<PAGE>
Travelers
Corporate
Loan Fund Inc.
Semi-Annual Report
March 31, 1999
- --------------------------------------------------------------------------------
[GRAPHIC]
<PAGE>
Travelers [GRAPHIC] [GRAPHIC]
Corporate
Loan Fund Inc. HEATH B. GLENN N.
MCLENDON MARCHAK
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide you with the first semi-annual report for the
Travelers Corporate Loan Fund Inc. ("Fund") for the period ended March 31, 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 March 31, 1999. During the reporting period, the Fund returned 3.97%
based on net asset value ("NAV") and distributed income dividends totaling $0.28
per share. The table below shows the annualized distribution rate based on the
Fund's initial offering price ("OP"), NAV per share at March 31, 1999 and the
New York Stock Exchange ("NYSE") closing price at March 31, 1999:
Price Annualized
Per Share Distribution Rate
--------- -----------------
$15.00 (OP) 7.50%
$15.16 (NAV) 7.42%
$13.9375 (NYSE) 8.07%
Portfolio Review
Since the Fund's inception, we have been cautious and patient investing its
assets. Consistent with our original strategy, the Fund's portfolio is made up
of corporate loans of U.S. issuers and is now fully invested (including the use
of leverage). In our view, we entered the market at an advantageous time and
have been able to purchase high-quality assets at very favorable prices.
At March 31, 1999, total Fund net assets were $148.3 million and had an average
rating of Ba3. The Fund's portfolio was invested in 17 industries with the
largest industry concentration being 12.3% to the Media: Non-Cable industry. The
Fund has made loans to 30 issuers with the largest loan to one issuer which
totals roughly $10.5 million. We are now in the process of refining the shape of
the portfolio to improve its diversification. For example, since March 31, 1999,
new industries have been added to the portfolio and the average size per loan
was decreased.
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 1
<PAGE>
Our relative success to date in managing the Fund's portfolio can be seen in the
growth of its NAV per share since its inception. On March 31, 1999 our NAV grew
to $15.16 per share from its opening NAV of $15.00 per share. Since then, our
NAV has grown to a high of $15.26 per share as of April 22, 1999.
Although the NAV performance of the Fund has been very strong, the performance
of the Fund in terms of stock price has been disappointing. Each of the
closed-end funds in the corporate loan sector has experienced similar declines
in their equity prices of late. We attribute this performance across the asset
class to several factors. First, the strength of the equity market has resulted
in investors overweighting equities and underweighting debt securities
(including corporate loans). Second, the high-yield bond market turned in a
strong performance in the first quarter of 1999, likely attracting assets away
from more conservative corporate loans. Third, the long end of the yield curve
has gotten steeper, making longer maturity bonds more attractive relative to
several months ago. Lastly, the Federal Reserve Board ("Fed") reduced short-term
interest rates three times toward the end of 1998, which directly affects the
yield for corporate loans. The characteristics of the corporate loan asset class
suggest that volatility should remain relatively low over the long-term.
Moreover, in our view, corporate loans are excellent long-term investments. As
capital market conditions become more favorable for this asset class, the Fund's
stock performance should improve.
Investment Strategy
Our investment strategy in the near term is to continue to improve the Fund's
diversification. One of our continuing challenges is to select the best assets
available in the market while still maintaining our conservative credit
standards. We remain cautious in the health care sector and have stayed away
from telecommunications build-outs that have yet to produce positive cash flow.
As we expect economic growth to slow somewhat as the year progresses, we will be
cautious when management projections for prospective investments call for high
growth assumptions. Although we cannot fully assess the impact of the Y2K
problem on either the U.S. or global economy, we will be careful to steer away
from those prospective investments which may potentially have undue exposure.
In our opinion, successful portfolio management in the corporate loan asset
class begins and ends with strong credit fundamentals and high standards in
credit selection. We will also continually work hard to optimize the
diversification of the portfolio staying within the confines of our credit
standards. We look to bring investors the best combination of quality and price
in the assets we purchase to achieve what we think are the best risk-adjusted
returns available from corporate loans.
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
Corporate Loan Market Update and Outlook
The Fund entered the loan market in late November as the global financial
disruption of late 1998 was ending. This proved to be opportune timing. The
uncertainty across financial markets led to a shortage in demand from
institutional investors. Pricing increased and credit structures tightened in
the primary market and assets became available in the secondary market at
favorable prices. As a result, the Fund was able to begin buying attractive
assets at compelling prices almost immediately.
