<PAGE>
Travelers
Corporate
Loan Fund Inc.
Quarterly Report
June 30, 1999
[GRAPHIC]
<PAGE>
Travelers Corporate Loan Fund Inc.
[PHOTO] [PHOTO]
HEATH B. GLENN N.
MCLENDON MARCHAK
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide you the fiscal third quarter report for the Travelers
Corporate Loan Fund Inc. ("Fund") for the period ended June 30, 1999. We hope
you find this report to be useful and informative. This report covers the period
from the Fund's inception, November 20, 1998 through June 30, 1999 ("Reporting
Period"). Over the Reporting Period, the Fund distributed income dividends
totaling $0.56 per share. The table below shows the annualized distribution rate
based on the Fund's initial offering price ("OP"), net asset value per share
("NAV") at June 30, 1999 and the New York Stock Exchange ("NYSE") closing price
at June 30, 1999.
Price Annualized
Per Share Distribution Rate*
--------- ------------------
$15.00 (OP) 7.50%
$15.20 (NAV) 7.40%
$14.125 (NYSE) 7.97%
Portfolio Review
Consistent with our original strategy, the Fund's portfolio is comprised
entirely of corporate loans of U.S. issuers. The loans in the portfolio continue
to perform well. Since our last report, we have improved portfolio
diversification by adding loans to new issuers, decreasing the average loan size
per issuer and increasing the number of industries in which we are invested.
At June 30, 1999, we had total net assets of approximately $149 million. The
portfolio was invested in 20 industries with the largest industry concentration
being 11.7% to the Media - Non-Cable industry. We have made loans to 41 issuers
with the largest loan to one issuer being $10,532,403. We believe that the Fund
is well diversified and we will continue to make improvements to diversification
at the margin. Also, the NAV performance of the Fund has continued to be
positive.
- ----------
* This distribution assumes a current monthly income dividend rate of
$0.09375 per share for twelve months.
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Travelers Corporate Loan Fund Inc. 1
<PAGE>
At June 30, 1999, our NAV was $15.20 per share. We continue to maintain a
comfortable margin over our NAV at the inception of the Fund of $15.00 per
share.
In the last quarter, we have seen the stock price of the Fund continue to move
up. Our closing price at June 30, 1999 was $14.125 and has closed at $14.250
since then with interday trading as high as $14.3125. Also, the performance of
the corporate loan asset class has shown improvement since our last report. We
attribute this improved performance to a general expectation for higher interest
rates, more turbulence in the high yield bond market and a general increase in
volatility across the financial markets all of which tend to make the corporate
loan asset class more attractive on a relative basis.
On June 30, 1999, the Federal Reserve Board ("Fed") increased short-term
interest rates by 25 basis points. As the loans in the Fund's portfolio are
based off of LIBOR, a short-term interest rate, the rate increase should improve
the return on the portfolio, all other things being equal. Since the loans in
the Fund's portfolio have varying interest rate reset dates, it will take some
time for the full effect of the rate increase to completely work its way into
the portfolio.
Investment Strategy
Our investment strategy has not changed appreciably since our last report. We
continue to focus on finding the highest quality assets at reasonable prices. As
previously noted, the Fund's portfolio is now well diversified and we will
continually look to improve diversification at the margin. As the environment in
the financial markets has grown more volatile, we have become more selective in
the assets we add to the portfolio. At the same time, we continually monitor the
existing portfolio in an attempt to identify negative trends in advance of the
occurrence of a credit problem and to ensure that the changing economic
landscape has not resulted in an unacceptably high level of vulnerability for
any of the loans in the portfolio.
Our goal remains constant: work hard to optimize the diversification of the
portfolio and operate successfully within the confines of our high credit
standards. We look to bring our shareholders the best combination of quality and
price in the assets we purchase and to achieve the best risk-adjusted returns
available from corporate loans.
Corporate Loan Market Update and Outlook
Supply of new product was very active in the second quarter of 1999. In fact,
the second quarter was a record quarter for new issuance. We evaluated many new
opportunities and added a number of new loans to the Fund's portfolio. The high
level of activity in the market was timely in the sense that we were able to
reach our diversification objectives more quickly than expected.
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2 1999 Quarterly Report to Shareholders
<PAGE>
Since the end of the second quarter, new product flow has slowed and, at the
same time, investors have become more discriminating. The net result is that
credit structures have remained sound and pricing for new issues have firmed.
