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Registration No. 2-74285
811-3274
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 29
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 29
MONEY MARKET PORTFOLIO
(FORMERLY CASH INCOME TRUST)
(Exact name of Registrant)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (860) 277-0111
ERNEST J. WRIGHT
Secretary to the Board of Trustees
Money Market Portfolio
One Tower Square
Hartford, Connecticut 06183
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: _____________________
It is proposed that this filing will become effective (check appropriate box):
_______ immediately upon filing pursuant to paragraph (b).
___X___ on May 1, 1999 pursuant to paragraph (b).
_______ 60 days after filing pursuant to paragraph (a)(1).
_______ on ___________ pursuant to paragraph (a)(1).
_______ 75 days after filing pursuant to paragraph (a)(2).
_______ on ___________ pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
______ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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MONEY MARKET PORTFOLIO
GOAL -- HIGH CURRENT INCOME,
PRESERVATION OF CAPITAL AND LIQUIDITY
Fund shares are offered only to separate accounts of The Travelers Insurance
Company and The Travelers Life and Annuity Company (together, "The Travelers").
The Fund serves as a funding option for certain variable annuity and variable
life insurance contracts issued by The Travelers.
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE 800-842-9368
PROSPECTUS
May 1, 1999
TABLE OF CONTENTS
<TABLE>
<S> <C>
Goals and Investments.................. 2
Fund Performance....................... 2
Investments and Practices.............. 3
Management............................. 4
Investment Adviser................ 4
Portfolio Manager................. 5
Legal Proceedings...................... 5
Year 2000 Compliance................... 5
Euro Conversion........................ 6
Shareholder Transactions and Pricing... 6
Tax Consequences of Dividends and
Distributions........................ 7
Financial Highlights................... 8
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THE FUND'S SHARES AS AN
INVESTMENT AND HAS NOT DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE.
IT IS AGAINST THE LAW FOR ANYONE TO TELL YOU OTHERWISE. AN INVESTMENT IN THE
FUND IS NOT A DEPOSIT OF THE BANK AND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
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MONEY MARKET PORTFOLIO
Goals and Investments
INVESTMENT ADVISER: Travelers
Asset
Management International
Corp.
PORTFOLIO MANAGER: Emil
Molinaro, Jr.
FUND'S OBJECTIVE: High current return,
preservation of capital
and liquidity.
KEY INVESTMENTS: Money market
instruments.
SELECTION PROCESS: The Fund is a "money
market" fund that invests in high quality U.S. dollar denominated money market
instruments. High quality instruments generally are rated in the highest rating
category by national rating agencies or are deemed comparable. Eligible
securities must have a remaining maturity of 13 months or less (subject to
certain exceptions). The Fund's portfolio manager selects from investments which
include, but are not limited to:
- - U.S. government securities, which include obligations issued or guaranteed by
the U.S. government and its agencies, instrumentalities and
government-sponsored enterprises;
- - repurchase agreements backed by U.S. government securities
- - short-term corporate securities
- - prime commercial paper, including variable rate master demand notes
- - CDs and bankers' acceptances of FDIC-insured banks, including U.S. banks, U.S.
branches of foreign banks, and foreign branches of U.S. banks
PRINCIPAL RISK FACTORS: The Fund seeks to preserve the value of your investment
at $1.00 per share, although it is possible for investors to lose money. The
Fund could underperform other short-term investments or money market funds if
interest rates rise sharply, or if an issuer of the Fund's securities defaults
or has its credit rating downgraded and fails to perform as expected.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF ANY BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
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FUND PERFORMANCE
The chart and table below show how an investment in the Fund has varied over
time. The returns shown assume that any dividends and distributions have been
reinvested in the Fund. The returns are not reduced to reflect any variable
insurance contract charges or fees that may be assessed by The Travelers. Past
performance can give some indication of the Fund's risk, but does not guarantee
future performance. To obtain the 7-day yield as of December 31, 1998, you may
call 1-800-842-9368.
YEAR-BY-YEAR % TOTAL RETURNS AS OF 12/31
[% TOTAL RETURNS BAR GRAPH]
<TABLE>
<CAPTION>
YEAR-BY YEAR % TOTAL RETURNS AS OF 12/31
----------------------------------------
<S> <C>
'89 7.57
'90 7.44
'91 6.50
'92 3.22
'93 2.14
'94 2.78
'95 4.17
'96 4.20
'97 5.03
'98 5.08
</TABLE>
The Fund commenced operations on March 18, 1982.
Best Quarter: 2nd (89) 2.39 %
Worst Quarter: 1st (94) 0.38 %
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/1998
1 year 5 year 10 year
5.08 % 4.19 % 5.88 %
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INVESTMENTS AND PRACTICES
The Fund invests in various instruments subject to its investment policy and
Rule 2a-7 of the Investment Company Act. The Fund may invest in all of the
following or other similar instruments, as described on page 2 of this
prospectus and in the Statement of Additional Information. For a free copy of
the Statement of Additional Information, see the back cover of this prospectus.
COMMERCIAL PAPER AND
SHORT-TERM CORPORATE DEBT Commercial paper is short-term unsecured
promissory notes issued by corporations to
finance their short-term credit needs. Commercial
paper is usually sold at a discount and is issued
with a maturity of not more than 9 months.
Short-term corporate debt that the Fund may
purchase includes notes and bonds issued by
corporations to finance longer-term credit needs.
These debt securities are issued with maturities
of more than 9 months. The Fund may purchase
short-term corporate debt with a remaining
maturity of 397 days or less at the time of
purchase.
U.S. GOVERNMENT MONEY MARKET
SECURITIES These are short-term debt instruments issued or
guaranteed by the U.S. Government or its
agencies, instrumentalities or
government-sponsored enterprises. The full faith
and credit of the United States back not all U.S.
government securities. For example, its right to
borrow money from the U.S. Treasury under certain
circumstances supports U.S. government securities
such as those issued by Fannie Mae. Other U.S.
government securities, such as those issued by
the Federal Farm Credit Banks Funding
Corporation, are supported only by the credit of
the entity that issued them.
CREDIT AND LIQUIDITY
ENHANCEMENTS Enhancements include letters of credit,
guarantees, puts and demand features, and
insurance provided by domestic or foreign
entities such as banks and other financial
institutions. Credit and liquidity enhancements
are designed to enhance the credit quality of an
instrument to eligible security status. However,
they expose the Fund to the credit risk of the
entity providing the credit or liquidity
enhancement. Changes in the credit quality of the
provider could affect the value of the security
and the Fund's share price.
PUT FEATURES These entitle the holder to put or sell a
security back to the issuer or another party who
issued the put. Demand features, standby
commitments, and tender options are types of put
features. In exchange for getting the put, the
Fund may accept a lower rate of interest. The
Fund evaluates the credit quality of the put
provider as well as the issuer, if a different
party. The put provider's creditworthiness
affects the credit quality of the investment.
VARIABLE AND FLOATING RATE
SECURITIES These securities have interest rates that adjust
periodically, which may be either at specific
intervals or whenever an external benchmark rate
changes. Interest-rate adjustments are designed
to help maintain a stable price for the security.
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REPURCHASE AGREEMENTS These permit the Fund to buy a security at one
price and, at the same time, agree to sell it
back at a higher price. Delays or losses to the
Fund could result if the other party to the
agreement defaults or becomes insolvent.
RISK FACTORS
Corporate debt securities held by the Fund may be subject to several types of
investment risk, including market or interest-rate risk. This risk relates to
the change in market value caused by fluctuations in prevailing interest rates
and credit risk, which, in turn, relates to the ability of the issuer to make
timely interest payments and to repay the principal at maturity. Short-term
corporate debt is less subject to market or interest-rate risk than longer-term
corporate debt. Certain corporate debt securities may be subject to call or
income risk. This risk appears during periods of falling interest rates and
involves the possibility that securities with high interest rates will be
prepaid or "called" by the issuer prior to maturity.
Because interest rates on money market instruments fluctuate in response to
economic factors, rates on the Fund's short-term investments and the daily
dividends paid to its shareholders will vary, rising or falling with short-term
interest rates generally. Yields from short-term securities may be lower than
yields from longer-term securities. Also, the value of the Fund's securities
generally varies inversely with interest rates, the amount of outstanding debt
and other factors. This means that the value of the Fund's investments usually
increases as short-term interest rates fall and decreases as short-term interest
rates rise.
Fund investments may be unprofitable in a time of sustained high inflation. In
addition, the Fund's investments in certificates of deposit issued by U.S.
branches of foreign banks and foreign branches of U.S. banks involve somewhat
more risk, but also more potential reward, than investments in comparable
domestic obligations.
MANAGEMENT
INVESTMENT ADVISER
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION ("TAMIC") provides
investment advice, and, in general, supervises the management and investment
program for the Fund.
TAMIC is a registered investment adviser that was incorporated in 1978. Its
principal offices are located at One Tower Square, Hartford, Connecticut, and it
is an indirect wholly owned subsidiary of Citigroup, Inc. TAMIC also acts as an
investment adviser or subadviser for:
- other investment companies used to fund variable products
- individual and pooled pension and profit-sharing accounts
- domestic insurance companies affiliated with The Travelers Insurance
Company (which is affiliated with TAMIC)
- nonaffiliated insurance companies
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For the year ended December 31, 1998, the Fund paid TAMIC an advisory fee at the
annual rate of 0.3233% of the Fund's average daily net assets. This percentage
also reflects the maximum advisory fee payable to Tamic.