As the first quarter of 1999 began, supply of new corporate loans was weak as a
result of the hangover from the disruption of late 1998. At the same time,
institutional investors returned to the market with strong appetites. A
supply/demand imbalance resulted and pricing dropped in both the primary and
secondary markets. While still very attractive relative to mid 1998 levels,
pricing moved off the highs seen in the last months of 1998. As the first
quarter progressed, the supply of new corporate loans began to increase, abating
some of the pressures on the market.
Looking forward, our view on the supply picture is that new corporate loan
issuance will not be sufficient to satisfy institutional demand from existing
lenders as well as new capital scheduled to enter the market. As a result,
marginal downward pressure on pricing should result. However, we do not expect
to approach the lows of mid-1998 in terms of pricing or terms. As we are fully
invested at what we believe are extremely attractive levels, the Fund should be
in the enviable position of being able to pick its spots in terms of new
additions to the portfolio.
Economic Outlook
Once again, the long anticipated slowdown in U.S. economic activity did not
occur in the first quarter of 1999 as consumer spending remained strong and the
unemployment rate declined. The stock market continued to rise led by
better-than-expected profit growth and continued merger and acquisition
activity. This stronger-than-expected growth caused longer-term interest rates
to rise during the quarter. Stocks were the best performing asset class in the
first quarter and high-yield bonds also had a strong quarter.
In our opinion, interest rates ended the first quarter of 1999 better reflecting
the risk of continued strong economic growth and there is a better than 50%
chance of moderation in growth by the year 2000. However, there are not any
catalysts on the horizon that would cause rates to move significantly in either
direction. More importantly for corporate loans, we do not expect any Fed
monetary policy changes any time soon.
- --------------------------------------------------------------------------------
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 to provide you with
a stable, long-term investment with favorable real rates of return.
Sincerely,
/s/ Heath B. McLendon /s/ Glenn N. Marchak
Heath B. McLendon Glenn N. Marchak
Chairman Vice President and
Investment Officer
April 28, 1999
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) March 31, 1999
- --------------------------------------------------------------------------------
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
================================================================================
SENIOR COLLATERALIZED LOANS -- 100.0%
Aerospace/Defense -- 5.1%
$9,962,487 Decrane Aircraft Holdings Term B 9/30/05 $ 9,993,374
- --------------------------------------------------------------------------------
Automotive -- 6.7%
5,000,000 American Axle & Manufacturing Inc. Term B 4/30/06 5,006,500
3,000,000 Federal Mogul Corp. Term B 12/19/05 3,009,300
4,987,500 Stoneridge Inc. Term B 8/10/00 4,984,508
- --------------------------------------------------------------------------------
13,000,308
- --------------------------------------------------------------------------------
Building Materials -- 1.5%
2,992,500 Panolam Industries International Term B 1/29/06 2,988,910
- --------------------------------------------------------------------------------
Chemicals -- 7.6%
4,884,614 Ethyl Corp. Term 2/18/07 4,884,614
6,923,076 Lyondell Petrochemical Co. Term C 6/30/99 6,905,769
3,076,923 Lyondell Petrochemical Co. Term D 6/30/00 3,019,385
- --------------------------------------------------------------------------------
14,809,768
- --------------------------------------------------------------------------------
Consumer Products -- 9.7%
2,876,660 Doane Pet Care Co. Term B 11/12/05 2,883,852
3,108,338 Doane Pet Care Co. Term C 11/12/06 3,116,110
3,750,000 Dura Automotive Systems Term B 3/3/06 3,742,875
9,000,000 Holmes Product Corp. Term B 2/5/07 9,011,700
- --------------------------------------------------------------------------------
18,754,537
- --------------------------------------------------------------------------------
Financial Institutions -- 3.0%
2,000,000 Bridge Information Systems Multi-Draw 5/2/03 1,987,600
3,750,000 Bridge Information Systems Term B 5/29/05 3,754,875
- --------------------------------------------------------------------------------
5,742,475
- --------------------------------------------------------------------------------
Food -- 0.8%
1,500,000 New World Pasta Co. Term B 1/28/06 1,510,350
- --------------------------------------------------------------------------------
Health Care -- 5.4%
3,500,000 Oxford Health Plans Term B 5/13/03 3,508,750
6,869,575 Stryker Corp. Term B 12/4/05 6,908,045
- --------------------------------------------------------------------------------
10,416,795
- --------------------------------------------------------------------------------
Industrial - Other -- 7.7%
4,987,500 Insilco Corp. Term B 11/30/05 4,981,515
4,947,368 SPX Corp. Term A 10/6/04 4,953,800
4,974,999 SPX Corp. Term B 9/30/06 4,987,437
- --------------------------------------------------------------------------------
14,922,752
- --------------------------------------------------------------------------------