Summer slowdowns are typical in the loan market and we expect that new product
generation will continue to be slow until September.
While the secondary market was strong through the second quarter, we have more
recently seen a slowdown in investor appetite and a resulting softness in the
market. As there continue to be reports of a significant amount of capital
inflows coming over the next few months, we believe this softness in the market
should be temporary.
Although we expect loan market activity to escalate in September, fourth quarter
activity is difficult to gauge at this point as the uncertainties surrounding
the Y2K issue obscure our vision beyond a short-term horizon. Irrespective of
the outcome, we think that the Fund is well positioned and we do not foresee the
need to be an active buyer in the fourth quarter outside of filling marginal
needs created by typical loan runoff. As such, we expect that we will remain in
the enviable position of being able to pick our spots in making changes to the
Fund's portfolio.
Economic Outlook
If U.S. economic growth continues at its first half pace, it is logical for
interest rates to continue to move up. While many have been forecasting a
slowing of economic growth for some time, high employment levels and strong
stock market performance continue to buoy consumers through the second quarter
of 1999. Improvements in foreign economies and strength in commodity prices like
oil, lumber and copper also put upward pressure on interest rates.
In response to the continuing strong economic activity and apparent improvement
in foreign economies, the Fed raised short-term interest rates by 25 basis
points on June 30, 1999. Although the equity market has pulled back more
recently, the financial markets appear to have largely priced in another rate
increase coming at the next Fed meeting on August 24, 1999. We believe that
there is a high probability that the Fed will increase short-term interest rates
at the next meeting. Nevertheless, it is clear that the trend at this point is
for higher rates going forward.
As short-term rates increase, the earnings from the Fund's portfolio should also
increase. So long as interest rates do not increase to a point where they
significantly choke off economic activity, the current interest rate environment
should be favorable to the corporate loan asset class and the Fund.
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Travelers Corporate Loan Fund Inc. 3
<PAGE>
In closing, thank you for investing in the Travelers Corporate Loan Fund Inc. We
look forward to achieving our objectives of maximizing current income consistent
with prudent efforts to preserve capital. We will seek the best risk adjusted
returns available in the corporate loan asset class and work diligently to
provide you with a stable, long-term investment offering competitive returns.
Sincerely,
/s/ Heath B. McLendon /s/ Glenn N. Marchak
Heath B. McLendon Glenn N. Marchak
Chairman Vice President and
Investment Officer
August 11, 1999
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4 1999 Quarterly Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
===========================================================================================================
<S> <C> <C> <C> <C>
SENIOR COLLATERALIZED LOANS -- 98.6%
Aerospace/Defense -- 4.7%
$ 9,937,475 Decrane Aircraft Holdings Term B 9/30/05 $ 9,968,282
- -----------------------------------------------------------------------------------------------------------
Automotive -- 8.9%
5,000,000 American Axle & Manufacturing Inc. Term B 4/30/06 5,015,500
3,750,000 Dura Automotive Systems Term B 3/3/06 3,764,250
3,000,000 Federal Mogul Corp. Term B 12/19/05 3,005,700
1,973,684 JL French Automotive Term B 11/7/06 1,983,553
4,975,000 Stoneridge Inc. Term B 12/31/05 4,972,015
- -----------------------------------------------------------------------------------------------------------
18,741,018
- -----------------------------------------------------------------------------------------------------------
Building Materials -- 1.4%
2,985,000 Panolam Industries International Term B 1/29/06 2,981,418
- -----------------------------------------------------------------------------------------------------------
Chemicals -- 6.2%
4,884,614 Ethyl Corp. Term 2/18/07 4,884,614
5,213,072 Lyondell Petrochemical Co. Term B 6/30/05 5,222,977
2,992,500 Lyondell Petrochemical Co. Term E 5/20/06 3,022,425
- -----------------------------------------------------------------------------------------------------------
13,130,016
- -----------------------------------------------------------------------------------------------------------
Consumer Products -- 4.0%
460,000 American Safety Razor Term B 1/31/05 459,448
2,869,450 Doane Pet Care Co. Term B 11/12/05 2,880,356
3,100,547 Doane Pet Care Co. Term C 11/12/06 3,112,330
2,000,000 Holmes Product Corp. Term B 2/5/07 2,002,600
- -----------------------------------------------------------------------------------------------------------
8,454,734
- -----------------------------------------------------------------------------------------------------------
