UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8372
Travelers Series Fund Inc.
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
Smith Barney Fund Management LLC
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 451-2010
Date of fiscal year end: October 31
Date of reporting period: April 30, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
The Semi-Annual Report to Stockholders is filed herewith.
TRAVELERS SERIES FUND INC.
AIM CAPITAL
APPRECIATION PORTFOLIO
SMITH BARNEY LARGE
CAPITALIZATION GROWTH
PORTFOLIO
SEMI-ANNUAL REPORT | APRIL 30, 2004
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
WHAT'S INSIDE
Letter from the Chairman............ 1
Schedules of Investments............ 6
Statements of Assets and Liabilities 14
Statements of Operations............ 15
Statements of Changes in Net Assets. 16
Notes to Financial Statements....... 18
Financial Highlights................ 26
LETTER FROM THE CHAIRMAN
[PHOTO]
R. Jay Gerken
R. JAY GERKEN, CFA
Chairman, President and Chief Executive Officer
Dear Shareholder,
Stock market returns were mixed during the six months ended April 30, 2004. The
broader market, as measured by the S&P 500 Index,/i/ posted strong gains due to
improving corporate earnings and positive economic news. However, some sectors
of the equity markets were hampered by sluggish job growth earlier in the
period and continuing geopolitical concerns, particularly around the situation
in Iraq. Finally, in March and April, nearly the entire equity market
experienced a pull-back due to signs of increasing inflation and the
possibility of higher interest rates.
These conditions benefited some of the more defensive industries, such as
consumer staples and
utilities, and hampered some of last year's better-performing sectors, such as
technology and materials. In general, value stocks outperformed growth stocks
for the six-month period, while large-cap stocks generally outperformed small-
and mid-cap stocks.
At the start of the period in November, most reports released on the economy
were very strong, and equities continued to climb, as most indices were in
positive territory for eight of the past nine months./ii/ The manufacturing
sector continued to grow at a very healthy pace, and the equity markets ended
2003 with a bang by posting strong gains with continued improvement through the
first part of 2004. Economic data released during February was mixed, as was
performance in the major financial markets. During March, reports released on
the economy were mostly positive, while the major financial markets posted
declines, mainly in response to heightened investor concerns over a recent
increase in terrorist activity across the globe.
The final report on gross domestic product ("GDP")/iii/ for the fourth calendar
quarter of 2003 did not change from its healthy preliminary estimate, and GDP
growth in the first calendar quarter of 2004 remained strong. The Conference
Board's measure of consumer confidence exceeded analyst expectations, but the
report also indicated that consumer attitudes were generally pessimistic at the
beginning of the month, and were further depressed by the terrorist bombings in
Madrid./iv/ However, consumer attitudes did become a bit more optimistic later
in the month and the manufacturing sector continued to surge, as the Institute
for
1 Travelers Series Fund Inc. | 2004 Semi-Annual Report
Supply Management's Index rose in March. Consumer confidence, as reported by
the Conference Board, improved in April, mainly due to better reports on
current and prospective labor market conditions. The labor market continued to
show signs of strength, as the unemployment rate fell in April.
Within this environment, the funds performed as follows:/1/
PERFORMANCE OF THE FUNDS
AS OF APRIL 30, 2004
6 Months
AIM Capital Appreciation Portfolio 1.97%
S&P 500 Index/2/ 6.27%
Lipper Multi-Cap Growth Variable Funds Category Average/5/ 3.22%
Smith Barney Large Capitalization Growth Portfolio/4/ 3.22%
Russell 1000 Growth Index/3/ 4.14%
S&P 500 Index/2/ 6.27%
Lipper Large-Cap Growth Variable Funds Category Average/6/ 2.46%
The performance shown represents past performance. Past performance is no
guarantee of future results and current performance may be higher or lower
than the performance shown above. Principal value and investment returns
will fluctuate and investors' shares, when redeemed, may be worth more or
less than their original cost.
The performance returns set forth above do not reflect the reduction of
initial charges and expenses imposed in connection with investing in
variable annuity contracts such as administrative fees, account charges and
surrender charges, which if reflected, would reduce the performance of the
funds.
All index performance reflects no deduction for fees, expenses or taxes.
Please note that an investor cannot invest directly in an index.
/2/The S&P 500 Index is a market capitalization-weighted index of 500 widely
held common stocks.
/3/The Russell 1000 Growth Index measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values.
/4/Effective June 11, 2003, the fund changed its performance benchmark to the
Russell 1000 Growth Index. Management of the fund determined that the
Russell 1000 Growth Index, rather than the S&P 500 Index, was a more
appropriate index reflecting more closely the composition of the fund's
securities.
Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the six-month period ended April 30, 2004 and include
the reinvestment of dividends and capital gains, if any.
/5/ Returns were calculated among the 1,270 funds in the multi-cap growth
variable funds category.
/6/ Returns were calculated among the 1,422 funds in the large-cap growth
funds category.
/1/The fund is an underlying investment option of various variable annuity
products. A variable annuity product is a contract issued by an insurance
company where the annuity premium (a set amount of dollars) is immediately
turned into units of a portfolio of securities. Upon retirement, the
policyholder is paid according to accumulated units whose dollar value
varies according to the performance of the securities within the sub
accounts. Its objective is to preserve, through investment, the purchasing
value of the annuity, which otherwise is subject to erosion through
inflation. The fund's performance returns do not reflect the deduction of
initial sales charges and expenses imposed in connection with investing in
variable annuity contracts such as administrative fees, account charges and
surrender charges, which if reflected, would reduce the performance of the
fund. Past performance is no guarantee of future results.
2 Travelers Series Fund Inc. | 2004 Semi-Annual Report
AIM Capital Appreciation Portfolio
For the six months ended April 30, 2004, shares of the AIM Capital Appreciation
Portfolio returned 1.97%. In comparison the fund's unmanaged benchmark, the S&P
500 Index/v/ returned 6.27% for the same period. The fund's Lipper multi-cap
growth variable funds category average returned 3.22% for the same period./3/
Relative to the S&P 500 Index, the portfolio was overweight in the consumer
discretionary, healthcare and the information technology sectors during the
last six months and was underweight in the financials, consumer staples and
industrials sectors.
The portfolio benefited in relative performance from the consumer discretionary
sector due to an overweight position and good stock selection. Within the
consumer discretionary sector, the media industry had the largest contribution
to relative performance.
Relative performance was negatively impacted by the financials and the
information technology sectors. Within the financials sector, performance was
affected by a combination of stock selection and an underweight position.
Within the information technology sector, performance lagged the benchmark
primarily due to stock selection. On a relative basis, the semiconductors and
semiconductor equipment industry had the largest negative impact within the
information technology sector for the period.