PORTFOLIO MANAGER
Mr. Emil J. Molinaro Jr. has served as the Fund's day-to-day portfolio manager
since March, 1995. Mr. Molinaro is currently a Vice President of The Travelers
Insurance Company's Securities Department. For the past six years, he has
managed short term investment portfolios backing various insurance company
products, and is currently responsible for managing the Travelers Money Market
Pool.
LEGAL PROCEEDINGS
There are no material pending legal proceedings affecting the Fund, and it has
been advised by TAMIC that TAMIC has no material pending legal proceedings
affecting it.
YEAR 2000 COMPLIANCE
The Travelers Insurance Company ("the Company") is highly dependent on computer
systems and system applications for conducting its ongoing business functions.
In 1996, the Company began the process of identifying, assessing and
implementing changes to computer programs necessary to address the Year 2000
issue and developed a comprehensive plan to address the issue. This issue
involves the ability of computer systems that have time sensitive programs to
recognize properly the Year 2000. The inability to do so could result in major
failures or miscalculations that would disrupt the Company's ability to meet its
customer and other obligations on a timely basis.
The Company has achieved substantial compliance with respect to its business
critical systems in accordance with its Year 2000 plan and is in the process of
certification to validate compliance. The Company anticipates completing the
certification process by June 30, 1999. An ongoing re-certification process will
be put in place for third and fourth quarter 1999 to ensure all systems and
products remain compliant.
The total pre-tax cost associated with the required modifications and
conversions is expected to be between $25 million and $35 million and is being
expensed by the Company as incurred in the period 1996 through 1999. The Company
has incurred approximately $22 million to date on these efforts. The Company
also has third party customers, financial institutions, vendors and others with
which it conducts business and has confirmed their plans to address and resolve
Year 2000 issues on a timely basis. While it is likely that these efforts by
third party vendors and customers will be successful, it is possible that a
series of failures by third parties could have a material adverse effect on
certain operations of the Fund.
In addition, the Company is developing contingency plans to address perceived
risks associated with the Year 2000 effort. These include business resumption
plans to address the possibility of internal systems failures and the
possibility of failure of systems or processes outside the Company's control. As
of year-end 1998, the Company has completed initial business resumption
contingency plans which would enable business critical units to function
beginning January 1, 2000 in the event of an unexpected failure. Business
resumption contingency plans are expected to be
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finalized by June 30, 1999. Preparations for the management of the date change
will continue through 1999.
EURO CONVERSION
On January 1, 1999, 11 participating countries in the European Economic Monetary
Union (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, and Spain) adopted the Euro as their official
currency. As of January 1, 1999, governments in participating countries now
issue new debt and redenominate existing debt in Euros, although corporations
may choose whether to issue stocks or bonds in Euros or the national currency.
The new European Central Bank (the "ECB") has assumed responsibility for a
uniform monetary policy in participating countries. Currency conversion occurs
through a "triangulation" process whereby an amount denominated in one national
currency is converted into Euros, which is then converted into the second
national currency. The Euro conversion presents investors with unique risks and
uncertainties, including: (1) the readiness of Euro payment, clearing, and other
operational systems; (2) the legal treatment of debt instruments and financial
contracts denominated in or referring to existing national currencies rather
than the Euro; (3) exchange-rate fluctuations between the Euro and non-Euro
currencies during the transition period of January 1, 1999 through December 31,
2001 and beyond; (4) potential U.S. tax issues with respect to Fund securities;
and (5) the ECB's abilities to manage monetary policies among the participating
countries. Three other EU member countries (Denmark, Greece, and the United
Kingdom) may convert to the Euro at a later date. These and other factors could
adversely affect the value of or income from Fund securities.
SHAREHOLDER TRANSACTIONS AND PRICING
Fund shares are currently sold only to insurance company separate accounts in
connection with the variable annuity and variable life insurance contracts
issued by The Travelers. The term "shareholder" as used in this prospectus
refers to any insurance company separate account that may use Fund shares as a
funding option now or in the future. Fund shares are not sold to the general
public. Fund shares are sold on a continuing basis without a sales charge at the
net asset value next computed after the Fund's custodian receives payment. The
separate accounts to which shares are sold, however, may impose sales and other
charges, as described in the appropriate contract prospectus.
The Fund currently issues only one class of shares. All shares participate
equally in dividends and distributions and have equal voting, liquidation and
other rights. All shares of the Fund participate equally in dividends and
distributions and have equal voting liquidation and other rights. When issued
for the consideration described in the prospectus, shares are fully paid and
nonassessable by the Fund. Shares are redeemable transferable and freely
assignable as collateral. (See the accompanying separate account prospectus for
a discussion of voting rights applicable to purchasers of variable annuity and
variable life insurance contracts.)
PRICING OF FUND SHARES
The Fund's policy is to try to maintain a stable net asset value of $1.00 per
share. To help achieve this policy, the Fund uses amortized-cost method for
valuing the securities that it owns in accordance with the requirements of Rule
2a-7 under the 1940 Act. Under amortized-cost
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methodology, securities are valued based on the Fund's acquisition cost,
adjusted for amortization of premium or accretion of discount, which is an
approximation of market value of the securities.
PURCHASES AND REDEMPTIONS
Owners of variable annuity or variable life insurance contracts should follow
the purchase and redemption procedures described in the accompanying separate
account prospectus. The following is general information with regard to
purchases and redemptions of Fund shares by insurance company separate accounts.
Fund shares are purchased and redeemed at the NAV next determined after the Fund
receives a purchase or redemption order. NAVs are adjusted for fractions of a
cent. Upon redemption, a shareholder may receive more or less than the amount
paid at the time of purchase, depending upon changes in the value of the Fund's
investment portfolio between purchase and redemption.
The Fund computes each Fund's NAV for purchases and redemptions as of the close
of the Exchange on the day that the Trust has received all proper documentation
from the shareholder. Redemption proceeds are normally wired or mailed either
the same or the next business day, but not more than seven days later.
The Fund retains the right to refuse a purchase order. The Fund may temporarily
suspend the redemption rights or postpone payments when the Exchange is closed
(other than on weekends and holidays), when trading on the Exchange is
restricted, or when permitted by the SEC.
TAX CONSEQUENCES OF DIVIDENDS AND DISTRIBUTIONS
Capital gains and dividends are distributed in cash or reinvested in additional
Fund shares, without a sales charge. The Fund expects that Fund shares will be
held under a variable annuity or variable life insurance contract. Under current
tax law, distributions that are left to accumulate in the variable annuity or
life insurance contract are not subject to federal income tax until they are
withdrawn from the contract. Contract purchasers should review the accompanying
contract prospectus for a discussion of the tax treatment applicable to variable
annuity or variable life insurance contracts.
The Fund intends to make distributions of income and capital gains in order to
qualify each year as a regulated company under Subchapter M of the Internal
Revenue Code. Further, the Fund intends to meet certain diversification
requirements applicable to mutual funds underlying variable insurance products.
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FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
The financial highlights table provides information to help you understand the
Fund's financial performance for the past 5 years. Certain information presents
financial results for a single Fund share. The total returns in the table
represent the rate that a Fund investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The information for the years ended December 31, 1998 and 1997
was audited by KPMG LLP, independent auditors, whose report and the Fund's
financial statements are included in the annual report to shareholders, which is
available upon request. All other years presented were audited by other
independent auditors.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net Investment Income(1)................ 0.049 0.049 0.0412 0.0417 0.0278
Less Distributions:(2)
Dividends (from net investment
income)................................. (0.049) (0.049) (0.0412) (0.0417) (0.0278)
Net Asset Value, End of Year (Unchanged
during year).............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- --------- --------- ---------
TOTAL RETURN(3)........................... 5.08% 5.03% 4.20% 4.17% 2.78%
------- ------- --------- --------- ---------
Net Assets, End of Year (thousands)..... $42,069 $13,494 $ 3,543 $ 1,417 $ 1,203
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets
(with reimbursement)(1)(4).............. 0.65% 0.57% 0.78% 1.25% 1.25%
Ratio of Expenses to average net assets
(without reimbursement)(4).............. 0.65% 1.39% 1.71% 7.37% 6.40%
Ratio of Net Investment Income to
Average Net Assets...................... 5.37% 5.03% 3.72% -- --
</TABLE>
(1) Travelers reimbursed the Fund for $31,300 and $43,376 in expenses for the
years ended December 31, 1997 and 1996, respectively. If expenses were not
reimbursed, the per share decreases in net investment income would have been
$0.002 and $0.02, respectively.
(2) Distribution from realized gains include both net realized short-term and
long-term capital gains. Prior to 1996, net realized short-term capital gains
were included in distributions from net investment income.
(3) Total return is determined after reflecting the reinvestment of dividends
declared during the year, by dividing net investment income by average net
assets. Shares in the Fund are only sold to The Travelers separate accounts in
connection with the issuance of variable life insurance contracts. The above
total return does not reflect the deduction of any contract charges or fees
assessed by The Travelers separate accounts.
(4) Annalized.
