<PAGE>
Travelers
Corporate
Loan Fund Inc.
Annual Report
September 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 with the annual report for the Travelers Corporate
Loan Fund Inc. ("Fund") for the period ended September 30, 1999. We hope you
find this report useful and informative. This report covers the period from the
Fund's inception, November 20, 1998, through September 30, 1999 ("the reporting
period"). During the reporting period, the Fund distributed income dividends
totaling $0.85 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 September 30, 1999 and the New York Stock Exchange ("NYSE")closing
price at September 30, 1999.
Price Annualized
Per Share Distribution Rate*
--------------- ------------------
$15.00 (OP) 7.68%
$15.19 (NAV) 7.58%
$14.375 (NYSE) 8.01%
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 increased the Fund's dividend
twice.
At September 30, 1999, we had total net assets of $148.5 million which had an
average rating of Ba3. We continue to maintain a comfortable margin over the
$15.00 per share NAV at the inception of the Fund. Please note that our NAV has
been calculated to date using current market prices for each loan as determined
weekly by a third party pricing service.
The corporate loan asset class has continued to perform well since our last
report. The trends in the financial markets that tend to positively affect the
corporate loan
- --------------
* This distribution rate assumes a current monthly income dividend rate of
$0.096 per share for twelve months.
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Travelers Corporate Loan Fund Inc. 1
<PAGE>
asset class on a relative basis have continued. Those trends include a general
expectation for higher interest rates, continued turbulence in the high yield
bond market and generally higher volatility across financial markets.
The Federal Reserve Board ("Fed") increased short-term interest rates on June
30, 1999 by 25 basis points and again on August 24, 1999 by another 25 basis
points./2/ As the interest rates payable on the loans in the Fund's portfolio
are calculated based upon LIBOR/1/, the rate increase should improve the return
on the Fund's portfolio, all other things being equal. (Of course, no guarantees
can be made that this will occur.) However, since the loans in the Fund's
portfolio have varying interest rate reset dates, it may take some time for the
full effect of the rate increases to completely work their way into the
portfolio.
As previously noted, on September 20, 1999 and on October 14, 1999, we announced
increases to the Fund's monthly dividend. The September 20, 1999 increase caused
the dividend to rise from $0.09375 per share to $0.095 per share. On October 14,
1999, we announced another increase in the dividend from $0.095 per share to
$0.096 per share.
Investment Strategy
The Fund's investment objective is to maximize current income consistent with
prudent efforts to preserve capital. The Fund seeks to achieve its objective by
investing primarily in a professionally managed portfolio of interests in
floating or variable rate collateralized senior loans. Unlike fixed-rate
investments, the interest rate on these collateralized loans will periodically
adjust in response to changes in the market interest rates. These rate
adjustments provide investors with higher income during periods of rising
interest rates and lower income during periods of declining interest rates.
Our investment strategy has not changed appreciably since our last report. We
continue to focus on finding the highest quality assets at reasonable prices. We
believe the Fund's portfolio is well diversified and we will continually look to
improve diversification at the margin. As conditions in the financial markets
have grown more volatile, we have become more selective in our investment
approach. At the same time, we continually monitor our existing holdings in an
attempt to identify negative trends in advance of any potential credit problems
and to ensure that changing economic factors do not result in an unacceptably
high level of vulnerability for any of the loans in the portfolio. We expect
that the financial markets will continue to be somewhat more volatile for the
remainder of 1999 and we remain committed to our present investment strategy.
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/1/ London Interbank Offered Rate (LIBOR) is the rate the most creditworthy
international banks dealing in eurodollars charge each other for large
loans.
/2/ On Tuesday, November 16, 1999, the Fed raised short-term rates by 25
basis points after this letter was written.
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2 1999 Annual Report to Shareholders
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There have been and we expect that there will continue to be for the remainder
of 1999, a larger number of loans in the portfolio that will be prepaid than
there are in a typical period. Based on current transactions, we should be able
to replace a large portion of this portfolio runoff almost immediately.
Moreover, we anticipate that we will be able to stay fully invested. As always,
we will attempt to carefully pick our spots in making replacements in the
portfolio. Our primary goal is to work hard to maximize the diversification of
the Fund and operate successfully within the confines of its high credit
standards.