At the end of the period, the portfolio had the highest weighting in earnings
momentum stocks versus core-growth holdings since the year 2000. The managers
have a positive outlook for the market and have positioned the portfolio for an
economic recovery, as well as a business profits recovery. Typically, as
profits improve in businesses, an increase in staff occurs, which consequently
has a positive impact on the consumer discretionary stocks. The consumer
discretionary sector continues to have a significant weighting in the AIM
Capital Appreciation Portfolio. The portfolio also has a large weighting in the
information technology and industrials sectors, particularly in the machinery
stocks within the industrials sector, which could have an impact on the
portfolio as companies upgrade their infrastructure and their capital equipment
infrastructure./vi/
/3/Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the six-month period ended April 30, 2004, calculated
among the 1,270 funds in the fund's Lipper category including the
reinvestment of dividends and capital gains, if any, and excluding sales
charges.
3 Travelers Series Fund Inc. | 2004 Semi-Annual Report
Smith Barney Large Capitalization Growth Portfolio
Special Shareholder Notice
Effective June 11, 2003, fund management determined that the Russell 1000
Growth Index, rather than the S&P 500 Index was a more appropriate benchmark
index, reflecting more closely the composition of the fund's securities.
Accordingly, the S&P 500 Index will not appear in future reporting.
For the six months ended April 30, 2004, shares of the Smith Barney Large
Capitalization Growth Portfolio returned 3.22%. In comparison the fund's
unmanaged benchmark, the Russell 1000 Growth Index/vii/ returned 4.14% and the
fund's previous benchmark, the S&P 500 Index/viii/ returned 6.27% for the same
period. The fund outperformed its Lipper large-cap growth variable funds
category average, which returned 2.46% for the same period./4/
Despite positive performance overall for the period, the portfolio
underperformed its benchmark for the period, due largely to stock selection in
the consumer discretionary and technology sectors and to sector allocation in
the underperforming technology healthcare, and consumer discretionary sectors.
Positive performance came primarily from stock selection in the healthcare and
consumer staples sectors. At the close of the period, the fund maintained
overweights in the technology, consumer discretionary and financials sectors,
and was underweight in healthcare and industrials./ix/
In terms of individual holdings, leading positive contributors to performance
included biotechnology companies Biogen Idec Corp. and Genentech, and wireless
technology holding Motorola. Holdings that negatively affected fund returns
included semiconductor manufacturer Texas Instruments, internet retailer
Amazon.com, and technology holding Veritas Software./x/
Information About Your Fund
In recent months several issues in the mutual fund industry have come under the
scrutiny of federal and state regulators. The fund's Adviser and some of its
affiliates have received requests for information from various government
regulators regarding market timing, late trading, fees and other mutual fund
issues in connection with various investigations. The fund has been informed
that the Adviser and its affiliates are responding to those information
requests, but are not in a position to predict the outcome of these requests
and investigations.
/4/Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the six-month period ended April 30, 2004, calculated
among the 1,422 funds in the fund's Lipper category including the
reinvestment of dividends and capital gains, if any, and excluding sales
charges.
4 Travelers Series Fund Inc. | 2004 Semi-Annual Report
As always, thank you for your continued confidence in our stewardship of your
assets. We look forward to helping you continue to meet your financial goals.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
May 20, 2004
The information provided is not intended to be a forecast of future events, a
guarantee of future results or investment advice. Views expressed may differ
from those of the firm as a whole.
Portfolio holdings and breakdowns are as of April 30, 2004 and are subject to
change. Please refer to pages 6 through 13 for a list and percentage breakdown
of each fund's holdings.
All index performance reflects no deduction for fees, expenses or taxes. Please
note that an investor cannot invest directly in an index.
RISKS:
AIM Capital Appreciation Portfolio: The fund may invest in foreign securities.
Investing in foreign securities is subject to certain risks not associated with
domestic investing, such as currency fluctuations, and changes in political and
economic conditions. The fund may use derivatives, such as options and futures,
which can be illiquid, may disproportionately increase losses, and have a
potentially large impact on fund performance. The fund may invest in small
capitalization companies. Small capitalization companies may involve a higher
degree of risk and volatility than investments in larger, more established
companies. The fund may invest in medium-capitalization companies. These
investments may involve a higher degree of risk and volatility than investments
in larger, more established companies.
Smith Barney Large Capitalization Growth Portfolio: Keep in mind, common stocks
are subject to market fluctuations.
/i/The S&P 500 Index is a market capitalization-weighted index of 500 widely
held common stocks.
/ii/Source: Lipper, Inc. (April 2004).
/iii/Gross domestic product is a market value of goods and services produced by
labor and property in a given country.
/iv/Source: Banc of American Securities Economic Research on Consumer
Confidence (March 30, 2004).
/v/The S&P 500 Index is a market capitalization-weighted index of 500 widely
held common stocks.
/vi/The mention of sector breakdowns is for informational purposes only and
should not be construed as a recommendation to purchase or sell any
securities. The information provided regarding such sectors is not a
sufficient basis upon which to make an investment decision. Investors
seeking financial advice regarding the appropriateness of investing in any
securities or investment strategies discussed should consult their
financial professional. Portfolio holdings are subject to change at any
time and may not be representative of the portfolio manager's current or
future investments. The fund's top five sector holdings as of April 30,
2004 were: Consumer Discretionary (25.0%); Information Technology (23.0);
Healthcare (21.1%); Industrials (11.1%); Financials (9.0%). The fund's
portfolio composition is subject to change at any time.
/vii/The Russell 1000 Growth Index measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values.
/viii/The S&P 500 Index is a market capitalization-weighted index of 500 widely
held common stocks.
/ix/The mention of sector breakdowns is for informational purposes only and
should not be construed as a recommendation to purchase or sell any
securities. The information provided regarding such sectors is not a
sufficient basis upon which to make an investment decision. Investors
seeking financial advice regarding the appropriateness of investing in any
securities or investment strategies discussed should consult their
financial professional. Portfolio holdings are subject to change at any
time and may not be representative of the portfolio manager's current or
future investments. The fund's top five sector holdings as of April 30,
2004 were: Information Technology (29.2%); Healthcare (23.0%); Consumer
Discretionary (20.5%); Financials (13.9%); Staples (10.7%). The fund's
portfolio composition is subject to change at any time.
/x/Portfolio holdings and breakdowns are as of April 30, 2004 and are subject
to change and may not be representative of the portfolio manager's current
or future investments. The fund's top ten holdings as of this date were:
Amazon.com, Inc. (5.3%), Genentech, Inc. (4.9%), Berkshire Hathaway Inc.,
Class A Shares (4.8%), The Gillette Co. (4.4%), Pfizer Inc. (3.9%), Intel
Corp. (3.9%), The Home Depot, Inc.(3.8%), Dell Inc. (3.6%), Merrill Lynch &
Co., Inc. (3.6%), and The Coca-Cola Co. (3.6%).