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MONEY MARKET PORTFOLIO
Investors who want more information about the Fund can obtain a statement of
additional information ("SAI") which provides more detailed information on a
number of topics and is made a part of this prospectus. Additional information
about the Fund's investments is available in its annual and semi-annual reports
to shareholders. The Fund's annual report provides a discussion of the market
conditions and investment strategies that particularly impact the Fund's
performance over the past fiscal year. These documents are free of charge. To
obtain a copy, or ask other questions about the fund, do one of the following:
CALL -- 1-800-842-9368
- --------------------------------------------------------------------------------
WRITE -- ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
- --------------------------------------------------------------------------------
ACCESS THE SEC'S WEBSITE -- http://www.sec.gov
Investors may, for a fee, get text-only copies of the above documents from the
SEC Public Reference Room at 1-800-SEC-0330 or write to the SEC Public Reference
Room, Washington, DC, 20549-6009
<PAGE> 15
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 16
STATEMENT OF ADDITIONAL INFORMATION
MONEY MARKET PORTFOLIO
(Formerly Cash Income Trust)
May 1, 1999
This Statement of Additional Information ("SAI") is not a prospectus. Investors
should read this SAI with the Money Market Portfolio's prospectus dated May 1,
1999 and 1998 annual shareholder report. Investors may obtain a free copy of the
prospectus and annual shareholder report by writing or calling us at:
The Travelers Insurance Company
Annuity Services
One Tower Square
Hartford, Connecticut 06183-5030
Phone number 860-277-0111 (collect); or
800-843-9368 (toll free)
or by accessing the Securities and Exchange Commission's website at
http://www.sec.gov.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Objective, Policies and Risks ............................. 2
Investment Restrictions .............................................. 5
Valuation and Pricing ................................................ 7
Distributions ........................................................ 8
Trustees and Officers ................................................ 8
Declaration of Trust ................................................. 11
Investment Advisory Services ......................................... 11
Redemptions in Kind .................................................. 12
Brokerage ............................................................ 12
Fund Administration .................................................. 13
Shareholder Rights ................................................... 134
Tax Status ........................................................... 14
Financial Statements ................................................. 16
Additional Information ............................................... 16
</TABLE>
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INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Money Market Portfolio (the "Fund") is registered with the SEC as a
"diversified, open-end investment company" or mutual fund. The Fund was formed
as a Massachusetts business trust on October 1, 1981. The Fund changed its name
from "Cash Income Trust" to "Money Market Portfolio" on January 30, 1998.
The Fund's investment objective is to seek high current income from short-term
money market instruments while preserving capital and maintaining a high degree
of liquidity. The Fund seeks to achieve this objective by investing in
short-term money market securities that are "eligible securities" under Rule
2a-7 of the Investment Company Act of 1940, as amended (the "1940 Act"). All
instruments that the Fund may purchase must comply with the credit quality,
maturity, diversification and other risk-limiting conditions of Rule 2a-7. The
Fund may purchase instruments with maximum remaining maturity of 397 days (13
months) in accordance with current Rule 2a-7 requirements.
As indicated in the prospectus, the Fund may invest in a variety of
high-quality, short-term debt instruments that primarily include obligations
issued or guaranteed by the U.S. government or its agencies, instrumentalities
and government-sponsored enterprises (described below); certificates of deposit
and bankers' acceptances of U.S. banks, U.S. branches of foreign banks, and
foreign branches of U.S. banks; prime commercial paper, including variable rate
master demand notes; and, repurchase agreements backed by U.S. government
securities.
U.S. GOVERNMENT SECURITIES. As used in this SAI, "U.S. government securities"
include securities issued by the U.S. Government, its agencies,
instrumentalities and government-sponsored enterprises. U.S. government
securities include a variety of Treasury securities that differ only in their
interest rates, initial maturities and dates of issuance. Treasury bills have
initial maturities of one year or less; Treasury notes have initial maturities
of one to ten years; and Treasury bonds generally have initial maturities of
greater than ten years at the date of issuance.
U.S. government securities include direct obligations of the U.S. Treasury and
securities issued or guaranteed by the Federal Housing Administration,
Export-Import Bank of the U.S., Small Business Administration, Government
National Mortgage Association, Federal Home Loan Mortgage Corporation, The
Tennessee Valley Authority, Student Loan Marketing Association and Federal
National Mortgage Association.
Some U.S. government securities, such as Treasury bills and Government National
Mortgage Association pass-through certificates, are supported by the full faith
and credit of the U.S.; others, such as securities of Federal Home Loan Banks,
are supported by the right of the issuer to borrow from the Treasury; still
others, such as bonds issued by the Federal National Mortgage Association, a
private corporation, are supported only by the credit of the instrumentality.
Because the U.S. Government is not obligated by law to provide support to an
instrumentality or government-sponsored enterprise, the Fund will invest in
those U.S. government securities only when the Fund's investment adviser,
Travelers Asset Management International Corporation ("TAMIC"), determines that
the credit risk with respect to the instrumentality or enterprise does not make
its securities unsuitable investments. U.S. government securities will not
include international agencies or instrumentalities in which the U.S.
Government, its agencies, instrumentalities or government-sponsored enterprises
participate, such as the World Bank, the Asian Development Bank or the
Inter-American Development Bank, or issues insured by the Federal Deposit
Insurance Corporation.
CERTIFICATES OF DEPOSIT. Certificates of deposit are receipts issued by a bank
in exchange for the deposit of funds. The issuer/bank agrees to pay the amount
deposited plus interest to the bearer of the receipt on the date specified on
the certificate. The certificates usually can be traded in the secondary market
prior to maturity.
Certificates of deposit are limited to U.S. dollar-denominated certificates of
U.S. banks with at least $1 billion in deposits as of the date of their most
recently published financial statements (including foreign branches of U.S.
banks, U.S. branches of foreign banks that are members of the Federal Reserve
System or the Federal Deposit Insurance Corporation, and savings and loan
associations that are insured by the Federal Deposit Insurance Corporation).
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The Fund does not acquire time deposits or obligations issued by the
International Bank for Reconstruction and Development, Asian Development Bank or
Inter-American Development Bank. Additionally, the Fund currently does not
intend to purchase such foreign securities (except to the extent that
certificates of deposit of foreign branches of U.S. banks may be deemed foreign
securities) or purchase certificates of deposit, bankers' acceptances or other
similar obligations issued by foreign banks.
OBLIGATIONS OF FOREIGN BRANCHES OF U.S. BANKS. The obligations of foreign
branches of U.S. banks may be general obligations of the parent bank in addition
to the issuing branch. They also may be limited by the terms of a specific
obligation and by government regulation. Payment of interest and principal upon
these obligations may also be affected by governmental action in the country of
domicile of the branch (generally referred to as sovereign risk). In addition,
evidences of ownership of such securities may be held outside the U.S., the Fund
is subject to the risks associated with the holding of such property overseas.
Various provisions of federal law governing domestic branches do not apply to
foreign branches of domestic banks.
OBLIGATIONS OF U.S. BRANCHES OF FOREIGN BANKS. Obligations of U.S. branches of
foreign banks may be general obligations of the parent bank in addition to the
issuing branch. They also may be limited by the terms of a specific obligation
and by federal and state regulation as well as by governmental action in the
country in which the foreign bank has its head office. In addition, there may be
less publicly available information about a U.S. branch of a foreign bank than
about a domestic bank.
COMMERCIAL PAPER RATINGS. The Fund's investments in commercial paper are limited
to instruments rated A-1 by Standard & Poor's Corporation (S&P) or PRIME-1 by
Moody's Investors Service, Inc. (Moody's). Commercial paper rated A-1 by S&P has
liquidity ratios adequate to meet cash requirements. Further, the issuer's
long-term senior debt generally is rated A or better, although, in some cases,
BBB ratings may be allowed. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances. Typically, the issuer's industry is
well established, and the issuer has a strong position within the industry.
The rating PRIME-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks that
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) earnings trends over a period of ten years; (7)
financial strength of a parent company and the relationships that exist with the
issuer; and (8) management's recognition of obligations that may be present or
may arise as a result of public preparations to meet such obligations. Relative
strength or weakness of the above factors determines how the issuer's commercial
paper is rated within various categories.
See Appendix for information with respect to ratings for other debt or equity
securities.
VARIABLE RATE MASTER DEMAND NOTES. Variable rate master demand notes are
unsecured obligations that permit the Fund to invest different amounts at
varying interest rates under arrangements between the Fund (as lender) and the
issuer of the note (as borrower). Under the note, the Fund has the right at any
time to increase the amount up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower has the right to repay at
any time up to the full amount of the note without penalty. Notes purchased by
the Fund permit it to demand payment of principal and accrued interest at any
time (on not more than seven days notice). Notes acquired by the Fund may have
maturities of more than [13] months, provided that: (1) the Fund is entitled to
payment of principal and accrued interest upon not more than seven days notice,
and (2) the interest rate on such notes is adjusted automatically at periodic
intervals, which normally do not exceed 31 days but may extend up to one year.
The notes are deemed to have a maturity equal to the longer of the period
remaining to the next interest-rate adjustment or the demand notice period.
Because these notes are direct lending arrangements between the lender and the
borrower, the notes normally are not traded and have no secondary market,
although the notes are redeemable and, thus, repayable at any time by the
borrower at face value plus accrued interest. Accordingly, the Fund's right to
redeem
3
<PAGE> 19
depends on the borrower's ability to pay interest on demand and repay principal.
In connection with variable rate master demand notes, TAMIC considers, under
standards established by the Board of Trustees ("Board"), earning power, cash
flow and other liquidity ratios of a borrower and monitors the ability of a
borrower to pay principal and interest on demand. These notes are not typically
rated by credit rating agencies. Unless rated, the Fund invests in them only if
the investment adviser determines that the issuer meets the criteria established
for commercial paper.
REPURCHASE AGREEMENTS. The Fund's Interim cash balances may be invested from
time to time in repurchase agreements with approved counterparties. Approved
counterparties are limited to national banks or broker-dealers on the Federal
Reserve Bank of New York's list of primary reporting dealers, in each case
meeting the investment adviser's credit quality standards as presenting minimal
risk of default. All repurchase transactions must be collateralized by U.S.
government securities with market value no less than 102% of the amount of the
transaction, including accrued interest. Repurchase transactions generally
mature the next business day but, in the event of a transaction of longer
maturity, collateral will be marked-to-market daily and, when required, the
counterparty will provide additional cash or qualifying collateral.