Financial Institutions -- 2.7%
2,000,000 Bridge Information Systems Multi-Draw 5/2/03 2,003,800
3,750,000 Bridge Information Systems Term B 5/29/05 3,761,625
- -----------------------------------------------------------------------------------------------------------
5,765,425
- -----------------------------------------------------------------------------------------------------------
Food -- 0.7%
1,396,500 New World Pasta Co. Term B 1/28/06 1,405,298
- -----------------------------------------------------------------------------------------------------------
Health Care -- 6.6%
1,500,000 Dade Behring Term B 6/29/06 1,502,850
1,500,000 Dade Behring Term C 6/29/07 1,502,850
540,107 Express Scripts, Inc. Term B 4/30/05 540,810
3,500,000 Oxford Health Plans Term B 5/13/03 3,497,900
6,852,358 Stryker Corp. Term B 12/4/05 6,878,397
- -----------------------------------------------------------------------------------------------------------
13,922,807
- -----------------------------------------------------------------------------------------------------------
Independent Energy -- 4.7%
10,000,000 Heating Oil Partners Term B 9/30/03 9,975,000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 5
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
===========================================================================================================
<S> <C> <C> <C> <C>
Industrial - Other -- 7.6%
$ 3,000,000 General Cable Corp. Term B 5/28/07 $ 3,009,300
4,894,736 SPX Corp. Term A 10/6/04 4,901,100
4,962,499 SPX Corp. Term B 9/30/06 5,012,125
3,000,000 Western Industries Inc. Term B 6/23/06 2,998,200
- -----------------------------------------------------------------------------------------------------------
15,920,725
- -----------------------------------------------------------------------------------------------------------
Media - Cable -- 4.0%
5,000,000 Charter Communications Operating LLC Term B 12/30/07 5,015,500
3,500,000 TWFanch-One Co. Term B 2/4/08 3,515,400
- -----------------------------------------------------------------------------------------------------------
8,530,900
- -----------------------------------------------------------------------------------------------------------
Media - Non-Cable -- 11.7%
4,900,000 21st Century Newspapers Term B 9/15/05 4,881,870
2,000,000 American Media Operations Term B 5/6/07 1,944,375
3,885,625 Capstar Broadcasting Term B 5/31/05 3,887,957
5,000,000 Emmis Communications Term B 2/28/07 4,998,500
4,000,000 Susquehanna Media Co. Term B 4/30/05 4,022,400
5,000,000 Ziff-Davis Inc. Term B 3/31/06 5,019,000
- -----------------------------------------------------------------------------------------------------------
24,754,102
- -----------------------------------------------------------------------------------------------------------
Metals -- 2.3%
4,996,000 Ucar International Inc. Term B 12/31/01 4,946,040
- -----------------------------------------------------------------------------------------------------------
Other - Energy -- 1.4%
3,000,000 TransMontaigne Inc. Term 6/30/06 2,988,900
- -----------------------------------------------------------------------------------------------------------
Packaging -- 2.4%
4,975,000 Graham Packaging Co. Term D 1/31/07 4,977,985
- -----------------------------------------------------------------------------------------------------------
Paper -- 8.1%
9,950,000 Jefferson Smurfit Co. Term B 3/24/06 10,005,720
3,517,561 Packaging Corp. of America Term B 4/1/07 3,548,516
3,517,561 Packaging Corp. of America Term C 4/1/08 3,548,517
- -----------------------------------------------------------------------------------------------------------
17,102,753
- -----------------------------------------------------------------------------------------------------------
Pharmaceuticals -- 6.4%
10,473,750 King Pharmaceuticals, Inc. Term B 12/28/06 10,532,403
2,947,556 Roberts Pharmaceuticals Corp. Term B 7/1/04 2,944,019
- -----------------------------------------------------------------------------------------------------------
13,476,422
- -----------------------------------------------------------------------------------------------------------
Real Estate Investment Trust -- 4.7%
10,000,000 Starwood Hotels and Resorts IRN 2/23/03 10,013,000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1999 Quarterly Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
===========================================================================================================
Telecommunications -- 8.2%
<S> <C> <C> <C> <C>
$ 4,975,000 Centennial Cellular Operating Co. Term B 5/31/07 $ 4,996,890
4,975,000 Centennial Cellular Operating Co. Term C 11/30/07 4,996,890
7,375,490 Superior TeleCom Inc. Term B 11/27/05 7,416,794
- -----------------------------------------------------------------------------------------------------------
17,410,574
- -----------------------------------------------------------------------------------------------------------
Transportation -- 1.9%
4,000,000 Sea Containers IRN 5/19/00 3,970,000