5 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) APRIL 30, 2004
AIM CAPITAL APPRECIATION PORTFOLIO
SHARES SECURITY VALUE
- --------------------------------------------------------------------
COMMON STOCK -- 97.9%
CONSUMER DISCRETIONARY -- 25.6%
Automobiles -- 0.4%
12,200 Harley-Davidson, Inc. $ 687,104
- --------------------------------------------------------------------
Hotels, Restaurants & Leisure -- 4.1%
23,800 Carnival Corp. 1,015,546
17,300 International Game Technology 652,902
23,500 McDonald's Corp. 639,905
29,600 MGM MIRAGE+ 1,355,976
13,700 Outback Steakhouse, Inc. 601,841
10,000 P.F. Chang's China Bistro, Inc.+++ 488,600
25,000 Royal Caribbean Cruises Ltd.++ 1,013,250
17,700 Starwood Hotels & Resorts Worldwide, Inc. 704,283
18,000 Wendy's International, Inc. 702,000
- --------------------------------------------------------------------
7,174,303
- --------------------------------------------------------------------
Internet & Catalog Retail -- 1.1%
23,700 eBay Inc.+ 1,891,734
- --------------------------------------------------------------------
Media -- 7.0%
70,900 Clear Channel Communications, Inc. 2,941,641
11,800 Gannett Co., Inc. 1,022,824
71,000 Lamar Advertising Co.+++ 2,915,260
8,500 Omnicom Group Inc. 675,835
6,000 Pixar, Inc.+++ 409,800
50,550 Univision Communications Inc., Class A Shares+ 1,711,117
47,300 Viacom Inc., Class B Shares 1,828,145
23,700 Westwood One, Inc.+ 700,098
- --------------------------------------------------------------------
12,204,720
- --------------------------------------------------------------------
Multi-Line Retail -- 3.5%
35,500 Dollar General Corp. 665,980
25,600 Family Dollar Stores, Inc. 822,784
29,200 J.C. Penney Co., Inc. 988,712
23,700 Nordstrom, Inc. 844,431
47,300 Wal-Mart Stores, Inc. 2,696,100
- --------------------------------------------------------------------
6,018,007
- --------------------------------------------------------------------
Specialty Retail -- 8.9%
11,400 AutoZone, Inc.+ 998,298
58,900 Bed Bath and Beyond Inc.+ 2,186,368
18,000 Best Buy Co., Inc. 976,500
41,600 CDW Corp. 2,599,584
19,000 Chico's FAS, Inc.+++ 773,870
23,400 Foot Locker, Inc. 561,600
70,400 The Gap, Inc. 1,549,504
28,000 Lowe's Cos., Inc. 1,457,680
47,800 Staples, Inc. 1,231,328
See Notes to Financial Statements.
6 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004
AIM CAPITAL APPRECIATION PORTFOLIO
SHARES SECURITY VALUE
- ----------------------------------------------------
Specialty Retail -- 8.9% (continued)
23,700 Tiffany & Co. $ 924,300
47,300 The TJX Cos., Inc. 1,162,161
29,200 Williams-Sonoma, Inc.+ 948,416
- ----------------------------------------------------
15,369,609
- ----------------------------------------------------
Textiles & Apparel -- 0.6%
23,200 Coach, Inc.+ 988,320
- ----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 44,333,797
- ----------------------------------------------------
CONSUMER STAPLES -- 3.3%
Food & Drug Retailing -- 1.7%
25,400 Sysco Corp. 971,550
36,000 Walgreen Co. 1,241,280
8,500 Whole Foods Market, Inc.++ 679,915
- ----------------------------------------------------
2,892,745
- ----------------------------------------------------
Household Products -- 0.9%
14,900 The Procter & Gamble Co. 1,575,675
- ----------------------------------------------------
Personal Products -- 0.7%
29,600 The Gillette Co. 1,211,232
- ----------------------------------------------------
TOTAL CONSUMER STAPLES 5,679,652
- ----------------------------------------------------
ENERGY -- 3.3%
Energy Equipment & Services -- 2.7%
20,500 BJ Services Co.+ 912,250
29,000 ENSCO International Inc. 793,730
19,200 Nabors Industries, Ltd.+ 851,712
17,000 Noble Corp.+ 631,720
15,200 Smith International, Inc.+ 832,200
14,900 Weatherford International Ltd.+ 647,852
- ----------------------------------------------------
4,669,464
- ----------------------------------------------------
Oil & Gas -- 0.6%
16,600 Devon Energy Corp. 1,015,920
- ----------------------------------------------------
TOTAL ENERGY 5,685,384
- ----------------------------------------------------
FINANCIALS -- 9.0%
Banks -- 1.0%
11,800 Bank of America Corp. 949,782
17,700 Northern Trust Corp. 748,356
- ----------------------------------------------------
1,698,138
- ----------------------------------------------------
Diversified Financials -- 7.0%
35,200 American Express Co. 1,723,040
22,600 The Goldman Sachs Group, Inc. 2,186,550
See Notes to Financial Statements.
7 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004
AIM CAPITAL APPRECIATION PORTFOLIO
SHARES SECURITY VALUE
- -------------------------------------------------------------------
Diversified Financials -- 7.0% (continued)
34,700 J.P. Morgan Chase & Co. $ 1,304,720
82,800 MBNA Corp. 2,018,664
41,500 Merrill Lynch & Co., Inc. 2,250,545
17,500 Morgan Stanley 899,325
23,900 SLM Corp. 915,609
17,700 State Street Corp. 863,760
- -------------------------------------------------------------------
12,162,213
- -------------------------------------------------------------------
Insurance -- 1.0%
23,800 American International Group, Inc. 1,705,270
- -------------------------------------------------------------------
TOTAL FINANCIALS 15,565,621
- -------------------------------------------------------------------
HEALTHCARE -- 21.1%
Biotechnology -- 2.0%
17,400 Amgen Inc.+ 979,098
13,800 Biogen Idec Inc.+ 814,200
19,700 Genzyme Corp.+ 858,132
12,900 Gilead Sciences, Inc.+ 784,707
- -------------------------------------------------------------------
3,436,137
- -------------------------------------------------------------------
Healthcare Equipment & Supplies -- 5.8%
83,700 Biomet, Inc. 3,306,150
51,100 Boston Scientific Corp.+ 2,104,809
17,600 Guidant Corp. 1,108,976
19,300 Medtronic, Inc. 973,878
11,800 St. Jude Medical, Inc.+ 899,868
21,500 Zimmer Holdings, Inc.+ 1,716,775
- -------------------------------------------------------------------
10,110,456
- -------------------------------------------------------------------
Healthcare Providers & Services -- 6.2%
14,000 Aetna Inc. 1,158,500
19,200 AmerisourceBergen Corp. 1,111,488
18,950 Cardinal Health, Inc. 1,388,087
97,223 Caremark Rx, Inc.+ 3,290,999
11,800 Coventry Health Care, Inc.+ 493,712
20,200 UnitedHealth Group Inc. 1,241,896
19,100 WellPoint Health Networks, Inc.+ 2,133,279
- -------------------------------------------------------------------
10,817,961
- -------------------------------------------------------------------
Pharmaceuticals -- 7.1%
19,950 Barr Pharmaceuticals, Inc.+ 826,329
13,600 Eli Lilly and Co. 1,003,816
14,400 Forest Laboratories, Inc.+ 928,512
23,700 Johnson & Johnson 1,280,511
31,600 Medicis Pharmaceutical Corp., Class A Shares++ 1,356,272
See Notes to Financial Statements.