Media - Cable -- 7.0%
10,000,000 Charter Communications
Operating LLC Term B 12/30/07 10,025,000
3,500,000 TWFanch-One Co. Term B 2/4/08 3,522,050
- --------------------------------------------------------------------------------
13,547,050
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 5
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) March 31, 1999
- --------------------------------------------------------------------------------
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE
================================================================================
Media - Non-Cable -- 12.3%
$9,900,000 21st Century Newspapers Term B 9/15/05 $ 9,900,000
3,895,437 Capstar Broadcasting Term B 5/31/05 3,895,437
5,000,000 Emmis Communications Term B 2/28/07 4,987,500
5,000,000 Ziff-Davis Inc. Term B 3/31/06 5,012,500
- --------------------------------------------------------------------------------
23,795,437
- --------------------------------------------------------------------------------
Metals -- 2.6%
4,996,000 Ucar International Inc. Term B 12/31/01 4,977,515
- --------------------------------------------------------------------------------
Packaging -- 2.6%
4,987,500 Graham Packaging Co. Term D 8/11/07 4,999,969
- --------------------------------------------------------------------------------
Paper -- 5.2%
9,950,000 Jefferson Smurfit Co. Term B 3/24/06 9,990,795
- --------------------------------------------------------------------------------
Pharmaceuticals -- 8.5%
10,473,750 King Pharmaceuticals, Inc. Term B 12/28/06 10,526,118
5,955,000 Roberts Pharmaceuticals Corp. Term B 7/1/04 5,947,854
- --------------------------------------------------------------------------------
16,473,972
- --------------------------------------------------------------------------------
Real Estate Investment Trust -- 5.2%
10,000,000 Starwood Hotels and Resorts IRN 2/23/03 10,019,000
- --------------------------------------------------------------------------------
Telecommunications -- 9.1%
4,987,500 Centennial Cellular Operating Co. Term B 5/31/07 5,024,906
4,987,500 Centennial Cellular Operating Co. Term C 11/30/07 5,024,906
7,478,573 Superior TeleCom Inc. Term B 12/3/06 7,501,755
- --------------------------------------------------------------------------------
17,551,567
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $192,549,515*) $193,494,574
================================================================================
* 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.
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) March 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $192,549,515) $193,494,574
Cash 367,233
Interest receivable 911,297
Deferred organization costs 190,828
- --------------------------------------------------------------------------------
Total Assets 194,963,932
- --------------------------------------------------------------------------------
LIABILITIES:
Notes payable 45,810,000
Dividends payable 332,787
Management fees payable 181,538
Interest payable 79,724
Accrued expenses 235,148
- --------------------------------------------------------------------------------
Total Liabilities 46,639,197
- --------------------------------------------------------------------------------
Total Net Assets $148,324,735
================================================================================
NET ASSETS:
Par value of capital shares $ 9,782
Capital paid in excess of par value 146,490,218
Undistributed net investment income 814,338
Accumulated net realized gain from security transactions 65,338
Net unrealized appreciation of investments 945,059
- --------------------------------------------------------------------------------
Total Net Assets $148,324,735
================================================================================
Shares Outstanding 9,781,667
- --------------------------------------------------------------------------------
Net Asset Value $15.16
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended March 31, 1999(a)
INVESTMENT INCOME:
Interest $ 4,511,275
Less: Interest expense (211,541)
- -------------------------------------------------------------------------------
Total Investment Income 4,299,734
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 563,932
Amortization of deferred organization costs 125,771
Audit and legal 41,904
Shareholder communications 29,857
Directors' fees 16,620
Shareholder and system servicing fees 13,138
Pricing service fees 4,000
Custody 3,979
Other 25,499
- -------------------------------------------------------------------------------
Total Expenses 824,700
- -------------------------------------------------------------------------------
Net Investment Income 3,475,034
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 45,904,391
Cost of securities sold 45,839,053
- -------------------------------------------------------------------------------
Net Realized Gain 65,338
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period --
End of period 945,059
- -------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 945,059
- -------------------------------------------------------------------------------
Net Gain on Investments 1,010,397
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 4,485,431
===============================================================================
(a) For the period from November 20, 1998 (commencement of operations) to March
31, 1999.