In executing a repurchase agreement, the Fund purchases eligible securities
subject to the counterparty's agreement to repurchase them on a mutually agreed
upon date and at a mutually agreed upon price. The purchase and resale prices
are negotiated with the counterparty on the basis of current short-term interest
rates, which may be more or less than the rate on the securities collateralizing
the transaction. The Fund engages in repurchase agreements only where it takes
physical delivery or, in the case of "book-entry" securities, the security is
segregated in the counterparty's account at the Federal Reserve for the benefit
of the Fund, to perfect the Fund's claim to the collateral for the term of the
repurchase agreement in the event the counterparty fails to fulfill its
obligation.
As the securities collateralizing a repurchase transaction are generally of
longer maturity than the term of the transaction, in the event of default by the
counterparty on its obligation, the Fund would bear the risks of delay, adverse
market fluctuation and any transaction costs in disposing of the collateral.
OTHER INVESTMENT COMPANIES. The Fund may invest in other investment companies to
the extent permitted by the 1940 Act, including investing some or all of its
assets in one or more other such investment companies. The Fund will indirectly
bear its pro rata share of any investment advisory and other fund expenses paid
by the funds in which it invests.
ILLIQUID SECURITIES. The Fund may make investments in illiquid securities in an
amount not exceeding 10% of the Fund's total asset value. Illiquid securities
are those that are not readily marketable within seven days in the ordinary
course and include restricted securities that may not be publicly sold without
registration under the Securities Act of 1933 (the "1933 Act") and Rule 144A
securities. In most instances such securities are traded at a discount from the
market value of unrestricted securities of the same issuer until the restriction
is eliminated. If the Fund sells such portfolio securities, it may be deemed an
underwriter, as such term is defined in the 1933 Act, with respect to those
sales, and registration of such securities under the 1933 Act may be required.
The Fund will not bear the expense of such registration. In determining
securities subject to the percentage limitation, the Fund will include, in
addition to restricted securities, repurchase agreements maturing in more than
seven days and other securities not having readily available market quotations,
including options traded over-the-counter and other securities subject to
restrictions on resale.
RULE 144A SECURITIES. Certain Rule 144A securities may be considered illiquid
and, therefore, their purchase is subject to the Fund's limitation on the
purchase of illiquid securities, unless the adviser under guidelines approved by
the Board determines on an ongoing basis that an adequate trading market exists
for the securities. If qualified institutional buyers become uninterested for a
time in purchasing Rule 144A securities held by the Fund, the Fund's level of
illiquidity could increase. The Board has established standards and procedures
for determining the liquidity of Rule 144A securities and periodically monitors
the adviser's implementation of the standards and procedures. The ability to
sell to qualified institutional buyers under Rule 144A has developed in recent
years, and the adviser cannot predict how this market will develop.
4
<PAGE> 20
LOANS OF SECURITIES TO BROKER DEALERS. The Fund may lend securities to brokers
and dealers pursuant to agreements requiring that the loans be continuously
secured by cash, liquid securities, or any combination of cash and liquid
securities, as collateral equal at all times in value to at least 102% of the
market value of the securities loaned. The Fund will not loan securities if,
after a loan, the aggregate of all outstanding securities loans exceeds one
third of the value of the Fund's total assets taken at their current market
value. The Fund continues to receive interest or dividends on the securities
loaned and simultaneously earns interest on the investment of any cash loan
collateral in U.S. Treasury notes, certificates of deposit, other high grade,
short-term obligations or interest-bearing cash equivalents. Although voting
rights attendant to securities loaned pass to the borrower, such loans may be
called at any time and will be called so that the Fund may vote the securities
if, in the opinion of the investment adviser, a material event affecting the
investment would occur. There may be risks of delay in receiving additional
collateral, in recovering the securities loaned, or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans may be made only to borrowers deemed to be of good standing, under
standards approved by the Board of Trustees ("Board"), when the income to be
earned from the loan justifies the risks.
BANKERS' ACCEPTANCES. Bankers' acceptances in which the Fund may invest are
issued by domestic banks (including their branches located outside the United
Sates and subsidiaries located in Canada), domestic branches of foreign banks,
savings and loan associations and similar institutions. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by the bank that, in effect, unconditionally guarantees to pay
the face value of the instrument on its maturity date. The acceptance may then
be held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less. Bankers' acceptances acquired by the Fund must
have been accepted by U.S. commercial banks, including foreign branches of U.S.
commercial banks, having total deposits at the time of purchase in excess of $1
billion and must be payable in U.S. dollars.
INVESTMENT RESTRICTIONS
Subject to shareholder approval at a meeting held April 30, 1999, the Fund
adopted the following as fundamental investment policies as. The Fund may not:
FUNDAMENTAL POLICIES
The Fund, irrespective of any fundamental or non-fundamental, operating
investment policies, may invest all or a portion of its assets in one or more
investment companies without a shareholder vote.
1. DIVERSIFICATION: with respect to 75% of its assets, purchase a security other
than a security issued or guaranteed by the U. S. Government, its agencies,
instrumentalities, or government-sponsored enterprises or a security of an
investment company if, as a result: (1) more than 5% of the Fund's total assets
would be invested in the securities of a single issuer, or (2) the Fund would
own more than 10% of the outstanding voting securities of any single issuer.
2. INDUSTRY CONCENTRATION: purchase a security if, as a result, more than 25% of
the Fund's total assets would be invested in securities of issuers conducting
their principal business activities in the same industry. For purposes of this
policy, there is no limit on: (1) investments in U. S. government securities,
in repurchase agreements covering U. S. government securities, in securities
issued by the states, territories or possessions of the United States
("municipal securities") or in foreign government securities; or (2) investment
in issuers domiciled in a single jurisdiction. Notwithstanding anything to the
contrary, to the extent permitted by the 1940 Act, the Fund may invest in one or
more investment companies; provided that, except to the extent that it invests
in other investment
5
<PAGE> 21
companies pursuant to Section 12(d)(1)(A) of the 1940 Act, the Fund treats the
assets of the investment companies in which it invests as its own for purposes
of this policy.
3. BORROWING: borrow money if, as a result, outstanding borrowings would exceed
an amount equal to one-third of the Fund's total assets.
4. REAL ESTATE: purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate or
in securities of companies engaged in the real estate business).
5. LENDING: make loans to other parties if, as a result, more than one-third of
its total assets would be loaned to other parties. For purposes of this policy,
entering into repurchase agreements, lending securities, and acquiring any debt
security are not deemed to be the making of loans.
6. COMMODITIES: purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures contracts and
options on futures or from investing in securities or other instruments backed
by physical commodities).
7. UNDERWRITING: be an underwriter (as that term is defined in the Securities
Act of 1933, as amended (the "1933 Act")) of securities issued by other persons
except, to the extent that in connection with the disposition of its assets, the
Fund may be deemed to be an underwriter.
8. SENIOR SECURITIES: issue any class of senior securities except to the extent
consistent with the 1940 Act.
NONFUNDAMENTAL POLICIES
Effective May 1, 1999, the Fund also complies with the following nonfundamental
investment policies. The Fund will not:
1. BORROWING: for purpose of the borrowing limitation, the following are not
treated as borrowings to the extent they are fully collateralized: (1) the
delayed delivery of purchased securities (such as the purchase of when-issued
securities); (2) reverse repurchase agreements; (3) dollar-roll transactions;
and (4) the lending of securities ("leverage transactions"). (See Fundamental
Policy No. 3 "Borrowing.")
2. LIQUIDITY: invest more than 10% of its net assets in: (1) securities that
cannot be disposed of within seven days at their then-current value; (2)
repurchase agreements not entitling the holder to payment of principal within
seven days; and (3) securities subject to restrictions on the sale of the
securities to the public without registration under the 1933 Act ("restricted
securities") that are not readily marketable. The Fund may treat certain
restricted securities as liquid pursuant to guidelines adopted by the Trust's
Board of Trustees.
3. EXERCISING CONTROL OF ISSUERS: make investments for the purpose of exercising
control of an issuer. Investments by the Fund in entities created under the laws
of foreign countries solely to facilitate investment in securities in that
country will not be deemed the making of investments for the purpose of
exercising control.
4. OTHER INVESTMENT COMPANIES: invest in securities of another investment
company, except to the extent permitted by the 1940 Act.
5. SHORT SALES: sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short (short
sales "against the box"), provided that transactions in futures contracts and
options are not deemed to constitute selling securities short.
6
<PAGE> 22
6. PURCHASING ON MARGIN: purchase securities on margin, except that the Fund may
use short-term credit for the clearance of its portfolio transactions, and
provided that initial and variation margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin.
7. LENDING: lend a security if, as a result, the amount of loaned securities
would exceed an amount equal to one-third of the Fund's total assets.
8. PLEDGING: pledge its assets except as permitted by the 1940 Act.
VALUATION AND PRICING
The Fund's policy is to try to maintain a stable net asset value of $1.00 per
share. To help achieve this policy, the Fund uses amortized-cost method for
valuing the securities that it owns in accordance with the requirements of Rule
2a-7 under the 1940 Act. Under amortized-cost methodology, securities are valued
based on the Fund's acquisition cost, adjusted for amortization of premium or
accretion of discount, which is an approximation of market value of the
securities.