- -----------------------------------------------------------------------------------------------------------
TOTAL SENIOR COLLATERALIZED LOANS
(Cost -- $207,508,955) 208,435,399
===========================================================================================================
SHORT-TERM INVESTMENTS -- 1.4%
Time Deposit -- 1.4%
3,000,000 Chase Manhattan Bank 4.750% due 7/1/99
(Cost -- $3,000,000) 3,000,000
===========================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $210,508,955*) $211,435,399
===========================================================================================================
</TABLE>
* Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in schedule:
Term -- Term Loan
Term B -- Term Loan B
Term C -- Term Loan C
Term D -- Term Loan D
Multi Draw -- Multi Draw Term Loan
IRN -- Increasing Rate Note
See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) June 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $210,508,955) $211,435,399
Cash 9,119
Interest receivable 1,226,617
Organization costs 91,110
Other assets 8,769
- --------------------------------------------------------------------------------
Total Assets 212,771,014
- --------------------------------------------------------------------------------
LIABILITIES:
Notes payable 63,000,000
Dividends payable 348,979
Management fees payable 202,088
Interest payable 167,864
Accrued expenses 413,023
- --------------------------------------------------------------------------------
Total Liabilities 64,131,954
- --------------------------------------------------------------------------------
Total Net Assets $148,639,060
================================================================================
NET ASSETS:
Par value of capital shares $ 9,782
Capital paid in excess of par value 146,490,218
Undistributed net investment income 1,038,882
Accumulated net realized gain from security transactions 173,734
Net unrealized appreciation of investments 926,444
- --------------------------------------------------------------------------------
Total Net Assets $148,639,060
================================================================================
Shares Outstanding 9,781,667
- --------------------------------------------------------------------------------
Net Asset Value $15.20
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Quarterly Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended June 30, 1999(a)
INVESTMENT INCOME:
Interest $ 9,145,824
Less: Interest expense (1,106,414)
- -------------------------------------------------------------------------------
Total Investment Income 8,039,410
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 1,109,330
Amortization of deferred organization costs (Note 1) 215,890
Shareholder communications 88,023
Audit and legal 70,418
Directors' fees 28,643
Shareholder and system servicing fees 22,570
Custody 7,042
Other 46,822
- -------------------------------------------------------------------------------
Total Expenses 1,588,738
- -------------------------------------------------------------------------------
Net Investment Income 6,450,672
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 86,722,930
Cost of securities sold 86,549,196
- -------------------------------------------------------------------------------
Net Realized Gain 173,734
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period --
End of period 926,444
- -------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 926,444
- -------------------------------------------------------------------------------
Net Gain on Investments 1,100,178
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 7,550,850
===============================================================================
(a) For the period from November 20, 1998 (commencement of operations) to June
30, 1999.
See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended June 30, 1999(a)
OPERATIONS:
Net investment income $ 6,450,672
Net realized gain 173,734
Increase in net unrealized appreciation 926,444
- -------------------------------------------------------------------------------
Increase in Net Assets from Operations 7,550,850
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (5,411,790)
- -------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders (5,411,790)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 146,500,000
Cost of shares reacquired --
- -------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 146,500,000
- -------------------------------------------------------------------------------
Increase in Net Assets 148,639,060
NET ASSETS:
Beginning of period --
- -------------------------------------------------------------------------------
End of period* $148,639,060
===============================================================================
* Includes undistributed net investment income of: $ 1,038,882
===============================================================================
(a) For the period from November 20, 1998 (commencement of operations) to June
30, 1999.
See Notes to Financial Statements.
