<PAGE>
[GRAPHIC]
Smith Barney
World Funds, Inc.
Global Government Bond Portfolio
International Equity Portfolio
International Balanced Portfolio
----------------------------------------------
SEMI-ANNUAL REPORT
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April 30, 1999
Smith Barney Mutual Funds
<PAGE>
Smith Barney
World Funds, Inc.
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"Financial markets have demonstrated an impressive ability to correct imbalances
and recover quickly. In our view, the ability of markets to recover from
economic setbacks and the emergence of responsive financial leadership that
addresses problems swiftly, are signs of a more mature and more durable global
financial framework."
Heath B. McLendon
Chairman
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The Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with investing principally in high-quality
bonds of the U.S. and foreign governments.
NASDAQ SYMBOL
-------------
Class A SBGLX
Class B SGGBX
The International Equity Portfolio seeks total return on its assets from growth
of capital and income. The Portfolio seeks to achieve its objective by investing
at least 65% of its assets in a diversified portfolio of equity securities of
established non-U.S. issuers.
NASDAQ SYMBOL
-------------
Class A SBIEX
Class B SBIBX
Class L SBICX
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-U.S. issuers.
NASDAQ SYMBOL
-------------
Class A SIEBX
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WHAT'S INSIDE
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A Message from the Chairman....................................................1
Global Government Bond Portfolio
Portfolio Manager Commentary................................................2
Historical Performance......................................................4
Portfolio at a Glance.......................................................6
International Equity Portfolio
Portfolio Manager Commentary................................................7
Historical Performance......................................................9
Portfolio at a Glance......................................................12
International Balanced Portfolio
Portfolio Manager Commentary...............................................13
Historical Performance.....................................................14
Portfolio at a Glance......................................................16
Schedules of Investments......................................................17
Statements of Assets and Liabilities..........................................25
Statements of Operations......................................................27
Statements of Changes in Net Assets...........................................28
Notes to Financial Statements.................................................30
Financial Highlights .........................................................39
<PAGE>
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A Message from the Chairman
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[PHOTO]
HEATH B. MCLENDON
Chairman
Dear Shareholder:
The world's economies faced a number of challenges the past six months. The
rapid transformation from a world divided between planned economies and free
markets towards a truly open, global marketplace has created imbalances in parts
of the world. Yet, many of those regions are successfully meeting these
challenges and we continue to view underlying global trends quite favorably. The
current economic cycle is unprecedented both in the scope of its expansion and
its longevity--with few signs of any significant rise in inflation that had
accompanied previous economic expansions.
While the world's economic situation is encouraging, trouble spots remain.
However, we believe that the tough issues facing countries such as Indonesia,
Yugoslavia and Russia are largely political in nature, not economic. As
financial conditions continue to improve, and more and more people benefit from
these improvements, particularly in Latin America and Southeast Asia, political
stability should follow.
Another development that supports our optimistic outlook for the long term is
the resilience of world financial markets. Over the course of the last year, we
have seen major financial dislocations. But rather than resulting in permanent
disruption, financial markets have demonstrated an impressive ability to correct
imbalances and recover quickly. In our view, the ability of markets to recover
from economic setbacks and the emergence of responsive financial leadership that
addresses problems swiftly, are signs of a more mature and more durable global
financial framework.
Finally, we identify two trends that should add sustainability and force to the
ongoing global economic expansion: the convergence of currencies and the
evolution of corporations from nationalistic businesses to multi-national
enterprises. In January 1999, the European Union merged the currencies of 11
member nations into a single currency, the euro. The unification of these
Western European currencies set an example for the rest of the world and
demonstrated the relative ease with which these types of convergence can be
accomplished. So far, Europe's unification appears to have been positive and we
expect more currency convergences in the coming years.
Moreover, when German automaker Daimler-Benz and U.S.-based Chrysler, two
industry giants, merged, it became the first successful international merger on
such a scale. The rapidly evolving telecommunications industry provided another
example of global strategic alliance this year with the announced merger of
Global Crossing Ltd. (a Bermuda-based fiber-optic telecommunications network)
and US West (a Baby Bell). We also expect that this trend will continue and that
more such mergers will follow.
In this report, you will find specific market commentary and performance
information on the Smith Barney World Funds, Inc. -- Global Government Bond
Portfolio, International Equity Portfolio and International Balanced Portfolio,
beginning on page two.
In closing, thank you for investing in our family of international funds. We
remain committed to providing our shareholders with competitive performance in
the years ahead.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
May 28, 1999
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Smith Barney World Funds, Inc. 1
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Global Government Bond Portfolio
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Portfolio Manager
DENIS P. MANGAN
Denis P. Mangan is a Global Fixed Income Portfolio Manager and Research
Specialist. He joined Smith Barney Capital Management in 1994. He was previously
at J.P. Morgan as a Proprietary Fixed Income Trader and a Researcher of Fixed
Income Options and Trading for three years. Prior to that, Mr. Mangan spent two
years at Citibank, NA London as a Fixed Income and Currency Strategist for the
Strategic Positioning Desk. He also was at Citicorp for seven years in Treasury
management, doing analysis and strategic positioning. Mr. Mangan graduated with
honors from Trinity College, Dublin, and holds an M.A. in Mathematics from
Columbia University, and a Ph.D. in Financial Economics from Columbia
University.
Performance Update
In the six months covered by this report, the Global Government Bond Portfolio
("Portfolio") Class A shares returned 1.86%, including dividends and before
deducting any sales charges. The Portfolio outperformed the average total return
for global income funds of 1.45% for the same period according to Lipper Inc.
(Lipper is an independent fund-tracking organization.) Additional information
about the Portfolio's other share classes can be found on pages four and five.
Market and Portfolio Update
Investor confidence in stocks and emerging market bonds began to return in the
final months of 1998. The flight-to-quality trend that began in the summer of
1998 started to reverse in the fall as investors demonstrated an increased
willingness to accept greater risk. In addition, Brazil's decision to devalue
its currency in January 1999 helped to remove another source of uncertainty and
further bolstered confidence in the emerging market bond arena. As a result, the
historically wide spreads between emerging market bonds and other fixed income
assets contracted sharply.
European countries were the chief beneficiaries of this latest development.
European bond markets generally outperformed the U.S. Treasury market as many
investors sold off their U.S. Treasury securities in favor of higher-yielding
securities. In addition, continued interest rate cuts across Europe helped to
further boost bond market performance in the region.
Japan's bond market improved dramatically from the worst-performing market in
the fourth quarter of 1998 to the best-performing market in the first quarter of
1999. Japanese government bonds fell after news of increased issuance and the
end of official purchases in the secondary market and recovered strongly in the
early months of 1999 after a 0.10% official interest rate cut.
As noted above, U.S. Treasury market performance suffered during the reporting
period. After generating a flat return for the fourth quarter of 1998, U.S.
Treasury securities lost roughly 1.78% in the first quarter of 1999. Stronger
than expected U.S. economic data helped to revive inflation fears in the U.S.
and led to a shift in the Federal Reserve Board's ("Fed") monetary policy bias
towards tightening.
Investment Strategy
During the reporting period, the Portfolio's allocation to the Japanese bond
market was reduced from a neutral position versus the benchmark, to zero. This
action was based on our view that in order to reflate the Japanese economy,
government and monetary authorities would have to engineer a positive rate of
inflation to replace the current deflation, which inhibits consumers from
spending and hinders an economic recovery.
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2 1999 Semi-Annual Report to Shareholders
<PAGE>
We have also slightly overweighted our holding in Canadian ten-year bonds
because we believe that they are likely to outperform due to an increased
appetite for risk on the part of investors. Moreover, Canada's inflation rate is
below that of the U.S. and its fiscal health has improved significantly in the
past few years.
The Portfolio's holding in Sweden was eliminated in favor of a new holding in
Denmark, based on our expectation that Denmark's slowing economy would require
aggressive interest rate cuts.
Finally, we have shortened the Portfolio's duration (a measure of a security's
sensitivity to interest rates) because we believed that world economic growth
was recovering. That may exert upward pressure on prices, which could lead to
higher inflation, especially in the U.S.
Market Outlook
With the exception of Japan, the world economy has shown exceptional signs of
resilence following the series of economic and stock market crises that took
place over the past eighteen months. At this time, it appears that even Brazil's
crises have had little of the predicted negative effect on the overall U.S.
economy, which continues full steam ahead. While Euroland economic growth slowed
in the second half of 1998, we believe this period of subpar growth has bottomed
out.
Consumer spending continues to power the U.S. economy ahead, with consumer
finances fueled by the rapid stock market gains so far this year, and the monies
released by mortgage refinancings that took advantage of the last six months'
historically low bond yields and mortgage rates. A 52% drop in energy prices
also helped to maintain spending by keeping inflation low, although this effect
has been reversed to some extent of late.
In our view, it was the strength of this demand that led the Fed to announce a
bias towards tightening. Despite the recent rise in oil prices, we do not
foresee inflationary pressures rising to such an extent that would justify
raising short-term interest rates. Clearly, the downward pressure on inflation
due to falling oil prices, and to some extent other raw materials' prices, is no
longer there. However, in our judgement, this only means that inflation is no
longer falling, and implies stability of inflation around slightly higher levels
than at present, rather than a serious inflationary spiral.
With growth outside of the U.S. reviving, and no signs of a slowdown in the U.S.
itself, this begs the question of what a world economic recovery means for bond
markets over the coming months. Our view is that major world bond markets, with
the exception of Japan, are close to fair value, and will continue to trade in a
range around fair value levels for some time to come. This does not mean that
there is no downside risk to bond prices. However, barring a major Gulf War-type
selloff should the Kosovo situation escalate, we do not expect a major weakening
of U.S. Treasury securities. In addition, we expect Euroland 10-year bond yields
to peak around 4.25%. In the current range-trading market, we also remain
bullish on the higher-yielding sovereign bonds of Australia, New Zealand, Canada
and Denmark.
Thank you for your investment in the Smith Barney World Funds -- Global
Government Bond Portfolio.
/s/ Denis P. Mangan
Denis P. Mangan
Vice President
May 21, 1999
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Smith Barney World Funds, Inc. 3
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GLOBAL GOVERNMENT BOND PORTFOLIO
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Historical Performance -- Class A Shares
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<TABLE>
<CAPTION>
Net Asset Value
------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
4/30/99 $11.88 $11.84 $0.26 $0.00 $0.00 1.86%+
- -------------------------------------------------------------------------------------------------------------------------------
10/31/98 12.22 11.88 0.22 0.60 0.45 8.08
- -------------------------------------------------------------------------------------------------------------------------------
10/31/97 12.55 12.22 1.22 0.08 0.00 8.21
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10/31/96 12.30 12.55 0.87 0.00 0.00 9.41
- -------------------------------------------------------------------------------------------------------------------------------
10/31/95 11.68 12.30 0.78 0.00 0.00 12.40
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10/31/94++ 12.92 11.68 0.23 0.00 0.42 (4.64)+
- -------------------------------------------------------------------------------------------------------------------------------
12/31/93 11.84 12.92 0.52 0.59 0.00 19.13
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12/31/92 12.90 11.84 0.97 0.19 0.00 0.93
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Inception* -- 12/31/91 12.00 12.90 0.44 0.13 0.00 12.42+
===============================================================================================================================
Total $5.51 $1.59 $0.87
===============================================================================================================================
</TABLE>
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Historical Performance -- Class B Shares
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<TABLE>
<CAPTION>
Net Asset Value
------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
4/30/99 $11.87 $11.82 $0.23 $0.00 $0.00 1.57%+
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10/31/98 12.22 11.87 0.19 0.60 0.42 7.46
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10/31/97 12.50 12.22 1.10 0.08 0.00 7.62
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10/31/96 12.26 12.50 0.81 0.00 0.00 8.83
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Inception* -- 10/31/95 11.57 12.26 0.66 0.00 0.00 11.97+
===============================================================================================================================
Total $2.99 $0.68 $0.42
===============================================================================================================================
</TABLE>
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Historical Performance -- Class L Shares
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<TABLE>
<CAPTION>
Net Asset Value
------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
4/30/99 $11.86 $11.81 $0.23 $0.00 $0.00 1.57%+
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10/31/98 12.19 11.86 0.19 0.60 0.42 7.67
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10/31/97 12.47 12.19 1.11 0.08 0.00 7.73
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10/31/96 12.23 12.47 0.81 0.00 0.00 8.90
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10/31/95 11.68 12.23 0.72 0.00 0.00 11.25
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10/31/94++ 12.93 11.68 0.21 0.00 0.39 (5.09)+
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Inception* -- 12/31/93 11.83 12.93 0.47 0.59 0.00 18.89+
===============================================================================================================================
Total $3.74 $1.27 $0.81
===============================================================================================================================
</TABLE>
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4 1999 Semi-Annual Report to Shareholders
<PAGE>
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GLOBAL GOVERNMENT BOND PORTFOLIO
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Historical Performance -- Class Y Shares
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<TABLE>
<CAPTION>
Net Asset Value
------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
4/30/99 $11.70 $11.67 $0.26 $0.00 $0.00 2.02%+
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10/31/98 12.03 11.70 0.23 0.60 0.46 8.50
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10/31/97 12.39 12.03 1.28 0.08 0.00 8.61
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10/31/96 12.14 12.39 0.90 0.00 0.00 9.82
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10/31/95 11.68 12.14 0.81 0.00 0.00 11.27
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10/31/94++ 12.93 11.68 0.23 0.00 0.43 (4.62)+
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Inception* -- 12/31/93 11.97 12.93 0.37 0.59 0.00 16.49+
===============================================================================================================================
Total $4.08 $1.27 $0.89
===============================================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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Average Annual Total Return
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<TABLE>
<CAPTION>
Without Sales Charge(1)
--------------------------------------------------------------
Class A Class B Class L Class Y
====================================================================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 4/30/99+ 1.86% 1.57% 1.57% 2.02%
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 4/30/99 6.02 5.46 5.55 6.41
- ------------------------------------------------------------------------------------------------------------------------------------
Five Years Ended 4/30/99 7.71 N/A 7.08 7.77
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Inception* through 4/30/99 8.51 8.39 7.83 8.23
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
With Sales Charge(2)
--------------------------------------------------------------
Class A Class B Class L Class Y
====================================================================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 4/30/99+ (2.73)% (2.92)% (0.44)% 2.02%
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 4/30/99 1.21 0.96 3.49 6.41
- ------------------------------------------------------------------------------------------------------------------------------------
Five Years Ended 4/30/99 6.73 N/A 6.87 7.77
- ------------------------------------------------------------------------------------------------------------------------------------
Inception* through 4/30/99 7.86 8.22 7.66 8.23
====================================================================================================================================
</TABLE>
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Cumulative Total Return
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Without Sales Charge(1)
================================================================================
Class A (Inception* through 4/30/99) 88.74%
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Class B (Inception* through 4/30/99) 43.13
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Class L (Inception* through 4/30/99) 61.05
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Class Y (Inception* through 4/30/99) 63.23
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 4.50% and 1.00%,
respectively; Class B shares reflect the deduction of a 4.50% CDSC, which
applies if shares are redeemed within one year from purchase. This CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L 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.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B, L and Y shares are July 22, 1991, November
18, 1994, January 4, 1993 and February 19, 1993, respectively.
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Smith Barney World Funds, Inc. 5
<PAGE>
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Global Government Bond Portfolio at a Glance (unaudited)
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Growth of $10,000 Invested in Class A Shares of the
Global Government Bond Portfolio vs. J.P. Morgan Global Bond Market Index+
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July 1991--April 1999
[LINE GRAPH]
Global JP Morgan Global JP Morgan
Government Fund Bond Hedged Global Bond Unhedged
Jul 1991 9,600 10,000 10,000
Oct 1991 10,422 10,459 10,685
Oct 1992 10,963 11,370 12,028
Oct 1993 12,612 12,749 13,351
Oct 1994 12,368 12,609 13,740
Oct 1995 13,902 15,048 15,319
Oct 1996 15,210 16,566 16,254
Oct 1997 16,459 18,319 16,822
Oct 1998 17,789 20,645 19,006
April 1999 18,119 21,107 18,394
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on July 22, 1991, assuming deduction of the maximum initial
sales charge of 4.00% at the time of investment and the reinvestment of
dividends and capital gains, if any, at net asset value through April 30,
1999. The J.P. Morgan Global Bond Market 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 as 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. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
Top Ten Holdings* As of April 30, 1999
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1. France O.A.T. 24.4%
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2. Kingdom of Denmark 12.3
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3. KFW International Finance 11.5
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4. Bundesrepublik 11.2
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5. Inter-American DEV BK 9.7
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6. Republic of Cypress 7.3
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7. Kingdom of Spain 6.7
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8. Bundesobligation 6.1
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9. Canadian Government 3.8
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10. Venezuela 2.3
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* As a percentage of total bonds, excluding U.S. government obligations.
Investment Allocation As of April 30, 1999
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[PIE CHART]
Repurchase Agreement 8.3%
Europe 47.2%
Australia 0.8%
The Americas 18.5%
U.S. Government Obligations 25.2%
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6 1999 Semi-Annual Report to Shareholders
<PAGE>
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International Equity Portfolio
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Portfolio Managers
Jeffrey J. Russell is a Managing Director of Smith Barney. Prior to joining the
firm in 1990, he worked for Drexel Burnham Lambert. Mr. Russell holds an
undergraduate degree from Massachusetts Institute of Technology and an M.B.A.
from the University of Pennsylvania's Wharton School of Finance.
[PHOTO]
JEFFREY J.
RUSSELL, CFA
Vice President
James B. Conheady has more than 35 years experience managing international and
global equity portfolios. He has been with the International Equity team since
its formation in 1968 at Drexel Burnham Lambert and moved to Smith Barney in
1990. Mr. Conheady holds a B.S.S. degree from Georgetown University.
[PHOTO]
JAMES B. CONHEADY
Vice President
Performance Update
The six months ended April 1999 featured an extraordinary recovery of global
equity markets. The International Equity Portfolio's ("Portfolio") Class A
shares returned 16.48% (including dividends and before deducting any sales
charges) and outperformed the MSCI-EAFE benchmark return of 15.28% for the six
months ended April 30, 1999.
Market and Portfolio Update
Global markets responded positively to a coordinated set of interest rate
reductions in the fall of 1998. The resulting improved liquidity in financial
markets successfully countered the paralysis following the Russian debt default
and resultant difficulties of hedge funds and financial institutions. As
financial market conditions returned to normal, the extreme investor aversion to
risk of the three months ending October 1998 receded.
The early months of 1999 have been an interesting period for international
equity markets, as for the first time in several years, performance of the
developed markets lagged the emerging markets by a substantial margin. Emerging
markets were spurred by sharply declining interest rates in many economies, an
upturn of depressed commodity prices and the perception that the "last shoe had
dropped" with the currency devaluation in Brazil. Both Asia and Latin America,
the critical bookends of the asset class, showed signs of stability and
recovery. Emerging market positions were reduced to 5% of the Portfolio, in line
with a reorientation of the Portfolio specifically on investment opportunities
in the developed economies.
Among the developed markets, the Japanese stock market posted the largest gain.
Japanese stock-reform efforts, crafted at an agonizingly slow pace over the last
two years, have finally gathered momentum. The long-term outlook for the
Japanese economy is guarded, but there can be no arguing that the government
efforts to stabilize the economy have been effective. Government spending has
accelerated, interest rates are at record low levels, banks are being forced to
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Smith Barney World Funds, Inc. 7
<PAGE>
recapitalize, and companies are restructuring to lower costs and boost
productivity. While guardedly cautious about the long-term sustainability of
these efforts, for now the exposure to Japanese equities has been maintained at
15%.
After several difficult economic years, non-Japan Asia has started a slow
recovery. Interest rates have plunged from levels needed to stem local currency
declines, and property prices, a key barometer of sentiment in many smaller
Asian economies, have rebounded. The exposure to high quality Asian large
capitalization stocks has increased during the past year to 12% of assets.
Additions have focused on companies with strong earnings prospects, such as Hong
Kong and Shanghai Bank and Sun Hung Kai Properties of Hong Kong and Venture
Manufacturing and ST Engineering of Singapore.
The Portfolio remains a committed owner of growth companies in Europe, despite
recent geographic and stylistic rotation by other international investors. The
launch of the new European currency, the euro, while technically well executed,
has been somewhat disappointing, as that currency has weakened sharply versus
the U.S. dollar. Rising short-term yields in the U.S. and a declining interest
rate pattern in Europe, combined with anxieties about the military conflict in
Kosovo, were the primary causes of the euro-weakness.
European companies across a swath of industries have embarked on major merger
and acquisition initiatives. Given the favorable cost of capital and
deregulation of many industries, progressive managements have launched strategic
alliance actions to build geographic breadth and also to achieve economies of
scale. The banking, telecommunications, insurance, automotive, pharmaceutical
and defense industries among others have been affected by the consolidation
trend. We believe these mergers and acquisitions will help European managements
dramatically improve the return on investment of their basic businesses.
The Portfolio allocation at the end of the six-month period was 69.8% in Europe,
26.4% in Asia, and 3.8% in Latin America and other emerging markets. (All
Portfolio holdings are as of April 30, 1999 and are subject to change.)
In closing, we thank you for your confidence in our investment approach. We look
forward to helping you take advantage of the growing number of investment
opportunities available in today's global economy.
/s/ Jeffrey Russell /s/ James Conheady
Jeffrey Russell James Conheady
Vice President Vice President
May 20, 1999
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8 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
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- --------------------------------------------------------------------------------
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>
4/30/99 $20.39 $23.75 $0.00 $0.00 16.48%+
- ----------------------------------------------------------------------------------------------------------
10/31/98 20.36 20.39 0.00 0.00 0.15
- ----------------------------------------------------------------------------------------------------------
10/31/97 18.64 20.36 0.01 0.00 9.30
- ----------------------------------------------------------------------------------------------------------
10/31/96 17.15 18.64 0.17 0.00 9.78
- ----------------------------------------------------------------------------------------------------------
10/31/95 18.79 17.15 0.12 0.10 (7.44)
- ----------------------------------------------------------------------------------------------------------
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 $0.32 $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>
4/30/99 $20.08 $23.29 $0.00 $0.00 15.99%+
- ----------------------------------------------------------------------------------------------------------
10/31/98 20.22 20.08 0.00 0.00 (0.69)
- ----------------------------------------------------------------------------------------------------------
10/31/97 18.65 20.22 0.00 0.00 8.42
- ----------------------------------------------------------------------------------------------------------
10/31/96 17.17 18.65 0.04 0.00 8.89
- ----------------------------------------------------------------------------------------------------------
Inception* -- 10/31/95 18.38 17.17 0.00 0.10 (6.00)+
==========================================================================================================
Total $0.04 $0.10
==========================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
==========================================================================================================
<S> <C> <C> <C> <C> <C>
4/30/99 $19.79 $22.96 $0.00 $0.00 16.02%+
- ----------------------------------------------------------------------------------------------------------
10/31/98 19.93 19.79 0.00 0.00 (0.70)
- ----------------------------------------------------------------------------------------------------------
10/31/97 18.38 19.93 0.00 0.00 8.43
- ----------------------------------------------------------------------------------------------------------
10/31/96 16.93 18.38 0.04 0.00 8.85
- ----------------------------------------------------------------------------------------------------------
10/31/95 18.54 16.93 0.00 0.10 (8.11)
- ----------------------------------------------------------------------------------------------------------
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 $0.04 $0.26
==========================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 9
<PAGE>
- --------------------------------------------------------------------------------
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>
4/30/99 $20.41 $23.82 $0.00 $0.00 16.71%+
- ----------------------------------------------------------------------------------------------------------
10/31/98 20.38 20.41 0.06 0.00 0.45
- ----------------------------------------------------------------------------------------------------------
10/31/97 18.64 20.38 0.06 0.00 9.68
- ----------------------------------------------------------------------------------------------------------
10/31/96 17.13 18.64 0.21 0.00 10.19
- ----------------------------------------------------------------------------------------------------------
10/31/95 18.80 17.13 0.17 0.10 (7.11)
- ----------------------------------------------------------------------------------------------------------
Inception* -- 10/31/94++ 17.64 18.80 0.00 0.00 6.58+
==========================================================================================================
Total $0.50 $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>
4/30/99 $20.39 $23.80 $0.00 $0.00 16.72%+
- ----------------------------------------------------------------------------------------------------------
10/31/98 20.36 20.39 0.06 0.00 0.45
- ----------------------------------------------------------------------------------------------------------
10/31/97 18.62 20.36 0.06 0.00 9.69
- ----------------------------------------------------------------------------------------------------------
10/31/96 17.12 18.62 0.21 0.00 10.13
- ----------------------------------------------------------------------------------------------------------
Inception* -- 10/31/95 18.38 17.12 0.17 0.10 (5.03)+
==========================================================================================================
Total $0.50 $0.10
==========================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge(1)
--------------------------------------------------------------------------------
Class A Class B Class L Class Y Class Z
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Six Months Ended 4/30/99+ 16.48% 15.99% 16.02% 16.71% 16.72%
- --------------------------------------------------------------------------------------------------------------
Year Ended 4/30/99 1.11 0.22 0.26 1.40 1.41
- --------------------------------------------------------------------------------------------------------------
Five Years Ended 4/30/99 6.32 N/A 5.45 N/A N/A
- --------------------------------------------------------------------------------------------------------------
Ten Years Ended 4/30/99 11.54 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Inception* through 4/30/99 11.37 5.63 10.61 7.18 6.84
==============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
With Sales Charge(2)
--------------------------------------------------------------------------------
Class A Class B Class L Class Y Class Z
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Six Months Ended 4/30/99+ 10.67% 10.99% 13.86% 16.71% 16.72%
- --------------------------------------------------------------------------------------------------------------
Year Ended 4/30/99 (3.96) (4.78) (1.73) 1.40 1.41
- --------------------------------------------------------------------------------------------------------------
Five Years Ended 4/30/99 5.24 N/A 5.23 N/A N/A
- --------------------------------------------------------------------------------------------------------------
Ten Years Ended 4/30/99 10.97 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Inception* through 4/30/99 10.94 5.45 10.44 7.18 6.84
==============================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
================================================================================
Class A (4/30/89 through 4/30/99)(3) 198.19%
- --------------------------------------------------------------------------------
Class B (Inception* through 4/30/99) 27.82
- --------------------------------------------------------------------------------
Class L (Inception* through 4/30/99) 89.17
- --------------------------------------------------------------------------------
Class Y (Inception* through 4/30/99) 40.26
- --------------------------------------------------------------------------------
Class Z (Inception* through 4/30/99) 34.52
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively. Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase. Thereafter
this CDSC declines by 1.00% per year until no CDSC is incurred. Class L
shares reflect the deduction of a 1.00% CDSC, which applies if shares are
redeemed within the first year of purchase.