Under Rule 2a-7:
1. The Board must establish written procedures reasonably designed, taking
into account current market conditions and the Fund's investment objective, to
stabilize the its net asset value per share, as computed for the purpose of
distribution, redemption and repurchase, at a single value;
2. The Fund must: (a) maintain a dollar-weighted average portfolio
maturity appropriate to its objective of maintaining a stable price per share,
(b) not purchase any instrument with a remaining maturity greater than 397 days
(although the Fund currently has a more restrictive fundamental policy that
requires it to limit the remaining maturity of securities purchased to maximum
of one year), and (c) maintain a dollar-weighted average portfolio maturity of
90 days or less;
3. The Fund must limit its purchase of portfolio instruments, including
repurchase agreements, to those U.S. dollar-denominated instruments that the
Fund's Board determines present minimal credit risks and that are eligible
securities as defined by Rule 2a-7 (eligible securities generally are securities
that have been rated or whose issuer has been rated or whose issuer has
comparable securities rated in one of the two highest rating categories by
nationally recognized statistical rating organizations or, in the case of any
instrument that is not rated, is of comparable quality as determined by
procedures adopted by the Fund's Board); and
4. The Board must determine that: (a) it is in the best interest of the
Fund and its shareholders to maintain a stable net asset value per share under
the amortized-cost method; and (b) the Fund will continue to use the
amortized-cost method only so long as the Board believes that it fairly reflects
the market-based net asset value per share.
Although the investment adviser believes that it will be able to maintain the
Fund's net asset value at $1.00 per share under most conditions, there can be no
absolute assurance that it will be able to do so on a continuous basis. If the
Fund's net asset value per share were to decline, or were expected to decline,
below $1.00 (rounded to the nearest one cent), the Fund's Board might
temporarily reduce or suspend dividend payments or take other action in an
effort to maintain the net asset value at $1.00 per share. As a result of such
reduction or suspension of dividends, an investor would receive less income
during a given period than if such a reduction or suspension had not taken
place. Such action could result in an investor receiving no dividend for the
period during which he or she holds shares and in his or her receiving, upon
redemption, a price per share lower than that which was paid. On the other hand,
if the Fund's net asset value per share were to increase, or were anticipated to
increase, above $1.00 (rounded to the nearest one cent), the Fund's Board might
supplement dividends or take other actions in an effort to maintain the net
asset value at $1.00 per share.
7
<PAGE> 23
The purchase and redemption price of the Fund's shares is equal to its net asset
value per share or share price. The Fund's net asset value per share is
calculated by subtracting the Fund's liabilities (including accrued expenses and
dividends payable) from its total assets (the market value of securities owned
by the Fund plus cash and other assets, including income accrued but not yet
received) and dividing the result by the total number of shares outstanding. The
Fund's net asset value per share normally is calculated as of the close of
trading (normally 4:00 pm Eastern time) on the New York Stock Exchange
("Exchange") every day the Exchange is open. The Exchange currently is closed on
the following days: New Year's Day, Dr. Martin Luther King, Jr. Holiday,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Fund shares are redeemed at the net asset value per share, normally $1.00, next
determined after the Fund receives a redemption request. The Fund computes the
net asset value at the close of the Exchange at the end of the day on which it
has received all documentation from the shareholder. Redemption proceeds are
normally wired or mailed either the same or the next business day but in no
event later than seven days thereafter.
The Fund may temporarily suspend the right to redeem its shares when: (1) the
Exchange is closed, other than customary weekend and holiday closings; (2)
trading on the Exchange is restricted; (3) an emergency exists as determined by
the SEC so that disposal of the Fund's investments or determination of its net
asset value is not reasonably practicable; or (4) the SEC, for the protection of
shareholders, so orders.
DISTRIBUTIONS
We determine the Fund's net investment income as of the close of trading on the
Exchange (currently 4:00 p.m. Eastern time) on each day that the Exchange is
open for trading, and at such other times as the trustees may determine, and
payable immediately thereafter to each shareholder of record. Net investment
income consist of: (1) all accrued interest income on the Fund's assets, (2)
plus/minus all realized and unrealized gains/losses on the Fund's assets, and
(3) less the Fund's estimated expenses, including accrued expenses and fees
payable to TAMIC, applicable to that dividend period. Net investment income is
distributed as dividends as of the close of business each calendar month either
in the form of additional shares or, at the request of shareholders, in cash.
Dividends are reinvested in full and fractional shares at the rate of one share
for each one dollar distributed.
Since the Fund's net investment income is declared as a dividend each day that
net income is determined, the net asset value per share remains at $1.00 per
share immediately after each dividend declaration. The Fund expects to have net
investment income at the time of each dividend determination. If for any reason
there is a net loss, the Fund will first offset such amount pro rata against
dividends accrued during the month in each shareholder account. To the extent
that such a net loss would exceed such accrued dividends, the Fund will reduce
the number of its outstanding shares by having each shareholder contribute to
the Fund's capital the pro rata portion of the total number of shares required
to be canceled in order to maintain the Fund's net asset value per share at a
constant value of $1.00. Each shareholder will be deemed to have agreed to such
a contribution under these circumstances by investment in the Fund.
TRUSTEES AND OFFICERS
Under Massachusetts law, the Fund's Board has absolute and exclusive control
over the management and disposition of all the Fund's assets. Subject to the
provisions of its Declaration of Trust, the Fund's business and affairs are
managed by the trustees or other parties so designated by the trustees. The
Fund's trustees and officers are listed below.
8
<PAGE> 24
<TABLE>
<CAPTION>
Name and Position
With the Fund Principal Occupation During Last Five Years
------------- -------------------------------------------
<S> <C>
* Heath B. McLendon Managing Director (1993-present), Salomon Smith Barney, Inc. ("Salomon Smith
Chairman and Trustee Barney"); President and Director (1994-present), SSBC Fund Management Inc.;
388 Greenwich Street Director and President (1996-present), Travelers Investment Adviser, Inc.;
New York, New York Chairman and Director of fifty-nine investment companies associated with
Age 65 Salomon Smith Barney; Trustee (1999) of certain Trusts of Citifunds' family
of Trusts; Trustee, Drew University; Advisory Director, First Empire State
Corporation; Chairman, Board of Managers, seven Variable Annuity Separate
Accounts of The Travelers Insurance Company+; Chairman, Board of Trustees,
five Mutual Funds sponsored by The Travelers Insurance Company++; prior to
July 1993, Senior Executive Vice President of Shearson Lehman Brothers Inc.
Knight Edwards Of Counsel (1988-present), Partner (1956-1988), Edwards & Angell, Attorneys;
Trustee Member, Advisory Board (1973-1994), thirty-one mutual funds sponsored by
154 Arlington Avenue Keystone Group, Inc.; Member, Board of Managers, seven Variable Annuity
Providence, Separate Accounts of The Travelers Insurance Company+; Trustee, five Mutual
Rhode Island Funds sponsored by The Travelers Insurance Company.++
Age 75
Robert E. McGill, III Retired manufacturing executive. Director (1983-1995), Executive Vice
Trustee President (1989-1994) and Senior Vice President, Finance and Administration
295 Hancock Street (1983-1989), The Dexter Corporation (manufacturer of specialty chemicals and
Williamstown, materials); Vice Chairman (1990-1992), Director (1983-1995), Life
Massachusetts Technologies, Inc. (life science/biotechnology products); Director,
Age 67 (1994-present), The Connecticut Surety Corporation (insurance); (Director
(1995-present), Chemfab Corporation (specialty materials manufacturer);
Director (1999-present), Ravenwoods Winery, Inc.; Member, Board of Managers,
seven Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Trustee, five Mutual Funds sponsored by The Travelers Insurance Company.++
Lewis Mandell Dean, School of Management (1998-present), State University of New York at
Trustee Buffalo; Dean, College of Business Administration (1995-1998), Marquette
160 Jacobs Halls University; Professor of Finance (1980-1995) and Associate Dean (1993-1995),
Buffalo, New York School of Business Administration, and Director, Center for Research and
Age 56 Development in Financial Services (1980-1995), University of Connecticut;
Director (1992-present), GZA Geoenvironmental Tech, Inc. (engineering
services); Member, Board of Managers, seven Variable Annuity Separate
Accounts of The Travelers Insurance Company+; Trustee, five Mutual Funds
sponsored by The Travelers Insurance Company.++
Frances M. Hawk, CFA, Private Investor, (1997-present); Portfolio Manager (1992-1997, HLM
CFP Management Company, Inc. (investment management); Assistant Treasurer,
Trustee Pensions and Benefits. Management (1989-1992), United Technologies
28 Woodland Street Corporation (broad-based designer and manufacturer of high technology
Sherborn, products); Member, Board of Managers, seven Variable Annuity Separate
Massachusetts Accounts of The Travelers Insurance Company+; Trustee, five Mutual Funds
Age 51 sponsored by The Travelers Insurance Company.++
</TABLE>
9
<PAGE> 25
<TABLE>
<S> <C>
Ernest J. Wright Vice President and Secretary (1996-present), Assistant Secretary (1994-1996),
Secretary to the Board Counsel (1987-present), The Travelers Insurance Company; Secretary, Board of
One Tower Square Managers, seven Variable Annuity Separate Accounts of The Travelers Insurance
Hartford, Connecticut Company+; Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 58 Travelers Insurance Company.++
Kathleen A. McGah Assistant Secretary and Counsel (1995-present), The Travelers Insurance
Assistant Secretary to Company; Assistant Secretary, Board of Managers, seven Variable Annuity
the Board Separate Accounts of The Travelers Insurance Company+; Assistant Secretary,
One Tower Square Board of Trustees, five Mutual Funds sponsored by The Travelers Insurance
Hartford, Connecticut Company.++ Prior to January 1995, Counsel, ITT Hartford Life Insurance
Age 48 Company.