8 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004
AIM CAPITAL APPRECIATION PORTFOLIO
SHARES SECURITY VALUE
- -----------------------------------------------------------------------
Pharmaceuticals -- 7.1% (continued)
100,300 Pfizer Inc. $ 3,586,728
53,100 Teva Pharmaceutical Industries Ltd., Sponsored ADR 3,268,836
- -----------------------------------------------------------------------
12,251,004
- -----------------------------------------------------------------------
TOTAL HEALTHCARE 36,615,558
- -----------------------------------------------------------------------
INDUSTRIALS -- 11.1%
Air Freight & Couriers -- 0.3%
11,800 Expeditors International of Washington, Inc. 474,242
- -----------------------------------------------------------------------
Airlines -- 0.8%
94,600 Southwest Airlines Co. 1,350,888
- -----------------------------------------------------------------------
Commercial Services & Supplies -- 4.2%
16,600 Apollo Group, Inc., Class A Shares+ 1,508,608
17,600 Cintas Corp. 791,296
65,200 Fiserv, Inc.+ 2,383,712
17,600 Paychex, Inc. 656,128
70,000 Robert Half International Inc.+ 1,908,900
- -----------------------------------------------------------------------
7,248,644
- -----------------------------------------------------------------------
Electrical Equipment -- 0.4%
23,300 Rockwell Automation, Inc. 761,677
- -----------------------------------------------------------------------
Industrial Conglomerates -- 1.1%
10,500 3M Co. 908,040
34,900 General Electric Co. 1,045,255
- -----------------------------------------------------------------------
1,953,295
- -----------------------------------------------------------------------
Machinery -- 4.3%
17,400 Caterpillar Inc. 1,352,502
11,800 Danaher Corp. 1,091,736
23,700 Deere & Co. 1,612,548
15,400 Eaton Corp. 914,452
26,000 Ingersoll-Rand Co., Ltd., Class A Shares 1,678,300
14,000 Parker-Hannifin Corp. 774,060
- -----------------------------------------------------------------------
7,423,598
- -----------------------------------------------------------------------
TOTAL INDUSTRIALS 19,212,344
- -----------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 23.0%
Communications Equipment -- 4.2%
36,000 Avaya Inc.+ 492,480
165,200 Cisco Systems, Inc.+ 3,447,724
82,800 Corning, Inc.+ 913,284
30,400 Juniper Networks, Inc.+++ 665,152
46,400 Nokia Oyj 649,468
302,000 Nortel Networks Corp.+ 1,129,480
- -----------------------------------------------------------------------
7,297,588
- -----------------------------------------------------------------------
See Notes to Financial Statements.
9 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004
AIM CAPITAL APPRECIATION PORTFOLIO
SHARES SECURITY VALUE
- ---------------------------------------------------------------------------------
Computers & Peripherals -- 2.4%
88,700 Dell Inc.+ $ 3,078,777
95,100 EMC Corp.+ 1,061,316
- ---------------------------------------------------------------------------------
4,140,093
- ---------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 1.3%
47,300 Agilent Technologies, Inc.+ 1,277,573
12,100 Broadcom Corp., Class A Shares+ 456,896
19,000 Molex, Inc. 565,820
- ---------------------------------------------------------------------------------
2,300,289
- ---------------------------------------------------------------------------------
Internet Software & Services -- 0.9%
29,600 Yahoo! Inc.+ 1,493,616
- ---------------------------------------------------------------------------------
IT Consulting & Services -- 0.5%
35,500 Accenture Ltd., Class A Shares+ 843,835
- ---------------------------------------------------------------------------------
Semiconductor Equipment & Products -- 9.1%
65,800 Analog Devices, Inc. 2,803,080
76,300 Applied Materials, Inc.+ 1,390,949
31,400 KLA-Tencor Corp.+ 1,308,438
94,600 Lam Research Corp.+++ 2,094,444
47,300 Linear Technology Corp. 1,685,299
35,700 Maxim Integrated Products, Inc. 1,641,843
119,843 Microchip Tehnology Inc. 3,358,001
101,272 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR+ 965,122
24,400 Teradyne, Inc.+ 497,272
- ---------------------------------------------------------------------------------
15,744,448
- ---------------------------------------------------------------------------------
Software -- 4.6%
31,500 Citrix Systems, Inc.+ 600,075
19,300 Intuit Inc.+ 819,671
11,600 Mercury Interactive Corp.+ 493,580
167,700 Microsoft Corp. 4,355,169
102,600 Oracle Corp.+ 1,151,172
23,900 VERITAS Software Corp.+ 637,413
- ---------------------------------------------------------------------------------
8,057,080
- ---------------------------------------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 39,876,949
- ---------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 1.5%
Wireless Telecommunication Services -- 1.5%
43,000 Nextel Communications, Inc., Class A Shares+ 1,025,980
646,800 Vodafone Group PLC 1,572,148
- ---------------------------------------------------------------------------------
TOTAL TELECOMMUNICATION SERVICES 2,598,128
- ---------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $143,941,956**) 169,567,433
- ---------------------------------------------------------------------------------
See Notes to Financial Statements.
10 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004
AIM CAPITAL APPRECIATION PORTFOLIO
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.1%
$3,687,000 State Street Bank & Trust Co. dated 4/30/04, 0.870% due 5/3/04;
Proceeds at maturity -- $3,687,267; (Fully collateralized by U.S.
Treasury Notes, 4.875% due 2/15/12; Market value -- $3,761,247)
(Cost -- $3,687,000) $ 3,687,000
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $ 147,628,956) $173,254,433
- ------------------------------------------------------------------------------------------
LOANED SECURITIES COLLATERAL
7,992,083 State Street Navigator Securities Lending Trust Prime Portfolio
(Cost -- $7,992,083) $ 7,992,083
- ------------------------------------------------------------------------------------------
+ Non-income producing.
++ All or a portion of this security is on loan (See Note 4).
** Aggregate cost for Federal income tax purpose is substantially the same.
Abbreviation used in this schedule:
ADR -- American Depositary Receipt
See Notes to Financial Statements.