Corporate Loan Market Update and Outlook
In our view, the quality of loans offered during the fourth quarter of 1999 was
somewhat disappointing. While we did participate in a number of new
transactions, there were many that we declined. Investors in the market
generally held the line on credit standards and forced many transactions to be
restructured, creating more favorable terms for investors. Credit structures
have generally remained sound and pricing has held steady. We think that trends
bode well for future transactions under consideration.
New issuance in September 1999 and in October 1999 has been relatively strong.
However, volume going forward will be difficult to predict as the uncertainties
surrounding the Y2K issue obscure our vision beyond a short-term horizon. The
secondary trading market was soft through most of the period due to decreased
investor activity. More recently, however, secondary prices and trading volume
have increased. We expect new capital to come into the market over the next few
quarters that should continue to lift prices in the secondary market.
Nonetheless, it will also increase competition among investors for quality
assets.
Economic Outlook
We continue to expect favorable economic conditions for the next few years with
much better balance in economic growth. Improvement in global growth has led to
a pickup in the U.S. manufacturing and export sectors that have been weak for
the past two years. We believe that the consumer sector is showing signs of
reaching its limit as the impact of higher interest rates and the recent
lackluster performance of the stock market are beginning to slow consumer
spending. However, the slowdown in consumption should not be too significant
because employment is at extremely high levels and income growth remains strong.
Although we expect some inflationary signals in upcoming economic reports,
inflation should not be a problem assuming a consumer slowdown takes place. We
anticipate that corporate profits will continue to do well in this environment,
with industrial companies benefiting and consumer companies coming under more
pressure.
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Travelers Corporate Loan Fund Inc. 3
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In our opinion, the major risk to the markets may be consumer spending. A
slowdown in consumer spending has been predicted for the past few years but has
not yet happened. The risk is that strong employment, robust wage growth and
rising home prices far outweigh any negative impact from higher interest rates
and a weak stock market. As a result consumer spending would not become
moderate, which more than likely will cause the Fed to be more aggressive in
raising interest rates in 2000.
While there has been an increase in credit defaults, we think this is largely a
result of an increase in leverage in credit structures two or three years ago (a
trend which has been reversed) rather than a more broad-based problem. Given our
outlook for the U.S. economy, corporate credit for the most part is in fairly
good shape.
While no guarantees can be made, as short term rates increase, the earnings from
the Portfolio should increase. As long as interest rates do not increase to a
point where they adversely affect economic activity, the current level of rates
should be favorable to the corporate loan asset class in general and the
Travelers Corporate Loan Fund in particular.
Thank you for investing in the Travelers Corporate Loan Fund Inc. We look
forward to achieving our objectives of maximizing income consistent with prudent
efforts to preserve capital. We promise to 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
October 15, 1999
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4 1999 Annual Report to Shareholders
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Schedule of Investments September 30, 1999
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FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
================================================================================
SENIOR COLLATERALIZED LOANS -- 99.5%
Aerospace/Defense -- 4.6%
$ 9,912,463 Decrane Aircraft Holdings Term B 9/30/05 $ 9,937,245
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Automotive -- 8.7%
5,000,000 American Axle &
Manufacturing Inc. Term B 4/30/06 4,975,000
3,750,000 Dura Automotive Systems Term B 3/3/06 3,747,750
3,000,000 Federal Mogul Corp. Term B 12/19/05 2,994,300
1,973,684 JL French Automotive Term B 10/21/06 1,983,553
4,962,500 Stoneridge Inc. Term B 12/31/05 4,959,523
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18,660,126
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Building Materials -- 2.8%
2,977,500 Panolam Industries
International Term B 1/29/06 2,973,927
3,000,000 Trussway Holdings Inc. Term B 6/29/08 2,996,400
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5,970,327
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Chemicals -- 7.4%
4,884,614 Ethyl Corp. Term B 2/18/07 4,884,614
1,500,000 Huntsman ICI Chemical LLC Term B 5/18/07 1,496,250
1,500,000 Huntsman ICI Chemical LLC Term C 5/18/08 1,496,250
5,213,072 Lyondell Petrochemical Co. Term B 6/30/05 5,173,974
2,992,500 Lyondell Petrochemical Co. Term E 5/17/06 2,999,981
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16,051,069
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Construction Machinery -- 1.4%
3,000,000 United Rentals Term C 7/15/06 2,994,300
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Consumer Products -- 4.6%
950,000 American Safety Razor Term B 1/31/05 948,860
2,862,241 Doane Pet Care Co. Term B 11/12/05 2,869,398
3,092,757 Doane Pet Care Co. Term C 11/12/06 3,100,490
2,000,000 Holmes Product Corp. Term B 2/5/07 2,002,600
1,000,000 Shop Vac Corp. Multi-Draw 7/7/07 1,000,000
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9,921,348
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Financial Institutions -- 2.7%
2,000,000 Bridge Information Systems Multi-Draw 5/29/03 1,988,800
3,750,000 Bridge Information Systems Term B 5/29/05 3,750,000
