdings of Class A shares offered
with a sales
charge equal or exceed $500,000 in the aggregate, will be made
at net asset
value with no initial sales charge, but will be subject to a
contingent
deferred sales charge ("CDSC") of 1.00% on redemptions made
within 12 months
of purchase. See "Prospectus Summary -- Reduced or No Initial
Sales Charge."
Class B Shares. Class B shares are offered at net asset value
subject to a
maximum CDSC of 5.00% of redemption proceeds, declining by
1.00% each year
after the date of purchase to zero. This CDSC may be waived for
certain
redemptions. Class B shares are subject to an annual service
fee of 0.25% and
an annual distribution fee of 0.75% of the average daily net
assets of the
Class. The Class B shares' distribution fee may cause that
Class to have
higher expenses and pay lower dividends than Class A shares.
Class B Shares Conversion Feature. Class B shares will convert
automatically
to Class A shares, based on relative net asset value, eight
years after the
date of
3
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS SUMMARY (CONTINUED)
the original purchase. Upon conversion, these shares will no
longer be subject
to an annual distribution fee. In addition, a certain portion
of Class B shares
that have been acquired through the reinvestment of dividends
and distributions
("Class B Dividend Shares") will be converted at that time. See
"Purchase of
Shares -- Deferred Sales Charge Alternatives."
Class C Shares. Class C shares are sold at net asset value with
no initial
sales charge. They are subject to an annual service fee of
0.25% and an annual
distribution fee of 0.75% of the average daily net assets of
the Class C
shares, and investors pay a CDSC of 1.00% if they redeem Class
C shares within
12 months of purchase. The CDSC may be waived for certain
redemptions. The
Class C shares' distribution fee may cause that Class to have
higher expenses
and pay lower dividends than Class A shares. Purchases of Class
C shares, which
when combined with current holdings of Class C shares of the
Portfolio equal or
exceed $500,000 in the aggregate, should be made in Class A
shares at net asset
value with no sales charge, and will be subject to a CDSC of
1.00% on redemp-
tions made within 12 months of purchase.
Class Y Shares. Class Y shares are available only to investors
meeting an
initial investment minimum of $5,000,000. Class Y shares are
sold at net asset
value with no initial sales charge or CDSC. They are not
subject to any service
or distribution fees.
In deciding which Class of Portfolio shares to purchase,
investors should
consider the following factors, as well as any other relevant
facts and circum-
stances:
Intended Holding Period. The decision as to which Class of
shares is more
beneficial to an investor depends on the amount and intended
length of his or
her investment. Shareholders who are planning to establish a
program of regular
investment may wish to consider Class A shares; as the
investment accumulates
shareholders may qualify for reduced sales charges and the
shares are subject
to lower ongoing expenses over the term of the investment. As
an alternative,
Class B and Class C shares are sold without any initial sales
charge so the
entire purchase price is immediately invested in the Portfolio.
Any investment
return on these additional invested amounts may partially or
wholly offset the
higher annual expenses of these Classes. Because the
Portfolio's future return
cannot be predicted, however, there can be no assurance that
this would be the
case.
4
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS SUMMARY (CONTINUED)
Finally, investors should consider the effect of the CDSC
period and any con-
version rights of the Classes in the context of their own
investment time
frame. For example, while Class C shares have a shorter CDSC
period than Class
B shares, they do not have a conversion feature, and therefore,
are subject to
an ongoing distribution fee. Thus, Class B shares may be more
attractive than
Class C shares to investors with longer term investment
outlooks.
Investors investing a minimum of $5,000,000 must purchase Class
Y shares,
which are not subject to an initial sales charge, CDSC or
service or distribu-
tion fees. The maximum purchase amount for Class A shares is
$4,999,999, Class
B shares is $249,999 and Class C shares is $499,999. There is
no
maximum pur-
chase amount for Class Y shares.
Reduced or No Initial Sales Charge. The initial sales charge on
Class A
shares may be waived for certain eligible purchasers, and the
entire purchase
price will be immediately invested in the Portfolio. In
addition, Class A share
purchases, which when combined with current holdings of Class A
shares offered
with a sales charge equal or exceed $500,000 in the aggregate,
will be made at
net asset value with no initial sales charge, but will be
subject to a CDSC of
1.00% on redemptions made within 12 months of purchase. The
$500,000 aggregate
investment may be met by adding the purchase to the net asset
value of all
Class A shares offered with a sales charge held in funds
sponsored by Smith
Barney Inc. ("Smith Barney") listed under "Exchange Privilege."
Class A share
purchases also may be eligible for a reduced initial sales
charge. See "Pur-
chase of Shares." Because the ongoing expenses of Class A
shares may be lower
than those for Class B and Class C shares, purchasers eligible
to purchase
Class A shares at net asset value or at a reduced sales charge
should consider
doing so.
Smith Barney Financial Consultants may receive different
compensation for
selling each Class of shares. Investors should understand that
the purpose of
the CDSC on the Class B and Class C shares is the same as that
of the initial
sales charge on the Class A shares.
See "Purchase of Shares" and "Management of the Fund" for a
complete descrip-
tion of the sales charges and service and distribution fees for
each Class of
shares and "Valuation of Shares," "Dividends, Distributions and
Taxes" and "Ex-
change Privilege" for other differences between the Classes of
shares.
5
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS SUMMARY (CONTINUED)
SMITH BARNEY 401(K) PROGRAM Investors may be eligible, during
the continuous
offering period, to participate in the Smith Barney 401(k)
Program, which is
generally designed to assist plan sponsors in the creation and
operation of
retirement plans under Section 401(a) of the Internal Revenue
Code of 1986, as
amended (the "Code"), as well as other types of participant
directed, tax-
qualified employee benefit plans (collectively, "Participating
Plans"). Class
A, Class B, Class C and Class Y shares are available as
investment alterna-
tives for Participating Plans. See "Purchase of Shares -- Smith
Barney 401(k)
Program."
PURCHASE OF SHARES Shares may be purchased through a brokerage
account main-
tained with Smith Barney. Shares may also be purchased through
a broker that
clears securities transactions through Smith Barney on a fully
disclosed basis
(an "Introducing Broker") and through other distribution
channels. In addi-
tion, certain investors, including qualified retirement plans
and certain
other institutional investors, may purchase shares directly
from the Fund
through the Fund's transfer agent, The Shareholder Services
Group, Inc.
("TSSG"), a subsidiary of First Data Corporation.
The initial subscription period for shares is scheduled to end
no later than
May 4, 1995, subject to extension (the "Subscription Period").
After the expi-
ration of the Subscription Period or a limited continuous
offering period, the
Portfolio will suspend the offering of shares to the public.
A continuous
offering of shares is expected to commence on or about June
5, 1995. See "Pur-
chase of Shares."
INVESTMENT MINIMUMS Investors in Class A, Class B and Class C
shares may open
an account by making an initial investment of at least $1,000
for each
account, or $250 for an individual retirement account ("IRA")
or a Self-
Employed Retirement Plan. Investors in Class Y shares may open
an account for
an initial investment of $5,000,000. Subsequent investments of
at least $50
may be made for all Classes. For participants in retirement
plans qualified
under Section 403(b)(7) or Section 401(a) of the Code, the
minimum initial
investment requirement for Class A, Class B and Class C shares
and the subse-
quent investment requirement for all Classes is $25. The
minimum initial
investment requirement for Class A, Class B and Class C shares
and the subse-
quent investment requirement for all Classes through the
Systematic Investment
Plan described below is $50. See "Purchase of Shares."
SYSTEMATIC INVESTMENT PLAN During the continuous offering
period, the Portfo-
lio offers shareholders a Systematic Investment Plan under
which they
6
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS SUMMARY (CONTINUED)
may authorize the automatic placement of a purchase order each
month or quar-
ter for Portfolio shares in an amount of at least $50. See
"Purchase of
Shares."
REDEMPTION OF SHARES Shares may be redeemed on each day the New
York Stock
Exchange, Inc. ("NYSE") is open for business. See "Purchase of
Shares" and
"Redemption of Shares."
MANAGEMENT OF THE PORTFOLIO Smith Barney Mutual Funds
Management Inc. (former-
ly, Smith, Barney Advisers, Inc.) (the "Manager") serves as the
Portfolio's
investment manager. The Manager is a wholly owned subsidiary of
Smith Barney
Holdings Inc. ("Holdings"). Holdings is a wholly owned
subsidiary of The Trav-
elers Inc. ("Travelers"), a diversified financial services
holding company
engaged, through its subsidiaries, principally in four business
segments:
Investment Services, Consumer Finance Services, Life Insurance
Services and
Property & Casualty Insurance Services. See "Management of the
Fund."
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for
shares of the same
Class of certain other funds of the Smith Barney Mutual Funds
at the respec-
tive net asset values next determined, plus any applicable
sales charge dif-
ferential. See "Exchange Privilege."
VALUATION OF SHARES Net asset value of the Portfolio for the
prior day gener-
ally is quoted daily in the financial section of most
newspapers and is also
available from a Smith Barney Financial Consultant. See
"Valuation of Shares."
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment
income and distribu-
tions of net realized capital gains, if any, are declared and
paid annually.
See "Dividends, Distributions and Taxes."
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on
shares of a
Class will be reinvested automatically, unless otherwise
specified by an
investor, in additional shares of the same Class at current net
asset value.
Shares acquired by dividend and distribution reinvestments will
not be subject
to any sales charge or CDSC. Class B shares acquired through
dividend and dis-
tribution reinvestments will become eligible for conversion to
Class A shares
on a pro rata basis. See "Dividends, Distributions and Taxes."
RISK FACTORS AND SPECIAL CONSIDERATIONS There can be no
assurance that the
Portfolio's investment objective will be achieved. The value of
the Portfo-
lio's investments, and thus the net asset value of the
Portfolio's shares,
will fluctuate in response to changes in market and economic
conditions, as
well as the financial condition and prospects of issuers in
which the Portfo-
lio invests. The Portfolio will invest in foreign securities.
Investments in
foreign securities incur
7
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS SUMMARY (CONTINUED)
higher costs than investments in U.S. securities, including
higher costs in
making securities transactions as well as foreign government
taxes which may
reduce the investment return of the Portfolio. In addition,
foreign invest-
ments may include additional risks associated with currency
exchange rates,
less complete financial information about individual companies,
less market
liquidity and political instability. See "Investment Objective
and Management
Policies." See the Appendix for a further discussion of the
risks associated
with an investment in the Portfolio.
THE PORTFOLIO'S EXPENSES The following expense table lists the
costs and
expenses an investor will incur either directly or indirectly
as a shareholder
of the Portfolio, based on the maximum sales charge or maximum
CDSC that may
be incurred at the time of purchase or redemption:
<TABLE>
<CAPTION>
CLASS A CLASS B
CLASS C CLASS Y -----------------------------------------------
- -------------------------------
<S> <C> <C>
<C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00% None
None None
Maximum CDSC (as a percentage of original cost
or redemption proceeds, whichever is lower) None* 5.00%
1.00% None --------------------------------------------------
- ----------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets)
Management fees 1.00% 1.00%
1.00% 1.00%
12b-1 fees** 0.25 1.00
1.00 --
Other expenses*** 0.40 0.40
0.40 0.40 --------------------------------------------------
- ----------------------------
TOTAL PORTFOLIO OPERATING EXPENSES 1.65% 2.40%
2.40% 1.40% --------------------------------------------------
- ----------------------------
</TABLE>
* Purchases of Class A shares, which when combined with current
holdings of
Class A shares offered with a sales charge equal or exceed
$500,000 in the
aggregate, will be made at net asset value with no sales
charge, but will
be subject to a CDSC of 1.00% on redemptions made within 12
months.
** Upon conversion of Class B shares to Class A Shares, such
shares will no
longer be subject to a distribution fee. Class C shares do
not have a con-
version feature and, therefore, are subject to an ongoing
distribution
fee. As a result, long-term shareholders of Class C shares
may pay more
than the economic equivalent of the maximum front-end sales
charge permit-
ted by the National Association of Securities Dealers, Inc.
*** These expenses are based on estimated amounts for the
fiscal year ending
October 31, 1995.
The sales charge and CDSC set forth in the above table are the
maximum
charges imposed on purchases or redemptions of Portfolio shares
and investors
may actually pay lower or no charges, depending on the amount
purchased and,
in the case of Class B, Class C and certain Class A shares, the
length of time
the shares are held and whether the shares are held through the
8
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PROSPECTUS SUMMARY (CONTINUED)
Smith Barney 401(k) Program. See "Purchase of Shares" and
"Redemption of
Shares." Smith Barney receives an annual 12b-1 service fee of
0.25% of the
value of average daily net assets of Class A shares. Smith
Barney also receives
with respect to Class B and Class C shares an annual 12b-1 fee
of 1.00% of the
value of average daily net assets of the respective Classes,
consisting of a
0.75% distribution fee and a 0.25% service fee. "Other
expenses" in the above
table include fees for shareholder services, custodial fees,
legal and account-
ing fees, printing costs and registration fees.
EXAMPLE
The following example is intended to assist an investor in
understanding the
various costs that an investor in the Portfolio will bear
directly or indirect-
ly. The example assumes payment by the Portfolio of operating
expenses at the
levels set forth in the table above. See "Purchase of Shares,"
"Redemption of
Shares" and "Management of the Fund."
<TABLE>
<CAPTION>
1 Year 3 Years --------
- ----------------------------------------------
<S> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5.00% annual return and
(2) redemption at the end of each
time period:
Class A $66 $
99 Class B 74
105 Class C 34
75 Class Y 14
44
An investor would pay the following
expenses on the same investment,
assuming the same annual return and
no redemption:
Class A $66 $ 99
Class B 24 75
Class C 24 75
Class Y 14 44
- ----------------------------------------------------
- -</TABLE>
The example also provides a means for the investor to compare
expense levels
of funds with different fee structures over varying investment
periods. To
facilitate such comparison, all funds are required to utilize a
5.00% annual
return assumption. However, the Portfolio's actual return will
vary and may be
greater or less than 5.00%. THIS EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTA-
TION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN
THOSE SHOWN.
9
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The investment objective of the Portfolio is to provide long
term capital
appreciation on its assets through a portfolio invested
primarily in securi-
ties of emerging country issuers. The Portfolio's investment
objective may be
changed only with the approval of a majority of the Portfolio's
outstanding
shares. There can be no assurance that the investment objective
of the Portfo-
lio will be achieved.
The Portfolio will seek to achieve its objective by investing
substantially
all its assets in equity securities of issuers in emerging
market countries
(consisting of dividend and non-dividend paying common stocks,
preferred
stocks, convertible securities and rights and warrants to such
securities).
The Portfolio will also invest in debt securities having a high
potential for
capital appreciation, especially in countries where direct
equity investment
is not permitted. Under normal conditions, at least 70% of the
Portfolio's
assets will be invested in equity securities.
For purposes of its investment objective, the Portfolio
considers as "emerg-
ing" all countries other than the United States, Canada,
Ireland, the United
Kingdom, Sweden, Norway, Finland, Denmark, Holland, Germany,
Switzerland, Bel-
gium, France, Italy, Spain and Japan. The Portfolio is
organized as a non-
diversified series, but will generally invest its assets
broadly among coun-
tries and will normally have at least 65% of its assets
invested in issuers in
not less than three different countries.
In selecting securities for investment by the Portfolio, the
Manager
assesses the general attractiveness of specific countries based
on an analysis
of internal conditions, including political stability, market
practices, eco-
nomic growth prospects, general market valuations and potential
changes in
currency relationships. The Manager then performs an analysis,
using many of
these same factors, of each issuer being considered for
investment.
The Portfolio also may invest in debt securities of issuers in
countries
having smaller capital markets. Capital appreciation in debt
securities may
arise as a result of a favorable change in relative foreign
exchange rates, in
relative interest rate levels, or in the creditworthiness of
issuers. In
accordance with its investment objective, the Portfolio will
not seek to bene-
fit from anticipated short-term fluctuations in currency
exchange rates. The
Portfolio may, from time to time, invest in debt securities
with relatively
high yields (as compared to other debt securities meeting the
Portfolio's
investment criteria), notwithstanding that the Portfolio may
not anticipate
that such securities will experience substantial
10
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
capital appreciation. Such income can be used, however, to
offset the operat-
ing expenses of the Portfolio.
The Portfolio may invest in debt securities issued or
guaranteed by foreign
governments (including foreign states, provinces and
municipalities) or their
agencies and instrumentalities ("governmental entities"),
issued or guaranteed
by international organizations designated or supported by
multiple foreign
governmental entities (which are not obligations of foreign
governments) to
promote economic reconstruction or development ("supranational
entities"), or
issued by foreign corporations or financial institutions.
Supranational entities include international organizations
designated or
supported by governmental entities to promote economic
reconstruction or
development and international banking institutions and related
government
agencies. Examples include the International Bank for
Reconstruction and
Development (the "World Bank"), the European Steel and Coal
Community, the
Asian Development Bank and the Inter-American Development Bank.
The governmen-
tal members, or "stockholders," usually make initial capital
contributions to
the supranational entity and in many cases are committed to
make additional
capital contributions if the supranational entity is unable to
repay its
borrowings.
The Portfolio reserves the right, as a temporary defensive
measure or to
provide for redemptions or in anticipation of investment in
countries having
smaller capital markets, to hold cash or cash equivalents (in
U.S. dollars or
foreign currencies) and short-term securities, including money
market securi-
ties ("Temporary Investments"). The Portfolio may invest in the
securities of
foreign issuers in the form of American Depositary Receipts
(ADRs), European
Depositary Receipts (EDRs), Global Depositary Receipts (GDRs)
or other securi-
ties convertible into securities of foreign issuers. The
Portfolio may invest
in unsponsored ADRs. The issuers of unsponsored ADRs are not
obligated to dis-
close material information in the United States, and therefore,
there may not
be a correlation between such information and the market value
of such ADRs.
The Portfolio may invest in U.S. over-the-counter securities of
issuers whose
business interests are in emerging countries.
Refer to the Appendix or the Statement of Additional
Information for further
information on the Portfolio's investments, including options
and futures con-
tracts, swap agreements, structured notes and indexed
securities (sometimes
referred to as "derivatives"); loans and other direct debt
instruments, float-
ing
11
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
and variable rate income securities, zero coupon, discount and
payment-in-kind
securities, premium securities, yankee bonds, borrowings,
repurchase agreements,
reverse repurchase agreements and securities loans, foreign
repurchase
agreements, illiquid investments, restricted securities, and
delayed-delivery
transactions.
RISK FACTORS
General. The Portfolio's net asset value will fluctuate,
reflecting
fluctuations in the market value of its portfolio positions.
The Portfolio
normally will invest in a substantial number of issuers;
however, the Portfolio
has registered under the Investment Company Act of 1940 (the
"1940 Act") as a
"non-diversified" fund so that it will be able to invest more
than 5% of its
assets in the securities of an issuer. Since, as a "non
diversified" fund, the
Portfolio is permitted to invest a greater proportion of its
assets in the
securities of a smaller number of issuers, the Portfolio may be
subject to
greater credit risk with respect to its individual portfolio
than a fund that is
more broadly diversified.
Securities of Non-U.S. Issuers. Investments in securities of
non-U.S. issuers
involve certain risks not ordinarily associated with
investments in securities
of domestic issuers. Such risks include fluctuations in foreign
exchange rates,
future political and economic developments, and the possible
imposition of
exchange controls or other foreign governmental laws or
restrictions. Since the
Portfolio will invest heavily in securities denominated or
quoted in currencies
other than the U.S. dollar, changes in foreign currency
exchange rates will, to
the extent the Portfolio does not adequately hedge against such
fluctuations,
affect the value of securities in its portfolio and the
unrealized appreciation
or depreciation of investments so far as U.S. investors are
concerned. In
addition, with respect to certain countries, there is the
possibility of
expropriation of assets, repatriation, confiscatory taxation,
political or
social instability or diplomatic developments which could
adversely affect
investments in those countries.
There may be less publicly available information about a
foreign company than
about a U.S. company, and foreign companies may not be subject
to accounting,
auditing, and financial reporting standards and requirements
comparable to or as
uniform as those of U.S. companies. Non-U.S. securities
markets, while growing
in volume, have, for the most part, substantially less volume
than U.S. markets,
and securities of many foreign companies are less liquid and
their prices more
volatile than securities of comparable U.S. companies. Transac-
12
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
tion costs on non-U.S. securities markets are generally higher
than in the
U.S. There is generally less government supervision and
regulation of
exchanges, brokers and issuers than there is in the U.S. The
Portfolio might
have greater difficulty taking appropriate legal action in non
U.S. courts.
Dividend and interest income from non-U.S. securities will
generally be sub-
ject to withholding taxes by the country in which the issuer is
located and
may not be recoverable by the Portfolio or the investors.
Securities of Emerging Market Countries. An emerging market
country gener-
ally is considered to be a country that is in the initial
stages of its indus-
trialization cycle. Investing in the equity and fixed-income
markets of emerg-
ing market countries involves exposure to economic structures
that are gener-
ally less diverse and mature, and to political systems that can
be expected to
have less stability, than those of developed countries.
Historical experience
indicates that the markets of developing countries have been
more volatile
than the markets of the more mature economies of developed
countries; however,
such markets often have provided higher rates of return to
investors.
Up to 10% of the Portfolio's assets may be invested in debt
securities of
emerging markets, which may be unrated or rated below
investment grade. Secu-
rities rated below investment grade (and comparable unrated
securities) are
the equivalent of high yield, high risk bonds, commonly known
as "junk bonds".
Such securities are regarded as predominantly speculative with
respect to the
issuer's capacity to pay interest and repay principal in
accordance with the
terms of the obligations and involve major risk exposure to
adverse business,
financial, economic, or political conditions.
One or more of the risks discussed above could affect adversely
the economy
of a developing market or the Portfolio's investments in such
market. In East-
ern Europe, for example, upon the accession to power of
Communist regimes in
the past, the governments of a number of Eastern European
countries expropri-
ated a large amount of property. The claims of many property
owners against
those governments were never finally settled. There can be no
assurance that
any investments that the Portfolio might make in such emerging
markets would
not be expropriated, nationalized or otherwise confiscated at
some time in the
future. In such an event, the Portfolio could lose its entire
investment in
the market involved. Moreover, changes in the leadership or
policies of such
markets could halt the expansion or reverse the liberalization
of foreign
investment
13
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
policies now occurring in certain of these markets and
adversely affect exist-
ing investment opportunities.
Restrictions On Foreign Investment. Some countries prohibit or
impose sub-
stantial restrictions on investments in their capital markets,
particularly
their equity markets, by foreign entities such as the
Portfolio. As illustra-
tions, certain countries require governmental approval prior to
investments by
foreign persons, or limit the amount of investment by foreign
persons in a par-
ticular company, or limit the investment by foreign persons to
only a specific
class of securities of a company which may have less
advantageous terms than
securities of the company available for purchase by nationals
or limit the
repatriation of funds for a period of time.
A number of countries, such as South Korea, Taiwan and
Thailand, have autho-
rized the formation of closed-end investment companies to
facilitate indirect
foreign investment in their capital markets. In accordance with
the 1940 Act,
the Portfolio may invest up to 10% of its total assets in
securities of closed-
end investment companies. This restriction on investments in
securities of
closed-end investment companies may limit opportunities for the
Portfolio to
invest indirectly in certain smaller capital markets. Shares of
certain closed-
end investment companies may at times be acquired only at
market prices repre-
senting premiums to their net asset values. If the Portfolio
acquires shares in
closed-end investment companies, shareholders would bear both
their proportion-
ate share of expenses in the Portfolio (including management
and advisory fees)
and, indirectly, the expenses of such closed-end investment
companies.
In some countries, banks or other financial institutions may
constitute a
substantial number of the leading companies or the companies
with the most
actively traded securities. Also, the 1940 Act restricts the
Portfolio's
investments in any equity security of an issuer which, in its
most recent fis-
cal year, derived more than 15% of its revenues from
"securities related activ-
ities," as defined by the rules thereunder. These provisions
may also restrict
the Portfolio's investments in certain foreign banks and other
financial insti-
tutions.
Smaller capital markets, while often growing in trading volume,
have substan-
tially less volume than U.S. markets, and securities in many
smaller capital
markets are less liquid and their prices may be more volatile
than securities
of comparable U.S. companies. Brokerage commissions, custodial
services, and
other costs relating to investment in smaller capital markets
are generally
more expen-
14
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
sive than in the United States. Such markets have different
clearance and set-
tlement procedures, and in certain markets there have been
times when settle-
ments have been unable to keep pace with the volume of
securities transac-
tions, making it difficult to conduct such transactions.
Further, satisfactory
custodial services for investment securities may not be
available in some
countries having smaller capital markets, which may result in
the Portfolio
incurring additional costs and delays in transporting and
custodying such
securities outside such countries. Delays in settlement could
result in tempo-
rary periods when assets of the Portfolio are uninvested and no
return is
earned thereon. The inability of the Portfolio to make intended
security pur-
chases due to settlement problems could cause the Portfolio to
miss attractive
investment opportunities. Inability to dispose of a portfolio
security due to
settlement problems could result either in losses to the
Portfolio due to sub-
sequent declines in value of the portfolio security or, if the
Portfolio has
entered into a contract to sell the security, could result in
possible liabil-
ity to the purchaser. There is generally less government
supervision and regu-
lation of exchanges, brokers and issuers in countries having
smaller capital
markets than there is in the United States.
Hedging Strategies. The Portfolio may engage in various
portfolio strategies
to seek to hedge its portfolio against movements in the equity
markets, inter-
est rates and exchange rates between currencies by the use of
options, futures
and options on futures. Utilization of options and futures
transactions
involves the risk of imperfect correlation in movements in the
price of
options and futures and movements in the price of the
securities, interest
rates or currencies which are the subject of the hedge. Options
and futures
transactions in foreign markets are also subject to the risk
factors associ-
ated with foreign investments generally, as discussed above.
There can be no
assurance that a liquid secondary market for options and
futures contracts
will exist at any specific time.
See the Appendix for a further discussion of the risks
associated with an
investment in the Portfolio.
PORTFOLIO TRANSACTIONS AND TURNOVER
All orders for transaction in securities and options on behalf
of the Port-
folio are placed by the Manager with broker/dealers that the
Manager selects,
including Smith Barney and other affiliated brokers. Brokerage
will be allo-
cated to Smith Barney, to the extent and in the manner
permitted by applicable
law, provided that, in the judgment of the Board of Directors
of the Fund, the
commission, fee or other remuneration received or to be
received by Smith Barney
(or any broker/dealer affiliate of Smith Barney that is also a
member of a
securities
15
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
exchange) is reasonable and fair compared to the commission,
fee or other
remuneration received by other brokers in connection with
comparable transac-
tions involving similar securities being purchased or sold on
a securities
exchange during the same or comparable period of time. In all
trades directed
to Smith Barney, the Fund has been assured that its orders
will be accorded
priority over those received from Smith Barney for its own
account or for any
of its directors, officers or employees. The Fund will not
deal with Smith
Barney in any transaction in which Smith Barney acts as
principal.
Under certain market conditions, the Portfolio may experience
high portfolio
turnover as a result of its investment strategies. For
example, the exercise
of a substantial number of options written by the Portfolio
and the purchase
or sale of securities by the Portfolio in anticipation of a
rise or decline in
interest rates could result in high portfolio turnover. Short
term gains real-
ized from portfolio transactions are taxable to shareholders
as ordinary
income. In addition, higher portfolio turnover rates can
result in correspond-
ing increases in brokerage commissions for the Portfolio. The
annual portfolio
turnover rate for the Portfolio may vary significantly from
year to year, but
it is generally not expected to exceed 75%. The Portfolio will
not consider
portfolio turnover rate a limiting factor in making investment
decisions con-
sistent with its respective objectives and policies.
VALUATION OF SHARES
The Portfolio's net asset value per share is determined as of
the close of
regular trading on the NYSE, on each day that the NYSE is
open, by dividing
the value of the Portfolio's net assets attributable to each
Class by the
total number of shares of the Class outstanding.
Securities owned by the Portfolio for which market quotations
are readily
available are valued at current market value or, in their
absence, at fair
value. Securities traded on an exchange are valued at last
sales prices on the
principal exchange on which each such security is traded, or if
there were no
sales on that exchange on the valuation date, the last quoted
sale, up to the
time of valuation, on the other exchanges. If instead there
were no sales on
the valuation date with respect to these securities, such
securities are val-
ued at the mean of the latest published closing bid and asked
prices. Over-
the-counter securities are valued at last sales price or, if
there were no
sales that day, at the mean
16
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
VALUATION OF SHARES (CONTINUED)
between the bid and asked prices. Options, futures contracts
and options
thereon that are traded on exchanges are also valued at last
sales prices as of
the close of the principal exchange on which each is listed or
if there were no
such sales on the valuation date, the last quoted sale, up to
the time of valu-
ation, on the other exchanges. In the absence of any sales on
the valuation
date, valuation shall be the mean of the latest closing bid and
asked prices.
Securities with a remaining maturity of 60 days or less are
valued at amortized
cost where the Board of Directors has determined that amortized
cost is fair
value. Premiums received on the sale of call options will be
included in the
Portfolio's net assets, and current market value of such
options sold by the
Portfolio will be subtracted from the Portfolio's net assets.
Any other invest-
ments of the Portfolio, including restricted securities and
listed securities
for which there is a thin market or that trade infrequently
(i.e., securities
for which prices are not readily available), are valued at a
fair value deter-
mined by the Board of Directors in good faith. This value
generally is deter-
mined as the amount that the Portfolio could reasonably expect
to receive from
an orderly disposition of these assets over a reasonable period
of time but in
no event more than seven days. The value of any security or
commodity denomi-
nated in a currency other than U.S. dollars will be converted
into U.S. dollars
at the prevailing market rate as determined by the investment
adviser.
Foreign securities trading may not take place on all days on
which the NYSE
is open. Further, trading takes place in various foreign
markets on days on
which the NYSE is not open. Accordingly, the determination of
the net asset
value of the Portfolio may not take place contemporaneously
with the determina-
tion of the prices of investments held by such Portfolio.
Events affecting the
values of investments that occur between the time their prices
are determined
and 4:00 P.M. on each day that the NYSE is open will not be
reflected in the
Portfolio's net asset value unless the investment adviser,
under the supervi-
sion of the Fund's Board of Directors, determines that the
particular event
would materially affect net asset value. As a result, the
Portfolio's net asset
value may be significantly affected by such trading on days
when a shareholder
has no access to the Portfolio.
17
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays income dividends at least annually
on shares of
the Portfolio and makes annual distributions of capital gains,
if any, on such
shares.
If a shareholder does not otherwise instruct, dividends and
capital gain dis-
tributions will be reinvested automatically in additional
shares of the same
Class at net asset value, subject to no sales charge or CDSC.
Income dividends and capital gain distributions that are
invested are cred-
ited to shareholders' accounts in additional shares at the net
asset value as
of the close of business on the payment date. A shareholder may
change the
option at any time by notifying his or her Smith Barney
Financial Consultant.
Accounts held directly by TSSG should notify TSSG in writing at
least five
business days prior to the payment date to permit the change to
be entered in
the shareholder's account.
The per share dividends on Class B and Class C shares of the
Portfolio may be
lower than the per share dividends on Class A and Class Y
shares principally as
a result of the distribution fee applicable with respect to
Class
B and Class C
shares. The per share dividends on Class A shares of the
Portfolio may be lower
than the per share dividends on Class Y shares principally as a
result of the
service fee applicable to Class A shares. Distributions of
capital gains, if
any, will be in the same amount for Class A, Class B, Class C
and Class Y
shares.
TAXES
The Portfolio intends to qualify as a regulated investment
company under
Subchapter M of the Code to be relieved of Federal income tax
on that part of
its net investment income and realized capital gains which it
pays out to its
shareholders. To qualify, the Portfolio must meet certain
tests, including dis-
tributing at least 90% of its investment company taxable
income, and deriving
less than 30% of its gross income from the sale or other
disposition of certain
investments held for less than three months.
Dividends from net investment income and distributions of
realized short-term
capital gains on the sale of securities, whether paid in cash
or automatically
invested in additional shares of the Portfolio, are taxable to
shareholders as
ordinary income. The Portfolio's dividends will not qualify for
the dividends
18
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
received deduction for corporations. Dividends and
distributions declared by
the Portfolio may also be subject to state and local taxes.
Distributions out
of net long-term capital gains (i.e., net long-term capital
gains in excess of
net short-term capital losses) are taxable to shareholders as
long-term capi-
tal gains. Information as to the tax status of dividends paid
or deemed paid
in each calendar year will be mailed to shareholders as early
in the suc-
ceeding year as practical but not later than January 31.
Income received by the Portfolio from sources within foreign
countries may
be subject to withholding and other taxes imposed by such
countries. Tax con-
ventions between certain countries and the United States may
reduce or elimi-
nate such taxes. It is impossible to determine the rate of
foreign tax in
advance since the amount of the Portfolio's assets to be
invested in various
countries is not known. Such foreign taxes would reduce the
income of the
Portfolio distributed to shareholders.
If, at the end of the Portfolio's taxable year, more than 50%
of the value
of the Portfolio's total assets consist of stock or securities
of foreign cor-
porations, the Portfolio may make an election pursuant to which
foreign income
taxes paid by it will be treated as paid directly by its
shareholders. The
Portfolio will make this election only if it deems the election
to be in the
best interests of shareholders, and will notify shareholders in
writing each
year if it makes the election and the amount of foreign taxes
to be treated as
paid by the shareholders. If the Portfolio makes such an
election, the amount
of such foreign taxes would be included in the income of
shareholders, and a
shareholder other than a foreign corporation or non-resident
alien individual
could claim either a credit or, provided the shareholder
itemizes deductions,
a deduction for U.S. federal income tax purposes for such
foreign
taxes.
Shareholders who choose to utilize a credit (rather than a
deduction) for for-
eign taxes will be subject to the limitation that the credit
may not exceed
the shareholders' U.S. tax (determined without regard to the
availability of
the credit) attributable to their total foreign source taxable
income. For
this purpose, the portion of dividends and distributions paid
by the Portfolio
from its foreign source income will be treated as foreign
source income. The
Portfolio's gains and losses from the sale of securities and
from certain for-
eign currency gains and losses will generally be treated as
derived from U.S.
sources. The limitation on the foreign tax credit is applied
separately to
foreign source "passive income," such as the portion of
dividends received
from the Portfolio that qualifies as foreign source income. In
addition, the
foreign tax credit is allowed to offset only 90% of the
alternative minimum
19
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
tax imposed on corporations and individuals. Because of these
limitations,
shareholders may be unable to claim a credit for the full
amount of their pro-
portionate share of the foreign income taxes paid by the
Portfolio.
In determining gain or loss, a shareholder who redeems or
exchanges shares
in the Portfolio within 90 days of the acquisition of such
shares will not be
entitled to include in tax basis the sales charges incurred in
acquiring such
shares to the extent of any subsequent reduction in sales
charges for invest-
ing in the Portfolio or a different Portfolio of the Fund, such
as pursuant to
the rights discussed in "Exchange Privilege."
The Fund is required to withhold and remit to the U.S. Treasury
31% of divi-
dends, distributions and redemption proceeds to shareholders
who fail to pro-
vide a correct taxpayer identification number (the Social
Security number in
the case of an individual) or to make the required
certifications, or who have
been notified by the Internal Revenue Service that they are
subject to backup
withholding and who are not otherwise exempt. The 31%
withholding tax is not
an additional tax, but is creditable against a shareholder's
federal income
tax liability.
Prior to investing in shares of the Portfolio, investors should
consult with
their tax advisors concerning the federal, state and local tax
consequences of
such an investment.
PURCHASE OF SHARES
GENERAL
The Portfolio offers four Classes of shares. Class A shares are
sold to
investors with an initial sales charge and Class B and Class C
shares are sold
without an initial sales charge but are subject to a CDSC
payable upon certain
redemptions. Class Y shares are sold without an initial sales
charge or CDSC
and are available only to investors investing a minimum of
$5,000,000. See
"Prospectus Summary--Alternative Purchase Arrangements" for a
discussion of
factors to consider in selecting which Class of shares to
purchase.
INITIAL SUBSCRIPTION PERIOD
Smith Barney, the Portfolio's distributor, will solicit
subscriptions for
shares of the Portfolio during the Subscription Period.
Subscriptions for
shares must be
20
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
made through a brokerage account maintained with Smith Barney
or an Introducing
Broker. Shares of the Portfolio subscribed for during the
Subscription Period
for which Smith Barney accepts purchase orders will be issued
and sold by the
Portfolio on the fifth business day after the end of the
Subscription Period
(the "Purchase Date"). Also on the Purchase Date, shareholders
of other funds
of the Smith Barney Mutual Funds will be able to exchange
shares of such funds
for shares of the Portfolio. On the Purchase Date, Smith Barney
will notify the
Portfolio of the aggregate number of shares for which it has
received and
accepted subscriptions, and the Portfolio will issue shares for
such
subscriptions and commence operations.
The Portfolio is offering its Class A shares to the public at a
maximum pur-
chase price per share of $12.63, which equals the Class A share
initial net
asset value per share of $12.00 plus the maximum sales charge
set forth below
under "Continuous Offerings". The Portfolio is offering its
Class B, Class C
and Class Y shares to the public at each Class' respective
initial net asset
value per share of $12.00.
The Portfolio and Smith Barney may in their discretion
determine to withdraw
the offering without notice for any reason before the end of
the Subscription
Period. The Portfolio also reserves the right to refuse any
order in whole or
in part.
CONTINUOUS OFFERINGS
Smith Barney will suspend the offering of shares to the public
immediately
after the expiration of the Subscription Period or within three
weeks thereaf-
ter. During the three-week period, Smith Barney would commence
a limited con-
tinuous offering of shares to the public. Once Smith Barney
suspends the offer-
ing of shares to the public (the "Closing Period"), it is
expected to do so for
30 days. This period may be lengthened or shortened in the
absolute discretion
of Smith Barney. During the Closing Period, the Portfolio will
invest the pro-
ceeds from its Subscription Period and its continuous offering,
if any, and
existing shareholders may request redemptions, purchase
additional shares and
exchange shares of the Portfolio for shares of certain other
funds of the Smith
Barney Mutual Funds. See "Exchange Privilege." Immediately
after the expiration
of the Closing Period, Smith Barney expects to commence a
continuous offering
of shares of the Portfolio.
21
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
During the continuous offerings, shares may be purchased
through a brokerage
account maintained with Smith Barney. Shares may also be
purchased through an
Introducing Broker and through other distribution channels. In
addition, cer-
tain investors, including qualified retirement plans and
certain other insti-
tutional investors, may purchase shares directly from the Fund
through TSSG.
When purchasing shares of the Portfolio, investors must specify
whether the
purchase is for Class A, Class B, Class C or Class Y shares. No
maintenance
fee will be charged by the Fund in connection with a brokerage
account through
which an investor purchases or holds shares.
Investors in Class A, Class B and Class C shares may open an
account by mak-
ing an initial investment of at least $1,000 for each account,
or $250 for an
IRA or a Self-Employed Retirement Plan in the Portfolio.
Investors in Class Y
shares may open an account by making an initial investment of
$5,000,000. Sub-
sequent investments of at least $50 may be made for all
Classes. For partici-
pants in retirement plans qualified under Section 403(b)(7) or
Section 401(a)
of the Code, the minimum initial investment requirement for
Class A, Class B
and Class C shares and the subsequent investment requirement
for all Classes
in the Portfolio is $25. For the Portfolio's Systematic
Investment Plan, the
minimum initial investment requirement for Class A, Class B and
Class C shares
and the subsequent investment requirement for all Classes is
$50.
There are no
minimum investment requirements in Class A shares for employees
of Travelers
and its subsidiaries, including Smith Barney, Directors of the
Fund, and their
spouses and children. The Fund reserves the right to waive or
change minimums,
to decline any order to purchase its shares and to suspend the
offering of
shares from time to time. Shares purchased will be held in the
shareholder's
account by the Fund's transfer agent, TSSG. Share certificates
are issued only
upon a shareholder's written request to TSSG.
Purchase orders received by Smith Barney prior to the close of
regular trad-
ing on the NYSE, on any day the Portfolio calculates its net
asset value, are
priced according to the net asset value determined on that day
(the "trade
date"). Orders received by dealers or Introducing Brokers prior
to the close
of regular trading on the NYSE on any day the Portfolio
calculates its net
asset value, are priced according to the net asset value
determined on that
day, provided the order is received by Smith Barney prior to
Smith Barney's
close of business. Currently, payment for Portfolio shares is
due on the fifth
business
22
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
day (the "settlement date") after the trade date. The Portfolio
anticipates
that, in accordance with regulatory changes, beginning on or
about June 1,
1995, the settlement date will be the third business day after
the trade date.
SYSTEMATIC INVESTMENT PLAN
During the continuous offering period, shareholders may make
additions to
their accounts at any time by purchasing shares through a
service known as the
Systematic Investment Plan. Under the Systematic Investment
Plan, Smith Barney
or TSSG is authorized through preauthorized transfers of $50 or
more to charge
the regular bank account or other financial institution
indicated by the share-
holder on a monthly or quarterly basis to provide systematic
additions to the
shareholder's Portfolio account. A shareholder who has
insufficient funds to
complete the transfer will be charged a fee of up to $25 by
Smith Barney or
TSSG. The Systematic Investment Plan also authorizes Smith
Barney to apply cash
held in the shareholder's Smith Barney brokerage account or
redeem the share-
holder's shares of a Smith Barney money market fund to make
additions to the
account. Additional information is available from the Fund or a
Smith Barney
Financial Consultant.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The sales charges applicable to purchases of Class A shares of
the Portfolio
are as follows:
<TABLE>
<CAPTION>
SALES CHARGE ----------------
--------------
DEALERS'
% OF % OF
REALLOWANCE AS % OF
AMOUNT OF INVESTMENT OFFERING PRICE AMOUNT INVESTED
OFFERING PRICE ------------------------------------------------
- --------------------------
<S> <C> <C> <C>
Less than $25,000 5.00% 5.26%
4.50%
$ 25,000 - 49,999 4.00 4.17
3.60
50,000 - 99,999 3.50 3.63
3.15
100,000 - 249,999 3.00 3.09
2.70
250,000 - 499,999 2.00 2.04
1.80
500,000 and over * *
* -------------------------------------------------------------
- -------------
</TABLE>
* Purchases of Class A shares, which when combined with current
holdings of
Class A shares offered with a sales charge equal or exceed
$500,000 in the
aggregate, will be made at net asset value without any initial
sales charge,
but will be subject to a CDSC of 1.00% on redemptions made
within 12 months of
purchase. The CDSC on Class A shares is payable to Smith
Barney,
which
compensates Smith Barney Financial Consultants and other
dealers
whose clients
make purchases of $500,000 or more. The CDSC is waived in the
same
circumstances in which the CDSC applicable to Class B and Class
C shares is
waived. See "Deferred Sales Charge Alternatives" and "Waivers
of
CDSC."
23
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
Members of the selling group may receive up to 90% of the sales
charge and
may be deemed to be underwriters of the Fund as defined in the
Securities Act
of 1933, as amended.
The reduced sales charges shown above apply to the aggregate of
purchases of
Class A shares of the Portfolio made at one time by "any
person," which
includes an individual, his or her spouse and children, or a
trustee or other
fiduciary of a single trust estate or single fiduciary account.
The reduced
sales charge minimums may also be met by aggregating the
purchase with the net
asset value of all Class A shares offered with a sales charge
held in funds
sponsored by Smith Barney listed under "Exchange Privilege."
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset value
without a sales
charge in the following circumstances: (a) sales of Class A
shares to Direc-
tors of the Fund and employees of Travelers and its
subsidiaries, or to the
spouse and children of such persons (including the surviving
spouse of a
deceased Director or employee, and retired Directors or
employees), or sales
to any trust, pension, profit-sharing or other benefit plan for
such persons
provided such sales are made upon the assurance of the
purchaser that the pur-
chase is made for investment purposes and that the securities
will not be
resold except through redemption or repurchase; (b) offers of
Class A shares
to any other investment company in connection with the
combination of such
company with the Portfolio by merger, acquisition of assets or
otherwise; (c)
purchases of Class A shares by any client of a newly employed
Smith Barney
Financial Consultant (for a period up to 90 days from the
commencement of the
Financial Consultant's employment with Smith Barney), on the
condition the
purchase of Class A shares is made with the proceeds of the
redemption of
shares of a mutual fund which (i) was sponsored by the
Financial Consultant's
prior employer, (ii) was sold to the client by the Financial
Consultant and
(iii) was subject to a sales charge; (d) shareholders who have
redeemed Class
A shares in the Portfolio (or Class A shares of another fund of
the Smith Bar-
ney Mutual Funds that are sold with a maximum 5.00% sales
charge) and who wish
to reinvest their redemption proceeds in the Portfolio,
provided the reinvest-
ment is made within 60 calendar days of the redemption; and (e)
accounts man-
aged by registered investment advisory subsidiaries of
Travelers. In order to
obtain such discounts, the purchaser must provide sufficient
information at
the time of purchase to permit
24
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
verification that the purchase would qualify for the
elimination of the sales
charge.
RIGHT OF ACCUMULATION
Class A shares of the Portfolio may be purchased by "any
person" (as defined
above) at a reduced sales charge or at net asset value
determined by aggregat-
ing the dollar amount of the new purchase and the total net
asset value of all
Class A shares of the Portfolio and of funds sponsored by Smith
Barney that
are offered with a sales charge listed under "Exchange
Privilege" then held by
such person and applying the sales charge applicable to such
aggregate. In
order to obtain such discount, the purchaser must provide
sufficient informa-
tion at the time of purchase to permit verification that the
purchase quali-
fies for the reduced sales charge. The right of accumulation is
subject to
modification or discontinuance at any time with respect to all
shares pur-
chased thereafter.
GROUP PURCHASES
Upon completion of certain automated systems, a reduced sales
charge or pur-
chase at net asset value will also be available to employees
(and partners) of
the same employer purchasing as a group, provided each
participant makes the
minimum initial investment required. The sales charge
applicable to purchases
by each member of such a group will be determined by the table
set forth above
under "Initial Sales Charge Alternative--Class A Shares", and
will be based
upon the aggregate sales of Class A shares of Smith Barney
Mutual Funds
offered with a sales charge to, and share holdings of, all
members of the
group. To be eligible for such reduced sales charges or to
purchase at net
asset value, all purchases must be pursuant to an employer- or
partnership-
sanctioned plan meeting certain requirements. One such
requirement is that the
plan must be open to specified partners or employees of the
employer and its
subsidiaries, if any. Such plan may, but is not required to,
provide for pay-
roll deductions, IRAs or investments pursuant to retirement
plans under Sec-
tions 401 or 408 of the Code. Smith Barney may also offer a
reduced sales
charge or net asset value purchase for aggregating related
fiduciary accounts
under such conditions that Smith Barney will realize economies
of sales
efforts and sales related expenses. An individual who is a
member of a quali-
fied group may also purchase Class A shares at the reduced
sales charge appli-
cable to the group as a whole. The sales charge is based upon
the aggregate
dollar value of Class A shares offered with a sales charge that
have been pre-
viously purchased and are still owned by the
25
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
group, plus the amount of the current purchase. A "qualified
group" is one
which (a) has been in existence for more than six months, (b)
has a purpose
other than acquiring Portfolio shares at a discount and (c)
satisfies uniform
criteria which enable Smith Barney to realize economies of
scale in its costs
of distributing shares. A qualified group must have more than
10 members, must
be available to arrange for group meetings between
representatives of the
Portfolio and the members, and must agree to include sales and
other materials
related to the Portfolio in its publications and mailings to
members at no
cost to Smith Barney. In order to obtain such reduced sales
charge or to pur-
chase at net asset value, the purchaser must provide sufficient
information at
the time of purchase to permit verification that the purchase
qualifies for
the reduced sales charge. Approval of group purchase reduced
sales charge
plans is subject to the discretion of Smith Barney.
LETTER OF INTENT
A Letter of Intent for amounts of $50,000 or more provides an
opportunity
for an investor to obtain a reduced sales charge by aggregating
investments
over a 13 month period, provided that the investor refers to
such Letter when
placing orders. For purposes of a Letter of Intent, the "Amount
of Investment"
as referred to in the preceding sales charge table includes
purchases of all
Class A shares of the Portfolio and other funds of the Smith
Barney Mutual
Funds offered with a sales charge over the 13 month period
based on the total
amount of intended purchases plus the value of all Class A
shares previously
purchased and still owned. An alternative is to compute the 13
month period
starting up to 90 days before the date of execution of a Letter
of Intent.
Each investment made during the period receives the reduced
sales charge
applicable to the total amount of the investment goal. If the
goal is not
achieved within the period, the investor must pay the
difference between the
sales charges applicable to the purchases made and the charges
previously
paid, or an appropriate number of escrowed shares will be
redeemed. Please
contact a Smith Barney Financial Consultant or TSSG to obtain a
Letter of
Intent application.
DEFERRED SALES CHARGE ALTERNATIVES
CDSC Shares are sold at net asset value next determined without
an initial
sales charge so that the full amount of an investor's purchase
payment may be
immediately invested in the Portfolio. A CDSC, however, may be
imposed on cer-
tain redemptions of these shares. "CDSC Shares" are: (a) Class
B shares; (b)
Class C shares; and (c) Class A shares which when combined with
Class A
26
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
shares offered with a sales charge currently held by an
investor equal or
exceed $500,000 in the aggregate.
Any applicable CDSC will be assessed on an amount equal to the
lesser of the
original cost of the shares being redeemed or their net asset
value at the
time of redemption. CDSC Shares that are redeemed will not be
subject to a
CDSC to the extent that the value of such shares represents:
(a) capital
appreciation of Portfolio assets; (b) reinvestment of dividends
or capital
gain distributions; (c) with respect to Class B shares, shares
redeemed more
than five years after their purchase; or (d) with respect to
Class C shares
and Class A shares that are CDSC Shares, shares redeemed more
than 12 months
after their purchase.
Class C shares and Class A shares that are CDSC Shares are
subject to a
1.00% CDSC if redeemed within 12 months of purchase. In
circumstances in which
the CDSC is imposed on Class B shares, the amount of the charge
will depend on
the number of years since the shareholder made the purchase
payment from which
the amount is being redeemed. Solely for purposes of
determining the number of
years since a purchase payment, all purchase payments made
during a month will
be aggregated and deemed to have been made on the last day of
the preceding
Smith Barney statement month. The following table sets forth
the rates of the
charge for redemptions of Class B shares by shareholders,
except in the case
of purchases by Participating Plans, as described below. See
"Purchase of
Shares--Smith Barney 401(k) Program."
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE
PAYMENT WAS MADE CDSC
----------------------------
<S> <C>
First 5.00%
Second 4.00
Third 3.00
Fourth 2.00
Fifth 1.00
Sixth 0.00
Seventh 0.00
Eighth 0.00
----------------------------
</TABLE>
Class B shares will convert automatically to Class A shares
eight years
after the date on which they were purchased and thereafter will
no longer be
subject to any distribution fees. There will also be converted
at that time
such propor-
27
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
tion of Class B Dividend Shares owned by the shareholder as the
total number of
his or her Class B Shares converting at the time bears to the
total number of
outstanding Class B shares (other than Class B Dividend Shares)
owned by the
shareholder. Shareholders who held Class B shares of Smith
Barney Shearson
Short-Term World Income Fund (the "Short-Term World Income
Fund") on July 15,
1994 and who subsequently exchange those shares for Class B
shares of the Port-
folio will be offered the opportunity to exchange all such
Class B shares for
Class A shares of the Portfolio four years after the date on
which those shares
were deemed to have been purchased. Holders of such Class B
shares will be
notified of the pending exchange in writing approximately 30
days before the
fourth anniversary of the purchase date and, unless the
exchange has been
rejected in writing, the exchange will occur on or about the
fourth anniversary
date. See "Prospectus Summary--Alternative Purchase
Arrangements-Class B
Shares Conversion Feature."
In determining the applicability of any CDSC, it will be
assumed that a
redemption is made first of shares representing capital
appreciation, next of
shares representing the reinvestment of dividends and capital
gain distribu-
tions and finally of other shares held by the shareholder for
the longest
period of time. The length of time that CDSC Shares acquired
through an
exchange have been held will be calculated from the date that
the shares
exchanged were initially acquired in one of the other Smith
Barney Mutual
Funds, and Portfolio shares being redeemed will be considered
to represent, as
applicable, capital appreciation or dividend and capital gain
distribution
reinvestments in such other funds. For Federal income tax
purposes, the amount
of the CDSC will reduce the gain or increase the loss, as the
case may be, on
the amount realized on redemption. The amount of any CDSC will
be paid to Smith
Barney.
To provide an example, assume an investor purchased 100 Class B
shares at $10
per share for a cost of $1,000. Subsequently, the investor
acquired 5 addi-
tional shares through dividend reinvestment. During the
fifteenth month after
the purchase, the investor decided to redeem $500 of his or her
investment.
Assuming at the time of the redemption the net asset value had
appreciated to
$12 per share, the value of the investor's shares would be
$1,260 (105 shares
at $12 per share). The CDSC would not be applied to the amount
which represents
appreciation ($200) and the value of the reinvested dividend
shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500 minus
$260) would be
charged at a rate of 4.00% (the applicable rate for Class B
shares) for a total
deferred sales charge of $9.60.
28
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
WAIVERS OF CDSC
The CDSC will be waived on: (a) exchanges (see "Exchange
Privilege"); (b)
automatic cash withdrawals in amounts equal to or less than
1.00% per month of
the value of the shareholder's shares at the time the
withdrawal plan commences
(see "Automatic Cash Withdrawal Plan"); (c) redemptions of
shares within twelve
months following the death or disability of the shareholder;
(d) redemption of
shares made in connection with qualified distributions from
retirement plans or
IRAs upon the attainment of age 59 1/2; (e) involuntary
redemptions; and (f)
redemptions of shares in connection with a combination of the
Portfolio with
any investment company by merger, acquisition of assets or
otherwise. In addi-
tion, a shareholder who has redeemed shares from other funds of
the Smith Bar-
ney Mutual Funds may, under certain circumstances, reinvest all
or part of the
redemption proceeds within 60 days and receive pro rata credit
for any CDSC
imposed on the prior redemption.
CDSC waivers will be granted subject to confirmation (by Smith
Barney in the
case of shareholders who are also Smith Barney clients or by
TSSG in the case
of all other shareholders) of the shareholder's status or
holdings, as the case
may be.
SMITH BARNEY 401(K) PROGRAM
During the continuous offering period, investors may be
eligible to partici-
pate in the Smith Barney 401(k) Program, which is generally
designed to assist
plan sponsors in the creation and operation of retirement plans
under Section
401(a) of the Code. To the extent applicable, the same terms
and
conditions are
offered to all Participating Plans in the Smith Barney 401(k)
Program.
The Portfolio offers to Participating Plans Class A, Class B,
Class C and
Class Y shares as investment alternatives under the Smith
Barney 401(k) Pro-
gram. Class A, Class B and Class C shares acquired through the
Smith Barney
401(k) Program are subject to the same service and/or
distribution fees as, but
different sales charge and CDSC schedules than, the Class A,
Class B and Class
C shares acquired by other investors. Similar to those shares
available to
other investors, Class Y shares acquired through the Smith
Barney 401(k) Pro-
gram are not subject to any service or distribution fees or any
initial sales
charge or CDSC. Once a Participating Plan has made an initial
investment in the
Portfo-
29
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
lio, all of its subsequent investments in the Portfolio must
be in the same
Class of shares, except as otherwise described below.
Class A Shares. Class A shares of the Portfolio are offered
without any
initial sales charge to any Participating Plan that purchases
from $500,000 to
$4,999,999 of Class A shares of one or more funds of the Smith
Barney Mutual
Funds. Class A shares acquired through the Smith Barney 401(k)
Program are
subject to a CDSC of 1.00% of redemption proceeds, if the
Participating Plan
terminates within four years of the date the Participating
Plan first enrolled
in the Smith Barney 401(k) Program.
Class B Shares. Class B shares of the Portfolio are offered to
any Partici-
pating Plan that purchases less than $250,000 of one or more
funds of the
Smith Barney Mutual Funds. Class B shares acquired through the
Smith Barney
401(k) Program are subject to a CDSC of 3.00% of redemption
proceeds, if the
Participating Plan terminates within eight years of the date
the Participating
Plan first enrolled in the Smith Barney 401(k) Program.
Eight years after the date the Participating Plan enrolled in
the Smith Bar-
ney 401(k) Program, it will be offered the opportunity to
exchange all of its
Class B shares for Class A shares of the Portfolio. Such Plans
will be notified
of the pending exchange in writing approximately 60 days before
the eighth
anniversary of the enrollment date and, unless the exchange has
been rejected
in writing, the exchange will occur on or about the eighth
anniversary date.
Once the exchange has occurred, a Participating Plan will not
be eligible to
acquire additional Class B shares of the Portfolio but instead
may acquire
Class A shares of the Portfolio. If the Participating Plan
elects not to
exchange all of its Class B shares at that time, each Class B
share held by the
Participating Plan will have the same conversion feature as
Class B shares held
by other investors. See "Purchase of Shares -- Deferred Sales
Charge Alterna-
tives."
Class C Shares. Class C shares of the Portfolio are offered to
any Partici-
pating Plan that purchases from $250,000 to $499,999 of one or
more funds
of the Smith Barney Mutual Funds. Class C shares acquired
through the
Smith Barney 401(k) Program are subject to a CDSC of 1.00% of
redemption pro-
ceeds, if the Participating Plan terminates within four years
of the date the
Participating Plan first enrolled in the Smith Barney 401(k)
Program. Each year
after the date a Participating Plan enrolled in the Smith
Barney 401(k) Pro-
gram, if its total Class C holdings equal at least $500,000 as
of the calendar
year-end,
30
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
the Participating Plan will be offered the opportunity to
exchange all of its
Class C shares for Class A shares of the Portfolio. Such Plans
will be notified
in writing within 30 days after the last business day of the
calendar year, and
unless the exchange offer has been rejected in writing, the
exchange will occur
on or about the last business day of the following March. Once
the exchange has
occurred, a Participating Plan will not be eligible to acquire
Class C shares
of the Portfolio but instead may acquire Class A shares of the
Portfolio. Any
Class C shares not converted will continue to be subject to the
distribution
fee.
Class Y Shares. Class Y shares of the Portfolio are offered
without any serv-
ice or distribution fees, sales charge or CDSC to any
Participating Plan that
purchases $5,000,000 or more of Class Y shares of one or more
funds of the
Smith Barney Mutual Funds.
No CDSC is imposed on redemptions of CDSC Shares to the extent
that the net
asset value of the shares redeemed does not exceed the current
net asset value
of the shares purchased through reinvestment of dividends or
capital gain dis-
tributions, plus (a) with respect to Class A and Class C
shares, the current
net asset value of such shares purchased more than one year
prior to redemption
and, with respect to Class B shares, the current net asset
value of Class B
shares purchased more than eight years prior to the redemption,
plus (b) with
respect to Class A and Class C shares, increases in the net
asset value of the
shareholder's Class A or Class C shares above the purchase
payments made during
the preceding year and, with respect to Class B shares,
increases in the net
asset value of the shareholder's Class B shares above the
purchase payments
made during the preceding eight years. Whether or not the CDSC
applies to a
Participating Plan depends on the number of years since the
Participating Plan
first became enrolled in the Smith Barney 401(k) Program,
unlike the applica-
bility of the CDSC to other shareholders, which depends on the
number of years
since those shareholders made the purchase payment from which
the amount is
being redeemed.
The CDSC will be waived on redemptions of Class A, Class B and
Class C shares
in connection with lump-sum or other distributions made by a
Participating Plan
as a result of: (a) the retirement of an employee in the
Participating Plan;
(b) the termination of employment of an employee in the
Participating Plan; (c)
the death or disability of an employee in the Participating
Plan; (d) the
attainment of age 59 1/2 by an employee in the Participating
Plan; (e) hardship
of an employee in the Participating Plan to the extent
permitted under Section
31
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PURCHASE OF SHARES (CONTINUED)
401(k) of the Code; or (f) redemptions of shares in connection
with a loan made
by the Participating Plan to an employee.
Participating Plans wishing to acquire shares of the Portfolio
through the
Smith Barney 401(k) Program must purchase such shares directly
from TSSG. For
further information regarding the Smith Barney 401(k) Program,
investors should
contact a Smith Barney Financial Consultant.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each Class may be
exchanged for
shares of the same Class in the following funds of the Smith
Barney Mutual
Funds, to the extent shares are offered for sale in the
shareholder's state of
residence. Exchanges of Class A, Class B and Class C shares
are subject to min-
imum investment requirements and all shares are subject to the
other require-
ments of the fund into which exchanges are made and a sales
charge differential
may apply.
FUND NAME
Growth Funds
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Special Equities Fund
Smith Barney Telecommunications Growth
Fund
Growth and Income Funds
Smith Barney Convertible Fund
Smith Barney Funds, Inc.--Income and Growth
Portfolio Smith Barney Funds, Inc.--Utility
Portfolio
Smith Barney Growth and Income Fund
Smith Barney Premium Total Return
Fund Smith Barney Strategic
Investors Fund Smith Barney
Utilities Fund
Taxable Fixed-Income Funds
** Smith Barney Adjustable Rate Government Income
Fund Smith Barney Diversified Strategic Income
Fund
32
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
EXCHANGE PRIVILEGE (CONTINUED)
* Smith Barney Funds, Inc.--Income Return Account Portfolio
Smith Barney Funds, Inc.--Monthly Payment Government
Portfolio
+++ Smith Barney Funds, Inc.--Short-Term U.S. Treasury
Securities Portfolio
Smith Barney Funds, Inc.--U.S. Government Securities
Portfolio
Smith Barney Government Securities Fund
Smith Barney High Income Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
Tax-Exempt Funds
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund
Inc. Smith Barney Florida Municipals Fund
* Smith Barney Intermediate Maturity California Municipals Fund
* Smith Barney Intermediate Maturity New York Municipals Fund
* Smith Barney Limited Maturity Municipals Fund
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Muni Funds--California Portfolio
* Smith Barney Muni Funds--Florida Limited Term
Portfolio Smith Barney Muni Funds--Florida Portfolio
Smith Barney Muni Funds--Georgia Portfolio
* Smith Barney Muni Funds--Limited Term Portfolio
Smith Barney Muni Funds--National Portfolio
Smith Barney Muni Funds--New Jersey Portfolio
Smith Barney Muni Funds--New York Portfolio
Smith Barney Muni Funds--Ohio Portfolio
Smith Barney Muni Funds--Pennsylvania
Portfolio Smith Barney New Jersey Municipals
Fund Inc. Smith Barney New York Municipals
Fund Inc. Smith Barney Oregon Municipals Fund
Smith Barney Tax-Exempt Income Fund
International Funds
Smith Barney World Funds, Inc.--European Portfolio
Smith Barney World Funds, Inc.--Global Government
Bond
Portfolio
Smith Barney World Funds, Inc.--International
Balanced Portfolio
Smith Barney World Funds, Inc.--International Equity
Portfolio
Smith Barney World Funds, Inc.--Pacific Portfolio
Smith Barney Precious Metals and Minerals Fund Inc.
33
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
EXCHANGE PRIVILEGE (CONTINUED)
Money Market Funds
+ Smith Barney Exchange Reserve Fund
++ Smith Barney Money Funds, Inc.--Cash Portfolio
++ Smith Barney Money Funds, Inc.--Government Portfolio
*** Smith Barney Money Funds, Inc.--Retirement Portfolio
+++ Smith Barney Municipal Money Market Fund, Inc.
+++ Smith Barney Muni Funds--California Money Market
Portfolio +++ Smith Barney Muni Funds--New York Money
Market Portfolio -----------------------------------------
- ------------------------
- --------------
* Available for exchange with Class A, Class C and Class Y
shares of the
Portfolio.
** Available for exchange with Class A, Class B and Class Y
shares of the
Portfolio. In addition, shareholders who own Class C shares
of the
Portfolio through the Smith Barney 401(k) Program may
exchange those
shares for Class C shares of this fund.
*** Available for exchange with Class A shares of the
Portfolio. + Available for exchange with Class B and Class C
shares of the
Portfolio.
++ Available for exchange with Class A and Class Y shares of
the
Portfolio.
In addition, shareholders who own Class C shares of the
Portfolio through
the Smith Barney 401(k) Program may exchange those shares
for Class C
shares of this fund.
+++ Available for exchange with Class A and Class Y shares of
the Portfolio.
Class A Exchanges. Class A shares of Smith Barney Mutual Funds
sold without
a sales charge or with a maximum sales charge of less than the
maximum charged
by other Smith Barney Mutual Funds will be subject to the
appropriate "sales
charge differential" upon the exchange of such shares for Class
A shares of a
fund sold with a higher sales charge. The "sales charge
differential" is lim-
ited to a percentage rate no greater than the excess of the
sales charge rate
applicable to purchases of shares of the mutual fund being
acquired in the
exchange over the sales charge rate(s) actually paid on the
mutual fund shares
relinquished in the exchange and on any predecessor of those
shares. For pur-
poses of the exchange privilege, shares obtained through
automatic reinvest-
ment of dividends and capital gain distributions are treated as
having paid
the same sales charges applicable to the shares on which the
dividends or dis-
tributions were paid; however, except in the case of the Smith
Barney 401(k)
Program, if no sales charge was imposed upon the initial
purchase of the
shares, any shares obtained through automatic reinvestment will
be subject to
a sales charge differential upon exchange.
Class B Exchanges. In the event a Class B shareholder (unless
such share-
holder was a Class B shareholder of the Short-Term World Income
Fund on July
15, 1994) wishes to exchange all or a portion of his or her
shares in any of
the funds imposing a higher CDSC than that imposed by the
Portfolio, the
exchanged Class B shares will be subject to the higher
applicable
CDSC. Upon
an exchange, the new Class B shares will be deemed to have been
purchased on
the same date as the Class B shares of the Portfolio that have
been exchanged.
34
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
EXCHANGE PRIVILEGE (CONTINUED)
Class C Exchanges. Upon an exchange, the new Class C shares
will be deemed to
have been purchased on the same date as the Class C shares of
the Portfolio
that have been exchanged.
Class Y Exchanges. Class Y shareholders of the Portfolio who
wish to exchange
all or a portion of their Class Y shares for Class Y shares in
any of the funds
identified above may do so without imposition of any charge.
Additional Information Regarding the Exchange Privilege.
Although the
exchange privilege is an important benefit, excessive exchange
transactions can
be detrimental to the Portfolio's performance and its
shareholders. The Manager
may determine that a pattern of frequent exchanges is excessive
and contrary to
the best interests of the Portfolio's other shareholders. In
this event, the
Manager will notify Smith Barney and Smith Barney may, at its
discretion,
decide to limit additional purchases and/or exchanges by the
shareholder. Upon
such a determination, Smith Barney will provide notice in
writing or by tele-
phone to the shareholder at least 15 days prior to suspending
the exchange
privilege and during the 15 day period the shareholder will be
required to (a)
redeem his or her shares in the Portfolio or (b) remain
invested in the Portfo-
lio or exchange into any of the funds of the Smith Barney
Mutual Funds ordinar-
ily available, which position the shareholder would be expected
to maintain for
a significant period of time. All relevant factors will be
considered in deter-
mining what constitutes an abusive pattern of exchanges.