(3) Performance calculations for Class A shares include the historical return
information related to the Fenimore International Fund, which was the
predecessor fund, for the period from February 18, 1986 through November
22, 1991.
++ For the period from January 1, 1994 to October 31, 1994, which reflects a
change in the fiscal year end of the Portfolio.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B, L, Y and Z shares are November 22, 1991,
November 7, 1994, January 4, 1993, June 16, 1994 and November 7, 1994,
respectively.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
International Equity Portfolio at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the
International Equity Portfolio vs. MSCI EAFE Index+
- --------------------------------------------------------------------------------
April 1989--April 1999
[LINE GRAPH]
International MSCI EAFE
Equity Index
April 1989 9,500 10,000
Oct 1989 10,438 10,041
Oct 1990 10,626 8,781
Oct 1991 13,733 9,423
Oct 1992 13,973 8,207
Oct 1993 19,868 11,316
Oct 1994 21,863 12,491
Oct 1995 20,237 12,482
Oct 1996 22,216 13,831
Oct 1997 24,283 14,512
Oct 1998 24,319 15,955
April 1999 28,327 18,393
+ Hypothetical illustration of $10,000 invested in Class A shares on April
30, 1989, assuming deduction of the maximum initial sales charge of 4.50%
at the time of investment and the reinvestment of dividends and capital
gains, if any, at net asset value through April 30, 1999. Illustration
includes historical return information related to the Fenimore
International Fund, which was the predecessor fund, for the period from
April 30, 1989 through November 22, 1991. The Morgan Stanley Capital
International ("MSCI") EAFE Index is a composite portfolio consisting of
equity total returns for the countries of Europe, Australia, New Zealand
and countries in the Far East. The MSCI EAFE Index is weighted based on
each company's market capitalization. The Index is unmanaged and is not
subject to the same management and trading expenses as 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. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
Top Ten Holdings* As of April 30, 1999
- --------------------------------------------------------------------------------
1. Nokia Oyj 3.6%
- --------------------------------------------------------------------------------
2. NTT Data Corp. 3.3
- --------------------------------------------------------------------------------
3. Hays PLC 3.2
- --------------------------------------------------------------------------------
4. Bank of Ireland 3.1
- --------------------------------------------------------------------------------
5. Misys PLC 3.0
- --------------------------------------------------------------------------------
6. Serco Group PLC 3.0
- --------------------------------------------------------------------------------
7. Tomra Systems ASA 3.0
- --------------------------------------------------------------------------------
8. Shohkoh Fund & Co., Ltd. 2.9
- --------------------------------------------------------------------------------
9. Rentokil Initial PLC 2.9
- --------------------------------------------------------------------------------
10. Cifra SA de CV, Series C 2.8
- --------------------------------------------------------------------------------
* As a percentage of total stocks.
Investment Allocation As of April 30, 1999
- --------------------------------------------------------------------------------
[PIE CHART]
Europe 69.8%
Asia/Pacific 26.4%
The Americas 2.8%
Africa 1.0%
Australia 1.0%
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
International Balanced Portfolio
- --------------------------------------------------------------------------------
Performance Update and Investment Strategy
The Smith Barney World Funds -- International Balanced Portfolio ("Portfolio")
seeks long-term growth of capital and current income through a balanced
investment in the stocks and bonds of non-U.S. issuers. The Portfolio gives
investors the opportunity to participate in potential profits worldwide and to
diversify assets over a number of countries' stock and bond markets. For the six
months ended April 30, 1999, the International Balanced Portfolio returned 1.94%
for Class A shares (including dividends and before the deduction of sales
charges), compared to the MSCI EAFE Index return of 15.28% and the J.P. Morgan
Global Bond Index (hedged) return of 2.24% for the same period. Additional
performance information about the Portfolio's other share classes can be found
beginning on page 14.
Please note that the International Balanced Portfolio utilizes a team management
approach with the stock portion managed by Jeff Russell and James Conheady
(International Equity Portfolio) and the bond portion managed by Denis Mangan
(Global Government Bond Portfolio). For a more in-depth discussion of economic
and market events during the reporting period, please refer to the Manager's
commentary for the International Equity Portfolio that appears on page seven and
the Global Government Bond Portfolios, which can be found on page two.
Although the stock portion of the Portfolio is managed similarly to the
International Equity Portfolio, and the fixed-income portion is managed
similarly to the Global Government Bond Portfolio, there are some differences
due to, among other things, cash flow and the timing and availability of
investment opportunities. It is thus impossible to replicate performance.
Thank you for your investment in the Smith Barney World Funds -- International
Balanced Portfolio.
Sincerely,
/s/ James B. Conheady /s/ Jeffrey J. Russell
James B. Conheady Jeffrey J. Russell
Vice President Vice President
/s/ Denis P. Mangan
Denis P. Mangan
Vice President
May 21, 1999
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
4/30/99 $14.89 $13.24 $0.06 $1.86 $0.00 1.94%+
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/98 13.32 14.89 0.10 0.03 0.00 12.87
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/97 13.90 13.32 0.15 0.00 0.20 (1.71)
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/96 12.64 13.90 0.35 0.00 0.00 12.89
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/95 12.20 12.64 0.39 0.00 0.00 7.05
- ------------------------------------------------------------------------------------------------------------------------------------
Inception* -- 10/31/94 12.00 12.20 0.00 0.00 0.00 1.67+
====================================================================================================================================
Total $1.05 $1.89 $0.20
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
4/30/99 $14.93 $13.27 $0.02 $1.86 $0.00 1.52%+
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/98 13.38 14.93 0.02 0.03 0.00 11.96
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/97 13.90 13.38 0.08 0.00 0.10 (2.45)
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/96 12.65 13.90 0.26 0.00 0.00 12.05
- ------------------------------------------------------------------------------------------------------------------------------------
Inception* -- 10/31/95 12.08 12.65 0.29 0.00 0.00 7.33+
====================================================================================================================================
Total $0.67 $1.89 $0.10
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
4/30/99 $14.89 $13.22 $0.02 $1.86 $0.00 1.46%+
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/98 13.35 14.89 0.01 0.03 0.00 11.90
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/97 13.87 13.35 0.08 0.00 0.10 (2.46)
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/96 12.63 13.87 0.26 0.00 0.00 11.99
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/95 12.18 12.63 0.29 0.00 0.00 6.29
- ------------------------------------------------------------------------------------------------------------------------------------
Inception* -- 10/31/94 12.00 12.18 0.00 0.00 0.00 1.50+
====================================================================================================================================
Total $0.66 $1.89 $0.10
====================================================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends quarterly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
--------------------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 4/30/99+ 1.94% 1.52% 1.46%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 10.65 9.68 9.55
- --------------------------------------------------------------------------------
Inception* through 4/30/99 7.28 6.63 6.41
================================================================================
With Sales Charge(2)
--------------------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 4/30/99+ (3.14)% (2.92)% (0.43)%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 5.09 4.88 7.51
- --------------------------------------------------------------------------------
Inception* through 4/30/99 6.11 6.45 6.19
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
================================================================================
Class A (Inception* through 4/30/99) 38.95%
- --------------------------------------------------------------------------------
Class B (Inception* through 4/30/99) 33.34
- --------------------------------------------------------------------------------
Class L (Inception* through 4/30/99) 33.79
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase. Thereafter,
this CDSC declines by 1.00% per year until no CDSC is incurred. Class L
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 L shares are August 25, 1994, November
7, 1994 and August 25, 1994, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
International Balanced Portfolio at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A and L Shares of the International Balanced
Portfolio vs. MSCIEAFE Index and J.P. Morgan Global Bond Market Index+
- --------------------------------------------------------------------------------
August 1994--April 1999
[LINE GRAPH]
J.P. Morgan
International International Global Bond
Balanced Balanced Market Index MSCI EAFE
Portfolio--Class A Portfolio--Class L (unhedged) Index++
Aug 1994 9,547 10,000 10,000 10,000
Oct 1994 9,706 9,050 10,262 10,443
Oct 1995 10,390 10,681 12,111 10,436
Oct 1996 11,730 11,962 12,850 11,563
Oct 1997 11,529 11,667 13,300 12,133
Oct 1998 13,013 13,056 15,026 13,340
Apr 1999 13,265 13,246 14,452 16,167
+ Hypothetical illustration of $10,000 invested in Class A and L shares at
inception on August 25, 1994, assuming deduction of the maximum initial
sales charge of 4.50% at the time of investment for Class A shares and the
deduction of the 1.00% CDSC for Class L shares. It also assumes
reinvestment of dividends and capital gains, if any, at net asset value
through April 30, 1999. The Morgan Stanley Capital International ("MSCI")
EAFE Index is a composite portfolio consisting of equity total returns for
the countries of Europe, Australia, New Zealand and countries in the Far
East. The MSCI EAFE Index is weighted based on each company's market
capitalization. The J.P. Morgan Global Bond Market Index-Unhedged is a
daily, market capitalization weighted international fixed income index
consisting of 13 countries. The indexes are unmanaged and are not subject
to the same management and trading expenses as a mutual fund. The
performance of the Portfolio's other classes may be greater or less than
the Class A and L 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. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
Top Ten Holdings* As of April 30, 1999
- --------------------------------------------------------------------------------
1. France O.A.T. 16.8%
- --------------------------------------------------------------------------------
2. Bundesobligation 12.2
- --------------------------------------------------------------------------------
3. United Kingdom Treasury 10.5
- --------------------------------------------------------------------------------
4. U.S. Treasury Note 10.3
- --------------------------------------------------------------------------------
5. Canadian Government 5.1
- --------------------------------------------------------------------------------
6. NTT Data Corp. 4.4
- --------------------------------------------------------------------------------
7. Serco Group PLC 4.3
- --------------------------------------------------------------------------------
8. Bundesrepublik Deutschland 4.2
- --------------------------------------------------------------------------------
9. Nokia 0y AB 3.6
- --------------------------------------------------------------------------------
10. TeleWest Communications PLC 2.3
- --------------------------------------------------------------------------------
* As a percentage of total stocks, bonds and U.S. government obligations.
Investment Allocation As of April 30, 1999
- --------------------------------------------------------------------------------
[PIE CHART]
Europe 66.8%
The Americas 18.4%
Asia/Pacific 9.5%
Repurchase Agreement 4.0%
Australia 1.3%
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
GLOBAL GOVERNMENT BOND PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT+++ SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
BONDS -- 66.5%
Australia -- 0.8%
1,500,000 Australian Government, 7.500% due 9/15/09 $ 1,148,717
- ------------------------------------------------------------------------------------------------------------------------------------
Canada -- 2.6%
4,700,000 Canadian Government, 6.000% due 6/1/08@ 3,420,998
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark -- 0.6%
5,000,000 Kingdom of Denmark, 7.000% due 11/15/07 856,842
- ------------------------------------------------------------------------------------------------------------------------------------
Europe -- 16.2%
18,846,941 France O.A.T., 5.250% due 4/25/08 21,954,000
- ------------------------------------------------------------------------------------------------------------------------------------
Germany -- 11.6%
5,000,000 Bundesobligation, 5.000% due 5/21/01 5,532,015
8,640,833 Bundesrepublik Deutscheland, 5.250% due 1/4/08@ 10,129,333
- ------------------------------------------------------------------------------------------------------------------------------------
15,661,348
- ------------------------------------------------------------------------------------------------------------------------------------
Greece -- 4.8%
6,000,000 Rep of Cypress, 5.375% due 7/28/08 6,551,451
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom -- 14.0%
5,000,000 Inter-American Development Bank, 7.125% due 11/26/04 8,700,972
5,000,000 KFW International Finance, 9.437% due 2/27/08 10,323,952
- ------------------------------------------------------------------------------------------------------------------------------------
19,024,924
- ------------------------------------------------------------------------------------------------------------------------------------
United States -- 14.3%
3,452,906++ Ecuador PDI Reg, 4.460% due 2/27/15 1,489,066
10,000,000++ Kingdom of Denmark, 6.625% due 6/17/03 10,265,750
6,000,000++ Kingdom of Spain, 5.875% due 7/28/08@ 6,050,100
2,000,000++ Mexico, 6.250% due 12/31/19 1,590,000
- ------------------------------------------------------------------------------------------------------------------------------------
19,394,916
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela -- 1.6%
3,000,000 Venezuela, 9.250% due 9/15/27 2,116,500
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL BONDS
(Cost -- $90,779,692) 90,129,696
====================================================================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 25.2%
$ 5,000,000 U.S. Treasury Note, 5.375% due 6/30/00 5,022,450
9,000,000 U.S. Treasury Note, 4.000% due 10/31/00 8,869,500
20,000,000 U.S. Treasury Bond, 5.625% due 5/15/08 20,289,200
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost -- $34,028,137) 34,181,150
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 17
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
GLOBAL GOVERNMENT BOND PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
WARRANTS/RIGHTS -- 0.0%
Mexico -- 0.0%
2,000,000 United Mexican States Value Recovery Rights, Expire 6/30/03 (Cost -- $0) $ 0
====================================================================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT -- 8.3%
$ 11,200,000 CIBC Wood Gundy Securities Inc., 4.700% due 5/3/99;
Proceeds at maturity -- $11,204,387; (Fully collateralized by
U.S. Treasury Notes, 5.625% due 12/31/99;
Market value -- $11,424,079) (Cost -- $11,200,000) 11,200,000
====================================================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $136,007,829*) $135,510,846
====================================================================================================================================
</TABLE>
@ All or a portion of this security is on loan (See Note 9).
+++ Represents local currency.
++ U.S. dollar denominated security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
STOCKS -- 100.0%
Australia -- 1.0%
2,555,088 Coca-Cola Amatil Ltd.@ $ 12,145,876
- ------------------------------------------------------------------------------------------------------------------------------------
Finland -- 3.6%
583,000 Nokia Oyj 43,251,287
- ------------------------------------------------------------------------------------------------------------------------------------
France -- 5.3%
140,000 Axa@ 18,100,256
80,000 Danone@ 21,413,910
200,000 Sidel SA@ 24,122,389
- ------------------------------------------------------------------------------------------------------------------------------------
63,636,555
- ------------------------------------------------------------------------------------------------------------------------------------
Germany -- 4.9%
100,000 Global TeleSystems Group, Inc.@+ 6,587,500
176,100 Mannesmann AG 23,084,269
24,000 SAP AG, Preferred Non-voting Shares@ 8,887,196
30,000 SAP AG, Preferred ADR@ 941,250
462,580 Volkswagen AG, Preferred Non-voting Shares 19,821,081
- ------------------------------------------------------------------------------------------------------------------------------------
59,321,296
- ------------------------------------------------------------------------------------------------------------------------------------
Greece -- 0.3%
145,000 Hellenic Telecommunications Organization SA 3,372,641
- ------------------------------------------------------------------------------------------------------------------------------------
Hong Kong -- 7.5%
13,416,904 Hong Kong and China Gas Co. Ltd. 18,869,008
554,417 Hong Kong and China Gas Co. Ltd. Warrants, Expire 9/30/99+ 92,277
610,398 HSBC Holdings PLC@ 22,681,713
3,000,000 Hutchison Whampoa Ltd. 26,901,490
2,505,727 Sun Hung Kai Properties Ltd.@ 21,984,315
- ------------------------------------------------------------------------------------------------------------------------------------
90,528,803
- ------------------------------------------------------------------------------------------------------------------------------------
India -- 0.1%
20,000 The India Magnum Fund, Class B Shares 660,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ireland -- 10.1%
1,888,377 Bank of Ireland 37,860,240
1,411,976 Grafton Group PLC+ 28,936,260
4,061,000 Independent Newspapers PLC 19,978,892
1,579,402 Irish Continental Group PLC 21,514,209
1,517,809 Irish Life PLC 13,649,650
- ------------------------------------------------------------------------------------------------------------------------------------
121,939,251
- ------------------------------------------------------------------------------------------------------------------------------------
Italy -- 4.1%
775,000 Alleanza Assicurazioni@ 9,284,289
4,000,000 Istituto Nazionale delle Assicurazioni@ 10,575,763
5,000,000 Telecom Italia Mobile S.p.A.@ 30,142,406
- ------------------------------------------------------------------------------------------------------------------------------------
50,002,458
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
Japan -- 14.7%
616,000 Canon, Inc. $ 15,069,073
933,000 Hosiden Corp.@ 19,697,231
173,000 Matsushita Communication Industrial Co., Ltd. 12,420,810
300,000 Murata Manufacturing Co., Ltd. 17,165,835
5,000 NTT Data Corp.@ 39,584,467
60,000 Shohkoh Fund & Co., Ltd.@ 35,186,193
203,000 Sony Corp.@ 18,962,426
880,000 Terumo Corp. 19,168,097
- ------------------------------------------------------------------------------------------------------------------------------------
177,254,132
- ------------------------------------------------------------------------------------------------------------------------------------
Mexico -- 2.8%
18,310,000 Cifra SA de CV, Series C 34,281,709
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands -- 4.6%
540,456 Getronics NV 22,214,515
363,873 IHC Caland NV 16,515,533
1,000,000 ING Groep NV Warrants, Expires 3/15/01+ 17,266,552
- ------------------------------------------------------------------------------------------------------------------------------------
55,996,600
- ------------------------------------------------------------------------------------------------------------------------------------
Norway -- 3.0%
897,000 Tomra Systems ASA@ 35,711,835
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore -- 3.1%
7,800,000 Keppel Corp. Ltd. PLC@ 22,292,294
8,000,000 Singapore Technologies Engineering Ltd. 8,597,578
1,220,100 Venture Manufactring (Singapore) Ltd. 6,700,283
- ------------------------------------------------------------------------------------------------------------------------------------
37,590,155
- ------------------------------------------------------------------------------------------------------------------------------------
South Africa -- 1.0%
2,770,669 Dimension Data Holdings Ltd. 12,277,270
- ------------------------------------------------------------------------------------------------------------------------------------
Spain -- 3.7%
700,000 Indra Sistemas SA 6,739,457
221,000 Superdiplo SA+ 4,781,576
716,456 Telefonica SA 33,617,756
- ------------------------------------------------------------------------------------------------------------------------------------
45,138,789
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden -- 0.7%
570,000 Securitas AB, Class B Shares 8,471,049
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland -- 5.9%
775,000 Mettler-Toledo International Inc.+ 20,246,875
18,866 Novartis AG, Registered Shares@ 27,670,133
2,000 Roche Holding AG 23,566,502
- ------------------------------------------------------------------------------------------------------------------------------------
71,483,510
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
United Kingdom -- 23.6%
2,370,000 Capita Group PLC $ 25,089,762
1,404,500 Colt Telecom Group PLC+ 26,073,750
3,375,000 Compass Group PLC 34,098,868
525,000 Guardian IT PLC 5,177,473
3,500,000 Hays PLC 39,081,116
3,890,000 Misys PLC 36,546,258
3,290,000 Racal Electronics PLC 22,725,091
5,959,000 Rentokil Initial PLC 34,804,328
1,640,000 Serco Group PLC 36,307,722
5,467,000 TeleWest Communications PLC+ 25,218,900
- ------------------------------------------------------------------------------------------------------------------------------------
285,123,268
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $740,236,559*) $1,208,186,484
====================================================================================================================================
</TABLE>
@ All or a portion of this security is on loan (See Note 9).
+ Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 21
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
INTERNATIONAL BALANCED PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
STOCKS -- 38.3%
Australia -- 0.2%
6,768 Coca Cola Beverage PLC $ 32,172
- ------------------------------------------------------------------------------------------------------------------------------------
Finland -- 3.4%
6,900 Nokia Oyj AB, Class K Shares 511,893
- ------------------------------------------------------------------------------------------------------------------------------------
France -- 2.6%
1,050 Axa 135,752
330 Danone 88,332
1,400 Sidel SA 168,857
- ------------------------------------------------------------------------------------------------------------------------------------
392,941
- ------------------------------------------------------------------------------------------------------------------------------------
Germany -- 1.3%
1,000 Mannesmann AG 131,086
65 SAP AG, Preferred Non-voting Shares 24,069
1,000 Volkswagen AG, Preferred Non-voting Shares 42,849
- ------------------------------------------------------------------------------------------------------------------------------------
198,004
- ------------------------------------------------------------------------------------------------------------------------------------
Greece -- 0.2%
1,600 Hellenic Telecommunications Organization SA 37,215
- ------------------------------------------------------------------------------------------------------------------------------------
Hong Kong -- 2.3%
33,000 Hong Kong and China Gas Co., Ltd. 46,410
1,600 HSBC Holdings PLC 59,454
14,000 Hutchison Whampoa Ltd. 125,540
13,000 Sun Hung Kai Properties Ltd. 114,057
- ------------------------------------------------------------------------------------------------------------------------------------
345,461
- ------------------------------------------------------------------------------------------------------------------------------------
Ireland -- 0.9%
4,027 Bank of Ireland 80,728
4 CRH PLC 79
6,000 Irish Life PLC 53,958
- ------------------------------------------------------------------------------------------------------------------------------------
134,765
- ------------------------------------------------------------------------------------------------------------------------------------
Italy -- 1.7%
10,000 Alleanza Assicurazioni 119,797
14,000 Istituto Nazionale delle Assicurazioni 37,015
15,000 Telecom Italia Mobile S.p.A. 90,427
- ------------------------------------------------------------------------------------------------------------------------------------
247,239
- ------------------------------------------------------------------------------------------------------------------------------------
Japan -- 6.3%
1,000 Canon, Inc. 24,463
4,000 Hosiden Corp. 84,447
1,000 Murata Manufacturing Co., Ltd. 57,219
800 NTT Data Corp. 633,351
150 Shohkoh Fund & Co., Ltd. 87,965
600 Sony Corp. 56,047
- ------------------------------------------------------------------------------------------------------------------------------------
943,492
- ------------------------------------------------------------------------------------------------------------------------------------
Mexico -- 1.5%
118,800 Cifra SA de CV, Series C+ 222,429
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
INTERNATIONAL BALANCED PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
Netherlands -- 1.6%
1,800 Aalberts Industries NV $ 42,849
1,700 Getronics NV 69,876
1,000 IHC Caland NV 45,388
1,200 ING Groep NV 74,018
- ------------------------------------------------------------------------------------------------------------------------------------
232,131
- ------------------------------------------------------------------------------------------------------------------------------------
Norway -- 0.6%
2,200 Tomra Systems ASA 87,587
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore -- 0.9%
25,000 Keppel Corp., Ltd. PLC 71,450
62,500 Singapore Technologies Engineering Ltd. 67,169
- ------------------------------------------------------------------------------------------------------------------------------------
138,619
- ------------------------------------------------------------------------------------------------------------------------------------
Spain -- 0.1%
500 Superdiplo SA+ 10,818
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland -- 1.0%
350 Gretag Imaging Group+ 33,448
2,000 Mettler-Toledo International Inc.+ 52,250
40 Novartis AG, Registered Shares 58,667
- ------------------------------------------------------------------------------------------------------------------------------------
144,365
- ------------------------------------------------------------------------------------------------------------------------------------
United States -- 2.2%
2,366 Telefonica SA ADR 329,761
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom -- 11.5%
6,800 Capita Group PLC 71,988
8,500 Colt Telecom Group PLC+ 157,798
8,700 Compass Group PLC 87,899
22,100 Hays PLC 246,769
9,000 Misys PLC 84,554
7,100 Racal Electronics PLC 49,042
11,000 Rentokil Initial PLC 64,247
28,200 Serco Group PLC 624,316
72,000 TeleWest Communications PLC+ 332,131
- ------------------------------------------------------------------------------------------------------------------------------------
1,718,744
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela -- 0.0%
7,140 Republic of Venezuela Warrants, Expire 4/15/20+ 0
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKS
(Cost -- $4,382,188) 5,727,636
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 23
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
INTERNATIONAL BALANCED PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 9.8%
$ 1,500,000 U.S. Treasury Note, 4.000% due 10/31/00 (Cost -- $1,479,800) $ 1,478,250
====================================================================================================================================
<CAPTION>
FACE
AMOUNT++ SECURITY VALUE
====================================================================================================================================
<S> <C> <C>
BONDS -- 47.9%
Australia -- 1.1%
220,000 Australian Government, 7.500% due 9/15/09 168,479
- ------------------------------------------------------------------------------------------------------------------------------------
Canada -- 4.9%
1,000,000 Canadian Government, 6.000% due 6/1/08 727,941
- ------------------------------------------------------------------------------------------------------------------------------------
France -- 16.1%
2,067,143 France O.A.T., 5.250% due 4/25/08 2,407,929
- ------------------------------------------------------------------------------------------------------------------------------------
Germany -- 15.7%
1,585,005 Bundesobligation, 5.000% due 5/21/01 1,753,654
511,292 Bundesrepublik Deutschland, 5.250% due 1/4/08 599,369
- ------------------------------------------------------------------------------------------------------------------------------------
2,353,023
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom -- 10.1%
800,000 United Kingdom Treasury, 7.250% due 12/7/07 1,510,530
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL BONDS
(Cost -- $7,154,513) 7,167,902
====================================================================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 4.0%
$ 600,000 CIBC Wood Gundy Securities Inc., 4.700% due 5/3/99;
Proceeds at maturity -- $600,235; (Fully collateralized by
U.S. Treasury Notes, 5.625% due 12/31/99;
Market value -- $612,370) (Cost -- $600,000) 600,000
====================================================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $13,616,501*) $14,973,788
====================================================================================================================================
</TABLE>
+ Non-income producing security.