Lewis E. Daidone Managing Director of Smith Barney, Senior Vice President and Treasurer of 41
Treasurer investment companies associated with Smith Barney, and Director and Vice
388 Greenwich Street President of SBBC and TIA; Treasurer, Board of Trustees, five Mutual Funds
New York, New York sponsored by The Travelers Insurance Company.++
Age 40
Irving David Vice President of Smith Barney, Asset Management Division (March
Controller 1994-present); Controller, Board of Trustees, five Mutual Funds sponsored by
388 Greenwich Street The Travelers Insurance Company.++
New York, NY
Age 37
</TABLE>
+ The seven Variable Annuity Separate Accounts are: The Travelers Growth and
Income Stock Account for Variable Annuities, The Travelers Quality Bond
Account for Variable Annuities, The Travelers Money Market Account for
Variable Annuities, The Travelers Timed Growth and Income Stock Account for
Variable Annuities, The Travelers Timed Short-Term Bond Account for
Variable Annuities, The Travelers Timed Aggressive Stock Account for
Variable Annuities and The Travelers Timed Bond Account for Variable
Annuities.
++ The five Mutual Funds are: Capital Appreciation Fund, Money Market
Portfolio, High Yield Bond Trust, Managed Assets Trust and The Travelers
Series Trust.
* Mr. McLendon is an "interested person" within the meaning of the 1940 Act
by virtue of his position as Managing Director of Smith Barney, Inc., an
indirect wholly owned subsidiary of CitiGroup Inc., and his ownership of
shares and options to purchase shares of Citigroup Inc., the indirect
parent of The Travelers Insurance Company.
COMMITTEES. To operate more efficiently, the Board established two operating
committees. The Nominating Committee recommends candidates for the nomination as
members of the Board. The Audit Committee reviews the scope and results of the
Fund's annual audits with the Fund's independent accountants and recommends the
engagement of the accountants. For the year ended December 31, 1998, the members
of the Nominating and Audit Committees were Knight Edwards, Robert E. McGill
III, Lewis Mandell, and Frances M. Hawk. Trustees do not receive any additional
compensation for their committee services.
COMPENSATION. Board members who are also officers or employees of CitiGroup,
Inc. or its subsidiaries are not entitled to any fee for their services to the
Fund. Board members are not affiliated as employees of CitiGroup, Inc. or its
subsidiaries receive an aggregate retainer of $19,000 for service on the Boards
of the five Mutual Funds sponsored by The Travelers Insurance Company ("The
Travelers") and the seven Variable Annuity Separate Accounts established by The
Travelers. They also receive an aggregate fee of $2,500 for each Board meeting
attended. Board members with 10 years of service may agree to provide services
as an emeritus director at age 72
10
<PAGE> 26
or upon reaching 80 years of age and will receive 50% of the annual retainer and
50% of meeting fees, if attended. The chart below shows the compensation paid to
Board members for the year ended December 31, 1998.
COMPENSATION TABLE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Total Compensation
Pension or Retirement From Fund and Fund
Aggregate Benefits Accrued As Complex Paid to
Name of Person, Position Compensation From Part of Fund Expenses Directors
Fund(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Heath B. McLendon N/A N/A N/A
Chairman and Trustee
- -------------------------------------------------------------------------------------------------------------
Knight Edwards $10,500 N/A $31,500
Trustee
- -------------------------------------------------------------------------------------------------------------
Robert E. McGill, III $11,125 N/A $34,000
Trustee
- -------------------------------------------------------------------------------------------------------------
Lewis Mandell $11,125 N/A $34,000
Trustee
- -------------------------------------------------------------------------------------------------------------
Frances M. Hawk, CFA, CFP $11,125 N/A $34,000
Trustee
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(1) No compensation was deferred for any Trustee or Officer under a deferred
compensation plan.
DECLARATION OF TRUST
The Fund is organized as a Massachusetts business trust. In accordance with
certain decisions of the Supreme Judicial Court of Massachusetts, shareholders
of such a trust may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. Even if the Fund were held to be a
partnership, however, the possibility of its shareholders incurring financial
loss for that reason appears remote because the Declaration of Trust contains an
express disclaimer of shareholder liability for the Fund's obligations and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Fund or the trustees. Further, the
Declaration of Trust provides for indemnification out of Fund property for any
shareholder held personally liable for the Fund's obligations.
INVESTMENT ADVISORY SERVICES
Travelers Asset Management International Corporation ("TAMIC"), an indirect
wholly owned subsidiary of CitiGroup Inc., furnishes investment management and
advisory services to the Fund in accordance with the terms of an investment
advisory agreement that was approved by shareholders on April 23, 1993 (the
"Agreement").
As required by the 1940 Act, the Agreement continues in effect each year so long
as its continuance is specifically approved at least annually: (1) by a vote of
a majority of the Board, or (2) by a vote of a majority of the Fund's
outstanding voting securities. In addition, and in either event, the terms of
the Agreement must be approved annually by a vote of a majority of the trustees
who are not parties to, or interested persons of any party to, the Agreement,
cast in person at a meeting called for the purpose of voting on such approval
and at which the Board is furnished such information as may be reasonably
necessary to evaluate the terms of the Agreement. The Agreement further provides
that it will terminate automatically upon assignment; may be amended only with
prior approval of a majority of the Fund's outstanding voting securities; may be
terminated without the payment of any penalty at any time upon sixty days'
notice by the Board or by a vote of a majority of the Fund's outstanding voting
securities; and may not be terminated by TAMIC without prior approval of a new
investment advisory agreement by a vote of a majority of the Fund's outstanding
voting securities.
11
<PAGE> 27
Under the terms of the Agreement, TAMIC shall:
(1) obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of the
Fund, affecting the economy generally and individual companies or
industries, the securities of which are included in the Fund's
portfolio or are under consideration for inclusion therein;
(2) be authorized to purchase supplemental research and other services
from brokers at an additional cost to the Fund;
(3) regularly furnish recommendations to the Board with respect to an
investment program for approval, modification or rejection by the
Board;
(4) take such steps as are necessary to implement the investment program
approved by the Board; and
(5) regularly report to the Board with respect to implementation of the
approved investment program and any other activities in connection
with the administration of the assets of the Fund.
ADVISORY FEES. For furnishing investment management and advisory services to the
Fund, TAMIC is paid an amount equivalent on an annual basis to 0.3233% of the
average daily net assets of the Fund. The fee is computed daily and paid weekly.
For the three years ended December 31, 1996, 1997, and 1998, the Fund paid TAMIC
advisory fees of $19,000, $19,634, and $96,335, respectively.
Under a management agreement dated May 1, 1993 and amended subsequently with the
Fund, The Travelers has agreed to reimburse the Fund for the amount by which the
Fund's aggregate annual expenses, including investment advisory fees but
excluding brokerage commissions, interest charges and taxes, exceed 0.40% of the
Fund's average net assets for any year. For the year ended December 31, 1998,
there was no expense reimbursement.
REDEMPTIONS IN KIND
If conditions arise that would make it undesirable for the Fund to pay for all
redemptions in cash, the Fund may authorize payment to be made in portfolio
securities or other property. The Fund has obligated itself under the 1940 Act,
however, to redeem for cash all shares presented for redemption in any 90-day
period by any one shareholder up to $250,000 or 1% of the Fund's net assets,
whichever is less. Securities delivered in payment of redemptions would be
valued at the same value assigned to them in computing the net asset value per
share. Shareholders receiving such securities would incur brokerage costs when
these securities are sold.
BROKERAGE
Subject to Board approval, TAMIC's policy, in executing transactions in
portfolio securities, to seek best execution of orders at the most favorable
prices. The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations, including, without limitation:
- - the overall direct net economic result to the Fund, involving both price
paid or received and any commissions and other cost paid;
- - the efficiency with which the transaction is effected;
- - the ability to effect the transaction at all where a large block is
involved;
- - the availability of the broker to stand ready to execute potentially
difficult transactions in the future; and
- - the financial strength and stability of the broker.
Such considerations are judgmental and are weighed by management in determining
the overall reasonableness of brokerage commissions paid. Subject to the
foregoing, a factor in the selection of brokers is the receipt of research
services, analyses and reports concerning issuers, industries, securities,
economic factors and trends, and other
12
<PAGE> 28
statistical and factual information. Any such research and other statistical and
factual information provided by brokers is considered to be in addition to and
not in lieu of services required to be performed by TAMIC under its investment
advisory agreement. The cost, value, and specific application of such
information are indeterminable and hence are not practicably allocable among the
Fund and TAMIC's other clients, who may indirectly benefit from the availability
of such information. Similarly, the Fund may indirectly benefit from information
made available as a result of transactions for such clients.
Purchases and sales of bonds and money market instruments are usually principal
transactions and normally are purchased directly from the issuer or from the
underwriter or market maker for the securities. There usually are no brokerage
commissions paid for such purchases. Purchases from the underwriters do include
the underwriting commission or concession, and purchases from dealers serving as
market makers do include the spread between the bid and asked prices. Where
transactions are made in the over-the-counter market, the Fund deals with
primary market makers unless more favorable prices are otherwise obtainable.
TAMIC may follow a policy of considering the sale of Fund shares a factor in
selecting broker-dealers to execute portfolio transactions, subject to the
requirements of best execution described above.
TAMIC's policy with respect to brokerage is and will be reviewed by the Board of
Trustees periodically. Because of the possibility of further regulatory
developments affecting the securities exchanges and brokerage practices
generally, the foregoing practices may be changed, modified or eliminated.
Because the purchase and sale of money market instruments is a principal
transaction there are no brokerage commissions to report.