Exchanges will be processed at the net asset value next
determined, plus any
applicable sales charge differential. Redemption procedures
discussed below are
also applicable for exchanging shares, and exchanges will be
made upon receipt
of all supporting documents in proper form. If the account
registration of the
shares of the fund being acquired is identical to the
registration of the shares
of the fund exchanged, no signature guarantee is required. A
capital gain or
loss for tax purposes will be realized upon the exchange,
depending upon the
cost or other basis of shares redeemed. Before exchanging
shares, investors
should read the current prospectus describing the shares to be
acquired. The
Portfolio reserves the right to modify or discontinue exchange
privileges upon
60 days' prior notice to shareholders.
REDEMPTION OF SHARES
The Fund is required to redeem the shares of the Portfolio
tendered to it, as
described below, at a redemption price equal to their net asset
value per share
next determined after receipt of a written request in proper
form at no charge
35
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
REDEMPTION OF SHARES (CONTINUED)
other than any applicable CDSC. Redemption requests received
after the close of
regular trading on the NYSE are priced at the net asset value
next determined.
If a shareholder holds shares in more than one Class, any
request for redemp-
tion must specify the Class being redeemed. In the event of a
failure to spec-
ify which Class, or if the investor owns fewer shares of the
Class than speci-
fied, the redemption request will be delayed until the Fund's
transfer agent
receives further instructions from Smith Barney, or if the
shareholder's
account is not with Smith Barney, from the shareholder
directly. The redemption
proceeds will be remitted on or before the seventh day
following receipt of
proper tender, except on any days on which the NYSE is closed
or as permitted
under the 1940 Act in extraordinary circumstances. The Fund
anticipates that,
in accordance with regulatory changes, beginning on or about
June 1, 1995, pay-
ment will be made on the third business day after receipt of
proper tender.
Generally, if the redemption proceeds are remitted to a Smith
Barney brokerage
account, these funds will not be invested for the shareholder's
benefit without
specific instruction and Smith Barney will benefit from the use
of temporarily
uninvested funds. Redemption proceeds for shares purchased by
check, other than
a certified or official bank check, will be remitted upon
clearance of the
check, which may take up to ten days or more.
Shares held by Smith Barney as custodian must be redeemed by
submitting a
written request to a Smith Barney Financial Consultant. Shares
other than those
held by Smith Barney as Custodian may be redeemed through an
investor's Finan-
cial Consultant, Introducing Broker or dealer in the selling
group or by sub-
mitting a written request for redemption to:
Smith Barney World Funds, Inc./Emerging Markets Portfolio
Class A, B, C or Y (please specify)
c/o The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request must (a) state the Class and
number or dollar
amount of shares to be redeemed, (b) identify the shareholder's
account number
and (c) be signed by each registered owner exactly as the
shares are regis-
tered. If the shares to be redeemed were issued in certificate
form, the cer-
tificates must be endorsed for transfer (or be accompanied by
an endorsed stock
power) and must be submitted to TSSG together with the
redemption request. Any
signature appearing on a redemption request, share certificate
or stock power
must be guaranteed by an eligible guarantor institution, such
as a domestic
bank, sav-
36
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
REDEMPTION OF SHARES (CONTINUED)
ings and loan institution, domestic credit union, member bank
of the Federal
Reserve System or member firm of a national securities
exchange. TSSG may
require additional supporting documents for redemptions made by
corporations,
executors, administrators, trustees or guardians. A redemption
request will not
be deemed properly received until TSSG receives all required
documents in
proper form.
AUTOMATIC CASH WITHDRAWAL PLAN
The Portfolio offers shareholders an automatic cash withdrawal
plan, under
which shareholders who own shares with a value of at least
$10,000 may elect to
receive cash payments of at least $50 monthly or quarterly.
Retirement plan
accounts are eligible for automatic cash withdrawal plans only
where the share-
holder is eligible to receive qualified distributions and has
an account value
of at least $5,000. The withdrawal plan will be carried over on
exchanges
between funds or Classes of the Portfolio. Any applicable CDSC
will not be
waived on amounts withdrawn by a shareholder that exceed 1.00%
per month of the
value of the shareholder's shares subject to the CDSC at the
time the with-
drawal plan commences. For further information regarding the
automatic cash
withdrawal plan, shareholders should contact a Smith Barney
Financial Consul-
tant.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to involuntarily liquidate any
shareholder's
account in the Portfolio if the aggregate net asset value of
the shares held in
the Portfolio account is less than $500. (If a shareholder has
more than one
account in this Portfolio, each account must satisfy the
minimum account size.)
The Fund, however, will not redeem shares based solely on
market reductions in
net asset value. Before the Fund exercises such right,
shareholders will
receive written notice and will be permitted 60 days to bring
accounts up to
the minimum to avoid automatic liquidation.
PERFORMANCE
From time to time the Portfolio may include its total return,
average annual
total return and current dividend return in advertisements
and/or other types
of sales literature. These figures are computed separately for
Class A, Class
B, Class C and Class Y shares of the Portfolio. These figures
are based on
histori-
37
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
PERFORMANCE (CONTINUED)
cal earnings and are not intended to indicate future
performance. Total return
is computed for a specified period of time assuming deduction
of the maximum
sales charge, if any, from the initial amount invested and
reinvestment of all
income dividends and capital gain distributions on the
reinvestment dates at
prices calculated as stated in this Prospectus, then dividing
the value of the
investment at the end of the period so calculated by the
initial amount
invested and subtracting 100%. The standard average annual
total return, as
prescribed by the SEC is derived from this total return, which
provides the
ending redeemable value. Such standard total return information
may also be
accompanied with nonstandard total return information for
differing periods
computed in the same manner but without annualizing the total
return or taking
sales charges into account. The Portfolio calculates current
dividend return
for each Class by dividing the current dividend by the net
asset value or the
maximum public offering price (including sales charge) on the
last day of the
period for which current dividend return is presented. The
current dividend
return for each Class may vary from time to time depending on
market condi-
tions, the composition of its investment portfolio and
operating expenses.
These factors and possible differences in the methods used in
calculating cur-
rent dividend return should be considered when comparing a
Class' current
return to yields published for other investment companies and
other investment
vehicles. The Portfolio may also include comparative
performance information in
advertising or marketing its shares. Such performance
information may include
data from Lipper Analytical Services, Inc. and other financial
publications.
The Portfolio will include performance data for Class A, Class
B, Class C and
Class Y shares in any advertisement or information including
performance data
of the Portfolio.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
Overall responsibility for management and supervision of the
Fund rests with
the Fund's Board of Directors. The Directors approve all
significant agreements
between the Fund and the companies that furnish services to the
Fund and the
Portfolio, including agreements with the Fund's distributor,
investment manag-
er, custodian and transfer agent. The day-to-day operations of
the Portfolio
are delegated to the Portfolio's investment manager. The
Statement of Addi-
tional Information contains background information regarding
each Director and
executive officer of the Fund.
38
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
MANAGEMENT OF THE FUND (CONTINUED)
MANAGER
Smith Barney Mutual Funds Management Inc. (the "Manager")
manages the day-to-
day operations of the Portfolio pursuant to a management
agreement entered into
by the Fund on behalf of the Portfolio under which the Manager
is responsible
for furnishing or causing to be furnished to the Portfolio
advice and assis-
tance with respect to the acquisition, holding or disposal of
securities and
recommendations with respect to other aspects and affairs of
the Portfolio and
furnishes the Portfolio with bookkeeping, accounting and
administrative servic-
es, office space and equipment, and the services of the
officers and employees
of the Fund. By written agreement the research and other
departments and staff
of Smith Barney furnish the Manager with information, advice
and assistance and
are available for consultation on the Portfolio, thus Smith
Barney may also be
considered an investment adviser to the Fund. Smith Barney
services are paid
for by the Manager on the basis of direct and indirect costs to
Smith Barney of
performing such services; there is no charge to the Fund for
such services. For
the investment advisory services provided by the Manager, the
Portfolio pays
the Manager an investment advisory fee calculated at the rate
of 1.00% of the
Portfolio's average daily net assets, paid monthly. Although
this fee is higher
than that paid by most investment companies, the Portfolio's
management has
determined that it is comparable to the fee charged by other
investment advis-
ers of investment companies that have similar investment
objectives and poli-
cies.
The management agreement further provides that all other
expenses not specif-
ically assumed by the Manager under the management agreement on
behalf of the
Portfolio are borne by the Fund. Expenses payable by the Fund
include, but are
not limited to, all charges of custodians (including sums as
custodian and sums
for keeping books and for rendering other services to the Fund)
and shareholder
servicing agents, expenses of preparing, printing and
distributing all prospec-
tuses, proxy material, reports and notices to shareholders, all
expenses of
shareholders' and directors' meetings, filing fees and expenses
relating to the
registration and qualification of the Fund's shares and the
Fund under federal
or state securities laws and maintaining such registrations and
qualifications
(including the printing of the Fund's registration statements),
fees of audi-
tors and legal counsel, costs of performing portfolio
valuations, out-of-pocket
expenses of directors and fees of directors who are not
"interested persons" as
defined in the 1940 Act, interest, taxes and governmental fees,
fees and com-
missions of every kind, expenses of issue, repurchase or
redemption of shares,
insurance expense, association membership dues, all other costs
incident to the
Fund's
39
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
MANAGEMENT OF THE FUND (CONTINUED)
existence and extraordinary expenses such as litigation and
indemnification
expenses. Direct expenses are charged to each of the Fund's
Portfolios; general
corporate expenses are allocated on the basis of relative net
assets.
The Manager was incorporated on March 12, 1968 under the laws
of Delaware. As
of January 1, 1995 the Manager had aggregate assets under
management of approx-
imately $55 billion. The Manager, Smith Barney and Holdings are
each located at
388 Greenwich Street, New York, New York 10013. The term "Smith
Barney" in the
title of the Fund has been adopted by permission of Smith
Barney and is subject
to the right of Smith Barney to elect that the Fund stop using
the term in any
form or combination of its name.
PORTFOLIO MANAGEMENT
The Portfolio is managed by Donald Elefson. Mr. Elefson joined
the Smith Bar-
ney international equity team in the spring of 1994 and is a
Vice President of
the Fund and of Smith Barney. Previously, he assisted in the
management of the
emerging markets mutual funds at Merrill Lynch Asset
Management. Prior to Mer-
rill Lynch, Mr. Elefson held a position in equity analysis and
equity sales
with Cazenove Inc. and BHF Securities in New York, and with
Georg Hauck and
Sohn in Frankfurt, Germany.
Management's discussion and analysis, and additional
performance information
regarding the Portfolio during the fiscal year ending October
31, 1995 will be
included in the Annual Report dated October 31, 1995. A copy of
the Annual
Report may be obtained upon request and without charge from a
Smith Barney
Financial Consultant or by writing or calling the Fund at the
address or phone
number listed on page one of this Prospectus.
DISTRIBUTOR
Smith Barney distributes shares of the Portfolio as principal
underwriter and
as such conducts a continuous offering pursuant to a "best
efforts" arrangement
requiring Smith Barney to take and pay for only such securities
as may be sold
to the public. Pursuant to a plan of distribution adopted by
the Portfolio
under Rule 12b-1 under the 1940 Act (the "Plan"), Smith Barney
is paid a serv-
ice fee with respect to Class A, Class B and Class C shares of
the Portfolio at
the annual rate of 0.25% of the average daily net assets
attributable to these
40
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
DISTRIBUTOR (CONTINUED)
Classes. Smith Barney is also paid a distribution fee with
respect to Class B
and Class C shares at the annual rate of 0.75% of the average
daily net assets
attributable to these Classes. Class B shares that
automatically convert to
Class A shares eight years after the date of original purchase
will no longer
be subject to a distribution fee. The fees are used by Smith
Barney to pay its
Financial Consultants for servicing shareholder accounts and,
in the case of
Class B and Class C shares, to cover expenses primarily
intended to result in
the sale of those shares. These expenses include: advertising
expenses; the
cost of printing and mailing prospectuses to potential
investors; payments to
and expenses of Smith Barney Financial Consultants and other
persons who pro-
vide support services in connection with the distribution of
shares; interest
and/or carrying charges; and indirect and overhead costs of
Smith Barney asso-
ciated with the sale of Portfolio shares, including lease,
utility, communica-
tions and sales promotion expenses.
The payments to Smith Barney Financial Consultants for selling
shares of a
Class include a commission or fee paid by the investor or Smith
Barney at the
time of sale and, with respect to Class A, Class B and Class C
Shares, a con-
tinuing fee for servicing shareholder accounts for as long as a
shareholder
remains a holder of that Class. Smith Barney Financial
Consultants may receive
different levels of compensation for selling different Classes
of shares.
Actual distribution expenses for Class B and Class C shares of
the Portfolio
for any given year may exceed the fees received pursuant to the
Plan and will
be carried forward and paid by the Portfolio in future years so
long as the
Plan is in effect. Interest is accrued monthly on such
carryforward amounts at
a rate comparable to that paid by Smith Barney for bank
borrowings.
ADDITIONAL INFORMATION
The Fund, an open-end investment company, was incorporated in
Maryland on
March 22, 1991. The Fund has an authorized capital of
1,000,000,000 shares
with a par value of $.001 per share. The Board of Directors has
authorized the
issuance of six series of shares, each representing shares in
one of six sepa-
rate Portfolios and may authorize the issuance of additional
series of shares
in the future. The assets of each Portfolio are segregated and
separately man-
aged and a shareholder's interest is in the assets of the
Portfolio in which
he or she holds shares. Class A, Class B, Class C and Class Y
shares of the
Portfolio
41
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
ADDITIONAL INFORMATION (CONTINUED)
represent interests in the assets of the Portfolio and have
identical voting,
dividend, liquidation and other rights on the same terms and
conditions except
that expenses related to the distribution of each Class of
shares are borne
solely by each Class and each Class of shares has exclusive
voting rights with
respect to provisions of the Fund's Rule 12b-1 distribution
plan which pertain
to a particular Class. As described under "Voting" in the
Statement of Addi-
tional Information, the Fund ordinarily will not hold meetings
of shareholders
annually; however, shareholders have the right to call a
meeting upon a vote of
10% of the Fund's outstanding shares for the purpose of voting
to remove direc-
tors, and the Fund will assist shareholders in calling such a
meeting as
required by the 1940 Act. Shares do not have cumulative voting
rights or pre-
emptive rights and are fully paid, transferable and
nonassessable when issued
for payment as described in this Prospectus.
Morgan Guaranty Trust Company of New York, located at 60 Wall
Street, New
York, New York 10260, serves as custodian of the Portfolio's
investments.
TSSG, located at Exchange Place, Boston, Massachusetts 02109,
serves as the
Fund's transfer agent.
The Fund sends its shareholders a semi-annual report and an
audited annual
report, which include listings of the investment securities
held by the Fund at
the end of the period covered. In an effort to reduce the
Fund's printing and
mailing costs, the Fund plans to consolidate the mailing of its
semi-annual and
annual reports by household. This consolidation means that a
household having
multiple accounts with the identical address of record will
receive a single
copy of each report. In addition, the Fund also plans to
consolidate the mail-
ing of its Prospectus so that a shareholder having multiple
accounts (that is,
individual, IRA and/or Self-Employed Retirement Plan accounts)
will receive a
single Prospectus annually. Shareholders who do not want this
consolidation to
apply to their account should contact their Smith Barney
Financial Consultant
or the Fund's transfer agent.
42
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
APPENDIX
CERTAIN INVESTMENT STRATEGIES
In attempting to achieve its investment objective, the
Portfolio may employ,
among others, one or more of the strategies set forth below.
More detailed
information concerning these strategies and their related risks
is contained
in the Statement of Additional Information.
Foreign Currencies. The value of the Portfolio's investments,
and the value
of dividends and interest earned by the Portfolio, may be
significantly
affected by changes in currency exchange rates. Some foreign
currency values
may be volatile, and there is the possibility of governmental
controls on cur-
rency exchange or governmental intervention in currency
markets, which could
adversely affect the Portfolio. Although the Manager may
attempt to manage
currency exchange rate risks, there is no assurance that the
Manager will do
so at an appropriate time or that the investment adviser will
be able to pre-
dict exchange rates accurately. For example, if the Manager
increases the
Portfolio's exposure to a foreign currency, and that currency's
value subse-
quently falls, the Manager's currency management may result in
increased
losses to the Portfolio. Similarly, if the Manager hedges the
Portfolio's
exposure to a foreign currency, and that currency's value
rises, the Portfolio
will lose the opportunity to participate in the currency's
appreciation.
Options and Futures Contracts. The Portfolio may buy and sell
options and
futures contracts to manage its exposure to changing interest
rates, security
prices, and currency exchange rates. Some options and futures
strategies,
including selling futures, buying puts, and writing calls, tend
to hedge the
Portfolio's investments against price fluctuations. Other
strategies, includ-
ing buying futures, writing puts, and buying calls, tend to
increase market
exposure. Options and futures may be combined with each other
or with forward
contracts in order to adjust the risk and return
characteristics of the over-
all strategy. The Portfolio may invest in options and futures
based on any
type of security, index, or currency, including options and
futures traded on
foreign exchanges and options not traded on exchanges.
Options and futures can be volatile investments, and involve
certain risks.
If the Manager applies a hedge at an inappropriate time or
judges market con-
ditions incorrectly, options and futures strategies may lower
the Portfolio's
return. The Portfolio could also experience losses if the
prices of its
A-1
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
APPENDIX (CONTINUED)
options and futures positions were poorly correlated with its
other invest-
ments, or if it could not close out its positions because of an
illiquid sec-
ondary market.
The Portfolio will not hedge more than 25% of its total assets
by selling
futures, buying puts, and writing calls under normal
conditions. In addition,
the Portfolio will not buy futures or write puts whose
underlying value
exceeds 25% of its total assets, and will not buy calls with a
value exceeding
5% of its total assets.
Swap Agreements. As one way of managing its exposure to
different types of
investments, the Portfolio may enter into interest rate swaps,
currency swaps,
and other types of swap agreements such as caps, collars, and
floors. In a
typical interest rate swap, one party agrees to make regular
payments equal to
a floating interest rate times a "notional principal amount,"
in
return for
payments equal to a fixed rate times the same amount for a
specified period of
time. If a swap agreement provides for payments in different
currencies, the
parties might agree to exchange the notional principal amount
as well. Swaps
may also depend on other prices or rates, such as the value of
a index or
mortgage prepayment rates.
Swap agreements are sophisticated hedging instruments that
typically involve
a small investment of cash relative to the magnitude of risks
assumed. As a
result, swaps can be highly volatile and may have a
considerable impact on the
Portfolio's performance. Swap agreements are subject to risks
related to the
counterparty's ability to perform, and may decline in value if
the
counterparty's creditworthiness deteriorates. The Portfolio may
also suffer
losses if it is unable to terminate outstanding swap agreements
or reduce its
exposure through offsetting transactions.
Indexed Securities. The Portfolio may invest in indexed
securities, includ-
ing inverse floaters, whose value is linked to currencies,
interest rates,
commodities, indices, or other financial indicators. Most
indexed securities
are short to intermediate term fixed-income securities whose
values at matu-
rity or interest rates rise or fall according to the change in
one or more
specified underlying instruments. Indexed securities may be
positively or neg-
atively indexed (i.e., their value may increase or decrease if
the underlying
instrument appreciates), and may have return characteristics
similar to direct
investments in the underlying instrument or to one or more
options on the
underlying instrument. Indexed securities may be more volatile
than the under-
lying instrument itself. No more than 5% of the Portfolio's
assets will be
invested in inverse floaters.
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<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
APPENDIX (CONTINUED)
Sovereign Debt Obligations. The Portfolio may purchase
sovereign debt
instruments issued or guaranteed by foreign governments or
their agencies,
including debt of developing countries. Sovereign debt may be
in the form of
conventional securities or other types of debt instruments such
as loans or
loan participations. Sovereign debt of developing countries may
involve a high
degree of risk, and may be in default or present the risk of
default. Govern-
mental entities responsible for repayment of the debt may be
unable or unwill-
ing to repay principal and interest when due, and may require
renegotiation or
rescheduling of debt payments. In addition, prospects for
repayment of princi-
pal and interest may depend on political as well as economic
factors. Although
some sovereign debt, such as Brady Bonds, is collateralized by
U.S. government
securities, repayment of principal and interest is not
guaranteed by the U.S.
government.
Loans and other direct debt instruments are interests in
amounts owed by a
corporate, governmental, or other borrower to another party.
They may repre-
sent amounts owed to lenders or lending syndicates (loans and
loan participa-
tions), to suppliers of goods or services (trade claims or
other receivables),
or to other parties. Direct debt instruments involve the risk
of loss in case
of default or insolvency of the borrower and may offer less
legal protection
to the Portfolio in the event of fraud or misrepresentation. In
addition, loan
participations involve a risk of insolvency of the lending bank
or other
financial intermediary. Direct debt instruments may also
include standby
financing commitments that obligate the Portfolio to supply
additional cash to
the borrower on demand.
Floating and Variable Rate Income Securities. Income securities
may provide
for floating or variable rate interest or dividend payments.
The floating or
variable rate may be determined by reference to a known lending
rate, such as
a bank's prime rate, a certificate of deposit rate or the
London
Inter Bank
Offered Rate (LIBOR). Alternatively, the rate may be determined
through an
auction or remarketing process. The rate also may be indexed to
changes in the
values of interest rate or securities indexes, currency
exchange rates or
other commodities. The amount by which the rate paid on an
income security may
increase or decrease may be subject to periodic or lifetime
caps. Floating and
variable rate income securities include securities whose rates
vary inversely
with changes in market rates of interest. Such securities may
also pay a rate
of interest determined by applying a multiple to the variable
rate. The extent
of increases and decreases in the value of securities whose
rates vary
inversely with changes in market rates of interest generally
will be larger
than comparable
A-3
<PAGE>
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
APPENDIX (CONTINUED)
changes in the value of an equal principal amount of a fixed
rate security
having similar credit quality, redemption provisions and
maturity.
Zero Coupon, Discount and Payment-in-Kind Securities. The
Portfolio may
invest in "zero coupon" and other deep discount securities of
governmental or
private issuers. Zero coupon securities generally pay no cash
interest (or
dividends in the case of preferred stock) to their holders
prior to maturity.
Payment-in-kind securities allow the lender, at its option, to
make current
interest payments on such securities either in cash or in
additional securi-
ties. Accordingly, such securities usually are issued and
traded at a deep
discount from their face or par value and generally are subject
to greater
fluctuations of market value in response to changing interest
rates than secu-
rities of comparable maturities and credit quality that pay
cash interest (or
dividends in the case of preferred stock) on a current basis.
Premium Securities. The Portfolio may invest in income
securities bearing
coupon rates higher than prevailing market rates. Such
"premium" securities
are typically purchased at prices greater than the principal
amounts payable
on maturity. The Portfolio will not amortize the premium paid
for such securi-
ties in calculating its net investment income. As a result, in
such cases the
purchase of such securities provides the Portfolio a higher
level of invest-
ment income distributable to shareholders on a current basis
than if the Port-
folio purchased securities bearing current market rates of
interest. If secu-
rities purchased by the Portfolio at a premium are called or
sold prior to
maturity, the Portfolio will recognize a capital loss to the
extent the call
or sale price is less than the purchase price. Additionally,
the Portfolio
will recognize a capital loss if it holds such securities to
maturity.
Yankee Bonds. The Portfolio may invest in U.S. dollar
denominated bonds sold
in the United States by non-U.S. issuers ("Yankee bonds"). As
compared with
bonds issued in the United States, such bond issues normally
carry a higher
interest rate but are less actively traded.
Borrowings. The Portfolio may borrow from banks up to 25% of
the value of
its assets for temporary or emergency purposes, such as to
accommodate
requests for the redemption of shares while effecting an
orderly liquidation
of portfolio securities or to clear securities transactions and
not for
leveraging purposes.
A-4
<PAGE>
Smith Barney World Funds, Inc.-
Emerging Markets Portfolio
APPENDIX (CONTINUED)
Repurchase Agreements and Securities Loans. The Portfolio may
enter into
repurchase agreements on up to 25% of its assets and may lend
for a fee portfo-
lio securities amounting up to one-third of its assets. These
transactions must
be fully collateralized at all times, and the investment
adviser will monitor
the value of the collateral, which will be marked to the market
daily, to
determine that the value is at least 100% of the agreed upon
sum to be paid to
the Port-folio. Repurchase agreements and lending of portfolio
securities
involve some credit risk to the Portfolio, if the other party
defaults on its
obligations, since the Portfolio could be delayed or prevented
from recovering
the collater-al. The Portfolio currently does not expect that
it will enter into
repurchase agreements on more than 5% of its assets.
Foreign Repurchase Agreements. In addition to repurchase
agreements solely in
U.S. markets, the Portfolio may enter into repurchase
agreements with respect
to foreign securities and repurchase agreements denominated in
foreign curren-
cies. Foreign repurchase agreements may be less well secured
than repurchase
agreements in U.S. markets, and may involve greater risks of
loss if the
counterparty should default on its obligations. As a result,
the creditworthi-
ness of the other party is an especially important concern.
Illiquid Investments. The Portfolio may invest up to 15% of its
assets in
illiquid investments. Under the supervision of the Board of
Directors, the
investment adviser determines the liquidity of the Portfolio's
investments. The
absence of a trading market can make it difficult to ascertain
a market value
for illiquid investments. Disposing of illiquid investments may
involve time-
consuming negotiation and legal expenses, and it may be
difficult or impossible
for a Portfolio to sell them promptly at an acceptable price.
Restricted Securities. The Portfolio may invest no more than
10% of its total
assets in securities which cannot be sold to the public without
registration
under the Securities Act of 1933 (restricted securities).
Unless registered for
sale, these securities can only be sold in privately negotiated
transactions or
pursuant to an exemption from registration. Restricted
securities (excluding
securities issued pursuant to Rule 144A of the Securities Act
of 1933) are con-
sidered to be illiquid and are subject to the 15% limitation on
investments in
illiquid securities.
Delayed-Delivery Transactions. The Portfolio may buy and sell
securities on a
when-issued or delayed-delivery basis, with payment and
delivery taking
A-5
<PAGE>
Smith Barney World Funds, Inc.
Emerging Markets Portfolio
APPENDIX (CONCLUDED)
place at a future date. The market value of securities
purchased in this way
may change before the delivery date, which could increase
fluctuation in the
Portfolio's yield. Although the Portfolio has not established
any limit on the
percentage of its assets that may be committed in connection
with such trans-
actions, the Portfolio will maintain a segregated account with
its custodian
of cash, cash equivalents, U.S. Government securities or other
high grade liq-
uid debt or equity securities denominated in U.S. dollars or
nonU.S. curren-
cies in an aggregate amount equal to the amount of its
commitment in connec-
tion with such purchase transactions.
Structured Notes. The Portfolio may purchase structured notes,
which are
over-the-counter debt instruments where the interest rate
and/or principal are
indexed to an unrelated indicator (e.g., short-term rates in
Japan, the price
of oil). Sometimes the two are inversely related (i.e., as the
index goes up,
the coupon rate goes down; inverse floaters are an example of
this) and some-
times they may fluctuate to a greater degree than the
underlying index (e.g.,
the coupon may change twice as much as the change in the index
rate).
Structured notes are often issued by high-grade corporate
issuers. There is
often an underlying swap involved; the issuer will receive
payments that match
its obligations under the structured note (usually from an
investment bank
that puts the deal together) and, in turn, makes more
"traditional" payments
to the investment bank (e.g., fixed rate or ordinary floating
rate payments).
It is important to note, however, that in such cases the
Portfolio would not
be involved in the swap; the issuer of the note would remain
obligated even if
its counterparty defaulted.
A-6
<PAGE>
SMITH BARNEY
- ------------
A Member of
Travelers Group [LOGO]
SMITH BARNEY
WORLD FUNDS, INC.
EMERGING
MARKETS PORTFOLIO
388
Greenwich Street
New
York, New York 10013
FD0875C5
SMITH BARNEY WORLD FUNDS, INC.
388 Greenwich Street
New York, New York 10013
STATEMENT OF ADDITIONAL
INFORMATION
February 28, 1995, as amended
November 10November 30, 1995
Shares of the Fund are offered with a choice of
six
Portfolios:
The Global Government Bond Portfolio seeks as high a
level of current income and capital appreciation as
is consistent with its policy of investing
principally in high quality bonds of the United
States and foreign governments.
The International Equity Portfolio seeks a total
return on its assets from growth of capital and
income. The Portfolio seeks to achieve its
objective principally through a diversified portfolio
of equity securities of established non-United States
issuers.
The Pacific Portfolio seeks long-term
capital appreciation by investing primarily in a
diversified portfolio of equity securities of
companies in the Asian Pacific Countries.
The European Portfolio seeks long-term
capital appreciation by investing primarily in equity
securities of issuers based in countries of Europe.
The International Balanced Portfolio seeks a
competitive total return on its assets from growth of
capital and income through a portfolio invested
primarily in securities of established non-United States
issuers.
The Emerging Markets Portfolio seeks long term
capital appreciation on its assets through a portfolio
invested primarily in securities of emerging country
issuers. The
Emerging Markets Portfolio is not currently available
for investment.
The Fund offers three classes of shares which may be purchased
at the next determined net asset value per share plus a sales
charge which, at the election of the investor, may be imposed
(i) at the time of purchase (Class A shares) or (ii) on a
deferred basis (Class B and Class C shares). A fourth class of
shares (the Class Y shares) is sold at net asset value and is
available only to investors investing a minimum of
$5,000,000. A fifth class of shares of the International
Equity Portfolio (the Class Z shares) are offered only to tax-
exempt retirement plans of Smith Barney Inc. These
alternatives permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of
the purchase, the length of time the investor expects to hold
the shares and other circumstances.
This Statement of Additional Information is not a prospectus.
It is intended to provide more detailed information about
Smith Barney World Funds, Inc. as well as matters already
discussed in the Prospectus of the applicable Portfolio and
therefore should be read in conjunction with each Prospectus
dated February 28, 1995 for the International Equity
Portfolio, the Global Government Bond Portfolio, the
Pacific Portfolio, the European Portfolio and the
International Balanaced Portfolio and the Prospectus dated
January 14, 1995 for the Emerging Markets Portfolio,
which may be obtained from the Fund or your Smith Barney
Financial Consultant.
TABLE OF CONTENTS
Page
Directors and Officers 3
Investment Policies 5
Investment Restrictions 14
Additional Tax Information 18
IRA and Other Prototype Retirement Plans 20
Performance Information 21
Determination of Net Asset Value 28
Redemption of Shares 28
Investment Management Agreement and Other Services 28
Custodian 31
Independent Auditors 31
Voting 31
Financial Statements 34
Appendix - Ratings of Debt Obligations 35
DIRECTORS, ADVISORY DIRECTOR AND OFFICERS
VICTOR K. ATKINS, Director
Retired; 120 Montgomery Street, San Francisco, CA.
Former President of Lips Propellers, Inc. Director of two
investment companies associated with Smith Barney; 73.
ROBERT A. BELFER, Director
Private investor, One Dag Hammarskjold Plaza, New York,
NY. Director and Member of the Executive Committee of Enron
Corp. (natural gas pipeline company); Director of NAC Re
Corporation. Director of two investment companies
associated with Smith Barney. Former Chairman of Belco
Petroleum Corp. (production and exploration of oil and gas);
59.
ALGER B. CHAPMAN, Director
Chairman and Chief Executive Officer, Chicago Board of
Options Exchange; 400 S. LaSalle, Chicago, Il. Director
of seven investment companies associated with Smith Barney;
67.
ROBERT A. FRANKEL, Director
Managing Partner of Robert A. Frankel Managing Consultants,
108 Grand Street, Croton-on-Hudson, NY. Director of seven
investment companies associated with Smith Barney. Former Vice
President of The Readers Digest; 67.
RAINER GREEVEN, Director
Partner of the law firm of Greeven & Ercklentz; 30
Rockefeller Plaza, Suite 3030, New York, NY. Director of
two investment companies associated with Smith Barney; 58.
SUSAN M. HEILBRON, Director
Attorney; 411 West End Avenue, New York, NY. Prior to
November 1990, Vice President and General Counsel of
MacMillan, Inc. and Executive Vice President of The Trump
Organization. Director of two investment companies associated
with Smith Barney; 50.
*BRUCE D. SARGENT, Vice President and Director
Managing Director of Smith Barney Inc. ("Smith Barney ")
and Vice President and Director of Smith Barney Mutual
Fund Management, Inc. (the "Manager"), and four investment
companies associated with Smith Barney; 51.
JAMES M. SHUART, Director
President, Hofstra University; 1000 Fulton Avenue, Hempstead,
NY. Director of European American Bank; Director of Long
Island Tourism and Convention Commission; and Director of
Association of Colleges and Universities of the State of New
York. Director of two investment companies associated with
Smith Barney; 63.
*HEATH P. McLENDON, Chairman of the Board and Chief
Executive Officer
Managing Director of Smith Barney; Director of thirty-
nine investment companies associated with Smith Barney;
President of the Manager; Chairman of Smith Barney Strategy
Advisers Inc.; prior to July 1993, Senior Executive Vice
President of Shearson Lehman Brothers, Inc.; Vice
Chairman of Shearson Asset Management; 61.
*JESSICA BIBLIOWICZ, Director and President
Executive Vice President of Smith Barney, President and
Director
of eleven investment companies associated with Smith
Barney; prior to January, 1994, Director of Sales and
Marketing of Prudential Mutual Funds; prior to September,
1991, Assistant Portfolio Manager to Shearson Lehman Brothers;
35.
*MAURITS E. EDERSHEIM, Chairman of the Fund and
Advisory
Director
Deputy Chairman of Smith Barney International
Incorporated; Chairman of the Board, Chief Executive Officer,
Treasurer and Secretary of Fenimore International
Management Corporation ("FIMC"); Director and President of
Amstel Hudson Management Corp. (offshore investment
management); Director Esfinco NV (U.S. subsidiary of Spanish
Construction Company); Member of the International Capital
Markets Advisory Committee--NYSE. Formerly Deputy Chairman
and Director of Drexel Burnham Lambert Incorporated, The
Drexel Burnham Lambert Group Inc., and various of their
subsidiaries; 76.
*LEWIS E. DAIDONE, Senior Vice President and Treasurer
Managing Director of Smith Barney , and Senior Vice President
and Treasurer of forty-one investment companies associated with
Smith Barney , and Director and Senior Vice President of the
Manager. Prior to January 1990, Senior Vice President and
Chief Financial Officer of Cortland Financial Group, Inc. and
Vice President and Treasurer of its associated investment
companies and subsidiary broker-dealer; 37.
*JAMES B. CONHEADY, Vice President
Managing Director of Smith Barney ; Vice President of
FIMC. Formerly First Vice President of Drexel
Burnham Lambert
Incorporated; 59.
*JEFFREY RUSSELL, Vice President
Managing Director of Smith Barney ; Vice President and
Assistant Secretary of FIMC. Formerly Vice President of
Drexel Burnham Lambert Incorporated; 37.
*REIN VAN DER DOES, Vice President
Managing Director of Smith Barney ; Vice President of
FIMC. Formerly Vice President of Drexel Burnham Lambert
Incorporated; 55.
*VICTOR S. FILATOV, Vice President
Managing Director of Smith Barney , President and Director
of Smith Barney Global Capital Management Inc. Formerly
Vice President of J.P. Morgan Securities Inc; 43.
*SIMON R. HILDRETH, Vice President
Senior Vice President of Smith Barney , Managing Director
of Smith Barney Global Capital Management Inc. Formerly
Director of Mercury Asset Management Ltd; 43.
*DENIS P. MANGAN, Vice President
Vice President of Smith Barney Global Capital Management
Inc. Formerly Vice President of J.P. Morgan and Citibank; 44.
*IRVING DAVID, Controller
Vice President of the Manager. Formerly Assistant Treasurer
of First Investment Management Company; 34.
*CHRISTINA T. SYDOR, Secretary
Managing Director of Smith Barney and Secretary of forty-
one investment companies associated with Smith Barney;
Secretary and General Counsel of the Manager; 44.
* Designates an "interested person" as defined in the
Investment
Company Act of 1940, as amended (the "1940 Act") whose
business address is 388 Greenwich Street, New York, New York
10013. Such person is not separately compensated for
services as a Fund officer or director.
On January 31, 1995 directors and officers owned, in
the aggregate, less than 1% of the outstanding shares
of the International Equity Portfolio, the Global
Government Bond Portfolio, the International Balanced
Portfolio and the Emerging Markets Portfolio. As of January
31, 1995, the directors and officers as a group owned, in
the aggregate, 1.53% and 2.77% of the outstanding Class A
shares of the European and Pacific
Portfolios, respectively.
The following table shows the compensation paid by the
Fund to each director during the Fund's last fiscal year. None
of the officers of the Fund received any compensation from the
Fund for such period. Officers and interested
directors of the Fund are
compensated by Smith Barney.
COMPENSATION
TABLE Total
Pension or Compensation Number of
Retirement from Fund Funds for
AggregateBenefits Accrued and Fund Which
Director Compensation as part of Complex Serves
Within
Name of Person from Fund Fund Expenses Paid to
Directors
Fund Complex
Victor K. Atkins$11,059.50 $0 $16,950.00 2
Robert A. Belfer 11,059.50 0 16,950.00 2
Alger B. Chapman 11,059.50 0 51,075.00 7
Robert A. Frankel 2,065.00 0
79,100.00
7
Ranier Greeven 11,059.50 0 16,950.00 2
Susan M. Heilbron 11,059.50 0
16,950.00
2
Bruce D. Sargent0 0 0 4
James M. Shuart 11,059.50 0 16,950.00 2
INVESTMENT POLICIES
Except as described under "INVESTMENT RESTRICTIONS,"
the investment policies described in the Prospectuses and in
this Statement of Additional Information are not fundamental
and the Board of Directors may change such policies without
shareholder approval.
The Fund effects transactions with a view towards
attaining each Portfolio's investment objective, and
although it is not
limited by a predetermined rate of portfolio turnover, it
is expected that the annual turnover rate for each
of the
International Equity Portfolio, the Global Government
Bond Portfolio, the European Portfolio, the Pacific Portfolio
and the equity portion of each of the International Balanced
Portfolio and the Emerging Markets Portfolio will not exceed
100% in normal circumstances and that the annual turnover
rate for the debt portion of each of the International
Balanced Portfolio and the Emerging Markets Portfolio will
not exceed 200% in normal circumstances. A high
portfolio turnover results in
correspondingly greater transaction costs in the form
of
brokerage commissions or dealer spreads that a Portfolio
will bear directly, and may result in the realization of net
capital gains which are taxable when distributed to
shareholders. See
"Investment Management Agreement and Other Services -
Portfolio Transactions" in this Statement of Additional
Information.
Each of the following investment policies is subject to
the limitations set forth under "Investment Restrictions."
Repurchase Agreements. As described in the
applicable
Prospectus, the International Equity Portfolio, the
Pacific Portfolio, the European Portfolio, the International
Balanced Portfolio and the Emerging Markets Portfolio each may
enter into repurchase agreements. A repurchase agreement
is a contract under which a Portfolio acquires a security
for a relatively short period (usually not more than one
week) subject to the obligation of the seller to
repurchase and the Portfolio to
resell such security at a fixed time and price (representing
the Portfolio's cost plus interest). It is each Portfolio's
present intention to enter into repurchase agreements only
upon receipt of fully adequate collateral and only with
commercial banks (whether U.S. or
foreign) and registered broker-
dealers.
Repurchase agreements may also be viewed as loans made by
a Portfolio which are collateralized primarily by the
securities subject to repurchase. A Portfolio bears a risk of
loss in the event that the other party to a repurchase
agreement defaults on
its obligations and the Portfolio is delayed or prevented
from exercising its rights to dispose of the collateral
securities. Pursuant to policies established by the Board of
Directors, the investment adviser monitors the
creditworthiness of all issuers with which each Portfolio
enters into repurchase agreements.
Reverse Repurchase Agreements. The Fund does not
currently intend to commit more than 5% of a Portfolio's net
assets to
reverse repurchase agreements. The Fund may enter into
reverse repurchase agreements with broker/dealers and other
financial institutions. Such agreements involve the sale
of Portfolio securities with an agreement to repurchase the
securities at an
agreed-upon price, date and interest payment and are
considered to be borrowings by a Portfolio and are subject to
the borrowing limitations set forth under "Investment
Restrictions." Since the proceeds of reverse repurchase
agreements are invested, this would introduce the
speculative factor known as "leverage." The
securities purchased with the funds obtained from the
agreement and securities collateralizing the agreement will
have maturity dates no later than the repayment date.
Generally the effect of
such a transaction is that the Fund can recover all or most
of
the cash invested in the portfolio securities involved during
the term of the reverse repurchase agreement, while in many
cases it
will be able to keep some of the interest income associated
with those securities. Such transactions are only advantageous
if the Portfolio has an opportunity to earn a greater rate of
interest on the cash derived from the transaction than the
interest cost of obtaining that cash. Opportunities to
realize earnings from the use of the proceeds equal to or
greater than the interest required to be paid may not always
be available, and the Fund intends to use the reverse
repurchase technique only when the Manager believes it will
be advantageous to the Portfolio. The
use of reverse repurchase agreements may exaggerate any
interim increase or decrease
in the value of the participating
Portfolio's assets. The Fund's custodian bank will maintain
a separate account for the Portfolio with securities having a
value equal to or greater than such commitments.
Restricted Securities. Each Portfolio may invest in
securities the disposition of which is subject to legal or
contractual
restrictions. The sale of restricted securities often
requires more time and results in higher brokerage charges
or dealer discounts and other selling expenses than does
the sale of securities eligible for trading on a national
securities exchange that are not subject to restrictions on
resale. Restricted
securities often sell at a price lower than similar
securities that are not subject to restrictions on resale.
Securities Lending. Each Portfolio may seek to increase its
net investment income by lending its securities provided such
loans are callable at any time and are continuously secured by
cash or U.S. Government Obligations equal to no less than
the market value,
determined daily, of the securities loaned. Each
Portfolio will receive amounts equal to dividends or interest
on the securities loaned. It will also earn income for having
made the loan because cash collateral pursuant to these loans
will be invested in short-term money market instruments. In
connection with lending of securities the Fund may pay
reasonable finders, administrative and custodial fees.
Management will limit such lending to not more than one-
third of the value of the total assets of each Portfolio.
Where voting or consent rights with respect to loaned
securities pass to the borrower, management will follow the
policy of calling the loan, in whole or in part as may be
appropriate, to permit the exercise of such voting or consent
rights if the issues involved have a material effect on the
Portfolio's investment in the securities loaned. Apart from
lending its securities and acquiring debt securities of a
type customarily purchased by financial institutions, no
Portfolio will make loans to other persons.
Commercial Bank Obligations. For the purposes of
each
Portfolio's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks
and of foreign banks may be general obligations of the
parent bank in addition to the issuing bank, or may be limited
by the terms of a specific obligation and by government
regulation. As with investment in non-U.S. securities in
general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Portfolio to
investment risks that are different in some respects from
those of investments in obligations of domestic issuers.
Although a Portfolio will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase in excess of U.S.
$1 billion (or the equivalent thereof), this U.S. $1 billion
figure is not a fundamental investment policy or restriction
of the Portfolio. For calculation purposes with respect to
the U.S. $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S.
branches.
Commercial Paper. Commercial paper consists of short-
term
(usually from 1 to 270 days) unsecured promissory notes issued
by corporations in order to finance their current
operations. A variable amount master demand note (which is a
type of commercial paper)
represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a
letter agreement between a commercial paper issuer and an
institutional lender, such as one of the Portfolios, pursuant
to which the lender may determine to invest varying amounts.
Transfer of such notes is usually restricted by the issuer,
and there is no secondary trading
market for such notes. Each Portfolio,
therefore, may not invest in a master demand note, if as a
result more than 15% of the value of the Portfolio's total
assets would be invested in such notes and other illiquid
securities.
Writing Covered Call Options. Each Portfolio may write
(sell) covered call options for hedging purposes. Covered
call options
will generally be written on securities and currencies which,
in
the opinion of the investment adviser, are not expected to
make any major price moves in the near future but which, over
the long term, are deemed to be attractive investments for the
Portfolio.
A call option gives the holder (buyer) the right to purchase
a security or currency at a specified price (the exercise
price) at any time until a certain date (the expiration date).
So long as
the obligation of the writer of a call option continues, he
may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring him to deliver
the underlying security or currency against payment of the
exercise price. This obligation terminates upon the expiration
of the call option, or
such earlier time at which the writer effects a closing
purchase transaction by purchasing an option identical to that
previously sold. The Manager and the Fund believe that
writing of covered call options is less risky than writing
uncovered or "naked" options, which the Portfolios will not
do.
Portfolio securities or currencies on which call options
may be written will be purchased solely on the basis of
investment considerations consistent with each Portfolio's
investment objective. When writing a covered call option, the
Portfolio, in return for the premium, gives up the opportunity
for profit from a price increase in the underlying security or
currency above the exercise price and retains the risk of loss
should the price of
the security or currency decline. Unlike one who owns
securities or currencies not subject to an option, the
Portfolio has no
control over when it may be required to sell the
underlying securities or currencies, since the option may be
exercised at
any time prior to the option's expiration. If a call
option which the Portfolio has written expires, the
Portfolio will realize a gain in the amount of the premium;
however, such gain may be offset by a decline in the market
value of the underlying security or currency during the
option period. If the call option is exercised, the
Portfolio will realize a gain or loss from the sale of
the underlying security or currency. The
security or currency covering the call option will be
maintained in a segregated account of the Portfolio's
custodian. The
Portfolio does not consider a security or currency covered by
a call option to be "pledged" as that term is used in
the Portfolio's policy which limits the pledging or mortgaging
of its assets.
The premium the Portfolio receives for writing a call
option is deemed to constitute the market value of an
option. The
premium the Portfolio will receive from writing a call
option will reflect, among other things, the current market
price of the underlying security or currency, the relationship
of the exercise price to such market price, the implied price
volatility of the underlying security or currency, and the
length of the option period. In determining whether a
particular call option should be written on a particular
security or currency, the Manager will consider the
reasonableness of the anticipated premium and the likelihood
that a liquid secondary market will exist for those options.
The premium received by the Portfolio for writing covered
call options will be recorded as a liability in the
Portfolio's statement of assets and liabilities. This
liability will be adjusted daily to the option's current
market value, which will be calculated as described in
"Determination of Net Asset Value" in the Prospectus.
The liability will be
extinguished upon expiration of the option or delivery of
the underlying security or currency upon the exercise of the
option. The liability with respect to a listed option will
also be
extinguished upon the purchase of an identical option in
a closing transaction.
Closing transactions will be effected in order to realize
a profit or to limit losses on an outstanding call option,
to prevent an underlying security or currency from being
called, or to permit the sale of the underlying security
or currency. Furthermore, effecting a closing transaction
will permit the Portfolio to write another call option on the
underlying security or currency with either a different
exercise price, expiration date or both. If the Portfolio
desires to sell a particular security or currency from its
portfolio on which it has written a call option or purchases a
put option, it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security or
currency. There is no assurance that the Portfolio will
be able to effect such closing transactions at a favorable
price. If the Portfolio cannot enter into such a
transaction, it may be required to hold a security or
currency that it might otherwise have sold, in which case
it would continue to be a market risk with respect to the
security or currency.
Each Portfolio will pay transaction costs in connection
with the writing of options and in entering into closing
purchase contracts. Transaction costs relating to options
activity are normally higher than those applicable to
purchases and sales of portfolio securities.
Call options written by each Portfolio, other than
the International Balanced Portfolio, will normally have
expiration dates of less than nine months from the date
written. Call options written by the International
Balanced Portfolio will normally have expiration dates of
less than twelve months from the date written. The
exercise price of the options may be below, equal to or
above the current market values of the underlying
securities or currencies at the time the options are written.
From time to time, the Portfolio may purchase an
underlying security or currency for delivery in accordance
with the exercise of an option, rather than delivering such
security or currency from its portfolio. In such cases,
additional costs will be incurred.
Each Portfolio will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is
less or more, respectively, than the premium received from the
writing of the option. Because increases in the market price
of a call option will generally reflect increases in the
market price of the underlying security or currency, any
loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Portfolio.
See "Additional Tax Information" for a discussion of
federal income tax treatment of covered call options.
Purchasing Put Options. Each Portfolio may purchase put
options. As the holder of a put option, the Portfolio has the
right to sell the underlying security or currency at the
exercise price at any time during the option period. The
Portfolio may enter into closing sale transactions with
respect to such options, exercise them or permit them to
expire.
Each Portfolio may purchase a put option on an
underlying security or currency (a "protective put") owned by
the Portfolio as a hedging technique in order to protect
against an anticipated decline in the value of the security
or currency. Such hedge protection is provided only during
the life of the put option when the Portfolio, as the holder
of the put option, is able to
sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying
security's market price or currency's exchange value. For
example, a put option may be purchased in order to
protect unrealized appreciation of a security or currency
when the Manager deems it desirable to continue to hold the
security or currency because of tax considerations. The
premium paid for the put option and any transaction costs
would reduce any capital gain otherwise available for
distribution when the security or currency is eventually
sold.
Each Portfolio may also purchase put options at a time
when the Portfolio does not own the underlying security or
currency. By purchasing put options on a security or currency
it does not own, the Portfolio seeks to benefit from a
decline in the market price of the underlying security or
currency. If the put option is not sold when it has remaining
value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise
price during the life of the put option, the Portfolio will
lose its entire investment in the put option. In
order for the purchase of a put option to be
profitable, the market price of the underlying security
or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the
put option is sold in a closing sale transaction.
The premium paid by a Portfolio when purchasing a put
option will be recorded as an asset in the Portfolio's
statement of assets and liabilities. This asset will be
adjusted daily to the option's current market value, which
will be calculated as described in "Determination of
Net Asset Value" in
the
Prospectus. The asset will be extinguished upon expiration
of the option or the delivery of the underlying security or
currency upon the exercise of the option. The asset with
respect to a listed option will also be extinguished upon
the writing of an identical option in a closing transaction.
Purchasing Call Options. Each Portfolio may purchase
call options.
As the holder of a call option, a Portfolio has the
right to purchase the underlying security or currency at
the exercise price at any time during the option period.
The
Portfolio may enter into closing sale transactions with
respect to such options, exercise them or permit them to
expire. Call options may be purchased by the Portfolio for
the purpose of acquiring the underlying security or currency
for its portfolio. Utilized in this fashion, the purchase of
call options enables the Portfolio to acquire the security or
currency at the exercise price of the call option plus the
premium paid. At times the net cost of acquiring the security
or currency in this manner may be less than the cost of
acquiring the security or currency directly. This
technique may also be useful to the Portfolio in purchasing a
large block of securities that would be more difficult to
acquire by direct market purchases. So long as it holds
such a call option rather than the underlying security or
currency itself, the Portfolio is partially protected from
any unexpected decline in the market price of the underlying
security or currency and in such event could allow the call
option to expire, incurring a loss only to the extent of the
premium paid for the option.
Each Portfolio may also purchase call options on
underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written
by it. A call option would be purchased for this purpose
where tax considerations make it inadvisable to realize such
gains through a closing purchase transaction. Call options
may also be purchased at times to
avoid realizing losses that would result in a reduction of
the Portfolio's current return.
Interest Rate and Currency Futures Contracts. Each Portfolio
may enter into interest rate or currency futures contracts
("Futures" or "Futures Contracts") as a hedge against changes
in prevailing levels of interest rates or currency exchange
rates in order to establish more definitely the effective
return on securities or currencies held or committed to be
acquired by the Portfolio. A Portfolio's hedging may
include holding Futures as an offset against anticipated
changes in interest or currency exchange rates. A
Portfolio may also enter into Futures Contracts based on
financial indices including any index of U.S. Government
securities, foreign government securities or corporate
debt securities. The International Equity Portfolio and the
Pacific Portfolio and the International Balanced Portfolio may
also enter into Futures Contracts for non-hedging purposes,
subject to applicable law.
A Futures Contract provides for the future sale by one
party and purchase by another party of a specified amount of a
specific financial instrument or currency for a specified
price at a designated date, time and place. The purchaser
of a Futures Contract on an index agrees to take or make
delivery of an amount of cash equal to the difference
between a specified dollar multiple of the value of the
index on the expiration date of the contract ("current
contract value") and the price at which the contract was
originally struck. No physical delivery of the debt securities
underlying the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin
deposits must be maintained at all times that the
Futures Contract is outstanding.
Although techniques other than sales and purchases of
Futures Contracts could be used to reduce the Portfolio's
exposure to interest rate and currency exchange rate
fluctuations, the Portfolio may be able to hedge its exposure
more effectively and at a lower cost through using Futures
Contracts.
Although Futures Contracts typically require future
delivery of and payment for financial instruments or
currencies, Futures Contracts are usually closed out before
the delivery date. Closing out an open Futures Contract sale
or purchase is effected by entering into an offsetting Futures
Contract purchase or sale, respectively, for the same
aggregate amount of the identical financial instrument or
currency and the same delivery date. If
the offsetting purchase price is less than the original
sale price, the Portfolio realizes a gain; if it is
more, the Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase
price, the Portfolio realizes a gain; if it is less, the
Portfolio realizes a loss. The transaction costs must
also be included in
these
calculations. There can be no assurance, however, that
the Portfolio will be able to enter into an offsetting
transaction with respect to a particular Futures Contract at
a particular time. If the Portfolio is not able to enter
into an offsetting transaction, the Portfolio will continue
to be required to maintain the
margin deposits of the underlying
financial
instrument or currency on the relevant delivery date. The
Fund
intends to enter into futures transactions only on exchanges
or boards of trade where there appears to be a liquid
secondary market. However,
there can be no assurance that such a market
will exist for a particular contract at a particular time.
As an example of an offsetting transaction, the
contractual obligations arising from the sale of one Futures
Contract of
September Treasury Bills on an exchange may be fulfilled at
any time before delivery under the Futures Contract is
required (i.e., on a specific date in September, the "delivery
month") by the purchase of another Futures Contract of
September Treasury Bills on the same exchange. In such
instance the difference between the price at which the
Futures Contract was sold and the price paid for the
offsetting purchase, after allowance for transaction costs,
represents the profit or loss to the
Portfolio.
Persons who trade in Futures Contracts may be
broadly classified as "hedgers" and "speculators."
Hedgers, whose
business activity involves investment or other commitment
in securities or other obligations, use the Futures
markets to offset unfavorable changes in value that may
occur because of fluctuations in the value of the securities
and obligations held or committed to be acquired by them or
fluctuations in the value of the currency in which the
securities or obligations are denominated. Debtors and
other obligers may also hedge the interest cost of their
obligations. The speculator, like the hedger, generally
expects neither to deliver nor to receive the financial
instrument underlying the Futures Contract, but, unlike the
hedger, hopes to profit from fluctuations in prevailing
interest rates or currency exchange rates.
Each Portfolio's Futures transactions will be entered into
for traditional hedging purposes; that is, Futures Contracts
will be sold to protect against a decline in the price of
securities or currencies that the Portfolio owns, or Futures
Contracts will be purchased to protect a Portfolio against an
increase in the price of securities or currencies it has
committed to purchase or expects to purchase. The
International Equity Portfolio, the Pacific Portfolio and
the International Balanced Portfolio may each also enter
into Futures transactions for non-hedging purposes, subject
to applicable law.
"Margin" with respect to Futures Contracts is the amount
of funds that must be deposited by the Portfolio with a
broker in order to initiate Futures trading and to maintain
the Portfolio's open positions in Futures Contracts. A margin
deposit made when the Futures Contract is entered into
("initial margin") is intended to assure the Portfolio's
performance of the Futures Contract. The margin required for
a particular Futures Contract is set by the exchange on
which the Futures Contract is traded, and may be
significantly modified from time to time by the exchange
during the term of the Futures Contract. Futures
Contracts are customarily purchased and sold on margins,
which may be 5% or less of the value of the Futures
Contract being traded.
If the price of an open Futures Contract changes (by
increase in the case of a sale or by decrease in the case of
a purchase) so that the loss on the Futures Contract reaches a
point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the
margin deposit ("variation margin"). If, however, the value
of a position increases because of favorable price changes
in the Futures Contract so that the margin deposit exceeds
the required margin, it is anticipated that the broker will
pay the excess to the Portfolio. In computing
daily net asset values, the Portfolio
will mark to market the current value of its open
Futures Contracts. Each Portfolio expects to earn interest
income on its margin deposits.
Risks of Using Futures Contracts. The prices of
Futures Contracts are volatile and are influenced, among other
things, by
actual and anticipated changes in interest rates, which in
turn are affected by fiscal and monetary policies and
national and international political and economic events.
At best, the correlation between changes in prices of
Futures Contracts and of the securities or currencies being
hedged can be only approximate. The degree of imperfection
of correlation depends upon circumstances such as:
variations in speculative market demand for Futures and for
debt securities or currencies, including technical
influences in Futures trading; and
differences between the financial instruments being hedged
and the instruments underlying the standard Futures
Contracts available for trading, with respect to interest
rate levels, maturities, and creditworthiness of issuers.
A decision of whether, when, and how to hedge involves skill
and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market
behavior or interest rate trends.
Because of the low margin deposits required, Futures
trading involves an extremely high degree of leverage. As a
result, a relatively small price movement in a Futures
Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the
time of purchase, 10% of the value of the Futures
Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result
in a total loss of the margin deposit, before any deduction
for the transaction costs, if the account were then closed
out. A 15% decrease would result in a loss equal to 150% of
the original margin deposit, if the Futures Contract were
closed out. Thus, a purchase or sale of a Futures Contract
may result in losses in excess of the amount invested in the
Futures Contract. A Portfolio, however, would presumably have
sustained comparable losses if, instead of the Futures
Contract, it had invested in the underlying financial
instrument and sold it after the decline. Where a Portfolio
enters into Futures transactions for non-hedging purposes, it
will be subject to greater risks and could sustain losses
which are net offset by gains on other portfolio assets.
Furthermore, in the case of a Futures Contract purchase,
in order to be certain that each Portfolio has sufficient
assets to satisfy its obligations under a Futures Contract,
the Portfolio segregates and commits to back the Futures
Contract an amount of cash, U.S. Government securities and
other liquid, high-grade debt securities equal in value to
the current value of the underlying instrument less the
margin deposit.
Most United States Futures exchanges limit the amount
of fluctuation permitted in Futures Contract prices during a
single trading day. The daily limit establishes the maximum
amount that the price of a Futures Contract may vary either up
or down from the previous day's settlement price at the end
of a trading session. Once the daily limit has been reached
in a particular type of Futures Contract, no trades may be
made on that day at a price beyond that limit. The daily
limit governs only price movement during a particular
trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of
unfavorable positions. Futures Contract prices have
occasionally moved to the daily limit for
several
consecutive trading days with little or no trading,
thereby preventing prompt liquidation of Futures positions and
subjecting some Futures traders to substantial losses.
See "Additional Tax Information" for a discussion of
federal tax treatment of Futures Contracts.
Options on Futures Contracts. Options on Futures Contracts
are similar to options on securities or currencies except
that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position
in a Futures Contract (a long position if the option is a
call and a short position if the option is a put), rather
than to purchase or sell the Futures Contract, at a specified
exercise price at any time during the period of the option.
Upon exercise of the option, the delivery of the Futures
position by the writer of the option to the holder of the
option will be accompanied by delivery of the accumulated
balance in the writer's Futures margin account which
represents the amount by which the market price of the
Futures Contract, at exercise, exceeds (in the case of a call)
or is less than (in the case of a put) the exercise price of
the option on the Futures Contract. If an option is exercised
on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash equal to
the difference between the exercise price of the option and the
closing level of the securities or currencies upon which the
Futures Contracts are based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
As an alternative to purchasing call and put options
on Futures, each Portfolio may purchase call and put options on
the underlying securities or currencies themselves (see
"Purchasing Put Options" and "Purchasing Call Options" above).
Such options would be used in a manner identical to the use
of options on Futures Contracts.
To reduce or eliminate the leverage then employed by
the Portfolio or to reduce or eliminate the hedge position
then currently held by the Portfolio, the Portfolio may seek to
close out an option position by selling an option covering
the same securities or currency and having the same exercise
price and expiration date. The ability to establish and
close out
positions on options on Futures Contracts is subject to
the existence of a liquid market. It is not certain that this
market will exist at any specific time.
In order to assure that the Portfolios will not be deemed
to be "commodity pools" for purposes of the Commodity Exchange
Act, regulations of the Commodity Futures Trading Commission
("CFTC") require that each Portfolio enter into transactions
in Futures Contracts and options on Futures Contracts only (i)
for bona fide hedging purposes (as defined in CFTC
regulations), or (ii) for non-hedging purposes, provided that
the aggregate initial margin and premiums on such non-hedging
positions does not exceed 5% of the liquidation value of the
Portfolio's assets. The
Global
Government Bond Portfolio and the European Portfolio will
enter into transactions in Futures Contracts and options on
Futures Contracts only for hedging purposes.
Forward Currency Contracts and Options on Currency. A
forward currency contract is an obligation to purchase or sell
a currency against another currency at a future date and
price as agreed upon by the parties. A Portfolio may
either accept or make delivery of the currency at the
maturity of the forward contract or, prior to maturity, enter
into a closing transaction involving the purchase or sale of
an offsetting contract. Each Portfolio engages in forward
currency transactions in anticipation of, or to protect
itself against, fluctuations in exchange rates. A Portfolio
might sell a particular foreign currency forward, for example,
when it holds bonds denominated in that currency but
anticipates, and seeks to be protected against, decline in
the currency against the U.S. dollar. Similarly, a Portfolio
might
sell the U.S. dollar forward when it holds bonds denominated
in U.S. dollars but anticipates, and seeks to be protected
against, a decline
in the U.S. dollar relative to other currencies.
Further, a Portfolio might purchase a currency forward to
"lock in" the price of securities denominated in that currency
which it anticipates purchasing.
The matching of the increase in value of a forward
contract and the decline in the U.S. dollar equivalent
value of the foreign currency denominated asset that is the
subject of the hedge generally will not be precise. In
addition, a Portfolio may not always be able to enter into
foreign currency forward contracts at attractive prices
and this will limit
the
Portfolio's ability to use such contract to hedge or cross-
hedge its assets. Also, with regard to a Portfolio's use of
crosshedges, there can be no assurance that historical
correlations between the movement of certain foreign
currencies relative to the U.S. dollar will continue.
Thus, at any time poor correlation may exist between
movements in the exchange rates of the foreign currencies
underlying the Portfolio's cross-hedges and the movements in
the exchange rates of the foreign currencies in which the
Portfolio's assets that are the subject of such cross-hedges
are denominated.
Forward contracts are traded in an interbank market
conducted directly between currency traders (usually large
commercial banks) and their customers. A forward contract
generally has no deposit requirement and is consummated
without payment of any commission. Each Portfolio,
however, may enter into forward contracts with deposit
requirements or commissions.
A put option or currency gives a Portfolio, as purchaser,
the right (but not the obligation) to sell a specified
amount of currency at the exercise price until the
expiration of the option. A call option gives a Portfolio,
as purchaser, the right (but not the obligation) to purchase
a specified amount of currency at the exercise price until
its expiration. A Portfolio might purchase a currency put
option, for example, to protect itself during the contract
period against a decline in the value of a currency
in which it holds or anticipates holding
securities. If the currency's value should decline, the loss
in currency value should be offset, in whole or in part,
by an increase in the value of the put. If the value of the
currency instead should rise, any gain to the Portfolio would
be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in
anticipation of, or to protect against, a rise in the value of
a currency in which the Portfolio anticipates purchasing
securities.
Each Portfolio's ability to establish and close out
positions in foreign currency options is subject to the
existence of a liquid market. There can be no assurance
that a liquid market will exist for a particular option at
any specific time. In
addition, options on foreign currencies are affected by all
of those factors that influence foreign exchange rates
and
investments generally.
A position in an exchange-listed option may be closed out
only on an exchange that provides a secondary market for
identical options. Exchange markets for options on foreign
currencies exist but are relatively new, and the ability to
establish and close out positions on the exchanges is subject
to maintenance of a liquid
secondary market. Closing transactions may be effected
with respect to options traded in the over-the-counter
("OTC") markets (currently the primary markets for options
on foreign currencies) only by negotiating directly with the
other party to
the option contract or in a secondary market for the option
if such market exists. Although each Portfolio intends to
purchase only those options for which there appears to be
an active secondary market, there is no assurance that a
liquid secondary market will exist for any particular option
at any specific time. In such event, it may not be
possible to effect closing transactions with respect to
certain options, with the result that the Portfolio would
have to exercise those options which it has purchased in
order to realize any profit. The staff of the Securities and
Exchange Commission has taken the position that, in general,
purchased OTC options and the underlying securities used to
cover written OTC options are illiquid securities.
However, a Portfolio may treat as liquid the
underlying securities used to cover written OTC options,
provided it has arrangements with certain qualified dealers
who agree that the Portfolio may repurchase any option it
writes for a maximum price to be calculated by a predetermined
formula. In these cases, the OTC option itself would only be
considered illiquid to the extent that the maximum repurchase
price under the formula exceeds the intrinsic value of the
option.
Swap Agreements. Among the hedging transactions into which
the Portfolios may enter are interest rate swaps and the
purchase or sale of interest rate caps and floors. Each
Portfolio expects to enter into these transactions primarily
to preserve a return or spread on a particular investment or
portion of its portfolio or to protect against any increase
in the price of securities the Portfolio anticipates
purchasing at a later date. Each Portfolio intends to use
these transactions as a hedge and not as a speculative
investment. Each Portfolio will not sell interest rate caps
or floors that it does not own. Interest rate swaps involve
the exchange by a Portfolio with another party of their
respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments.
The
purchase of an interest rate cap entitles the purchaser, to
the extent that a specified index exceeds a predetermined
interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate
cap. The
purchase of an interest rate floor entitles the purchaser, to
the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest
on a notional principal amount from the party selling such
interest rate floor.
A Portfolio may enter into interest rate swaps, caps
and floors on either an asset-based or liability-based
basis,
depending on whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps
on a net basis, i.e., the two payment streams are netted but,
with the Portfolio receiving or paying, as the case may be,
only the net amount of the two payments. Inasmuch as these
hedging transactions are entered into for good faith
hedging purposes, the investment adviser and the
Portfolios believe such obligations do not constitute
senior securities and, accordingly will not treat them as
being subject to its borrowing restrictions. The net amount
of the excess, if any, of a Portfolio's obligations over
its entitlement with respect to each interest rate swap
will be accrued on a daily basis and an amount of cash
or liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in a
segregated account by a custodian that satisfies the
requirements of the Investment Company Act of 1940. The
Portfolios will not enter into any interest rate swap, cap or
floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated
in the highest rating category of at least one nationally
recognized rating organization at the time of entering into
such transaction. If there is a default by the other party
to such a transaction, a Portfolio will have contractual
remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years
with a large number of banks and investment banking firms
acting both as
principals and as agents utilizing swap documentation. As
a result, the swap market has become relatively liquid. Caps
and floors are more recent innovations for which
standardized
documentation has not yet been developed and, accordingly,
they are less liquid than swaps.
New options and futures contracts and various
combinations thereof continue to be developed and the
Portfolios may invest in any such options and contracts as may
be developed to the extent consistent with its
investment objective and regulatory
requirements applicable to investment companies.
The Articles of Incorporation of the Fund permit the Board
of Directors to establish additional Portfolios of the Fund
from time to time.
The investment objectives, policies and
restrictions applicable to additional Portfolios would
be
established by the Board of Directors at the time such
Portfolios were established and may differ from those set
forth in the Prospectus and this Statement of Additional
Information.
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions
and
fundamental policies that cannot be changed without approval by
a "vote of a majority of the outstanding voting securities" of
each Portfolio affected by the change as defined in the
Investment Company Act of 1940 (the "Act") and Rule 18f-2
thereunder (see "Voting").