++ Represents local currency.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
Government International International
Bond Equity Balanced
Portfolio Portfolio Portfolio
====================================================================================================================================
<S> <C> <C> <C>
ASSETS:
Investments -- Cost $136,007,829 $ 740,236,559 $13,616,501
Foreign currency -- Cost -- 4,608,045 4,990
====================================================================================================================================
Investments, at value $135,510,846 $1,208,186,484 $14,973,788
Foreign currency, at value -- 4,604,260 4,958
Cash 48,665 -- 32,985
Collateral for securities on loan (Note 9) 20,433,950 240,910,571 --
Receivable for Fund shares sold 108,101 730,848 7,841
Receivable for securities sold -- 3,479,500 --
Dividends and interest receivable 3,118,386 2,302,484 223,996
Receivable for open forward foreign currency
contracts (Note 4) 279,166 8,901 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 159,499,114 1,460,223,048 15,243,568
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 9) 20,433,950 240,910,571 --
Dividends payable 504,275 -- --
Management fees payable 85,955 856,437 10,291
Payable for open forward foreign currency
contracts (Note 4) 67,822 -- 14,518
Distribution fees payable 22,658 316,895 2,041
Payable to bank 350 39,527,764 --
Payable for securities purchased -- 6,338,238 --
Payable for Fund shares purchased -- 8,295 8,290
Accrued expenses 62,915 794,222 82,344
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 21,177,925 288,752,422 117,484
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $138,321,189 $1,171,470,626 $15,126,084
====================================================================================================================================
NET ASSETS:
Par value of capital shares $ 11,742 $ 49,664 $ 1,142
Capital paid in excess of par value 132,398,805 653,246,957 10,365,648
Undistributed (overdistributed) net investment income 5,679,293 (11,473,596) (178,950)
Accumulated net realized gain from security
transactions and foreign currencies 557,718 61,808,061 3,601,373
Net unrealized appreciation (depreciation) of
investments and foreign currencies (326,369) 467,839,540 1,336,871
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $138,321,189 $1,171,470,626 $15,126,084
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 25
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
Government International International
Bond Equity Balanced
Portfolio Portfolio Portfolio
====================================================================================================================================
<S> <C> <C> <C>
Shares Outstanding:
Class A 6,679,821 16,428,604 672,315
-------------------------------------------------------------------------------------------------------------------------------
Class B 1,052,016 8,063,944 267,826
-------------------------------------------------------------------------------------------------------------------------------
Class L 180,637 6,831,697 202,171
-------------------------------------------------------------------------------------------------------------------------------
Class Y 3,830,198 12,696,021 --
-------------------------------------------------------------------------------------------------------------------------------
Class Z -- 5,644,080 --
-------------------------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $11.84 $23.75 $13.24
-------------------------------------------------------------------------------------------------------------------------------
Class B* $11.82 $23.29 $13.27
-------------------------------------------------------------------------------------------------------------------------------
Class L** $11.81 $22.96 $13.22
-------------------------------------------------------------------------------------------------------------------------------
Class Y (and redemption price) $11.67 $23.82 --
-------------------------------------------------------------------------------------------------------------------------------
Class Z (and redemption price) -- $23.80 --
-------------------------------------------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.71% of net asset value per share) $12.40 -- --
-------------------------------------------------------------------------------------------------------------------------------
Class A (net asset value plus 5.26% of net asset value per share) -- $25.00 $13.94
-------------------------------------------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $11.93 $23.19 $13.35
====================================================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC for
Global Government Bond Portfolio or by a 5.00% CDSC for the International
Equity and International Balanced Portfolios if shares are redeemed within
one year from purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations (unaudited) For the Six Months Ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
Government International International
Bond Equity Balanced
Portfolio Portfolio Portfolio
====================================================================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 4,020,051 $ 1,334,262 $ 285,231
Dividends -- 6,292,610 55,903
Less: Foreign withholding tax -- (406,027) (7,797)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 4,020,051 7,220,845 333,337
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 528,870 5,138,483 67,741
Distribution fees (Note 2) 163,178 2,261,366 44,469
Shareholder and system servicing fees 52,840 478,037 12,487
Custody 17,192 335,351 22,639
Audit and legal 16,018 33,470 13,524
Shareholder communications 15,763 52,871 13,299
Registration fees 9,972 37,163 35,858
Directors' fees 2,799 14,622 1,287
Other 2,588 15,401 2,062
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 809,220 8,366,764 213,366
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 3,210,831 (1,145,919) 119,971
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES (NOTES 3 AND 4):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 934,069 75,090,253 (66,291)
Foreign currency transactions 6,131,606 1,019,903 (235,131)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) 7,065,675 76,110,156 (301,422)
- ------------------------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments and Foreign Currencies:
Beginning of period 7,359,067 337,608,556 883,228
End of period (326,369) 467,839,540 1,336,871
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation (Depreciation) (7,685,436) 130,230,984 453,643
- ------------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) on Investments and Foreign Currencies (619,761) 206,341,140 152,221
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 2,591,070 $205,195,221 $ 272,192
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 27
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (unaudited)
For the Six Months Ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
Government International International
Bond Equity Balanced
Portfolio Portfolio Portfolio
====================================================================================================================================
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 3,210,831 $ (1,145,919) $ 119,971
Net realized gain (loss) 7,065,675 76,110,156 (301,422)
Increase in net unrealized appreciation (depreciation) (7,685,436) 130,230,984 453,643
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 2,591,070 205,195,221 272,192
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,066,604) -- (63,790)
Net realized gains -- -- (2,750,372)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (3,066,604) -- (2,814,162)
- ------------------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 10,451,483 2,957,116,292 7,047,897
Net asset value of shares issued for
reinvestment of dividends 1,505,304 -- 2,435,637
Cost of shares reacquired (16,012,719) (3,228,529,438) (8,398,803)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions (4,055,932) (271,413,146) 1,084,731
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (4,531,466) (66,217,925) (1,457,239)
NET ASSETS:
Beginning of period 142,852,655 1,237,688,551 16,583,323
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $138,321,189 $1,171,470,626 $15,126,084
====================================================================================================================================
* Includes underdistributed
(overdistributed) net investment income of: $5,679,293 $(11,473,596) $(178,950)
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
28 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
For the Year Ended October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
Government International International
Bond Equity Balanced
Portfolio Portfolio Portfolio
====================================================================================================================================
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 6,488,551 $ (1,455,652) $ 673,640
Net realized gain (loss) (3,133,405) 63,603,029 7,009,119
Increase (decrease) in net unrealized appreciation 7,652,796 (24,011,935) (2,668,125)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 11,007,942 38,135,442 5,014,634
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,571,347) (1,282,091) (274,304)
Net realized gains (7,063,325) -- (147,477)
Capital (5,311,989) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (14,946,661) (1,282,091) (421,781)
- ------------------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 21,964,285 3,488,292,293 12,535,645
Net asset value of shares issued
for reinvestment of dividends 7,826,233 743,911 104,623
Cost of shares reacquired (28,999,827) (3,618,555,356) (62,556,734)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Fund Share Transactions 790,691 (129,519,152) (49,916,466)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (3,148,028) (92,665,801) (45,323,613)
NET ASSETS:
Beginning of year 146,000,683 1,330,354,352 61,906,936
- ------------------------------------------------------------------------------------------------------------------------------------
End of year* $142,852,655 $ 1,237,688,551 $ 16,583,323
====================================================================================================================================
* Includes overdistributed net investment income of: $ (596,540) $ (11,347,580) --
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Global Government Bond, International Equity and International Balanced
Portfolios ("Portfolios") are separate investment portfolios 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
management company and consists of these Portfolios and three other separate
investment portfolios: Emerging Markets, European and Pacific Portfolios. The
financial statements and financial highlights for the other portfolios are
presented in a separate semi-annual report.
The significant accounting policies consistently followed by the Portfolios are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on the primary
exchange on which they are traded; securities listed or traded on certain
foreign exchanges or other markets whose operations are similar to the U.S.
over-the-counter market (including securities listed on exchanges where the
primary market is believed to be over-the-counter) and securities for which no
sales price was reported on that date are valued at the mean between the bid and
ask prices. Securities which are listed or traded on more than one exchange or
market are valued at the quotations on the exchange or market determined to be
the primary market for such securities; (c) securities maturing within 60 days
are valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (d) gains or losses on the sale of securities are calculated
by using the specific identification method; (e) interest income, adjusted for
amortization of premium and accretion of discount, is recorded on an accrual
basis; (f) dividend income is recorded on the ex-dividend date; foreign dividend
income is recorded on the ex-dividend date or as soon as practical after the
Portfolio determines the existence of a dividend declaration after exercising
reasonable due diligence; (g) direct expenses are charged to each Portfolio and
each class; management fees and general Fund expenses are allocated on the basis
of relative net assets; (h) dividends and distributions to shareholders are
recorded on the ex-dividend date; (i) the accounting records of each Portfolio
are maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies are translated into U.S. dollars on the date of valuation.
Purchases and sales of securities, and income and expenses are translated at the
rate of exchange quoted on the respective date that such transactions are
recorded. Differences between income or expense amounts recorded and collected
or paid are adjusted when reported by the custodian; (j) the character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles. At
October 31, 1998, reclassifications were made to the capital accounts of the
Portfolios to reflect permanent book/tax differences and income and gains
available for distributions under tax regulations. Accordingly, for the
International Equity Portfolio, a portion of overdistributed net investment
income amounting to $2,254,604 was reclassified to paid-in capital. Net
investment income, net realized gains and net assets were not affected by these
changes; (k) each Portfolio intends to comply with the applicable provisions of
the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies and to make distributions of taxable income sufficient to
relieve each Portfolio from substantially all Federal income and excise taxes;
and (l) estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ.
- --------------------------------------------------------------------------------
30 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
In addition, the Portfolios may enter into forward exchange contracts in order
to hedge against foreign currency risk. These contracts are marked to market
daily by recognizing the difference between the contract exchange rate and the
current market rate as an unrealized gain or loss. Realized gains or losses are
recognized when contracts are settled.
2. Management Agreement and Other Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager of the Fund. The Global Government Bond Portfolio pays SSBC a management
fee calculated at an annual rate of 0.75% of the average daily net assets of the
portfolio. The International Equity and International Balanced Portfolios pay
SSBC a management fee calculated at an annual rate of 0.85% of the average daily
net assets of each respective portfolio. These fees are calculated daily and
paid monthly.
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, as well as certain other broker-dealers, continues
to sell Fund shares to the public as a member of the selling group.
SSB acts as the primary broker for its portfolio agency transactions. For the
six months ended April 30, 1999, SSB received total brokerage commissions of
$73,186 from the International Equity and International Balanced Portfolios.
For the Global Government Portfolio, there is a contingent deferred sales charge
("CDSC") of 4.50% on Class B shares, which applies if redemption occurs within
one year from purchase. This CDSC declines by 0.50% the first year after
purchase and thereafter by 1.00% per year until no CDSC is incurred. For the
International Equity and International Balanced Portfolios, there is a CDSC of
5.00% on Class B shares, which applies if redemption occurs within one year from
purchase. Thereafter this CDSC declines by 1.00% per year until no CDSC is
incurred. Class L shares for each Portfolio have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. In addition, Class A shares
for each Portfolio have a 1.00% CDSC, which applies if redemption occurs within
the first year of purchase. This CDSC only applies to those purchases of Class A
shares that equal or exceed $500,000 in the aggregate. These purchases do not
incur an initial sales charge.
For the six months ended April 30, 1999, CDSCs paid to CFBDS were approximately:
CDSCs
----------------------------------
Portfolio Class A Class B Class L
=====================================================================
Global Government Bond -- $ 15,000 --
- ---------------------------------------------------------------------
International Equity $10,000 428,000 $18,000
- ---------------------------------------------------------------------
International Balanced 5,000 10,000 --
=====================================================================
For the six months ended April 30, 1999, sales charges received by CFBDS were
approximately:
Sales Charges
-------------------
Portfolio Class A Class L
====================================================================
Global Government Bond $ 11,000 $ 1,000
- --------------------------------------------------------------------
International Equity 559,000 61,000
- --------------------------------------------------------------------
International Balanced 13,000 --
====================================================================
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 31
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Pursuant to a Distribution Plan, the Portfolios pay a service fee with respect
to Class A, B and L shares calculated at an annual rate of 0.25% of the average
daily net assets of each respective class's shares. The Global Government Bond
Portfolio pays a distribution fee with respect to Class B and L shares
calculated at the annual rates of 0.50% and 0.45% of the average daily net
assets of each class, respectively. The International Equity and International
Balanced Portfolios pay a distribution fee with respect to Class B and L shares
calculated at an annual rate of 0.75% of the average daily net assets for each
respective Portfolio and class. For the six months ended April 30, 1999, total
Distribution Plan fees incurred by the Portfolios were:
Portfolio Class A Class B Class L
================================================================================
Global Government Bond $104,674 $ 50,679 $ 7,825
- --------------------------------------------------------------------------------
International Equity 532,934 936,486 791,946
- --------------------------------------------------------------------------------
International Balanced 11,742 18,609 14,118
================================================================================
All officers and one Director of the Fund are employees of SSB.
3. Investments
During the six months ended April 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
Portfolio Purchases Sales
================================================================================
Global Government Bond $ 56,884,160 $ 65,725,947
- --------------------------------------------------------------------------------
International Equity 192,300,849 313,596,248
- --------------------------------------------------------------------------------
International Balanced 5,723,517 5,748,664
================================================================================
At April 30, 1999, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Portfolio Appreciation Depreciation (Depreciation)
=================================================================================================================
<S> <C> <C> <C>
Global Government Bond $ 1,166,878 $(1,663,861) $ (496,983)
- -----------------------------------------------------------------------------------------------------------------
International Equity 475,504,972 (7,555,047) 467,949,925
- -----------------------------------------------------------------------------------------------------------------
International Balanced 1,540,586 (183,299) 1,357,287
=================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
32 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
4. Forward Foreign Currency Contracts
At April 30, 1999, the Portfolios had open forward foreign currency contracts as
described below. The Portfolios bear the market risk that arises from changes in
foreign currency exchange rates. The unrealized gain (loss) on the contracts
reflected in the accompanying financial statements were as follows:
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain (Loss)
=================================================================================================================
<S> <C> <C> <C> <C>
Global Government Bond Portfolio
To Sell:
Australian Dollars 1,770,000 $ 1,173,220 5/27/99 $ (16,118)
British Pound 12,170,000 19,588,727 5/27/99 57,061
Canadian Dollars 5,120,000 3,516,009 5/27/99 (51,704)
Danish Krone 6,210,000 885,982 5/27/99 3,919
Euro 43,490,000 46,094,402 5/27/99 218,186
- -----------------------------------------------------------------------------------------------------------------
Net Unrealized Gain on
Forward Foreign Currency Contracts $ 211,344
=================================================================================================================
International Equity Portfolio
To Sell:
South Africa Rand 4,777,719 $ 781,848 5/4/99 $ 5,255
- -----------------------------------------------------------------------------------------------------------------
To Buy:
Singapore Dollar 5,654,435 3,339,989 5/3/99 3,646
- -----------------------------------------------------------------------------------------------------------------
Net Unrealized Gain on
Forward Foreign Currency Contracts $ 8,901
=================================================================================================================
International Balanced Portfolio
To Sell:
Australian Dollars 100,000 $ 66,289 6/15/99 $ (1,480)
British Pound 410,000 659,824 6/15/99 (1,364)
Canadian Dollars 460,000 315,938 6/15/99 (7,006)
- -----------------------------------------------------------------------------------------------------------------
(9,850)
- -----------------------------------------------------------------------------------------------------------------
To Buy:
Euro 330,000 350,222 6/15/99 (1,096)
Euro 110,000 116,741 6/15/99 (617)
Japanese Yen 153,000,000 1,289,837 6/15/99 (2,393)
Swedish Krona 1,600,000 190,704 6/15/99 (562)
- -----------------------------------------------------------------------------------------------------------------
(4,668)
- -----------------------------------------------------------------------------------------------------------------
Net Unrealized Loss on
Forward Foreign Currency Contracts $ (14,518)
=================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 33
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
5. Option Contracts
Premiums paid when put or call options are purchased by the Portfolios represent
investments, which are marked-to-market daily. When a purchased option expires,
the Portfolio will realize a loss in the amount of the premium paid. When the
Portfolio enters into a closing sales transaction, the Portfolio will realize a
gain or loss depending on whether the proceeds from the closing sales
transaction are greater or less than the premium paid for the option. When the
Portfolio exercises a put option, it will realize a gain or loss from the sale
of the underlying security and the proceeds from such sale will be decreased by
the amount of the premium originally paid. When the Portfolio exercises a call
option, the cost of the security that the Portfolio purchases upon exercise will
be increased by the premium originally paid.
At April 30, 1999, the Portfolios had no open purchased call or put options.
When a Portfolio writes a call or put option, an amount equal to the premium
received by the Portfolio is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Portfolio realizes a
gain. When the Portfolio enters into a closing purchase transaction, the
Portfolio realizes a gain or loss depending upon whether the cost of the closing
transaction is greater or less than the premium originally received, without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is eliminated. When a written call option is
exercised the cost of the security sold will be decreased by the premium
originally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Portfolio purchased upon exercise. When written index options are exercised,
settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Portfolio enters into options for hedging purposes. The risk in
writing a call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price. The risk in writing a put option is that the Portfolio is
exposed to the risk of loss if the market price of the underlying security
declines.
During the six months ended April 30, 1999, the Portfolios did not write any
options.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contract. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are received or made and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Portfolio records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract.
The Portfolio enters into such contracts to hedge a portion of its portfolio.
The Portfolio bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At April 30, 1999, the Portfolios had no open futures contracts.
- --------------------------------------------------------------------------------
34 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
7. Concentration of Risk
The Portfolios' investments in foreign securities may involve risks not present
in domestic investments. Since securities may be denominated in a foreign
currency and may require settlement in foreign currencies and pay interest or
dividends in foreign currencies, changes in the relationship of these foreign
currencies to the U.S. dollar can significantly affect the value of the
investments and earnings of each of the Portfolios. Foreign investments may also
subject the Portfolios to foreign government exchange restrictions,
expropriation, taxation or other political, social or economic developments, all
of which could affect the market and/or credit risk of the investments.
In addition to the risks described above, risks may arise from forward foreign
currency contracts with respect to the potential inability of counterparties to
meet the terms of their contracts.
8. Capital Loss Carryforwards
At April 30, 1999, the International Equity Portfolio had, for Federal income
tax purposes, approximately $12,705,000 of capital loss carryforwards available
to offset future realized gains before expiration in 2003. To the extent that
these carryforward losses are used to offset gains, it is probable that the
gains so offset will not be distributed.
9. Lending of Portfolio Securities
The Portfolio has an agreement with their custodian whereby the custodian may
lend securities owned by the Portfolio to brokers, dealers, and other financial
organizations. Fees earned by the Portfolios on securities lending are recorded
as interest income. Loans of securities by the Portfolio are collateralized by
cash, U.S. government securities, high quality money market instruments or other
securities that are maintained at all times in an amount at least equal to the
current market value of the loaned securities, plus a margin which may vary
depending on the type of securities loaned. The Custodian establishes and
maintains the collateral in segregated accounts.
The Portfolios maintain exposure for the risk of any loss in the investment of
amounts received as collateral.
At April 30, 1999, the Portfolios listed below had loaned common stocks and
bonds which were collateralized by cash. In addition, the International Equity
Portfolio had loaned common stocks collateralized by securities. The market
value for the securities on loan for each portfolio was as follows:
Portfolio Value
================================================================================
Global Government Bond Portfolio $ 18,719,005
- --------------------------------------------------------------------------------
International Equity Portfolio 264,871,817
================================================================================
At April 30, 1999, the cash collateral received for these securities on loan was
invested as follows:
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 35
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Global Government Bond Portfolio
Security Description Value
================================================================================
Time Deposit:
National Australia Bank, 4.875% due 5/3/99 $ 1,000,549
Caisse de Depots et Consign., Paris, 4.875% due 5/3/99 1,000,549
Argentaria Caja Postal Banco Hipote, 4.875% due 5/3/99 1,000,549
Dresdner Bank Grand Cayman, 4.968% due 5/3/99 1,000,549
Caisse National de Credit Agricole, 4.937% due 5/3/99 1,000,549
CommerzBank AG, Frankfurt, 5.125% due 5/3/99 1,000,549
Southtrust Bank of Alabama, G.C., 5.000% due 5/3/99 789,907
Repurchase Agreement:
Merrill Lynch Sec./MLPFS, 4.987% due 5/3/99 3,738,894
NationsBanc Montogomery Sec. Inc., 4.987% due 5/3/99 4,081,188
Commercial Paper:
General Electric Credit Corp., 4.952% due 5/3/99 1,000,137
General Motor Acc. Corp., 4.942% due 5/3/99 977,695
Associates First Captial, 4.942% due 5/3/99 1,000,137
Wood Street Funding Corp., 5.052% due 5/3/99 526,620
BP Capital PLC, 5.102% due 5/3/99 1,000,124
Barton Capital Corp., 5.102% due 5/3/99 657,977
Market Street Funding, 5.102% due 5/3/99 657,977
- --------------------------------------------------------------------------------
Total $20,433,950
================================================================================
International Equity Portfolio
Security Description Value
================================================================================
Time Deposit:
National Australia Bank, 4.875% due 5/3/99 $ 11,796,196
Caisse de Depots et Consign., Paris, 4.875% due 5/3/99 11,796,196
Argentaria Caja Postal Banco Hipote, 4.875% due 5/3/99 11,796,196
Dresdner Bank Grand Cayman, 4.968% due 5/3/99 11,796,196
Caisse National de Credit Agricole, 4.937% due 5/3/99 11,796,196
CommerzBank AG, Frankfurt, 5.125% due 5/3/99 11,796,196
Southtrust Bank of Alabama, G.C., 5.000% due 5/3/99 9,312,787
Repurchase Agreement:
Merrill Lynch Sec./MLPFS, 4.987% due 5/3/99 44,080,522
NationsBanc Montogomery Sec. Inc., 4.987% due 5/3/99 48,116,063
Commercial Paper:
General Electric Credit Corp., 4.952% due 5/3/99 11,791,330
General Motor Acc. Corp., 4.942% due 5/3/99 11,526,751
Associates First Captial, 4.942% due 5/3/99 11,791,340
Wood Street Funding Corp., 5.052% due 5/3/99 6,208,704
BP Capital PLC, 5.102% due 5/3/99 11,791,183
Barton Capital Corp., 5.102% due 5/3/99 7,757,357
Market Street Funding, 5.102% due 5/3/99 7,757,358
- --------------------------------------------------------------------------------
Total $240,910,571
================================================================================
In addition to the above noted cash collateral, the International Equity
Portfolio held securities collateral with a market value of $32,869,800 as of
April 30, 1999.
Interest income earned by the Portfolios from securities loaned for the year
ended April 30, 1999 was as follows:
================================================================================
Global Government Bond Portfolio $ 31,334
- -------------------------------------------------------------------------------
International Equity Portfolio 330,308
================================================================================
- --------------------------------------------------------------------------------
36 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
10. Capital Shares
At April 30, 1999, the Fund had one billion shares of capital stock authorized
with a par value of $0.001 per share. The Portfolios have the ability to issue
multiple classes of shares. Each share of a class represents an identical legal
interest in a Portfolio and has the same rights, except that each class bears
certain expenses specifically related to the distribution of its shares.