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5,738,800
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Food -- 0.7%
1,393,000 New World Pasta Co. Term B 1/28/06 1,397,318
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Health Care -- 4.8%
3,500,000 Oxford Health Plans Term B 5/13/03 3,497,900
6,835,141 Stryker Corp. Term B 12/4/05 6,839,242
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10,337,142
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See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 5
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Schedule of Investments (continued) September 30, 1999
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FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
================================================================================
Independent Energy -- 4.6%
$10,000,000 Heating Oil Partners Term B 9/30/03 $ 9,975,000
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Industrial - Other -- 8.7%
3,000,000 General Cable Corp. Term B 5/28/07 3,009,300
1,496,250 Mueller Group Inc. Term B 8/12/06 1,496,250
1,496,250 Mueller Group Inc. Term C 8/12/07 1,496,250
4,842,115 SPX Corp. Term A 10/6/04 4,848,410
4,949,999 SPX Corp. Term B 9/30/06 4,968,810
2,992,500 Western Industries Inc. Term B 6/23/06 2,990,705
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18,809,725
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Media - Cable -- 5.3%
5,000,000 Charter Communications
Operating LLC Term B 12/30/07 4,994,000
2,000,000 Classic Cable Inc. Term B 1/23/08 1,997,600
1,000,000 Classic Cable Inc. Term C 1/23/08 998,800
3,500,000 TWFanch-One Co. Term B 2/24/08 3,515,400
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11,505,800
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Media - Non-Cable -- 9.7%
4,875,252 21st Century Newspapers Term B 9/15/05 4,850,876
2,000,000 American Media Operations Term B 4/1/07 2,002,600
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
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20,893,376
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Metals -- 2.3%
4,984,095 Ucar International Inc. Term C 12/31/01 4,971,635
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Other - Energy -- 1.4%
3,000,000 Transmontaigne Inc. Term D 7/1/06 2,988,900
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Packaging -- 1.4%
3,000,000 Graham Packaging Co. Term D 1/31/07 3,001,800
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Paper -- 7.8%
9,900,000 Jefferson Smurfit Co. Term B 3/24/06 9,918,810
3,440,082 Packaging Corp. of America Term B 4/1/07 3,459,347
3,440,082 Packaging Corp. of America Term C 4/1/08 3,459,347
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16,837,504
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Pharmaceuticals -- 6.2%
10,447,500 King Pharmaceuticals, Inc. Term B 12/28/06 10,473,619
2,940,113 Roberts Pharmaceuticals
Corp. Term B 6/30/03 2,936,585
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13,410,204
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See Notes to Financial Statements.
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6 1999 Annual Report to Shareholders
<PAGE>
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Schedule of Investments (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
================================================================================
Real Estate Investment Trust -- 4.6%
$10,000,000 Starwood Hotels and Resorts IRN 2/23/03 $ 10,006,000
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Telecommunications -- 8.0%
4,962,500 Centennial Cellular
Operating Co. Term B 5/31/07 4,974,906
4,962,500 Centennial Cellular
Operating Co. Term C 11/30/07 4,974,906
7,354,296 Superior TeleCom Inc. Term B 11/27/05 7,382,244
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17,332,056
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Transportation -- 1.8%
4,000,000 Sea Containers IRN 5/19/00 3,970,000
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TOTAL SENIOR COLLATERALIZED LOANS
(Cost -- $214,144,118) 214,709,675
================================================================================
SHORT-TERM INVESTMENTS -- 0.5%
Time Deposit -- 0.5%
1,000,000 American Home Product, 5.550% due 10/1/99
(Cost -- $1,000,000) 1,000,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $215,144,118*) $215,709,675
================================================================================
* Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in schedule:
-------------------------------
Term B -- Term Loan B
Term C -- Term Loan C
Term D -- Term Loan D
Term E -- Term Loan E
Multi Draw -- Multi Draw Term Loan
IRN -- Increasing Rate
See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 7
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Statement of Assets and Liabilities September 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $215,144,118) $ 215,709,675
Dividends and interest receivable 1,193,283
Other assets 7,930
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Total Assets 216,910,888
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LIABILITIES:
Notes payable 67,000,000
Dividends payable 428,008
Payable to bank 367,707
Management fees payable 168,428
Interest payable 150,643
Accrued expenses 248,135
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Total Liabilities 68,362,921
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Total Net Assets $148,547,967
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NET ASSETS:
Par value of capital shares $ 9,782
Capital paid in excess of par value 146,297,239
Undistributed net investment income 1,454,270
Accumulated net realized gain from security transactions 221,119
Net unrealized appreciation of investments 565,557
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Total Net Assets $148,547,967
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Shares Outstanding 9,781,667
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Net Asset Value $15.19
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See Notes to Financial Statements.