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10 1999 Quarterly Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Cash Flows (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended June 30, 1999(a)
CASH FLOWS USED BY OPERATING AND INVESTING ACTIVITIES:
Interest received $ 7,586,242
Operating expenses paid (880,539)
Interest payments on bank loans (937,319)
Deferred organization costs (194,197)
Purchases of portfolio securities (296,725,187)
Proceeds from disposition of long-term securities 86,722,930
- -------------------------------------------------------------------------------
Net Cash Used By Operating and Investing Activities (204,428,070)
- -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings under line-of-credit agreement 63,000,000
Proceeds from issuance of Common Stock 146,500,000
Cash dividends paid on Common Stock (5,062,812)
- -------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 204,437,188
- -------------------------------------------------------------------------------
NET INCREASE IN CASH 9,119
Cash -- Beginning of Period --
- -------------------------------------------------------------------------------
Cash -- End of Period $ 9,119
================================================================================
RECONCILIATION OF INCREASE IN NET ASSETS
FROM OPERATIONS TO NET CASH USED BY
OPERATING AND INVESTING ACTIVITIES:
Increase in net assets from operations $ 7,550,850
- -------------------------------------------------------------------------------
Amortization of discount on securities (586,233)
Increase in investments (210,849,166)
Increase in deferred organization costs (91,110)
Increase in other assets (8,769)
Increase in interest payable 167,864
Increase in dividends and interest receivable (1,226,617)
Increase in accrued expenses 615,111
- -------------------------------------------------------------------------------
Total Adjustments (211,978,920)
- -------------------------------------------------------------------------------
Net Cash Used By Operating and Investing Activities $(204,428,070)
================================================================================
(a) For the period from November 20, 1998 (commencement of operations) to June
30, 1999.
See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Travelers Corporate Loan Fund Inc. ("Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-end management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date and collateralized senior
loans are accounted for on settlement date; (b) U.S. government agencies and
obligations are valued at the mean between the bid and ask prices; (c)
securities, excluding senior collateralized loans, 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 Trustees; (d) securities maturing within 60 days are
valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (e) interest income is recorded on an accrual basis; (f)
gains or losses on the sale of securities are calculated by using the specific
identification method; (g) direct expenses are charged to 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 Fund intends to comply with the applicable provisions
of the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and excise taxes; (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; (k) 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; and (l) collateralized senior loans will
be valued at readily ascertainable market values and in the absence at fair
value. Fair value is determined in accordance with guidelines established by the
Fund's Board of Directors. In valuing a loan, SSBC Fund Management Inc. ("SSBC")
the Fund's investment adviser, with the assistance of the Travelers Asset
Management International Corporation ("TAMIC"), the sub-adviser, will consider
among other factors: (i) the creditworthiness of the borrower and any party
interpositioned between the Fund and the borrower; (ii) the current interest
rate, period until next interest rate reset and maturity date of the
collateralized senior loan; (iii) recent market prices for similar loans, if
any; and (iv) recent prices in the market for instruments with similar quality,
rate, period until next interest rate reset, maturity, terms and conditions;
SSBC may also consider prices or quotations, if any, provided by
- --------------------------------------------------------------------------------
12 1999 Quarterly Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
banks, dealers or pricing services which may represent the prices at which
secondary market transactions in the collateralized senior loans held by the
Fund have or could have occurred. However, because the secondary market has not
yet fully developed, SSBC will not rely solely on such prices or quotations.
Organization costs are being amortized on a straight-line basis over a one-year
period, which began with the Fund's inception in November 1998.
2. Management Agreement and Transactions with Affiliated Persons
SSBC, a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), which is a
wholly-owned subsidiary of Citigroup, Inc., acts as investment adviser for the
Fund. The Fund pays SSBC a management fee for its investment advisory and
administration services calculated at an annual rate of 1.05% of the average
weekly assets. This fee is calculated weekly and paid monthly.
SSBC has entered into a sub-investment advisory agreement with TAMIC, another
wholly-owned indirect subsidiary of Citigroup. Pursuant to a subadvisory
agreement, TAMIC is responsible for certain investment decisions related to the
Fund. SSBC pays TAMIC a fee of 0.50% of the value of the Fund's average weekly
assets for the services TAMIC provides as sub-adviser. This fee is calculated
weekly and paid monthly.
All officers and one Director of the Fund are employees of either Salomon Smith
Barney Inc. ("SSB"), another subsidiary of SSBH or its affiliates.
3. Investments
During the period ended June 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $293,725,187
- --------------------------------------------------------------------------------
Sales 86,722,930
================================================================================
At June 30, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
===============================================================================
Gross unrealized appreciation $ 1,080,527
Gross unrealized depreciation (154,083)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 926,444
===============================================================================
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
4. Commitments
The Fund has entered into a 364 day revolving credit agreement and a three year
revolving credit agreement to borrow up to an aggregate of $73.5 million from a
syndicate of major financial institutions. The 364 day revolving credit
agreement matures on February 1, 2000 and the three year revolving credit
agreement matures on February 1, 2002. Borrowing rates under both of these
agreements are based on a fixed spread over LIBOR or the Prime Rate. The Fund
pays a facility fee quarterly at 0.10% and 0.15% per annum for the 364 day and
three year revolving credit agreements, respectively. The amount of aggregate
borrowings outstanding at June 30, 1999 was $63.0 million at a weighted average
interest rate of 5.497%, which represented 29.75% of net assets plus borrowings.