At April 30, 1999, total paid-in capital amounted to the following for each
Portfolio:
<TABLE>
<CAPTION>
Portfolio Class A Class B Class L Class Y Class Z
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Global Government Bond $ 74,505,686 $ 10,824,527 $ 2,395,127 $ 44,685,207 --
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity 110,466,458 122,740,815 102,590,024 222,937,897 $94,561,427
- ------------------------------------------------------------------------------------------------------------------------------------
International Balanced 5,102,302 3,121,565 2,142,923 -- --
====================================================================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
-------------------------------- ----------------------------------
Shares Amount Shares Amount
=========================================================================================================================
<S> <C> <C> <C> <C>
Global Government Bond Portfolio
Class A
Shares sold 202,557 $ 2,107,389 854,433 $ 10,070,134
Shares issued on reinvestment 80,043 1,243,523 525,036 6,212,574
Shares reacquired (1,081,415) (12,849,362) (1,669,632) (19,842,022)
- -------------------------------------------------------------------------------------------------------------------------
Net Decrease (798,815) $ (9,498,450) (290,163) $ (3,559,314)
=========================================================================================================================
Class B
Shares sold 47,006 $ 508,448 59,689 $ 711,346
Shares issued on reinvestment 14,496 222,803 114,717 1,356,444
Shares reacquired (236,531) (2,805,969) (558,703) (6,632,006)
- -------------------------------------------------------------------------------------------------------------------------
Net Decrease (175,029) $ (2,074,718) (384,297) $ (4,564,216)
=========================================================================================================================
Class L+
Shares sold 5,856 $ 69,687 9,865 $ 116,532
Shares issued on reinvestment 3,297 38,978 21,786 257,215
Shares reacquired (30,152) (357,388) (97,100) (1,146,636)
- -------------------------------------------------------------------------------------------------------------------------
Net Decrease (20,999) $ (248,723) (65,449) $ (772,889)
=========================================================================================================================
Class Y
Shares sold 662,079 $ 7,765,959 946,492 $ 11,066,273
Shares reacquired -- -- (113,418) (1,379,163)
- -------------------------------------------------------------------------------------------------------------------------
Net Increase 662,079 $ 7,765,959 833,074 $ 9,687,110
=========================================================================================================================
</TABLE>
+ On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 37
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
------------------------------------ -------------------------------------
Shares Amount Shares Amount
============================================================================================================================
<S> <C> <C> <C> <C>
International Equity Portfolio
Class A
Shares sold 114,474,395 $ 2,535,594,872 145,287,524 $ 3,124,384,638
Shares issued on reinvestment -- -- -- --
Shares reacquired (120,267,693) (2,682,019,760) (145,894,274) (3,167,710,830)
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease (5,793,298) $ (146,424,888) (606,750) $ (43,326,192)
============================================================================================================================
Class B
Shares sold 6,432,261 $ 140,226,594 8,282,267 $ 175,524,703
Shares issued on reinvestment -- -- -- --
Shares reacquired (7,381,155) (161,870,176) (10,699,379) (225,481,466)
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease (948,894) $ (21,643,582) (2,417,112) $ (49,956,763)
============================================================================================================================
Class L+
Shares sold 11,494,639 $ 247,963,246 3,611,918 $ 76,814,423
Shares issued on reinvestment -- -- -- --
Shares reacquired (12,371,903) (268,534,228) (5,982,110) (124,971,412)
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease (877,264) $ (20,570,982) (2,370,192) $ (48,156,989)
============================================================================================================================
Class Y
Shares sold 909,742 $ 19,816,703 4,632,642 $ 99,224,433
Shares issued on reinvestment -- -- 19,405 381,500
Shares reacquired (4,574,582) (100,156,694) (3,102,340) (72,862,759)
- ----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (3,664,840) $ (80,339,991) 1,549,707 $ 26,743,174
============================================================================================================================
Class Z
Shares sold 611,519 $ 13,514,877 579,525 $ 12,344,096
Shares issued on reinvestment -- -- 18,443 362,411
Shares reacquired (710,653) (15,948,580) (1,323,023) (27,528,889)
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease (99,134) $ (2,433,703) (725,055) $ (14,822,382)
============================================================================================================================
International Balanced Portfolio
Class A
Shares sold 436,489 $ 6,514,393 90,635 $ 1,264,311
Shares issued on reinvestment 123,724 1,630,397 6,185 83,320
Shares reacquired (535,393) (7,119,833) (280,571) (6,136,725)
- ----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 24,820 $ 1,024,957 (183,751) $ (4,789,094)
============================================================================================================================
Class B
Shares sold 21,310 $ 288,067 30,146 $ 415,822
Shares issued on reinvestment 32,818 434,141 876 11,818
Shares reacquired (54,478) (746,872) (122,702) (1,654,968)
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease (350) $ (24,664) (91,680) $ (1,227,328)
============================================================================================================================
Class L+
Shares sold 16,581 $ 245,437 5,081 $ 68,946
Shares issued on reinvestment 28,158 371,099 704 9,485
Shares reacquired (40,051) (532,098) (81,145) (1,099,592)
- ----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 4,688 $ 84,438 (75,360) $ (1,021,161)
============================================================================================================================
Class Y++
Shares sold -- -- 830,192 $ 10,786,566
Shares issued on reinvestment -- -- -- --
Shares reacquired -- -- (4,004,817) (53,665,449)
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease -- -- (3,174,625) $ (42,878,883)
============================================================================================================================
</TABLE>
+ On June 12, 1998, Class C shares were renamed Class L shares.
++ On July 30, 1998, all Class Y shares were redeemed from the International
Balanced Portfolio.
- --------------------------------------------------------------------------------
38 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------------------------
Global Government Bond Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995 1994(3)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.88 $ 12.22 $ 12.55 $ 12.30 $ 11.68 $ 12.92
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.27 0.54 0.59 0.70 0.92* 0.69
Net realized and unrealized gain (loss) (0.05) 0.39 0.38 0.42 0.48 (1.28)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.22 0.93 0.97 1.12 1.40 (0.59)
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(4) (0.26) (0.22) (1.22) (0.87) (0.78) (0.23)
Net realized gains -- (0.60) (0.08) -- -- --
Capital -- (0.45) -- -- -- (0.42)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (1.27) (1.30) (0.87) (0.78) (0.65)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.84 $ 11.88 $ 12.22 $ 12.55 $ 12.30 $ 11.68
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 1.86%++ 8.08% 8.21% 9.41% 12.40% (4.64)%++
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $79,064 $88,836 $94,957 $106,536 $123,917 $77,961
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(5) 1.20%+ 1.22% 1.26% 1.26% 1.38% 1.32%+
Net investment income 4.48+ 4.58 4.82 5.69 7.44 6.57+
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 45% 287% 367% 133% 195% 179%
====================================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from January 1, 1994 to October 31, 1994.
(4) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(5) During the years ended October 31, 1996 and October 31, 1995, the
Portfolio had earned credits from the custodian which reduced service fees
incurred. If the credits are taken into consideration, the expense ratios
for Class A would have been 1.24% and 1.32%, respectively; numbers prior
to October 31, 1995 have not been restated to reflect these credits.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 39
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares
-----------------------------------------------------------------------
Global Government Bond Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995(3)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.87 $ 12.22 $ 12.50 $ 12.26 $ 11.57
- ------------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.27 0.47 0.52 0.63 0.78*
Net realized and unrealized gain (loss) (0.09) 0.39 0.38 0.42 0.57
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.18 0.86 0.90 1.05 1.35
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(4) (0.23) (0.19) (1.10) (0.81) (0.66)
Net realized gains -- (0.60) (0.08) -- --
Capital -- (0.42) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.23) (1.21) (1.18) (0.81) (0.66)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.82 $ 11.87 $ 12.22 $ 12.50 $ 12.26
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 1.57%++ 7.46% 7.62% 8.83% 11.97%++
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $12,437 $14,569 $19,690 $25,970 $35,159
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(5) 1.76%+ 1.77% 1.80% 1.81% 1.92%+
Net investment income 3.90+ 3.93 4.24 5.15 6.65+
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 45% 287% 367% 133% 195%
====================================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from November 18, 1994 (inception date) to October 31,
1995.
(4) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(5) During the year ended October 31, 1996 and the period ended October 31,
1995, the Portfolio had earned credits from the custodian which reduced
service fees incurred. If the credits are taken into consideration, the
expense ratios for Class B would have been 1.78% and 1.86% (annualized),
respectively; numbers prior to October 31, 1995 have not been restated to
reflect these credits.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
40 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares
--------------------------------------------------------------------------
Global Government Bond Portfolio 1999(1)(2) 1998(2)(3) 1997(2) 1996(2) 1995(4) 1994(5)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.86 $12.19 $12.47 $12.23 $11.68 $12.93
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.29 0.48 0.53 0.64 0.85* 0.90
Net realized and unrealized gain (loss) (0.11) 0.40 0.38 0.41 0.42 (1.55)
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.18 0.88 0.91 1.05 1.27 (0.65)
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(6) (0.23) (0.19) (1.11) (0.81) (0.72) (0.21)
Net realized gains -- (0.60) (0.08) -- -- --
Capital -- (0.42) -- -- -- (0.39)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.23) (1.21) (1.19) (0.81) (0.72) (0.60)
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.81 $11.86 $12.19 $12.47 $12.23 $11.68
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.57%++ 7.67% 7.73% 8.90% 11.25% (5.09)%++
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,133 $2,391 $3,257 $3,986 $4,141 $5,835
- ---------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(7) 1.66%+ 1.68% 1.69% 1.74% 1.84% 1.80%+
Net investment income 4.03+ 4.01 4.33 5.22 7.15 6.05+
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 45% 287% 367% 133% 195% 179%
=====================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) On November 7, 1994, Class B shares were renamed Class C shares.
(5) For the period from January 1, 1994 to October 31, 1994.
(6) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(7) During the years ended October 31, 1996 and October 31, 1995, the
Portfolio had earned credits from the custodian which reduced service fees
incurred. If the credits are taken into consideration, the expense ratios
for Class L would have been 1.71% and 1.78%, respectively; numbers prior
to October 31, 1995 have not been restated to reflect these credits.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 41
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class Y Shares
----------------------------------------------------------------------------
Global Government Bond Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995(3) 1994(4)
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.70 $ 12.03 $ 12.39 $ 12.14 $11.68 $12.93
- ------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.26 0.59 0.63 0.73 0.78* 0.76
Net realized and unrealized gain (loss) (0.03) 0.37 0.37 0.42 0.49 (1.35)
- ------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.23 0.96 1.00 1.15 1.27 (0.59)
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(5) (0.26) (0.23) (1.28) (0.90) (0.81) (0.23)
Net realized gains -- (0.60) (0.08) -- -- --
Capital -- (0.46) -- -- -- (0.43)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (1.29) (1.36) (0.90) (0.81) (0.66)
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.67 $ 11.70 $ 12.03 $ 12.39 $12.14 $11.68
- ------------------------------------------------------------------------------------------------------------------------
Total Return 2.02%++ 8.50% 8.61% 9.82% 11.27% (4.62)%++
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $44,687 $37,057 $28,097 $15,105 $ 62 $3,202
- ------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(6) 0.83%+ 0.83% 0.89% 0.84% 0.98% 1.23%+
Net investment income 5.03+ 5.06 5.19 6.12 6.38 6.76+
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 45% 287% 367% 133% 195% 179%
========================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On November 7, 1994 Class C shares were renamed Class Y shares.
(4) For the period from January 1, 1994 to October 31, 1994.
(5) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(6) During the years ended October 31, 1996 and October 31, 1995, the
Portfolio had earned credits from the custodian which reduced service fees
incurred. If the credits are taken into consideration, the expense ratios
for Class Y would have been 0.81% and 0.93%, respectively; numbers prior
to October 31, 1995 have not been restated to reflect these credits.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
42 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------------------------------------
International Equity Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995 1994(3)(4)
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 20.39 $ 20.36 $ 18.64 $ 17.15 $ 18.79 $ 18.71
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) 0.00@ -- (0.04) 0.01 0.08* (0.01)
Net realized and unrealized gain (loss) 3.36 0.03 1.77 1.65 (1.50) 0.09
- ---------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 3.36 0.03 1.73 1.66 (1.42) 0.08
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(5) -- -- (0.01) (0.17) (0.12) --
Net realized gains -- -- -- -- (0.10) --
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- (0.01) (0.17) (0.22) --
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 23.75 $ 20.39 $ 20.36 $ 18.64 $ 17.15 $ 18.79
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 16.48%++ 0.15% 9.30% 9.78% (7.44)% 0.43%++
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $390,112 $453,029 $464,796 $513,870 $489,533 $591,598
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(6) 1.28%+ 1.28% 1.31% 1.35% 1.36% 1.35%+
Net investment income (loss) 0.02+ 0.00 (0.18) 0.17 0.50 (0.05)+
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 25% 35% 46% 42% 35%
===========================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from January 1, 1994 to October 31, 1994.
(4) On October 10, 1994, Class C shares were exchanged into Class A shares;
therefore Class C share activity for the period from January 1, 1994 to
October 10, 1994 is included with Class A share activity.
(5) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(6) During the years ended October 31, 1996 and October 31, 1995, the
Portfolio had earned credits from the custodian which reduced service fees
incurred. If the credits are taken into consideration, the expense ratios
for Class A would have been 1.29% and 1.28%, respectively; numbers prior
to October 31, 1995 have not been restated to reflect these credits.
@ Represents less than $0.01 per share.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 43
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares
--------------------------------------------------------------------
International Equity Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995(3)
================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 20.08 $ 20.22 $ 18.65 $ 17.17 $ 18.38
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.09) (0.18) (0.20) (0.08) 0.06*
Net realized and unrealized gain (loss) 3.30 0.04 1.77 1.60 (1.17)
- ----------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 3.21 (0.14) 1.57 1.52 (1.11)
- ----------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(4) -- -- -- (0.04) --
Net realized gains -- -- -- -- (0.10)
- ----------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- (0.04) (0.10)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 23.29 $ 20.08 $ 20.22 $ 18.65 $ 17.17
- ----------------------------------------------------------------------------------------------------------------
Total Return 15.99%++ (0.69)% 8.42% 8.89% (6.00)%++
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $187,832 $180,980 $231,148 $212,294 $126,171
- ----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(5) 2.08%+ 2.09% 2.11% 2.11% 2.13%+
Net investment income (loss) (0.78)+ (0.84) (0.95) (0.58) 0.34+
- ----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 25% 35% 46% 42%
================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from November 7, 1994 (inception date) to October 31, 1995.
(4) Distributions from net investment income included short-term capital
gains, if any, for Federal income tax purposes.
(5) During the year ended October 31, 1996 and the period ended October 31,
1995, the Portfolio had earned credits from the custodian which reduced
service fees incurred. If the credits are taken into consideration, the
expense ratios for Class B would have been 2.04% and 2.04% (annualized),
respectively.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
44 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares
-------------------------------------------------------------------------------------
International Equity Portfolio 1999(1)(2) 1998(2)(3) 1997(2) 1996(2) 1995(4) 1994(5)
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 19.79 $ 19.93 $ 18.38 $ 16.93 $ 18.54 $ 18.58
- ---------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.08) (0.17) (0.22) (0.13) (0.06)* (0.11)
Net realized and unrealized gain (loss) 3.25 0.03 1.77 1.62 (1.45) 0.07
- ---------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 3.17 (0.14) 1.55 1.49 (1.51) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(6) -- -- -- (0.04) -- --
Net realized gains -- -- -- -- (0.10) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- (0.04) (0.10) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 22.96 $ 19.79 $ 19.93 $ 18.38 $ 16.93 $ 18.54
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 16.02%++ (0.70)% 8.43% 8.85% (8.11)% (0.22)%++
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $156,836 $152,569 $200,849 $229,514 $240,090 $287,458
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(7) 2.08%+ 2.07% 2.12% 2.15% 2.16% 2.10%+
Net investment loss (0.77)+ (0.81) (0.97) (0.63) (0.34) (0.77)+
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 25% 35% 46% 42% 35%
=================================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) On November 7, 1994, Class B shares were renamed Class C shares.
(5) For the period from January 1, 1994 to October 31, 1994.
(6) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(7) During the years ended October 31, 1996 and October 31, 1995, the
Portfolio had earned credits from the custodian which reduced service fees
incurred. If the credits are taken into consideration, the expense ratios
for Class L would have been 2.09% and 2.08%, respectively; numbers prior
to October 31, 1995 have not been restated to reflect these credits.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 45
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class Y Shares
---------------------------------------------------------------------------------
International Equity Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995(3) 1994(4)
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 20.41 $ 20.38 $ 18.64 $ 17.13 $ 18.80 $ 17.64
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.04 0.08 0.04 0.18 0.10* 0.01
Net realized and unrealized gain (loss) 3.37 0.01 1.76 1.54 (1.50) 1.15
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 3.41 0.09 1.80 1.72 (1.40) 1.16
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(5) -- (0.06) (0.06) (0.21) (0.17) --
Net realized gains -- -- -- -- (0.10) --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.06) (0.06) (0.21) (0.27) --
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 23.82 $ 20.41 $ 20.38 $ 18.64 $ 17.13 $ 18.80
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 16.71%++ 0.45% 9.68% 10.19% (7.11)% 6.58%++
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $302,387 $333,979 $301,852 $200,427 $97,132 $48,765
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(6) 0.92%+ 0.91% 0.94% 0.96% 1.06% 1.09%+
Net investment income 0.33+ 0.37 0.23 0.56 0.91 0.29+
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 25% 35% 46% 42% 35%
=============================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On November 7, 1994, the Class D shares were renamed Class Y shares.
(4) For the period from June 16, 1994 (inception date) to October 31, 1994.
(5) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(6) During the years ended October 31, 1996 and October 31, 1995, the
Portfolio had earned credits from the custodian which reduced service fees
incurred. If the credits are taken into consideration, the expense ratios
for Class Y would have been 0.90% and 0.98%, respectively; numbers prior
to October 31, 1995 have not been restated to reflect these credits.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
46 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class Z Shares
-------------------------------------------------------------------
International Equity Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995(3)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 20.39 $ 20.36 $ 18.62 $ 17.12 $ 18.38
- ---------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.05 0.08 0.05 0.14 0.13*
Net realized and unrealized gain (loss) 3.36 0.01 1.75 1.57 (1.12)
- ---------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 3.41 0.09 1.80 1.71 (0.99)
- ---------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income(4) -- (0.06) (0.06) (0.21) (0.17)
Net realized gains -- -- -- -- (0.10)
- ---------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.06) (0.06) (0.21) (0.27)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 23.80 $ 20.39 $ 20.36 $ 18.62 $ 17.12
- ---------------------------------------------------------------------------------------------------------------
Total Return 16.72%++ 0.45% 9.69% 10.13% (5.03)%++
- ---------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $134,304 $117,132 $131,709 $119,408 $94,387
- ---------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(5) 0.93%+ 0.92% 0.94% 0.97% 1.10%+
Net investment income 0.37+ 0.36 0.22 0.55 1.06+
- ---------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 25% 35% 46% 42%
===============================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from November 7, 1994 (inception date) to October 31, 1995.
(4) Distributions from net investment income include short-term capital gains,
if any, for Federal income tax purposes.
(5) During the year ended October 31, 1996 and the period ended October 31,
1995, the Portfolio had earned credits from the custodian which reduced
service fees incurred. If the credits are taken into consideration, the
expense ratios for Class Z would have been 0.91% and 1.02% (annualized),
respectively.
* Includes realized gains and losses from foreign currency transactions.
++ Total return is not annualized as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 47
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------------------------------------
International Balanced Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995 1994(3)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.89 $13.32 $13.90 $12.64 $12.20 $12.00
- ----------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(4) (0.00)* 0.51 0.18 0.26 0.35 0.07
Net realized and unrealized gain (loss) 0.27 1.19 (0.41) 1.35 0.48 0.13
- ----------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.27 1.70 (0.23) 1.61 0.83 0.20
- ----------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.06) (0.10) (0.15) (0.35) (0.39) --
Net realized gains (1.86) (0.03) -- -- -- --
Capital -- -- (0.20) -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions (1.92) (0.13) (0.35) (0.35) (0.39) --
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.24 $14.89 $13.32 $13.90 $12.64 $12.20
- ----------------------------------------------------------------------------------------------------------------------
Total Return 1.94%++ 12.87% (1.71)% 12.89% 7.05% 1.67%++
- ----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $8,900 $9,639 $11,072 $16,116 $17,667 $20,634
- ----------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 2.33%+ 1.79% 1.71% 1.81% 1.62% 1.34%+
Net investment income (loss) (0.06)+ 3.80 1.32 1.94 2.89 1.37+
- ----------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 41% 141% 197% 189% 42% 6%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from August 25, 1994 (inception date) to October 31, 1994.
(4) The Manager waived all or part of its fees for the year ended October 31,
1995 and the period ended October 31, 1994. If such fees were not waived,
the per share effect on net investment income and the expense ratios would
have been as follows:
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Income and Custody Credits
--------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
Class A $0.04 $0.02 1.96% 2.03%+
In addition, during the years ended October 31, 1996 and October 31, 1995,
the Portfolio had earned credits from the custodian which reduced service
fees incurred. If the credits are taken into consideration, the expense
ratios for Class A would have been 1.72% and 1.52%, respectively; numbers
prior to October 31, 1995 have not been restated to reflect these credits.
* Represents less than $(0.01) per share.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
48 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares
------------------------------------------------------------
International Balanced Portfolio 1999(1)(2) 1998(2) 1997(2) 1996(2) 1995(3)
======================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.93 $13.38 $13.90 $12.65 $12.08
- ------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)(4) (0.06) 0.41 0.07 0.15 0.36
Net realized and unrealized gain (loss) 0.28 1.19 (0.41) 1.36 0.50
- ------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.22) 1.60 (0.34) 1.51 0.86
- ------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.02) (0.02) (0.08) (0.26) (0.29)
Net realized gains (1.86) (0.03) -- -- --
Capital -- -- (0.10) -- --
- ------------------------------------------------------------------------------------------------------
Total Distributions (1.88) (0.05) (0.18) (0.26) (0.29)
- ------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.27 $14.93 $13.38 $13.90 $12.65
- ------------------------------------------------------------------------------------------------------
Total Return 1.52%++ 11.96% (2.45)% 12.05% 7.33%++
- ------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $3,554 $4,004 $4,813 $5,258 $3,064
- ------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 3.15%+ 2.52% 2.48% 2.62% 2.49%+
Net investment income (loss) (0.81)+ 3.03 0.53 1.14 3.11+
- ------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 41% 141% 197% 189% 42%
======================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from November 7, 1994 (inception date) to October 31, 1995.
(4) The Manager waived all or part of its fees for the period ended October
31, 1995. If such fees were not waived, the per share effect on net
investment income and the expense ratio would have been as follows:
Expense Ratio
Per Share Decrease to Without Fee Waivers
Net Investment Income and Custody Credits
--------------------- -------------------
1995 1995
---- ----
Class B $0.04 2.86%+
In addition, during the year ended October 31, 1996 and the period ended
October 31, 1995, the Portfolio had earned credits from the custodian
which reduced service fees incurred. If the credits are taken into
consideration, the expense ratios for Class B would have been 2.53% and
2.39% (annualized), respectively; numbers prior to October 31, 1995 have
not been restated to reflect these credits.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 49
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares
---------------------------------------------------------------------------
International Balanced Portfolio 1999(1)(2) 1998(2)(3) 1997(2) 1996(2) 1995(4) 1994(5)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.89 $13.35 $13.87 $12.63 $12.18 $12.00
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)(6) (0.06) 0.40 0.08 0.15 0.28 0.05
Net realized and unrealized gain (loss) 0.27 1.18 (0.42) 1.35 0.46 0.13
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.21 1.58 (0.34) 1.50 0.74 0.18
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.02) (0.01) (0.08) (0.26) (0.29) --
Net realized gains (1.86) (0.03) -- -- -- --
Capital -- -- (0.10) -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (1.88) (0.04) (0.18) (0.26) (0.29) --
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.22 $14.89 $13.35 $13.87 $12.63 $12.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.46%++ 11.90% (2.46)% 11.99% 6.29% 1.50%++
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,672 $2,940 $3,642 $4,869 $4,317 $4,310
- ---------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(6) 3.31%+ 2.58% 2.51% 2.62% 2.37% 2.03%+
Net investment income (loss) (0.94)+ 2.93 0.60 1.14 2.33 0.79+
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 41% 141% 197% 189% 42% 6%
=====================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) On November 7, 1994, Class B shares were renamed Class C shares.
(5) For the period from August 25, 1994 (inception date) to October 31, 1994.
(6) The Manager waived all or part of its fees for the year ended October 31,
1995 and the period ended October 31, 1994. If such fees were not waived,
the per share effect on net investment income and the expense ratios would
have been as follows:
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Income and Custody Credits
--------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
Class L $0.04 $0.02 2.71% 2.74%+
In addition, during the years ended October 31, 1996 and October 31, 1995,
the Portfolio had earned credits from the custodian which reduced service
fees incurred. If the credits are taken into consideration, the expense
ratios for Class L would have been 2.53% and 2.27%, respectively; numbers
prior to October 31, 1995 have not been restated to reflect these credits.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
50 1999 Semi-Annual Report to Shareholders
<PAGE>
[This page intentionally left blank]
<PAGE>
[This page intentionally left blank]
<PAGE>
Smith Barney
World Funds, Inc.
Directors
Victor Atkins
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
Officers
Maurits E. Edersheim
Chairman of the Fund
& Advisory Director
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
James B. Conheady
Vice President
Simon R. Hildreth
Vice President
Denis P. Mangan
Vice President
Jeffrey J. Russell
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
Investment Manager and Administrator
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
Chase Manhattan Bank
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of shareholders of Smith
Barney World Fund, Inc. -- Global Government, International Equity and
International Balanced Portfolios. It is not authorized for distribution to
prospective investors unless accompanied or preceded by a current Prospectus for
the Fund, which contains information concerning the Fund's investment policies
and expenses as well as other pertinent information.
SALOMON SMITH BARNEY
- ---------------------------
A member of citigroup[LOGO]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney
World Funds, Inc.
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD01489 6/99
<PAGE>
[GRAPHIC]
Smith Barney
World Funds, Inc.
Emerging Markets Portfolio
European Portfolio
Pacific Portfolio
----------------------------------
S E M I - A N N U A L R E P O R T
----------------------------------
April 30, 1999
Smith Barney Mutual Funds
<PAGE>
Smith Barney
World Funds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
"Financial markets have demonstrated an impressive ability to correct imbalances
and recover quickly. In our view, the ability of markets to recover from
economic setbacks and the emergence of responsive financial leadership that
addresses problems swiftly, are signs of a more mature and more durable global
financial framework."
Heath B. McLendon
Chairman
- --------------------------------------------------------------------------------
The Emerging Markets Portfolio seeks long-term capital appreciation of its
assets through a portfolio invested primarily in securities of emerging country
issuers. The Portfolio follows an investment strategy involving broad geographic
diversification.
NASDAQ SYMBOL
-------------
Class A SMMAX
Class B SEMBX
Class L SEMLX
The European Portfolio seeks long-term capital appreciation by investing
primarily in equity of issuers based in countries of Europe.
NASDAQ SYMBOL
-------------
Class A SBEAX
Class B SBEBX
Class L SBELX
The Pacific Portfolio's primary investment objective is long-term capital
appreciation. In seeking to achieve its objective, the Portfolio will invest
primarily in a diversified portfolio of equity securities of companies in the
Pacific Rim.