11 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004
SMITH BARNEY LARGE CAPITALIZATION GROWTH PORTFOLIO
SHARES SECURITY VALUE
- ---------------------------------------------------------------
COMMON STOCK -- 99.6%
CONSUMER DISCRETIONARY -- 20.4%
Internet & Catalog Retail -- 8.5%
496,800 Amazon.com, Inc.+ $ 21,590,929
414,200 InterActiveCorp.+ 13,200,555
- ---------------------------------------------------------------
34,791,484
- ---------------------------------------------------------------
Media -- 8.1%
824,320 Time Warner Inc.+ 13,865,062
249,000 Viacom Inc., Class B Shares 9,623,850
434,915 The Walt Disney Co. 10,016,092
- ---------------------------------------------------------------
33,505,004
- ---------------------------------------------------------------
Specialty Retail -- 3.8%
444,950 The Home Depot, Inc. 15,657,790
- ---------------------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 83,954,278
- ---------------------------------------------------------------
CONSUMER STAPLES -- 10.7%
Beverages -- 3.6%
288,790 The Coca-Cola Co. 14,604,110
- ---------------------------------------------------------------
Food Products -- 2.7%
182,140 Wm. Wrigley Jr. Co. 11,238,038
- ---------------------------------------------------------------
Personal Products -- 4.4%
445,295 The Gillette Co. 18,221,471
- ---------------------------------------------------------------
TOTAL CONSUMER STAPLES 44,063,619
- ---------------------------------------------------------------
FINANCIALS -- 13.9%
Diversified Financials -- 5.9%
272,030 Merrill Lynch & Co., Inc. 14,752,187
181,170 Morgan Stanley 9,310,326
- ---------------------------------------------------------------
24,062,513
- ---------------------------------------------------------------
Insurance -- 8.0%
181,456 American International Group, Inc. 13,001,322
212 Berkshire Hathaway Inc., Class A Shares+ 19,798,680
- ---------------------------------------------------------------
32,800,002
- ---------------------------------------------------------------
TOTAL FINANCIALS 56,862,515
- ---------------------------------------------------------------
HEALTHCARE -- 23.0%
Biotechnology -- 11.3%
214,180 Amgen Inc.+ 12,051,909
238,850 Biogen Idec Inc.+ 14,092,150
165,400 Genentech, Inc.+ 20,311,120
- ---------------------------------------------------------------
46,455,179
- ---------------------------------------------------------------
Pharmaceuticals -- 11.7%
164,750 Eli Lilly and Co. 12,160,198
198,570 Johnson & Johnson 10,728,737
See Notes to Financial Statements.
12 Travelers Series Fund Inc. | 2004 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004
SMITH BARNEY LARGE CAPITALIZATION GROWTH PORTFOLIO
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------------------
Pharmaceuticals -- 11.7% (continued)
189,440 Merck & Co., Inc. $ 8,903,680
453,270 Pfizer Inc. 16,208,935
- -------------------------------------------------------------------------------------------
48,001,550
- -------------------------------------------------------------------------------------------
TOTAL HEALTHCARE 94,456,729
- -------------------------------------------------------------------------------------------
INDUSTRIALS -- 2.4%
Industrial Conglomerates -- 2.4%
331,120 General Electric Co. 9,917,044
- -------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 29.2%
Communications Equipment -- 10.1%
962,900 CIENA Corp.+ 3,986,406
498,508 Cisco Systems, Inc.+ 10,403,862
397,400 Juniper Networks, Inc.+ 8,695,112
1,284,000 Lucent Technologies Inc.+ 4,327,080
766,680 Motorola, Inc. 13,991,910
- -------------------------------------------------------------------------------------------
41,404,370
- -------------------------------------------------------------------------------------------
Computers & Peripherals -- 3.6%
428,600 Dell Inc.+ 14,876,706
- -------------------------------------------------------------------------------------------
Semiconductor Equipment & Products -- 9.9%
626,600 Intel Corp. 16,122,418
579,660 Texas Instruments Inc. 14,549,466
296,980 Xilinx, Inc.+ 9,987,437
- -------------------------------------------------------------------------------------------
40,659,321
- -------------------------------------------------------------------------------------------
Software -- 5.6%
497,000 Microsoft Corp. 12,907,090
373,000 VERITAS Software Corp.+ 9,947,910
- -------------------------------------------------------------------------------------------
22,855,000
- -------------------------------------------------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 119,795,397
- -------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $347,395,623) 409,049,582
- -------------------------------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.4%
$1,684,000 UBS Securities LLC dated 4/30/04, 0.920% due 5/3/04;
Proceeds at maturity -- $1,684,129; (Fully collateralized by U.S.
Treasury Inflation-Indexed Notes, 3.000% due 7/15/04;
Market value -- $1,717,691) (Cost -- $1,684,000) 1,684,000
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $349,079,623*) $410,733,582
- -------------------------------------------------------------------------------------------
+Non-income producing security.
*Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
13 Travelers Series Fund Inc. | 2004 Semi-Annual Report
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 2004
AIM Capital Smith Barney Large
Appreciation Capitalization
Portfolio Growth Portfolio
- ----------------------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $147,628,956 and
$349,079,623, respectively) $173,254,433 $410,733,582
Loaned securities collateral, at value
(Cost -- $7,992,083) (Note 4) 7,992,083 --
Cash 646 750
Receivable for securities sold 1,104,421 --
Dividends and interest receivable 51,988 128,699
Prepaid expenses 148 --
Other receivables 12,592 39,569
- ---------------------------------------------------------------------------------------------
Total Assets 182,416,311 410,902,600
- ---------------------------------------------------------------------------------------------
LIABILITIES:
Payable for loaned securities collateral (Note 4) 7,992,083 --
Payable for securities purchased 491,630 --
Payable for Fund shares reacquired 123,452 208,560
Management fees payable 119,513 259,776
Accrued expenses 28,559 32,954
- ---------------------------------------------------------------------------------------------
Total Liabilities 8,755,237 501,290
- ---------------------------------------------------------------------------------------------
Total Net Assets $173,661,074 $410,401,310
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 177 $ 289
Capital paid in excess of par value 219,915,993 413,132,001
Accumulated net investment loss (256,025) --
Overdistributed net investment income -- (138,381)
Accumulated net realized loss from investment transactions
and options (71,624,548) (64,246,558)
Net unrealized appreciation of investments 25,625,477 61,653,959
- ---------------------------------------------------------------------------------------------
Total Net Assets $173,661,074 $410,401,310
- ---------------------------------------------------------------------------------------------
Shares Outstanding 17,676,476 28,900,671
- ---------------------------------------------------------------------------------------------
Net Asset Value $9.82 $14.20
- ---------------------------------------------------------------------------------------------
See Notes to Financial Statements.
14 Travelers Series Fund Inc. | 2004 Semi-Annual Report
STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended April 30, 2004
AIM Capital Smith Barney Large
Appreciation Capitalization
Portfolio Growth Portfolio
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 507,272 $ 1,429,785
Interest 26,017 26,687
Less: Foreign withholding tax (5,501) --
- --------------------------------------------------------------------------------------
Total Investment Income 527,788 1,456,472
- --------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 729,680 1,496,022
Audit and legal 16,705 15,386
Custody 16,596 11,626
Shareholder communications 8,800 14,704
Directors' fees 3,030 4,422
Transfer agency services 2,485 2,548
Other 3,530 3,276
- --------------------------------------------------------------------------------------
Total Expenses 780,826 1,547,984
- --------------------------------------------------------------------------------------
Net Investment Loss (253,038) (91,512)
- --------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCIES AND
OPTIONS (NOTES 3, 6 AND 7):
Realized Gain (Loss) From:
Investment transactions 6,752,354 1,212,049
Options written 6,264 --
Foreign currency transactions (2,987) --
- --------------------------------------------------------------------------------------
Net Realized Gain 6,755,631 1,212,049
- --------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 28,368,641 51,820,240
End of period 25,625,477 61,653,959
- --------------------------------------------------------------------------------------
Increase (Decrease) in Net Unrealized Appreciation (2,743,164) 9,833,719
- --------------------------------------------------------------------------------------
Net Gain on Investments, Foreign Currencies
and Options 4,012,467 11,045,768
- --------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 3,759,429 $10,954,256
- --------------------------------------------------------------------------------------
See Notes to Financial Statements.