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets (unaudited)
- -------------------------------------------------------------------------------
For the Period Ended March 31, 1999(a)
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 3,475,034
Net realized gain 65,338
Increase in net unrealized appreciation 945,059
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 4,485,431
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,660,696)
- -------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders (2,660,696)
- -------------------------------------------------------------------------------
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 148,324,735
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- -------------------------------------------------------------------------------
End of period* $ 148,324,735
===============================================================================
* Includes undistributed net investment income of: $814,338
===============================================================================
(a) For the period from November 20, 1998 (commencement of operations) to March
31, 1999.
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 9
<PAGE>
- -------------------------------------------------------------------------------
Statement of Cash Flows (unaudited)
- -------------------------------------------------------------------------------
For the Period Ended March 31, 1999(a)
CASH FLOWS USED BY OPERATING
AND INVESTING ACTIVITIES:
Interest received $ 3,599,978
Operating expenses paid (408,014)
Interest payments on bank loans (131,817)
Deferred organization costs (190,828)
Purchases of portfolio securities (238,388,568)
Proceeds from disposition of long-term securities 45,904,391
- -------------------------------------------------------------------------------
Net Cash Used By Operating and Investing Activities (189,614,858)
- -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line-of-credit agreement 45,810,000
Proceeds from issuance of Common Stock 146,500,000
Cash dividends paid on Common Stock (2,327,909)
- -------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 189,982,091
- -------------------------------------------------------------------------------
NET INCREASE IN CASH 367,233
Cash -- Beginning of Period --
- -------------------------------------------------------------------------------
Cash -- End of Period $ 367,233
===============================================================================
RECONCILIATION OF INCREASE IN NET ASSETS
FROM OPERATIONS TO NET CASH USED
BY OPERATING AND INVESTING ACTIVITIES:
Increase in net assets from operations $ 4,485,431
- -------------------------------------------------------------------------------
Amortization of discount on securities (566,038)
Increase in investments (192,928,536)
Increase in deferred organization costs (190,828)
Increase in interest payable 79,724
Increase in interest receivable (911,297)
Increase in accrued expenses 416,686
- -------------------------------------------------------------------------------
Total Adjustments (194,100,289)
- -------------------------------------------------------------------------------
Net Cash Used By Operating and Investing Activities $(189,614,858)
===============================================================================
(a) For the period from November 20, 1998 (commencement of operations) to March
31, 1999.
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<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 banks, dealers
or pricing services which may represent the
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)(continued)
- --------------------------------------------------------------------------------
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"), 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 March 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
===============================================================================
Purchases $238,165,366
- -------------------------------------------------------------------------------
Sales 45,904,391
===============================================================================
At March 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
===============================================================================
Gross unrealized appreciation $975,463
Gross unrealized depreciation (30,404)
- -------------------------------------------------------------------------------
Net unrealized appreciation $945,059
===============================================================================
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<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. Both revolving credit agreements
mature 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 March 31, 1999 was $45.8 million at a weighted average interest
rate of 5.34%, which represented 30.88% of net assets plus borrowings. Average
aggregate borrowings for the period ended March 31, 1999, were $28,990,857 and
the average annualized interest rate was 5.34%.
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 March 31, 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
March 31, 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 March
31, 1999.
- -------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout the period
ended March 31:
1999(1)
================================================================================
Net Asset Value, Beginning of Period $15.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.36
Net realized and unrealized gain 0.08
- --------------------------------------------------------------------------------
Total Income From Operations 0.44
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income 0.28
- --------------------------------------------------------------------------------
Total Distributions 0.28
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $15.16
- --------------------------------------------------------------------------------
Total Return, Based on Market Value++ (4.60)%
- --------------------------------------------------------------------------------
Total Return, Based on Net Asset Value++ 3.97%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $148,325
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Net investment income 6.76%
Interest expense 0.41
Organization expense 0.25
Other expenses 1.35
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 31%
- --------------------------------------------------------------------------------
Market Value, End of Period $13.9375
================================================================================
(1) For the period from November 20, 1998 to March 31, 1999 (unaudited).
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
14 1999 Semi-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. 15
<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
- --------------------------------------------------------------------------------
16 1999 Semi-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 to the Plan Agent at P.O. Box 8030, Boston, Massachusetts 02266-8030.
- --------------------------------------------------------------------------------
Travelers Corporate Loan Fund Inc. 17
<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
FD01642 5/99