NASDAQ SYMBOL
-------------
Class A SBPPX
Class B SBPFX
Class L SBPCX
- --------------------------------------------------------------------------------
WHAT'S INSIDE
- --------------------------------------------------------------------------------
A Message from the Chairman....................................................1
Emerging Markets Portfolio
Manager Commentary...........................................................2
Historical Performance.......................................................5
Portfolio at a Glance........................................................7
European Portfolio
Manager Commentary...........................................................8
Historical Performance......................................................10
Portfolio at a Glance.......................................................12
Pacific Portfolio
Managers Commentary.........................................................13
Historical Performance......................................................16
Portfolio at a Glance.......................................................18
Schedules of Investments......................................................19
Statements of Assets and Liabilities..........................................26
Statements of Operations......................................................27
Statements of Changes in Net Assets...........................................28
Notes to Financial Statements.................................................30
Financial Highlights..........................................................39
<PAGE>
- --------------------------------------------------------------------------------
A Message from the Chairman
- --------------------------------------------------------------------------------
[PHOTO]
HEATH B.
MCLENDON
Chairman
Dear Shareholder:
The world's economies faced a number of challenges the past six months. The
rapid transformation from a world divided between planned economies and free
markets towards a truly open, global marketplace has created imbalances in parts
of the world. Yet, many of those regions are successfully meeting these
challenges and we continue to view underlying global trends quite favorably. The
current economic cycle is unprecedented both in the scope of its expansion and
its longevity -- with few signs of any significant rise in inflation that had
accompanied previous economic expansions.
While the world's economic situation is encouraging, trouble spots remain.
However, we believe that the tough issues facing countries such as Indonesia,
Yugoslavia and Russia are largely political in nature, not economic. As
financial conditions continue to improve, and more and more people benefit from
these improvements, particularly in Latin America and Southeast Asia, political
stability should follow.
Another development that supports our optimistic outlook for the long term is
the resilience of world financial markets. Over the course of the last year, we
have seen major financial dislocations. But rather than resulting in permanent
disruption, financial markets have demonstrated an impressive ability to correct
imbalances and recover quickly. In our view, the ability of markets to recover
from economic setbacks and the emergence of responsive financial leadership that
addresses problems swiftly, are signs of a more mature and more durable global
financial framework.
Finally, we identify two trends that should add sustainability and force to the
ongoing global economic expansion: the convergence of currencies and the
evolution of corporations from nationalistic businesses to multi-national
enterprises. In January 1999, the European Union merged the currencies of 11
member nations into a single currency, the euro. The unification of these
Western European currencies set an example for the rest of the world and
demonstrated the relative ease with which these types of convergence can be
accomplished. So far, Europe's unification appears to have been positive and we
expect more currency convergences in the coming years.
Moreover, when German automaker Daimler-Benz and U.S.-based Chrysler, two
industry giants, merged, it became the first successful international merger on
such a scale. The rapidly evolving telecommunications industry provided another
example of global strategic alliance this year with the announced merger of
Global Crossing Ltd. (a Bermuda-based fiber-optic telecommunications network)
and US West (a Baby Bell). We also expect that this trend will continue and that
more such mergers will follow.
In this report, you will find specific market commentary and performance
information on the Smith Barney World Funds, Inc. -- Emerging Markets Portfolio,
European Portfolio and Pacific Portfolio beginning on page two.
In closing, thank you for investing in our family of international funds. We
remain committed to providing our shareholders with competitive performance in
the years ahead.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
May 28, 1999
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 1
<PAGE>
- --------------------------------------------------------------------------------
Emerging Markets Portfolio
- --------------------------------------------------------------------------------
The Emerging Markets Portfolio is managed by the Smith Barney International
Equity Team that is led by Scott E. Kalb.
[PHOTO]
SCOTT E. KALB
Vice President
Scott joined the Smith Barney International Equity Team in 1995. He has 11 years
of experience in research and was formerly Head of International Equity Research
at Smith Barney from 1990 to 1995, where he was responsible for the coverage of
equities in emerging markets. Prior to joining Smith Barney, Mr. Kalb served as
the First Vice President of Corporate Finance and Vice President of Equity
Research for Drexel Burnham Lambert. Previously, he worked at James Capel and
served for two years as economic consultant for the Ministry of Finance in South
Korea. Mr. Kalb lived in Asia for ten years and in London for two, speaks Korean
fluently and some Japanese. Mr. Kalb holds a B.A. from Oberlin College and an
M.A. in Economics from Harvard University.
Performance Update
The emerging markets performed very strongly over the last six months, led by
powerful gains in recovering Asian economies. Emerging markets have suffered
through a five-year bear market that began in Mexico in 1994 (the "Tequila
Crisis"), spread to Asia in 1997 (triggered by the debt crisis in Thailand), and
concluded with the Brazilian real devaluation in January 1999. Since then, the
asset class has been firing on all cylinders. A combination of positive
developments, including lower interest rates, stable currencies, improving
current account balances, corporate restructuring and government deregulation,
have stimulated economic growth in the developing world and encouraged investors
to once again start buying beaten-down emerging stocks.
During the six month period ended April 30, 1999, emerging markets, as measured
by the benchmark Morgan Stanley Capital International ("MSCI") Emerging Markets
Free Index, was up by 33%. (The MSCI Emerging Markets Free Index, comprising of
equities in Brazil, Mexico, Korea, Taiwan, India, South Africa and other
countries in the emerging markets, is a common benchmark against which the
performance of emerging market funds is measured.) During the same period, the
Emerging Markets Portfolio Class A shares increased by 22.33%, including
dividends and before the deduction of any sales charges. This relative
performance gap occurred mostly during February and March, when the Brazilian
and Mexican stock markets rallied by 50% and 30%, respectively. We were
underweight in these markets, expecting it would take some time to recover from
the damaging effects of a major devaluation of the real, as we had seen in Asia
during the previous year and in Latin America when the Mexican peso devalued. We
frankly underestimated the ability of these countries to rebound so soon and
lost some relative performance as a result. Since then, we have repositioned the
portfolios and performance has been in line. Going forward, we are optimistic
about the outlook for the emerging markets and believe it is a good time for
investors to increase investment in this asset class.
Market Review -- Currency and Banking
Crises Subside, Stocks Rise
Asia
Stock markets in the developing countries of Asia rebounded sharply during the
last six months, as economies bottomed out in the 4th quarter of 1998 and began
to recover. The MSCI Emerging Asia Index, including Indonesia, Thailand, the
Philippines and other developing Asian countries, increased by 64% in dollar
terms during the period. Most of the gains were recorded during March and April,
as investors became increasingly confident that corporate earnings were starting
to pick up again.
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
China and Taiwan were laggards. Although, both countries survived the crisis
well they are currently showing signs of slower growth, just as many other
countries start to pick-up.
There are a number of factors underlying the recovery in Asia, including
interest rate cuts, stable currencies, positive funds flows, low input costs,
the resumption of industrial production and export growth. However, most
important, in our view, are the measures taken by companies and government
leaders to restructure and restore competitiveness. Having experienced a
difficult period of pain and contraction, officials in many countries in the
region have resolved to correct excesses of the past and reduce vulnerability to
similar shocks. Banking systems are being repaired, new lending practices put in
place, unprofitable businesses are being sold off, and debts are getting repaid.
Latin America
Share prices in Latin America showed surprising resiliency, with the MSCI Latin
America Index posting a gain of 26% for the period, despite the 50% devaluation
of the Brazilian real in January. In 1994, when the Mexican peso devalued,
economies and share prices throughout the region took over a year to recover
from the fallout. This time around, government officials and company managers
were much better prepared to deal with the crisis and were quickly able to
stabilize currency outflows, current account deficits and currency weakness.
Unlike Asia, where corporate indebtedness reached extreme levels pre-crisis,
Latin companies had relatively clean balance sheets and most were well
positioned to weather the storm. Problems in Latin America stemmed largely from
the government side and in this regard, officials showed surprising dexterity in
responding to the issues.
Emerging Europe and Middle East (EMEA)
Performance in the Emerging European and Middle East stock markets was mixed for
the reporting period. Share prices in Greece rose strongly in reaction to
government actions to bring inflation and interest rates down to levels
acceptable for joining the European Union in the next round of admissions. The
Turkish exchange also performed strongly on the back of lower inflation figures
and a favorable election result. However, shares in the Czech Republic, Poland,
Hungary and South Africa lagged the emerging markets index by a wide margin.
Moreover, the war in Kosovo dampened investor enthusiasm for stocks in this
region.
Outlook for Second Half -- Some Risks but
Recovery Likely to Continue
There are a number of things that could derail the recovery in emerging markets
or at least delay it. In Asia, currency stability is still fragile, and should
China devalue the renminbi later this year, currency weakness could resume
throughout the region. In Latin America, the Brazilian legislature needs to pass
some tough measures to meet budget targets for next year and if these measures
are delayed, the real could fall again, putting pressure on economies in the
region. Another risk has to do with a potential rise in global interest rates
which could hurt fund flows to the region that are critical for continued
restructuring and growth.
While these risks are real, we remain optimistic about the outlook for emerging
markets as an asset class. We believe that the authorities in China have enough
weapons in their arsenal to resist devaluation and we are confident that the
Brazilian government will continue to chip away at fiscal reform. As for global
interest rates, a sharp rise might cause markets everywhere to pull back, but we
believe a modest increase in rates, a more likely scenario, will not deter
recovery or limit fund flows to the region. Finally, we note that valuations for
many emerging market company shares are compelling, while equity risk premiums
for the asset class are falling.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 3
<PAGE>
Portfolio Changes*
We made a number of changes to the Portfolio during the last six months. In
Asia, positions in Korean and Taiwanese companies have become mainstays of the
portfolio, comprising over 20% of net assets. We are particularly excited about
the prospects for earnings growth in Korea, as companies de-lever and
concentrate on improving profitability. We added several new positions in Korea
including Kepco (the monopoly electric utility), Posco (the world's lowest cost
producer of steel), SK Telecom (Korea's largest cellular phone company) and
Korea Housing Bank (the country's largest mortgage lender). In Taiwan, we added
Cathay Life (the country's largest financial conglomerate), Hon Hai (a leading
global provider of connectors), Winbond (a profitable producer of 128 megabit
DRAMS) and President Chain Stores (the "Seven-Eleven" of Taiwan). At the same
time, we deleted our holdings in China, as we became concerned about slowing
earnings growth prospects.
In Latin America, we rebuilt holdings in Brazil and Mexico, encouraged by low
valuations and the ability of companies to maintain earnings growth in the face
of currency volatility. Positions in these two countries comprised over 20% of
the portfolio. In Brazil, we added Unibanco (the third largest commercial bank)
Pao de Acucar (Brazil's most profitable retailer) and Tele Norte Leste (an
undervalued fixed-line telephone operator). In Mexico we added Cemex (a top
global cement producer) and Cifra (the country's leading food retailer).
In the EMEA area, we established a weighting in Israel, as we found a variety of
companies reporting strong earnings growth that were virtually unaffected by the
economic crisis facing many other emerging market countries. These companies
include Gilat (the world's largest supplier of Very Small Aperture
Terminals--VSATs), ECI Telecom (a leading exporter of specialized
telecommunications equipment), Comverse Technologies (a dominant supplier of
voice mail systems), and Teva Pharmaceuticals (the country's leading drug
company). Israel accounted for 5% of the portfolio.
Thank you for your investment in the Emerging Markets Portfolio.
/s/ Scott E. Kalb
Scott E. Kalb
Vice President
June 4, 1999
- ----------
* All Portfolio holdings are as of April 30, 1999 and are subject to change.
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
================================================================================
4/30/99 $ 7.03 $ 8.60 $0.00 22.33%+
- --------------------------------------------------------------------------------
10/31/98 12.45 7.03 0.00 (43.53)
- --------------------------------------------------------------------------------
10/31/97 12.08 12.45 0.00 3.06
- --------------------------------------------------------------------------------
10/31/96 11.06 12.08 0.00 9.22
- --------------------------------------------------------------------------------
Inception* -- 10/31/95 12.00 11.06 0.00 (7.83)+
================================================================================
Total $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
================================================================================
4/30/99 $ 6.85 $ 8.34 $0.00 21.75%+
- --------------------------------------------------------------------------------
10/31/98 12.21 6.85 0.00 (43.90)
- --------------------------------------------------------------------------------
10/31/97 11.95 12.21 0.00 2.18
- --------------------------------------------------------------------------------
10/31/96 11.02 11.95 0.00 8.44
- --------------------------------------------------------------------------------
Inception* -- 10/31/95 12.00 11.02 0.00 (8.17)+
================================================================================
Total $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
================================================================================
4/30/99 $ 6.84 $ 8.33 $0.00 21.78%+
- --------------------------------------------------------------------------------
10/31/98 12.22 6.84 0.00 (44.03)
- --------------------------------------------------------------------------------
10/31/97 11.95 12.22 0.00 2.26
- --------------------------------------------------------------------------------
10/31/96 11.02 11.95 0.00 8.44
- --------------------------------------------------------------------------------
Inception* -- 10/31/95 12.00 11.02 0.00 (8.17)+
================================================================================
Total $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
================================================================================
4/30/99 $ 7.07 $ 8.67 $0.00 22.63%+
- --------------------------------------------------------------------------------
Inception* -- 10/31/98 12.16 7.07 0.00 (41.86)+
================================================================================
Total $0.00
================================================================================
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 5
<PAGE>
- --------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
--------------------------------------------
Class A Class B Class L Class Y
================================================================================
Six Months Ended 4/30/99+ 22.33% 21.75% 21.78% 22.63%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 (28.87) (29.38) (29.53) (28.35)
- --------------------------------------------------------------------------------
Inception* through 4/30/99 (8.04) (8.75) (8.78) (28.70)
================================================================================
With Sales Charges(2)
--------------------------------------------
Class A Class B Class L Class Y
================================================================================
Six Months Ended 4/30/99+ 16.22% 16.75% 19.55% 22.63%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 (32.44) (32.91) (30.93) (28.35)
- --------------------------------------------------------------------------------
Inception* through 4/30/99 (9.22) (9.21) (9.01) (28.70)
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 4/30/99) (28.33)%
- --------------------------------------------------------------------------------
Class B (Inception* through 4/30/99) (30.50)
- --------------------------------------------------------------------------------
Class L (Inception* through 4/30/99) (30.58)
- --------------------------------------------------------------------------------
Class Y (Inception* through 4/30/99) (28.70)
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charge ("CDSC") with respect to Class
B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one period from initial purchase.
Thereafter, this CDSC declines by 1.00% per year until no CDSC is
incurred. Class L shares also reflect the deduction of a 1.00% CDSC, which
applies if shares are redeemed within the first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* The inception date for Class A, B and L shares is May 12, 1995 and the
inception date for Class Y shares is March 10, 1998.
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Emerging Markets Portfolio at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A, B and L Shares of the
Emerging Markets Portfolio vs. MSCI Emerging Markets Free Index+
- --------------------------------------------------------------------------------
May 1995 -- April 1999
[LINE GRAPH]
<TABLE>
<CAPTION>
Emerging Markets Portfolio
--------------------------------------------------- MSCI Free World MSCI Emerging Markets
Class A Shares Class B Shares Class L Shares Market Index Free Index
-------------- -------------- -------------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
May 12, 1995 9501 10000 10000 10000 10000
Oct 1995 8757 8724 9092 10497 9453
Apr 1996 9850 9800 10167 11928 10600
Oct 1996 9565 9560 9958 12264 9861
Apr 1997 11283 11292 11700 13146 10837
Oct 1997 10375 9875 10183 14098 8844
Apr 1998 9572 9546 9850 16645 9079
Oct 1998 5566 5594 5644 16041 5936
Apr 30, 1999 6809 6811 6873 21634 7098
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A, B and L shares
at inception on May 12, 1995, assuming deduction of the maximum 5.00%
sales charge at the time of investment for Class A shares, the deduction
of the maximum 5.00% CDSC for Class B shares (which decreases by 1.00%
each year) and the deduction of the 1.00% CDSC for Class L shares. It also
assumes reinvestment of dividends and capital gains, if any, at net asset
value through April 30, 1999. The Morgan Stanley Capital International
("MSCI") Emerging Markets Free Index consists of emerging market companies
with an average size of $800 million, the index measures performance of
emerging markets in South America, South Africa, Asia and Eastern Europe.
The index is unmanaged and is not subject to the same management and
trading expenses as a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
<TABLE>
<S> <C>
Top Ten Holdings* As of April 30, 1999
- --------------------------------------------------------------------------------
1. Telefonos de Mexico SA ADR 3.6%
- ---------------------------------------------------------------------------------
2. Malayan Banking Berhad 3.3
- ---------------------------------------------------------------------------------
3. Grupo Carso S.A. de CV, Series A1 3.0
- ---------------------------------------------------------------------------------
4. Indian Tobacco 2.9
- ---------------------------------------------------------------------------------
5. Telekom Malaysia Berhad 2.7
- ---------------------------------------------------------------------------------
6. Grupo Televisa SA GDR 2.6
- ---------------------------------------------------------------------------------
7. Pentafour Software Ltd. GDR 2.6
- ---------------------------------------------------------------------------------
8. Uniao de Banco Brasileiro SA GDR 2.6
- ---------------------------------------------------------------------------------
9. Cifra SA de CV, Series V 2.6
- ---------------------------------------------------------------------------------
10. SM Prime Holdings Inc. 2.4
- ---------------------------------------------------------------------------------
</TABLE>
* As a percentage of total investments.
Investment Allocation as of April 30, 1999*
- --------------------------------------------------------------------------------
[PIE CHART]
Asia/Pacific 46.9%
Latin America 32.8%
Europe 12.5%
Africa 7.8%
* As a percentage of total investments.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 7
<PAGE>
- --------------------------------------------------------------------------------
European Portfolio
- --------------------------------------------------------------------------------
Portfolio Manager
[PHOTO]
REIN W.
VAN DER DOES
Vice President
Rein W. van der Does began his career with Drexel Burnham Lambert in 1968 as a
domestic research analyst. In 1975, he joined Drexel's International Research
Department and was appointed Director of International Research and Head of
Portfolio Strategy in 1985. He moved with the International Equity team to Smith
Barney in 1990. He is a member of the New York State Association for
International Investment and a member of the New York Society of Security
Analysts. Mr. van der Does was awarded a doctorate in Economics from the Dutch
Economic University in Rotterdam.
Performance Update
The European Portfolio posted a total return of 9.50% for Class A shares, before
the deduction of any sales charges, for the six months ended April 30, 1999. The
Portfolio outperformed the average total return of 8.95% for European region
funds according to Lipper Inc., a respected fund-tracking organization. For
performance information on the Portfolio's other classes, please refer to page
10.
European Markets Update
European stock markets turned in a disappointing performance in the last six
months despite a number of positive events. To help stimulate the flagging
economies of its members, The European Central Bank, the bank of the
newly-formed European Union, lowered interest rates by 0.5% in April. Moreover,
the burst of new mergers and acquisitions, and the sudden departure of
controversial German Finance Minister, Oskar Lafontaine, should have helped
boost European stock markets. Nevertheless, Europe was one of the
worst-performing stock markets in recent months, defying the expectations of
many investors.
After years of negotiations and preparations, the European Union finally
introduced its new single currency, the euro, on January 1, 1999. The historic
debut marked the first time that nations have converged their currencies into a
single currency. The economic unification of the 11 members is a major step
towards the creation of a single market that rivals that of the U.S. in size and
influence. Since its introduction, the euro has slipped against the U.S. dollar,
hampered by sluggish economies and concerns of a deteriorating situation in
nearby Kosovo. However, the new single currency should play an important role in
bringing greater efficiencies to European financial markets.
Investment Strategy*
In selecting investments for the Portfolio, we continue to use a "bottom-up"
approach, evaluating individual companies rather than investment trends. While
economic cycles are important when evaluating a company's outlook, we generally
search for promising European companies with excellent growth prospects,
regardless of the regional macroeconomic conditions. In our opinion, this
approach should provide investors with competitive returns over the long term.
During the reporting period, we sold Independent Newspaper (in Ireland) and
Gucci (the Italian fashion designer). In addition, we also sold AOT (a financial
services company) after the merger with Bank Labouchere did not go through. New
additions to the Portfolio included Banque National de Paris (banking), Sidel (a
French world leader in bottling machines), Indra (a Spanish information
technology service provider) and BP-Amoco (a UK oil company).
- ----------
* All Portfolio holdings are as of April 30, 1999 and are subject to change.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
We believe the introduction of the euro has eliminated much of the
country-specific risk associated with currency exchange and has encouraged a
sector-based investment approach. One consequence of this shift in investor
emphasis has been the development of new European stock indices. As a result,
many European pension funds have rebalanced, or are in the process of
rebalancing their European stock portfolios, which could accelerate the trend
favoring large-capitalization stocks.
Overall, we continue to emphasize service industries (outsourcing of information
technology as well as catering), consumer goods and growth stocks. We have
lightened exposure to basic materials industries and financial services
companies (preferring insurance companies over banks). Geographically, we have
concentrated on Continental Europe and placed less emphasis on the U.K. relative
to the Portfolio's benchmark index, on the belief that its decision to stay out
of the European Union might hurt its growth prospects.
European Markets Outlook
In our opinion, Europe's economic fundamentals remain strong enough to withstand
the negative impact of the emerging market crisis. Moreover, Mr. Lafontaine's
departure, combined with weak economic growth and low inflation, could entice
the European Central Bank to lower short-term interest rates in the coming
months. The consensus opinion for European economic growth is 1.8% in 1999 and a
strong 3.1% next year. We believe these economic conditions, combined with heavy
ongoing corporate restructuring, should result in healthy earnings in 1999 and
2000. While Salomon Smith Barney research estimates that earnings for the S&P
500 stock index will only rise slightly in 1999 and 2000, analyst consensus for
Europe is a 9% rise in 1999 and a 12% increase in 2000.
We continue to believe that investing in Europe should be exciting in the next
few years due to four ongoing structural changes:
. The creation of the European Union in January 1999 (more deregulation,
privatization, restructuring, and increased mergers and acquisitions);
. The creation of one currency, the euro (increased price transparency means
lower inflation);
. The creation of a true equity culture through cheaply-priced privatization
offerings, stock options and corporate share buybacks, and;
. The greater emphasis on enhancing shareholder value by European companies.
In this dynamic marketplace, stock picking will be crucial to investing success,
as there will be many winners and losers. We continue to remain optimistic on
investing in Europe due to the many changes underway there and the relative
undervaluation of many European companies and the relative underperformance
compared to the U.S. stock market. Barring the further escalation of the Kosovo
conflict or other catastrophe, we expect that European stock markets should
continue their bullish trends fueled by a very accommodating monetary policy.
Thank you for your investment in the European Portfolio.
/s/ Rein W. van der Does
Rein W. van der Does
Vice President
May 25, 1999
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 9
<PAGE>
- --------------------------------------------------------------------------------
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>
4/30/99 $19.44 $20.95 $0.00 $0.33 9.50%+
- -----------------------------------------------------------------------------------------
10/31/98 18.23 19.44 0.00 0.39 9.10
- -----------------------------------------------------------------------------------------
10/31/97 17.25 18.23 0.00 1.16 12.88
- -----------------------------------------------------------------------------------------
10/31/96 14.67 17.25 0.09 0.04 18.65
- -----------------------------------------------------------------------------------------
10/31/95 12.88 14.67 0.00 0.00 13.90
- -----------------------------------------------------------------------------------------
Inception* -- 10/31/94 12.50 12.88 0.00 0.00 3.04+
=========================================================================================
Total $0.09 $1.92
=========================================================================================
</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>
4/30/99 $18.95 $20.34 $0.00 $0.33 9.11%+
- -----------------------------------------------------------------------------------------
10/31/98 17.92 18.95 0.00 0.39 8.24
- -----------------------------------------------------------------------------------------
10/31/97 17.09 17.92 0.00 1.16 12.08
- -----------------------------------------------------------------------------------------
10/31/96 14.56 17.09 0.00 0.04 17.72
- -----------------------------------------------------------------------------------------
Inception* -- 10/31/95 12.62 14.56 0.00 0.00 15.37+
=========================================================================================
Total $0.00 $1.92
=========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
=========================================================================================
<S> <C> <C> <C> <C> <C>
4/30/99 $18.91 $20.30 $0.00 $0.33 9.13%+
- -----------------------------------------------------------------------------------------
10/31/98 17.86 18.91 0.00 0.39 8.38
- -----------------------------------------------------------------------------------------
10/31/97 17.04 17.86 0.00 1.16 12.06
- -----------------------------------------------------------------------------------------
10/31/96 14.51 17.04 0.00 0.04 17.78
- -----------------------------------------------------------------------------------------
10/31/95 12.83 14.51 0.00 0.00 13.09
- -----------------------------------------------------------------------------------------
Inception*-- 10/31/94 12.48 12.83 0.00 0.00 2.80+
=========================================================================================
Total $0.00 $1.92
=========================================================================================
</TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
EUROPEAN PORTFOLIO
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
--------------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 4/30/99+ 9.50% 9.11% 9.13%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 (3.55) (4.28) (4.24)
- --------------------------------------------------------------------------------
Five Years Ended 4/30/99 13.60 N/A 12.81
- --------------------------------------------------------------------------------
Inception* through 4/30/99 12.81 13.99 12.12
================================================================================
With Sales Charges(2)
--------------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 4/30/99+ 4.04% 4.11% 7.04%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 (8.36) (8.98) (6.14)
- --------------------------------------------------------------------------------
Five Years Ended 4/30/99 12.44 N/A 12.57
- --------------------------------------------------------------------------------
Inception* through 4/30/99 11.71 13.85 11.90
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 4/30/99) 87.80%
- --------------------------------------------------------------------------------
Class B (Inception* through 4/30/99) 79.78
- --------------------------------------------------------------------------------
Class L (Inception* through 4/30/99) 81.49
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from initial purchase.