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8 1999 Annual Report to Shareholders
<PAGE>
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Statement of Operations
- --------------------------------------------------------------------------------
For the Period Ended September 30, 1999(a)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $13,909,727
Less: Interest expense (2,114,883)
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Total Investment Income 11,794,844
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EXPENSES:
Management fees (Note 2) 1,666,210
Organization costs 306,999
Audit and legal 152,701
Shareholder communications 125,000
Directors' fees 40,675
Shareholder and system servicing fees 32,051
Custody 2,000
Other 32,806
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Total Expenses 2,358,442
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Net Investment Income 9,436,402
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 99,612,838
Cost of securities sold 99,391,719
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Net Realized Gain 221,119
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Change in Net Unrealized Appreciation of Investments:
Beginning of period --
End of period 565,557
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Increase in Net Unrealized Appreciation 565,557
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Net Gain on Investments 786,676
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Increase in Net Assets From Operations $10,223,078
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(a) For the period from November 20, 1998 (commencement of operations) to
September 30, 1999.
See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 9
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Statement of Changes in Net Assets
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For the Period Ended September 30, 1999(a)
OPERATIONS:
Net investment income $ 9,436,402
Net realized gain 221,119
Increase in net unrealized appreciation 565,557
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Increase in Net Assets from Operations 10,223,078
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DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (8,175,111)
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Decrease in Net Assets From Distributions to Shareholders (8,175,111)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Proceeds from sale of shares (net of $225,000 offering costs) 146,500,000
Cost of shares reacquired --
- --------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 146,500,000
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Increase in Net Assets 148,547,967
NET ASSETS:
Beginning of period --
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End of period* $148,547,967
================================================================================
* Includes undistributed net investment income of: $1,454,270
================================================================================
(a) For the period from November 20, 1998 (commencement of operations) to
September 30, 1999.
See Notes to Financial Statements.
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10 1999 Annual Report to Shareholders
<PAGE>
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Statement of Cash Flows
- --------------------------------------------------------------------------------
For the Period Ended September 30, 1999(a)
CASH FLOWS USED BY OPERATING AND INVESTING ACTIVITIES:
Interest and dividends received $ 12,359,627
Operating expenses paid (1,708,850)
Interest paid on bank loans (1,898,199)
Organization costs (306,999)
Purchases of portfolio securities (314,179,021)
Proceeds from disposition of long-term securities 99,612,838
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Net Cash Used By Operating and Investing Activities (206,120,604)
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CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Net borrowings under line-of-credit agreement 67,000,000
Proceeds from issuance of Common Stock 146,500,000
Cash dividends paid on Common Stock (7,747,103)
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Net Cash Flows Provided By Financing Activities 205,752,897
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NET DECREASE IN CASH (367,707)
Cash -- Beginning of Period --
- --------------------------------------------------------------------------------
Payable to Bank -- End of Period $ (367,707)
================================================================================
RECONCILIATION OF INCREASE IN NET ASSETS FROM OPERATIONS
TO NET CASH FLOWS PROVIDED BY OPERATING
AND INVESTING ACTIVITIES:
Increase in Net Assets From Operations 10,223,078
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Amortization of discount on securities (602,238)
Increase in investments, at value (215,107,437)
Increase in other assets (7,930)
Increase in interest payable for money borrowed 150,643
Increase in dividends and interest receivable (1,193,283)
Increase in accrued expenses 416,563
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Total Adjustments (216,343,682)
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Net Cash Flows Used By Operating and Investing Activities $(206,120,604)
================================================================================
(a) For the period from November 20, 1998 (commencement of operations) to
September 30, 1999.
See Notes to Financial Statements.