Without the approval of a majority of its outstanding
voting securities, the Global Government Bond Portfolio may
not:
1. Change its subclassification as an open-end fund;
2.
Change its subclassification as a non-diversified company;
3.
Invest more than 25% of its total assets in a
particular industry, except that this limitation shall
not apply to
securities issued or guaranteed as to principal and interest
by
the U.S. Government or any of its agencies or
instrumentalities; 4. Purchase any securities on margin,
provided that the Portfolio may obtain such short-term credits
as may be necessary for the clearance of purchases and sales
of securities; except that it
may make margin deposits in connection with futures
contracts subject to Investment Restriction 14. below; 5. Make
short sales of securities or maintain a short position in
securities unless at all times when a short position in
securities is open, the Portfolio owns or has the right to
obtain, at no added cost, securities identical to those
sold short; 6. Buy or sell real estate (including real
estate limited partnerships) and real estate mortgage
loans, commodities or commodity contracts, or
issue senior securities; however, the Portfolio may invest
in
debt securities secured by real estate or interests therein
or
issued by companies that invest in real estate or
interest therein, including real estate investment trusts,
provided such securities are readily marketable and may
purchase or sell currencies (including forward currency
contracts), futures contracts and related options generally
as described in the Prospectus and this Statement of
Additional Information and subject to Investment
Restriction 14. below; 7. Invest in
securities of another investment company except as permitted
by
Section 12(d) (1) of the Investment Company Act of 1940 or
as
part of a merger, consolidation, or acquisition; 8. Have
more
than 15% of its total assets at any time invested in or
subject
to puts, calls or combinations thereof; 9. Borrow money,
except from banks for temporary or emergency purposes not in
excess of 33 1/3% of the value of the Portfolio's total
assets. Whenever such borrowings exceed 5% of the value of
the Portfolio's total assets, the Portfolio will not make
any additional investments. This restriction shall not prevent
the Portfolio from entering into reverse repurchase
agreements, provided that
reverse
repurchase agreements and any other transactions
constituting borrowing by the Portfolio may not exceed one-
third of the Portfolio's total assets. In the event that
the asset coverage for the Portfolio's borrowings falls
below 300%, the Portfolio would reduce, within three days
(excluding Saturdays, Sundays and holidays), the amount of its
borrowings in order to provide for 300% asset coverage; 10.
Pledge, mortgage or hypothecate its assets other than
(i) in connection with the investment strategies
described in Investment Restriction 9. above, (ii) to secure
letters of credit solely for purposes of participating in a
captive insurance company sponsored by the Investment Company
Institute to provide fidelity and directors and
officers
liability insurance, or (iii) in connection with short sales
and collateral arrangements with respect to options and
Futures Contracts including deposits of initial and variation
margin; 11. Make loans, except the Portfolio may purchase
debt obligations, enter into repurchase agreements and lend
its securities; 12. Acquire securities subject to
restrictions on disposition or securities for which there is
no readily available market; enter into repurchase agreements,
or purchase time deposits or variable amount master demand
notes, if any of the foregoing have a term or demand feature
of more than seven days; or purchase OTC options or set
aside assets to cover OTC options written by the Portfolio
if, immediately after and as a result, the value of such
securities would exceed, in the aggregate, 10% of the
Portfolio's total assets; 13. Engage in the business
of
underwriting securities of other issuers, except to the
extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that
term is defined under the Securities Act of 1933; 14. Enter
into a futures contract or a commodity option other than for
bona fide hedging purposes and, if, as a result thereof, more
than 5% of the Portfolio's total assets (taken at market
value at the time of entering into the contract or
commodity option) would be committed to initial margin on
futures contracts and premiums on commodity options all within
the meaning of Regulation 4.5 of the Commodity Futures
Trading Commission; and 15. Invest in companies for the
purpose of exercising control or management.
In order to comply with certain state statutes and
policies, the Global Government Bond Portfolio also will not,
as a matter of operating policy:
1. Purchase oil, gas or other mineral leases, rights
or royalty contracts or exploration or development programs,
except that the Portfolio may invest in, or sponsor such
programs; 2. Invest more than 5% of its total assets in
securities of companies having, together with their
predecessors, a record of less than three years of
continuous operation; 3. Purchase or retain the securities of
any issuer, if those individual officers and directors of
the issuer, its investment adviser,
or
distributor, each owning beneficially more than 1/2 of 1% of
the securities of such issuer, together own more than 5%
of the securities of such issuer; and 4. Purchase
puts, calls, straddles, spreads, and any combination,
thereof if by reason, thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its
total assets.
A further investment policy of the Global Government
Bond
Portfolio, which may be changed by action of the Fund's Board
of Directors without shareholder approval, is that the
Portfolio shall not invest in securities of an issuer if the
investment would cause the Portfolio to own more than 10% of
any class of securities of any one issuer.
Without the approval of a majority of its outstanding
voting securities, the International Equity Portfolio, the
Pacific Portfolio, the European Portfolio, the International
Balanced Portfolio and the Emerging Markets Portfolio each may
not:
1.Purchase the securities of issuers conducting
their principal business activities in the same industry if
immediately after a particular purchase the value of
the Portfolio's investments in such industry would exceed 25%
of the value of its total assets; 2. (a) With respect to the
International Equity Portfolio only, purchase the securities
of any one issuer, if immediately after such purchase (i)
more than 5% of the value of the total assets of the Portfolio
would be invested in securities of such issuer, provided that
such limitation does not apply to the U.S. Government, its
agencies or instrumentalities, or (ii) the Portfolio would
own more than 10% of the outstanding voting securities of such
issuer; (b) With respect to 75% of the value of the total
assets of each of the European Portfolio and the Pacific
Portfolio, purchase the securities of any one issuer, if
immediately after such purchase (i) more than 5% of the value
of the total assets of the Portfolio would be invested in
securities of such issuer, provided that such limitation does
not apply to the U.S. Government, its agencies or
instrumentalities, or (ii) the Portfolio would own more than
10% of the outstanding voting securities of such issuer (under
the 1940 Act, each Portfolio may not, under any circumstance,
own more than 10% of the outstanding voting securities of an
issuer); (c) With respect to 50% of the value of the
total assets of the International Balanced Portfolio,
purchase the securities of any one issuer,
if
immediately after such purchase more than 5% of the value of
the total assets of the Portfolio would be invested in
securities of such issuer, provided that such limitation does
not apply to the U.S. Government, its agencies or
instrumentalities, or (ii) the Portfolio would own more
than 10% of the outstanding voting securities of such issuer
(under the 1940 Act, the Portfolio may not, under any
circumstance, own more than 10% of the outstanding voting
securities of an issuer); (d) With respect to 50% of the value
of the total assets of the Emerging Markets Portfolio,
purchase the securities of any one issuer, if immediately
after such purchase more than 5% of the value of the total
assets of the Portfolio would be invested in securities of
such issuer, provided that such limitation does not
apply to the U.S. Government, its agencies or
instrumentalities; (e) with respect to the Emerging Markets
Portfolio, purchase more than 10% of the outstanding voting
securities of any issuer); 3. Invest in real estate or real
estate mortgage loans, real estate limited partnerships,
commodities or commodity contracts, or interests in oil, gas
and/or mineral exploration or development programs
(including mineral leases), except for purchases of
currencies and futures and options and other related contracts
as described in the Prospectus from time to time and except
for the purchase of marketable securities issued by
companies that have such interests; 4. Purchase
securities of any other registered investment company,
except in connection with a merger, consolidation,
reorganization or acquisition of assets; provided, however,
that each of the European, Pacific, International
Balanced and Emerging Markets Portfolios may also purchase
shares of other investment companies pursuant to Section
12(d)(1) of the Investment Company Act of 1940; 5. Make
investments in securities for the purpose of exercising
control over or managing the
issuer; 6. Make loans, except, to the extent any of
such transactions may be deemed to be loans, for (a) the
purchase of
publicly distributed debt securities, (b) entry into
repurchase agreements or (c) the lending of its securities;
7. Purchase securities of any issuer (including any
predecessor) which has been in
operation for less than three years if immediately after
such purchase more than 5% of the value of the total assets
of
the Portfolio would be invested in such securities; 8.
Sell securities short, unless at all times when a short
position is
open the Portfolio owns an equal amount of the securities or
of
securities convertible into, or exchangeable without payment
of
any further consideration for, securities of the same issue
as
the securities sold short; 9. Issue securities senior to
its common stock or borrow money, except that the
Portfolio may borrow money from banks to provide greater
liquidity or to make additional portfolio investments so long
as the aggregate amount borrowed does not exceed 10% of
the value of the European Portfolio's total assets
(including the proceeds of
the
borrowing) or 25% of the value of each of the
International Equity Portfolio's, the Pacific Portfolio's
or the Emerging Markets Portfolio's total assets, or 33-1/3%
of the International Balanced Portfolio's total assets, as the
case may be, (including the proceeds of the borrowing)
immediately after the borrowing and so long as the
Portfolio maintains asset coverage ratios specified in the
Act. This restriction shall not prevent a Portfolio from
entering into reverse repurchase agreements, provided that
reverse repurchase agreements and any transactions constituting
borrowing by the Portfolio may not exceed one-third of the
Portfolio's total assets. 10. Mortgage or pledge any assets
except to secure borrowings permitted under the previous
restriction; 11. Purchase the securities of an issuer if, at
the time of
such purchase, one or more of the directors or officers
of the Fund or the investment adviser individually
own
beneficially more than .5% of the outstanding securities of
such issuer and together such trustees, directors and officers
owning more than
.5% own beneficially more than 5% of such securities;
12. Purchase a security which is not readily marketable, which
is subject to legal or contractual restrictions,
including repurchase agreements and interest rate swaps having
more than seven days remaining to maturity, if, as a result,
more than 5%
of total assets with respect to the International
Equity
Portfolio and more than 15% of total assets with respect to
each of the Pacific Portfolio, the European Portfolio,
the
International Balanced Portfolio and the Emerging
Markets Portfolio would consist of such securities; provided
that each of the Pacific, European, and International Balanced
Portfolios will not invest more than 5% of its assets in
securities that are restricted from sale to the public
until they have been
registered under the Securities Act of 1933; or act as
an
underwriter, except in connection with the resale of
portfolio securities; or 13. Purchase any securities on
margin, provided that
the Portfolio may obtain such short-term credits as may be
necessary for the clearance of purchases and sales of
securities and except that it may make margin deposits in
connection with futures contracts.
In order to comply with certain state statutes and
policies, the International Equity Portfolio, the Pacific
Portfolio, the European Portfolio, the International Balanced
Portfolio and the Emerging Markets Portfolio each may not:
1. Purchase warrants if as a result the Portfolio would
then have more
than 5% of its net assets (determined at the time of
investment) invested in warrants. Warrants will be valued at
the lower of cost or market and investment in warrants which
are not listed on the New York Stock Exchange or American
Stock Exchange
will be limited to 2% of the Portfolio's net assets
(determined at the time of investment). For the purpose of
this limitation, warrants acquired in units or attached to
securities are deemed to be without value.
ADDITIONAL TAX INFORMATION
The following summary addresses the principal United
States income tax considerations regarding the purchase,
ownership and disposition of shares in a Portfolio of the
Fund.
General
Each Portfolio intends to qualify and elect to be treated
for each taxable year as a "regulated investment company"
under Sections 851-855 of the Code. To so qualify, a
Portfolio must, among other things, (i) derive at least 90%
of its gross income in each taxable year from dividends,
interest, proceeds from loans of stock and securities,
gains from the sale or other disposition of stock,
securities or foreign currency, or certain other income
(including but not limited to gains from options, futures and
forward contracts) derived from its business of investing
in stock, securities or currency; (ii) derive less than 30% of
its gross income in each taxable year from the sale or other
disposition of any of the following which was held for less
than three months: (a) stocks or securities, (b) options,
futures or forward contracts (other than options, futures
or forward contracts on foreign currency), or (c) foreign
currency (or options, futures or forward contracts on foreign
currency), but only if such currency (or options, futures or
forward contracts) is not directly related to the Portfolio's
principal business of investing in stock or securities (or
options or futures with respect to stock or securities); and
(iii) diversify its holdings so that, at the end of each
quarter of its taxable year, the following two conditions are
met: (a) at least 50% of the market value of the Portfolio's
total assets is represented by cash, U.S. Government
securities, securities of other regulated investment
companies and other securities, with such other
securities limited, in respect of any one issuer, to an
amount not greater than 5% of the Portfolio's assets and not
more than 10% of the outstanding voting securities of such
issuer; and (b) not more than 25% of the value of the
Portfolio's assets is invested in securities of any one
issuer (other than U.S. Government securities or securities
of other regulated investment companies). The diversification
requirements described above may limit the Portfolio's
ability to engage in hedging transactions by writing or
buying options or by entering into futures or forward
contracts.
Foreign currency gains that are not directly related to
a Portfolio's principal business of investing in stock
or
securities, or options or forward contracts thereon, might
be excluded by regulations from income that counts toward the
90% gross income requirement described above.
As a regulated investment company, each Portfolio will not
be subject to U.S. federal income tax on net investment income
and net long-term capital gains distributed to shareholders if,
as is intended, the Portfolio distributes at least 90% of its
ordinary income and net short-term capital gains to the
Portfolio's shareholders each year.
Each Portfolio, however, will generally be subject to
a nondeductible excise tax of 4% to the extent that it does
not meet certain minimum distribution requirements as of the
end of each calendar year. Each Portfolio intends to
make timely distributions of its income (including any net
capital gains) in
compliance with these requirements. As a result, it
is
anticipated that each Portfolio will not be subject to the
excise tax.
For federal income tax purposes, dividends declared by
each Portfolio in October, November or December as of a record
date in such month and which are actually paid in
January of the following year will be treated as if they
were paid on December 31. These dividends will be taxable to
shareholders in the year declared, and not in the year in
which shareholders actually receive the dividend.
Gains or losses that a Portfolio recognizes upon the sale
or other disposition of stock or securities will be treated as
longterm capital gains or losses if the securities have been
held by it for more than one year, except in certain cases
where the Portfolio sells the stock or security short or
acquires a put or writes a call thereon. Other gains or
losses on the sale of stock or securities will be short-
term capital gains or losses. Gains and losses on the
sale, lapse or other termination of options on stock or
securities will generally be treated as gains and losses from
the sale of stock or securities. If an option written for a
Portfolio lapses or is terminated through a closing transaction
the Portfolio may realize a short-term capital gain or loss,
depending on whether the premium income is greater or less
than the amount paid in the closing transaction. If a
Portfolio sells stock or securities pursuant to the exercise of
a call option written by it, the Portfolio will add the
premium received to the sale price of the stock or securities
delivered in determining the amount of gain or loss on the
sale. The
requirement that a Portfolio derive less than 30% of its
gross income from gains from the sale of stock or securities
held for less than three months may limit the Portfolio's
ability to acquire put options or make short sales.
Under the Code, gains or losses attributable to
foreign currency contracts, or to fluctuations in exchange
rates between the time a Portfolio accrues income or
receivables or expenses or other liabilities denominated in a
foreign currency and the time the Portfolio actually
collects such income or pays such liabilities, are
treated as ordinary income or ordinary loss. Similarly,
gains or losses on the disposition of debt securities held by
the Portfolio denominated in foreign currency, to the extent
attributable to fluctuations in exchange rates between the
acquisition and disposition dates, are also treated as
ordinary income or loss.
Forward currency contracts, options and futures
contracts entered into by a Portfolio may create "straddles"
for federal income tax purposes and this may affect the
character and timing of gains or losses realized by the
Portfolio on such contracts or options or on the underlying
securities. Under regulations yet to be issued, straddles
may also result in the loss of the holding period of
underlying property, and therefore, the
Portfolio's ability to enter into forward currency
contracts, options and futures contracts may be limited by the
30% of gross income test described above.
Certain options, futures and foreign currency contracts
held by a Portfolio at the end of each fiscal year will be
required to be "marked to market" for federal income tax
purposes; that is, treated as having been sold at market
value. Sixty percent of any capital gain or loss recognized
on these deemed sales and on actual dispositions will be
treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital
gain or loss regardless of how long the Portfolio has held
such options or contracts.
If a Portfolio purchases shares in certain foreign
investment entities, referred to as "passive foreign
investment companies," the
Portfolio itself may be subject to U.S. federal income tax
and an additional charge in the nature of interest on a
portion
of any "excess distribution" from such company or gain from
the disposition of such shares, even if the distribution or
gain is distributed by the Portfolio to its shareholders in a
manner that satisfies the requirements described above. If
the Portfolio were able and elected to treat a passive
foreign investment company as a "qualified electing fund," in
lieu of the treatment described above, the Portfolio would be
required each year to include in income, and distribute to
shareholders in accordance with the distribution
requirements described above, the
Portfolio's pro rata share of the ordinary earnings and
net capital gains of the company, whether or not actually
received by the Portfolio.
Distributions.
If the net asset value of shares of a Portfolio is
reduced below a shareholder's cost as a result of
distribution by the Portfolio, such distribution will be
taxable even though it represents a return of invested
capital.
Redemption of Shares.
Any gain or loss realized on the redemption or exchange
of Portfolio shares by a shareholder who is not a
dealer in securities will be treated as long-term capital gain
or loss if the
shares have been held for more than one year, and otherwise
as short-term capital gain or loss.
However, any loss realized by a shareholder upon
the redemption or exchange of Portfolio shares held six
months or less will be treated as long-term capital loss to
the extent of any
long-term capital gain distributions received by the
shareholder with respect to such shares. Additionally, any
loss realized on a redemption or exchange of Portfolio shares
will be disallowed to the extent the shares disposed of
are replaced within a period of 61 days beginning 30 days
before and ending 30 days after such disposition, such as
pursuant to reinvestment of dividends in Portfolio shares.
IRA AND OTHER PROTOTYPE RETIREMENT PLANS
Copies of the following plans with custody or trust
agreements have been approved by the Internal Revenue
Service and are available from the Fund or Smith Barney
; investors should consult with their own tax or retirement
planning advisors prior to the establishment of a plan.
IRA, Rollover IRA and Simplified Employee Pension - IRA
The Tax Reform Act of 1986 (the "Tax Reform Act") changed
the eligibility requirements for participants in
Individual Retirement Accounts ("IRAs"). Under the Tax
Reform Act's new provisions, if you or your spouse have
earned income and neither you
nor your spouse is an active participant in an employer-
sponsored retirement plan, each of you may establish an IRA
and
make maximum annual contributions equal to the lesser of
earned income or $2,000. If your spouse is not employed,
you may contribute and deduct on your joint return a total
of $2,250 between two IRAs.
If you or your spouse is an active participant in an
employersponsored retirement plan, a deduction for
contributions to an IRA might still be allowed in full or in
part, depending on your combined adjusted gross income. For
married couples filing jointly, a full deduction for
contributions to an IRA will be allowed where the couples'
adjusted gross income is below $40,001 ($25,001 for an
unmarried individual); a partial deduction will be allowed
when adjusted gross income is between $40,001 $50,000
($25,001-$35,000 for an unmarried individual); and no
deduction when adjusted gross income is $50,000 ($35,000 for
an unmarried individual). Shareholders should consult their
tax advisors concerning the effects of the Tax Reform Act
on the deductibility of their IRA contributions.
A Rollover IRA is available to defer taxes on lump
sum payments and other qualifying rollover amounts (no
maximum) received from another retirement plan.
An employer who has established a Simplified Employee
Pension - IRA ("SEP-IRA") on behalf of eligible employees may
make a
maximum annual contribution to each participant's account of
15% (up to $30,000) of each participant's compensation.
In addition, certain small employers (those who have 25
or fewer employees) can establish a Simplified Employee Pension
Plan - Salary Reduction Plan ("SEP - Salary Reduction
Plan") under
which employees can make elective pre-tax contributions of up
to $9,240 of gross income. Consult your tax advisor for
special rules regarding establishing either type of SEP.
An ERISA disclosure statement providing additional details
is included with each IRA application sent to participants.
Paired Defined Contribution Prototype
Corporations (including Subchapter S corporations) and
noncorporate entities may purchase shares of the Fund through
the Smith Barney Prototype Paired Defined Contribution Plan.
The
prototype permits adoption of profit-sharing provisions,
money purchase pension provisions, or both, to provide
benefits for eligible
employees and their beneficiaries. The prototype
provides for a maximum annual tax deductible contribution
on behalf of each Participant of up to 25% of compensation, but
not to exceed $30,000 (provided that a money purchase pension
plan or both a profit-sharing plan and a money purchase pension
plan are adopted thereunder).
PERFORMANCE INFORMATION
From time to time the Fund may advertise a Portfolio's
total return, average annual total return and yield in
advertisements. In addition, in other types of sales
literature the Fund may include a Portfolio's current
dividend return. These figures are based on historical
earnings and are not intended to indicate future performance.
The total return shows what an investment in the Portfolio
would have earned over a specified period of time (one, five
or ten years) assuming the payment of the maximum sales
load when the investment was first made, that all
distributions and dividends by the Portfolio were invested on
the reinvestment dates during the period less all recurring
fees. The average annual total return is derived from
this total return, which provides the ending redeemable value.
The Fund may
also quote the Portfolio's total return for present
shareholders that eliminates the sales charge on the initial
investment. The following chart reflects the financial
performance of the Portfolios through the period ended
December 31, 1994 for the one and five year periods and since
inception:
Average Annual Total Returns
SEC Returns
5 Year Since Inception
Name of PortfolioClass 1Year AnnualizedCumulative
Annualized
Cumulative
International Equity1
inception: 2-18-86 A (13.43%) 10.05%
61.40%
12.11% 175.69%
inception: 11-7-94 B - - -
(11.96%)
- -
inception: 1-4-93 C (10.47%) - -
17.55%
38.00%
inception: 6-16-94 Y - - -
(3.22%)
- -
Global Government Bond
inception: 7-22-91 A (8.32%) - -
6.40%
23.85%
inception: 11-7-94 B - - -
(2.94%)
- -
inception: 1-4-93 C (5.47%) - -
6.58%
13.52%
inception: 2-19-93 Y (3.92%) - -
6.22%
11.92%
International Balanced
inception: 8-25-94 A - - -
(8.10%)
- -
inception: 11-7-94 B - - -
(8.80%)
- -
inception: 8-25-94 C - - -
(4.49%)
- -
inception: 11-7-94 Y - - - - -
Pacific
inception: 2-7-94 A - - -
(12.31%)
- -
inception: 11-7-94 B - - -
(13.42%)
- -
inception: 2-14-94 C - - -
(9.24%)
- -
inception: 11-7-94 Y - - - - -
European
inception: 2-7-94 A - - -
(6.99%)
- -
inception: 11-7-94 B - - -
(8.01%)
- -
inception: 2-14-94 C - - -
(3.38%)
- -
inception: 11-7-94 Y - - - - -
1The International Equity Portfolio's performance
record includes the performance of the Fenimore
International Fund through November 22, 1991. The
shareholders of Fenimore International Fund approved a
reorganization with the Portfolio at their October 31, 1991
shareholders meeting. As a result, all shares of Fenimore
International Fund were exchanged at the close of business on
November 22 for shares of the Portfolio. Prior to November 22
the Portfolio had not made an offering of its shares.
Note that, prior to November 7, 1994, (i) with respect to
each Portfolio, Class C shares were designated as Class B
shares; and (ii) with respect to Global Government Bond
Portfolio, Class Y shares
were designated as Class C shares. Note further, that
effective October 3, 1994, with respect to the
International Equity, International Balanced, European and
Pacific Portfolios, Class C shares of each such Portfolio
were reclassified as additional Class A shares.
The Global Government Bond Portfolio's yield is computed
by dividing the net investment income per share earned
during a specified thirty day period by the maximum offering
price per share on the last day of such period and analyzing
the result. For
purposes of the yield calculation, interest income is
determined based on a yield to maturity percentage for each
longterm debt obligation in the portfolio; income on
short-term obligations is based on current payment rate.
The Fund calculates current dividend return for each
Portfolio by dividing the dividends from investment income
declared during the most
recent twelve months by the net asset value or the
maximum public offering price (including sales charge) on
the last day of the period for which current dividend
return is presented. From time to time, the Fund may
include the
Portfolio's current dividend return in information furnished
to present or prospective shareholders and in advertisements.
Each Portfolio's current dividend return may vary from time
to time depending on market conditions, the composition of
its investment portfolio and operating expenses. These
factors and possible differences in the methods used in
calculating current dividend return
should be considered when comparing the
Portfolio's current dividend return to yields published for
other investment companies and other investment vehicles.
Current
dividend return should also be considered relative to changes
in the value
of the Portfolio's shares and to the risks associated
with the Portfolio's investment objective and policies.
For
example, in comparing current dividend returns with those
offered by Certificates of Deposit ("CDs"), it should be noted
that CDs are insured (up to $100,000) and offer a fixed rate
of return.
Performance information may be useful in evaluating
a Portfolio and for providing a basis for comparison with
other financial alternatives. Since the performance of the
Portfolio changes in response
to fluctuations in market conditions, interest rates
and
Portfolio expenses, no performance quotation should be
considered a representation as to the Portfolio's performance
for any future period.
A Portfolio may from time to time compare its
investment results with the following:
(1) Various Salomon Brothers World Bond Indices and J.P.
Morgan Global Bond Indices, which measure the total return
performance of high-quality securities in major sectors of
the worldwide bond markets.
(2) The Shearson Lehman Government/Corporate Bond Index,
which is a comprehensive measure of all public obligations
of the U.S. Treasury (excluding flower bonds and foreign
targeted issues), all publicly issued debt of agencies of
the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-
convertible investment grade domestic corporate debt
rated at least Baa by Moody's Investors Service or
BBB by Standard and Poor's Corporation, or, in the case
of nonrated bonds, BBB by Fitch Investors Service
(excluding Collateralized
Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of
all kinds of savings deposits, including
longer-term certificates (based on figures supplied by
the U.S. League of Savings Institutions). Savings
accounts offer a guaranteed rate of return on
principal, but no opportunity for capital growth.
During a portion of the period, the maximum rates paid
on some savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of
the average change in prices over time in a fixed
market basket of goods and services (e.g., food,
clothing, shelter, fuels, transportation fares, charges
for doctors' and dentists' services, prescription
medicines, and other goods and services that people buy
for day-to-day living).
(5) Data and mutual fund rankings published or prepared
by Lipper Analytical Services, Inc., which ranks mutual
funds by overall performance, investment objectives and
assets.
(6) Ibbottson Associates International Bond Index,
which provides a detailed breakdown of local market and
currency returns since 1960.
(7) Standard & Poor's "500" Index ("S&P 500") which is
a widely recognized index composed of the
capitalizationweighted average of the price of 500
of the largest publicly traded stocks in the U.S.
(8) Salomon Brothers Broad Investment Grade Index which
is a widely used index composed of U.S. domestic
government, corporate and mortgage-back fixed income
securities.
(9) Dow Jones Industrial Average.
(10) Financial News Composite Index.
(11) Morgan Stanley Capital International World
Indices, including, among others, the Morgan
Stanley Capital International Europe, Australia, Far
East Index ("EAFE Index"). The EAFE index is an
unmanaged index of more than 800 companies of Europe,
Australia and the Far East.
(12) Data and comparative performance rankings
published or prepared by CDA Investment Technologies,
Inc.
(13) Data and comparative performance rankings
published or prepared by Wiesenberger Investment Company
Service.
Indices prepared by the research departments of such
financial organizations as Salomon Brothers, Inc., Merrill
Lynch, Pierce, Fenner & Smith, Inc., Bear Stearns & Co.,
Inc., Morgan Stanley, and Ibbottson Associates may be used, as
well as information provided by the Federal Reserve Board.
In addition, performance rankings and ratings reported
periodically in national financial publications, including but
not limited to Money Magazine, Forbes, Business Week, The
Wall Street Journal and Barron's may also be used.
World Market Capitalization
In 1970 U.S. securities represented two-thirds of the world's
stock market capitalization. Ten years later, the
U.S.
percentage had dropped to roughly 50 percent. As of January
1, 1993, companies outside the U.S. comprised approximately 67%
of the world's stock market capitalization, according to
Morgan Stanley Capital International.
Diversification
A study of world markets showed that diversification into
overseas markets over the last ten years not only reduced
risk but also increased returns. The S&P 500, representing the
U.S. stock market, and EAFE Index, representing the markets of
Europe, Australia and the Far East, were used as measures of
U.S. and nonU.S. market performance. Portfolios of the indices
were combined in varying proportions to determine the
optimum risk/return relationship. This showed that the least
volatile investment portfolio would have been composed of 70%
U.S. equities and 30% foreign equities.
(Graph)
The graph displays the following approximate risk/return
relationships of various asset combinations of U.S., Non-
U.S. Developed and Emerging Markets for the period from January
1985December 1994:
(Source: MSCI, IFC)
Asset Combination Return Risk/Volatility
100% U.S./0% Non-U.S/ 14.00% 15.25%
90% U.S./ 10% Non-U.S. 14.50%
15.00%
80% U.S./ 20% Non-U.S. 15.50%
14.50%
70% U.S./ 30% Non-U.S. 16.00%
14.25%
60% U.S./ 40% Non-U.S. 16.50%
14.50%
50% U.S/ 50% Non-U.S. 17.25%
14.75%
40% U.S./ 60% Non-U.S. 17.75%
15.00%
30% U.S./ 70% Non-U.S. 18.25%
15.50%
20% U.S./ 80% Non-U.S. 18.75%
16.25%
10% U.S./ 90% Non-U.S. 19.25%
17.00%
0% U.S./100% Non-U.S. 20.00%
18.00%
Top-Performing Markets 1985-1994 (Based on U.S.
Dollars) (Source: MSCI)
Since 1985 the U.S. stock market has not ranked among
the five best performers.
1st 2nd 3rd 4th 5th
1985 Austria Germany Italy/ Switzer
France/
/ / 134% land/10 83%
177% 137% 8%
1986 Spain/ Italy/ Japan/ Belgium
France/
123% 109% 100% / 79%
81%
1987 Japan/ Spain/ UK/ Canada/
Denmark
43% 38% 35% 15% /
14%
1988 Belgium Denmark Sweden/ Norway/
France/
/ / 49% 43% 39%
55% 54%
1989 Austria Germany Norway/ Denmark
Singapo / / 46% / re/
105% 47% 45% 42%
1990 UK/ Hong Austria Norway/
Denamrk
10% Kong/ / 1% /
9% 7% 0%
1991 Mexico/ Hong Singapo S.
Austral
138% Kong/ re/ Africa/ ia/
45% 38% 36% 28%
1992 Jordan/ Philipp Thailan Hong
Mexico/
40% ines/ d/ Kong/ 31%
38% 35% 32%
1993 Turkey/ Philipp Hong Malaysi
Indones
220% ines/ Kong/ a/ ia/
131% 117% 110% 106%
1994 Brazil/ Finland Peru/ Chile/
Norway/
66% / 45% 45% 24%
53%
The chart below illustrates how $10,000 invested on January
1, 1985 in international equities, as measured by the EAFE
Index, would have grown to $51,872 as of December 31,
1994 - and outpaced the major benchmark averages for common
stocks, U.S. Government Bonds and inflation.
Average Annual Rates of Return
(January 1, 1985-December 31, 1994)
EAFE 17.89%
S&P 500 14.36%
Long-Term Treasuries 9.57%
Inflation 3.58%
(Chart)
Inflation (CPI): $14,214 (42%)
Government Bonds* $24.939(149%)
U.S. Equities
(S&P 500) $38,268(283%)
Foreign Equities
(EAFE) $51,872(419%)
* Lehman Brothers U.S. Government Bond Index
Sources: Lipper Analytical Services, Inc., Morgan Stanley
Capital International, Lehman Brothers
Prepared by Smith, Barney Advisors, Inc. Total Returns in
U.S. dollars.
This chart is for illustrative purposes only, and is not
an indication of the future performance of Smith Barney World
Funds.
DETERMINATION OF NET ASSET VALUE
The net asset value of each Portfolio's shares will
be determined on any day that the New York Stock Exchange
("NYSE") is open. The NYSE is closed on the following
holidays: New Year's Day, President's Day,
Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
REDEMPTION OF SHARES
In conformity with applicable rules of the Securities
and Exchange Commission,redemptions may be paid in
portfolio
securities, in cash or any combination of both, as the Board
of Directors may deem advisable; however, payments shall be
made wholly in cash unless the Board of Directors
believes that economic conditions exist that would make
such a practice detrimental to the best interests of the
Fund and its remaining shareholders. If a redemption is paid
in portfolio securities, such securities will be valued in
accordance with the procedures described under "Determination
of Net Asset Value" in the Prospectus and a shareholder
would incur brokerage expenses if these securities were then
converted to cash.
INVESTMENT MANAGEMENT AGREEMENT AND OTHER SERVICES
Manager
The Management Agreement for the Global Government
Bond Portfolio provides for an annual fee calculated at the
rate of 0.75%
of the Portfolio's average daily net assets, paid monthly;
each of the Management Agreements for the International
Equity Portfolio, the Pacific Portfolio, the European Portfolio
and the International Balanced Portfolio provides for an
annual fee calculated at the rate of 0.85% of the Portfolio's
average daily net assets, paid monthly; and the Management
Agreement for the Emerging Markets Portfolio provides for an
annual fee calculated at the rate of 1.00% of the Portfolio's
average daily net assets, paid monthly.
For fiscal year 1992, fiscal year 1993, and fiscal year
1994 the management fee for the Global Government Bond
Portfolio was $774,931, $833,919, and $615,294 respectively.
For fiscal year 1992,
fiscal year 1993 and fiscal year 1994 the management fee
for the International Equity Portfolio was $883,203,
$1,836,933, and $5,320,716, respectively. For the fiscal
period ended 1994 the management fee for the European
Portfolio was $34,637; for the Pacific Portfolio was
$58,231; and for the International Balanced Portfolio was
$33,036. Through October 31, 1994, the manager waived $34,
637, $25,439 and $29,801 of management fees for the European,
Pacific and International Balanced Portfolios, respectively,
and reimbursed the European Portfolio for expenses in the
amount of $10,344.
Each Management Agreement further provides that all
other expenses not specifically assumed by the Manager
under the Management Agreement on behalf of the Portfolio are
borne by the Fund.
Expenses payable by the Fund include, but are not limited
to, all charges of custodians (including sums as custodian
and sums for keeping books and for rendering other services
to the Fund)
and shareholder servicing agents, expenses of preparing,
printing and distributing all prospectuses, proxy
material, reports and
notices to shareholders, all expenses of
shareholders' and directors' meetings, filing fees and
expenses relating to the registration and qualification of
the Fund's shares and the Fund under Federal or state
securities laws and maintaining such registrations and
qualifications (including the printing of the Fund's
registration statements), fees of auditors and legal counsel,
costs of performing portfolio valuations, outof-pocket expenses
of directors and fees of directors who are not "interested
persons" as defined in the Act, interest, taxes and
governmental fees, fees and commissions of every kind,
expenses of issue, repurchase or redemption of shares,
insurance expense, association membership dues, all other
costs incident to the Fund's existence and extraordinary
expenses such as litigation and indemnification expenses.
Direct expenses are charged to each Portfolio; general
corporate expenses are allocated on the basis
of the relative net assets. Smith Barney Mutual Funds
Management Inc., the investment manager of the Fund, also acts
as
investment adviser to numerous other open-end
investment
companies. Smith Barney serves as investment manager of
The Inefficient-Market Fund, Inc., a closed-end investment
company. Smith Barney also advises profit-sharing and pension
accounts. Smith Barney and its affiliates may in the
future act as investment advisers for other accounts.
One of the states in which the shares of the Fund
are qualified for sale imposes limitations on the expenses
of the Fund. Although there is no certainty that the state
limitation will be in effect in the future, these limitations
on an annual basis are currently 2.5% of the first $30
million of average daily net assets, 2% of the next $70
million of average daily net assets and 1.5% of the
average daily net assets in excess of $100
million.
Distributor
Pursuant to a Plan of Distribution adopted by the Fund
on behalf of each Portfolio under Rule 12b-1 under the Act
(the "Plan"), Smith Barney incurs the expenses of
distributing the Fund's Class A, Class B and Class C shares.
See "Management of the Fund-- Distributor" in the Prospectus.
Class A Shares. For the fiscal year ended October 31,
1994, $186,541 had been accrued and/or paid to Smith Barney
under the Plan for the Global Government Bond Portfolio;
$989,897 had been accrued and/or paid to Smith Barney under
the Plan for the International Equity Portfolio; $7,335 had
been accrued and/or paid to Smith Barney under the Plan for
the European Portfolio; $13,566 had been accrued and/or paid
to Smith Barney under the Plan for the Pacific Portfolio;
and $8,131 had been accrued and/or paid to Smith Barney
under the Plan for the International Balanced Portfolio. The
distribution expenses for these periods included compensation
of Financial Consultants and printing costs of prospectuses
and marketing materials. On October 10, 1994, then existing
Class C shares were exchanged into Class A shares. Through that
date $94,882, $303 and $522 had been accrued and/or paid to
Smith Barney under the Plan for the International Equity,
European and Pacific Portfolios, respectively.
Class C Shares. (Prior to November 7, 1994, these shares
were designated as Class B shares.) For the fiscal year ended
October 31, 1994, $35,949 had been accrued and/or paid to
Smith Barney under the Plan for the Global Government
Bond Portfolio; $1,844,266 had been accrued and/or paid to
Smith Barney under the Plan for the International Equity
Portfolio; $9,483 had been accrued and/or paid to Smith
Barney under the Plan for the European Portfolio; $16,658
had been accrued and/or paid to Smith Barney under the Plan
for the Pacific Portfolio; and $6,265 had been accrued and/or
paid to Smith Barney under the Plan for the International
Balanced Portfolio. The distribution expenses for these
periods included compensation of Smith Barney Financial
Consultants and printing costs of prospectuses and
marketing materials.
Class Y Shares. (With respect to the Global Government
Bond Portfolio, these shares were, prior to November 7,
1994, designated as Class C shares and were subject to fees
under a Plan. Beginning November 7, 1994 these shares were
no longer subject to fees under a Plan. With respect to the
International Equity Portfolio, these shares were, prior to
November 7, 1994, designated as Class D shares and have been
subject to fees under a Plan.) For the fiscal year ended
October 31, 1994, $3,079 had been accrued and/or paid to Smith
Barney under the Plan for the
Global Government Bond Portfolio. The distribution expenses
for these periods included compensation of Financial
Consultants and printing costs of prospectuses and marketing
materials.
Smith Barney will pay for the printing, at
printer's overrun cost, of prospectuses and periodic reports
after they have been prepared, set in type and mailed to
shareholders, and will also pay the cost of distributing
such copies used in connection with the offering to
prospective investors and will also pay for supplementary
sales literature and other promotional costs. Such expenses
incurred by Smith Barney are distribution expenses within
the meaning of the Plan and may be paid from amounts
received by Smith Barney from the Fund under the Plan.
Brokerage and Portfolio Transactions
The Manager is responsible for allocating the
Fund's brokerage. Orders may be directed to any broker
including, to the extent and in the manner permitted by
applicable law, Smith Barney . No Portfolio will deal
with Smith Barney in any transaction in which Smith Barney
acts as principal.
The Fund attempts to obtain the most favorable execution
of each portfolio transaction in the International Equity
Portfolio, the Pacific Portfolio, the European Portfolio, the
International Balanced Portfolio and the Emerging Markets
Portfolio, that is, the best combination of net price and
prompt reliable execution. In the opinion of the Manager,
however, it is not possible to determine in advance that any
particular broker will actually be able to effect the most
favorable execution because, in the context of a constantly
changing market, order execution involves judgments as to
price, commission rates, volume, the direction of the market
and the likelihood of future change. In making its decision
as to which broker or brokers are most likely to provide the
most favorable execution, the management of the Fund takes
into account the relevant circumstances. These include,
in varying degrees, the size of the order, the importance of
prompt execution, the breadth and trends of the market in the
particular security, anticipated commission rates, the
broker's familiarity with such security including its
contacts with possible buyers and sellers and its level of
activity in the security, the possibility of a block
transaction and the general record of the broker for prompt,
competent and reliable service in all aspects of order
processing, execution and settlement.
Commissions are negotiated and take into account
the difficulty involved in execution of a transaction, the
time it took to conclude, the extent of the broker's
commitment of its own capital, if any, and the price
received. Anticipated commission rates are an important
consideration in all trades and are weighed along with the
other relevant factors affecting order execution set forth
above. In allocating brokerage among those brokers who are
believed to be capable of providing equally favorable
execution, the Fund takes into consideration the fact that
a particular broker may, in addition to execution
capability, provide other services to the Fund such as
research and statistical information. It is not possible
to place a dollar value on such services nor does their
availability reduce the Manager's expenses in a determinable
amount. These various services may, however, be useful to
the Manager or Smith Barney in connection with its
services rendered to other advisory clients and not all such
services may be used in connection with the Fund.
The Board of Directors of the Fund has adopted
certain policies and procedures incorporating the standard of
Rule 17e-1
issued by the Securities and Exchange Commission under the
Act which requires that the commissions paid to Smith Barney
must be "reasonable and fair compared to the commission fee
or other remuneration received or to be received by other
brokers in connection with comparable transactions
involving similar
securities during a comparable period of time." The Rule and
the policy and procedures also contain review
requirements and require the Manager to furnish reports to
the Board of Directors and to maintain records in connection
with such reviews.
In placing orders for the Global Government Bond
Portfolio's transactions, the Manager seeks to obtain the best
net results. The Manager has no agreement or commitment to
place orders with any broker-dealer. Debt securities are
generally traded on a "net" basis with a dealer acting as
principal for its own account without stated commission,
although the price of the security usually includes a
profit to the dealer. U.S. and foreign government
securities and money market instruments are generally traded
in the over-the-counter ("OTC") markets. In underwritten
offerings, securities are usually purchased at a fixed
price which includes an amount of compensation to the
underwriter. On occasion, securities may be purchased
directly from an issuer, in which case no commissions or
discounts are paid. Dealers may receive commissions on
futures, currency and options transactions purchased on behalf
of the Portfolio. Commissions or discounts in foreign
securities exchanges or OTC markets typically are fixed and
generally are higher than those in U.S. securities exchanges
or OTC markets.
CUSTODIAN
Portfolio securities and cash owned by the Fund are held
in the custody of Morgan Guaranty Trust Company of New York, 60
Wall Street, New York, NY 10260.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New
York 10154, have been selected as independent auditors for
the Fund for its fiscal year ending October 31, 1995 to
audit the financial statements of the Fund and to perform
required reviews of certain filings with the Commission.
VOTING
As permitted by Maryland law, there will normally be
no meetings of shareholders for the purpose of electing
directors unless and until such time as less than a
majority of the directors holding office have been elected
by shareholders. At that time, the directors then in office
will call a shareholders' meeting for the election of
directors. The directors must call a meeting of shareholders
for the purpose of voting upon the question of removal of
any director when requested in writing to do so by the
record holders of not less than 10% of the outstanding
shares of the Fund. At such a meeting, a director may be
removed after the holders of record of not less than a
majority of the outstanding shares of the Fund have declared
that the director be removed either by declaration in writing
or by votes cast in person or by proxy. The Fund
will assist shareholders in calling such a meeting as required
by the Act. Except as set forth above, the directors shall
continue to hold
office and may appoint successor directors.
As used in the Prospectus and this Statement of
Additional Information, a "vote of a majority of the
outstanding voting securities" means the affirmative vote of
the lesser of (a) more than 50% of the outstanding shares of
the Fund (or the affected Portfolio or class) or (b) 67% or
more of such shares present at a
meeting if more than 50% of the outstanding shares of the Fund
(or the affected Portfolio or class) are represented at
the meeting in person or by proxy.
Following are the names, addresses and percent of ownership
of each person who owns of record or is known by the Fund to
own of record of beneficially 5% or more of any Class of the
European Portfolio as of January 31, 1995: Smith Barney
Mutual Fund Management, Inc., Attn: Tom Reynolds, 388
Greenwich Street, 22nd Fl., New York, New York 10013 owned of
record 119,116.926 shares (30.66%) of the outstanding Class A
shares; Betty Comer Yoe, 2844 Shook Hill Rd., Birmingham, AL
35223-2617 beneficially owned 40,916.530 shares (10.53%) of
the outstanding Class A; Dr. Juda Jona and Susan R. Jona
JTWROS, 2525 N. Terrace, Milwaukee, WI 53211-3821
beneficially owned 7,742.520 shares (6.72%) of the Class C
shares; Patrick D. Broe, Cust FBO, Sean Patrick Broe, 252
Clayton Street, 4th Floor, Denver, CO 80206-4814,
beneficially owned 10,328.223 shares (8.96%) of the
outstanding Class C shares; Frontier Trust Company as TTEE,
Orthopedic Therapy Inc. 401(k) in Care of the Barclay
Group, Springhouse Coprporate Center II, 323 Norristown
Road, Ambler, PA 19002, beneficially owned 2,
230.583 shares (33.51%) of the outstanding Class B
shares; Frontier Trust Company as TTEE, Gay Gillen Travel,
Inc. 401(K), 1709 Rio Grande, Austin, TX, 78701, beneficially
owned 1, 840.502 shares (27.65%) of the outstanding Class B
shares; Tom T. Marumoto, 3037 11th Avenue, Los Angeles,
CA, 90018-3334, beneficially owned 635.737 shares (9.55%)
of the outstanding Class B shares; Mariaro F. Sanito,
Smith Barney Inc. IRA Cusodian, 27629 North 72 Place,
Scottsdale, AZ, 85255-1102, beneficially owned 633.914
shares (9.52%) of the outstanding Class B; M.G. Parfett
Consulting Inc., Smith Baney Prototype MP Plan, Michael G.
Parfett Trustee, 17 Grandview Drive, Holmdel, NJ 07733-2007,
beneficially owned 617.899 shares (9.28%) of the
outstanding Class B shares;
Fred W. Copley, Smith Barney Inc. IRA Custodian, 2627 Route
75, Kenova, WV, 25530-9791, beneficially owned 410.172 shares
(6.16%) of the outstanding Class B shares; and Dr. Juda
Jona, Smith Barney Inc. Rollover Cust., 3057 N. Lake Drive,
Milwaukee, WI, 53211-3403, beneficially owned 7,674.786
shares (6.66%) of the outstanding Class C shares.
Following are the names, addresses and percent of ownership
of each person who owns of record or is known by the Fund to
own of record or beneficially 5% or more of any Class
of the
International Balanced Portfolio as of January 31,
1995: Ouzinkie Native Corporation, Attn: William Anderson,
Box 89, Ouzinkie, AK, 99644-0089, beneficially owned
21,115.911 shares (14.49%) of the outstanding Class B shares
and Sharon Sackin, Smith Barney Inc. Rollover Cust., 3030
Brookdale Road, Studio City, CA 91604-4217, beneficially
owned 10,434.525 shares (7.16%) of the outstanding Class B
shares.
Following are the names, addresses and percent of ownership
of each person who owns of record or is known by the Fund to
own of record or beneficially 5% or more of any Class of
the Pacific Portfolio as of January 31, 1995: BSDT
Custodian, Orcutt Union School District 403-B-7 A/C William E.
Eyler, 4641 Brandon Ct., Santa Maria, CA, 93455,
beneficially owned 2,153.316 shares (11.08%) of the
outstanding Class B shares; Xavier J. Padilla,
Smith Barney Inc. Rollover Cust., 14436 Emory Drive,
Whittier, CA, 90605-1111, beneficially owned 2,030.869 shares
(10.45%) of the outstanding Class B shares; Eugene W. Kinaman
Succ TTEE, FBO Nell V. Kinaman, UAD 11/09/88 Irrevocable Trust,
Special Account, 2912 Via Pacheco, Palos Verdes Estates, CA,
90274, beneficially owned 1,418.353 shares (7.30%) of the
outstanding Class B shares; Dr. Chaeryle R. Hart, Smith Barney
Inc. Sep. Custodian, U/P/O Dr. Cheryle R. Hart, 11525 Sunview
Circle, Spokane, WA, 99206-5722, beneficially owned 1,323.919
shares (6.81%) of the outstanding Class B shares; Gary
Tanouye and Alyce Tanouye Ten in Com., 10950 Owensmouth Ave.,
Chatsworth, CA, 91311-1342, beneficially owned 1,028.639
shares (5.30%) of the outstanding Class B shares; and Smith
Barney Mutual Fund Management, Inc., Attn: Tom Reynolds, 388
Greenwich Street, New York, NY 10013 owned of record 77,355
shares (14.75%) of the Class A shares.
Following are the names, addresses and percent of ownership
of each person who owns of record or is known by the Fund to
own of record or beneficially 5% or more of any Class of
the Global Government Bond Portfolio as of January 31,
1995: Algemeen
Pensionfords Van de Nederlandse Antillen, Attn. Dr. E.
Profet, P.O. Box 502, Willemstad, Curacao, The Netherlands
Antilles beneficially owned 248,157.972 shares (98.09%)
of the
outstanding Class Y shares; SRS. of Providence Community,
Support Trust - Int'l Inv., Generalate - Finance Office, Owens
Hall, St. Mary of the W in 47876-1096, beneficially owned
314,440.235 shares (5.11%) of the outstanding Class A shares;
Mr. Raymond M. Bdaz, Smith Barney Inc. IRA Cusodian, 34
Oliver Court, Signal Mountain, TN 37377-2317, beneficially
owned 3,914.729 shares (31.20%) of the outstanding Class B
shares; George E. Meyers TTEE, George E. Meyers REV LIV
Trust, D/T/D 01/26/94, FBO George E. Meyers, 9441 West
Butte Road, Live Oak, CA, 95953-9522, beneficially owned
3,305.891 shares (26.35%) of the outstanding Class B shares;
Phillip B. Swain TTEE, FBO Georgian D. Ireland, U/A/D
06/30/76, FBO Michael D. Ireland, 109 Mahanolia Hill Road,
Bethlehem, CT, 06751-1812, beneficially owned 1,296.451
shares (10.33%) of the outstanding Class B shares; Harriet
Eisner & Ilene Egert & Steven Haas, JTWROS, 2801 N.E.
183RD Street, Apt.#1807, No. Miami Beach, FL, 33160-2133,
beneficially owned 1,291.990 shares (10.30%) of the
outstanding Class B shares; and Vicki Osborne Hulet, TTEE,
U/A/D 9/26/94, FBO Marie Sunshine Osborne, P.O. Box 2334,
Idaho Falls, ID, 83403-2334, beneficially owned 1,172.059
shares (9.34%) of the outstanding Class B shares.
Following are the names, addresses and percent of ownership
of each person who owns of record or is known by the Fund to
own of record or beneficially 5% or more of any Class
of the
International Equity Portfolio as of January 31, 1995:
Northern
Trust As Trustee, FBO USAA Retirement Plan, P.O. Box
92956, Chicago, IL 60675, beneficially owned 979,488.447 shares
(19.40%) of the outstanding Class Y shares; Grand Lodge
of Free & Accepted, Masons of Pennsylvania, c/o Smith
Barney, Inc., 1345 Ave. of the Americans, Attn: Robert
Barrel, New York, New York, 10105, beneficially owned
700,031.334 shares (13.87%) of the outstanding Class Y
shares; Northern Trust As Trustee, FBO USAA, Savings &
Investment Plan Trust, P.O. Box 92956, beneficially owned
637,565.730 shares (12.63%) of the outstanding Class Y
shares; The Phoenix Insurance Co., One Tower Square, Hartford,
CT 06183-2030, beneficially owned 554,937.778 shares (10.99%)
of the outstanding Class Y shares; Blue Cross of Washington and
Alaska, 7001 - 220th Street SW, Mountlake Terrace, WA,
98043-2124, beneficially owned 551,025.526 shares (10.91%) of
the outstanding Class Y shares; Memphis Light Gas & Water,
Division Retirement & Pension System, 220 S Main P.O. Box
430, Memphis, TN, 38101, beneficially owned 529,262.069
shares (10.48%) of the outstanding Class Y shares; American
Bar Endowment, Attn: Tom Rogers, 750
North Lake Shore Drive, Chicago, IL, 60611, beneficially owned
345,609.207 shares (6.85%) of the outstanding Class Y shares; 8
Calmont & Company, & Wells Fargo Bank NA, FDS ACCTG MAC# 0103
174, Attn: Brigid Breen, 525 Market Street, San Francisco, CA,
94163, beneficially owned 335,679.532 shares (6.65%) of the
outstanding Class Y shares; and 1 Citibank NA TTRUSTEE, Smith
Banrey Harris Upham & Co. Inc., 401 K Savings Plan, 111 Wall
Street, 20th Floor, Attn: N. Kronenberg, New York, NY, 10043,
beneficially owned 4,375,043.123 shares (100%) of the outstanding
Class Y shares.
FINANCIAL STATEMENTS
The following financial information is hereby incorporated
by reference to the indicated pages of the Fund's October 31,
1994 Annual Report and April 30, 1995 Semi-Annual Report to
Shareholders, copies of which are furnished with this Statement
of Additional Information.
Page(s) in Page(s) in Page(s)
in
Annual Report Annual Report Annual
Report (Int'l Equity)(Global Gov't)
(European,
Pacific &
Int'l
Bal'd) Average Annual Total Return 3
3 4-8
Line Graph Showing Growth of
$10,000 Investment
. 4 4 5-9
Statement of Assets and Liabilities13 6 19
Statement of Operations 14 7 20
Statement of Changes in Net Assets15 8 21
Notes to Financial Statements 16-19 9-13 22-27
Financial Highlights 20-22 14-15 28-30
Independent Auditors' Report 23 16 31
Page(s) in Page(s) in Page(s)
in
Semi- Semi- Semi-
Annual Report Annual Report Annual
Report (Int'l Equity)(Global Gov't)
(European,
Pacific &
Int'l
Bal'd) Average Annual Total Return 5
5 7,10,13
Line Graph Showing Growth of
$10,000 Investment 7 6
8,11,14
Statement of Assets and Liabilities17 9 24-25
Statement of Operations 18 10 26
Statement of Changes in Net Assets19 11 26
Notes to Financial Statements 20-25 12-17 29-35
Financial Highlights 26-28 18-20 36-38
Statement of Assets and Liabilities (unaudited) August 31,
1995 ASSETS:
Cash denominated in foreign currencies (Cost -
($374,931))(377,524) Investments, at value (Cost - $13,632,311)
$13,376,185
Cash denominated in foreign currencies (Cost -
($374,931))(377,524) Cash and cash equivalents 4,420,136
Receivable for Fund shares sold 126,358
Dividend and interest receivable 2,863
Total Assets $17,548,018
LIABILITIES:
Payable for Fund shares purchased $
4,686 Payable for investment securities purchased 1,553,070
Unrealized foreign currency loss (6,001)
Management fee payable 19,377
Distribution costs payable 20,255
Accrued expenses (7,225)
Other liabilities (9,253)
Total Liabilities 1,574,909
Total Net Assets
$15,973,109
NET ASSETS:
Par value of capital shares $ 1,373
Capital paid in excess of par value
16,437,513
Accumulated net investment loss
($95,835)
Accumulated net realized loss on investments
($121,791)
Net unrealized depreciation of investments and foreign
currencies
($248,151)
Total Net Assets $15,973,109
Shares Outstanding:
Class A 591,162
Class B 660,504
Class C 121,283
Net Asset Value:
Class A (and redemption price) $11.65
Class B*
$11.62
Class C**
$11.62
Class A Maximum Public Offering Price Per Share
(net asset value plus 5.26% of the net asset value per share) $12.26
* Redemption price is NAV of Class B shares reduced by a 5.00%
CDSC if shares are redeemed less than one year from initial
purchase. This CDSC declines by 1.00% per year after the
date
of purchase until no CDSC is incurred.
**Redemption price is NAV of Class C shares reduced by a
1.00% CDSC if shares are redeemed within the first year of
purchase.
See Notes to Financial Statements. (unaudited)
Statement of Operations (unaudited)For the Period Ended August 31,
1 995
1995(a) INVESTMENT INCOME:
Dividend and Interest $
3,872
Less foreign taxes withheld
(645)
Total Investment Income
3,227
EXPENSES:
Management fees (Note 2)
41,824
Distribution costs (Note 2)
27,499
Shareholder servicing agent fees
5,337
Shareholder communications fees
8,223
Registration fees
8,507
Other
3,106
Total Expenses
94,496
Net Investment Loss
(91,269)
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES:
Realized Gain/(Loss) From:
Security transactions
(121,791)
Foreign currency transactions
1,974)
Net Realized Loss
(119,817)
Change in Net Unrealized Depreciation of Investments:
Beginning of period
0
End of period (Note 1)
(254,692)
Decrease in Net Unrealized Depreciation
(254,692)
Net Loss on Investment and Foreign Currencies
(374,509)
Decrease in Net Assets Resulting From Operations
($465,778)
(a) For the period May 12, 1995 (commencement of operations) to
August 31, 1995.
See Notes to Financial Statements. (Unaudited)
Statement of Changes in Net Assets (Unaudited) August 31, 1995
1995(a) OPERATIONS:
Net investment loss
($91,269)
Net realized loss
(119,817)
Decrease in net unrealized depreciation
of investments and foreign currencies
(254,692)
Decrease in Net Assets From Operations
(465,778)
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares
17,292,504 Cost of shares reacquired
(853,617)
Increase in Net Assets from Fund
Share Transactions
16,438,887
Increase in Net Assets
15,973,109
NET ASSETS:
Beginning of period 0
End of period*
$15,973,109
* Includes undistributed net investment loss of:
($91,269)
(a) For the from period May 12, 1995 (commencement of
operations) to August 31, 1995.
See Notes to Financial Statements. (Unaudited)
Notes to Financial Statements (unaudited) August 31, 1995
1. Significant Accounting Policies
The Emerging Markets Portfolio ("Portfolio") is a separate
investment portfolio of the Smith Barney World Funds, Inc. ("Fund").
The Fund, a Maryland corporation, is registered under the
Investment Company Act of 1940, as amended, as an open-end
investment company and consists of this portfolio and five
other separate investment
portfolios:
European, Pacific, International Balanced, Global Government Bond
and International Equity Portfolios. The significant accounting
policies consistently followed by the Fund are: (a) security
transactions are accounted for on trade date; (b) securities
traded in national securities markets are valued at the closing
prices in 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 overthe-counter) and
listed securities for which no sale 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.
Short term securities maturing within 60 days are valued at cost
plus accreted discount, or minus amortized premium, as
applicable; (c) gains or losses on the sale of securities are
calculated by using the specific identification method; (d) interest
income, adjusted for amortization of premiums and accretion of
discount, is recorded on the accrual basis; (e) direct
expenses are charged in each portfolio and each class; management
fees and general fund expenses are allocated on the basis of
relative net assets; (f) foreign currencies (and receivables and
payable for unsettled foreign securities transactions) are
translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation.
Transaction gains or losses resulting from changes in the
exchange rate and realized gains and losses on the settlement
of foreign currency transactions are reported in the
statement of operations; (g)
certificates of deposit, time deposits and other short-
term investments maintained with financial institutions are
considered to be cash equivalents; and (h) the Portfolio intends
to comply with the requirements of the Internal Revenue Code
pertaining to regulated investment companies and make the
required distributions to
shareholders; therefore no provision for Federal income taxes has
been made.
In addition, the Portfolio 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 Transactions with Affiliated Persons
Smith Barney Mutual Funds Management, Inc. ("SBMFM"), a subsidiary
of Smith Barney Holdings Inc. ("SBH"), acts as investment manager of
the Fund. As compensation for its services, the Portfolio pays
SBMFM a fee calculated at the annual rate of 1.00% onf the average
daily net assets; the fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts
as
distributor of the Portfolio's shares. The Fund pays to
the
distributor a sales charge of 5.0% on purchases of Class A shares.
There is a contingent deferred sales charge ("CDSC") of 5.00%
on Class B shares of the Portfolio if redemption occurs less than
one year from initial purchase.and declining This CDSC declines
by 1% each year after the date of purchase to zero. Class C
shares are subject to a CDSC of 1% on redemptions made within
12 months of purchase. Any CDSC imposed on redemptions are paid
to the distributor of the Fund.
Pursuant to a Distribution Plan the Portfolio pays a service fee
with respect to its Class A, B and C shares calculated at the
annual rate of
0.25% of the average daily net assets of each respective class'
shares. The Portfolio also pays a distribution fee with respect
to Class B and Class C shares calculated at the annual rate of
0.75% of average daily net assets for that class. All officers
and three directors of the Fund are employees of SB.
3. Investments
For the period ended August 31, 1995, the aggregate cost of
purchases and proceeds from sales of investments (including
maturities, but excluding short-term securities) was
$14,545,907 and $793,082, respectively.
At August 31, 1995, the aggregate gross unrealized appreciation
and depreciation of investments for tax purposes were as follows:
Gross unrealized appreciation $
687,157 Gross unrealized depreciation
(943,287)
Net unrealized depreciation
($256,130)
4. Portfolio Concentration
The Portfolio's investments in foreign securities may involve
risks not present in domestic investments. Since securities
may
be
denominated in a foreign currency and may require settlement
in foreign currencies and pay interest or dividends in
foreign currencies, changes in the relationship of these foreign
currencies to the U.S. dollar can significantly affect the value of
the investments and earnings of the Portfolio. Foreign investments
may also subject the Portfolio 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 counter parties to meet the terms of their contracts.
5. Capital Shares
At August 31, 1995, there were one billion shares of $.001 par
value capital stock authorized for the Fund of which
125,000,000 are authorized as Emerging Markets Portfolio shares.
The Portfolio has the authority to issue four classes of shares:
A, B, C and Y. Each share of a class represents an identical
legal interest in the Portfolio and has the same rights,
except that each class bears certain expenses specifically
related to the distribution of its shares. At August 31, 1995,
paid-in capital amounted to the following for each class:
Class A Class B Class
C
Total Paid-in Capital
$7,074,622$7,914,724$1,449,540
Transactions in shares of each class were as follows:
Period Ended
August
31,
1995(a)
Shares
Amount
Class A*
Shares sold 650,720
$7,793,581
Shares redeemed (59,558)
(718,959)
Net Increase 591,162
$7,074,622
Class B*
Shares sold 670,886
$8,036,580
Shares redeemed (10,382)
(121,855)
Net Increase 660,504
$7,914,725
Class C*
Shares sold 122,371
$1,462,764
Shares redeemed 1,088
13,224
Net Increase $121,283
$1,449,540
* Sales of Class A, Class B and Class C shares commenced on May
12,
1995, respectively.
(a) For the period from May 12, 1995 (commencement of operations)
to August 31, 1995 (unaudited).
FINANCIAL HIGHLIGHTS(unaudited) August
31, 1995
The following schedule sets forth certain information
concerning the Portfolio's investment results for the
period from May 12, 1995 (commencement of operations) to
August 31,
1995. No information is presented for Class Y shares since
none were purchased during the period indicated. This
information has not been audited.
Class A(a) (B)(a)
(C)(a)
Net Asset Value, Beginning of Period $12.00 $12.00 $12.00
Loss from Investment Operations:
Net Investment Loss
(0.069) (0.075) (0.075)
Net Realized and Unrealized Loss on Investments (0.281) (0.305)
(0.305)
Total Loss from Investment Operations (0.350) (0.380) (0.380)
Less Distributions:
Dividends from Net Investment Income 0.000 0.000 0.000
Distribution from Net Realized Gains 0.000 0.000 0.000
Total Distributions 0.000 0.000 0.000
Net Asset Value, End of Period $11.65 $11.62 $11.62
Total Return(c) (9.59%) (10.41%)
(10.41%)
Net Assets, End of Period(000s) $6,887 $7,676 $1,410
Ratios to Average Net Assets:
Expenses((b) 1.5883% 2.3358%
2.3358%
Net Investment Loss(b) (2.12%)
(2.87%) (2.87%)
Portfolio Turnover Rate 7.16% 7.16% 7.16%
(a) For the period from May 12, 1995(commencement of operations)
to August 31,1995.
(b) Annualized.
(c) Total return is not annualized as it may not
be
representative of the total return for the year.
APPENDIX - RATINGS OF DEBT OBLIGATIONS
BOND (AND NOTE) RATINGS
Moody's Investors Service, Inc.
Aaa - Bonds that are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds that are rated "Aa" are judged to be of high quality
by all standards. Together with the "Aaa" group they comprise
what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may not be
as large as in "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present that make the long term risks appear somewhat
larger than in "Aaa" securities.
A - Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present that suggest
a susceptibility to impairment sometime in the future.
Baa - Bonds that are rated "Baa" are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba - Bonds that are rated Ba are judged to have
speculative elements; their future cannot be considered as
well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well
safeguarded during both good
and bad times over the future. Uncertainty of
position
characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics
of desirable investments. Assurance of interest and
principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing.
These issues may be in default or present elements of danger may
exist with respect to principal or interest.
Ca - Bonds that are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in
default or have other marked short-comings.
C - Bonds that are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment
standing.
Moody's applies the numerical modifiers 1, 2 and 3 in
each generic rating classification from Aa through B. The
modifier 1 indicates that the security ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category.
Standard & Poor's Corporation
AAA - Debt rated "AAA" has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the highest rated
issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB - Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B and CCC - Bonds rated BB and B are regarded, on
balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms
of the
obligation. BB represents a lower degree if speculation than
B and CCC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C - The rating C is reserved for income bonds on which
no interest is being paid.
D - Bonds rated D are in default, and payment of
interest and/or repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a
plus or a minus sign, which is used to show relative standing
within the major rating categories, except in the AAA-
Prime Grade category.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.
Issuers rated "Prime-1" (or related supporting
institutions) have a superior capacity for repayment of short-
term promissory obligations. Prime-1 repayment capacity
will normally be
evidenced by the following characteristics: leading
market positions in well-established industries; high rates of
return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset
protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; well-
established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated "Prime-2" (or related supporting
institutions) have a strong capacity for repayment of short-
term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is
maintained.
Standard & Poor's Corporation
A-1 - This designation indicates that the degree of
safety regarding timely payment is either overwhelming or very
strong. Those issues determined
to possess overwhelming safety
characteristics will be denoted with a plus (+) sign
designation.
A-2 - Capacity for timely payment on issues with
this designation is strong. However, the relative degree of
safety is not as high as for issues designated A-1.
<PAGE>
- ----------------------------------------------------------------
- ---------------
SEMI-ANNUAL REPORT ---------------
- ----------------------------------------------------------------
[ARTWORK APPEARS HERE]
Smith Barney
World Funds, Inc.
International Equity
Portfolio ------------------------------------
------------
April 30, 1995
[LOGO OF SMITH BARNEY MUTUAL FUNDS APPEARS
HERE] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- ---------------------------------------------------------------
- ----------------
International Equity Portfolio --------------------------------
- -----------------------------------------------
Dear Shareholder:
International financial markets were roiled by several key
themes in 1994 and
the first quarter of 1995, including rising U.S. interest
rates, a decline in
the U.S. dollar, and the Mexican peso crisis. The effect of
these events was
far-reaching, causing most international stock markets to
decline. The
International Equity Portfolio had a total return of -11.98%
for the six months,
and -7.71% for the 12 months, (Class A shares) ended April 30,
1995. This
performance information excludes sales charges. For additional
performance
information, please see the Average Annual Total Return chart
on page 5 of this
report.
Market and Economic Overview
In February 1994, the U.S. Federal Reserve Board began to raise
short-term
interest rates in an unexpectedly early reversal of monetary
policy. This action
caused turmoil in global bond markets and drove stock prices
down, not only in
the U.S., but also in most major markets worldwide.