FUND ADMINISTRATION
The Fund entered into an administrative services agreement during 1996 with The
Travelers to provide pricing and bookkeeping services at an annualized rate of
0.06% of the daily net assets of the Fund. The Travelers at its expense may
appoint a subadministrator to perform these services. SSBC Fund Management Inc.
("SSBC") (f/k/a/ Mutual Management Corp.), an affiliate of The Travelers, has
been appointed to serve in this capacity. The Travelers pays SSBC a
subadministration fee at an annual rate of 0.06% of the Fund's average daily net
assets. For the period ended December 31, 1996 and the years ended December 31,
1997 and 1998, the Fund paid administration fees of $6,662, $3,644, and $19,629,
respectively.
SHAREHOLDER RIGHTS
Fund shares are currently sold only to insurance company separate accounts in
connection with variable annuity and variable life insurance contracts issued by
the Company. Shares are not sold to the general public. Fund shares are sold on
a continuing basis, without a sales charge, at the net asset value next computed
after the insurance company makes payment to the Fund's custodian. However,
separate accounts to which shares are sold may impose sales and other charges,
as described in the appropriate contract prospectus.
The Fund currently issues one class of shares that participate equally in
dividends and distributions and have equal voting, liquidation and other rights.
When issued for the consideration described in the prospectus, shares are fully
paid and nonassessable by the Fund and have no preference, conversion, exchange
or preemptive rights.
Shareholders are entitled to one vote for each full share owned and fractional
votes for fractional shares. Shares are redeemable, transferable and freely
assignable as collateral. There are no sinking fund provisions. (See the
accompanying separate account prospectus for a discussion of voting rights
applicable to purchasers of variable life insurance contracts.)
Although the Fund is not currently aware of any disadvantages to contract owners
of either variable annuity or variable life insurance contracts because the
Fund's shares are available with respect to both products, an irreconcilable
material conflict may conceivably arise between contract owners of different
separate accounts investing in the Fund due to differences in tax treatment,
management of the Fund's investments, or other
13
<PAGE> 29
considerations. The Fund's Board will monitor events in order to identify any
material conflicts between variable annuity contract owners and variable life
insurance policy owners, and will determine what action, if any, should be taken
in the event of such a conflict.
TAX STATUS
GENERAL TAX INFORMATION
The Fund qualified in its last taxable year as a regulated investment company
("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Fund intends to so qualify in the future so long as such
qualification is in the best interest of shareholders. If the Fund qualifies as
a regulated investment company and distributes substantially all of its net
income and gains to its shareholders (which it intends to do), then under the
provisions of Subchapter M, the Fund should have little or no income taxable to
it under the Code.
The Fund must meet several requirements to maintain its status as a regulated
investment company. These requirements include the following: (1) at least 90%
of the Fund's gross income must be derived from dividends, interest, payments
with respect to securities loaned, and gains from the sale or disposition of
securities; and (2) at the close of each quarter of the Fund's taxable year, (a)
at least 50% of the value of the Fund's total assets must consist of cash, U.S.
government securities and other securities (no more than 5% of the value of the
Fund may consist of such other securities of any one issuer, and the Fund must
not hold more than 10% of the outstanding voting stock of any issuer), and (b)
the Fund must not invest more than 25% of the value of its total assets in the
securities of any one issuer (other than U.S. government securities).
In order to maintain the qualification of the Fund's status as a regulated
investment company, in its business judgment, the investment adviser may
restrict the Fund's ability to invest in certain types of financial instruments.
For the same reason, the investment adviser may, in its business judgment,
require the Fund to maintain or dispose of its investment in certain types of
financial instruments beyond the time when it might otherwise be advantageous to
do so.
The Fund also intends to comply with section 817(h) of the Code and the
regulations issued thereunder, which impose certain investment diversification
requirements on life insurance companies' separate accounts (such as the
account) that are used to fund benefits under variable life insurance and
variable annuity contracts. These requirements are in addition to the
requirements of subchapter M and of the 1940 Act and may affect the securities
in which the Fund may invest. In order to comply with the current or future
requirements of section 817(h) (or related Code provisions), the Fund may be
required, for example, to alter its investment objective or policies. No such
change of investment policies will take place without notice to the Fund's
shareholders, the approval of a majority of the outstanding voting shares if
necessary, and the approval of the SEC, to the extent legally required.
ADDITIONAL TAX CONSIDERATIONS
If the Fund fails to qualify as a regulated investment company, the Fund will be
subject to federal, and possibly state, corporate taxes on its taxable income
and gains (without any deduction for its distributions to its shareholders), and
distributions to its shareholders will constitute ordinary income to the extent
of the Fund's available earnings and profits. Owners of variable life insurance
and annuity contracts that have invested in such a Fund might be taxed currently
on the investment earnings under their contracts and thereby lose the benefit of
tax deferral. In addition, if the Fund failed to comply with the diversification
requirements of section 817(h) of the Code and the regulations thereunder,
owners of variable life insurance and annuity contracts that have invested in
the Fund would be taxed on the investment earnings under their contracts and
thereby lose the benefit of tax deferral. Accordingly, compliance with the above
rules is carefully monitored by the Fund's adviser, and it is intended that the
Fund will comply with these rules as they exist or as they may be modified from
time to time. Compliance with the tax requirements described above may result in
a reduction in the return under the Fund, since, to comply with the above rules,
the investments utilized (and the time at which such investments are entered
into and closed out) may be different from what the Fund's adviser might
otherwise believe to be desirable.
14
<PAGE> 30
The Fund should not be subject to the 4% federal excise tax imposed on regulated
investment companies that do not distribute substantially all their income and
gains each calendar year because the tax does not apply to a regulated
investment company whose only shareholders are segregated asset accounts of life
insurance companies held in connection with variable annuity contracts and/or
variable life insurance policies.
OTHER INFORMATION. The discussion of "Tax Consequences of Dividends and
Distributions" in the prospectus and the foregoing discussion of federal income
tax consequences is a general and abbreviated summary based on tax laws and
regulations in effect on the date of the prospectuses. Tax law is subject to
change by legislative, administrative or judicial action. Each prospective
investor should consult his or her own tax advisor as to the tax consequences of
investments in the Fund.
It is not feasible to comment on all of the federal tax consequences concerning
the Fund. No further discussion of those consequences is included in this SAI.
For information concerning the federal income tax consequences to the owners of
variable life insurance and annuity contracts, see the prospectuses for the
contracts.
The following is a partial list of publications that may be noted in the Fund's
sales literature or shareholder materials that contain articles describing
investment results or other data relative to one or more of the insurance
products that purchase Fund shares. Other publications may also be cited.
Broker World Financial World
Across the Board Advertising Age
American Banker Barron's
Best's Review Business Insurance
Business Month Business Week
Changing Times Consumer Reports
The Economist Financial Planning
Forbes Fortune
Inc. Institutional Investor
Insurance Forum Insurance Sales
Insurance Week Journal of Accountancy
Journal of the American Society of CLU & ChFC Journal of Commerce
Life Insurance Selling Life Association News
MarketFacts Manager's Magazine
National Underwriter Money
Morningstar, Inc. Nation's Business
New Choices (formerly 50 Plus) The New York Times
Pension World Pensions & Investments
Rough Notes Round the Table
U.S. Banker VARDs
The Wall Street Journal Working Woman
15
<PAGE> 31
FINANCIAL STATEMENTS
The Fund's year-end is December 31st. Financial statements for the Fund's annual
and semi-annual periods will be distributed to shareholders of record.
KPMG LLP, 345 Park Avenue, New York, NY 10154, has been selected as independent
auditors to examine and report on the Fund's financial statements. The financial
statements of the Registrant and the Report of Independent Accountants are
contained in the Fund's Annual Report, which is incorporated in the Statement of
Additional Information by reference.
ADDITIONAL INFORMATION
On April 1, 1999, The Travelers owned 100% of the Fund's outstanding shares. The
Travelers is a stock insurance company chartered in 1864 in Connecticut and
continuously engaged in the insurance business since that time. It is a wholly
owned subsidiary of The Travelers Insurance Group Inc., which is an indirect
wholly owned subsidiary of Citigroup Inc., a bank holding company. The
Traveler's home office is located at One Tower Square, Hartford, Connecticut
06183, telephone 860-277-0111.
PNC Bank, 200 Stevens Drive, Lester, Pennsylvania, 19113 and Morgan Stanley
Trust Company, One Pierrepont Plaza, Brooklyn, New York 11201, are custodians of
all securities and cash of the Fund.
First Data Investor Services Group, Inc., 53 State Street, Exchange Place,
Boston, MA 02109 acts as transfer agent and dividend disbursing agent for the
Fund.
Except as otherwise stated in its prospectus or as required by law, the Fund
reserves the right to change the terms of the offer stated in its prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
No dealer, salesman or other person is authorized to give any information or to
make any representation not contained in the Fund's prospectus, this SAI or any
supplemental sales literature issued by the Fund, and no person is entitled to
rely on any information or representation not contained in the prospectus.
The Fund's prospectus and this SAI do not contain all of the information
contained in the Fund's registration statement filed with the SEC, which may be
obtained from the SEC's principal office in Washington, D.C. upon payment of the
fee prescribed by the rules and regulations promulgated by the SEC. Otherwise,
investors may obtain the Fund's registration statement for free by accessing the
SEC's website at http://www.sec.gov.
16
<PAGE> 32
MONEY MARKET PORTFOLIO
(FORMERLY CASH INCOME TRUST)
STATEMENT OF ADDITIONAL INFORMATION
L-11170S TIC Ed. 5-99
Printed in U.S.A.