Average aggregate borrowings for the period ended June 30, 1999, were
$52,537,422 and the average annualized interest rate was 5.36%.
5. Offering Costs
Offering costs of $607,394 were incurred at the inception of the Fund. Of this
amount, $382,395 was paid by SSBC.
6. Capital Shares
At June 30, 1999, the Fund had 150,000,000 shares of capital stock authorized,
all initially classified as one class called Common Stock (the "Common Stock")
with a par value of $0.001 per share.
Transactions in shares of each class were as follows:
Period Ended
June 30, 1999(a)
--------------------------
Shares Amount
================================================================================
Shares sold 9,781,667 $146,500,000
Shares reacquired -- --
- --------------------------------------------------------------------------------
Net Increase 9,781,667 $146,500,000
================================================================================
(a) For the period from November 20, 1998 (commencement of operations) to June
30, 1999.
- --------------------------------------------------------------------------------
14 1999 Quarterly Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout the period
ended June 30:
1999(1)
================================================================================
Net Asset Value, Beginning of Period $ 15.00
- -----------------------------------------------------------------------------
Income From Operations:
Net investment income 0.67
Net realized and unrealized gain 0.09
- -----------------------------------------------------------------------------
Total Income From Operations 0.76
- -----------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.56)
- -----------------------------------------------------------------------------
Total Distributions (0.56)
- -----------------------------------------------------------------------------
Net Asset Value, End of Period $ 15.20
- -----------------------------------------------------------------------------
Total Return, Based on Market Value++ (2.04)%
- -----------------------------------------------------------------------------
Total Return, Based on Net Asset Value++ 5.42%
- -----------------------------------------------------------------------------
Net Assets, End of Period (000s) $ 148,639
- -----------------------------------------------------------------------------
Ratios to Average Net Assets+:
Net investment income 7.29%
Interest expense 1.25
Organization expense 0.24
Other expenses 1.55
- -----------------------------------------------------------------------------
Portfolio Turnover Rate 49%
- -----------------------------------------------------------------------------
Market Value, End of Period $ 14.125
=============================================================================
(1) For the period from November 20, 1998 to June 30, 1999 (unaudited).
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited)
- --------------------------------------------------------------------------------
Pursuant to the Plan, shareholders whose Common Stock is registered in their own
names will be deemed to have elected to have all distributions reinvested
automatically in additional Common Stock of the Fund by First Data Investor
Services Group, Inc. ("Plan Agent") as agent under the Plan, unless such
shareholders elect to receive distributions in cash. Shareholders who elect to
receive distributions in cash will receive all distributions in cash paid by
check in U.S. dollars mailed directly to the shareholder by First Data Investor
Services Group, Inc., as dividend paying agent. In the case of shareholders such
as banks, brokers or nominees, which hold Common Stock for others who are the
beneficial owners, the Plan Agent will administer the Plan on the basis of the
number of shares of Common Stock certified from time to time by the record
shareholders as representing the total amount registered in the record
shareholder's name and held for the account of beneficial owners that have not
elected to receive distributions in cash. Investors that own shares of Common
Stock registered in the name of a bank, broker or other nominee should consult
with such nominee as to participation in the Plan through such nominee, and may
be required to have their shares registered in their own names in order to
participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the Plan.