As the year came to a close in December, political and
financial instability in
Mexico caused the country's central bank to let the peso float
freely against
the dollar. This resulted in a sharp devaluation in the peso
and a more than 40%
drop in the Mexican stock market in dollar terms. The events in
Mexico had a
broad-brush effect causing a crisis of confidence in Latin
American markets and
a sell-off in virtually all emerging markets.
Since January, anxiety over the decline of the U.S. dollar has
emerged as a
factor in international equity market weakness. The dollar's
value showed
quarterly declines of roughly 12% against the German mark and
nearly 14% against
the Japanese yen. The strength of these local currencies made
exports less
attractive and depressed corporate earnings overseas.
Portfolio Review
After Mexico's surprise devaluation of the peso, which spilled
over into other
Latin American markets, we lightened our exposure to the
Americas region from
17.3% of the Portfolio to 10.3%. At the same time, we increased
the Portfolio's
exposure to the European region from 43.5% to 49.2%. Our largest
holdings
continue to be in Europe with the major concentration in
Ireland, Italy, Sweden,
and Austria. Europe is enjoying a solid economic recovery
1
<PAGE>
which is becoming more deeply distributed throughout various
sectors of the
economy. The improved macroeconomic picture should eventually be
visible in
European corporate earnings, which have not fully recovered from
a sustained
recession.
The Pacific Rim is our second largest regional holding with a
weighting of
36.8%. The Portfolio remains underweighted in Japan relative to
the major
international equity indexes. On the other hand, the Portfolio
is overweighted
in Malaysia, Singapore, Hong Kong, and Thailand. The
extraordinary strength of
the yen has once again placed the Japanese economy under great
duress. We also
believe it is likely that Japanese manufacturing firms will
continue to invest
directly throughout the Pacific Rim in order to lower labor
costs. The smaller
Southeast Asian markets have suffered major corrections, largely
due to U.S.
interest-rate increases. Local market valuations are now below
10year averages
while overall, regional growth continues at the high end of the
global scale.
Smaller positions in the Portfolio included 1.6% in India and 1%
in Turkey.
Recently we invested just under 1% of the Portfolio's assets in
South Africa
where we are particularly positive on growth opportunities.
Although South
Africa is considered an emerging market, it has the advantage of
an established
infrastructure. President Nelson Mandela's African National
Congress-led
coalition government faces tremendous post-apartheid pressure to
deliver on job
creation and social services from the country's mostly
impoverished black
majority. This should eventually create a huge demand for goods
and services in
South Africa.
Outlook
In our view, the difficult conditions seen throughout 1994 and
into the new
year, are most likely past us. In recent weeks the dollar has
stabilized,
appreciating against the yen and mark. Foreign bond markets
have firmed on news
that the U.S. may be finished with its series of interest-rate
hikes due to
signs of a slowing economy. In addition, international
corporate fundamentals
continue to be solid, and in many cases during the past
quarter, exceptionally
strong. We believe the prospects for the international equity
markets are quite
positive and should reward shareholders' patience with longer
term results.
We would like to point out that on April 21, 1995, the Smith
Barney Global
Opportunities Fund was merged into the Smith Barney World Funds
International
Equity Portfolio, increasing the Portfolio's assets to over $1
billion.
2
<PAGE>
We thank you for your confidence in our investment management
and look forward
to serving your investment needs in the future.
Sincerely,
/s/ Heath B. McLendon /s/
James B. Conheady
Heath B. McLendon James
B.
Conheady
Chairman and Vice
President
Chief Executive Officer
/s/ Jeffrey J. Russell
Jeffrey J. Russell
Vice President
May 26, 1995
3
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
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>
4/30/95 $18.79 $16.32
$0.12 $0.10 (11.98)% --------------------------
- ---------------------------------------------------------------
- ---------
10/31/94+ 18.71 18.79
0.00 0.00 0.43 -----------------------------
- ---------------------------------------------------------------
- ------
12/31/93 12.35 18.71
0.00 0.16 52.78 -----------------------------
- ---------------------------------------------------------------
- ------
12/31/92 12.31 12.35
0.02 0.00 0.49 -----------------------------
- ---------------------------------------------------------------
- ------
Inception*-12/31/91 11.94 12.31
0.00 0.00 3.10
===============================================================
== ==================================
Total
$0.14 $0.26
===============================================================
== ==================================
</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*- 4/30/95 $18.38 $16.37
$0.00 $0.10 (10.39)%
===============================================================
== ==================================
</TABLE>
- ---------------------------------------------------------------
- ----------------
Historical Performance -- Class C 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>
4/30/95 $18.54 $16.16
$0.00 $0.10 (12.30)%
- ---------------------------------------------------------------
- -----------------------------------
10/31/94+ 18.58 18.54
0.00 0.00 (0.22)
- ---------------------------------------------------------------
- -----------------------------------
Inception*-12/31/93 12.35 18.58
0.00 0.16 51.73
===============================================================
== ==================================
Total
$0.00 $0.26
===============================================================
== ==================================
</TABLE>
It is the Fund's policy to distribute dividends and capital
gains, if any,
annually.
4
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Historical Performance -- Class Y 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>
4/30/95 $18.80 $16.31
$0.17 $0.10 (11.84)%
- ---------------------------------------------------------------
- -----------------------------------
Inception*-10/31/94+ 17.64 18.80
0.00 0.00 (6.58)
===============================================================
== ==================================
Total
$0.17 $0.10
===============================================================
== ==================================
</TABLE>
- ---------------------------------------------------------------
- ----------------
Historical Performance -- Class Z 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*- 4/30/95 $18.38 $16.30
$0.17
$0.10 (9.88)%
===============================================================
== ==================================
</TABLE>
- ---------------------------------------------------------------
- ----------------
Average Annual Total Return -----------------------------------
- --------------------------------------------
<TABLE>
<CAPTION>
Without
Sales Charge/(1)/
----------------------------
- ---------------------------------------
Class A Class B
Class C Class Y Class Z
===============================================================
== ======================================
<S> <C> <C>
<C> <C> <C>
Six Months Ended 4/30/95 (11.98)% N/A
(12.30)% (11.84)% N/A ---------------------------
- ---------------------------------------------------------------
- ------------
Year Ended 4/30/95 (7.71) N/A
(8.50) N/A N/A ----------------------------
- ---------------------------------------------------------------
- -----------
Five Years Ended 4/30/95 11.61 N/A
N/A N/A N/A -----------------------------
- ---------------------------------------------------------------
- ----------
Inception* through 4/30/95 10.26 (10.39)%
13.00 (6.05) (9.88)% --------------------------
- ---------------------------------------------------------------
- -------------
<CAPTION>
With
Sales Charge/(2)/
----------------------------
- ---------------------------------------
Class A Class B
Class C Class Y Class Z
===============================================================
==
======================================
<S> <C> <C>
<C> <C> <C>
Six Months Ended 4/30/95 (16.39)% N/A
(13.17)% (11.84)% N/A ---------------------------
- ---------------------------------------------------------------
- ------------
Year Ended 4/30/95 (12.31) N/A
(9.41) N/A N/A ----------------------------
- ---------------------------------------------------------------
- -----------
Five Years Ended 4/30/95 10.47 N/A
N/A N/A N/A -----------------------------
- ---------------------------------------------------------------
- ----------
Inception* through 4/30/95 11.29 (14.85)%
13.00 (6.05) (9.88)% --------------------------
- ---------------------------------------------------------------
- -------------
</TABLE>
5
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Cumulative Total Return ---------------------------------------
- ----------------------------------------
<TABLE>
<CAPTION>
Without
Sales Charge/(1)/
===============================================================
== ===============
<S>
<C> Class A (Inception* through 4/30/95)
39.91% --------------------------------------------------------
- -----------------------
Class B (Inception* through 4/30/95)
(10.39) -------------------------------------------------------
- ------------------------
Class C (Inception* through 4/30/95)
32.78 ---------------------------------------------------------
- ----------------------
Class Y (Inception* through 4/30/95)
(6.05) --------------------------------------------------------
- -----------------------
Class Z (Inception* through 4/30/95)
(9.88) --------------------------------------------------------
- -----------------------
</TABLE>
(1) Assumes reinvesment of all dividends and capital gain
distributions at net
asset value and does not reflect deduction of the
applicable
sales charge
with respect to Class A shares or the applicable contingent
deferred sales
charges ("CDSC") with respect to Class B and Class C
shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value. In addition, Class A shares reflect the
deduction of the
maximum initial sales charge of 5.00%; Class B shares
reflect the deduction
of a 5.00% CDSC, which applies if shares are redeemed less
than one year
from initial purchase and declines by 1.00% per year until
no CDSC is
incurred. Class C shares reflect the deduction of a 1.00%
CDSC which applies
if shares are redeemed within the first year of purchase.
+ For the period from January 1, 1994 to October 31, 1994 which
reflects a
change in the fiscal year end of the Portfolio.
* Inception dates for Class A, B, C, Y and Z shares are
November 22, 1991,
November 7, 1994, January 4, 1993, June 16, 1994 and
November 7, 1994,
respectively.
6
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Historical Performance ----------------------------------------
- ---------------------------------------
Growth of $10,000 Invested in Class A Shares of
International Equity Portfolio vs.
The Morgan Stanley EAFE-GDP Weighted Index+
(unaudited)
- ---------------------------------------------------------------
- ----------------
November 1991 - April 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATE INTERNATIONAL EQUITY EAFE INDEX
---- -------------------- ----------
<S> <C> <C>
11/22/91 9,552.00 10,000.00
11/91 9,423.20 10,000.00
12/91 9,848.00 10,075.00
3/92 10,488.00 8,887.00
6/92 10,200.00 9,083.00
9/92 9,528.00 9,229.00
12/92 9,895.00 9,577.00
3/93 10,480.90 10,734.00
6/93 11,081.90 11,823.00
9/93 12,684.50 12,615.00
12/93 15,119.00 12,732.00
3/94 14,068.50 13,177.00
6/94 13,955.40 13,851.00
7/94 14,472.50 14,157.10
8/94 15,167.50 14,380.70
9/94 14,989.70 13,858.70
10/94 15,183.60 14,263.40
11/94 14,294.80 13,631.50
12/94 13,773.80 13,739.20
1/95 12,971.30 13,391.60
2/95 12,897.60 13,380.90
3/95 12,979.50 13,992.40
4/95 13,364.40 14,623.50
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A
shares
at inception
on November 22, 1991 assuming deduction of the maximum 4.50%
sales charge at
the time of investment and the reinvestment of dividends and
capital gains at
net asset value through April 30, 1995. The Morgan Stanley EAFE-
GDP Weighted
Index is a composite portfolio consisting of equity total
returns for the
countries of Europe, Australia, New Zealand and countries in
the Far East,
weighted based on each country's gross domestic product. The
Index is
unmanaged and is not subject to the same management and trading
expenses of a
mutual fund. The performance of the Portfolio's other classes
may be greater
or less than the Class A shares' performance indicated on this
chart,
depending on whether greater or lesser sales charges and fees
were incurred by
shareholders investing in the other classes.
All figures represent past performance and are not a guarantee
of future
results. Investments 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.
7
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
STOCKS -- 99.1%
Argentina -- 1.3%
1,313,014 Bagley S.A. Series B
$ 2,954,134
500,000 Ciadea S.A. Cina
2,324,884
375,000 Quilmes Industrial S.A. Quinsa
Luxembourg 7,125,000
- ---------------------------------------------------------------
- ----------------------------------------
12,404,018 ----------------------------------------------------
- ---------------------------------------------------
Australia -- 2.5%
2,999,999 Burns Philip & Co. Ltd.
7,598,253
1,502,773 Coca Cola Amatil Ltd.
9,187,259
1,200,000 Mayne Nickless Ltd.
5,668,122
166,992 The News Corp. Ltd.
811,868
83,496 The News Corp. Ltd. Preferred
368,865 -------------------------------------------------------
- ------------------------------------------------
23,634,367 ----------------------------------------------------
- ---------------------------------------------------
Austria -- 5.7%
105,000 Austria Mikro Systeme International
AG
10,450,769
3,334 Bau Holding AG
214,254
90,000 Bau Holding AG Preferred
4,663,980
150,000 Baumax AG Preferred
6,894,176
150,000 Burgenland Holding AG
5,598,626
40,000 BWT AG
5,038,250
60,000 Maculan Holding AG Preferred
2,480,053
50,000 VA Technologie AG
5,531,792
60,833 VAE Eisenbahn AG
5,485,578
25,000 Weinerberger Baustoffinds AG
8,405,651 -----------------------------------------------------
- --------------------------------------------------
54,763,129 ----------------------------------------------------
- ---------------------------------------------------
Belgium -- 0.5%
700,000 Cockerill Sambre
4,617,625 -----------------------------------------------------
- --------------------------------------------------
Brazil -- 1.3%
12,160,000 Brasmotor S.A. BMT Preferred
3,291,396
500,000 CAPCO Automotive Products Corp.
4,437,500
127,849 Telecomunicoes Brasileiras S.A.
Sponsored ADR 4,682,470
- ---------------------------------------------------------------
- ----------------------------------------
12,411,366 ----------------------------------------------------
- ---------------------------------------------------
Canada -- 1.3%
225,000 Loewen Group Inc.
6,324,405
689,000 Videotron Group Ltd. Subord. Voting
6,012,548 -----------------------------------------------------
- --------------------------------------------------
12,336,953 ----------------------------------------------------
- ---------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
Chile -- 2.9%
110,000 Chilectra S.A. ADR+
$ 5,382,520
215,000 Cristalerias De Chile S.A. Sponsored
ADR 3,977,500
350,000 Embotelladora Andina S.A. Sponsored
ADR 10,062,500
50,000 Laboratorio Chile S.A. Sponsored ADR
956,250
263,600 Madeco S.A. Sponsored ADR
7,677,350 -----------------------------------------------------
- --------------------------------------------------
28,056,120 ----------------------------------------------------
- ---------------------------------------------------
Denmark -- 0.2%
75,000 Tele Danmark A/S Sponsored ADR
Repstg
Class B 1,968,750
- ---------------------------------------------------------------
- ----------------------------------------
Finland -- 2.1%
80,000 Nokia Corp. Sponsored ADR Preferred
3,280,000
500,000 Nokia OY AB Shares A
20,436,928 ----------------------------------------------------
- ---------------------------------------------------
23,716,928 ----------------------------------------------------
- ---------------------------------------------------
France -- 1.5%
51,142 Castorama Dubois Investment
8,481,986
8,839 Cie Europeene De Gestion Et De
Placment 282,567
80,000 Incom*(a)
1,352,893
13,800 Sidel S.A.
4,040,465 -----------------------------------------------------
- --------------------------------------------------
14,157,911 ----------------------------------------------------
- ---------------------------------------------------
Germany -- 3.3%
20,845 Bayarische Motoren Werke BMW AG
10,736,917
30,000 Grohe Friedrich Non-Voting Preferred
9,918,252
40,000 Mannesmann AG
10,880,417 ----------------------------------------------------
- ---------------------------------------------------
31,535,586 ----------------------------------------------------
- ---------------------------------------------------
Greece -- 0.2%
500,000 Flour Mills Loulis GRD
2,194,635 -----------------------------------------------------
- --------------------------------------------------
Hong Kong -- 6.3%
2,000,000 Cheung Kong Holdings Ltd.
8,424,861
15,000,000 Guangzhou Investment Ltd.
2,403,411
1,500,000 Guoco Group Ltd.
5,698,411
100,000 Hang Lung Development Warrants,
expire
12/31/95* 147,306
3,000,000 Hong Kong & China Gas Co. Ltd.
4,361,029
200,000 Hong Kong & China Gas Co. Ltd.
Warrants, expire 12/31/95* 22,742
400,000 Hong Kong Telecommunications Ltd.
Sponsored ADR 7,800,000
4,000,000 Hutchinson Whampoa Ltd.
17,366,585
3,213,000 Shaw Brothers
5,667,069
2,800,000 Wharf Holdings
8,393,849 -----------------------------------------------------
- ------------
- ---------------------------------------
60,285,263 ----------------------------------------------------
- ---------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
India -- 1.6%
20,000 India Magnum Fund N.V. A
$ 1,000,000
535,000 Larsen & Toubro Limited ADR+
9,028,125
494,527 Mahindra & Mahindra Ltd. GDR+
5,434,852 -----------------------------------------------------
- --------------------------------------------------
15,462,977 ----------------------------------------------------
- ---------------------------------------------------
Indonesia -- 0.8%
1,004,000 Bank Umum Nasional
1,213,972
1,460,000 Berlian Laju Tanker
457,680
135,000 PT Indonesian Satellite Corp.
Sponsored ADR 4,876,875
1,449,000 Sekar Laut
600,235 -------------------------------------------------------
- ------------------------------------------------
7,148,762 -----------------------------------------------------
- --------------------------------------------------
Ireland -- 7.0%
1,650,931 Bank of Ireland Dublin
8,960,605
1,500,000 CRH PLC
9,266,051
1,562,611 Grafton Group PLC
9,500,007
1,250,000 Greencore
8,842,273
2,453,614 Independent Newspapers PLC
11,197,691
1,256,396 Irish Continental Group PLC
7,781,697
553,411 Irish Life PLC
1,767,942
1,750,000 Smurfit Jefferson
10,382,540 ----------------------------------------------------
- ---------------------------------------------------
67,698,806 ----------------------------------------------------
- ---------------------------------------------------
Israel -- 0.1%
20,000 Teva Pharmaceutical Industries Ltd.
ADR 685,000
- ---------------------------------------------------------------
- ----------------------------------------
Italy -- 6.5%
1,410,083 Alleanza Assicurazioni di Risp NC
12,697,972
1 Alleanza Svg Assi General Warrants,
expire 2/26/96* 1
220,000 Assicurazioni Generali S.p.A.
5,286,496
5,000,000 Cofide S.p.A.
2,394,031
150,000 Industrie Natuzzi S.p.A. ADR
5,606,250
6,800,000 Olivetti & Co. S.p.A.
6,895,998
5,000,000 Parmalat Finanziaria S.p.A.
4,669,103
250,000 Parmalat Finanziaria S.p.A. To Subs
Ord Warrants,
expire 12/31/99*
178,437
455,000 RAS S.p.A.
4,790,143
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
Italy -- 6.5% (continued)
65,000 Riunione Adriatico di Sicurta For
Ord
Shs Warrants,
expire 12/31/97*
$ 280,295
1,000,000 Stet di Risp NC
2,289,942
4,500,000 Telecom Italia S.p.A.
11,977,588
1,095,000 Trenno S.p.A.
1,758,497
1,250,000 Unicem Union CEM S.p.A. di Risp NC
3,724,874 -----------------------------------------------------
- --------------------------------------------------
62,549,627 ----------------------------------------------------
- ---------------------------------------------------
Japan -- 10.8%
500 Bandai Co. Ltd. Warrants, expire
11/4/97* 250,000
209,300 Bunkyodo Co. Ltd.
7,224,113
80,000 Canon Inc.
1,323,495
493,000 Hitachi Ltd.
5,016,841
280,000 Ishikawajima Construction Materials
Co. Ltd. 4,765,532
700,000 Itochu Corp. Ltd.
4,748,869
75,000 Japan Associated Finance Co. Ltd.
9,194,240
500 Maeda Corporation Warrants, expire
2/5/97* 675,000
330,000 Matsushita Electric Ind. Co. Ltd.
5,537,967
247,000 Mitsubishi Bank Ltd.
6,055,939
383,000 Mitsubishi Estate Ltd.
4,604,023
937,000 Mitsubishi Heavy Industries Ltd.
6,802,785
227,700 Mr. Max Corp.
5,094,930
16,800 NIC Corp.
233,944
289,000 Nippon Denso Co. Ltd.
5,813,021
292,800 Nippon Denwa Shisetsu Co. Ltd.
2,704,270
450,000 Nippon Express Ltd.
4,450,726
800 Nishimatsu Construction Co. Ltd.
Warrants, expire 12/3/96* 440,000
23,000 OYO Corp.
1,412,521
142,000 Rohm Co.
6,540,586
500 Sagami Chain Co. Ltd.
10,712
213,000 Sagami Rubber Industries Co.
Ltd.
1,845,561
145,410 Sato Corp.
3,011,347
68,000 Secom Co.
4,435,135
23,000 Shohkoh Fund & Co. Ltd.
4,681,028
72,000 Sony Music Entertainment Inc.
3,659,129
110,000 Toyo Seikan Kaisha Ltd.
3,796,715 -----------------------------------------------------
- --------------------------------------------------
104,328,429 ---------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
Korea -- 0.5%
97,000 Korea Electric Power Corp.
$ 3,549,944
38,440 Tong Yang Confectionery
1,346,295 -----------------------------------------------------
- --------------------------------------------------
4,896,239 -----------------------------------------------------
- --------------------------------------------------
Malaysia -- 6.4%
1,750,000 Arab Malaysia Corp.
4,819,375
306,666 Arab Malaysia Finance Bhd. Foreign
832,117
1,000,000 Bandar Raya Developments Bhd.
1,684,756
900,000 Hong Leong Credit Bhd.
3,280,415
1,750,000 Leader Universal Holdings Bhd.
5,882,472
1,166,666 Leader Universal Holdings Bhd. A
3,779,899
300,000 Malaysia Helicoptor Services Bhd.
510,287
4,000,000 Renong Bhd.
6,123,441
1,580,000 Resorts World Bhd.
8,318,484
800,000 Road Builders M Holdings Bhd.
2,332,739
200,000 Road Builders Rights, expire 5/9/95*
137,696
2,750,000 Sungei Way Holdings
10,914,466
250,000 Sungei Way Holdings Bhd. Warrants,
expire 6/29/99* 334,116
1,700,000 Technology Resources Industries Bhd.
4,337,437
1,200,000 Telekom Malaysia Bhd.
8,261,785 -----------------------------------------------------
- --------------------------------------------------
61,549,485 ----------------------------------------------------
- ---------------------------------------------------
Mexico -- 3.0%
1,000,000 Coca Cola Femsa S.A. De C.V. L
1,994,937
5,250,000 Conductores Latincasa S.A. De C.V. A
372,152
1,000,000 Fomento Economico Mexicano S.A.
Femsa
Series B 2,197,468
997,560 Gruma S.A. De C.V. B
3,400,964
732,077 Grupo Industrial Bimbo S.A. De C.V.
A
2,693,549
2,000,000 Grupo Industrial Maseca S.A. De C.V.
B
1,633,755
4,026,923 Herdez S.A. De C.V. B
1,610,769
1,100,000 Jugos Del Valle B
2,970,464
475,000 Kimberly Clark A NPV
4,850,211
1,000,706 Tablex S.A. De C.V. Series 2
1,435,612
200,000 Telefonos De Mexico S.A. De C.V.
Sponsored ADR Series L 6,050,000
- ---------------------------------------------------------------
- ----------------------------------------
29,209,881 ----------------------------------------------------
- ---------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
==
=======================================
<C> <S>
<C>
Netherlands -- 3.4%
200,000 Draka Holding N.V.
$ 5,073,259
86,000 Heineken N.V.
15,369,315
400,000 IHC Caland N.V.
10,946,879
9,725 Royal Dutch Petroleum Co.
1,202,051 -----------------------------------------------------
- --------------------------------------------------
32,591,504 ----------------------------------------------------
- ---------------------------------------------------
Norway -- 1.6%
607,000 Benor Tankers Ltd.
2,731,598
450,000 Petroleum Geo Services AS
12,295,082 ----------------------------------------------------
- ---------------------------------------------------
15,026,680 ----------------------------------------------------
- ---------------------------------------------------
Panama -- 0.5%
200,000 Panamerican Beverages Inc. A
5,200,000 -----------------------------------------------------
- --------------------------------------------------
Philippines -- 0.3%
3,731,375 International Container Services
Inc.
2,076,965
1,250,000 Universal Robina Corp.
695,777 -------------------------------------------------------
- ------------------------------------------------
2,772,742 -----------------------------------------------------
- --------------------------------------------------
Singapore -- 6.5%
1,800,000 Cerebos Pacific
11,108,719
5,000,000 DBS Land Ltd.
13,778,256
700,000 Fraser & Neave
7,685,684
589,000 Fraser & Neave Ltd. Warrants, expire
5/27/98* 2,599,462
100,734 Jardine Matheson Holding Registered
800,835
1,200,000 Jurong Shipyard Ltd.
9,214,209
806,000 Overseas Union Bank Ltd. Foreign
Registered 4,656,118
2,500,000 QAF Ltd.
2,762,827
800,000 QAF Ltd. Warrants, expire 11/14/98*
353,068
1,800,000 Sembawang Maritime Ltd.
7,556,512
450,660 United Overseas Bank Ltd. Warrants,
expire 6/17/97* 2,360,831
- ---------------------------------------------------------------
- ----------------------------------------
62,876,521 ----------------------------------------------------
- ---------------------------------------------------
South Africa -- 0.8%
250,000 Barlow Ltd.
2,522,600
368,000 Pepkor Ltd. Sponsored ADR+
4,697,888 -----------------------------------------------------
- --------------------------------------------------
7,220,488 -----------------------------------------------------
- --------------------------------------------------
Spain -- 1.0%
82,500 Acerinox S.A. ORD
9,449,634 -----------------------------------------------------
- --------------------------------------------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
Sweden -- 8.1%
200,000 Allgon AB B
$ 3,922,054
3,000 Asea AB Series A Free
253,076
433,570 Astra AB Series A
12,649,222
40,000 Ericsson Tel AB LM Series B ADR
2,682,520
260,000 Ericsson Tel AB LM Series B Free
17,210,250
200,000 Getinge Industrier AB B Free
6,137,671
170,000 Hennes Mauritz Series B Free
11,486,803
75,000 Kinnevick Series B Free
2,600,941
157,000 Lindex AB
2,225,387
1,600,000 Skandinaviska Enskilda Bank Series A
Free 7,464,289
600,000 Volvo AB Series B Free
11,270,746 ----------------------------------------------------
- ---------------------------------------------------
77,902,959 ----------------------------------------------------
- ---------------------------------------------------
Switzerland -- 3.4%
10,000 Nestle AG Cham & Vevey Registered
9,798,599
2,000 Roche Holding AG Basel Genuss Schein
12,057,793
15,000 Schweiz Rueckversichering Registered
10,402,802 ----------------------------------------------------
- ---------------------------------------------------
32,259,194 ----------------------------------------------------
- ---------------------------------------------------
Taiwan -- 0.5%
315,000 Formosa Growth Fund Ltd. Series 1
5,040,000 -----------------------------------------------------
- --------------------------------------------------
Thailand -- 2.1%
4,600,000 Bangkok Metropolitan Bank Public Co.
Ltd. Foreign 4,675,747
825,000 Dhana Siam Finance & Securities
Public
Co. Ltd.
Foreign Registered
3,522,057
1,307,800 Finance One Public Co. Foreign
Registered 7,178,410
36,360 Finance One Public Co. Ltd. Foreign
Warrants,
expire 3/15/99*
325,237
250,000 Land & House Public Co. Ltd. Foreign
4,411,466
31 Saha Pathana Inter Holding Public
Co.
Ltd. Foreign 54
- ---------------------------------------------------------------
- ----------------------------------------
20,112,971 ----------------------------------------------------
- ---------------------------------------------------
Turkey -- 1.0%
8,700,000 Dogan Sirketler Grubu Holdings AS
2,351,351
2,000,000 Koc Holding AS
1,621,622
600,000 Migros Turkey Registered
1,551,116
8,316,000 Netas
3,322,491
3,000,000 T. Garanti Bankasi AS
757,932 -------------------------------------------------------
- ------------------------------------------------
9,604,512 -----------------------------------------------------
- --------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
United Kingdom -- 4.0%
1,006,032 BAA PLC
$ 7,674,072
149,895 Cable & Wireless PLC
968,520
950,000 Ewart PLC
810,280
1,100,000 Flextech
7,045,495
659,815 Independent Insurance PLC
2,973,144
1,500,000 Queens Moat Houses PLC
241,394
150,000 Reuters Holdings PLC ADR B
6,825,000
1,000,000 Stagecoach Holdings PLC
3,170,312
275,000 Vodafone Group PLC Sponsored ADR
8,765,625 -----------------------------------------------------
- --------------------------------------------------
38,473,842 ----------------------------------------------------
- ---------------------------------------------------
United States -- 0.1%
30,000 Interpool Inc.*
442,500 -------------------------------------------------------
- ------------------------------------------------
TOTAL STOCKS
(Cost -- $919,570,771)
954,585,404
===============================================================
== =======================================
<CAPTION>
FACE
AMOUNT(b) SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
BONDS -- 0.9%
Hong Kong -- 0.1%
1,000,000 Private Investment Fin. Cayman Ltd.
Conv.,
4.500% due 12/1/00 GTD+
725,000 -------------------------------------------------------
- ------------------------------------------------
Italy -- 0.0%
3,500,000 IFIL Risp, 5.000% due 1/1/00
2,082 ---------------------------------------------------------
- ----------------------------------------------
Malaysia -- 0.0%
106,666 Arab Malaysian Finance Bhd.
Unsecured
Loan Stock,
7.500% due 11/20/99
45,359 --------------------------------------------------------
- -----------------------------------------------
Singapore -- 0.1%
400,000 QAF Ltd. Loan Stock, 2.000% due 1998
241,120
500,000 Sembawang Maritime Ltd. Culs Loan
Stock,
1.500% due 12/31/98
696,089 -------------------------------------------------------
- ------------------------------------------------
937,209 -------------------------------------------------------
- ------------------------------------------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT(b) SECURITY
VALUE
===============================================================
== =======================================
<C> <S>
<C>
Sweden -- 0.7%
22,000,000 Kinnevick AB Conv. Sub., 10.500% due
7/21/97 $ 6,660,612
- ---------------------------------------------------------------
- --
- ---------------------------------------
Taiwan -- 0.0%
250,000 U-Ming Marine Trans Corp. Notes,
1.500% due 2/7/01
(Convertible until 1/28/01)
255,750 -------------------------------------------------------
- ------------------------------------------------
Thailand -- 0.0%
3,636,000 Finance One Public Co. Ltd.
Unsecured
Debt,
3.750% due 3/15/01
147,835 -------------------------------------------------------
- ------------------------------------------------
TOTAL BONDS
(Cost -- $6,581,973)
8,773,847
===============================================================
== =======================================
TOTAL INVESTMENTS -- 100%
(Cost -- $926,152,744)++
$963,359,251
===============================================================
== =======================================
</TABLE>
(a) Restricted security. (See Note 6)
(b) Represents local currency.
* Non-income producing security.
+ Security exempt from registration under Rule 144A of the
Securities Act of
1933. These securities may be resold in transactions exempt
from
registration, normally to qualified institutional buyers.
++ Aggregate cost for Federal income tax purposes is
substantially the same.
See Notes to Financial Statements.
16
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Statement of Assets and Liabilities (unaudited)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<S>
<C>
ASSETS:
Investments, at value (Cost--$926,152,744)
$ 963,359,251
Cash and cash equivalents
60,969,029
Foreign currency (Cost--$3,419,551)
3,741,877
Receivable for Fund shares sold
10,915,988
Receivable for securities sold
5,699,071
Dividends and interest receivable
1,459,658 -----------------------------------------------------
- -------------------------------------
Total Assets
1,046,144,874 -------------------------------------------------
- -----------------------------------------
LIABILITIES:
Payable for securities purchased
25,522,929
Payable for Fund shares purchased
865,183
Management fees payable
749,725
Distribution costs payable
1,059,718
Accrued expenses
1,522,469 -----------------------------------------------------
- -------------------------------------
Total Liabilities
29,720,024 ----------------------------------------------------
- --------------------------------------
Total Net Assets
$1,016,424,850
===============================================================
== ==========================
NET ASSETS:
Par value of capital shares
$ 62,388
Capital paid in excess of par value
1,015,591,648
Accumulated net investment loss
(370,321)
Accumulated net realized loss on investments
(26,977,901)
Net unrealized appreciation of investments
and foreign currencies
28,119,036 ----------------------------------------------------
- --------------------------------------
Total Net Assets
$1,016,424,850
===============================================================
== ==========================
Shares Outstanding:
Class A
31,184,699 ----------------------------------------------------
-----------
- --------------------------
Class B
5,595,800 -----------------------------------------------------
----------
- --------------------------
Class C
15,216,995 ----------------------------------------------------
-----------
- --------------------------
Class Y
5,012,105 -----------------------------------------------------
----------
- --------------------------
Class Z
5,378,214 -----------------------------------------------------
----------
- --------------------------
Net Asset Value:
Class A (and redemption price)
$16.32 --------------------------------------------------------
-------
- --------------------------
Class B *
$16.37 --------------------------------------------------------
-------
- --------------------------
Class C **
$16.16 --------------------------------------------------------
-------
- --------------------------
Class Y (and redemption price)
$16.31 --------------------------------------------------------
-------
- --------------------------
Class Z (and redemption price)
$16.30 --------------------------------------------------------
-------
- --------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 5.26% of net asset value per share)
$17.18
===============================================================
== ==========================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00%
CDSC if shares
are redeemed less than one year from initial purchase and
declines by 1.00%
per year until no CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a 1.00%
CDSC which
applies if shares are redeemed within the first year of
purchase.
See Notes to Financial Statements.
17
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Statement of Operations (unaudited) ---------------------------
- ----------------------------------------------------
For the Six Months Ended April 30, 1995
<TABLE>
<S>
<C>
INVESTMENT INCOME:
Dividends and interest
$ 4,573,135
- ---------------------------------------------------------------
- --------------------------
EXPENSES:
Management fees (Note 2)
3,883,808
Distribution costs (Note 2)
1,973,893
Shareholder and system servicing fees
440,000
Shareholder communication fees
73,500
Directors' fees
51,000
Registration fees
30,781
Audit and legal fees
20,063
Other
22,500 --------------------------------------------------------
- ---------------------------------
Total Expenses
6,495,545 -----------------------------------------------------
- ------------------------------------
Net Investment Loss
(1,922,410) ---------------------------------------------------
- --------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCIES:
Realized Loss From:
Securities transactions
(26,218,843)
Foreign currency transactions
(35,784) ------------------------------------------------------
- -----------------------------------
Net Realized Loss
(26,254,627) --------------------------------------------------
- ---------------------------------------
Change in Net Unrealized Appreciation of
Investments and Foreign Currencies:
Beginning of period (Note 1)
113,579,307
End of period
28,119,036 ----------------------------------------------------
- -------------------------------------
Decrease in Net Unrealized Appreciation
(85,460,271) --------------------------------------------------
- ---------------------------------------
Net Loss on Investments and Foreign Currencies
(111,714,898) -------------------------------------------------
- ----------------------------------------
Decrease in Net Assets From Operations
$(113,637,308)
===============================================================
== =========================
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Statements of Changes in Net Assets ---------------------------
- ----------------------------------------------------
For the Six Months Ended April 30, 1995 (unaudited)
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
1995 1994 (a)
<S> <C>
<C>
OPERATIONS:
Net investment loss $
(1,922,410) $ (1,613,430)
Net realized gain (loss)
(26,254,627) 5,015,205
Increase (decrease) in net unrealized appreciation
of investments and foreign currencies
(85,460,271) 4,417,014 ------------------------------
- ---------------------------------------------------------------
- -
Increase (Decrease) in
Net Assets From Operations
(113,637,308) 7,818,789 -----------------------------
- ---------------------------------------------------------------
- --
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
(4,897,827) --
Net realized gain
(5,523,833) ----------------------------------
- -------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders
(10,421,660) ---------------------------------
- --------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares
687,389,862 613,695,273
Net asset value of shares
issued in connection with
the transfer of the Smith
Barney Global Opportunities
Fund's net assets (Note 7)
91,997,814 --
Net asset value of shares issued
for reinvestment of dividends
10,018,913 --
Cost of shares reacquired
(576,743,863) (207,606,766) ----------------------------
- ---------------------------------------------------------------
- ---
Increase in Net Assets From
Fund Share Transactions
212,662,726 406,088,507 ------------------------------
- ---------------------------------------------------------------
- -
Increase in Net Assets
88,603,758 413,907,296
NET ASSETS:
Beginning of period
927,821,092 513,913,796
- ---------------------------------------------------------------
- -------------------------------
End of period*
$1,016,424,850 $ 927,821,092
===============================================================
== ==============================
* Includes undistributed net investment
income (loss) of:
$(370,321) $6,485,700
===============================================================
== ==============================
</TABLE>
(a) For the period from January 1, 1994 to October 31, 1994.
See Notes to Financial Statements.
19
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Notes to Financial Statements (unaudited) ---------------------
- ----------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The International Equity Portfolio ("Portfolio") is a
separate investment
portfolio of the Smith Barney World Funds, Inc. ("Fund"). The
Fund, a Maryland
corporation, is registered under the Investment Company Act of
1940, as amended,
as an open-end investment company and consists of this
Portfolio and four other
separate investment portfolios: European, Pacific,
International Balanced and
Global Government Bond Portfolios. The financial statements and
financial
highlights for the other portfolios are presented in separate
semi-annual
reports.
The significant accounting policies consistently followed
by the Fund are:
(a) security transactions are accounted for on trade date; (b)
securities traded
in national securities markets are valued at the closing prices
in 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 listed
securities for
which no sale 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. Short-term
securities maturing within
60 days are valued at cost plus accreted discount, or minus
amortized premium,
as applicable; (c) gains or losses on the sale of securities
are calculated by
using the specific identification method; (d) interest income,
adjusted for
amortization of premiums and accretion of discount, is
recorded on the accrual
basis; (e) direct expenses are charged to each portfolio and
class, management
fees and general expenses are allocated on the basis of
relative net assets;
(f) foreign currencies (and receivables and payables for
unsettled foreign
securities transactions) are translated into U.S. dollars
based on the rate of
exchange of such currencies against U.S. dollars on the date
of valuation.
Translation gains or losses resulting from changes in the
exchange rate and
realized gains and losses on the settlement of foreign
currency transactions are
reported in the statements of operations; (g) the Portfolio
intends to comply
with the requirements of the Internal Revenue Code pertaining
to regulated
investment companies and make required distributions to
shareholders; therefore
no provision for Federal income
20
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
taxes has been made; and (h) during 1994, the Fund adopted
Statement of Position
93-2 Determination, Disclosure, and Financial Statement
Presentation of Income,
----------------------------------------------------------
--
- --------------
Capital Gain, and Return of Capital Distributions by Investment
Companies. ----------------------------------------------------
- ---------------------
Accordingly, book and tax basis differences relating to
shareholder
distributions and other permanent book and tax differences are
reclassified to
paid-in capital. As of October 31, 1994, the cumulative effect
of such
differences, totaling $9,406,244, was reclassified to
undistributed net
investment income from net unrealized appreciation of
investments and foreign
currencies for the period ended October 31, 1994. Net investment
income, net
realized gains, and net assets were not affected by this change.
As of October
31, 1994, the Smith Barney World Funds, Inc. has changed its
yearend from
December 31 to October 31. This change was done to facilitate
the administration
of the Fund.
In addition, the Portfolio 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. There were no
open forward
foreign currency contracts as of October 31, 1994 and April 30,
1995.
2. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATED
PERSONS
Smith Barney Mutual Fund Management, Inc. ("SBMFM"),
formerly known as
Smith Barney Advisers, Inc., a subsidiary of Smith Barney
Holdings Inc. ("SBH"),
acts as investment manager of the Fund. The International Equity
Portfolio pays
SBMFM a management fee calculated at the annual rate of 0.85% on
average daily
net assets; the fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts
as distributor of
the Portfolio's shares. For the six months ended April 30, 1995,
SB has advised
the Fund that it was paid sales charges of approximately
$1,017,000 by
purchasers of Fund shares.
Effective November 7, 1994, the Fund adopted a new class
structure,
renaming the existing Class B and D shares as Class C and Y
shares,
respectively. Under the new class structure, a contingent
deferred sales
21
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
charge ("CDSC") of 5.00% was imposed on new Class B shares if
redemption occurs
less than one year from initial purchase and declines by 1.00%
per year until no
CDSC is incurred. A CDSC of 1.00% was imposed on Class C shares
if redemption
occurs less than one year from initial purchase. Any CDSC
imposed on redemptions
is paid to SB. For the six months ended April 30, 1995, there
were approximately
$86,000 in such charges.
Pursuant to a Distribution Plan the Portfolio pays a
service fee with
respect to its Class A, B and C shares calculated at the annual
rate of 0.25% of
the average daily net assets of each respective class' shares.
The Portfolio
also pays a distribution fee with respect to Class B and C
shares calculated at
the annual rate of 0.75% of average daily net assets for that
class. All
officers and three directors of the Fund are employees of SB.
3. INVESTMENTS
For the six months ended April 30, 1995, the aggregate
cost of purchases
and proceeds from sales of investments (including maturities,
but excluding
short-term securities) was $205,604,424 and $174,484,037,
respectively.
At April 30, 1995, the aggregate gross unrealized
appreciation and
depreciation of investments for tax purposes were as follows:
<TABLE>
<S>
<C>
===============================================================
== ===============
Gross unrealized appreciation
$130,605,766
Gross unrealized depreciation
(93,399,259) --------------------------------------------------
- -----------------------------
Net unrealized appreciation
$ 37,206,507
===============================================================
== ===============
</TABLE>
4. PORTFOLIO CONCENTRATION
The Portfolio's investments in foreign securities may
involve risks not
present in domestic investments. Since securities may be
denominated in a
foreign currency and may require settlement in foreign
currencies and pay
interest or dividends in foreign currencies, changes in the
relationship of
these foreign currencies to the U.S. dollar can significantly
affect the value
of the investments and earnings of the Portfolio. Foreign
investments may also
subject the Portfolio 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.
22
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
In addition to the risks described above, risks may arise
from forward
foreign currency contracts with respect to the potential
inability of counter
parties to meet the terms of their contracts.
5. CAPITAL SHARES
At April 30, 1995, there were two billion shares of $.001
par value capital
stock authorized. The Portfolio has the authority to issue
multiple classes of
shares. Each share of a class represents an identical legal
interest in the
Portfolio and has the same rights, except that each class bears
certain expenses
specifically related to the distribution of its shares. At
April 30, 1995, total
paid-in capital, including adjustments for book and tax
differences discussed in
Note 1, amounted to the following for each class:
<TABLE>
<CAPTION>
Class A Class B
Class C Class Y Class Z
===============================================================
== ==========================================
<S> <C> <C>
<C> <C> <C>
Total Paid-in Capital $471,131,977 $92,405,767
$267,634,009 $91,363,202 $93,119,081
===============================================================
== ==========================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months
Ended Period Ended
April 30,
1995 October 31, 1994 (a)
-------------------
--
- ---------- ----------------------------
Shares
Amount Shares Amount
===============================================================
== =============================================
<S> <C>
<C>
<C> <C>
Class A*
Shares sold 10,698,182 $
172,355,626 15,652,201 $288,105,584
Net asset value of shares
issued in connection with the
transfer of the Smith Barney
Global Opportunities
Fund's net assets (Note 7) 2,644,564
42,207,186 -- --
Shares issued on reinvestment 360,185
6,070,352 -- --
Shares redeemed (14,009,599)
(232,874,259) (3,180,807) (57,723,002) --------------
- ---------------------------------------------------------------
- --------------------------------
Net Increase (Decrease) (306,668) $
(12,241,095) 12,471,394 $230,382,582
===============================================================
== =============================================
Class B**
Shares sold 4,035,914 $
67,597,504 -- --
Net asset value of shares
issued in connection with the
transfer of the Smith Barney
Global Opportunities
Fund's net assets (Note 7) 2,530,152
40,556,604 -- --
Shares issued on reinvestment 9,172
154,729 -- --
Shares redeemed (16,487,505)
(287,976,278) -- --
- ---------------------------------------------------------------
- ----------------------------------------------
Net Decrease (9,912,267)
$(179,667,441) -- --
===============================================================
== =============================================
</TABLE>
23
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
<TABLE>
<CAPTION>
Six Months Ended
Period Ended
April 30, 1995
October 31, 1994 (a)
------------------------
- ---- -----------------------------
Shares
Amount
Shares Amount
===============================================================
== =======================================
<S> <C> <C>
<C> <C>
Class C+
Shares sold 17,541,638
$305,013,405 11,333,295
$206,379,344 Net asset value of shares
issued in connection with the
transfer of the Smith Barney
Global Opportunities
Fund's net assets (Note 7)
45,583
720,310 -- -
Shares issued on reinvestment
93,621
1,557,858 -- --
Shares redeemed (2,463,847) (39,657,564)
(2,012,143) (36,089,627)
- ---------------------------------------------------------------
- ----------------------------------------
Net Increase 15,216,995
$267,634,009 9,321,152 $170,289,717
===============================================================
== =======================================
Class Y++
Shares sold 3,139,832 $
55,219,953 2,594,032 $ 47,545,030
Shares issued on reinvestment
75,623
1,273,768 -- --
Shares redeemed
(797,382) (12,675,549) -- --
- ---------------------------------------------------------------
- ----------------------------------------
Net Increase 2,418,073 $
43,818,172 2,594,032 $ 47,545,030
===============================================================
== =======================================
Class Z**
Shares sold 5,003,381 $
87,203,374 -- --
Net asset value of shares
issued in connection with the
transfer of the Smith Barney
Global Opportunities
Fund net assets (Note 7) 534,101
8,513,714 -- --
Shares issued on reinvestment
57,242
962,206 -- -
Shares redeemed
(216,510) (3,560,213) -- --
- ---------------------------------------------------------------
- ----------------------------------------
Net Increase 5,378,214 $
93,119,081 -- --
===============================================================
== =======================================
</TABLE>
(a) For the period from January 1, 1994 to October 31, 1994.
* On October 10, 1994 the former Class C shares were exchanged
into Class A
shares; therefore Class C share activity for the period
from January 1, 1994
to October 9, 1994 is included with Class A share activity.
** For the period from November 7, 1994 (inception date) to
April 30, 1995.
+ On November 7, 1994 the former Class B shares were renamed
Class C shares.
++ On November 7, 1994 the former Class D shares were
renamed
Class Y shares.
24
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
6. RESTRICTED SECURITIES
Restricted securities are held under the Federal
securities laws and are
valued at fair value in good faith by, or under the direction
of, the
Portfolio's Board of Directors taking into consideration such
factors as the
Board deems appropriate. The Portfolio may purchase securities
which are subject
to legal or contractual restrictions on resale if not more than
5% of the value
of the Portfolio's total assets would be invested in such
securities or in
securities for which there is no readily available market. In
purchasing
securities which could not be sold by the Portfolio without
registration under
the Securities Act of 1933, as amended, the Portfolio will
endeavor to obtain
the right to registration at the expense of the issuer. There
generally will be
a lapse of time between the decision by the Portfolio to sell
any
security and
the registration of the security permitting sale. During any
such period, the
security will be subject to market fluctuations.
7. TRANSFER OF NET ASSETS
On April 24, 1994, the Portfolio acquired the assets and
certain
liabilities of the Smith Barney Global Opportunities Fund Inc.
("SBGO"),
pursuant to a plan of reorganization approved by SBGO
shareholders on April 20,
1995. Total shares issued by the Portfolio and the total net
assets of SBGO and
the Portfolio are as follows:
<TABLE>
<CAPTION>
Total Net
Shares Assets of
Total Net
Acquired Issued by Acquired
Assets of
Fund the Portfolio Fund
the Portfolio
===============================================================
== ===============
<S> <C> <C>
<C>
SBGO 5,754,400 $93,548,579
$1,009,768,736
===============================================================
== ===============
</TABLE>
25
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Financial Highlights ------------------------------------------
- -------------------------------------
For a share of each capital stock outstanding throughout the
period:
<TABLE>
<CAPTION>
Class A Shares (a) 1995 (1)
1994 (2) 1993 1992 1991 (3)
===============================================================
== ======================================================
<S> <C>
<C> <C> <C> <C>
Net Asset Value, Beginning of Period $18.79
$18.71 $12.35 $12.31 $11.94
- ---------------------------------------------------------------
- -------------------------------------------------------
Income (Loss) From Investment Operations:
Net investment income (loss) 0.20
(0.01) (0.01) 0.02 (0.01)
Net realized and unrealized
gain (loss) on investment (2.45)
0.09 6.53 0.04 0.38
- ---------------------------------------------------------------
- -------------------------------------------------------
Total Income (Loss) from Investment Operations (2.25)
0.08 6.52 0.06 0.37
- ---------------------------------------------------------------
- -------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.12)
- -- -- (0.02) --
Distribution from net realized gains (4) (0.10)
- -- (0.16) -- --
- ---------------------------------------------------------------
- -------------------------------------------------------
Total Distributions (0.22)
- -- (0.16) (0.02) --
- ---------------------------------------------------------------
- -------------------------------------------------------
Net Asset Value, End of Period $16.32
$18.79 $18.71 $12.35 $12.31
- ---------------------------------------------------------------
- --
- ------------------------------------------------------
Total Return
(11.98)%++ 0.43%++ 52.78% 0.49% 3.10%++ --
- ---------------------------------------------------------------
- -----------------------------------------------------
Net Assets, End of Period (000s) $509,187
$591,598 $355,926 $122,605 $54,958 ------------
- ---------------------------------------------------------------
- -------------------------------------------
Ratios to Average Net Assets:
Expenses 1.22%+
1.35%+ 1.35% 1.56% 1.73%+
Net investment income (loss) 0.24+
(0.05)+ (0.10) 0.24 0.75+ --------------
- ---------------------------------------------------------------
- ----------------------------------------Portfolio Turnover Rate
20.07%
34.75% 26.75% 20.11% 1.85%
===============================================================
== ======================================================
</TABLE>
(a) On October 10, 1994 the former Class C shares were
exchanged into Class A
shares; therefore Class C share activity for the period
from February 11,
1994 to October 9, 1994 is included with Class A share
activity.
(1) For the six months ended April 30, 1995 (unaudited).
(2) For the period from January 1, 1994 to October 31, 1994.
(3) For the period from November 22, 1991 (inception date) to
December 31, 1991.
(4) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
++ Not annualized as it may not be representative of the total
return for the
year.
+ Annualized.
26
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio --------------------------------
- -----------------------------------------------
Financial Highlights (continued) ------------------------------
- -------------------------------------------------
For a share of each capital stock outstanding throughout the
period:
<TABLE>
<CAPTION>
Class B
Class C (1)
-----
- --- ---------------------------------------------
1995(2) 1995 (3) 1994 (4) 1993 (5)
===============================================================
== ======================================================
<S> <C>
<C> <C> <C>
Net Asset Value, Beginning of Period
$18.38
$18.54 $18.58 $12.35
- ---------------------------------------------------------------
- -------------------------------------------------------
Income (Loss) From Investment Operations:
Net investment loss
(0.02) (0.09) (0.11) (0.14)
Net realized and unrealized gain
(loss) on investments
(1.89) (2.19) 0.07 6.25
- ---------------------------------------------------------------
- -------------------------------------------------------
Total Income (Loss) from Investment
Operations
(1.91) (2.28) (0.04) 6.39
- ---------------------------------------------------------------
- -------------------------------------------------------
Less Distributions:
Dividends from net investment income
- --
- -- -- --
Distribution from net realized gains (6)
(0.10) (0.10) -- (0.16)
- ---------------------------------------------------------------
- -------------------------------------------------------
Total Distributions
(0.10) (0.10) -- (0.16)
- ---------------------------------------------------------------
- -------------------------------------------------------
Net Asset Value, End of Period
$16.37
$16.16 $18.54 $18.58
- ---------------------------------------------------------------
- -------------------------------------------------------
Total Return
(10.39)%++ (12.30)%++ (0.22)%++ 51.73%++
- ---------------------------------------------------------------
- -------------------------------------------------------
Net Assets, End of Period (000s)
$91,653
$246,064 $287,458 $114,951
- ---------------------------------------------------------------
- -------------------------------------------------------
Ratios to Average Net Assets:
Expenses
1.70%+ 2.01%+ 2.10%+ 2.14%+
Net investment loss
(0.60)+ (1.03)+ (0.77)+ (1.08)+
- ---------------------------------------------------------------
- ------------------------------------------------------Portfolio
Turnover Rate
20.07% 20.07% 34.75% 26.75%
===============================================================
== ======================================================
</TABLE>
(1) On November 7, 1994, the former Class B shares were renamed
Class C shares.
(2) For the period from November 7, 1994 (inception date) to
April 30, 1995
(unaudited).
(3) For the six months ended April 30, 1995 (unaudited).
(4) For the period from January 1, 1994 to October 31, 1994.
(5) For the period from January 4, 1993 (inception date) to
December 3, 1993.
(6) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
++ Not annualized as it may not be representative of the total
return for the
year.
+ Annualized.
27
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
- ---------------------------------------------------------------
- ----------------
Financial Highlights (continued) ------------------------------
- -------------------------------------------------
For a share of each capital stock outstanding throughout the
period:
<TABLE>
<CAPTION>
Class Y (1) Class Z
--
- ----------------------- --------
1995 (2) 1994 (3) 1995 (4)
===============================================================
== =======================================
<S>
<C>
<C> <C>
Net Asset Value, Beginning of Period
$18.80 $17.64 $18.38 ---------------------
- ---------------------------------------------------------------
- -------------------
Income (Loss) From Investment Operations:
Net investment income
0.32 0.01 0.30
Net realized and unrealized
gain (loss) on investment
(2.54) 1.15 (2.11) ---------------------
- ---------------------------------------------------------------
- -------------------
Total Income (Loss) from Investment Operations
(2.22) 1.16 (1.81) ---------------------
- ---------------------------------------------------------------
- -------------------
Less Distributions:
Dividends from net investment income
(0.17) -- (0.17) Distribution from net
realized gains (5)
(0.10) -- (0.10)
- ---------------------------------------------------------------
- --
- ---------------------------------------
Total Distributions
(0.27) -- (0.27) ---------------------
- ---------------------------------------------------------------
- -------------------
Net Asset Value, End of Period
$16.31 $18.80 $16.30 ---------------------
- ---------------------------------------------------------------
- -------------------
Total Return
(11.84)%++ (6.58)%++ (9.88)%++ -----------------
- ---------------------------------------------------------------
- -----------------------
Net Assets, End of Period (000s)
$81,821 $48,765 $87,699 --------------------
- ---------------------------------------------------------------
- --------------------
Ratios to Average Net Assets:
Expenses
0.95%+ 1.09%+ 0.95%+
Net investment income
4.25+ 0.29+ 3.60+ ----------------------
- ---------------------------------------------------------------
- ------------------
Portfolio Turnover Rate
20.07% 34.75% 20.07%
===============================================================
== =======================================
</TABLE>
(1) On November 7, 1994 the Class D shares were renamed Class Y
shares.
(2) For the six months ended April 30, 1995 (unaudited).
(3) For the period from June 16, 1994 (inception date) to
October 31, 1994.
(4) For the period from November 7, 1994 (inception date) to
April 30, 1995
(unaudited).
(5) Net short term gains, if any, are included and reported
as ordinary income
for income tax purposes.
++ Not annualized as it may not be representative of the
total
return for the
year.
+ Annualized.
28
<PAGE>
Smith Barney
World Funds, Inc.
Directors
Victor Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
Bruce D. Sargent
James M. Shuart
Officers
Maurits E. Edersheim
Chairman of the Fund
& Advisory Director
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
James B. Conheady
Vice President
Victor S. Filatov
Vice President
Simon R. Hildreth
Vice President
Denis P. Mangan
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Rein W. van der Does
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
Smith Barney -----------
-
A Member of
TravelersGroup [LOGO APPEARS HERE]
Investment Manager
Smith Barney Mutual Fund
Management, Inc.
Distributor
Smith Barney Inc.
Custodian
J.P. Morgan & Co. Incorporated
Shareholder
Servicing Agent
The Shareholder Services Group Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the
shareholders of
Smith Barney World Funds, Inc. International Equity Portfolio.
It is not
authorized for distribution to prospective investors unless
accompanied or
preceded by a current Prospectus for the Portfolio, which
contains information
concerning the Portfolio's investment policies and expenses as
well as other
pertinent information.
Smith Barney
World Funds, Inc.
388 Greenwich Street
New York, New York 10013
FD0626F5
<PAGE>
- ---------------------------------------------------------------
- ----------------
SEMI-ANNUAL REPORT --------------
- ---------------------------------------------------------------
- --
Smith Barney
World Funds, Inc.
Global Government
Bond Portfolio ----------------
-----------------
- ---------------
April 30, 1995
Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- ---------------------------------------------------------------
- ----------------
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Dear Shareholder:
The Global Government Bond Portfolio was a beneficiary of the
strong rally in
worldwide bond markets which began in the U.S. in November
1994. For the six
months ended April 30, 1995, the Portfolio had a total return
of 6.12%, and for
the 12 months ended April 30, 1995 its total return was 5.00%
for Class A
shares. This performance information excludes sales charges.
For additional
performance information, please see the Average Annual Total
Return chart on
page 4 of this report.
After the turbulent conditions in global bond markets during
1994, two key
themes dominated currency and fixed-income markets in the first
quarter of 1995.
The first theme was the weakening U.S. dollar; the second was
the improved
sentiment towards bond markets in general.
In the currency markets the focus returned to the exchange rate
between the U.S.
dollar and the Japanese yen. In the first three months of 1995,
the yen
appreciated 13.75% against the dollar. Japan's massive trade
surplus, and to a
lesser extent the Japanese year-end with its accompanying
repatriation of
institutional funds, contributed to the strength of the yen.
The German mark
also strengthened against the dollar, appreciating 8.8%.
The currencies of other dollar-bloc countries fared somewhat
better than the
U.S. unit. The Canadian dollar appreciated to a degree, and the
New Zealand
dollar continued to rally on the back of demand for commodities
and favorable
economic developments. The Australian dollar's performance was
more erratic,
however, falling against the U.S. dollar on signs of a
faltering economy.
In Europe, the German currency's dominance was apparent at the
expense of the
peripheral, higher yielding currencies. Political concerns and
ongoing fiscal
imbalances propelled both the Italian lira and the Swedish
krona to new lows.
To a lesser extent, the Spanish peseta and the Danish krona
also weakened
against the German mark. In addition, the French franc suffered
in the run-up to
the French presidential election, and the unpopularity of the
Conservative
government in the U.K. led investors to shun sterling, despite
a strong economic
performance and an increase in official interest rates in the
quarter.
U.S. government bonds performed well over the quarter, with the
yield on the
benchmark 10-year Treasury bond falling to nearly 7.25% from
over 7.80% at the
beginning of 1995, and from over 8.0% in the latter part of
1994. This
1
<PAGE>
positive tone was transmitted across the globe, with all the
major government
bond markets generating attractive returns over the period.
Bond market
participants viewed the Federal Reserve Board's decision to
raise the federal
funds rate by one-half of a percentage point on February 1, the
seventh increase
in a little more than a year, as a decisive attempt to address
concerns over
potential inflation. Positive sentiment was also fueled by data
showing that the
economy's growth might be displaying early signs of slowdown to
a more
sustainable level. This was apparent in the interest-rate
sensitive housing and
automotive sectors. Some economists also noted higher-than-
usual levels of
inventory accumulation, which would imply a slowdown in the
manufacturing sector
going into the summer.
Also adding to the bond markets' positive performance was an
increased demand
for high-quality, domestic securities as investors continued to
shy away from
emerging market investments in the aftermath of the Mexican
peso crisis.
The core European bond markets also performed well. German,
French, and Dutch
government bond yields all declined during the period. In
contrast, yields rose
on Italian and Spanish securities as investors moved away from
the higher-
yielding peripheral markets into the security of the core
markets, and as short-
term interest rates rose in reaction to currency weakness.
The Portfolio's core bond holdings remained concentrated in
Europe and Canada,
where attractive returns could be achieved on a currency-hedged
basis. As the
Portfolio is managed against a fully hedged global bond
benchmark, our strategy
is to take only limited currency risk to keep overall
volatility low. Therefore,
currency exposure in the Global Government Bond Portfolio was
modified
moderately during the latter part of 1994 in order to take
advantage of the
dollar's weakness against the German mark. In the first months
of 1995, the
Portfolio's exposure to dollar-denominated currencies was
increased to about 85%
of the portfolio as we anticipated a correction in recent
currency trends. As a
result, the Portfolio benefitted from a reduction in volatility
during this
period.
In Europe, we focused our currency exposure aggressively on the
core currencies
with purchases of the German mark. Exposure to the higher
yielding currencies
such as the Italian lira and the Spanish peseta was kept to a
minimum. The
Portfolio's exposure to emerging markets was limited to less
than 2% of the
portfolio in U.S. dollar-denominated assets.
2
<PAGE>
In our opinion, the environment for international bond markets
looks positive in
the near future. International bond market prices should
improve as investors
become more confident of a worldwide economic recovery with
moderate growth and
slowing inflation. We also believe that the dollar has reached
a low point and
is cheap compared to currencies in Europe and Japan. These
factors should cause
it to rebound in the coming months. Finally, a degree of
stability has returned
to emerging markets which have begun to recover from their
levels of earlier
this year.
Sincerely,
/s/ Heath B. McLendon /s/ Victor S.
Filatov
Heath B. McLendon Victor S.
Filatov
Chairman and Vice President
Chief Executive Officer
May 26, 1995
3
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
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>
4/30/95 $11.68 $11.99
$0.39
$0.00 6.12% -----------------------------------------
- ---------------------------------------------------------
10/31/94+ 12.92 11.68
0.23
0.00 (4.87) ------------------------------------------
- --------------------------------------------------------
12/31/93 11.84 12.92
0.52
0.59 19.13 -------------------------------------------
- -------------------------------------------------------
12/31/92 12.90 11.84
0.97
0.19 0.93 -------------------------------------------
- -------------------------------------------------------
Inception*-12/31/91 12.00 12.90
0.44
0.13 12.42
===============================================================
== ==================================
Total
$2.55
$0.91
===============================================================
== ==================================
</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*-4/30/95 $11.57 $11.96
$0.30
$0.00 6.59%
===============================================================
== ==================================
</TABLE>
- ---------------------------------------------------------------
- ----------------
Historical Performance -- Class C 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>
4/30/95 $11.68 $11.93
$0.36
$0.00 5.33% -----------------------------------------
- ---------------------------------------------------------
10/31/94+ 12.93 11.68
0.21
0.00 (5.33) ------------------------------------------
- --------------------------------------------------------
Inception*-12/31/93 11.83 12.93
0.47
0.59 18.89
===============================================================
== ==================================
Total
$1.04
$0.59
===============================================================
== ==================================
</TABLE>
- ---------------------------------------------------------------
- ----------------
Historical Performance -- Class Y 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>
4/30/95 $11.68 $11.84
$0.40
$0.00 4.93% -----------------------------------------
- ---------------------------------------------------------
10/31/94+ 12.93 11.68
0.23
0.00 (4.86) ------------------------------------------
- --------------------------------------------------------
Inception*-12/31/93 11.97 12.93
0.37
0.59 16.49
===============================================================
== ==================================
Total
$1.00
$0.59
===============================================================
== ==================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and
capital gains, if
any, annually.
4
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Average Annual Total Return -----------------------------------
- --------------------------------------------
<TABLE>
<CAPTION>
Without
Sales Charge/(1)/
------------------------
- -----------------------------
Class A Class B
Class C Class Y
===============================================================
== ============================
<S> <C> <C>
<C> <C>
Six Months Ended 4/30/95 6.12% N/A
5.33% 4.93% -----------------------------------------
- ---------------------------------------------------
Year Ended 4/30/95 5.00 N/A
3.89 3.81 ------------------------------------------
- --------------------------------------------------
Inception* through 4/30/95 8.64 6.59%
7.74 7.24 ------------------------------------------
- --------------------------------------------------
<CAPTION>
With
Sales Charge/(2)/
------------------------
- -----------------------------
Class A Class B
Class C Class Y
===============================================================
== ============================
<S> <C> <C>
<C> <C>
Six Months Ended 4/30/95 1.34% N/A
4.33% 4.93% -----------------------------------------
- ---------------------------------------------------
Year Ended 4/30/95 0.31 N/A
2.91 3.81 ------------------------------------------
- --------------------------------------------------
Inception* through 4/30/95 7.31 2.09%
7.74 7.24 ------------------------------------------
- --------------------------------------------------
</TABLE>
- ---------------------------------------------------------------
- ----------------
Cumulative Total Return ---------------------------------------
- ----------------------------------------
<TABLE>
<CAPTION>
Without
Sales Charge/(1)/
===============================================================
== ===============
<S> <C>
Class A (Inception* through 4/30/95)
36.73% --------------------------------------------------------
- -----------------------
Class B (Inception* through 4/30/95)
6.59 ----------------------------------------------------------
- ---------------------
Class C (Inception* through 4/30/95)
18.86 ---------------------------------------------------------
- ----------------------
Class Y (Inception* through 4/30/95)
16.59 ---------------------------------------------------------
- ----------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value and does not reflect deduction of the
applicable sales charge
with respect to Class A shares or the applicable contingent
deferred sales
charges ("CDSC") with respect to Class B and Class C
shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value. In addition, Class A shares reflect the
deduction of the
maximum initial sales charge of 4.50%; Class B shares
reflect the deduction
of a 4.50% CDSC, which applies if shares are redeemed less
than one year
from initial purchase. This CDSC declines by 0.50% the
first year after
purchase and by 1.00% per year thereafter until no CDSC is
incurred. Class C
shares reflect the deduction of a 1.00% CDSC which applies
if shares are
redeemed within the first year of purchase.
+ For the period from January 1, 1994 to October 31, 1994 which
reflects a
change in the fiscal year end of the Portfolio.
* Inception dates for Class A, B, C and Y shares are July 22,
1991,
November 18, 1994, January 4, 1993 and February 19, 1993,
respectively.
5
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Historical Performance ----------------------------------------
- ---------------------------------------
Growth of $10,000 Invested in Class A Shares of
Global Government Bond Portfolio vs.
J.P. Morgan Global Bond Index+
(unaudited)
- ---------------------------------------------------------------
- ----------------
July 1991 - April 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Global Govt Hedged Unhedged
- ---------------------------------------------------------------
- ----------------
7/22/91 9600 10000
10000 ---------------------------------------------------------
- ----------------------
<S> <C> <C>
<C>
8/91 9864 10191.28
10207.82
9/91 10288 10368.34
10580.09
10/91 10421 10459.21
10684.63
11/91 10361.51 10525.11
10858.61
12/91 10789.92 10785.61
11407.36
1/92 10484.46 10747.65
11183.93
2/92 10523.29 10786.50
11151.31
3/92 10400.63 10718.37
11048.39
4/92 10464.61 10780.40
11140.29
5/92 10606.55 10926.03
11456.67
6/92 10872.32 11005.62
11769.11
7/92 11304.19 11126.82
12028.40
8/92 11114.91 11184.08
12348.49
9/92 11039.45 11342.52
12336.49
10/92 10964.08 11369.89
12028.34
11/92 10753.39 11343.46
11815.08
12/92 10888.86 11504.17
11926.71
1/93 10941.68 11676.49
12128.95
2/93 11263.65 11894.09
12324.42
3/93 11429.20 11918.84
12513.77
4/93 11651.41 11970.45
12741.60
5/93 11743.22 11991.42
12822.45
6/93 12016.33 12236.19
12833.27
7/93 12131.22 12334.70
12838.46
8/93 12458.53 12589.14
13218.47
9/93 12351.87 12642.12
13358.21
10/93 12614.00 12749.19
13351.42
11/93 12575.00 12739.24
13253.92
12/93 12971.80 12903.12
13389.69
1/94 13358.39 12945.93
13515.97
2/94 12898.15 12671.09
13367.52
3/94 12527.00 12494.22
13306.33
4/94 12501.45 12401.54
13295.62
5/94 12362.51 12321.48
13185.76
6/94 12161.90 12244.85
13342.35
7/94 12187.70 12515.46
13637.22
8/94 12172.20 12713.21
13852.68
9/94 12272.00 12251.72
13349.83
10/94 12340.50 12609.47
13739.65
11/94 12427.60 12450.59
13833.08
12/94 12454.20 12479.22
13851.06
1/95 12524.20 12731.30
14040.82
2/95 12745.30 13059.77
14271.09
3/95 12924.20 13724.51
14478.02
4/95 13364.00 13943.00
14687.00 ------------------------------------------------------
- -------------------------
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A
shares
on July 22,
1991 (inception), assuming deduction of the maximum 4.00% sales
charge at the
time of investment and the reinvestment of dividends and
capital gains at net
asset value through April 30, 1995. The J.P. Morgan Global Bond
Index is a
daily, market capitalization weighted international fixed
income index
consisting of 13 countries. The Index is unmanaged and is not
subject to the
same management and trading expenses of a mutual fund. The
performance of the
Portfolio's other classes may be greater or less than the Class
A shares'
performance indicated on this chart, depending on whether
greater or lesser
sales charges and fees were incurred by shareholders investing
in the other
classes.