15 Travelers Series Fund Inc. | 2004 Semi-Annual Report
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 2004 (unaudited)
and the Year Ended October 31, 2003
AIM Capital Appreciation Portfolio 2004 2003
- ----------------------------------------------------------------------------------
OPERATIONS:
Net investment loss $ (253,038) $ (422,391)
Net realized gain (loss) 6,755,631 (11,775,533)
Increase (decrease) in net unrealized appreciation (2,743,164) 42,305,560
- ---------------------------------------------------------------------------------
Increase in Net Assets From Operations 3,759,429 30,107,636
- ---------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 5,558,781 5,082,394
Cost of shares reacquired (14,110,679) (28,925,438)
- ---------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share Transactions (8,551,898) (23,843,044)
- ---------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (4,792,469) 6,264,592
NET ASSETS:
Beginning of period 178,453,543 172,188,951
- ---------------------------------------------------------------------------------
End of period* $173,661,074 $178,453,543
- ---------------------------------------------------------------------------------
* Includes accumulated net investment loss of: $(256,025) --
- ---------------------------------------------------------------------------------
See Notes to Financial Statements.
16 Travelers Series Fund Inc. | 2004 Semi-Annual Report
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the Six Months Ended April 30, 2004 (unaudited)
and the Year Ended October 31, 2003
Smith Barney Large Capitalization Growth Portfolio 2004 2003
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (91,512) $ 166,464
Net realized gain (loss) 1,212,049 (13,016,040)
Increase in net unrealized appreciation 9,833,719 103,011,731
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 10,954,256 90,162,155
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (70,808) (501,211)
- --------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to
Shareholders (70,808) (501,211)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 57,526,371 54,577,683
Net asset value of shares issued for reinvestment
of dividends 70,808 501,211
Cost of shares reacquired (11,914,915) (16,052,630)
- --------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 45,682,264 39,026,264
- --------------------------------------------------------------------------------
Increase in Net Assets 56,565,712 128,687,208
NET ASSETS:
Beginning of period 353,835,598 225,148,390
- --------------------------------------------------------------------------------
End of period* $410,401,310 $353,835,598
- --------------------------------------------------------------------------------
* Includes undistributed (overdistributed) net
investment income of: $(138,381) $23,939
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
17 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Significant Accounting Policies
The AIM Capital Appreciation Portfolio and Smith Barney Large Capitalization
Growth Portfolio ("Fund(s)") are separate diversified investment funds of the
Travelers Series Fund Inc. ("Company"). The Company, a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company and consists of these Funds and thirteen other
separate investment funds: Smith Barney Large Cap Value Portfolio, Strategic
Equity Portfolio, Van Kampen Enterprise Portfolio, Smith Barney International
All Cap Growth Portfolio, Travelers Managed Income Portfolio, Pioneer Strategic
Income Portfolio, Salomon Brothers Strategic Total Return Bond Portfolio, Smith
Barney High Income Portfolio, MFS Total Return Portfolio, Smith Barney Money
Market Portfolio, Smith Barney Mid Cap Core Portfolio, Smith Barney Aggressive
Growth Portfolio and SB Adjustable Rate Income Portfolio. Shares of the Company
are offered only to insurance company separate accounts that fund certain
variable annuity and variable life insurance contracts. The financial
statements and financial highlights for the other funds are presented in
separate shareholder reports.
The following are significant accounting policies consistently followed by the
Funds and are in conformity with generally accepted accounting principles
("GAAP"): (a) security transactions are accounted for on trade date; (b)
securities traded on national securities markets are valued at the closing
prices in the primary exchange on which they are traded; securities traded in
the over-the-counter market and listed securities for which no sales price was
reported and U.S. government agencies and obligations are valued at the mean
between the bid and asked prices; securities listed on the NASDAQ National
Market System for which market quotations are available are valued at the
official closing price or, if there is no official closing price on that day,
at the last sale price; (c) securities maturing within 60 days are valued at
cost plus accreted discount, or minus amortized premium, which approximates
value; (d) 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; (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 dividends are recorded on the
ex-dividend date or as soon as practical after the Funds determine the
existence of a dividend declaration after exercising reasonable due
18 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
diligence; (g) dividends and distributions to shareholders are recorded on the
ex- dividend date; the Funds distribute dividends and capital gains, if any, at
least annually; (h) gains or losses on the sale of securities are calculated by
using the specific identification method; (i) the accounting records of the
Funds are maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies are translated into U.S. dollars based on the rate of
exchange of such currencies against 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 is determined in accordance with income tax
regulations which may differ from U.S. generally accepted accounting
principles; (k) the Funds intend to comply with the applicable provisions of
the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies and to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and excise taxes; 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.
2. Management Agreement and Transactions with Affiliated Persons
Smith Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary
of Citigroup Inc. ("Citigroup"), acts as investment manager of the Smith Barney
Large Capitalization Growth Portfolio ("SBLCG"). SBLCG pays SBFM a management
fee calculated at an annual rate of 0.75% on the average daily net assets of
SBLCG. This fee is calculated daily and paid monthly.
Travelers Investment Adviser, Inc. ("TIA"), an affiliate of SBFM, acts as the
investment manager of the AIM Capital Appreciation Portfolio ("AIMCAP"). AIMCAP
pays TIA a management fee calculated at an annual rate of 0.80% on the average
daily net assets of AIMCAP. This fee is calculated daily and paid monthly.
TIA has also entered into a sub-advisory agreement with AIM Capital Management,
Inc. ("AIM"). Pursuant to the sub-advisory agreement, AIM is responsible
19 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
for the day-to-day portfolio operations and investment decisions and is
compensated by TIA for such services at the annual rate of 0.375% of AIMCAP's
average daily net assets.
TIA has also entered into a Sub-Administrative Services Agreement with SBFM.
TIA pays SBFM, as sub-administrator, a fee calculated at an annual rate of
0.10% of the average daily net assets of AIMCAP.
Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as the
Funds' transfer agent. PFPC Inc. ("PFPC") acts as the Funds' sub-transfer
agent. CTB receives account fees and asset-based fees that vary according to
the size and type of account. PFPC is responsible for shareholder recordkeeping
and financial processing for all shareholder accounts and is paid by CTB. For
the six months ended April 30, 2004, each Fund paid transfer agent fees of
$2,500 to CTB.