Thereafter, this CDSC declines by 1.00% per year until no CDSC is
incurred. Class L shares also reflect the deduction of a 1.00% CDSC, which
applies if shares are redeemed within the first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B and L shares are February 7, 1994, November
7, 1994 and February 14, 1994, respectively.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
European Portfolio at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the
European Portfolio vs. MSCI European Market Index+
- --------------------------------------------------------------------------------
[LINE GRAPH]
February 1994 -- April 1999
European Portfolio MSCI European Index
------------------ -------------------
Feb 7, 1994 9,545 10,000
Apr 1994 9,481 9,761
Oct 1994 9,840 10,064
Apr 1995 10,298 10,664
Oct 1995 11,207 11,393
Apr 1996 12,550 12,366
Oct 1996 13,298 13,383
Apr 1997 14,311 14,959
Oct 1997 15,010 16,861
Apr 1998 18,592 21,795
Oct 1998 16,377 20,812
Apr 30, 1999 17,933 23,062
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on February 7, 1994, assuming deduction of the maximum 4.50%
sales charge at the time of investment and the reinvestment of dividends
and capital gains, if any, at net asset value through April 30, 1999. The
Morgan Stanley Capital International ("MSCI") European Market 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 as 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. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
Top Ten Holdings* As of April 30, 1999
- --------------------------------------------------------------------------------
1. Nokia Oyj 6.2%
- --------------------------------------------------------------------------------
2. BP Amoco PLC ADR 4.7
- --------------------------------------------------------------------------------
3. Mannesmann AG 4.7
- --------------------------------------------------------------------------------
4. Tomra Systems ASA 4.7
- --------------------------------------------------------------------------------
5. Schering AG 4.1
- --------------------------------------------------------------------------------
6. CMG PLC 3.9
- --------------------------------------------------------------------------------
7. Telefonica SA 3.1
- --------------------------------------------------------------------------------
8. Axa 3.1
- --------------------------------------------------------------------------------
9. ING Groep NV 2.9
- --------------------------------------------------------------------------------
10. Novartis AG 2.9
- --------------------------------------------------------------------------------
* As a percentage of total investments.
Investment Allocation as of April 30, 1999**
- --------------------------------------------------------------------------------
[PIE CHART]
France 24.3%
Germany 13.0%
Netherlands 15.7%
United Kingdom 14.8%
Finland 7.8%
Spain 6.5%
Norway 5.7%
Other 7.7%
Switzerland 4.5%
** As a percentage of total investments.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Pacific Portfolio
- --------------------------------------------------------------------------------
Portfolio Managers
[PHOTO]
SCOTT E. KALB
Vice President
Scott E. Kalb joined the Smith Barney International Equity Team in 1995. He has
11 years of experience in research and was formerly Head of International Equity
Research at Smith Barney from 1990 to 1995, where he was responsible for the
coverage of equities in emerging markets. Prior to joining Smith Barney, Mr.
Kalb served as the First Vice President of Corporate Finance and Vice President
of Equity Research for Drexel Burnham Lambert. Previously, he worked at James
Capel and served for two years as economic consultant for the Ministry of
Finance in South Korea. Mr. Kalb lived in Asia for ten years and in London for
two, speaks Korean fluently and some Japanese. Mr. Kalb holds a B.A. from
Oberlin College and an M.A. in Economics from Harvard University.
[PHOTO]
DAVID ISHIBASHI
Vice President
David Ishibashi joined Smith Barney International Equity team as a Vice
President and Portfolio Manager in 1993. Mr. Ishibashi came to Smith Barney from
S.G. Warburg, where he was responsible for Japanese equities and headed the
Japan desk. Previously, he was at Baring Securities, Inc., where he was
responsible for Japan and Southeast Asia, opening and operating Baring's first
West Coast office. He also spent four years at Nomura Securities International
brokering Japanese securities and established the Nomura Finance Collection at
the Crocker School of Business and Business Library. Prior to that, he served as
a financial analyst at Rockwell International. Mr. Ishibashi has a B.A. from
California State College at Los Angeles and attended the post-graduate studies
program in Tokyo at the Inter-Cultural Japanese Language Institute.
Performance Update
It's official; the Asian markets are back! After several years of economic
turmoil and plunging stock markets, share prices in the region recovered
strongly over the last six months. A combination of positive developments,
including lower interest rates, stable currencies, improving current account
balances, corporate restructuring and government deregulation, are stimulating
economic growth and encouraging investors to dip into local shares. During the
six month period ended April 30, 1999, Asian stocks, as measured by the
benchmark Morgan Stanley Capital International ("MSCI") All Country Asia Pacific
Index, was up by 29%. (The MSCI All Country Asia Pacific Index, comprising of
equities in Japan, Australia, New Zealand, Hong Kong and other countries in the
Far East, is a common benchmark against which the performance of Asian funds is
measured.) During the same period, the Pacific Portfolio Class A shares
increased by 25.26%, including dividends and before the deduction of any sales
charges. The small performance gap occurred mostly in the last two months, when
some of the smaller and riskier stock markets in Asia, including Indonesia and
Malaysia, where the portfolio is under-weighted, increased very sharply. Going
forward, we are optimistic about the outlook for share price appreciation in
Asia and believe it is an excellent time to allocate funds to the region.
Asian Market Review -- Economies Begin to
Recover, Stocks Rebound
Japan
There is some controversy about the long-term sustainability of government
efforts to stimulate growth in the Japanese economy, but there can be no
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 13
<PAGE>
argument with the success shown year to date. So far, interest rates are down,
spending is up, banks are recapitalizing and corporations are restructuring. The
government has engaged classic Keynesian measures to boost demand, as it has for
much of the past decade, but this time it added a few new twists, including the
distribution of free vouchers to revive consumer demand, faster money supply
growth and tax relief. The new package of monetary and fiscal stimulus measures
was greeted warmly by investors. In fact, major stock price indices in Japan
broke through their long-term (downward sloping) moving average in February 1999
for the first time since 1995. For the six-month period ended April 30th 1999,
the Japanese stock market increased by 19% in U.S. dollar terms.
It is more than government measures, however, that are driving share prices
higher. Even more important in our view, have been announcements from major
corporations in Japan about shutting down excess capacity, shedding unprofitable
businesses and laying-off costly excess employees. This new focus on improving
returns and enhancing profitability is a most welcome development in a country
where the average return on equity has languished at less than 5% for years.
Corporate actions to improve returns may cause some pain in the short-term, but
they will restore competitiveness to the economy in the long-term, and this will
encourage consumers to feel more confident and to spend again.
Asia except Japan
Stock markets in the rest of the region rebounded sharply during the last six
months, as economies bottomed out in the 4th quarter of 1998 and began to
recover. Share prices rose most sharply in the developing Asian nations, as it
was these countries that were most affected by the crisis and had the most to
gain from recovery. The MSCI Emerging Asia Index, including Indonesia, Thailand,
the Philippines and other less-economically developed countries, increased by
43% in dollar terms during the period. At the same time, share prices in the
developed economies also increased during the last six months, but at a more
reasonable pace. The MSCI Pacific ex-Japan Index, including Hong Kong,
Singapore, Australia and New Zealand, rose by 28% in dollar terms during the
period.
There are a number of factors underlying the recovery in Asia, including
interest rate cuts, stable currencies, positive fund flows, low input costs, the
resumption of industrial production and export growth. However, most important,
in our view, are the measures taken by companies and government leaders to
restructure and restore competitiveness. Having experienced a difficult period
of pain and contraction, many countries in the region have resolved to correct
excesses of the past and reduce their vulnerability to such future shocks.
Banking systems are being repaired, new lending practices put in place,
unprofitable businesses are being sold off, and debts are getting repaid. Korea
is a good example of this development. As Korean companies de-lever, cut back on
costs and refocus on core operations, returns on equity ("ROE") are rising
dramatically and competitiveness is being restored. In response, share prices in
Korea have increased by over 100% in the last six months.
Outlook for Second Half -- Some Risks but
Recovery Likely to Continue
There are a number of things that could derail the recovery in Asia or at least
delay it. First, currency stability in the region is still fragile, and should
China devalue the renminbi later this year, currency weakness could resume.
Second, if global interest rates begin to rise again, fund flows to the region
that are critical for continued growth, could slow. Third, if Japan's recovery
falters or if the yen weakens substantially, growth in the rest of the region
could be negatively affected.
While these risks are real, we remain optimistic about the outlook for Asian
markets. We believe that the authorities in China have enough weapons in their
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
arsenal to resist a maxi-devaluation, including foreign exchange reserves equal
to 140 billion dollars. We expect that next year China may seek to depreciate
the renminbi by about 10%, but that this process will be well managed and cause
minimal disruption to regional economies. As for global interest rates, a sharp
rise might cause markets everywhere to pull back, but we believe a modest
increase in rates, a more likely scenario, would not deter recovery or limit
fund flows to the region. Finally, we remain cautiously optimistic about Japan
and expect steady economic improvement with only modest yen depreciation.
Portfolio Changes*
We made a few changes to the portfolio during the last six months. First, we
added a number of new positions in Australia, as we found a variety of companies
reporting strong earnings growth that were virtually unaffected by the economic
crisis in the region. These companies include National Australia Bank (the
country's largest commercial bank), Computershare (a dominant provider of share
registry services and back office functions for brokers), Lendlease (a financial
conglomerate), Tabcorp (Australia's leading gaming company), and Westfield
Holdings (the leading developer and operator of shopping malls). We deleted
several positions in Australia to accommodate these additions, but the net
effect was to increase our weighting in Australia to 10% of the portfolio from
7% previously.
In Japan, we took profits on some of our export-oriented companies, such as
Nidec and Mabuchi Motor. We used the proceeds to switch into domestic names such
as Japan Telco, NTT, Sumitomo Bank and Ito Yokado. We also invested in a few
companies with more cyclical earnings patterns that are currently in a "sweet
spot" in terms of their earnings cycles, including Toyota, Honda and Nippon
Steel. Overall, our weighting in Japan increased to 58% from 55% of the
portfolio.
The most dramatic shift in the portfolio occurred between Thailand and Taiwan.
We deleted our holdings in Thailand, taking our weighting down from 5% to zero.
At the same time, we added four new positions in Taiwan, including Cathay Life
(the country's leading life insurer), China Motors (the largest motor company),
Lea Lea (a major petrochemical producer) and TSMC (the world's largest
semi-conductor foundry). Our weighting in Taiwan increased to 5% from 1%
previously.
In other countries, we made a few switches but weightings remained broadly
unchanged. For example, in Hong Kong (9% of the portfolio) we added a few blue
chips, on improved earnings prospects and positive fund flows, including HSBC,
Hong Kong Telecom and Hutchison, while deleting positions in smaller companies
such as New World Development and Asia Satellite. In Korea (6% of the
portfolio), we took profits on exporters like Samsung Electronics (following the
announcement of a 10% rights issue) and Youngone and swapped into domestic
restructuring plays such as Kepco, Korea Telecom, Posco, and Samsung Corp.
Thank you for your investment in the Pacific Portfolio.
/s/ Scott E. Kalb /s/ David Ishibashi
Scott E. Kalb David Ishibashi
Vice President Vice President
June 2, 1999
- ----------
* All Portfolio holdings are as of April 30, 1999 and are subject to change.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
PACIFIC PORTFOLIO
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
================================================================================
4/30/99 $ 6.73 $ 8.43 $0.00 25.26%+
- --------------------------------------------------------------------------------
10/31/98 8.46 6.73 0.00 (20.45)
- --------------------------------------------------------------------------------
10/31/97 10.18 8.46 0.00 (16.90)
- --------------------------------------------------------------------------------
10/31/96 10.07 10.18 0.00 1.09
- --------------------------------------------------------------------------------
10/31/95 12.92 10.07 0.00 (22.06)
- --------------------------------------------------------------------------------
Inception* -- 10/31/94 12.50 12.92 0.00 3.36+
================================================================================
Total $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
================================================================================
4/30/99 $ 6.51 $ 8.12 $0.00 24.73%+
- --------------------------------------------------------------------------------
10/31/98 8.25 6.51 0.00 (21.09)
- --------------------------------------------------------------------------------
10/31/97 10.01 8.25 0.00 (17.58)
- --------------------------------------------------------------------------------
10/31/96 9.99 10.01 0.00 0.20
- --------------------------------------------------------------------------------
Inception* -- 10/31/95 12.64 9.99 0.00 (20.97)+
================================================================================
Total $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
================================================================================
4/30/99 $ 6.48 $ 8.09 $0.00 24.85%+
- --------------------------------------------------------------------------------
10/31/98 8.21 6.48 0.00 (21.07)
- --------------------------------------------------------------------------------
10/31/97 9.98 8.21 0.00 (17.74)
- --------------------------------------------------------------------------------
10/31/96 9.95 9.98 0.00 0.30
- --------------------------------------------------------------------------------
10/31/95 12.86 9.95 0.00 (22.63)
- --------------------------------------------------------------------------------
Inception* -- 10/31/94 12.50 12.86 0.00 2.88+
================================================================================
Total $0.00
================================================================================
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
PACIFIC PORTFOLIO
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
-------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 4/30/99+ 25.26% 24.73% 24.85%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 10.63 9.73 9.92
- --------------------------------------------------------------------------------
Five Years Ended 4/30/99 (7.41) N/A (8.14)
- --------------------------------------------------------------------------------
Inception* through 4/30/99 (7.26) (9.41) (8.00)
================================================================================
With Sales Charges(2)
-------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 4/30/99+ 19.07% 19.73% 22.51%
- --------------------------------------------------------------------------------
Year Ended 4/30/99 5.11 4.73 7.88
- --------------------------------------------------------------------------------
Five Years Ended 4/30/99 (8.35) N/A (8.32)
- --------------------------------------------------------------------------------
Inception* through 4/30/99 (8.17) (9.61) (8.18)
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 4/30/99) (32.56)%
- --------------------------------------------------------------------------------
Class B (Inception* through 4/30/99) (35.76)
- --------------------------------------------------------------------------------
Class L (Inception* through 4/30/99) (35.28)
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from initial purchase.
Thereafter, this CDSC declines by 1.00% per year until no CDSC is
incurred. Class L shares also reflect the deduction of a 1.00% CDSC, which
applies if shares are redeemed within the first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B and L shares are February 7, 1994, November
7, 1994 and February 11, 1994, respectively.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 17
<PAGE>
- --------------------------------------------------------------------------------
Pacific Portfolio at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the
Pacific Portfolio vs. MSCI All Country Asia Pacific Index+
- --------------------------------------------------------------------------------
February 1994 -- April 1999
[LINE GRAPH]
MSCI All Country Asia
Pacific Portfolio Pacific Index
----------------- -------------
Feb 7, 1994 9,549 10,000
Apr 1994 9,465 10,012
Oct 1994 9,870 10,716
Apr 1995 8,121 10,248
Oct 1995 7,693 9,438
Apr 1996 8,579 11,076
Oct 1996 7,777 9,650
Apr 1997 8,289 8,873
Oct 1997 6,463 7,703
Apr 1998 5,821 7,040
Oct 1998 5,141 6,634
Apr 30, 1999 6,440 8,615
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on February 7, 1994, assuming deduction of the maximum 4.50%
sales charge at the time of investment and the reinvestment of dividends
and capital gains, if any, at net asset value through April 30, 1999. The
Morgan Stanley Capital International ("MSCI") All Country Asia Pacific
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. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
Top Ten Holdings* As of April 30, 1999
- --------------------------------------------------------------------------------
1. Nippon Telegraph & Telephone Corp. 5.3%
- --------------------------------------------------------------------------------
2. Shohkoh Fund & Co. 4.8
- --------------------------------------------------------------------------------
3. Nippon Steel Corp. 3.9
- --------------------------------------------------------------------------------
4. NTT Data Corp. 3.9
- --------------------------------------------------------------------------------
5. Murata Manufacturing Co., Ltd. 3.7
- --------------------------------------------------------------------------------
6. Sony Corp. 3.7
- --------------------------------------------------------------------------------
7. Sumitomo Bank, Ltd. 3.5
- --------------------------------------------------------------------------------
8. Chugai Pharmaceutical Co., Ltd. 3.3
- --------------------------------------------------------------------------------
9. Ito-Yokado Co., Ltd. 3.0
- --------------------------------------------------------------------------------
10. Canon, Inc. 2.8
- --------------------------------------------------------------------------------
* As a percentage of total investments.
Investment Allocation as of April 30, 1999*
- --------------------------------------------------------------------------------
[PIE CHART]
Hong Kong 8.8%
Japan 57.6%
Australia 9.5%
Taiwan 5.4%
South Korea 6.0%
Singapore 7.0%
Other 5.7%
* As a percentage of total investments.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================
<S> <C> <C>
STOCK -- 100%
Argentina -- 6.5%
8,100 Banco de Galicia y Buenos Aires SA de CV ADR(a) $ 186,806
9,600 IRSA Inversiones y Representaciones SA GDR 321,600
33,000 Perez Companc SA, Class B Shares 205,342
6,500 Telefonica de Argentina SA ADR 242,938
- -------------------------------------------------------------------------------------------
956,686
- -------------------------------------------------------------------------------------------
Brazil -- 11.4%
15,000 Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR 261,563
6,136 Companhia Energetica de Minas Gerais ADR 147,208
12,000 Petroleo Brasileiro SA ADR 193,855
15,500 Tele Norte Leste Participacoes SA ADR 262,531
2,700 Telecomunicacoes Brasileiras SA, Preferred(b) 246,206
7,000 Telesp Particpacoes SA ADR(b) 175,000
15,200 Uniao de Banco Brasileiro SA GDR(a) 377,150
- -------------------------------------------------------------------------------------------
1,663,513
- -------------------------------------------------------------------------------------------
Chile -- 0.1%
627 Enersis SA ADR 12,031
- -------------------------------------------------------------------------------------------
Greece -- 4.2%
2,250 Alpha Credit Bank 161,028
8,600 Hellenic Telecommunication Organization SA 200,033
3,534 National Bank of Greece SA 241,482
353 National Bank of Greece SA Rights(b) 10,915
- -------------------------------------------------------------------------------------------
613,458
- -------------------------------------------------------------------------------------------
Hungary -- 2.3%
7,500 Magyar Tavkozlesi Rt ADR(a) 211,406
10,000 Synergon Information Systems(b)(c) 127,300
- -------------------------------------------------------------------------------------------
338,706
- -------------------------------------------------------------------------------------------
India -- 7.8%
15,000 ITC Ltd.(a)(b) 422,250
8,000 Infosys Technologies Ltd. ADR(a)(b) 330,500
17,200 Pentafour Software & Exports Ltd. GDR 387,000
- -------------------------------------------------------------------------------------------
1,139,750
- -------------------------------------------------------------------------------------------
Indonesia -- 2.4%
17,600 Gulf Indonesia Resources Ltd. 181,500
9,200 PT Indosat ADR 173,650
- -------------------------------------------------------------------------------------------
355,150
- -------------------------------------------------------------------------------------------
Israel -- 4.9%
3,000 Comverse Technology, Inc.(a)(b) 192,375
3,650 ECI Telecom Ltd. 134,593
4,900 Gilat Satellite Networks Ltd.(a)(b) 254,800
2,800 Teva Pharmaceutical Industries Ltd. ADR 128,100
- -------------------------------------------------------------------------------------------
709,868
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================
<S> <C> <C>
Malaysia -- 6.0%
194,000 Malayan Banking Berhad $ 482,980
144,000 Telekom Malaysia Berhad 397,545
- -------------------------------------------------------------------------------------------
880,525
- -------------------------------------------------------------------------------------------
Mexico -- 14.8%
61,000 Cemex SA de CV, Series B 283,213
195,680 Cifra SA de CV, Series V(b) 373,147
91,200 Grupo Carso S.A. de CV, Series A1 441,195
58,500 Grupo Financiero Banamex Accival, SA de CV, Class O 149,099
9,450 Grupo Televisa SA GDR 387,450
7,000 Telefonos de Mexico SA ADR Series L 530,250
- -------------------------------------------------------------------------------------------
2,164,354
- -------------------------------------------------------------------------------------------
Philippines -- 2.5%
1,584,000 SM Prime Holdings Inc. 358,249
- -------------------------------------------------------------------------------------------
Poland -- 1.5%
18,500 Elektrim Spolka Akcyjna SA 220,015
- -------------------------------------------------------------------------------------------
Russia -- 1.2%
22,200 Surgutneftegaz ADR(a) 169,719
- -------------------------------------------------------------------------------------------
South Africa -- 7.8%
17,221 Bidvest Group Ltd. 140,205
41,232 Dimension Data Holdings Ltd. 182,705
1 Edgars Stores Ltd. 5
15,600 Fedsure Holdings Ltd. 141,574
8,000 Investec Holdings Ltd. 277,566
365,500 Iscor Ltd. 113,760
6,940 Nedcor Ltd. 151,203
20,000 Sasol Ltd. 140,880
- -------------------------------------------------------------------------------------------
1,147,898
- -------------------------------------------------------------------------------------------
South Korea -- 11.6%
30,000 Hanwha Chemical Corp. 245,856
7,200 Housing & Commercial Bank of Korea 169,626
5,750 Korea Electric Power Corp. 165,461
3,700 Korea Telecom Corp. 161,885
8,600 Pohang Iron & Steel Co. Ltd. ADR(a) 221,450
22,500 Samsung Corp. 316,155
400 Samsung Fire & Marine Insurance 185,107
17,000 SK Telecom Co. Ltd. ADR 235,875
- -------------------------------------------------------------------------------------------
1,701,415
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================
<S> <C> <C>
Taiwan -- 9.8%
52,000 Cathay Life Insurance Co. Ltd. $ 186,055
127,000 China Motor Co. Ltd. 207,783
48,000 Hon Hai Precision Industry(b) 261,284
340,000 Lealea Enterprises Co. 186,116
57,000 President Chain Store Corp. 178,670
67,000 Taiwan Semiconductor Manufacturing Co.(b) 226,407
173,000 Winbond Electronics Corp.(b) 188,343
- -------------------------------------------------------------------------------------------
1,434,658
- -------------------------------------------------------------------------------------------
Thailand -- 1.9%
19,000 Italian-Thai Development Public Co. Ltd. 46,585
84,500 Thai Farmers Bank Public Co. Ltd. 234,501
- -------------------------------------------------------------------------------------------
281,086
- -------------------------------------------------------------------------------------------
Turkey -- 3.3%
217,000 Migros Turk TAS 299,249
7,600,000 Yapi ve Kredi Bankasi AS 182,440
- -------------------------------------------------------------------------------------------
481,689
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $12,297,606*) $14,628,770
===========================================================================================
</TABLE>
(a) A portion of this security is on loan (See Note 9).
(b) Non-income producing security.
(c) Security is exempt from registration under Rule 144a of the Securities Act
of 1933. This security may be resold in transactions that are exempt from
registration, generally to qualified institutional buyers.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 21
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
EUROPEAN PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================
<S> <C> <C>
STOCK -- 100%
Austria -- 1.4%
12,000 VA Technologie AG(a) $ 1,142,639
- -------------------------------------------------------------------------------------------
Canada -- 0.0%
242,957 International UNP Holdings Ltd.(b) 15,015
- -------------------------------------------------------------------------------------------
Finland -- 7.8%
260,000 Fortum Corp.(a) 1,389,153
70,000 Nokia Oyj 5,193,122
- -------------------------------------------------------------------------------------------
6,582,275
- -------------------------------------------------------------------------------------------
France -- 24.3%
10,000 Alcatel 1,229,396
20,000 Atos SA(b) 1,713,959
20,000 Axa 2,585,751
25,000 Banque Nationale de Paris 2,075,002
15,000 Cap Gemini SA(a) 2,296,388
10,000 Coflexip SA(a) 899,299
5,000 Danone 1,338,369
10,391 Guilbert SA(a) 1,539,115
45,000 Rhone-Poulenc SA 2,142,449
35,000 Schlumberger Ltd.(a) 2,235,625
20,000 Sidel SA 2,412,239
- -------------------------------------------------------------------------------------------
20,467,592
- -------------------------------------------------------------------------------------------
Germany -- 13.0%
21,104 DaimlerChrysler AG 2,066,458
30,000 Mannesmann AG 3,932,584
4,000 SAP AG(a) 1,481,199
30,000 Schering AG(a) 3,435,854
- -------------------------------------------------------------------------------------------
10,916,095
- -------------------------------------------------------------------------------------------
Ireland -- 0.9%
50,000 CBT Group Public Ltd. Co. ADR(b) 775,000
- -------------------------------------------------------------------------------------------
Italy -- 4.4%
60,000 Industrie Natuzzi S.p.A. ADR(a) 1,147,500
800,000 Istituto Nazionale delle Assicurazioni(a) 2,115,152
800,000 Unione Immobiliare S.p.A 457,056
- -------------------------------------------------------------------------------------------
3,719,708
- -------------------------------------------------------------------------------------------
Netherlands -- 15.7%
71,842 Fugro NV 1,949,626
42,090 Hunter Douglas NV 1,625,388
40,370 IHC Caland NV 1,832,321
40,294 ING Groep NV(a) 2,485,389
60,526 Koninklijke Ahrend NV 1,178,272
62,400 Ordina Beheer NV 1,498,635
105,017 Samas Groep NV 1,544,408
50,000 Vedior NV(a) 1,126,769
- -------------------------------------------------------------------------------------------
13,240,808
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
EUROPEAN PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================
<S> <C> <C>
Norway -- 5.7%
50,000 Orkla ASA $ 841,200
100,000 Tomra Systems ASA 3,981,249
- -------------------------------------------------------------------------------------------
4,822,449
- -------------------------------------------------------------------------------------------
Spain -- 6.5%
50,000 Amper SA 799,847
61,250 Azkoyen SA 1,703,008
39,000 Indra Sistemas SA 375,485
55,765 Telefonica SA 2,616,642
- -------------------------------------------------------------------------------------------
5,494,982
- -------------------------------------------------------------------------------------------
Sweden -- 1.0%
150,000 Mandator AB 859,589
- -------------------------------------------------------------------------------------------
Switzerland -- 4.5%
51,000 Mettler-Toledo International Inc.(a)(b) 1,332,375
1,664 Novartis AG(a) 2,440,534
- -------------------------------------------------------------------------------------------
3,772,909
- -------------------------------------------------------------------------------------------
United Kingdom -- 14.8%
35,000 BP Amoco PLC ADR(a) 3,961,563
120,000 CMG PLC 3,249,823
240,000 Compass Group PLC 2,424,809
600,000 Corporate Services Group PLC 864,622
200,000 SEMA Group PLC 1,948,219
- -------------------------------------------------------------------------------------------
12,449,036
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $66,367,766*) $84,258,097
===========================================================================================
</TABLE>
(a) A portion of this security is on loan (See Note 9).