All figures represent past performance and are not a guarantee
of future
results. Investments 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.
6
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Schedule of Investments (unaudited)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT+ SECURITY
VALUE
===============================================================
== ======================================
<C> <S>
<C>
BONDS -- 91.6%
Argentina -- 2.3%
2,000,000 Gas Argentina S.A., 7.250% due
12/7/98
(U.S. dollar denominated)
$ 1,600,000
- ---------------------------------------------------------------
- ---------------------------------------
Austria -- 3.8%
2,500,000 Republic of Austria, 8.500% due
3/4/03
(U.S. dollar denominated)
2,664,075 -----------------------------------------------------
- -------------------------------------------------
Belgium -- 5.3%
100,000,000 Kingdom of Belgium, 9.000% due
7/30/98 3,728,837
- ---------------------------------------------------------------
- ---------------------------------------
Canada -- 21.5%
6,000,000 Canada, 7.500% due 7/1/97
4,386,684
2,000,000 Export Development Corp., 7.750%
due 4/30/02
(U.S. dollar denominated)
2,040,000
6,000,000 Government of Canada, 6.500% due
6/1/04 3,896,825
6,000,000 Government of Canada, 9.750% due
6/1/01 4,748,941
- ---------------------------------------------------------------
- ---------------------------------------
15,072,450 ----------------------------------------------------
- --------------------------------------------------
Denmark -- 6.8%
25,000,000 Kingdom of Denmark, 9.000% due
11/15/98 4,753,965
- ---------------------------------------------------------------
- ---------------------------------------
Finland -- 6.8%
19,000,000 Republic of Finland, 11.000% due
6/15/97 4,747,411
- ---------------------------------------------------------------
- ---------------------------------------
France -- 7.2%
25,000,000 France BTAN, 7.000% due 11/12/99
5,021,903 -----------------------------------------------------
- -------------------------------------------------
Ireland -- 11.0%
4,700,000 Republic of Ireland, 8.750% due
7/27/97 7,714,211
- ---------------------------------------------------------------
- ---------------------------------------
Portugal -- 5.5%
105,000,000 European Investment Bank, 12.500%
due 2/24/98 722,773
300,000,000 International Bank Reconstruction
&
Development,
11.500% due 2/28/97
2,035,638
160,000,000 International Finance Corp.,
15.750% due 12/7/95 1,115,016
- ---------------------------------------------------------------
- ---------------------------------------
3,873,427 -----------------------------------------------------
- -------------------------------------------------
Spain -- 5.9%
500,000,000 Government of Spain, 12.250% due
3/25/00 4,121,446
- ---------------------------------------------------------------
- ---------------------------------------
Sweden -- 5.9%
30,000,000 Kingdom of Sweden, 10.750% due
1/23/97 4,160,680
- ---------------------------------------------------------------
- ---------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Schedule of Investments (unaudited) (continued)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT+ SECURITY
VALUE
===============================================================
== ======================================
<C> <S>
<C>
United Kingdom -- 6.8%
3,000,000 United Kingdom Treasury
Conversion,
7.000% due 8/6/97 $ 4,744,907
- ---------------------------------------------------------------
- ---------------------------------------
United States -- 2.8%
2,000,000 International Bank Reconstruction
&
Development,
5.875% due 7/16/97
1,978,760 -----------------------------------------------------
- -------------------------------------------------
TOTAL BONDS
(Cost -- $60,864,558)
64,182,072
===============================================================
== ======================================
SHORT-TERM INVESTMENTS -- 8.4%
New Zealand -- 8.4%
8,700,000 New Zealand Short-Term, 8.5625%
due
5/4/95
(Cost -- $5,871,634)
5,856,851
===============================================================
== ======================================
TOTAL INVESTMENTS -- 100%
(Cost -- $66,736,192)++
$70,038,923
===============================================================
== ======================================
</TABLE>
+ Represents local currency.
++ Aggregate cost for Federal income tax purposes is
substantially the same.
See Notes to Financial Statements.
8
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Statement of Assets and Liabilities (unaudited)
April 30, 1995 ------------------------------------------------
- -------------------------------
<TABLE>
<S>
<C>
ASSETS:
Investments, at value (Cost - $66,736,192)
$70,038,923
Foreign currency (Cost - $3,925,304)
3,934,516
Cash
852,355
Receivable for Fund shares sold
327,694
Receivable for securities sold
337,247
Dividends and interest receivable
2,380,520 -----------------------------------------------------
- -------------------------------------------
Total Assets
77,871,255 ----------------------------------------------------
- --------------------------------------------
LIABILITIES:
Payable for Fund shares purchased
156,148
Payable for open forward foreign currency contracts (Note 4)
1,249,902
Management fees payable
99,600
Distribution costs payable
30,291
Dividends payable
409,898
Accrued expenses and other liabilities
397,620 -------------------------------------------------------
- -----------------------------------------
Total Liabilities
2,343,459 -----------------------------------------------------
- -------------------------------------------
Total Net Assets
$75,527,796
===============================================================
== ================================
NET ASSETS:
Par value of capital shares
$ 6,303
Capital paid in excess of par value
74,523,616
Accumulated net investment loss
(1,275,361)
Accumulated net realized gain on investments
110,936
Net unrealized appreciation of investments and foreign
currencies 2,162,302 ----------------------
- ---------------------------------------------------------------
- -----------
Total Net Assets
$75,527,796
===============================================================
== ================================
Shares Outstanding:
Class A
5,600,964 -----------------------------------------------------
----------
- --------------------------------
Class B
53,820 --------------------------------------------------------
-------
- --------------------------------
Class C
389,820 -------------------------------------------------------
--------
- --------------------------------
Class Y
258,653 -------------------------------------------------------
--------
- --------------------------------
Net Asset Value:
Class A (and redemption price)
$11.99 --------------------------------------------------------
-------
- --------------------------------
Class B *
$11.96 --------------------------------------------------------
-------
- --------------------------------
Class C **
$11.93 --------------------------------------------------------
-------
- --------------------------------
Class Y (and redemption price)
$11.84 --------------------------------------------------------
-------
- --------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.71% of net asset value per share)
$12.55
===============================================================
== ================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50%
CDSC if shares
are redeemed less than one year from initial purchase. This
CDSC declines by
0.50% the first year after purchase and by 1.00% per year
thereafter until no
CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a
1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
9
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Statement of Operations (unaudited) ---------------------------
- ----------------------------------------------------
For the Six Months Ended April 30, 1995
<TABLE>
<S>
<C>
INVESTMENT INCOME:
Interest
$3,192,171 ----------------------------------------------------
- -------------------------------------------
EXPENSES:
Management fees (Note 2)
340,277
Distribution costs (Note 2)
105,622
Shareholder and system servicing fees
26,483
Registration fees
18,422
Audit and legal fees
17,250
Shareholder communication fees
16,216
Directors' fees
5,472
Custodian fees
4,000
Other
10,997 --------------------------------------------------------
- ---------------------------------------
Total Expenses
544,739 -------------------------------------------------------
- ----------------------------------------
Net Investment Income
2,647,432 -----------------------------------------------------
- ------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCIES:
Realized Gain (Loss) From:
Securities transactions
1,463,025
Foreign currency transactions
(1,269,918) ---------------------------------------------------
- --------------------------------------------
Net Realized Gain
193,107 -------------------------------------------------------
- ----------------------------------------
Change in Net Unrealized Appreciation of
Investments and Foreign Currencies:
Beginning of period (Note 1)
591,217
End of period
2,162,302 -----------------------------------------------------
- ------------------------------------------
Increase in Net Unrealized Appreciation
1,571,085 -----------------------------------------------------
- ------------------------------------------
Net Gain on Investments and Foreign Currencies
1,764,192 -----------------------------------------------------
- ------------------------------------------
Increase in Net Assets From Operations
$4,411,624
===============================================================
== ===============================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Statements of Changes in Net Assets ---------------------------
- ----------------------------------------------------
For the Six Months Ended April 30, 1995 (unaudited)
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
1995 1994(a)
===============================================================
== ===================================
<S>
<C> <C>
OPERATIONS:
Net investment income
$ 2,647,432 $ 5,397,116
Net realized gain (loss)
193,107 (6,947,202)
Increase (decrease) in net unrealized appreciation
of investments and foreign currencies
1,571,085 (3,563,743) --------------------------------
- ---------------------------------------------------------------
- ----
Increase (Decrease) in
Net Assets From Operations
4,411,624 (5,113,829) --------------------------------
- ---------------------------------------------------------------
- ----
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
(2,652,875) (1,840,958)
Paid-in capital
- -- (3,463,739)
Net realized gain
- -- --
- ---------------------------------------------------------------
- ------------------------------------
Decrease in Net Assets From
Distributions to Shareholders
(2,652,875) (5,304,697)
- ---------------------------------------------------------------
- ------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares
14,073,370 8,103,416
Net asset value of shares issued
for reinvestment of dividends
1,276,402 3,110,947
Cost of shares reacquired
(28,578,702) (26,555,201)
- ---------------------------------------------------------------
- ------------------------------------
Decrease in Net Assets From
Fund Share Transactions
(13,228,930) (15,340,838)
- ---------------------------------------------------------------
- ------------------------------------
Decrease in Net Assets
(11,470,181) (25,759,364)
NET ASSETS:
Beginning of period
86,997,977 112,757,341
- ---------------------------------------------------------------
- ------------------------------------
End of period*
$ 75,527,796 $ 86,997,977
===============================================================
== ===================================
* Includes undistributed net investment loss of:
$(1,275,361) --
===============================================================
== ===================================
</TABLE>
(a) For the period from January 1, 1994 to October 31, 1994.
See Notes to Financial Statements.
11
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Notes to Financial Statements (unaudited) ---------------------
- ----------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Global Government Bond Portfolio ("Portfolio") is a
separate investment
portfolio of the Smith Barney World Funds, Inc. ("Fund"). The
Fund, a Maryland
corporation, is registered under the Investment Company Act of
1940, as amended,
as an open-end investment company and consists of this
Portfolio and four other
separate investment portfolios: European, Pacific,
International Balanced and
International Equity Portfolios. The financial statements and
financial
highlights for the other portfolios are presented in separate
semi-annual
reports.
The significant accounting policies consistently followed
by the Fund are:
(a) security transactions are accounted for on trade date; (b)
securities traded
in national securities markets are valued at the closing prices
in 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 listed
securities for
which no sale 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 securities. Short-term securities
maturing within 60
days are valued at cost plus accreted discount, or minus
amortized premium, as
applicable; (c) gains or losses on the sale of securities are
calculated by
using the specific identification method; (d) interest income,
adjusted for
amortization of premiums and accretion of discount, is recorded
on the accrual
basis; (e) direct expenses are charged to each portfolio and
each class,
management fees and general expenses are allocated on the basis
of relative net
assets; (f) foreign currencies (and receivables and payables
for unsettled
foreign securities transactions) are translated into U.S.
dollars based on the
rate of exchange of such currencies against U.S. dollars on the
date of
valuation. Translation gains or losses resulting from changes
in the exchange
rate and realized gains and losses on the settlement of foreign
currency
transactions are reported in the statement of operations; (g)
during 1994, the
Fund adopted Statement of Position 93-2 Determination,
Disclosure, and Financial
-----------------------
- ----------------
Statement Presentation of Income, Capital Gain, and Return of
Capital -------------------------------------------------------
- -------------
Distributions by Investment Companies. Accordingly, book and
tax basis
- -------------------------------------
differences relating to shareholder distributions and other
permanent book and
tax differences are reclassified to paid-in capital. As of
October 31, 1994, the
cumulative effect of such differences, totaling $4,063,287, was
reclassified to
paid-in capital from accumulated net investment loss. Net
investment income, net
realized gains, and net assets were not affected by this
change.
12
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
In addition, $146,501 of unrealized forward foreign currency
losses were also
reclassified to paid-in capital for the period ended October
31, 1994; and (h)
the Portfolio intends to comply with the requirements of the
Internal Revenue
Code pertaining to regulated investment companies and to make
the required
distributions to shareholders; therefore no provision for
Federal income taxes
has been made. As of October 31, 1994, the Smith Barney World
Funds, Inc. had
changed its year-end from December 31 to October 31. This
change was done in
order to facilitate the administration of the Fund.
In addition, the Portfolio 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 TRANSACTIONS WITH AFFILIATED
PERSON
Smith Barney Mutual Fund Management Inc. ("SBMFM"),
formerly known as Smith
Barney Advisers, Inc., a subsidiary of Smith Barney Holdings
Inc. ("SBH"), acts
as investment manager of the Fund. The Global Government Bond
Portfolio pays
SBMFM a fee calculated at the annual rate of 0.75% on average
daily net assets;
the fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts
as distributor of
the Portfolio's shares. For the six months ended April 30,
1995, SB has advised
the Portfolio that it was paid sales charges of approximately
$9,000 by
purchasers of Fund shares.
Effective November 7, 1994, the Fund adopted a new class
structure renaming
Class B and C shares as Class C and Y shares, respectively.
Under the new class
structure, a contingent deferred sales charge ("CDSC") of 4.50%
is imposed on
Class B shares if redemption occurs less than one year from
initial purchase.
This CDSC declines by 0.50% the first year after purchase and
by 1.00% per year
thereafter until no CDSC is incurred. A CDSC of 1.00% is
imposed on Class C
shares if redemption occurs less than one year from initial
purchase. Any CDSC
imposed on redemptions is paid to SB. For the six months ended
April 30, 1995,
there were approximately $2,000 in such charges.
Pursuant to a Distribution Plan the Portfolio pays a
service fee with
respect to its Class A, B and C shares calculated at the annual
rate of
13
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio
- ---------------------------------------------------------------
- ----------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
0.25% of the average daily net assets of each respective class'
shares. The
Portfolio also pays a distribution fee with respect to Class B
and Class C
shares calculated at the annual rate of 0.50% and 0.45%,
respectively, of
average daily net assets for each respective class. All
officers and three
directors of the Fund are employees of SB.
3. INVESTMENTS
For the six months ended April 30, 1995, the aggregate
cost of purchases
and proceeds from sales of investments (including maturities,
but excluding
short-term securities) was $33,412,992 and $21,637,224,
respectively.
At April 30, 1995, the aggregate gross unrealized
appreciation and
depreciation of investments for tax purposes were as follows:
<TABLE>
<S>
<C>
===============================================================
== ===============
Gross unrealized appreciation
$3,637,763
Gross unrealized depreciation
(335,032) -----------------------------------------------------
- --------------------------
Net unrealized appreciation
$3,302,731
===============================================================
== ===============
</TABLE>
4. FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 1995, the Portfolio had open forward foreign
currency
contracts as described below. The Portfolio bears the market
risk that arises
from changes in foreign currency exchange rates. The unrealized
gain (loss) on
the contracts reflected in the accompanying financial
statements are as follows:
<TABLE>
<CAPTION>
Unrealized
Local
Market Settlement Gain
Foreign Currency Currency
Value Date (Loss)
===============================================================
== ======================================
<S> <C> <C>
<C> <C>
To Sell:
Belgian Franc 106,490,648 $
3,736,580 5/30/95 $ (44,116)
British Pound 2,770,160
4,458,006 5/30/95 (25,750)
Canadian Dollar 10,626,163
7,808,762 5/30/95 (250,229)
Danish Krone 27,391,048
5,046,158 5/30/95 (133,846)
Finnish Markka 20,939,203
4,918,770 5/30/95 (149,563)
French Franc 21,410,946
4,362,458 5/30/95 (38,325)
German Deutschemark 11,801,931
8,537,894 5/22/95 (107,943)
Irish Punt 4,488,414
7,315,721 5/30/95 (112,265)
Portuguese Escudo
619,836,202
4,229,665 5/30/95 (68,294)
Spanish Peseta 496,119,742
4,030,217 5/30/95 (198,289)
Swedish Krona 30,727,724
4,228,625 5/30/95 (43,427)
- ---------------------------------------------------------------
- ---------------------------------------
58,672,856 (1,172,047)
- ---------------------------------------------------------------
- ---------------------------------------
</TABLE>
14
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
<TABLE>
<CAPTION>
Unrealized
Local
Market Settlement Gain
Foreign Currency Currency
Value Date (Loss)
===============================================================
== ======================================
<S> <C> <C>
<C> <C>
To Buy:
German Deutschemark 6,500,000 $
4,702,308 5/22/95 $ 46,247 --------------------
- ---------------------------------------------------------------
- -------------------
Cross Forwards**:
Sell Canadian Dollar vs.
German Deutschemark
5,240,389 5/30/95 (124,102) -------------------
- ---------------------------------------------------------------
- --------------------
Total Market Value and
Unrealized Loss
on Forward Foreign
Currency Contracts
$68,615,553 $(1,249,902)
===============================================================
== ======================================
</TABLE>
<TABLE>
<CAPTION>
**Local Currency on Cross Forwards
Sell Buy
<S>
<C> <C> ----------------------------------------
- --------------------------------------------------------------
Sell Canadian Dollar vs. German Deutschemark
7,300,000 7,243,790
</TABLE>
5. PORTFOLIO CONCENTRATION
The Portfolio's investments in foreign securities may
involve risks not
present in domestic investments. Since securities may be
denominated in a
foreign currency and may require settlement in foreign
currencies and pay
interest or dividends in foreign currencies, changes in the
relationship of
these foreign currencies to the U.S. dollar can significantly
affect the value
of the investments and earnings of the Portfolio. Foreign
investments may
subject the Portfolio 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
currency contracts with respect to the potential inability of
counter parties to
meet the terms of their contracts.
15
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
6. CAPITAL SHARES
At April 30, 1995, the Fund had two billion shares of
$.001 par value
capital stock authorized. The Portfolio has the ability to
issue multiple
classes of shares. Each share of a class represents an
identical legal interest
in the Portfolio and has the same rights except that each class
bears certain
expenses, including those specifically related to the
distribution of its
shares. At April 30, 1995, total paid-in capital, including
adjustments for book
and tax difference discussed in Note 1, amounted to the
following for each
class:
<TABLE>
<CAPTION>
Class A Class B
Class C Class Y
===============================================================
== ==============================
<S> <C> <C>
<C> <C>
Total Paid-in Capital $65,817,724 $635,282
$4,915,480 $3,161,433
===============================================================
== ==============================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six
Months Ended Period Ended
April
30, 1995 October 31, 1994*
-----------------
--
- ------------ ------------------------------
Shares
Amount Shares Amount
===============================================================
== ==================================================
<S> <C>
<C> <C> <C>
Class A
Shares sold 287,866
$ 3,543,931 194,227 $ 2,467,800
Shares issued on reinvestment 95,006
1,108,885 230,834 2,800,281
Shares redeemed (1,457,943)
(17,014,958) (2,059,934) (25,206,264)
- ---------------------------------------------------------------
- ---------------------------------------------------
Net Decrease (1,075,071)
$(12,362,142) (1,634,873) $(19,938,183)
===============================================================
== ==================================================
Class B**
Shares sold 53,888
$ 636,065 -- --
Shares issued on reinvestment
97
1,134 -- --
Shares redeemed
(499,605)
(6,208,608) -- --
- ---------------------------------------------------------------
- ---------------------------------------------------
Net Decrease (445,620)
$ (5,571,409) -- --
===============================================================
== ==================================================
Class C+
Shares sold 526,703
$ 6,512,253 208,788 $ 2,634,361
Shares issued on reinvestment
9,110
106,286 19,019 229,506
Shares redeemed
(420,092)
(5,075,351) (113,045) (1,347,764)
- ---------------------------------------------------------------
- ---------------------------------------------------
Net Increase 115,721
$ 1,543,188 114,762 $ 1,516,103
===============================================================
== ==================================================
</TABLE>
* For the period from January 1, 1994 to October 31, 1994.
** For the period from November 18, 1994 (inception date) to
April 30, 1995.
+ On November 7, 1994 the former Class B shares were renamed
Class C shares.
16
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Notes to Financial Statements (unaudited) (continued) ---------
- ---------------------------------------------------------------
- -------
<TABLE>
<CAPTION>
Six
Months Ended Period Ended
April
30, 1995 October 31, 1994*
-----------------
--
- ------------ ------------------------------
Shares
Amount Shares Amount
===============================================================
== ==================================================
<S> <C>
<C> <C> <C>
Class Y++
Shares sold 277,678
$3,381,121 238,639 $3,001,255
Shares issued on reinvestment 5,157
60,097 6,874 81,160
Shares redeemed (24,182)
(279,785) (101) (1,173)
- ---------------------------------------------------------------
- ---------------------------------------------------
Net Increase 258,653
$3,161,433 245,412 $3,081,242
===============================================================
==
==================================================
</TABLE>
* For the period from January 1, 1994 to October 31, 1994.
++ On November 7, 1994 the former Class C shares were
renamed Class Y shares.
17
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Financial Highlights ------------------------------------------
- -------------------------------------
For a share of each capital stock outstanding throughout the
period:
<TABLE>
<CAPTION>
Class A Shares
1995(2) 1994(3) 1993 1992 1991(4)
===============================================================
== ============================================================
<S> <C>
<C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.68
$12.92 $11.84 $12.90 $12.00 ------------
- ---------------------------------------------------------------
- ------------------------------------------------Income (Loss)
From Investment Operations:
Net investment income 0.18
0.69 0.83 1.00 0.35
Net realized and unrealized
gain (loss) on investment 0.52
(1.28) 1.36 (0.90) 1.12 -------------
- ---------------------------------------------------------------
- -----------------------------------------------Total Income
(Loss) From Investment Operations 0.70
(0.59) 2.19 0.10 1.47 -------------
- ---------------------------------------------------------------
- -----------------------------------------------Less
Distributions:
Dividends from net investment income (0.39)
(0.23) (0.52) (0.97) (0.44)
Distribution from net realized gains (1) --
- -- (0.59) (0.19) (0.13)
Paid-in capital --
(0.42) -- -- ----------------
- ---------------------------------------------------------------
- ---------------------------------------------Total
Distributions (0.39)
(0.65) (1.11) (1.16) (0.57) ------------
- ---------------------------------------------------------------
- ------------------------------------------------Net Asset
Value, End of Period $11.99 $11.68
$12.92 $11.84 $12.90 ----------------------------
- ---------------------------------------------------------------
- --------------------------------Total Return
6.12%++ (4.87)%++ 19.13% 0.93%
12.42%++ ------------------------------------------------------
- ---------------------------------------------------------------
- ------Net Assets, End of Period (000s)
$67,172 $77,961 $107,415 $107,609 $99,855 ---
- ---------------------------------------------------------------
- ---------------------------------------------------------Ratios
to Average Net Assets:
Expenses
1.35%+
1.32%+ 1.30% 1.36% 1.15%+
Net investment income
3.44+
6.57+ 6.67 7.72 8.26+ -------------
- ---------------------------------------------------------------
- -----------------------------------------------Portfolio
Turnover Rate
33.57%
179.29% 119.06% 177.06% 63.46%
===============================================================
== ============================================================
Class B Shares
1995(5)
===============================================================
== ============================================================
Net Asset Value, Beginning of Period $ 11.57
- ---------------------------------------------------------------
- ------------------------------------------------------------
Income From Investment Operations:
Net investment income 0.23
Net realized and unrealized
gain on investment 0.46
- ---------------------------------------------------------------
- ------------------------------------------------------------
Total Income From Investment Operations 0.69
- ---------------------------------------------------------------
- ------------------------------------------------------------
Less Distributions:
Dividends from net investment income
(0.30) Distribution from net realized gains (1) --
Paid-in capital --
- ---------------------------------------------------------------
- ------------------------------------------------------------
Total Distributions
(0.30) --------------------------------------------------------
- ---------------------------------------------------------------
- ----Net Asset Value, End of Period $
11.96
- ---------------------------------------------------------------
- ------------------------------------------------------------
Total Return
6.59%++ -------------------------------------------------------
- ---------------------------------------------------------------
- -----Net Assets, End of Period (000s)
$644 ----------------------------------------------------------
- ---------------------------------------------------------------
- --Ratios to Average Net Assets:
Expenses
1.63%+
Net investment income
1.56+
- ---------------------------------------------------------------
- ------------------------------------------------------------
Portfolio Turnover Rate
33.57%
===============================================================
== ============================================================
</TABLE>
(1) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
(2) For the six months ended April 30, 1995 (unaudited).
(3) For the period from January 1, 1994 to October 31, 1994.
(4) For the period from July 22, 1991 (inception date) to
December 31, 1991.
(5) For the period from November 18, 1995 (inception date) to
April 30, 1995.
++ Not annualized as it may not be representative of the total
return for the
year.
+ Annualized.
18
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio
- ---------------------------------------------------------------
- ----------------
Financial Highlights (continued) ------------------------------
- -------------------------------------------------
For a share of each capital stock outstanding throughout the
period:
<TABLE>
<CAPTION>
Class C Shares(2)
1995(3) 1994(4) 1993(5)
===============================================================
== ========================================
<S>
<C> <C> <C>
Net Asset Value, Beginning of Period
$11.68 $12.93 $11.83
- ---------------------------------------------------------------
- -----------------------------------------
Income (Loss) From Investment Operations:
Net investment income
0.16 0.90 0.79
Net realized and unrealized
gain (loss) on investment
0.45 (1.55) 1.37 ------------------------
- ---------------------------------------------------------------
- -----------------
Total Income (Loss) From Investment Operations
0.61 (0.65) 2.16 ------------------------
- ---------------------------------------------------------------
- -----------------
Less Distributions:
Dividends from net investment income
(0.36) (0.21) (0.47)
Distribution from net realized gains (1) -- --
(0.59)
Paid-in capital
- -- (0.39) -
- ---------------------------------------------------------------
- -----------------------------------------
Total Distributions
(0.36) (0.60) (1.06)
- ---------------------------------------------------------------
- -----------------------------------------
Net Asset Value, End of Period
$11.93 $11.68 $12.93 ----------------------
- ---------------------------------------------------------------
- -------------------
Total Return
5.33%++ (5.33)%++ 18.89%++ ---------------------
- ---------------------------------------------------------------
- --------------------
Net Assets, End of Period (000s)
$4,649 $5,835 $4,972 ----------------------
- ---------------------------------------------------------------
- -------------------
Ratios to Average Net Assets:
Expenses
1.77%+ 1.80%+ 1.74%+
Net investment income
3.18+ 6.05+ 6.28+ -----------------------
- ---------------------------------------------------------------
- ------------------
Portfolio Turnover Rate
33.57% 179.29% 119.06%
===============================================================
== ========================================
</TABLE>
(1) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
(2) On November 7, 1994 the former Class B shares were renamed
Class C shares.
(3) For the six months ended April 30, 1995 (unaudited).
(4) For the period from January 1, 1994 to October 31, 1994.
(5) For the period from January 4, 1993 (inception date) to
December 31, 1993.
++ Not annualized as it may not be representative of the total
return for the
year.
+ Annualized.
19
<PAGE>
Smith Barney World Funds, Inc.
Global Government Bond Portfolio ------------------------------
- -------------------------------------------------
Financial Highlights (continued) ------------------------------
- -------------------------------------------------
For a share of each capital stock outstanding throughout the
period:
<TABLE>
<CAPTION>
Class Y Share(2)
1995(3) 1994(4) 1993(5)
===============================================================
== ========================================
<S>
<C> <C> <C>
Net Asset Value, Beginning of Period
$11.68 $12.93 $11.97
- ---------------------------------------------------------------
- -----------------------------------------
Income (Loss) From Investment Operations:
Net investment income
0.22 0.76 0.69
Net realized and unrealized
gain (loss) on investment
0.34 (1.35) 1.23
- ---------------------------------------------------------------
- -----------------------------------------
Total Income (Loss) From Investment Operations
0.56 (0.59) 1.92
- ---------------------------------------------------------------
- -----------------------------------------
Less Distributions:
Dividends from net investment income
(0.40) (0.23) (0.37)
Distribution from net realized gains
(1) -- --
(0.59)
Return of capital
- -- (0.43) --
- ---------------------------------------------------------------
- -----------------------------------------
Total Distributions
(0.40) (0.66) (0.96)
- ---------------------------------------------------------------
- -----------------------------------------
Net Asset Value, End of Period
$11.84 $11.68 $12.93
- ---------------------------------------------------------------
- -----------------------------------------
Total Return
4.93%++ (4.86)%++ 16.49%++ ---------------------
- ---------------------------------------------------------------
- --------------------
Net Assets, End of Period (000s)
$3,063 $3,202 $ 371
- ---------------------------------------------------------------
- -----------------------------------------
Ratios to Average Net Assets:
Expenses
0.91%+ 1.23%+ 1.20%+
Net investment income
3.97+ 6.76+ 6.73+
- ---------------------------------------------------------------
- -----------------------------------------
Portfolio Turnover Rate
33.57% 179.29% 119.06%
===============================================================
== ========================================
</TABLE>
(1) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
(2) On November 7, 1994 the former Class C shares were renamed
Class Y shares.
(3) For the six months ended April 30, 1995 (unaudited).
(4) For the period from January 1, 1994 to October 31, 1994.
(5) For the period from February 19, 1993 (inception date) to
December 31, 1993.
++ Not annualized as it may not be representative of the
total
return for the
year.
+ Annualized.
20
<PAGE>
Smith Barney
World Funds, Inc.
Directors
Victor Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
Bruce D. Sargent
James M. Shuart
Officers
Maurits E. Edersheim
Chairman of the Fund
& Advisory Director
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
James B. Conheady
Vice President
Victor S. Filatov
Vice President
Simon R. Hildreth
Vice President
Denis P. Mangan
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Rein W. van der Does
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
Smith Barney --------
----
A Member of the TravelersGroup
[LOGO APPEARS HERE]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
J.P. Morgan & Co. Incorporated
Shareholder
Servicing Agent
The Shareholder Servicing Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the
shareholders of
Smith Barney World Funds, Inc. Global Government Bond
Portfolio. It is not
authorized for distribution to prospective investors unless
accompanied or
preceded by a current Prospectus for the Portfolio, which
contains information
concerning the Portfolio's investment policies and expenses as
well as other
pertinent information.
Smith Barney
World Funds, Inc.
388 Greenwich Street
New York, New York 10013
FD0627F5
<PAGE> --------------------------------------------------------------
- --------
--------SEMI-ANNUAL REPORT
- ---------------------------------------------------------------------
- ----------
[ARTWORK APPEARS HERE]
Smith Barney
World Funds, Inc.
European Portfolio
Pacific Portfolio
International
Balanced Portfolio -------------------------
---------------------April 30, 1995
[LOGO OF SMITH BARNEY MUTUAL FUNDS APPEARS
HERE] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- ----------------------------------------------------------------------------
- --European, Pacific and
International Balanced Portfolios ------------------------------------------
- -------------------------------------
Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Smith
Barney World Funds: European, Pacific and International Balanced Portfolios
for the period ended April 30, 1995. The report includes Portfolio
Highlights, Schedules of Investments, and unaudited financial statements for
each of the three Portfolios. Please note that the performance information
in the Portfolio Highlights section excludes sales charges. For more
information on performance, please refer to the Average Annual Total Return
charts on pages 7, 10, and 13 of this report.
Portfolio Highlights
European Portfolio
The European Portfolio had a total return of 4.66% for the six months and
8.62% for the 12 months (Class A shares) ended April 30, 1995. A flight to
safety has dominated global financial markets since Mexico's devaluation of
the peso in December 1994, refocusing investors' attention on Europe's
relatively safe-haven status. The story for Europe is quite simple. The
European economic upturn, which has lagged the economic recovery in the U.S.
by 18 months, is continuing. In the U.S., however, the economy is
decelerating.
In our opinion, the improved economic environment in Europe, combined with
the heavy corporate restructuring which occurred during the recession years
from 1991 to 1993, will result in excellent earnings comparisons throughout
1995 and into 1996. While we estimate that the earnings of the Standard &
Poor's 500 Stock Index, a common proxy for the U.S. stock market, will
advance by only 10.9% and 0.7% in 1995 and 1996, respectively,
the consensus for Europe
is a 30 to 35% average increase in 1995 and a 10 to 15% rise next year.
Valuations in Europe, except Germany, are cheaper than in the U.S. For
example, currently most European stocks have a price/earnings (P/E) ratio of
from 11 to 13 times earnings. In the U.S., the average P/E multiple is now
at 14.7 times earnings.
In terms of investment strategy, the European Portfolio is heavily
underweighted in the United Kingdom, relative to the MSCI European Index.
This is because the
British economic cycle is about 12 months ahead of Continental Europe and
both short- and long-term interest rates have already gone up. Moreover, we
feel that the corporate earnings cycle should be more explosive on the
Continent. We have overweighted Ireland relative to the Index because we
believe that economic conditions there are far superior to those in the U.K.
We also tend to
1
<PAGE> overweight Austria as a means of participating in the exciting new
developments in Eastern Europe. Germany's weighting has been upgraded to
neutral, as the German economy is performing much better than anticipated
12
months ago. We have underweighted Switzerland because most Swiss companies
are export-oriented, and the strong Swiss franc will penalize earnings.
We sharply increased our position in France, adding Euro Disney, Louis
Vuitton Moet Hennessy, Valeo, Total and Michelin, due to the reasonably
priced valuations of French companies compared to neighboring Germany. Also,
the recent victory of Mr. Chirac as the new president of France might be a
positive factor for the depressed and under-owned Paris stock market. In
addition, the Portfolio is overweighted in the Netherlands due to
investments in a few attractive special situations such as Hoogovens
(steel), Grolsch (beer) and IHC-Caland (dredging equipment).
In the coming months European companies should continue to benefit from a
solid economic recovery which is taking place throughout the region.
European markets are showing good relative strength given the underpinnings
of corporate earnings recovery, improved backlogs, cost-cutting and merger
activity. Indeed, Europe represents, in our view, a conservative way for
investors to participate in the long-term growth potential of foreign stock
markets.
We would like to point out that on April 21, 1995, the Smith Barney European
Fund was merged into the Smith Barney World Funds European Portfolio,
increasing the Portfolio's assets to $38 million.
Pacific Portfolio
During the second half of 1994 and the first quarter of 1995, several
factors combined to have a primarily negative impact on the world's
financial markets, including those in the Pacific Basin. For the six months
ended April 30, 1995, the Pacific Portfolio had a total return of -17.72%
and for the 12-month period ended April 30, 1995, it produced a total return
of -14.21% for Class A shares.
Rising U.S. interest rates were a primary force behind declines in key
markets around the globe in the second half of 1994. This situation was
exacerbated in Japan where a gradual economic recovery was stalled by the
effects of a major earthquake in Kobe and the nerve gas attack which
occurred on the Tokyo subway system. In addition, virtually all emerging
markets, such as those in Southeast Asia, felt the impact of the political
developments in Mexico, where the peso plummeted after being freed to float
against the dollar in December 1994.
Currency also played a role in the region's economic performance during the
period. As 1995 began, the U.S. dollar declined dramatically against the
Japanese yen. The yen appreciated by approximately 15%, causing much
uncertainty in financial markets in Japan and elsewhere in the Pacific
Basin. Exports, which have driven Japan's growth in the past, were
constrained by the strength of the yen, which made Japanese products less
competitive abroad.
2
<PAGE>
Our portfolio management strategy during this period was based on our belief
that a high-growth, low-inflation environment will continue to be the key
factor behind the region's development. We remain underweighted in Japan,
where a gradual recovery is taking place, relative to the major Pacific
Basin indexes.
We are overweighted, however, in the other major markets of Southeast Asia
where economic growth is quite vibrant.
We have increased the Portfolio's weighting in Singapore, the tiny city-
state that serves as the area's economic hub. Inflation and interest rates
are low, the saving rate is high and foreign investments continue to infuse
capital into the Singapore economy. As European, American, and even Japanese
investors increase their positions in Singapore's financial and
manufacturing community, real estate prices should rise and provide a strong
underpinning for the economy itself.
Indonesia is another country where we see extremely solid growth potential.
We have recently increased the Portfolio's weighting there with a position
in Indonesian Satellite, which is Indonesia's satellite communications
company. With Indonesia's far-flung system of 10,000 islands, there is a
huge need for cellular phones and the ability to send messages by satellite.
We view such areas as utilities, telecommunications, and consumer non-
durables as strong
sectors for investment in Southeast Asia, as a vast middle class increases
its consumption of these goods and services.
Looking forward, we have a positive viewpoint on the potential for
impressive growth in Southeast Asia. We think that inflation will remain
low, commodity prices will stay low to moderate and that capital flow into
the region should remain high. We also believe that productivity should
continue to be quite high and that capital expenditures in the outlying
countries should remain moderate or even grow, which is a positive trend. In
Japan, the economic recovery should continue in 1995. The Pacific Basin as a
whole is not only still growing, but is also participating in the continued
recovery of the western economies. These positive factors should provide our
shareholders with strong investment returns over the long term.
International Balanced Portfolio
The International Balanced Portfolio is designed to seek long-term growth
through a balanced approach to investments in international equity and bond
markets. For the six months ended April 30, 1995, the Portfolio produced a
total return for Class A shares of -1.28%. Since its inception on August 25,
1994, the Portfolio has generated a total return for Class A shares of
0.36%.
International Balanced Portfolio: Equity
The international equity markets were roiled by several themes in 1994 and
the first quarter of 1995. In February 1994 the Federal Reserve Board began
to raise short-term interest rates. This action drove stock prices down, not
only in the U.S., but also in most major markets worldwide.
3
<PAGE>
As the year came to a close in December, political and financial instability
in Mexico forced officials to let the peso float freely against the dollar
resulting in a sharp devaluation in the peso. The events in Mexico had a
broad brush effect causing a crisis of confidence in Latin American markets
and a sell-off in virtually all emerging markets.
Since January, anxiety over the decline of the U.S. dollar has emerged as a
factor in international equity market weakness. The strength of the local
currencies such as the Japanese yen and the German mark made exports less
attractive and depressed corporate earnings overseas.
After Mexico's devaluation of the peso, we lightened our exposure to the
Americas region from 18.8% of the Equity portion of the Portfolio to 13.9%.
At the same time, we increased the Equity portion's exposure to the European
region from 54.5% to 58.5%. Our largest holdings continue to be in Europe
with the major concentration in Ireland, Italy, Sweden, and Austria. Europe
is enjoying a solid economic recovery which is becoming more deeply
distributed throughout
various sectors of the economy.
The Pacific Rim is our second largest regional holding with a weighting of
22.1%. The Equity portion of the Portfolio remains underweighted in Japan
relative to the major international equity indexes. On the other hand, it is
overweighted in Malaysia, Singapore, Hong Kong, and Thailand. The
extraordinary strength of the yen has once again placed the Japanese economy
under great duress. We also believe it is likely that Japanese manufacturing
firms will continue to invest directly throughout the Pacific Rim in order
to lower labor costs. The smaller Southeast Asian markets have suffered
major corrections, largely due to U.S. interest-rate increases. Local market
valuations are now below 10-year averages while overall, regional growth
continues at the high end of the global scale.
In our view, the difficult conditions seen in international equity markets
throughout 1994 and into the new year, are most likely past us. In recent
weeks the dollar has stabilized, appreciating against the yen and mark.
Foreign bond markets have firmed on news that the U.S. may be finished with
its series of interest-rate hikes due to signs of a slowing economy. In
addition, international corporate fundamentals continue to be solid, and in
many cases during the past quarter, exceptionally strong.
International Balanced Portfolio: Fixed-Income
The fixed-income component of the International Balanced Portfolio was a
beneficiary of the strong rally in worldwide bond markets which began in the
U.S. in November of 1994 and spread to markets overseas. U.S. bond prices
rose on evidence that the Federal Reserve's series of increases in short-
term interest rates since early February 1994 had tempered growth and
contained inflation.
4
<PAGE>
Another positive factor for the fixed-income portion of the Portfolio was
the dramatic fall of the dollar against the mark which began in January
1995. To take advantage of the dollar's decline, we reduced the fixed-income
portfolio's exposure to dollar-denominated assets from a weighting of 75% to
50%. This ultimately benefits the portfolio because more dollars are
obtained when the foreign investment is converted back to dollars.
To offset the impact of the Mexican financial crisis in December 1994, we
sold one-third of our emerging market holdings to protect the portfolio from
further price erosion in that sector.
We believe that the environment for international bond markets looks
positive in the near future. International bond prices should improve as
investors become more confident of a worldwide economic recovery with
moderate growth and slowing inflation. We also believe that the dollar has
reached a low point and is cheap compared to currencies in Europe and Japan.
These factors should cause it to rebound in the coming months. Finally, a
degree of stability is returning to emerging markets which should begin to
recover from their levels of earlier this year.
We thank you for your investment in the Portfolios and your continued
confidence in our investment management.
Sincerely,
/s/ Heath B. McLendon /s/ Denis P. Mangan
Heath B. McLendon Denis P. Mangan
Chairman and Vice President
Chief
Executive Officer
/s/ James B. Conheady /s/ Jeffrey J.
Russell
James B. Conheady Jeffrey J. Russell
Vice President Vice President
/s/ Victor S. Filatov /s/ Rein W. van
der
Does
Victor S. Filatov Rein W. van der
Does
Vice President Vice President
May 26, 1995
5
<PAGE> Smith Barney World Funds, Inc.
European Portfolio ------------------------------------------------------
- ------------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>
4/30/95 $12.88 $13.48 $0.00 $0.00
4.66%
- ------------------------------------------------------------------------------------------------
- --Inception*-10/31/94 12.50 12.88 0.00 0.00 3.04
================================================================================================
== == Total $0.00 $0.00
================================================================================================
== == </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*-4/30/95 $12.62 $13.43 $0.00 $0.00
6.42%
================================================================================================
== == </TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class C 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>
4/30/95 $12.83 $13.38 $0.00 $0.00
4.29% ------------------------------------------------------------------------------------------
- --------Inception*-10/31/94 12.48 12.83 0.00 0.00 2.80
================================================================================================
== == Total $0.00 $0.00
================================================================================================
== == </TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
6
<PAGE>
Smith Barney World Funds, Inc.
European Portfolio --------------------------------------------------------
- --
Average Annual Total Return -------------------------------------------
- ----------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
---------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Six Months Ended 4/30/95 4.66% N/A 4.29%
- --------------------------------------------------------------------------------
Year Ended 4/30/95 8.62 N/A 7.90
- --------------------------------------------------------------------------------
Inception* through 4/30/95 6.36 6.42% 5.95
- --------------------------------------------------------------------------------
<CAPTION>
With Sales Charge/(2)/ ---------------------
--------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Six Months Ended 4/30/95 (0.59)% N/A 3.29%
- --------------------------------------------------------------------------------
Year Ended 4/30/95 3.22 N/A 6.90
- --------------------------------------------------------------------------------
Inception* through 4/30/95 1.97 1.42% 5.95
- --------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
Cumulative Total Return ------------------------------------------------------------------------
- -------
Without Sales Charge/(1)/
================================================================================
<S> <C>
Class A (Inception* through 4/30/95) 7.84%
- --------------------------------------------------------------------------------
Class B (Inception* through 4/30/95) 6.42
- --------------------------------------------------------------------------------
Class C (Inception* through 4/30/95) 7.21
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred
sales charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at
net asset value. In addition, Class A shares reflect the deduction of
the maximum initial sales charge of 5.00%; Class B shares reflect the
deduction of a 5.00% CDSC which applies if shares are redeemed less than
one year from initial purchase and declines by 1.00% per year until no
CDSC is incurred. Class C shares reflect the deduction of a 1.00% CDSC
which applies if shares are redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are February 7, 1994, November
7, 1994 and February 14, 1994, respectively.
7
<PAGE> Smith Barney World Funds, Inc.
European Portfolio ---------------------------------------------------------
- ------------Historical Performance
- ----------------------------------------------------------------------------
- ---
Growth of $10,000 Invested in Class A Shares of
European Portfolio vs.
The European Financial Times
Index+
(unaudited)
- -------------------------------------------------------------------------
-----February 1994 - April 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATE EUROPEAN EUROPEAN FINANCIAL TIMES
INDEX
---- -------- ----------------------------
- -
- -
<S> <C> <C>
2/7/94 9,549.00 10,000.00
2/94 9,396.00
10,000.00
3/94 9,274.00
10,042.00
4/94 9,480.00
10,575.00
5/94 9,220.00
10,051.00
6/94 8,984.00
9,821.00
7/94 9,595.00
10,384.00
8/94 9,839.00
10,569.00
9/94 9,541.00
10,116.00
10/94 9,839.00
10,431.00
11/94 9,335.00
10,001.00
12/94 9,350.00
10,047.00
1/95 9,327.00
10,000.00
2/95 9,625.00
10,180.00
3/95 9,885.00
10,415.00
4/95 10,297.00
10,844.00
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares on
February
7,
1994 (inception), assuming deduction of the maximum 4.50% sales charge at
the time of investment and the reinvestment of dividends and capital gains
at net asset value through April 30, 1995. The European Financial Times
Index is a composite portfolio consisting of equity total returns for
Europe. The Index is unmanaged and is not subject to the same management
and trading expenses of a mutual fund. The performance of the Portfolio's
other classes may be greater or less than the Class A shares' performance
indicated on this chart, depending on whether greater or lesser sales
charges and fees were incurred by shareholders investing in the other
classes.
All figures represent past performance and are not a guarantee of future
results. Investments 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.
8
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio ----------------------------------------------------------
- --------------------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>
4/30/95 $12.92 $10.63 $0.00 $0.00
(17.72)% ---------------------------------------------------------------------------------------
- -----------Inception*-10/31/94 12.50 12.92 0.00
0.00 3.36
================================================================================================
== == Total $0.00 $0.00
================================================================================================
== == </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*-4/30/95 $12.64 $10.57 $0.00 $0.00
(16.38)%
============================================================================
== == </TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class C 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>
4/30/95 $12.86 $10.54 $0.00 $0.00
(18.04)%
- ------------------------------------------------------------------------------------------------
- --Inception*-10/31/94 12.50 12.86 0.00 0.00 2.88
================================================================================================
== == Total $0.00 $0.00
================================================================================================
== == </TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
9
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio ----------------------------------------------------------
- --------------------Average Annual Total Return --------------
- ------------
- -----------------------------------------------------<TABLE>
<CAPTION>
Without Sales Charge/(1)/
--------------------------------
-Class A Class B
Class C
============================================================================
== == <S> <C> <C>
<C>
Six Months Ended 4/30/95 (17.72)% N/A
(18.04)% -------------------------------------------------------------------
- -----------Year Ended 4/30/95 (14.21) N/A
(14.79) --------------------------------------------------------------------
- ----------Inception* through 4/30/95 (12.39) (16.38)%
(13.00) --------------------------------------------------------------------
- -----------
<CAPTION>
With Sales Charge/(2)/ --
-------------------------------
Class A Class B Class
C
============================================================================
== == <S> <C> <C>
<C>
Six Months Ended 4/30/95 (21.84)% N/A
(18.86)% -------------------------------------------------------------------
- -----------Year Ended 4/30/95 (18.48) N/A
(15.65) --------------------------------------------------------------------
- ----------Inception* through 4/30/95 (16.00) (20.56)%
(13.00) --------------------------------------------------------------------
- ----------</TABLE>
- ----------------------------------------------------------------------------
- --Cumulative Total Return --------------------------------------------------
- -----------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
============================================================================
== == <S> <C>
Class A (Inception* through 4/30/95) (14.96)%
- ----------------------------------------------------------------------------
- --Class B (Inception* through 4/30/95) (16.38)
- ----------------------------------------------------------------------------
- --Class C (Inception* through 4/30/95) (15.68)
- ----------------------------------------------------------------------------
- --</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at
net asset value and does not reflect deduction of the applicable sales
charge with respect to Class A shares or the applicable contingent
deferred sales charges ("CDSC") with respect to Class B and Class C
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at
net asset value. In addition, Class A shares reflect the deduction of
the maximum initial sales charge of 5.00%; Class B shares reflect the
deduction of a 5.00% CDSC which applies if shares are redeemed less than
one year from initial purchase and declines by 1.00% per year until no
CDSC is incurred. Class C shares reflect the deduction of a 1.00% CDSC
which applies if shares
are redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are February 7, 1994,
November 7, 1994 and February 11, 1994, respectively.
10
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio ----------------------------------------------------------
- --------------------Historical Performance ---------------------------------
- ----------------------------------------------
Growth of $10,000 Invested in Class A Shares of
Pacific Portfolio vs. The MSCI Pacific
Index+
(unaudited)
------------------------------------------------
------------------------------February 1994 -
April 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATE PACIFIC J.P. MORGAN PACIFIC BASIN
INDEX
---- -------- -----------------------------
- --
<S> <C> <C>
2/7/94 9,549.00 10,000.00
2/94 9,526.00
10,250.00
3/94 9,236.00
9,677.00
4/94 9,465.00
10,088.00
5/94 9,495.00
10,321.00
6/94 9,127.00
10,651.00
7/94 9,373.00
10,415.00
8/94 9,992.00
10,241.00
9/94 9,723.00
9,978.00
10/94 9,870.00
10,222.00
11/94 8,976.00
9,653.00
12/94 8,815.00
9,719.00
1/95 7,914.00
9,107.00
2/95 8,113.00
8,883.00
3/95 8,105.00
9,567.00
4/95 8,120.00
9,975.00
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares on
February
7,
1994 (inception), assuming deduction of the maximum 4.50% sales charge at
the time of investment and the reinvestment of dividends and capital gains
at net asset value through April 30, 1995. The J.P. Morgan Pacific Basin
Index is a composite portfolio consisting of equity total returns for the
countries of Australia, New Zealand and countries in the Far East. The
Index is unmanaged and is not subject to the same management and trading
expenses of a mutual fund. The performance of the Portfolio's other
classes may be greater or less than the Class A shares' performance
indicated on this chart, depending on whether greater or lesser sales
charges and fees were incurred by shareholders investing in the other
classes.
All figures represent past performance and are not a guarantee of future
results. Investments 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.
11 <PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio -------------------------------------------
- -----------------------------------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>
4/30/95 $12.20 $11.82 $0.21 $0.00
(1.28)%
- ------------------------------------------------------------------------------------------------
- --Inception*-10/31/94 12.00 12.20 0.00 0.00 1.67
================================================================================================
== == Total $0.21 $0.00
===========================================================================
== == </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*-4/30/95 $12.08 $11.84 $0.16 $0.00
(0.59)%
=================================================================
== == </TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class C 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>
4/30/95 $12.18 $11.82 $0.16 $0.00
(1.57)%
- ----------------------------------------------------------------------------------------
Inception*-10/31/94 12.00 12.18 0.00 0.00 1.50
====================================================================================== == Total
$0.16 $0.00
============================================================================================= ==
</TABLE>
It is the Fund's policy to distribute dividends quarterly and capital gains,
if any, annually.
12
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio ---------------------------------------
Average Annual Total Return --------------------------------------------
- -<TABLE>
<CAPTION>
Without Sales Charge/(1)/ --------------------
--------------
-Class A Class B Class
C
===================================================
<S> <C> <C>
<C>
Six Months Ended 4/30/95 (1.28)% N/A
(1.57)%
- ------------------------------------------------------------
- -Inception* through 4/30/95 0.36 (0.59)%
(0.09)
- ------------------------------------------------------------
<CAPTION>
With Sales Charge/(2)/ -----------------------
-----------
Class A Class B Class
C
=========================================================================
<S> <C> <C>
<C>
Six Months Ended 4/30/95 (6.20)% N/A
(2.54)%
- ------------------------------------------------------------------------------
- -Inception* through 4/30/95 (4.64) (5.49)%
(1.07)
- ------------------------------------------------------------------------------
- -</TABLE>
- ------------------------------------------------------------------------------
- -Cumulative Total Return ----------------------------------------
- --------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
==============================================================================
== <S> <C>
Class A (Inception* through 4/30/95) 0.36%
- ----------------------------------------------------------------------------
- --Class B (Inception* through 4/30/95) (0.59)
- ----------------------------------------------------------------------------
- --Class C (Inception* through 4/30/95) (0.09)
- ----------------------------------------------------------------------------
- --</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at
net asset value and does not reflect deduction of the applicable sales
charge with respect to Class A shares or the applicable contingent
deferred sales charges ("CDSC") with respect to Class B and Class C
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at
net asset value. In addition, Class A shares reflect the deduction of
the maximum initial sales charge of 5.00%; Class B shares reflect the
deduction of a 5.00% CDSC which applies if shares are redeemed less than
one year from initial purchase and declines by 1.00% per year until no
CDSC is incurred. Class C shares reflect the deduction of a 1.00% CDSC
which applies if shares are redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are August 25, 1994,
November 7, 1994 and August 25, 1994, respectively.
13 <PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio -------------------------------------------
- -----------------------------------Historical Performance -----------
- --------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
International Balanced
Portfolio vs. The Morgan Stanley
EAFE-GDP Weighted Index and
The J.P. Morgan Global Bond
Index (unaudited)
- ----------------------------------------------------------------------------
--August 1994 - April 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATE INTERNATIONAL BALANCED EAFE INDEX J.P. MORGAN GLOBAL BOND INDEX
--- ---------------------- ---------- ----------------------------
<S> <C> <C> <C>
8/25/94 9,546.00 10,000.00 10,000.00
8/94 9,546.00 10,030.00
9,994.00
9/94 9,467.00 9,666.00
10,043.00
10/94 9,705.00 9,984.00
10,194.00
11/94 9,395.00 9,473.00
10,066.00
12/94 9,233.00 9,534.00
10,089.00
1/95 9,048.00 9,170.00
10,293.00
2/95 9,137.00 9,146.00
10,558.00
3/95 9,240.00 9,720.00
11,096.00
4/95 9,581.00 10,088.00
11,272.00
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares on August
25,
1994 (inception), assuming deduction of the maximum 4.50% sales charge at
the time of investment and the reinvestment of dividends and capital gains
at net asset value through April 30, 1995. The Morgan Stanley EAFE-GDP
Weighted Index is a composite portfolio consisting of equity total returns
for the countries of Europe, Australia, New Zealand and countries in the
Far East, weighted based on each country's gross domestic product. The
Indices are unmanaged and are not subject to the same management and
trading expenses of a mutual fund. The performance of the Portfolio's
other classes may be greater or less than the Class A shares' performance
indicated on this chart, depending on whether greater or lesser sales
charges and fees were incurred by shareholders investing in the other
classes.
All figures represent past performance and are not a guarantee of future
results. Investments 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.
14
<PAGE>
Smith Barney World Funds, Inc.
European Portfolio ---------------------------------------------------------
- ---------------------Schedules of Investments (unaudited)
April 30, 1995 -------------------------------------------------------------
- -----------------<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
=======================================================================================
== == <C>
<S> <C>
STOCKS -- 100.0%
Austria -- 8.2%
9,000 Bau Holding AG Preferred $
466,398
26,000 Baumax AG Preferred
1,194,991
83,000 Fotex Elso Amerikai Magyar Austrian Certified
145,508
12,000 VA Technologie AG
1,327,630 ------------------------------------------------------------------------------
- ----------
3,134,
5 27
- ----------------------------------------------------------------------------------------
- -- Canada -- 0.2%
242,957 International UNP Holdings Ltd.
98,197 ---------------------------------------------------------------------------------
- --------- Finland -- 6.2%
48,000 Nokia OY AB Shares A
1,961,945
16,600 Outokumpu OY Series A
297,139
43,333 Tampella AB
109,936 --------------------------------------------------------------------------------
- ---------
2,369,
02 0
- ----------------------------------------------------------------------------------------
- -- France -- 21.0%
7,558 Castorama Dubois Investment
1,253,507
7,626 Compagnie Generale Des Eaux
804,863
400,000 Euro Disney SCA
1,181,744
13,568 Guilbert S.A.
1,230,187
5,000 Louis Vuitton Moet Hennessy
952,526
23,200 Michelin CGDE Series B
1,042,298
3,074 Societe Nationale Elf Aquitaine
245,958
16,344 Total Series B
1,022,999
4,000 Valeo S.A.
228,199 --------------------------------------------------------------------------------
- ---------
7,962,
28 1
- ----------------------------------------------------------------------------------------
- -- Germany -- 14.7%
2,000 Bayer AG
494,104
2,700 Buderus AG Lahn Wetzlar
1,445,417
2,875 GEA AG Non-Voting Preferred
942,180
900 Grohe Friedrich Non-Voting Preferred
297,548
1,430 Linde AG
824,503
4,000 Mannesmann AG
1,088,042
1,000 Moebel Walter Preferred
486,146 --------------------------------------------------------------------------------
- ---------
5,577,
94 0
- ----------------------------------------------------------------------------------------
- -- Ireland -- 4.9%
140,000 CRH PLC
864,832
215,000 Independent Newspapers PLC
981,207 --------------------------------------------------------------------------------
- ---------
1,846,
03 9
- ----------------------------------------------------------------------------------------
- -- </TABLE>
See Notes to Financial Statements
15
<PAGE>
Smith Barney World Funds, Inc.
European Portfolio ------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1995
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
========================================================================================
== = <C> <S>
<C>
Italy -- 5.4%
130,000 Fiat S.p.A. $
528,887
17,000 Industrie Natuzzi S.p.A. ADR
635,375
325,000 Stet Di Risp NC
744,231
50,000 Telecom Italia S.p.A.
133,084 --------------------------------------------------------------------------------
- ---------
2,041,
57 7
- ----------------------------------------------------------------------------------------
- -- Norway -- 1.0%
4,000 Norsk Hydro AS ADR
160,500
8,000 Petroleum Geo Services AS
218,579 --------------------------------------------------------------------------------
- ---------
379,
07 9
- ----------------------------------------------------------------------------------------
- -- Netherlands -- 12.6%
20,000 Grolsch CTA
709,998
2,000 Heineken N.V.
357,426
32,500 Hoogovens & Staalfabrieken Non Exchangeable Certified
1,254,437
10,000 IHC Caland N.V.
273,672
20,000 NBM Amstelland N.V.
262,054
10,200 Royal Dutch Petroleum Co.
1,260,763
6,000 VNU Verenigd Bezit N.V.
672,304 --------------------------------------------------------------------------------
- ---------
4,790,
65 4
- ----------------------------------------------------------------------------------------
- -- Spain -- 3.1%
20,560 Repsol S.A.
654,713
16,000 Repsol S.A. ADR
512,000 --------------------------------------------------------------------------------
- ---------
1,166,
71 3
- ----------------------------------------------------------------------------------------
- -- Sweden -- 5.6%
9,100 Asea AB Series A Free
767,663
18,000 Hennes Mauritz Series B Free
1,216,250
7,500 Volvo AB Series B Free
140,884 --------------------------------------------------------------------------------
- ---------
2,124,
79 7
- ----------------------------------------------------------------------------------------
- -- Switzerland --5.3%
1,560 Ciba Geigy AG Basel Registered
1,070,963
1,200 Magazine Globus PTG Certified
799,475
1,200 SMH Neuchatel S.A. Registered
140,806 --------------------------------------------------------------------------------
- ---------
2,011,
24 4
- ----------------------------------------------------------------------------------------
- -- United Kingdom -- 11.8%
124,004 Barclays Bank PLC
1,275,182
3,482 BTR PLC Warrants, expire 12/31/98(a)
1,961
30,634 Cable & Wireless PLC
197,936
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney World Funds, Inc.
European Portfolio -------------------------------------------
- ----------
Schedules of Investments (unaudited) (continued) April 30, 1995
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
==========================================================================
== = <C> <S>
<C>
United Kingdom -- 11.8% (continued)
50,000 Carlton Communications PLC $
759,587
92,000 Norweb ORD
969,761
8,000 Vodafone Group PLC Sponsored ADR
255,000
182,774 Wolseley PLC
1,023,598 ------------------------------------------------------------------------------
- ------------
4,483,025 ------------------------------------------------------------------------------
- -----------
TOTAL INVESTMENTS -- 100%
(Cost -- $31,714,729)++
$37,985,093
=======================================================================================
== == </TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio --------------------------------------------------------
- ---------Schedules of Investments (unaudited) (continued) April 30,
1995 --------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
=======================================================================================
== == <C>
<S> <C>
STOCKS -- 100.0%
Australia -- 2.8%
35,498 Coca Cola Amatil Ltd. $
217,018 -------------------------------------------------------------------------------
- ----------Hong Kong -- 13.5%
400,000 Guangzhou Investment Ltd.
64,091
40,000 Guoco Group Ltd.
151,958
72,000 Hong Kong & China Gas Co.
104,665
5,000 Hong Kong & China Gas Co. Ltd. Warrants, expire 12/31/95(a)
569
6,000 Hong Kong Telecommunications Ltd. Sponsored ADR
117,000
40,000 Hutchinson Whampoa Ltd.
173,666
800,000 Pricerite Group Ltd.
85,799
400,000 Singamas Container Holding Ltd.
88,900
350,000 Vitasoy International Holdings Ltd.
132,285
40,000 Wharf Holdings
119,912 -------------------------------------------------------------------------------
- ---------
1,038
,8 45
- ---------------------------------------------------------------------------------------
- --Indonesia -- 2.7%
5,000 PT Indonesian Satellite Corp. Sponsored ADR
180,625
54,000 Sekar Laut
22,369 --------------------------------------------------------------------------------
- --------
202
,9
94
- ---------------------------------------------------------------------------------------
- --Japan --25.2%
9,000 Ishikawajima Construction Materials Co. Ltd.
153,178
22,000 Itochu Corp. Ltd.
149,250
60 Japan Telecom Co. Ltd.
139,967
3,000 Mabuchi Motor Co. Ltd.
198,167
9,000 Matsushita Electric Ind. Co. Ltd.
151,035
6,000 Mitsubishi Bank Ltd.
147,108
6,050 Mr. Max Corp.
135,373
10,000 Nippon Denso Co. Ltd.
201,143
20,000 Nippon Express Ltd.
197,810
5,000 Rohm Co.
230,302
9,000 Sagami Rubber Industries Co. Ltd.
77,981
3,000 Sony Music Entertainment Inc.
152,464 --------------------------------------------------------------------------------
- --------
1,933,
7 78
- ----------------------------------------------------------------------------------------
- -Malaysia -- 15.5%
50,000 Leader Universal Holdings Bhd.
168,071
33,333 Leader Universal Holdings Bhd. A
107,997
12,000 Malaysian Helicopter Services Bhd.
20,411
60,000 Muhibbah Engineering Bhd.
221,124
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio -----------------------------------------------------
- ---------
Schedules of Investments (unaudited) (continued) April 30, 1995
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
========================================================================================
== = <C>
<S> <C>
Malaysia -- 15.5% (continued)
12,000 Renong Bhd. $
18,370
40,000 Resorts World Bhd.
210,595
66,250 Sungei Way Holdings
262,939
8,750 Sungei Way Holdings Bhd. Warrants, expire 6/29/99(a)
11,694
25,000 Telekom Malaysia Bhd.
172,120 --------------------------------------------------------------------------------
- ---------
1,193,
32 1
- ----------------------------------------------------------------------------------------
- -- New Zealand --2.6%
3,000 Telecom Corp. New Zealand Sponsored ADR
200,250 --------------------------------------------------------------------------------
- ---------- Philippines -- 4.9%
187,500 International Container Services Inc.
104,367
500,000 JG Summit Holding Inc. Series B
157,390
1,356,000 Kepphil Shipyard Inc.
114,230 --------------------------------------------------------------------------------
- ---------
375,
98 7
- ----------------------------------------------------------------------------------------
- --
Singapore --24.4%
35,000 Cerebos Pacific
216,003
75,000 DBS Land Ltd.
206,674
10,000 Fraser & Neave
109,795
10,000 Fraser & Neave Ltd. Warrants, expire 3/27/98(a)
44,133
20,187 Jardine Matheson Holding Registered
160,487
25,000 Jurong Shipyard Ltd.
191,963
200,000 QAF Ltd.
221,026
50,000 Sembawang Maritime Ltd.
209,903
87,000 Singapore Shipbuilding & Engineering Foreign Registered
212,271
165,000 Steamers Maritime Holding Ltd.
112,487
36,525 United Overseas Bank Ltd. Warrants, expire 6/17/97(a)
191,340 --------------------------------------------------------------------------------
- ---------
1,876,
08 2
- ----------------------------------------------------------------------------------------
- -- Thailand -- 8.4%
20,000 Dhana Siam Finance & Securities Public Co.
Ltd. Foreign Registered
85,383
7,500 Land & House Public Co. Ltd. Foreign
132,344
9,000 Siam City Cement Public Co. Ltd. Foreign
133,930
20,000 United Communication Industry Public Co. Ltd. Foreign
292,742 --------------------------------------------------------------------------------
- ---------
644,
39 9
- ----------------------------------------------------------------------------------------
-- TOTAL INVESTMENTS -- 100%
(Cost -- $8,311,925)++ $
7,682,674
========================================================================================
== =
</TABLE>
See Notes to Financial Statements.
19 <PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio ----------------------------------------
Schedules of Investments (unaudited) (continued)
April 30, 1995 --------------------------------------------------------
- ------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
==============================================================
= == <C> <S> <C>
STOCKS -- 45.9%
Australia -- 0.8%
40,000 Mayne Nickless Ltd. $
188,937 --------------------------------------------------------------------------------
- ---------- Austria -- 4.2%
6,000 Austria Mikro Systeme International AG
597,187
2,000 VA Technologie AG
221,272
2,000 VAE Eisenbahn AG
180,349 --------------------------------------------------------------------------------
- ---------
998,
80 8
- ----------------------------------------------------------------------------------------
- -- Brazil -- 0.6%
4,000 Telecomunicoes Brasileiras S.A. Sponsored ADR
146,500 --------------------------------------------------------------------------------
- ---------- Canada -- 0.5%
14,000 Videotron Group Ltd. Subord. Voting
122,171 --------------------------------------------------------------------------------
- ---------- Chile -- 1.2%
10,000 Embotelladora Andina S.A. Sponsored ADR
287,500 --------------------------------------------------------------------------------
- ---------- Finland -- 1.7%
10,000 Nokia OY AB Shares A
408,739 --------------------------------------------------------------------------------
- ---------- France -- 1.1%
1,500 Castorama Dubois Investment
248,777 --------------------------------------------------------------------------------
- ---------- Germany -- 2.3%
500 Bayarische Motoren Werke BMW AG
257,542
1,000 Mannesmann AG
272,010 --------------------------------------------------------------------------------
- ---------
529,
55 2
- ----------------------------------------------------------------------------------------
- -- Hong Kong -- 1.7%
50,000 Guoco Group Ltd.
189,947
50,000 Hutchinson Whampoa Ltd.