During the six months ended April 30, 2004, Citigroup Global Markets Inc.,
another indirect wholly-owned subsidiary of Citigroup, received brokerage
commissions in the amounts of $1,390 for AIMCAP and $1,925 for SBLCG.
Most of the officers and one Director of the Company are employees of Citigroup
or its affiliates.
3. Investments
During the six months ended April 30, 2004, the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
investments, but excluding short-term investments) were as follows:
AIMCAP SBLCG
- ----------------------------------------------------------------
Purchases $42,400,851 $53,772,139
- ---------------------------------------------------------------
Sales 50,734,429 4,483,892
- ---------------------------------------------------------------
At April 30, 2004 the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
AIMCAP SBLCG
- --------------------------------------------------------------
Gross unrealized appreciation $29,407,711 $ 78,476,340
Gross unrealized depreciation (3,782,234) (16,822,381)
- -------------------------------------------------------------
Net unrealized appreciation $25,625,477 $ 61,653,959
- -------------------------------------------------------------
20 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. Lending of Portfolio Securities
Each Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Funds to brokers, dealers and other financial
organizations. Fees earned by the Funds on securities lending are recorded as
interest income. Loans of securities by the Funds are collateralized by cash,
U.S. government securities or high quality money market instruments that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities, plus a margin which may vary depending on the type of
securities loaned.
At April 30, 2004, AIMCAP loaned securities having a market value of $7,741,034
and received cash collateral amounting to $7,992,083 which was invested in the
State Street Navigator Securities Lending Trust Prime Portfolio.
For the six months ended April 30, 2004, income earned from securities lending
by AIMCAP was $4,973.
At April 30, 2004, SBLCG did not have any securities on loan.
5. Repurchase Agreements
When entering into repurchase agreements, it is the Funds' policy that a
custodian takes possession of the underlying collateral securities, the value
of which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market to
ensure the adequacy of the collateral. If the seller defaults and the value of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Funds may
be delayed or limited.
6. Forward Foreign Currency Contracts
The Funds may from time to time enter into forward foreign currency contracts.
A forward foreign currency contract is an agreement between two parties to buy
and sell a currency at a set price on a future date. The contract is
marked-to-market daily and the change in value is recorded by the Funds as an
unrealized gain or loss. When a forward foreign currency contract is
extinguished, through either delivery or offset by entering into another
forward foreign currency con-
21 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
tract, the Funds record a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value of the
contract at the time it was extinguished or offset. The Funds bear the market
risk that arises from changes in foreign currency exchange rates and the credit
risk should a counterparty be unable to meet the terms of such contracts.
At April 30, 2004, AIMCAP and SBLCG did not have any open forward foreign
currency contracts.
7. Option Contracts
The Funds may from time to time purchase call or put option contracts. Premiums
paid when call or put options are purchased by the Funds represent investments
which are marked-to-market daily. When a purchased option expires, the Funds
will realize a loss in the amount of the premium paid. When the Funds enter
into a closing sales transaction, the Funds will realize a gain or loss
depending on whether the sales proceeds from the closing sales transaction are
greater or less than the premium paid for the option. When the Funds exercise 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 premium
originally paid. When the Funds exercise a call option, the cost of the
security which the Funds purchase upon exercise will be increased by the
premium originally paid.
At April 30, 2004, AIMCAP and SBLCG did not hold any purchased call or put
option contracts.
SBLCG may from time to time enter into written call or put option contracts.
AIMCAP may only enter into written covered call option contracts. When a Fund
writes a call or put option, an amount equal to the premium received by the
Fund is recorded as a liability, the value of which is marked-to-market daily.
When a written option expires, the Fund realizes a gain equal to the amount of
the premium received. When the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or loss if the cost of the closing purchase
transaction exceeds the premium received when the option was written) 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 reduced by the premium
originally received.
22 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
When a written put option is exercised, the amount of the premium received will
reduce the cost of the security which the Fund 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 Funds enter into options for hedging purposes. The risk in
writing a covered call option is that the Fund 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 Fund is exposed to
the risk of loss if the market price of the underlying security declines. The
risk in writing a call option is that the Fund is exposed to the risk of loss
if the market price of the underlying security increases.
The written option transactions for AIMCAP which occurred during the six months
ended April 30, 2004 were as follows:
Number of
AIMCAP Contracts Premiums
-------------------------------------------------------------------
Options written, outstanding at October 31, 2003 -- $ 0
Options written 84 6,324
Options closed (10) (680)
Options expired (74) (5,644)
-------------------------------------------------------------------
Options written, outstanding at April 30, 2004 -- $ 0
-------------------------------------------------------------------
During the six months ended April 30, 2004, SBLCG did not enter into any
written covered call or put option contracts.
8. Capital Shares
At April 30, 2004, the Company had six billion shares of capital stock
authorized with a par value of $0.00001 per share. Each share of a Fund
represents an equal proportionate interest in that Fund with each other share
of the same Fund and has an equal entitlement to any dividends and
distributions made by the Fund.
23 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Transactions in shares of each Fund were as follows:
Six Months Ended Year Ended
April 30, 2004 October 31, 2003
--------------------------------------------------------------------
AIM Capital Appreciation Portfolio
Shares sold 547,555 610,791
Shares reacquired (1,393,930) (3,517,542)
--------------------------------------------------------------------
Net Decrease (846,375) (2,906,751)
--------------------------------------------------------------------
Smith Barney Large Capitalization Growth Portfolio
Shares sold 4,002,563 4,480,533
Shares issued on reinvestment 4,938 51,353
Shares reacquired (820,954) (1,541,281)
--------------------------------------------------------------------
Net Increase 3,186,547 2,990,605
--------------------------------------------------------------------
9. Additional Information
The Funds have received the following information from Citigroup Asset
Management ("CAM"), the Citigroup business unit which includes the Funds'
Investment Manager and other investment advisory companies, all of which are
indirect, wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry,
through an affiliate, into the transfer agent business in the period 1997-1999.
As CAM currently understands the facts, at the time CAM decided to enter the
transfer agent business, CAM sub-contracted for a period of five years certain
of the transfer agency services to a third party and also concluded a revenue
guarantee agreement with this sub-contractor providing that the sub-contractor
would guarantee certain benefits to CAM or its affiliates (the "Revenue
Guarantee Agreement"). In connection with the subsequent purchase of the
sub-contractor's business by an affiliate of the current sub-transfer agent
(PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee
Agreement was amended eliminating those benefits in exchange for arrangements
that included a one-time payment from the sub-contractor.
The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue
Guarantee Agreement with the sub-contractor at the time the Boards considered
and approved the transfer agent arrangements. Nor were the Boards informed of
the subsequent amendment to the Revenue Guarantee Agreement when that occurred.