(b) Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 23
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
PACIFIC PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================
<S> <C> <C>
STOCK -- 100%
Australia -- 9.5%
4,300 Brambles Industries Ltd. $ 126,556
4,355 Commonwealth Bank of Australia 79,421
5,050 Computershare Ltd. 52,215
7,627 E*Trade Australia Ltd. 47,973
3,851 Lend Lease Corp. 52,000
3,147 National Australia Bank Ltd. 61,365
6,900 Tabcorp Holdings Ltd. 56,206
10,056 Telstra Corp. Ltd. 54,653
8,200 Westfield Holdings Ltd. 54,349
- -------------------------------------------------------------------------------------------
584,738
- -------------------------------------------------------------------------------------------
Hong Kong -- 8.8%
260,000 CCT Telecom Holdings Ltd. 59,376
8,000 Cheung Kong Holdings Ltd. 72,769
21,500 Hong Kong Telecom 57,838
1,236 HSBC Holdings PLC 45,928
8,600 Hutchison Whampoa Ltd. 77,117
7,440 Sun Hung Kai Properties Ltd. 65,275
34,000 Vtech Holdings Ltd. 116,250
15,000 Wing Hang Bank Ltd. 45,868
- -------------------------------------------------------------------------------------------
540,421
- -------------------------------------------------------------------------------------------
India -- 2.2%
6,000 Pentafour Software & Exports Ltd. GDR 135,000
- -------------------------------------------------------------------------------------------
Japan -- 57.6%
7,000 Canon, Inc. 171,239
17,000 Chugai Pharmaceutical Co., Ltd.(a) 202,236
1,000 Hirose Electric Co., Ltd. 92,992
3,000 Honda Motor Co., Ltd. 132,199
3,000 Ito-Yokado Co., Ltd. 184,224
110 Japan Telecom Co., Ltd. 155,740
500 Kao Corp. 12,692
4,000 Murata Manufacturing Co., Ltd. 228,877
106,000 Nippon Steel Corp.(a) 237,992
30 Nippon Telegraph & Telephone Corp. 326,728
30 NTT Data Corp. 237,506
20,000 Sekisui Chemical Co., Ltd. 133,707
13,000 Sekisui House, Ltd. 145,612
2,000 Seven-Eleven Japan Co., Ltd. 170,736
500 Shohkoh Fund & Co. 293,218
2,400 Sony Corp. 224,186
16,000 Sumitomo Bank, Ltd. 216,612
5,000 Terumo Corp. 108,909
1,000 Tokio Marine & Fire Insurance Co., Ltd. 11,653
7,000 Tostem Corp. 129,895
4,000 Toyota Motor Corp. 113,601
- -------------------------------------------------------------------------------------------
3,530,554
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) April 30, 1999
- --------------------------------------------------------------------------------
PACIFIC PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================
<S> <C> <C>
New Zealand -- 2.0%
24,000 Telecom Corp. of New Zealand Ltd. $ 124,902
- -------------------------------------------------------------------------------------------
Philippines -- 1.5%
414,000 SM Prime Holdings 93,633
- -------------------------------------------------------------------------------------------
Singapore -- 7.0%
130,000 Allgreen Properties 79,067
12,300 City Developments Ltd. 82,072
39,139 Datacraft Asia Ltd. 122,896
17,200 Natsteel Electronics Ltd. 57,891
9,200 Oversea - Chinese Banking Corp., Ltd. 86,377
- -------------------------------------------------------------------------------------------
428,303
- -------------------------------------------------------------------------------------------
South Korea -- 6.0%
4,100 Kookmin Bank 55,885
2,500 Korea Electric Power Corp. 71,939
1,600 Korea Telecom Corp. 70,004
3,150 Pohang Iron & Steel Co., Ltd. ADR 81,140
6,500 Samsung Electronics 91,333
- -------------------------------------------------------------------------------------------
370,301
- -------------------------------------------------------------------------------------------
Taiwan -- 5.4%
16,000 Cathay Life Insurance Co., Ltd. 57,247
24,000 China Motor Co., Ltd. 39,266
18,200 Hon Hai Precision Industry(b) 99,070
114,000 Lealea Enterprises Co. 62,403
21,000 Taiwan Semiconductor Manufacturing Co.(b) 70,963
- -------------------------------------------------------------------------------------------
328,949
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $4,758,291*) $ 6,136,801
===========================================================================================
</TABLE>
(a) A portion of this security is on loan (See Note 9).
(b) Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 25
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging
Markets European Pacific
Portfolio Portfolio Portfolio
=============================================================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at cost $ 12,297,606 $ 66,367,766 $ 4,758,291
Foreign currency, at cost 18,061 1,979,432 89,020
=============================================================================================================================
Investments, at value $ 14,628,770 $ 84,258,097 $ 6,136,801
Foreign currency, at value 17,946 1,973,625 89,368
Cash 2,264,157 -- --
Collateral for securities on loan (Note 9) 1,415,390 14,260,954 469,750
Receivable for securities sold 628,655 1,244,369 107,943
Dividends and interest receivable 45,223 87,644 11,794
Receivable for Fund shares sold 11,308 152,673 254,048
Receivable for open forward foreign
currency contracts (Note 4) 289 -- 656
Receivable from Manager -- -- 525
- -----------------------------------------------------------------------------------------------------------------------------
Total Assets 19,011,738 101,977,362 7,070,885
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 9) 1,415,390 14,260,954 469,750
Payable for securities purchased 1,088,358 1,237,348 220,510
Management fees payable 11,200 60,805 --
Distribution fees payable 5,955 25,768 3,508
Payable to bank -- 3,114,120 237,370
Accrued expenses 54,449 82,544 45,990
- -----------------------------------------------------------------------------------------------------------------------------
Total Liabilities 2,575,352 18,781,539 977,128
- -----------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 16,436,386 $ 83,195,823 $ 6,093,757
=============================================================================================================================
NET ASSETS:
Par value of capital shares $ 1,937 $ 4,049 $ 742
Capital paid in excess of par value 25,809,097 61,066,925 8,260,522
Accumulated net investment loss (242,190) (397,054) (126,547)
Accumulated net realized gain (loss) from
security transactions and foreign currencies (11,458,587) 4,639,858 (3,418,928)
Net unrealized appreciation of investments
and foreign currencies 2,326,129 17,882,045 1,377,968
- -----------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 16,436,386 $ 83,195,823 $ 6,093,757
=============================================================================================================================
Shares Outstanding:
Class A 902,125 1,433,290 241,356
-------------------------------------------------------------------------------------------------------------------------
Class B 687,022 2,015,193 270,154
-------------------------------------------------------------------------------------------------------------------------
Class L 205,507 600,371 230,484
-------------------------------------------------------------------------------------------------------------------------
Class Y 142,813 -- --
-------------------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 8.60 $ 20.95 $ 8.43
-------------------------------------------------------------------------------------------------------------------------
Class B * $ 8.34 $ 20.34 $ 8.12
-------------------------------------------------------------------------------------------------------------------------
Class L ** $ 8.33 $ 20.30 $ 8.09
-------------------------------------------------------------------------------------------------------------------------
Class Y (and redemption price) $ 8.67 -- --
-------------------------------------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $ 9.05 $ 22.05 $ 8.87
-------------------------------------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $ 8.41 $ 20.51 $ 8.17
=============================================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if
shares are redeemed within one year from initial purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations (unaudited) For the Six Months Ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging
Markets European Pacific
Portfolio Portfolio Portfolio
=============================================================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 12,833 $ 147,246 $ 5,522
Dividends 92,245 373,331 34,606
Less: Foreign withholding tax (4,036) (44,251) (3,698)
- -----------------------------------------------------------------------------------------------------------------------------
Total Investment Income 101,042 476,326 36,430
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 67,717 363,278 23,661
Registration fees 65,921 36,259 27,208
Distribution fees (Note 2) 42,776 311,730 19,727
Custody 40,911 31,810 10,637
Shareholder and system servicing fees 20,088 88,315 12,218
Audit and legal 16,345 15,021 10,909
Shareholder communications 10,670 29,688 7,565
Directors' fees 2,204 1,518 1,489
Other 2,401 2,923 4,422
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 269,033 880,542 117,836
Less: Management fee waiver and
expense reimbursement (Note 2) -- -- (30,751)
- -----------------------------------------------------------------------------------------------------------------------------
Net Expenses 269,033 880,542 87,085
- -----------------------------------------------------------------------------------------------------------------------------
Net Investment Loss (167,991) (404,216) (50,655)
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCIES (NOTES 3 AND 4):
Realized Gain (Loss) From:
Security transactions (4,952,468) 4,640,807 538,529
Foreign currency transactions (74,199) 7,162 7,061
- -----------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) (5,026,667) 4,647,969 545,590
- -----------------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments and Foreign Currencies:
Beginning of period (5,748,404) 14,047,667 465,438
End of period 2,326,129 17,882,045 1,377,968
- -----------------------------------------------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 8,074,533 3,834,378 912,530
- -----------------------------------------------------------------------------------------------------------------------------
Net Gain on Investments and Foreign Currencies 3,047,866 8,482,347 1,458,120
- -----------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 2,879,875 $ 8,078,131 $ 1,407,465
=============================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 27
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (unaudited)
For the Six Months Ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging
Markets European Pacific
Portfolio Portfolio Portfolio
=================================================================================================
<S> <C> <C> <C>
OPERATIONS:
Net investment loss $ (167,991) $ (404,216) $ (50,655)
Net realized gain (loss) (5,026,667) 4,647,969 545,590
Increase in net unrealized appreciation 8,074,533 3,834,378 912,530
- -------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 2,879,875 8,078,131 1,407,465
- -------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains -- (1,344,312) --
- -------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders -- (1,344,312) --
- -------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 11,719,222 184,729,633 26,793,201
Net asset value of shares issued
for reinvestment of dividends -- 1,277,396 --
Cost of shares reacquired (12,131,989) (187,960,492) (27,036,352)
- -------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Fund Share Transactions (412,767) (1,953,463) (243,151)
- -------------------------------------------------------------------------------------------------
Increase in Net Assets 2,467,108 4,780,356 1,164,314
NET ASSETS:
Beginning of period 13,969,278 78,415,467 4,929,443
- -------------------------------------------------------------------------------------------------
End of period* $ 16,436,386 $ 83,195,823 $ 6,093,757
=================================================================================================
* Includes accumulated net investment loss of: $ (242,190) $ (397,054) $ (126,547)
=================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
28 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Year Ended October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging
Markets European Pacific
Portfolio Portfolio Portfolio
============================================================================================================
<S> <C> <C> <C>
OPERATIONS:
Net investment loss $ (268,393) $ (153,463) $ (153,249)
Net realized gain (loss) (5,703,990) 1,340,410 (1,687,288)
Change in net unrealized appreciation (depreciation) (6,526,925) (2,609,890) 722,889
- ------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Operations (12,499,308) (1,422,943) (1,117,648)
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains -- (971,550) --
- ------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders -- (971,550) --
- ------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 10):
Net proceeds from sale of shares 16,605,085 232,181,828 29,892,372
Net asset value of shares issued
for reinvestment of dividends -- 914,761 --
Cost of shares reacquired (26,621,269) (198,735,480) (33,645,977)
- ------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Fund Share Transactions (10,016,184) 34,361,109 (3,753,605)
- ------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (22,515,492) 31,966,616 (4,871,253)
NET ASSETS:
Beginning of year 36,484,770 46,448,851 9,800,696
- ------------------------------------------------------------------------------------------------------------
End of year* $ 13,969,278 $ 78,415,467 $ 4,929,443
============================================================================================================
* Includes accumulated net investment income of: -- -- $ 82,953
============================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Emerging Markets, European and Pacific Portfolios ("Portfolios") are
separate investment portfolios 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 management company. The Fund
consists of these Portfolios and three other separate investment portfolios:
Global Government Bond, International Equity and International Balanced
Portfolios. The financial statements and financial highlights for the other
portfolios are presented in a separate semi-annual report.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities traded on
national securities markets are valued at the closing prices on the primary
exchange on which they are traded; securities listed or traded on certain
foreign exchanges or other markets whose operations are similar to the U.S.
over-the-counter market (including securities listed on exchanges where the
primary market is believed to be over-the-counter) and securities for which no
sales price was reported on that date are valued at the mean between the bid and
ask prices. Securities which are listed or traded on more than one exchange or
market are valued at the quotations on the exchange or market determined to be
the primary market for such securities; (c) securities for which market
quotations are not available will be valued in good faith at fair value by or
under the direction of the Board of Directors; (d) securities maturing within 60
days are valued at cost plus accreted discount, or minus amortized premium,
which approximates value; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) interest income,
adjusted for amortization of premium and accretion of discount, is recorded on
an accrual basis; (g) dividend income is recorded on the ex-dividend date;
foreign dividend income is recorded on the ex-dividend date or as soon as
practical after the Fund determines the existence of a dividend declaration
after exercising reasonable due diligence; (h) direct expenses are charged to
each Portfolio and class; management fees and general Portfolio expenses are
allocated on the basis of relative net assets by class; (i) dividends and
distributions to shareholders are recorded on the ex-dividend date; (j) the
accounting records of each Portfolio are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies are translated into U.S.
dollars on the date of valuation. Purchases and sales of securities, and income
and expenses are translated at the rate of exchange quoted on the respective
date that such transactions are recorded. Differences between income or expense
amounts recorded and collected or paid are adjusted when reported by the
custodian; (k) the character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. At October 31, 1998, reclassifications
were made to the capital accounts of the Portfolios to reflect permanent
book/tax differences and income and gains available for distributions under tax
regulations. Accordingly, a portion of accumulated net investment loss amounting
to $461,640, $157,771 and $158,273 was reclassified to paid-in capital for the
Emerging Markets, European and Pacific Portfolios, respectively. Net investment
income (loss), net realized gains and net assets were not affected by these
adjustments; (l) each Portfolio intends to comply with the applicable provisions
of the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies and to make distributions of taxable income sufficient to
relieve each Portfolio from substantially all Federal income and excise taxes;
and (m) estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ.
- --------------------------------------------------------------------------------
30 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
In addition, the Portfolios may enter into forward exchange contracts in order
to hedge against foreign currency risk. These contracts are marked-to-market
daily by recognizing the difference between the contract exchange rate and the
current market rate as an unrealized gain or loss. Realized gains or losses are
recognized when contracts are settled.
2. Management Agreement and Other Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager of the Portfolios. The European and Pacific Portfolios pay SSBC a
management fee calculated at an annual rate of 0.85% of the average daily net
assets of each respective Portfolio. The Emerging Markets Portfolio pays SSBC a
management fee calculated at an annual rate of 1.00% of the average daily net
assets of the Portfolio. These fees are calculated daily and paid monthly. For
the six months ended April 30, 1999, SSBC waived a portion of its management fee
for the Pacific Portfolio in the amount of $30,751.
CFBDS, Inc. ("CFBDS") acts as the Portfolios' distributor. Salomon Smith Barney
Inc. ("SSB"), another subsidiary of SSBH, as well as certain other
broker-dealers, continues to sell shares of the Portfolios to the public as a
member of the selling group.
SSB acts as the primary broker for the Fund's portfolio agency transactions. For
the six months ended April 30, 1999, SSB received brokerage commissions of
$5,938.
There is a contingent deferred sales charge ("CDSC") of 5.00% on Class B shares,
which applies if redemption occurs within one year from initial purchase.
Thereafter this CDSC declines by 1.00% per year until no CDSC is incurred. Class
L shares also have a 1.00% CDSC, which applies if redemption occurs within the
first year of purchase. In addition, Class A shares for each Portfolio have a
1.00% CDSC, which applies if redemption occurs within the first year of
purchase. This CDSC only applies to those purchases of Class A shares that equal
or exceed $500,000 in the aggregate. These purchases do not incure an initial
sales charge.
For the six months ended April 30, 1999, CDSC's paid to CFBDS were
approximately:
Portfolio Class A Class B Class L
================================================================================
Emerging Markets $1,000 $23,000 --
- --------------------------------------------------------------------------------
European -- 67,000 $4,000
- --------------------------------------------------------------------------------
Pacific -- 16,000 --
================================================================================
For the six months ended April 30, 1999, sales charges received by CFBDS were
approximately:
Portfolio Class A Class L
================================================================================
Emerging Markets $ 2,000 $ 2,000
- --------------------------------------------------------------------------------
European 104,000 29,000
- --------------------------------------------------------------------------------
Pacific 2,000 5,000
================================================================================
Pursuant to a Distribution Plan, the Portfolios pay a service fee with respect
to Class A, B and L shares calculated at the annual rate of 0.25% of the average
daily net assets of each respective class' shares. The Portfolios also pay a
distribution fee with respect to Class B and L shares calculated at the annual
rate of 0.75% of the average daily net assets for each respective Portfolio and
class. For the six months ended April 30, 1999, total Distribution Plan fees
incurred by the Portfolios were:
Portfolio Class A Class B Class L
================================================================================
Emerging Markets $ 6,711 $ 28,439 $ 7,626
- --------------------------------------------------------------------------------
European 38,552 212,419 60,759
- --------------------------------------------------------------------------------
Pacific 2,703 10,606 6,418
================================================================================
All officers and one Director of the Fund are employees of SSB.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 31
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
3. Investments
During the six months ended April 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
Portfolio Purchases Sales
================================================================================
Emerging Markets $15,949,823 $18,215,819
- --------------------------------------------------------------------------------
European 13,621,203 10,730,619
- --------------------------------------------------------------------------------
Pacific 4,541,848 3,806,159
================================================================================
At April 30, 1999, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
Net Unrealized
Portfolio Appreciation Depreciation Appreciation
================================================================================
Emerging Markets $ 2,597,174 $ (266,010) $ 2,331,164
- --------------------------------------------------------------------------------
European 24,570,776 (6,680,445) 17,890,331
- --------------------------------------------------------------------------------
Pacific 1,417,210 (38,700) 1,378,510
================================================================================
4. Forward Foreign Currency Contracts
At April 30, 1999, the Portfolios had open forward foreign currency contracts as
described below. The Portfolios bear the market risk that arises from changes in
foreign currency exchange rates. The unrealized gain on the contracts reflected
in the accompanying financial statements were as follows:
Emerging Markets Portfolio
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain
=================================================================================================
<S> <C> <C> <C> <C>
To Buy:
Thailand Baht 1,736,111 $46,777 5/6/99 $289
- -------------------------------------------------------------------------------------------------
Total Unrealized Gain on
Forward Foreign Currency Contracts $289
=================================================================================================
</TABLE>
Pacific Portfolio
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain
=================================================================================================
<S> <C> <C> <C> <C>
To Buy:
Australian Dollar 51,053 $33,838 5/3/99 $459
Australian Dollar 3,522 2,334 5/4/99 10
Singapore Dollar 133,900 79,118 5/6/99 187
- -------------------------------------------------------------------------------------------------
Total Unrealized Gain on
Forward Foreign Currency Contracts $656
=================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
32 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
5. Option Contracts
Premiums paid when put or call options are purchased by the Portfolios represent
investments, which are marked-to-market daily. When a purchased option expires,
the Portfolio will realize a loss in the amount of the premium paid. When the
Portfolio enters into a closing sales transaction, the Portfolio will realize a
gain or loss depending on whether the proceeds from the closing sales
transaction are greater or less than the premium paid for the option. When the
Portfolio exercises a put option, it will realize a gain or loss from the sale
of the underlying security and the proceeds from such sale will be decreased by
the amount of the premium originally paid. When the Portfolio exercises a call
option, the cost of the security that the Portfolio purchases upon exercise will
be increased by the premium originally paid.
At April 30, 1999, the Portfolios had no open purchased call or put options.
When a Portfolio writes a call or put option, an amount equal to the premium
received by the Portfolio is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Portfolio realizes a
gain equal to the amount of the premium received. When the Portfolio enters into
a closing purchase transaction, the Portfolio realizes a gain or loss depending
upon whether the cost of the closing transaction is greater or less than the
premium originally received without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a written call option is exercised, the cost of the security sold will be
decreased by the premium originally received. When a written put option is
exercised, the amount of the premium originally received will reduce the cost of
the security that the Portfolio purchased upon exercise. When written index
options are exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Portfolio enters into options for hedging purposes. The risk in
writing a call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price. The risk in writing a put option is that the Portfolio is
exposed to the risk of a loss if the market price of the underlying security
declines.
During the six months ended April 30, 1999, the Portfolios did not write any
call or put options.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contract. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are received or made and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Portfolio records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract. The Portfolio enters
into such contracts to hedge a portion of its portfolio. The Portfolio bears the
market risk that arises from changes in the value of the financial instruments
and securities indices (futures contracts).
At April 30, 1999, the Portfolios had no open futures contracts.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 33
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
7. Concentration of Risk
The Portfolios' investments in foreign securities may involve risks not present
in domestic investments. Since securities may be denominated in a foreign
currency and may require settlement in foreign currencies and pay interest or
dividends in foreign currencies, changes in the relationship of these foreign
currencies to the U.S. dollar can significantly affect the value of the
investments and earnings of each of the Portfolios. Foreign investments may also
subject the Portfolios to foreign government exchange restrictions,
expropriation, taxation or other political, social or economic developments, all
of which could affect the market and/or credit risk of the investments. As of
April 30, 1999, 57.6% of the Pacific Portfolio's total investments were
concentrated in Japan.
In addition to the risks described above, risks may arise from forward foreign
currency contracts with respect to the potential inability of counterparties to
meet the terms of their contracts.
8. Capital Loss Carryforwards
At October 31, 1998, the Emerging Markets and Pacific Portfolios had, for
Federal income tax purposes, approximately $6,458,000 and $3,949,000,
respectively, of capital loss carryforwards available to offset future realized
gains. To the extent that these carryforward losses are used to offset gains, it
is probable that the gains so offset will not be distributed. The amount and
date of expiration of the carryforward losses for each Portfolio is indicated
below:
<TABLE>
<CAPTION>
Portfolio 10/31/02 10/31/03 10/31/04 10/31/05 10/31/06 Total
==============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets -- $46,000 -- $879,000 $5,533,000 $6,458,000
- ----------------------------------------------------------------------------------------------
Pacific $37,000 1,426,000 $246,000 515,000 1,725,000 3,949,000
==============================================================================================
</TABLE>
9. Lending of Portfolio Securities
The Portfolios have an agreement with their custodian whereby the custodian may
lend securities owned by the Portfolios to brokers, dealers and other financial
organizations. Fees earned by the Portfolios on securities lending are recorded
as interest income. Loans of securities by the Portfolios are collateralized by
cash, U.S. government securities, high quality money market instruments or other
securities that are maintained at all times in an amount at least equal to the
current market value of the loaned securities, plus a margin depending on the
type of securities loaned. The custodian establishes and maintains the
collateral in a segregated account. The Portfolios maintain exposure for the
risk of any losses in the investment of amounts received as collateral.
At April 30, 1999, the Portfolios listed below had loaned common stocks which
were collateralized by cash and securities. The market value for the securities
on loan for each portfolio was as follows:
Portfolio Value
================================================================================
Emerging Markets $ 1,400,433
- --------------------------------------------------------------------------------
European 14,770,904
- --------------------------------------------------------------------------------
Pacific 440,195
================================================================================
- --------------------------------------------------------------------------------
34 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
At April 30, 1999, the Portfolios held the following collateral for loaned
securities:
Emerging Markets Portfolio
Security Description Value
================================================================================
Time Deposits:
Argentaria Caja Postal Banco Hipote, 4.875% due 5/3/99 $ 69,305
Caisse De Depots Et Consign, Paris, 4.875% due 5/3/99 69,305
Caisse National De Credit Agricole, 4.938% due 5/3/99 69,305
Commerzbank AG, Frankfurt, 5.125% due 5/3/99 69,305
Dresdner Bank Grand Cayman, 4.968% due 5/3/99 69,305
National Australia Bank G.C., 4.875% due 5/3/99 69,305
Southtrust Bank of Alabama, G.C., 5.000% due 5/3/99 54,714
Commercial Paper:
Associates First Capital, 4.942% due 5/3/99 69,276
Barton Capital Corp., 5.102% due 5/3/99 45,575
BP Capital PLC, 5.102% due 5/3/99 69,275
General Electric Credit, 4.952% due 5/3/99 69,276
General Motors ACC Corp., 4.942% due 5/3/99 67,722
Market Street Funding, 5.102% due 5/3/99 45,575
Wood Street Funding Corp., 5.052% due 5/3/99 36,477
Repurchase Agreements:
Merrill Lynch Securities/MLPFS, 4.987% due 5/3/99 258,980
NationsBanc Montgomery Securities Inc., 4.987% due 5/3/99 282,690
- --------------------------------------------------------------------------------
Total $ 1,415,390
================================================================================
European Portfolio
Security Description Value
================================================================================
Time Deposits:
Argentaria Caja Postal Banco Hipote, 4.875% due 5/3/99 $ 698,288
Caisse De Depots Et Consign, Paris, 4.875% due 5/3/99 698,288
Caisse National De Credit Agricole, 4.938% due 5/3/99 698,288
Commerzbank AG, Frankfurt, 5.125% due 5/3/99 698,288
Dresdner Bank Grand Cayman, 4.968% due 5/3/99 698,289
National Australia Bank G.C., 4.875% due 5/3/99 698,289
Southtrust Bank of Alabama, G.C., 5.000% due 5/3/99 551,280
Commercial Paper:
Associates First Capital, 4.942% due 5/3/99 698,000
Barton Capital Corp., 5.102% due 5/3/99 459,205
BP Capital PLC, 5.102% due 5/3/99 697,992
General Electric Credit, 4.952% due 5/3/99 698,000
General Motors ACC Corp., 4.942% due 5/3/99 682,338
Market Street Funding, 5.102% due 5/3/99 459,205
Wood Street Funding Corp., 5.052% due 5/3/99 367,530
Repurchase Agreements:
Merrill Lynch Securities/MLPFS, 4.987% due 5/3/99 2,609,393
NationsBanc Montgomery Securities Inc., 4.987% due 5/3/99 2,848,281
- --------------------------------------------------------------------------------
Total $14,260,954
================================================================================
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 35
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Pacific Portfolio
Security Description Value
================================================================================
Time Deposits:
Argentaria Caja Postal Banco Hipote, 4.875% due 5/3/99 $ 23,001
Caisse De Depots Et Consign, Paris, 4.875% due 5/3/99 23,001
Caisse National De Credit Agricole, 4.938% due 5/3/99 23,001
Commerzbank AG, Frankfurt, 5.125% due 5/3/99 23,001
Dresdner Bank Grand Cayman, 4.968% due 5/3/99 23,001
National Australia Bank G.C., 4.875% due 5/3/99 23,001
Southtrust Bank of Alabama, G.C., 5.000% due 5/3/99 18,159
Commercial Paper:
Associates First Capital, 4.942% due 5/3/99 22,992
Barton Capital Corp., 5.102% due 5/3/99 15,126
BP Capital PLC, 5.102% due 5/3/99 22,991
General Electric Credit, 4.952% due 5/3/99 22,992
General Motors ACC Corp., 4.942% due 5/3/99 22,476
Market Street Funding, 5.102% due 5/3/99 15,126
Wood Street Funding Corp., 5.052% due 5/3/99 12,107
Repurchase Agreements:
Merrill Lynch Securities/MLPFS, 4.987% due 5/3/99 85,953
NationsBanc Montgomery Securities Inc., 4.987% due 5/3/99 93,822
- --------------------------------------------------------------------------------
Total $469,750
================================================================================
In addition to the above noted cash collateral, the European Portfolio held
securities collateral with a market value of $928,978 as of April 30, 1999.