Unless the Board of Directors of the Fund declares a dividend or capital gains
distribution payable only in cash, non-participants in the Plan will receive
cash and participants in the Plan will receive shares of Common Stock of the
Fund, to be issued by the Fund or purchased by the Plan Agent in the open market
as outlined below. Whenever the market price per share of Common Stock is equal
to or exceeds the net asset value per share as of the determination date
(defined as the fourth New York Stock Exchange trading day preceding the payment
date for the dividend or distribution), participants will be issued new shares
of Common Stock at a price per share equal to the greater of: (a) the net asset
value per share on the valuation date or (b) 95% of the market price per share
on the valuation date. Except as noted below, the valuation date generally will
be the dividend or distribution payment date. If net asset value exceeds the
market price of the Fund's shares of Common Stock as of the determination date,
the Plan Agent will, as agent for the participants, buy shares in the open
market, on the New York Stock Exchange or elsewhere, for the participants'
accounts as soon as practicable commencing on the trading day following the
determination date and generally terminating no later than 30 days after the
dividend or distribution payment date. If, before the Plan Agent has completed
its purchases, the market price exceeds the net asset value of a share of Common
Stock, the average per share purchase price paid by the Plan Agent may exceed
the net asset value of the Fund's shares, resulting in the acquisition
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16 1999 Quarterly Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
- --------------------------------------------------------------------------------
of fewer shares than if the dividend or capital gains distribution had been paid
in shares of Common Stock issued by the Fund. Because of the foregoing
difficulty with respect to open-market purchases, the Plan provides that if the
Plan Agent is unable to invest the full dividend amount in open-market purchases
during the permissible purchase period or if the market discount shifts to a
market premium during such purchase period, the Plan Agent will cease making
open-market purchases and will receive the uninvested portion of the dividend
amount in newly issued shares of Common Stock (in which case the valuation date
will be the date such shares are issued) at a price per share equal to the
greater of (a) the net asset value per share on the valuation date or (b) 95% of
the market price per share on the valuation date.
A shareholder may elect to withdraw from the Plan at any time upon written
notice to the Plan Agent or by calling the Plan Agent at 1-800-331-1710. When a
participant withdraws from the Plan, or upon termination of the Plan as provided
below, certificates for whole shares of Common Stock credited to his or her
account under the Plan will be issued and a cash payment will be made for any
fractional shares credited to such account. An election to withdraw from the
Plan will, until such election is changed, be deemed to be an election by a
shareholder to take all subsequent dividends and distributions in cash.
Elections will be effective immediately if notice is received by the Plan Agent
not less than ten days prior to any dividend or distribution record date;
otherwise such termination will be effective after the investment of the then
current dividend or distribution. If a withdrawing shareholder requests the Plan
Agent to sell the shareholder's shares upon withdrawal from participation in the
Plan, the withdrawing shareholder will be required to pay a $5.00 fee plus
brokerage commissions.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmation of all transactions in the accounts, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in noncertificated form in
the name of the participant, and each shareholder's proxy will include those
shares of Common Stock purchased pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions. The Plan Agent's fee for the handling of reinvestment of
dividends and distributions will be paid by the Fund. There will be no brokerage
charges with respect to shares of Common Stock issued directly by the Fund as a
result of dividends or capital gains distributions payable either in shares or
in cash. However, each participant will pay a pro rata share of brokerage
commissions incurred with respect to the Plan Agent's
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Travelers Corporate Loan Fund Inc. 17
<PAGE>
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Dividend Reinvestment Plan (unaudited) (continued)
- --------------------------------------------------------------------------------
open market purchases in connection with the reinvestment of dividends or
capital gains distributions.
The automatic reinvestment of dividends and distributions will not relieve
participants of any U.S. federal income tax that may be payable on such
dividends or distributions.
Experience under the Plan may indicate that changes thereto may be desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid: (i) subsequent to notice of the
change sent to all participants at least 30 days before the record date for such
dividend or distribution or (ii) otherwise in accordance with the terms of the
Plan. The Plan also may be amended or terminated by the Plan Agent, with the
Board of Directors' prior written consent, on at least 30 days' prior written
notice to all participants. All correspondence concerning the Plan should be
directed to the Plan Agent at P.O. Box 8030, Boston, Massachusetts 02266-8030.
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18 1999 Quarterly Report to Shareholders
<PAGE>
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<PAGE>
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<PAGE>
Directors
Allan J. Bloostein
Martin Brody
Dwight Crane
Robert Frankel
William R. Hutchinson
Heath B. McLendon, Chairman
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Glenn N. Marchak
Vice President and
Investment Officer
Irving P. David
Controller
Christina T. Sydor
Secretary
Investment Adviser
SSBC Fund Management Inc.
Sub-Investment Adviser
Travelers Asset Management
International Corporation
Custodian
PNC Bank, N.A.
Shareholder
Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is intended only for shareholders of Travelers Corporate Loan Fund
Inc. It is not a Prospectus, circular or representation intended for use in the
purchase or sale of shares of the Fund or any securities mentioned in this
report.
Travelers Corporate
Loan Fund Inc.
388 Greenwich Street
New York, New York 10013
FD01693 8/99