217,082 --------------------------------------------------------------------------------
- ---------
407,
02 9
- ----------------------------------------------------------------------------------------
- -- Indonesia -- 0.8%
5,000 PT Indonesian Satellite Corp. Sponsored ADR
180,625 --------------------------------------------------------------------------------
- ---------- Ireland -- 2.7%
50,000 CRH PLC
308,868
55,000 Smurfit Jefferson
326,308 --------------------------------------------------------------------------------
- ----------
635,17 6
- ----------------------------------------------------------------------------------------
- -- Italy -- 1.1%
100,000 Telecom Italia S.p.A.
266,169 --------------------------------------------------------------------------------
- ---------- </TABLE>
See Notes to Financial Statements.
20
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio --------------------------------------
- ------------------------
Schedules of Investments (unaudited) (continued) April 30, 1995 --
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
========================================================================================
== = <C> <S>
<C>
Japan -- 4.0%
14,000 Matsushita Electric Ind. Co. Ltd. $
234,944
31,000 Mitsubishi Heavy Industries Ltd.
225,065
12,000 Nippon Denso Co. Ltd.
241,371
25,000 Nippon Express Ltd.
247,263 --------------------------------------------------------------------------------
- ---------
948,
64 3
- ----------------------------------------------------------------------------------------
- -- Malaysia -- 3.0%
40,000 Leader Universal Holdings Bhd.
134,456
26,666 Leader Universal Holdings Bhd. A
86,396
40,000 Resorts World Bhd.
210,595
70,000 Sungei Way Holdings
277,823 --------------------------------------------------------------------------------
- ---------
709,
27 0
- ----------------------------------------------------------------------------------------
- -- Mexico -- 2.5%
40,800 Gruma S.A. De C.V. B
139,099
25,000 Grupo Carso A1
134,810
15,000 Kimberly Clark A NPV
153,165
5,000 Telefonos De Mexico S.A. De C.V. Sponsored ADR Series L
151,250 --------------------------------------------------------------------------------
- ---------
578,
32 4
- ------------------------------------------------------------------------------------------
Netherlands -- 1.7%
15,000 IHC Caland N.V.
410,508 ----------------------------------------------------------------------------------
- -------- Norway -- 1.4%
12,000 Petroleum Geo Services AS
327,869 ----------------------------------------------------------------------------------
- -------- Singapore 3.0%
50,000 Cerebos Pacific
308,576
25,234 Jardine Matheson Holding Registered
200,610
50,000 Sembawang Maritime Ltd.
209,903 ----------------------------------------------------------------------------------
- -------
719,08
9
- ------------------------------------------------------------------------------------------
Spain -- 1.1%
2,200 Acerinox S.A. ORD
251,990 ----------------------------------------------------------------------------------
- -------- Sweden -- 6.1%
15,000 Allgon AB B
294,154
7,500 Autoliv AB Free
339,567
5,000 Ericcson LM Telephone Co. B ADR
335,315
25,000 Volvo AB Series B Free
469,614 ----------------------------------------------------------------------------------
- --------
1,438,650 --------------------------------------------------------------------------------
- ---------- </TABLE>
See Notes to Financial Statements.
21
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio -------------------------------
- ----------------------
Schedules of Investments (unaudited) (continued) April 30, 1995 ---------
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
==========================================================================================
= <C> <S> <C>
Thailand -- 2.1%
12,000 Land & House Public Co. Ltd. Foreign $
211,750
20,000 United Communication Industry Public Co. Ltd. Foreign
292,742
- -----------------------------------------------------------------------------------------
504,49
2
- ------------------------------------------------------------------------------------------
United Kingdom -- 2.3%
5,000 Reuters Holdings PLC ADR B
227,500
10,000 Vodafone Group PLC Sponsored ADR
318,750
- ------------------------------------------------------------------------------------------
546,25
0
- ------------------------------------------------------------------------------------------
- -
TOTAL STOCKS
(Cost -- $11,404,385)
10,855,068
=========================================================================================
== <CAPTION>
FACE
AMOUNT+ SECURITY VALUE
=========================================================================================
== <C> <S>
<C>
BONDS -- 54.1%
Argentina -- 1.7%
500,000 Gas Argentina S.A., 7.250% due 12/7/98 (U.S. dollar denominated)
400,000
- ------------------------------------------------------------------------------------------
- - Brazil -- 2.0%
500,000 Banco Nacional, 10.375% due 4/27/98 (U.S. dollar denominated)
477,500
- ------------------------------------------------------------------------------------------
- - Canada -- 6.2%
2,000,000 Canada, 7.500% due 7/1/97
1,462,228 ----------------------------------------------------------------------------------------
- --
- - Denmark -- 3.5%
5,000,000 Kingdom of Denmark, 7.000% due 12/15/04
825,888
- ------------------------------------------------------------------------------------------
- - France -- 5.1%
6,000,000 France BTAN, 6.500% due 10/12/96
1,213,479 ----------------------------------------------------------------------------------------
- --
- - Germany -- 4.6%
1,500,000 Treuhandanstalt, 6.250% due 7/29/99
1,087,535 ----------------------------------------------------------------------------------------
- --
- - Ireland -- 6.9%
1,000,000 Republic of Ireland, 8.750% due 7/27/97
1,641,322 ----------------------------------------------------------------------------------------
- --
- - Malaysia -- 1.3%
300,000 Renong Berhad Convertible Notes, 2.500% due 1/15/05(b)
301,500
- ------------------------------------------------------------------------------------------
- - Netherlands -- 6.3%
2,500,000 Netherlands, 5.750% due 1/15/04
1,486,155 ----------------------------------------------------------------------------------------
- --
- - </TABLE>
See Notes to Financial Statements.
22
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio -------------------------
Schedules of Investments (unaudited) (continued) April 30, 1995 -----
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT+ SECURITY VALUE
======================================================================
= <C> <S>
<C>
New Zealand -- 5.7%
2,000,000 New Zealand, 9.000% due 11/15/96 $
1,357,578 ----------------------------------------------------------------------------------------
- --
- - Philippines -- 0.9%
250,000 House of Investments Inc. Convertible, 4.000% due 10/17/01(b)
221,250 --------------------------------------------------------------------------------
- ---------- Spain -- 7.0%
200,000,000 Spanish Government, 12.250% due 3/25/00
1,648,578 ------------------------------------------------------------------------------
- ------------ Sweden -- 2.9%
5,000,000 Kingdom of Sweden, 10.750% due 1/23/97
693,447 --------------------------------------------------------------------------------
- ---------
- TOTAL BONDS
(Cost -- $12,193,379)
12,816,460
========================================================================================
==
= TOTAL INVESTMENTS -- 100%
(Cost -- $23,597,764)++
$23,671,528
========================================================================================
== = </TABLE>
(a) Non-income producing security.
(b) Security exempt from registration under Rule 144A of Securites Act of 1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
+ Represents local currency.
++ Aggregate cost for Federal income taxes is substantially the same.
See Notes to Financial Statements.
23
<PAGE>
Smith Barney World Funds, Inc. ------------------------------
- ----------
Statements of Assets and Liabilities (unaudited) April 30, 1995
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
International European Pacific
Balanced
Portfolio Portfolio
Portfolio
=============================================================================
== == <S> <C>
<C> <C>
ASSETS:
Investments, at value
(Cost -- $31,714,729,
$8,311,925 and $23,597,764) $37,985,093 $ 7,682,674
$23,671,528
Foreign currency (Cost -- $788,507,
$6,893 and $449,394) 753,624 6,895
451,363
Cash -- 1,278,412
420,640
Receivable for Fund shares sold 28,030 10,000
171,595
Receivable for securities sold 238,825 67,794
- -
- -
Dividends and interest receivable 230,101 2,761
348,713
Receivable from manager 10,344 37,640
29,801 --------------------------------------------------------------------
- --------
Total Assets 39,246,017 9,086,176
25,093,640 -------------------------------------------------------
- --------------LIABILITIES:
Payable for Fund shares purchased 63,258 382
- -
- -
Payable for securities purchased 358,444 --
- -
- -
Payable for open forward foreign
currency contracts (Note 4) -- --
63,607
Management fees payable 32,574 3,633
17,345
Distribution costs payable 7,795 --
14,642
Accrued expenses 77,227 26
79,404
Other liabilities 853,461 --
- -
- -----------------------------------------------------------------------------------------------------
-Total Liabilities 1,392,759 4,041
174,998 -------------------------------------------------------------------------------------------
- -----------Total Net Assets $37,853,258
$ 9,082,135
$24,918,642
=====================================================================================================
== =
NET ASSETS:
Par value of capital shares $ 2,819 $ 859 $
2,108
Capital paid in excess of par value 31,821,575 10,472,507
25,340,666
Accumulated net investment loss (41,886) (60,572)
(218,313)
Accumulated net realized loss
on investments (176,394) (702,129)
(231,625)
Net unrealized appreciation (depreciation)
of investments and foreign currencies 6,247,144 (628,530)
25,806 ----------------------------------------------------------------------------------------------
- --------Total Net Assets $37,853,258
$ 9,082,135
$24,918,642
=====================================================================================================
== = </TABLE>
See Notes to Financial Statements.
24
<PAGE>
Smith Barney World Funds, Inc. --------------------------------------
- ---------
Statements of Assets and Liabilities (unaudited) (continued)--------------
<TABLE>
<CAPTION>
International European Pacific
Balanced
Portfolio Portfolio Portfolio
=====================================================================================================
= <S> <C>
<C> <C>
Shares Outstanding:
Class A 856,827 523,793
1,574,964
- ---------------------------------------------------------------------------------------------------
Class B 1,856,142 118,181
171,653
- ---------------------------------------------------------------------------------------------------
Class C 106,227 216,713
361,180
- ---------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $13.48 $10.63
$11.82
- ---------------------------------------------------------------------------------------------------
Class B * $13.43 $10.57
$11.84 ---------------------------------------------------------------------------------------------
- ------
Class C ** $13.38 $10.54
$11.82 ---------------------------------------------------------------------------------------------
- ------Class A Maximum Public Offering Price Per Share
(net asset value plus 5.26% of net asset value
per share) $14.19 $11.19
$12.44
==================================================================================================
== == </TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed less than one year from initial purchase and declines by 1.00%
per year until no CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC which
applies if shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
25
<PAGE>
Smith Barney World Funds, Inc. ----------------------------
- -----------
Statements of Operations (unaudited) -----------------------------
- --------------------
For the Six Months Ended April 30, 1995
<TABLE>
<CAPTION>
International European Pacific
Balanced
Portfolio Portfolio
Portfolio
===================================================================================================
== == <S> <C>
<C> <C>
INVESTMENT INCOME:
Interest -- -- $
548,809
Dividends $ 20,751 $ 33,670
55,297 --------------------------------------------------------------------------------------------
- --------
-Total Investment Income 20,751 33,670
604,106 -----------------------------------------------------------------------------------------
- ------------EXPENSES:
Management fees (Note 2) 32,574 38,454
105,275
Distribution costs (Note 2) 18,880 21,537
50,445
Registration fees 17,926 15,878
6,822
Audit and legal fees 10,125 6,625
7,125
Shareholder communication fees 9,493 10,183
6,463
Shareholder and system servicing fees 8,286 5,070
16,245
Directors' fees 2,030 1,910
2,966
Other 10,200 10,300
10,382 --------------------------------------------------------------
- --------
-Total Expenses 109,514 109,957
205,723
Less: Management fee waiver -- 15,834
- -----------------------------------------------------------------------
- --
-Net Expenses 109,514 94,123
205,723 -----------------------------------------------------------------------------------------
- ------------Net Investment Income (Loss) (88,763) (60,453)
398,383 -------------------------------------------------------------------------------------------
- ----------REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Realized Gain (Loss) From:
Securities transactions (47,283) (665,091)
(231,625)
Foreign currency transactions 46,877 (119)
(306,158) -------------------------------------------------------------------------------------------
- ----------
Net Realized Loss (406) (665,210)
(537,783) -----------------------------------------------------------------------------------------
- ------------
Change in Net Unrealized Appreciation
(Depreciation) of Investments and Foreign Currencies:
Beginning of period (Note 1) 462,498 457,481
276,354
End of period 6,247,144 (628,530)
25,806
- -----------------------------------------------------------------------------------------------------
Increase (Decrease) in
Net Unrealized Appreciation 5,784,646 (1,086,011)
(250,548) -------------------------------------------------------------------------------------------
- ----------Net Gain (Loss) on Investments
and Foreign Currencies 5,784,240 (1,751,221)
(788,331) -------------------------------------------------------------------------------------------
- ----------Increase (Decrease) in Net Assets
From Operations $5,695,477 $(1,811,674)
$(389,948)
=====================================================================================================
== </TABLE>
See Notes to Financial Statements.
26
<PAGE>
Smith Barney World Funds, Inc. -----------------------------------
- ---------
Statements of Changes in Net Assets --------------------------
- -------------------
For the Six Months Ended April 30, 1995 (unaudited)
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
European Pacific
Portfolio Portfolio ------
--
----------------- -------------------------
1995 1994(a) 1995
1994(a)
===================================================================================================
== <S> <C> <C> <C> <C>
OPERATIONS:
Net investment loss $ (88,763) $ (56,218) $ (60,453) $
(57,806)
Net realized loss (406) (141,544) (665,210)
(47,641)
Increase (decrease) in net
unrealized appreciation of investments
and foreign currencies 5,784,646 462,498 (1,086,011)
457,481
- ---------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations 5,695,477 264,736 (1,811,674)
352,034
- ---------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- -- -- -
- -
Net realized gain -- -- -- -
- -
- ---------------------------------------------------------------------------------------------------
-Decrease in Net Assets From
Distributions to Shareholders -- -- -- -
- -
- ---------------------------------------------------------------------------------------------------
- -FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 8,172,152 8,562,656 15,282,004
12,242,972
Net asset value of shares issued
for reinvestment of dividends -- -- -- -
- -
Net asset value of shares issued
in connection with the transfer of
the Smith Barney European Fund's
net assets (Note 7) 25,837,876 -- -- --
Cost of shares reacquired (8,648,600) (2,031,039) (15,093,989)
(1,889,212)
- ----------------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 25,361,428 6,531,617 188,015 10,353,760
- ----------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 31,056,905 6,796,353 (1,623,659) 10,705,794
NET ASSETS:
Beginning of period 6,796,353 -- 10,705,794 --
- ----------------------------------------------------------------------------------------------------
End of period* $37,853,258 $6,796,353 $ 9,082,135 $10,705,794
====================================================================================================
= * Includes undistributed net
investment loss of: $(41,886) -- $(60,572) --
====================================================================================================
= </TABLE>
(a) For the period from February 7, 1994 (commencement of operations) to
October 31, 1994.
See Notes to Financial Statements.
27
<PAGE>
Smith Barney World Funds, Inc. ----------------------------------
- ----------
Statements of Changes in Net Assets (continued) --------
- --------------------------------
For the Six Months Ended April 30, 1995 (unaudited)
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
International
Balanced Portfolio ----
--
--------------------------
1995 1994(a)
====================================================================================================
== <S> <C> <C>
OPERATIONS:
Net investment income $ 398,383 $
55,414
Net realized gain (loss) (537,783)
72,613
Increase (decrease) in net unrealized appreciation
of investments and foreign currencies (250,548)
276,354
- ----------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (389,948)
404,381
- ----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (438,565)
- --
Net realized gain --
- --
- ----------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions
to Shareholders (438,565)
- --
- ----------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 8,185,198
24,701,801
Net asset value of shares issued
for reinvestment of dividends 393,960
- --
Cost of shares reacquired (7,776,421)
(161,764) ------------------------------------------------------------------------------------------
- ----------
Increase in Net Assets From
Fund Share Transactions 802,737
24,540,037
- ----------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (25,776)
24,944,418
NET ASSETS:
Beginning of period 24,944,418
- --
- ----------------------------------------------------------------------------------------------------
End of period* $24,918,642
$24,944,418
====================================================================================================
== * Includes undistributed net investment income (loss) of: $(218,313)
$134,941
====================================================================================================
== </TABLE>
(a) For the period from August 25, 1994 (commencement of operations) to
October 31, 1994.
See Notes to Financial Statements.
28
<PAGE>
Smith Barney World Funds, Inc. -----------------------------
- ----------
Notes to Financial Statements (unaudited) -------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The European Portfolio ("European"), Pacific Portfolio ("Pacific") and
International Balanced Portfolio ("International Balanced") are separate
investment portfolios ("Portfolio") of the Smith Barney World Funds, Inc.
("Fund"). The Fund, a Maryland corporation, is registered under the
Investment Company Act of 1940, as amended, as an open-end investment
company and consists of these Portfolios and two other separate investment
portfolios: International Equity and Global Government Bond Portfolios. The
financial statements and financial highlights for the other portfolios are
presented in separate semiannual reports.
The significant accounting policies consistently followed by the Fund
are: (a) security transactions are accounted for on trade date; (b)
securities traded in national securities markets are valued at the closing
prices in 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 listed
securities for which no sale 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.
Short-term securities maturing within 60 days are valued at cost plus
accreted discount, or minus amortized premium, as applicable; (c) gains or
losses on the sale of securities are calculated by using the specific
identification method; (d) interest income, adjusted for amortization of
premiums and accretion of discount, is recorded on the accrual basis; (e)
direct expenses are charged to each Portfolio and class, management fees and
general expenses are allocated on the basis of relative net assets; (f)
foreign currencies (and receivables and payables for unsettled foreign
securities transactions) are translated into U.S. dollars based on the rate
of exchange of such currencies against U.S. dollars on the date of
valuation. Translation gains or losses resulting from changes in the
exchange rate and realized gains and losses on the settlement of foreign
currency transactions are reported in the statements of operations; (g)
during 1994, the Portfolios adopted Statement of Position 93-2
Determination, Disclosure, and Financial
----------------------------------------
Statement Presentation of Income, Capital Gain and Return of Capital -------
- -----------------------------------------------------------Distributions by
Investment Companies. Accordingly, book and tax ----------------------------
- --------
29 <PAGE>
Smith Barney World Funds, Inc. ---------------------------------------------
- ---------------------------------Notes to Financial Statements (unaudited)
(continued) ---------------------------------------------------------------
- ----------------
basis differences relating to shareholder distributions and other permanent
book and tax differences are reclassified to paid-in capital. As of October
31, 1994, the cumulative effect of such differences, totaling $68,651 and
$68,409, for the European and Pacific Portfolios were reclassified to paid-
in capital from accumulated net investment losses and realized net foreign
currency losses. Net investment income, net realized gains, and net assets
were not affected by this change. In addition, $6,914 of unrealized forward
foreign currency gains were reclassified to undistributed net investment
income for the International Balanced Portfolio for the period ended October
31, 1994; and (i) the Portfolios intend to comply with the requirements of
the Internal Revenue Code pertaining to regulated investment companies and
to make the required distributions to shareholders; therefore no provision
for Federal income taxes has been made.
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 TRANSACTIONS WITH AFFILIATED PERSONS
Smith Barney Mutual Fund Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager of the Fund. The
European, Pacific and International Balanced Portfolios pay SBMFM a
management fee calculated at the annual rate of 0.85% on average daily net
assets; this fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as
distributor of the Fund's shares. For the six months ended April 30, 1995,
SB has advised the Fund that it was paid sales charges of approximately
$1,000, $4,000 and $24,000 by purchasers of Fund shares for the European,
Pacific and International Balanced Portfolios, respectively.
Effective November 7, 1994, the Fund adopted a new class structure,
renaming the existing Class B shares as Class C shares. Under the new class
structure, a contingent deferred sales charge ("CDSC") of 5.00% is imposed
on new Class B shares if redemption occurs less than one year
30
<PAGE>
Smith Barney World Funds, Inc. ---------------------------------------------
- ---------------------------------Notes to Financial Statements (unaudited)
(continued) ---------------------------------------------------------------
- ----------------
from initial purchase and declines by 1.00% per year until no CDSC is
incurred. A CDSC of 1.00% is imposed on Class C shares if redemption occurs
within the first year from the date such investments was made. Any CDSC
imposed on redemptions is paid to SB. For the six months ended April 30,
1995, there were approximately $9,000 in such charges.
Pursuant to a Distribution Plan each Portfolio pays a service fee with
respect to its Class A, B and C shares calculated at the annual rate of
0.25% of the average daily net assets of each respective class' shares. The
Portfolios also pay a distribution fee with respect to Class B and C shares
calculated at the annual rate of 0.75% of average daily net assets for that
class. All officers and three directors of the Fund are employees of SB.
Through April 30, 1995, SBMFM waived $15,834 of management fees for the
Pacific Portfolio.
3. INVESTMENTS
For the six months ended April 30, 1995, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<CAPTION>
International European Pacific
Balanced
Portfolio Portfolio
Portfolio
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ----<S> <C> <C> <C>
Purchases $3,536,166$ 691,561
$3,539,201
- ------------------------------------------------------------------------------------------------------
- --Sales 8,584,479 1,736,312
2,847,256
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ----</TABLE>
At April 30, 1995, the aggregate gross unrealized appreciation and
depreciation of investments for tax purposes were as follows:
<TABLE>
<CAPTION>
International European Pacific
Balanced
Portfolio Portfolio
Portfolio
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ----<S> <C> <C> <C>
Gross unrealized appreciation $7,262,619 $ 394,931 $
1,548,087
Gross unrealized depreciation (992,255) (1,024,182)
(1,474,323) ------------------------------------------------------------------------------------------
- --------------Net unrealized appreciation (depreciation) $6,270,364 $
(629,251) $ 73,764
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ----</TABLE>
31
<PAGE>
Smith Barney World Funds, Inc. -------------------------------------
- --------
Notes to Financial Statements (unaudited) (continued) -----------
- --------------------------------
4. FORWARD FOREIGN CURRENCY CONTRACTS
At April 30, 1995, the International Balanced Portfolio 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 are as follows:
<TABLE>
<CAPTION>
Unrealized Local Market
Settlement Gain
Currency Value Date (Loss)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----<S> <C> <C> <C> <C>
To Sell:
Canadian Dollar 2,013,764 $1,479,839 6/12/95
$(30,566)
New Zealand Dollar 944,890 636,101 6/12/95
(9,450)
Spanish Peseta 100,000,000 812,348 6/12/95
(15,154)
Swedish Krona 4,919,461 676,996 6/12/95
(8,437)
- ----------------------------------------------------------------------------------------------------------
- --Total Market Value and
Unrealized Loss on
Forward Foreign
Currency Contracts $3,605,284
$(63,607)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----</TABLE>
5. PORTFOLIO CONCENTRATION
The Portfolios' investments in foreign securities may involve risks not
present in domestic investments. Since securities may be denominated in a
foreign currency and may require settlement in foreign currencies and pay
interest or dividends in foreign currencies, changes in the relationship of
these foreign currencies to the U.S. dollar can significantly affect the
value of the investments and earnings of 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
counter parties to meet the terms of their contracts.
32
<PAGE>
Smith Barney World Funds, Inc. ---------------------------------------------
- ---------------------------------Notes to Financial Statements (unaudited)
(continued) ---------------------------------------------------------------
- ----------------
6. CAPITAL SHARES
At April 30, 1995, there were two billion shares of $.001 par value
capital stock authorized. The Portfolios have the authority to issue
multiple classes of shares. Each share of a class represents an identical
legal interest in the Portfolios and has the same rights, except that each
class bears certain expenses specifically related to the distribution of its
shares. At April 30, 1995, total paid-in capital, including adjustments for
book and tax differences discussed in Note 1, amounted to the following for
each Portfolio:
<TABLE>
<CAPTION>
Total Paid-in Capital Class A Class B Class
C
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- ----<S> <C> <C>
<C>
European Portfolio $ 9,919,737 $20,617,893
$1,286,764 Pacific Portfolio 6,526,995 1,237,931
2,708,440 International Balanced Portfolio 19,002,391 2,018,191
4,322,192 --------------------------------------------------------------------------------------------------------
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Period Ended
April 30, 1995 October 31, 1994
(a)
-------------------------- ----------------------
- --European Portfolio Shares Amount Shares
Amount -----------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- -----------<S> <C> <C>
<C> <C>
Class A*+
Shares sold 476,185 $ 6,071,113 458,402 $
6,252,684
Net asset value of shares
issued in connection with
the transfer of the Smith
Barney European Fund's
net assets (Note 7) 491,711 5,483,873 --
- --
Shares redeemed (513,844) (6,575,571) (55,627)
(1,258,667) ------------------------------------------------------------------------------------------------------
- --------------Net Increase 454,052 $ 4,979,415 402,775
$
4,994,017 --------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- --------------Class B*
Shares sold 40,186 $ 512,335 --
- -
- -
Net asset value of shares
issued in connection with
the transfer of the Smith
Barney European Fund's
net assets (Note 7) 1,834,562 20,351,639 --
- -
- -
Shares redeemed (143,880) (1,768,725) --
- ------------------------------------------------------------------------------------------------------------------
- --
- -Net Increase 1,730,868 $19,095,249 --
- -
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ----</TABLE>
33
<PAGE>
Smith Barney World Funds, Inc.
- ----------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued) --------
- --------------------
<TABLE>
<CAPTION>
Six Months Ended Period Ended
April 30, 1995 October 31, 1994
(a)
-------------------------- ----------------------
- --
- --
European Portfolio Shares Amount Shares
Amount -----------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- -----------<S> <C> <C>
<C>
<C>
Class C*++
Shares sold 130,414 $1,588,704 141,147
$1,735,144
Net asset value of shares
issued in connection with
the transfer of the Smith
Barney European Fund's
net assets (Note 7) 29 2,364 --
- -
- -
Shares redeemed (24,216) (304,304) (15,873)
(195,392) ---------------------------------------------------------------------------------------------------------
- -----------Net Increase 106,227 $1,286,764
125,274 $1,539,752 -------------------------------------------------------------------------------------
- -------------------------------</TABLE>
(a) For the period from February 7, 1994 to October 31, 1994.
* Sales of Class A, B and C shares commenced on February 7, 1994,
November 7, 1994 and February 14, 1994, respectively.
+ On October 10, 1994 the former Class C shares were exchanged into Class A
shares, therefore Class C share activity for the period from February
14, 1994 to October 9, 1994 is included with the Class A shares
activity.
++ On November 7, 1994 the former Class B shares were renamed Class C
shares.
<TABLE>
<CAPTION>
Six Months Ended Period Ended
April 30, 1995 October 31, 1994 (a)
- -
------------------------- -------------------------
- -
Pacific Portfolio Shares Amount Shares
Amount
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A*+
Shares sold 690,568 $ 7,244,420 713,604 $
8,894,536
Shares redeemed (750,347) (7,976,316) (130,032)
(1,592,618) --------------------------------------------------------------------------------------------------------
- ------------Net Increase (Decrease) (59,779) $ (731,896) 583,572 $
7,301,918 ----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ----------Class B*
Shares sold 462,119 $ 4,841,363 --
- -
- -
Shares redeemed (590,312) (6,629,892) --
- -
- --------------------------------------------------------------------------------------------------------------------
Net Decrease (128,193) $(1,788,529) --
- -
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Class C*++
Shares sold 261,963 $ 3,196,221 264,017 $
3,273,313
Shares redeemed (42,250) (487,781) (17,643)
(219,994) ----------------------------------------------------------------------------------------------------------
- ----------Net Increase 219,713 $ 2,708,440 246,374 $
3,053,319 ----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ----------</TABLE>
(a) For the period from February 7, 1994 to October 31, 1994.
* Sales of Class A, B and C shares commenced on February 7, 1994, November 7,
1994 and February 11, 1994, respectively.
+ On October 10, 1994 the former Class C shares were exchanged into Class A
shares; therefore Class C share activity for the period from February 11,
1994 to October 9, 1994 is included with the Class A share activity.
++ On November 7, 1994 the former Class B shares were renamed Class C
shares.
34
<PAGE>
- ---------------------------------------------------------------------------
- --Smith Barney World Funds, Inc. -------------------------------------------
- -----------------------------------Notes to Financial Statements (unaudited)
(continued) ---------------------------------------------------------------
- ----------------
<TABLE>
<CAPTION>
Six Months Ended Period Ended
April 30, 1995 October 31, 1994 (a)
-------------------------- ------------------------
- -
International
Balanced Portfolio Shares Amount Shares
Amount
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --<S> <C> <C> <C> <C>
Class A*
Shares sold 122,675 $ 1,435,040 1,704,454
$20,452,319
Shares issued on reinvestment 28,060 319,666 --
- -
- -
Shares redeemed (267,260) (3,048,628) (12,965)
(156,006) ----------------------------------------------------------------------------------------------------------
- -----------Net Increase (Decrease) (116,525) $(1,293,922) 1,691,489
$20,296,313 --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------Class B*
Shares sold 185,248 $ 2,173,666 --
- -
- -
Shares issued on reinvestment 1,787 20,376 --
- -
- -
Shares redeemed (369,168) (4,419,575) --
- -
- --------------------------------------------------------------------------------------------------------------------
- -Net Decrease (182,133) $(2,225,533) --
- -
- --------------------------------------------------------------------------------------------------------------------
- -Class C*++
Shares sold 383,476 $ 4,576,492 354,268 $
4,249,482
Shares issued on reinvestment 4,735 53,918 --
- -
- -
Shares redeemed (27,031) (308,218) (482)
(5,758) ------------------------------------------------------------------------------------------------------------
- ---------Net Increase 361,180 $ 4,322,192 353,786
$
4,243,724 ----------------------------------------------------------------------------------------------------------
- -----------</TABLE>
(a) For the period from August 25, 1994 to October 31, 1994.
* Sales of Class A, B and C shares commenced on August 25, 1994, November 7,
1994 and August 25, 1994, respectively.
++ On November 7, 1994 the former Class B shares were renamed Class C
shares.
7. TRANSFER OF NET ASSETS
On April 24, 1995, the European Portfolio acquired the assets and certain
liabilities of the Smith Barney European Fund Inc. ("SBEF"), pursuant to a plan
of reorganization approved by SBEF shareholders on April 20, 1995. Total shares
issued by the European Portfolio and the total net assets of SBEF and the
Portfolio are as follows:
<TABLE>
<CAPTION>
Total Net
Shares Assets of Total Net
Acquired Issued by Acquired Assets of
Funds the Portfolio Fund the
Portfolio --------------------------------------------------------------------------------------------------------------
- ------------<S> <C> <C>
<C>
European Fund 2,326,302 $30,790,937
$38,441,787
- ------------------------------------------------------------------------------------------------------------------------
- --</TABLE>
35
<PAGE>
Smith Barney World Funds, Inc.
- ----------------------------------------------------------------------------
- --Financial Highlights --------------------------------------------------
- ---
- ---------------------------
FOR A SHARE OF EACH CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
Class A (a) Class B Class C (b)
European Portfolio 1995 (1) 1994 (2) 1995 (3) 1995 (1) 1994 (4)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.88 $12.50 $12.62 $12.83
$12.48 ----------------------------------------------------------------------------------------------------------------------
- ------Income From Investment Operations:
Net investment loss* (0.04) (0.11) -- (0.15)
(0.16)
Net realized and unrealized
gain on investments 0.64 0.49 0.81 0.70
0.51 ------------------------------------------------------------------------------------------------------------------------
- ----Total Income From
Investment Operations 0.60 0.38 0.81 0.55
0.35 ------------------------------------------------------------------------------------------------------------------------
- ----Less Distributions:
Dividends from net investment income -- -- -- -- -
- -
Distributions from net realized gains
on security transactions -- -- -- -- -
- ----------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- -
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.48 $12.88 $13.43 $13.38
$12.83 ----------------------------------------------------------------------------------------------------------------------
- ------
Total Return 4.66%++ 3.04%++ 6.42%++ 4.29%++
2.80%++ ---------------------------------------------------------------------------------------------------------------------
- -------Net Assets, End of Period (000s) $11,525 $5,189 $24,913 $1,415
$1,607 ----------------------------------------------------------------------------------------------------------------------
- ------Ratios to Average Net Assets:
Expenses* 2.46%+ 1.34%+ 4.61%+ 3.06%+
2.02%+
Net investment income (loss) (1.28)+ (1.12)+ 1.48+ (2.22)+
(1.60)+ ---------------------------------------------------------------------------------------------------------------------
- -------Portfolio Turnover Rate 47.90% 20.57% 47.90% 47.90%
20.57%
- -----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) On October 10, 1994, the former Class C shares were exchanged into Class A
shares; therefore Class C share activity for the period from
February 14, 1994 to October 9, 1994 is included with the Class A
share activity.
(b) On November 7, 1994 the former Class B shares were renamed Class C
shares. (1) For the six months ended April 30, 1995 (unaudited).
(2) For the period from February 7, 1994 (inception date) to October 31,
1994. (3) For the period from November 7, 1994 (inception date) to April
30,
1995 (unaudited).
(4) For the period from February 14, 1994 (inception date) to October 31,
1994.
++ Not annualized as it may not be representative of the total return for
the year.
+ Annualized.
* The Manager has agreed to waive all management fees and has agreed to
reimburse the European Portfolio for $10,344 of the Portfolio's expenses
during the period ended October 31, 1994. If the Manager had not agreed
to the fee waiver and expense reimbursement, the per share decrease in
net investment income and the ratio of expenses to average net assets
would have been:
<TABLE>
<CAPTION>
European Class A Class
B
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income decrease $0.10
$0.10
Expense ratio 2.37%+
3.07%+ ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- -------</TABLE>
36
<PAGE>
Smith Barney World Funds, Inc.
- -----------------------------------------------------------------------------
- -Financial Highlights (continued) -----------------------------------------
- ---------------------------------------
FOR A SHARE OF EACH CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
Class A (a) Class B Class C (b)
Pacific Portfolio 1995 (1) 1994 (2) 1995 (3) 1995 (1) 1994
(4) -----------------------------------------------------------------------------------------------------------------------
- -----<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period $12.92 $12.50 $12.64 $12.86
$12.50 Income From Investment Operations:
Net investment loss* (0.06) (0.07) (0.03) (0.11)
(0.11) Net realized and unrealized
gain (loss) on investments (2.23) 0.49 (2.04) (2.21)
0.47 ----------------------------------------------------------------------------------------------------------------------
- ------Total Income (Loss) from
Investment Operations (2.29) 0.42 (2.07) (2.32)
0.36 ----------------------------------------------------------------------------------------------------------------------
- ------Less Distributions:
Dividends from net investment income -- -- -- -- -
- -
Distributions from net realized gains
on security transactions -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
- --
Total Distributions -- -- -- -- -
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.63 $12.92 $10.57 $10.54
$12.86 ----------------------------------------------------------------------------------------------------------------------
- ------
Total Return (17.72)%++ 3.36%++ (16.38)%++ (18.04)%++
2.88%++ ---------------------------------------------------------------------------------------------------------------------
- -------Net Assets, End of Period (000s) $5,554 $7,538 $1,249 $2,279
$3,167
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses* 1.85%+ 1.51%+ 2.39%+ 2.57%+
2.29%+
Net investment loss (1.10)+ (0.82)+ (2.01)+ (1.82)+
(1.49)+ ---------------------------------------------------------------------------------------------------------------------
- -------Portfolio Turnover Rate 7.89% 6.14% 7.89% 7.89%
6.14%
- -----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) On October 10, 1994, the former Class C shares were exchanged into Class A
shares; therefore Class C share activity for the period from February 11,
1994 to October 9, 1994 is included with the Class A share activity.
(b) On November 7, 1994 the former Class B shares were renamed Class C
shares.
(1) For the six months ended April 30, 1995 (unaudited).
(2) For the period from February 7, 1994 (inception date) to October 31,
1994. (3) For the period from November 7, 1994 (inception date) to April 30,
1995
(unaudited).
(4) For the period from February 11, 1994 (inception date) to October 31,
1994.
++ Not annualized as it may not be representative of the total return for
the year.
+ Annualized.
* The Manager has agreed to waive a portion of the Portfolio's management
fees during the periods ended April 30, 1995 and October 31, 1994,
respectively. If the Manager had not agreed to the fee waiver, the per
share decreases in net investment income and the ratios of expenses to
average net assets would have been:
<TABLE>
<CAPTION>
Class A Class B Class C
Pacific 1995 1994 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- ----<S> <C> <C> <C> <C> <C> <C>
Net investment income decrease $0.02 $0.03 -- -- $0.02
$0.03
Expense ratio 2.20%+ 1.87%+ 2.71%+ -- 2.92%+
2.70%+ -------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- -----------</TABLE>
37
<PAGE>
Smith Barney World Funds, Inc.
- ----------------------------------------------------------------------------
- --Financial Highlights (continued) --------------------------------------
- -----------------------------------------
FOR A SHARE OF EACH CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
Class A Class B Class C (a)
International Balanced
Portfolio 1995 (1) 1994 (2) 1995 (3) 1995 (1) 1994
(2)
- --------------------------------------------------------------------------------------------------------------------------
- --<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Period $12.20 $12.00 $12.08 $12.18 $12.00
- --------------------------------------------------------------------------------------------------------------------------
- --Income From Investment Operations:
Net investment income (loss)* 0.05 0.07 (0.01) -- 0.05
Net realized and unrealized
gain (loss) on investments (0.22) 0.13 (0.07) (0.20) 0.13
- --------------------------------------------------------------------------------------------------------------------------
- --Total Income (Loss) from
Investment Operations (0.17) 0.20 (0.08) (0.20) 0.18
- --------------------------------------------------------------------------------------------------------------------------
- --Less Distributions:
Dividends from net investment income (0.21) -- (0.16) (0.16) --
Distributions from net realized gains
on security transactions -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
- --Total Distributions (0.21) -- (0.16)
(0.16) --
- --------------------------------------------------------------------------------------------------------------------------
- --Net Asset Value, End of Period $11.82 $12.20 $11.84 $11.82 $12.18
- --------------------------------------------------------------------------------------------------------------------------
- --Total Return (1.28)%++ 1.67%++ (0.59)%++ (1.57)%++
1.50%++ ------------------------------------------------------------------------------------------------------------------
- ----------Net Assets, End of Period (000s) $18,618 $20,634 $2,032 $4,268
$4,310 -------------------------------------------------------------------------------------------------------------------
- ---------Ratios to Average Net Assets:
Expenses* 1.49%+ 1.34%+ 2.38%+ 2.21%+
2.03%+
Net investment income (loss) 0.97+ 1.37+ (1.22)+ 0.01+
0.79+
- --------------------------------------------------------------------------------------------------------------------------
- --Portfolio Turnover Rate 12.23% 5.52% 12.23% 12.23%
5.52%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- ----</TABLE>
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(1) For the six months ended April 30, 1995 (unaudited).
(2) For the period from August 25, 1994 (inception date) to October 31, 1994.
(3) For the period from November 7, 1994 (inception date) to April 30, 1995
(unaudited).
++ Not annualized as it may not be representative of the total return for
the year.
+ Annualized.
* The Manager has agreed to waive a portion of the Portfolio's management
fees during the period ended October 31, 1994. If the Manager had not
agreed to the fee waiver, the per share decrease in net investment
income and the ratio of expenses to average net assets would have been:
<TABLE>
<CAPTION>
International Balanced Class A
Class C ------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
- ------------<S> <C>
<C> Net investment income decrease $0.02
$0.02 Expense ratio 2.03%+
2.74%+ -------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- -----------</TABLE>
38
<PAGE>
Smith Barney
World Funds, Inc.
Directors
Victor Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
Bruce D. Sargent
James M. Shuart
Officers
Maurits E. Edersheim
Chairman of the Fund
& Advisory Director
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
James B. Conheady
Vice President
Victor S. Filatov
Vice President
Simon R. Hildreth
Vice President
Denis P. Mangan
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Rein W. van der Does
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
[LOGO OF SMITH BARNEY APPEARS HERE]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
J.P. Morgan & Co. Incorporated
Shareholder
Servicing Agent
The Shareholder Services Group Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney World Funds, Inc. European, Pacific and International Balanced
Portfolios. It is not authorized for distribution to prospective investors
unless accompanied or preceded by a current Prospectus for the Portfolios,
which contains information concerning the Portfolios' investment policies
and expenses as well as other pertinent information.
Smith Barney
World Funds, Inc.
388 Greenwich Street
New York, New York 10013
FD0625 F5
<PAGE>
ANNUAL REPORT
- -------------
1994
1994
1994
1994
1994
[PHOTO APPEARS HERE]
SMITH BARNEY
WORLD FUNDS, INC.
GLOBAL GOVERNMENT
BOND PORTFOLIO
- --------------------
October 31, 1994
SMITH BARNEY
- ------------
<PAGE>
- ---------------------------------------------------------------
- ----------------
GLOBAL GOVERNMENT BOND PORTFOLIO ------------------------------
- -------------------------------------------------
Dear Shareholder:
We are pleased to present the annual report and audited
financial statements for
the Smith Barney World Funds: Global Government Bond
Portfolio. The "Portfolio
Highlights" section below provides a review of the Portfolio's
performance and
the markets in which the assets have been invested. Following
this section, you
will find a more detailed summary of holdings in the Schedule
of Investments.
We hope you find this information useful as you evaluate your
investments.
Reflecting a difficult year for investing in global bond
markets, the total
return of the Global Government Portfolio was a negative 4.87%
(Class A) through
October 31, 1994. Global bond markets continued to perform
poorly in the third
quarter, and throughout October. The strength of U.S. economic
activity has
been viewed by the bond market as creating potentially
inflationary bottlenecks
in many areas of manufacturing. In an effort to curb the
resurgence of
inflation, the U.S. Federal Reserve has adopted a tighter
monetary policy, by
raising the target Federal Funds rate six times this year.
According to most
indicators, this shift has not yet impacted the real economy,
and the perception
remains that interest rates may have further to rise before
monetary policy is
eased.
At this time, a further easing of monetary policy in many core
European
economies seems unlikely. In fact, in the face of stronger
economic growth, a
more restrained monetary policy has been implemented in the
United Kingdom,
Italy and Sweden.
Against this background we have reduced the interest rate
sensitivity of the
Global Government Bond Portfolio and have substantially reduced
its exposure to
foreign exchange fluctuations. At the same time, exposure to
the more volatile
peripheral currencies was reduced in favor of the Deutschemark.
In anticipation
of aggressive action by the Federal Reserve, and in light of
recent intervention
to support the dollar, the Global Government Bond Portfolio is
currently 94%
hedged back into its own currency. Our largest holdings are
currently in
Canada, Ireland and the United Kingdom. In recent months the
main focus of our
activities has been to create a stable share price and to
generate a high level
of income.
In the past few weeks, we have seen a change in the tone of the
currency
markets, starting with the successful intervention by the
Federal Reserve to
support the dollar this Fall, and bolstered by the most recent
increase in the
Federal Funds rate in November. These events have had the
effect of calming
1
<PAGE>
financial markets, and we look forward to a much more favorable
investment
environment in the coming year.
* * * * *
We appreciate your support and will continue to pledge our best
efforts on your
behalf.
Sincerely yours,
/s/ Stephen Treadway
Stephen Treadway
Chairman
December 15, 1994
2
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Historical Performance -- Class A Shares ----------------------
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End of Income Capital
Gain Total
Period ended of Period Period Dividends
Distributions Returns(1) -------------------------------------
- ------------------------------------------
<S> <C> <C> <C> <C>
<C>
10/31/94* $12.92 $11.68 $ 0.230 $
0.00
(4.87)%
12/31/93 11.84 12.92 0.518
0.59
19.13
12/31/92 12.90 11.84 0.970
0.19
0.93
7/22/91+-12/31/91 12.00 12.90 0.440
0.13
12.42
------- ----
- -Total $ 2.158 $
0.91
=======
====== </TABLE>
It is the Fund's policy to distribute dividends monthly and
capital gains, if
any, annually.
- ---------------------------------------------------------------
- ----------------
Average Annual Total Return -- Class A Shares -----------------
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Without
With
Sales Charge(1)
Sales Charge(2)
---------------
- --------------
<S> <C>
<C>
Period Ended October 31, 1994* (4.87)%
(8.68)%
7/22/91+ through 10/31/94 7.96
6.62
Cumulative Total Return (7/22/91-10/31/94) 28.55
N/A
</TABLE>
- ---------------------------------------------------------------
- ----------------
Average Annual Total Return -- Class B Shares -----------------
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Without
With
Sales Charge(1)
Sales Charge(2)
---------------
- --------------
<S> <C>
<C>
Period Ended October 31, 1994* (5.33)%
(6.28)%
1/4/93+ through 10/31/94 6.70
6.70
Cumulative Total Return (1/4/93-10/31/94) 12.55
N/A
</TABLE>
- ---------------------------------------------------------------
- ----------------
Average Annual Total Return -- Class C Shares -----------------
- ------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Without
With
Sales Charge(1)
Sales Charge(2)
---------------
- --------------
<S> <C>
<C>
Period Ended October 31, 1994* (4.86)%
(6.29)%
2/19/93+ through 10/31/94 6.24
6.24
Cumulative Total Return (2/19/93-10/31/94) 10.82
N/A
</TABLE>
+ Inception
* For the period January 1, 1994 to October 31, 1994.
3
<PAGE>
GROWTH OF $10,000 INVESTED IN CLASS A SHARES OF
GLOBAL GOVERNMENT BOND PORTFOLIO VS.
J.P. MORGAN GLOBAL BOND INDEX+
(UNAUDITED)
----------------------------------------------
July 1991 -- October 1994
[GRAPH APPEARS HERE]
+ Hypothetical illustration of $10,000 invested in Class A
shares on July 22,
1991 (inception), assuming deduction of the maximum 4.00% sales
charge at the
time of investment and the reinvestment of dividends and
capital gains at Net
Asset Value through October 31, 1994. The J.P. Morgan Global
Bond Index is a
daily, market capitalization weighted international fixed
income index
consisting of 13 countries. The Index is unmanaged and is not
subject to the
same management and trading expenses of mutual fund. The
performance of the
Portfolio's other classes may be greater or less than the Class
A shares
performance indicated on this chart, depending on whether
greater or lesser
sales charges and fees were incurred by shareholders investing
in the other
classes.
All figures represent past performance and are not a guarantee
of future
results. Investments return 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.
- ---------------------------------------------------------------
- ----------------
(1) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value and does not reflect deduction of the
applicable sales charge
with respect to Class A shares or the applicable
contingent deferred sales
charges ("CDSC") with respect to Class B and Class C
shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value. In addition, the deduction of the maximum
initial sales charge
of 4.00% with respect to Class A shares and a deduction of
a CDSC of 1.00%
with respect to Class B shares and 1.50% with respect to
Class C shares has
been factored into these calculations.
4
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Schedule of Investments
October 31, 1994 ----------------------------------------------
- ---------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT+ SECURITY
VALUE ---------------------------------------------------------
- ----------------------
<S> <C>
<C>
BELGIUM -- 6.7%
100,000,000 Kingdom of Belgium, 9.0% due 7/30/98
$ 3,358,843
- -----------
CANADA -- 17.5%
12,000,000 Canada Government, 7.5% due 7/01/97
8,759,112
- -----------
DENMARK -- 8.7%
25,000,000 Kingdom of Denmark, 9.0% due 11/15/96
4,329,812
- -----------
FRANCE -- 9.4%
25,000,000 French Treasury Bill, 4.5% due 5/12/96
4,709,573
- -----------
IRELAND -- 15.3%
4,700,000 Republic of Ireland, 8.75% due 7/27/97
7,645,043
- -----------
PORTUGAL -- 8.1%
105,000,000 European Investment Bank, 12.5% due 2/24/98
696,332
50,000,000 European Investment Bank, 10.125% due
8/3/00 301,088
300,000,000 International Bank of Research &
Development, 11.5% due 2/28/97
1,965,109
160,000,000 International Finance Corp., 15.750% due
12/7/95
1,091,732
- -----------
4,054,261
- -----------
SPAIN -- 8.2%
500,000,000 Government of Spain, 11.6% due 1/15/97
4,076,800
- -----------
UNITED KINGDOM -- 9.6%
3,000,000 United Kingdom Government National Cnv, 7%
due 8/6/97
4,791,319
- -----------
UNITED STATES -- 16.5%
2,000,000 Export Development Bank, 7.75% due 4/30/02
1,951,900
2,000,000 Gas Argentino, 7.25% due 12/07/98
1,797,500
2,000,000 International Bank for Research &
Development, 5.875% due 7/16/97
1,973,460
2,500,000 Republic of Austria, 8.5% due 3/4/03
2,541,250
- -----------
8,264,110
- -----------
TOTAL INVESTMENTS -- 100%
(Cost -- $48,914,907*)
$49,988,873
===========
</TABLE>
+ Represents local currency.
* Aggregate cost for Federal income taxes is substantially
the same.
See Notes to Financial Statements
5
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Statement of Assets and Liabilities
October 31, 1994 ----------------------------------------------
- ---------------------------------
<TABLE>
<S>
<C>
ASSETS:
Investments, at value (Cost -- $48,914,907)
$49,988,873
Cash and cash equivalents
22,365,221
Receivable for Fund shares sold
17,525
Receivable for securities sold
13,550,036
Dividends and interest receivable
2,072,241
- -----------
Total Assets
87,993,896
- -----------
LIABILITIES:
Unrealized foreign currency loss
482,749
Payable for Fund shares reacquired
77,204
Management fees payable
57,103
Distribution costs payable
28,108
Accrued expenses and other liabilities
350,755
- -----------
Total Liabilities
995,919
- -----------
Total Net Assets
$86,997,977
- -----------
NET ASSETS:
Par value of capital shares
$ 7,449
Capital paid in excess of par value
87,604,899
Net realized loss on investments
(1,352,089)
Net unrealized appreciation of investments and
foreign currencies
737,718
- -----------
Total Net Assets
$86,997,977
- -----------
Shares Outstanding:
Class A
6,676,035
Class B
499,440
Class C
274,099
Net Asset Value:
Class A (and redemption price)
$11.68
Class B*
$11.68
Class C*
$11.68
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net asset value per share)
$12.17
</TABLE>
* Redemption price is NAV of Class B and Class C shares reduced
by 1.00% and
1.50%, respectively, if shares are redeemed within 18 months of
purchase.
See Notes to Financial Statements.
6
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Statement of Operations For the period ended
October 31, 1994(a) -------------------------------------------
- ------------------------------------
<TABLE>
<S>
<C>
INVESTMENT INCOME:
Interest
$ 6,508,939
- -----------
EXPENSES:
Management fees (Note 2)
615,294
Distribution costs (Note 2)
225,569
Custodian fees
80,603
Shareholder communication fees
59,318
Shareholder servicing agent fees
44,977
Directors' fees
37,483
Registration fees
33,318
Audit and legal fees
12,495
Other
2,766
- -----------
Total Expenses
1,111,823
- -----------
Net Investment Income
5,397,116
===========
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND FOREIGN CURRENCIES:
Realized Loss From:
Securities transactions
(1,798,458)
Foreign currency transactions
(5,148,744)
===========
NET REALIZED LOSS
(6,947,202)
===========
Change in Net Unrealized Appreciation of
Investments and Foreign Currencies:
Beginning of period
4,154,960
End of period (Note 1)
591,217
===========
Decrease in Net Unrealized Appreciation
(3,563,743)
- -----------
Net Loss on Investments and Foreign Currencies
(10,510,945)
===========
Decrease in Net Assets Resulting From Operations
$(5,113,829)
===========
</TABLE>
(a) For the period from January 1, 1994 to October 31,
1994.
See Notes to Financial Statements.
7
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Statement of Changes in Net Assets ----------------------------
- ---------------------------------------------------
For the period ended October 31, 1994 and the year ended
December 31, 1993
<TABLE>
<CAPTION>
1994(a)
1993 ----------------------------------------------------------
- ---------------------
<S> <C>
<C>
OPERATIONS:
Net investment income $ 5,397,116
$ 7,431,616
Net realized gain (loss) (6,947,202)
4,506,639
Increase in net unrealized appreciation
(depreciation) (3,563,743)
7,698,140
-------------
- ----------
Increase (Decrease) In Net Assets
Resulting From Operations (5,113,829)
19,636,395
-------------
- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,840,958)
(4,709,038)
Return of capital (3,463,739)
- --
Net realized gain --
(5,133,750)
-------------
- ----------
Decrease In Net Assets from Distributions
to Shareholders (5,304,697)
(9,842,788)
-------------
- ----------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 8,103,416
18,642,381
Net asset value of shares issued for
reinvestment of dividends and distributions 3,110,947
5,869,265
Cost of shares reacquired (26,555,201)
(29,156,989)
-------------
- ----------
Decrease In Net Assets From Fund
Share Transactions (15,340,838)
(4,645,343)
-------------
- ----------
Increase (Decrease) in Net Assets (25,759,364)
5,148,264
NET ASSETS:
Beginning of period 112,757,341
107,609,077
-------------
- ----------
End of period* $ 86,997,977
$112,757,341
------------
- ------------
*Includes undistributed net investment income of:
- -$ 993,038
----------
- -------------
</TABLE>
(a) For the period from January 1, 1994 to October 31,
1994.
See Notes to Financial Statements.
8
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Notes to Financial Statements ---------------------------------
- ----------------------------------------------
1. Significant Accounting Policies
The Global Government Bond Portfolio ("Portfolio") is a
separate investment
portfolio of the Smith Barney World Funds, Inc. ("Fund"). The
Fund, a Maryland
corporation, is registered under the Investment Company Act of
1940, as amended,
as an open-end investment company and consists of this
Portfolio and four other
separate investment portfolios: European, Pacific,
International Balanced and
International Equity Portfolios. The significant accounting
policies
consistently followed by the Fund are: (a) security
transactions are accounted
for on trade date; (b) securities traded in national securities
markets are
valued at the closing prices in 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 listed securities for which no sale 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 securities.
Short term
securities maturing within 60 days are valued at cost plus
accreted discount, or
minus amortized premium, as applicable; (c) gains or losses on
the sale of
securities are calculated by using the specific identification
method; (d)
interest income, adjusted for amortization of premiums and
accretion of
discount, is recorded on the accrual basis; (e) direct expenses
are charged to
each portfolio and each class, management fees and general
expenses are
allocated on the basis of relative net assets; (f) foreign
currencies (and
receivables and payables for unsettled foreign securities
transactions) are
translated into U.S. dollars based on the rate of exchange of
such currencies
against U.S. dollars on the date of valuation. Translation
gains or losses
resulting from changes in the exchange rate and realized gains
and losses on the
settlement of foreign currency transactions are reported in the
statement of
operations; (g) certificates of deposit and other short-term
investments
maintained with financial institutions are considered to be
cash equivalents;
(h) during the current year, the Fund adopted Statement of
Position 93-2
Determination, Disclosure, and Financial Statement Presentation
of Income, ----------------------------------------------------
- ---------------------
Capital Gain, and Return of Capital Distributions by Investment
Companies. ----------------------------------------------------
- ---------------------
Accordingly, book and tax basis differences relating to
shareholder
distributions and other permanent book and tax differences are
reclassified to
paid-in capital. As of November 1, 1994, the cumulative effect
of such
differences, totaling $4,063,287, was reclassified to paid-in
capital from
accumulated net investment loss. Net investment income, net
realized gains, and
net assets were not affected by this change. In addition,
$146,501 of unrealized
forward foreign currency losses were
9
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Notes to Financial Statements (continued) ---------------------
- ----------------------------------------------------------
also reclassified to paid-in capital; and (i) the Portfolio
intends to comply
with the requirements of the Internal Revenue Code pertaining
to regulated
investment companies and to make the required distributions to
shareholders;
therefore no provision for Federal income taxes has been made.
As of October 31,
1994, the Smith Barney World Funds, Inc. has changed its year-
end from December
31 to October 31. This change was done in order to facilitate
the administration
of the Fund.
In addition, the Portfolio 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 Transactions with Affiliated
Person
Smith Barney Mutual Fund Management Inc. ("SBMFM"),
formerly known as Smith
Barney Advisers, Inc., a subsidiary of Smith Barney Holdings
Inc. ("SBH"), acts
as investment manager of the Fund. As compensation for its
services, the Global
Government Bond Portfolio pays SBMFM a fee calculated at the
annual rate of
0.75% on average daily net assets; the fee is calculated daily
and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts
as distributor of
the Portfolio's shares. For the period ended October 31, 1994,
SB has advised
the Portfolio that it was paid sales charges of approximately
$68,000 by
purchasers of Fund shares.
Effective November 7, 1994, the Fund adopted a new class
structure. At that
time current Class B and C shares were moved into Class C and A
shares,
respectively. Subsequently, a declining contingent deferred
sales charge
("CDSC") of 4.50% will be imposed on new Class B shares if
redemption occurs
within 5 years from the date such investment was made. Also, a
CDSC of 1.00% is
imposed on Class C shares if redemption occurs within 12 months
from the date
such investment was made. Any CDSC imposed on redemptions are
paid to the
distributor of the Portfolio. For the period ended October 31,
1994, there were
$7,990 in such charges.
Pursuant to a Distribution Plan the Portfolio pays a
service fee with
respect to its Class A, B and C shares calculated at the annual
rate of 0.25% of
the average daily net assets of each respective class' shares.
The Portfolio
also pays a distribution fee with respect to Class B and Class
C shares
calculated at the annual rate of 0.50% of average daily net
assets for
10
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Notes to Financial Statements (continued) ---------------------
- ----------------------------------------------------------
that class. All officers and two directors of the Fund are
employees of SB.
3. Investments
For the period ended October 31, 1994, the aggregate cost
of purchases and
proceeds from sales of investments (including maturities, but
excluding short-
term securities) was $144,553,389 and $193,157,090,
respectively.
At October 31, 1994, the aggregate gross unrealized
appreciation and
depreciation of investments for tax purposes were as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $1,356,577
Gross unrealized depreciation (282,611)
----------
Net unrealized appreciation $1,073,966
==========
</TABLE>
At October 31, 1994, included in cash and cash equivalents
were time
deposits with Credit Lyonnais London of:
<TABLE>
<CAPTION>
Local
Market Value Currency Maturity Rate
- ---------------------------------------------------------------
- -<S> <C> <C>
<C>
$ 9,000,000 $ 9,000,000 11/2/94
4.625%
12,584,943 18,900,000 DM 11/4/94
4.8125% </TABLE>
4. Forward Foreign Currency Contracts And Options
At October 31, 1994 the Portfolio had forward contracts for
foreign
currencies as described below. The Portfolio bears the market
risk that arises
from changes in foreign currency exchange rates. The unrealized
gain (loss) on
the contracts reflected in the accompanying financial
statements are as follows:
<TABLE>
<CAPTION>
Unrealized
Local Market Settlement
Gain
Foreign Currency Currency Value Date
(Loss) --------------------------------------------------------
- --------------------
<S> <C> <C> <C>
<C>
To Sell:
Canadian Dollars 11,843,603 $ 8,758,818 11/4/94
$ 20,562
French Francs 21,840,465 4,248,189 11/4/94
(125,869)
Irish Punts 4,694,375 7,560,291 11/4/94
(227,677)
New Zealand Dollars 6,094,988 3,749,027 11/4/94
(92,034)
Portuguese Escudo 666,263,778 4,337,377 11/4/94
(148,620)
Spanish Pesetas 554,440,166 4,435,521 11/4/94
(114,675)
-----------
- ----------
33,089,223
(688,313)
-----------
- ----------
</TABLE>
11
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Notes to Financial Statements (continued) ---------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized
Market
Settlement Gain
Foreign Currency Value
Date (Loss) -------------------------------------------
- ----------------------------------------------
<S> <C>
<C> <C>
Cross Forwards**:
Sell Belgium Francs vs. German Deutschemarks 3,449,232
11/4/94 $ (8,972)
Sell Danish Krona vs. German Deutschemarks 4,664,613
11/4/94 (18,820)
Sell British Pounds vs. German Deutschemarks 4,702,124
11/4/94 (41,194)
Sell Swedish Krona vs. German Deutschemarks 4,735,402
11/4/94 (49,935)
17,551,371
(118,921)
Total Market Value and Unrealized Loss
on Forward Foreign Currency Contracts $50,640,594
$ (807,234)
</TABLE>
<TABLE>
<CAPTION>
**Local Currency on Cross Forwards
Sell Buy
- ---------------------------------------------------------------
- --------------------------
<S> <C>
<C>
Sell Belgium Francs vs. German Deutschemarks
106,490,648 5,166,565
Sell Danish Krona vs. German Deutschemarks
27,425,994 6,977,027
Sell British Pounds vs. German Deutschemarks
2,872,403 6,999,759
Sell Swedish Krona vs. German Deutschemarks
33,965,011 7,036,610
</TABLE>
At October 31, 1994, the Portfolio had two offsetting
option contracts for
which the gain had been locked in. These two contracts resulted
in a gain of
$643,200. The two open contracts were as follows:
<TABLE>
<CAPTION>
Local Currency Description Expiration
Market Value --------------------------------------------------
- -----------------------------
<S> <C> <C>
<C>
16,000,000 Buy: US Dollars vs.
Deutschemarks
Strike price: 1.642 12/19/94
$ 909,668
16,000,000 Sell: US Dollar vs.
Deutschemarks
Strike price: 1.642 12/19/94
(909,668)
Total Cost -- ($643,200)
</TABLE>
5. Portfolio Concentration
The Portfolio's investments in foreign securities may
involve risks not
present in domestic investments. Since securities may be
denominated in a
foreign currency and may require settlement in foreign
currencies and pay
interest or dividends in foreign currencies, changes in the
relationship of
these foreign currencies to the U.S. dollar can significantly
affect the value
of the investments and earnings of the Portfolio. Foreign
investments may
subject the Portfolio 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.
12
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Notes to Financial Statements (continued) ---------------------
- ----------------------------------------------------------
In addition to the risks described above, risks may arise
from forward
currency contracts with respect to the potential inability of
counter parties to
meet the terms of their contracts.
6. Capital Shares
At October 31, 1994, the Fund had two billion shares of
$.001 par value
capital stock authorized. The Portfolio has the ability to
issue multiple
classes of shares. Each share of a class represents an
identical legal interest
in the Portfolio 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, 1994, paid in capital, including
adjustments for book and
tax difference discussed in Note 1, amounted to the following
for each class:
<TABLE>
<CAPTION>
Class A Class B
Class C -------------------------------------------------------
- ------------------------
<S> <C> <C>
<C>
Total Paid-in Capital $ 78,234,812 $
3,291,545 $ 6,085,991
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Period Ended
Year Ended
October 31, 1994(a)
December 31, 1993
------------------------
- -----------------
Global Government Bond Shares Amount
Shares Amount ------------------------------------------
- -------------------------------------------------
<S> <C> <C>
<C> <C>
Class A
Shares sold 194,227 $
2,467,800
1,041,563 $ 12,967,908
Shares issued on reinvestment 230,834
2,800,281
451,685 5,686,981
Shares redeemed (2,059,934)
(25,206,264)
(2,272,201) (28,514,522)
---------- -----------
- -
- ---------- ------------
Net Decrease (1,634,873)
$(19,938,183)
(778,953) $ (9,859,633)
==========
============
========== ============
Class B*
Shares sold 208,788 $
2,634,361
420,798 $ 5,324,460
Shares issued on reinvestment 19,019
229,506
13,474 172,829
Shares redeemed (113,045)
(1,347,764)
(49,593) (642,467)
---------- -----------
- -
- ---------- ------------
Net Increase 114,762 $
1,516,103
384,679 $ 4,854,822
==========
============
========== ============
Class C*
Shares sold 238,639 $
3,001,255
27,950 $ 350,013
Shares issued on reinvestment 6,874
81,160
737 9,455
Shares redeemed (101)
(1,173)
- -- --
---------- -----------
- -
- ---------- ------------
Net Increase 245,412 $
3,081,242
28,687 $ 359,468
==========
============
========== ============
</TABLE>
(a) For the period from January 1, 1994 to October 31, 1994.
* Sales of Class B and Class C shares commenced on January 4,
1993 and
February 19, 1993, respectively.
13
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Financial Highlights ------------------------------------------
- -------------------------------------
For a share of each capital stock outstanding throughout each
period:
<TABLE>
<CAPTION>
Class A Shares 1994(2)
1993 1992 1991(3)
- ---------------------------------------------------------------
- --------------------------------------------------------
<S> <C>
<C> <C> <C>
Net Asset Value, Beginning of Period $
12.92
$ 11.84 $ 12.90 $ 12.00
--------
- --------- -------- --------
Income From Investment Operations:
Net investment income
0.69
0.83 1.00 0.35
Net realized and unrealized
gain (loss) on investment
(1.28)
1.36 (0.90) 1.12
--------
- --------- -------- --------
Total Income (Loss) from Investment Operations
(0.59)
2.19 0.10 1.47
--------
- --------- -------- --------
Less Distributions:
Dividends from net investment income
(0.23)
(0.52) (0.97) (0.44)
Distribution from net realized gains (1)
- -
(0.59) (0.19) (0.13)
Return of Capital
(0.42)
- - - -
--------
- --------- -------- --------
Total Distributions
(0.65)
(1.11) (1.16) (0.57)
--------
- --------- -------- --------
Net Asset Value, End of Period $
11.68
$ 12.92 $ 11.84 $ 12.90
--------
- --------- -------- --------
Total Return
(4.87)%++ 19.13% 0.93% 12.42%+
--------
- --------- -------- --------
Net Assets, End of Period (000s) $
77,961
$ 107,415 $107,609 $ 99,855
--------
- --------- -------- --------
Ratios to Average Net Assets:
Expenses
1.32%+ 1.30% 1.36% 1.15%+
Net investment income
6.57+
6.67 7.72 8.26+
--------
- --------- -------- --------
Portfolio Turnover Rate
179.29%
119.06% 177.06% 63.46%
--------
- --------- -------- --------
<CAPTION>
Class B Shares
1994(2) 1993(4) ---------------------------------------
- ---------------------------------------------------------------
- -----------------
<S>
<C> <C>
Net Asset Value, Beginning of Period
$ 12.93 $ 11.83
- -------- --------
Income From Investment Operations:
Net investment income
.90 0.79
Net realized and unrealized
gain (loss) on investment
(1.55) 1.37
- -------- --------
Total Income (Loss) from Investment
Operations (0.65) 2.16
- -------- --------
Less Distributions:
Dividends from net investment income
(0.21) (0.47)
Distribution from net realized gains (1)
- - (0.59)
Return of Capital
(0.39) -
- -------- --------
Total Distributions
(0.60) (1.06)
- -------- --------
Net Asset Value, End of Period
$ 11.68 $ 12.93
- -------- --------
Total Return
(5.33)%++ 18.89%+
- -------- --------
Net Assets, End of Period (000s)
$ 5,835 $ 4,972
- -------- --------
Ratios to Average Net Assets:
Expenses
1.80%+ 1.74%+
Net investment income
6.05+ 6.28+
- -------- --------
Portfolio Turnover Rate
179.29% 119.06%
- -------- --------
</TABLE>
(1) Net short term gains, if any, are included and reported
as ordinary income
for income tax purposes.
(2) For the period from January 1, 1994 to October 31, 1994.
(3) For the period from July 22, 1991 (inception) to
December 31, 1991.
(4) For the period from January 4, 1993 (inception date) to
December 31, 1993.
+ Annualized.
++ Not annualized as it may not be representative of the
total
return for the
year.