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Travelers Corporate Loan Fund Inc. 11
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Notes to Financial Statements
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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; (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) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) interest income,
adjusted for amortization of premium and accretion of discount, is recorded on
an accrual basis; (g) 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; (h) the
character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. At October 31, 1999, reclassifications were made to the Fund's
capital accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Accordingly, a portion
of net investment loss amounting to $192,979 was reclassified to paid-in
capital. Net investment income, net realized gains and net assets were not
affected by this change; (i) 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 (j) collateralized
senior loans will be valued at readily ascertainable market values and in the
absence of these market values the loans are valued at fair value. Fair value is
determined in accordance with guidelines established by the Fund's Board of
Directors. In valuing a loan, SSB Citi Fund Management LLC ("SSBC"), formerly
known as SSBC Fund Management Inc. 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
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12 1999 Annual Report to Shareholders
<PAGE>
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Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
until next interest rate reset, maturity, terms and conditions; SSBC may also
consider prices or quotations, if any, provided by 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.
Facility fees, incurred by the Fund on loan agreements, are amortized over the
term of the loan.
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 Citigroup, Inc. or its affiliates.
3. Investments
During the period ended September 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $313,179,021
- --------------------------------------------------------------------------------
Sales 99,612,838
================================================================================
At September 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $664,690
Gross unrealized depreciation (99,133)
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Net unrealized appreciation $565,557
================================================================================
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Travelers Corporate Loan Fund Inc. 13
<PAGE>
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Notes to Financial Statements (continued)
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4. Commitments
Pursuant to certain terms of the senior loan agreements, the Fund had unfunded
loan commitments of approximately $2,000,000 as of September 30, 1999. The Fund
generally will maintain with its custodian short-term investments having an
aggregate value at least equal to the amount of the unfunded loan commitment.
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 September 30, 1999 was $67.0 million at a weighted
average interest rate of 5.78%, which represented 31.08% of net assets plus
borrowings. Average aggregate borrowings for the period ended September 30,
1999, were $63,454,865 and the average annualized interest rate was 5.63%.
5. Offering Costs
Offering costs of $607,394 were incurred at the inception of the Fund. Of this
amount, $382,394 was paid by SSBC. The balance of $225,000 was paid by the Fund.
6. Capital Shares
At September 30, 1999, the Fund had 150,000,000 shares of capital stock
authorized, ("Common Stock") with a par value of $0.001 per share.
Transactions in shares were as follows:
Period Ended
September 30, 1999(a)
-------------------------
Shares Amount
================================================================================
Shares sold (net of $225,000 offering costs) 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
September 30, 1999.
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14 1999 Annual Report to Shareholders
<PAGE>
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Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout the period ended
September 30:
1999(1)
================================================================================
Net Asset Value, Beginning of Period $15.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.97
Net realized and unrealized gain 0.09
- --------------------------------------------------------------------------------
Total Income From Operations 1.06
- --------------------------------------------------------------------------------
Offering Costs on Issuance of Common Stock (0.02)
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.85)
- --------------------------------------------------------------------------------
Total Distributions (0.85)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $15.19
- --------------------------------------------------------------------------------
Total Return, Based on Market Value++ 1.68%
- --------------------------------------------------------------------------------
Total Return, Based on Net Asset Value++ 7.45%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $148,548
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Net investment income 7.48%
Interest expense 1.68
Organization expense 0.24
Other expenses 1.63
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 53%
- --------------------------------------------------------------------------------
Market Value, End of Period $14.375
================================================================================
(1) For the period from November 20, 1998 to September 30, 1999.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
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Travelers Corporate Loan Fund Inc. 15
<PAGE>
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Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
Travelers Corporate Loan Fund Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Travelers Corporate Loan Fund Inc. as of
September 30, 1999, the related statements of operations, changes in net assets,
cash flows, and financial highlights for the period November 20, 1998
(commencement of operations) to September 30, 1999. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at
September 30, 1999 by correspondence with the Fund's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Travelers Corporate Loan Fund Inc. as of September 30, 1999, the results of its
operations, the changes in its net assets, cash flows, and financial highlights
for the period November 20, 1998 (commencement of operations) to September 30,
1999, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
November 16, 1999
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<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
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 17
<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
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
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 by mail to First Data Investor Services Group, Inc., P.O. Box 8030,
Boston, Massachusetts 02266-8030 or by telephone at (800) 331-1710.
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 19
<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
SSB Citi Fund Management LLC
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 8030
Boston, Massachusetts 02266-8030
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