Interest income earned by the Portfolios from securities loaned for the year
ended April 30, 1999 was as follows:
Emerging
Markets European Pacific
Portfolio Portfolio Portfolio
================================================================================
Income from securities lending $3,956 $16,356 $1,030
================================================================================
10. Capital Shares
At April 30, 1999, the Fund had one billion shares of capital stock authorized
with a par value of $0.001 per share. The Portfolios have the ability to issue
multiple classes of shares. Each share of a class represents an identical legal
interest in a Portfolio and has the same rights, except that each class bears
certain expenses specifically related to the distribution of its shares.
At April 30, 1999, total paid-in capital amounted to the following for each
Portfolio:
Portfolio Class A Class B Class L Class Y
================================================================================
Emerging Markets $10,970,810 $10,633,776 $3,044,710 $1,161,738
- --------------------------------------------------------------------------------
European 22,114,262 26,978,350 11,978,362 --
- --------------------------------------------------------------------------------
Pacific 3,056,829 2,759,896 2,444,539 --
================================================================================
- --------------------------------------------------------------------------------
36 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
--------------------------- ---------------------------
Shares Amount Shares Amount
==================================================================================================
<S> <C> <C> <C> <C>
Emerging Markets Portfolio
Class A
Shares sold 1,241,346 $ 9,600,072 1,137,419 $ 10,738,376
Shares reacquired (1,152,803) (8,797,147) (1,452,183) (14,275,725)
- --------------------------------------------------------------------------------------------------
Net Increase (Decrease) 88,543 $ 802,925 (314,764) $ (3,537,349)
==================================================================================================
Class B
Shares sold 164,497 $ 1,222,656 464,368 $ 4,405,558
Shares reacquired (352,966) (2,607,022) (1,071,606) (10,500,886)
- --------------------------------------------------------------------------------------------------
Net Decrease (188,469) $ (1,384,366) (607,238) $ (6,095,328)
==================================================================================================
Class L(1)
Shares sold 77,079 $ 583,771 54,700 $ 603,227
Shares reacquired (96,998) (727,820) (183,794) (1,844,658)
- --------------------------------------------------------------------------------------------------
Net Decrease (19,919) $ (144,049) (129,094) $ (1,241,431)
==================================================================================================
Class Y*
Shares sold 42,527 $ 312,723 100,286 $ 857,924
Shares reacquired -- -- -- --
- --------------------------------------------------------------------------------------------------
Net Increase 42,527 $ 312,723 100,286 $ 857,924
==================================================================================================
European Portfolio
Class A
Shares sold 7,374,104 $ 151,442,050 7,081,251 $ 145,667,578
Shares issued on reinvestment 21,291 439,883 17,388 292,645
Shares reacquired (7,380,309) (152,340,433) (6,454,939) (132,333,615)
- --------------------------------------------------------------------------------------------------
Net Increase (Decrease) 15,086 $ (458,500) 643,700 $ 13,626,608
==================================================================================================
Class B
Shares sold 850,187 $ 17,180,049 3,390,677 $ 67,508,019
Shares issued on reinvestment 32,745 658,501 34,196 564,579
Shares reacquired (983,092) (19,868,140) (2,940,383) (56,380,398)
- --------------------------------------------------------------------------------------------------
Net Increase (Decrease) (100,160) $ (2,029,590) 484,490 $ 11,692,200
==================================================================================================
Class L(1)
Shares sold 800,191 $ 16,107,534 922,946 $ 19,006,231
Shares issued on reinvestment 8,919 179,012 3,496 57,537
Shares reacquired (777,761) (15,751,919) (531,482) (10,021,467)
- --------------------------------------------------------------------------------------------------
Net Increase 31,349 $ 534,627 394,960 $ 9,042,301
==================================================================================================
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
* For the period from March 10, 1998 (inception date) to October 31, 1998.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 37
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
-------------------------- --------------------------
Shares Amount Shares Amount
==================================================================================================
<S> <C> <C> <C> <C>
Pacific Portfolio
Class A
Shares sold 2,566,627 $ 19,457,891 3,240,998 $ 22,974,473
Shares reacquired (2,591,071) (19,787,953) (3,536,658) (25,734,908)
- --------------------------------------------------------------------------------------------------
Net Decrease (24,444) $ (330,062) (295,660) $ (2,760,435)
==================================================================================================
Class B
Shares sold 117,555 $ 869,045 357,395 $ 2,621,087
Shares reacquired (179,075) (1,327,099) (457,136) (3,300,568)
- --------------------------------------------------------------------------------------------------
Net Decrease (61,520) $ (458,054) (99,741) $ (679,481)
==================================================================================================
Class L(1)
Shares sold 908,994 $ 6,466,265 648,151 $ 4,296,812
Shares reacquired (830,166) (5,921,300) (678,354) (4,610,501)
- --------------------------------------------------------------------------------------------------
Net Increase (Decrease) 78,828 $ 544,965 (30,203) $ (313,689)
==================================================================================================
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
38 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares
--------------------------------------------------------------------
Emerging Markets Portfolio 1999(1)(2) 1998(2) 1997(2) 1996 1995(3)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $7.03 $12.45 $12.08 $11.06 $12.00
- --------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss(4) (0.02) (0.06) (0.05) (0.02) (0.05)#
Net realized and unrealized gain (loss) 1.59 (5.36) 0.42 1.04 (0.89)
- --------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.57 (5.42) 0.37 1.02 (0.94)
- --------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.60 $7.03 $12.45 $12.08 $11.06
- --------------------------------------------------------------------------------------------------------------
Total Return 22.33%++ (43.53)% 3.06% 9.22% (7.83)%++
- --------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $7,757 $5,723 $14,046 $10,691 $7,069
- --------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses(4) 2.94%+ 2.46% 2.11% 2.25% 1.45%+
Net investment loss (0.41)+ (0.63) (0.34) (0.19) (0.63)+
- --------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 119% 97% 99% 78% 17%
==============================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from May 12, 1995 (inception date) to October 31, 1995.
(4) The Manager waived all or part of its fees for the period ended October
31, 1995. If such fees were not waived, the per share effect on net
investment loss and the expense ratio would have been as follows:
Per Share Increase Expense Ratio
to Net Investment Loss Without Fee Waivers
---------------------- -------------------
1995 1995
---- ----
Class A $0.05 2.12%+
In addition, during the year ended October 31, 1996 and the period ended
October 31, 1995, the Portfolio had earned credits from the custodian
which reduced service fees incurred. If the credits are taken into
consideration, the expense ratios for Class A would have been 2.16% and
1.20% (annualized), respectively.
# Includes realized gains and losses on foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 39
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares
-------------------------------------------------------------------------------
Emerging Markets Portfolio 1999(1)(2) 1998(2) 1997(2) 1996 1995(3)
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $6.85 $12.21 $11.95 $11.02 $12.00
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss(4) (0.05) (0.14) (0.14) (0.10) (0.09)#
Net realized and unrealized gain (loss) 1.54 (5.22) 0.40 1.03 (0.89)
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.49 (5.36) 0.26 0.93 (0.98)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.34 $6.85 $12.21 $11.95 $11.02
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 21.75%++ (43.90)% 2.18% 8.44% (8.17)%++
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $5,728 $5,994 $18,107 $13,062 $7,630
- -----------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses(4) 3.71%+ 3.24% 2.88% 3.06% 2.00%+
Net investment loss (1.24)+ (1.42) (1.00) (0.94) (1.17)+
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 119% 97% 99% 78% 17%
=============================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from May 12, 1995 (inception date) to October 31, 1995.
(4) The Manager waived all or part of its fees for the period ended October
31, 1995. If such fees were not waived, the per share effect on net
investment loss and the expense ratio would have been as follows:
Per Share Increase Expense Ratio
to Net Investment Loss Without Fee Waivers
---------------------- -------------------
1995 1995
---- ----
Class B $0.05 2.68%+
In addition, during the year ended October 31, 1996 and the period ended
October 31, 1995, the Portfolio had earned credits from the custodian
which reduced service fees incurred. If the credits are taken into
consideration, the expense ratios for Class B would have been 2.97% and
1.74% (annualized), respectively.
# Includes realized gains and losses on foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
40 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares
-------------------------------------------------------------------------------
Emerging Markets Portfolio 1999(1)(2) 1998(2)(3) 1997(2) 1996 1995(4)
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $6.84 $12.22 $11.95 $11.02 $12.00
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss(5) (0.05) (0.15) (0.15) (0.10) (0.08)#
Net realized and unrealized gain (loss) 1.54 (5.23) 0.42 1.03 (0.90)
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.49 (5.38) 0.27 0.93 (0.98)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.33 $6.84 $12.22 $11.95 $11.02
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 21.78%++ (44.03)% 2.26% 8.44% (8.17)%++
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $1,712 $1,543 $4,332 $2,448 $1,604
- -----------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets:
Expenses(5) 3.79%+ 3.31% 2.86% 3.02% 1.95%+
Net investment loss (1.29)+ (1.47) (1.03) (0.92) (1.08)+
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 119% 97% 99% 78% 17%
=============================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) For the period from May 12, 1995 (inception date) to October 31, 1995.
(5) The Manager waived all or part of its fees for the period ended October
31, 1995. If such fees were not waived, the per share effect on net
investment loss and the expense ratio would have been as follows:
Per Share Increase Expense Ratio
to Net Investment Loss Without Fee Waivers
---------------------- -------------------
1995 1995
---- ----
Class L $0.05 2.61%+
In addition, during the year ended October 31, 1996 and the period ended
October 31, 1995, the Portfolio had earned credits from the custodian
which reduced service fees incurred. If the credits are taken into
consideration, the expense ratios for Class C would have been 2.92% and
1.70% (annualized), respectively.
# Includes realized gains and losses on foreign currency transactions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 41
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each share of capital stock outstanding throughout the year ended
October 31, except where noted:
Class Y Shares
---------------------------------
Emerging Markets Portfolio 1999(1)(2) 1998(2)(3)
================================================================================
Net Asset Value, Beginning of Period $7.07 $12.16
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.01) (0.01)
Net realized and unrealized gain (loss) 1.61 (5.08)
- --------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.60 (5.09)
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
- --------------------------------------------------------------------------------
Total Distributions -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $8.67 $7.07
- --------------------------------------------------------------------------------
Total Return++ 22.63% (41.86)%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $1,238 $709
- --------------------------------------------------------------------------------
Ratio to Average Net Assets+:
Expenses 2.70% 1.89%
Net investment loss (0.18) (0.16)
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 119% 97%
================================================================================
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from March 10, 1998 (inception date) to October 31, 1998.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
42 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------------------
European Portfolio 1999(1)(2) 1998(2) 1997(2) 1996 1995 1994(3)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $19.44 $18.23 $17.25 $14.67 $12.88 $12.50
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)(4) (0.05) 0.06 (0.08) (0.08) 0.07 (0.11)
Net realized and unrealized gain 1.89 1.54 2.22 2.79 1.72 0.49
- ---------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.84 1.60 2.14 2.71 1.79 0.38
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- (0.09) -- --
Net realized gains (0.33) (0.39) (1.16) (0.04) -- --
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.39) (1.16) (0.13) -- --
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $20.95 $19.44 $18.23 $17.25 $14.67 $12.88
- ---------------------------------------------------------------------------------------------------------------------
Total Return 9.50%++ 9.10% 12.88% 18.65% 13.90% 3.04%++
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $30,029 $27,563 $14,118 $10,528 $11,870 $5,189
- ---------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 1.57%+ 1.56% 1.80% 1.85% 2.06% 1.34%+
Net investment income (loss) (0.43)+ 0.30 (0.42) (0.49) 0.51 (1.12)+
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 27% 28% 39% 34% 21%
=====================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from February 7, 1994 (inception date) to October 31, 1994.
(4) The Manager waived all or part of its fees for the year ended October 31,
1995 and the period ended October 31, 1994. In addition, the manager
agreed to reimburse the European Portfolio for $10,344 of the Portfolio's
expenses for the period ended October 31, 1994. If such fees and expenses
were not waived or reimbursed, the per share effect on net investment
income (loss) and the expense ratios would have been as follows:
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Income (Loss) and Custody Credits
---------------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
Class A $0.01 $0.10 2.09% 2.37%+
In addition, during the years ended October 31, 1996 and October 31, 1995,
the Portfolio had earned credits from the custodian which reduced service
fees incurred. If the credits are taken into consideration, the expense
ratios for Class A would have been 1.82% and 2.02%, respectively; numbers
prior to October 31, 1995 have not been restated to reflect these credits.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 43
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares
--------------------------------------------------------------------------------
European Portfolio 1999(1)(2) 1998(2) 1997(2) 1996 1995(3)
=========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $18.95 $17.92 $17.09 $14.56 $12.62
- -------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)(4) (0.13) (0.11) (0.20) (0.20) 0.02
Net realized and unrealized gain 1.85 1.53 2.19 2.77 1.92
- -------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.72 1.42 1.99 2.57 1.94
- -------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net realized gains (0.33) (0.39) (1.16) (0.04) --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.39) (1.16) (0.04) --
- -------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $20.34 $18.95 $17.92 $17.09 $14.56
- -------------------------------------------------------------------------------------------------------------------------
Total Return 9.11%++ 8.24% 12.08% 17.72% 15.37%++
- -------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $40,982 $40,090 $29,221 $26,384 $24,825
- -------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 2.33%+ 2.32% 2.52% 2.59% 3.31%+
Net investment income (loss) (1.25)+ (0.56) (1.13) (1.22) 0.26+
- -------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 27% 28% 39% 34%
=========================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from November 7, 1994 (inception date) to October 31, 1995.
(4) The Manager waived all or part of its fees for the year ended October 31,
1995. If such fees were not waived, the per share effect on net investment
income and the expense ratio would have been as follows:
Expense Ratio
Per Share Decrease to Without Fee Waivers
Net Investment Income (Loss) and Custody Credits
---------------------------- -------------------
1995 1995
---- ----
Class B $0.00* 3.35%+
In addition, during the year ended October 31, 1996 and the period ended
October 31, 1995, the Portfolio had earned credits from the custodian
which reduced service fees incurred. If the credits are taken into
consideration, the expense ratios for Class B would have been 2.56% and
3.26% (annualized), respectively; numbers prior to October 31, 1995 have
not been restated to reflect these credits.
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
44 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares
--------------------------------------------------------------------------------
European Portfolio 1999(1)(2) 1998(2)(3) 1997(2) 1996 1995(4) 1994(5)
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $18.91 $17.86 $17.04 $14.51 $12.83 $12.48
- ------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss(6) (0.12) (0.07) (0.21) (0.14) (0.08) (0.16)
Net realized and unrealized gain 1.84 1.51 2.19 2.71 1.76 0.51
- ------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.72 1.44 1.98 2.57 1.68 0.35
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net realized gains (0.33) (0.39) (1.16) (0.04) -- --
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.39) (1.16) (0.04) -- --
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $20.30 $18.91 $17.86 $17.04 $14.51 $12.83
- ------------------------------------------------------------------------------------------------------------------------
Total Return 9.13%++ 8.38% 12.06% 17.78% 13.09% 2.80%++
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $12,185 $10,762 $3,110 $2,011 $1,311 $1,607
- ------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(6) 2.31%+ 2.18% 2.54% 2.52% 2.51% 2.02%+
Net investment loss (1.18)+ (0.37) (1.18) (1.17) (0.64) (1.60)+
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 27% 28% 39% 34% 21%
========================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) On November 7, 1994, the former Class B shares were renamed Class C
shares.
(5) For the period from February 14, 1994 (inception date) to October 31,
1994.
(6) The Manager waived all or part of its fees for the year ended October 31,
1995 and the period ended October 31, 1994. In addition, the manager
agreed to reimburse the European Portfolio for $10,344 of the Portfolio's
expenses for the period ended October 31, 1994. If such fees and expenses
were not waived or reimbursed, the per share effect on net investment
income and the expense ratios would have been as follows:
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Loss and Custody Credits
------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
Class L $0.01 $0.10 2.54% 3.07%+
In addition, during the years ended October 31, 1996 and October 31, 1995,
the Portfolio had earned credits from the custodian which reduced service
fees incurred. If the credits are taken into consideration, the expense
ratios for Class C would have been 2.50% and 2.48%, respectively; numbers
prior to October 31, 1995 have not been restated to reflect these credits.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 45
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------------------------------------------
Pacific Portfolio 1999(1)(2) 1998(2) 1997 1996(2) 1995 1994(3)
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $6.73 $8.46 $10.18 $10.07 $12.92 $12.50
- ---------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss(4) (0.05) (0.12) (0.17) (0.14) (0.01) (0.07)
Net realized and unrealized gain (loss) 1.75 (1.61) (1.55) 0.25 (2.84) 0.49
- ---------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.70 (1.73) (1.72) 0.11 (2.85) 0.42
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.43 $6.73 $8.46 $10.18 $10.07 $12.92
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 25.26%++ (20.45)% (16.90)% 1.09% (22.06)% 3.36%++
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,035 $1,788 $4,750 $4,929 $4,409 $7,538
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 2.54%+ 3.47% 3.37% 2.64% 1.97% 1.51%+
Net investment loss (1.18)+ (1.66) (2.36) (1.38) (0.71) (0.82)+
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 71% 135% 154% 86% 31% 6%
=================================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from February 7, 1994 (inception date) to October 31, 1994.
(4) The Manager waived all or part of its fees for the six months ended April
30, 1999, the year ended October 31, 1995 and the period ended October 31,
1994. In addition, the Manager agreed to reimburse the Pacific Portfolio
for $7,090 and $30,862 of the Portfolio's expenses for the six months
ended April 30, 1999 and the year ended October 31, 1995, respectively. If
such fees and expenses were not waived or reimbursed, the per share effect
on net investment loss and the expense ratios would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Loss and Custody Credits
------------------------------------------ ---------------------------------------------
1999(1) 1998 1997 1996 1995 1994 1999(1) 1998 1997 1996 1995 1994
------ ---- ---- ---- ---- ---- ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.04 N/A N/A N/A $0.14 $0.03 3.64%+ N/A N/A N/A 3.18% 1.87%+
</TABLE>
In addition, during the years ended October 31, 1996 and October 31, 1995,
the Portfolio had earned credits from the custodian which reduced service
fees incurred. If the credits are taken into consideration, the expense
ratios for Class A would have been 2.51% and 1.70%, respectively; numbers
prior to October 31, 1995 have not been restated to reflect these credits.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
46 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares
-------------------------------------------------------------------------
Pacific Portfolio 1999(1)(2) 1998(2) 1997 1996(2) 1995(3)
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $6.51 $8.25 $10.01 $9.99 $12.64
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss(4) (0.08) (0.22) (0.27) (0.23) (0.01)
Net realized and unrealized gain (loss) 1.69 (1.52) (1.49) 0.25 (2.64)
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.61 (1.74) (1.76) 0.02 (2.65)
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.12 $6.51 $8.25 $10.01 $9.99
- ---------------------------------------------------------------------------------------------------------------------
Total Return 24.73%++ (21.09)% (17.58)% 0.20% (20.97)%++
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,195 $2,159 $3,558 $4,009 $1,031
- ---------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 3.52%+ 4.45% 4.24% 3.65% 3.39%+
Net investment loss (2.22)+ (3.14) (3.07) (2.26) (1.47)+
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 71% 135% 154% 86% 31%
=====================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from November 7, 1994 (inception date) to October 31, 1995.
(4) The Manager waived all or part of its fees for the six months ended April
30, 1999 and period ended October 31, 1995. In addition, the Manager
agreed to reimburse the Pacific Portfolio for $7,090 and $30,862 of the
Portfolio's expenses for the six months ended April 30, 1999 and the
period ended October 31, 1995, respectively. If such fees and expenses
were not waived or reimbursed, the per share effect on net investment loss
and the expense ratio would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Loss and Custody Credits
----------------------------------- --------------------------------------
1999(1) 1998 1997 1996 1995 1999(1) 1998 1997 1996 1995
------ ---- ---- ---- ---- ------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class B $0.04 N/A N/A N/A $0.16 4.62%+ N/A N/A N/A 4.90%+
</TABLE>
In addition, during the year ended October 31, 1996 and the period ended
October 31, 1995, the Portfolio had earned credits from the custodian
which reduced service fees incurred. If the credits are taken into
consideration, the expense ratios for Class B would have been 3.47% and
3.06% (annualized), respectively; numbers prior to October 31, 1995 have
not been restated to reflect these credits.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney World Funds, Inc. 47
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended October 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares
------------------------------------------------------------------------------
Pacific Portfolio 1999(1)(2) 1998(2)(3) 1997 1996(2) 1995(4) 1994(5)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $6.48 $8.21 $9.98 $9.95 $12.86 $12.50
- --------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss(6) (0.08) (0.20) (0.27) (0.24) (0.02) (0.11)
Net realized and unrealized gain (loss) 1.69 (1.53) (1.50) 0.27 (2.89) 0.47
- --------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.61 (1.73) (1.77) 0.03 (2.91) 0.36
- --------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.09 $6.48 $8.21 $9.98 $9.95 $12.86
- --------------------------------------------------------------------------------------------------------------------------
Total Return 24.85%++ (21.07)% (17.74)% 0.30% (22.63)% 2.88%++
- --------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $1,864 $982 $1,493 $1,612 $1,952 $3,167
- --------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(6) 3.42%+ 4.28% 4.44% 3.46% 2.69% 2.29%+
Net investment loss (2.31)+ (2.90) (3.21) (2.22) (1.45) (1.49)+
- --------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 71% 135% 154% 86% 31% 6%
==========================================================================================================================
</TABLE>
(1) For the six months ended April 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) On November 7, 1994, the former Class B shares were renamed Class C
shares.
(5) For the period from February 11, 1994 (inception date) to October 31,
1994.
(6) The Manager waived all or part of its fees for the six months ended April
30, 1999, the year ended October 31, 1995 and the six months ended April
30, 1999 and the period ended October 31, 1994. In addition, the Manager
agreed to reimburse the Portfolio for $7,090 and $30,862 of the
Portfolio's expenses for the year ended October 31, 1995, respectively. If
such fees and expenses were not waived or reimbursed, the per share effect
on net investment loss and the expense ratios would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Loss and Custody Credits
------------------------------------------ ---------------------------------------------
1999(1) 1998 1997 1996 1995 1994 1999(1) 1998 1997 1996 1995 1994
------ ---- ---- ---- ---- ---- ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class L $0.04 N/A N/A N/A $0.13 $0.03 4.51%+ N/A N/A N/A 3.88% 2.70%+
</TABLE>
In addition, during the years ended October 31, 1996 and October 31, 1995,
the Portfolio had earned credits from the custodian which reduced service
fees incurred. If the credits are taken into consideration, the expense
ratios for Class L would have been 3.29% and 2.42%, respectively; numbers
prior to October 31, 1995 have not been restated to reflect these credits.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
48 1999 Semi-Annual Report to Shareholders
<PAGE>
Smith Barney
World Funds, Inc.
Directors
Victor Atkins
Abraham E. Cohen
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
Officers
Maurits E. Edersheim
Chairman of the Fund
& Advisory Director
Heath B. McLendon
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
David Ishibashi
Vice President
Scott E. Kalb
Vice President
Rein W. van der Does
Vice President
Irving P. David
Controller
Christina T. Sydor
Secretary
Investment Manager
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
The Chase Manhattan Bank, N.A.
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of shareholders of Smith
Barney World Funds, Inc. -- Emerging Markets, European and Pacific Portfolios.
It is not authorized for distribution to prospective investors unless
accompanied or preceded by a current Prospectus for the Fund, which contains
information concerning the Fund's investment policies and expenses as well as
other pertinent information.
SALOMONSMITHBARNEY
- ---------------------------
A member of citigroup[LOGO]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney
World Funds, Inc.
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD01488 6/99