14
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Financial Highlights (continued) ------------------------------
- -------------------------------------------------
For a share of each capital stock outstanding throughout the
period:
<TABLE>
<CAPTION>
Class C Shares 1994(2)
1993(3) -------------------------------------------------------
- -----------------
<S> <C>
<C>
Net Asset Value, Beginning of Period $ 12.93 $
11.97
--------- -
- -------
Income From Investment Operations:
Net investment income 0.76
0.69
Net realized and unrealized
gain (loss) on investment (1.35)
1.23
--------- -
- -------
Total Income (Loss) from Investment Operations (0.59)
1.92
--------- -
- -------
Less Distributions:
Dividends from net investment income (0.23)
(0.37)
Distribution from net realized gains (1) -
(0.59)
Return of Capital (0.43)
- -
--------- -
- -------
Total Distributions (0.66)
(0.96)
--------- -
- -------
Net Asset Value, End of Period $ 11.68 $
12.93
--------- -
- -------
Total Return (4.86)%++
16.49%++
--------- -
- -------
Net Assets, End of Period (000s) $ 3,202 $
371
--------- -
- -------
Ratios to Average Net Assets:
Expenses 1.23%+
1.20%+
Net investment income 6.76+
6.73+
---------
- -------
Portfolio Turnover Rate 179.29%
119.06%
---------
- -------
</TABLE>
(1) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
(2) For the period from January 1, 1994 to October 31, 1994.
(3) For the period from February 19, 1993 (inception date) to
December 31,
1993.
+ Annualized.
++ Not annualized as it may not be representative of the total
return for the
year.
15
<PAGE>
SMITH BARNEY WORLD FUNDS, INC.
GLOBAL GOVERNMENT BOND PORTFOLIO
- ---------------------------------------------------------------
- ----------------
Independent Auditors' Report ----------------------------------
- ---------------------------------------------
To The Shareholders and Board of Directors of
Smith Barney World Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities
including the schedule of investments of the Global Government
Bond Portfolio of
Smith Barney World Funds, Inc. as of October 31, 1994 and the
related statement
of operations for the period from January 1, 1994 to October
31, 1994, the
statements of changes in net assets for the period from January
1, 1994 to
October 31, 1994 and the year ended December 31, 1993, and the
financial
highlights for the period from January 1, 1994 to October 31,
1994, two years
ended December 31, 1993 and for the period from July 22, 1991
(inception) to
December 31, 1991. These financial statements and financial
highlights are the
responsibility of the Fund's management. Our responsibility is
to express an
opinion on these financial statements and financial highlights
based on our
audits.
We conducted our audits in accordance with generally
accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements and
financial
highlights are free of material misstatement. An audit includes
examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial
statements. Our procedures included confirmation of securities
owned as of
October 31, 1994. An audit also includes assessing the
accounting principles
used and significant estimates made by management, as well as
evaluating the
overall financial statement presentation. We believe that our
audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred
to above present fairly, in all material respects, the
financial position of the
Global Government Bond Portfolio of Smith Barney World Funds,
Inc. as of October
31, 1994 and the results of its operations for the period from
January 1, 1994
to October 31, 1994, the changes in its net assets and for the
period from
January 1, 1994 to October 31, 1994 and the year ended December
31, 1993 and the
financial highlights for the period from January 1, 1994 to
October 31, 1994,
two years ended December 31, 1993 and for the period from July
22, 1991
(inception) to December 31, 1991, in conformity with generally
accepted
accounting principles.
/s/ KPMG Peat
Marwick LLP
New York, New York
December 28, 1994
16
<PAGE>
SMITH BARNEY
WORLD FUNDS, INC.
DIRECTORS
Victor Atkins
Robert A. Belfer
Alger B. Chapman
Robert Frankel
Rainer Greeven
Susan M. Heilbron
Bruce D. Sargent
James M. Shuart
Stephen Treadway, Chairman
OFFICERS
Maurits E. Edersheim,
Chairman of the Fund
& Advisory Director
Stephen Treadway
Chief Executive Officer
Heath B. McLendon
Executive Vice President
Lewis E. Daidone
Senior Vice President
and Treasurer
James Conheady
Vice President
J. Gabriel Irwin
Vice President
Jeffrey Russell
Vice President
Rein Van Der Does
Vice President
Simon J. Wells
Vice President
Victor S. Filatov
Vice President
Simon R. Hildreth
Vice President
Denis P. Mangan
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
Smith Barney Mutual Funds
Management Inc.
DISTRIBUTOR
Smith Barney Inc.
CUSTODIAN
J.P. Morgan & Co. Incorporated
SHAREHOLDER
SERVICING AGENT
The Shareholder Servicing Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the
shareholders of
Smith Barney World Funds, Inc. Global Government Bond
Portfolio. It is not
authorized for distribution to prospective investors unless
accompanied or
preceded by a current Prospectus for the Portfolio, which
contains information
concerning the Portfolio's investment policies and expenses as
well as other
pertinent information.
SMITH BARNEY
- ------------
SMITH BARNEY
WORLD FUNDS, INC.
1345 Avenue of the Americas
New York, New York 10105
FD2265 L4
<PAGE>
A N N U A L R E P O R T
1994
1994
1994 LOGO
1994
1994
SMITH BARNEY
WORLD FUNDS, INC.
EUROPEAN PORTFOLIO
PACIFIC PORTFOLIO
INTERNATIONAL
BALANCED PORTFOLIO
- -----------------------
October 31,1994
SMITH BARNEY
- ------------
<PAGE>
European, Pacific and
International Balanced Portfolios
DEAR SHAREHOLDER:
We are pleased to present the annual report and audited
financial statements
for the Smith Barney World Funds: European, Pacific and
International Balanced
Portfolios. The "Portfolio Highlights" sections below provides
a review of each
Portfolio's performance and the markets in which they are
invested. Following
this section, you will find a more detailed summary of their
holdings in the
Schedules of Investments. We hope you find this information
useful as you
evaluate your investments.
PORTFOLIO HIGHLIGHTS
EUROPEAN PORTFOLIO
The Portfolio commenced operations just after the European
Financial Times
Index reached its all-time high in February 1993. Since
inception, the net
asset value of the European Portfolio has increased 3.04%
(Class A) from $12.50
to $12.88 on October 31, 1994. This return compares favorably
to the 0.61%
advance of the European Financial Times Index (in U.S. dollar
terms) during the
same period.
After three years of recession, European economies are showing
signs of
improvement. Nine months ago, the consensus European economic
forecast for real
growth in gross domestic product was only 0.5%. At this time,
however, it seems
apparent that a 2.5% growth rate is achievable in the current
year, and
possibly 3% next year.
In several ways, the overall economic cycle in Europe has been
very similar
to what we have seen in the United States, but at a lag of
about two years.
First of all, the decline in profitability over the past few
years has forced
many companies into cost-reduction programs and corporate
restructuring. As the
overall economy continues to turn upward, we believe that the
effects of these
restructurings will be reflected in relatively stronger
earnings over the next
two years. The trend towards privatization in many European
countries should be
another boost for equities.
Our weighting in Germany is neutral. We remain underweighted in
France and
heavily underweighted in the United Kingdom. Ireland, however,
is overweighted
as economic conditions are by far superior compared to those in
the United
Kingdom, and valuations are more attractive. We also tend to
overweight
Austria, as a means of participating in the exciting new
developments in
Eastern Europe.
The Portfolio's best performing market was in Finland (up
64.50% during the
first ten months of 1994). Most notable was the strong
performance of one of
the Portfolio's largest holdings, Nokia.
We are also pleased with the performance of our investments in
Switzerland
where price/earnings ratios are relatively favorable. Also,
conservative Swiss
accounting standards are being adjusted toward more liberal
European rules, and
the corporate
1
<PAGE>
management of many Swiss companies is showing strong interest
in
improving
shareholders' values. Investments in the Netherlands are
currently overweighted,
due to our investment in two attractive special
situations (I.H.C. Caland and
NBM Amstelland).
PACIFIC PORTFOLIO
Since the inception of the Portfolio on February 7, 1994, we
have been
building our positions in Hong Kong (just under 17% as of the
date of this
report), Malaysia (just under 16%) and Singapore (about 18%).
The Portfolio's
performance has been in line with market movements, with a 3.36%
(Class A)
total return through October 31.
We continue to believe that the Portfolio will benefit from the
high growth
and low-inflation economic environment of the Pacific Basin.
Lower cost labor
has led to industrialization and prosperity, with a growing
middle class and a
tremendous need for the development of infrastructure. These
highgrowth areas
include telecommunications, transportation and basic utilities
services.
We continue to overweight several markets in the Pacific Basin.
Our
investments in Singapore have performed well, given positive
economic data and
reflecting the beginning of a real estate recovery cycle. We are
also positive
on the Hong Kong market, having added to position earlier in the
year. We are
also positive about the Malaysian market, considering the
improved
interest-rate environment, moderate inflation and sustained
economic growth.
In recent months, holdings have been added to our Philippines
positions.
Here, we are attempting to take advantage of the significant
number of Initial
Public Offerings on the Manila Exchange.
One market in which we remain underweighted is Japan. Persistent
market
concerns, a longer-than-expected duration for the recession, and
high exchange
rates have prevented appreciation in many of the Portfolio's
growth companies.
In fact, our positions in this market have remained static
throughout most of
1994.
INTERNATIONAL BALANCED PORTFOLIO
The International Balanced Portfolio is designed to invest
approximately 50%
of net assets in equity markets outside the United States, with
the remaining
50% allocated to global fixed income investments. Thus, the
review of this
Portfolio has been divided into sections for "Fixed Income" and
"Equity."
FIXED INCOME: During the third quarter, global bond markets
continued to
perform poorly. The strength of U.S. economic activity has been
viewed by the
bond market as creating potentially inflationary bottlenecks in
many areas of
manufacturing. In an effort to curb the resurgence of
inflation, the U.S.
Federal Reserve has adopted a tighter monetary policy by
raising the target
Federal Funds rate six times this year. According to most
indicators, this
shift has not yet impacted the real economy, and the perception
remains that
interest rates may have further to rise before monetary policy
is eased.
2
<PAGE>
At this time, a further easing of monetary policy in many core
European
economies seems unlikely. In fact, in the face of stronger
economic growth, a
more restrained monetary policy has been implemented in the
United Kingdom,
Italy and Sweden.
In view of these economic trends, we have defensively
positioned the assets
of the Balanced Portfolio's fixed-income portion. As of October
31, 1994, we
were 100% invested with our largest holdings in Holland,
France, Ireland, Spain
and New Zealand. In very recent weeks, we have have seen a
change in the tone
of the currency markets, starting with the successful
intervention by the
Federal Reserve to support the dollar this Fall, and bolstered
by the most
recent increase in the Federal Funds rate in November.
Accordingly, we have
increased our dollar weighting from below 50% to just over 70%.
EQUITY: The positioning of the International Balanced
Portfolio's equity
holdings are concentrated in sectors that we believe will
perform well in the
current economic cycle, such as retailing, construction and
construction
materials, telecommunications and equipment suppliers, and
consumer
nondurables. In general, we have attempted to identify
companies with the
potential for high, dependable earnings-growth rates (often
expected to be 25
to 50% higher than the average of their local markets).
Our emphasis is on broad diversification, with the assets
spread across 24
markets as of the date of this letter. Investments in the
Pacific Basin, which
comprise about 15% of the total portfolio, include holdings in
Hong Kong,
Japan, Malaysia, the Philippines, Singapore and Thailand.
Outside of Japan, the
stock markets of the Pacific Basin have rebounded, following a
selloff that
occurred largely due to profit-taking earlier this year. We
continue to have a
favorable view of the investment fundamentals in this region.
Investments in European equity markets comprise about 22% of
the total
assets. We believe that these markets will perform well in
1995, as many
economies are now emerging from recession and experiencing
economic expansion.
The remaining assets are primarily invested in Latin America.
* * * * *
We appreciate your support, and will continue to pledge our
best efforts on
your behalf.
Respectfully yours,
/s/ Stephen Treadway
Stephen Treadway
Chairman and Chief Executive Officer
December 15, 1994
3
<PAGE>
Smith Barney World Funds, Inc.
European Portfolio
Historical Performance -- Class A Shares
Net Asset Value
---------------------
Beginning End Income Capital
Gain
Total
Period Ended of Period of Period Dividends
Distribution
Return(1)
--------- --------- --------- ----------
- ----------
2/7/94*-10/31/94 $12.50 $12.88 $0.00 $0.00
3.04%
It is the Fund's policy to distribute dividends and capital
gains, if any,
annually.
Average Total Return - Class A Shares
Without With
Sales Charge(1) Sales
Charge(2) --------------- ---
------------
2/7/94* through 10/31/94 3.04% (1.60)%
Average Total Return - Class B Shares
Without With
Sales Charge(1) Sales
Charge(2) --------------- ---
------------
2/14/94* through 10/31/94 2.80% 1.80%
* Inception
4
<PAGE>
Growth of $10,000 Invested in Class A Shares of
European Portfolio vs.
The European Financial Times Index+
(unaudited)
- ---------------------------------------------------------------
- ----------------
February 1994 -- October 1994
GRAPH HERE
+ Hypothetical illustration of $10,000 invested in Class A
shares at
inception on February 7, 1994 (inception), assuming deduction
of the maximum
4.50% sales charge at the time of investment and the
reinvestment of
dividends and capital gains at Net Asset Value through October
31, 1994.
The European Financial Times Index is a composite portfolio
consisting of
equity total returns for Europe. The Index is unmanaged and is
not subject to
the same management and trading expenses of a Mutual Fund. The
performance
of the Portfolio's other classes may be greater or less than
the Class A shares
performance indicated on this chart, depending on whether
greater or
lesser sales charges and fees were incurred by shareholders
investing in the
other classes.
All figures represent past performance and are not a guarantee
of future
results. Investments returns and 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.
- ---------------------------------------------------------------
- ----------------
(1) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value and does not reflect deduction of the
applicable sales charge
with respect to Class A shares or the applicable contingent
deferred sales
charges ("CDSC") with respect to Class B shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value. In addition, the deduction of the maximum
initial sales charge
of 4.50% with respect to Class A shares and a deduction of
a CDSC of 1.00%
with respect to Class B shares has been factored into these
calculations.
5
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio
Historical Performance -- Class A Shares
Net Asset Value
---------------
Beginning End Income Capital
Gain
Total
Period Ended of Period of Period Dividends
Distribution
Return (1)
--------- --------- --------- ----------
- --
- -----------
2/7/94*-10/31/94 $12.50 $12.92 $0.00 $0.00
3.36%
It is the Fund's policy to distribute dividends and capital
gains, if any,
annually.
Average Total Return - Class A Shares
Without With
Sales Charge(1) Sales
Charge(2)
--------------- ---------
- -----
2/7/94* through 10/31/94 3.36%
(1.30)%
Average Total Return - Class B Shares
Without With
Sales Charge(1) Sales
Charge(2)
--------------- ---------
- -----
2/11/94* through 10/31/94 2.88%
1.88%
* Inception
6
<PAGE>
Growth of $10,000 Invested in Class A Shares of
Pacific Portfolio vs.
The J.P. Morgan Pacific Basin Index+
(unaudited)
- ---------------------------------------------------------------
- --
- ---------------
February 1994 -- October 1994
GRAPH HERE
+ Hypothetical illustration of $10,000 invested in Class A
shares at
inception on February 7, 1994 (inception), assuming deduction
of the maximum
4.50% sales charge at the time of investment and the
reinvestment of dividends
and capital gains at Net Asset Value through October 31, 1994.
The J.P. Morgan
Pacific Basin Index is a composite portfolio consisting of
equity total returns
for the countries of Australia, New Zealand and countries in
the Far East. The
Index is unmanaged and is not subject to the same management
and trading
expenses of a Mutual Fund. The performance of the Portfolio's
other classes may
be greater or less than the Class A shares performance
indicated on this chart,
depending on whether greater or lesser sales charges and fees
were incurred by
shareholders investing in the other classes.
All figures represent past performance and are not a guarantee
of future
results. Investments returns and 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.
- ---------------------------------------------------------------
- --------------
(1) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value and does not reflect deduction of the
applicable sales charge
with respect to Class A shares or the applicable contingent
deferred sales
charges ("CDSC") with respect to Class B shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value. In addition, the deduction of the maximum
initial sales charge
of 4.50% with respect to Class A shares and a deduction of
a CDSC of 1.00%
with respect to Class B shares has been factored into these
calculations.
7
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio
Historical Performance - Class A Shares
<TABLE>
<CAPTION>
Net Asset Value ----------------------
Beginning End Income Capital
Gain Total
Period Ended of Period of Period Dividends
Distribution Return (1)
- ------------ --------- --------- --------- -----
- --
- ----- ----------
<S> <C> <C> <C> <C>
<C>
8/25/94*-10/31/94 $12.00 $12.20 $0.00
$0.00 1.67%
</TABLE>
It is the Fund's policy to distribute dividends quarterly and
capital gains, if
any, annually.
Average Total Return - Class A Shares
Without
With Sales Charge(1)
Sales
Charge(2)
--------------- ------
- --------
8/25/94* through 10/31/94 1.67%
(2.94)%
Average Total Return - Class B Shares
Without
With Sales Charge(1)
Sales
Charge(2)
--------------- ------
- --------
8/25/94* through 10/31/94 1.50%
0.50%
* Inception
8
<PAGE>
Growth of $10,000 Invested in Class A Shares of
International Balanced Portfolio vs.
The Morgan Stanley EAFE-GDP Weighted Index and
The J.P. Morgan Global Bond Index
- ---------------------------------------------------------------
- ----------------
August 1994 -- October 1994
GRAPH HERE
+ Hypothetical illustration of $10,000 invested in Class A
shares at
inception on August 25, 1994 (inception), assuming deduction of
the maximum
4.50% sales charge at the time of investment and the
reinvestment of dividends
and capital gains at Net Asset Value through October 31, 1994.
The Morgan
Stanley EAFE-GDP Weighted Index is a composite portfolio
consisting of equity
total returns for the countries of Europe, Australia, New
Zealand and
countries in the Far East, weighted based on each country's
gross domestic
product. The Indices are unmanaged and are not subject to the
same management
and trading expenses of a Mutual Fund. The performance of the
Portfolio's other classes may be greater or less than the
Class A shares
performance indicated on this chart, depending on whether
greater or lesser
sales charges and fees were incurred by shareholders investing
in the other
classes.
All figures represent past performance and are not a guarantee
of future
results. Investments returns and 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.
- ---------------------------------------------------------------
- ----------------
(1) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value and does not reflect deduction of the
applicable sales charge
with respect to Class A shares or the applicable contingent
deferred sales
charges ("CDSC") with respect to Class B shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions at net
asset value. In addition, the deduction of the maximum
initial sales charge
of 4.50% with respect to Class A shares and a deduction of
a
CDSC of 1.00%
with respect to Class B shares has been factored into these
calculations.
9
<PAGE>
Smith Barney World Funds, Inc.
European Portfolio
Schedules of Investments
October 31, 1994
SHARES SECURITY
VALUE
- ------ --------
- -----
COMMON STOCKS -- 100%
Austria -- 7.7%
2,000 Bau Holdings Pref.
$ 160,229
3,000 Baumax AG Pref.
117,062
2,000 Va Technologies AG
205,659
- ----------
482,950
Finland -- 7.0%
2,000 OY Nokia Ab Preferred
300,775
43,333 Tampella AB
140,649
- ----------
441,424
France -- 12.4%
1,513 Castorama Dubois Investment
219,772
3,000 Credit Local De France
228,981
2,074 Societe Nationale Elf
Aquitaine
152,840
2,255 Guilbert SA
178,625
- ----------
780,218
Germany -- 14.0%
700 Buderus AG
345,914
900 Grohe Friedrich Non Voting
267,445
1,000 Mannesmann AG
266,981
- ----------
880,340
Great Britain -- 10.7%
30,401 Cable & Wireless
208,688
8,000 Vodafone Group PLC ADR
278,000
15,000 Wolseley PLC
189,793
- ----------
676,481
Ireland -- 6.5%
40,000 Cement Roadston Holdings PLC
221,012
40,000 Independent Newspapers Ltd.
188,981
- ----------
409,993
Italy -- 5.7%
7,000 Industrie Natuzzi ADR
225,750
50,000 Telecom Italia
136,777
- ----------
362,527
See Notes to Financial Statements.
10
<PAGE>
Smith Barney World Funds, Inc.
European Portfolio
Schedules of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE
------ --------
- -----
Netherlands -- 12.1%
2,000 Heineken NV $
291,647
10,000 I.H.C. Caland NV
253,194
20,000 NBM Amstelland
217,700
762,541
Norway -- 3.7%
4,000 Norsk Hydro ADR
161,000
3,000 Petroleum Geo Services
75,507
236,507
Spain -- 6.1%
1,500 Banco Popular Espanol SA
187,846
6,000 Repsol SA ADR
195,000
382,846
Sweden -- 5.0%
3,000 Hennes & Mauritz Series B
165,596
7,500 Volvo AB Series B Free
147,705
313,301
Switzerland --
9.1%
200 Magazine Globus PC
131,638
1,200 SMH Neuchatel SA Reg.
157,393
200 Gebrueder Sulzer AG Reg.
140,858
100 S.G.S. Surveillance
144,674
574,563
Total Investments--100% (Cost--$5,839,463*)
$6,303,691
==========
See Notes to Financial Statements.
11
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio
Schedules of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE
- ------ --------
- -----
COMMON STOCKS -- 100%
Australia -- 7.7%
51,512 Burns Philip
$ 131,513
35,498 Coca Cola Amatil
223,937
125,000 M.I.M.S. Holdings
271,820
35,000 Mayne Nickless Ltd.
184,689
- ----------
811,959
Hong Kong -- 16.8%
400,000 Guangzhou Investment
128,114
40,000 Guoco Group Ltd.
188,936
60,000 Hong Kong & China Gas Co.
113,750
5,000 Hong Kong & China Wts 12/31/95
1,812
6,000 Hong Kong Telecom ADR
127,500
35,000 Hutchison Whampoa Ltd.
161,695
20,000 Jardine Matheson Holdings
166,289
800,000 Pricerite Group Ltd.
140,796
124,000 Shun Tak Holdings
109,117
400,000 Singamas Container Holdings
130,702
350,000 Vitasoy International
142,672
40,000 Wharf Holdings Ltd.
157,878
500,000 Yizheng Chemical 'H' Sh
198,965
- ----------
1,768,226
Indonesia -- 1.4%
1,500 Pt Indonesian Satellite
58,875
30,000 Sekar Laut
82,904
- ----------
141,779
Japan -- 21.0%
9,200 Ishikawajima Construction
185,044
22,000 Itochu Corporation
171,099
5 Japan Telecom Co Ltd.
182,568
9,000 Matsushita Electric Industrial Co.
Ltd.
149,458
6,000 Mitsubishi Bank
150,387
38,000 Mitsubishi Heavy Industry Ltd.
309,252
5,500 Mr. Max Corp.
146,364
10,000 Nippon Denso Co. Ltd.
213,512
20,000 Nippon Express Co. Ltd.
216,607
5,000 Rohm
220,217
9,000 Sagami Rubber Industries
95,616
See Notes to Financial Statements.
12
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio
Schedules of Investments (continued)
October 31, 1994
SHARES
SECURITY
VALUE
------ ------
- --
- -----
Japan -- 21.0% (continued)
3,000 Sony Music Entertainment
$ 169,881
- ----------
2,210,005
Malaysia -- 15.5%
50,000 Leader Universal Holdings
277,702
12,000 Malaysia Helicopter Service
29,569
60,000 Muhibbah Engineering
244,065
150,000 Renong Berhad
234,678
40,000 Resorts World Berhad
253,452
66,250 Sungei Way Holdings
261,714
8,750 Sungei Way Holdings Wts 1999
1,965
30,000 Technology Resources
116,752
25,000 Telekom Malaysia
202,409
- ----------
1,622,306
New Zealand -- 1.1%
2,000 Telecom Corp New Zealand
111,250
- ----------
Philippines -- 9.1 %
150,000 International Container
Terminal 149,212
500,000 Jg Summit Holdings Inc.
200,959
1,300,000 Kepphil Shipyard Inc.
177,648
1,580,000 Liberty Telecoms Holdings
203,210
250,000 Universal Robina Corp.
217,286
- ----------
948,315
Singapore -- 18.4%
35,000 Cerebos Pacific
199,973
50,000 Dbs Land Ltd.
175,146
10,000 Fraser & Neave
118,351
10,000 Fraser & Neave Wts 5/27/98
57,815
25,000 Jurong Shipyards Ud
224,459
200,000 Qaf Ud
210,856
50,000 Sembawang Maritime Ltd.
239,763
87,000 Singapore Shipbuilding & Engineering
214,216
36,525 United Overseas Bank - Wts 6/17/97
216,139
60,000 Van Der Horst Ltd.
269,351
- ----------
1,926,069
See Notes to Financial Statements.
13
<PAGE>
Smith Barney World Funds, Inc.
Pacific Portfolio
Schedules of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE
------ --------
- -----
Thailand -- 9.0%
15,000 Bangkok Bank $
162,496
5,000 Dhana Siam
133,207
7,500 Land and House Public Company Ltd. Foreign
154,070
9,000 Siam City Cement Co. Ltd.
193,551
10,000 United Communications Ind.
295,301
938,625
Total Investments 100% (Cost--$10,021,767*)
$10,478,534
===========
See Notes to Financial Statements.
14
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio
Schedules of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE
- ------ --------
- -----
COMMON STOCKS -- 50.4%
Argentina -- 0.9%
53,352 Bagley SA Series B
$ 210,783
- ---------
Australia -- 0.9%
40,000 Mayne Nickless Ltd
211,073
- ---------
Austria -- 3.8%
6,000 Austria Mikro System
443,929
2,000 Va Technologies AG
205,659
2,000 V.A.E. Eisenbahn AG
255,047
- ---------
904,635
Brazil -- 0.9%
4,000 Telecomunicacoes Brasileiras
ADR 202,500
- ---------
Canada -- 0.6%
14,000 Videotron Groupe Ltd Subord.
Vtg. 134,565
- ---------
Chile -- 1.2%
10,000 Embotelladora Andina SA ADR
276,250
- ---------
Finland -- 1.6%
2,500 OY Nokia Ab Preferred
375,968
- ---------
France -- 0.9%
1,500 Castorama Dubois Investment
217,884
- ---------
Germany -- 2.2%
500 Bayarische Motoren Werke
258,689
1,000 Mannesmann AG
266,981
- ---------
525,670
Hong Kong -- 2.9%
50,000 Guoco Group Ltd.
236,170
50,000 Hutchison Whampoa Ltd.
230,993
25,000 Jardine Matheson Holdings
207,862
- ---------
675,025
Ireland -- 2.5%
50,000 Cement Roadston Holdings PLC
276,265
50,000 Smurfit Jefferson
299,488
- ---------
575,753
- ---------
See Notes to Financial
Statements.
15
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio
Schedules of Investments (continued) October 31, 1994
SHARES SECURITY
VALUE
- ------ --------
- -----
Italy -- 1.3%
25,000 Lloyd Adriatico Spa
$ 307,910
- -----------
Japan -- 4.4%
14,000 Matsushita Electric Industrial Co.
Ltd. 232,491
31,000 Mitsubishi Heavy Industry Ltd.
252,285
12,000 Nippon Denso Co. Ltd.
256,215
25,000 Nippon Express Co. Ltd.
270,758
- -----------
1,011,749
Malaysia -- 3.2%
40,000 Leader Universal Holdings
222,161
40,000 Resorts World Berhad
253,452
70,000 Sungei Way Holdings
276,528
- -----------
752,141
Mexico -- 4.8%
40,000 Gruma SA DE. CV
268,956
25,000 Grupo Carso SA Series A1
267,428
15,000 Kimberly Clark Series A
296,027
5,000 Telefonos De Mexico SA DE. CV. ADR Series
L
275,625
- -----------
1,108,036
Netherlands -- 1.6%
15,000 I.h.c. Caland NV
379,792
Norway -- 1.3%
12,000 Petroleum Geo Services
302,027
Philippines -- 0.9%
250,000 Universal Robina Corp
217,287
Singapore -- 2.3%
50,000 Cerebos Pacific
285,675
50,000 Sembawang Maritime Ltd.
239,763
- ----------
525,438
Spain -- 1.0%
2,000 Acerionox SA
220,967
See Notes to Financial Statements.
16
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio
Schedules of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE
- ------ --------
- -----
Sweden -- 6.0%
15,000 Allgon AB B
$ 337,018
7,500 Autoliv AB Free
264,205
5,000 Ericsson (L.M.) Telephone Co. B ADR
304,690
25,000 Volvo AB Series B Free
492,351
- ----------
1,398,264
Thailand -- 2.3%
12,000 Land and House Public Company Ltd.
Foreign 246,512
10,000 United Communications Ind.
295,301
- ----------
541,813
United Kingdom -- 2.5%
5,000 Reuters Holdings PLC ADR B
235,625
10,000 Vodafone Group PLC ADR
347,500
- ----------
583,125
TOTAL COMMON STOCKS
(Cost--$11,573,603)
11,658,655
==========
FACE
AMOUNT+
SECURITY
VALUE
- ------- -------
- -
- -----
BONDS -- 49.6%
Canada -- 6.3%
2,000,000 Canadian Government, 7.50% due 7/1/97
1,461,590
- ----------
Denmark -- 3.2%
5,000,000 Kingdom of Denmark, 7.00% due 12/15/04
741,811
- ----------
France -- 5.0%
6,000,000 French Btan, 6.50% due 10/12/96
1,151,473
- ----------
Germany -- 4.1%
1,500,000 Treuhandanstalt 6.25% due 7/29/99
960,533
- ----------
Ireland -- 7.0%
1,000,000 Republic of Ireland, 8.75% due 7/27/97
1,615,151
- ----------
New Zealand -- 5.3%
2,000,000 New Zealand Government, 9.00% due 11/15/96
1,234,284
- ----------
Spain -- 7.0%
200,000,000 Spain Government, 11.0% due 6/15/97
1,610,219
- ----------
Sweden -- 3.0%
5,000,000 Kingdom of Sweden, 10.75% due 1/23/97
702,190
- ----------
See Notes to Financial
Statements.
17
<PAGE>
Smith Barney World Funds, Inc.
International Balanced Portfolio
Schedules of Investments (continued) October 31, 1994
FACE
AMOUNT+ SECURITY
VALUE
------- --------
- -----
United States -- 8.7%
500,000 Banco Nacional, 10.375% due 4/27/98
$ 503,750
500,000 Gas Argentino SA, 7.25% due 12/7/98
449,375
250,000 House Of Investments Inc. Conv., 4.00%
due 10/17/01 Gtd. 144A, Option to
redeem 10/17/98 C 127.85
250,000
300,000 Renong Berhad Convertible Notes 144A, 2.50%
due 1/15/05
301,125
500,000 Telecomunicacoes Brasileiras, 10.375% due
9/9/97 506,250
- -----------
2,010,500
Total Bonds
(Cost--$11,310,311)
11,487,751
===========
Total Investments--100% (Cost--$22,883,914*)
$23,146,406
===========
* Aggregate cost for Federal income taxes is substantially
the
same.
+ Represents local currency.
See Notes to Financial Statements.
18
<PAGE>
Smith Barney World Funds, Inc.
Statements of Assets and Liabilities
October 31, 1994
<TABLE>
<CAPTION>
International
European
Pacific Balanced
Portfolio Portfolio Portfolio
---------
- ------------- ------------
<S> <C>
<C> <C>
ASSETS:
Investments, at value (Cost -- $5,839,463,
$10,021,767 and $22,883,914) $
6,303,691
$ 10,478,534 $ 23,146,406
Cash and cash equivalents
329,478
110,971 1,501,172
Receivable for Fund shares sold
2,592
55,750 220,636
Receivable for securities sold
164,558
91,952 --
Dividends and interest receivable
- --
9,464 341,382
Unrealized gain on foreign currencies
- --
714 13,862
Reimbursement from investment manager
17,459
- -- 29,801
---------
- ------------- ------------
Total Assets
6,817,778
10,747,385 25,253,259
=========== ============
============
LIABILITIES:
Payable for Fund shares reacquired -
- -
- -- 59,884
Unrealized loss on foreign currencies
1,730
- -- --
Payable for securities purchased -
- -
- -- 169,644
Management fees payable -
- -
13,213 33,036
Distribution costs payable
419
3,701 14,396
Accrued expenses and other liabilities
19,276
24,677 31,881
----------
- ------------ ------------
Total Liabilities
21,425
41,591 308,841
=========== ============
============
Total Net Assets
$6,796,353
$10,705,794 $24,944,418
=========== ============
============
NET ASSETS:
Par value of capital shares $
528
$ 830 $ 204
Capital paid in excess of par value
6,462,438
10,284,521 24,539,833
Accumulated net investment income -
- -
- -- 134,941
Accumulated net realized loss on investments
(129,111)
(37,038) --
Net unrealized appreciation of investments
and foreign currencies
462,498
457,481 269,440
----------
- ------------ ------------
Total Net Assets
$6,796,353
$10,705,794 $24,944,418
=========== ============
============
Shares Outstanding:
Class A
402,775
583,572 1,691,489
----------
- ------------ ------------
Class B
125,274
246,374 353,786
----------
- ------------ ------------
Net Asset Value:
Class A (and redemption price)
$12.88
$12.92 $12.20
----------
- ------------ ------------
Class B*
$12.83
$12.86 $12.18
----------
- ------------ ------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.71% of net asset
value per share)
$13.49
$13.53 $12.77
=========== ============ ============
</TABLE>
* Redemption price is NAV of Class B shares reduced by 1.00% if
shares are
redeemed within 18 months of purchase.
See Notes to Financial Statements.
19
<PAGE>
Smith Barney World Funds, Inc.
Statements of Operations For the period ended
October 31, 1994
<TABLE>
<CAPTION>
International
European Pacific Balanced
Portfolio(a) Portfolio(a) Portfolio(b)
----
- ------- ------------ -------------
<S> <C>
<C> <C>
INVESTMENT INCOME:
Dividends and Interest $
12,544 $ 58,355 $ 118,392
========= ========= =========
EXPENSES:
Management fees (Note 2)
34,637 58,231 33,036
Distribution costs (Note 2)
17,340 30,527 14,396
Registration fees
21,000 7,500 10,000
Audit and legal fees
13,500 13,500 13,500
Shareholder communication fees
1,000 4,000 11,000
Directors' fees
3,615 3,842 4,547
Shareholder servicing agent fees
900 2,500 3,300
Other
21,751 21,500 3,000
----
- ---- --------- ---------
Total Expenses
113,743 141,600 92,779
Less: Expense reimbursement and fee waiver
(44,981) (25,439) (29,801)
----
- ---- ---------- ---------
Net Expenses
68,762 116,161 62,978
----
- --
- --- ---------- ---------
Net Investment Income (Loss)
(56,218) (57,806) 55,414
========= =========
=========
Realized and Unrealized GAIN (LOSS) on
Investments and Foreign Currencies:
Realized Gain (Loss) From:
Securities transactions
(129,111) (37,038) -
- -
Foreign currency transactions
(12,433) (10,603) 72,613
========= =========
=========
Net Realized Gain (Loss)
(141,544) (47,641)
72,613
========= =========
=========
Change in Net Unrealized Appreciation of Investments
and Foreign Currencies:
Beginning of period
- -- -- --
End of period
462,498 457,481 276,354
========= ========= =========
Increase in Net Unrealized Appreciation
462,498 457,481 276,354
-------- -----
- ---- ---------
Net Gain on Investments and Foreign Currencies
320,954 409,840 348,967
========= ========= =========
Increase in Net Assets Resulting From
Operations $
264,736 $352,034 $404,381
========= ========= =========
</TABLE>
(a) For the period from February 7, 1994 (commencement of
operations) to
October 31, 1994.
(b) For the period from August 25, 1994 (commencement of
operations) to
October 31, 1994.
See Notes to Financial Statements.
20
<PAGE>
Smith Barney World Funds, Inc.
Statements of Changes in Net Assets
For the period ended October 31, 1994
<TABLE>
<CAPTION>
International
European
Pacific Balanced
Portfolio(a)
Portfolio(a) Portfolio(b)
-----------
- ---------- -------------
<S> <C>
<C> <C>
OPERATIONS:
Net investment income (loss) $ (56,218)
$
(57,806) $ 55,414
Net realized gain (loss) (141,544)
(47,641) 72,613
Increase in net unrealized
appreciation of investments 462,498
457,481 276,354
-----------
- ---------- -----------
Increase In Net Assets
Resulting From Operations 264,736
352,034 404,381
===========
=========== ===========
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
- -- --
Net realized gain --
- -- --
-----------
- ---------- -----------
Decrease In Net Assets from
Distributions to Shareholders --
- -- --
===========
=========== ===========
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 8,562,656
12,242,972 24,701,801
Cost of shares reacquired (2,031,039)
(1,889,212) (161,764)
-----------
- ---------- -----------
Increase In Net Assets From Fund
Share Transactions 6,531,617
10,353,760 24,540,037
===========
=========== ===========
Increase in Net Assets 6,796,353
10,705,794 24,944,418
NET ASSETS:
Beginning of period --
- -- --
End of period* $ 6,796,353
$10,705,794 $24,944,418
===========
=========== ===========
* Includes net investment income of --
- -- $134,941
===========
=========== ===========
</TABLE>
(a) For the period from February 7, 1994 (commencement of
operations) to
October 31, 1994.
(b) For the period from August 25, 1994 (commencement of
operations) to
October 31, 1994.
See Notes to Financial
Statements.
21
<PAGE>
Smith Barney World Funds, Inc.
Notes to Financial Statements
1. Significant Accounting Policies
The European Portfolio ("European"), Pacific Portfolio
("Pacific") and
International Balanced Portfolio ("International Balanced") are
separate
investment portfolios ("Portfolio") of the Smith Barney World
Funds, Inc.
("Fund"). The Fund, a Maryland corporation, is registered under
the Investment
Company Act of 1940, as amended, as an open-end investment
company and consists
of these Portfolios and two other separate investment
portfolios: International
Equity and Global Government Bond Portfolios. The significant
accounting
policies consistently followed by the Fund are: (a) security
transactions are
accounted for on trade date; (b) securities traded in national
securities
markets are valued at the closing prices in 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 listed securities for which no sale
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. Short term securities maturing within 60
days are valued
at cost plus accreted discount, or minus amortized premium, as
applicable; (c)
gains or losses on the sale of securities are calculated by
using the specific
identification method; (d) interest income, adjusted for
amortization of
premiums and accretion of discount, is recorded on the accrual
basis; (e)
direct expenses are charged to each Portfolio and class,
management fees and
general expenses are allocated on the basis of relative net
assets; (f) foreign
currencies (and receivables and payables for unsettled foreign
securities
transactions) are translated into U.S. dollar based on the rate
of exchange of
such currencies against U.S. dollars on the date of valuation.
Translation
gains or losses resulting from changes in the exchange rate and
realized gains
and losses on the settlement of foreign currency transactions
are reported in
the statements of operations; (g) certificates of deposit, time
deposits and
other short-term investments maintained with financial
institutions are
considered to be cash equivalents; (h) during the current year,
the Portfolios
adopted Statement of Position 93-2 Determination, Disclosure,
and Financial
----------------------------
- -----------
Statement Presentation of Income, Capital Gain and Return of
Capital -------------------------------------------------------
- ------------
Distributions by Investment Companies. Accordingly, book and
tax basis
- -------------------------------------
22
<PAGE>
differences relating to shareholder distributions and other
permanent book and
tax differences are reclassified to paid-in capital. As of
November 1, 1994,
the cumulative effect of such differences, totaling $68,651 and
$68,409, for
the European and Pacific Portfolios were reclassified to paid-
in capital from
accumulated net investment losses and realized net foreign
currency losses. Net
investment income, net realized gains, and net assets were not
affected by this
change. In addition, $6,914 of unrealized forward foreign
currency gains were
reclassified to undistributed net investment income for the
International
Balanced Portfolio; and (i) the Portfolios intend to comply
with the
requirements of the Internal Revenue Code pertaining to
regulated investment
companies and to make the required distributions to
shareholders; therefore no
provision for Federal income taxes has been made.
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 Transactions with Affiliated
Persons
Smith Barney Mutual Fund Management Inc. ("SBMFM"), formerly
known as Smith
Barney Advisers, Inc., a subsidiary of Smith Barney Holdings
Inc. ("SBH"), acts
as investment manager of the Fund. As compensation for its
services, the
Portfolios pay SBMFM a fee calculated at the annual rate of
0.85% on average
daily net assets; the fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as
distributor of
the Fund's shares. For the period ended October 31, 1994, SB
has advised the
Fund that it was paid sales charges of approximately $125,000
and $278,000 by
purchasers of Fund shares for the European and Pacific
Portfolios, respectively.
Effective November 7, 1994, the Fund adopted a new class
structure. At that
time current Class B and C shares were moved into Class C and A
shares,
respectively. Subsequently, a declining contingent deferred
sales charge
("CDSC") of 4.50% will be imposed on new Class B shares if
redemption occurs
within 5 years from the date such investment was made. Also a
CDSC of 1.00% is
imposed on Class C shares if redemption occurs within 12 months
from the date
such investment was made. Any CDSC imposed on redemptions are
paid to the
distributor of the Fund.
23
<PAGE>
Pursuant to a Distribution Plan each Portfolio pays a service
fee with respect
to its Class A, B and C shares calculated at the annual rate of
0.25% of the
average daily net assets of each respective class' shares. The
Portfolios also
pay a distribution fee with respect to Class B and C shares
calculated at the
annual rate of 0.75% of average daily net assets for that
class. All officers
and two directors of the Fund are employees of SB.
Through October 31, 1994, SBMFM waived $34,637, $25,439 and
$29,801 of
management fees for the European, Pacific and International
Balanced
Portfolios, respectively, and has agreed to reimburse the
European Portfolio
for expenses in the amount of $10,344.
3. INVESTMENTS
For the period ended October 31, 1994, the aggregate cost of
purchases and
proceeds from sales of investments (including maturities, but
excluding
short-term securities) were as follows:
Purchases Sales
----------- --------
--
European Portfolio $ 7,026,361
$1,064,912
Pacific Portfolio 10,545,144
486,339
International Balanced Portfolio 24,012,741
1,153,736
===========
==========
At October 31, 1994, the aggregate gross unrealized
appreciation and
depreciation of investments for tax purposes were as follows in
thousands:
International
European Pacific
Balanced
Portfolio Portfolio
Portfolio
--------- ---------
- -
- --------
Gross unrealized appreciation $ 621,274 $ 866,884
$
769,233
Gross unrealized depreciation (157,046) (410,117)
(506,741)
--------- ---------
- -
- --------
Net unrealized depreciation $ 464,228 $ 456,767
$
262,492
========= =========
=========
4. INVESTMENTS
At October 31, 1994 the International Balanced Portfolio had
forward
contracts for foreign currencies as described below. The
Portfolio bears the
market risk that arises from changes in foreign currency
exchange rates. The
unrealized gain (loss) on the contracts reflected in the
accompanying financial
statements are as follows:
24
<PAGE>
Smith Barney World Funds, Inc.
Notes to Financial Statements (continued)
Unrealized
Local Market
Settlement Gain
Currency Value
Date
(Loss)
----------- ---------- ----
- -- ------
To Sell:
Spanish Pesetas 100,000,000 $ 797,138
12/2/94 $2,734
French Francs 5,910,727 1,144,758
12/2/94 6,914
----------- ---------- ------
- -- --------
1,941,896
9,648
Cross Forwards**:
Sell Danish Krona vs.
German Deutschemark 779,128
12/2/94 (3,861)
Sell Swedish Krona vs.
German Deutschemark 779,317
12/2/94 8,098
Sell New Zealand Dollars vs.
British Pounds 627,123
12/2/94 (5,455)
---------- ------
- -- --------
2,185,568
(1,218)
Total Market Value and Unrealized
Gain on Forward Foreign Currency
Contracts $4,127,464
$ 8,430
==========
========
**Local Currency on Cross Forwards Sell
Buy
-----------------
Sell Danish Krona vs.
German Deutschemark 4,605,588
1,170,803
Sell Swedish Krona vs.
German Deutschemark 5,456,961
1,153,204
Sell New Zealand Dollars vs.
British Pounds 1,034,890
387,454
==========
=========
5. PORTFOLIO CONCENTRATION
The Portfolios' investments in foreign securities may involve
risks not
present in domestic investments. Since securities may be
denominated in a
foreign currency and may require settlement in foreign
currencies and pay
interest or dividends in foreign currencies, changes in the
relationship of
these foreign currencies to the U.S. dollar can significantly
affect the value
of the investments and earnings of 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.
25
<PAGE>
Smith Barney World Funds, Inc.
Notes to Financial Statements (continued)
In addition to the risks described above, risks may arise from
forward
foreign currency contracts with respect to the potential
inability of counter
parties to meet the terms of their contracts.
6. Capital Shares
At October 31, 1994, there were two billion shares of $.001 par
value
capital stock authorized. The Portfolios have the authority to
issue multiple
classes of shares. Each share of a class represents an
identical legal interest
in the Portfolios and has the same rights, except that each
class bears certain
expenses specifically related to the distribution of its
shares. At October 31,
1994, paid-in capital, including adjustments for book and tax
differences
discussed in Note 1, amounted to the following for each
Portfolio:
Total Paid-in Capital Class A Class B
Class C
- --------------------- ----------- -----------
- --------
European Portfolio $ 4,939,450 $ 1,523,516
$ --
Pacific Portfolio 7,252,267 3,033,084
- --
International Balanced Portfolio 20,296,313 4,243,724
- --
=========== ===========
========
Transactions in shares of each class were as follows:
Period Ended
October
31, 1994(a)
-------
- -----------
European Portfolio Shares
Amount
- ------------------ ------
- ------
Class A*
Shares sold 458,402
$6,252,684
Shares redeemed (55,627)
(1,258,667)
-------
- ---------
Net Increase 402,775
$4,994,017
=======
==========
Class B*
Shares sold 141,147
$1,735,144
Shares redeemed (15,873)
(195,392)
-------
- -
- ---------
Net Increase 125,274
$1,539,752
=======
==========
Class C*+
Shares sold 47,211
$
574,876
Shares redeemed (47,211)
(577,028)
-------
- ---------
Net Decrease --
$
(2,152)
=======
==========
(a) For the period from January 1, 1994 to October 31, 1994.
* Sales of Class A, Class B and Class C shares commenced on
February 7,
1994, February 14, 1994 and May 12, 1994, respectively.
+ On October 10, 1994 the old Class C shares were exchanged
into Class A
shares, as part of the Fund family consolidation.
26
<PAGE>
Smith Barney World Funds, Inc.
Notes to Financial Statements (continued)
Period Ended
October 31,
1994(a) ----------
----------
Pacific Portfolio Shares
Amount
- ----------------- ------ ----
- --
Class A*
Shares sold 713,604 $
8,894,536
Shares redeemed (130,032)
(1,592,618)
----------- --------
- --
- -
Net Increase 583,572 $
7,301,918
===========
===========
Class B*
Shares sold 264,017 $
3,273,313
Shares redeemed (17,643)
(219,994)
----------- --------
- --
- -
Net Increase 246,374 $
3,053,319
===========
===========
Class C*+
Shares sold 6,098 $
75,123
Shares redeemed (6,098)
(76,600)
----------- --------
- --
- -
Net Decrease -- $
(1,477)
===========
===========
* Sales of Class A, Class B and Class C shares commenced on
February 7, 1994,
February 11, 1994 and June 7, 1994, respectively.
+ On October 10, 1994 the old Class C shares were exchanged
into
Class A
shares, as part of the Fund family consolidation.
Period Ended
October 31,
1994(a) ----------
---------
International Balanced Portfolio Shares
Amount
- -------------------------------- ------ ----
- --
Class A*
Shares sold 1,704,454
$20,452,319
Shares redeemed (12,965)
(156,006)
----------- --------
- --
Net Increase 1,691,489
$20,296,313
===========
===========
Class B*
Shares sold 354,268 $
4,249,482
Shares redeemed (482)
(5,758)
----------- --------
- --
Net Increase 353,786 $
4,243,724
===========
===========
(a) For the period from January 1, 1994 to October 31, 1994.
* Sales of Class A and Class B shares commenced on August 25,
1994.
27
<PAGE>
Smith Barney World Funds, Inc.
Financial Highlights
For a share of each capital stock outstanding throughout each
period:
European Portfolio Class A (1)
Class B (2)
-------- -
- ------
Net Asset Value, Beginning of Period $12.50
$12.48
------
- -----
Income From Investment Operations:
Net investment loss* (.11)
(.16)
Net realized and unrealized
gain on investment .49
.51
------ -
- -----
Total Income From Investment Operations .38
.35
------ -
- -----
Less Distributions:
Dividends from net investment income --
- --
------ -
- -----
Total Distributions --
- --
------ -
- -----
Net Asset Value, End of Period $12.88
$12.83
------ -
- -----
Total Return 3.04%++
2.80%++
------ -
- -----
Net Assets, End of Period (000s) $5,189
$1,607
------ -
- -----
Ratios to Average Net Assets:
Expenses* 1.34%+
2.02%+
Net investment income (1.12)+
(1.60)+
------ -
- -----
Portfolio Turnover Rate 20.57%
20.57%
======
======
(1) For the period from February 7, 1994 (inception date) to
October 31, 1994.
(2) For the period from February 14, 1994 (inception date) to
October 31, 1994.
+ Annualized.
++ Not annualized as it may not be representative of the
total return for
the year.
* The Manager has agreed to waive all management fees and has
agreed to
reimburse the European Portfolio for $10,344 of the
Portfolio's expenses
during the period ended October 31, 1994. If the Manager
had not agreed to
the fee waiver and expense reimbursement, the per share
decrease in net
investment income and the ratio of expenses to average net
assets would
have been:
European Class A
Class B
-------
- -
- ------
Net invesment income decrease $0.10
$0.10
Expense ratio 2.37%+
3.07%+
======
======
28
<PAGE>
Smith Barney World Funds, Inc.
Financial Highlights (continued)
For a share of each capital stock outstanding throughout the
period:
Pacific Portfolio Class A (1)
Class B (2)
- ----------------- -----------
- --
- ---------
Net Asset Value, Beginning of Period $12.50
$12.50
-----------
- --
- ---------
Income From Investment Operations:
Net investment loss* (0.07)
(0.11)
Net realized and unrealized
gain on investment 0.49
0.47
-----------
- --
- ---------
Total Income From Investment Operations 0.42
0.36
-----------
- --
- ---------
Less Distributions:
Dividends from net investment income --
- --
-----------
- --
- ---------
Total Distributions --
- --
-----------
- --
- ---------
Net Asset Value, End of Period $12.92
$12.86
-----------
- --
- ---------
Total Return 3.36%++
2.88%++
-----------
- --
- ---------
Net Assets, End of Period (000s) $7,538
$3,167
-----------
- --
- ---------
Ratios to Average Net Assets:
Expenses* 1.51%+
2.29%+
Net Investment Income (0.82)+
(1.49)+
-----------
- ----------
Portfolio Turnover Rate 6.14%
6.14%
===========
===========
(1) For the period from February 7, 1994 (inception date) to
October 31,
1994.
(2) For the period from February 11, 1994 (inception date) to
October 31,
1994.
+ Annualized.
++ Not annualized as it may not be representative of the total
return for
the year.
* The Manager has agreed to waive a portion of the Portfolio's
management fees
during the period ended October 31, 1994. If the Manager
had not agreed to
the fee waiver, the per share decrease in net investment
income and the
ratio of expenses to average net assets would have been:
Pacific Class A
Class B
------- -------
- -------
Net investment income decrease $0.03
$0.03
Expense ratio 1.87%+
2.70%+
=======
=======
29
<PAGE>
Smith Barney World Funds, Inc.
Financial Highlights (continued)
For a share of each capital stock outstanding throughout the
period:
International Balanced Portfolio Class A (1)
Class B (2)
- -------------------------------- ------------
- -
- -----------
Net Asset Value, Beginning of Period $ 12.00
$ 12.00
------------
- -----------
Income From Investment Operations:
Net investment income 0.07
0.05
Net realized and unrealized
gain on investment 0.13
0.13
------------
- -----------
Total Income From Investment Operations 0.20
0.18
------------ -
- -----------
Less Distributions:
Dividends from net investment income --
- --
------------ -
- -----------
Total Distributions --
- --
------------ -
- -----------
Net Asset Value, End of Period $ 12.20
$ 12.18
------------ -
- -----------
Total Return 1.67%++
1.50%++
------------ -
- -----------
Net Assets, End of Period (000s) $20,634
$4,310
------------ -
- -----------
Ratios to Average Net Assets:
Expenses* 1.34%+
2.03%+
Net Investment Income 1.37+
0.79+
------------ -
- -----------
Portfolio Turnover Rate 5.52%
5.52%
============
============
(1) For the period from August 25, 1994 (inception date) to
October 31, 1994.
(2) For the period from August 25, 1994 (inception date) to
October 31, 1994.
+ Annualized.
++ Not annualized as it may not be representative of the total
return for
the year.
* The Manager has agreed to waive a portion of the Portfolio's
management fees
during the period ended October 31, 1994. If the Manager
had not agreed to
the fee waiver, the per share decrease in net investment
income and the
ratio of expenses to average net assets would have been:
International Balanced Class A
Class B
---------------------- ------- -
- --------
Net investment income decrease $0.02
$0.02
Expense ratio 2.03%+
2.74%+
=======
=========
30
<PAGE>
Smith Barney World Funds, Inc.
Independent Auditors' Report
To the Shareholders and Board of Directors of
Smith Barney World Funds, Inc.:
We have audited the accompanying statements of assets and
liabilities,
including the schedules of investments, of the European,
Pacific and
International Balanced Portfolios of Smith Barney World Funds,
Inc. as of
October 31, 1994, the related statements of operations,
statements of changes
in net assets and financial highlights for the period from
February 7, 1994
(commencement of operations) to October 31, 1994 with respect
to the European
and Pacific Portfolios and for the period from August 25, 1994
(commencement of
operations) to October 31, 1994 with respect to the
International Balanced
Portfolio. These financial statements and financial highlights
are the
responsibility of the Fund's management. Our responsibility is
to express an
opinion on these financial statements and financial highlights
based on our
audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements and
financial
highlights are free of material misstatements. An audit
includes examining, on
a test basis, evidence supporting the amounts and disclosures
in the financial
statements. Our procedures included confirmation of securities
owned as of
October 31, 1994. An audit also includes assessing the
accounting principles
used and significant estimates made by management, as well as
evaluating the
overall financial statement presentation. We believe that our
audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights
referred to above present fairly, in all material respects, the
financial
positions of the European, Pacific and International Balanced
Portfolios of
Smith Barney World Funds, Inc. as of October 31, 1994, the
results of their
operations, the changes in their net assets and financial
highlights for the
period from February 7, 1994 (commencement of operations) to
October 31, 1994
with respect to the European and Pacific Portfolios and for the
period from
August 25, 1994 (commencement of operations) to October 31,
1994 with respect
to the International Balanced Portfolio in conformity with
generally accepted
accounting principles.
/s/ KPMG Peat Marwick
LLP
New York, New York
December 28, 1994
31
<PAGE>
Smith Barney
World Funds, Inc.
DIRECTORS
Victor Atkins
Robert A. Belfer
Alger B. Chapman
Robert Frankel
Rainer Greeven
Susan M. Heilbron
Bruce D. Sargent
James M. Shuart
Stephen Treadway, Chairman
OFFICERS
Maurits E. Edersheim, Chairman of the
Fund & Advisory Director
Stephen Treadway
Chief Executive Officer
Heath B. McLendon
Executive Vice President
Lewis E. Daidone
Senior Vice President
and Treasurer
James Conheady
Vice President
J. Gabriel Irwin
Vice President
Jeffrey Russell
Vice President
Rein Van Der Does
Vice President
Simon J. Wells
Vice President
Victor S. Filatov
Vice President
Simon R. Hildreth
Vice President
Denis P. Mangan
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
Smith Barney Mutual Funds
Management Inc.
DISTRIBUTOR
Smith Barney Inc.
CUSTODIAN
J.P. Morgan & Co. Incorporated
SHAREHOLDER
SERVICING AGENT
The Shareholder Services Group Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the
shareholders of
Smith Barney World Funds, Inc. European, Pacific and
International Balanced
Portfolios. It is not authorized for distribution to
prospective investors
unless accompanied or preceded by a current Prospectus for the
Portfolios, which
contains information concerning the Portfolios' investment
policies and expenses
as well as other pertinent information.
SMITH BARNEY
- ------------
SMITH BARNEY
WORLD FUNDS, INC.
1345 Avenue of the Americas
New York, New York 10105
FD2365 A5
Annual Report
- -------------
1994
1994
1994
1994
1994
[PHOTO APPEARS HERE]
Smith Barney
World Funds, Inc.
International Equity
Portfolio
October 31,1994
- --------------------
SMITH BARNEY
- ------------
<PAGE>
International Equity Portfolio -------
- -----------------------
DEAR SHAREHOLDER:
We are pleased to present the annual report and audited
financial statements
for the Smith Barney World Funds Inc.: International Equity
Portfolio. This
10-month reporting period is shorter than annual reports in the
past, as it
reflects a change in the fiscal year-end of the Smith Barney
World Funds from
December 31 to October 31.
The "Portfolio Highlights" section below provides a review of
the Portfolio's performance and the markets in which it is
invested. Following
this section, you will find a more detailed summary of holdings
in the Schedule
of Investments. We hope you find this information useful as
you evaluate your
investments.
PERFORMANCE OVERVIEW
For the 10-month period ended October 31, 1994, the total
return of Class A
Shares was 0.43%, versus a 9.94% increase in world markets
(outside of the
United States). This return reflects an increase in net asset
value from
$18.71 to $18.79.
MARKET CONDITIONS AND PORTFOLIO REVIEW
Early in 1994, the Portfolio underperformed world equity stock
markets
outside of the United States, primarily due to our longstanding
underweighting
in Japanese securities. Although we have raised the
Portfolio's weighting in
this market from 4.3% at the end of last year to 10.6% as of
October 31, 1994
the Portfolio's allocation remains far below the 46% Japanese
weighting within
the European Australian and Far East Index, or EAFE. We are
gradually adding
to our Japanese holdings, but do not believe a market weighting
would be wise
in the longer term.
Following a selloff earlier this year in markets outside of
Japan, the stock
markets of the Pacific Rim rebounded in the third quarter. We
continue to be
optimistic about the investment fundamentals of this region.
Industrialization
and prosperity continue to be seen in many economies, with a
growing middle
class and a tremendous need for "infrastructure" development
(e.g.
telecommunications, transportation and basic utilities
services).
In mid-year 1994 we began adding to positions in Hong Kong and
Malaysia. We
also have started to build a position in the Philippines, with
a focus on
companies in the consumer goods sector and those engaged in
ship repair. As of
October 31, 1994 approximately 37% of the Portfolio's assets
were allocated to
these and other areas of the Pacific Basin.
Another 16% of assets has been invested in Latin American
markets, where we
have generally been less active than in earlier years.
Recently, we have added
to positions in Mexico, where our largest holding was Telefonos
de Mexico as of
October 31, 1994.
1
<PAGE>
Many European economies have improved considerably in 1994.
As this
recovery has taken shape, we have increased the Portfolio's
exposure from 37%
to about 43.5% during the year--primarily through investments
in Italy, Ireland
and Austria. Though Italy has had some recent political
difficulties, there
has been significant progress toward economic and political
stability, and
Ireland is showing signs of economic improvement. Our Austrian
holdings have
been increased as a means to participate in the economic
expansion in Eastern
Europe.
The European economic cycle is lagging that of the United
States by about 18
months to two years, with a number of similarities. There has
been a
large-scale inflow of funds into equity markets, as investors
look for
alternatives to low-interest-bearing money market funds. In
addition,
corporate restructuring and cost-reduction programs have been
common in many
companies where profitability has deteriorated over the past
several years.
Looking forward, we believe that the effects of these
restructurings will begin
to show up to earnings as the overall Continental economies
continue to turn
upward.
Our Portfolio is broadly diversified, with the assets invested
in the equity
markets of 33 countries as of October 31, 1994. These holdings
are
concentrated in sectors that we believe will perform well in
the current
economic cycle, such as retailing, construction and
construction materials,
telecommunications and equipment suppliers, and consumer
nondurables. In
general, we are seeking companies with the potential for high,
dependable
earnings-growth rates (often expected to be 25% to 50% higher
than the average
of their local markets).
* * * * *
We appreciate your support, and will continue to pledge our
best efforts on
your behalf.
Sincerely yours,
/s/ Stephen Treadway
Stephen Treadway
Chairman
December 15, 1994
2
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Historical Performance - Class A Shares
<TABLE>
<CAPTION>
Net Asset Value -----------------------
--
Beginning End Income
Capital Gain Total
Period Ended of Period of Period Dividends
Distribution Returns(1)
- ---------------------------------------------------------------
- -------------------------------
<S> <C> <C> <C>
<C> <C>
10/31/94* $18.71 $18.79 $0.00
$0.00 0.43%
12/31/93 12.35 18.71 0.00
0.16 52.78
12/31/92 12.31 12.35 0.02
0.00 0.49
11/22/91+-12/31/91 11.94 12.31 0.00
0.00 3.10 ----------------------------------------
- ------------------------------------------------------
Total $0.02
$0.16 ---------------------------------------------------------
- -------------------------------------
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS AND CAPITAL
GAINS, IF ANY,
ANNUALLY.
Average Annual Total Return - Class A Shares
Without
With
Sales Charge(1)
Sales Charge(2) -----------------------------------------------
- --------------------------------
Period Ended October 31, 1994* 0.43%
(4.08)%
11/22/91+ through 10/31/94 17.06
15.25
Cumulative Total Return (11/22/91+-10/31/94) 58.96
N/A
Average Annual Total Return - Class B Shares
Without
With
Sales Charge(1)
Sales Charge(2) -----------------------------------------------
- --------------------------------
Period Ended October 31, 1994* (0.22)%
(1.21)%
1/4/93+ through 10/31/94 25.91
25.91
Cumulative Total Return (1/4/93+-10/31/94) 52.26
N/A
Average Annual Total Return - Class D Shares
Without
With
Sales Charge(1)
Sales Charge(2) -----------------------------------------------
- --------------------------------
6/16/94+ through 10/31/94 6.58%
6.58% ---------------------------------------------------------
- ----------------------
+ Inception
* For the period January 1, 1994 to October 31, 1994.
3
<PAGE>
GROWTH OF $10,000 INVESTED IN CLASS A SHARES
OF INTERNATIONAL EQUITY PORTFOLIO VS.
THE MORGAN STANLEY EAFE-GDP WEIGHTED INDEX+
(UNAUDITED)
- ---------------------------------------------------------------
- ----------------
November 1991 - October 1994
[GRAPH APPEARS HERE]
+ Hypothetical illustration of $10,000 invested in Class A
shares at
inception on November 22, 1991 (date of transfer of net assets
of Fenimore
International Fund, Inc.), assuming deduction of the maximum
4.50% sales charge
at the time of investment and the reinvestment of dividends and
capital gains
at Net Asset Value through October 31, 1994. The Morgan
Stanley EAFE-GDP
Weighted Index is a composite portfolio consisting of equity
total returns for
the countries of Europe, Australia, New Zealand and countries
in the Far East,
weighted based on each country's gross domestic product. The
Index is
unmanaged and is not subject to the same management and trading
expenses of a
Mutual Fund. The performance of the Portfolio's other classes
may be greater
or less than the Class A shares performance indicated on this
chart, depending
on whether greater or lesser sales charges and fees were
incurred by
shareholders investing in the other classes.
All figures represent past performance and are not a guarantee
of future
results. Investments returns and 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. ------------------------------------------------
- -------------------------------
(1) Assumes reinvestment of all dividends and capital gain
distributions at
net asset value and does not reflect deduction of the
applicable sales
charge with respect to Class A shares or the applicable
contingent deferred
sales charges ("CDSC") with respect to Class B shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions at
net asset value. In addition, the deduction of the maximum
initial sales
charge of 4.50% with respect to Class A shares and a
deduction of a CDSC of
1.00% with respect to Class B shares has been factored into
these
calculations.
4
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Schedule of Investments
October 31, 1994
SHARES SECURITY
VALUE ---------------------------------------------------------
- ---------------------
COMMON STOCKS -- 99.1%
ARGENTINA -- 2.8%
948,287 Bagley SA Series B
$
3,730,359
500,000 Ciadea SA Cina
6,501,300
144,103 Citicorp Equity Investments B
792,725
16,926 Molinos Rio De La Plata, S.A.
206,539
364,000 Quilmes Industrials SA Registered
9,555,000
750,000 Telecom Argentina Ser B Voting
4,575,915 -----------------------------------------------------
- ------------------------
25,361,838 ----------------------------------------------------
- -------------------------
AUSTRALIA -- 2.6%
2,060,509 Burns Philip
5,260,614
1,202,773 Coca Cola Amatil Ltd.
7,587,630
2,500,000 M.I.M. Holdings Ltd.
5,436,396
1,000,000 Mayne Nickless Ltd.
5,276,829 -----------------------------------------------------
- ------------------------
23,561,469 ----------------------------------------------------
- -------------------------
AUSTRIA -- 6.0%
30,000 Austria Mikro System International
2,219,646
3,334 Bau Holdings
279,672
80,000 Bau Holdings Preferred W/O Voting Rights
6,409,169
135,000 Baumax Preferred
5,267,771
40,000 Bewckiser Wasser Tecknik AG
6,277,215
150,000 Burgenland Holding AG
5,556,184
50,000 Maculan Holding AG Preferred
5,089,634
50,000 VA Technologies AG
5,141,473
43,333 Voest-Alpine Eisenbahnsystem AG
5,525,981
50,000 Waagner Biro AG
3,279,987
25,000 Wienerberger Baustoff Industries AG
8,836,170 -----------------------------------------------------
- ------------------------
53,882,902 ----------------------------------------------------
- -------------------------
BELGIUM -- 0.5%
700,000 Cockerill-Sambre
4,376,988 -----------------------------------------------------
- ------------------------
BRAZIL -- 1.9%
12,160,000 Brasmotor SA Bmt Preferred
5,039,669
500,000 Clark Automotive Products Corp.
6,187,500
127,849 Telecomunicacoes Brasileiras ADR
6,161,810 -----------------------------------------------------
- ------------------------
17,388,979 ----------------------------------------------------
- -------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Schedule of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE ---------------------------------------------------------
- --------------------
CANADA -- 1.7%
500,000 Grad & Walker Energy Corp
$
4,390,018
200,000 Loewen Group Inc.
4,935,305
589,000 Videotron Ltd. Subord. Voting
5,661,368 -----------------------------------------------------
- ------------------------
14,986,691 ----------------------------------------------------
- -------------------------
CHILE -- 3.0%
215,000 Cristalerias De Chile SA ADR
4,622,500
110,000 Distribuidora Chilectra ADR 144A
7,755,000
300,000 Embotelladora Andina ADR
8,287,500
200,000 Madeco SA ADR
6,250,000 -----------------------------------------------------
- ------------------------
26,915,000 ----------------------------------------------------
- -------------------------
FINLAND -- 2.5%
100,000 Oy Nokia Ab Preferred
15,038,733
1,241,333 Oy Tampella Ab
4,673,734
40,000 Nokia Pref ADR
3,005,000 -----------------------------------------------------
- ------------------------
22,717,467 ----------------------------------------------------
- -------------------------
FRANCE -- 0.9%
8,839 C.E.G.E.P. (Soc De)
287,598
50,642 Castorama Dubois
7,356,051 -----------------------------------------------------
- ------------------------
7,643,649 -----------------------------------------------------
- ------------------------
GERMANY -- 2.9%
15,272 Bayarische Motoren Werke AG
7,850,756
30,000 Fredrich Grohe Non-Voting Preferred
8,815,336
35,000 Mannesmann AG
9,332,714 -----------------------------------------------------
- ------------------------
25,998,806 ----------------------------------------------------
- -------------------------
GREECE -- 0.7%
500,000 Flour Mills Loulis
3,153,154
6,000 Michaniki SA
86,523
66,000 Mickaniki SA Preferred
779,873
100,000 Teletypos
559,604
95,400 Themeliodomi
1,246,363 -----------------------------------------------------
- ------------------------
5,825,517 -----------------------------------------------------
- ------------------------
HONG KONG -- 5.0%
1,250,000 Cheung Kong Holdings Ltd.