24 Travelers Series Fund Inc. | 2004 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
CAM has begun to take corrective actions. CAM will pay to the applicable funds
approximately $17 million (plus interest) that CAM and its affiliates received
from the Revenue Guarantee Agreement and its amendment. CAM also plans an
independent review to verify that the transfer agency fees charged by CAM were
fairly priced as compared to competitive alternatives. CAM is instituting new
procedures and making changes designed to ensure no similar arrangements are
entered into in the future.
CAM has briefed the SEC, the New York State Attorney General and other
regulators with respect to this matter, as well as the U.S. Attorney who is
investigating the matter. CAM is cooperating with governmental authorities on
this matter, the ultimate outcome of which is not yet determinable.
25 Travelers Series Fund Inc. | 2004 Semi-Annual Report
FINANCIAL HIGHLIGHTS
For a share of capital stock outstanding throughout each year ended October 31,
unless otherwise noted:
AIM Capital Appreciation Portfolio 2004/(1)/ 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.63 $8.04 $9.11 $ 21.73 $16.30 $12.31
- -----------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.01) (0.02) (0.03) (0.02) (0.07) (0.03)
Net realized and unrealized gain (loss) 0.20 1.61 (1.04) (8.72) 6.03 4.02
- -----------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.19 1.59 (1.07) (8.74) 5.96 3.99
- -----------------------------------------------------------------------------------------------------
Less Distributions From:
Net realized gains -- -- -- (3.88) (0.53) --
- -----------------------------------------------------------------------------------------------------
Total Distributions -- -- -- (3.88) (0.53) --
- -----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.82 $9.63 $8.04 $ 9.11 $21.73 $16.30
- -----------------------------------------------------------------------------------------------------
Total Return/(2)/ 1.97%++ 19.78% (11.75)% (43.36)% 36.53% 32.41%
- -----------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $174 $178 $172 $224 $435 $300
- -----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.86%+ 0.85% 0.85% 0.83% 0.83% 0.84%
Net investment loss (0.28)+ (0.25) (0.28) (0.20) (0.35) (0.18)
- -----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 24% 49% 65% 77% 91% 76%
- -----------------------------------------------------------------------------------------------------
(1) For the six months ended April 30, 2004 (unaudited).
(2) Total returns do not reflect expenses associated with the separate account
such as administrative fees, account charges and surrender charges which,
if reflected, would reduce the total returns for all periods shown.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
26 Travelers Series Fund Inc. | 2004 Semi-Annual Report
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of capital stock outstanding throughout each year ended October
31, unless otherwise noted:
Smith Barney Large Capitalization
Growth Portfolio 2004/(1)/ 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $13.76 $ 9.91 $11.86 $16.04 $14.53 $ 9.90
- ----------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.00)* 0.01 0.02 0.02 0.01 0.00*
Net realized and unrealized gain (loss) 0.44 3.86 (1.95) (4.20) 1.55 4.64
- ----------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.44 3.87 (1.93) (4.18) 1.56 4.64
- ----------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.00)* (0.02) (0.02) -- (0.01) (0.01)
Net realized gains -- -- -- -- (0.02) --
Capital -- -- -- -- (0.02) --
- ----------------------------------------------------------------------------------------------
Total Distributions (0.00)* (0.02) (0.02) -- (0.05) (0.01)
- ----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $14.20 $13.76 $ 9.91 $11.86 $16.04 $14.53
- ----------------------------------------------------------------------------------------------
Total Return/(2)/ 3.22%++ 39.16% (16.29)% (26.06)% 10.77% 46.88%
- ----------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $410 $354 $225 $280 $324 $168
- ----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.78%+ 0.79% 0.80% 0.78% 0.77% 0.86%
Net investment income (loss) (0.05)+ 0.06 0.13 0.14 0.06 0.07
- ----------------------------------------------------------------------------------------------
Portfolio Turnover Rate 1% 16% 19% 10% 7% 14%
- ----------------------------------------------------------------------------------------------
(1) For the six months ended April 30, 2004 (unaudited).
(2) Total returns do not reflect expenses associated with the separate account
such as administrative fees, account charges and surrender charges which,
if reflected, would reduce the total returns for all periods shown.
* 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.
27 Travelers Series Fund Inc. | 2004 Semi-Annual Report
TRAVELERS SERIES
FUND INC.
DIRECTORS INVESTMENT MANAGERS
A.E. Cohen Smith Barney Fund
Robert A. Frankel Management LLC
Michael E. Gellert Travelers Investment Adviser, Inc.
R. Jay Gerken, CFA
Chairman CUSTODIAN
Rainer Greeven State Street Bank and
Susan M. Heilbron Trust Company
OFFICERS ANNUITY
R. Jay Gerken, CFA ADMINISTRATION
President and Chief Travelers Annuity Investor Services
Executive Officer One Cityplace
Hartford, CT 06103-3415
Andrew B. Shoup
Senior Vice President
and Chief
Administrative Officer
Alan J. Blake
Vice President and
Investment Officer
Andrew Beagley
Chief Anti-Money
Laundering Compliance
Officer
Kaprel Ozsolak
Controller
Robert I. Frenkel
Secretary and Chief
Legal Officer
Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
Smith Barney Large Capitalization Growth Portfolio
The Funds are separate investment funds of the Travelers Series Fund Inc., a
Maryland corporation.
A description of the policies and procedures that the fund uses to determine
how to vote proxies relating to portfolio securities is available without
charge, upon request, by telephoning the fund (toll-free) at 1-800-451-2010
and by visiting the SEC's web site at www.sec.gov.
This report is submitted for the general information of the shareholders of
the Travelers Series Fund Inc. -- AIM Capital Appreciation Portfolio and
Smith Barney Large Capitalization Growth Portfolio. It is not authorized for
distribution to prospective investors unless accompanied or preceded by a
current Prospectus.
TRAVELERS SERIES FUND INC.
125 Broad Street
10th Floor, MF-2
New York, New York 10004
This document must be preceded or accompanied by a free prospectus. Investors
should consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other important
information about the fund. Please read the prospectus carefully before you
invest or send money.
IN0806 6/04 04-6791
ITEM 2. CODE OF ETHICS.
Not Applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure
controls and procedures (as defined in Rule 30a- 3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act")) are
effective as of a date within 90 days of the filing date of this
report that includes the disclosure required by this paragraph,
based on their evaluation of the disclosure controls and
procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act) that occurred during the registrant's last fiscal half-year
(the registrant's second fiscal half-year in the case of an
annual report) that have materially affected, or are likely to
materially affect the registrant's internal control over
financial reporting.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section 302 of
the Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.
Travelers Series Fund Inc.
By: /s/ R. Jay Gerken
--------------------------------
R. Jay Gerken
Chief Executive Officer of
Travelers Series Fund Inc.
Date: June 30, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
--------------------------------
R. Jay Gerken
Chief Executive Officer of
Travelers Series Fund Inc.
Date: June 30, 2004
By: /s/ Andrew B. Shoup
--------------------------------
Andrew B. Shoup
Chief Administrative Officer of
Travelers Series Fund Inc.
Date: June 30, 2004