<PAGE> 33
PART C
OTHER INFORMATION
Item 23. EXHIBITS
(a) Declaration of Trust. (Incorporated herein by reference to Exhibit 1 to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A filed on April 11, 1996.) Amendment No. 2 to the Declaration of
Trust. (Incorporated herein by reference to Exhibit 1(a) to
Post-Effective Amendment No. 26 to the Registration Statement on Form
N-1A filed on April 22, 1998)
(b) By-Laws of Money Market Portfolio (formerly Cash Income Trust).
(Incorporated herein by reference to Exhibit 2 to Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A filed on
April 11, 1996.)
(d) Investment Advisory Agreement between the Registrant and Travelers Asset
Management International Corporation. (Incorporated herein by reference
to Exhibit 5 to Post-Effective Amendment No. 23 to the Registration
Statement on Form N-1A filed on April 11, 1996.)
(g)(1) Form of Custody Agreement between the Registrant and PNC Bank, N.A.
(Incorporated herein by reference to Exhibit 8(a) to Post-Effective
Amendment No. 27 to the Registration Statement on Form N-1, File No.
2-76640, filed April 22, 1998.)
(g)(2) Form of Subcustody Agreement between Morgan Stanley Trust Company and
Subcustodians. (Incorporated herein by reference to Exhibit 8(b) to
Post-Effective Amendment No. 27 to the Registration Statement on Form
N-1, File No. 2-76640, filed April 22, 1998.)
(h)(1) Administrative Services Agreement between the Registrant and The
Travelers Insurance Company. (Incorporated herein by reference to Exhibit
9 to Post-Effective Amendment No. 24 to the Registration Statement on
Form N-1A filed April 18, 1997.)
(h)(2) Form of Transfer Agency and Registrar Agreement. (Incorporated herein by
reference to Exhibit 9(b) to Post-Effective Amendment No. 27 to the
Registration Statement on Form N-1, File No. 2-76640, filed April 22,
1998.)
(i) An opinion and consent of counsel as to the legality of the securities
registered by the Fund. (Incorporated herein by reference to the
Registrant's most recent Rule 24f-2 Notice filing on March 25, 1998.)
j(1) Consent of KPMG LLP, Independent Certified Public Accountants.
j(3) Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as
signatories for Heath B. McLendon, Knight Edwards, Robert E. McGill III,
Lewis Mandell, Frances M. Hawk and Ian R. Stuart. (Incorporated herein by
reference to Exhibit 11(b) to Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A filed April 11, 1996.)
j(4) Power of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as
signatory for Lewis E. Daidone. (Incorporated herein by reference to
Exhibit 11(b) to Post-Effective Amendment No. 24 to the Registration
Statement on Form N-1A filed April 18, 1997.)
(n) Financial Data Schedule. To be filed by amendment.
<PAGE> 34
Item 24. Persons Controlled By or Under Common Control With the Registrant
Not Applicable.
Item 25. Indemnification
Provisions for the indemnification of the Fund's Trustees and officers are
contained in the Fund's Declaration of Trust which was filed with Post-Effective
Amendment No. 23 to this Registration Statement as Exhibit 1 on April 11, 1996.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE> 35
Item 26. Business and Other Connections of Investment Adviser
Officers and Directors of Travelers Asset Management International Corporation
(TAMIC), the Fund's Investment Adviser, are set forth in the following table:
<TABLE>
<CAPTION>
Name Position with TAMIC Travelers Investment Group*
- ---- ------------------- ---------------------------
<S> <C> <C>
Marc P. Weill Director and Chairman Executive President
Chief Investment Officer
David A. Tyson Director, President and Executive Vice President
Chief Investment Officer
Joseph E. Rueli, Jr. Director, Senior Vice President Senior Vice President
and Chief Financial Officer and Chief Financial Officer
F. Denney Voss Director and Senior Vice Senior Vice President
President Executive Vice President
John R. Britt Director and Secretary Senior Counsel
Gene Collins Senior Vice President Senior Vice President
Thomas Hajdukiewicz Senior Vice President Senior Vice President
Glenn N. Marchak Senior Vice President Senior Vice President
Joseph M. Mullally Senior Vice President Senior Vice President
Kathryn D. Karlic Senior Vice President Vice President
David R. Miller Senior Vice President First Vice President
Jordan M. Stitzer Senior Vice President Senior Vice President
David Amaral Vice President Trader
John R. Calcagni Vice President First Vice President
Allen R. Cantrell Vice President Vice President
A. William Carnduff Vice President Vice President
Angela Pellegrini Degis Vice President Vice President
Craig Farnsworth Vice President First Vice President
Bruce E. Fox Vice President Vice President
Carl Franzetti Vice President First Vice President
Kothandaraman Ganesh Vice President Vice President
John F. Gilsenan Vice President First Vice President
Kimerly M. Polak Guerrero Vice President Vice President
John F. Green Vice President Vice President
Edward Hinchliffe III Vice President and Cashier Vice President
Richard E. John Vice President Vice President
Kurt Lin Vice President Vice President
David R. Martin Vice President Vice President
Paul A. Mataras Vice President Vice President
Emil J. Molinaro Vice President First Vice President
John W. Petchler Vice President First Vice President
Steven A. Rosen Vice President Vice President
Andrew Sanford Vice President Vice President
Eric L. Sappenfield Vice President Trader
</TABLE>
<PAGE> 36
<TABLE>
<S> <C> <C>
Charles H. Silverstein Vice President Vice President
Robert Simmons Vice President Vice President
Joel Strauch Vice President Vice President
Teresa M. Torrey Vice President First Vice President
Pamela D. Westmoreland Vice President Vice President
William M. Gardner Assistant Vice President Private Placement Officer
Jeremy C. Hughes Assistant Vice President Trader
Matthew J. McInerny Assistant Vice President Private Placement Officer
Lisa A. Thomas Assistant Vice President Assistant Vice President
William H. White Treasurer Vice President and Treasurer
Charles B. Chamberlain Assistant Treasurer Assistant Treasurer
George M. Quaggin, Jr. Assistant Treasurer Assistant Treasurer
Marla A. Berman Assistant Secretary Assistant General Counsel
Andrew Feldman Assistant Secretary Senior Counsel, Corporate Staff
Millie Kim Assistant Secretary General Counsel
Patricia A. Uzzel Compliance Officer Assistant Vice President and
Investment Compliance Officer
Frank J. Fazzina Controller Vice President
</TABLE>
* Positions held with Travelers Investment Group Inc., 388 Greenwich Street,
New York, N.Y.
<PAGE> 37
Item 27. Principal Underwriter
Not Applicable.
Item 28. Location of Accounts and Records
(1) SSBC Fund Management Inc.
388 Greenwich Street
New York, NY 10013
(2) PNC Bank, N.A.
200 Stevens Drive
Lester, PA 19113
(3) Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, NY 11201
(4) First Data Investor Services Group, Inc.
53 State Street
Boston, MA 02109
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
The undersigned Registrant hereby undertakes to provide to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE> 38
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, Money Market Portfolio, certifies that it
meets all of the requirements for effectiveness of this post-effective amendment
to this Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and that it has duly caused this amendment to this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hartford, State of Connecticut, on the 28th day of
April 1999.
MONEY MARKET PORTFOLIO
----------------------
(Registrant)
By: *HEATH B. McLENDON
-----------------------------------
Heath B. McLendon
Chairman, Board of Trustees
Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to this Registration Statement has been signed below by the following
persons in the capacities indicated on the 28th day of April 1999.
*HEATH B. McLENDON Chairman of the Board
- ------------------------------
(Heath B. McLendon)
*KNIGHT EDWARDS Trustee
- ------------------------------
(Knight Edwards)
*ROBERT E. McGILL III Trustee
- ------------------------------
(Robert E. McGill III)
*LEWIS MANDELL Trustee
- ------------------------------
(Lewis Mandell)
*FRANCES M. HAWK Trustee
- ------------------------------
(Frances M. Hawk)
*LEWIS E. DAIDONE Treasurer
- ------------------------------
(Lewis E. Daidone)
*By: /s/Ernest J. Wright, Attorney-in-Fact
Secretary, Board of Trustees
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
--- ----------- ----------------
<S> <C> <C>
j(1) Consent of KPMG LLP, Independent Certified Electronically
Public Accountants.
(n) Financial Data Schedule. Electronically
</TABLE>
<PAGE> 1
Exhibit (j)(1)
Independent Auditors' Consent
To the Shareholders and Board of Trustees of
Money Market Portfolio
We consent to the use of our report dated February 8, 1999, with respect to the
Money Market Portfolio, incorporated herein by reference and to the references
to our Firm under the headings "Financial Highlights" in the Prospectus and
"Financial Statements" in the Statement of Additional Information.
KPMG LLP
New York, New York
April 26, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000355751
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 42,172,393
<INVESTMENTS-AT-VALUE> 42,172,393
<RECEIVABLES> 56
<ASSETS-OTHER> 252
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42,172,701
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 103,372
<TOTAL-LIABILITIES> 103,372
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,069,329
<SHARES-COMMON-STOCK> 42,069,329
<SHARES-COMMON-PRIOR> 13,493,801
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 1,637,680
<ACCUMULATED-NET-GAINS> 27,585
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 42,069,329
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,637,680
<OTHER-INCOME> 0
<EXPENSES-NET> 177,669
<NET-INVESTMENT-INCOME> 1,460,011
<REALIZED-GAINS-CURRENT> (215)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,459,796
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,459,796
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 103,475,184
<NUMBER-OF-SHARES-REDEEMED> 76,308,910
<SHARES-REINVESTED> 1,409,254
<NET-CHANGE-IN-ASSETS> 28,575,528
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 96,335
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 27,166,366
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.49
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 065
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