6,017,470
15,000,000 Guangzhou Investment Ltd.
4,804,271
1,250,000 Guoco Group Ltd.
5,904,238
2,500,000 Hong Kong & China Gas Co.
4,739,567
200,000 Hong Kong & China Gas Co. Ltd. Wts.
72,468
300,000 Hong Kong Telecommunications Ltd. ADR
6,375,000
SEE NOTES TO FINANCIAL
STATEMENTS.
6
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Schedule of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE ---------------------------------------------------------
- -----------------
HONG KONG -- 5.0% (continued)
2,112,000 Manhattan Card Company Ltd.
$
860,925
3,000,000 Shaw Brothers
5,221,611
6,087,318 Shun Tak Enterprises
5,356,682
1,500,000 Wharf Holdings
5,920,414 -----------------------------------------------------
- ---------------------
45,272,646 ----------------------------------------------------
- ----------------------
INDIA -- 0.6%
20,000 India Magnum Fund N.V. A Restricted
1,250,000
394,527 Mahindra And Mahindra Ltd. Global Dep. Receipt
144A
4,537,061 -----------------------------------------------------
- ---------------------
5,787,061 -----------------------------------------------------
- ---------------------
INDONESIA -- 1.4%
1,004,000 Bank Umum Nasional
1,248,531
1,460,000 Berlian Laju Tanker
1,344,884
2,500,000 Global Mark International Ltd. Exchangeable
Var. Rate 144A
2,737,500
1,200,000 Japfa Comfeed
1,823,883
540,800 Pt Mayora Indah
2,988,958
805,000 Sekar Laut
2,224,585
- ---------------------------------------------------------------
- -----------
12,368,341 ----------------------------------------------------
- ----------------------
IRELAND -- 5.8%
1,650,931 Bank of Ireland Dublin
7,561,920
1,100,000 CRH PLC
6,165,919
1,548,784 Grafton Group PLC
9,425,655
850,000 Greencore
5,241,032
1,766,625 Independent Newspapers Ltd.
8,487,948
1,146,428 Irish Continental Group
8,298,942
1,100,000 Smurfit Jefferson
6,641,576 -----------------------------------------------------
- ---------------------
51,822,992 ----------------------------------------------------
- ----------------------
ITALY -- 7.2%
668,750 Alleanza Assicurazioni Di Risparmio Non CNV
6,142,758
20,500 Alleanza Svg (Assi Generali) Wts. 2/26/96
30,431
220,000 Assicurazioni Generali Spa
5,490,516
5,000,000 Cofide Spa
3,318,943
100,000 Ifil Finanz Parte Call Wts. 12/31/96
120,895
1,265,000 Ifil Finanziaria Parteci Pazioni
2,427,236
110,000 Ifil Wts 12/31/99
0
150,000 Industrie Natuzzi Spa ADR
4,837,500
3,500,000 Italia Telecom
9,574,372
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Schedule of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE ---------------------------------------------------------
- -----------------
ITALY -- 7.2% (continued)
600,000 Lloyds Adriatico Spa
$
7,389,833
6,000,000 Olivetti & Co Spa
7,156,470
4,000,000 Parmalat Finanziera Spa
4,078,669
250,000 Parmalat Finanziaria Spa Wts. 12/31/99
188,797
300,000 Ras Spa
3,733,811
700,000 Sirti Spa
4,696,434
1,095,000 Trenno Spa
1,767,434
1,000,000 Unicem (Union Cem) Spa
3,574,994 -----------------------------------------------------
- ---------------------
64,529,093 ----------------------------------------------------
- ----------------------
JAPAN -- 10.6%
500 Bandai Wts 11/4/97
643,750
138,000 Bunkyodo Co. Ltd.
5,978,339
493,000 Hitachi Ltd.
5,135,946
209,000 Ishikawajima Construction Materials Co Ltd.
4,203,713
700,000 Itochu Corp. Ltd.
5,444,043
36,000 Japan Associated Finance Co. Ltd.
5,309,954
330,000 Matsushita Electric Ind Co. Ltd.
5,480,144
500 Maeda Wts. #2 2/5/97
906,250
190,000 Mitsubishi Bank
4,762,249
383,000 Mitsubishi Estate Ltd.
4,503,559
700,000 Mitsubishi Heavy Industries Ltd.
5,696,751
149,000 Mr Max Corp.
3,965,137
206,000 Nippon Denso Co. Ltd.
4,398,350
244,000 Nippon Denwa Shisetsu Co. Ltd.
3,649,304
450,000 Nippon Express Ltd.
4,873,646
800 Nishimatsu Construction #2 Wts. 12/3/96
570,000
142,000 Rohm Co.
6,254,152
500 Sagami Chain Co.
12,274
205,000 Sagami Rubber Industries Co. Ltd.
2,177,927
131,000 Sato Corp.
3,594,224
68,000 Secom Co.
4,538,009
23,000 Shohkoh Fund & Co. Ltd.
5,480,144
72,000 Sony Music Entertainment Inc.
4,077,153
110,000 Toyo Seikan Kaisha
3,676,122 -----------------------------------------------------
- ---------------------
95,331,140 ----------------------------------------------------
- ----------------------
KOREA -- 0.6%
97,000 Korea Electric Power Corp Kepco
4,319,656
31,000 Tong Yang Confectionery
1,088,852 -----------------------------------------------------
- ---------------------
5,408,508 -----------------------------------------------------
- ---------------------
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Schedule of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE ---------------------------------------------------------
- -----------------
MALAYSIA -- 7.4%
1,750,000 Arab Malaysia Corp
$
5,749,599
1,000,000 Bandar Raya Developments Berhad
1,893,065
1,000,000 Golden Plus Holdings Berhad
4,850,002
900,000 Hong Leong Credit Berhad
5,350,647
1,500,000 Leader Universal Holdings Berhad
8,331,052
300,000 Malaysian Helicopter Services Berhad
739,234
3,000,000 Renong Berhad
4,693,550
1,350,000 Resorts World Berhad
8,553,996
500,000 Road Builders M Holdings Berhad
3,109,477
2,350,000 Sungei Way Holdings
9,227,452
250,000 Sungei Way Holdings Berhad Wts.
56,000
35,000 Tanjong PLC
136,895
1,500,000 Technology Resources Industries Berhad
5,837,603
1,000,000 Telecom Malaysia Berhad
8,096,374 -----------------------------------------------------
- ---------------------
66,624,946 ----------------------------------------------------
- ----------------------
MEXICO -- 7.1%
1,000,000 Coca Cola Femsa Sa De Cv L
3,114,539
5,250,000 Conductores Latincasa Sa De Cv A
519,575
750,000 Fomento Economico Mexicano SA Femsa Ser B
3,296,463
778,000 Gruma Sa De Cv B
5,231,204
300,000 Grupo Carso A1
3,191,675
125,000 Grupo Casa Autrey Sa De Cv ADR
3,812,500
500,000 Grupo Continental Sa Contal Cp
2,619,706
582,077 Grupo Industrial Bimbo Sa De Cv A
4,727,099
2,000,000 Grupo Industrial Maseca Sa De Cv B
3,260,079
60,000 Grupo Televisa Sa De Cv Global Dep. Receipts
2,662,500
150,000 Grupo Tribasa Sa De Cv ADR
4,706,250
3,026,923 Herdez Sa De Cv B
2,907,538
935,000 Jugos Del Valle B
5,171,008
400,000 Kimberly Clark A Npv
7,940,620
1,000,707 Tablex Sa De Cv Shr 2
3,862,429
125,000 Telefonos De Mexico Sa De Cv ADR Ser L
6,890,625 -----------------------------------------------------
- ---------------------
63,913,810 ----------------------------------------------------
- ----------------------
NETHERLANDS -- 2.6%
200,000 Draka Holding Nv
4,708,945
50,000 Heineken Nv
7,317,795
400,000 I.H.C. Caland Nv
10,033,128
10,000 Royal Dutch Petroleum Co ADR
1,165,000 -----------------------------------------------------
- ---------------------
23,224,868 ----------------------------------------------------
- ----------------------
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Smith Barney World Funds, Inc. International Equity Portfolio
Schedule of Investments (continued) October 31, 1994
SHARES SECURITY
VALUE
- ---------------------------------------------------------------
- -----------
NORWAY -- 2.1%
607,000 Benor Tankers Ltd.
$
3,009,213
400,000 Petroleum Geo Services As
10,067,575
300,000 Unitor A/S
5,399,881 -----------------------------------------------------
- ---------------------
18,476,669 ----------------------------------------------------
- ----------------------
PANAMA -- 0.6%
150,000 Panamerican Beverages Inc A
5,175,000 -----------------------------------------------------
- ---------------------
PHILIPPINES -- 0.9%
2,985,100 International Container Services Inc.
2,969,419
6,000,000 Universe Robina Corp.
5,255,400 -----------------------------------------------------
- ---------------------
8,224,819 -----------------------------------------------------
- ---------------------
SINGAPORE -- 5.9%
1,200,000 Cerebos Pacific Ltd.
6,856,210
2,500,000 Dbs Land
8,757,312
2,000,000 Dbs Land B Wts. 2/21/95
2,122,160
300,000 Frazier & Neave
3,550,537
589,000 Fraser & Neave Ltd. Wts. 5/27/98
3,405,319
750,000 Jurong Shipyard Ltd.
6,733,778
2,000,000 Kim Eng Holdings Ltd.
2,489,457
200,000 Kim Eng Holdings Ltd. Loan Stock 2/3/97 3.5%
125,833
400,000 Kim Eng Holdings Ltd. Wts. 2/2/97
231,261
520,000 Overseas Union Bank Ltd. Fgn Rg
2,971,024
1,000,000 Overseas Chinese Banking Corp Ltd. Wts. 7/14/95
3,979,050
2,500,000 Qaf Ltd.
2,635,696
400,000 Qaf Ltd. Loan Stock 98 2%
223,099
800,000 Qaf Ltd. Wts. 11/14/98
492,450
1,025,000 Sembawang Maritime Ltd.
4,915,148
500,000 Sembawang Maritime Culs 1.5% Ln Stock
782,207
56,909 United Overseas Bank Ltd. Wts. 6/17/97
336,763
393,750 United Overseas Bank Ltd. Wts. 6/17/97
2,330,040 -----------------------------------------------------
- ---------------------
52,937,344 ----------------------------------------------------
- ----------------------
SOUTH AFRICA -- 0.5%
368,000 Pepkor Ltd. ADR 144A
4,029,600 -----------------------------------------------------
- ---------------------
SPAIN -- 0.9%
75,000 Acerinox
8,286,249 -----------------------------------------------------
- ---------------------
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Schedule of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE ---------------------------------------------------------
- -----------------
SWEDEN -- 6.2%
200,000 Astra Ab Ser A
$
5,395,060
250,000 Celsius Industrier Ab Ser B
5,720,983
225,000 Ericsson Tel Ab Lm Ser B Free
13,652,345
200,000 Getinge Industrier Ab B Free
5,492,143
100,000 Hennes & Mauritz Series B
5,519,881
50,000 Kinnevik Ser B Free
1,657,351
1,200,000 Skandinaviska Enskilda Bank Ser A Free
7,822,143
500,000 Volvo Ab Ser B Free
9,847,025 -----------------------------------------------------
- ---------------------
55,106,931 ----------------------------------------------------
- -------------
- ----------
SWITZERLAND -- 1.3%
2,500 Afg Arbonia Forster Holdings
2,285,374
2,500 Bbc Brown Boveri Sa
2,146,264
4,500 Gebrueder Sulzer Reg
3,169,316
1,000 Vetropack Holding SA Saint Prex.
4,014,308 -----------------------------------------------------
- ---------------------
11,615,262 ----------------------------------------------------
- ----------------------
TAIWAN -- 0.5%
315,000 The Fermosa Growth Fund Ltd. Ser. 2
5,197,500 -----------------------------------------------------
- ---------------------
THAILAND -- 2.2%
4,600,000 Bangkok Metropolitan Bank Public Co. Ltd. Foreign
6,136,729
200,000 Dhana Siam Finance And Secs Pub Co. Ltd.
5,328,262
200,000 Finance One Public Com Fgn Rg
4,044,343
36,360 Finance One Wts. 2/10/99
350,125
200,000 Land And House Public Company Ltd. Foreign
4,108,539
31 Saha Pathana Inter Holding Public Co. Ltd.
115 -----------------------------------------------------------
- ---------------
19,968,113 ----------------------------------------------------
- ----------------------
TURKEY -- 0.7%
8,700,000 Dogan Sirketler Grubu Holdings As
603,151
2,000,000 Koc Holding As
1,288,515
500,000 Migros Turkey
1,134,454
8,316,000 Netas
2,970,000
3,000,000 T.Garanti Bankasi As
714,286 -------------------------------------------------------
- -------------------
6,710,406 -----------------------------------------------------
- ---------------------
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Schedule of Investments (continued)
October 31, 1994
SHARES SECURITY
VALUE ---------------------------------------------------------
- -----------------
UNITED KINGDOM -- 3.5%
800,000 British Airport Authority
$
6,756,889
500,000 Flextech
3,913,256
1,500,000 Queens Moat Houses PLC
244,578
150,000 Reuters Holdings PLC ADR B
7,068,750
1,000,000 Stagecoach Holdings PLC
3,538,235
275,000 Vodafone Group PLC ADR
9,556,250 -----------------------------------------------------
- ---------------------
31,077,958 ----------------------------------------------------
- ----------------------
TOTAL COMMON STOCKS (Cost--$768,409,627)
889,748,562 ---------------------------------------------------
- -----------------------
FACE
AMOUNT+ SECURITY
VALUE ---------------------------------------------------------
- -----------------
BONDS -- 0.9%
HONG KONG --0.1%
1,000,000 Private Investment Finance Cayman Ltd. Conv. 4.5%,
12/1/00 144A
787,500 -------------------------------------------------------
- -------------------
ITALY -- 0.0%
385,000,000 Ifil 1/1/00 5% Ex. Wts Risp
249,569 -------------------------------------------------------
- -------------------
SWEDEN -- 0.7%
22,000,000 Kinnevik Ab Conv. Sub 10.5% 7/21/97
6,438,012 -----------------------------------------------------
- ---------------------
TAIWAN -- 0.1%
250,000 U-Ming Marine Bonds Trans. Corp. Notes 1.5% 2/7/01
Convertible until 1/28/01
266,250 -------------------------------------------------------
- -------------------
THAILAND -- 0.0%
3,636,000 Finance One Public Co. Ltd. Unsec. Debt 3/15/01
3.75% 145,885 ------------------------------------------------
- --------------------------
TOTAL BONDS (Cost--$6,362,551)
7,887,216
- ---------------------------------------------------------------
- -----------
TOTAL INVESTMENTS -- 100% (Cost--$774,772,178*)
$897,635,778 --------------------------------------------------
- ------------------------
+ Local currency
* Aggregate cost for Federal income taxes is substantially the
same.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Statement of Assets and Liabilities
October 31, 1994
ASSETS:
Investments, at value (Cost -- $774,772,178)
$897,635,778
Cash and cash equivalents
29,366,096
Receivable for Fund shares sold
4,594,948
Receivable for securities sold
1,379,014
Unrealized foreign currency gain
121,951
Dividends and interest receivable
313,606 -------------------------------------------------------
- -------------------
Total Assets
933,411,393 ---------------------------------------------------
- -----------------------
LIABILITIES:
Payable for Fund shares reacquired
315,225
Payable for securities purchased
3,494,893
Management fees payable
630,298
Distribution costs payable
493,932
Accrued expenses and other liabilities
655,953 -------------------------------------------------------
- -------------------
Total Liabilities
5,590,301 -----------------------------------------------------
- ---------------------
Total Net Assets
$927,821,092 --------------------------------------------------
- ------------------------
NET ASSETS:
Par value of capital shares
$ 49,594
Capital paid in excess of par value
802,941,716
Accumulated net investment income
6,485,700
Accumulated net realized gain on investments
4,764,775
Net unrealized appreciation of investments and
foreign currencies
113,579,307 ---------------------------------------------------
- -----------------------
Total Net Assets
$927,821,092 --------------------------------------------------
- ------------------------
Shares Outstanding:
Class A
31,491,367 ----------------------------------------------------
- ----------------------
Class B
15,508,067 ----------------------------------------------------
- ----------------------
Class D
2,594,032 -----------------------------------------------------
- ---------------------
Net Asset Value:
Class A
$18.79 --------------------------------------------------------
- ------------------
Class B* (and redemption price)
$18.54 --------------------------------------------------------
- ------------------
Class D
$18.80 --------------------------------------------------------
- ------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.71% of net asset value per share)
$19.68 --------------------------------------------------------
- ------------------
* Redemption price is NAV of Class B shares reduced by 1.00% if
shares are
redeemed within 18 months of purchase.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Statement of Operations For the period ended October
31, 1994 (a)
INVESTMENT INCOME:
Dividends and Interest
$ 8,216,433 ---------------------------------------------------
- --------------
- ----------
EXPENSES:
Management fees (Note 2)
5,320,716
Distribution costs (Note 2)
2,929,045
Custodian fees
781,579
Shareholder servicing agent fees
261,209
Directors' fees
63,861
Shareholder communications fees
116,178
Registration fees
324,952
Audit and legal fees
19,158
Other
13,165 --------------------------------------------------------
- ------------------
Total Expenses
9,829,863 -----------------------------------------------------
- ---------------------
Net Investment Loss
(1,613,430) ---------------------------------------------------
- -----------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES:
Realized Gain (Loss) From:
Securities transactions
6,257,942
Foreign currency transactions
(1,242,737) ---------------------------------------------------
- -----------------------
Net Realized Gain
5,015,205 -----------------------------------------------------
- ---------------------
Change in Net Unrealized Appreciation of Investments
and Foreign Currencies:
Beginning of period
118,568,537
End of period (Note 1)
122,985,551 ---------------------------------------------------
- -----------------------
Increase in Net Unrealized Appreciation
4,417,014 -----------------------------------------------------
- ---------------------
Net Gain on Investments and Foreign Currencies
9,432,219 -----------------------------------------------------
- ---------------------
Increase in Net Assets Resulting From Operations
$ 7,818,789 ---------------------------------------------------
- -----------------------
(a) For the period from January 1, 1994 to October 31, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Statements of Changes in Net Assets
For the period ended October 31, 1994 and the year ended
December 31, 1993
1994 (a)
1993 ----------------------------------------------------------
- ----------------
OPERATIONS:
Net investment loss $ (1,613,430) $
(460,943)
Net realized gain 5,015,205
5,935,510
Increase in unrealized appreciation of
investments and foreign currencies 4,417,014
105,223,622 ---------------------------------------------------
- -----------------------
Increase In Net Assets
Resulting From Operations 7,818,789
110,698,189 ---------------------------------------------------
- -----------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
- --
Net realized gain --
(4,069,202) ---------------------------------------------------
- -----------------------
Decrease In Net Assets from Distributions
to Shareholders --
(4,069,202) ---------------------------------------------------
- -----------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 613,695,273
324,402,026
Net asset value of shares issued for
reinvestment of dividends --
3,923,068
Cost of shares reacquired (207,606,766)
(43,645,297) --------------------------------------------------
- ------------------------
Increase In Net Assets From Fund
Share Transactions 406,088,507
284,679,797 ---------------------------------------------------
- -----------------------
Increase in Net Assets 413,907,296
391,308,784
NET ASSETS:
Beginning of period 513,913,796
122,605,012 ---------------------------------------------------
- -----------------------
End of period* $927,821,092
$513,913,796 --------------------------------------------------
- ------------------------
* Includes accumulated net investment
income (loss) of 6,485,700
$(64,377) -----------------------------------------------------
- ---------------------
(a) For the period from January 1, 1994 to October 31, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES
The International Equity Portfolio ("Portfolio") is a
separate investment
portfolio of the Smith Barney World Funds, Inc. ("Fund"). The
Fund, a Maryland
corporation, is registered under the Investment Company Act of
1940, as
amended, as an open-end investment company and consists of this
Portfolio and
four other separate investment portfolios: European, Pacific,
International
Balanced and Global Government Bond Portfolios. The financial
statements and
financial highlights for the other portfolios are presented in
separate annual
reports. The significant accounting policies consistently
followed by the Fund
are: (a) security transactions are accounted for on trade date;
(b) securities
traded in national securities markets are valued at the closing
prices in 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
listed securities
for which no sale 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. Short
term securities
maturing within 60 days are valued at cost plus accreted
discount, or minus
amortized premium, as applicable; (c) gains or losses on the
sale of securities
are calculated by using the specific identification method; (d)
interest
income, adjusted for amortization of premiums and accretion of
discount, is
recorded on the accrual basis; (e) direct expenses are charged
to each
portfolio and class, management fees and general expenses are
allocated on the
basis of relative net assets; (f) foreign currencies (and
receivables and
payables for unsettled foreign securities transactions) are
translated into
U.S. dollars based on the rate of exchange of such currencies
against U.S.
dollars on the date of valuation. Translation gains or losses
resulting from
changes in the exchange rate and realized gains and losses on
the settlement of
foreign currency transactions are reported in the statements of
operations; (g)
certificates of deposit, time deposits and other short-term
investments
maintained with financial institutions are considered to be
cash equivalents;
(h) the Portfolio intends to comply with the requirements of
the Internal
Revenue Code pertaining to regulated investment companies and
make required
distributions to shareholders; therefore no provision for
Federal
16
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Notes to Financial Statements (continued)
income taxes has been made; and (i) during the current year,
the Fund adopted
Statement of Position 93-2 Determination, Disclosure, and
Financial Statement
------------------------------------
- -------------
Presentation of Income, Capital Gain, and Return of Capital
Distributions by ----------------------------------------------
- -----------------------------
Investment Companies. Accordingly, book and tax basis
differences relating to
- ---------------------
shareholder distributions and other permanent book and tax
differences are
reclassified to paid-in capital. As of November 1, 1994, the
cumulative effect
of such differences, totaling $9,406,244, was reclassified to
undistributed net
investment income from net unrealized appreciation of
investments and foreign
currencies. Net investment income, net realized gains, and net
assets were not
affected by this change. As of October 31, 1994, the Smith
Barney World Funds,
Inc. has changed its year-end from December 31 to October 31.
This change was
done to facilitate the administration of the Fund.
In addition, the Portfolio 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. There were no
open forward
contracts at October 31, 1994.
2. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH
AFFILIATED PERSONS
Smith Barney Mutual Fund Management, Inc. ("SBMFM"),
formerly known as Smith
Barney Advisers, Inc., a subsidiary of Smith Barney Holdings
Inc. ("SBH"), acts
as investment manager of the Fund. As compensation for its
services, the
Portfolio pays SBMFM a fee calculated at the annual rate of
0.85% on average
daily net assets; the fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts
as distributor of
the Portfolio's shares. For the period ended October 31, 1994,
SB has advised
the Fund that it was paid sales charges of approximately
$8,167,000 by
purchasers of Fund shares.
Effective November 7, 1994, the Fund adopted a new class
structure. At that
time current Class B and C Shares were moved into Class C and A
Shares,
respectively. Subsequently, a declining contingent deferred
sales charge
("CDSC") of 5.00% will be imposed on new Class B shares if
redemption occurs
within 5 years from the date such investment was made. Also, a
CDSC of 1.00% is
imposed on Class C shares if redemption occurs
17
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Notes to Financial Statements (continued)
within 12 months from the date such investment was made. Any
CDSC imposed on
redemptions are paid to the distributor of the Fund. For the
period ended
October 31, 1994, $139,534 was paid on such redemptions.
Pursuant to a Distribution Plan the Portfolio pays a
service fee with
respect to its Class A and B shares calculated at the annual
rate of 0.25% of
the average daily net assets of each respective class' shares.
The Portfolio
also pays a distribution fee with respect to Class B shares
calculated at the
annual rate of 0.75% of average daily net assets for that
class. All officers
and two directors of the Fund are employees of SB.
3. INVESTMENTS
For the period ended October 31, 1994, the aggregate cost
of purchases and
proceeds from sales of investments (including maturities, but
excluding short-
term securities) was $652,543,915 and $256,600,920,
respectively.
At October 31, 1994, the aggregate gross unrealized
appreciation and
depreciation of investments for tax purposes were as follows:
- ---------------------------------------------------------------
- -----------
Gross unrealized appreciation
$156,600,277
Gross unrealized depreciation
(33,736,677) --------------------------------------------------
- ------------------------
Net unrealized appreciation
$122,863,600 --------------------------------------------------
- ------------------------
4. PORTFOLIO CONCENTRATION
The Portfolio's investments in foreign securities may
involve risks not
present in domestic investments. Since securities may be
denominated in a
foreign currency and may require settlement in foreign
currencies and pay
interest or dividends in foreign currencies, changes in the
relationship of
these foreign currencies to the U.S. dollar can significantly
affect the value
of the investments and earnings of the Portfolio. Foreign
investments may also
subject the Portfolio 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 counter
parties to meet the terms of their contracts.
5. CAPITAL SHARES
At October 31, 1994, there were two billion shares of $.001
par value
capital stock authorized. The Portfolio has the authority to
issue
18
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Notes to Financial Statements
(continued)
multiple classes of shares. Each share of a class represents an
identical legal
interest in the Portfolio and has the same rights, except that
each class bears
certain expenses specifically related to the distribution of
its shares. At
October 31, 1994, paid-in capital, including adjustments for
book and tax
differences discussed in Note 1, amounted to the following for
each class:
Class A Class B
Class D -------------------------------------------------------
- -------------------
Total Paid-in Capital $483,373,072 $272,073,208
$47,545,030 ---------------------------------------------------
- -----------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Period Ended
Year Ended
October 31, 1994 (a)
December 31, 1993
------------------------- ---
- --------------------
Shares Amount
Shares Amount --------------------------------------------
- ---------------------------------------
<S> <C> <C> <C>
<C>
Class A
Shares sold 15,652,201 $ 288,105,584
10,595,790 $168,970,489
Shares issued on reinvestment -- --
146,923 2,744,521
Shares redeemed (3,180,807) (57,723,002)
(1,654,080) (24,182,875) -------------------------------------
- ----------------------------------------------
Net Increase 12,471,394 $ 230,382,582
9,088,633 $147,532,135 ---------------------------------------
- --------------------------------------------
Class B*
Shares sold 11,333,295 $206,379,344
6,455,160 $106,360,493
Shares issued on reinvestment -- --
45,801 849,612
Shares redeemed (2,012,143) (36,089,627)
(314,046) (5,426,615) ---------------------------------------
- --------------------------------------------
Net Increase 9,321,152 $170,289,717
6,186,915 $101,783,490
- ---------------------------------------------------------------
- --------------------
Class C*+
Shares sold 3,942,740 $ 71,665,315
3,095,173 $ 49,071,044
Shares issued on reinvestment -- -17,618
328,935
Shares redeemed (6,243,356) (113,794,137)
(812,175) (14,035,807) ---------------------------------------
- --------------------------------------------
Net Increase (Decrease) (2,300,616) $(42,128,822)
2,300,616 $ 35,364,172 ---------------------------------------
- --------------------------------------------
Class D*
Shares sold 2,594,032 $47,545,030
- -- --
Shares issued on reinvestment -- --
- -- --
Shares redeemed -- --
- -- --
- ---------------------------------------------------------------
- --------------------
Net Increase 2,594,032 $47,545,030
- -- --
- ---------------------------------------------------------------
- --------------------
</TABLE>
(a) For the period from January 1, 1994 to October 31, 1994.
* Sales of Class B, Class C and Class D shares commenced on
January 4, 1993,
February 19, 1993, and June 16, 1994, respectively.
+ On October 10, 1994 the old Class C shares were exchanged
into Class A
shares and are included in "Shares sold".
19
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Financial Highlights
For a share of each capital stock outstanding throughout each
period:
Class A Shares 1994 (1) 1993
1992 1991 (2) ------------------------------------------------
- -----------------------------
Net Asset Value, Beginning of Period $18.71 $12.35
$12.31 $11.94 ------------------------------------------------
- -----------------------------
Income From Investment Operations:
Net investment income (loss) (0.01) (0.01)
0.02 (0.01)
Net realized and unrealized
gain on investment 0.09 6.53
0.04 0.38
- ---------------------------------------------------------------
- --------------
Total Income from Investment Operations 0.08 6.52
0.06 0.37 --------------------------------------------------
- ---------------------------
Less Distributions:
Dividends from net investment income -- --
(0.02) --
Distribution from net realized gains(3) -- (0.16)
- -- -------------------------------------------------------
- -----------------------
Total Distributions -- (0.16)
(0.02) ----------------------------------------------------
- --------------------------
Net Asset Value, End of Period $18.79 $18.71
$12.35 $12.31 ------------------------------------------------
- -----------------------------
Total Return 0.43%++ 52.78%
0.49% 3.10% -------------------------------------------------
- ----------------------------
Net Assets, End of Period (000s) $591,598 $355,926
$122,605 $54,958 ----------------------------------------------
- -------------------------------
Ratios to Average Net Assets:
Expenses 1.35%+ 1.35%
1.56% 1.73%
Net investment income (loss) (0.05)+ (0.10)
0.24 0.75+ -------------------------------------------------
- ----------------------------
Portfolio Turnover Rate 34.75% 26.75%
20.11% 1.85% ------------------------------------------------
- -----------------------------
(1) For the period from January 1, 1994 to October 31, 1994.
(2) For the period from November 22, 1991 (date of transfer of
Net Assets of
Fenimore International Fund, Inc.) to December 31, 1991.
(3) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
+ Annualized.
++ Not annualized as it may not be representative of the total
return for the
year.
20
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Financial Highlights (continued)
For a share of each capital stock outstanding throughout the
period:
Class B Shares 1994 (1)
1993 (2) ------------------------------------------------------
- -----------------------
Net Asset Value, Beginning of Period $18.58
$12.35 --------------------------------------------------------
- ---------------------
Income From Investment Operations:
Net investment loss (0.11)
(0.14)
Net realized and unrealized
gain on investment 0.07
6.25 ----------------------------------------------------------
- -------------------
Total Income (Loss) from Investment Operations (0.04)
6.39 ----------------------------------------------------------
- -------------------
Less Distributions:
Dividends from net investment income --
- --
Distribution from net realized gains(3) --
(0.16) --------------------------------------------------------
- ---------------------
Total Distributions --
(0.16) --------------------------------------------------------
- ---------------------
Net Asset Value, End of Period $18.54
$18.58 --------------------------------------------------------
- ---------------------
Total Return (0.22)%++
51.73%++ ------------------------------------------------------
- -----------------------
Net Assets, End of Period (000s) $287,458
$114,951 ------------------------------------------------------
- -----------------------
Ratios to Average Net Assets:
Expenses 2.10%+
2.14%+
Net investment loss (0.77)+
(1.08)+ -------------------------------------------------------
- ----------------------
Portfolio Turnover Rate 34.75%
26.75% --------------------------------------------------------
- ---------------------
(1) For the period from January 1, 1994 to October 31, 1994.
(2) For the period from January 4, 1993 (inception date) to
December 31, 1993.
(3) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
+ Annualized.
++ Not annualized as it may not be representative of the total
return for the
year.
21
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Financial Highlights (continued)
For a share of each capital stock outstanding throughout the
period:
Class D Shares
1994 (1) ------------------------------------------------------
- -----------------------
Net Asset Value, Beginning of Period
$17.64 --------------------------------------------------------
- ---------------------
Income From Investment Operations:
Net investment income
0.01
Net realized and unrealized
gain on investment
1.15 ----------------------------------------------------------
- -------------------
Total Income from Investment Operations
1.16 ----------------------------------------------------------
- -------------------
Less Distributions:
Dividends from net investment income
- --
Distribution from net realized gains(2)
- ---------------------------------------------------------------
- ---------------
Total Distributions
- ---------------------------------------------------------------
- ---------------
Net Asset Value, End of Period
$18.80 --------------------------------------------------------
- ---------------------
Total Return
(6.58)% -------------------------------------------------------
- ----------------------
Net Assets, End of Period (000s)
$48,765 -------------------------------------------------------
- ----------------------
Ratios to Average Net Assets:
Expenses
1.09%
Net investment loss
0.29+ ---------------------------------------------------------
- --------------------
Portfolio Turnover Rate
34.75% --------------------------------------------------------
- ---------------------
(1) For the period from June 16, 1994 (inception date) to
October 31, 1994.
(2) Net short term gains, if any, are included and reported as
ordinary income
for income tax purposes.
+ Annualized
++ Not annualized as it may not be representative of the
total
return for the
year.
22
<PAGE>
Smith Barney World Funds, Inc.
International Equity Portfolio
Independent Auditors' Report
To The Shareholders and Board of Directors of
Smith Barney World Funds, Inc:
We have audited the accompanying statement of assets and
liabilities
including the schedule of investments of the International
Equity Portfolio of
Smith Barney World Funds, Inc., as of October 31, 1994 and the
related
statements of operations for the period from January 1, 1994 to
October 31,
1994, the statement of changes in net assets for the period
from January 1,
1994 to October 31, 1994 and the year ended December 31, 1993,
and the
financial highlights for the period from January 1, 1994 to
October 31, 1994,
two years ended December 31, 1993 and for the period from
November 22, 1991
(date of transfer of net assets of Fenimore International Fund,
Inc.) to
December 31, 1991. These financial statements and financial
highlights are the
responsibility of the Fund's management. Our responsibility is
to express an
opinion on these financial statements and financial highlights
based on our
audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements and
financial
highlights are free of material misstatement. An audit includes
examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial
statements. Our procedures included confirmation of securities
owned as of
October 31, 1994. An audit also includes assessing the
accounting principles
used and significant estimates made by management, as well as
evaluating the
overall financial statement presentation. We believe that our
audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights
referred to above present fairly, in all material respects, the
financial
position of the International Equity Portfolio of Smith Barney
World Funds,
Inc., as of October 31, 1994, and the results of its
operations for the period
from January 1, 1994 to October 31, 1994, the changes in its
net assets for the
period from January 1, 1994 to October 31, 1994, and the year
ended December
31, 1993, and the financial highlights for the period from
January 1, 1994 to
October 31, 1994, two years ended December 31, 1993 and for
the period from
November 22, 1991 (date of transfer of net assets of Fenimore
International
Fund, Inc.) to December 31, 1991, in conformity with generally
accepted
accounting principles.
/s/ KPMG PEAT MARWICK
LLP
New York, New York
December 28, 1994
23
<PAGE>
SMITH BARNEY
WORLD FUNDS, INC.
DIRECTORS
Victor Atkins
Robert A. Belfer
Alger B. Chapman
Robert Frankel
Rainer Greeven
Susan M. Heilbron
Bruce D. Sargent
James M. Shuart
Stephen Treadway, Chairman
OFFICERS
Maurits E. Edersheim, Chairman of the
Fund & Advisory Director
Stephen Treadway
Chief Executive Officer
Heath B. McLendon
Executive Vice President
Lewis E. Daidone
Senior Vice President
and Treasurer
James Conheady
Vice President
J. Gabriel Irwin
Vice President
Jeffrey Russell
Vice President
Rein Van Der Does
Vice President
Simon J. Wells
Vice President
Victor S. Filatov
Vice President
Simon R. Hildreth
Vice President
Denis P. Mangan
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
Smith Barney Mutual Fund
Management, Inc.
DISTRIBUTOR
Smith Barney Inc.
CUSTODIAN
J.P. Morgan & Co. Incorporated
SHAREHOLDER
SERVICING AGENT
The Shareholder Services Group Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the
shareholders of
Smith Barney World Funds, Inc. International Equity Portfolio.
It is not
authorized for distribution to prospective investors unless
accompanied or
preceded by a current Prospectus for the Portfolio, which
contains information
concerning the Portfolio's investment policies and expenses as
well as other
pertinent information.
SMITH BARNEY
- ------------
SMITH BARNEY
WORLD FUNDS, INC.
1345 Avenue of the Americas
New York, New York 10105
FD2265 L4
PART C Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Location in:
Part A
Part
B
SemiAnnual
and Annual
Report
Statements of Assets and Liabilities -- *
Statements of Operations -- *
Statements of Changes in Net Assets -- *
Notes to Financial Statements -- *
* See the Annual Report and Semi-Annual Report to
Shareholders,
which are incorporated by reference in the Statement
of
Additional Information. Financial Statements for the
Emerging
Markets Portfolio filed herewith are unaudited.
All other statements and schedules are omitted because they
are
not applicable or the required information will be shown in
the financial statements or notes thereto.
(b) Exhibits
(1) (a)Articles of
Incorporation
(1)
(b)Articles Supplementary
to
Articles of Incorporation for
International
Equity Portfolio (2)
(c)Articles of Amendment
to
the Articles of Incorporation for the
Fund
dated November 10, 1992 (3)
(d)Articles Supplementary
to
Articles of Incorporation for the Fund
dated
December 8, 1992 (3)
(e)Articles Supplementary
to
Articles of Incorporation for Pacific
Portfolio
and European Portfolio(10)
(f)Articles Supplementary
to
Articles of Incorporation for
International
Balanced Portfolio (11)
(g)Form of
Articles
Supplementary to Articles of Incorporation
for
Emerging Markets Portfolio(12)
(h)Articles of Amendment
to
the Articles of Incorporation for the
Fund
dated June 4, 1991(13)
(i)Articles Supplementary
to
Articles of Incorporation for the Fund
dated
July 13, 1994(13)
(j)Articles of Amendment
to
Articles of Incorporation for the Fund
dated
November 3, 1994(13)
(k)Articles of Amendment
to
Articles of Incorporation for the Fund
dated
November 3, 1994(13)
(l)Articles Supplementary
to Articles of Incorporation for the Fund
dated
November 3, 1994(13)
(m)Articles Supplementary
to Articles of Incorporation for Emerging
Markets
Portfolio dated November 10, 1994(13)
(2) Bylaws (4)
(3) None
(4) Form of Stock Certificates for the
International Equity Portfolio, the
Global Government Bond Portfolio, the
Pacific Portfolio and the European
Portfolio (9)
(5) Form of Management Agreement
(a) --Global Government Bond Portfolio
(4)
(b) --International Equity Portfolio (5)
(c) --Pacific Portfolio (11)
(d) --European Portfolio (11)
(e) --International Balanced Portfolio (11)
(f) --Emerging Markets Portfolio(12)
(g)Form of
Subadvisory Agreement (4)
(6) (i)Form of
Distribution
Agreement (5)
(ii)Form of Selling
Group Agreement (5)
(7) Not applicable
(8) (i)Form of Custodian
Agreement
(4)
(ii)Form of Transfer
Agency Agreement (4)
(9) Not applicable
(10) Opinion and Consent of Counsel (6)
(11) (i)Auditor's Report (See
the
Annual Report to Shareholders which
is
incorporated by reference in the Statement
of Additional Information)
(ii)Auditors' Consent *
(iii) Powers of Attorney for Robert A. Frankel
and Bruce Sargent.(13)
(12) Not applicable
(13) Form of Subscription Agreement (4)
(14) IRA Agreement (6)
(15) Rule 12b-1 Plan of Distribution
(a) Global Government Bond Portfolio (4)
(b) International Equity Portfolio (5)
(c) Rule 12b-1 Plan of Distribution for the
Fund on behalf of the Global Government Bond
Portfolio (7)
(d) Rule 12b-1 Plan of Distribution for the
Fund
on behalf of the International Equity Portfolio (7)
(e) Rule 12b-1 Plan of Distribution for the
Fund
on behalf of the Pacific Portfolio (11)
(f) Rule 12b-1 Plan of Distribution for the
Fund on behalf of the European Portfolio (11)
(g) Rule 12b-1 Plan of Distribution for the
Fund on behalf of the International Balanced
Portfolio (11)
(h) Rule 12b-1 Plan of Distribution for the
Fund on behalf of the Emerging Markets Portfolio(12)
(16) Schedule of Performance Quotations (8)
(1) Previously filed on March 25, 1991.
(2) Previously filed on September 24,
1992. (3) Previously filed on December
21, 1992. (4) Previously filed on May
27, 1991.
(5) Previously filed on August 8, 1991.
(6) Previously filed on June 17, 1991.
(7) Previously filed on April 30, 1993.
(8) Previously filed on January 17,
1992. (9) Previously filed on November
5, 1993. (10)Previously filed on
January 4, 1994. (11)Previously filed
on July 27, 1994. (12)Previously filed
on October 31, 1994. (13)Previously
filed on February 28, 1995
*Filed herewith.
Item 25. Persons Controlled by or under Common
Control
with Registrant
None.
Item 26. Number of Holders of Securities
Number of Record holders
Title of Class On October 31, 1995
Global Government Bond Portfolio 13,773
International Equity
Portfolio
89,362
Pacific Portfolio 801
European Portfolio 5,790
International Balanced Portfolio 2,269
Emerging Markets Portfolio 2,384
Item 27. Indemnification
Reference is made to Article IX, or
Registrant's Articles of Incorporation for a
complete statement of its terms.
Registrant is a named assured on a joint
insured bond pursuant to Rule 17g-1 of the
Investment Company Act of 1940. Other assureds
include Smith, Barney Mutual Funds Management,
Inc. (Registrant's Adviser) and affiliated
investment companies.
Item 28. Business and other Connections of
Investment
Adviser
See the material under the caption "Management of
the Fund" included in Part A
(Prospectus) of this Registration Statement and the material
appearing under the caption "Management Agreement" included
in Part B (Statement of Additional Information) of this
Registration Statement.
Information as to the Directors and Officers of
Smith Barney Mutual Funds Management Inc.
is included in its Form ADV (File No. 801- 8314),
filed with the Commission, which is incorporated herein by
reference thereto.
Item 29. Principal Underwriters
(a) Smith Barney Inc. ("Smith Barney ") also acts
as principal underwriter for Smith Barney Money Funds, Inc.;
Smith Barney Muni Funds; Smith Barney Funds, Inc., Smith
Barney
Variable Account Funds; Smith Barney Intermediate Municipal Fund,
Inc., Smith Barney Municipal Fund, Inc., High Income Opportunity
Fund Inc., Smith Barney/Travelers Series Fund Inc., Smith Barney
World Funds, Inc., Greenwich Street California Municipal Fund
Inc., The Inefficient -Market Fund, Inc., Smith Barney Adjustable
Rate Government Income Fund, Smith Barney Equity Funds, Smith
Barney Income Funds, Smith Barney Massachusetts Municipals Fund,
Zenix Income Fund Inc., Smith Barney Arizona Municipals Fund
Inc., Smith Barney Principal Return Fund, Municipal High Income
Fund Inc., The Trust for TRAK Investments, Smith Barney Series
Fund, Smith Barney Income Trust, Smith Barney Oregon Municipals
Fund Inc., Smith Barney Municipal Money Market Fund,Inc., Smith
Barney Aggressive Growth Fund Inc., Smith Barney Appreciation
Fund Inc., Smith Barney California Municipals Fund Inc., Smith
Barney Fundamental Value Fund Inc., Smith Barney Managed
Governments Fund Inc., Smith Barney Managed Municipals Fund Inc.,
Smith Barney New York Municipals Fund Inc., Smith Barney New
Jersey Municipals Fund Inc., Smith Barney Global Opportunities
Fund, Smith Barney Precious Metals and Minerals Fund Inc., Smith
Barney Investment Funds Inc., Smith Barney FMA (R) Trust, The
Italy Fund Inc., Smith Barney Telecommunications Trust, Managed
Municipals Portfolio Inc., Managed Municipals Portfolio II Inc.,
Smith Barney Florida Municipal Fund, Managed High Income
Portfolio Inc.,
(b) The information required by this Item 29 with respect
to each director and officer of Smith Barney is incorporated
by reference to Schedule A of Form BdD filed by Smith
Barney pursuant to the Securities Exchange Act of 1934 (SEC File
No. 88177)
(c) not applicable
Item 30. Location of Accounts and Records
Morgan Guaranty Trust Company of New
York, 60 Wall Street, New York, New York 10260, and The
Shareholder Services Group, Inc., 53 State
Street,Boston, Massachusetts 02109, will maintain the
custodian and the shareholder servicing agent records,
respectively, required by Section 31(a).
All other records required by
Section 31 (a) are maintained at the offices of
the Registrant at 388 Greenwich Street, New York, New
York 10013 (and preserved for the period specified by
Rule 31a-2).
Item 31. Management Services
not applicable
Item 32. Undertakings
(a) not applicable
(b) Registrant undertakes, if
requested to do so by holders of at least 10% of
Registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the
questions of removal of a director or directors and to
assist in communications with other shareholders as
required by Section 16(c).
(c) Registrant undertakes to furnish
each person to whom a prospectus is delivered with
a copy of Registrant's latest report to
shareholders, upon request and without charge.
EXHIBIT INDEX
Exhibit No. Exhibit Page Number
11(ii) Auditors' Consent
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant
certifies that it meets all of the requirements for
effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-
Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned,
and where applicable, the true and lawful attorney-in-fact,
thereto duly authorized, in the City of New York and State of
New York on the 30th day of
November 1995.
SMITH BARNEY WORLD FUNDS,
INC.
BY /s/ Heath B.
McLendon (Heath B. McLendon, Chief Executive Officer)
Pursuant to the requirements of the Securities Act of
1933, this Post-Effective Amendment to the Registration
Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signatures Title Date
/s/ Heath B. McLendon
Director,
and
(Heath B. McLendon) Chief Executive Officer
11/30/95
President and Director
(Jessica Bibliowicz)
Victor Atkins* Director
(Victor Atkins)
Robert Belfer* Director
(Robert Belfer)
Alger Chapman* Director
(Alger Chapman)
Robert Frankel*
Director
(Robert Frankel)
Rainer Greeven* Director
(Rainer Greeven)
Susan M. Heilbron * Director
(Susan M. Heibron)
Bruce D. Sargent*
Director
(Bruce D. Sargent)
Signatures Title Date
James M. Shuart*
Director
(James M. Shuart)
/s/ Lewis Daidone
Treasurer
and Principal
(Lewis E. Daidone) Financial
Officer
11/30/95
*By: /s/ Christina T.
Sydor
11/30/95
Christina T. Sydor
Pursuant to Power of Attorney
EXHIBIT INDEX
Exhibit No. Exhibit Page Number
11(ii) Auditors' Consent
Independent Auditors' Consent
To the Shareholders and Directors of the
Smith Barney World Funds, Inc.:
We consent to the use of our reports dated December 28, 1994
with respect to the Portfolios listed below of the Smith Barney
World Funds, Inc. incorporated herein by reference and to the
references to our Firm under the "Independent Auditors" in the
Statement of Additional Information.
Portfolios
International Equity Portfolio
Global Government Bond Portfolio
European Portfolio
Pacific Portfolio
International Balanced Portfolio
KPMG Peat Marwick LLP
New York, New York
November 27, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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[AVG-DEBT-PER-SHARE] 0
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[SENIOR-LONG-TERM-DEBT] 0
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[TOTAL-LIABILITIES] 2,343,459
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 74,529,919
[SHARES-COMMON-STOCK] 389,820
[SHARES-COMMON-PRIOR] 274,099
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (1,275,361)
[ACCUMULATED-NET-GAINS] 110,936
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2,162,302
[NET-ASSETS] 75,527,796
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 3,192,171
[OTHER-INCOME] 0
[EXPENSES-NET] (544,739)
[NET-INVESTMENT-INCOME] 2,647,432
[REALIZED-GAINS-CURRENT] 193,107
[APPREC-INCREASE-CURRENT] 1,571,085
[NET-CHANGE-FROM-OPS] 4,411,624
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 159,309
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 526,703
[NUMBER-OF-SHARES-REDEEMED] (420,092)
[SHARES-REINVESTED] 9,110
[NET-CHANGE-IN-ASSETS] (11,470,181)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (82,171)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 340,277
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 544,739
[AVERAGE-NET-ASSETS] 5,192,633
[PER-SHARE-NAV-BEGIN] 11.68
[PER-SHARE-NII] 0.16
[PER-SHARE-GAIN-APPREC] 0.45
[PER-SHARE-DIVIDEND] (0.36)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11,93
[EXPENSE-RATIO] 1.77
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
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<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> GLOBAL GOVERNMENT BOND
PORTFOLIO
[NUMBER] 024
<NAME> CLASS Y
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 66,736,192
<INVESTMENTS-AT VALUE> 70,038,923
[RECEIVABLES] 3,045,461
[ASSETS-OTHER] 4,786,871
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 77,871,255
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2,343,459
[TOTAL-LIABILITIES] 2,343,459
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 74,529,919
[SHARES-COMMON-STOCK] 258,653
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (1,275,361)
[ACCUMULATED-NET-GAINS] 110,936
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2,162,302
[NET-ASSETS] 75,527,796
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 3,192,171
[OTHER-INCOME] 0
[EXPENSES-NET] (544,739)
[NET-INVESTMENT-INCOME] 2,647,432
[REALIZED-GAINS-CURRENT] 193,107
[APPREC-INCREASE-CURRENT] 1,571,085
[NET-CHANGE-FROM-OPS] 4,411,624
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 107,284
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 277,678
[NUMBER-OF-SHARES-REDEEMED] (24,182)
[SHARES-REINVESTED] 5,157
[NET-CHANGE-IN-ASSETS] (11,470,181)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (82,171)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 340,277
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 544,739
[AVERAGE-NET-ASSETS] 3,089,109
[PER-SHARE-NAV-BEGIN] 11.68
[PER-SHARE-NII] 0.22
[PER-SHARE-GAIN-APPREC] 0.34
[PER-SHARE-DIVIDEND] (0.40)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.84
[EXPENSE-RATIO] 0.91
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL BALANCED
PORTFOLIO
[NUMBER] 031
<NAME> CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 23,597,764
<INVESTMENTS-AT VALUE> 23,671,528
[RECEIVABLES] 550,109
[ASSETS-OTHER] 872,003
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 25,093,640
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 174,998
[TOTAL-LIABILITIES] 174,998
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 25,342,774
[SHARES-COMMON-STOCK] 1,574,964
[SHARES-COMMON-PRIOR] 1,691,489
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (218,313)
[ACCUMULATED-NET-GAINS] (231,625)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 25,806
[NET-ASSETS] 24,918,642
[DIVIDEND-INCOME] 55,297
[INTEREST-INCOME] 548,809
[OTHER-INCOME] 0
[EXPENSES-NET] (205,723)
[NET-INVESTMENT-INCOME] 398,383
[REALIZED-GAINS-CURRENT] (537,783)
[APPREC-INCREASE-CURRENT] (250,548)
[NET-CHANGE-FROM-OPS] (389,948)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (359,774)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 122,675
[NUMBER-OF-SHARES-REDEEMED] (267,260)
[SHARES-REINVESTED] 28,060
[NET-CHANGE-IN-ASSETS] (25,776)
[ACCUMULATED-NII-PRIOR] 134,941
[ACCUMULATED-GAINS-PRIOR] 72,613
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 105,275
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 205,723
[AVERAGE-NET-ASSETS] 19,298,480
[PER-SHARE-NAV-BEGIN] 12.20
[PER-SHARE-NII] 0.05
[PER-SHARE-GAIN-APPREC] (0.22)
[PER-SHARE-DIVIDEND] (0.21)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11,82
[EXPENSE-RATIO] 1,49
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL BALANCED
PORTFOLIO
[NUMBER] 032
<NAME> CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 23,597,764
<INVESTMENTS-AT VALUE> 23,671,528
[RECEIVABLES] 550,109
[ASSETS-OTHER] 872,003
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 25,093,640
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 174,998
[TOTAL-LIABILITIES] 174,998
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 25,342,774
[SHARES-COMMON-STOCK] 171,653
[SHARES-COMMON-PRIOR] 353,786
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (218,313)
[ACCUMULATED-NET-GAINS] (231,625)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 25,806
[NET-ASSETS] 24,918,642
[DIVIDEND-INCOME] 55,297
[INTEREST-INCOME] 548,809
[OTHER-INCOME] 0
[EXPENSES-NET] (205,723)
[NET-INVESTMENT-INCOME] 398,383
[REALIZED-GAINS-CURRENT] (537,783)
[APPREC-INCREASE-CURRENT] (250,548)
[NET-CHANGE-FROM-OPS] (389,948)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (21,292)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 185,248
[NUMBER-OF-SHARES-REDEEMED] (369,168)
[SHARES-REINVESTED] 1,787
[NET-CHANGE-IN-ASSETS] (25,776)
[ACCUMULATED-NII-PRIOR] 134,941
[ACCUMULATED-GAINS-PRIOR] 72,613
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 105,275
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 205,723
[AVERAGE-NET-ASSETS] 1,349,221
[PER-SHARE-NAV-BEGIN] 12.18
[PER-SHARE-NII] (0.01)
[PER-SHARE-GAIN-APPREC] (0.07)
[PER-SHARE-DIVIDEND] (0.16)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.84
[EXPENSE-RATIO] 2.38
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL BALANCED
PORTFOLIO
[NUMBER] 033
<NAME> CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 23,597,764
<INVESTMENTS-AT VALUE> 23,671,528
[RECEIVABLES] 550,109
[ASSETS-OTHER] 872,003
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 25,093,640
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 174,998
[TOTAL-LIABILITIES] 174,998
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 25,342,774
[SHARES-COMMON-STOCK] 361,180
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (218,313)
[ACCUMULATED-NET-GAINS] (231,625)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 25,806
[NET-ASSETS] 24,918,642
[DIVIDEND-INCOME] 55,297
[INTEREST-INCOME] 548,809
[OTHER-INCOME] 0
[EXPENSES-NET] (205,723)
[NET-INVESTMENT-INCOME] 398,383
[REALIZED-GAINS-CURRENT] (537,783)
[APPREC-INCREASE-CURRENT] (250,548)
[NET-CHANGE-FROM-OPS] (389,948)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (57,499)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 383,476
[NUMBER-OF-SHARES-REDEEMED] (27,031)
[SHARES-REINVESTED] 4,735
[NET-CHANGE-IN-ASSETS] (25,776)
[ACCUMULATED-NII-PRIOR] 134,941
[ACCUMULATED-GAINS-PRIOR] 72,613
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 105,275
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 205,723
[AVERAGE-NET-ASSETS] 4,122,984
[PER-SHARE-NAV-BEGIN] 12.18
[PER-SHARE-NII] 0.00
[PER-SHARE-GAIN-APPREC] (0.20)
[PER-SHARE-DIVIDEND] (0.16)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.82
[EXPENSE-RATIO] 2.21
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL EQUITY
PORTFOLIO
[NUMBER] 041
<NAME> CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 926,152,744
<INVESTMENTS-AT VALUE> 963,359,251
[RECEIVABLES] 18,074,717
[ASSETS-OTHER] 64,710,906
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,046,144,874
[PAYABLE-FOR-SECURITIES] 25,522,029
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,197,095
[TOTAL-LIABILITIES] 29,720,024
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,015,654,036
[SHARES-COMMON-STOCK] 31,184,699
[SHARES-COMMON-PRIOR] 31,491,367
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (370,321)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (26,977,901)
[ACCUM-APPREC-OR-DEPREC] 28,119,036
[NET-ASSETS] 1,016,424,850
[DIVIDEND-INCOME] 4,573,135
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (6,495,545)
[NET-INVESTMENT-INCOME] (1,922,410)
[REALIZED-GAINS-CURRENT] (26,254,627)
[APPREC-INCREASE-CURRENT] (85,460,271)
[NET-CHANGE-FROM-OPS] (113,637,308)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 3,361,548
[DISTRIBUTIONS-OF-GAINS] 3,001,415
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 13,342,746
[NUMBER-OF-SHARES-REDEEMED] (14,009,599)
[SHARES-REINVESTED] 360,185
[NET-CHANGE-IN-ASSETS] 88,603,758
[ACCUMULATED-NII-PRIOR] 6,485,700
[ACCUMULATED-GAINS-PRIOR] 4,764,775
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3,883,808
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6,495,545
[AVERAGE-NET-ASSETS] 4,886,461
[PER-SHARE-NAV-BEGIN] 18.79
[PER-SHARE-NII] (0.200)
[PER-SHARE-GAIN-APPREC] (2.450)
[PER-SHARE-DIVIDEND] (0.120)
[PER-SHARE-DISTRIBUTIONS] (0.100)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 16.32
[EXPENSE-RATIO] 1.22
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL EQUITY
PORTFOLIO
[NUMBER] 042
<NAME> CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 926,152,744
<INVESTMENTS-AT VALUE> 963,359,251
[RECEIVABLES] 18,074,717
[ASSETS-OTHER] 64,710,906
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,046,144,874
[PAYABLE-FOR-SECURITIES] 25,522,029
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,197,095
[TOTAL-LIABILITIES] 29,720,024
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,015,654,036
[SHARES-COMMON-STOCK] 5,595,800
[SHARES-COMMON-PRIOR] 15,508,067
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (370,321)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (26,977,901)
[ACCUM-APPREC-OR-DEPREC] 28,119,036
[NET-ASSETS] 1,016,424,850
[DIVIDEND-INCOME] 4,573,135
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (6,495,545)
[NET-INVESTMENT-INCOME] (1,922,410)
[REALIZED-GAINS-CURRENT] (26,254,627)
[APPREC-INCREASE-CURRENT] (85,460,271)
[NET-CHANGE-FROM-OPS] (113,637,308)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 157,751
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 6,566,066
[NUMBER-OF-SHARES-REDEEMED] (16,487,505)
[SHARES-REINVESTED] 9,172
[NET-CHANGE-IN-ASSETS] 88,603,758
[ACCUMULATED-NII-PRIOR] 6,485,700
[ACCUMULATED-GAINS-PRIOR] 4,764,775
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3,883,808
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6,495,545
[AVERAGE-NET-ASSETS] 32,265
[PER-SHARE-NAV-BEGIN] 18.38
[PER-SHARE-NII] (0.020)
[PER-SHARE-GAIN-APPREC] (1.890)
[PER-SHARE-DIVIDEND] (0.000)
[PER-SHARE-DISTRIBUTIONS] (0.100)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 16.37
[EXPENSE-RATIO] 1.70
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL EQUITY
PORTFOLIO
[NUMBER] 043
<NAME> CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 926,152,744
<INVESTMENTS-AT VALUE> 963,359,251
[RECEIVABLES] 18,074,717
[ASSETS-OTHER] 64,710,906
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,046,144,874
[PAYABLE-FOR-SECURITIES] 25,522,029
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,197,095
[TOTAL-LIABILITIES] 29,720,024
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,015,654,036
[SHARES-COMMON-STOCK] 15,216,995
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (370,321)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (26,977,901)
[ACCUM-APPREC-OR-DEPREC] 28,119,036
[NET-ASSETS] 1,016,424,850
[DIVIDEND-INCOME] 4,573,135
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (6,495,545)
[NET-INVESTMENT-INCOME] (1,922,410)
[REALIZED-GAINS-CURRENT] (26,254,627)
[APPREC-INCREASE-CURRENT] (85,460,271)
[NET-CHANGE-FROM-OPS] (113,637,308)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 704,801
[DISTRIBUTIONS-OF-GAINS] 260,038
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 17,587,221
[NUMBER-OF-SHARES-REDEEMED] (2,463,847)
[SHARES-REINVESTED] 93,621
[NET-CHANGE-IN-ASSETS] 88,603,758
[ACCUMULATED-NII-PRIOR] 6,485,700
[ACCUMULATED-GAINS-PRIOR] 4,764,775
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3,883,808
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6,495,545
[AVERAGE-NET-ASSETS] 255,795,849
[PER-SHARE-NAV-BEGIN] 18.54
[PER-SHARE-NII] (0.090)
[PER-SHARE-GAIN-APPREC] (2.190)
[PER-SHARE-DIVIDEND] (0.000)
[PER-SHARE-DISTRIBUTIONS] (0.100)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 16.16
[EXPENSE-RATIO] 2.01
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL EQUITY
PORTFOLIO
[NUMBER] 044
<NAME> CLASS Y
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 926,152,744
<INVESTMENTS-AT VALUE> 963,359,251
[RECEIVABLES] 18,074,717
[ASSETS-OTHER] 64,710,906
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,046,144,874
[PAYABLE-FOR-SECURITIES] 25,522,029
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,197,095
[TOTAL-LIABILITIES] 29,720,024
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,015,654,036
[SHARES-COMMON-STOCK] 5,012,105
[SHARES-COMMON-PRIOR] 2,594,032
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (370,321)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (26,977,901)
[ACCUM-APPREC-OR-DEPREC] 28,119,036
[NET-ASSETS] 1,016,424,850
[DIVIDEND-INCOME] 4,573,135
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (6,495,545)
[NET-INVESTMENT-INCOME] (1,922,410)
[REALIZED-GAINS-CURRENT] (26,254,627)
[APPREC-INCREASE-CURRENT] (85,460,271)
[NET-CHANGE-FROM-OPS] (113,637,308)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 831,448
[DISTRIBUTIONS-OF-GAINS] 508,419
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,139,832
[NUMBER-OF-SHARES-REDEEMED] (797,382)
[SHARES-REINVESTED] 75,623
[NET-CHANGE-IN-ASSETS] 88,603,758
[ACCUMULATED-NII-PRIOR] 6,485,700
[ACCUMULATED-GAINS-PRIOR] 4,764,775
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3,883,808
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6,495,545
[AVERAGE-NET-ASSETS] 76,829,961
[PER-SHARE-NAV-BEGIN] 18.80
[PER-SHARE-NII] 0.320
[PER-SHARE-GAIN-APPREC] (2.540)
[PER-SHARE-DIVIDEND] (0.170)
[PER-SHARE-DISTRIBUTIONS] (0.100)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 16.31
[EXPENSE-RATIO] 0.950
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> INTERNATIONAL EQUITY
PORTFOLIO
[NUMBER] 045
<NAME> CLASS Z
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 926,152,744
<INVESTMENTS-AT VALUE> 963,359,251
[RECEIVABLES] 18,074,717
[ASSETS-OTHER] 64,710,906
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,046,144,874
[PAYABLE-FOR-SECURITIES] 25,522,029
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,197,095
[TOTAL-LIABILITIES] 29,720,024
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,015,654,036
[SHARES-COMMON-STOCK] 5,378,214
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (370,321)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (26,977,901)
[ACCUM-APPREC-OR-DEPREC] 28,119,036
[NET-ASSETS] 1,016,424,850
[DIVIDEND-INCOME] 4,573,135
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (6,495,545)
[NET-INVESTMENT-INCOME] (1,922,410)
[REALIZED-GAINS-CURRENT] (26,254,627)
[APPREC-INCREASE-CURRENT] (85,460,271)
[NET-CHANGE-FROM-OPS] (113,637,308)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 704,801
[DISTRIBUTIONS-OF-GAINS] 260,038
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,537,482
[NUMBER-OF-SHARES-REDEEMED] (216,510)
[SHARES-REINVESTED] 57,242
[NET-CHANGE-IN-ASSETS] 88,603,758
[ACCUMULATED-NII-PRIOR] 6,485,700
[ACCUMULATED-GAINS-PRIOR] 4,764,775
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3,883,808
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6,495,545
[AVERAGE-NET-ASSETS] 59,550
[PER-SHARE-NAV-BEGIN] 18.38
[PER-SHARE-NII] 0.300
[PER-SHARE-GAIN-APPREC] (2.110)
[PER-SHARE-DIVIDEND] (0.170)
[PER-SHARE-DISTRIBUTIONS] (0.100)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 16.30
[EXPENSE-RATIO] 0.950
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> PACIFIC PORTFOLIO
[NUMBER] 051
<NAME> CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 8,311,925
<INVESTMENTS-AT VALUE> 7,682,674
[RECEIVABLES] 118,195
[ASSETS-OTHER] 1,285,307
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 9,086,176
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,041
[TOTAL-LIABILITIES] 4,041
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 10,473,366
[SHARES-COMMON-STOCK] 523,793
[SHARES-COMMON-PRIOR] 583,572
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (60,572)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (702,129)
[ACCUM-APPREC-OR-DEPREC] (628,530)
[NET-ASSETS] 9,082,135
[DIVIDEND-INCOME] 33,670
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (94,123)
[NET-INVESTMENT-INCOME] (60,453)
[REALIZED-GAINS-CURRENT] (665,210)
[APPREC-INCREASE-CURRENT] (1,086,011)
[NET-CHANGE-FROM-OPS] (1,811,674)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 690,568
[NUMBER-OF-SHARES-REDEEMED] (750,347)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (1,623,659)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 38,454
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 109,957
[AVERAGE-NET-ASSETS] 6,107,561
[PER-SHARE-NAV-BEGIN] 12.92
[PER-SHARE-NII] (0.060)
[PER-SHARE-GAIN-APPREC] (2.23)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.63
[EXPENSE-RATIO] 1.85
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> PACIFIC PORTFOLIO
[NUMBER] 052
<NAME> CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 8,311,925
<INVESTMENTS-AT VALUE> 7,682,674
[RECEIVABLES] 118,195
[ASSETS-OTHER] 1,285,307
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 9,086,176
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,041
[TOTAL-LIABILITIES] 4,041
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 10,473,366
[SHARES-COMMON-STOCK] 118,181
[SHARES-COMMON-PRIOR] 246,374
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (60,572)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (702,129)
[ACCUM-APPREC-OR-DEPREC] (628,530)
[NET-ASSETS] 9,082,135
[DIVIDEND-INCOME] 33,670
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (94,123)
[NET-INVESTMENT-INCOME] (60,453)
[REALIZED-GAINS-CURRENT] (665,210)
[APPREC-INCREASE-CURRENT] (1,086,011)
[NET-CHANGE-FROM-OPS] (1,811,674)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 462,119
[NUMBER-OF-SHARES-REDEEMED] (590,312)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (1,623,659)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 38,454
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 109,957
[AVERAGE-NET-ASSETS] 329,082
[PER-SHARE-NAV-BEGIN] 12.64
[PER-SHARE-NII] (0.030)
[PER-SHARE-GAIN-APPREC] (2.040)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.57
[EXPENSE-RATIO] 2.39
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 873637
<NAME> SMITH BARNEY WORLD FUNDS
INC.
<SERIES> PACIFIC PORTFOLIO
[NUMBER] 053
<NAME> CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCTOBER 31, 1994
<PERIOD-START> NOVEMBER 01, 1994
<PERIOD-END> APRIL 30, 1995
<INVESTMENTS-AT COST> 8,311,925
<INVESTMENTS-AT VALUE> 7,682,674
[RECEIVABLES] 118,195
[ASSETS-OTHER] 1,285,307
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 9,086,176
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,041
[TOTAL-LIABILITIES] 4,041
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 10,473,366
[SHARES-COMMON-STOCK] 216,713
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (60,572)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (702,129)
[ACCUM-APPREC-OR-DEPREC] (628,530)
[NET-ASSETS] 9,082,135
[DIVIDEND-INCOME] 33,670
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (94,123)
[NET-INVESTMENT-INCOME] (60,453)
[REALIZED-GAINS-CURRENT] (665,210)
[APPREC-INCREASE-CURRENT] (1,086,011)
[NET-CHANGE-FROM-OPS] (1,811,674)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 261,963
[NUMBER-OF-SHARES-REDEEMED] (42,250)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (1,623,659)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] (0)
[GROSS-ADVISORY-FEES] 38,454
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 109,957
[AVERAGE-NET-ASSETS] 2,611,286
[PER-SHARE-NAV-BEGIN] 12.86
[PER-SHARE-NII] (0.11)
[PER-SHARE-GAIN-APPREC] (2.21)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.54
[EXPENSE-RATIO] 2.57
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
